Ann Arbor, Michigan, June 19, 2017, — University Bancorp, Inc. (OTCQB: UNIB) announced that it had an unaudited net income attributable to University Bancorp, Inc. common stock shareholders in 1Q2017 of $900,023, $0.175 per share on average shares outstanding of 5,146,177 for the first quarter, versus an unaudited net loss of ($224,897), ($0.044) per share on average shares outstanding of 5,100,899 for 1Q2016.  Net income in the first quarter of each year is usually seasonally slow due to the lower pace of mortgage originations.  For the 12 months ended March 31, 2017, net income was $4,931,117, $0.97 per share on average shares outstanding of 5,112,218 for the period.  For the first three months of 2017 minority interest of $33,191 was incurred.

Results in 1Q2017 were assisted by a seasonal factor, only partially offset by two unusual expenses, which had an overall positive cumulative impact of $190,594, before tax:

Unusual gain:

  1. The value of the hedged mortgage origination pipeline rose $383,473 as the amount of locked loans rose over the level at year-end;

Unusual expense:

  1. With the fall in long term mortgage interest rates during the quarter the valuation of mortgage servicing rights (MSRs) decreased $117,879;
  2. A litigation was settled at an early stage for $75,000;

Results in 1Q2016 were restrained by a single large non-recurring, unusual expense only partially offset by a seasonal factor, which had an overall negative cumulative impact of ($798,475), before tax:

Unusual expense:

  1. With the fall in long term mortgage interest rates during the quarter the valuation of mortgage servicing rights (MSRs) decreased $1,581,059;

Unusual gain:

  1. The value of the hedged mortgage origination pipeline rose $782,584 as the amount of locked loans rose over the level at year-end;

For 1Q2017, the Company had an annualized return on equity attributable to common stock shareholders of 19.9% on initial equity of $18,075,835.  Return on equity over the trailing twelve months was 35.1% on initial equity of $14,049,724.

Management currently projects budgeted annual net income in 2017 of at least $4,890,000 or $0.94 per share.  This forecast takes our actual results for 1Q2017, the estimated results in the 2Q2017 plus our original budget for the final two quarters of 2017, adjusted for all known major changes.  The re-forecast assumes no change in mortgage interest rates from current levels, which would result in a mark to market charge on our mortgage servicing rights of at least $500,000 in June.  In all periods in the past when our mortgage servicing rights drop in value, the increased originations income in the following six months more than offsets this write-down.

President Stephen Lange Ranzini noted, “The 1Q2017 result for profitability was very good.  In addition to strong profitability at our subservicing division we had strong year over year growth in purchase related mortgage originations during the quarter and first quarter revenue grew 41.7% over the first quarter of 2016.  Mortgage origination volumes continue to be ahead of the budget in 2Q2017.  We were proud to be noted by American Banker newspaper for the second year in a row as the top performing publicly traded bank in the entire United States in 2016, based on our return on average equity of 25.25%, following three years, 2012-2014, when we were ranked #2 nationally.”

In support of the bank’s ongoing growth a subsidiary of the bank recently entered into a purchase agreement during the quarter to acquire a modern three story office building in Ann Arbor near the Ann Arbor freeway ring with 24,000 ft2 of office space for $2,370,000 or $99 per ft2 which will be used to support the bank’s back office operations.

Under the Basel 3 Capital Rules, the Tier 1 Leverage Capital Ratio rose to 9.02% on net average assets of $161.9 million, from 8.64% at 12/31/2016 on net average assets of $183.3 million, and was 8.94% at 9/30/2016 on net average assets of $171.6 million, 8.75% at 3/31/2016 on net average assets of $141.2 million, and 8.93% at 12/31/2015 on net average assets of $135.4 million. The Tier 1 Leverage Capital Ratio is projected to be 11.48% at 12/31/2017, if we achieve our 2017 re-forecasted budget projection, which assumes that mortgage originations will revert to lower budgeted levels for the rest of the year and we receive all the proceeds from an MSR sale we recently closed, which will raise our regulatory capital by about $1.3 million, but does not reflect payment of additional dividends or stock buybacks during 2017, both of which are likely.

Basel 3 Common Equity Tier 1 Capital at 3/31/2017 was $13,865,000, at 12/31/2016 was $14,215,000, at 9/30/2016 was $13,859,000, at 3/31/2016 was $10,900,000, and at 12/31/2015 was $10,584,000.
Basel 3 Total Risk Weighted Assets at 3/31/2017 was $92,168,000, at 12/31/2016 were $96,908,000, at 9/30/2016 were $102,272,000, 3/31/2016 were $82,481,000 and at 12/31/2015 were $74,775,000.

The CET1 Risk Weighted Capital Ratio at 3/31/2017 was 15.04%, at 12/31/2016 was 14.67%, at 9/30/2016 was 13.55%, at 3/31/2016 was 13.22%, at and 12/31/2015 was 14.15%.

Shareholders’ equity attributable to University Bancorp, Inc. common stock shareholders was $19,223,994 or $3.70 per share, based on shares outstanding at March 31, 2017 of 5,200,899.

Excluding goodwill & other intangibles related to the acquisition of Midwest Loan Services and Ann Arbor Insurance Center, net tangible shareholders’ equity attributable to University Bancorp, Inc. common stock shareholders was $18,671,994 or $3.59 per share at 3/31/2017.  Please note that we do not see this latter statistic as particularly meaningful because the value of the insurance agency and Midwest Loan Services substantially exceed their carrying value including this goodwill, but we are asked for it.  Treasury shares as of 3/31/2017 were zero.

Total Assets as of 3/31/2017 were $235,232,000 versus $190,940,176 at 12/31/2016, $246,524,231 at 9/30/2016, $216,976,000 at 6/30/2016, $194,934,000 at 3/31/2016 and $182,458,912 at 12/31/2015.

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 be excellent and we are experiencing low loan delinquencies.  We had only one loan delinquent over 30 days at 3/31/2017: a well secured commercial real estate loan delinquent 43 days with a total carrying value of $354,045, which has been downgraded to substandard and is in process of foreclosure.  The allowance for loan losses stands at $417,750 or 0.64% of the amount of portfolio loans, excluding the loans held for sale.  Due to the loan discussed above, substandard assets rose 63.5% during 1Q2017 to $806,896, 5.09% of Tier 1 Capital at 3/31/2017, including a single other real estate owned home of $97,743.  Subsequent to quarter-end, this home was placed under sales contract for an amount exceeding the carrying value.

In 1Q2017, our residential mortgage origination groups originated $169.0 million of mortgages, of which $111.9 million were originated by our retail origination group, University Lending Group, LLC (ULG), $45.4 million were originated by our UIF unit, and the remainder originated by our credit union and community bank correspondent origination group.  Home purchase transactions originated during 1Q2017 rose 27.8% at ULG and 53.1% at UIF over the 1Q2016 level and 88% of our retail originations at ULG and 82% of our UIF originations in 1Q2017 financed purchase transactions.

Liquidity remains excellent.  The bank is positioned to benefit from rising short term interest rates.  We manage an average of over $100 million of deposits in an off-balance sheet sweep arrangement through a series of deposit accounts at the Federal Home Loan Bank of Indianapolis (FHLBI) on which we earn interest at Fed Funds rate.

Other key statistics as of 3/31/2017:

  • 5-year annual average revenue growth*,                    31.4%
  • 1-year annual revenue growth*,                                   25.4%
  • 5 Year Average ROE                                                        19.2%
  • LLR/NPAs>90 %                                                          247.4%
  • Debt to equity ratio,                                                           0%
  • Current Ratio,#                                                                   6.5x
  • Efficiency Ratio, %+                                                         85.5%
  • Total Assets,                                                     $235,232,000
  • Loans Held for Sale, before Reserves,            $56,828,139
  • NPAs >90 days                                                                      $0
  • TTM ROA %                                                                        2.84%
  • TCE/TA %                                                                           8.06%
  • Total Capital Ratio %                                                        13.40%
  • NPAs/Assets %                                                                    0.34%
  • Texas Ratio %                                                                      4.17%
  • NIM %                                                                                   3.24%
  • NCOs/Loans %                                                                 -0.007%
  • Trailing 12 Months P-E Ratiox                                             7.4x


*Using Trailing 12 month 1Q2017 sales which were $54,730,879, 2015 sales which were $43,644,425 and 2011 sales which were $21,280,296.

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

+Calculated as: (non-interest expense/(net interest income + non-interest income))

xBased on last sale of $7.15 per share.


Shareholders and investors are encouraged to refer to the financial information including the audited financial statements, strategic plan and prior press releases, available on our investor relations web page at:

Ann Arbor-based University Bancorp owns 100% of University Bank which, together with its Michigan-based subsidiaries, holds and manages a total of over $20 billion in financial assets for over 117,000 customers, and our 375 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.  The members of University Bank’s corporate family, ranked by their size of revenues are:

  • University Lending Group, a retail residential mortgage originator based in Clinton Township, MI;
  • Midwest Loan Services, a residential mortgage subservicer based in Houghton, MI;
  • UIF, a faith-based banking firm based in Southfield, MI;
  • Community Banking, based in Ann Arbor, MI, which provides traditional community banking services in the Ann Arbor area;
  • Ann Arbor Insurance Centre, an independent insurance agency based in Ann Arbor.

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.