University Bancorp 9M2012 Profit 1,938,345 0.416 per Share
ANN ARBOR, MI, Nov 20, 2012 (Menafn - MARKETWIRE via COMTEX) --University Bancorp, Inc. (otcqb:UNIB) announced that it hadunaudited net income attributable to University Bancorp, Inc. commonstock shareholders in the first nine months of 2012 of 1,938,345,0.416 per share on average shares outstanding of 4,659,265 for thefirst nine months. For the first nine months of 2012, University Bankhad pre-tax income of 2,936,375. For the first nine months of 2012minority interest of 915,917 and preferred stock dividends of70,540 were incurred.
For the 12 months ended September 30, 2012, the Company had unauditednet income attributable to University Bancorp, Inc. common stockshareholders of 2,383,685 or 0.519 per share on average sharesoutstanding of 4,592,214 and return on equity attributable to commonstock shareholders was 44.0% on initial equity of 5,420,309. Netincome attributable to University Bancorp, Inc. common stockshareholders in the fourth quarter of 2011 was 445,340, or 0.101per share on average shares outstanding of 4,391,062.
Unaudited net income attributable to University Bancorp, Inc. commonstock shareholders in the three months ended September 30, 2012 was493,601, or 0.106 per share on average shares outstanding of4,667,598. For the three months ended September 30, 2012, UniversityBank had pre-tax income of 842,090, minority interest was 265,301and preferred stock dividends of 26,240 were incurred.
Until September 2012, the bank was tracking ahead of its annualbudget, which calls for the company to have net income attributableto University Bancorp, Inc. common stock shareholders of 3,668,875after-tax (0.788 per share) and for University Bank to earn5,709,744 pre-tax for the entire 2012 year. Unusual expensestotaling 1,289,254 in September included:
--642,900 market valuation reserve on mortgage servicing rights, as a
result of the Fed's initialization of QE3, which manipulated mortgage
interest rates down to record low levels;
--420,549 special addition to the economic risk assumption in the
Allowance for Loan Losses (a change in our methodology to a more
conservative posture) to discount the increasing possibility of a
national recession in 2013;
--225,805 was added to the Allowance for Loan Losses to write-off an
unsecured commercial loan when the sale of the business (a convenience
store in Ann Arbor) fell through at the last minute. We do anticipate
full recovery of this loan from the sale of the business later this
In every six month period following a write-down of mortgage servicingrights, the bank earns more income from increased mortgageoriginations as a result and we expect the same pattern in the fourthquarter of 2012 and first quarter of 2013. We currently expect 2013earnings to be similar to the 2012 budgeted amounts and for theresults in the fourth quarter of 2012 to be ahead of the budget. Ourinterest rate stress test models indicate that pre-tax income for thenext 12 months will range between 5.7 million and 2.5 million iflong and short term interest rates shift between -100 b.p. to 500b.p., with pre-tax income of 5.1 million in the 500 scenario. Thelow end of the profit range assumes scenarios where our residentialmortgage origination units are unprofitable.
For the first ten months of 2012, University Bank had pre-tax incomeof 3,577,782, and net income of 2,482,259, including 641,406 ofpre-tax income and 568,800 of net income in October 2012. TheOctober 2012 result was 164,202 ahead of the budgeted net income forthe month, although 918,691 below the budgeted income for the firstten months of 2012 due to factors noted above. Both October 2012 andfuture results will be assisted by reduced minority interest expense,as we completed the purchase of an additional 12.4975% of UniversityLending Group, LLC at a price of 500,000, bringing our ownershipstake to 100% from 87.5025%. Overall, we currently expect to meet orfall up to 500,000 short of the budgeted net income for the 2012year.
Federal income tax expense of 107,000 was accrued in the thirdquarter of 2012 and also year-to-date, since the Company was in ataxable position for the 2012 tax year, although the Company doeshave tax carry forward assets which can absorb taxable income ofapproximately 3.35 million in 2012 and subsequent years beforefederal income tax is actually payable, as a result of an investmentin a low income housing tax credit partnership in prior years.
Tier 1 Capital rose to 10.19% at 9/30/2012, and was 12,738,000 onaverage assets of 125.0 million, was 11.04% at 10/31/2012 on averageassets of 116.6 million, and is projected to be 12.48% at 12/31/2012if we achieve our 2012 budget goal and average assets continue toshrink seasonally as expected. Our goal is to keep Tier 1 Capitalabove 10% of average assets, and not more than 14%, so we haveachieved the bottom-end of our goal. Shareholders' equityattributable to University Bancorp, Inc. common stock shareholdersrose to 7,776,296 or 1.666 per share, based on shares outstandingat September 30, 2012 of 4,667,598. Annualized return for the firstnine months of 2012 on equity attributable to University Bancorp,Inc. common stock shareholders was 44.1% based on initial equity of5,865,649.
During the quarter, and based on the June 30, 2012 FDIC Call Reportdata, the IDC Rating Agency, scored University Bank 289 out of 300,the 8th best bank headquartered in Michigan and superior to all otherbanks based in Washtenaw County:
--Ann Arbor State Bank 260
--Bank of Ann Arbor 232
--Chelsea State Bank 196
--United Bank & Trust 159
Michigan and the Ann Arbor MSA continue to increase employment and as aresult, the performance of our portfolio loans and our overall assetquality continues to improve and we are experiencing low loandelinquencies. As of 9/30/2012 we had just 1 commercial loan for202,277 delinquent over 30 days, 1 consumer loan for 2,876delinquent over 30 days and 1 residential mortgage loan for 61,113delinquent over 30 days and still accruing and 1 residential mortgageloan for 319,407 on non-accrual that was transferred to ORE afterquarter-end. At quarter-end we had 4 ORE properties carried at570,007 left to sell, and three of these totaling 370,607 are undercontract to sell prior to year-end. With the earnings as strong asthey are, we are aggressively moving to write-down, discount and sellsubstandard assets. In addition, we charged 1,372,772 againstearnings for the Allowance for Loan Losses during the first ninemonths of 2012, leaving us with a balance of 1,161.2k at quarter-endversus portfolio loans of 58,848.2k, or 1.97%. Including thedelinquent loans mentioned above, total non-performing loansdelinquent over 90 days, loans on non-accrual and ORE totaled 1.09million at 9/30/2012, down from 1.61 million at 6/30/2012. The ratioof substandard and non-performing assets to Tier 1 Capital was 17.1%at 10/31/2012 and is projected to be 9.0% at 12/31/2012 with pendingsales and loan payoffs.
In the first nine months of 2012, our retail mortgage originationgroup, University Lending Group, LLC, originated a new record294,730,154 in residential mortgage loans, of which 72% financedpurchase transactions, which is excellent. It is our goal to build asustainable mortgage origination business not dependent uponrefinancing.
During the past several months the bulk of the daily retailoriginations from our credit union customers have been migrated tothe unified back office platform across which all of our otherresidential originations flow. The remaining credit unions will bemigrated before year-end. This is expected to enable an increase inthe origination business won from our current 308 credit unionsubservicing customers, since our unified origination platform issignificantly more competitive than the platform it is replacing.
Liquidity remains excellent and we manage an additional 70 millionof deposits in an off-balance sheet sweep arrangement through aseries of deposit accounts at the Federal Home Loan Bank ofIndianapolis, which are available to us to meet any withdraws in justa few minutes.
President Stephen Lange Ranzini noted, "While the results for thepast 12 months are very encouraging, we remain very focused on andconcerned about our ability to fully comply with highly complexcompliance rules and the tremendous amount of work that these willrequire of us to succeed in future regulatory examinations. Currentareas of major focus and follow-up include HMDA and BSA complianceand preparation for our first CFPB examinations expected in 2013."
Other key statistics:
--5-year annual average revenue growth*, 39.7%
--1-year annual revenue growth*, 88.7%
--Debt to equity ratio, 11.7%
--Trailing 12 Months P-E Ratiox, 6.3x
*Annualizing October 2012 YTD sales which were 33.46 million, 2011sales were 21,280,296 and 2008 sales were 13,449,856. OutstandingPreferred Stock of 1,031,450 and total Company equity capital of8,807,746. #Parent company only current assets divided by 12 monthprojected expenses. xBased on last sale price of 3.25 per share.
Shareholders and investors are encouraged to refer to the financialinformation including the audited financial statements, available onour investor relations web page at:http://www.university-bank.com/Bancorp.html.
Ann Arbor-based University Bancorp owns 100% of University Bankwhich, together with its subsidiaries, holds and manages a total ofover 11.8 billion in loans and assets and our 317 employees make usthe 9th largest bank based in Michigan. University Bank is anFDIC-insured, locally owned and managed community bank, and meets thefinancial needs of its community through its creative and innovativeservices. Founded in 1890, University Bank(R) is proud to have beenselected as the "Community Bankers of the Year" by American Bankermagazine and as the recipient of the American Bankers Association'sCommunity Bank Award.
CAUTIONARY STATEMENT: This press release contains certainforward-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 netincome, budgeted income levels, the sustainability of past results,and other expectations and/or goals. Such statements are subject tocertain risks and uncertainties which could cause actual results todiffer materially from those expressed or implied by suchforward-looking statements, including, but not limited to, economic,competitive, governmental and technological factors affecting ouroperations, markets, products, services, interest rates and fees forservices. Readers are cautioned not to place undue reliance on theseforward-looking statements, which speak only as of the date of thispress release.
Stephen Lange Ranzini
President and CEO
Phone: 734-741-5858, Ext. 9226
Email: Email Contact
SOURCE: University Bancorp
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