University Bank 1Q2012 Profit $937,546

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ANN ARBOR, MI--(Marketwire -05/09/12)- University Bancorp, Inc. (UNIB.PK) (UNIB.PK) provided an update on operating results of its bank subsidiary, University Bank, announcing that the bank had an unaudited pre-tax profit of $937,546 for the first three months of 2012. These results were ahead of the budget by $642,900 year-to-date pre-tax for the three months. The budget for 2012 calls for the bank to earn $5.7 million pre-tax. University Lending Group, Midwest Loan Services and University Islamic Financial all had excellent pre-tax income results ahead of their budgeted level in March, the third month in a row.

After deducting minority interest of $406,844 and preferred stock dividends of $24,859, net income attributable to University Bancorp, Inc. common stock shareholders in the first quarter of 2012 was $499,474, or $0.108 per share on average shares outstanding for the quarter of 4,642,598. Minority Interest in the quarter was unusually high as the bank recouped all the start-up expenses of eight new offices of University Lending Group during the quarter, which had been absorbed by the minority shareholders per the existing contractual arrangements in 2011. Federal Income Tax expense was not levied, since the Company has tax carry forward assets which can absorb taxable income of approximately $3.35 million before incurring federal income tax, as a result of an investment in a low income housing tax credit partnership in prior years.

Tier 1 Capital rose to 9.66% at 3/31/2012, and was $10,806,000 on average assets of $111.9 million. Our goal is to keep Tier 1 Capital above 10% of average assets, and not more than 14%, so we are close to reaching the bottom-end of our goal.

Now that Michigan has added back 100,000 of the 900,000 jobs lost over the past 10 years, our asset quality continues to improve and we are experiencing low loan delinquencies, with just 1 commercial loan delinquent over 30 days, no consumer loans and 3 residential mortgage loans delinquent over 60 days. After quarter-end another ORE was sold on our books for $20k, leaving 5 ORE properties carried at $1,007,821 left to sell. The largest of these properties, now carried on our books for $399,093, is under contract at $440,000 and scheduled to close in June. During March we also wrote down another ORE property (42 acres of land on the west side of Ann Arbor now carried for $7,500 an acre) that has been on our books a number of years by $74.5k, to put us in a better position to move it off the books now that it is carried at a large discount under appraised value. With the earnings as strong as they are, we are aggressively moving to write-down, discount and sell substandard assets and we also used the opportunity in March to establish additional liability reserves against potential future costs. In addition, we added $81k to the Allowance for Loan Losses during the quarter, leaving us with a balance of $1,056.4k at quarter-end versus portfolio loans of $60,014.5k, or 1.68%.

In the first quarter of 2012, our retail mortgage origination group, University Lending Group, LLC, originated a record $74,212,476 in residential mortgage loans, of which 61% financed purchase transactions. Of note, 78% of ULG's applications and 73% of our closings in April are purchase transactions not refinancing transactions, which is excellent. It is our goal to build a sustainable mortgage origination business not dependent upon refinancing. Across all subsidiaries, mortgage closings in April were ahead of the March level, and the locked pipeline is up substantially, so we again achieved excellent profits in April.

Liquidity remains excellent and we manage an additional $60 million of deposits in an off-balance sheet sweep arrangement through a series of deposit accounts at the Federal Home Loan Bank of Indianapolis, which are available to us to meet any withdraws in just a few minutes.

President Stephen Lange Ranzini noted, "While the results in the first quarter of 2012 are very encouraging, we remain very focused on and concerned about the pace and large number of highly complex compliance rules coming out of the regulatory agencies and the tremendous amount of work that these will require of us to succeed in future regulatory examinations."

Ann Arbor-based University Bancorp owns 100% of University Bank which, together with its subsidiaries, holds and manages a total of over $10.8 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 including the audited financial statements, 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 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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