University Bancorp 1Q2021 Net Income $7,703,863, $1.62 Per Share

ANN ARBOR, MI / ACCESSWIRE / July 30, 2021 / University Bancorp, Inc. (OTCQB:UNIB) announced that it had an unaudited net income attributable to University Bancorp, Inc. common stock shareholders in 1Q2020 of $7,703,863, $1.62 per share on average shares outstanding of 4,765,518 for the first quarter, versus an unaudited net loss of $453,266, $0.09 per share on average shares outstanding of 5,204,899 for 1Q2020. For the 12 months ended March 31, 2021, net income was $35,859,946, $7.13 per share on average shares outstanding of 5,031,303 for the period.

Shareholders' equity attributable to University Bancorp, Inc. common stock shareholders was $58,579,620 or $12.19 per share, based on shares outstanding at March 31, 2020 of 4,765,518.

President Stephen Lange Ranzini noted, "The 1Q2021 result for profitability was excellent, despite lower industry-wide margins on mortgage loan originations during the quarter. Net income in the first quarter of each year is usually seasonally slow due to the lower pace of mortgage originations. Our internal model indicates that at current volumes of mortgage originations and current margins, $2.5 million per month of pre-tax income is possible, before any provisioning for potential or actual loan losses, or other unusual items."

At Midwest Loan Services, the increase in internal originations and organic growth of our sub-servicing clients led the number of mortgages serviced to grow 6.2% during 1Q2021, or annualized growth of 24.8%. Excluding the benefit from its $608.8 million of non-interest-bearing escrow deposits, Midwest Loan Services contributed $2.1 million in pre-tax income in 1Q2021, or an annualized pre-tax income run rate of $8.4 million.

Results in 1Q2021 were positively impacted by above average margins on mortgage originations sold to the secondary market, which was caused by the pandemic and the Federal Reserve's reaction to it. The following graph is the best index that we are aware of for the overall industry-wide margins on standard FNMA and FHLMC loans sold in the secondary market.

Foto: Accesswire

Margins began to rise in mid-February 2020 and rose to record levels, as the industry struggled with capacity constraints caused by the surge in applications caused by record low interest rates, and financial and operational dislocations caused by the global pandemic. Margins have since moderated to lower but still elevated, mid-cycle levels.