PR-Inside.com: 2018-11-08 16:53:19
ANN ARBOR, MI / ACCESSWIRE / November 8, 2018 / University Bancorp, Inc. (OTCQB: UNIB) announced that it had an unaudited net income attributable to University Bancorp, Inc. common stock shareholders in 3Q2018 of $1,170,465; $0.225 per share on average shares outstanding of 5,200,921 for the third quarter, versus an unaudited net income of $844,103, $0.162 per share on average shares outstanding of 5,200,899 for 3Q2017. For the third quarter of 2018 minority interest income in the amount of $230,821 was incurred, versus a loss of ($28,292) for 3Q2017.
Unaudited net income attributable to University Bancorp, Inc. common stock shareholders for the first nine months of 2018 was $2,684,973, $0.516 per share on average shares outstanding of 5,200,906 for the first nine months, versus an unaudited net income of $2,653,081, $0.512 per share on average shares outstanding of 5,182,658 for 9M2017.
Net income and net income per share for the 12 months ended September 30, 2018 was $5,156,249 and $0.99, respectively.
In the first nine months of 2018, net income of the Company was decreased by three large non-recurring, unusual expenses, which were more than offset by a seasonal factor and a large non-recurring, unusual income item, which had an overall positive cumulative impact of $414,231, before tax:
Two Midwest Loan Services lawsuits were settled out of court for a total of $(260,000);
Obtaining the final ruling on an appeal related to the Guidance Residential litigation resulted in total legal costs of $(143,000). This litigation is now ended and the time for any further appeals has lapsed;
Implementation costs related to the adoption of a new mortgage loan origination system in the amount of $(121,250) were charged against income. The system is now fully operational though continuous improvement is ongoing.
The value of the hedged mortgage origination pipeline rose $226,420 as the amount of locked loans rose over the level held as of 12/31/2017;
With the rise in long term mortgage interest rates the valuation of mortgage servicing rights (MSRs) increased $712,061;
In the first nine months of 2017, net income of the Company was decreased by four large non-recurring, unusual expenses, only partially offset by a seasonal factor, which had an overall negative cumulative impact of $(1,255,487), before tax:
With the decline in long term mortgage interest rates the valuation of mortgage servicing rights (MSRs) decreased by $834,241;
A litigation was settled at an early stage for $75,000;
Retention stock option expense of $213,667;
Implementation costs related to the adoption of a new mortgage loan origination system in the amount of $271,250 were charged against income.
The value of the hedged mortgage origination pipeline rose $138,671 as the amount of locked loans rose over the level at year-end due to seasonal factors and record mortgage production levels.
For 9M2018, the Company had a return on equity attributable to common stock shareholders of 17.2% annualized on initial equity of $23,376,660. Return on equity over the trailing twelve months was 24.3% on initial equity of $21,188,576.
Management currently projects annual net income in 2018 of at least $3,650,000 or $0.70 per share. This forecast takes our actual results for 9M2018 and the actual and estimated results in the 4Q2018 based on our original budget, adjusted for all known major changes. The re-forecast assumes no change in mortgage interest rates from current levels.
President Stephen Lange Ranzini noted, ''2018 net income through the end of September was $(1,662,338) below budgeted levels, with the shortfall caused by decreased margins in our mortgage origination business in line with overall industry conditions, only partially offset by higher origination volumes, about $(403,000) in pre-tax legal expense, related to the final disposition of three lawsuits and $(1,298,953) in net losses at American Mortgage Solutions (AMS), which were $(1,148,921) above the budgeted levels due to delays in the restart of its correspondent origination business. AMS now appears to be on track to have better results in future periods.''
Towards the end of the third quarter of 2018, the new CEO of AMS hired a group of former colleagues who are key sales personnel and key underwriting personnel from competitor organizations, which should position this business unit to return to profitability in the first half of 2019, reaching substantial profitability in 2020, based upon a revised business plan for this unit. The team we have hired has the track record and ability to increase the volume of this business unit towards $2 billion a year, from current de minimus levels of under $10 million per quarter, while we work on renovating the business unit by positioning it with a fully competitive product offering. We believe that this potential will be unlocked with the completion of a technology enhancement project that is schedule to take about 120 days to complete.
The pipeline of interested mortgage subservicing prospects for our Midwest Loan Services division is the largest it's been in years. Also we are making changes to the software of our core subservicing system that will enable us to offer home equity line of credit subservicing starting no later than March 2019 and have identified three initial customers for that new line of business. We currently project a 15% increase in loans subserviced in 2019.
In 9M2018, our residential mortgage origination groups originated $662.2 million of mortgages, versus $644.5 million in 9M2017, of which $437.5 million were originated by our retail origination group, University Lending Group, LLC (ULG), versus $422.0 million in 9M2017, $204.8 million were originated by our UIF unit, versus $184.3 million in 9M2017 and the remainder originated by AMS. Home purchase transactions originated during 9M2018 rose 7.8% at ULG and 17.1% at UIF over the 9M2017 level and 95% of our retail originations at ULG and 91% of our UIF originations in 9M2018 financed home purchase transactions. The turmoil in the mortgage banking industry is providing us with excellent recruitment opportunities of seasoned loan originators who fit our model. Our ULG retail lending business is seeing success in recruitment, especially Loan Officers focused on high margin Renovation & Construction to Permanent Lending and high margin F