University Bancorp Reports 3Q 2006 Results

ANN ARBOR, MI -- (MARKET WIRE) -- November 16, 2006 -- University Bancorp, Inc. (NASDAQ: UNIB) reported unaudited financial results for the third quarter of 2006. Net loss for the Company for the third quarter of 2006 was $132,971, versus net income of $7,960 for the same period in 2005. Basic and diluted earnings (loss) per share for the 2006 and 2005 periods were $(0.03) and $0.00, respectively. The Company's net loss for the first nine months of 2006 was $347,237 versus a net income of $112,063 for the same period last year. Basic and diluted (loss) earnings per share for the first nine months of 2006 and 2005 were $(0.09) and $0.02, respectively.

Community and Islamic Banking reported a net loss of $95,000 during 3Q 2006 as opposed to a net loss of $101,000 in 3Q 2005. Net interest and profit margin increased by $58,068 on the quarter from the prior year on the strength of a 15.2% increase in the average balance of earning assets. This improvement was offset by an accrual of $57,411 during the quarter in additional allowance for loan losses based on management's calculation of potential future economic risk due to the deterioration of the local Michigan economy despite the fact that the bank's loan portfolio currently has record low delinquencies. Net loss for the quarter and first nine months of 2006 was also impacted by planned marketing, product development and personnel expenses at the Islamic subsidiary.

Midwest Loan Services reported a net loss of $11,000 for the third quarter of 2006 as compared to net income of $145,000 for the same period in 2005. Income at Midwest was negatively impacted in the third quarter of 2006 by a $150,000 reserve against the valuation of the mortgage servicing rights portfolio held by Midwest. During the quarter, mortgage interest rates decreased, thus affecting the value of the portfolio. In the prior year period income was impacted by a $99,000 reversal of this reserve as mortgage interest rates rose during that period. This quarter's negative trend was partially offset by rising subservicing and loan origination income. Midwest's portfolio of mortgage subservicing grew 3.0% in the third quarter of 2006 to 31,519 loans from 30,581, and is now 20.6% higher than at the end of 2005, when 26,414 loans were subserviced.

At September 30, 2006, the Bank's Tier 1 leverage capital ratio was 12.2%, up from 11.6% at June 30, 2006.

The Company's net loss for the first nine months of 2006 was $347,237, versus net income of $112,063 for the same period last year. Community & Islamic Banking reported a net loss of $261,000 during the current year's first nine months as opposed to a loss of $58,000 in the prior year. Midwest Loan Services had net income of $238,000 in the first nine months of 2006 compared to a net loss of $221,000 in the same period last year. Earnings during the second quarter and first half of 2006 were impacted by a one-time payment to modify an agreement with a company that has been assisting over the past four years in the development of University Islamic Financial Corporation and its products. During the quarter, $259,023 was charged to the Corporate Office segment related to this one-time contract modification.

                                        For the            For the
                                     Quarter Ended     Nine Months Ended
                                       September 30,      September 30,
                                        (in 000s)          (in 000s)
                                   2006       2005       2006       2005

Net interest & financing income  $    610   $    552   $  1,918   $  1,708
Provision for loan & financing
 losses                                57          0        106         17
Total securities gains                  0         22          0         22
Total other income                  1,197      1,054      3,284      3,099
Total other expense                 1,883      1,598      5,433      4,678
Income tax                              0          0          0          0
Net income (loss)                $   (133)  $      8   $   (347)  $    112
Basic and diluted income
 (loss) per common share         $  (0.03)  $   0.00   $  (0.09)  $   0.02
Average shares outstanding
Basic                               4,248      4,149      4,214      4,146
Diluted                             4,248      4,184      4,214      4,185
Net interest & profit margin         4.29%      4.47%      4.53%      4.79%

Period-end:                         September 30,    December 31,
                                   2006       2005       2005
  Loans & financings including
   those held for sale           $ 50,163   $ 45,517   $ 47,099
  Allowance for loan &
   financing losses                   458        349        349
  Deposits                         57,015     51,915     56,021
  Assets                           65,842     56,696     64,540
  Equity                            5,300      3,423      5,301
  Book value per share           $   1.21   $   0.80   $   1.24

The following table summarizes the net (loss) income of each profit center of the Company for the three and nine months ended September 30, 2006 and 2005 (in thousands):

2006                                     Three Months   Nine months
Community & Islamic Banking                 $ (95)        $ (261)
Midwest Loan Services                         (11)           238
Corporate Office                              (27)          (324)
                                           ------         ------
Total                                      $ (133)        $ (347)
                                           ======         ======

2005                                     Three Months   Nine months
Community & Islamic Banking                $ (101)        $  (58)
Midwest Loan Services                         145            221
Corporate Office                              (36)           (51)
                                           ------         ------
Total                                      $    8         $  112
                                           ======         ======

Ann Arbor-based University Bancorp owns 100% of University Bank which manages a total of over $3.95 billion in assets. University Bank is an FDIC-insured, locally owned and managed community bank, and is the only financial institution headquartered in Washtenaw County rated "Outstanding" by the FDIC for Community Service and Community Reinvestment. University Bank focuses on local businesses, minorities and the non-profit communities primarily serving the cities of Ann Arbor and Ypsilanti of Washtenaw County. Other University Bank specialties include highly competitive deposit products for business owners, residential mortgages, commercial real estate lending and insurance, investments and money management through its wholly owned subsidiary University Insurance & Investments, Inc. University Bank also engages in Islamic Banking through 80%-owned University Islamic Financial Corporation, the first and only Islamic Banking subsidiary of a bank in the U.S. University Islamic offers mortgage alternative financing, the only FDIC-insured Islamic deposits (offered through University Bank) and Islamic equity mutual funds (offered through University Insurance & Investments). University Bank also specializes in mortgage subservicing and mortgage origination primarily serving over 250 credit unions (representing 2.6% of all credit unions nationwide) through its Houghton-based 80%-owned subsidiary, Midwest Loan Services.

Any prediction of the future is inherently not assured. Investors should read the risk factors listed on pages 22 through 24 in the Company's report on Form 10K for the year ended December 31, 2005 and any prediction in this release is intended to be covered by the Safe Harbor provisions of Section 21E of the Securities Exchange Act of 1934.

Contact Information: Contact: Stephen Lange Ranzini President and CEO Phone: 734-741-5858, Ext. 226 Email: Email Contact