UNIVERSITY BANCORP, INC. ANNOUNCES RESULTS FOR 2010

For Immediate Release

UNIVERSITY BANCORP, INC. ANNOUNCES RESULTS FOR 2010

Ann Arbor, Michigan, May 15, 2011, – University Bancorp, Inc. (OTCQB: UNIB) (Pink Sheets: UNIB) announced today that it had an audited net income of $169,359 in 2010 versus net income of $2,618,272 in 2009.  After taking into account preferred stock dividends and net income attributable to the minority interests held by outside shareholders in University Bank’s subsidiaries, net income per share attributable to the common stockholders of University Bancorp, Inc. was a net loss of $241,205 ($0.056 per share) in 2010 versus net income of $693,517 ($0.147 per share) in 2009.  Highlights for the year include:

    • Mortgages subserviced by Midwest Loan Services grew 21.1% to 65,367 from 53,970, the total of mortgages subserviced grew to $9.07 billion and revenue at Midwest Loan Services rose 24.6% to $8,449,698 from $6,781,241;
    • Deposit mortgage escrow deposits at University Bank grew 51.0% to $103,390,466 from $68,485,648;
    • Our Islamic division booked its first annual operating profit, $188,200, and the amount of loans serviced for FHLMC rose 51.9%;
    • University Bank and its subsidiaries continue to actively lend in our local community despite the ongoing business recession, with $381,380,905 in residential mortgage originations in 2010;

Key metrics for the year ended December 31, 2010 were:

    • Total Revenue decreased to $20.4 million from $21.8 million, down -6.3%;
    • Total Assets decreased to $117.3 million from $134.4 million, down -12.7%;
    • Net Interest and financing income decreased to $3.925 million, down -6.6%;
  • Loans and financings held for portfolio decreased -0.5% to $58.95 million;
  • Residential mortgage originations fell -30.6% to $381,380,905 from $549,701,692 in 2009;
  • Islamic revenue fell -2.3% to $2,747,026 from $2,810,660 in 2009;
  • Islamic residential originations grew 4.5% to $40,414,381 from $38,691,969 in 2009;
  • Tier 1 Capital rose to 9.27% from 9.21% at 12/31/2009;
  • Return on common stockholders’ equity was minus -4.1%.

Unusual expenses during the year decreased the final result by $494,552:

    • Provision for Loan Losses in the amount of $500,000 was booked with respect to a performing commercial loan the balance of which was paid down after year-end to under $900,000, partially offset by a full recovery of a commercial loan previously charged off in the amount of $286,600.
    • Legal collection costs of $136,000 were incurred related to a commercial loan collected in full during 2011;
    • Valuation reserves from the write-down of mortgage servicing rights of $145,152.

President & CEO Stephen Lange Ranzini noted, “2010 results were down from 2009, because our wholesale mortgage banking division, University Lending Group, had reduced mortgage originations which resulted in a profit in 2010 of just $248,823 versus profits of $3,259,642 in 2009, a decrease of $3,010,819.  Increased profitability at both Midwest Loan Services and University Islamic Financial were insufficient to offset these lost profits, as Community Banking also registered a loss due to a decrease in portfolio loans which caused a decrease in net interest income.  Management took steps to increase capital efficiency by decreasing the bank’s assets during 2010 by moving mortgage deposit escrow accounts off balance sheet into an innovative sweep account arrangement established at the Federal Home Loan Bank of Indianapolis.  The decrease in assets enabled us to raise our capital ratios.

“Massive government intervention in the residential lending business continues to substantially and negatively impact our residential lending units.  Also, this caused decreases in the volume of our portfolio loans held for investment at both Community Banking and University Islamic, which decreased our net interest and financing income,” Ranzini noted.  “Our high growth subsidiaries generated 82.5% of our bank’s revenues in 2010.”

Ann Arbor-based University Bancorp owns 100% of University Bank which, together with its subsidiaries, holds and manages a total of over $9.25 billion in loans and assets. 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.

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

Contact: University Bank
Stephen Lange Ranzini, President and CEO
Phone: 734-741-5858, Ext. 226
Email: ranzini@university-bank.com

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 and net income, 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.