SOURCE: UnionBancorp, Inc.

July 28, 2006 16:15 ET

UnionBancorp, Inc. Announces Second Quarter Earnings

OTTAWA, IL -- (MARKET WIRE) -- July 28, 2006 -- Scott A. Yeoman, President and Chief Executive Officer of UnionBancorp, Inc. (NASDAQ: UBCD), reported net income for the second quarter ended June 30, 2006 of $1,294,000 or $0.33 per diluted share compared to $1,382,000 or $0.33 per diluted share earned in the second quarter of 2005. For the six months ended June 30, 2006, net income equaled $2,940,000 or $0.74 per diluted share compared to $2,346,000 or $0.55 per diluted share earned in the same period during 2005.

Commenting on the quarter, Yeoman said, "Excluding nonrecurring activity for the 2006 and 2005 quarters, we were pleased to report an 8% improvement in earnings. We continue to enjoy acceptable customer retention levels and improved customer service while expense controls remain firmly on target. This, combined with continued favorable asset quality trends, has yielded a strong start in the first half of 2006. As we move into the latter half of the year, we will continue to focus on our sales and service efforts in an attempt to help offset the anticipated flat yield curve. We will remain committed to attracting high quality commercial relationships and reaping the benefits of strong credit quality."

Second Quarter 2006 Highlights:

    
--  On June 30, 2006, UnionBancorp, Inc. and Centrue Financial Corporation
    (NASDAQ: TRUE) announced that they have signed a definitive agreement to
    join forces in a merger of equals transaction. Under the terms of the
    agreement, Centrue shareholders will receive shares of UnionBancorp common
    stock, using a fixed exchange ratio of 1.2 shares of UnionBancorp common
    stock for each share of Centrue common stock outstanding. The combined
    company will adopt the Centrue name and change its stock market ticker
    symbol to TRUE.  The merger is subject to approval by UnionBancorp's and
    Centrue's stockholders and banking regulators and other customary
    conditions. The transaction is expected to be completed during the fourth
    quarter of 2006.
    
--  Earnings per share were unchanged compared to the second quarter of
    2005.
    
--  The Company's earnings were positively impacted by a $300,000 negative
    provision for loan losses largely based on continued improvements in the
    quality of the loan portfolio, which was partially offset by a loss on sale
    of securities of $88,000 in order to better position the securities
    portfolio. Excluding these items, net income for the quarter would have
    equaled $1,163,000 or $0.29 per diluted share.
    
--  The second quarter of 2005 results were positively impacted by a
    $251,000 reduction in state income taxes and $90,000 of interest received
    due to the receipt of a tax refund related to amended tax returns
    outstanding from prior years. Excluding these items, net income for the
    second quarter of 2005 would have equaled $1,076,000 or $0.25 per diluted
    share.
    
--  Due to the flat yield curve, the net interest margin decreased to
    3.37% during the second quarter of 2006 as compared with 3.59% for the same
    period in 2005 and 3.50% in the first quarter of 2006.
    
--  The loan portfolio decreased to $403.5 million as compared to $417.5
    million at December 31, 2005. Of this decrease in balances, approximately
    $7.7 million or 55% was related to the pay-off of action list credits
    refinanced by a competitor.
    
--  The level of nonperforming loans to end of period loans totaled 0.70%
    as of June 30, 2006 compared to 0.95% at June 30, 2005 and 0.96% on
    December 31, 2005.
    
--  Net charge-offs for the second quarter of 2006 were 0.09% of average
    loans as compared to 0.19% for the same period 2005.
    
--  The Company's Board of Directors approved the payment of a $0.12
    quarterly cash dividend on the Company's common stock, marking the 85th
    consecutive quarter of dividends paid to stockholders.
    
Net Interest Margin

The net interest margin for the second quarter of 2006 was reported at 3.37% as compared to 3.59% for the same period in 2005. The expectation of a flat yield curve is likely to maintain pressure on margins for the remainder of 2006.

Tax-equivalent net interest income decreased $360,000 to $5,078,000 for the second quarter of 2006 as compared to $5,438,000 for the second quarter of 2005. This change in net interest income was largely related to a decrease in volume and a shift in the mix of earning assets. Also contributing to the decline was a decrease in non-interest bearing deposits and an increase in time deposits.

Noninterest Income and Expense

Excluding $88,000 in securities losses from the second quarter of 2006 and $90,000 in interest received due to the receipt of a tax refund in the second quarter of 2005, noninterest income decreased $156,000 or 8.0% during the second quarter of 2006 as compared to the same period in 2005. The change was primarily related to a production level decrease in revenue generated from the mortgage banking division and lower brokerage and insurance revenue and losses related to investment activity.

Noninterest expense experienced a decrease of $498,000 or 8.9% during the second quarter of 2006 as compared to the same period in 2005. This decrease was largely due to the reduction of salary and benefit costs, and lower accounting and professional fees. These savings were offset by a modest increase in furniture and fixture expense.

Asset Quality

General asset quality trends continued to improve as the level of nonperforming loans to end of period loans totaled 0.70% as of June 30, 2006 compared to 0.95% at June 30, 2005 and 0.96% on December 31, 2005. Additionally, the reserve coverage ratio (allowance to nonperforming loans) was reported at 244.05% as of June 30, 2006 as compared to 238.83% as of June 30, 2005 and 208.84% as of December 31, 2005.

About the Company

UnionBancorp, Inc. is a regional financial services company based in Ottawa, Illinois, and devotes special attention to personal service and offers Bank, Trust, Insurance and Investment services at each of its locations. The Company's market area extends from the far Western suburbs of the Chicago metropolitan area across Central and Northern Illinois.

UnionBancorp common stock is listed on The NASDAQ Global Market under the symbol "UBCD." Further information about UnionBancorp, Inc. can be found at the Company's website at http://www.ubcd.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1993, as amended, and Section 21E of the Securities Act of 1934 as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by the use of words such as "believe," "expect," "intend," "anticipate," "estimate," or "project" or similar expressions. The Company's ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company and the subsidiaries include, but are not limited to, changes in: interest rates; general economic conditions; legislative/regulatory changes; monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality and composition of the loan or securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in the Company's market areas; the Company's implementation of new technologies; the Company's ability to develop and maintain secure and reliable electronic systems; and accounting principles, policies, and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Accompanying Financial Statements and Tables

Accompanying this press release is the following unaudited financial information:

--  Unaudited Quarterly Highlights
--  Unaudited Consolidated Balance Sheets
--  Unaudited Consolidated Statements of Income
--  Unaudited Selected Quarterly Consolidated Financial Data
    

UnionBancorp, Inc. Unaudited Quarterly and Year to Date Highlights (In Thousands, Except Share Data) Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 2006 2005 2006 2005 --------- --------- --------- --------- Operating Highlights Net income $ 1,294 $ 1,382 $ 2,940 $ 2,346 Return on average total assets 0.79% 0.83% 0.89% 0.71% Return on average stockholders equity 7.93 7.94 9.03 6.73 Net interest margin 3.37 3.59 3.44 3.56 Efficiency ratio 74.80 74.27 74.70 75.81 Per Share Data Diluted earnings per common share $ 0.33 $ 0.33 $ 0.74 $ 0.55 Book value per common share $ 17.31 $ 17.40 $ 17.31 $ 17.40 Diluted weighted average common shares outstanding 3,787,231 4,054,804 3,809,813 4,083,477 Period end common shares outstanding 3,742,751 3,923,018 3,742,751 3,923,018 Stock Performance Data Market Price: Quarter End $ 20.10 $ 22.00 $ 20.10 $ 22.00 High $ 21.12 $ 22.00 $ 21.48 $ 22.00 Low $ 19.44 $ 20.10 $ 19.44 $ 20.10 Period end price to book value 1.16 1.26 1.16 1.26 UnionBancorp, Inc. Unaudited Consolidated Balance Sheets (In Thousands) June 30, December 31, 2006 2005 --------- --------- ASSETS Cash and cash equivalents $ 30,265 $ 24,358 Securities available-for-sale 182,914 196,440 Loans 403,455 417,525 Allowance for loan losses (6,848) (8,362) --------- --------- Net loans 396,607 409,163 Cash surrender value of life insurance 15,775 15,498 Mortgage servicing rights 2,373 2,533 Premises and equipment, net 13,789 13,908 Goodwill 6,963 6,963 Intangible assets, net 446 533 Other real estate 1,390 203 Other assets 6,309 6,623 --------- --------- Total assets $ 656,831 $ 676,222 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Deposits Non-interest-bearing $ 56,119 $ 57,832 Interest-bearing 466,576 486,009 --------- --------- Total deposits 522,695 543,841 Federal funds purchased and securities sold under agreements to repurchase 7,297 612 Advances from the Federal Home Loan Bank 46,700 50,000 Notes payable 8,824 9,468 Series B mandatory redeemable preferred stock 831 831 Other liabilities 5,180 5,395 --------- --------- Total liabilities 591,527 610,147 --------- --------- Stockholders' equity Series A convertible preferred stock 500 500 Common stock 4,698 4,684 Surplus 23,381 23,167 Retained earnings 50,775 48,837 Accumulated other comprehensive income (1,204) 95 --------- --------- 78,150 77,283 Treasury stock, at cost (12,846) (11,208) --------- --------- Total stockholders' equity 65,304 66,075 --------- --------- Total liabilities and stockholders' equity $ 656,831 $ 676,222 ========= ========= UnionBancorp, Inc. Unaudited Consolidated Statements of Income (In Thousands, Except Per Share Data) Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 2006 2005 2006 2005 --------- --------- --------- --------- Interest income Loans $ 7,194 $ 6,751 $ 14,349 $ 13,201 Securities Taxable 2,030 1,484 4,025 2,909 Exempt from federal income taxes 210 263 426 521 Federal funds sold and other 42 47 59 56 --------- --------- --------- --------- Total interest income 9,476 8,545 18,859 16,687 Interest expense Deposits 3,845 2,571 7,324 4,890 Federal funds purchased and securities sold under agreements to repurchase 51 37 123 111 Advances from the Federal Home Loan Bank 455 550 938 1,133 Series B Mandatory Redeemable 13 13 25 25 Notes payable 161 94 315 163 --------- --------- --------- --------- Total interest expense 4,525 3,265 8,725 6,322 --------- --------- --------- --------- Net interest income 4,951 5,280 10,134 10,365 Provision for loan losses (300) - (1,100) 100 --------- --------- --------- --------- Net interest income after Provision for loan losses 5,251 5,280 11,234 10,265 Noninterest income Service charges 495 525 935 1,008 Trust income 199 187 418 402 Mortgage banking income 281 364 527 704 Insurance commissions and fees 414 472 793 893 Bank owned life insurance (BOLI) 137 135 277 269 Securities gains, net (88) - (88) - Gain (loss) on sale of assets (9) 1 (9) 3 Other income 268 347 604 602 --------- --------- --------- --------- 1,697 2,031 3,457 3,881 Noninterest expenses Salaries and employee benefits 2,910 3,366 5,955 6,842 Occupancy expense, net 346 385 789 779 Furniture and equipment expense 521 461 1,033 885 Marketing 98 128 209 224 Supplies and printing 65 86 162 163 Telephone 118 106 235 213 Other real estate owned expense 2 29 8 34 Amortization of intangible assets 43 43 87 87 Other expenses 1,026 1,023 1,985 1,946 --------- --------- --------- --------- 5,129 5,627 10,463 11,173 --------- --------- --------- --------- Income before income taxes 1,819 1,684 4,228 2,973 Income taxes 525 302 1,288 627 --------- --------- --------- --------- Net income 1,294 1,382 2,940 2,346 Preferred stock dividends 52 52 104 104 --------- --------- --------- --------- Net income for common stockholders $ 1,242 $ 1,330 $ 2,836 $ 2,242 ========= ========= ========= ========= Basic earnings per share $ 0.33 $ 0.33 $ 0.75 $ 0.56 ========= ========= ========= ========= Diluted earnings per common share $ 0.33 $ 0.33 $ 0.74 $ 0.55 ========= ========= ========= ========= UnionBancorp, Inc. Unaudited Selected Quarterly Consolidated Financial Data (In Thousands, Except Share Data) Quarters Ended ------------------------------------------------------ 06/30/06 03/31/06 12/31/05 09/30/05 06/30/05 ---------- ---------- ---------- ---------- ---------- (Dollars in Thousands, Except Per Share Data) Statement of Income Data Interest income $ 9,476 $ 9,383 $ 9,290 $ 8,720 $ 8,545 Interest expense (4,525) (4,200) (3,886) (3,504) (3,265) ---------- ---------- ---------- ---------- ---------- Net interest income 4,951 5,183 5,404 5,216 5,280 Provision for loan losses (300) (800) 100 50 - ---------- ---------- ---------- ---------- ---------- Net interest income after provision for loan losses 5,251 5,983 5,304 5,166 5,280 Noninterest income 1,697 1,760 1,707 2,014 2,031 Noninterest expense 5,129 5,334 6,042 5,750 5,627 ---------- ---------- ---------- ---------- ---------- Income before income taxes 1,819 2,409 969 1,430 1,684 Provision (benefit) for income taxes 525 763 203 369 302 ---------- ---------- ---------- ---------- ---------- Net income $ 1,294 $ 1,646 $ 766 $ 1,061 $ 1,382 ========== ========== ========== ========== ========== Net income on common stock $ 1,242 $ 1,594 $ 715 $ 1,009 $ 1,330 ========== ========== ========== ========== ========== Per Share Data Basic earnings per common share $ 0.33 $ 0.42 $ 0.19 $ 0.26 $ 0.33 Diluted earnings per common share 0.33 0.42 0.19 0.25 0.33 Cash dividends on common stock 0.12 0.12 0.11 0.11 0.11 Dividend payout ratio for common stock 36.15% 28.17% 58.60% 41.92% 32.48% Book value per common share $ 17.31 $ 17.33 $ 17.23 $ 17.42 $ 17.40 Basic weighted average common shares outstanding 3,742,716 3,786,559 3,839,693 3,895,365 3,993,164 Diluted weighted average common shares outstanding 3,787,231 3,837,708 3,898,320 3,958,948 4,054,804 Period-end common shares outstanding 3,742,751 3,742,651 3,806,876 3,855,776 3,923,018 Balance Sheet Data Securities $ 182,914 $ 201,195 $ 196,440 $ 197,580 $ 192,593 Loans 403,455 406,617 417,525 405,884 404,462 Allowance for loan losses 6,848 7,506 8,362 8,493 9,159 Assets 656,831 661,707 676,222 664,643 665,424 Deposits 522,695 530,928 543,841 522,943 521,200 Stockholders' equity 65,304 65,369 66,075 67,664 68,749 Earnings Performance Data Return on average total assets 0.79% 0.99% 0.45% 0.64% 0.83% Return on average stockholders' equity 7.93 10.14 4.54 6.18 7.94 Net interest margin ratio 3.37 3.50 3.60 3.53 3.59 Efficiency ratio (1) 74.80 74.60 82.44 77.09 74.27 Asset Quality Ratios Nonperforming assets to total end of period assets 0.64% 0.59% 0.62% 0.59% 0.68% Nonperforming loans to total end of period loans 0.70 0.82 0.96 0.92 0.95 Net loan charge- offs to total average loans 0.09 0.01 0.06 0.17 0.19 Allowance for loan losses to total end of period loans 1.70 1.85 2.00 2.09 2.26 Allowance for loan losses to nonperforming loans 244.05 223.93 208.84 227.94 238.83 Capital Ratios Average equity to average assets 9.94% 9.80% 10.01% 10.33% 10.38% Total capital to risk adjusted assets 13.69 13.46 13.33 13.92 14.26 Tier 1 leverage ratio 9.38 9.18 9.03 9.30 9.42 (1) Calculated as noninterest expense less amortization of intangibles and expenses related to other real estate owned divided by the sum of net interest income before provisions for loan losses and total noninterest income excluding securities gains and losses and gains on sale of assets.

Contact Information

  • Contact:
    Scott A. Yeoman
    President and
    Chief Executive Officer
    UnionBancorp, Inc.
    Email Contact

    Kurt R. Stevenson
    Senior Executive Vice President and
    Chief Financial Officer
    UnionBancorp, Inc.
    Email Contact