University Bancorp, Inc. (OTCQB: UNIB) (PINKSHEETS: UNIB) announced
today that its subsidiary, University Bank, had acquired an
additional 37.4925% membership interest in University Lending
Group, LLC, effective as of December 31, 2011, bringing its total
ownership to 87.5025%. University Bancorp, Inc. issued a total of
366,720 shares of common stock, representing 8.26% of the shares
outstanding. As a result of the acquisition, our total outstanding
shares of common stock increased to 4,642,598. Shareholders' equity
of University Bancorp, Inc. increased by approximately $400,000 as
a result of the acquisition and the Tier 1 Capital of University
Bank decreased by approximately $250,000.
University Lending Group, LLC is a subsidiary of University Bank
specializing in retail residential mortgage originations. ULG
originates residential mortgage loans for sale to secondary market
investors which are guaranteed by FHA, FNMA, FHLMC, USDA Rural
Development, VA and various state housing authorities. University
Lending Group, LLC ("ULG") began operations in May 2008 and 50.01%
of ULG has been owned by University Bank since inception. A total
of $800,000 of shareholders' capital was invested by the
shareholders of ULG in founding the firm. Since inception and
through December 31, 2011, ULG has originated $1,199,794,439 in
residential mortgage loans, and it has had cumulative earnings from
inception through November 30, 2011, of $1,845,660:
Earnings Originations
2008 -$319,522 $132,721,654
2009 $3,259,642 $488,920,057
2010 $248,823 $312,977,078
2011 -$1,343,283 $265,175,650
Cumulative $1,845,660 $1,199,794,439
During 2011, ULG suffered losses of $1,050,000 related to
shutting down its wholesale mortgage banking division. Management
opted to terminate ULG's wholesale mortgage banking division in
June 2012 because massive government intervention in the
residential lending business substantially and negatively impacted
its traditional customer base of reputable mortgage banking firms.
While changes in regulations drove 95% of all mortgage banking
firms out of business, 75% of ULG's customers went out of business.
When the volume of business was insufficient to generate a critical
mass of volume, we closed the business.
During 2011, additional costs were incurred with establishing
retail residential mortgage production offices and hiring
approximately 100 employees to staff these offices and the related
back office operations. The mortgage originators that we hired to
staff the offices of ULG specialize mainly in Realtor® referral
purchase mortgage transactions. For the first six months of 2012,
ULG projects that it will originate over $150 million of
residential mortgages from its retail residential mortgage
production offices and contribute materially to the bank's
bottomline.
In December 2010, all residential mortgage originations of
University Bank's subsidiary, University Islamic Financial ("UIF"),
were transitioned onto the ULG back office mortgage origination
technology and operations support platform with ULG providing
outsourced services to UIF. In addition to the technology and
compliance support, these operations support services included
underwriting, closing, post-closing, secondary marketing and
quality control. Since then, by being able to focus on retail
originations while ULG provided outsourced support services, the
capacity constraints on UIF's business have been removed, and UIF
generated a record $79,504,725 of residential financings, up 90.5%
from the total of $41,745,381 generated in 2010.
Effective October 1, 2011, ULG was divided into two firms, ULG
retained the retail mortgage origination operations and Midwest
Mortgage Solutions (MMS) acquired the back office mortgage
origination technology and operations support platform supporting
both University Islamic Financial and ULG's retail offices.
Effective October 1, 2011, MMS became a wholly-owned subsidiary of
University Bank. The mortgage originations of University Bank's
Midwest Loan Services subsidiary are in the process of also being
transitioned onto the MMS platform, so that all of the mortgage
originations of University Bank's various subsidiaries will be
through one unified technology and operations support platform
going forward.
Ann Arbor-based University Bancorp owns 100% of University Bank
which, together with its subsidiaries, holds and manages a total of
over $10.3 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.
Shareholders and investors are encouraged to refer to the
financial information available on our investor relations web page
at: http://www.university-bank.com/Bancorp.html.
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, mortgage
originations and net income, 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.
Contact: Stephen Lange Ranzini President and CEO Phone:
734-741-5858, Ext. 226 Email: Email Contact
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