SOURCE: University Bancorp

November 14, 2008 15:30 ET

University Bancorp Reports $469,500 9MO 2008 Unaudited Net Income

ANN ARBOR, MI--(Marketwire - November 14, 2008) - University Bancorp, Inc. (NASDAQ: UNIB) reported unaudited net income for the Company for the nine-month period ended September 30, 2008 was $469,500 as compared to $1,015,294 for the same period last year. Net income for the Company for the three-month period ended September 30, 2008 was $121,238 as compared to a net loss of $49,738 for the same period in 2007. Net income available to common shareholders was $433,660 for the first three quarters of 2008, versus income of $985,727 for the same period in 2007. Basic and diluted earnings (loss) per share for the 2008 and 2007 nine-month periods were $0.10 and $0.23, and for the three-month periods were $0.03 and ($0.01) in 2008 and 2007, respectively.

--  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: Email Contact