-- The Bank's subsidiary, Midwest Loan Services Inc., reported a pre-tax
net income of $181,000 for the third quarter of 2008 as compared to net
income of $214,000 for the same period in 2007. Improvements in the volume
of loans subserviced were offset by a $154,301 decrease in the fair value
of mortgage servicing rights during the third quarter of 2008. Income for
the nine-months ended September 30, 2007 at Midwest Loan Services was
positively impacted by termination fee income of $1,175,284 which was
partially offset by a change in fair value of mortgage servicing rights of
$182,770. At September 30, 2008, Midwest was subservicing 42,781
mortgages, an increase of 30.55% from 32,770 mortgages subserviced at
September 30, 2007 and an increase of 26.06% from 33,937 mortgages
subserviced at December 31, 2007.
-- Community Banking and Islamic Banking reported a pre-tax loss of
$57,000 during the 2008 third quarter, compared to a pre-tax net loss of
$226,000 for the same period in 2007. Islamic Banking's results continue
to reflect ongoing investment in the expansion of University Islamic
Financial including legal and personnel costs to expand the product
offering into additional states. Improvements in net interest and
financing income and financial origination volumes driven by increases in
loans and financings were partially offset by higher loan loss provisions
for the three months ended September 30, 2008.
-- University Lending Group, our new FHA wholesale lending division that
began operations in April 2008, achieved profitability during the third
quarter of 2008 and contributed net income of $71,000 versus a loss of
$308,000 for the nine months ended September 30, 2008. Volumes continue to
expand this quarter.
Year-to-date key metrics of the bank have shown positive trends when
comparing 2008 to 2007:
-- Average earning assets increased by 30.09% to $92,138,350;
-- Net interest and financing income +25.1%;
-- The net margin increased to 5.15% from 4.64%;
-- Tier 1 Capital +7% to $9,305,000.
(in 000s except for per share data)
For the For the
Quarter Ended Nine-Months Ended
Sept. 30, Sept. 30,
2008 2007 2008 2007
Net interest and financing
income $1,262 $ 884 $3,217 $2,571
Provision for loan losses 80 16 369 92
Trading securities gains
(losses) (26) 78 (68) 78
Total other income 2,205 1,184 5,229 4,823
Increase (decrease) in fair
value of mortgage servicing
rights (102) (237) 175 (183)
Total other expense 3,086 1,922 7,863 5,865
Income tax expense (benefit) 0 0 (44) 20
Minority interest 52 21 (105) 297
Net income (loss) 121 (50) 470 1,015
Preferred stock dividends 12 11 36 30
Net income (loss) available to
common shareholders $ 109 $ (61) $ 434 $ 986
Basic earnings (loss) per
common share $ 0.03 $(0.01) $ 0.10 $ 0.23
Diluted earnings (loss) per
common share $ 0.03 $(0.01) $ 0.10 $ 0.23
Weighted average shares
outstanding
Basic 4,256 4,248 4,253 4,248
Diluted 4,290 4,248 4,290 4,286
Net interest & profit margin 5.15% 4.64% 4.98% 4.87%
Period End: September 30, December 31,
----------------- ------------
2008 2007 2007
-------- -------- ------------
Loans & financings including those held for
sale $ 71,920 $ 58,827 $ 60,063
-------- -------- ------------
Allowance for loan & financing losses 398 536 686
-------- -------- ------------
Deposits 97,970 77,347 78,657
-------- -------- ------------
Assets 112,969 87,487 88,238
-------- -------- ------------
Equity 5,732 6,373 5,984
-------- -------- ------------
Book value per common share $ 1.22 $ 1.38 $ 1.29
-------- -------- ------------
At September 30, 2008 University Bank's Tier 1 Capital Ratio was 8.4%.
Tier 1 Capital increased to $9,305,000 from $8,721,000 at December 31,
2007.
President Stephen Lange Ranzini noted, "Although University Bank is an
active participant in the residential mortgage industry, it has never
originated many types of riskier mortgage loans that are currently causing
severe losses among our competitors. We've never originated any
'interest-only,' 'optional payment,' 'negatively amortizing' or 'no income
verification' loans. Moreover, the bank owns no mortgage securities other
than those guaranteed by GNMA, FNMA or FHLMC."
The following table summarizes the pre-tax income (loss) of each profit
center of the Company for the three and nine-months ended September 30,
2008 (in thousands):
Three-Months Nine-Months
Community and Islamic Banking $ (57) $ (581)
Midwest Loan Services 181 1,261
University Lending Group 71 (308)
Corporate Office (22) (51)
Eliminations (52) 104
-------------- --------------
Total $ 121 $ 425
============== ==============
The following table summarizes the pre-tax income (loss) of each profit
center of the Company for the three and nine-months ended September 30,
2007 (in thousands):
Three-Months Nine-Months
Community and Islamic Banking $ (226) $ (1,007)
Midwest Loan Services 214 2,393
University Lending Group - -
Corporate Office (17) (54)
Eliminations (21) (297)
-------------- --------------
Total $ (50) $ 1,035
============== ==============
Ann Arbor-based University Bancorp owns 100% of University Bank which,
together with its subsidiaries, holds and manages a total of $5.8 billion
in loans and 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 through its creative and innovative services to
meet the financial needs of its community. University Bank also
specializes in several niche financial services through subsidiaries:
-- University Islamic Financial Corporation, based in Ann Arbor, Michigan
and 80%-owned, engages in Islamic Banking and is the first and only Islamic
Banking subsidiary of a bank in the U.S. It offers residential and
commercial real estate financing, the only FDIC-insured Islamic deposits
(offered through University Bank) and Islamic equity mutual funds (offered
through University Insurance & Investments).
-- Midwest Loan Services, Inc., based in Houghton, Michigan and 80%-
owned, specializes in mortgage subservicing and mortgage origination
primarily serving over 250 credit unions, representing 2.6% of all credit
unions in the U.S.
-- University Lending Group is a division of University Bank located in
Farmington Hills, Michigan that originates HUD's FHA and VA and other
mortgage loans on a wholesale and retail basis. University Bank has a
50.01% profit participation in the income of the division.
-- University Insurance & Investment Services is a 100%-owned subsidiary
that provides a full range of insurance services as an independent agent
for 49 insurance companies and investment brokerage account services.
Any prediction of the future is inherently not assured. Investors should
read the risk factors listed on pages 23 through 24 in the Company's report
on Form 10KSB for the year ended December 31, 2007 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: