University Bancorp 3Q2014 Net Income $528,727, $0.112 per Share - Seite 2

Tier 1 Capital was $13,833,000 or 12.74% of regulatory average quarterly assets at 9/30/2014, and is currently forecast to be 13.95% at 12/31/2014, before any impact from the payment of dividends from the bank or if we conduct some stock buybacks during 4Q2014, which is very likely. During the quarter, all accumulated dividends on the Company's 9% preferred stock were paid and the balance outstanding was reduced to $350,000 from cash on hand at the Company. University Bank's board of directors paid a monthly dividend of 30% of monthly net income during the quarter, since the bank's most recent stress test indicates that the bank has substantial excess capital to meet both its business plan and a severe economic downturn. We currently anticipate fully retiring the remaining 9% preferred stock from cash on hand by year-end.

Shareholders' equity attributable to University Bancorp, Inc. common stock shareholders was $10,329,410 or $2.174 per share, based on shares outstanding at September 30, 2014 of 4,751,490. Excluding goodwill & other intangibles related to the acquisition of Midwest Loan Services and AAIC, net tangible shareholders' equity attributable to University Bancorp, Inc. common stock shareholders was $9,599,601 or $2.046 per share at 9/30/2014. (Please note that we do not see this latter statistic as particularly useful or meaningful because the goodwill mainly relates to our insurance agency which has a value higher than the amount of goodwill being carried.) Treasury Shares as of 9/30/2014 were 31,522 after the exercise of stock options covering 24,770 shares of common stock. If the pending acquisition of the final 20% of Midwest Loan Services common stock had closed as of 9/30/2014, we currently estimate that the book value per share of common stock of University Bancorp would have increased from $2.174 to $2.466 per share, or an increase of $0.292 per share.

Michigan and the Ann Arbor MSA continue to increase employment and as a result, the performance of our portfolio loans and our overall asset quality continues to improve and we are experiencing low loan delinquencies. We had only two loans delinquent over 30 days at 9/30/2014, a residential loan with a carrying value of $11,315 which is in the process of foreclosure and a commercial real estate loan with a carrying value of $267,921 that was 46 days late. Total classified loans on our watch list at September 30, 2014 were 5 in number for $1,248,831 and ORE numbered 3 for $359,629, for a total of 8 substandard assets carried at $1,608,460, or 11.63% of Tier 1 Capital. The Allowance for Loan Losses stands at $676,000, or 1.31% of the amount of portfolio loans of $51,439,000 excluding the loans held for sale, which have their own separate reserve of $481,000 at September 30, 2014. Subsequent to quarter-end, we successfully resolved the final two outstanding buyback requests from secondary market investors and about half this reserve was released into earnings as a result.