-- The Bank's subsidiary, Midwest Loan Services Inc., reported a pre-tax net income of $181,000 for the third quarter of 2008 as compared to net income of $214,000 for the same period in 2007. Improvements in the volume of loans subserviced were offset by a $154,301 decrease in the fair value of mortgage servicing rights during the third quarter of 2008. Income for the nine-months ended September 30, 2007 at Midwest Loan Services was positively impacted by termination fee income of $1,175,284 which was partially offset by a change in fair value of mortgage servicing rights of $182,770. At September 30, 2008, Midwest was subservicing 42,781 mortgages, an increase of 30.55% from 32,770 mortgages subserviced at September 30, 2007 and an increase of 26.06% from 33,937 mortgages subserviced at December 31, 2007. -- Community Banking and Islamic Banking reported a pre-tax loss of $57,000 during the 2008 third quarter, compared to a pre-tax net loss of $226,000 for the same period in 2007. Islamic 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. Improvements in net interest and financing income and financial origination volumes driven by increases in loans and financings were partially offset by higher loan loss provisions for the three months ended September 30, 2008. -- University Lending Group, our new FHA wholesale lending division that began operations in April 2008, achieved profitability during the third quarter of 2008 and contributed net income of $71,000 versus a loss of $308,000 for the nine months ended September 30, 2008. Volumes continue to expand this quarter.Year-to-date key metrics of the bank have shown positive trends when comparing 2008 to 2007:
-- Average earning assets increased by 30.09% to $92,138,350; -- Net interest and financing income +25.1%; -- The net margin increased to 5.15% from 4.64%; -- Tier 1 Capital +7% to $9,305,000.
(in 000s except for per share data) For the For the Quarter Ended Nine-Months Ended Sept. 30, Sept. 30, 2008 2007 2008 2007 Net interest and financing income $1,262 $ 884 $3,217 $2,571 Provision for loan losses 80 16 369 92 Trading securities gains (losses) (26) 78 (68) 78 Total other income 2,205 1,184 5,229 4,823 Increase (decrease) in fair value of mortgage servicing rights (102) (237) 175 (183) Total other expense 3,086 1,922 7,863 5,865 Income tax expense (benefit) 0 0 (44) 20 Minority interest 52 21 (105) 297 Net income (loss) 121 (50) 470 1,015 Preferred stock dividends 12 11 36 30 Net income (loss) available to common shareholders $ 109 $ (61) $ 434 $ 986 Basic earnings (loss) per common share $ 0.03 $(0.01) $ 0.10 $ 0.23 Diluted earnings (loss) per common share $ 0.03 $(0.01) $ 0.10 $ 0.23 Weighted average shares outstanding Basic 4,256 4,248 4,253 4,248 Diluted 4,290 4,248 4,290 4,286 Net interest & profit margin 5.15% 4.64% 4.98% 4.87% Period End: September 30, December 31, ----------------- ------------ 2008 2007 2007 -------- -------- ------------ Loans & financings including those held for sale $ 71,920 $ 58,827 $ 60,063 -------- -------- ------------ Allowance for loan & financing losses 398 536 686 -------- -------- ------------ Deposits 97,970 77,347 78,657 -------- -------- ------------ Assets 112,969 87,487 88,238 -------- -------- ------------ Equity 5,732 6,373 5,984 -------- -------- ------------ Book value per common share $ 1.22 $ 1.38 $ 1.29 -------- -------- ------------At September 30, 2008 University Bank's Tier 1 Capital Ratio was 8.4%. Tier 1 Capital increased to $9,305,000 from $8,721,000 at December 31, 2007. 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. Moreover, the bank owns no mortgage securities other than those guaranteed by GNMA, FNMA or FHLMC." The following table summarizes the pre-tax income (loss) of each profit center of the Company for the three and nine-months ended September 30, 2008 (in thousands):
Three-Months Nine-Months Community and Islamic Banking $ (57) $ (581) Midwest Loan Services 181 1,261 University Lending Group 71 (308) Corporate Office (22) (51) Eliminations (52) 104 -------------- -------------- Total $ 121 $ 425 ============== ==============The following table summarizes the pre-tax income (loss) of each profit center of the Company for the three and nine-months ended September 30, 2007 (in thousands):
Three-Months Nine-Months Community and Islamic Banking $ (226) $ (1,007) Midwest Loan Services 214 2,393 University Lending Group - - Corporate Office (17) (54) Eliminations (21) (297) -------------- -------------- Total $ (50) $ 1,035 ============== ==============Ann Arbor-based University Bancorp owns 100% of University Bank which, together with its subsidiaries, holds and manages a total of $5.8 billion in loans and assets. 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 through its creative and innovative services to meet the financial needs of its community. University Bank also specializes in several niche financial services through subsidiaries:
-- University Islamic Financial Corporation, based in Ann Arbor, Michigan and 80%-owned, engages in Islamic Banking and is the first and only Islamic Banking subsidiary of a bank in the U.S. It offers residential and commercial real estate financing, the only FDIC-insured Islamic deposits (offered through University Bank) and Islamic equity mutual funds (offered through University Insurance & Investments). -- Midwest Loan Services, Inc., based in Houghton, Michigan and 80%- owned, specializes in mortgage subservicing and mortgage origination primarily serving over 250 credit unions, representing 2.6% of all credit unions in the U.S. -- University Lending Group is a division of University Bank located in Farmington Hills, Michigan that originates HUD's FHA and VA and other mortgage loans on a wholesale and retail basis. University Bank has a 50.01% profit participation in the income of the division. -- University Insurance & Investment Services is a 100%-owned subsidiary that provides a full range of insurance services as an independent agent for 49 insurance companies and investment brokerage account services.Any prediction of the future is inherently not assured. Investors should read the risk factors listed on pages 23 through 24 in the Company's report on Form 10KSB for the year ended December 31, 2007 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: