-- Loans and financings +15.5% (+20.7% annualized)
-- Islamic profit sharing deposits +81.4% (+108.6% annualized)
-- Islamic financings +33.2% (+44.2% annualized)
-- Tier 1 Capital +17.2% to $9,031,000
-- Net interest and financing income +34.1%
Net interest and financing income increased from a year ago as a result of
a net increase in earning assets and an increase in net interest and
financing income as a percentage of total average earning assets to 4.87%
from 4.54%. Net income available to common shareholders was $985,727 for
the first three quarters of 2007, versus a net loss of $370,216 for the
same period in 2006. Basic and diluted earnings (loss) per share for the
2007 and 2006 nine-month periods were $0.23 and $0.23, in 2007 and $(0.09)
and $(0.09) in 2006, respectively.
The pre-tax net loss for the Company for the three-month period ended
September 30, 2007 was $49,738 as compared to a loss of $132,971 for the
same period in 2006. The Bank's subsidiary, Midwest Loan Services,
reported a pre-tax net loss of $19,000 for the third quarter of 2007 as
compared to net loss of $11,000 for the same period in 2006. Income at
Midwest was negatively impacted in the third quarter 2007 by a decrease in
long term mortgage interest rates which caused the fair value of mortgage
servicing rights held for investment to decrease by $236,914, throwing
operating results into an overall loss for the quarter. Community Banking
reported a pre-tax net loss of $12,000 during the current year's third
quarter, an improvement over a pre-tax net loss of $95,000 for the same
period in 2006. Community Banking's results continue to reflect ongoing
investment in the expansion of University Islamic Financial, including
legal and personnel costs to expand the product offering into additional
states. Subsequent to quarter-end, FHLMC approved the expansion of the
Islamic financing product into a total of ten states. A 44.9% increase in
net interest and financing income from the third quarter of 2007 to the
third quarter of 2006, driven by increases in loans and financings and an
increased net spread, was offset by the mortgage servicing rights valuation
allowance.
At September 30, 2007, Midwest was subservicing 32,770 mortgages, an
increase of 4.9% from 31,242 mortgages subserviced at June 30, 2007 and an
increase of 1.0% from 32,461 mortgages subserviced at December 31, 2006.
Midwest currently has under contract for conversion to its subservicing
system prior to year-end a total of 10,000 new mortgages.
(in 000s except for per share data)
For the For the
Quarter Ended Nine-Months Ended
Sept. 30, Sept. 30,
2007 2006 2007 2006
Net interest and financing income $ 884 $ 610 $ 2,571 $ 1,918
Provision for loan losses 16 57 92 106
Total securities gains 78 0 78 0
Total other income 1,184 1,197 4,823 3,284
Decrease in fair value of mortgage
servicing rights 237 0 183 0
Servicing rights amortization 0 194 0 160
Total other expense 1,921 1,661 5,865 5,178
Income tax expense 0 0 20 0
Minority interest 21 27 297 105
Net income (loss) (50) (133) 1,015 (347)
Preferred stock dividends 11 9 30 23
Net income (loss) available to
common shareholders $ (61) $ (142) $ 986 $ (370)
Basic earnings (loss) per
common share $ (0.01) $ (0.03) $ 0.23 $ (0.09)
Diluted earnings (loss) per
common share $ (0.01) $ (0.03) $ 0.23 $ (0.09)
Weighted average shares
outstanding
Basic 4,248 4,248 4,248 4,214
Diluted 4,248 4,248 4,286 4,214
Net interest & profit margin 4.64% 4.29% 4.87% 4.54%
Period-end (in 000s except Book Value per share):
Sept 30, December 31,
2007 2006 2006
Financings & Financings
Held for Sale $58,827 $50,163 $52,879
Allowance for loan losses 536 458 466
Deposits 77,347 57,015 78,882
Assets 87,487 65,842 87,272
Equity 6,373 5,300 5,251
Book value per share $ 1.38 $ 1.21 $ 1.15
At September 30, 2007 University Bank's Tier 1 Capital Ratio was 10.2%, an
increase from 9.80% at December 31, 2006. Tier 1 Capital increased to
$9,031,000 from $7,676,000 over this period. Over the past 23 months, the
bank's Tier 1 capital has risen dramatically, from $3,159,000 to nearly
three times that level through a combination of earnings and strategic
management decisions. President Stephen Lange Ranzini noted, "With our
current capital levels, University Bank could grow its balance sheet by 47%
and still remain well capitalized at our long-term capital to asset goal of
7% Tier 1 Capital to Assets."
President Stephen Lange Ranzini noted, "Although University Bank is an
active participant in the residential mortgage industry, it has never
originated many types of riskier mortgage loans that are currently causing
severe losses among our competitors. We've never originated any
'interest-only,' 'optional payment,' 'negatively amortizing' or 'no income
verification' loans. We have originated and then sold to the secondary
market a few hundred ALT-A and sub-prime loans, however, remarkably, this
portfolio of loan servicing as of September 30, 2007 had zero
delinquencies. Moreover, the bank owns no mortgage securities other than
those guaranteed by GNMA, FNMA or FHLMC."
Pre-tax income (loss) summary after minority interest for the three and
nine-months ended September 30, 2007 (in thousands):
Three-Months Nine-months
------------- -------------
Community Banking $ (12) $ (255)
Midwest Loan Services (19) 1,345
Corporate Office (19) (55)
============= =============
Total $ (50) $ 1,035
============= =============
Pre-tax income (loss) summary after minority interest for the three and
nine-months ended September 30, 2006 (in thousands):
Three-Months Nine-months
------------- -------------
Community Banking $ (95) $ (261)
Midwest Loan Services (11) 238
Corporate Office (27) (324)
============= =============
Total $ (133) $ (347)
============= =============
Ann Arbor-based University Bancorp owns 100% of University Bank which
services a total of over $4 billion in loans. University Bank is an
FDIC-insured, locally owned and managed community bank, and is the only
financial institution headquartered in Washtenaw County rated "Outstanding"
by the FDIC for Community Service and Community Reinvestment. University
Bank focuses on local businesses, minorities and the non-profit communities
primarily serving the cities of Ann Arbor and Ypsilanti of Washtenaw
County. Other University Bank specialties include highly competitive
deposit products for business owners, residential mortgages, commercial
real estate lending and insurance, investments and money management through
its wholly owned subsidiary University Insurance & Investments, Inc.
University Bank also engages in Islamic Banking through 80%-owned
University Islamic Financial Corporation, the first and only Islamic
Banking subsidiary of mortgage alternative financing, the only FDIC-insured
Islamic deposits a bank in the U.S. University Islamic Financial offers
home financings, deposits (offered through University Bank) and Islamic
equity mutual funds (offered through University Insurance & Investments).
University Bank also specializes in mortgage subservicing and mortgage
origination primarily serving over 240 credit unions (representing 2.5% of
all credit unions nationwide) through its Houghton-based 80%-owned
subsidiary, Midwest Loan Services, Inc.
Any prediction of the future is inherently not assured. Investors should
read the risk factors listed on pages 21 through 22 in the Company's report
on Form 10KSB for the year ended December 31, 2006 and any prediction in
this release is intended to be covered by the Safe Harbor provisions of
Section 21E of the Securities Exchange Act of 1934.
Contact Information: Contact: Stephen Lange Ranzini President and CEO Phone: 734-741-5858, Ext. 226 Email: