SOURCE: UnionBancorp, Inc.

November 13, 2006 16:52 ET

UnionBancorp, Inc. Announces Third Quarter Earnings

OTTAWA, IL -- (MARKET WIRE) -- November 13, 2006 -- Kurt R. Stevenson, Interim President and Chief Financial Officer of UnionBancorp, Inc. (NASDAQ: UBCD), reported income from continuing operations for the third quarter ended September 30, 2006 of $1,506,000 or $0.38 per diluted share compared to $1,118,000 or $0.26 per diluted share earned in the third quarter of 2005. The Company recorded a net loss of ($270,000) or ($0.07) for the 2006 quarter and a net loss of ($57,000) or ($0.01) for the 2005 quarter per diluted share from discontinued operations related to the recent sale of the insurance unit within our financial services business segment. Net income for the period was $1,236,000 or $0.31 per diluted share as compared to $1,061,000 or $0.25 per diluted share for the same period in 2005.

For the nine months ended September 30, 2006, net income equaled $4,176,000 or $1.06 per diluted share compared to $3,407,000 or $0.80 per diluted share earned in the same period during 2005. During this period, the Company reported a net loss of ($327,000) or ($0.08) per diluted share related to the discontinued operations for the insurance unit as compared to a net loss of ($143,000) or ($0.03) per diluted share for the same period in 2005. For continuing operations, the Company reported results of $4,503,000 or $1.14 per diluted share as compared with earnings of $3,550,000 or $0.84 per diluted share for the same period.

Third 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 in mid-November,
    2006.
    
--  Diluted earnings per share increased 24.0% compared to the third
    quarter of 2005 and decreased 6.1% as compared to second quarter 2006
    levels.
    
--  The Company's earnings were positively impacted by a $200,000 negative
    provision for loan losses largely based on continued improvements in the
    quality of the loan portfolio.
    
--  During the quarter, the Company sold its Insurance unit to a third
    party.
    
--  The net interest margin decreased to 3.49% during the third quarter of
    2006 as compared with 3.53% for the same period in 2005 due largely to the
    flat yield curve and intense competition for deposits and loans.
    
--  The loan portfolio decreased to $407.0 million as compared to $417.5
    million at December 31, 2005.
    
--  The level of nonperforming loans to end of period loans totaled 0.79%
    as of September 30, 2006 compared to 0.92% at September 30, 2005 and 0.96%
    on December 31, 2005.
    
--  Net charge-offs for the third quarter of 2006 were 0.14% of average
    loans as compared to 0.17% 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 86th
    consecutive quarter of dividends paid to stockholders.
    

Net Interest Margin

The net interest margin for the third quarter of 2006 was reported at 3.49% as compared to 3.53% 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 and through the beginning of 2007.

Tax-equivalent net interest income decreased $159,000 to $5,206,000 for the third quarter of 2006 as compared to $5,365,000 for the third quarter of 2005. This change in net interest income was largely related to a decrease in loan volume. Also contributing to the decline was a shift in the mix of funding liabilities from lower costing non-interest bearing deposits to higher costing time deposits.

Noninterest Income and Expense

Noninterest income decreased $221,000 or 13.0% during the third quarter of 2006 as compared to the same period in 2005. The change was primarily related to a decrease in revenue generated from the mortgage banking and brokerage divisions due to a slowdown in production levels.

Noninterest expense experienced a decrease of $756,000 or 14.2% during the third 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 slight 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 0.79% as of September 30, 2006 compared to 0.92% at September 30, 2005 and 0.96% on December 31, 2005. Additionally, the reserve coverage ratio (allowance to nonperforming loans) was reported at 189.48% as of September 30, 2006 as compared to 227.94% as of September 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 and Wealth Management 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 Stock 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 1933, 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      Nine Months Ended
                                 September 30,           September 30,
                            ----------------------  ----------------------
                               2006        2005        2006        2005
                            ----------  ----------  ----------  ----------
Operating Highlights
  Net income                $    1,236  $    1,061  $    4,176  $    3,407
  Income from continuing
   operations               $    1,506  $    1,118  $    4,503  $    3,550
  Return on average
   total assets                   0.76%       0.64%       0.85%       0.69%
  Return on average
   stockholders' equity           7.32        6.18        8.45        6.55
  Net interest margin             3.49        3.53        3.57        3.55
  Efficiency ratio               70.23       77.09       73.21       76.24

Per Share Data
  Diluted earnings per
   common share             $     0.31  $     0.25  $     1.06  $     0.80
  Diluted earnings per
   common share for
   continuing operations    $     0.38  $     0.26  $     1.14  $     0.84
  Diluted earnings per
   common share for
   discontinued operations  $    (0.07) $    (0.01) $    (0.08) $    (0.03)
  Book value per common
   share                    $    17.85  $    17.42  $    17.85  $    17.42
  Diluted weighted
   average common shares
   outstanding               3,783,075   3,958,948   3,800,869   4,040,309
  Period end common
   shares outstanding        3,742,851   3,855,776   3,742,851   3,855,776

Stock Performance Data
  Market price:
     Quarter end            $    19.16  $    20.91  $    19.16  $    20.91
     High                   $    20.17  $    21.98  $    21.48  $    22.00
     Low                    $    17.44  $    20.68  $    17.44  $    20.10
  Period end price to
   book value                     1.07        1.20        1.06        1.20



UnionBancorp, Inc.
Unaudited Consolidated Balance Sheets (In Thousands)

                                            September 30,     December 31,
                                               2006              2005
                                            ------------      -----------
ASSETS
Cash and cash equivalents                   $     20,051     $     24,358
Securities available-for-sale                    182,171          196,440
Loans                                            407,015          417,525
Allowance for loan losses                         (6,103)          (8,362)
                                            ------------     ------------
   Net loans                                     400,912          409,163
Cash surrender value of life insurance            15,928           15,498
Mortgage servicing rights                          2,314            2,533
Premises and equipment, net                       13,826           13,908
Goodwill                                           6,310            6,963
Intangible assets, net                                44              533
Other real estate                                    859              203
Other assets                                       6,436            6,623
                                            ------------     ------------
     Total assets                           $    648,851     $    676,222
                                            ============     ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
   Deposits
     Non-interest-bearing                   $    56,564      $     57,832
     Interest-bearing                           470,354           486,009
                                            -----------      ------------
       Total deposits                           526,918           543,841
   Federal funds purchased and securities
    sold under agreements to repurchase           4,116               612
   Advances from the Federal Home Loan Bank      36,700            50,000
   Notes payable                                  8,301             9,468
   Series B mandatory redeemable preferred
    stock                                           831               831
   Other liabilities                              4,672             5,395
                                            -----------      ------------
     Total liabilities                          581,538           610,147
                                            -----------      ------------

Stockholders' equity
   Series A convertible preferred stock             500               500
   Common stock                                   4,698             4,684
   Surplus                                       23,417            23,167
   Retained earnings                             51,510            48,837
   Accumulated other comprehensive income            34                95
                                            -----------      ------------
                                                 80,159            77,283
   Treasury stock, at cost                      (12,846)          (11,208)
                                            -----------      ------------
       Total stockholders' equity                67,313            66,075
                                            -----------      ------------

       Total liabilities and stockholders'
        equity                              $   648,851      $    676,222
                                            ===========      ============



UnionBancorp, Inc.
Unaudited Consolidated Statements of Income
(In Thousands, Except Per Share Data)


                              Three Months Ended       Nine Months Ended
                                 September 30,           September 30,
                            ----------------------  ----------------------
                               2006        2005        2006        2005
                            ----------  ----------  ----------  ----------
Interest income
  Loans                     $    7,444  $    6,874  $   21,793  $   20,075
  Securities
     Taxable                     2,065       1,587       6,083       4,493
     Exempt from federal
      income taxes                 218         241         644         762
  Federal funds sold and
   other                            75          18         141          77
                            ----------  ----------  ----------  ----------
     Total interest income       9,802       8,720      28,661      25,407

Interest expense
  Deposits                       4,128       2,832      11,452       7,722
  Federal funds purchased
   and securities sold under
   agreements to repurchase         69          44         192         155
  Advances from the Federal
   Home Loan Bank                  363         486       1,300       1,619
  Series B Mandatory
   Redeemable                       12          12          37          37
  Notes payable                    156         128         468         287
                            ----------  ----------  ----------  ----------
     Total interest expense      4,728       3,502      13,449       9,820
                            ----------  ----------  ----------  ----------
Net interest income              5,074       5,218      15,212      15,587
Provision for loan losses         (200)         50      (1,300)        150
                            ----------  ----------  ----------  ----------
Net interest income after
 provision for loan losses       5,274       5,168      16,512      15,437
Noninterest income
  Service charges                  476         490       1,411       1,498
  Trust income                     202         193         620         595
  Mortgage banking income          240         357         767       1,061
  Brokerage commissions
   and fees                         87         236         260         439
  Bank owned life
   insurance (BOLI)                153         138         430         407
  Securities gains, net              -           -         (88)          -
  Gain (loss) on sale of
   assets                           (1)          -          (2)          3
  Other income                     324         288         927         890
                            ----------  ----------  ----------  ----------
                                 1,481       1,702       4,325       4,893
Noninterest expenses
  Salaries and employee
   benefits                      2,630       3,098       8,035       9,307
  Occupancy expense, net           356         386       1,110       1,120
  Furniture and equipment
   expense                         515         497       1,508       1,339
  Marketing                         88         115         294         337
  Supplies and printing             71          80         230         238
  Telephone                        104         112         339         321
  Other real estate owned
   expense                           2          12          10          46
  Amortization of
   intangible assets                11          30          71          90
  Other expenses                   814       1,017       2,754       2,906
                            ----------  ----------  ----------  ----------
                                 4,591       5,347      14,351      15,704
                            ----------  ----------  ----------  ----------



                                Three Months Ended     Nine Months Ended
                                   September 30,          September 30,
                               --------------------   -------------------
                                2006          2005     2006         2005
                               ------        ------   ------       ------
Income from continuing
 operations before income
 taxes                          2,164         1,523    6,486        4,626
Income taxes                      658           405    1,983        1,076
                               ------        ------   ------       ------
Income from continuing
 operations                     1,506         1,118    4,503        3,550

Discontinued Operations:

Loss from discontinued
 operations (including
 loss from disposal
 of insurance unit of $355)      (440)          (93)    (534)        (223)
Income tax benefit               (170)          (36)    (207)         (80)
                               ------        ------    -----       ------
Loss on discontinued
 operations                      (270)          (57)    (327)        (143)
                               ------        ------    -----       ------
        Net income              1,236         1,061    4,176        3,407
                               ======        ======    =====       ======
Preferred stock dividends          52            52      156          156
                               ------        ------   ------       ------
Net income for common
 stockholders                  $1,184        $1,009   $4,020       $3,251
                               ======        ======    =====       ======

Basic earnings per share for
 continuing operations         $ 0.39        $ 0.27   $ 1.16       $ 0.85
Diluted earnings per share for
 continuing operations         $ 0.38        $ 0.26   $ 1.14       $ 0.84
                               ======        ======    =====       ======
Basic earnings per share for
 discontinued operations       $(0.07)       $(0.01)  $(0.09)      $(0.04)
                               ======        ======    =====       ======
Diluted earnings per share for
 discontinued operations       $(0.07)       $(0.01)  $(0.08)      $(0.04)
                               ======        ======    =====       ======
Basic earnings per common
 share                         $ 0.32        $ 0.26   $ 1.07       $ 0.81
                               ======        ======    =====       ======
Diluted earnings per common
 share                         $ 0.31        $ 0.25   $ 1.06       $ 0.80
                               ======        ======    =====       ======







UnionBancorp, Inc.
Unaudited Selected Quarterly Consolidated Financial Data (In Thousands,
 Except Share Data)

                                          Quarters Ended
                          ------------------------------------------------
                          09/30/06  06/30/06  03/31/06  12/31/05   9/30/05
                          --------  --------  --------  --------   -------

                           (Dollars in Thousands, Except Per Share Data)
Statement of Income Data
  Interest income           $9,802    $9,476    $9,383    $9,290    $8,720
  Interest expense          (4,728)   (4,523)   (4,198)   (3,884)   (3,502)
                            ------    ------    ------    ------    ------
  Net interest income        5,074     4,953     5,185     5,406     5,218
  Provision for loan losses   (200)     (300)     (800)      100        50
                            ------    ------    ------    ------    ------
  Net interest income after
   provision for loan
   losses                    5,274     5,253     5,985     5,306     5,168
  Noninterest income         1,481     1,380     1,465     1,403     1,702
  Noninterest expense        4,591     4,767     4,993     5,637     5,347
                            ------    ------    ------    ------    ------
  Income before income
   taxes                     2,164     1,866     2,457     1,072     1,523
  Provision (benefit) for
   income taxes                658       543       782       243       405
                            ------    ------    ------    ------    ------
  Income from continuing
   operations (after
   related taxes)            1,506     1,323     1,675       829     1,118
  Loss on discontinued
   operations (tax
   effected)                  (270)      (29)      (29)      (63)      (57)
                            ------    ------    ------    ------    ------
  Net income                $1,236    $1,294    $1,646      $766    $1,061
                            ======    ======    ======    ======    ======
  Net income on common
   stock                    $1,184    $1,242    $1,594      $715    $1,009
                            ======    ======    ======    ======    ======
Per Share Data
  Basic earnings per
   common share              $0.32     $0.33     $0.42     $0.19     $0.26
  Basic earnings per common
   share from continuing
   operations                 0.39      0.35      0.44      0.22      0.27
  Diluted earnings per
   common share               0.31      0.33      0.42      0.19      0.25
  Diluted earnings per
   common share from
   continuing operations      0.38      0.35      0.44      0.21      0.27
  Cash dividends on common
   stock                      0.12      0.12      0.12      0.11      0.11
  Dividend payout ratio for
   common stock              37.91%    36.15%    28.17%    58.60%    41.92%
  Book value per common
   share                    $17.85    $17.31    $17.33    $17.23    $17.42
  Basic weighted average
   common shares
   outstanding           3,742,777 3,742,716 3,786,559 3,839,693 3,895,365
  Diluted weighted
   average common
   shares outstanding    3,783,075 3,787,231 3,837,708 3,898,320 3,958,948
  Period-end common
   shares outstanding    3,742,851 3,742,751 3,742,651 3,806,876 3,855,776

Balance Sheet Data
  Securities              $182,171  $182,914  $201,195  $196,440  $197,580
  Loans                    407,015   403,455   406,617   417,525   405,884
  Allowance for loan
   losses                    6,103     6,848     7,506     8,362     8,493
  Assets                   648,851   656,831   661,707   676,222   664,643
  Deposits                 526,918   522,695   530,928   543,841   522,943
  Stockholders' equity      67,313    65,304    65,369    66,075    67,664
Earnings Performance Data
  Return on average
   total assets               0.76%     0.79%     0.99%     0.45%     0.64%
  Return on average
   stockholders' equity       7.32      7.93     10.14      4.54      6.18
  Net interest margin ratio   3.49      3.37      3.50      3.60      3.53
  Efficiency ratio (1)       70.23     74.80     74.60     82.44     77.09

Asset Quality Ratios
  Nonperforming assets to
   total end of period
   assets                     0.63%     0.64%     0.59%     0.62%     0.59%
  Nonperforming loans to
   total end of period
   loans                      0.79      0.70      0.82      0.96      0.92
  Net loan charge-offs to
   total average loans        0.14      0.09      0.01      0.06      0.17
  Allowance for loan
   losses to total end of
   period loans               1.50      1.70      1.85      2.00      2.09
  Allowance for loan
   losses to nonperforming
   loans                    189.48    244.05    223.93    208.84    227.94

Capital Ratios
  Average equity to
   average assets            10.34%     9.94%     9.80%    10.01%    10.33%
  Total capital to risk
   adjusted assets           13.60     13.69     13.46     13.33     13.92
  Tier 1 leverage ratio       9.49      9.38      9.18      9.03      9.30


(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:
    Kurt R. Stevenson
    Interim President and
    Chief Financial Officer
    UnionBancorp, Inc.
    Email Contact