10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2017

Commission file number 333-86453

UNITED BANCSHARES, INC.

(Exact name of Registrant as specified in its charter)

Ohio

(State or other jurisdiction of incorporation or organization)

105 Progressive Drive, Columbus Grove, Ohio

(Address of principal executive offices)

34-1516518

(I.R.S. Employer Identification Number)

45830

(Zip Code)

(419) 659-2141

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒   No ☐

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

Large accelerated filer ☐   Accelerated filer  ☐    Non-accelerated filer  ☐     Smaller Reporting Company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes ☐   No ☒

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

Yes ☐    No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of September 30, 2017: 3,267,643.

This document contains 77 pages. The Exhibit Index is on page 42 immediately preceding the filed exhibits.

UNITED BANCSHARES, INC.

Table of Contents

	Page
Part I – Financial Information
Item 1 – Financial Statements	3
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3 – Quantitative and Qualitative Disclosures about Market Risk	37
Item 4 – Controls and Procedures	38
Part II – Other Information
Item 1 – Legal Proceedings	39
Item 1A – Risk Factors	39
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3 – Defaults Upon Senior Securities	39
Item 4 – Mine Safety Disclosures	40
Item 5 – Other Information	40
Item 6 – Exhibits	40

PART 1 - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

United Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets (Unaudited) 

	(in thousands except share data)
	September 30,			December 31,
	2017			2016
ASSETS
CASH AND CASH EQUIVALENTS
Cash and due from banks	$	9,401		$	9,926
Interest-bearing deposits in other banks		4,448			4,260
Total cash and cash equivalents		13,849			14,186
SECURITIES, available-for-sale		178,740			190,205
FEDERAL HOME LOAN BANK STOCK, at cost		5,302			4,830
CERTIFICATES OF DEPOSIT, at cost		1,245			1,494
LOANS HELD FOR SALE		6,993			1,510
LOANS AND LEASES		493,089			376,086
Less allowance for loan and lease losses		2,817			3,345
Net loans and leases		490,272			372,741
PREMISES AND EQUIPMENT, net		19,312			13,395
GOODWILL		25,432			10,072
CORE DEPOSIT INTANGIBLE ASSETS, net		829			766
CASH SURRENDER VALUE OF LIFE INSURANCE		17,726			17,351
OTHER REAL ESTATE OWNED		451			578
OTHER ASSETS, including accrued interest receivable		10,562			5,991
TOTAL ASSETS	$	770,713		$	633,119
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits:
Non-interest-bearing	$	104,913		$	98,134
Interest-bearing		532,761			426,546
Total deposits		637,674			524,680
Other borrowings		40,260			18,774
Junior subordinated deferrable interest debentures		12,832			12,806
Other liabilities		4,233			4,301
Total liabilities		694,999			560,561
SHAREHOLDERS’ EQUITY
Common stock, stated value $1.00, authorized 10,000,000 shares;
issued 3,760,557 shares		3,761			3,761
Surplus		14,746			14,674
Retained earnings		64,521			62,717
Accumulated other comprehensive income (loss)		396			(866	)
Treasury stock, at cost, 492,914 shares at September 30, 2017
and 494,040 shares at December 31, 2016		(7,710	)		(7,728	)
Total shareholders’ equity		75,714			72,558
TOTAL LIABILITIES AND SHAREHOLDERS'  EQUITY	$	770,713		$	633,119

The accompanying notes are an integral part of the consolidated financial statements.

3

United Bancshares, Inc. and Subsidiary

Condensed Consolidated Statements of Income (Unaudited) 

	(in thousands except share data)
	Three months ended September 30,				Nine months ended September 30,
	2017		2016		2017			2016
INTEREST INCOME
Loans and leases, including fees	$	5,384	$	4,498	$	14,516		$	12,980
Securities:
Taxable		581		552		1,833			1,623
Tax-exempt		420		390		1,266			1,224
Other		99		101		257			262
Total interest income		6,484		5,541		17,872			16,089
INTEREST EXPENSE
Deposits		559		437		1,466			1,249
Borrowings		217		143		569			403
Total interest expense		776		580		2,035			1,652
Net interest income		5,708		4,961		15,837			14,437
CREDIT FOR LOAN AND LEASE LOSSES		-		-		(350	)		(700	)
Net interest income after credit
for loan and lease losses		5,708		4,961		16,187			15,137
NON-INTEREST INCOME
Gain on sale of loans		235		202		466			409
Net securities gains		30		23		111			159
Other operating income		1,095		1,064		3,168			2,903
Total non-interest income		1,360		1,289		3,745			3,471
NON-INTEREST EXPENSES		6,427		4,454		15,949			13,371
INCOME BEFORE INCOME TAXES		641		1,796		3,983			5,237
PROVISION FOR INCOME TAXES		239		418		1,002			1,216
NET INCOME	$	402	$	1,378	$	2,981		$	4,021
NET INCOME PER SHARE (basic and diluted)	$	0.12	$	0.42	$	0.91		$	1.22
Weighted average common shares outstanding (basic)		3,267,527		3,287,875		3,267,191			3,295,307
Weighted average common shares outstanding (diluted)		3,273,313		3,287,875		3,272,976			3,295,307

The accompanying notes are an integral part of the consolidated financial statements.

4

United Bancshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Unaudited)

	(in thousands)						(in thousands)
	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016
NET INCOME	$	402		$	1,378		$	2,981		$	4,021
OTHER COMPREHENSIVE INCOME
Unrealized gains on securities:
Unrealized holding gains (losses) during period		189			(886	)		2,023			2,376
Reclassification adjustments for gains
included in net income		(30	)		(23	)		(111	)		(159	)
Other comprehensive income (loss), before income taxes		159			(909	)		1,912			2,217
Income tax expense (benefit) related to items of other
comprehensive income (loss)		54			(309	)		650			754
Other comprehensive income (loss)		105			(600	)		1,262			1,463
COMPREHENSIVE INCOME	$	507		$	778		$	4,243		$	5,484

The accompanying notes are an integral part of the consolidated financial statements.

5

United Bancshares, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity (Unaudited)

Nine months ended September 30, 2017 and 2016 

	(in thousands except share data)
	Common stock		Surplus		Retained earnings			Accumulated other comprehensive income (loss)			Treasury stock			Total
BALANCE AT DECEMBER 31, 2016	$	3,761	$	14,674	$	62,717		$	(866	)	$	(7,728	)	$	72,558
Comprehensive income:
Net income		-		-		2,981			-			-			2,981
Other comprehensive income		-		-		-			1,262			-			1,262
1,126 shares issued from treasury in connection with
the Corporation's Employee Stock Purchase Plan		-		7		-			-			18			25
Stock option expense		-		65		-			-			-			65
Cash dividends declared, $0.36 per share		-		-		(1,177	)		-			-			(1,177	)
BALANCE AT SEPTEMBER 30, 2017	$	3,761	$	14,746	$	64,521		$	396		$	(7,710	)	$	75,714
BALANCE AT DECEMBER 31, 2015	$	3,761	$	14,669	$	58,642		$	1,397		$	(6,908	)	$	71,561
Comprehensive income:
Net income		-		-		4,021			-			-			4,021
Other comprehensive income		-		-		-			1,463			-			1,463
Repurchase of 33,668 shares		-		-		-			-			(633	)		(633	)
843 shares issued from treasury in connection with
the Corporation's Employee Stock Purchase Plan		-		5		-			-			13			18
Cash dividends declared, $0.33 per share		-		-		(1,086	)		-			-			(1,086	)
BALANCE AT SEPTEMBER 30, 2016	$	3,761	$	14,674	$	61,577		$	2,860		$	(7,528	)	$	75,344

6

United Bancshares, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows (Unaudited)

	Nine months ended September 30,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES	$	582		$	4,226
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales, calls and maturities of available-for-sale securities		42,791			34,475
Purchases of available-for-sale securities		(29,941	)		(41,884	)
Proceeds from certificates of deposit		249			-
Proceeds from sale of other real estate owned		358			266
Acquisition of Benchmark Bancorp, Inc., net of cash received		(24,660	)		-
Net increase in loans and leases		(23,556	)		(4,724	)
Purchases of premises and equipment		(3,943	)		(37	)
Net cash used in investing activities		(38,702	)		(11,904	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits		17,449			(902	)
Proceeds from other borrowings		40,260			3,609
Principal payments on other borrowings		(18,774	)		-
Purchase of treasury shares		-			(633	)
Proceeds from sale of treasury shares		25			18
Cash dividends paid		(1,177	)		(1,086	)
Net cash provided by financing activities		37,783			1,006
NET DECREASE IN CASH AND
CASH EQUIVALENTS		(337	)		(6,672	)
CASH AND CASH EQUIVALENTS
At beginning of period		14,186			22,922
At end of period	$	13,849		$	16,250
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the period for:
Interest	$	1,899		$	1,597
Federal income taxes	$	425		$	610
Non-cash investing activities:
Transfer of loans to other real estate owned	$	241		$	644
Change in net unrealized gain or loss on available-for-sale securities	$	1,912		$	2,217

The accompanying notes are an integral part of the consolidated financial statements.

7

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2017

NOTE 1 – CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of United Bancshares, Inc. and subsidiaries (the “Corporation”) have been prepared without audit and in the opinion of management reflect all adjustments (which include normal recurring adjustments) necessary to present fairly such information for the periods and dates indicated. Since the unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q, they do not contain all information and footnotes typically included in financial statements prepared in conformity with generally accepted accounting principles. Operating results for the nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. The balance sheet as of December 31, 2016 is derived from completed audited consolidated financial statements with footnotes, which are included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2016.

The consolidated financial statements include the accounts of the Corporation and its wholly-owned subsidiary, The Union Bank Company (the “Bank”). The Bank has formed a wholly-owned subsidiary, UBC Investments, Inc. (“UBC”), to hold and manage its securities portfolio. The operations of UBC are located in Wilmington, Delaware. The Bank has also formed a wholly-owned subsidiary, UBC Property, Inc. (“UBC Property”), to hold and manage certain property. All significant intercompany balances and transactions have been eliminated in consolidation. The accounting and reporting policies of the Corporation conform to generally accepted practices within the banking industry. The Corporation considers all of its principal activities to be banking related.

NOTE 2 – NEW ACCOUNTING PRONOUNCEMENTS

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606): Summary and Amendments that Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40). The guidance in this update supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the industry topics of the Codification.  For public companies, this update will be effective for interim and annual periods beginning after December 15, 2017.  The guidance does not apply to revenues associated with financial instruments, including loans and securities that are accounted for under U.S. GAAP.  The Corporation does not expect the guidance will have a material impact on its consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, amending ASU Subtopic 825-10. The amendments in this update make targeted improvements to generally accepted accounting principles (GAAP) as follows: 1) require equity investments to be measured at fair value with changes in fair value recognized in net income; 2) simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; 3) eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; 4) eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; 5) require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; 6) require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; 7) require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; and 8) clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The amendments in this update are effective for fiscal years beginning after December 15, 2017. The Corporation has begun gathering data and is currently assessing the impact that this guidance will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842).  The ASU requires a lessee to recognize on the balance sheet assets and liabilities for leases with lease terms of more than 12 months.  Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease.  Unlike current GAAP, which requires that only capital leases be recognized on the balance sheet, the ASC requires that both types of leases by recognized on the balance sheet.  For public companies, this update will be effective for interim and annual periods beginning after December 15, 2018.  Early application is permitted.  The adoption of this guidance is not expected to have a material impact on the Corporation’s consolidated financial statements. 

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718). ASU 2016-09 is intended to simplify the accounting for share-based payment transactions, including income tax consequences, classification of awards as either assets or liabilities and classification in the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2017 and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted. The Corporation does not expect the adoption of ASU 2016-09 to have a material impact on its consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2019. Management has begun gathering data and evaluating the process for calculating the allowance for loan losses under the requirements of ASU 2016-13, but has not yet determined the expected impact the adoption of ASU 2016-13 will have on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The guidance in this update eliminates the Step 2 from the goodwill impairment test. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted for interim and annual goodwill impairment test with a measurement date after January 1, 2017. The Corporation does not expect the guidance to have a material impact on the consolidated financial statements.

8

NOTE 3 – ACQUISITION

On September 8, 2017, after receiving full board of director and regulatory approval, the Corporation completed the acquisition of Benchmark Bancorp, Inc. (“Benchmark”) and its wholly-owned subsidiary, Benchmark Bank, in an all cash transaction. Under the terms of the merger agreement, shareholders of Benchmark received approximately $8.59 per share for each outstanding common share. Immediately following the merger of Benchmark with and into the Corporation, Benchmark Bank merged with and into the Bank.

As a result of the acquisition, the two full-service banking centers of Benchmark Bank located in Gahanna and Westerville, Ohio, became full service offices of the Bank, and one mortgage loan production office located in Gahanna Ohio, became a mortgage loan production office of the Bank. With the acquisition, the Corporation has expanded its geographical footprint in an effort to help continue the growth of the Corporation’s overall profile in size and in earnings.

The results of operations of Benchmark are included in the Corporation’s consolidated operating results for the period subsequent to the date of the transaction. Acquisition-related costs of $1,115,000 and $1,271,000, respectively, for the quarter and nine month periods ended September 30, 2017, are included in other non-interest operating expenses in the accompanying consolidated statements of income for the quarter and nine month periods ended September 30, 2017.

Goodwill of $15,360,000 arising from the acquisition consists largely of synergies and the cost savings expected to result from the combining of operations and is not expected to be deductible for income tax purposes.

Consideration paid and the estimated fair value of the assets acquired and the liabilities assumed at the acquisition date are as follows (dollars in thousands):

Cash and cash equivalents	$	6,092
Restricted stock		472
Loans, including loans held for sale		98,804
Premises and equipment		2,483
Core deposit intangible asset		146
Other real estate owned		141
Other assets, including accrued interest receivable		5,460
Total assets acquired		113,598
Deposits		95,545
Other liabilities		2,661
Total liabilities assumed		98,206
Net identifiable assets		15,392
Goodwill		15,360
Total cash paid	$	30,752

The acquisition was partially funded through other borrowings, as more fully described in Note 6.

Explanatory Note: The following unaudited pro forma condensed combined consolidated financial statements, as well as the consolidated financial statements of Benchmark as of and for the year ended December 31, 2016, filed herewith as Exhibit 99.2 are intended to satisfy the Corporation’s reporting obligation under Item 9.01 of Form 8-K.

Unaudited Pro Forma Condensed Combined Consolidated Financial Statements

The following unaudited pro forma condensed combined consolidated balance sheet as of June 30, 2017 gives effect to the acquisition as if the merger occurred on that date. The unaudited pro forma condensed combined consolidated statement of income for the six months ended June 30, 2017 and the year ended December 31, 2016 give effect to the acquisition, as if the merger had occurred on January 1, 2016. The pro forma adjustments are based on estimates made for the purpose of preparing these pro forma financial statements and are described in the accompanying Notes. The Corporation’s management believes that the estimates used in these pro forma financial statements are reasonable under the circumstances.

9

The unaudited pro forma condensed combined consolidated financial information has been prepared based on the purchase method of accounting.

The unaudited pro forma condensed combined consolidated financial statements included herein are presented for information purposes only. The unaudited pro forma condensed combined consolidated balance sheet as of June 30, 2017 is not necessarily indicative of the combined financial position had the merger been effective at that date. The unaudited pro forma condensed combined consolidated statements of income are not necessarily indicative of the results of operations that would have occurred had the merger been effective at the beginning of the period indicated, or of the future results of operations of the Corporation.

These pro forma financial statements do not include the effects of any potential cost savings which management believes will result from operating Benchmark Bank as branches and combining certain operating procedures. It also does not necessarily reflect what the historical results of the combined company would have been had the companies been combined during this period. 

	(in thousands except per share data)
	June 30, 2017
	Historical United			Historical Benchmark			Pro Forma Adjustments Debit/(Credit)			Footnote Reference	Pro Forma Combined
	(Unaudited)
ASSETS:
Cash and due from banks	$	14,155		$	9,982		$	(5,897	)	(1)	$	18,240
Fed Funds sold		-			775			-				775
Securities, available-for-sale		183,975			1,621			-				185,596
Loans, gross		385,777			105,798			(3,046	)	(2)		488,529
Allowance for loan losses		(2,829	)		(1,088	)		1,088		(3)		(2,829	)
Premises and equipment		17,008			2,409			142		(4)		19,559
Other real estate owned		344			351			(211	)	(5)		484
Federal Home Loan Bank stock		4,829			473			-				5,302
Bank owned life insurance		17,548			-			-				17,548
Other intangible assets		707			-			146		(6)		853
Goodwill		10,072			-			14,586		(7)		24,658
Accrued interest and other assets		5,092			4,029			618		(8)		9,739
Total Assets	$	636,678		$	124,350		$	7,426			$	768,454
LIABILITIES:
Deposits	$	537,303		$	97,862		$	418		(9)	$	635,583
Other borrowings		7,571			8,000			25,000		(1)		40,571
Trust preferred		12,823			-			-				12,823
Accrued expenses and other liabilities		3,425			641			-				4,066
Total Liabilities	$	561,122		$	106,503		$	25,418			$	693,043
EQUITY:
Common stock	$	3,761		$	3,115		$	(3,115	)	(10)	$	3,761
Preferred stock		-			2			(2	)	(10)		-
Warrants		-			38			(38	)	(10)		-
Additional paid-in capital - Common		-			20,923			(20,923	)	(10)		-
Additional paid-in capital - Preferred		-			1,605			(1,605	)	(10)		-
Surplus		14,712			-			-				14,712
Retained earnings (accumulated deficit)		64,511			(7,814	)		7,669		(11)		64,366
Treasury stock		(7,719	)		-			-				(7,719	)
Accumulated other comprehensive income (loss)		291			(22	)		22		(12)		291
Total Stockholders' Equity		75,556			17,847			(17,992	)			75,411
Total Liabilities & Stockholders' Equity	$	636,678		$	124,350		$	7,426			$	768,454

10

	(in thousands except per share data)
	For the Six months Ended June 30, 2017
	Historical United			Historical Benchmark			Pro Forma Adjustments Debit/(Credit)		Footnote Reference	Pro Forma Combined
	(Unaudited)
Interest Income	$	11,389		$	3,128		$	187	(13)	$	14,704
Interest Expense		1,260			434			158	(14)		1,852
Net interest income		10,129			2,694			29			12,852
Credit for loan losses		(350	)		(96	)		-			(446	)
Net interest income after provision for loan losses		10,479			2,790			29			13,298
Non-interest income		2,385			2,651			-			5,036
Non-interest expense		9,522			5,028			15	(15)(16)		14,565
Income before income taxes		3,342			413			14			3,769
Income tax provision		763			207			5	(17)		975
Net Income	$	2,579		$	206		$	9		$	2,794
Earnings per share
Basic	$	0.79		$	0.07
Diluted	$	0.79		$	0.07
Pro Forma earnings per share
Basic									(18)	$	0.86
Diluted									(18)	$	0.86

	(in thousands except per share data)
	For the Year Ended December 31, 2016
	Historical United			Historical Benchmark			Pro Forma Adjustments Debit/(Credit)			Footnote Reference	Pro Forma Combined
	(Unaudited)
Interest Income	$	21,627		$	6,082		$	334		(13)	$	28,043
Interest Expense		2,231			700			318		(14)		3,249
Net interest income		19,396			5,382			16				24,794
Credit for loan losses		(750	)		(256	)		-				(1,006	)
Net interest income after provision for loan losses		20,146			5,638			16				25,800
Non-interest income		4,903			6,473			-				11,376
Non-interest expense		17,784			10,636			29		(15)(16)		28,449
Income before income taxes		7,265			1,475			(13	)			8,727
Income tax provision		1,744			(3,652	)		(5	)	(17)		(1,913	)
Net Income	$	5,521		$	5,127		$	(8	)		$	10,640
Earnings per share
Basic	$	1.68		$	1.65
Diluted	$	1.68		$	1.65
Pro Forma earnings per share
Basic										(18)	$	3.43
Diluted										(18)	$	3.43

11

PRELIMINARY PURCHASE ACCOUNTING ALLOCATIONS

The unaudited pro forma condensed combined consolidated financial information for the merger includes an unaudited pro forma condensed combined balance sheet as of June 30, 2017 assuming the merger was completed on June 30, 2017. The unaudited pro forma condensed combined consolidated statements of income is for the six months ended June 30, 2017.

	(in thousands)
	June 30, 2017
			Footnote Reference
Benchmark Bancorp shareholders' equity - June 30, 2017 plus/(minus) estimated fair value adjustments:				$	17,847
Loan fair value	$	(3,046)	(2)
Allowance for loan losses		1,088	(3)
Loans, net		(1,958)
Building		142	(4)
OREO		(211)	(5)
Core deposit intangible asset		146
Deferred tax asset, net		618	(8)
Deposits - fixed maturity		(418)	(9)
Total fair value adjustments				$	(1,681)
Estimated fair value of Benchmark Bancorp net
assets at June 30, 2017					16,166
Total consideration paid to Benchmark Bancorp
shareholders (**)					30,752
Goodwill				$	14,586

** The purchase price is based on estimated total cash consideration of $30,752.

A. Notes:

(1) Cash consideration of $30,752,000 paid to Benchmark Bancorp’s shareholders plus estimated transaction costs of $145,000 net of tax, less additional borrowings of $25,000,000.

(2) The fair value of Benchmark’s loan portfolio acquired in the transaction is estimated by United to be less than book value. Based on management’s judgment, United applied a discount to the loan portfolio to estimate the fair value adjustment as of June 30, 2017. The adjustment reflects United’s estimates of both market interest rate differential and credit considerations on pools of loans and the potential adjustments required by ASC 310-30, “Receivables - Loans and Debt Securities Acquired with Deteriorated Credit Quality” for applicable individual loans. The portion of the fair market value adjustment that is accretable is assumed to amortize into interest income on a level yield basis over the estimated remaining life of the loans.

(3) Elimination of Benchmark’s allowance for loan losses.

(4) Adjusts bank premises to appraised value at June 30, 2017.

(5) Adjusts the value of OREO at June 30, 2017 to estimated fair value.

(6) Represents the establishment of the estimated core deposit intangible. The core deposit intangible is assumed to amortize into non-interest expense over 10 years, using accelerated methods.

(7) Goodwill estimate based on the excess of the purchase price over the estimated fair value of the net assets acquired.

(8) Tax effect of estimated fair market value adjustments.

(9) Estimated fair market value adjustment related to deposits and is assumed to amortize into interest expense on a level yield basis over the estimated remaining maturity of the deposits.

(10) Reflects the elimination of Benchmark’s common and preferred stock, including related additional paid-in capital, as well as warrants.

(11) Reflects the elimination of Benchmark’s accumulated deficit of $7,814,000, net of after-tax transaction costs of $145,000.

(12) Reflects the elimination of Benchmark’s accumulated other comprehensive loss of $22,000.

(13) Interest income impact of loan discount accretion on purchase accounting adjustment, net of lost earnings on cash consideration paid and net merger costs, after tax.

(14) Interest expense on other borrowings incurred to facilitate the transaction, net of estimated fair value adjustment related to deposits assumed to amortize into interest expense on an accelerated basis over 5 years.

(15) Reflects additional depreciation on fair value adjustment of bank premises.

(16) Reflects core deposit intangible amortization over 10 years, using accelerated methods.

(17) Represents the income tax effect (34%) of the impact of pro forma adjustments on income before tax.

(18) Basic and diluted pro forma earnings per share for the six months ended June 30, 2017 have been computed based on 3,267,020 basic and 3,271,477 diluted shares, respectively. Basic and diluted pro forma earnings per share for the year ended December 31, 2016 have been computed based upon 3,289,497 basic and diluted shares.

12

NOTE 4 - SECURITIES

The amortized cost and fair value of available-for-sale securities as of September 30, 2017 and December 31, 2016 are as follows:

	(in thousands)
	September 30, 2017				December 31, 2016
	Amortized cost		Fair value		Amortized cost		Fair value
Available-for-sale:
Obligations of states and political
subdivisions	$	69,796	$	70,800	$	70,757	$	70,624
Mortgage-backed		107,342		106,948		119,758		118,595
Other		1,002		992		1,002		986
Total	$	178,140	$	178,740	$	191,517	$	190,205

A summary of gross unrealized gains and losses on available-for-sale securities as of September 30, 2017 and December 31, 2016 follows:

	September 30, 2017				December 31, 2016
	Gross unrealized gains		Gross unrealized losses		Gross unrealized gains		Gross unrealized losses
Available-for-sale:
Obligations of states and political
subdivisions	$	1,210	$	206	$	644	$	777
Mortgage-backed		603		997		769		1,932
Other		-		10		-		16
Total	$	1,813	$	1,213	$	1,413	$	2,725

13

NOTE 5 – LOANS AND LEASES

The following tables present the activity in the allowance for loan and lease losses by portfolio segment for the periods ending September 30, 2017 and 2016:

	(in thousands)
	Commercial			Commercial and multi-family real estate			Residential 1 – 4 family real estate			Consumer			Total
Balance at December 31, 2016	$	896		$	1,876		$	542		$	31		$	3,345
Provision (credit) charged to expenses		(374	)		(65	)		65			24			(350	)
Losses charged off		(36	)		(553	)		(45	)		(23	)		(657	)
Recoveries		78			381			12			8			479
Balance at September 30, 2017	$	564		$	1,639		$	574		$	40		$	2,817

	Commercial			Commercial and multi-family real estate			Residential 1 – 4 family real estate			Consumer			Total
Balance at December 31, 2015	$	893		$	2,540		$	373		$	28		$	3,834
Provision (credit) charged to expenses		163			(904	)		42			(1	)		(700	)
Losses charged off		(86	)		(11	)		(24	)		(8	)		(129	)
Recoveries		28			285			62			8			383
Balance at September 30, 2016	$	998		$	1,910		$	453		$	27		$	3,388

14

The following tables present the balance in the allowance for loan and lease losses and the recorded investment in loans and leases by portfolio segment and based on impairment method for the periods ending September 30, 2017 and December 31, 2016: 

	(in thousands)
September 30, 2017	Commercial		Commercial and multi-family real estate		Residential 1 – 4 family real estate		Consumer		Total
Allowance for loan and lease losses:
Attributable to loans and leases
individually evaluated for impairment	$	98	$	-	$	-	$	-	$	98
Collectively evaluated for impairment		466		1,639		574		40		2,719
Total allowance for loan
and lease losses	$	564	$	1,639	$	574	$	40	$	2,817
Loans and leases:
Individually evaluated for impairment	$	490	$	396	$	-	$	-	$	886
Acquired with deteriorated
credit quality		-		915		227		-		1,142
Collectively evaluated for impairment		64,284		301,085		121,180		4,512		491,061
Total ending loans and
leases balance	$	64,774	$	302,396	$	121,407	$	4,512	$	493,089

December 31, 2016	Commercial		Commercial and multi-family real estate		Residential 1 – 4 family real estate		Consumer		Total
Allowance for loan and lease losses:
Attributable to loans and leases
individually evaluated for impairment	$	399	$	619	$	-	$	-	$	1,018
Collectively evaluated for impairment		497		1,257		542		31		2,327
Total allowance for loan
and lease losses	$	896	$	1,876	$	542	$	31	$	3,345
Loans and leases:
Individually evaluated for impairment	$	937	$	1,980	$	-	$	-	$	2,917
Acquired with deteriorated
credit quality		-		573		51		-		624
Collectively evaluated for impairment		62,782		216,933		88,818		4,012		372,545
Total ending loans and
leases balance	$	63,719	$	219,486	$	88,869	$	4,012	$	376,086

Impaired loans and leases were as follows as of September 30, 2017 and December 31, 2016:

	(in thousands)
	September 30, 2017		December 31, 2016
Loans and leases with no allowance
for loan and lease losses allocated	$	396	$	-
Loans and leases with allowance
for loan and lease losses allocated		490		2,917
Total impaired loans and leases		886		2,917
Amount of the allowance allocated to impaired loans and leases	$	98	$	1,018

No additional funds are committed to be advanced in connection with impaired loans and leases.

The average recorded investment in impaired loans and leases (excluding loans and leases acquired with deteriorated credit quality) for the nine month periods ended September 30, 2017 and 2016 was approximately $1.8 million and $4.5 million, respectively. There was $86,000 and $255,000 in interest income recognized by the Corporation on impaired loans and leases on an accrual or cash basis for the nine month periods ended September 30, 2017 and 2016, respectively.

15

The following table presents loans and leases individually evaluated for impairment by class of loans as of September 30, 2017 and December 31, 2016: 

	(in thousands)
	September 30, 2017				December 31, 2016
	Recorded investment		Allowance for loan and lease losses allocated		Recorded investment		Allowance for loan and lease losses allocated
With no related allowance recorded:
Commercial	$	-	$	-	$	-	$	-
Commercial and multi-family real estate		396		-		-		-
Agriculture		-		-		-		-
Agricultural real estate		-		-		-		-
Consumer		-		-		-		-
Residential 1-4 family real estate		-		-		-		-
With an allowance recorded:
Commercial		490		98		937		399
Commercial and multi-family real estate		-		-		1,980		619
Agriculture		-		-		-		-
Agricultural real estate		-		-		-		-
Consumer		-		-		-		-
Residential 1-4 family real estate		-		-		-		-
Total	$	886	$	98	$	2,917	$	1,018

The following tables present the recorded investment in nonaccrual loans and leases, loans and leases past due over 90 days still on accrual and troubled debt restructurings by class of loans as of September 30, 2017 and December 31, 2016:

	(in thousands)
September 30, 2017	Nonaccrual		Loans and leases past due over 90 days still accruing		Troubled Debt Restructurings
Commercial	$	618	$	-	$	27
Commercial real estate		1,573		-		604
Agricultural real estate		233		-		-
Agriculture		-		-		-
Consumer		-		-		-
Residential:
1 – 4 family		726		199		436
Home equity		-		-		-
Total	$	3,150	$	199	$	1,067

16

	(in thousands)
December 31, 2016	Nonaccrual		Loans and leases past due over 90 days still accruing		Troubled Debt Restructurings
Commercial	$	1,295	$	-	$	29
Commercial real estate		3,462		-		722
Agricultural real estate		277		-		-
Agriculture		-		73		-
Consumer		3		-		-
Residential:
1 – 4 family		966		81		457
Home equity		-		-		-
Total	$	6,003	$	154	$	1,208

The nonaccrual balances in the tables above include troubled debt restructurings that have been classified as nonaccrual.

The following table presents the aging of the recorded investment in past due loans and leases as of September 30, 2017 by class of loans and leases:

	(in thousands)
	30 – 59 days past due		60 – 89 days past due		Greater than 90 days past due		Total past due		Loans and leases not past due		Total
Commercial	$	113	$	-	$	74	$	187	$	51,550	$	51,737
Commercial real estate		125		23		516		664		271,771		272,435
Agriculture		60		-		-		60		12,977		13,037
Agricultural real estate		10		-		-		10		29,951		29,961
Consumer		-		3		-		3		4,509		4,512
Residential real estate		2,970		29		297		3,296		118,111		121,407
Total	$	3,278	$	55	$	887	$	4,220	$	488,869	$	493,089

The following table presents the aging of the recorded investment in past due loans and leases as of December 31, 2016 by class of loans and leases: 

	(in thousands)
	30 – 59 days past due		60 – 89 days past due		Greater than 90 days past due		Total past due		Loans and leases not past due		Total
Commercial	$	326	$	71	$	79	$	476	$	49,988	$	50,464
Commercial real estate		103		147		553		803		192,830		193,633
Agriculture		227		-		-		227		13,026		13,253
Agricultural real estate		-		-		5		5		25,850		25,855
Consumer		10		2		-		12		4,000		4,012
Residential real estate		1,770		484		462		2,716		86,153		88,869
Total	$	2,436	$	704	$	1,099	$	4,239	$	371,847	$	376,086

17

Credit Quality Indicators:

The Corporation categorizes loans and leases into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current final financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Corporation analyzes loans and leases individually by classifying the loans and leases as to the credit risk. This analysis generally includes loans and leases with an outstanding balance greater than $500,000 and non-homogenous loans and leases, such as commercial and commercial real estate loans and leases. This analysis is performed on a quarterly basis. The Corporation uses the following definitions for risk ratings:

· Special Mention: Loans and leases which possess some credit deficiency or potential weakness which deserves close attention, but which do not yet warrant substandard classification. Such loans and leases pose unwarranted financial risk that, if not corrected, could weaken the loan or lease and increase risk in the future. The key distinctions of a Special Mention classification are that (1) it is indicative of an unwarranted level of risk, and (2) weaknesses are considered "potential", versus "defined", impairments to the primary source of loan repayment.

· Substandard: These loans and leases are inadequately protected by the current sound net worth and paying ability of the borrower. Loans and leases of this type will generally display negative financial trends such as poor or negative net worth, earnings or cash flow. These loans and leases may also have historic and/or severe delinquency problems, and Corporation management may depend on secondary repayment sources to liquidate these loans and leases. The Corporation could sustain some degree of loss in these loans and leases if the weaknesses remain uncorrected.

· Doubtful: Loans and leases in this category display a high degree of loss, although the amount of actual loss at the time of classification is undeterminable. This should be a temporary category until such time that actual loss can be identified, or improvements made to reduce the seriousness of the classification.

Loans and leases not meeting the previous criteria that are analyzed individually as part of the above described process are considered to be pass rated loans and leases. Loans and leases listed as not rated are generally either less than $500,000 or are included in groups of homogenous loans and leases. As of September 30, 2017 and December 31, 2016, and based on the most recent analysis performed, the risk category of loans by class of loans and leases is as follows: 

	(in thousands)
September 30, 2017	Pass		Special Mention		Substandard		Doubtful		Not rated
Commercial	$	43,832	$	-	$	1,998	$	-	$	18,944
Commercial and multi-
family real estate		224,970		2,390		2,449		-		72,587
Residential 1 - 4 family		11,056		-		124		-		110,227
Consumer		-		-		-		-		4,512
Total	$	279,858	$	2,390	$	4,571	$	-	$	206,270

December 31, 2016	Pass		Special Mention		Substandard		Doubtful		Not rated
Commercial	$	41,233	$	-	$	3,666	$	-	$	18,819
Commercial and multi-
family real estate		162,399		4,239		3,850		-		48,999
Residential 1 - 4 family		210		-		-		-		88,659
Consumer		-		-		-		-		4,012
Total	$	203,842	$	4,239	$	7,516	$	-	$	160,489

18

The Corporation considers the performance of the loan and lease portfolio and its impact on the allowance for loan and lease losses. For all loan classes that are not rated, the Corporation also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. Generally, all loans and leases not rated that are 90 days past due or are classified as nonaccrual and collectively evaluated for impairment, are considered nonperforming. The following table presents the recorded investment in all loans and leases that are not risk rated, based on payment activity as of September 30, 2017 and December 31, 2016:

	(in thousands)
September 30, 2017	Commercial		Commercial and multi-family real estate		Residential 1-4 family		Consumer
Performing	$	18,870	$	72,127	$	109,930	$	4,512
Nonperforming		74		460		297		-
Total	$	18,944	$	72,587	$	110,227	$	4,512

December 31, 2016	Commercial		Commercial and multi-family real estate		Residential 1-4 family		Consumer
Performing	$	18,740	$	48,441	$	88,197	$	4,012
Nonperforming		79		558		462		-
Total	$	18,819	$	48,999	$	88,659	$	4,012

Modifications:

The Corporation’s loan and lease portfolio also includes certain loans and leases that have been modified in a Troubled Debt Restructuring (TDR), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Corporation’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. All TDRs are also classified as impaired loans and leases.

When the Corporation modifies a loan or lease, management evaluates any possible concession based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan or lease agreement, except when the sole (remaining) source of repayment for the loan or lease is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs, instead of discounted cash flows. If management determines that the value of the modified loan or lease is less than the recorded investment in the loan or lease (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), an impairment is recognized through a specific reserve in the allowance or a direct write down of the loan or lease balance if collection is not expected.

There were no modifications for TDR loans and leases, or troubled debt restructurings for which there was a payment default during the nine month period ended September 30, 2017.

In addition to the Benchmark transaction describe in Note 3, the Corporation acquired The Ohio State Bank (OSB) in November 2014. As a result of these acquisitions, the Corporation has loans and leases, for which there was at acquisition, evidence of deterioration of credit quality since origination and for which it was probable at acquisition, that all contractually required payments would not be collected.  

19

The following is information related to loans and leases acquired in these transactions, including purchased impaired loans: 

	The Ohio State Bank
	(in thousands)
	Contractual
	Principal			Accretable			Carrying
	Receivable			Difference			Amount
Purchased Performing Loans and Leases
Balance at December 31, 2016	$	34,416		$	(1,476	)	$	32,940
Change due to payments received		(6,285	)		494			(5,791	)
Transfer to foreclosed real estate		-			-			-
Change due to loan charge-off		-			-			-
Balance at September 30, 2017	$	28,131		$	(982	)	$	27,149

	Contractual			Non
	Principal			Accretable			Carrying
	Receivable			Difference			Amount
Purchased Impaired Loans and Leases
Balance at December 31, 2016	$	1,520		$	(896	)	$	624
Change due to payments received		(288	)		176			(112	)
Transfer to foreclosed real estate		(433	)		297			(136	)
Change due to loan charge-off		(208	)		107			(101	)
Balance at September 30, 2017	$	591		$	(316	)	$	275

	Benchmark Bank
	(in thousands)
	Contractual
	Principal			Accretable			Carrying
	Receivable			Difference			Amount
Purchased Performing Loans and Leases
Balance at September 8, 2017	$	96,914		$	(2,273	)	$	94,641
Change due to payments received		(34	)		1			(33	)
Transfer to foreclosed real estate		-			-			-
Change due to loan charge-off		-			-			-
Balance at September 30, 2017	$	96,880		$	(2,272	)	$	94,608

	Contractual		Non
	Principal		Accretable			Carrying
	Receivable		Difference			Amount
Purchased Impaired Loans and Leases
Balance at September 8, 2017	$	1,641	$	(771	)	$	870
Change due to payments received		-		-			-
Transfer to foreclosed real estate		-		-			-
Change due to loan charge-off		-		-			-
Balance at September 30, 2017	$	1,641	$	(771	)	$	870

A $101,000 provision for loan and lease losses was recognized during the nine month period ended September 30, 2017 related to one purchase credit impaired commercial loan from the OSB acquisition for which the sheriff’s appraisal was substantially below the expected collateral value. There was no provision for loan and lease losses recognized during the nine month period ended September 30, 2016 related to the acquired loans and leases as there was no significant change to the credit quality of the loans and leases during the period.

There was no provision for loan and lease losses recognized during the period ended September 30, 2017 related to loans acquired in the Benchmark acquisition.

20

NOTE 6 – OTHER BORROWINGS

During September 2017, the Bank borrowed $25,000,000 and issued secured notes to the Federal Home Loan Bank and the Corporation borrowed $10,000,000 to facilitate the acquisition described in Note 3.

Other borrowings consists of the following at September 30, 2017 and December 31, 2016: 

	(in thousands)
	September 30,		December 31,
	2017		2016
Federal Home Loan Bank borrowings:
Secured notes, with interest at .74%, due March, 2017	$	-	$	18,774
Secured note, with interest at 1.27%, due December, 2017		5,160		-
Secured note, with interest at 0.0%, due October, 2018		100		-
Secured note, with interest at 1.56%, due September, 2021		7,000		-
Secured note, with interest at 1.72%, due September, 2020		6,000		-
Secured note, with interest at 1.86%, due September, 2021		6,000		-
Secured note, with interest at 1.97%, due September, 2022		6,000		-
United Bankers Bank
Note payable, with interest at 4.875%, due September, 2022		10,000		-
Total other borrowings	$	40,260	$	18,774

The United Bankers Bank note requires quarterly interest-only payments commencing December 1, 2017, with quarterly $250,000 principal payments plus interest, commencing December 1, 2018 and any remaining unpaid principal due September 1, 2022.

Federal Home Loan Bank borrowings are secured by Federal Home Loan Bank stock and eligible mortgage loans approximating $98,300,000 and $86,970,000 at September 30, 2017 and December 31, 2016 respectively. The note payable is secured by all outstanding shares of the Bank.

21

NOTE 7 – JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES

The Corporation has formed and invested $300,000 in a business trust, United (OH) Statutory Trust (“United Trust”) which is not consolidated by the Corporation. United Trust issued $10,000,000 of trust preferred securities, which are guaranteed by the Corporation, and are subject to mandatory redemption upon payment of the debentures. United Trust used the proceeds from the issuance of the trust preferred securities, as well as the Corporation’s capital investment, to purchase $10,300,000 of junior subordinated deferrable interest debentures issued by the Corporation. The debentures have a stated maturity date of March 26, 2033. As of March 26, 2008, and quarterly thereafter, the debentures may be shortened at the Corporation’s option. Interest is payable quarterly at a floating rate adjustable quarterly and equal to 315 basis points over the 3-month LIBOR, amounting to 4.16% at September 30, 2017 and 4.15% at December 31, 2016. The Corporation has the right, subject to events in default, to defer payments of interest on the debentures by extending the interest payment period for a period not exceeding 20 consecutive quarterly periods.

The Corporation assumed $3,093,000 of trust preferred securities through the OSB acquisition with $3,000,000 of the liability guaranteed by the Corporation and the remaining $93,000 secured by an investment in the trust preferred securities. The trust preferred securities carrying value as of September 30, 2017 and December 31, 2016 was $2,532,000 and $2,506,000, respectively. The difference between the principal owed and the carrying value is due to the below-market interest rate on the debentures. The debentures have a stated maturity date of April 23, 2034. Interest is at a floating rate adjustable quarterly and equal to 285 basis points over the 3-month LIBOR, amounting to 4.48% at September 30, 2017 and 3.73% at December 31, 2016.

Each issue of the trust preferred securities carries an interest rate identical to that of the related debenture. The securities have been structured to qualify as Tier I capital for regulatory purposes and the dividends paid on such are tax deductible. However, under Federal Reserve Board guidelines, the securities cannot be used to constitute more than 25% of the Corporation’s core Tier I capital inclusive of these securities.

Interest expense on the debentures amounted to $411,000 and $365,000 for the nine month periods ended September 30, 2017 and 2016, respectively, and is included in interest expense-other borrowings in the accompanying consolidated statements of income.

22

NOTE 8 - FAIR VALUE MEASUREMENTS

ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are independent, knowledgeable, and both able and willing to transact.

ASC 820-10 requires the use of valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, ASC 820-10 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access at the measurement date.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include 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 for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 – Unobservable inputs for the asset or liability for which there is little, if any, market activity at the measurement date. Unobservable inputs reflect the Corporation’s own assumptions about what market participants would use to price the asset or liability. The inputs are developed based on the best information available in the circumstances, which might include the Corporation’s own financial data such as internally developed pricing models, discounted cash flow methodologies, as well as instruments for which the fair value determination requires significant management judgment.

Financial assets (there were no financial liabilities) measured at fair value on a recurring basis at September 30, 2017 and December 31, 2016 include available-for-sale securities, which are valued using Level 2 inputs except for one other security which is valued using Level 3 inputs that was redeemed during the second quarter 2017, as well as mortgage servicing rights, amounting to $1,231,000 at September 30, 2017 and $1,247,000 at December 31, 2016, which are valued using Level 3 inputs. Financial assets (there were no financial liabilities) measured at fair value on a non-recurring basis at September 30, 2017 and December 31, 2016 include impaired loans net of specific reserves, approximating $788,000 at September 30, 2017 and $1,899,000 at December 31, 2016, all of which are valued using Level 3 inputs.

There were no financial instruments measured at fair value that moved to a lower level in the fair value hierarchy during the period ended September 30, 2017, due to the lack of observable quotes in inactive markets for those instruments at September 30, 2017. 

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The tables below present a reconciliation and income statement classification of gains and losses for mortgage servicing rights, which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3), and certain securities which are valued using Level 3 inputs, for the nine month period ended September 30, 2017 and year ended December 31, 2016: 

	(in thousands)
	September 30,			December 31,
	2017			2016
Mortgage Servicing Rights
Balance at beginning of period	$	1,247		$	1,181
Gains or losses, including realized and unrealized:
Purchases, issuances, and settlements		138			273
Disposals - amortization based on loan payments and payoffs		(97	)		(195	)
Changes in fair value		(57	)		(12	)
Balance at end of period	$	1,231		$	1,247
Securities valued using Level 3 inputs
Balance at beginning of period	$	2,238		$	2,389
Principal payments received		(2,238	)		(151	)
Changes in fair value		-			-
Balance at end of period	$	-		$	2,238

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, and disclosure of unobservable inputs follows.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality, the Corporation’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. The Corporation’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Corporation’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Securities Available-for-Sale

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would typically include government bonds and exchange traded equities. If quoted market prices are not available, then fair values are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Examples of such instruments, which would generally be classified within Level 2 of the valuation hierarchy, include U.S. Government and agencies securities, municipal bonds, mortgage-backed securities, and asset-backed securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. There were no gains or losses relating to securities available-for-sale included in earnings before income taxes that were attributable to changes in fair values of securities held at September 30, 2017 and December 31, 2016.

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Impaired Loans

The Corporation does not record impaired loans at fair value on a recurring basis. However, periodically, a loan is considered impaired and is reported at the fair value of the underlying collateral less estimated cost to sell, if repayment is expected solely from collateral. Collateral values are estimated using Level 2 inputs, including recent appraisals and Level 3 inputs based on customized discounting criteria such as additional appraisal adjustments to consider deterioration of value subsequent to appraisal date and estimated cost to sell. Additional appraisal adjustments range between 15% and 35% of appraised value, and estimated selling cost ranges between 10% and 20% of the adjusted appraised value.  Due to the significance of the Level 3 inputs, impaired loans fair values have been classified as Level 3.

Mortgage Servicing Rights

The Corporation records mortgage servicing rights at estimated fair value based on a discounted cash flow model which includes discount rates between 9% and 11%, in addition to prepayment, internal rate of return, servicing costs, inflation rate of servicing costs and earnings rate assumptions that are considered to be unobservable inputs. Due to the significance of the Level 3 inputs, mortgage servicing rights have been classified as Level 3.

Other Real Estate Owned

The Corporation values other real estate owned at the estimated fair value of the underlying collateral less appraisal adjustments between 10% and 70% of appraised value, and expected selling costs between 10% and 20% of adjusted appraised value. Such values are estimated primarily using appraisals and reflect a market value approach. Due to the significance of the Level 3 inputs, other real estate owned has been classified as Level 3.

Certain other financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, for example, when there is evidence of impairment. Financial assets and financial liabilities, excluding impaired loans and other real estate owned, measured at fair value on a nonrecurring basis were not significant at September 30, 2017 and December 31, 2016.

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NOTE 9 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of recognized financial instruments at September 30, 2017 and December 31, 2016 were as follows:

	(in thousands)
	September 30, 2017				December 31, 2016
	Carrying amount		Estimated value		Carrying amount		Estimated value		Input  Level
FINANCIAL ASSETS
Cash and cash equivalents	$	13,849	$	13,849	$	14,186	$	14,186		1
Securities, including FHLB stock		184,042		184,042		195,035		195,035		2,3
Certificates of deposit		1,245		1,245		1,494		1,494		2
Loans held for sale		6,993		6,993		1,510		1,510		3
Net loans and leases		490,272		489,027		372,741		371,493		3
Mortgage servicing rights		1,231		1,231		1,247		1,247		3
	$	697,632	$	696,387	$	586,213	$	584,965
FINANCIAL LIABILITIES
Deposits
Maturity	$	176,599		175,618	$	129,460	$	128,592		3
Non-maturity		461,075		461,075		395,220		395,220		1
Other borrowings		40,260		40,276		18,774		18,774		3
Junior subordinated deferrable
interest debentures		12,832		10,213		12,806		9,295		3
	$	690,766	$	687,182	$	556,260	$	551,881

The above summary does not include accrued interest receivable or cash surrender value of life insurance, which are also considered financial instruments. The estimated fair value of such items is considered to be their carrying amounts and would be considered Level 1 inputs.

There are also unrecognized financial instruments at September 30, 2017 and December 31, 2016 which relate to commitments to extend credit and letters of credit. The contract amount of such financial instruments amounted to $127,752,000 at September 30, 2017 and $91,023,000 at December 31, 2016. Such amounts are also considered to be the estimated fair values.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments shown above:

Cash and cash equivalents:

Fair value is determined to be the carrying amount for these items (which include cash on hand, due from banks, and federal funds sold) because they represent cash or mature in 90 days or less, and do not represent unanticipated credit concerns.

Securities:

The fair value of securities is determined based on quoted market prices of the individual securities; if not available, estimated fair value is obtained by comparison to other known securities with similar risk and maturity characteristics. Such value does not consider possible tax ramifications or estimated transaction costs.

Loans held for sale:

The fair value of loans held for sale is determined to be the book value as they are typically held for 60 days or less.

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Loans and leases:

Fair value for loans and leases was estimated for portfolios of loans and leases with similar financial characteristics. For adjustable rate loans, which re-price at least annually and generally possess low risk characteristics, the carrying amount is believed to be a reasonable estimate of fair value. For fixed rate loans, the fair value is estimated based on a discounted cash flow analysis, considering weighted average rates and terms of the portfolio, adjusted for credit and interest rate risk inherent in the loans. Fair value for nonperforming loans is based on recent appraisals or estimated discounted cash flows.

Mortgage servicing rights:

The fair value for mortgage servicing rights is determined based on an analysis of the portfolio by an independent third party.

Deposit liabilities:

The fair value of core deposits, including demand deposits, savings accounts, and certain money market deposits, is the amount payable on demand. The fair value of fixed-maturity certificates of deposit is estimated using the rates offered at quarter end for deposits of similar remaining maturities. The estimated fair value does not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the marketplace.

Other borrowings and junior subordinated deferrable interest debentures:

The fair value of Federal Home Loan Bank (FHLB) borrowings and junior subordinated deferrable interest debentures are determined using the net present value of discounted cash flows based on current borrowing rates for similar types of borrowing arrangements, and are obtained from an independent third party. The fair value of the note payable to United Bankers Bank obtained in September, 2017 to partially finance the acquisition described in Note 3 is considered to be book value.

Other financial instruments:

The fair value of commitments to extend credit and letters of credit is determined to be the contract amount, since these financial instruments generally represent commitments at existing rates. The fair value of other borrowings is determined based on a discounted cash flow analysis using current interest rates. The fair value of other liabilities is generally considered to be carrying value except for the deferred compensation agreement. The fair value of the contract is determined based on a discounted cash flow analysis using a current interest rate for a similar instrument.

The fair value estimates of financial instruments are made at a specific point in time based on relevant market information. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument over the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Since no ready market exists for a significant portion of the financial instruments, fair value estimates are largely based on judgments after considering such factors as future expected credit losses, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

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NOTE 10 – STOCK OPTIONS

The United Bancshares, Inc. 2016 Stock Option Plan (the “Plan”) permits the Corporation to award non-qualified stock options to eligible participants. A total of 250,000 shares are available for issuance pursuant to the Plan.

The Corporation issued 33,352 options during the fourth quarter of 2016 at an exercise price of $19.32 and 30,151 options during the third quarter of 2017 at an exercise price of $21.70 under the Plan. Following is a summary of activity for stock options for the quarter ended September 30, 2017.

	Number
	of Shares
Outstanding, beginning of period		33,352
Granted		30,151
Exercised		-
Outstanding, end of period		63,503

The options vest over a three-year period on the anniversary of the date of grant. At September 30, 2017, no options were exercisable and outstanding options had a weighted average remaining contractual term of 6.625 years.

The fair value of options granted is estimated at the date of grant using the Black Scholes option pricing model. Following are assumptions used in calculating the fair value of the options granted: 

	2017			2016
Weighted-average fair value of options granted	$	7.35		$	6.27
Average dividend yield		2.23	%		2.31	%
Expected volatility		40.00	%		40.00	%
Rick-free interest rate		2.06	%		1.58	%
Expected term (years)		7			7

Total compensation expense related to the stock options granted in 2016 is expected to be $209,000 and is being recognized ratably over the 36 month period beginning January 1, 2017. Total compensation expense related to the stock options granted in 2017 is expected to be $222,000 and is being recognized ratably over the 36 month period beginning August 1, 2017. Stock option expense for outstanding awards amounted to $30,000 and $65,000, respectfully, for the quarter and nine months ended September 30, 2017.

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NOTE 11 – SUBSEQUENT EVENTS

Management evaluated subsequent events through the date the consolidated financial statements were issued. Events or transactions occurring after September 30, 2017 but prior to when the consolidated financial statements were issued, that provided additional evidence about conditions that existed at September 30, 2017 have been recognized in the consolidated financial statements for the period ended September 30, 2017. Events or transactions that provided evidence about conditions that did not exist at September 30, 2017 but arose before the financial statements were issued have not been recognized in the consolidated financial statements for the period ended September 30, 2017.

On October 17, 2017, the Corporation's Board of Directors approved a cash dividend of $0.12 per common share payable December 15, 2017 to shareholders of record at the close of business on November 30, 2017.

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ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SELECTED FINANCIAL DATA

The following data should be read in conjunction with the unaudited consolidated financial statements and management’s discussion and analysis that follows:

	As of or for the Three  months ended September 30,						As of or for the Nine months ended September 30,
	2017			2016			2017			2016
SIGNIFICANT RATIOS (Unaudited)
Net income to:
Average assets (a)		0.24	%		0.89	%		0.61	%		0.87	%
Average tangible shareholders’ equity (a)		2.11	%		7.32	%		5.30	%		7.23	%
Net interest margin (a)		3.79	%		3.57	%		3.68	%		3.53	%
Efficiency ratio (b)		89.72	%		70.25	%		79.36	%		72.88	%
Average shareholders’ equity to average assets		11.23	%		12.15	%		11.48	%		12.04	%
Loans to deposits (end of period) (c)		77.39	%		69.39	%		77.39	%		69.39	%
Allowance for loan losses to loans (end of period)		0.57	%		0.94	%		0.57	%		0.94	%
Book value per share	$	23.17		$	23.00		$	23.17		$	23.00

(a) Net income to average assets, net income to average shareholders’ equity and net interest margin are presented on an annualized basis. Net interest margin is calculated using fully-tax equivalent net interest income as a percentage of average interest earning assets.

(b) Efficiency ratio is a ratio of non-interest expense as a percentage of fully tax equivalent net interest income plus non-interest income.

(c) Includes loans held for sale

The significant ratios presented above for 2017 include the impact on the consolidated financial statements of the Benchmark acquisition described in Note 3 of the accompanying consolidated financial statements. The significant decrease in the allowance for loan losses to loans ratio reflects the elimination of Benchmark Bank’s allowance for loan losses of $1,014,000 at the time of the acquisition as required under purchase accounting rules.

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Introduction

United Bancshares, Inc. (the “Corporation”), an Ohio corporation, is a bank holding company registered under the Bank Holding Company Act of 1956, as amended, and is subject to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”). The Corporation was incorporated and organized in 1985. The executive offices of the Corporation are located at 105 Progressive Drive, Columbus Grove, Ohio 45830. The Corporation is a one-bank holding company, as that term is defined by the Federal Reserve Board.

The Union Bank Company (the “Bank”), a wholly-owned subsidiary of the Corporation, is engaged in the business of commercial banking. The Bank is an Ohio state-chartered bank, which serves Allen, Delaware, Franklin, Hancock, Marion, Putnam, Sandusky, and Wood counties in Ohio, with office locations in Bowling Green, Columbus Grove, Delaware, Delphos, Findlay, Gahanna, Gibsonburg, Kalida, Leipsic, Lima, Marion, Ottawa, Pemberville and Westerville, Ohio.

The Bank offers a full range of commercial banking services, including checking accounts, savings and money market accounts, time certificates of deposit, automatic teller machines, commercial, consumer, agricultural, residential mortgage and home equity loans, credit card services, safe deposit box rentals, and other personalized banking services. The Bank has formed UBC Investments, Inc. (“UBC”) to hold and manage its securities portfolio. The operations of UBC are located in Wilmington, Delaware. The Bank has also formed UBC Property, Inc. to hold and manage certain other real estate owned.

On September 8, 2017, after receiving full board of director and regulatory approval, United Bancshares, Inc. (“United”) completed the acquisition of Benchmark Bancorp, Inc. (“Benchmark”) in an all-cash transaction. Under the terms of the merger agreement, shareholders of Benchmark received approximately $8.59 per share for each outstanding Benchmark common share. Immediately following the merger of Benchmark with and into the Corporation, Benchmark Bank, an Ohio banking corporation and wholly-owned subsidiary of Benchmark merged with and into the Bank. Benchmark Bank was headquartered in Gahanna, Ohio and operated two full-service banking branches along with a loan mortgage production office all located in Gahanna and Westerville, Ohio and all of which will remain open and operate under the Bank.

When or if used in the Corporation’s Securities and Exchange Commission filings or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases: “anticipate,” “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “is estimated,” “is projected,” or similar expressions are intended to identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Any such statements are subject to the risks and uncertainties that include but are not limited to: changes in economic conditions in the Corporation’s market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Corporation’s market area, and competition. All or some of these factors could cause actual results to differ materially from historical earnings and those presently anticipated or projected.

The Corporation cautions readers not to place undue reliance on any such forward looking statements, which speak only as of the date made, and advises readers that various factors, including regional and national economic conditions, substantial changes in the levels of market interest rates, credit and other risks associated with lending and investing activities, and competitive and regulatory factors could affect the Corporation’s financial performance and could cause the Corporation’s actual results for future periods to differ materially from those anticipated or projected. The Corporation does not undertake, and specifically disclaims any obligation, to update any forward looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

The Corporation is registered as a Securities Exchange Act of 1934 reporting company.

The following discussion and analysis of the consolidated financial statements of the Corporation is presented to provide insight into management’s assessment of the financial results.

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RESULTS OF OPERATIONS

Overview of the Income Statement

Results for the quarter and nine months ended September 30, 2017 were impacted by the completion of the acquisition of Benchmark Bancorp and Benchmark Bank on September 8, 2017 and include the operating results of Benchmark subsequent to the acquisition date.

Costs incurred relating to the merger aggregated $1,115,000 and $1,271,000, respectively, for the quarter and nine month periods ended September 30, 2017.

For the quarter ended September 30, 2017, the Corporation reported net income of $402,000, or $0.12 basic earnings per share compared to the third quarter of 2016 net income of $1,378,000, or $0.42 basic earnings per share. In addition to the aforementioned acquisition costs, the decrease in operating results for the third quarter of 2017 as compared to the same period in 2016 was primarily attributable to other increases in non-interest expenses of $858,000 and interest expense of $196,000 offset by increases in interest income of $943,000 and non-interest income of $71,000, as well as a decrease in provision for income taxes of $179,000.

For the nine months ended September 30, 2017, the Corporation reported net income of $2,981,000, or $0.91 basic earnings per share compared to the nine months ended September 30, 2016 net income of $4,021,000, or $1.22 basic earnings per share. In addition to the aforementioned acquisition costs, the decrease in operating results for the nine months ending September 30, 2017 as compared to the same period in 2016 was primarily attributable to increases in other non-interest expenses of $1,307,000 and interest expense of $383,000 offset by increases in interest income of $1,783,000 and non-interest income of $274,000.

Net Interest Income

Net interest income is the amount by which income from interest-earning assets exceeds interest incurred on interest-bearing liabilities. Interest-earning assets consist principally of loans and investment securities while interest-bearing liabilities include interest-bearing deposit accounts and borrowed funds. Net interest income remains the primary source of revenue for the Corporation. Changes in market interest rates, as well as changes in the mix and volume of interest-bearing assets and interest-bearing liabilities impact net interest income. Net interest income was $5,708,000 for the third quarter of 2017, compared to $4,961,000 for the same period of 2016, an increase of $747,000 (15.1%).

The increase in net interest income was largely attributable to an increase in interest income for the quarter ended September 30, 2017 of $942,000, as compared to the same period in 2016, including an $886,000 increase in interest income from loans and leases and a $59,000 increase in interest income from securities.

For the nine month period ended September 30, 2017, the increase in net interest income of $1,400,000 was primarily attributable to an increase in interest income of $1,783,000 offset by an increase in interest expense of $383,000. The increase in loan interest income of $1,536,000 was primarily due to organic loan growth, increase in interest rates as well as the addition of Benchmark Bank. Securities interest income increased $252,000 during the same period. Through May of 2017, the Corporation increased the level of security holdings. Since then, the Bank utilized mortgage-backed security pay downs and other security maturities to pay-off other borrowings, as well as fund the Benchmark acquisition. The increase in interest expense of $383,000 was attributable to increases in both deposit balances and interest rates.

Net interest margin is calculated by dividing net interest income (adjusted to reflect tax-exempt interest income on a taxable equivalent basis) by average interest-earning assets. The resulting percentage serves as a measurement for the Corporation in comparing its results with those of past periods as well as those of peer institutions. For the quarterly and nine months ended September 30, 2017, the net interest margin (on a taxable equivalent basis) was 3.79% and 3.68% compared with 3.57% and 3.53% for the same periods in 2016.

Interest-bearing deposits comprised 94.09% of average interest-bearing liabilities for the nine months ended September 30, 2017, compared to 95.9% for the same period in 2016.

Interest expense for the quarter and nine month periods ended September 30, 2017 increased $196,000 (33.7%) and $383,000 (23.2%), respectfully. These increases were driven by higher deposit and other borrowing balances throughout 2017 as well as higher interest rates.

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Provision (Credit) for Loan and Lease Losses

The Corporation’s provision (credit) for loan and lease losses is determined based upon management’s calculation of the allowance for loan and lease losses and is reflective of management’s assessment of the quality of the portfolio and overall management of the inherent credit risk of the loan and lease portfolio. Changes in the provision (credit) for loan and lease losses are dependent, among other things, on loan and lease delinquencies, collateral position, portfolio risks and general economic conditions in the Corporation’s lending markets. A $350,000 credit for loan and lease losses was recognized during the nine month period ended September 30, 2017 compared to a $700,000 credit during the nine month period ended September 30, 2016. No provision or credit for loan losses was recognized for the quarters ended September 30, 2017 and 2016. See “Allowance for Loan and Lease Losses” under Financial Condition for further discussion relating to the provision for loan and lease losses.

Non-Interest Income

The Corporation’s non-interest income is largely generated from activities related to the origination, servicing and gain on sales of fixed rate mortgage loans; customer deposit account fees; earnings on life insurance policies; income arising from sales of investment products to customers; and occasional security sale transactions. Income related to customer deposit accounts and life insurance policies provides a relatively steady flow of income while the other sources are more volume or transaction related and consequently can vary from quarter to quarter. For the quarter ended September 30, 2017, non-interest income was $1,360,000, compared to $1,289,000 for the third quarter of 2016, a $71,000 (5.5%) increase. For the nine month period ended September 30, 2017, non-interest income was $3,745,000 compared to $3,471,000 for the same period in 2016, a $274,000 (7.9%) increase.

Gain on sales of loans amounted to $235,000 for the quarter ended September 30, 2017, compared to $202,000 for the third quarter of 2016, an increase of $33,000 (16.3%). Gain on sales of loans amounted to $466,000 for the nine month period ended September 30, 2017, compared to $409,000 for the same period in 2016, an increase of $57,000 (13.9%). The changes in gain on sales of loans resulted primarily from the changes in the volume of loans sold during the respective periods.

Gain on sales of securities amounted to $30,000 for the quarter ended September 30, 2017, compared to $23,000 for the same period in 2016, an increase of $7,000 (28.9%). Gains on sale of securities amounted to $111,000 for the nine month period ended September 30, 2017 compared to $159,000 for the comparable period in 2016, a decrease of $48,000 (30.2%).

Other operating income increased $31,000 (2.9%) for the quarter ended September 30, 2017 and $265,000 (9.1%) for the nine months ended September 30, 2017. The increase in other operating income was largely attributable to the impact of changes in fair value of mortgage servicing rights.  During the nine months ended September 30, 2017, the fair value of mortgage servicing rights asset decreased $17,000 compared to a decrease of $198,000 for the same period in 2016 primarily due to an increase in prepayment speeds caused by a decrease in mortgage loan interest rates.

Non-Interest Expenses

For the quarter ended September 30, 2017, non-interest expenses were $6,427,000, compared to $4,454,000 for the third quarter of 2016, a $1,973,000 (44.3%) increase. For the nine month period ended September 30, 2017, non-interest expenses totaled $15,949,000, compared to $13,371,000 for the same period of 2016, an increase of $2,578,000 (19.3%). The increase in non-interest expenses for the nine month period ended September 30, 2017, excluding the impact of merger costs, was primarily attributable to increases in salary and benefits, premises and equipment, data processing and advertising and promotion expenses.

Maintaining acceptable levels of non-interest expenses and operating efficiency are key performance indicators for the Corporation in its strategic initiatives. The financial services industry uses the efficiency ratio (total non-interest expense as a percentage of the aggregate of fully-tax equivalent net interest income and non-interest income) as a key indicator of performance. For the quarter ended September 30, 2017, the Corporation’s efficiency ratio was 89.72%, compared to 70.25% for the same period of 2016. For the nine month period ended September 30, 2017, the Corporation’s efficiency ratio was 79.36% compared to 72.88% for the same period of 2016. The efficiency ratio for the quarter and nine month periods ending September 30, 2017 was largely impacted by the Benchmark acquisition costs. Excluding the impact of these acquisition costs, the efficiency ratio for the respective periods would have been 74.24% and 73.05%.

Provision for Income Taxes

The provision for income taxes for the quarter ended September 30, 2017 was $239,000 (effective rate of 37.3%), compared to $418,000 (effective rate of 23.3%) for the comparable 2016 period. The significant increase in the effective tax rate was attributable to certain merger costs that are not deductible for income tax reporting purposes.

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FINANCIAL CONDITION

Overview of Balance Sheet

Total assets amounted to $770.7 million at September 30, 2017, compared to $633.1 million at December 31, 2016, an increase of $137.6 million, which reflects the impact of the Benchmark acquisition, completed on September 8, 2017.  The fair value of assets acquired in the transaction was $129.0 million.  Excluding the impact of the transaction, total assets increased $8.6 million, with loans increasing $21.5 million (5.7%), net premises and equipment increasing $3.4 million (25.6%), and available-for-sale securities decreasing $11.5 million (6.0%).  Deposits during the same period increased $17.4 million (3.3%), excluding the impact of deposits assumed in the Benchmark acquisition. The decrease in securities was largely due to sales and maturities of securities during the nine months ended September 30, 2017, including the $2.2 million redemption of the Corporation’s only level 3 available-for-sale security. Cash flow from the securities sales and maturities were used to fund loan growth and the Benchmark Bank acquisition. The increase in premises and equipment includes the impact of the Corporation’s new operations center located in Columbus Grove, which was completed in May 2017.

Shareholders’ equity increased from $72.6 million at December 31, 2016 to $75.7 million at September 30, 2017. This increase was primarily the result of net income of $2,981,000 and $1,262,000 of other comprehensive income from available-for-sale securities market value changes, net of tax, offset by dividends paid of $1,177,000. The market value changes for available-for-sale securities during the nine month period ended September 30, 2017, was the result of customary and expected changes in the bond market. Net unrealized gains and losses on securities are reported as accumulated other comprehensive income or loss in the consolidated balance sheets.

Cash and Cash Equivalents

Cash and cash equivalents totaled $13.8 million at September 30, 2017 and $14.2 million at December 31, 2016, including interest-bearing deposits in other banks of $4.4 million at September 30, 2017 and $4.3 million at December 31, 2016. Management believes the current level of cash and cash equivalents is sufficient to meet the Corporation’s present liquidity and performance needs especially considering the availability of other funding sources, as described below. Total cash and cash equivalents fluctuate on a daily basis due to transactions in process and corresponding liquidity sources and uses. Management believes the Corporation’s liquidity needs in the near term will be satisfied by the current level of cash and cash equivalents, readily available access to traditional and non-traditional funding sources, and the portions of the investment and loan portfolios that will mature within one year. These sources of funds should enable the Corporation to meet cash obligations and off-balance sheet commitments as they come due. In addition, the Corporation has access to various sources of additional borrowings by virtue of long-term assets that can be used as collateral for such borrowings.

Securities

Management monitors the earnings performance and liquidity of the securities portfolio on a regular basis through Asset/Liability Committee (ALCO) meetings. As a result, all securities, except FHLB stock, have been designated as available-for-sale and may be sold if needed for liquidity, asset-liability management or other reasons. Such securities are reported at fair value, with any net unrealized gains or losses reported as a separate component of shareholders’ equity, net of related incomes taxes.

The amortized cost and fair value of available-for-sale securities as of September 30, 2017 totaled $178.1 million and $178.7 million, respectively, resulting in net unrealized gains before tax of $600,000 and a corresponding after-tax increase in shareholders’ equity of $396,000.

Loans Held for Sale

The increase of $5,483,000 in loans held for sale was primarily attributable to loans originated subsequent to the acquisition through Loan One, the mortgage company acquired through the Benchmark acquisition. These loans are typically expected to be sold within 60 days.

Loans and Leases

The Corporation’s primary lending areas are Northwestern, West Central, and Central Ohio. Gross loans and leases totaled $493.1 million at September 30, 2017, compared to $376.1 million at December 31, 2016, an increase of $117.0 million (31.1%). This increase includes the fair value of loans acquired in the Benchmark acquisition of $95.5 million, as well as net organic loan growth of $21.5 million.

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There are also unrecognized financial instruments at September 30, 2017 and December 31, 2016 which relate to commitments to extend credit and letters of credit. The contract amount of such financial instruments approximated $127.8 million at September 30, 2017 and $91.0 million at December 31, 2016.

Allowance for Loan and Lease Losses

The following table presents a summary of activity in the allowance for loan and lease losses for the nine months ended September 30, 2017 and 2016: 

	(in thousands)
	2017			2016
Balance, beginning of period	$	3,345		$	3,834
Credit for loan and lease losses		(350	)		(700	)
Charge offs		(657	)		(129	)
Recoveries		479			383
Net (charge offs) recoveries		(178	)		254
Balance, end of period	$	2,817		$	3,388

The allowance for loan and lease losses as a percentage of gross loans and leases was .57% at September 30, 2017, .89% at December 31, 2016, and .94% at September 30, 2016. The significant decrease in the allowance for loan and lease losses as a percentage of gross loans and leases was due to the elimination of the Benchmark allowance for loan losses as described in Note 3.

Regular provisions are made in amounts sufficient to maintain the balance in the allowance for loan and lease losses at a level considered by management to be adequate for losses within the portfolio. Even though management uses all available information to assess possible loan and lease losses, future additions or reductions to the allowance may be required as changes occur in economic conditions and specific borrower circumstances. The regulatory agencies that periodically review the Corporation’s allowance for loan and lease losses may also require additions to the allowance or the charge-off of specific loans and leases based upon the information available to them at the time of their examinations.

Loans and leases on non-accrual status amounted to $3.1 million and $6.0 million at September 30, 2017 and December 31, 2016, respectively. Non-accrual loans and leases as a percentage of outstanding loans amounted to .64% at September 30, 2017 and 1.6% at December 31, 2016.

The Corporation considers a loan or lease to be impaired when it becomes probable that the Corporation will be unable to collect under the contractual terms of the loan or lease, as the case may be, based on current information and events. Impaired loans and leases, all consisting of commercial and commercial real estate credits, amounted to $886,000 at September 30, 2017 and $2.9 million at December 31, 2016. Of the $886,000 of impaired loans and leases as of September 30, 2017, $490,000 had specific reserves of $98,000 while all impaired loans and leases at December 31, 2016 had specific reserves in the amount of $1.0 million. The specific reserves for both periods are included in the Corporation’s allowance for loan and lease losses. Not all non-accrual loans are considered impaired due to improved payment history. Loans that are current on all payments and management believes will remain current, can be removed from the impaired list before being removed from the non-accrual list. To be removed from non-accrual, loans must show six months of on-time payment history as well as current financial statements indicating a debt service coverage of at least one to one.

In addition to impaired loans, the Corporation had other potential problem credits of $6.5 million at September 30, 2017 and $9.7 million at December 31, 2016. The Corporation’s credit administration department continues to closely monitor these credits.

The Corporation provides pooled reserves for potential problem loans and leases using loss rates calculated considering historic net loan charge-off experience. The Corporation has experienced $657,000 of loan charge-offs during the first nine months of 2017 compared to annual loan charge-offs of $160,000 in 2016, $638,000 in 2015, and $497,000 in 2014, with most of the charge-offs coming from the commercial and commercial real estate loan portfolios. The Corporation also provides general reserves for the remaining portion of its loan portfolio not considered to be problem or potential problem loans. These general reserves are also calculated considering, among other things, the historic net charge-off experience for the relative loan type.

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Funding Sources

The Corporation considers a number of alternatives, including but not limited to, deposits, as well as short-term and long-term borrowings when evaluating funding sources. Deposits, including customer deposits, brokered certificates of deposit, and public funds deposits continue to be the most significant source of funds for the Corporation, totaling $637.7 million, or 91.8% of the Corporation’s outstanding funding sources at September 30, 2017. Total deposits increased $113.0 million during the nine months ended September 30, 2017, including $95.5 million from the Benchmark acquisition.

Non-interest bearing deposits remain a smaller portion of the funding source for the Corporation than for most of its peers. Non-interest bearing deposits comprised 16.5% of total deposits at September 30, 2017, compared to 18.7% at December 31, 2016.

In addition to traditional deposits, the Corporation maintains both short-term and long-term borrowing arrangements. Other borrowings consisted of FHLB borrowings totaling $30.3 million at September 30, 2017 and $18.8 million at December 31, 2016 as well as $10 million of long term debt from the United Bankers’ Bank (UBB) at September 30, 2017. The UBB term borrowings, as well as a substantial portion of the FHLB borrowings at September 30, 2017 were used to facilitate the Benchmark acquisition. The Corporation also has outstanding junior subordinated deferrable interest debentures of $12.8 million at September 30, 2017 and December 31, 2016. Management plans to maintain access to various borrowing alternatives as an appropriate funding source.

Shareholders’ Equity

Shareholders’ equity increased from $72.6 million at December 31, 2016 to $75.7 million at September 30, 2017, principally due to net income of $3.0 million and other comprehensive income of $1.3 million, net of dividends paid.

For the nine month period ended September 30, 2016, shareholder’s equity increased from $71.6 million at December 31, 2015 to $75.3 million, principally due to net income of $4.0 million and other comprehensive income of $1.5 million, net of dividends paid.

The Corporation and Bank met all regulatory capital requirements as of September 30, 2017, and the Bank is considered “well capitalized” under regulatory and industry standards of risk-based capital.

Liquidity and Interest Rate Sensitivity

The objective of the Corporation’s asset/liability management function is to maintain consistent growth in net interest income through management of the Corporation’s balance sheet liquidity and interest rate exposure based on changes in economic conditions, interest rate levels, and customer preferences.

The Corporation manages interest rate risk to minimize the impact of fluctuating interest rates on earnings. The Corporation uses simulation techniques that attempt to measure the volatility of changes in the level of interest rates, basic banking interest rate spreads, the shape of the yield curve, and the impact of changing product growth patterns. The primary method of measuring the sensitivity of earnings of changing market interest rates is to simulate expected cash flows using varying assumed interest rates while also adjusting the timing and magnitude of non-contractual deposit re-pricing to more accurately reflect anticipated pricing behavior. These simulations include adjustments for the lag in prime loan re-pricing and the spread and volume elasticity of interest-bearing deposit accounts, regular savings and money market deposit accounts.

The principal function of interest rate risk management is to maintain an appropriate relationship between those assets and liabilities that are sensitive to changing market interest rates. The Corporation closely monitors the sensitivity of its assets and liabilities on an ongoing basis and projects the effect of various interest rate changes on its net interest margin. Interest sensitive assets and liabilities are defined as those assets or liabilities that mature or re-price within a designated time frame.

Management believes the Corporation’s current mix of assets and liabilities provides a reasonable level of risk related to significant fluctuations in net interest income and the resulting volatility of the Corporation’s earning base. The Corporation’s management reviews interest rate risk in relation to its effect on net interest income, net interest margin, and the volatility of the earnings base of the Corporation.

Effects of Inflation on Financial Statements

All of the Corporation’s assets relate to commercial banking operations and are generally monetary in nature. Therefore, they are not impacted by inflation to the same degree as companies in capital-intensive industries in a replacement cost environment. During a period of rising prices, a net monetary asset position results in loss of purchasing power and conversely a net monetary liability position results in an increase in purchasing power. In the commercial banking industry, monetary assets typically exceed monetary liabilities. The Corporation has not experienced a significant level of inflation or deflation during the nine month period ended September 30, 2017. However, because of the depressed national real estate market and sluggish local economy, the Corporation has experienced declines in the value of collateral securing commercial and non-commercial real estate loans. Management continues to closely monitor these trends in calculating the Corporation’s allowance for loan and lease losses.

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ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The only significant market risk to which the Corporation is exposed is interest rate risk. The business of the Corporation and the composition of its balance sheet consist of investments in interest-earning assets (primarily loans and securities), which are funded by interest bearing liabilities (deposits and borrowings). These financial instruments have varying levels of sensitivity to changes in the market rates of interest, resulting in market risk. None of the Corporation’s financial instruments are held for trading purposes.

The Corporation manages interest rate risk regularly through its Asset Liability Committee. The Committee meets on a regular basis and reviews various asset and liability management information, including but not limited to, the bank’s liquidity positions, projected sources and uses of funds, interest rate risk positions and economic conditions.

The Corporation monitors its interest rate risk through a sensitivity analysis, whereby it measures potential changes in its future earnings and the fair values of its financial instruments that may result from one or more hypothetical changes in interest rates. This analysis is performed by estimating the expected cash flows of the Corporation’s financial instruments using interest rates in effect at year-end. For the fair value estimates, the cash flows are then discounted to year-end to arrive at an estimated present value of the Corporation’s financial instruments. Hypothetical changes in interest rates are then applied to the financial instruments, and the cash flows and fair values are again estimated using these hypothetical rates. For the net interest income estimates, the hypothetical rates are applied to the financial instruments based on the assumed cash flows. The Corporation typically applies interest rate “shocks” to its financial instruments up and down under various scenarios up to as much as 400 basis points depending on the overall level of interest rates at any point in time.

There have been no material changes in the quantitative and qualitative information about market risk from the information provided in the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

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ITEM 4

CONTROLS AND PROCEDURES

Evaluation of Controls and Procedures.

With the participation of our management, including our chief executive officer and chief financial officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")); as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that:

(a) information required to be disclosed by the Corporation in this Quarterly Report on Form 10-Q would be accumulated and communicated to the Corporation’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure;

(b) information required to be disclosed by the Corporation in this Quarterly Report on Form 10-Q would be recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and

(c) the Corporation’s disclosure controls and procedures are effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that material information relating to the Corporation and its consolidated subsidiaries is made known to them, particularly during the period for which our periodic reports, including this Quarterly Report on Form 10-Q, are being prepared.

Changes in Internal Control over Financial Reporting.

There were no significant changes during the period covered by this Quarterly Report on Form 10-Q in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – Other Information

Item 1: Legal Proceedings.

There are no pending legal proceedings to which the Corporation or its subsidiaries are a party or to which any of their property is subject except routine legal proceedings to which the Corporation or its subsidiaries are a party incident to the banking business. None of such proceedings are considered by the Corporation to be material.

Item 1A: Risk Factors

There have been no material changes in the discussion pertaining to risk factors that was provided in the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

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

The Corporation has not sold any of its securities which were not registered under the Securities Act during the period covered by this report. The table below includes certain information regarding the Corporation’s purchase of United Bancshares, Inc. common stock during the quarterly period ended September 30, 2017: 

Period	Total number of shares purchased		Weighted Average price paid per share		Total number of shares purchased as part of a publicly announced plan or program (a)		Maximum number of shares that may yet be purchased under the plan or program (a)
07/01/17 - 07/31/17		-	$	-		397,334		202,666
08/01/17 - 08/31/17		-	$	-		397,334		202,666
09/01/17 - 09/30/17		-	$	-		397,334		202,666

The Plan authorizes the Corporation to repurchase up to 600,000 of the Corporation’s common shares from time to time in a program of market purchases or in privately negotiated transactions as the securities laws and market conditions permit.

Item 3: Defaults upon Senior Securities.

None

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Item 4: Mine Safety Disclosures

Not applicable

Item 5: Other Information.

None

Item 6: Exhibits

(a) Exhibits

Exhibit 2.1	Stock Purchase Agreement, dated July 1, 2014 among United Bancshares, Inc., Ohio State Bancshares, Inc. and Rbancshares, Inc.
Exhibit 2.2	Agreement and Plan of Merger, dated March 22, 2017 among United Bancshares, Inc., Benchmark Bancorp, Inc. and Benchmark Bank
Exhibit 3.1	Amended and Restated Articles of Incorporation
Exhibit 3.2	Amended and Restated Code of Regulations
Exhibit 10.1	Salary Continuation Agreement - Brian D. Young
Exhibit 10.2	Salary Continuation Agreement – Heather M. Oatman
Exhibit 10.3	Preferred Trust Securities, Placement and Debenture agreements
Exhibit 10.4	Salary Continuation Agreement, First Amendment – Brian D. Young
Exhibit 10.5	2017 Stock Option Plan
Exhibit 23	Consent of Plante & Moran, PLLC
Exhibit 31.1	Rule 13a-14(a)/15d-14(a) Certification of CEO
Exhibit 31.2	Rule 13a-14(a)/15d-14(a) Certification of CFO
Exhibit 32.1	Section 1350 CEO’s Certification
Exhibit 32.2	Section 1350 CFO’s Certification
Exhibit 99.1	Safe Harbor under The Private Securities Litigation Reform Act of 1995
Exhibit 99.2	Consolidated Financial Statements of Benchmark Bancorp, Inc. as of and for the year ended December 31, 2016

Exhibit 101.INS XBRL Instance Document

Exhibit 101.SCH XBRL Taxonomy Extension Schema

Exhibit 101.CAL XBRL Taxonomy Extension Calculation

Exhibit 101.DEF XBRL Taxonomy Extension Definition

Exhibit 101.LAB XBRL Taxonomy Extension Label

Exhibit 101.PRE XBRL Taxonomy Extension Presentation

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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:	October 30, 2017	By: /s/ Daniel J. Lucke
		Daniel J. Lucke
		Chief Financial Officer

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EXHIBIT INDEX

UNITED BANCSHARES, INC. QUARTERLY REPORT ON FORM 10-Q

FOR PERIOD ENDED September 30, 2017

Exhibit Number	Description	Exhibit Location
2.1	Stock Purchase Agreement, dated July 1, 2014 among United Bancshares, Inc., Ohio State Bancshares, Inc. and Rbancshares, Inc.	Incorporated herein by reference to the Corporation’s Form 8-K filed July 1, 2014.
2.2	Agreement and Plan of Merger, dated March 22, 2017 among United Bancshares, Inc, Benchmark Bancorp, Inc. and Benchmark Bank	Incorporated herein by reference to the Coporation’s Form 8-K filed March 22, 2017.
3.1	Amended and Restated Articles of Incorporation	Incorporated herein by reference to the Corporation's Definitive Proxy Statement pursuant to Section 14(a) filed March 8, 2002.
3.2	Amended and Restated Code of Regulations	Incorporated herein by reference to the Corporation’s Form 10Q for the quarter ended September 30, 2007.
10.1	Salary Continuation Agreement - Brian D. Young	Incorporated herein by reference to the Corporation's 2004 Form 10K/A filed August 5, 2005.
10.2	Salary Continuation Agreement – Heather M. Oatman	Incorporated herein by reference to the Corporation's 2008 Form 10K filed March 20, 2009.
10.3	Preferred Trust Securities, Placement and Debenture agreements	Incorporated herein by reference to the Corporation’s 2004 Form 10K/A filed August 5, 2005.
10.4	Salary Continuation Agreement, First Amendment – Brian D. Young	Incorporated herein by reference to the Corporation’s 2007 Form 10Q filed April 27, 2007.
10.5	2017 Stock Option Plan	Incorporated herein by reference to the Corporation’s Definitive Proxy Statement pursuant to Section 14(a) filed March 13, 2017.
23	Consent of Plante & Moran, PLLC	Filed herewith
31.1	Rule 13a-14(a)/15d-14(a) Certification of CEO	Filed herewith
31.2	Rule 13a-14(a)/15d-14(a) Certification of CFO	Filed herewith
32.1	Section 1350 CEO’s Certification	Filed herewith
32.2	Section 1350 CFO’s Certification	Filed herewith
99.1	Safe Harbor under the Private Securities Litigation Reform Act of 1995	Filed herewith
99.2	Consolidated Financial Statements of Benchmark Bancorp, Inc. as of and for the year ended December 31, 2016	Filed herewith
101.INS	XBRL Instance Document	Filed herewith
101.SCH	XBRL Taxonomy Extension Schema	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation	Filed herewith
101.DEF	XBRL Taxonomy Extension Definition	Filed herewith
101.LAB	XBRL Taxonomy Extension Label	Filed herewith
101.PRE	XBRL Taxonomy Extension Presentation	Filed herewith

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EX-23

Exhibit 23 

CONSENT OF INDEPENDENT AUDITORS

We consent to the use in this Form 10-Q of United Bancshares, Inc. of our report dated March 14, 2017, relating to the consolidated financial statements of Benchmark Bancorp, Inc. as of December 31, 2016 and for the year then ended.

/s/ Plante & Moran, PLLC

Columbus, OH

October 30, 2017

EX-31.1

Exhibit 31.1

Rule 13a–14(a)/15d–14(a) CERTIFICATION

I, Brian D. Young, President and Chief Executive Officer of United Bancshares, Inc., 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 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 officer 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)) 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 subsidiary, 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 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 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 the 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/ Brian D. Young

Brian D. Young

President and Chief Executive Officer

October 30, 2017

EX-31.2

Exhibit 31.2

Rule 13a–14(a)/15d–14(a) CERTIFICATION 

I, Daniel J. Lucke, Chief Financial Officer of United Bancshares, Inc., 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 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 officer 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)) 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 subsidiary, 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 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 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 the 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/ Daniel J. Lucke

Daniel J. Lucke

Chief Financial Officer

October 30, 2017

EX-32.1

Exhibit 32.1 

SECTION 1350 CERTIFICATION

In connection with the Quarterly Report of United Bancshares, Inc. (the "Company") on Form 10-Q for the quarterly period ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Brian D. Young, Chief Executive Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(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 results of operations of the Company.

/s/ Brian D. Young

Brian D. Young

President and Chief Executive Officer

Date: October 30, 2017

*This certification is being furnished as required by Rule 13a –14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

EX-32.2

 Exhibit 32.2

SECTION 1350 CERTIFICATION

In connection with the Quarterly Report of United Bancshares, Inc. (the "Company") on Form 10-Q for the quarterly period ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Daniel J. Lucke, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(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 results of operations of the Company.

/s/ Daniel J. Lucke

Daniel J. Lucke

Chief Financial Officer

Date: October 30, 2017

*This certification is being furnished as required by Rule 13a –14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

EX-99.1

Exhibit 99.1

SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

The Private Securities Litigation Reform Act of 1995 (the "Act") provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about their companies, so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the statement. United Bancshares, Inc. ("Corporation") desires to take advantage of the "safe harbor" provisions of the Act. Certain information, particularly information regarding future economic performance and finances and plans and objectives of management, contained or incorporated by reference in the Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, is forward-looking. In some cases, information regarding certain important factors that could cause actual results of operations or outcomes of other events to differ materially from any such forward-looking statement appears together with such statement. In addition, forward-looking statements are subject to other risks and uncertainties affecting the financial institutions industry, including, but not limited to, the following:

Interest Rate Risk

The Corporation’s operating results are dependent to a significant degree on its net interest income, which is the difference between interest income from loans, investments and other interest-earning assets and interest expense on deposits, borrowings and other interest-bearing liabilities. The interest income and interest expense of the Corporation changes as the interest rates on interest-earning assets and interest-bearing liabilities change. Interest rates may change because of general economic conditions, the policies of various regulatory authorities and other factors beyond the Corporation's control. In a rising interest rate environment, loans tend to prepay slowly and new loans at higher rates increase slowly, while interest paid on deposits increases rapidly because the terms to maturity of deposits tend to be shorter than the terms to maturity or prepayment of loans. Such differences in the adjustment of interest rates on assets and liabilities may negatively affect the Corporation's income.

Possible Inadequacy of the Allowance for Loan and Lease Losses

The Corporation maintains an allowance for loan and lease losses based upon a number of relevant factors, including, but not limited to, trends in the level of non-performing assets and classified loans and leases, current economic conditions in the primary lending area, past loss experience, possible losses arising from specific problem loans and leases and changes in the composition of the loan and lease portfolio. While the Board of Directors of the Corporation believe that it uses the best information available to determine the allowance for loan and lease losses, unforeseen market conditions could result in material adjustments, and net earnings could be significantly adversely affected if circumstances differ substantially from the assumptions used in making the final determination.

Loans and leases not secured by one to four family residential real estate are generally considered to involve greater risk of loss than loans secured by one to four family residential real estate due, in part, to the effects of general economic conditions. The repayment of multifamily residential, nonresidential real estate and commercial loans generally depends upon the cash flow from the operation of the property or business, which may be negatively affected by national and local economic conditions. Construction loans may also be negatively affected by such economic conditions, particularly loans made to developers who do not have a buyer for a property before the loan is made. The risk of default on consumer loans increases during periods of recession, high unemployment and other adverse economic conditions. When consumers have trouble paying their bills, they are more likely to pay mortgage loans than consumer loans. In addition, the collateral securing such loans and leases, if any, may decrease in value more rapidly than the outstanding balance of the loan or lease.

Competition

The Corporation competes for deposits with other savings associations, commercial banks and credit unions and issuers of commercial paper and other securities, such as shares in money market mutual funds. The primary factors in competing for deposits are interest rates and convenience of office location. In making loans, the Corporation competes with other commercial banks, savings associations, consumer finance companies, credit unions, leasing companies, mortgage companies and other lenders. Competition is affected by, among other things, the general availability of lendable funds, general and local economic conditions, current interest rate levels and other factors that are not readily predictable. The size of financial institutions competing with the Corporation is likely to increase as a result of changes in statutes and regulations eliminating various restrictions on interstate and inter-industry branching and acquisitions. Such increased competition may have an adverse effect upon the Corporation.

Legislation and Regulation that may Adversely Affect the Corporation's Earnings

The Corporation is subject to extensive regulation by the State of Ohio, Division of Financial Institutions (the “ODFI”), the Federal Reserve Bank (the “FED”), and the Federal Deposit Insurance Corporation (the "FDIC") and is periodically examined by such regulatory agencies to test compliance with various regulatory requirements. Such supervision and regulation of the Corporation and the bank are intended primarily for the protection of depositors and not for the maximization of shareholder value and may affect the ability of the Corporation to engage in various business activities. The assessments, filing fees and other costs associated with reports, examinations and other regulatory matters are significant and may have an adverse effect on the Corporation's net earnings.

EX-99.2

Exhibit 99.2

Benchmark Bancorp

Consolidated Financial Report

December 31, 2016

Benchmark Bancorp

	Contents
Independent Auditor's Report	1
Consolidated Financial Statements
Balance Sheet	2
Statement of Income	3
Statement of Comprehensive Income	4
Statement of Stockholders' Equity	5
Statement of Cash Flows	6
Notes to Consolidated Financial Statements	7-26

Independent Auditor's Report

To the Board of Directors
Benchmark Bancorp

We have audited the accompanying consolidated financial statements of Benchmark Bancorp and its subsidiary, which comprise the consolidated balance sheet as of December 31, 2016 and 2015, and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Benchmark Bancorp as of December 31, 2016 and 2015 and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

	/s/ Plante & Moran, PLLC
March 14, 2017

1

Benchmark Bancorp

Consolidated Balance Sheet

December 31, 2016 and 2015

	2016			2015
Assets
Cash and cash equivalents	$	13,317,351		$	14,411,692
Federal funds sold		775,000			1,963,682
Total cash and cash equivalents		14,092,351			16,375,374
Investment securities - Available for sale (Note 3)		1,946,034			1,116,546
Federal Home Loan Bank stock		460,500			460,500
Loans held for sale		5,457,206			4,232,411
Loans - Net of allowance for loan losses of $1,186,666 and $1,507,253 as of December 31, 2016 and 2015, respectively (Note 4)		103,172,340			96,408,739
Other real estate owned		351,524			523,082
Property and equipment - Net (Note 5)		2,436,755			2,456,151
Intangible assets		175,000			175,000
Deferred tax asset (Note 9)		3,713,253			-
Other assets		498,188			538,881
Total assets	$	132,303,151		$	122,286,684
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Noninterest bearing	$	9,238,478		$	26,703,857
Interest bearing (Note 6)		99,693,709			83,058,849
Total deposits		108,932,187			109,762,706
Advances from the Federal Home Loan Bank (Note 8)		5,000,000			-
Accrued and other liabilities		684,468			622,636
Total liabilities		114,616,655			110,385,342
Stockholders' Equity
Preferred stock, $1.00 par value - 200,000 shares authorized; Series A: 0 shares outstanding at December 31, 2016 and 2015; Series B: 1,665 and 850 shares outstanding at December 31, 2016 and 2015, respectively		1,665			850
Common stock, $1.00 par value - 5,000,000 shares authorized; 3,115,030 shares outstanding at December 31, 2016 and 2015		3,115,030			3,115,030
Warrants		38,420			38,420
Additional paid-in capital - Common		20,910,620			20,885,375
Additional paid-in capital - Preferred		1,604,537			849,150
Accumulated deficit		(7,962,631	)		(12,982,389	)
Accumulated other comprehensive loss		(21,145	)		(5,094	)
Total stockholders' equity		17,686,496			11,901,342
Total liabilities and stockholders' equity	$	132,303,151		$	122,286,684

See notes to consolidated financial statements.

2

Benchmark Bancorp

Consolidated Statement of Income

Years Ended December 31, 2016 and 2015

	2016			2015
Interest Income
Loans - Including fees	$	5,966,958		$	5,815,107
Investment securities		36,787			60,463
Other		78,388			39,766
Total interest income		6,082,133			5,915,336
Interest Expense
Deposits		696,806			627,106
Borrowings		3,539			50,666
Total interest expense		700,345			677,772
Net Interest Income		5,381,788			5,237,564
(Recovery) Provision for Loan Losses		(255,826	)		113,019
Net Interest Income After (Recovery) Provision for Loan Losses		5,637,614			5,124,545
Noninterest Income
Service charges and other fee income		76,511			91,675
Net gain on sale of loans held for sale		6,307,330			5,147,725
Gain on sale of investment securities		-			88,321
Gain on sale of other real estate owned		46,340			164,693
Other		43,259			213,030
Total noninterest income		6,473,440			5,705,444
Noninterest Expense
Salaries and employee benefits		6,379,780			5,628,334
Occupancy and equipment expenses		588,307			490,716
Federal deposit insurance		163,594			279,796
Foreclosed asset and other real estate owned expense		62,173			678,529
Marketing expense		1,016,950			1,011,998
Loan-related expense		675,833			592,043
Other		1,749,382			1,231,074
Total noninterest expense		10,636,019			9,912,490
Income - Before income taxes		1,475,035			917,499
Income Tax Recovery		(3,652,231	)		-
Net Income	$	5,127,266		$	917,499

See notes to consolidated financial statements.

3

Benchmark Bancorp

Consolidated Statement of Comprehensive Income

Years Ended December 31, 2016 and 2015

	2016			2015
Net Income	$	5,127,266		$	917,499
Other Comprehensive Loss
Unrealized gain (loss) on securities:
Reclassification adjustment for gains recognized on sale of investment securities		-			(88,321	)
(Loss) gain arising during the year (net of tax of ($9,160) and $0 in 2016 and 2015, respectively)		(16,051	)		22,655
Total other comprehensive loss		(16,051	)		(65,666	)
Comprehensive Income	$	5,111,215		$	851,833

See notes to consolidated financial statements.

4

Benchmark Bancorp

Consolidated Statement of Stockholders' Equity

Years Ended December 31, 2016 and 2015

	Preferred Stock			Common Stock		Warrants		Additional Paid- in Capital - Common		Additional Paid- in Capital - Preferred			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity
Balance - January 1, 2015	$	250		$	2,841,058	$	28,831	$	20,140,639	$	249,750		$	(13,899,888	)	$	60,572		$	9,421,212
Net income		-			-		-		-		-			917,499			-			917,499
Issuance of Series A preferred stock		750			-		-		-		749,250			-			-			750,000
Conversion of shares of Series A preferred stock into common stock		(1,000	)		273,972		9,589		716,437		(999,000	)		-			-			(2	)
Issuance of Series B preferred stock		850			-		-		-		849,150			-			-			850,000
Stock-based compensation expense		-			-		-		28,299		-			-			-			28,299
Other comprehensive income		-			-		-		-		-			-			(65,666	)		(65,666	)
Balance - December 31, 2015		850			3,115,030		38,420		20,885,375		849,150			(12,982,389	)		(5,094	)		11,901,342
Net income		-			-		-		-		-			5,127,266			-			5,127,266
Issuance of Series B preferred stock		815			-		-		-		755,387			-			-			756,202
Stock-based compensation expense		-			-		-		25,245		-			-			-			25,245
Other comprehensive income		-			-		-		-		-			-			(16,051	)		(16,051	)
Dividends on Series B preferred stock		-			-		-		-		-			(107,508	)		-			(107,508	)
Balance - December 31, 2016	$	1,665		$	3,115,030	$	38,420	$	20,910,620	$	1,604,537		$	(7,962,631	)	$	(21,145	)	$	17,686,496

See notes to consolidated financial statements.

5

Benchmark Bancorp

Consolidated Statement of Cash Flows

Years Ended December 31, 2016 and 2015

	2016			2015
Cash Flows from Operating Activities
Consolidated net income	$	5,127,266		$	917,499
Adjustments to reconcile consolidated net income to net cash and cash equivalents from operating activities:
Depreciation		110,954			109,978
(Recovery) provision for loan losses		(255,826	)		113,019
Gain on sale of loans		(6,307,330	)		(5,147,725	)
Gain on sale of securities		-			(88,321	)
Gain on sale of other real estate owned		(46,340	)		(164,693	)
Stock-based compensation expense		25,245			28,299
Net amortization on investment securities		31,265			120,134
Proceeds from sale of loans		182,983,369			154,947,336
Loans originated for sale		(177,900,834	)		(153,509,787	)
Writedowns on other real estate owned		-			377,608
Deferred tax asset valuation allowance		(4,177,303	)		310,383
Deferred tax expense		473,210			(310,383	)
Net change in:
Other assets		42,425			7,022
Accrued and other liabilities		61,832			(4,328	)
Net cash and cash equivalents provided by (used in) operating activities		167,933			(2,293,959	)
Cash Flows from Investing Activities
Proceeds from prepayments of securities		398,605			3,567,678
Proceeds from sale of investment securities		-			3,106,845
Purchase of investment securities		(1,286,301	)		(1,083,711	)
Net increase in loans		(6,507,775	)		(738,079	)
Proceeds from sale of other real estate owned		217,898			2,301,374
Purchase of property and equipment		(91,558	)		(115,363	)
Net cash and cash equivalents (used in) provided by investing activities		(7,269,131	)		7,038,744
Cash Flows from Financing Activities
Net (decrease) increase in deposits		(830,519	)		200,546
Cash paid in lieu of fractional shares in stock conversion		-			(2	)
Repayment of FHLB advances		-			(5,000,000	)
Proceeds from FHLB advances		5,000,000			-
Dividends paid on preferred stock		(107,508	)		-
Issuance of preferred stock		756,202			1,600,000
Net cash and cash equivalents provided by (used in) financing activities		4,818,175			(3,199,456	)
Net (Decrease) Increase in Cash and Cash Equivalents		(2,283,023	)		1,545,329
Cash and Cash Equivalents - Beginning of year		16,375,374			14,830,045
Cash and Cash Equivalents - End of year	$	14,092,351		$	16,375,374
Supplemental Cash Flow Information
Cash paid for:
Interest	$	691,358		$	689,539
Income taxes		10,000			-
Loans transferred to other real estate		-			580,430
Preferred stock converted to common stock		-			999,998

See notes to consolidated financial statements. 

6

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 1 - Nature of Business

Benchmark Bank (the "Bank") was incorporated under the laws of the State of Ohio on May 26, 2005 and commenced operations on August 1, 2005. In May 2009, the Bank's stockholders approved the formation of a one-bank holding company. Benchmark Bancorp was formed on July 31, 2009 under the laws of the State of Ohio. The stockholders of the Bank received one share of Benchmark Bancorp stock for each share of the Bank's stock. This transaction was recorded as an internal reorganization.

The Bank provides financial services through its offices in Gahanna and Westerville, Ohio. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow operations of businesses. There are no significant concentrations of loans to any one industry or customer. However, the customers' ability to repay their loans is dependent on the real estate and general economic conditions in the area.

Rocky Fork Investments, LLC holds foreclosed properties of the Bank.

Note 2 - Significant Accounting Policies

Basis of Presentation and Consolidation

The consolidated financial statements include Benchmark Bancorp and its wholly owned subsidiary, Benchmark Bank, and Rocky Fork Investments, LLC a wholly owned subsidiary of the Bank, together referred to as the "Company." Intercompany transactions and balances are eliminated in consolidation.

Use of Estimates

In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the fair value of financial instruments, and the valuation of deferred tax assets.

Cash and Cash Equivalents

For the purpose of the consolidated statement of cash flows, cash and cash equivalents include cash and balances due from banks and federal funds sold.

Investment Securities

Securities are classified as "available for sale" and are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income.

Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Declines in the fair value of securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

Federal Home Loan Bank stock is carried at cost, which approximates fair value.

7

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 2 - Significant Accounting Policies (Continued)

Loans Held for Sale

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized in a valuation allowance by charges to income.

Rate Lock Commitments

The Company enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (rate lock commitments). Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Accordingly, such commitments, along with any related fees received from potential borrowers, are recorded at fair value in derivative assets or liabilities with changes in fair value recorded in the net gain or loss on sale of mortgage loans. Fair value considers the difference between current levels of interest rates and the committed rates.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of the right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay- off are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan's yield using the interest method.

The accrual of interest on loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. If a loan is returned to accrual, the interest payments previously received continue to be reported as a reduction of the unpaid principal balance until the loan is paid off, at which time the interest payments are recognized in interest income.

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management's periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

8

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 2 - Significant Accounting Policies (Continued)

The allowance consists of specific and general components. The specific component relates to loans classified as impaired. For such loans, 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 nonimpaired loans and is based on historical loss experience adjusted for qualitative factors.

A loan is considered impaired when, based on current information and events, it is probable that the Company 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 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. Impairment is measured on a loan-by-loan basis 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.

Other Real Estate Owned

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value, less costs to sell, at the date of the foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Revenue and expenses from operations and changes in the valuation allowance are included in net expenses from other real estate owned.

Property and Equipment

Land is carried at cost. Buildings and equipment are carried at cost, less accumulated depreciation computed on the straight-line method over the estimated useful lives of the assets ranging from 5 to 40 years.

Other Comprehensive Income (Loss)

Accounting principles generally require that recognized revenue, expenses, gains, and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the consolidated balance sheet, such items, along with net income, are components of comprehensive income (loss). Other comprehensive income consists solely of unrealized gains and losses on available- for-sale securities.

Intangible Assets

Intangible assets consists of a trade name purchased by the Company. The trade name was recorded at cost and has an indefinite useful life. The trade name is reviewed for potential impairment on an annual basis or more frequently if circumstances indicate potential impairment.

9

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 2 - Significant Accounting Policies (Continued)

Income Taxes

Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the various temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax asset will not be realized. The Company recognizes interest and penalties related to income tax matters in income tax expense.

In accordance with guidance on accounting for uncertainty in income taxes, management evaluated the Company's tax position and does not believe the Company has any uncertain tax positions that require disclosure or adjustment to the financial statements.

Off-balance-sheet Instruments

The Company enters into commitments to make loans and standby letters of credit, issued to meet customer financing needs. The face amount of these items represents the exposure to loss before considering customer collateral or ability to repay.

Loss Contingencies

Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters that will have a material effect on the consolidated financial statements.

Stock-based Compensation

Compensation cost is recognized for stock options issued to employees and directors, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

Marketing Expense

Marketing expenses are charged to income in the period in which they are incurred.

Stock Warrants

The Company issued stock warrants to purchase common stock in connection with the issuance of preferred and common stock. The fair value of the stock warrants was determined using a Black-Scholes model. The carrying value of the warrants was determined based on the relative fair value of the warrants compared to the underlying shares of stock issued.

10

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 2 - Significant Accounting Policies (Continued)

Upcoming Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which will supersede the current revenue recognition requirements in Topic 605, Revenue Recognition. The ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The new guidance will be effective for the Company's year ending December 31, 2019. The ASU permits application of the new revenue recognition guidance to be applied using one of two retrospective application methods. The Company has not yet determined which application method it will use. Interest income is outside of the scope of the new standard and will not be impacted by the adoption of the new standard. The Company is evaluating the impact the new standard will have on its noninterest income.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The ASU covers various changes to the accounting, measurement, and disclosures related to certain financial instruments, including requiring equity investments to be accounted for at fair value with changes recorded through earnings, the use of the exit price when measuring fair value, and disaggregation of financial assets and liabilities by category for disclosure purposes. The new guidance will be effective for the Company's year ending December 31, 2019. Early adoption is permitted as early as periods ending after December 31, 2017 with some additional options for early application such as the elimination of the requirement for nonpublic business entities to disclose the methods and significant assumptions used to estimate the disclosed fair value of financial instruments. The Company adopted the provision by which it eliminated the disclosure of fair value of its financial instruments in these consolidated financial statements. The Company does not believe adopting the remaining provisions of ASU No. 2016-01 in the future will have a material impact on the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases, which will supersede the current lease requirements in ASC 840. The ASU requires lessees to recognize a right-of-use asset and related lease liability for all leases, with a limited exception for short-term leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of operations. Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet. The reporting of lease-related expenses in the statements of operations and cash flows will be generally consistent with the current guidance. The new lease guidance will be effective for the Company's year ending December 31, 2020 and will be applied using a modified retrospective transition method to the beginning of the earliest period presented. The new lease standard will have an effect on the Company’s consolidated financial statements as a result of the leases described in Note 5 classified as operating leases which will be recorded on the consolidated balance sheet upon adoption. The effects on the consolidated income statement are not expected to be significant as recognition and measurement of expenses and cash flows for leases will be substantially the same under the new standard.

11

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 2 - Significant Accounting Policies (Continued)

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. The ASU includes increased disclosures and various changes to the accounting and measurement of financial assets including the Company’s loans and available-for-sale investment securities. Each financial asset presented on the balance sheet would have a unique allowance for credit losses valuation account that is deducted from the amortized cost basis to present the net carrying value at the amount expected to be collected on the financial asset. The amendments in this ASU also eliminate the probable initial recognition threshold in current GAAP and instead, reflect an entity’s current estimate of all expected credit losses using reasonable and supportable forecasts. The new credit loss guidance will be effective for the Company's year ending December 31, 2021. Upon adoption, the ASU will be applied using a modified retrospective transition method to the beginning of the first reporting period in which the guidance is effective. A prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. Early adoption for all institutions is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of the new standard.

Subsequent Events

The consolidated financial statements and related disclosures include evaluation of events up through and including March 14, 2017, which is the date the consolidated financial statements were available to be issued.

Note 3 - Investment Securities

The amortized cost and fair value of securities available for sale, with gross unrealized gains and losses, are as follows:

	2016
	Amortized Cost		Gross  Unrealized  Gains		Gross  Unrealized  Losses			Fair Value
Mortgage-backed	$	1,978,071	$	279	$	(32,316	)	$	1,946,034

	2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Mortgage-backed	$	1,121,640	$	854	$	(5,948	)	$	1,116,546

As of December 31, 2016 and 2015, there were no securities pledged.

The investment securities held at December 31, 2016 consist only of mortgage-backed securities. Such securities are not due at a single maturity date.

There were no sales of securities in 2016. During 2015, proceeds from sales of investment securities were $3,106,845 and net realized gains were $88,321.

12

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 3 - Investment Securities (Continued)

Information pertaining to investment securities with gross unrealized losses at December 31, 2016 and 2015, aggregated by investment category and length of time that individual securities have been in a continuous loss position, is as follows:

	2016
	Less than 12 Months					12 Months or Greater					Total
	Gross					Gross
	Unrealized					Unrealized					Unrealized
	Losses			Fair Value		Losses			Fair Value		Losses			Fair Value
Mortgage-backed	$	(30,255	)	$	1,908,167	$	(2,061	)	$	26,805	$	(32,316	)	$	1,934,972

	2015
	Less than 12 Months					12 Months or Greater				Total
	Unrealized					Unrealized				Unrealized
	Losses			Fair Value		Losses		Fair Value		Losses			Fair Value
Mortgage-backed	$	(5,948	)	$	1,079,989	$	-	$	-	$	(5,948	)	$	1,079,989

Unrealized losses on investment securities have not been recognized into income because the issuers' bonds are of high credit quality, the Company has the intent and ability to hold the securities for the foreseeable future, and the declines in fair value are primarily due to increased market interest rates. The fair values are expected to recover as the bonds approach their maturity dates.

Note 4 - Loans

A summary of the balances of loans follows:

	2016		2015
Construction and development	$	11,199,110	$	9,185,435
Conventional 1-4 family		49,132,527		48,088,171
Revolving		4,951,219		4,559,852
Multi-family		11,254,371		9,318,696
Commercial real estate		25,084,228		23,779,372
Commercial		2,731,223		2,979,964
Consumer		6,328		4,502
Total loans		104,359,006		97,915,992
Less allowance for loan losses		1,186,666		1,507,253
Net loans	$	103,172,340	$	96,408,739

13

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 4 - Loans (Continued)

The allowance for loan losses as of December 31, 2016 and 2015 is as follows:

	Year Ended December 31, 2016
	Beginning										Ending
	Balance		Charge-offs			Recoveries		Provision			Balance
Allowance for loan losses:
Construction and development	$	98,431	$	-		$	1,820	$	25,097		$	125,348
Conventional 1-4 family		943,484		(220,234	)		120,794		(103,002	)		741,042
Revolving		42,859		-			32,859		(32,159	)		43,559
Multi-family		70,579		-			-		(16,419	)		54,160
Commercial real estate		187,354		-			-		7,032			194,386
Commercial		164,546		-			-		(136,584	)		27,962
Consumer		-		-			-		209			209
Total	$	1,507,253	$	(220,234	)	$	155,473	$	(255,826	)	$	1,186,666

	Year Ended December 31, 2015
	Beginning										Ending
	Balance		Charge-offs			Recoveries		Provision			Balance
Allowance for loan losses:
Construction and development	$	45,364	$	-		$	5,200	$	47,867		$	98,431
Conventional 1-4 family		915,555		(214,540	)		283,747		(61,003	)		923,759
Revolving		59,560		(5,955	)		20,762		(11,783	)		62,584
Multi-family		120,078		-			-		(49,499	)		70,579
Commercial real estate		142,671		-			5,994		38,689			187,354
Commercial		15,798		-			-		148,748			164,546
Total	$	1,299,026	$	(220,495	)	$	315,703	$	113,019		$	1,507,253

The allowance for loan losses and loan balances are as follows:

	Year Ended December 31, 2016
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Ending Balance
Ending allowance attributable to loans:
Construction and development	$	-	$	125,348	$	125,348
Conventional 1-4 family		171,858		569,184		741,042
Revolving		-		43,559		43,559
Multi-family		-		54,160		54,160
Commercial real estate		-		194,386		194,386
Commercial		-		27,962		27,962
Consumer		-		209		209
Total	$	171,858	$	1,014,808	$	1,186,666

14

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 4 - Loans (Continued)

	Year Ended December 31, 2016
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Ending Balance
Loans:
Construction and development	$	45,034	$	11,154,076	$	11,199,110
Conventional 1-4 family		2,429,432		46,703,095		49,132,527
Revolving		-		4,951,219		4,951,219
Multi-family		-		11,254,371		11,254,371
Commercial real estate		-		25,084,228		25,084,228
Commercial		-		2,731,223		2,731,223
Consumer		-		6,328		6,328
Total	$	2,474,466	$	101,884,540	$	104,359,006

	Year Ended December 31, 2015
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Ending Balance
Ending allowance attributable to loans:
Construction and development	$	-	$	98,431	$	98,431
Conventional 1-4 family		282,345		641,414		923,759
Revolving		-		62,584		62,584
Multi-family		-		70,579		70,579
Commercial real estate		-		187,354		187,354
Commercial		135,835		28,711		164,546
Total	$	418,180	$	1,089,073	$	1,507,253

	Year Ended December 31, 2015
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Ending Balance
Loans:
Construction and development	$	-	$	9,185,435	$	9,185,435
Conventional 1-4 family		3,613,804		44,474,367		48,088,171
Revolving		-		4,559,852		4,559,852
Multi-family		-		9,318,696		9,318,696
Commercial real estate		-		23,779,372		23,779,372
Commercial		135,835		2,844,129		2,979,964
Consumer		-		4,502		4,502
Total	$	3,749,639	$	94,166,353	$	97,915,992

Credit Risk Grading

The Company categorized each loan into credit risk categories based on current financial information, overall debt service coverage, comparison against industry averages, collateral coverage, historical payment experience, and current economic trends.

Pass

Credits not covered by the definitions below are pass credits, which are not considered to be adversely rated. 

15

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 4 - Loans (Continued)

Special Mention

Loans classified as special mention, or watch credits, have a potential weakness or weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard

Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution may sustain some loss if the deficiencies are not corrected.

Doubtful

Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The Company's credit quality indicators, by loan segment and class, at December 31, 2016 and 2015 are summarized below:

	December 31, 2016
			Special						Ending
	Pass		Mention		Substandard		Doubtful		Balance
Construction and development	$	10,514,166	$	509,719	$	175,225	$	-	$	11,199,110
Conventional 1-4 family		45,208,190		246,085		3,678,252		-		49,132,527
Revolving		4,478,747		-		472,472		-		4,951,219
Multi-family		11,254,371		-		-		-		11,254,371
Commercial real estate		22,396,163		1,066,418		1,621,647		-		25,084,228
Commercial		2,237,751		398,208		95,264		-		2,731,223
Consumer		6,328		-		-		-		6,328
Total	$	96,095,716	$	2,220,430	$	6,042,860	$	-	$	104,359,006

	December 31, 2015
			Special						Ending
	Pass		Mention		Substandard		Doubtful		Balance
Construction and development	$	8,165,468	$	868,716	$	151,251	$	-	$	9,185,435
Conventional 1-4 family		41,824,238		1,941,728		4,322,205		-		48,088,171
Revolving		4,087,380		-		472,472		-		4,559,852
Multi-family		9,001,713		316,983		-		-		9,318,696
Commercial real estate		21,301,701		876,114		1,601,557		-		23,779,372
Commercial		2,154,359		689,770		135,835		-		2,979,964
Consumer		4,502		-		-		-		4,502
Total	$	86,539,361	$	4,693,311	$	6,683,320	$	-	$	97,915,992

16

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 4 - Loans (Continued)

Age Analysis of Past Due Loans

The following tables detail the age analysis of past due loans at December 31, 2016 and 2015:

	December 31, 2016
													Recorded
													Investment > 90
	30-59 Days		60-89 Days		Greater than 90								Days and
	Past Due		Past Due		Days		Total Past Due		Current		Total Loans		Accruing
Construction and development	$	-	$	-	$	45,034	$	45,034	$	11,154,077	$	11,199,110	$	-
Conventional 1-4 family		468,999		13,741		517,330		1,000,070		48,132,456		49,132,527		-
Revolving		-		-		-		-		4,951,219		4,951,219		-
Multi-family		-		-		-		-		11,254,371		11,254,371		-
Commercial real estate		-		-		-		-		25,084,228		25,084,228		-
Commercial		-		-		-		-		2,731,223		2,731,223		-
Consumer		-		-		-		-		6,328		6,328		-
Total	$	468,999	$	13,741	$	562,364	$	1,045,104	$	103,313,902	$	104,359,006	$	-

	December 31, 2015
													Recorded
													Investment > 90
	30-59 Days		60-89 Days		Greater than 90								Days and
	Past Due		Past Due		Days		Total Past Due		Current		Total Loans		Accruing
Construction and development	$	-	$	-	$	-	$	-	$	9,185,435	$	9,185,435	$	-
Conventional 1-4 family		188,524		139,754		710,756		1,039,034		47,049,137		48,088,171		-
Revolving		-		-		-		-		4,559,852		4,559,852		-
Multi-family		-		-		-		-		9,318,696		9,318,696		-
Commercial real estate		-		-		-		-		23,779,372		23,779,372		-
Commercial		-		-		-		-		2,979,964		2,979,964		-
Consumer		-		-		-		-		4,502		4,502		-
Total	$	188,524	$	139,754	$	710,756	$	1,039,034	$	96,876,958	$	97,915,992	$	-

Impaired Loans

A loan is considered impaired when it is probable that not all principal and interest amounts will be collected according to the loan contract. Impaired loans are written down by the establishment of a specific allowance where necessary. Information regarding impaired loans is as follows:

	As of and for the Year Ended December 31, 2016
							Average		Interest
			Unpaid				Recorded		Income
	Recorded		Principal		Related		Investment for		Recognized for
	Investment		Balance		Allowance		the Year		the Year
With no related allowance recorded:
Construction and development	$	45,034	$	45,034	$	-	$	46,827	$	2,283
Conventional 1-4 family		1,524,513		1,861,996		-		2,030,672		91,247
Total with no related allowance recorded		1,569,547		1,907,030		-		2,077,499		93,530
With an allowance recorded - Conventional 1-4 family		904,919		987,724		171,858		1,021,358		41,761
Total	$	2,474,466	$	2,894,754	$	171,858	$	3,098,857	$	135,291

17

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 4 - Loans (Continued)

	As of and for the Year Ended December 31, 2015
							Average		Interest
			Unpaid				Recorded		Income
	Recorded		Principal		Related		Investment for		Recognized for
	Investment		Balance		Allowance		the Year		the Year
With no related allowance recorded - Conventional 1-4 family	$	2,105,292	$	2,394,278	$	-	$	2,502,297	$	113,207
With an allowance recorded:
Conventional 1-4 family		1,508,512		1,590,060		282,345		1,613,951		68,260
Revolving		135,835		149,308		135,835		192,182		11,355
Total with an allowance recorded		1,644,347		1,739,368		418,180		1,806,133		79,615
Total	$	3,749,639	$	4,133,646	$	418,180	$	4,308,430	$	192,822

No additional funds are committed to be advanced in connection with impaired loans at December 31, 2016 and 2015.

Included in the balance of impaired loans are troubled debt restructurings (TDRs) which are performing in accordance with the modified terms. As these loans are TDRs, they meet the definition of an impaired loan; however, they have met the regulatory and accounting guidance for restoration to accrual status.

Nonaccrual Loans

Nonaccrual loan balances at December 31, 2016 and 2015 are as follows:

	2016		2015
Construction and development	$	45,034	$	-
Conventional 1-4 family		1,061,547		1,622,596
Commercial		-		135,835
Total	$	1,106,581	$	1,758,431

Troubled Debt Restructurings

A modification of a loan constitutes a TDR when a borrower is experiencing financial difficulty and the modification constitutes a concession. The Company offers various types of concessions when modifying a loan; however, forgiveness of principal is rarely granted.

The following table presents information related to loans modified in a TDR during the years ended December 31, 2016 and 2015:

2016

2015

Pre-

Post-

Pre-

Post-

modification

modification

modification

modification

Outstanding

Outstanding

Outstanding

Outstanding

Number of

Recorded

Recorded

Number of

Recorded

Recorded

Contracts

Investment

Investment

Contracts

Investment

Investment

Conventional 1-4 family

2

$

1,395,138

$

1,395,138

4

$

2,198,165

$

2,198,165

There were no loans modified as troubled debt restructurings within the previous 12 months that became 30 days or more past due during the years ended December 31, 2016 and 2015. 

18

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 5 - Property and Equipment

A summary of the cost and accumulated depreciation of property and equipment follows:

	2016			2015
Land	$	600,000		$	600,000
Buildings and building improvements		2,293,055			2,293,055
Furniture and equipment		839,056			776,275
Leasehold improvements		88,490			63,845
Total cost		3,820,601			3,733,175
Accumulated depreciation		(1,383,846	)		(1,277,024	)
Net premises and equipment	$	2,436,755		$	2,456,151

Depreciation expense for 2016 and 2015 totaled $110,954 and $109,978, respectively.

The Bank subleases space for a branch location in Westerville, Ohio. The sublease had a 94-month term starting June 1, 2008 with two five-year options to renew at the discretion of the Bank. The sublease has been renewed for a five-year term.

In 2016, the Bank entered into a lease for additional office space in Westerville, Ohio for a term of seven years with two five-year options to renew at the discretion of the Bank. The office building is owned by two directors of the Company. Refer to Note 7 for additional information.

Rent expense for all Bank properties for 2016 and 2015 was $261,774 and $198,148, respectively.

The future minimum rent payments under leases are as follows:

Years Ending	Amount
2017	$	201,861
2018		193,396
2019		194,183
2020		102,808
2021		73,560
Thereafter		75,399
Total	$	841,207

Note 6 - Deposits

The following is a summary of the distribution of the interest-bearing deposits at December 31, 2016 and 2015:

	2016		2015
Interest-bearing demand deposits	$	7,319,938	$	7,828,141
Savings and money market accounts		31,867,780		23,542,109
Time deposits:
Under $250,000		56,992,683		48,246,947
$250,000 and over		3,513,308		3,441,652
Total	$	99,693,709	$	83,058,849

19

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 6 - Deposits (Continued)

At December 31, 2016, the scheduled maturities of time deposits are as follows:

Years Ending	Amount
2017	$	36,004,382
2018		17,961,504
2019		3,068,164
2020		1,409,942
2021		2,061,999
Total	$	60,505,991

Note 7 - Related Party Transactions

In the ordinary course of business, the Bank has granted loans to principal officers and directors and their affiliates amounting to $3,653,556 and $3,161,956 at December 31, 2016 and 2015, respectively.

Total deposits from such parties totaled $4,810,045 and $22,567,828 at December 31, 2016 and 2015, respectively.

On January 1, 2015, the Bank hired former employees of a mortgage company owned by two directors of the Company. During 2016 and 2015, the Bank rented space in a building owned by the same two directors of the Company for the mortgage division to occupy. Rent paid to the related parties was $109,702 and $79,237 in 2016 and 2015, respectively.

Note 8 - Advances from the Federal Home Loan Bank

At December 31, 2016, the Bank had one advance for $5,000,000 outstanding from the Federal Home Loan Bank of Cincinnati. The advance had a fixed rate of 0.65 percent and matured in January 2017. The advance was collateralized by the Bank's Federal Home Loan Bank stock and first mortgage loans. At December 31, 2016, the advance was collateralized by first mortgage loans of approximately $40,202,000 and home equity loans of approximately $1,374,000. At December 31, 2015, the Bank did not have any borrowings outstanding.

The advance was subject to prepayment penalties and the provisions and conditions of the credit policy of the Federal Home Loan Bank of Cincinnati.

Note 9 - Income Taxes

Allocation of income taxes between current and deferred portions is as follows:

	2016			2015
Current	$	51,862		$	-
Deferred		473,210			(310,383	)
Valuation allowance		(4,177,303	)		310,383
Total income tax recovery	$	(3,652,231	)	$	-

20

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 9 - Income Taxes (Continued)

The components of net deferred tax assets are as follows:

	2016			2015
Deferred tax assets:
Allowance for loan losses	$	36,800		$	28,759
Start-up costs		23,698			30,052
Nonqualified stock options		47,109			46,148
Deferred loan fees		189,794			189,080
Nonaccrual loan interest		171,332			173,389
Other real estate owned		251,421			263,321
Net operating loss carryforward		2,972,694			3,412,999
Net unrealized loss on securities available for sale		10,892			1,732
Other		130,207			152,742
Gross deferred tax assets		3,833,947			4,298,222
Valuation allowance recognized for net deferred tax assets		-			(4,177,303	)
Total deferred tax assets		3,833,947			120,919
Deferred tax liabilities:
Accumulated depreciation and amortization		(110,050	)		(114,572	)
FHLB stock dividends		(2,380	)		(2,380	)
Other		(8,264	)		(3,967	)
Gross deferred tax liabilities		(120,694	)		(120,919	)
Net deferred tax asset	$	3,713,253		$	-

A valuation allowance related to deferred tax assets is required when it is more likely than not that all or part of the benefit related to such assets will not be realized. As of December 31, 2015, a valuation allowance of $4,177,303 existed based on uncertainty about the Company's ability to generate sufficient future taxable income to realize all of the related temporary differences. During 2016, the valuation allowance was reversed based on an evaluation of the facts and circumstances of the Company's ability to realize the deferred tax asset.

There are no significant differences between the Company's statutory tax rate and the effective tax rate other than the effect of the valuation allowance reversal.

At December 31, 2016, the Company has an $8.7 million net operating loss carryforward available to reduce future income tax through 2035. The net operating loss carryforward will begin expiring in 2029.

Note 10 - Off-balance-sheet Activities

Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

21

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 10 - Off-balance-sheet Activities (Continued)

As of December 31, 2016 and 2015, the following financial instruments whose contract amounts represent credit risk were outstanding:

	2016		2015
Commitments to extend credit	$	7,681,000	$	5,581,000
Unfunded commitments under lines of credit		16,862,286		15,443,993
Total	$	24,543,286	$	21,024,993

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments for equity lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Company, is based on management's credit evaluation of the customer.

Note 11 - Minimum Regulatory Capital Requirements

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the following table) of common equity Tier 1, total, common, and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 2016, that the Bank met all capital adequacy requirements to which it is subject.

During 2010, the Bank entered into a Consent Order (the "Order") with the Federal Deposit Insurance Corporation (FDIC) and the Ohio Department of Financial Institutions (ODFI). The Order was amended in 2013. The Order was terminated in June 2016. While the Order was in effect, the Bank was required to achieve and maintain a total capital to risk weighted assets ratio of 13.0 percent and a Tier 1 capital to average total assets ratio of 9.0 percent. The capital ratios for capital adequacy as of December 31, 2015 as shown in the following table reflect the requirements of the Consent Order. The Order also addressed asset quality and risk monitoring activities.

22

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 11 - Minimum Regulatory Capital Requirements (Continued)

The Bank's capital ratios at December 31, 2016 and 2015 are presented in the following table:

											To be Well Capitalized Under
						For Capital Adequacy					Prompt Corrective Action
	Actual					Purposes					Provisions
(000s omitted)	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2016
Common equity Tier 1 (to risk- weighted assets)	$	13,786		14.61	%	$	4,246		4.50	%	$	6,134		6.50	%
Total capital (to risk-weighted assets)		14,973		15.87			7,549		8.00			9,437		10.00
Tier 1 capital (to risk-weighted assets)		13,786		14.61			5,662		6.00			7,549		8.00
Tier 1 leverage ratio		13,786		10.59			5,207		4.00			6,509		5.00
As of December 31, 2015
Common equity Tier 1 (to risk- weighted assets)		11,529		10.88			-		-			6,890		6.50
Total capital (to risk-weighted assets)		12,856		12.13			13,781		13.00			10,601		10.00
Tier 1 capital (to risk-weighted assets)		11,529		10.88			-		-			8,480		8.00
Tier 1 leverage ratio		11,529		9.37			11,073		9.00			6,152		5.00

Note 12 - Benefit Plans

The Company has a 401(k) plan. Participants may contribute a percentage of compensation, but not in excess of the maximum allowed under the Internal Revenue Code. The plan provides for a discretionary matching contribution by the Company. The Company made matching contributions in both 2016 and 2015. Compensation expense related to this plan for the years ended December 31, 2016 and 2015 was $183,455 and $154,184, respectively.

In 2005, the stockholders approved the Company’s stock option plan. Options to buy stock are granted to directors, officers, and employees under the Bank’s stock option plan, which provides for issuance of up to 226,885 options. According to the plan, the maximum option term is 10 years and options can vest over a period no shorter than three years.

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model that uses the weighted-average assumptions noted in the following table. Since the Company does not have its own historical stock price volatility, expected volatilities are based on an index for community bank stocks. The expected term of options granted is based on Company experience and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

No options were granted in 2016. In 2015, 100,000 options were granted under the plan. The grant date fair value of options granted in 2015 was $1.35 per option. The following assumptions relate to options granted in 2015:

Expected option life (in years)	10
Expected volatility	23.60	%
Expected dividend yield	0.00	%
Risk-free rate of return	2.12	%

23

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 12 - Benefit Plans (Continued)

A summary of option activity under the plan for the year ended December 31, 2016 is presented below:

						Weighted
						Average
				Weighted		Remaining
	Number of			Average		Contractual
Options	Shares			Exercise Price		Term (in years)
Outstanding at January 1, 2016		203,800		$	7.71		4.9
Expired		(49,800	)		11.50
Forfeited		(10,750	)		7.87
Outstanding at December 31, 2016		143,250			6.38		5.6
Exercisable at December 31, 2016		68,450			9.36		2.9

Nonvested options at December 31, 2016 totaled 74,800. As of December 31, 2016, there was $75,735 of total unrecognized compensation cost related to nonvested options granted under the plan. That cost is expected to be recognized over the next three years.

Note 13 - Stock Warrants and Capital Raise

In connection with a private placement capital raise in 2013 and 2014, the Company issued warrants to purchase common stock. As part of the private placement, for every two shares of stock issued, the Company issued a warrant to purchase one share of Company stock at a fixed exercise price of $5.00 per share. The warrants expire four years from the date of issuance. The carrying value of the warrants was determined based on the relative fair value of the warrants compared to the underlying shares of stock issued.

Subsequent to the completion of the 2014 private placement, the Company raised additional capital through the issuance of a combination of common shares and Series A preferred shares. During 2014 and 2015, the Company issued a total of 1,000 shares of nonvoting Series A preferred stock at a price of $1,000 per share. The Series A preferred stock is nonvoting, noncumulative, zero coupon preferred stock and is convertible into common shares and warrants based on the same terms that were available to investors in the private placement. The terms of the Series A preferred stock entitle the preferred shareholders to the same dividend as the common shareholders. Later in 2015, the 1,000 shares of Series A preferred shares were converted into 273,972 shares of common stock and 136,986 warrants to purchase common stock at $5.00 per share.

At December 31, 2016, a total of 634,331 warrants were outstanding. No warrants have been exercised.

In December 2015, the Company initiated a private placement of Series B preferred stock. The Series B preferred stock is nonvoting and entitles the holder to a 7 percent noncumulative dividend. In 2015, the Company issued 850 shares of Series B preferred shares for $1,000 per share. During 2016, an additional 815 shares of the Series B preferred shares were issued for $1,000 per share.

Note 14 - Fair Value Measurements

Accounting standards require certain assets and liabilities be reported at fair value in the financial statements and provide a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the inputs and valuation techniques used to measure fair value.

The following tables present information about the Company’s assets measured at fair value on a recurring basis at December 31, 2016 and 2015 and the valuation techniques used by the Company to determine those fair values.

24

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 14 - Fair Value Measurements (Continued)

Fair values determined by Level 1 inputs use quoted prices in active markets for identical assets that the Company has the ability to access.

Fair values determined by Level 2 inputs use other inputs that are observable either directly or indirectly. These Level 2 inputs include quoted prices for similar assets in active markets and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset. These Level 3 fair value measurements are based primarily on management’s own estimates using pricing models, discounted cash flow methodologies, or similar techniques taking into account the characteristics of the asset.

In instances whereby inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset.

The following tables present information about the Company’s assets measured at fair value on a recurring basis at December 31, 2016 and 2015 and the valuation techniques used by the Company to determine those fair values.

	Assets Measured at Fair Value on a Recurring Basis at
	December 31, 2016
	Quoted Prices in
	Active Markets		Significant Other		Significant
	for Identical		Observable		Unobservable		Balance at
	Assets		Inputs		Inputs		December 31,
	(Level 1)		(Level 2)		(Level 3)		2016
Assets - Available-for-sale securities - Mortgage-backed	$	-	$	1,946,034	$	-	$	1,946,034

	Assets Measured at Fair Value on a Recurring Basis at
	December 31, 2015
	Quoted Prices in
	Active Markets		Significant Other		Significant
	for Identical		Observable		Unobservable		Balance at
	Assets		Inputs		Inputs		December 31,
	(Level 1)		(Level 2)		(Level 3)		2015
Assets - Available-for-sale securities - Mortgage-backed	$	-	$	1,116,546	$	-	$	1,116,546

The Company also has assets that, under certain conditions, are subject to measurement at fair value on a nonrecurring basis. These assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances, for example, where there is evidence of impairment.

	Assets Measured at Fair Value on a Nonrecurring Basis at
	December 31, 2016
	Quoted Prices in
	Active Markets		Significant Other		Significant
	for Identical		Observable		Unobservable		Balance at
	Assets		Inputs		Inputs		December 31,
	(Level 1)		(Level 2)		(Level 3)		2016
Impaired loans	$	-	$	-	$	2,302,608	$	2,302,608
Other real estate owned		-		-		351,524		351,524

25

Benchmark Bancorp

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 14 - Fair Value Measurements (Continued)

	Assets Measured at Fair Value on a Nonrecurring Basis at
	December 31, 2015
	Quoted Prices in
	Active Markets		Significant Other		Significant
	for Identical		Observable		Unobservable		Balance at
	Assets		Inputs		Inputs		December 31,
	(Level 1)		(Level 2)		(Level 3)		2015
Impaired loans	$	-	$	-	$	3,331,459	$	3,331,459
Other real estate owned		-		-		523,082		523,082

26

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2017 shares
Document and Entity Information [Abstract]
Entity Registrant Name	UNITED BANCSHARES INC/OH
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Trading Symbol	uboh
Entity Common Stock, Shares Outstanding	3,267,643
Amendment Flag	false
Entity Central Index Key	0001087456
Entity Filer Category	Smaller Reporting Company
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
CASH AND CASH EQUIVALENTS
Cash and due from banks	$ 9,401	$ 9,926
Interest-bearing deposits in other banks	4,448	4,260
Total cash and cash equivalents	13,849	14,186
SECURITIES, available-for-sale	178,740	190,205
FEDERAL HOME LOAN BANK STOCK, at cost	5,302	4,830
CERTIFICATES OF DEPOSIT, at cost	1,245	1,494
LOANS HELD FOR SALE	6,993	1,510
LOANS AND LEASES	493,089	376,086
Less allowance for loan and lease losses	2,817	3,345
Net loans and leases	490,272	372,741
PREMISES AND EQUIPMENT, net	19,312	13,395
GOODWILL	25,432	10,072
CORE DEPOSIT INTANGIBLE ASSETS, net	829	766
CASH SURRENDER VALUE OF LIFE INSURANCE	17,726	17,351
OTHER REAL ESTATE OWNED	451	578
OTHER ASSETS, including accrued interest receivable	10,562	5,991
Total Assets	770,713	633,119
Deposits:
Non-interest bearing	104,913	98,134
Interest-bearing	532,761	426,546
Total deposits	637,674	524,680
Other borrowings	40,260	18,774
Junior subordinated deferrable interest debentures	12,832	12,806
Other liabilities	4,233	4,301
Total liabilities	694,999	560,561
SHAREHOLDERS' EQUITY
Common stock, stated value $1.00 authorized 10,000,000 shares; issued 3,760,557 shares	3,761	3,761
Surplus	14,746	14,674
Retained earnings	64,521	62,717
Accumulated other comprehensive income (loss)	396	(866)
Treasury stock, at cost, 492,914 shares at September 30, 2017 and 494,040 shares at December 31, 2016	(7,710)	(7,728)
Total shareholders' equity	75,714	72,558
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 770,713	$ 633,119

XML

Consolidated Balance Sheets (Parentheticals) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Common stock par value (in Dollars per share)	$ 1.00	$ 1.00
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	3,760,557	3,760,557
Treasury stock, shares	492,914	494,040

XML

Condensed Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
INTEREST INCOME
Loans and leases, including fees	$ 5,384	$ 4,498	$ 14,516	$ 12,980
Securities:
Taxable	581	552	1,833	1,623
Tax-exempt	420	390	1,266	1,224
Other	99	101	257	262
Total interest income	6,484	5,541	17,872	16,089
INTEREST EXPENSE
Deposits	559	437	1,466	1,249
Borrowings	217	143	569	403
Total interest expense	776	580	2,035	1,652
Net interest income	5,708	4,961	15,837	14,437
CREDIT FOR LOAN AND LEASE LOSSES			(350)	(700)
Net interest income after credit for loan and lease losses	5,708	4,961	16,187	15,137
NON-INTEREST INCOME
Gain on sale of loans	235	202	466	409
Net securities gains	30	23	111	159
Other operating income	1,095	1,064	3,168	2,903
Total non-interest income	1,360	1,289	3,745	3,471
NON-INTEREST EXPENSES	6,427	4,454	15,949	13,371
INCOME BEFORE INCOME TAXES	641	1,796	3,983	5,237
PROVISION FOR INCOME TAXES	239	418	1,002	1,216
NET INCOME	$ 402	$ 1,378	$ 2,981	$ 4,021
NET INCOME PER SHARE (basic and diluted)
NET INCOME PER SHARE (basic and diluted) (in dollars per share)	$ 0.12	$ 0.42	$ 0.91	$ 1.22
Weighted average common shares outstanding, Basic	3,267,527	3,287,875	3,267,191	3,295,307
Weighted average common shares outstanding, Diluted	3,273,313	3,287,875	3,272,976	3,295,307

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
NET INCOME	$ 402	$ 1,378	$ 2,981	$ 4,021
Unrealized gains on securities:
Unrealized holding gains during period	189	(886)	2,023	2,376
Reclassification adjustments for (gains) losses included in net income	(30)	(23)	(111)	(159)
Other comprehensive income, before income taxes	159	(909)	1,912	2,217
Income tax expense related to items of other comprehensive income	54	(309)	650	754
Other comprehensive income	105	(600)	1,262	1,463
COMPREHENSIVE INCOME	$ 507	$ 778	$ 4,243	$ 5,484

XML

Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Surplus [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]	Total
Beginning balance at Dec. 31, 2015	$ 3,761	$ 14,669	$ 58,642	$ 1,397	$ (6,908)	$ 71,561
Net income			4,021			4,021
Other comprehensive income				1,463		1,463
Repurchase of shares					(633)	(633)
Shares issued from treasury in connection with the Corporation's Employee Stock Purchase Plan		5			13	18
Cash dividends declared			(1,086)			(1,086)
Balance at Sep. 30, 2016	3,761	14,674	61,577	2,860	(7,528)	75,344
Beginning balance at Dec. 31, 2015	3,761	14,669	58,642	1,397	(6,908)	71,561
Balance at Dec. 31, 2016	3,761	14,674	62,717	(866)	(7,728)	72,558
Beginning balance at Dec. 31, 2016	3,761	14,674	62,717	(866)	(7,728)	72,558
Net income			2,981			2,981
Other comprehensive income				1,262		1,262
Shares issued from treasury in connection with the Corporation's Employee Stock Purchase Plan		7			18	25
Stock option expense		65				65
Cash dividends declared			(1,177)			(1,177)
Balance at Sep. 30, 2017	3,761	14,746	64,521	396	(7,710)	75,714
Net income						402
Other comprehensive income						105
Balance at Sep. 30, 2017	$ 3,761	$ 14,746	$ 64,521	$ 396	$ (7,710)	$ 75,714

XML

Consolidated Shareholders' Equity (Parentheticals) - $ / shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash dividends declared per share (in Dollars per share)	$ 0.36	$ 0.33
Stock issued during the period, shares, Employee Stock Purchase Plans	1,126	843
Treasury Stock [Member]
Repurchase of shares		33,668

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Statement of Cash Flows [Abstract]
Cash flows from operating activities	$ 582	$ 4,226
Cash flows from investing activities:
Proceeds from sales of available-for-sale securities	42,791	34,475
Purchases of available-for-sale securities	(29,941)	(41,884)
Proceeds from of certificates of deposit	249
Proceeds from sale of OREO	358	266
Acquisition, net of cash received	(24,660)
Net increase in loans and leases	(23,556)	(4,724)
Purchases of premises and equipment	(3,943)	(37)
Net cash provided by (used in) investing activities	(38,702)	(11,904)
Cash flows from financing activities
Net increase (decrease) in deposits	17,449	(902)
Proceeds from other borrowings	40,260	3,609
Principal payments on other borrowings	(18,774)
Purchase of treasury shares		(633)
Proceeds from sale of treasury shares	25	18
Cash dividends paid	(1,177)	(1,086)
Net cash provided by (used in) financing activities	37,783	1,006
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(337)	(6,672)
Cash and cash equivalents at beginning of period	14,186	22,922
Cash and cash equivalents at end of period	13,849	16,250
Cash paid during the period for:
Interest	1,899	1,597
Federal income taxes	425	610
Non-cash investing activities:
Transfer of loans to other real estate owned	241	644
Change in net unrealized gain or loss on available-for-sale securities	$ 1,912	$ 2,217

XML

Consolidated Financial Statements

9 Months Ended

Sep. 30, 2017

Consolidated Financial Statements [Abstract]

Consolidated Financial Statements

NOTE 1 – CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of United Bancshares, Inc. and subsidiaries (the “Corporation”) have been prepared without audit and in the opinion of management reflect all adjustments (which include normal recurring adjustments) necessary to present fairly such information for the periods and dates indicated.  Since the unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q, they do not contain all information and footnotes typically included in financial statements prepared in conformity with generally accepted accounting principles.  Operating results for the nine months endedSeptember 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.  The balance sheet as of December 31, 2016 is derived from completed audited consolidated financial statements with footnotes, which are included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2016.

The consolidated financial statements include the accounts of the Corporation and its wholly-owned subsidiary, The Union Bank Company (the “Bank”).  The Bank has formed a wholly-owned subsidiary, UBC Investments, Inc. (“UBC”), to hold and manage its securities portfolio.  The operations of UBC are located in Wilmington, Delaware. The Bank has also formed a wholly-owned subsidiary, UBC Property, Inc. (“UBC Property”), to hold and manage certain property.  All significant intercompany balances and transactions have been eliminated in consolidation. The accounting and reporting policies of the Corporation conform to generally accepted practices within the banking industry.  The Corporation considers all of its principal activities to be banking related.

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New Accounting Pronouncements

9 Months Ended

Sep. 30, 2017

New Accounting Pronouncements [Abstract]

New Accounting Pronouncements

NOTE 2 – NEW ACCOUNTING PRONOUNCEMENTS

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606): Summary and Amendments that Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40). The guidance in this update supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the industry topics of the Codification.  For public companies, this update will be effective for interim and annual periods beginning after December 15, 2017.  The guidance does not apply to revenues associated with financial instruments, including loans and securities that are accounted for under U.S. GAAP.  The Corporation does not expect the guidance will have a material impact on its consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, amending ASU Subtopic 825-10.  The amendments in this update make targeted improvements to generally accepted accounting principles (GAAP) as follows: 1) require equity investments to be measured at fair value with changes in fair value recognized in net income; 2) simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; 3) eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; 4) eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; 5) require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; 6) require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; 7) require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; and 8) clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets.  The amendments in this update are effective for fiscal years beginning after December 15, 2017.  The Corporation has begun gathering data and is currently assessing the impact that this guidance will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842).  The ASU requires a lessee to recognize on the balance sheet assets and liabilities for leases with lease terms of more than 12 months.  Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease.  Unlike current GAAP, which requires that only capital leases be recognized on the balance sheet, the ASC requires that both types of leases by recognized on the balance sheet.  For public companies, this update will be effective for interim and annual periods beginning after December 15, 2018.  Early application is permitted.  The adoption of this guidance is not expected to have a material impact on the Corporation’s consolidated financial statements. 

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718). ASU 2016-09 is intended to simplify the accounting for share-based payment transactions, including income tax consequences, classification of awards as either assets or liabilities and classification in the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2017 and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted. The Corporation does not expect the adoption of ASU 2016-09 to have a material impact on its consolidated financial statements and related disclosures.

InJune2016,theFASBissuedASU2016-13,FinancialInstruments CreditLosses(Topic326):MeasurementofCreditLossesonFinancialInstruments. TheASUrequiresanorganizationtomeasureallexpectedcreditlossesforfinancialassetsheldatthereportingdatebasedonhistoricalexperience,currentconditions,andreasonableandsupportableforecasts.Financialinstitutionsandotherorganizationswillnowuseforward-lookinginformationtobetterinformtheircreditlossestimates.Manyofthelossestimationtechniquesappliedtodaywillstillbepermitted,althoughtheinputstothosetechniqueswillchangetoreflectthefullamountofexpectedcreditlosses.Organizationswillcontinuetousejudgmenttodeterminewhichlossestimationmethodisappropriatefortheircircumstances.Additionally,theASUamendstheaccountingforcreditlossesonavailable-for-saledebtsecuritiesandpurchasedfinancialassetswithcreditdeterioration.Forpubliccompanies,thisupdatewillbeeffective for interimand annual periodsbeginning afterDecember 15, 2019. Management has begun gathering data and evaluating the process for calculating the allowance for loan losses under the requirements of ASU 2016-13, but has not yet determined the expected impact the adoption of ASU 2016-13 will have on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The guidance in this update eliminates the Step 2 from the goodwill impairment test.  For public companies, this update will be effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted for interim and annual goodwill impairment test with a measurement date after January 1, 2017.  The Corporation does not expect the guidance to have a material impact on the consolidated financial statements.

XML

Acquisition

9 Months Ended

Sep. 30, 2017

Acquisition [Abstract]

Acquisition

NOTE 3 – ACQUISITION

On September 8, 2017, after receiving full board of director and regulatory approval, the Corporation completed the acquisition of Benchmark Bancorp, Inc. (“Benchmark”) and its wholly-owned subsidiary, Benchmark Bank, in an all cash transaction.  Under the terms of the merger agreement, shareholders of Benchmark received approximately $8.59 per share for each outstanding common share.  Immediately following the merger of Benchmark with and into the Corporation, Benchmark Bank merged with and into the Bank.

As a result of the acquisition, the two full-service banking centers of Benchmark Bank located in Gahanna and Westerville, Ohio, became full service offices of the Bank, and one mortgage loan production office located in Gahanna Ohio, became a mortgage loan production office of the Bank. With the acquisition, the Corporation has expanded its geographical footprint in an effort to help continue the growth of the Corporation’s overall profile in size and in earnings.

The results of operations of Benchmark are included in the Corporation’s consolidated operating results for the period subsequent to the date of the transaction. Acquisition-related costs of $1,115,000 and $1,271,000, respectively, for the quarter and nine month periods ended September 30, 2017, are included in other non-interest operating expenses in the accompanying consolidated statements of income for the quarter and nine month periods ended September 30, 2017.

Goodwill of $15,360,000 arising from the acquisition consists largely of synergies and the cost savings expected to result from the combining of operations and is not expected to be deductible for income tax purposes.

Consideration paid and the estimated fair value of the assets acquired and the liabilities assumed at the acquisition date are as follows (dollars in thousands):

Cash and cash equivalents	$	6,092
Restricted stock		472
Loans, including loans held for sale		98,804
Premises and equipment		2,483
Core deposit intangible asset		146
Other real estate owned		141
Other assets, including accrued interest receivable		5,460
Total assets acquired		113,598
Deposits		95,545
Other liabilities		2,661
Total liabilities assumed		98,206
Net identifiable assets		15,392
Goodwill		15,360
Total cash paid	$	30,752

The acquisition was partially funded through other borrowings, as more fully described in Note 6.

Explanatory Note: The following unaudited pro forma condensed combined consolidated financial statements, as well as the consolidated financial statements of Benchmark as of and for the year ended December 31, 2016, filed herewith as Exhibit 99.2 are intended to satisfy the Corporation’s reporting obligation under Item 9.01 of Form 8-K.

Unaudited Pro Forma Condensed Combined Consolidated Financial Statements

Thefollowing unaudited pro formacondensed combined consolidatedbalancesheetasof June30,2017 gives effect to the acquisition as if the merger occurred on that date.  Theunauditedproformacondensedcombinedconsolidatedstatementof incomefor the six months ended June 30, 2017 and the year ended December 31, 2016 give effect to the acquisition, asifthe mergerhad occurredonJanuary 1, 2016.Thepro formaadjustmentsare basedonestimatesmade forthepurposeofpreparing these pro formafinancialstatements andaredescribedin theaccompanyingNotes.The Corporation’s management believes thattheestimates usedintheseproformafinancial statementsarereasonableunderthe circumstances.

The unaudited proformacondensed combinedconsolidatedfinancialinformation has beenpreparedbasedonthepurchasemethodofaccounting.

The unaudited proformacondensed combinedconsolidatedfinancialstatements included herein arepresentedforinformation purposesonly. The unaudited pro formacondensed combinedconsolidatedbalancesheetasofJune 30,2017 isnotnecessarilyindicativeofthecombinedfinancial positionhad themerger beeneffective atthatdate.Theunaudited pro formacondensed combinedconsolidated statementsofincomeare notnecessarilyindicativeoftheresultsofoperationsthatwouldhave occurred had the merger been effective at the beginningoftheperiod indicated,or of thefutureresults of operationsof the Corporation.

Theseproformafinancial statementsdonot include theeffects of any potential costsavings which managementbelieveswillresultfromoperatingBenchmark Bank asbranches andcombiningcertainoperatingprocedures.Italsodoesnotnecessarilyreflectwhat thehistorical results ofthecombined company would have beenhad thecompanies been combinedduring thisperiod.

	(in thousands except per share data)
	June 30, 2017
	Historical United		Historical Benchmark		Pro Forma Adjustments Debit/(Credit)		Footnote Reference		Pro Forma Combined
	(Unaudited)
ASSETS:
Cash and due from banks	$	14,155	$	9,982	$	(5,897)		(1)	$	18,240
Fed Funds sold		-		775		-				775
Securities, available-for-sale		183,975		1,621		-				185,596
Loans, gross		385,777		105,798		(3,046)		(2)		488,529
Allowance for loan losses		(2,829)		(1,088)		1,088		(3)		(2,829)
Premises and equipment		17,008		2,409		142		(4)		19,559
Other real estate owned		344		351		(211)		(5)		484
Federal Home Loan Bank stock		4,829		473		-				5,302
Bank owned life insurance		17,548		-		-				17,548
Other intangible assets		707		-		146		(6)		853
Goodwill		10,072		-		14,586		(7)		24,658
Accrued interest and other assets		5,092		4,029		618		(8)		9,739
Total Assets	$	636,678	$	124,350	$	7,426			$	768,454
LIABILITIES:
Deposits	$	537,303	$	97,862	$	418		(9)	$	635,583
Other borrowings		7,571		8,000		25,000		(1)		40,571
Trust preferred		12,823		-		-				12,823
Accrued expenses and other liabilities		3,425		641		-				4,066
Total Liabilities	$	561,122	$	106,503	$	25,418			$	693,043
EQUITY:
Common stock	$	3,761	$	3,115	$	(3,115)		(10)	$	3,761
Preferred stock		-		2		(2)		(10)		-
Warrants		-		38		(38)		(10)		-
Additional paid-in capital - Common		-		20,923		(20,923)		(10)		-
Additional paid-in capital - Preferred		-		1,605		(1,605)		(10)		-
Surplus		14,712		-		-				14,712
Retained earnings (accumulated deficit)		64,511		(7,814)		7,669		(11)		64,366
Treasury stock		(7,719)		-		-				(7,719)
Accumulated other comprehensive income (loss)		291		(22)		22		(12)		291
Total Stockholders' Equity		75,556		17,847		(17,992)				75,411
Total Liabilities & Stockholders' Equity	$	636,678	$	124,350	$	7,426			$	768,454

	(in thousands except per share data)
	For the Six months Ended June 30, 2017
	Historical United		Historical Benchmark		Pro Forma Adjustments Debit/(Credit)		Footnote Reference		Pro Forma Combined
	(Unaudited)
Interest Income	$	11,389	$	3,128	$	187		(13)	$	14,704
Interest Expense		1,260		434		158		(14)		1,852
Net interest income		10,129		2,694		29				12,852
Credit for loan losses		(350)		(96)		-				(446)
Net interest income after provision for loan losses		10,479		2,790		29				13,298
Non-interest income		2,385		2,651		-				5,036
Non-interest expense		9,522		5,028		15		(15)(16)		14,565
Income before income taxes		3,342		413		14				3,769
Income tax provision		763		207		5		(17)		975
Net Income	$	2,579	$	206	$	9			$	2,794
Earnings per share
Basic	$	0.79	$	0.07
Diluted	$	0.79	$	0.07
Pro Forma earnings per share
Basic								(18)	$	0.86
Diluted								(18)	$	0.86

	(in thousands except per share data)
	For the Year Ended December 31, 2016
	Historical United		Historical Benchmark		Pro Forma Adjustments Debit/(Credit)		Footnote Reference		Pro Forma Combined
	(Unaudited)
Interest Income	$	21,627	$	6,082	$	334		(13)	$	28,043
Interest Expense		2,231		700		318		(14)		3,249
Net interest income		19,396		5,382		16				24,794
Credit for loan losses		(750)		(256)		-				(1,006)
Net interest income after provision for loan losses		20,146		5,638		16				25,800
Non-interest income		4,903		6,473		-				11,376
Non-interest expense		17,784		10,636		29		(15)(16)		28,449
Income before income taxes		7,265		1,475		(13)				8,727
Income tax provision		1,744		(3,652)		(5)		(17)		(1,913)
Net Income	$	5,521	$	5,127	$	(8)			$	10,640
Earnings per share
Basic	$	1.68	$	1.65
Diluted	$	1.68	$	1.65
Pro Forma earnings per share
Basic								(18)	$	3.43
Diluted								(18)	$	3.43

PRELIMINARY PURCHASE ACCOUNTING ALLOCATIONS

The unaudited pro forma condensed combined consolidated financial information for the merger includes an unaudited pro forma condensed combined balance sheet as of June 30, 2017 assuming the merger was completed on June 30, 2017. The unaudited pro forma condensed combined consolidated statements of income is for the six months ended June 30, 2017.

	(in thousands)
	June 30, 2017
			Footnote Reference
Benchmark Bancorp shareholders' equity - June 30,
2017 plus/(minus) estimated fair value adjustments:					$	17,847
Loan fair value	$	(3,046)		(2)
Allowance for loan losses		1,088		(3)
Loans, net		(1,958)
Building		142		(4)
OREO		(211)		(5)
Core deposit intangible asset		146
Deferred tax asset, net		618		(8)
Deposits - fixed maturity		(418)		(9)
Total fair value adjustments					$	(1,681)
Estimated fair value of Benchmark Bancorp net
assets at June 30, 2017						16,166
Total consideration paid to Benchmark Bancorp
shareholders (**)						30,752
Goodwill					$	14,586

**  Thepurchaseprice is basedon estimatedtotal cash considerationof$30,752.  

A. Notes:

(1) Cash consideration of $30,752,000 paid toBenchmark Bancorp’s shareholders plus estimated transaction costs of $145,000net of tax, less additional borrowings of $25,000,000.

(2) The fairvalueofBenchmark’s loan portfolio acquired in the transactionis estimated by Unitedto be lessthan book value.Based on management’s judgment,Unitedapplied a  discount to the loan portfolio to estimate the fair valueadjustment as of June 30, 2017. Theadjustment reflectsUnited’s estimatesof both market interest ratedifferential and credit considerationson poolsof loansandthe potentialadjustmentsrequiredbyASC310-30,“Receivables-Loansand Debt Securities AcquiredwithDeteriorated CreditQuality”for applicable individualloans.The portion of the fair market value adjustmentthatisaccretable isassumed to amortizeintointerest incomeon  alevelyieldbasisovertheestimated remaininglife ofthe loans.

(3) Elimination ofBenchmark’s allowancefor loan losses.

(4) Adjusts bank premises to appraised value at June 30, 2017.

(5) Adjusts the value of OREO at June 30, 2017 to estimated fair value.

(6) Represents theestablishment of theestimated core deposit intangible.The core depositintangibleis assumed toamortize into non-interest expense over10years,using acceleratedmethods.

(7) Goodwill estimate basedontheexcess ofthepurchasepriceover the estimated fairvalueof the netassets acquired.

(8) Taxeffectof estimated fairmarketvalueadjustments.

(9) Estimatedfairmarket valueadjustment relatedtodepositsand isassumed toamortizeintointerest expense onalevelyield basisovertheestimatedremainingmaturityofthedeposits.

(10) ReflectstheeliminationofBenchmark’s common and preferred stock, including related additional paid-in capital, as well as warrants.

(11) Reflects theeliminationof Benchmark’s accumulated deficit of $7,814,000, net of after-tax transactioncosts of$145,000.

(12) Reflects the elimination of Benchmark’s accumulated other comprehensive loss of $22,000.

(13) Interest income impact of loan discount accretion on purchase accounting adjustment, net of lost earnings on cash consideration paid and net merger costs, after tax.

(14) Interest expense on other borrowings incurred to facilitate the transaction, net of estimated fair value adjustment related to deposits assumed to amortize into interest expense on an accelerated basis over 5 years.

(15) Reflects additional depreciation on fair value adjustment of bank premises.

(16) Reflects core deposit intangible amortization over 10 years, using accelerated methods.

(17) Represents the income tax effect (34%) of the impact of pro forma adjustments on income before tax.

(18) Basic and diluted proformaearningspershare forthesix monthsendedJune30,2017 havebeen computedbasedon 3,267,020 basic and 3,271,477 diluted shares, respectively. Basic and diluted pro forma earnings per share for the year ended December 31, 2016 have been computed based upon 3,289,497 basic and diluted shares.

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Securities

9 Months Ended

Sep. 30, 2017

Securities [Abstract]

Securities

NOTE 4 - SECURITIES

The amortized cost and fair value of available-for-sale securities as of September 30, 2017 and December 31, 2016 are as follows:

	(in thousands)
	September 30, 2017				December 31, 2016
	Amortized cost		Fair value		Amortized cost		Fair value
Available-for-sale:
Obligations of states and political
subdivisions	$	69,796	$	70,800	$	70,757	$	70,624
Mortgage-backed		107,342		106,948		119,758		118,595
Other		1,002		992		1,002		986
Total	$	178,140	$	178,740	$	191,517	$	190,205

A summary of gross unrealized gains and losses on available-for-sale securities as of September 30, 2017 and December 31, 2016 follows:

	September 30, 2017				December 31, 2016
	Gross unrealized gains		Gross unrealized losses		Gross unrealized gains		Gross unrealized losses
Available-for-sale:
Obligations of states and political
subdivisions	$	1,210	$	206	$	644	$	777
Mortgage-backed		603		997		769		1,932
Other		-		10		-		16
Total	$	1,813	$	1,213	$	1,413	$	2,725

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Loans and Leases

9 Months Ended

Sep. 30, 2017

Loans and Leases [Abstract]

Loans and Leases

NOTE 5 – LOANSAND LEASES

The following tables present the activity in the allowance for loan and lease losses by portfolio segment for the periods ending September 30, 2017 and 2016:

	(in thousands)
	Commercial		Commercial and multi-family real estate		Residential 1 – 4 family real estate		Consumer		Total
Balance at December 31, 2016	$	896	$	1,876	$	542	$	31	$	3,345
Provision (credit) charged to expenses		(374)		(65)		65		24		(350)
Losses charged off		(36)		(553)		(45)		(23)		(657)
Recoveries		78		381		12		8		479
Balance at September 30, 2017	$	564	$	1,639	$	574	$	40	$	2,817
	Commercial		Commercial and multi-family real estate		Residential 1 – 4 family real estate		Consumer		Total
Balance at December 31, 2015	$	893	$	2,540	$	373	$	28	$	3,834
Provision (credit) charged to expenses		163		(904)		42		(1)		(700)
Losses charged off		(86)		(11)		(24)		(8)		(129)
Recoveries		28		285		62		8		383
Balance at September 30, 2016	$	998	$	1,910	$	453	$	27	$	3,388

The following tables present the balance in the allowance for loan and lease losses and the recorded investment in loans and leases by portfolio segment and based on impairment method for the periods ending September 30, 2017 and December 31, 2016:

		(in thousands)
September 30, 2017	Commercial		Commercial and multi-family real estate		Residential 1 – 4 family real estate		Consumer		Total
Allowance for loan and lease losses:
Attributable to loans and leases
individually evaluated for impairment	$	98	$	-	$	-	$	-	$	98
Collectively evaluated for impairment		466		1,639		574		40		2,719
Total allowance for loan
and lease losses	$	564	$	1,639	$	574	$	40	$	2,817
Loans and leases:
Individually evaluated for impairment	$	490	$	396	$	-	$	-	$	886
Acquired with deteriorated
credit quality		-		915		227		-		1,142
Collectively evaluated for impairment		64,284		301,085		121,180		4,512		491,061
Total ending loans and
leases balance	$	64,774	$	302,396	$	121,407	$	4,512	$	493,089
December 31, 2016	Commercial		Commercial and multi-family real estate		Residential 1 – 4 family real estate		Consumer		Total
Allowance for loan and lease losses:
Attributable to loans and leases
individually evaluated for impairment	$	399	$	619	$	-	$	-	$	1,018
Collectively evaluated for impairment		497		1,257		542		31		2,327
Total allowance for loan
and lease losses	$	896	$	1,876	$	542	$	31	$	3,345
Loans and leases:
Individually evaluated for impairment	$	937	$	1,980	$	-	$	-	$	2,917
Acquired with deteriorated
credit quality		-		573		51		-		624
Collectively evaluated for impairment		62,782		216,933		88,818		4,012		372,545
Total ending loans and
leases balance	$	63,719	$	219,486	$	88,869	$	4,012	$	376,086

Impaired loans and leases were as follows as of September 30, 2017 and December 31, 2016:

	(in thousands)
	September 30, 2017		December 31, 2016
Loans and leases with no allowance
for loan and lease losses allocated	$	396	$	-
Loans and leases with allowance
for loan and lease losses allocated		490		2,917
Total impaired loans and leases		886		2,917
Amount of the allowance allocated to impaired loans and leases	$	98	$	1,018

No additional funds are committed to be advanced in connection with impaired loans and leases.

The average recorded investment in impaired loans and leases (excluding loans and leases acquired with deteriorated credit quality) for the nine month periods ended September 30, 2017 and 2016 was approximately $1.8 million  and $4.5 million, respectively.  There was  $86,000and $255,000 in interest income recognized by the Corporation on impaired loans and leases on an accrual or cash basis for the nine month periods ended September 30, 2017 and 2016, respectively.

The following table presents loans and leases individually evaluated for impairment by class of loans as of September 30, 2017 and December 31, 2016:

	(in thousands)
	September 30, 2017				December 31, 2016
	Recorded investment		Allowance for loan and lease losses allocated		Recorded investment		Allowance for loan and lease losses allocated
With no related allowance recorded:
Commercial	$	-	$	-	$	-	$	-
Commercial and multi-family real estate		396		-		-		-
Agriculture		-		-		-		-
Agricultural real estate		-		-		-		-
Consumer		-		-		-		-
Residential 1-4 family real estate		-		-		-		-
With an allowance recorded:
Commercial		490		98		937		399
Commercial and multi-family real estate		-		-		1,980		619
Agriculture		-		-		-		-
Agricultural real estate		-		-		-		-
Consumer		-		-		-		-
Residential 1-4 family real estate		-		-		-		-
Total	$	886	$	98	$	2,917	$	1,018

The following tables present the recorded investment in nonaccrual loans and leases, loans and leases past due over 90 days still on accrual and troubled debt restructurings by class of loans as of September 30, 2017 and December 31, 2016:

	(in thousands)
September 30, 2017	Nonaccrual		Loans and leases past due over 90 days still accruing		Troubled Debt Restructurings
Commercial	$	618	$	-	$	27
Commercial real estate		1,573		-		604
Agricultural real estate		233		-		-
Agriculture		-		-		-
Consumer		-		-		-
Residential:
1 – 4 family		726		199		436
Home equity		-		-		-
Total	$	3,150	$	199	$	1,067

	(in thousands)
December 31, 2016	Nonaccrual		Loans and leases past due over 90 days still accruing		Troubled Debt Restructurings
Commercial	$	1,295	$	-	$	29
Commercial real estate		3,462		-		722
Agricultural real estate		277		-		-
Agriculture		-		73		-
Consumer		3		-		-
Residential:
1 – 4 family		966		81		457
Home equity		-		-		-
Total	$	6,003	$	154	$	1,208

The nonaccrual balances in the tables above include troubled debt restructurings that have been classified as nonaccrual.

The following table presents the aging of the recorded investment in past due loans and leases as of September 30, 2017 by class of loans and leases:

	(in thousands)
	30 – 59 days past due		60 – 89 days past due		Greater than 90 days past due		Total past due		Loans and leases not past due			Total
Commercial	$	113	$	-	$	74	$	187	$	51,550	$	51,737
Commercial real estate		125		23		516		664		271,771		272,435
Agriculture		60		-		-		60		12,977		13,037
Agricultural real estate		10		-		-		10		29,951		29,961
Consumer		-		3		-		3		4,509		4,512
Residential real estate		2,970		29		297		3,296		118,111		121,407
Total	$	3,278	$	55	$	887	$	4,220	$	488,869	$	493,089

The following table presents the aging of the recorded investment in past due loans and leases as of December 31, 2016 by class of loans and leases:

	(in thousands)
	30 – 59 days past due		60 – 89 days past due		Greater than 90 days past due		Total past due		Loans and leases not past due			Total
Commercial	$	326	$	71	$	79	$	476	$	49,988	$	50,464
Commercial real estate		103		147		553		803		192,830		193,633
Agriculture		227		-		-		227		13,026		13,253
Agricultural real estate		-		-		5		5		25,850		25,855
Consumer		10		2		-		12		4,000		4,012
Residential real estate		1,770		484		462		2,716		86,153		88,869
Total	$	2,436	$	704	$	1,099	$	4,239	$	371,847	$	376,086

Credit Quality Indicators:

The Corporation categorizes loans and leases into risk categories based on relevant information about the ability of borrowers to service their debt, such as:  current final financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.  The Corporation analyzes loans and leases individually by classifying the loans and leases as to the credit risk.  This analysis generally includes loans and leases with an outstanding balance greater than $500,000and non-homogenous loans and leases, such as commercial and commercial real estate loans and leases.  This analysis is performed on a quarterly basis.  The Corporation uses the following definitions for risk ratings:

· Special Mention:  Loans and leases which possess some credit deficiency or potential weakness which deserves close attention, but which do not yet warrant substandard classification.  Such loans and leases pose unwarranted financial risk that, if not corrected, could weaken the loan or lease and increase risk in the future.  The key distinctions of a Special Mention classification are that (1) it is indicative of an unwarranted level of risk, and (2) weaknesses are considered "potential", versus "defined", impairments to the primary source of loan repayment.

· Substandard:  These loans and leases are inadequately protected by the current sound net worth and paying ability of the borrower.  Loans and leases of this type will generally display negative financial trends such as poor or negative net worth, earnings or cash flow.  These loans and leases may also have historic and/or severe delinquency problems, and Corporation management may depend on secondary repayment sources to liquidate these loans and leases.  The Corporation could sustain some degree of loss in these loans and leases if the weaknesses remain uncorrected.

· Doubtful:  Loans and leases in this category display a high degree of loss, although the amount of actual loss at the time of classification is undeterminable.  This should be a temporary category until such time that actual loss can be identified, or improvements made to reduce the seriousness of the classification.

Loans and leases not meeting the previous criteria that are analyzed individually as part of the above described process are considered to be pass rated loans and leases.  Loans and leases listed as not rated are generally either less than $500,000 or are included in groups of homogenous loans and leases.  As of September 30, 2017 and December 31, 2016, and based on the most recent analysis performed, the risk category of loans by class of loans and leases is as follows:

	(in thousands)
September 30, 2017	Pass		Special Mention		Substandard		Doubtful		Not rated
Commercial	$	43,832	$	-	$	1,998	$	-	$	18,944
Commercial and multi-
family real estate		224,970		2,390		2,449		-		72,587
Residential 1 - 4 family		11,056		-		124		-		110,227
Consumer		-		-		-		-		4,512
Total	$	279,858	$	2,390	$	4,571	$	-	$	206,270

December 31, 2016	Pass		Special Mention		Substandard		Doubtful		Not rated
Commercial	$	41,233	$	-	$	3,666	$	-	$	18,819
Commercial and multi-
family real estate		162,399		4,239		3,850		-		48,999
Residential 1 - 4 family		210		-		-		-		88,659
Consumer		-		-		-		-		4,012
Total	$	203,842	$	4,239	$	7,516	$	-	$	160,489

The Corporation considers the performance of the loan and lease portfolio and its impact on the allowance for loan and lease losses.  For all loan classes that are not rated, the Corporation also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity.  Generally, all loans and leases not rated that are 90 days past due or are classified as nonaccrual and collectively evaluated for impairment, are considered nonperforming. The following table presents the recorded investment in all loans and leases that are not risk rated, based on payment activity as of September 30, 2017 and December 31, 2016:

:

	(in thousands)
September 30, 2017	Commercial		Commercial and multi-family real estate		Residential 1-4 family		Consumer
Performing	$	18,870	$	72,127	$	109,930	$	4,512
Nonperforming		74		460		297		-
Total	$	18,944	$	72,587	$	110,227	$	4,512
December 31, 2016	Commercial		Commercial and multi-family real estate		Residential 1-4 family		Consumer
Performing	$	18,740	$	48,441	$	88,197	$	4,012
Nonperforming		79		558		462		-
Total	$	18,819	$	48,999	$	88,659	$	4,012

Modifications:

The Corporation’s loan and lease portfolio also includes certain loans and leases that have been modified in a Troubled Debt Restructuring (TDR), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties.  These concessions typically result from the Corporation’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions.  All TDRs are also classified as impaired loans and leases.

When the Corporation modifies a loan or lease, management evaluates any possible concession based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan or lease agreement, except when the sole (remaining) source of repayment for the loan or lease is the operation or liquidation of the collateral.  In these cases, management uses the current fair value of the collateral, less selling costs, instead of discounted cash flows.  If management determines that the value of the modified loan or lease is less than the recorded investment in the loan or lease (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), an impairment is recognized through a specific reserve in the allowance or a direct write down of the loan or lease balance if collection is not expected.

There were no modifications for TDR loans and leases, or troubled debt restructurings for which there was a payment default during the nine month period ended September 30, 2017.

In addition to the Benchmark transaction describe in Note 3, the Corporation acquired The Ohio State Bank (OSB) in November 2014.  As a result of these acquisitions, the Corporation has loans and leases, for which there was at acquisition, evidence of deterioration of credit quality since origination and for which it was probable at acquisition, that all contractually required payments would not be collected.

The following is information related to loans and leases acquired in these transactions, including purchased impaired loans:

	The Ohio State Bank
	(in thousands)
		Contractual
		Principal		Accretable		Carrying
		Receivable		Difference		Amount
Purchased Performing Loans and Leases
Balance at December 31, 2016	$	34,416	$	(1,476)	$	32,940
Change due to payments received		(6,285)		494		(5,791)
Transfer to foreclosed real estate		-		-		-
Change due to loan charge-off		-		-		-
Balance at September 30, 2017	$	28,131	$	(982)	$	27,149
		Contractual		Non
		Principal		Accretable		Carrying
		Receivable		Difference		Amount
Purchased Impaired Loans and Leases
Balance at December 31, 2016	$	1,520	$	(896)	$	624
Change due to payments received		(288)		176		(112)
Transfer to foreclosed real estate		(433)		297		(136)
Change due to loan charge-off		(208)		107		(101)
Balance at September 30, 2017	$	591	$	(316)	$	275

	Benchmark Bank
	(in thousands)
		Contractual
		Principal		Accretable		Carrying
		Receivable		Difference		Amount
Purchased Performing Loans and Leases
Balance at September 8, 2017	$	96,914	$	(2,273)	$	94,641
Change due to payments received		(34)		1		(33)
Transfer to foreclosed real estate		-		-		-
Change due to loan charge-off		-		-		-
Balance at September 30, 2017	$	96,880	$	(2,272)	$	94,608
		Contractual		Non
		Principal		Accretable		Carrying
		Receivable		Difference		Amount
Purchased Impaired Loans and Leases
Balance at September 8, 2017	$	1,641	$	(771)	$	870
Change due to payments received		-		-		-
Transfer to foreclosed real estate		-		-		-
Change due to loan charge-off		-		-		-
Balance at September 30, 2017	$	1,641	$	(771)	$	870

A  $101,000 provision for loan and lease losses was recognized during the nine month period ended September 30, 2017 related to one purchase credit impaired commercial loan from the OSB acquisition for which the sheriff’s appraisal was substantially below the expected collateral value.  There was no provision for loan and lease losses recognized during the nine month period ended September 30, 2016 related to the acquired loans and leases as there was no significant change to the credit quality of the loans and leases during the period.

There was no provision for loan and lease losses recognized during the period ended September 30, 2017 related to loans acquired in the Benchmark acquisition.

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Other Borrowings

9 Months Ended

Sep. 30, 2017

Other Borrowings [Abstract]

Other Borrowings

NOTE 6 – OTHER BORROWINGS

During September 2017, the Bank borrowed $25,000,000 and issued secured notes to the Federal Home Loan Bank and the Corporation borrowed $10,000,000 to facilitate the acquisition described in Note 3.

Other borrowings consists of the following at September 30, 2017 and December 31, 2016:

	(in thousands)
	September 30,		December 31,
	2017		2016
Federal Home Loan Bank borrowings:
Secured notes, with interest at .74%, due March, 2017	$	-	$	18,774
Secured note, with interest at 1.27%, due December, 2017		5,160		-
Secured note, with interest at 0.0%, due October, 2018		100		-
Secured note, with interest at 1.56%, due September, 2021		7,000		-
Secured note, with interest at 1.72%, due September, 2020		6,000		-
Secured note, with interest at 1.86%, due September, 2021		6,000		-
Secured note, with interest at 1.97%, due September, 2022		6,000		-
United Bankers Bank
Note payable, with interest at 4.875%, due September, 2022		10,000		-
Total other borrowings	$	40,260	$	18,774

The United Bankers Bank note requires quarterly interest-only payments commencing December 1, 2017, with quarterly $250,000 principal payments plus interest, commencing December 1, 2018 and any remaining unpaid principal due September 1, 2022.

Federal Home Loan Bank borrowings are secured by Federal Home Loan Bank stock and eligible mortgage loans approximating $98,300,000 and $86,970,000 at September 30, 2017 and December 31, 2016 respectively. The note payable is secured by all outstanding shares of the Bank.

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Junior Subordinated Deferrable Interest Debentures

9 Months Ended

Sep. 30, 2017

Junior Subordinated Deferrable Interest Debentures [Abstract]

Junior Subordinated Deferrable Interest Debentures

NOTE 7 – JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES

The Corporation has formed and invested $300,000 in a business trust, United (OH) Statutory Trust (“United Trust”) which is not consolidated by the Corporation.  United Trust issued $10,000,000 of trust preferred securities, which are guaranteed by the Corporation, and are subject to mandatory redemption upon payment of the debentures.  United Trust used the proceeds from the issuance of the trust preferred securities, as well as the Corporation’s capital investment, to purchase $10,300,000 of junior subordinated deferrable interest debentures issued by the Corporation. The debentures have a stated maturity date of March 26, 2033.  As of March 26, 2008, and quarterly thereafter, the debentures may be shortened at the Corporation’s option.  Interest is payable quarterly at a floating rate adjustable quarterly and equal to 315 basis points over the 3-month LIBOR, amounting to 4.16% atSeptember 30, 2017and 4.15% atDecember 31, 2016.  The Corporation has the right, subject to events in default, to defer payments of interest on the debentures by extending the interest payment period for a period not exceeding 20 consecutive quarterly periods.

The Corporation assumed $3,093,000 of trust preferred securities through the OSB acquisition with$3,000,000 of the liability guaranteed by the Corporation and the remaining $93,000secured by an investment in the trust preferred securities.  The trust preferred securities carrying value as of September 30, 2017 and December 31, 2016was  $2,532,000 and $2,506,000, respectively.  The difference between the principal owed and the carrying value is due to the below-market interest rate on the debentures.  The debentures have a stated maturity date of April 23, 2034.  Interest is at a floating rate adjustable quarterly and equal to 285 basis points over the 3-month LIBOR, amounting to  4.48%  atSeptember 30, 2017 and 3.73% at December 31, 2016.

Each issue of the trust preferred securities carries an interest rate identical to that of the related debenture.  The securities have been structured to qualify as Tier I capital for regulatory purposes and the dividends paid on such are tax deductible.  However, under Federal Reserve Board guidelines, the securities cannot be used to constitute more than 25% of the Corporation’s core Tier I capital inclusive of these securities.

Interest expense on the debentures amounted to  $411,000  and$365,000 for the nine month periods ended September 30, 2017 and 2016, respectively, and is included in interest expense-other borrowings in the accompanying consolidated statements of income.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2017

Fair Value [Abstract]

Fair Value Measurements

NOTE 8 - FAIR VALUE MEASUREMENTS

ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.  A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.  The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs.  An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are independent, knowledgeable, and both able and willing to transact.

ASC 820-10 requires the use of valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach.  The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities.  The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis.  The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).  Valuation techniques should be consistently applied.  Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability.  Inputs may be observable or unobservable.  Observable inputs reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources.  Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.  In that regard, ASC 820-10 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  The fair value hierarchy is as follows:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access at the measurement date.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.  Level 2 inputs include 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 for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 – Unobservable inputs for the asset or liability for which there is little, if any, market activity at the measurement date.  Unobservable inputs reflect the Corporation’s own assumptions about what market participants would use to price the asset or liability.  The inputs are developed based on the best information available in the circumstances, which might include the Corporation’s own financial data such as internally developed pricing models, discounted cash flow methodologies, as well as instruments for which the fair value determination requires significant management judgment.

Financial assets (there were no financial liabilities) measured at fair value on a recurring basis at September 30, 2017 and December 31, 2016 include available-for-sale securities, which are valued using Level 2 inputs except for one other security which is valued using Level 3 inputs that was redeemed during the second quarter 2017,as well as mortgage servicing rights, amounting to $1,231,000 atSeptember 30, 2017 and $1,247,000at December 31, 2016, which are valued using Level 3 inputs.  Financial assets (there were no financial liabilities) measured at fair value on a non-recurring basis at September 30, 2017 and December 31, 2016 include impaired loans net of specific reserves,approximating $788,000  at  September 30, 2017 and  $1,899,000at December 31, 2016, all of which are valued using Level 3 inputs.

There were no financial instruments measured at fair value that moved to a lower level in the fair value hierarchy during the period endedSeptember 30, 2017, due to the lack of observable quotes in inactive markets for those instruments at September 30, 2017.

The tables below present a reconciliation and income statement classification of gains and losses for mortgage servicing rights, which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3), and certain securities which are valued using Level 3 inputs, for the nine month period ended September 30, 2017 and year ended December 31, 2016:

	(in thousands)
	September 30,		December 31,
	2017		2016
Mortgage Servicing Rights
Balance at beginning of period	$	1,247	$	1,181
Gains or losses, including realized and unrealized:
Purchases, issuances, and settlements		138		273
Disposals - amortization based on loan payments and payoffs		(97)		(195)
Changes in fair value		(57)		(12)
Balance at end of period	$	1,231	$	1,247
Securities valued using Level 3 inputs
Balance at beginning of period	$	2,238	$	2,389
Principal payments received		(2,238)		(151)
Changes in fair value		-		-
Balance at end of period	$	-	$	2,238

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, and disclosure of unobservable inputs follows. 

In general, fair value is based upon quoted market prices, where available.  If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters.  Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality, the Corporation’s creditworthiness, among other things, as well as unobservable parameters.  Any such valuation adjustments are applied consistently over time.  The Corporation’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Corporation’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Securities Available-for-Sale

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy.  Level 1 securities would typically include government bonds and exchange traded equities.  If quoted market prices are not available, then fair values are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.  Examples of such instruments, which would generally be classified within Level 2 of the valuation hierarchy, include U.S. Government and agencies securities, municipal bonds, mortgage-backed securities, and asset-backed securities.  In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. There were no gains or losses relating to securities available-for-sale included in earnings before income taxes that were attributable to changes in fair values of securities held at September 30, 2017 and December 31, 2016.

Impaired Loans

The Corporation does not record impaired loans at fair value on a recurring basis.  However, periodically, a loan is considered impaired and is reported at the fair value of the underlying collateral less estimated cost to sell, if repayment is expected solely from collateral.  Collateral values are estimated using Level 2 inputs, including recent appraisals and Level 3 inputs based on customized discounting criteria such as additional appraisal adjustments to consider deterioration of value subsequent to appraisal date and estimated cost to sell.  Additional appraisal adjustments range between 15% and 35% of appraised value, and estimated selling cost ranges between 10% and 20% of the adjusted appraised value.  Due to the significance of the Level 3 inputs, impaired loans fair values have been classified as Level 3.

Mortgage Servicing Rights

The Corporation records mortgage servicing rights at estimated fair value based on a discounted cash flow model which includes discount rates between 9% and 11%, in addition to prepayment, internal rate of return, servicing costs, inflation rate of servicing costs and earnings rate assumptions that are considered to be unobservable inputs.  Due to the significance of the Level 3 inputs, mortgage servicing rights have been classified as Level 3.

Other Real Estate Owned

The Corporation values other real estate owned at the estimated fair value of the underlying collateral less appraisal adjustments between 10% and 70% of appraised value, and expected selling costs between 10% and 20% of adjusted appraised value.  Such values are estimated primarily using appraisals and reflect a market value approach.  Due to the significance of the Level 3 inputs, other real estate owned has been classified as Level 3.

Certain other financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, for example, when there is evidence of impairment.  Financial assets and financial liabilities, excluding impaired loans and other real estate owned, measured at fair value on a nonrecurring basis were not significant atSeptember 30, 2017 and December 31, 2016.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2017

Fair Value [Abstract]

Fair Value of Financial Instruments

NOTE 9 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of recognized financial instruments at September 30, 2017 and December 31, 2016 were as follows:

	(in thousands)
	September 30, 2017				December 31, 2016
	Carrying amount		Estimated value		Carrying amount		Estimated value		Input  Level
FINANCIAL ASSETS
Cash and cash equivalents	$	13,849	$	13,849	$	14,186	$	14,186	1
Securities, including FHLB stock		184,042		184,042		195,035		195,035	2,3
Certificates of deposit		1,245		1,245		1,494		1,494	2
Loans held for sale		6,993		6,993		1,510		1,510	3
Net loans and leases		490,272		489,027		372,741		371,493	3
Mortgage servicing rights		1,231		1,231		1,247		1,247	3
	$	697,632	$	696,387	$	586,213	$	584,965
FINANCIAL LIABILITIES
Deposits
Maturity	$	176,599		175,618	$	129,460	$	128,592	3
Non-maturity		461,075		461,075		395,220		395,220	1
Other borrowings		40,260		40,276		18,774		18,774	3
Junior subordinated deferrable
interest debentures		12,832		10,213		12,806		9,295	3
	$	690,766	$	687,182	$	556,260	$	551,881

The above summary does not include accrued interest receivable or cash surrender value of life insurance, which are also considered financial instruments.  The estimated fair value of such items is considered to be their carrying amounts and would be considered Level 1 inputs.

There are also unrecognized financial instruments at September 30, 2017 and December 31, 2016 which relate to commitments to extend credit and letters of credit.  The contract amount of such financial instruments amounted to$127,752,000 atSeptember 30, 2017and $91,023,000 at December 31, 2016.  Such amounts are also considered to be the estimated fair values.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments shown above:

Cash and cash equivalents:

Fair value is determined to be the carrying amount for these items (which include cash on hand, due from banks, and federal funds sold) because they represent cash or mature in 90 days or less, and do not represent unanticipated credit concerns.

Securities:

The fair value of securities is determined based on quoted market prices of the individual securities; if not available, estimated fair value is obtained by comparison to other known securities with similar risk and maturity characteristics.  Such value does not consider possible tax ramifications or estimated transaction costs.

Loans held for sale:

The fair value of loans held for sale is determined to be the book value as they are typically held for 60 days or less.

Loans and leases:

Fair value for loans and leases was estimated for portfolios of loans and leases with similar financial characteristics.  For adjustable rate loans, which re-price at least annually and generally possess low risk characteristics, the carrying amount is believed to be a reasonable estimate of fair value.  For fixed rate loans, the fair value is estimated based on a discounted cash flow analysis, considering weighted average rates and terms of the portfolio, adjusted for credit and interest rate risk inherent in the loans.  Fair value for nonperforming loans is based on recent appraisals or estimated discounted cash flows. 

Mortgage servicing rights:

The fair value for mortgage servicing rights is determined based on an analysis of the portfolio by an independent third party.

Deposit liabilities:

The fair value of core deposits, including demand deposits, savings accounts, and certain money market deposits, is the amount payable on demand.  The fair value of fixed-maturity certificates of deposit is estimated using the rates offered at quarter end for deposits of similar remaining maturities.  The estimated fair value does not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the marketplace.

Other borrowings and junior subordinated deferrable interest debentures:

The fair value of Federal Home Loan Bank (FHLB) borrowings and junior subordinated deferrable interest debentures are determined using the net present value of discounted cash flows based on current borrowing rates for similar types of borrowing arrangements, and are obtained from an independent third party.  The fair value of the note payable to United Bankers Bank obtained in September, 2017 to partially finance the acquisition described in Note 3 is considered to be book value.

Other financial instruments:

The fair value of commitments to extend credit and letters of credit is determined to be the contract amount, since these financial instruments generally represent commitments at existing rates.  The fair value of other borrowings is determined based on a discounted cash flow analysis using current interest rates.  The fair value of other liabilities is generally considered to be carrying value except for the deferred compensation agreement.  The fair value of the contract is determined based on a discounted cash flow analysis using a current interest rate for a similar instrument.

The fair value estimates of financial instruments are made at a specific point in time based on relevant market information.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument over the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.  Since no ready market exists for a significant portion of the financial instruments, fair value estimates are largely based on judgments after considering such factors as future expected credit losses, current economic conditions, risk characteristics of various financial instruments, and other factors.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions could significantly affect these estimates.

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Stock Options

9 Months Ended

Sep. 30, 2017

Stock Options [Abstract]

Stock Options

NOTE 10 – STOCK OPTIONS

The United Bancshares, Inc. 2016 Stock Option Plan (the “Plan”) permits the Corporation to award non-qualified stock options to eligible participants.  A total of 250,000 shares are available for issuance pursuant to the Plan.

The Corporation issued 33,352 options during the fourth quarter of 2016 at an exercise price of $19.32 and 30,151 options during the third quarter of 2017 at an exercise price of $21.70 under the Plan.  Following is a summary of activity for stock options for the quarter ended September 30, 2017.

	Number
	of Shares
Outstanding, beginning of period	33,352
Granted	30,151
Exercised	-
Outstanding, end of period	63,503

The options vest over a three-year period on the anniversary of the date of grant.  At September 30, 2017, no options were exercisable and outstanding options had a weighted average remaining contractual term of 6.625 years.

The fair value of options granted is estimated at the date of grant using the Black Scholes option pricing model.  Following are assumptions used in calculating the fair value of the options granted:

		2017			2016
Weighted-average fair value of options granted	$	7.35		$	6.27
Average dividend yield		2.23	%		2.31	%
Expected volatility		40.00	%		40.00	%
Rick-free interest rate		2.06	%		1.58	%
Expected term (years)		7			7

Total compensation expense related to the stock options granted in 2016 is expected to be $209,000 and is being recognized ratably over the 36 month period beginning January 1, 2017.  Total compensation expense related to the stock options granted in 2017 is expected to be $222,000 and is being recognized ratably over the 36 month period beginning August 1, 2017. Stock option expense for outstanding awards amounted to $30,000 and $65,000, respectfully, for the quarter and nine months ended September 30, 2017.

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Subsequent Events

9 Months Ended

Sep. 30, 2017

Subsequent Events [Abstract]

Subsequent Events

NOTE 11 – SUBSEQUENT EVENTS

Management evaluated subsequent events through the date the consolidated financial statements were issued. Events or transactions occurring after September 30, 2017 but prior to when the consolidated financial statements were issued, that provided additional evidence about conditions that existed at September 30, 2017 have been recognized in the consolidated financial statements for the period ended September 30, 2017.  Events or transactions that provided evidence about conditions that did not exist at September 30, 2017 but arose before the financial statements were issued have not been recognized in the consolidated financial statements for the period ended September 30, 2017.

On October 17, 2017, the Corporation's Board of Directors approved a cash dividend of $0.12 per common share payable December 15, 2017 to shareholders of record at the close of business on November 30, 2017.

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Acquisition (Tables)

9 Months Ended

Sep. 30, 2017

Acquisition [Abstract]

Schedule of Assets and Deposits Assumed in Acquisition

Consideration paid and the estimated fair value of the assets acquired and the liabilities assumed at the acquisition date are as follows (dollars in thousands):

Cash and cash equivalents	$	6,092
Restricted stock		472
Loans, including loans held for sale		98,804
Premises and equipment		2,483
Core deposit intangible asset		146
Other real estate owned		141
Other assets, including accrued interest receivable		5,460
Total assets acquired		113,598
Deposits		95,545
Other liabilities		2,661
Total liabilities assumed		98,206
Net identifiable assets		15,392
Goodwill		15,360
Total cash paid	$	30,752

Business Acquisition, Pro Forma Information

	(in thousands except per share data)
	June 30, 2017
	Historical United		Historical Benchmark		Pro Forma Adjustments Debit/(Credit)		Footnote Reference		Pro Forma Combined
	(Unaudited)
ASSETS:
Cash and due from banks	$	14,155	$	9,982	$	(5,897)		(1)	$	18,240
Fed Funds sold		-		775		-				775
Securities, available-for-sale		183,975		1,621		-				185,596
Loans, gross		385,777		105,798		(3,046)		(2)		488,529
Allowance for loan losses		(2,829)		(1,088)		1,088		(3)		(2,829)
Premises and equipment		17,008		2,409		142		(4)		19,559
Other real estate owned		344		351		(211)		(5)		484
Federal Home Loan Bank stock		4,829		473		-				5,302
Bank owned life insurance		17,548		-		-				17,548
Other intangible assets		707		-		146		(6)		853
Goodwill		10,072		-		14,586		(7)		24,658
Accrued interest and other assets		5,092		4,029		618		(8)		9,739
Total Assets	$	636,678	$	124,350	$	7,426			$	768,454
LIABILITIES:
Deposits	$	537,303	$	97,862	$	418		(9)	$	635,583
Other borrowings		7,571		8,000		25,000		(1)		40,571
Trust preferred		12,823		-		-				12,823
Accrued expenses and other liabilities		3,425		641		-				4,066
Total Liabilities	$	561,122	$	106,503	$	25,418			$	693,043
EQUITY:
Common stock	$	3,761	$	3,115	$	(3,115)		(10)	$	3,761
Preferred stock		-		2		(2)		(10)		-
Warrants		-		38		(38)		(10)		-
Additional paid-in capital - Common		-		20,923		(20,923)		(10)		-
Additional paid-in capital - Preferred		-		1,605		(1,605)		(10)		-
Surplus		14,712		-		-				14,712
Retained earnings (accumulated deficit)		64,511		(7,814)		7,669		(11)		64,366
Treasury stock		(7,719)		-		-				(7,719)
Accumulated other comprehensive income (loss)		291		(22)		22		(12)		291
Total Stockholders' Equity		75,556		17,847		(17,992)				75,411
Total Liabilities & Stockholders' Equity	$	636,678	$	124,350	$	7,426			$	768,454

	(in thousands except per share data)
	For the Six months Ended June 30, 2017
	Historical United		Historical Benchmark		Pro Forma Adjustments Debit/(Credit)		Footnote Reference		Pro Forma Combined
	(Unaudited)
Interest Income	$	11,389	$	3,128	$	187		(13)	$	14,704
Interest Expense		1,260		434		158		(14)		1,852
Net interest income		10,129		2,694		29				12,852
Credit for loan losses		(350)		(96)		-				(446)
Net interest income after provision for loan losses		10,479		2,790		29				13,298
Non-interest income		2,385		2,651		-				5,036
Non-interest expense		9,522		5,028		15		(15)(16)		14,565
Income before income taxes		3,342		413		14				3,769
Income tax provision		763		207		5		(17)		975
Net Income	$	2,579	$	206	$	9			$	2,794
Earnings per share
Basic	$	0.79	$	0.07
Diluted	$	0.79	$	0.07
Pro Forma earnings per share
Basic								(18)	$	0.86
Diluted								(18)	$	0.86

	(in thousands except per share data)
	For the Year Ended December 31, 2016
	Historical United		Historical Benchmark		Pro Forma Adjustments Debit/(Credit)		Footnote Reference		Pro Forma Combined
	(Unaudited)
Interest Income	$	21,627	$	6,082	$	334		(13)	$	28,043
Interest Expense		2,231		700		318		(14)		3,249
Net interest income		19,396		5,382		16				24,794
Credit for loan losses		(750)		(256)		-				(1,006)
Net interest income after provision for loan losses		20,146		5,638		16				25,800
Non-interest income		4,903		6,473		-				11,376
Non-interest expense		17,784		10,636		29		(15)(16)		28,449
Income before income taxes		7,265		1,475		(13)				8,727
Income tax provision		1,744		(3,652)		(5)		(17)		(1,913)
Net Income	$	5,521	$	5,127	$	(8)			$	10,640
Earnings per share
Basic	$	1.68	$	1.65
Diluted	$	1.68	$	1.65
Pro Forma earnings per share
Basic								(18)	$	3.43
Diluted								(18)	$	3.43

PRELIMINARY PURCHASE ACCOUNTING ALLOCATIONS

The unaudited pro forma condensed combined consolidated financial information for the merger includes an unaudited pro forma condensed combined balance sheet as of June 30, 2017 assuming the merger was completed on June 30, 2017. The unaudited pro forma condensed combined consolidated statements of income is for the six months ended June 30, 2017.

	(in thousands)
	June 30, 2017
			Footnote Reference
Benchmark Bancorp shareholders' equity - June 30,
2017 plus/(minus) estimated fair value adjustments:					$	17,847
Loan fair value	$	(3,046)		(2)
Allowance for loan losses		1,088		(3)
Loans, net		(1,958)
Building		142		(4)
OREO		(211)		(5)
Core deposit intangible asset		146
Deferred tax asset, net		618		(8)
Deposits - fixed maturity		(418)		(9)
Total fair value adjustments					$	(1,681)
Estimated fair value of Benchmark Bancorp net
assets at June 30, 2017						16,166
Total consideration paid to Benchmark Bancorp
shareholders (**)						30,752
Goodwill					$	14,586

**  Thepurchaseprice is basedon estimatedtotal cash considerationof$30,752.  

A. Notes:

(1) Cash consideration of $30,752,000 paid toBenchmark Bancorp’s shareholders plus estimated transaction costs of $145,000net of tax, less additional borrowings of $25,000,000.

(2) The fairvalueofBenchmark’s loan portfolio acquired in the transactionis estimated by Unitedto be lessthan book value.Based on management’s judgment,Unitedapplied a  discount to the loan portfolio to estimate the fair valueadjustment as of June 30, 2017. Theadjustment reflectsUnited’s estimatesof both market interest ratedifferential and credit considerationson poolsof loansandthe potentialadjustmentsrequiredbyASC310-30,“Receivables-Loansand Debt Securities AcquiredwithDeteriorated CreditQuality”for applicable individualloans.The portion of the fair market value adjustmentthatisaccretable isassumed to amortizeintointerest incomeon  alevelyieldbasisovertheestimated remaininglife ofthe loans.

(3) Elimination ofBenchmark’s allowancefor loan losses.

(4) Adjusts bank premises to appraised value at June 30, 2017.

(5) Adjusts the value of OREO at June 30, 2017 to estimated fair value.

(6) Represents theestablishment of theestimated core deposit intangible.The core depositintangibleis assumed toamortize into non-interest expense over10years,using acceleratedmethods.

(7) Goodwill estimate basedontheexcess ofthepurchasepriceover the estimated fairvalueof the netassets acquired.

(8) Taxeffectof estimated fairmarketvalueadjustments.

(9) Estimatedfairmarket valueadjustment relatedtodepositsand isassumed toamortizeintointerest expense onalevelyield basisovertheestimatedremainingmaturityofthedeposits.

(10) ReflectstheeliminationofBenchmark’s common and preferred stock, including related additional paid-in capital, as well as warrants.

(11) Reflects theeliminationof Benchmark’s accumulated deficit of $7,814,000, net of after-tax transactioncosts of$145,000.

(12) Reflects the elimination of Benchmark’s accumulated other comprehensive loss of $22,000.

(13) Interest income impact of loan discount accretion on purchase accounting adjustment, net of lost earnings on cash consideration paid and net merger costs, after tax.

(14) Interest expense on other borrowings incurred to facilitate the transaction, net of estimated fair value adjustment related to deposits assumed to amortize into interest expense on an accelerated basis over 5 years.

(15) Reflects additional depreciation on fair value adjustment of bank premises.

(16) Reflects core deposit intangible amortization over 10 years, using accelerated methods.

(17) Represents the income tax effect (34%) of the impact of pro forma adjustments on income before tax.

Basic and diluted proformaearningspershare forthesix monthsendedJune30,2017 havebeen computedbasedon 3,267,020 basic and 3,271,477 diluted shares, respectively. Basic and diluted pro forma earnings per share for the year ended December 31, 2016 have been computed based upon 3,289,497 basic and diluted shares

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Securities (Tables)

9 Months Ended

Sep. 30, 2017

Securities [Abstract]

Amortized Cost and Fair Value of Securities

The amortized cost and fair value of available-for-sale securities as of September 30, 2017 and December 31, 2016 are as follows:

	(in thousands)
	September 30, 2017				December 31, 2016
	Amortized cost		Fair value		Amortized cost		Fair value
Available-for-sale:
Obligations of states and political
subdivisions	$	69,796	$	70,800	$	70,757	$	70,624
Mortgage-backed		107,342		106,948		119,758		118,595
Other		1,002		992		1,002		986
Total	$	178,140	$	178,740	$	191,517	$	190,205

Unrealized Gain (Loss) on Securities

A summary of gross unrealized gains and losses on available-for-sale securities as of September 30, 2017 and December 31, 2016 follows:

	September 30, 2017				December 31, 2016
	Gross unrealized gains		Gross unrealized losses		Gross unrealized gains		Gross unrealized losses
Available-for-sale:
Obligations of states and political
subdivisions	$	1,210	$	206	$	644	$	777
Mortgage-backed		603		997		769		1,932
Other		-		10		-		16
Total	$	1,813	$	1,213	$	1,413	$	2,725

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Loans and Leases (Tables)

9 Months Ended

Sep. 30, 2017

Loans and Leases [Abstract]

Activity in the Allowance for Credit Losses on Financing Receivables

The following tables present the activity in the allowance for loan and lease losses by portfolio segment for the periods ending September 30, 2017 and 2016:

	(in thousands)
	Commercial		Commercial and multi-family real estate		Residential 1 – 4 family real estate		Consumer		Total
Balance at December 31, 2016	$	896	$	1,876	$	542	$	31	$	3,345
Provision (credit) charged to expenses		(374)		(65)		65		24		(350)
Losses charged off		(36)		(553)		(45)		(23)		(657)
Recoveries		78		381		12		8		479
Balance at September 30, 2017	$	564	$	1,639	$	574	$	40	$	2,817
	Commercial		Commercial and multi-family real estate		Residential 1 – 4 family real estate		Consumer		Total
Balance at December 31, 2015	$	893	$	2,540	$	373	$	28	$	3,834
Provision (credit) charged to expenses		163		(904)		42		(1)		(700)
Losses charged off		(86)		(11)		(24)		(8)		(129)
Recoveries		28		285		62		8		383
Balance at September 30, 2016	$	998	$	1,910	$	453	$	27	$	3,388

Allowance for Loan and Lease Losses, Current

The following tables present the balance in the allowance for loan and lease losses and the recorded investment in loans and leases by portfolio segment and based on impairment method for the periods ending September 30, 2017 and December 31, 2016:

		(in thousands)
September 30, 2017	Commercial		Commercial and multi-family real estate		Residential 1 – 4 family real estate		Consumer		Total
Allowance for loan and lease losses:
Attributable to loans and leases
individually evaluated for impairment	$	98	$	-	$	-	$	-	$	98
Collectively evaluated for impairment		466		1,639		574		40		2,719
Total allowance for loan
and lease losses	$	564	$	1,639	$	574	$	40	$	2,817
Loans and leases:
Individually evaluated for impairment	$	490	$	396	$	-	$	-	$	886
Acquired with deteriorated
credit quality		-		915		227		-		1,142
Collectively evaluated for impairment		64,284		301,085		121,180		4,512		491,061
Total ending loans and
leases balance	$	64,774	$	302,396	$	121,407	$	4,512	$	493,089
December 31, 2016	Commercial		Commercial and multi-family real estate		Residential 1 – 4 family real estate		Consumer		Total
Allowance for loan and lease losses:
Attributable to loans and leases
individually evaluated for impairment	$	399	$	619	$	-	$	-	$	1,018
Collectively evaluated for impairment		497		1,257		542		31		2,327
Total allowance for loan
and lease losses	$	896	$	1,876	$	542	$	31	$	3,345
Loans and leases:
Individually evaluated for impairment	$	937	$	1,980	$	-	$	-	$	2,917
Acquired with deteriorated
credit quality		-		573		51		-		624
Collectively evaluated for impairment		62,782		216,933		88,818		4,012		372,545
Total ending loans and
leases balance	$	63,719	$	219,486	$	88,869	$	4,012	$	376,086

Schedule of Impaired Loans and Leases

Impaired loans and leases were as follows as of September 30, 2017 and December 31, 2016:

	(in thousands)
	September 30, 2017		December 31, 2016
Loans and leases with no allowance
for loan and lease losses allocated	$	396	$	-
Loans and leases with allowance
for loan and lease losses allocated		490		2,917
Total impaired loans and leases		886		2,917
Amount of the allowance allocated to impaired loans and leases	$	98	$	1,018

Schedule of Activity in Allowance of Impaired Loans and Leases

The following table presents loans and leases individually evaluated for impairment by class of loans as of September 30, 2017 and December 31, 2016:

	(in thousands)
	September 30, 2017				December 31, 2016
	Recorded investment		Allowance for loan and lease losses allocated		Recorded investment		Allowance for loan and lease losses allocated
With no related allowance recorded:
Commercial	$	-	$	-	$	-	$	-
Commercial and multi-family real estate		396		-		-		-
Agriculture		-		-		-		-
Agricultural real estate		-		-		-		-
Consumer		-		-		-		-
Residential 1-4 family real estate		-		-		-		-
With an allowance recorded:
Commercial		490		98		937		399
Commercial and multi-family real estate		-		-		1,980		619
Agriculture		-		-		-		-
Agricultural real estate		-		-		-		-
Consumer		-		-		-		-
Residential 1-4 family real estate		-		-		-		-
Total	$	886	$	98	$	2,917	$	1,018

Schedule of Financing Receivables, Non-Accrual Status

The following tables present the recorded investment in nonaccrual loans and leases, loans and leases past due over 90 days still on accrual and troubled debt restructurings by class of loans as of September 30, 2017 and December 31, 2016:

	(in thousands)
September 30, 2017	Nonaccrual		Loans and leases past due over 90 days still accruing		Troubled Debt Restructurings
Commercial	$	618	$	-	$	27
Commercial real estate		1,573		-		604
Agricultural real estate		233		-		-
Agriculture		-		-		-
Consumer		-		-		-
Residential:
1 – 4 family		726		199		436
Home equity		-		-		-
Total	$	3,150	$	199	$	1,067

	(in thousands)
December 31, 2016	Nonaccrual		Loans and leases past due over 90 days still accruing		Troubled Debt Restructurings
Commercial	$	1,295	$	-	$	29
Commercial real estate		3,462		-		722
Agricultural real estate		277		-		-
Agriculture		-		73		-
Consumer		3		-		-
Residential:
1 – 4 family		966		81		457
Home equity		-		-		-
Total	$	6,003	$	154	$	1,208

Past Due Financing Receivables

The following table presents the aging of the recorded investment in past due loans and leases as of September 30, 2017 by class of loans and leases:

	(in thousands)
	30 – 59 days past due		60 – 89 days past due		Greater than 90 days past due		Total past due		Loans and leases not past due			Total
Commercial	$	113	$	-	$	74	$	187	$	51,550	$	51,737
Commercial real estate		125		23		516		664		271,771		272,435
Agriculture		60		-		-		60		12,977		13,037
Agricultural real estate		10		-		-		10		29,951		29,961
Consumer		-		3		-		3		4,509		4,512
Residential real estate		2,970		29		297		3,296		118,111		121,407
Total	$	3,278	$	55	$	887	$	4,220	$	488,869	$	493,089

The following table presents the aging of the recorded investment in past due loans and leases as of December 31, 2016 by class of loans and leases:

	(in thousands)
	30 – 59 days past due		60 – 89 days past due		Greater than 90 days past due		Total past due		Loans and leases not past due			Total
Commercial	$	326	$	71	$	79	$	476	$	49,988	$	50,464
Commercial real estate		103		147		553		803		192,830		193,633
Agriculture		227		-		-		227		13,026		13,253
Agricultural real estate		-		-		5		5		25,850		25,855
Consumer		10		2		-		12		4,000		4,012
Residential real estate		1,770		484		462		2,716		86,153		88,869
Total	$	2,436	$	704	$	1,099	$	4,239	$	371,847	$	376,086

Risk Category of Loans, Credit Quality Indicators

As of September 30, 2017 and December 31, 2016, and based on the most recent analysis performed, the risk category of loans by class of loans and leases is as follows:

	(in thousands)
September 30, 2017	Pass		Special Mention		Substandard		Doubtful		Not rated
Commercial	$	43,832	$	-	$	1,998	$	-	$	18,944
Commercial and multi-
family real estate		224,970		2,390		2,449		-		72,587
Residential 1 - 4 family		11,056		-		124		-		110,227
Consumer		-		-		-		-		4,512
Total	$	279,858	$	2,390	$	4,571	$	-	$	206,270

December 31, 2016	Pass		Special Mention		Substandard		Doubtful		Not rated
Commercial	$	41,233	$	-	$	3,666	$	-	$	18,819
Commercial and multi-
family real estate		162,399		4,239		3,850		-		48,999
Residential 1 - 4 family		210		-		-		-		88,659
Consumer		-		-		-		-		4,012
Total	$	203,842	$	4,239	$	7,516	$	-	$	160,489

Performance of Residential, Commercial, and Consumer Loan Portfolio

The following table presents the recorded investment in all loans and leases that are not risk rated, based on payment activity as of September 30, 2017 and December 31, 2016:

:

	(in thousands)
September 30, 2017	Commercial		Commercial and multi-family real estate		Residential 1-4 family		Consumer
Performing	$	18,870	$	72,127	$	109,930	$	4,512
Nonperforming		74		460		297		-
Total	$	18,944	$	72,587	$	110,227	$	4,512
December 31, 2016	Commercial		Commercial and multi-family real estate		Residential 1-4 family		Consumer
Performing	$	18,740	$	48,441	$	88,197	$	4,012
Nonperforming		79		558		462		-
Total	$	18,819	$	48,999	$	88,659	$	4,012

Schedule of Loans Acquired in Acquisition

The following is information related to loans and leases acquired in these transactions, including purchased impaired loans:

	The Ohio State Bank
	(in thousands)
		Contractual
		Principal		Accretable		Carrying
		Receivable		Difference		Amount
Purchased Performing Loans and Leases
Balance at December 31, 2016	$	34,416	$	(1,476)	$	32,940
Change due to payments received		(6,285)		494		(5,791)
Transfer to foreclosed real estate		-		-		-
Change due to loan charge-off		-		-		-
Balance at September 30, 2017	$	28,131	$	(982)	$	27,149
		Contractual		Non
		Principal		Accretable		Carrying
		Receivable		Difference		Amount
Purchased Impaired Loans and Leases
Balance at December 31, 2016	$	1,520	$	(896)	$	624
Change due to payments received		(288)		176		(112)
Transfer to foreclosed real estate		(433)		297		(136)
Change due to loan charge-off		(208)		107		(101)
Balance at September 30, 2017	$	591	$	(316)	$	275

	Benchmark Bank
	(in thousands)
		Contractual
		Principal		Accretable		Carrying
		Receivable		Difference		Amount
Purchased Performing Loans and Leases
Balance at September 8, 2017	$	96,914	$	(2,273)	$	94,641
Change due to payments received		(34)		1		(33)
Transfer to foreclosed real estate		-		-		-
Change due to loan charge-off		-		-		-
Balance at September 30, 2017	$	96,880	$	(2,272)	$	94,608
		Contractual		Non
		Principal		Accretable		Carrying
		Receivable		Difference		Amount
Purchased Impaired Loans and Leases
Balance at September 8, 2017	$	1,641	$	(771)	$	870
Change due to payments received		-		-		-
Transfer to foreclosed real estate		-		-		-
Change due to loan charge-off		-		-		-
Balance at September 30, 2017	$	1,641	$	(771)	$	870

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Other Borrowings (Tables)

9 Months Ended

Sep. 30, 2017

Other Borrowings [Abstract]

Composition of Other Borrowings

Other borrowings consists of the following at September 30, 2017 and December 31, 2016:

	(in thousands)
	September 30,		December 31,
	2017		2016
Federal Home Loan Bank borrowings:
Secured notes, with interest at .74%, due March, 2017	$	-	$	18,774
Secured note, with interest at 1.27%, due December, 2017		5,160		-
Secured note, with interest at 0.0%, due October, 2018		100		-
Secured note, with interest at 1.56%, due September, 2021		7,000		-
Secured note, with interest at 1.72%, due September, 2020		6,000		-
Secured note, with interest at 1.86%, due September, 2021		6,000		-
Secured note, with interest at 1.97%, due September, 2022		6,000		-
United Bankers Bank
Note payable, with interest at 4.875%, due September, 2022		10,000		-
Total other borrowings	$	40,260	$	18,774

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value [Abstract]

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The tables below present a reconciliation and income statement classification of gains and losses for mortgage servicing rights, which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3), and certain securities which are valued using Level 3 inputs, for the nine month period ended September 30, 2017 and year ended December 31, 2016:

	(in thousands)
	September 30,		December 31,
	2017		2016
Mortgage Servicing Rights
Balance at beginning of period	$	1,247	$	1,181
Gains or losses, including realized and unrealized:
Purchases, issuances, and settlements		138		273
Disposals - amortization based on loan payments and payoffs		(97)		(195)
Changes in fair value		(57)		(12)
Balance at end of period	$	1,231	$	1,247
Securities valued using Level 3 inputs
Balance at beginning of period	$	2,238	$	2,389
Principal payments received		(2,238)		(151)
Changes in fair value		-		-
Balance at end of period	$	-	$	2,238

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value [Abstract]

Carrying Amounts and Fair Values of Recognized Financial Instruments

The carrying amounts and estimated fair values of recognized financial instruments at September 30, 2017 and December 31, 2016 were as follows:

	(in thousands)
	September 30, 2017				December 31, 2016
	Carrying amount		Estimated value		Carrying amount		Estimated value		Input  Level
FINANCIAL ASSETS
Cash and cash equivalents	$	13,849	$	13,849	$	14,186	$	14,186	1
Securities, including FHLB stock		184,042		184,042		195,035		195,035	2,3
Certificates of deposit		1,245		1,245		1,494		1,494	2
Loans held for sale		6,993		6,993		1,510		1,510	3
Net loans and leases		490,272		489,027		372,741		371,493	3
Mortgage servicing rights		1,231		1,231		1,247		1,247	3
	$	697,632	$	696,387	$	586,213	$	584,965
FINANCIAL LIABILITIES
Deposits
Maturity	$	176,599		175,618	$	129,460	$	128,592	3
Non-maturity		461,075		461,075		395,220		395,220	1
Other borrowings		40,260		40,276		18,774		18,774	3
Junior subordinated deferrable
interest debentures		12,832		10,213		12,806		9,295	3
	$	690,766	$	687,182	$	556,260	$	551,881

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Stock Options (Tables)

9 Months Ended

Sep. 30, 2017

Stock Options [Abstract]

Summary of Activity for Stock Options

Following is a summary of activity for stock options for the quarter ended September 30, 2017.

	Number
	of Shares
Outstanding, beginning of period	33,352
Granted	30,151
Exercised	-
Outstanding, end of period	63,503

Schedule of Assumptions Used in Calculating the Fair Value of Options Granted

Following are assumptions used in calculating the fair value of the options granted:

		2017			2016
Weighted-average fair value of options granted	$	7.35		$	6.27
Average dividend yield		2.23	%		2.31	%
Expected volatility		40.00	%		40.00	%
Rick-free interest rate		2.06	%		1.58	%
Expected term (years)		7			7

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Acquisition (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2017	Sep. 08, 2017	Dec. 31, 2016
Business Acquisition [Line Items]
Goodwill	$ 25,432	$ 25,432		$ 10,072
Benchmark [Member]
Business Acquisition [Line Items]
Business Combination, Acquisition Related Costs	$ 1,115	$ 1,271
Share price in business merger			$ 8.59
Goodwill			$ 15,360

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Acquisition (Schedule of Assets and Deposits Assumed in Acquisition) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Sep. 08, 2017	Jun. 30, 2017	Dec. 31, 2016
Business Acquisition [Line Items]
Goodwill	$ 25,432			$ 10,072
Benchmark Bancorp, Inc. [Member]
Business Acquisition [Line Items]
Cash and cash equivalents		$ 6,092
Restricted stock		472
Loans, including loans held for sale		98,804
Premises and equipment		2,483
Core deposit intangible asset		146
Other real estate owned		141
Other assets, including accrued interest receivable		5,460
Total assets acquired		113,598
Deposits		95,545
Other liabilities		2,661
Total liabilities assumed		98,206
Net identifiable assets		15,392	$ 16,166
Goodwill		15,360	$ 14,586
Total cash paid		$ 30,752

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Acquisition (Unaudited Pro Forma Condensed Combined Balance Sheet) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Sep. 08, 2017	Jun. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Dec. 31, 2015
ASSETS
Cash and due from banks	$ 9,401			$ 9,926
SECURITIES, available-for-sale	178,740			190,205
Loans, gross	493,089			376,086
Allowance for loan losses	(2,817)			(3,345)	$ (3,388)	$ (3,834)
Premises and equipment, net of accumulated depreciation	19,312			13,395
Other real estate owned	451			578
Federal Home Loan Bank stock	5,302			4,830
Bank owned life insurance	17,726			17,351
Other intangible assets	829			766
Goodwill	25,432			10,072
OTHER ASSETS, including accrued interest receivable	10,562			5,991
Total Assets	770,713			633,119
LIABILITIES
Deposits	637,674			524,680
Other borrowings	40,260			18,774
Trust preferred	12,832			12,806
Accrued expenses and other liabilities	4,233			4,301
Total liabilities	694,999			560,561
SHAREHOLDERS' EQUITY
Common stock	3,761			3,761
Surplus	14,746			14,674
Retained earnings (accumulated deficit)	64,521			62,717
Treasury stock, at cost	(7,710)			(7,728)
Accumulated other comprehensive income (loss)	396			(866)
Total shareholders' equity	75,714			72,558	$ 75,344	$ 71,561
Total Liabilities & Stockholders' Equity	$ 770,713			$ 633,119
Adjustments [Member]
ASSETS
Cash and due from banks			$ (5,897)
Loans, gross			(3,046)
Allowance for loan losses			1,088
Premises and equipment, net of accumulated depreciation			142
Other real estate owned			(211)
Other intangible assets			146
Goodwill			14,586
OTHER ASSETS, including accrued interest receivable			618
Total Assets			7,426
LIABILITIES
Deposits			418
Other borrowings			25,000
Total liabilities			25,418
SHAREHOLDERS' EQUITY
Common stock			(3,115)
Preferred stock			(2)
Warrants			(38)
Additional paid-in-capital - Common			(20,923)
Additional paid-in-capital - Preferred			(1,605)
Retained earnings (accumulated deficit)			7,669
Accumulated other comprehensive income (loss)			22
Total shareholders' equity			(17,992)
Total Liabilities & Stockholders' Equity			7,426
Pro Forma [Member]
ASSETS
Cash and due from banks			18,240
Federal Funds sold			775
SECURITIES, available-for-sale			185,596
Loans, gross			488,529
Allowance for loan losses			(2,829)
Premises and equipment, net of accumulated depreciation			19,559
Other real estate owned			484
Federal Home Loan Bank stock			5,302
Bank owned life insurance			17,548
Other intangible assets			853
Goodwill			24,658
OTHER ASSETS, including accrued interest receivable			9,739
Total Assets			768,454
LIABILITIES
Deposits			635,583
Other borrowings			40,571
Trust preferred			12,823
Accrued expenses and other liabilities			4,066
Total liabilities			693,043
SHAREHOLDERS' EQUITY
Common stock			3,761
Surplus			14,712
Retained earnings (accumulated deficit)			64,366
Treasury stock, at cost			(7,719)
Accumulated other comprehensive income (loss)			291
Total shareholders' equity			75,411
Total Liabilities & Stockholders' Equity			768,454
Benchmark Bancorp, Inc. [Member]
ASSETS
Goodwill		$ 15,360	14,586
United Bancshares Inc OH [Member] | Historical [Member]
ASSETS
Cash and due from banks			14,155
SECURITIES, available-for-sale			183,975
Loans, gross			385,777
Allowance for loan losses			(2,829)
Premises and equipment, net of accumulated depreciation			17,008
Other real estate owned			344
Federal Home Loan Bank stock			4,829
Bank owned life insurance			17,548
Other intangible assets			707
Goodwill			10,072
OTHER ASSETS, including accrued interest receivable			5,092
Total Assets			636,678
LIABILITIES
Deposits			537,303
Other borrowings			7,571
Trust preferred			12,823
Accrued expenses and other liabilities			3,425
Total liabilities			561,122
SHAREHOLDERS' EQUITY
Common stock			3,761
Surplus			14,712
Retained earnings (accumulated deficit)			64,511
Treasury stock, at cost			(7,719)
Accumulated other comprehensive income (loss)			291
Total shareholders' equity			75,556
Total Liabilities & Stockholders' Equity			636,678
Benchmark Bancorp, Inc. [Member] | Historical [Member]
ASSETS
Cash and due from banks			9,982
Federal Funds sold			775
SECURITIES, available-for-sale			1,621
Loans, gross			105,798
Allowance for loan losses			(1,088)
Premises and equipment, net of accumulated depreciation			2,409
Other real estate owned			351
Federal Home Loan Bank stock			473
OTHER ASSETS, including accrued interest receivable			4,029
Total Assets			124,350
LIABILITIES
Deposits			97,862
Other borrowings			8,000
Accrued expenses and other liabilities			641
Total liabilities			106,503
SHAREHOLDERS' EQUITY
Common stock			3,115
Preferred stock			2
Warrants			38
Additional paid-in-capital - Common			20,923
Additional paid-in-capital - Preferred			1,605
Retained earnings (accumulated deficit)			(7,814)
Accumulated other comprehensive income (loss)			(22)
Total shareholders' equity			17,847
Total Liabilities & Stockholders' Equity			$ 124,350

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Acquisition (Unaudited pro forma combined statement of income) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Jun. 30, 2017	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Interest Income	$ 6,484	$ 5,541		$ 17,872	$ 16,089
Interest Expense	776	580		2,035	1,652
Net interest income	5,708	4,961		15,837	14,437
Credit for loan losses				(350)	(700)
Net interest income after provision for loan losses	5,708	4,961		16,187	15,137
Non-interest income	1,360	1,289		3,745	3,471
Non-interest expense	6,427	4,454		15,949	13,371
Income before income taxes	641	1,796		3,983	5,237
Income tax expense (benefit)	239	418		1,002	1,216
Net income	$ 402	$ 1,378		$ 2,981	$ 4,021
Historical [Member] | United Bancshares Inc OH [Member]
Interest Income			$ 11,389			$ 21,627
Interest Expense			1,260			2,231
Net interest income			10,129			19,396
Credit for loan losses			(350)			(750)
Net interest income after provision for loan losses			10,479			20,146
Non-interest income			2,385			4,903
Non-interest expense			9,522			17,784
Income before income taxes			3,342			7,265
Income tax expense (benefit)			763			1,744
Net income			$ 2,579			$ 5,521
Basic			$ 0.79			$ 1.68
Diluted			$ 0.79			$ 1.68
Historical [Member] | Benchmark Bancorp, Inc. [Member]
Interest Income			$ 3,128			$ 6,082
Interest Expense			434			700
Net interest income			2,694			5,382
Credit for loan losses			(96)			(256)
Net interest income after provision for loan losses			2,790			5,638
Non-interest income			2,651			6,473
Non-interest expense			5,028			10,636
Income before income taxes			413			1,475
Income tax expense (benefit)			207			(3,652)
Net income			$ 206			$ 5,127
Basic			$ 0.07			$ 1.65
Diluted			$ 0.07			$ 1.65
Adjustments [Member]
Interest Income			$ 187			$ 334
Interest Expense			158			318
Net interest income			29			16
Net interest income after provision for loan losses			29			16
Non-interest expense			15			29
Income before income taxes			14			(13)
Income tax expense (benefit)			5			(5)
Net income			9			(8)
Pro Forma [Member]
Interest Income			14,704			28,043
Interest Expense			1,852			3,249
Net interest income			12,852			24,794
Credit for loan losses			(446)			(1,006)
Net interest income after provision for loan losses			13,298			25,800
Non-interest income			5,036			11,376
Non-interest expense			14,565			28,449
Income before income taxes			3,769			8,727
Income tax expense (benefit)			975			(1,913)
Net income			$ 2,794			$ 10,640
Pro Forma earnings per share, Basic			$ 0.86			$ 3.43
Pro Forma earnings per share, Diluted			$ 0.86			$ 3.43

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Acquisition (Preliminary Purchase Accounting Allocations) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Sep. 30, 2017	Sep. 08, 2017	Dec. 31, 2016
Goodwill		$ 25,432		$ 10,072
Benchmark Bancorp, Inc. [Member]
Benchmark Bancorp shareholders' equity - June 30, 2017 plus/(minus) estimated fair value adjustments:	$ 17,847
Loan fair value	(3,046)
Allowance for loan losses	1,088
Loans, net	(1,958)
Building	142
OREO	(211)
Core deposit intangible asset	146
Deferred tax asset, net	618
Deposits - fixed maturity	(418)
Total fair value adjustments	(1,681)
Estimated fair value of Benchmark Bancorp net assets at June 30, 2017	16,166		$ 15,392
Total consideration paid to Benchmark Bancorp shareholders	30,752
Goodwill	$ 14,586		$ 15,360

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Acquisition (A. Notes) (Details) - Benchmark Bancorp, Inc. [Member] - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Payments to Acquire Businesses, Gross	$ 30,752
Business Acquisition, Transaction Costs	145
Business Combination, Consideration Transferred, Liabilities Incurred	25,000
Business Combination, Elimination Of Accumulated Deficit From Purchase Price	7,814
Business Combination, Elimination Of Accumulated Other Comprehensive Loss	$ 22
Business Acquisition, Deposits Acquiried Amortize On An Accelerated Basis	5 years
Business Combination, Income Tax Effect Impact Of Pro Forma Adjustments On Income Before Tax	34.00%
Weighted Average Basic Shares Outstanding, Pro Forma	3,267,020	3,289,497
Pro Forma Weighted Average Shares Outstanding, Diluted	3,271,477	3,289,497
Core Deposits [Member]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	10 years

XML

Securities (Amortized Cost and Fair Value of Available-for-Sale Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule of Trading Securities and Other Trading Assets [Line Items]
Amortized cost	$ 178,140	$ 191,517
Fair value	178,740	190,205
Obligations of States and Political Subdivisions [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Amortized cost	69,796	70,757
Fair value	70,800	70,624
Mortgage-backed Securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Amortized cost	107,342	119,758
Fair value	106,948	118,595
Other Available-for-Sale Securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Amortized cost	1,002	1,002
Fair value	$ 992	$ 986

XML

Securities (Gross Unrealized Gains and Losses on Available-for-Sale Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities gross unrealized gains	$ 1,813	$ 1,413
Available-for-sale securities gross unrealized losses	1,213	2,725
Obligations of States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities gross unrealized gains	1,210	644
Available-for-sale securities gross unrealized losses	206	777
Mortgage-backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities gross unrealized gains	603	769
Available-for-sale securities gross unrealized losses	997	1,932
Other Available-for-Sale Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities gross unrealized losses	$ 10	$ 16

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Loans and Leases (Narrative) (Details)	9 Months Ended
	Sep. 30, 2017 USD ($) loan	Sep. 30, 2016 USD ($)
Financing Receivable, Allowance for Credit Losses [Line Items]
Impaired financing receivable, average recorded investment	$ 1,800,000	$ 4,500,000
Impaired financing receivable, interest income, accrual method	86,000	255,000
Provision charged to expenses	(350,000)	(700,000)
TDR modifications	0
Ohio State Bancshares, Inc. [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Provision charged to expenses	$ 101,000	$ 0
Troubled debt restructuring in default | loan	1
Benchmark Bancorp, Inc. [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Provision charged to expenses	$ 0

XML

Loans and Leases (Activity in the Allowance for Loan Losses) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses beginning balance	$ 3,345	$ 3,834
Provision (credit) charged to expenses	(350)	(700)
Losses charged-off	(657)	(129)
Recoveries	479	383
Allowance for loan and lease losses ending balance	2,817	3,388
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses beginning balance	896	893
Provision (credit) charged to expenses	(374)	163
Losses charged-off	(36)	(86)
Recoveries	78	28
Allowance for loan and lease losses ending balance	564	998
Commercial and Multi-Family Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses beginning balance	1,876	2,540
Provision (credit) charged to expenses	(65)	(904)
Losses charged-off	(553)	(11)
Recoveries	381	285
Allowance for loan and lease losses ending balance	1,639	1,910
Residential 1 - 4 Family Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses beginning balance	542	373
Provision (credit) charged to expenses	65	42
Losses charged-off	(45)	(24)
Recoveries	12	62
Allowance for loan and lease losses ending balance	574	453
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses beginning balance	31	28
Provision (credit) charged to expenses	24	(1)
Losses charged-off	(23)	(8)
Recoveries	8	8
Allowance for loan and lease losses ending balance	$ 40	$ 27

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Loans and Leases (Activity in the Allowance for Loan Losses by Portfolio Segment) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, attributable to loans individually evaluated for impairment	$ 98	$ 1,018
Allowance for loan and lease losses, collectively evaluated for impairment	2,719	2,327
Allowance for loan and lease losses	2,817	3,345
Loans and leases individually evaluated for impairment	886	2,917
Loans and leases collectively evaluated for impairment	491,061	372,545
Total loans and leases balance	493,089	376,086
Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases acquired with deteriorated credit quality	1,142	624
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, attributable to loans individually evaluated for impairment	98	399
Allowance for loan and lease losses, collectively evaluated for impairment	466	497
Allowance for loan and lease losses	564	896
Loans and leases individually evaluated for impairment	490	937
Loans and leases acquired with deteriorated credit quality	18,944	18,819
Loans and leases collectively evaluated for impairment	64,284	62,782
Total loans and leases balance	51,737	50,464
Commercial [Member] | Commercial Borrower [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans and leases balance	64,774	63,719
Commercial and Multi-Family Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, attributable to loans individually evaluated for impairment		619
Allowance for loan and lease losses, collectively evaluated for impairment	1,639	1,257
Allowance for loan and lease losses	1,639	1,876
Loans and leases individually evaluated for impairment	396	1,980
Loans and leases acquired with deteriorated credit quality	72,587	48,999
Loans and leases collectively evaluated for impairment	301,085	216,933
Total loans and leases balance	302,396	219,486
Commercial and Multi-Family Real Estate [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases acquired with deteriorated credit quality	915	573
Residential 1 - 4 Family Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, collectively evaluated for impairment	574	542
Allowance for loan and lease losses	574	542
Loans and leases acquired with deteriorated credit quality	110,227	88,659
Loans and leases collectively evaluated for impairment	121,180	88,818
Total loans and leases balance	121,407	88,869
Residential 1 - 4 Family Real Estate [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases acquired with deteriorated credit quality	227	51
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, collectively evaluated for impairment	40	31
Allowance for loan and lease losses	40	31
Loans and leases acquired with deteriorated credit quality	4,512	4,012
Loans and leases collectively evaluated for impairment	4,512	4,012
Total loans and leases balance	$ 4,512	$ 4,012

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Loans and Leases (Loans Individually Evaluated for Impairment) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable, Impaired [Line Items]
Recorded investment, with no related allowance	$ 396
Recorded investment, with allowance recorded	490	2,917
Total impaired loans and leases	886	2,917
Amount of the allowance allocated to impaired loans and leases	98	1,018
Commercial [Member]
Financing Receivable, Impaired [Line Items]
Recorded investment, with allowance recorded	490	937
Amount of the allowance allocated to impaired loans and leases	98	399
Commercial and Multi-Family Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Recorded investment, with no related allowance	$ 396
Recorded investment, with allowance recorded		1,980
Amount of the allowance allocated to impaired loans and leases		$ 619

XML

Loans and Leases (Nonaccrual Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	$ 3,150	$ 6,003
Loans and leases past due over 90 days and still accruing	199	154
Troubled debt restructurings	1,067	1,208
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	618	1,295
Loans and leases past due over 90 days and still accruing
Troubled debt restructurings	27	29
Commercial [Member] | Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	1,573	3,462
Loans and leases past due over 90 days and still accruing
Troubled debt restructurings	604	722
Agriculture [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans and leases past due over 90 days and still accruing		73
Agriculture [Member] | Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	233	277
Loans and leases past due over 90 days and still accruing
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual		3
Loans and leases past due over 90 days and still accruing
Residential 1 - 4 Family Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	726	966
Loans and leases past due over 90 days and still accruing	199	81
Troubled debt restructurings	436	$ 457
Residential Home Equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans and leases past due over 90 days and still accruing

XML

Loans and Leases (Aging of the Recorded Investment in Past Due Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	$ 4,220	$ 4,239
Loans not past due	488,869	371,847
Total loans and leases balance	493,089	376,086
30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	3,278	2,436
60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	55	704
Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	887	1,099
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	187	476
Loans not past due	51,550	49,988
Total loans and leases balance	51,737	50,464
Commercial [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	113	326
Commercial [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due		71
Commercial [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	74	79
Commercial [Member] | Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	664	803
Loans not past due	271,771	192,830
Total loans and leases balance	272,435	193,633
Commercial [Member] | Real Estate [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	125	103
Commercial [Member] | Real Estate [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	23	147
Commercial [Member] | Real Estate [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	516	553
Agriculture [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	60	227
Loans not past due	12,977	13,026
Total loans and leases balance	13,037	13,253
Agriculture [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	60	227
Agriculture [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due
Agriculture [Member] | Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	10	5
Loans not past due	29,951	25,850
Total loans and leases balance	29,961	25,855
Agriculture [Member] | Real Estate [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	10
Agriculture [Member] | Real Estate [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due
Agriculture [Member] | Real Estate [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due		5
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	3	12
Loans not past due	4,509	4,000
Total loans and leases balance	4,512	4,012
Consumer [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due		10
Consumer [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	3	2
Residential 1 - 4 Family Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans and leases balance	121,407	88,869
Residential 1 - 4 Family Real Estate [Member] | Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	3,296	2,716
Loans not past due	118,111	86,153
Total loans and leases balance	121,407	88,869
Residential 1 - 4 Family Real Estate [Member] | Real Estate [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	2,970	1,770
Residential 1 - 4 Family Real Estate [Member] | Real Estate [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	29	484
Residential 1 - 4 Family Real Estate [Member] | Real Estate [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	$ 297	$ 462

XML

Loans and Leases (Loans by Credit Quality Indicators) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	$ 493,089	$ 376,086
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	279,858	203,842
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	2,390	4,239
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	4,571	7,516
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable
Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	206,270	160,489
Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	51,737	50,464
Commercial [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	43,832	41,233
Commercial [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	1,998	3,666
Commercial [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable
Commercial [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	18,944	18,819
Commercial and Multi-Family Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	302,396	219,486
Commercial and Multi-Family Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	224,970	162,399
Commercial and Multi-Family Real Estate [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	2,390	4,239
Commercial and Multi-Family Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	2,449	3,850
Commercial and Multi-Family Real Estate [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable
Commercial and Multi-Family Real Estate [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	72,587	48,999
Residential 1 - 4 Family Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	121,407	88,869
Residential 1 - 4 Family Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	11,056	210
Residential 1 - 4 Family Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	124
Residential 1 - 4 Family Real Estate [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable
Residential 1 - 4 Family Real Estate [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	110,227	88,659
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	4,512	4,012
Consumer [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable
Consumer [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	$ 4,512	$ 4,012

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Loans and Leases (Performance of the Loan Portfolio) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonimpaired loans	$ 18,944	$ 18,819
Commercial [Member] | Performing Financial Instruments [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonimpaired loans	18,870	18,740
Commercial [Member] | Nonperforming Financial Instruments [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonimpaired loans	74	79
Commercial and Multi-Family Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonimpaired loans	72,587	48,999
Commercial and Multi-Family Real Estate [Member] | Performing Financial Instruments [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonimpaired loans	72,127	48,441
Commercial and Multi-Family Real Estate [Member] | Nonperforming Financial Instruments [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonimpaired loans	460	558
Residential 1 - 4 Family Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonimpaired loans	110,227	88,659
Residential 1 - 4 Family Real Estate [Member] | Performing Financial Instruments [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonimpaired loans	109,930	88,197
Residential 1 - 4 Family Real Estate [Member] | Nonperforming Financial Instruments [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonimpaired loans	297	462
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonimpaired loans	4,512	4,012
Consumer [Member] | Performing Financial Instruments [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonimpaired loans	$ 4,512	$ 4,012

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Loans and Leases (Schedule of Loans Acquired in Acquisition) (Details) - USD ($) $ in Thousands	1 Months Ended	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2017
Ohio State Bancshares, Inc. [Member] | Performing Financial Instruments [Member]
Contractual Principal Receivable [Abstract]
Contractual principal receivable, beginning balance		$ 34,416
Contractual principal receivable, change due to payments received		(6,285)
Contractual principal receivable, ending balance	$ 28,131	28,131
Accretable Difference [Abstract]
Accretable difference, beginning balance		(1,476)
Accretable difference, change due to payments received		494
Accretable difference, ending balance	(982)	(982)
Carrying Amount [Abstract]
Carrying amount, beginning balance		32,940
Carrying amount, change due to payments received		(5,791)
Carrying amount, ending balance	27,149	27,149
Ohio State Bancshares, Inc. [Member] | Nonperforming Financial Instruments [Member]
Contractual Principal Receivable [Abstract]
Contractual principal receivable, beginning balance		1,520
Contractual principal receivable, change due to payments received		(288)
Contractual principal receivable, transfer to foreclosed real estate		(433)
Contractual principal receivable, change due to loan charge-off		(208)
Contractual principal receivable, ending balance	591	591
Accretable Difference [Abstract]
Non-accretable difference, beginning balance		(896)
Accretable difference, change due to payments received		176
Accretable difference, transfer to foreclosed real estate		297
Accretable difference, change due to loan charge-off		107
Non-accretable difference, ending balance	(316)	(316)
Carrying Amount [Abstract]
Carrying amount, beginning balance		624
Carrying amount, change due to payments received		(112)
Carrying amount, transfer to foreclosed real estate		(136)
Carrying amount, change due to loan charge-off		(101)
Carrying amount, ending balance	275	275
Benchmark Bancorp, Inc. [Member] | Performing Financial Instruments [Member]
Contractual Principal Receivable [Abstract]
Contractual principal receivable, beginning balance	96,914
Contractual principal receivable, change due to payments received	(34)
Contractual principal receivable, transfer to foreclosed real estate
Contractual principal receivable, change due to loan charge-off
Contractual principal receivable, ending balance	96,880	96,880
Accretable Difference [Abstract]
Accretable difference, beginning balance	(2,273)
Accretable difference, change due to payments received	1
Accretable difference, transfer to foreclosed real estate
Accretable difference, change due to loan charge-off
Accretable difference, ending balance	(2,272)	(2,272)
Carrying Amount [Abstract]
Carrying amount, beginning balance	94,641
Carrying amount, change due to payments received	(33)
Carrying amount, transfer to foreclosed real estate
Carrying amount, change due to loan charge-off
Carrying amount, ending balance	94,608	94,608
Benchmark Bancorp, Inc. [Member] | Nonperforming Financial Instruments [Member]
Contractual Principal Receivable [Abstract]
Contractual principal receivable, beginning balance	1,641
Contractual principal receivable, change due to payments received
Contractual principal receivable, transfer to foreclosed real estate
Contractual principal receivable, change due to loan charge-off
Contractual principal receivable, ending balance	1,641	1,641
Accretable Difference [Abstract]
Non-accretable difference, beginning balance	(771)
Accretable difference, change due to payments received
Accretable difference, transfer to foreclosed real estate
Accretable difference, change due to loan charge-off
Non-accretable difference, ending balance	(771)	(771)
Carrying Amount [Abstract]
Carrying amount, beginning balance	870
Carrying amount, change due to payments received
Carrying amount, transfer to foreclosed real estate
Carrying amount, change due to loan charge-off
Carrying amount, ending balance	$ 870	$ 870

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Other Borrowings (Narrative) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Federal Home Loan Bank borrowings	$ 25,000,000
Other borrowings	40,260,000	$ 18,774,000
Loans Pledged as Collateral	98,300,000	$ 86,970,000
Note Payable with Interest at 4.875% [Member]
Other borrowings	10,000,000
Debt Instrument, Periodic Payment, Principal	$ 250,000
Debt Instrument, Date of First Required Payment	Dec. 01, 2017
Debt Instrument, Maturity Date	Sep. 01, 2022

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Other Borrowings (Composition of Other Borrowings) (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Federal Home Loan Bank borrowings:
Federal Home Loan Bank borrowings	$ 25,000,000
Total other borrowings	40,260,000	$ 18,774,000
Secured Notes, with Interest at 0,74% [Member]
Federal Home Loan Bank borrowings:
Federal Home Loan Bank borrowings		$ 18,774,000
Debt instrument, interest rate, stated percentage		0.74%
Debt instrument, maturity date		Mar. 01, 2017
Secured Notes, with Interest at 1.27% [Member]
Federal Home Loan Bank borrowings:
Federal Home Loan Bank borrowings	$ 5,160,000
Debt instrument, interest rate, stated percentage	1.27%
Debt instrument, maturity date	Dec. 01, 2017
Secured Notes, with Interest at 0.0% [Member]
Federal Home Loan Bank borrowings:
Federal Home Loan Bank borrowings	$ 100,000
Debt instrument, interest rate, stated percentage	0.00%
Debt instrument, maturity date	Oct. 01, 2018
Secured Notes, with Interest at 1.56% [Member]
Federal Home Loan Bank borrowings:
Federal Home Loan Bank borrowings	$ 7,000,000
Debt instrument, interest rate, stated percentage	1.56%
Debt instrument, maturity date	Sep. 01, 2021
Secured Notes, with Interest at 1.72% [Member]
Federal Home Loan Bank borrowings:
Federal Home Loan Bank borrowings	$ 6,000,000
Debt instrument, interest rate, stated percentage	1.72%
Debt instrument, maturity date	Sep. 01, 2020
Secured Notes, with Interest at 1.86% [Member]
Federal Home Loan Bank borrowings:
Federal Home Loan Bank borrowings	$ 6,000,000
Debt instrument, interest rate, stated percentage	1.86%
Debt instrument, maturity date	Sep. 01, 2021
Secured Notes, with Interest at 1.97% [Member]
Federal Home Loan Bank borrowings:
Federal Home Loan Bank borrowings	$ 6,000,000
Debt instrument, interest rate, stated percentage	1.97%
Debt instrument, maturity date	Sep. 01, 2022
Note Payable with Interest at 4.875% [Member]
Federal Home Loan Bank borrowings:
Total other borrowings	$ 10,000,000
Debt instrument, interest rate, stated percentage	4.875%
Debt instrument, maturity date	Sep. 01, 2022

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Junior Subordinated Deferrable Interest Debentures (Narrative) (Details) - USD ($)	9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Investments in and Advances to Affiliates, Balance, Principal Amount	$ 300,000
Guarantor Obligations, Maximum Exposure, Undiscounted	10,000,000
Trust preferred	$ 12,832,000		$ 12,806,000
Subordinated Borrowing, Interest Rate	4.16%		4.15%
Interest Expense, Debt	$ 411,000	$ 365,000
Maximum Amount of Core Capital	25.00%
Maximum Consecutive Period that Interest Payments may be Deferred	5 years
Junior Subordinated Debt [Member]
Debt Instrument, Maturity Date	Mar. 26, 2033
Trust Preferred Securities [Member]
Trust preferred	$ 10,300,000
London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate	3.15%
Ohio State Bancshares, Inc. [Member]
Other Debt, Carrying Value	$ 2,532,000		$ 2,506,000
Ohio State Bancshares, Inc. [Member] | Trust Preferred Securities [Member]
Subordinated Borrowing, Interest Rate	4.48%		3.73%
Debt Instrument, Basis Spread on Variable Rate	2.85%
Debt Instrument, Maturity Date	Apr. 23, 2034
Liability Assumed	$ 3,093,000
Ohio State Bancshares, Inc. [Member] | Guaranteed Trust Preferred Securities [Member]
Liability Assumed	3,000,000
Ohio State Bancshares, Inc. [Member] | Trust Preferred Securities Secured by an Investment [Member]
Liability Assumed	$ 93,000

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Fair Value Measurements (Narrative) (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value assets moved to a lower level fair value hierarchy	$ 0
Gain (loss) relating to securities available-for-sale included in earnings	0	$ 0
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial liabilities, fair value	0	0
Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial liabilities, fair value	0	0
Assets, nonrecurring, fair value	$ 788,000	1,899,000
Minimum [Member] | Mortgage Servicing Rights [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate	9.00%
Minimum [Member] | Additional Appraisal Adjustments [Member] | Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate	15.00%
Minimum [Member] | Additional Appraisal Adjustments [Member] | Other Real Estate Owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate	10.00%
Minimum [Member] | Estimated Selling Costs [Member] | Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate	10.00%
Minimum [Member] | Estimated Selling Costs [Member] | Other Real Estate Owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate	10.00%
Maximum [Member] | Mortgage Servicing Rights [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate	11.00%
Maximum [Member] | Additional Appraisal Adjustments [Member] | Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate	35.00%
Maximum [Member] | Additional Appraisal Adjustments [Member] | Other Real Estate Owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate	70.00%
Maximum [Member] | Estimated Selling Costs [Member] | Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate	20.00%
Maximum [Member] | Estimated Selling Costs [Member] | Other Real Estate Owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate	20.00%
Fair Value, Inputs, Level 3 [Member] | Mortgage Servicing Rights [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, recurring, fair value	$ 1,231,000	$ 1,247,000

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Fair Value Measurements (Reconciliation and Income Statement Classification of Gains and Losses) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Servicing Contracts [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at beginning of period	$ 1,247	$ 1,181
Purchases, issuances, and settlements	138	273
Disposals - amortization based on loan payments and payoffs	(97)	(195)
Changes in fair value	(57)	(12)
Balance at end of period	1,231	1,247
Fair Value, Inputs, Level 3 [Member] | Securities (Assets) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at beginning of period	2,238	2,389
Principal payments received	(2,238)	(151)
Changes in fair value
Balance at end of period		$ 2,238

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Fair Value of Financial Instruments (Narrative) (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Commitments to Extend Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Other commitments	$ 127,752,000	$ 91,023,000

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Fair Value of Financial Instruments (Carrying Amounts and Estimated Fair Values of Recognized Financial Instruments) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Estimate of Fair Value Measurement [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total Assets	$ 696,387	$ 584,965
Total financial liabilities	687,182	551,881
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	13,849	14,186
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member] | Non-Maturity Deposits [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Deposits estimated value	461,075	395,220
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Certificates of deposit	1,245	1,494
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans held for sale	6,993	1,510
Net loans	489,027	371,493
Mortgage servicing rights	1,231	1,247
Other borrowings	40,276	18,774
Junior subordinated deferrable interest debentures	10,213	9,295
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member] | Maturity Deposits [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Deposits estimated value	175,618	128,592
Estimate of Fair Value Measurement [Member] | Fair Value Inputs Level 2, and 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities, including Federal Home Loan Bank stock	184,042	195,035
Reported Value Measurement [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	13,849	14,186
Securities, including Federal Home Loan Bank stock	184,042	195,035
Certificates of deposit	1,245	1,494
Loans held for sale	6,993	1,510
Net loans	490,272	372,741
Mortgage servicing rights	1,231	1,247
Total Assets	697,632	586,213
Other borrowings	40,260	18,774
Junior subordinated deferrable interest debentures	12,832	12,806
Total financial liabilities	690,766	556,260
Reported Value Measurement [Member] | Maturity Deposits [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Deposits estimated value	176,599	129,460
Reported Value Measurement [Member] | Non-Maturity Deposits [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Deposits estimated value	$ 461,075	$ 395,220

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Stock Options (Narrative) (Details) - Stock Option Plan [Member] - USD ($)	2 Months Ended	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total compensation expense for share based compensation plan	$ 222,000	$ 222,000		$ 222,000
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of share authorized for issuance under the stock options plan	250,000	250,000		250,000
Options issued		30,151	33,352
Options exercise price	$ 21.70	$ 21.70	$ 19.32	$ 21.70
Options vesting period				3 years
Options exercisable	0	0		0
Outstanding option weighted average remaining contractual term				6 years 7 months 16 days
Total compensation expense for share based compensation plan	$ 209,000	$ 209,000		$ 209,000
Share based compensation expense period for recognition	36 months			36 months
Share based compensation expense		$ 30,000		$ 65,000

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Stock Options (Summary of Activity for Stock Options) (Details)	9 Months Ended
	Sep. 30, 2017 shares
Stock Options [Abstract]
Outstanding, beginning of period	33,352
Granted	30,151
Exercised
Outstanding, end of period	63,503

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Stock Options (Schedule of Assumptions Used in Calculating the Fair Value of Options Granted) (Details) - $ / shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Stock Options [Abstract]
Weighted-average fair value of options granted	$ 7.35	$ 6.27
Average dividend yield	2.23%	2.31%
Expected volatility	40.00%	40.00%
Risk-free interest rate	2.06%	1.58%
Expected term (years)	7 years	7 years

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Subsequent Events (Narrative) (Details) - Subsequent Event [Member]	Oct. 17, 2017 $ / shares
Subsequent Event [Line Items]
Dividends, date declared	Oct. 17, 2017
Dividends payable (dollars per share)	$ 0.12
Dividends, date to be paid	Dec. 15, 2017
Dividends, date of record	Nov. 30, 2017