UBCD Unionbancorp

UnionBancorp, Inc. Announces Year-End and Fourth Quarter Results OTTAWA, Ill., Feb. 11 /PRNewswire-FirstCall/ -- Dewey R. Yaeger, President and Chief Executive Officer of UnionBancorp, Inc. (NASDAQ:UBCD), reported net income for the year ended December 31, 2004 of $4,803,000 or $1.12 per diluted share compared to $2,130,000 or $0.48 per diluted share earned in the year ended December 31, 2003. During the fourth quarter of 2004, the Company reported net income of $473,000 or $0.10 per diluted share. This compares to a net loss of ($206,000) or ($0.06) per diluted share for the same period in 2003. "We are extremely encouraged by the improvement in core earnings over 2003 and believe that the full impact of many of our recent initiatives will continue to favorably impact results," remarked Yaeger on 2004 earnings. "The completion of our charter consolidation initiative, our exit from the western Illinois market area and improvement in credit quality and our overall lending process all indicate that we are trending in the right direction. With the core foundation now in place, an emphasis on revenue generation will be made throughout 2005." Fourth Quarter 2004 Highlights: -- The Board of Directors of UnionBancorp, Inc. approved the payment of a $0.10 quarterly cash dividend on the Company's common stock during the fourth quarter, marking the 79th consecutive quarter of dividends paid to stockholders. -- The Company completed the merger of UnionFinancial Services & Trust Company into UnionBank early in the fourth quarter. This action was the final step in the Company's efforts to consolidate its entities into a single bank charter. -- During the fourth quarter, the Company incurred approximately $300,000 in nonrecurring expenses. A major contributor to the activity were expenses incurred from the write-down of one of the Company's sales and service center buildings in association with its anticipated closing. The impact to earnings, net of taxes, was approximately $0.05 per diluted share. -- Noninterest expense experienced a $930,000 decrease or 12.82% during the fourth quarter of 2004 as compared to the same period in 2003 and fell $1,626,000 to $27.0 million for the year ending December 31, 2004 as compared to the year ending December 31, 2003. -- The net interest margin increased to 3.33% during the fourth quarter of 2004 as compared with 3.29% for the same period in 2003. -- Net charge-offs for the fourth quarter of 2004 were 0.13% of average loans, as compared to 0.44% for fourth quarter of 2003. -- The reserve coverage ratio (allowance to nonperforming loans) was reported at 231.60% as of December 31, 2004 as compared to 106.30% as of December 31, 2003. Net Interest Margin The net interest margin increased to 3.33% during the fourth quarter of 2004 as compared with 3.29% for the same period in 2003 and decreased from 3.38% in the third quarter of 2004. The majority of the quarter-over-quarter improvement in the net interest margin was related to an increase in yields earned on average loans through competitive pricing on new and refinanced loans, an overall improvement in asset quality with respect to non-performing loans and net charge-offs, and the divesture of the Company's western Illinois sales and service centers which historically had lower yields than other markets. Tax-equivalent net interest income was reported at $4.8 million for the fourth quarter of 2004 as compared to $6.0 million for the fourth quarter 2003. Noninterest Income and Expense Noninterest income, excluding securities gains, decreased $800,000 or 28.8% during the fourth quarter of 2004 as compared to the same period in 2003. For the year ending December 31, 2004, noninterest income increased $209,000 to $13.9 million as compared to the same period in 2003. The increase for the year ending December 31, 2004 was primarily driven by the $3.4 million gain in connection with the sale of the Company's western Illinois sales and service centers. Conversely, a loss in incremental income from those offices during the fourth quarter attributed to a decrease in noninterest income on a quarter-over-quarter basis. Noninterest expense experienced a $930,000 decrease or 12.82% during the fourth quarter of 2004 as compared to the same period in 2003 and fell $1,626,000 to $27.0 million for the period ending December 31, 2004 as compared to the same period in 2003. The decrease was due, in large part, to the sale of the Company's western Illinois sales and service centers. Asset Quality During 2004, the loan portfolio decreased to $419.3 million as of December 31, 2004, as compared to $476.8 million as of December 31, 2003. The decrease was due, in large part, to the sale of the Company's western Illinois sales and service centers which resulted in the sale of approximately $40.4 million in loans. The remaining decrease resulted from a continued softening of overall loan demand and normal paydowns. The level of nonperforming loans to end of period loans totaled 1.00% as of December 31, 2004 compared to 1.77% as of December 31, 2003. Net charge-offs for the fourth quarter of 2004 were 0.13% of average loans, as compared to 0.44% for the fourth quarter of 2003. The reserve coverage ratio (allowance to nonperforming loans) was reported at 231.60% as of December 31, 2004 as compared to 106.30% as of December 31, 2003. About the Company UnionBancorp, Inc. is a regional financial services company based in Ottawa, Illinois, and devotes special attention to personal service and offers Bank, Trust, Insurance and Investment services at each of its locations. The Company's market area extends from the far Western suburbs of the Chicago metropolitan area across Central and Northern Illinois. UnionBancorp common stock is listed on The Nasdaq National Market Securities Stock Market under the symbol "UBCD." Further information about UnionBancorp, Inc. can be found at the Company's website at http://www.ubcd.com/ . Safe Harbor Statement Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1993, as amended, and Section 21E of the Securities Act of 1934 as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by the use of words such as "believe," "expect," "intend," "anticipate," "estimate," or "project" or similar expressions. The Company's ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company and the subsidiaries include, but are not limited to, changes in: interest rates; general economic conditions; legislative/regulatory changes; monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality and composition of the loan or securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in the Company's market areas; the Company's implementation of new technologies; the Company's ability to develop and maintain secure and reliable electronic systems; and accounting principles, policies, and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Accompanying Financial Statements and Tables Accompanying this press release is the following unaudited financial information: -- Unaudited Quarterly and Year to Date Highlights -- Unaudited Consolidated Balance Sheets -- Unaudited Consolidated Statements of Income/(Loss) -- Unaudited Selected Quarterly Consolidated Financial Data UnionBancorp, Inc. and Subsidiaries Unaudited Quarterly and Year to Date Highlights (Dollars In Thousands, Except Share Data) Three Months Ended Twelve Months Ended December 31, December 31, 2004 2003 2004 2003 Operating Highlights Net income (loss) $473 $(206) $4,803 $2,130 Return on average total assets 0.28% (0.10)% 0.65% 0.28% Return on average stockholders equity 2.78% (1.10)% 7.06% 3.16% Net interest margin 3.33% 3.29% 3.34% 3.65% Efficiency ratio 88.32% 85.04% 82.90% 72.25% Per Share Data Diluted earnings (loss) per common share $0.10 $(0.06) $1.12 $0.48 Book value per common share $17.30 $16.77 $17.30 $16.77 Diluted weighted average common shares outstanding 4,109,357 4,098,841 4,109,999 4,069,220 Period end common shares outstanding 4,032,144 4,026,850 4,032,144 4,026,850 Stock Performance Data Market Price: Quarter End $21.25 $21.84 $21.25 $21.84 High $21.94 $24.04 $23.00 $24.04 Low $20.29 $20.00 $19.20 $15.15 Period end price to book value 1.23 1.30 1.23 1.30 UnionBancorp, Inc. and Subsidiaries Unaudited Consolidated Balance Sheets December 31, 2004 and December 31, 2003 (Dollars in Thousands) December 31, December 31, 2004 2003 ASSETS Cash and cash equivalents $22,802 $22,198 Securities available-for-sale 191,661 252,248 Loans 419,275 476,812 Allowance for loan losses (9,732) (9,011) Net loans 409,543 467,801 Cash surrender value of life insurance 14,953 14,379 Mortgage servicing rights 2,772 2,775 Premises and equipment, net 13,463 16,576 Goodwill 6,963 7,642 Intangible assets, net 703 1,232 Other real estate 420 227 Other assets 6,266 8,344 Total assets $669,546 $793,422 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Deposits Non-interest-bearing $55,800 $89,424 Interest-bearing 456,677 548,608 Total deposits 512,477 638,032 Federal funds purchased and securities sold under agreements to repurchase 12,722 1,533 Advances from the Federal Home Loan Bank 61,900 72,450 Notes payable 6,629 7,873 Series B mandatory redeemable preferred stock 831 831 Other liabilities 4,740 4,656 Total liabilities 599,299 725,375 Stockholders' equity Series A convertible preferred stock 500 500 Common stock 4,641 4,628 Surplus 22,632 22,484 Retained earnings 46,592 43,609 Accumulated other comprehensive income 1,351 2,141 Unearned compensation under stock option plans - (2) 75,716 73,360 Treasury stock, at cost (5,469) (5,313) Total stockholders' equity 70,247 68,047 Total liabilities and stockholders' equity $669,546 $793,422 UnionBancorp, Inc. and Subsidiaries Unaudited Consolidated Statements of Income (Loss) Three Months and Twelve Months Ended December 31, 2004 and December 31, 2003 (Dollars in Thousands, Except Per Share Data) Three Months Ended Twelve Months Ended December 31, December 31, 2004 2003 2004 2003 Interest income Loans $6,543 $7,495 $27,718 $32,693 Securities Taxable 1,231 1,731 5,925 6,805 Exempt from federal income taxes 266 361 1,221 1,533 Federal funds sold and other 16 4 48 55 Total interest income 8,056 9,591 34,912 41,086 Interest expense Deposits 2,275 2,910 9,909 12,453 Federal funds purchased and securities sold under agreements to repurchase 31 26 98 122 Advances from the Federal Home Loan Bank 697 769 2,887 2,997 Series B mandatory redeemable preferred stock 13 16 50 64 Notes payable 73 78 306 325 Total interest expense 3,089 3,799 13,250 15,961 Net interest income 4,967 5,792 21,662 25,125 Provision for loan losses 300 2,011 1,750 8,236 Net interest income after provision for loan losses 4,667 3,781 19,912 16,889 Noninterest income Service charges 610 750 2,866 3,090 Merchant fee income - 32 56 560 Trust income 197 198 740 701 Mortgage banking income 355 625 2,020 3,947 Insurance commissions and fees 480 503 2,234 2,318 Bank owned life insurance (BOLI) 99 151 573 681 Securities gains, net (9) 1 123 281 Gain on sale of assets (5) - 4,089 - Other income 237 514 1,227 2,141 1,964 2,774 13,928 13,719 Noninterest expenses Salaries and employee benefits 3,296 3,955 15,410 16,020 Occupancy expense, net 737 692 2,461 2,138 Furniture and equipment expense 522 559 2,215 2,094 Marketing 153 210 615 709 Supplies and printing 114 182 435 541 Telephone 121 137 546 874 Other real estate owned expense - 10 8 178 Amortization of intangible assets 56 31 337 247 Other expenses 1,331 1,484 4,954 5,806 6,330 7,260 26,981 28,607 Income (loss) before income taxes 301 (705) 6,859 2,001 Income taxes (172) (499) 2,056 (129) Net income (loss) 473 (206) 4,803 2,130 Preferred stock dividends 52 48 207 193 Net income (loss) for common stockholders $421 $(254) $4,596 $1,937 Basic earnings (loss) per common share $0.10 $(0.07) $1.14 $0.48 Diluted earnings (loss) per common share $0.10 $(0.06) $1.12 $0.48 UnionBancorp, Inc. Unaudited Selected Quarterly Consolidated Financial Data (Dollars in Thousands, Except Share Data) Quarters Ended 12/31/04 09/30/04 06/30/04 03/31/04 12/31/03 (Dollars in Thousands, Except Per Share Data) Statement of Income Data Interest income $8,056 $8,505 $8,843 $9,508 $9,591 Interest expense (3,089) (3,142) (3,312) (3,707) (3,847) Net interest income 4,967 5,363 5,531 5,801 5,744 Provision for loan losses 300 200 500 750 2,011 Net interest income after provision for loan losses 4,667 5,163 5,031 5,051 3,733 Noninterest income 1,964 5,850 3,190 2,924 2,774 Noninterest expense 6,330 6,643 7,029 6,979 7,260 Income (loss) before income taxes 301 4,370 1,192 996 (753) Provision (benefit) for income taxes (172) 1,753 279 196 (499) Net income (loss) $473 $2,617 $913 $800 $(254) Net income (loss) on common stock $421 $2,565 $861 $748 $(254) Per Share Data Basic earnings (loss) per common share $0.10 $0.64 $0.21 $0.19 $(0.07) Diluted earnings (loss) per common share 0.10 0.62 0.21 0.18 (0.06) Cash dividends on common stock 0.10 0.10 0.10 0.10 0.09 Dividend payout ratio for common stock 110.21% 15.71% 46.92% 53.96% -- Book value per common share $17.30 $17.38 $16.47 $16.88 $16.77 Basic weighted average common shares outstanding 4,031,552 4,034,365 4,037,347 4,031,181 4,010,111 Diluted weighted average common shares outstanding 4,109,357 4,105,872 4,115,166 4,114,385 4,098,841 Period-end common shares outstanding 4,032,144 4,030,800 4,038,800 4,035,900 4,026,850 Balance Sheet Data Securities $191,661 $190,385 $211,733 $250,282 $252,248 Loans 419,275 413,941 453,676 466,591 476,812 Allowance for loan losses 9,732 9,962 10,224 9,882 9,011 Assets 669,546 667,818 732,019 776,399 793,422 Deposits 512,477 511,568 583,612 614,975 638,032 Stockholders' equity 70,247 70,561 67,032 68,619 68,047 Earnings Performance Data Return on average total assets 0.28% 1.46% 0.49% 0.41% (0.10)% Return on average stockholders' equity 2.78 15.40 5.44 4.67 (1.10) Net interest margin ratio 3.33 3.38 3.31 3.34 3.29 Efficiency ratio (1) 88.32 81.85 82.45 80.33 85.04 Asset Quality Ratios Nonperforming assets to total end of period assets 0.69% 0.69% 0.81% 0.95% 1.10% Nonperforming loans to total end of period loans 1.01 1.09 1.28 1.53 1.78 Net loan charge-offs to total average loans 0.13 0.10 0.03 (0.03) 0.44 Allowance for loan losses to total end of period loans 2.32 2.41 2.25 2.12 1.89 Allowance for loan losses to nonperforming loans 231.60 220.20 176.43 138.13 106.30 Capital Ratios Average equity to average assets 9.98% 9.47% 8.92% 8.72% 8.63% Total capital to risk adjusted assets 14.30 14.36 12.73 12.32 12.52 Tier 1 leverage ratio 9.54 9.55 8.38 7.83 7.60 (1) Calculated as noninterest expense less amortization of intangibles and expenses related to other real estate owned divided by the sum of net interest income before provisions for loan losses and total noninterest income excluding securities gains and losses and gains on sale of assets. DATASOURCE: UnionBancorp, Inc. CONTACT: Dewey R. Yaeger, President and Chief Executive Officer, , or Kurt R. Stevenson, Senior Vice President and Chief Financial Officer, , both of UnionBancorp, Inc., +1-815-431-2720 Web site: http://www.ubcd.com/

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