For Immediate Release
Ann Arbor, Michigan, August 10, 2012, — University Bancorp, Inc. (OTCQB: UNIB) (Pink Sheets: UNIB) announced that it had unaudited net income attributable to University Bancorp, Inc. common stock shareholders in the first half of 2012 of $1,400,444, represented $0.301 per share on average shares outstanding for the first half of 4,655,098. These results were ahead of the Company’s budgeted net income of $1,380,474 by $19,970 year-to-date for the six months. The Company’s budget calls for the company to have net income attributable to University Bancorp, Inc. common stock shareholders of $3,668,875 after-tax ($0.788 per share) and for University Bank to earn $5,709,744 pre-tax for the entire 2012 year. For the first six months of 2012, University Bank had pre-tax income of $2,094,285, $207,837 ahead of the budget which called for the bank’s pre-tax income to be $1,886,448.
For the first half of 2012 minority interest of $650,616 and preferred stock dividends of $44,300 were incurred. Minority interest in the first quarter of 2012 was unusually high as the bank recouped all the start-up expenses of eight new offices of University Lending Group during that quarter, which had been absorbed by the minority shareholders per the existing contractual arrangements in 2011. Federal Income Tax expense was not levied, since the Company has tax carry forward assets which can absorb taxable income of approximately $3.35 million before incurring federal income tax, as a result of an investment in a low income housing tax credit partnership in prior years and temporary tax related timing differences in 2012.
Tier 1 Capital rose to 10.18% at 6/30/2012, and was $11,987,000 on average assets of $117.73 million and is projected to be 12.48% at 12/31/2012 if we achieve our 2012 budget goal. Our goal is to keep Tier 1 Capital above 10% of average assets, and not more than 14%, so we have achieved the bottom-end of our goal. Shareholders’ equity attributable to University Bancorp, Inc. common stock shareholders rose to $7,306,093, or $1.565 per share, based on shares outstanding at June 30, 2012 of 4,667,598. Annualized return for the first half of 2012 on equity attributable to University Bancorp, Inc. common stock shareholders based on initial equity of $5,865,649 was 49.1%.
Michigan has added back 100,000 of the 900,000 jobs lost over the past 10 years, and over the past 12 months ended June 30, 2012, the Ann Arbor MSA has increased the number of persons employed by 4.8%. As a result, the performance of our portfolio loans and our overall asset quality continues to improve and we are experiencing low loan delinquencies, with just 1 commercial loan for $225,806 delinquent over 1 day, 2 home equity related consumer loans for $55,800 delinquent over 1 day and 5 residential mortgage loans for $803,469 delinquent over 1 day. At quarter-end we had 3 ORE properties carried at $540,741 left to sell. With the earnings as strong as they are, we are aggressively moving to write-down, discount and sell substandard assets. In addition, we charged $515,476 against earnings for the Allowance for Loan Losses during the first half of 2012, leaving us with a balance of $650.0k at quarter-end versus portfolio loans of $58,230.3k, or 1.12%. Including the delinquent loans mentioned above, total non-performing loans delinquent over 90 days, loans on non-accrual and ORE totaled $1.61 million, or 1.19% of June 30, 2012 assets of $135.81 million. Due to the monthly cyclicality of our mortgage deposit escrows generated from our mortgage sub-servicing business, month-end assets are always significantly higher than quarterly average assets.
In the first half of 2012, our retail mortgage origination group, University Lending Group, LLC, originated a record $171,690,749 in residential mortgage loans, of which 68% financed purchase transactions, which is excellent. It is our goal to build a sustainable mortgage origination business not dependent upon refinancing. Across all subsidiaries, mortgage closings in July were ahead of the June level, and the locked pipeline is up substantially, so we again achieved excellent operating profits in July before any reserves, estimated to be about $1 million for that month alone. Following a record earnings result in the 3rd quarter, results are expected to moderate seasonally, with lower profits expected in the 4th quarter, but overall, we currently expect to meet or exceed the budget for the 2012 year.
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 in the first half of 2012 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.”
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: University Bank
Stephen Lange Ranzini, President and CEO
Phone: 734-741-5858, Ext. 226
Ann Arbor-based University Bancorp owns 100% of University Bank which, together with its subsidiaries, holds and manages a total of over $11.3 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.
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, 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