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~~March 3031, ~~2021~~2022

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

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)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of Each Exchange
Common Stock, No Par Value	UBOH	NASDAQ Global Market

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 every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth 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. ☐

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~~March 3031, ~~2021~~2022: 3,~~275~~279,~~430~~238.

This document contains 4039 pages. The Exhibit Index is on page 3938 immediately preceding the filed exhibits.

Table of Contents

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	26
	Item 3 – Quantitative and Qualitative Disclosures about Market Risk	3635
	Item 4 – Controls and Procedures	3736
Part II – Other Information
	Item 1 – Legal Proceedings	3837
	Item 1A – Risk Factors	3837
	Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	3837
	Item 3 – Defaults Upon Senior Securities	3837
	Item 4 – Mine Safety Disclosures	3938
	Item 5 – Other Information	3938
	Item 6 – Exhibits	3938

Table of Contents

PART 1 - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

United Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets

~~September~~March 3031, ~~2021~~2022 (unaudited) and December 31, ~~2020~~2021

	(in thousands except share data)
	September 30,			December 31,
	March 31,			December 31,
	2021			2020
	2022			2021
ASSETS
CASH AND CASH EQUIVALENTS
Cash and due from banks	$	1917,~~243~~772		$	1011,~~446~~654
Interest-bearing deposits in other banks		~~101~~47,~~936~~789			4663,~~588~~548
Total cash and cash equivalents		~~121~~65,~~179~~561			5775,~~034~~202
SECURITIES, available-for-sale		~~270~~296,~~198~~649			~~194~~307,~~580~~642
FEDERAL HOME LOAN BANK STOCK, at cost		5,129			5,~~598~~129
LOANS HELD FOR SALE		1410,~~545~~480			189,~~427~~146
LOANS AND LEASES		~~589~~614,~~925~~204			~~634~~609,~~103~~559
Less allowance for loan and lease losses		10,~~325~~360			910,~~994~~355
Net loans and leases		~~579~~603,~~600~~844			~~624~~599,~~109~~204
PREMISES AND EQUIPMENT, net		2022,~~522~~738			1921,~~341~~840
GOODWILL		28,616			28,616
CORE DEPOSIT INTANGIBLE ASSETS, net		~~535~~464			~~643~~499
CASH SURRENDER VALUE OF LIFE INSURANCE		19,~~290~~474			1819,~~981~~383
OTHER ASSETS, including accrued interest receivable		1016,~~634~~403			119,~~203~~895
TOTAL ASSETS	$	1,~~070~~069,~~248~~358		$	~~978~~1,~~532~~076,556
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits:
Non-interest-bearing	$	~~193~~199,~~369~~591		$	~~185~~195,~~915~~374
Interest-bearing		~~734~~745,~~443~~241			~~652~~735,~~463~~039
Total deposits		~~927~~944,~~812~~832			~~838~~930,~~378~~413
Other borrowings		76,~~000~~750			7,~~750~~012
Junior subordinated deferrable interest debentures		12,~~967~~984			12,~~942~~976
Other liabilities		65,~~325~~426			7,~~863~~060
Total liabilities		~~954~~969,~~104~~992			~~866~~957,~~933~~461
SHAREHOLDERS’ EQUITY
Common stock, stated value $1.00, authorized 10,000,000 shares; issued 3,760,557 shares		3,~~769~~813			3,~~761~~794
Surplus		1516,~~571~~780			1516,~~438~~305
Retained earnings		~~101~~105,~~840~~735			92103,~~716~~903
Accumulated other comprehensive income		3,102			7,355
Accumulated other comprehensive (loss) income		(17,609	)		3,993
Treasury stock, at cost, 485,127 shares at September 30, 2021 and 488,573 shares at December 31, 2020		(8,138	)		(7,671	)
Treasury stock, at cost, 481,319 shares at March 31, 2022 and 487,972 shares at December 31, 2021		(9,353	)		(8,900	)
Total shareholders’ equity		~~116~~99,~~144~~366			~~111~~119,~~599~~095
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,~~070~~069,~~248~~358		$	~~978~~1,~~532~~076,556

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

Table of Contents

United Bancshares, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

Three ~~and nine~~ months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021 (unaudited)

(in thousands except share data)

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

2021

2020

2021

2020

2022

2021

INTEREST INCOME

Loans and leases, including fees

97,~~338~~135

98,~~110~~407

~~25,807~~

~~26,106~~

Securities:

Taxable

~~492~~727

~~435~~414

~~1,370~~

~~1,533~~

Tax-exempt

~~744~~853

~~539~~617

~~2,028~~

~~1,548~~

Other

7450

1652

~~181~~

~~223~~

Total interest income

108,~~648~~765

109,~~100~~490

~~29,386~~

~~29,410~~

INTEREST EXPENSE

Deposits

~~548~~385

~~789~~632

~~1,795~~

~~3,282~~

Other borrowings

~~197~~178

~~913~~203

~~599~~

~~2,020~~

Total interest expense

~~745~~563

~~1,702~~835

~~2,394~~

~~5,302~~

Net interest income

98,~~903~~202

8,~~398~~655

~~26,992~~

~~24,108~~

PROVISION FOR LOAN AND LEASE LOSSES

~~3,000~~300

~~300~~

~~4,450~~

Net interest income after provision for loan and lease losses

98,~~903~~202

58,~~398~~355

~~26,692~~

~~19,658~~

NON-INTEREST INCOME

Gain on sale of loans

~~3,799~~577

84,~~484~~576

~~11,257~~

~~17,032~~

Net securities gains (losses)

)

288

Net securities losses

(46

)

Other non-interest income

~~917~~2,550

21,~~659~~170

~~2,980~~

~~4,779~~

Total non-interest income

43,~~712~~081

115,~~144~~741

~~14,230~~

~~22,099~~

NON-INTEREST EXPENSES

98,~~680~~399

109,~~084~~106

~~27,859~~

~~27,099~~

INCOME BEFORE INCOME TAXES

42,~~935~~884

64,~~458~~990

~~13,063~~

~~14,658~~

PROVISION FOR INCOME TAXES

~~843~~364

~~1,208~~873

~~2,200~~

~~2,652~~

NET INCOME

42,~~092~~520

54,~~250~~117

~~10,863~~

~~12,006~~

NET INCOME PER SHARE

Basic

10.2577

1.6126

~~3.31~~

~~3.67~~

Diluted

10.2376

1.6024

~~3.28~~

~~3.67~~

Weighted average common shares outstanding (basic)

3,~~277~~278,~~070~~044

3,~~271~~277,~~402~~744

~~3,277,919~~

~~3,270,705~~

Weighted average common shares outstanding (diluted)

3,~~313~~335,~~387~~498

3,~~274~~311,~~784~~260

~~3,314,236~~

~~3,274,087~~

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

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United Bancshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive (Loss) Income

Three ~~and nine~~ months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021 (unaudited)

	(in thousands)
	Three months ended September 30,						Nine months ended September 30,
	Three months ended March 31,
	2021			2020			2021			2020
	2022			2021
NET INCOME	$	42,~~092~~520		$	54,~~250~~117		$	~~10,863~~		$	~~12,006~~
OTHER COMPREHENSIVE INCOME
OTHER COMPREHENSIVE LOSS
Unrealized gain on securities:
Unrealized holding gains (losses) during period		(3,409	)		(248	)		(5,391	)		4,793
Unrealized holding losses during period		(27,391	)		(4,138	)
Reclassification adjustments for losses (gains) included in net income		4			(1	)		7			(288	)
Reclassification adjustments for losses included in net income		46			5
Other comprehensive income (loss), before income taxes		(3,405	)		(249)			(5,384	)		4,505
Other comprehensive loss, before income taxes		(27,345	)		(4,133	)
Income tax expense (benefit) related to items of other comprehensive income		(715	)		(52	)		(1,131	)		946
Income tax benefit related to items of other comprehensive loss		(5,743	)		(868	)
Other comprehensive income (loss)		(2,690	)		(197	)		(4,253	)		3,559
Other comprehensive loss		(21,602	)		(3,265	)
COMPREHENSIVE INCOME	$	1,402		$	5,053		$	6,610		$	15,565
COMPREHENSIVE INCOME (LOSS) INCOME	$	(19,082	)	$	852

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

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United Bancshares, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity

(in thousands except share data)

~~Nine~~Three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021 (unaudited)

	Common stock		Surplus			Retained earnings			Accumulated other comprehensive income (loss)			Treasury stock			Total
BALANCE AT DECEMBER 31, 2021	$	3,794	$	16,305		$	103,903		$	3,993		$	(8,900	)	$	119,095
Comprehensive loss:
Net income		-		-			2,520			-			-			2,520
Other comprehensive loss		-		-			-			(21,602	)		-			(21,602	)
4,502 shares issued from treasury in connection with the Corporation's Employee Stock Purchase Plan		-		41			-			-			84			125
Stock option expense		-		56			-			-			-			56
Stock option exercise		19		378			-			-			(537	)		(140	)
Cash dividends declared, $0.21 per share		-		-			(688	)		-			-			(688	)
BALANCE AT MARCH 31, 2022	$	3,813	$	16,780		$	105,735		$	(17,609	)	$	(9,353	)	$	99,366
BALANCE AT DECEMBER 31, 2020	$	3,761	$	15,438		$	92,716		$	7,355		$	(7,671	)	$	111,599
Comprehensive income:
Net income		-		-			104,~~863~~117			-			-			104,~~863~~117
Other comprehensive income		-		-			-			(4,253	)		-			(4,253	)
Other comprehensive loss		-		-			-			(3,265	)		-			(3,265	)
11,943 shares issued from treasury in connection with the Corporation's Employee Stock Purchase Plan		-		46			-			-			188			234
6,805 shares issued from treasury in connection with the Corporation's Employee Stock Purchase Plan		-		4			-			-			107			111
Repurchase of 11,651 Shares		-		-			-			-			(368	)		(368	)
Stock option expense		-		45			-			-			-			45
Stock option expense		-		127			-			-			-			127
Stock option exercise		-		(11	)		-			-			-			(11	)
Stock option exercise, net of 10,096 shares repurchased and retired		8		(40	)		-			-			(287	)		(319	)
Cash dividends declared, $0.16 per share		-		-			(525	)		-			-			(525	)
Cash dividends declared, $0.51 per share		-		-			(1,739	)		-			-			(1,739	)
BALANCE AT MARCH 31, 2021	$	3,761	$	15,476		$	96,308		$	4,090		$	(7,564	)	$	112,071
BALANCE AT SEPTEMBER 30, 2021	$	3,769	$	15,571		$	101,840		$	3,102		$	(8,138	)	$	116,144
BALANCE AT DECEMBER 31, 2019	$	3,761	$	15,251		$	80,629		$	2,872		$	(7,732	)	$	94,781
Comprehensive income:
Net income		-		-			12,006			-			-			12,006
Other comprehensive income		-		-			-			3,559			-			3,559
3,556 shares issued from treasury in connection with the Corporation's Employee Stock Purchase Plan		-		33			-			-			56			89
Stock option expense		-		119			-			-			-			119
Cash dividends declared, $0.35 per share		-		-			(1,145	)		-			-			(1,145	)
BALANCE AT SEPTEMBER 30, 2020	$	3,761	$	15,403		$	91,490		$	6,431		$	(7,676	)	$	109,409

Three Months Ended September 30, 2021 and 2020 (unaudited)

	Common stock		Surplus		Retained earnings			Accumulated other comprehensive income			Treasury stock			Total
BALANCE AT JUNE 30, 2021	$	3,761	$	15,317	$	98,405		$	5,792		$	(7,559	)	$	115,716
Comprehensive income:
Net income		-		-		4,092			-			-			4,092
Other comprehensive income		-		-		-			(2,690	)		-			(2,690	)
4,851 shares issued from treasury in connection with the Corporation's Employee Stock Purchase Plan		-		38		-			-			76			114
Repurchase of 11,651 Shares		-		-		-			-			(368	)		(368	)
Stock option expense		-		58		-			-			-			58
Stock option exercise, net of 3,749 shares repurchased and retired		8		158		-			-			(287	)		(121	)
Cash dividends declared, $0.20 per share		-		-		(657	)		-			-			(657	)
BALANCE AT SEPTEMBER 30, 2021	$	3,769	$	15,571	$	101,840		$	3,102		$	(8,138	)	$	116,144
BALANCE AT JUNE 30, 2020	$	3,761	$	15,396	$	86,698		$	6,628		$	(7,689	)	$	104,794
Comprehensive income:
Net income		-		-		5,250			-			-			5,250
Other comprehensive loss		-		-		-			(197	)		-			(197	)
1,680 shares issued from treasury in connection with the Corporation's Employee Stock Purchase Plan		-		7		-			-			13			20
Stock option expense		-		-		-			-			-			-
Cash dividends declared, $0.14 per share		-		-		(458	)		-			-			(458	)
BALANCE AT SEPTEMBER 30, 2020	$	3,761	$	15,403	$	91,490		$	6,431		$	(7,676	)	$	109,409

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

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United Bancshares, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows

~~Nine~~Three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021 (unaudited)

	(in thousands)
	Nine months ended September 30,
	Three months ended March 31,
	2021			2020
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES	$	14(1,~~728~~713	)	$	~~(10~~3,~~662~~527	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales, calls and maturities of available-for-sale securities		257,~~789~~607			4410,~~277~~001
Purchases of available-for-sale securities		(~~107~~24,~~385~~243	)		(3920,~~569~~186	)
Purchases of FHLB stock		-			(296	)
Net increase in loans and leases		(4,683	)		(1,876	)
Proceeds from FHLB stock redemption		469
Purchases of premises and equipment		(61	)		(125	)
Net decrease (increase) in loans and leases		44,378			(86,903	)
Net cash used in investing activities		(21,380	)		(12,186	)
Purchases of premises and equipment		(304	)		(510	)
Net cash used in investing activities		(37,053	)		(83,001	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits		8914,~~412~~417			~~113~~50,~~833~~175
Repayments of other borrowings		(~~750~~262	)		(~~15,750~~250	)
Proceeds from sale of treasury shares		~~233~~125			89111
Purchase of Treasury Shares		(~~686~~140	)		-
Cash dividends paid		(~~1,739~~688	)		(~~1,145~~525	)
Net cash provided by financing activities		8613,~~470~~452			9749,~~027~~511
NET INCREASE IN CASH AND CASH EQUIVALENTS		64,145			3,364
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(9,641	)		40,852
CASH AND CASH EQUIVALENTS
At beginning of period		5775,~~034~~202			2657,~~412~~034
At end of period	$	~~121~~65,~~179~~561		$	2997,~~776~~886
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the period for:
Interest	$	~~2,473~~567		$	~~5,525~~875
Federal income taxes	$	~~1,370~~-		$	~~1,450~~-
Non-cash investing activities:
Change in net unrealized gain or loss on available-for-sale securities	$	(527,~~392~~345	)	$	(4,~~505~~133	)

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

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United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

~~September~~March 3031, ~~2021~~2022

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 consolidated financial statements prepared in conformity with generally accepted accounting principles. Operating results for the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021~~2022. The balance sheet as of December 31, ~~2020~~2021 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, ~~2020~~2021.

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 June 2016, the Financial Accounting Standards Board (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. Management has developed four different models for calculating the allowance for loan losses under the requirements of ASU 2016-13 and has been running them parallel to the Bank’s existing methodology. Management has not yet determined the expected impact the adoption of ASU 2016-13 will have on the consolidated financial statements. For public companies, this update was to be effective for interim and annual periods beginning after December 15, 2019. On July 17, 2019, the FASB voted to issue a proposal for public comment that would potentially result in a postponement of the required implementation date for ASU 2016-13. On October 16, 2019, the FASB extended the implementation deadline until the fiscal year and interim periods beginning after December 15, 2022.

In December, 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for the areas of Topic 740 by clarifying and amending existing guidance. This guidance is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2020. Early adoption of the amendments is permitted, including adoption in any interim period for which financial statements have not yet been issued. Depending on the amendment, adoption may be applied on the retrospective, modified retrospective, or prospective basis. Adoption of this guidance did not have a material impact on its consolidated financial statements.

In January, 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. The amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendments clarify that for the purpose of applying paragraph 815-10-15-141(a) an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option in accordance with the financial instruments guidance in Topic 825. An entity also would evaluate the remaining characteristics in paragraph 815-10-15-141 to determine the accounting for those forward contracts and purchased options. The amendments in this Update are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted, including early adoption in an interim period for which financial statements have not yet been issued. This update did not have a significant impact on the Corporation's consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), which provides optional guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting. The amendments in this Update provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. The Corporation does not expect this guidance to have a material impact on its consolidated financial statements.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which is in response to stakeholder concerns related to reference rate reform. The amendments in this Update are elective and apply to all entities that have derivative instruments that use an interest rate for managing, discounting, or contract price alignment that is modified as a result of reference rate reform. The amendments in this Update are effective immediately for all entities. The Corporation is currently reviewing the amendments in this Update, but does not expect this guidance to have a material impact on its consolidated financial statements.

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NOTE 3 - SECURITIES

The amortized cost, unrealized gains and losses, and fair value of available-for-sale securities as of ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021 are as follows:

	(in thousands)
September 30, 2021	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
March 31, 2022	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
Available-for-sale:
Agency	$	2,500	$	10	$	-	$	2,510
Obligations of states and political subdivisions	$	149,431	$	1,108	$	12,872	$	137,667
Obligations of states and political subdivisions		134,518		4,806		1,526		137,798
Mortgage-backed		164,675		72		10,450		154,297
Mortgage-backed		127,902		1,659		1,023		128,538
Agency		2,500		-		148		2,352
Other		12,~~352~~333		-		-		12,~~352~~333
Total	$	~~266~~318,~~272~~939	$	61,~~475~~180	$	223,~~549~~470	$	~~270~~296,~~198~~649

	(in thousands)
December 31, 2020	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
December 31, 2021	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
Available-for-sale:
Obligations of states and political subdivisions	$	93145,~~406~~775	$	65,~~400~~494	$	1485	$	99150,~~805~~784
Mortgage-backed		90152,~~712~~507		21,~~904~~248		51,185		93152,~~611~~570
Other		1,151		13		-		1,164
Agency		2,500		-		17		2,483
Total	$	185,269	$	9,317	$	6	$	194,580
Other		1,805		-		-		1,805
Total	$	302,587	$	6,742	$	1,687	$	307,642

Table of Contents

NOTE 4 – LOANS AND LEASES

The following tables present the activity in the allowance for loan and lease losses by portfolio segment for the ~~nine~~three month periods ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021:

	(in thousands)
	Residential 1 – 4 family real estate			Commercial and multi-family real estate			Commercial			Consumer			Total
Balance at December 31, 2021	$	1,719		$	7,121		$	1,414		$	101		$	10,355
Provision charged to expenses		(25	)		119			(86	)		(8	)		-
Losses charged off		-			-			-			-			-
Recoveries		2			1			-			2			5
Balance at March 31, 2022	$	1,696		$	7,241		$	1,328		$	95		$	10,360
Balance at December 31, 2020	$	1,683		$	6,664		$	1,515		$	132		$	9,994
Provision charged to expenses		~~120~~40			~~486~~239			~~(294~~26	)		(125	)		300
Losses charged off		-			-			-			(102	)		(102	)
Recoveries		6-			309			1-			4-			419
Balance at September 30, 2021	$	1,809		$	7,180		$	1,222		$	114		$	10,325
Balance at March 31, 2021	$	1,723		$	6,912		$	1,541		$	125		$	10,301
Balance at December 31, 2019	$	592		$	2,536		$	939		$	64		$	4,131
Provision charged to expenses		919			2,977			482			72			4,450
Losses charged off		(97	)		(45	)		(4	)		(19	)		(165	)
Recoveries		8			14			13			-			35
Balance at September 30, 2020	$	1,422		$	5,482		$	1,430		$	117		$	8,451

~~The~~ Table ~~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 as~~ of ~~September~~ ~~30, 2021 and December 31, 2020:~~Contents

	(in thousands)
September 30, 2021	Residential 1 – 4 family real estate		Commercial and multi-family real estate		Commercial		Consumer		Total
Allowance for loan and lease losses:
Attributable to loans and leases individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		1,809		7,180		1,222		114		10,325
Total allowance for loan and lease losses	$	1,809	$	7,180	$	1,222	$	114	$	10,325
Loans and leases:
Individually evaluated for impairment	$	-	$	1,292	$	1,306	$	-	$	2,598
Acquired with deteriorated credit quality		76		122		-		-		198
Collectively evaluated for impairment		111,014		383,561		86,655		5,899		587,129
Total ending loans and leases balance	$	111,090	$	384,975	$	87,961	$	5,899	$	589,925

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 as of March 31, 2022 and December 31, 2021:

December 31, 2020

Residential 1 – 4 family real estate

Commercial and multi-family real estate

Commercial

Consumer

Total

(in thousands)

March 31, 2022

Residential 1 – 4 family real estate

Commercial and multi-family real estate

Commercial

Consumer

Total

Allowance for loan and lease losses:

Attributable to loans and leases individually evaluated for impairment

~~249~~-

~~255~~-

Collectively evaluated for impairment

1,~~683~~696

67,~~658~~241

1,~~266~~328

~~132~~95

910,~~739~~360

Total allowance for loan and lease losses

1,~~683~~696

67,~~664~~241

1,~~515~~328

~~132~~95

910,~~994~~360

Loans and leases:

Individually evaluated for impairment

~~1,047~~648

1,~~978~~263

31,~~025~~911

Acquired with deteriorated credit quality

6076

~~104~~121

~~164~~197

Collectively evaluated for impairment

111,~~001~~964

~~373~~416,~~681~~607

~~139~~78,~~302~~171

65,~~930~~354

~~630~~612,~~914~~096

Total ending loans and leases balance

~~111~~112,~~061~~040

~~374~~417,~~832~~376

~~141~~79,~~280~~434

65,~~930~~354

~~634~~614,~~103~~204

December 31, 2021	*Residential 1 – 4 family real estate*		*Commercial and multi-family real estate*		*Commercial*		*Consumer*		*Total*
Allowance for loan and lease losses:
Attributable to loans and leases individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		1,719		7,121		1,414		101		10,355
Total allowance for loan and lease losses	$	1,719	$	7,121	$	1,414	$	101	$	10,355

Loans and leases:
Individually evaluated for impairment	$	-	$	676	$	1,272	$	-	$	1,948
Acquired with deteriorated credit quality		76		96		-		-		172
Collectively evaluated for impairment		112,120		404,192		85,562		5,565		607,439
Total ending loans and leases balance	$	112,196	$	404,964	$	86,834	$	5,565	$	609,559

~~The~~ Table average recorded investment in impaired loans and leases (excluding loans and leases acquired with deteriorated credit quality) for the nine month period ended September 30, 2021 was $2,761,000 compared to $2,710,000 for the nine month period ended September 30, 2020. There was no allowance for loan and lease losses specifically reserved as of ~~September~~ 30, 2021 for impaired loans compared to $346,000 as of September 30, 2020. Additionally, there was approximately $149,000 in interest income recognized by the Corporation on impaired loans and leases on an accrual or cash basis for the nine month period ended September 30, 2021 and $34,000 for the nine month period ended September 30, 2020.Contents

The ~~following~~average ~~table presents the~~ recorded investment in ~~nonaccrual~~impaired loans and leases, (excluding loans and leases ~~past~~acquired ~~due~~with ~~over~~deteriorated 90credit ~~days~~quality) ~~still~~for onthe three ~~accrual~~month ~~and~~period ~~troubled~~ended March ~~debt~~31, ~~restructurings~~2022 bywas ~~class~~$1,930,000 ofcompared ~~loans~~to as$2,948,000 ~~of September~~for 30the three month period ended March 31, 2021. There was no allowance for loan and lease losses specifically reserved as of March 31, 2022 or December 31, ~~2020~~2021. Additionally, ~~Nonaccrual~~there ~~loans~~was ~~primarily~~approximately ~~consist~~$31,000 ofin ~~smaller~~interest ~~dollar~~income ~~homogenous~~recognized by the Corporation on impaired loans ~~that~~and ~~are~~leases ~~collectively~~on ~~evaluated~~an accrual or cash basis for ~~impairment~~the three month period ended March 31, 2022 and $6,000 for the three month period ended March 31, 2021.

	(in thousands)
September 30, 2021	Nonaccrual		Loans and leases past due over 90 days still accruing		Accruing Troubled Debt Restructurings
Residential 1-4 family real estate	$	178	$	-	$	144
Commercial and multi-family real estate		121		-		496
Agricultural real estate		-		-		-
Commercial		-		-		767
Agriculture		-		-		-
Consumer		-		-		-
Total	$	299	$	-	$	1,407
December 31, 2020
Residential 1-4 family real estate	$	363	$	60	$	175
Commercial and multi-family real estate		570		-		546
Agricultural real estate		11		-		-
Commercial		-		-		769
Agriculture		-		-		-
Consumer		6		-		-
Total	$	950	$	60	$	1,490

The following table presents 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 March 31, 2022 and December 31, 2021. Nonaccrual loans primarily consist of smaller dollar homogenous loans that are collectively evaluated for impairment.

	(in thousands)
March 31, 2022	*Nonaccrual*		*Loans and leases past due over 90 days still accruing*		*Accruing Troubled Debt Restructurings*
Residential 1-4 family real estate	$	193	$	-	$	103
Commercial and multi-family real estate		153		-		12
Agricultural real estate		-		-		-
Commercial		-		1,072		766
Agriculture		-		-		-
Consumer		-		-		-
Total	$	346	$	1,072	$	881

December 31, 2021
Residential 1-4 family real estate	$	184	$	-	$	139
Commercial and multi-family real estate		136		-		14
Agricultural real estate		-		-		-
Commercial		-		-		767
Agriculture		-		-		-
Consumer		-		-		-
Total	$	320	$	-	$	920

There were $1,072,000 in commercial loans over 90 days but still accruing at March 31, 2022. These loans were originated through the PPP program and are pending a determination of forgiveness from the SBA.

~~The~~ Table ~~following table presents the aging~~ of ~~the recorded investment in past due loans and leases as of September 30, 2021 and December 31, 2020 by class of loans and leases:~~Contents

	(in thousands)
September 30, 2021	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
Residential 1-4 family real estate	$	251	$	11	$	49	$	311	$	110,779	$	111,090
Commercial and multi-family real estate		174		-		17		191		333,584		333,775
Agricultural real estate		-		-		-		-		51,200		51,200
Commercial		-		75		1		76		78,383		78,459
Agriculture		-		-		-		-		9,502		9,502
Consumer		7		-		-		7		5,892		5,899
Total	$	432	$	86	$	67	$	585	$	589,340	$	589,925
December 31, 2020
Residential 1-4 family real estate	$	795	$	-	$	173	$	968	$	110,093	$	111,061
Commercial and multi-family real estate		468		181		212		861		330,154		331,015
Agricultural real estate		-		-		-		-		43,817		43,817
Commercial		676		-		-		676		130,897		131,573
Agriculture		-		-		-		-		9,707		9,707
Consumer		4		-		6		10		6,920		6,930
Total	$	1,943	$	181	$	391	$	2,515	$	631,588	$	634,103

The following table presents the aging of the recorded investment in past due loans and leases as of March 31, 2022 and December 31, 2021 by class of loans and leases:

	(in thousands)
March 31, 2022	*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*
Residential 1-4 family real estate	$	440	$	-	$	48	$	488	$	111,552	$	112,040
Commercial and multi-family real estate		452		-		1		453		363,392		363,845
Agricultural real estate		-		-		-		-		53,531		53,531
Commercial		198		300		1,072		1,570		70,448		72,018
Agriculture		-		-		-		-		7,416		7,416
Consumer		4		-		-		4		5,350		5,354
Total	$	1,094	$	300	$	1,121	$	2,515	$	611,689	$	614,204

December 31, 2021
Residential 1-4 family real estate	$	425	$	-	$	48	$	473	$	111,723	$	112,196
Commercial and multi-family real estate		153		-		2		155		351,824		351,979
Agricultural real estate		-		-		-		-		52,985		52,985
Commercial		1,170		1,082		-		2,252		76,071		78,323
Agriculture		-		-		-		-		8,511		8,511
Consumer		5		-		-		5		5,560		5,565
Total	$	1,753	$	1,082	$	50	$	2,885	$	606,674	$	609,559

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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 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 non-homogenous loans and leases, such as commercial and commercial real estate loans and leases. The Corporation uses the following definitions for risk ratings:

●	Pass: 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.

●

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.

The following table provides a summary of the loan portfolio risk grades, as applicable, based on the most recent analysis performed, as of ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021. The Corporation risk rates all commercial and commercial real estate loans with the exception of PPP loans.

	(in thousands)
September 30, 2021	Pass		Special Mention		Substandard		Doubtful		Not rated
March 31, 2022	Pass		Special Mention		Substandard		Doubtful		Not rated
Residential 1 - 4 family	$	2,~~501~~404	$	-	$	-	$	-	$	~~108~~109,~~589~~636
Commercial and multi- family real estate		365,141		6,258		13,550		-		26
Commercial and multi-family real estate		394,029		9,058		13,487		-		802
Commercial		6273,~~921~~946		~~585~~240		21,~~022~~541		-		223,~~433~~707
Consumer		-		-		-		-		5,~~899~~354
Total	$	~~430~~470,~~563~~379	$	69,~~843~~298	$	15,~~572~~028	$	-	$	~~136~~119,~~947~~499
December 31, 2020
December 31, 2021
Residential 1 - 4 family	$	62,~~767~~479	$	-	$	-	$	-	$	~~104~~109,~~294~~717
Commercial and multi- family real estate		356,163		6,964		11,536		-		169
Commercial and multi-family real estate		380,936		10,080		13,823		-		125
Commercial		6477,~~068~~772		~~495~~228		2,~~530~~272		-		746,~~187~~562
Consumer		-		-		-		-		65,~~930~~565
Total	$	~~426~~461,~~998~~187	$	710,~~459~~308	$	1416,~~066~~095	$	-	$	~~185~~121,~~580~~969

~~The~~ Table ~~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, 2021 and December 31, 2020:Contents

	(in thousands)
September 30, 2021	Residential 1-4 family		Commercial and multi-family real estate		Commercial		Consumer		Total
Performing	$	108,540	$	10	$	22,432	$	5,899	$	136,881
Nonperforming		49		16		1		-		66
Total	$	108,589	$	26	$	22,433	$	5,899	$	136,947
December 31, 2020
Performing	$	104,121	$	153	$	74,187	$	6,924	$	185,385
Nonperforming		173		16		-		6		195
Total	$	104,294	$	169	$	74,187	$	6,930	$	185,580

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 March 31, 2022 and December 31, 2021:

	(in thousands)
March 31, 2022	*Residential 1-4 family*		*Commercial and multi-family real estate*		*Commercial*		*Consumer*		*Total*

Performing	$	109,588	$	802	$	2,635	$	5,354	$	118,379
Nonperforming		48		-		1,072		-		1,120
Total	$	109,636	$	802	$	3,707	$	5,354	$	119,499

December 31, 2021

Performing	$	109,669	$	125	$	6,562	$	5,565	$	121,921
Nonperforming		48		-		-		-		48
Total	$	109,717	$	125	$	6,562	$	5,565	$	121,969

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 for which there was a payment default during the ~~nine~~three month period ended ~~September~~March 3031, ~~2021~~2022. As a result of the COVID-19 pandemic, payment deferrals and interest only payment options for consumer, small business, and commercial customers for up to 90 days were offered. Payment extensions of up to 90 days for mortgage customers were also offered. At ~~September~~March 3031, ~~2021~~2022, ~~119~~110 loans were modified or extended, approximating $4138.03 million. These modifications and extensions were made under the CARES act and are not considered TDR's.

The Corporation acquired The Ohio State Bank (“OSB”) in November 2014 and Benchmark Bank in September 2017. 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.

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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, 2020	$	10,181		$	(319	)	$	9,862
Balance at December 31, 2021	$	7,024		$	(190	)	$	6,834
Change due to payments received		(~~2,679~~301	)		~~115~~12			(~~2,564~~289	)
Balance at September 30, 2021	$	7,502		$	(204	)	$	7,298
Balance at March 31, 2022	$	6,723		$	(178	)	$	6,545
Purchased Impaired Loans and Leases
Balance at December 31, 2020	$	109		$	(59	)	$	50
Balance at December 31, 2021	$	59		$	(9	)	$	50
Change due to payments received		~~(43~~23	)		482			525
Balance at September 30, 2021	$	66		$	(11	)	$	55
Balance at March 31, 2022	$	82		$	(7	)	$	75

	Benchmark Bank
	(in thousands)
	Contractual
	Principal			Accretable			Carrying
	Receivable			Difference			Amount
Purchased Performing Loans and Leases
Balance at December 31, 2020	$	37,386		$	(655	)	$	36,731
Balance at December 31, 2021	$	22,233		$	(328	)	$	21,905
Change due to payments received		(~~12,674~~545	)		~~239~~19			(~~12,435~~526	)
Balance at September 30, 2021	$	24,712		$	(416	)	$	24,296
Balance at March 31, 2022	$	21,688		$	(309	)	$	21,379
Purchased Impaired Loans and Leases
Balance at December 31, 2020	$	287		$	(173	)	$	114
Balance at December 31, 2021	$	260		$	(138	)	$	122
Change due to payments received		(610	)		3510			29-
Balance at September 30, 2021	$	281		$	(138	)	$	143
Balance at March 31, 2022	$	251		$	(128	)	$	122

There was no provision for loan and lease losses recognized during the nine month periods ended September 30, 2021 and 2020 related to the acquired loans, as there was no significant change to the credit quality of the loans during the period.

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NOTE 5 – OTHER BORROWINGS

Other borrowings consists of the following at ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021:

	(in thousands)
	September 30,		December 31,
	March 31,		December 31,
	2021		2020
	2022		2021
United Bankers Bank
Note payable, with interest at 4.875% and $250,000 principal payments payable quarterly with any remaining unpaid principal, due September 1, 2022. All Union Bank stock is held as collateral.		7,000		7,750
Federal Funds purchased	$	-	$	12
Total other borrowings	$	7,000	$	7,750
Note payable, with interest at 4.00% and $250,000 principal payments payable quarterly with any remaining unpaid principal, due December 1, 2028. All Union Bank stock is held as collateral.		6,750		7,000
Total other borrowings	$	6,750	$	7,012

Future maturities of other borrowings are as follows: ~~2021~~2022, $~~250~~750,000; ~~and~~2023, ~~2022~~$1,000,000; 2024, $61,~~750~~000,000; 2025 $1,000,000; 2026 $1,000,000; 2027 $1,000,000; 2028 $1,000,000.

The Corporation had $~~152~~157,~~186~~792,000 of borrowing availability under various line-of-credit agreements with the Federal Home Loan Bank and other financial institutions at ~~June~~March 3031, ~~2021~~2022.

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NOTE 6 – 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 34.2812% at ~~September~~March 3031, ~~2021~~2022 and 3.4037% at December 31, ~~2020~~2021. 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~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021 was $2,~~667~~683,000 and $2,~~642~~676,000, 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 23.9911% at ~~September~~March 3031, ~~2021~~2022 and 32.0697% at December 31, ~~2020~~2021.

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 $~~323~~109,000 and $~~405~~108,000 for the ~~nine~~three month periods ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021, respectively, and is included in other borrowings interest expense in the accompanying consolidated statements of income.

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NOTE 7 - 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~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021 include available-for-sale securities, which are valued using Level 1 and Level 2 inputs, as well as mortgage servicing rights, amounting to $12,~~759~~180,000 at ~~September~~March 3031, ~~2021~~2022 and $1,~~132~~868,000 at December 31, ~~2020~~2021, which are valued using Level 3 inputs. ~~Financial assets measured at fair value on a nonrecurring basis at September 30, 2021 include~~ ~~loans classified as impaired totaling $1,463,000 at December 31, 2020. There were no loans measured at fair value as of September 30, 2021.~~

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~~March 3031, ~~2021~~2022, due to the lack of observable quotes in inactive markets for those instruments at ~~September~~March 3031, ~~2021~~2022.

~~The~~ Table ~~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) for the nine month period ended September 30, 2021 and for the year ended December 31, 2020:Contents

	(in thousands)
	September 30,			December 31,
	2021			2020
Mortgage Servicing Rights
Balance at beginning of period	$	1,132		$	1,061
Gains or losses, including realized and unrealized:
Purchases, issuances, and settlements		507			690
Disposals - amortization based on loan payments and payoffs		(143	)		(326	)
Changes in fair value		263			(293	)
Balance at end of period	$	1,759		$	1,132

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) for the three month period ended March 31, 2022 and for the year ended December 31, 2021:

	(in thousands)
	*March 31,*			*December 31,*
	*2022*			*2021*
Mortgage Servicing Rights
Balance at beginning of period	$	1,868		$	1,132
Gains or losses, including realized and unrealized:
Purchases, issuances, and settlements		64			628
Disposals - amortization based on loan payments and payoffs		(44	)		(187	)
Changes in fair value		292			295
Balance at end of period	$	2,180		$	1,868

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.

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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 or evaluations as well as 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 8% and 10%, 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.

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~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021.

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NOTE 8 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of recognized financial instruments at ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows:

(in thousands)

September 30, 2021

December 31, 2020

March 31, 2022

December 31, 2021

Carrying amount

Estimated value

Carrying amount

Estimated value

Input Level

FINANCIAL ASSETS

Cash and cash equivalents

~~121~~65,~~179~~561

5775,~~034~~202

Securities, including FHLB stock

~~275~~301,~~327~~778

~~200~~312,~~178~~771

2,3

Loans held for sale

1410,~~545~~480

189,~~427~~146

Net loans and leases

~~579~~603,~~600~~844

~~580~~603,~~877~~671

~~624~~599,~~109~~204

~~625~~600,~~628~~512

Mortgage servicing rights

12,~~759~~180

1,~~132~~868

Hedging assets

~~1,616~~949

~~3,245~~922

Total Financial Assets

~~994~~984,~~026~~792

~~995~~984,~~303~~619

~~904~~999,~~125~~113

~~905~~1,~~644~~000,421

FINANCIAL LIABILITIES

Deposits

Maturity

~~152~~125,~~284~~436

~~152~~123,~~530~~689

~~152~~129,~~331~~447

~~153~~129,~~337~~196

Non-maturity

~~775~~819,~~528~~396

~~686~~800,~~047~~966

Other borrowings

76,~~000~~750

7,~~750~~012

Junior subordinated deferrable interest debentures

12,~~967~~984

10,667

12,~~942~~976

10,~~300~~931

Hedging liabilities

~~616~~46

Total Financial Liabilities

~~947~~964,~~779~~566

~~945~~960,~~725~~502

~~859~~950,~~686~~447

~~858~~948,~~050~~151

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.

There are also unrecognized financial instruments at ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021 which relate to commitments to extend credit and letters of credit. The contract amount of such financial instruments amounted to $~~200~~203,~~063~~705,000 at ~~September~~March 3031, ~~2021~~2022 and $~~156~~198,~~385~~681,000 at December 31, ~~2020~~2021. 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 based on the sales price of similar loans. Loan held for sale 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. The fair value disclosures for both fixed and adjustable rate loans were adjusted to reflect the exit price amount anticipated to be received from the sale of the loans in an open market transaction.

Mortgage servicing rights:

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

Derivative assets and liabilities:

The fair value of derivative assets and liabilities are evaluated monthly based on derivative valuation models using quoted prices for similar assets adjusted for specific attributes of the commitments and other observable market data at the valuation date.

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. The fair value disclosures for all of the deposits were adjusted to reflect the exit price amount anticipated to be received from sale of the deposits in an open market transaction.

Other borrowings and junior subordinated deferrable interest debentures:

The fair value of other 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.

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 9 – 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 21,958 options during 2021 at an exercise price of $34.60, 63,858 options during 2020 at an exercise price of $19.83, and 33,853 options during 2019 at an average exercise price of $22.97 under the Plan. Following is a summary of activity for stock options for the ~~nine~~three month periods ended ~~September~~March 3031, ~~2021~~2022 and ~~September~~March 3031, ~~2020~~2021:

	September 30,			September 30,
	March 31,			March 31,
	2021			2020
	2022			2021
Outstanding, beginning of period		~~157~~133,~~817~~792			~~117~~157,~~647~~817
Granted		~~21,958~~-			~~63,858~~-
Exercised		(2619,~~087~~396	)		-(2,520	)
Forfeited		~~(12,659~~-	)		~~(20,733~~-	)
Outstanding, end of period		~~141~~114,~~029~~396			~~160~~155,~~772~~297
Weighted average exercise price at end of quarter	$	22.2458		$	19.8280

Options vest over a three-year period on the anniversary of the date of grant. At ~~September~~March 3031, ~~2021~~2022, 7853,~~176~~914 options were vested compared to 7165,~~224~~749 options vested at ~~September~~March 3031, ~~2020~~2021 and outstanding options had a weighted average remaining contractual term of 87.08 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 that are still vesting:

	*2021*			*2020*			*2019*
Weighted-average fair value of options granted	$	11.19		$	4.83		$	7.77
Average dividend yield		2.23	%		2.93	%		2.26	%
Expected volatility		40.00	%		40.00	%		40.00	%
Risk-free interest rate		1.00	%		0.49	%		1.93	%
Expected term (years)		7			7			7

Total compensation expense related to the stock options granted in 2021, net of forfeitures, is expected to be $246,000 and is being recognized ratably over the 36 month period beginning July 1, 2021. Total compensation expense related to the stock options granted in 2020, net of forfeitures, is expected to be $~~271~~255,000 and is being recognized ratably over the 36 month period beginning July 1, 2020. Total compensation expense related to the stock options granted in 2019, net of forfeitures, is expected to be $~~198~~214,000 and is being recognized ratably over the 36 month period beginning July 1, 2019. Total compensation expense related to the stock options granted in 2018, net of forfeitures, is expected to be $175,000 and is being recognized ratably over the 36 month period beginning September 1, 2018. Stock option expense for outstanding awards amounted to $5856,000 ~~and $127,000~~ for the ~~quarter~~three ~~and nine~~ months ended ~~September~~March 3031, ~~2021~~2022 and $~~0 and $119~~45,000 for the ~~quarter~~three ~~and nine~~ months ended ~~September~~March 3031, ~~2020~~2021.

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NOTE 10 – NON-INTEREST INCOME

The Corporation’s revenue from contracts with customers within the scope of ASC 606 is recognized in non-interest income. The material groups of non-interest income are defined as follows:

Service charges on deposit accounts:

Service charges on deposit accounts primarily consist of account analysis fees, monthly maintenance fees, overdraft fees, and other deposit account related fees. Overdraft fees and certain service charges are fixed and the performance obligation is typically satisfied at the time of the related transaction. The consideration for analysis fees and monthly maintenance fees are variable as the fee can be reduced if the customer meets certain qualifying metrics. The Corporation’s performance obligations are satisfied at the time of the transaction or over the course of a month.

Interchange fee income:

The Corporation earns interchange fees from debit and credit cardholder transactions conducted through the MasterCard payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized concurrently with the transaction processing services provided to the cardholder.

Wealth management income:

The Corporation earns wealth management and investment brokerage fees from its services with customers to manage assets for investment, to provide advisory services, and for account transactions. Fees are based on the market value of the assets under management and are recognized monthly as the Corporation’s performance obligations are met. Commissions on transactions are recognized on a trade-date basis as the performance obligation is satisfied at the point in time in which the trade is processed. Other related services are based on a fixed fee schedule and the revenue is recognized when the services are rendered, which is when the Corporation has satisfied its performance obligation.

The following table presents the Corporation’s non-interest income for the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021. Items outside the scope of ASC 606 are noted as such.

	Nine Months ended September 30,
	Three Months ended March 31,
	2021			2020
	2022			2021
Service charges on deposit accounts	$	~~790~~294		$	~~827~~241
Gain on sale of loans (1)		~~11,257~~577			174,~~032~~576
Net securities gains (losses) (1)		(7	)		288
Net securities losses (1)		(46	)		(5	)
Change in fair value of mortgage servicing rights (1)		~~264~~292			~~(387~~340	)
Increase in cash surrender value of life insurance (1)		~~309~~91			~~283~~118
Other
Credit and debit card interchange fees		~~1,365~~429			~~1,113~~430
Wealth management		~~304~~137			~~237~~99
Net loan servicing fees (1)		~~367~~142			~~171~~121
Other non-interest income		~~(420~~1,165	)		~~2,535~~(179	)
Total non-interest income	$	143,~~229~~081		$	225,~~099~~741

(1) Not within the scope of ASC 606

NOTE 11 – SUBSEQUENT EVENTS

Management evaluated subsequent events through the date the consolidated financial statements were issued. Events or transactions occurring after ~~September~~March 3031, ~~2021~~2022 but prior to when the consolidated financial statements were issued, that provided additional evidence about conditions that existed at ~~September~~March 3031, ~~2021~~2022 have been recognized in the consolidated financial statements for the period ended ~~September~~March 3031, ~~2021~~2022. Events or transactions that provided evidence about conditions that did not exist at ~~September~~March 3031, ~~2021~~2022 but arose before the financial statements were issued have not been recognized in the consolidated financial statements for the period ended ~~September~~March 3031, ~~2021~~2022.

On ~~July 20~~April 19, ~~2021~~2022, the Corporation's Board of Directors approved a cash dividend of $0.2021 per common share payable ~~December~~June 15, ~~2021~~2022 to shareholders of record at the close of business on ~~November~~May 3031, ~~2021~~2022.

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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,
	As of or for the three months ended March 31,
	2021			2020			2021			2020
	2022			2021
SIGNIFICANT RATIOS (Unaudited)
Net income to:
Average assets (a)		10.5494	%		21.0966	%		~~1.39~~	%		~~1.66~~	%
Average tangible shareholders’ equity (non-GAAP) (a)		1811.5996	%		2619.9694	%		~~17.03~~	%		~~22.16~~	%
Net interest margin (a)		43.1242	%		3.6585	%		~~3.84~~	%		~~3.72~~	%
Efficiency ratio (a)		6572.3395	%		5162.3951	%		~~66.68~~	%		~~58.10~~	%
Average shareholders’ equity to average assets		1110.0559	%		1011.6525	%		~~11.02~~	%		~~10.58~~	%
Loans to deposits (end of period) (b)		63.58	%		85.70	%		63.58	%		85.70	%
Loans to deposits (end of period)		65.01	%		71.62	%
Allowance for loan losses to loans (end of period)		1.7569	%		1.2662	%		~~1.75~~	%		~~1.26~~	%
Book value per share	$	3530.4630		$	3334.4418		$	~~35.46~~		$	~~33.44~~

(a)

Some of the financial measures included in this table are not measures of financial performance recognized by U.S. Generally Accepted Accounting Principles, or GAAP. These non-GAAP financial measures include tangible book value, return on average tangible equity, net interest margin (tax-equivalent), and the efficiency ratio. Management uses these non-GAAP financial measures in its analysis of its performance, and believes financial analysts and investors frequently use these measures, and other similar measures, to evaluate capital adequacy. Reconciliations of non-GAAP disclosures used in this table to the comparable GAAP measures are provided in the accompanying table. Management, as well as regulators, financial analysts and other investors may use these measures in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, which typically stem from the use of the purchase accounting method of accounting for mergers and acquisitions.

These non-GAAP financial measures should not be considered in isolation or as a substitute for total shareholders’ equity, total assets, book value per share, return on average assets, return on average equity, or any other measure calculated in accordance with GAAP. Moreover, the manner in which we calculate these non-GAAP financial measures may differ from that of other companies reporting measures with similar names.

(b) Includes loans held for sale

Reconciliation of common shareholders' equity to tangible common equity	March 31, 2022			March 31, 2021
Shareholders' equity	$	99,365		$	112,071
Less goodwill and other intangibles		29,080			29,224
Tangible common equity	$	70,285		$	82,847
Average shareholders' equity	$	113,396		$	111,839
Less average goodwill and other intangibles		29,092			29,236
Average tangible common equity	$	84,304		$	82,603

Tangible Book Value per Common Share
Tangible common equity (a)	$	70,285		$	82,847
Total common shares issued and outstanding (b)		3,279,238			3,278,789
Tangible book value per common share (a)/(b)	$	21.43		$	25.27

Return on Average Tangible Equity
Net income, annualized ( c )	$	10,080		$	16,468
Average tangible common equity (d)	$	84,304		$	82,603
Return on average tangible common equity (c/d)		11.96	%		19.94	%

Net Interest Margin, Tax- Equivalent
Net interest income, annualized	$	32,808		$	34,620
Tax-equivalent adjustment, annualized		924			684
Tax-equivalent net interest income, annualized (e)	$	33,732		$	35,304
Average earning assets (f)	$	986,711		$	916,214
Net interest margin, tax equivalent (e)/(f)		3.42	%		3.85	%

Efficiency Ratio, Tax-Equivalent
Non-interest expense (g)	$	33,596		$	36,424
Tax-equivalent net interest income, annualized		33,732			35,304
Non-interest income		12,324			22,964
Total revenue (h)	$	46,056		$	58,268
Efficiency ratio (g)/(h)		72.95	%		62.51	%

Reconciliation of common shareholders' equity to tangible common equity	September 30, 2021			September 30, 2020
Shareholders' equity	$	116,144		$	109,409
Less goodwill and other intangibles		29,151			29,296
Tangible common equity	$	86,993		$	80,113
Average shareholders' equity	$	114,244		$	101,598
Less average goodwill and other intangibles		29,199			29,347
Average tangible common equity	$	85,045		$	72,251
Tangible Book Value per Common Share
Tangible common equity (a)	$	86,993		$	80,113
Total common shares issued and outstanding (b)		3,275,430			3,271,651
Tangible book value per common share (a)/(b)	$	26.56		$	24.49
Return on Average Tangible Equity
Net income, annualized ( c )	$	14,484		$	16,008
Average tangible common equity (d)	$	85,045		$	72,251
Return on average tangible common equity (c/d)		17.03	%		22.16	%
Net Interest Margin, Tax- Equivalent
Net interest income, annualized	$	35,989		$	32,144
Tax-equivalent adjustment		745			579
Tax-equivalent net interest income, annualized (e)	$	36,734		$	32,723
Average earning assets (f)	$	957,815		$	880,496
Net interest margin, tax equivalent (e)/(f)		3.84	%		3.72	%
Efficiency Ratio, Tax-Equivalent
Non-interest expense (g)	$	37,145		$	27,099
Tax-equivalent net interest income		36,734			24,543
Non-interest income		18,973			22,099
Total revenue (h)	$	55,707		$	46,642
Efficiency ratio (g)/(h)		66.68	%		58.10	%

Table of Contents

Forward-Looking Statements

When used in this document, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "projected" or similar expressions are intended to identify "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which statements are subject to numerous assumptions, risks, and uncertainties. Actual results could differ materially from those contained or implied by such statements for a variety of factors, including: changes in economic conditions; movements in interest rates; competitive pressures on product pricing and services; success and timing of business strategies; the nature, extent, and timing of government actions and reforms; and extended disruption of vital infrastructure and the impact of the COVID-19 pandemic. Significant progress has been made to combat the outbreak of COVID-19, and while it appears that the epidemiological and macroeconomic conditions are trending in a positive direction as of ~~September 30~~March 31, ~~2021~~2022, if there is a resurgence in the virus, United Bancshares, Inc. (the "Corporation") could experience further adverse effects on its business, financial condition, results of operations and cash flows.

The Corporation cautions readers not to place undue reliance on any such forward looking statements, which speak only as of the date made. 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.

Introduction

The Corporation is a registered financial holding company incorporated under Ohio law 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 a full service community bank offering a full range of commercial and consumer banking services. The Bank is an Ohio state-chartered bank, which serves Allen, Delaware, Franklin, Hancock, Huron, Marion, Paulding, Putnam, Sandusky, Van Wert and Wood counties in Ohio, with office locations in Bowling Green, Columbus Grove, Delaware, Delphos, Findlay, Gahanna, Gibsonburg, Kalida, Leipsic, Lima, Marion, Ottawa, Paulding, Pemberville, Plymouth, Westerville and Worthington, Ohio.

Deposit services include checking accounts, savings and money market accounts; certificates of deposit and individual retirement accounts. Additional supportive services include online banking, bill pay, mobile banking, Zelle payment service, ATM’s and safe deposit box rentals. Treasury management and remote deposit capture products are also available to commercial deposit customers. Deposits of Union Bank are insured up to applicable limits by the Deposit Insurance Fund, which is administered by the Federal Deposit Insurance Corporation.

Loan products offered include commercial and residential real estate loans, agricultural loans, commercial and industrial loans, home equity loans, various types of consumer loans and small business administration loans. Union Bank’s residential loan activities consist primarily of loans for purchasing or refinancing personal residences. The majority of these loans are sold to the secondary market.

Wealth management services are offered by Union Bank through an arrangement with LPL Financial LLC, a registered broker/dealer. Licensed representatives offer a full range of investment services and products, including financial needs analysis, mutual funds, securities trading, annuities and life insurance.

Union Bank has two subsidiaries: UBC Investments, Inc. (“UBC”), an entity formed to hold its securities portfolio, and UBC Property, Inc. (“UBC Property”), an entity formed to hold and manage certain property that is acquired in lieu of foreclosure.

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.

~~Recent~~ Table ~~Developments~~of Contents

~~The~~Economic ~~progression of the COVID-19 pandemic in the United States began to have an adverse impact on the local and national economy during the latter part of the first quarter of 2020 and may still~~Environment ~~have a complex and potentially adverse impact on the economy, the banking industry and our Corporation in future fiscal periods, all subject to a high degree of uncertainty.~~

~~Like~~The ~~most~~U.S. ~~states,~~economy ~~Ohio~~continued ~~experienced~~its arecovery ~~dramatic~~during the first quarter of 2022 despite pressures from higher inflation and ~~sudden~~rising ~~increase~~energy inprices ~~unemployment~~as ~~levels~~well as aconcerns ~~result~~over ofthe Russia-Ukraine war and the ~~curtailment~~continued ofeconomic ~~business~~uncertainty ~~activities~~caused inby ~~mid~~the COVID-~~March~~19 ~~2020~~pandemic. Inflation remains elevated, ~~with~~reflecting ~~unemployment~~supply ~~rising~~and ~~from~~demand imbalances related to the pandemic and higher energy prices as well as other broader price pressures, and exceeded an ~~average~~annual rate of 48.10% in ~~January~~the ~~2020~~first quarter of 2022, well above the FRB's target inflation rate. In addition, the Russia-Ukraine war and related events are likely to ancreate ~~average~~additional ofupward 17pressure on inflation and weigh on economic activity.~~6 %~~ inAs ~~April 2020~~previously discussed, ~~before~~the ~~gradually~~COVID-19 ~~dropping~~pandemic ~~back~~has ~~down~~resulted in disruption to 5 business and economic activity.4% While the Omicron variant took COVID-19 infection rates to a new high in ~~September 2021~~January 2022, ~~according~~COVID-19 tocases declined by the Uend of the first quarter.S. ~~Bureau~~However, the duration of ~~Labor~~the ~~Statistics. While~~pandemic, ~~unemployment~~including ~~rates~~the ~~have~~emergence ~~returned~~of new variants, and the ultimate repercussions continue to ~~lower~~remain ~~levels~~unclear. inU.S. ~~recent~~Gross ~~months,~~Domestic itProduct ("GDP") is ~~very~~declined ~~possible~~slightly ain ~~repeat~~the first quarter of 2022, however the ~~high~~total unemployment ~~rates~~rate ~~could~~fell beto ~~experienced~~3.6 ~~especially~~percent ifat ~~there~~March is2022 ~~another~~as ~~shutdown~~compared ~~similar~~with to3.9 ~~what~~percent ~~was~~at ~~experienced~~December in2021. In March 2022, the FRB increased short-term interest rates by 25 basis points and ~~April~~indicated ofthat ~~2020~~ongoing increases in short-term interest rates will occur in 2022 in order to fight inflation.

~~Federal,~~Although ~~state~~the ~~and~~U.S. ~~local~~economy ~~governments~~continued ~~and~~to ~~regulatory~~grow ~~authorities~~during ~~have~~the ~~enacted~~first ~~and~~quarter ~~issued~~of a2022, ~~range~~the impacts of ~~policy~~higher ~~responses~~inflation, rising energy prices and the Russia-Ukraine war, in addition to the continuing impact of the COVID-19 pandemic on economic conditions both in the United States and abroad, ~~including~~have created significant uncertainty about the ~~following:~~future economic environment which will continue to evolve and impact our business in future periods. Concerns over interest rate levels, energy prices, domestic, and global policy issues, trade policy in the U.S. and geopolitical events, as well as the implications of those events on the markets in general, further add to the global uncertainty. Interest rate levels and energy prices, in combination with global economic conditions, fiscal and monetary policy and the level of regulatory and government scrutiny of financial institutions will continue to impact our results in 2022 and beyond.

●Our ~~The~~credit ~~Federal~~administration ~~Reserve~~continues ~~decreased~~to ~~the~~closely ~~range~~monitor ~~for~~and analyze the ~~Federal~~higher ~~Funds~~risk ~~Target~~segments ~~Rate~~within bythe ~~0.50%~~loan onportfolio, ~~March~~tracking 3,loan ~~2020~~payment deferrals, customer liquidity and byproviding ~~another~~timely 1reports to senior management and the board of directors.0% Based on ~~March~~the 16Company’s capital levels, ~~2020~~prudent underwriting policies, ~~reaching~~loan aconcentration ~~current~~diversification ~~range~~and our geographic footprint, senior management is cautiously optimistic that the Company is positioned to continue managing the impact of 0the varied set of risks and uncertainties currently impacting the global economy and remain adequately capitalized.0 However, –the 0Company may be required to make additional loan loss provisions as warranted by the extremely fluid global economic condition.~~25%.~~

● On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, which established a $2.0 trillion economic stimulus package, including cash payments to individuals, supplemental unemployment insurance benefits and a $349 billion loan program administered through the U.S. Small Business Administration (SBA), referred to as the Paycheck Protection Program, or PPP program. Under the PPP program, small businesses, sole proprietorships, independent contractors and self-employed individuals could apply for loans from existing SBA lenders and other approved regulated lenders who enrolled in the program, subject to limitations and eligibility criteria. The Bank participated as a lender in the PPP program, originating $125.7 million in loans to over 1,600 borrowers during 2020. In addition, the CARES Act provided financial institutions the option to suspend certain requirements under U.S. GAAP related to TDRs for a limited period of time to account for the effects of COVID-19.

● On April 7, 2020, federal banking regulators issued a revised Interagency Statement on Loan Modifications and Reporting for Financial Institutions, which, among other things, encouraged financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations because of the effects of COVID-19, and stated that institutions generally do not need to categorize COVID-19-related modifications as TDRs and that the agencies will not direct supervised institutions to automatically categorize all COVID-19 related loan modifications as TDRs.

	●	On April 9, 2020, the Federal Reserve announced additional measures aimed at supporting small and midsized business, as well as state and local governments impacted by COVID-19. The Federal Reserve announced the Main Street Business Lending Program, which establishes two new loan facilities intended to facilitate lending to small and midsized businesses: (1) the Main Street New Loan Facility, or MSNLF, and (2) the Main Street Expanded Loan Facility, or MSELF. MSNLF loans are unsecured term loans originated on or after April 8, 2020, while MSELF loans are provided as upsized tranches of existing loans originated before April 8, 2020. The program is designed for businesses with up to 10,000 employees or $2.5 billion in 2019 revenues. To obtain a loan, borrowers must confirm that they are seeking financial support because of COVID-19 and that they will not use proceeds from the loan to pay off debt. The Federal Reserve also stated that it would provide additional funding to banks offering PPP loans to struggling small businesses. Lenders participating in the PPP can exclude loans financed by the facility from their leverage ratio. In addition, the Federal Reserve created a Municipal Liquidity Facility to support state and local governments with up to $500 billion in lending, with the Treasury Department backing $35 billion for the facility using funds appropriated by the CARES Act. The facility makes short-term financing available to cities with a population of more than one million or counties with a population of greater than two million. The Federal Reserve expanded both the size and scope of its Primary and Secondary Market Corporate Credit Facilities to support up to $750 billion in credit to corporate debt issuers.
	●	On December 27, 2020, President Trump signed into law the 2021 Consolidated Appropriations Act, which represents the latest round of COVID-19 relief, authorizing more than $900 billion in economic aid to small businesses and consumers—the second largest stimulus in history, behind only the CARES (Coronavirus Aid Relief and Economic Security) Act that Congress enacted in March. The bill also includes appropriations provisions to keep the government funded through September 30, 2021, as well as a host of miscellaneous items. The aspects of the legislation most applicable to the banking industry include the following:

● An additional $284.6 billion in Paycheck Protection Program (PPP) funding for loans to small businesses, including for borrowers who have previously received a PPP loan.

● A one-page simplified forgiveness process for PPP loans $150,000 and under.

● Clarification to various CARES Act provisions, the tax treatment of PPP expenses, lender responsibilities for agent fees, and lender “hold harmless” protections under the PPP and other laws.

● A further delay in Troubled Debt Restructuring (TDR) accounting until 60 days after the termination of the national emergency, or January 1, 2022.

● A further optional delay in Current Expected Credit Loss (CECL) accounting until January 1, 2022.

● A new round of Economic Impact Payments (EIPs) for consumers, with aggressive distribution timelines and new exemptions from garnishments.

● Significant added support for Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs).

● Funding for agricultural support programs and for renter assistance programs.

● Termination of existing Federal Reserve emergency lending authority under the CARES Act, while preserving the Fed’s general 13(3) emergency authority existing prior to that Act.

It Table is possible that the COVID-19 pandemic and the specific developments referred to above could have a significant adverse impact on our business. In particular, the Bank’s borrowers in the retail, restaurants, and hospitality industries may have endured significant economic distress, causing them to draw on their existing lines of credit, adversely affecting their ability and willingness to repay existing indebtedness, and adversely impacting the value of collateral. These developments, together with general economic conditions may also impact our commercial real estate portfolio, particularly with respect to real estate with exposure to these industries, our consumer loan business and loan portfolio, and the value of certain collateral securing our loans. It is possible that our financial condition, capital levels and results of operations could be adversely affected. The Corporation's results havebeen bolstered by the aforementioned PPP loan origination activity, which includes amortization of loan origination fees into interest income. Contents

We have taken numerous steps in response to the COVID-19 pandemic, including the following:

● We offered 90 day payment deferrals and interest only payment options for consumer, small business, and commercial customers. We also offered payment extensions of up to 90 days for mortgage customers. As of September 30, 2021, we have 119 loans, approximating $41.0 million that were modified or extended through these programs.

● We formed a Business Continuity Planning COVID-19 Response team which meets regularly to manage the Corporation’s response to the pandemic and the effect on our business. In addition, cross functional task force teams met as needed to address specific issues such as employee and client communications, facilities and branch services, and to discuss the effect on our business.

● We participated in the SBA’s Paycheck Protection Program. In the first round of PPP loans, we originated $125.7 million in loans to over 1,600 borrowers. In the second round of PPP loans beginning January 19, 2021, we originated $57.7 million in loans to over 1,500 borrowers. As of September 30, 2021, 3,173 loans totaling $161.1 million have been successfully forgiven.

● In response to the outbreak and business disruption, first and foremost, we have prioritized the safety, health and well-being of our employees, customers, and communities. We have implemented protective measures for customers who choose branch access and we continue to serve customers through our drive-up locations and digital platforms.

The broader U.S. and global economies slowly began reopening during the first quarter 2021 as highly effective vaccines against COVID-19 became widely available. However, labor and supply disruptions resulting from the global pandemic continue, and the emergence of a new and more infectious variant of COVID-19 is creating ongoing health and safety concerns that may lead to further disruptions in local, national and global economies.

While significant progress has been made to combat the outbreak of COVID-19, and while it appears that the epidemiological and macroeconomic conditions were trending in a positive direction as of September 30, 2021, if there is any further significant resurgence in the virus, the Company could experience further adverse effects on its business, financial condition, results of operations and cash flows.

RESULTS OF OPERATIONS

Overview of the Income Statement

For the quarter ended ~~September 30~~March 31, ~~2021~~2022, the Corporation reported net income of $42,~~092~~520,000, or $10.2577 basic earnings per share. This compares to the ~~third~~first quarter of ~~2020~~2021 net income of $54,~~250~~117,000, or $1.6126 basic earnings per share. The decrease in operating results for the ~~third~~first quarter of ~~2021~~2022 as compared to the same period in ~~2020~~2021 was primarily attributable to a decrease in non-interest income of $62,~~432~~660,000 (46. ~~This~~3%) ~~was~~and ~~offset~~a bydecrease ~~an increase~~ in net interest income of $1453,~~505,~~000, (5.2%). These awere ~~decrease~~offset inby ~~the~~a ~~provision~~decrease ~~for~~in ~~loan~~non-interest ~~losses~~ expenses of $3707,000 (7.8%),~~000,~~ a decrease in ~~non-interest~~ ~~expenses~~the provision for income taxes of $~~404~~509,000 (58.3%), and a decrease in the provision for ~~income~~loan ~~taxes~~ losses of $~~365~~300,000 (100.0%).

Net income for the nine months ended September 30, 2021 totaled $10,863,000, or $3.31 basic earnings per share, compared to $12,006,000, or $3.67 basic earnings per share for the same period in 2020. The decrease in operating results for the nine month period ended September 30, 2021 as compared to the nine month period ended September 30, 2020 was primarily attributable to a decrease in non-interest income of $7,869,000 and an increase in non-interest expenses of $760,000. These were offset by an increase in net interest income of $2,884,000, and decreases in the provision for loan losses of $4,150,000 and the provision for income taxes of $452,000.

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 $98,~~903~~202,000 for the ~~third~~first quarter of ~~2021~~2022, compared to $8,~~398~~655,000 for the same period of ~~2020~~2021, ~~an increase of $1,505,000~~a ~~(17.9%). Net~~decrease ~~interest income was $26,992,000 for the nine months ended September 30 2021 compared to $24,108,000 for the same period~~ of ~~2020, an increase of~~ $2453,~~884,~~000 ~~(12~~.~~0%).~~

InThe ~~response~~decrease toof ~~the COVID-19 pandemic~~$453,000 ~~the~~in ~~Federal~~net ~~Reserve~~interest ~~decreased~~income for the ~~targeted~~three ~~federal~~months ~~funds~~ended ~~rate~~March by31, 2022 is attributable to a ~~total~~decrease ofin ~~150~~interest ~~basis~~income ~~points~~of $725,000 (17.56%) inoffset ~~March~~by ~~2020~~a $272,000 (32. ~~This~~3%) decrease ~~impacts~~in ~~the comparability of net~~ interest ~~income between the year to date periods of 2020 and 2021~~expense.

The ~~increase of~~ $1725,~~505,~~000 decrease in ~~net~~ interest income for the three months ended ~~September 30~~March 31, ~~2021~~2022 was due ~~is attributable~~ to an$1.3 ~~increase~~million decrease in loan interest income ofoffset ~~$548,000~~by ~~and~~ a $~~957~~549,000 ~~decrease~~ increase in ~~interest~~securities ~~expense~~income. The decrease in loan interest income was due to a $2712,~~884,~~000 ~~increase~~ reduction in ~~net~~the ~~interest~~loan fee income ~~for~~generated ~~the~~through ~~nine months ended~~PPP ~~September 30~~loans as well as a $402,000 ~~2021 was~~decrease in mortgage loan origination fee income due to areduced ~~decrease~~origination involumes. Approximately ~~interest~~98% ~~expense~~of the loan balances generated through the PPP loan program have been forgiven as of March 31, 2022. There are $271,~~908,~~000, ~~offset~~of byfees areceived ~~decrease~~from inthe SBA remaining that have been deferred and are being amortized into interest income over the life of ~~$24,000~~the loans.

The ~~increase~~yield inon ~~interest~~average ~~income~~earning assets was 3.65% for the ~~three~~ ~~and~~three ~~nine~~ months ended ~~September~~March 3031, ~~2021~~2022 ~~was due~~compared to ~~recognizing~~ 4.22% for the ~~loan~~ ~~fee~~same ~~income~~period ~~received~~of ~~from~~2021. This ~~the~~is ~~SBA~~due ~~generated~~to ~~through~~the ~~PPP~~decrease ~~loans~~in asPPP ~~the~~and ~~forgiveness~~mortgage ~~process~~origination fees ~~accelerated~~and a shifting mix of earning assets. ~~Interest~~The ~~income increased~~average $2interest-bearing cash,~~238~~ securities,~~000~~ and loan balances were $349.6 million,~~928,000~~ $313.3 million and $623.8 million for the three ~~and nine~~ months ended ~~September 30~~March 31, ~~2021~~2022, respectively, ~~due to loan fee income generated through PPP loans forgiven~~ compared to $~~514~~64.7 million,~~000~~ $199.4 million and $~~851,000~~ 652.0 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2020~~2021, respectively. ~~Approximately~~The average ~~88%~~loan ofbalance ~~the~~decreased ~~loan~~$28.2 ~~balances~~million ~~generated~~between ~~through~~ the ~~PPP~~periods. The ~~loan~~average ~~program~~balance ~~have been forgiven as~~ of ~~September~~PPP ~~30,~~loans ~~2021. There~~decreased ~~are~~approximately $~~932,000~~86.2 ofmillion ~~fees~~and ~~received~~was ~~from~~offset ~~the~~by ~~SBA remaining~~approximately ~~that have been~~$58.0 ~~deferred~~million ~~and~~in ~~are~~new ~~being amortized~~commercial ~~into~~and ~~interest~~commercial ~~income~~real ~~over~~estate ~~the~~loan ~~life of the loans~~growth.

The ~~yield~~decline onin ~~average~~interest ~~earning~~expense ~~assets~~of $272,000 from March 31, 2021 to March 31, 2022 ~~was~~is 4due to a declining cost of funds, primarily in certificates of deposit.17 The cost of average interest bearing liabilities was 0.30% for the ~~nine~~ three months ended ~~September~~March 3031, ~~2021~~2022 compared to 40.5348% for the same period of ~~2020~~2021. This ~~is due to the~~ decrease inmore ~~interest~~than ~~rates~~offset ~~and~~the a$63.5 ~~shifting~~million ~~mix~~increase ofin ~~earnings assets. The~~ average interest- bearing ~~cash, securities,~~liabilities ~~and~~to ~~loan balances were~~ $97757.~~4 million, $219.8 million and $640.~~6 million for the ~~nine~~period ~~months~~ ended ~~September~~March 3031, ~~2021,~~2022 ~~respectively~~ compared to $39694.48 million~~, $184.7~~ ~~million and $656.4 million for~~ the ~~nine~~period ~~months~~ ended ~~September~~March 3031, ~~2020,~~ ~~respectively~~2021.

~~The~~Net ~~decline in~~ interest ~~expense~~margin is ~~due~~calculated by dividing net interest income (adjusted to ~~the~~reflect ~~prepayment~~tax-exempt ofinterest ~~$50~~income on a taxable equivalent basis) by average interest-earning assets.0 ~~million~~The ofresulting ~~Federal~~percentage ~~Home~~serves ~~Loan~~as ~~Bank~~a ~~advances~~measurement infor the ~~second,~~Corporation ~~third,~~in ~~and~~comparing ~~fourth~~its ~~quarters~~results with those of ~~2020~~past periods as well as athose ~~declining cost~~ of ~~funds~~peer institutions. ~~The~~ ~~decrease~~For inthe three ~~interest~~months ~~rates~~ended byMarch 31, 2022 the ~~Federal~~net ~~Reserve~~interest ~~resulted~~margin in(on a ~~decrease in~~taxable ~~the~~equivalent ~~cost~~basis) ofwas ~~average~~3.42% ~~interest~~compared ~~bearing~~with ~~liabilities to 0~~3.4485% for the ~~nine~~same ~~months~~period in ~~ended~~2021. ~~September~~Loans 30and leases comprised 63.7% of interest-earning assets at March 31, ~~2021~~2022 compared to 168.005% ~~for~~of ~~the~~interest-earning ~~same~~assets ~~period~~at ofMarch ~~2020~~31, 2021. ~~This~~ Interest-bearing ~~decrease more~~deposits ~~than~~comprised ~~offset the $64~~97.~~2 million increase in~~4% of average interest -bearing ~~deposits~~liabilities at March 31, 2022, compared to 97.2% for the ~~six~~same ~~month~~ period ~~ended September~~in ~~30,~~ 2021.

~~Net~~As ~~interest margin is calculated by dividing net interest income (adjusted to reflect tax-exempt interest income on~~ a ~~taxable~~result ~~equivalent~~of ~~basis)~~the byrecognition ~~average~~of ~~interest-earning~~the ~~assets.~~majority ~~The~~of ~~resulting~~deferred ~~percentage~~loan ~~serves~~fees asfrom athe ~~measurement~~SBA for ~~the~~PPP ~~Corporation~~loan infinancing, ~~comparing its results with those of past periods~~ as well as ~~those of peer institutions. For~~ the ~~quarter~~ ~~and~~impact ~~nine~~of ~~months ended September 30, 2021~~ the ~~net~~COVID-19 ~~interest~~pandemic ~~margin (on a taxable equivalent basis) was 4.12%~~ and ~~3.83%~~related ~~compared~~future ~~with~~loan ~~3.65%~~charge-offs and ~~3.77%~~increases ~~for the same period~~ in ~~2020. Loans and leases comprised 61.0% of interest~~non-~~earning~~accrual ~~assets~~loans atwhich ~~September~~may 30occur, ~~2021~~we ~~compared~~expect tothat ~~76.4%~~our ofnet interest~~-earning~~ ~~assets~~income atand ~~September~~net ~~30, 2020. Interest-bearing deposits comprised 97.2% of average~~ interest~~-bearing~~ ~~liabilities~~margin ~~at September~~will ~~30,~~continue ~~2021, compared~~ to ~~90.9%~~decrease ~~for~~throughout the ~~same~~remainder ~~period~~of ~~in 2020~~2022.

As a result of the reductions in the target federal funds interest rate, the recognition of the majority of deferred loan fees from the SBA for PPP loan financing, as well as the impact of the COVID-19 pandemic and related future loan charge-offs and increases in non-accrual loans which may occur, we expect that our net interest income and net interest margin will decrease in future periods. 29

30 Table of Contents

Provision for Loan ~~and Lease~~ Losses

The Corporation’s provision 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 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. In assessing the adequacy of the allowance, management considers the size and quality of the loan portfolio measured against prevailing economic conditions, regulatory guidelines, and historical loan loss experience. However, there is no assurance that loan credit losses will not exceed the allowance, and any growth in the loan portfolio and the uncertainty of the general economy may require additional provisions in future periods.

ADue ~~provision~~to a general ~~for~~stabilization ~~loan~~of ~~and~~uncertainties ~~lease~~related ~~losses~~to ofCOVID-19 ~~$300~~in the regional and broader U.S. economy,~~000~~ ~~was~~as ~~recognized~~well ~~during~~as the ~~nine month~~current ~~period ended~~status ~~September~~of ~~30,~~the ~~2021~~ Bank's loan portfolio, ~~none~~there ofwas ~~which~~no isprovision ~~attributable~~for toloan losses recognized during the ~~current~~three month ~~quarter~~period ended March 31, 2022, compared to ~~provisions~~a of $3300,000~~,000~~ ~~and~~provision ~~$4,450,000~~ for the ~~respective~~ three ~~and~~months ~~six month periods~~ ended ~~September~~March 3031, ~~2020~~ 2021. The allowance for loan ~~and lease~~ losses at ~~September 30~~March 31, ~~2021~~ 2022 is 1.7569% of total loans compared to 1.2662% of total loans at ~~September 30~~March 31, ~~2020. The significant reduction in provision expense in~~ 2021 ~~is to offset provision expenses taken in 2020 as a result of the COVID-19 pandemic given the general stabilization in the regional and broader U~~.~~S. economy, as well as the current status of the Bank's loan portfolio.~~

There is a possibility that the provision for loan losses could further increase in future periods based on the significant potential for the credit quality of our loan portfolio to decline and loan defaults to increase as a result of economic conditions created by the COVID-19 pandemic. 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~~March 3031, ~~2021~~2022, non-interest income was $43,~~712~~081,000, compared to $115,~~144~~741,000 for the ~~third~~first quarter of ~~2020~~2021, a $62,~~432~~660,000 (5746.73%) decrease, which was attributable to decreases in gain on sales of loans of $43,~~685~~999,000 (5587.24%), and an increase in loss on securities of $41,000, offset by an increase in other non-interest income of $1,~~742~~380,000 (65118.50%)~~, and net securities losses of $5,000~~.

~~Non-interest~~The ~~income~~significant ~~for~~decrease ~~the~~in ~~nine months~~gain ~~ended~~on ~~September 30,~~sale ~~2021~~of ~~totaled~~loans ~~$14,230,000,~~was ~~compared~~attributable to ~~$22,099,000~~a ~~for~~decrease ~~the~~in ~~same~~loan ~~period~~activity inby ~~2020~~the residential mortgage operations, along with a decrease ofin $7the net gain on sale,~~869,000~~ ~~(35.6%). The~~expressed ~~decrease~~as ina ~~non-interest~~percentage ~~income~~of ~~was~~loan ~~primarily~~balances ~~attributable~~sold. toDuring ~~decreases in~~the ~~gain~~quarter onended ~~sales~~March of31, 2022, there were 192 loans ofsold totaling $555.3 million,~~775,000~~ ~~(33~~compared to 460 loans sold totaling $117.~~9%),~~6 amillion ~~decrease~~during inthe same period of 2021. The net gain on sale was 0.86% for the first quarter of ~~securities of~~ ~~$295,000,~~2022 ~~and~~compared ato ~~decrease~~3.70% infor ~~other~~the ~~non-interest~~same ~~income~~period of ~~$1,799,000 (37~~2021.~~7%).~~

~~The~~Other ~~decrease~~non-interest inincome ~~gain on sale of loans~~ was attributable to a decrease of loan origination and sales activities within the residential mortgage operations along with a decrease in the average gain on sale per loan. Loan sales for the third quarter of 2021 were 328 loans sold totaling $~~90.4 million compared to 576 loans sold totaling $153.7 million for the third quarter of 2020~~2, ~~resulting in gains on sale of loans of $3~~550,~~799,~~000 for the quarter ended ~~September~~March 3031, ~~2021~~2022 compared to $81,~~484~~170,000 for the ~~quarter~~comparable ~~ended September 30, 2020. The average loan sale gain approximated $11,600 per loan during the third quarter of 2021 compared to approximately $14,700 for the same~~ period ~~of 2020. Loan sales year to date~~ in 2021 ~~were 1~~,~~098 loans~~ ~~sold~~an ~~totaling~~increase ~~$286.9 million compared to 1,360 loans closed totaling $354.9 million for the same period in 2020, resulting in gains on sale~~ of ~~loans of~~ $111,~~257~~380,000 ~~for~~. The ~~the~~increase ~~nine months~~was ~~ended~~primarily ~~September 30,~~related ~~2021 compared~~ to a $171,~~032~~247,000 ~~for~~ ~~the nine~~increase ~~months~~in ~~ended~~income ~~September 30,~~from ~~2020. The~~the ~~average~~Corporation’s loan ~~sale~~hedging ~~gain approximated $10,300 per loan during the first nine months of 2021 compared to approximately $12,500 for the same period of 2020~~program.

~~The~~A ~~high~~fair ~~levels~~value ~~of mortgage originations and sale~~write-down ~~activity in 2020 and early 2021 were attributable to the extremely low mortgage interest rate environment created by the Federal Reserve's lowering~~ of ~~Federal~~securities ~~funds~~resulted ~~target rates~~ in ~~March~~a ~~2020. Those~~loss ~~levels~~ of ~~mortgage banking activity or~~ ~~profitability~~$46,000 ~~are not~~for ~~sustainable in~~ the ~~long-term~~quarter ~~and results in the~~ended ~~second~~March ~~and~~31, ~~third~~2022, compared ~~quarters~~to ~~of 2021 reflect~~ a ~~slowdown~~ loss of ~~this~~ ~~activity. We anticipate~~$5,000 ~~that~~quarter ~~our~~ended ~~non-interest income may be adversely affected in future periods~~March 31, 2021.

~~Other non-interest income was $917,000 for the quarter ended September~~ 30, 2021 compared to $2,659,000 for the comparable period in 2020, a decrease of $1,742,000. The decrease in other non-interest income was primarily related to a $2,029,000 decrease in income from the Corporation’s loan hedging program. For the nine months ended September 30, 2021, other non-interest income was $2,979,000 compared to $4,779,000 for the nine months ended September 30, 2020, a decrease of $1,800,000. The decrease was due to a $2,900,000 decrease in income from the Corporations loan hedging program offset by an increase in Mortgage Servicing Rights valuation of $725,000 and an increase in debit card fees of $233,000.

~~The~~ Table ~~sale~~ of securities resulted in a loss of $4,000 and $7,000 for the quarter and nine month period ended September 30, 2021, respectively, compared to a gain of $1,000 and $288,000 for the quarter and nine month period ended September 30. 2020. In response to possible liquidity concerns at the time, the Corporation sold certain investment securities during the second quarter of 2020. Contents

Non-Interest Expenses

For the quarter ended ~~September~~March 3031, ~~2021~~2022 non-interest expenses were $98,~~680~~399,000, compared to $109,~~084~~106,000 for the ~~third~~first quarter of ~~2020~~2021, a $~~404~~707,000 (47.08%) decrease. The significant quarter-over-quarter decreases include salaries and benefits of $~~751~~472,000 (129.21%), ~~and~~ loan fees of $~~158~~264,000 (2557.34%), ~~offset~~and bymiscellaneous ~~increases in equipment service~~ expense of $~~146~~87,000 (8090.41%)~~, data processing expense of $119,000 (25~~.~~4%),~~ ~~and miscellaneous losses of $126,000.~~ The decrease in salaries and benefits is primarily related to a reduction in commissions paid based on loan activity by the residential mortgage operations.

~~Non-interest~~Maintaining ~~expenses~~acceptable ~~for~~levels ~~the~~of ~~nine months~~non-interest ~~ended~~expenses ~~September 30,~~and ~~2021~~operating ~~totaled~~efficiency ~~$27,859,000,~~are ~~compared~~key toperformance ~~$27,099,000~~indicators for the ~~same~~Corporation ~~period~~ in ~~2020,~~its anstrategic ~~increase~~initiatives. ofThe ~~$760,000~~financial ~~(2.8%). The~~services ~~increase~~industry inuses the efficiency ratio (total non-interest ~~expenses~~expense ~~was~~as ~~primarily~~a ~~attributable~~percentage toof ~~increases~~the ~~in data~~aggregate ~~processing~~ of ~~$367,000~~fully-tax ~~(27.3%),~~equivalent ~~equipment~~net ~~service~~interest ~~expense~~income ofand ~~$350,000~~non-interest ~~(67.5%~~income), ~~depreciation~~as ~~expense~~a key indicator of ~~$180~~performance. For the quarter ended March 31,~~000~~ ~~(24.2%)~~2022, ~~advertising~~the ~~and promotional expense~~Corporation’s ofefficiency ~~$134,000~~ratio was (872.995%), ~~building~~compared ~~maintenance~~to ~~projects~~62.51% offor ~~$111,000,~~the ~~and~~same ~~Ohio~~period ~~Financial~~of ~~Institutions~~2021. A ~~Tax~~lower ofefficiency ~~$98,000,~~ratio ~~offset~~generally byindicates ~~decreases~~that ina ~~salaries~~bank ~~and~~is ~~benefits~~spending ofless ~~$469,000~~to ~~(2.9%),~~generate ~~and loan fees~~every dollar of ~~$135,000 (9~~income.~~1%).~~

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, 2021, the Corporation’s efficiency ratio was 65.33%, compared to 51.39% for the same period of 2020. For the nine months ended September 30, 2021 the Corporation's efficiency ratio was 66.68% compared to 58.10% for the same period of 2020. A lower efficiency ratio generally indicates that a bank is spending less to generate every dollar of income.

Provision for Income Taxes

The provision for income taxes for the quarter ended ~~September~~March 3031, ~~2021~~2022 was $~~843~~364,000 (effective rate of 1712.16%), compared to $1873,~~208,~~000 (effective rate of 1817.75%) for the comparable ~~2020~~2021 period. The ~~provision~~decrease ~~for~~in the ~~nine month~~effective ~~period~~tax ~~ended~~rate ~~September 30, 2021~~ was ~~$2,200,000~~largely ~~(effective~~due ~~rate~~to oftax-exempt 16securities comprising 29.86%~~) compared~~ toof $2pre-tax income for the quarter ended March 31,~~652,000 (effective~~ ~~rate~~2022 ofcompared 18to 12.14%) for the comparable ~~2020~~ period in 2021.

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FINANCIAL CONDITION

Overview of Balance Sheet

Total assets amounted to $1.1 07 billion at ~~September~~ ~~30,~~March ~~2021~~31, 2022 compared to $~~978~~1.~~5 million~~08 billion at December 31, ~~2020~~2021, ana ~~increase~~decrease of $~~91.~~7 .2 million (90.467%). The ~~increase~~decrease in total assets was primarily the result of ~~increases~~decreases of $649.1 6 million (~~112~~12.58%) in cash and cash equivalents, and $7511.6 0 million (383.96%) in securities available-for-sale, offset by a $444.5 6 million (70.1%) ~~decrease~~ increase in net loans. Deposits ~~during~~totaled ~~this same period increased~~ $89944.4 8 million ~~(10.7%). Deposit~~at ~~balances~~March ~~have~~31, ~~been~~2022, ~~positively~~compared ~~impacted~~to by$930.4 ~~economic~~million ~~stimulus~~at ~~payments~~December ~~and~~31, ~~the~~2021, ~~Corporation’s~~an ~~participation~~increase inof ~~the~~$14.4 ~~Paycheck~~million ~~Protection Loan Program~~(1.6%).

Shareholders’ equity ~~increased~~decreased $19.7 million (16.6%) from $~~111~~119.61 million at December 31, ~~2020~~2021 to $~~116~~99.1 4 million at ~~September~~ 30March 31, ~~2021~~2022. This ~~increase~~ was ~~primarily~~ the result of ~~net~~an ~~income~~increase ~~during the nine month period ended September 30, 2021 of $10,863,000, offset by a decrease~~ in unrealized securities ~~gains~~losses, net of tax of $~~4,254,000,~~21.6 million and dividends paid of $1688,~~739~~000 offset by net income of $2,520,000. The ~~decrease~~increase in unrealized securities ~~gains~~losses ~~during~~from ~~the~~December ~~nine month~~31, ~~period ended~~2021 ~~September 30~~to March 31, ~~2021~~2022 was attributable to increasing long term treasury yields. Net unrealized gains and losses on securities are reported as accumulated other comprehensive (loss) income in the consolidated balance sheets.

Cash and Cash Equivalents

Cash and cash equivalents totaled $~~121~~65.26 million at ~~September~~March 3031, ~~2021~~2022 and $5775.02 million at December 31, ~~2020~~2021, including interest-bearing deposits in other banks of $~~101~~47.98 million at ~~September~~March 3031, ~~2021~~2022 and $4663.65 million at December 31, ~~2020~~2021. 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~~March 3031, ~~2021~~2022 totaled $~~266~~318.39 million and $~~270~~296.26 million, respectively, resulting in net unrealized ~~gain~~loss before tax of $322.93 million and a corresponding after-tax ~~increase~~decrease in shareholders’ equity of $317.16 million.

Loans and Leases

The Corporation’s primary lending areas are Northwestern, West Central, and Central Ohio. Gross loans and leases totaled $~~589~~614.92 million at ~~September~~March 3031, ~~2021~~2022, compared to $~~634~~609.16 million at December 31, ~~2020~~2021, ~~a decrease~~an increase of $444.26 million (7.0.8%). As compared to December 31, ~~2020~~2021, commercial and multi-family real estate loans ~~decreased~~increased $5312.34 million ~~due to PPP loan forgiveness~~, commercial ~~and consumer~~ loans decreased $17.0 4 million., ~~Commercial~~consumer ~~and multi-family real estate~~ loans ~~increased~~decreased $~~10.1~~211,000 ~~million~~ and residential 1-4 family real estate ~~loans~~loan ~~increased~~decreased ~~$29~~156,000. Loans originated through the PPP program are included in the Commercial segment and had an outstanding balance of $223.4 million as of ~~September 30~~March 31, ~~2021~~ 2022 and $766.8 6 million at December 31, ~~2020~~2021. Excluding the impact of PPP loans forgiven, loans and leases increased $107.28 million at ~~September~~March 3031, ~~2021~~2022 as compared to December 31, ~~2020~~2021.

There are also unrecognized financial instruments at ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021 which relate to commitments to extend credit and letters of credit. The contract amount of such financial instruments approximated $~~200~~203.17 million at ~~September~~March 3031, ~~2021~~2022 and $~~156~~198.4 7 million at December 31, ~~2020~~2021.

~~Excluding~~Loan ~~PPP loans, loan~~ demand ~~was relatively~~has ~~soft~~strengthened ~~throughout~~in the ~~majority of 2020 and the~~ first ~~nine~~three months of ~~2021~~2022, ~~primarily~~however asit ais ~~result~~possible ofthat ~~the overall economic impact from the COVID-19 pandemic. Resulting~~ uncertainties in economic conditions in our market areas may lead to reductions in the growth of our commercial and industrial loan, commercial real estate loan, residential real estate loan and consumer loan portfolios. ~~PPP loan balances will likely continue to decrease over the next year as the forgiveness process continues.~~

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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~~three month periods ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021:

	(in thousands)
	Nine months ended September 30,
	Three months ended March 31,
	2021			2020
	2022			2021
Balance, beginning of period	$	910,~~994~~355		$	49,~~131~~994
Provision for loan and lease losses		~~300~~-			~~4,450~~300
Charge offs		~~(10~~-	)		(~~165~~2	)
Recoveries		415			359
Net recoveries		315			~~(130~~7	)
Balance, end of period	$	10,~~325~~360		$	810,~~451~~301

The allowance for loan and lease losses as a percentage of gross loans and leases was 1.7569% at ~~September~~March 3031, ~~2021~~2022, 1.5870% at December 31, ~~2020~~2021, and 1.2662% at ~~September~~March 3031, ~~2020~~2021. Excluding PPP loans and the related allocation of allowance, the allowance for loan losses as a percentage of gross loans and leases was 1.8270% at ~~September~~March 3031, ~~2021~~2022, 1.7972% at December 31, ~~2020~~2021, and 1.5590% at ~~September~~March 3031, ~~2020~~2021. Based on current economic indicators, the Corporation increased the economic factors within the allowance for loan losses evaluation.

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 $~~299~~346,000 at ~~September~~March 3031, ~~2021~~2022 and $~~950~~320,000 at December 31, ~~2020~~2021. Non-accrual loans and leases as a percentage of outstanding loans amounted to 0.~~005~~006% at ~~September~~March 3031, ~~2021~~2022 and 0.~~015~~005% at December 31, ~~2020~~2021.

~~The~~There ~~Corporation~~were ~~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~~$1, ~~as the case may be~~072,000 in ~~based~~commercial onloan ~~current~~over ~~information~~90 ~~and~~days ~~events.~~but ~~The~~still ~~Corporation~~accruing ~~had no impaired loans with specific reserves~~ at ~~September~~ ~~30,~~March ~~2021 and impaired loans of $1.7 million with $255,000 of specific reserves as of December~~ 31, ~~2020~~2022. ~~The~~These ~~Corporation had $2.6 million of impaired~~ loans ~~without~~were ~~specific~~originated ~~reserves~~through atthe ~~September~~PPP ~~30,~~program ~~2021~~ and ~~$1.3~~are ~~million~~pending ofa ~~impaired~~determination ~~loans~~of ~~without~~forgiveness ~~specific~~from ~~reserve~~the ~~at December 31, 2020~~SBA.

The Corporation ~~had~~considers ~~other~~a ~~potential~~loan ~~problem credits, consisting of loans graded substandard~~ or ~~special~~lease ~~mention, as well as loans over 90 days past due, loans on non-accrual, and TDR loans, amounting~~ to ~~$20.1 million~~ ~~at September~~be ~~30,~~impaired ~~2021~~when ~~and~~it ~~$19.4 million~~becomes atprobable ~~December~~that ~~31,~~the ~~2020. The~~ Corporation’s ~~credit~~will ~~administration~~be ~~department~~unable ~~continues~~ to ~~closely~~collect ~~monitor~~under ~~these~~the ~~credits.~~contractual Asterms of ~~September 30, 2021~~ the ~~Corporation~~loan ~~has~~or ~~119 loans~~lease, ~~approximating~~as ~~$41.0 million~~the ~~that~~case ~~were~~may ~~modified~~be, orbased ~~extended~~on incurrent ~~response~~information toand ~~the~~events. ~~COVID-19~~The ~~pandemic. As~~Corporation ~~indicated~~had ~~above~~$1,911,000 ~~the~~at March ~~CARES~~31, ~~Act~~ 2022 and ~~guidance~~$1,948,000 ~~issued~~at December by31, ~~the~~2021, ~~Federal~~all ~~Bank~~with ~~Regulatory~~no ~~agencies provides relief from classifying COVID-19 related loan modifications as TDR loans~~reserve.

~~The~~In ~~Corporation~~addition ~~provides~~to ~~pooled~~impaired ~~reserves~~loans ~~for~~the ~~potential~~Corporation ~~problem~~had ~~loans~~other ~~and~~potential ~~leases~~problem ~~using~~credits, ~~loss~~consisting ~~rates~~of ~~calculated~~loans ~~considering~~graded ~~historic~~substandard ~~net~~or ~~loan~~special ~~charge-off experience~~mention, as well as ~~other~~loans ~~environmental~~over ~~and~~90 ~~qualitative~~days ~~factors.~~past ~~The Corporation experienced $10~~due,~~000~~ ofloans ~~loan~~on ~~charge~~non-~~offs~~accrual, ~~during~~and ~~the~~TDR ~~first nine~~loans, ~~months~~amounting ~~of 2021 compared~~ to $~~22,000 during the first~~23.7 ~~nine~~million ~~months of~~at ~~2020~~March ~~with~~31, ~~the~~2022 ~~charge-offs~~and ~~coming~~$24.7 ~~primarily~~million ~~from~~at ~~the consumer~~December ~~loan~~31, ~~portfolio~~2021. The Corporation’s ~~also~~credit ~~provides~~administration ~~pooled~~department ~~general~~continues ~~reserves for the remaining portion of its loan portfolio not considered~~ to beclosely ~~problem~~monitor orthese ~~potential problem loans~~credits. ~~These general reserves are also calculated considering, among other things, the historic net charge-off experience for the related loan type.~~

34 As of March 31, 2022 the Corporation has 110 loans, approximating $38.3 million that were modified or extended in response to the COVID-19 pandemic. As indicated above, the CARES Act and guidance issued by the Federal Bank Regulatory agencies provides relief from classifying COVID-19 related loan modifications as TDR loans.

The Corporation provides pooled reserves for potential problem loans and leases using loss rates calculated considering historic net loan charge-off experience, as well as other environmental and qualitative factors. The Corporation experienced no loan charge-offs during the first three months of 2022 compared to $2,000 during the first three months of 2021. The Corporation also provides pooled 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 related 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 $~~927~~944.8 million, or 97.24% of the Corporation’s outstanding funding sources at ~~September~~March 3031, ~~2021~~2022, compared to $~~838~~930.4 million at December 31, ~~2020~~2021. ~~The significant increase in deposits during the nine month period is somewhat attributable to customer deposits from economic stimulus payments and PPP loan proceeds.~~

Non-interest bearing deposits comprised 2021.81% of total deposits at ~~September~~March 3031, ~~2021~~2022 and 2221.20% at December 31, ~~2020~~2021. ~~We expect that deposit levels may decrease in future periods if the conditions in our market areas become distressed relating to the COVID-19 pandemic.~~

In addition to traditional deposits, the Corporation maintains both short-term and long-term borrowing arrangements. Other borrowings consisted of $76,~~000~~750,000 and $7,~~750~~012,000 of a term ~~borrowings~~ borrowing from the United Bankers’ Bank (UBB) at ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, respectively. The Corporation also has outstanding junior subordinated deferrable interest debentures of $12,~~967~~984,000 and $12,~~942~~976,000 at ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, respectively. Management plans to maintain access to various borrowing alternatives as an appropriate funding source.

Regulatory Capital

The Corporation and Bank met all regulatory capital requirements as of ~~September~~March 3031, ~~2021~~2022, and the Bank is considered “well capitalized” under regulatory and industry standards of risk-based capital.

Cash Flow from Operations

As part of the Bank's hedging program, loans held for sale are accumulated into larger blocks before being sold. Depending on the timing of the sales of these blocks, there could be a positive or negative impact to net income and cash flow from operations. As of ~~September~~March 3031, ~~2021~~2022, loans held for sale amounted to $1410,~~545~~480,000 compared to $189,~~427~~146,000 as of December 31, ~~2020~~2021 resulting in a ~~positive~~negative impact to cash flow from operations for the ~~nine~~three month period ended ~~September~~March 3031, ~~2021~~2022 of $31,~~882~~334,000. There was a ~~negative~~positive impact on cash flow from operations for the ~~nine~~three month period ended ~~September~~March 3031, ~~2020~~2021 of $16554,~~816,~~000 from ana ~~increase~~decrease in loans held for sale. Excluding these changes in loans held for sale, cash flow from operations for the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021 would have been a ~~positive~~ negative $18379,~~610,~~000 and a positive $62,~~154~~973,000, respectively.

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~~three month period ended ~~September~~March 3031, ~~2021~~2022. Management continues to closely monitor interest rate sensitivity trends through the Corporation's asset liability management program and in calculating the allowance for loan and lease losses.

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ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to Smaller Reporting Companies.

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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, who is also serving as our interim 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 on that evaluation, the Corporation's management, including the Chief Executive Officer, who is also serving as our Chief Financial Officer, concluded that the Corporation's disclosure controls and procedures were effective as of ~~September~~March 3031, ~~2021~~2022.

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

~~The~~ There ~~significant~~have ~~factors~~been ~~known~~no ~~that~~material ~~could~~changes ~~materially~~in ~~adversely~~the ~~affect~~discussion ~~the~~pertaining ~~business,~~to ~~financial~~risk ~~condition~~factors orthat ~~operating~~was ~~results~~provided ofin the Corporation’s ~~are~~Annual ~~described~~Report ~~in Part~~on ~~I, Item 1A “Risk Factors” in the~~ Form 10-K for the fiscal year ended December 31, ~~2020~~2021.

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~~March 3031, ~~2021~~2022:

Period	Total number of shares purchased (b)		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)
07/01/21 - 07/31/21		2,178	$	31.59		-		198,446
01/01/22 - 01/31/22		1,117	$	32.86		4,213		382,582
08/01/21 - 08/31/21		12,954	$	31.69		11,651		186,795
02/01/22 - 02/28/22		-	$	-		289		382,293
09/01/21 - 09/30/21		268	$	32.98		-		186,795
03/01/22 - 03/31/22		1,668	$	34.32		-		382,293

(a) A stock repurchase program (“Plan”) was adopted by the Corporation’s Board of Directors and originally announced on July 29, 2005. The Plan, which was subsequently amended on December 23, 2005, March 20, 2007, ~~and~~ December 17, 2013, and November 18, 2021, authorizes the Corporation to repurchase up to ~~600~~800,000 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.

(b) Includes shares repurchased by the Company in connection with the cashless exercise of stock option awards under the 2016 Stock Option Plan.

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

Exhibit Number	Description	Exhibit Location
3.1	Amended and Restated Articles of Incorporation	Incorporated herein by reference to the Corporation's Form 10Q for the quarter ended June 30, 2006.
3.2	Amended and Restated Code of Regulations	Incorporated herein by reference to the Corporation’s Form 10Q for the quarter ended June 30, 2007.
4	Description of Registrant's Common Stock	Incorporated herein by reference to the Corporation's Form 10K for the year ended December 31, ~~2020~~2019
31.1	Rule 13a-14(a)/15d-14(a) Certification of CEO	Filed herewith
32.1	Section 1350 CEO’s Certification	Filed herewith
101.INS	Inline XBRL Instance Document	Filed herewith
101.SCH	Inline XBRL Taxonomy Extension Schema	Filed herewith
101.CAL	Inline XBRL Taxonomy Extension Calculation	Filed herewith
101.DEF	Inline XBRL Taxonomy Extension Definition	Filed herewith
101.LAB	Inline XBRL Taxonomy Extension Label	Filed herewith
101.PRE	Inline XBRL Taxonomy Extension Presentation	Filed herewith
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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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: November 2, 2021		By: /s/ Brian D. Young
Date: May 6, 2022		By: /s/ Brian D. Young
		Brian D. Young
		Chief Executive Officer and Interim Chief Financial Officer

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