UNIVERSITY BANCORP 1Q-2013 PROFIT $486,848, $0.104 PER SHARE

For Immediate Release

UNIVERSITY BANCORP 1Q-2013 PROFIT $486,848, $0.104 PER SHARE

Ann Arbor, Michigan, April 26, 2013, — University Bancorp, Inc. (OTCQB: UNIB) announced that it had unaudited net income attributable to University Bancorp, Inc. common stock shareholders in the first three months of 2013 of $486,848, $0.104 per share on average shares outstanding of 4,667,598 for the first three months.  Year-to-date, the pre-tax profit of the Company’s wholly-owned subsidiary, University Bank, was $1,001,200, was above the budget by $649,673, and consolidated after-tax net income before minority interest was $660,200, above the budget by $427,192. For the first three months of 2013 minority interest of $145,248 and preferred stock dividends of $24,194 were incurred.

President Stephen Lange Ranzini noted, “The budget for 2013 calls for the company to have net income attributable to University Bancorp, Inc. common stock shareholders of $2,708,857 after-tax, $0.58 per share, the bank to earn $6.36 million pre- tax and $4.2 million after-tax before minority interest.  We are on track to exceed that. The first quarter is expected to be the least profitable quarter of each year because residential purchase transactions are typically at a seasonally low ebb.”

For the 12 months ended March 31, 2013, the Company had unaudited net income attributable to University Bancorp, Inc. common stock shareholders of $1,904,233 or $0.408 per share on average shares outstanding of 4,667,598 and return on equity attributable to common stock shareholders was 29.8% on initial equity of $6,386,632.

After deducting minority interest of $406,844 and preferred stock dividends of $24,859, net income attributable to University Bancorp, Inc. common stock shareholders in the first quarter of 2012 was $499,474, or $0.108 per share on average shares outstanding for the quarter of 4,642,598.

Tier 1 Capital rose to 11.25% at 3/31/2013, and was $11,966,000 on average assets of $106.4 million, was 9.69% at 12/31/2012 on average assets of $117.4 million, and is projected to be 14.18% at 12/31/2013 if we achieve our 2013 budget goal. Shareholders’ equity attributable to University Bancorp, Inc. common stock shareholders rose to $8,046,969 or $1.724 per share, based on shares outstanding at March 31, 2013 of 4,667,598.  Tier 1 Capital includes common stock equity from investors that own 20% of the bank’s operating subsidiaries Midwest Loan Services and University Islamic Financial.

Michigan and the Ann Arbor MSA continue to increase employment and as a result, the performance of our portfolio loans and our overall asset quality continues to improve and we are experiencing low loan delinquencies.  Total classified loans on our watch list at March 31, 2013 are 14 in number for $1,750,856 and ORE were 4 in number for $372,432 for a total of 18 substandard assets carried at $2,123,288, or 17.28% of Tier 1 Capital. While above our target of 9%, we plan to achieve this by the fourth quarter of 2013, assisted by a planned sale of substandard loans not expected to resolve within the next 12 months.  The Allowance for Loan Losses stands at $1,185,300, or 2.23% of the amount of portfolio loans excluding the loans held for sale, which have their own separate reserve of $653,100 at March 31, 2013.

In the first three months of 2013, our residential mortgage origination groups originated $177.7 million of mortgages sold to the secondary market, of which $93.3 million were originated by our retail origination group, University Lending Group, LLC, $32.4 million were originated by our Islamic banking unit, University Islamic Financial, and the remainder originated by our credit union origination group.  67% of our retail originations and 52% of our Islamic originations financed purchase transactions. It is our goal to build a sustainable mortgage origination business not dependent upon refinancing.

Liquidity remains excellent and we manage an additional $70 million of deposits in an off-balance sheet sweep arrangement through a series of deposit accounts at the Federal Home Loan Bank of Indianapolis, which are available to us to meet any withdraws in just a few minutes.

President Stephen Lange Ranzini noted, “While the results for the past 3 months are very encouraging, we remain very focused on and concerned about our ability to fully comply with highly complex compliance rules and the tremendous amount of work that these will require of us to succeed in future regulatory examinations. Recent successes by our compliance team include the completion of work to enhance the processes in BSA and HMDA.  Current areas of major focus and follow-up include enhancements to internal audit for which we doubled our 2013 budget to $700,000 a year and preparation for our first CFPB examinations expected later in 2013.”

Other key statistics:

•    5-year annual average revenue growth*,               42.1%

•    1-year annual revenue growth*,                              96.4%

•    Debt to equity ratio+,                                                 11.8%

•    Current Ratio,#                                                            2.01x

•    Trailing 12 Months P-E Ratiox,                                6.1x

 

*Using Trailing 12 month 1Q2013 sales which were $41,793,878, 2011 sales which were $21,280,296 and 2008 sales which were $13,449,856.

+Outstanding Preferred Stock of $1,078,247 and total Company equity capital (common stock plus maturing preferred stock) of $9,125,216.

#Parent company only current assets divided by 12 month projected cash expenses.

xBased on last sale price of $2.50 per share.

Shareholders and investors are encouraged to refer to the financial information including the audited financial statements, available on our investor relations web page at: http://www.university-bank.com/bancorp/.

Contact:  Stephen Lange Ranzini,
President and CEO
Phone: 734-741-5858, Ext. 9226
Email: ranzini@university-bank.com

Ann Arbor-based University Bancorp owns 100% of University Bank which, together with its subsidiaries, holds and manages a total of over $12.7 billion in loans and assets and our 330 employees make us the 9th largest bank based in Michigan. University Bank is an FDIC-insured, locally owned and managed community bank, and meets the financial needs of its community through its creative and innovative services.  Founded in 1890, University Bank® is proud to have been selected as the “Community Bankers of the Year” by American Banker magazine and as the recipient of the American Bankers Association’s Community Bank Award.  University Bank is a Member FDIC.

 

CAUTIONARY STATEMENT: This press release contains certain forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements concerning future growth in assets, pre-tax income and net income, budgeted income levels, the sustainability of past results, and other expectations and/or goals.  Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, economic, competitive, governmental and technological factors affecting our operations, markets, products, services, interest rates and fees for services. Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date of this press release.