UBCD Unionbancorp

UnionBancorp, Inc. Reports Second Quarter Earnings OTTAWA, Ill., July 28 /PRNewswire-FirstCall/ -- Dewey R. Yaeger, President and Chief Executive Officer of UnionBancorp, Inc. (NASDAQ:UBCD), announced second quarter earnings of $913,000 or $0.21 per diluted share. This compares to $1,446,000 or $0.34 per diluted share earned in the second quarter of 2003. For the six months ended June 30, 2004, net income equaled $1,713,000 or $0.39 per diluted share compared to $3,253,000 or $0.77 per diluted share earned in the same period during 2003. Commenting on the quarter, Yaeger stated, "Management's sustained focus on improving asset quality is beginning to show results by way of improved processes, stronger reserves and lower levels of non-performing loans. We are also encouraged by favorable trends in expense control and low charge-off levels. Net interest income growth will remain a challenge as we attempt to strike a balance between a conservative approach to lending and growth of our portfolio, while mitigating the continued pressure on our margin." Second Quarter 2004 Highlights: -- Earnings per share increased 16.7% over the first quarter of 2004. -- The Company completed the sale of its Blandinsville sales and service office that resulted in a net gain on the sale. The impact to earnings, net of taxes, was approximately $0.07 per diluted share. -- The Company entered into a Definitive Purchase and Assumption Agreement with First Bankers Trust Company to purchase approximately $90 million in deposits and $40 million in loans from UnionBank, thus exiting the Company from its Quincy, Macomb, Carthage, Rushville and Paloma markets. The transaction is expected to be completed late in the third quarter, pending the timing of regulatory approval by the Federal Reserve System and the Office of the Comptroller of the Currency. -- The Company announced that it has filed the necessary applications to merge UnionFinancial Services & Trust Company into UnionBank. -- The net interest margin remained relatively stable over the previous three quarters, reported at 3.31% at the end of the second quarter 2004. -- The Company experienced favorable trends in expense control as noninterest expense levels decreased $140,000 or 2.0% during the second quarter of 2004 in comparison to the second quarter of 2003. -- The reserve coverage ratio (allowance to nonperforming loans) was reported at 176.43% as of June 30, 2004 as compared to 117.69% as of June 30, 2003 and 106.30% as of December 31, 2003. -- Contributions to the provision for loan losses decreased $250,000 as compared with the first quarter 2004. -- The level of non-performing loans to total end of period loans totaled 1.28% as of June 30, 2004 compared to 1.29% on June 30, 2003 and 1.78% at December 31, 2003. -- Loan demand in the second quarter remained soft, as total loans decreased $23.1 million to $453.7 million since December 31, 2003. -- The Company's Board of Directors approved the payment of a $0.10 quarterly cash dividend on the Company's common stock, marking the 77th consecutive quarter of dividends paid to stockholders. Net Interest Margin Net interest margin for second quarter 2004 was 3.31%, down from 3.66% for second quarter 2003 and 3.34% from first quarter 2004. Tax-equivalent net interest income decreased 12.5% to $5,713,000 for second quarter 2004 as compared to $6,529,000 for 2003's second quarter. This decrease resulted from repricing of earning assets in a lower rate environment and a shift in our earning assets from higher yielding loans to lower yielding investments. Noninterest Income and Expense Noninterest income, excluding securities gains and the gain on sale of Blandinsville, decreased from $3,649,000 to $2,714,000. The decrease was primarily related to a drop in revenue generated from the mortgage banking division (including gains on sale and servicing income, net of non-cash amortization charges in the carrying value of the mortgage servicing rights portfolio), merchant POS and credit card fees due to the sale of those product lines. Noninterest expense experienced a $140,000 or 1.95% decrease on a quarter- over-quarter basis. The significant improvement was primarily a result of enhanced operational efficiencies. Offsetting the decrease was an increase in legal fees related to the work-out of nonperforming loans and personnel and facility expenses related to the opening of the Yorkville sales and service center. Asset Quality During the first six months of 2004, the loan portfolio decreased 0.05% to $453.7 million, as compared to $476.8 million at December 31, 2003. This was due to tighter underwriting standards, a continued softening of overall loan demand and normal paydowns. The level of nonperforming loans to total end of period loans totaled 1.26% as of June 30, 2004 compared to 1.29% on June 30, 2003 and 1.78% at December 31, 2003. Net charge-offs for the second quarter were 0.03% of average loans, as compared to 0.10% for second quarter 2003. The reserve coverage ratio (allowance to nonperforming loans) was reported at 176.43% as of June 30, 2004 as compared to 117.69% as of June 30, 2003 and 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 to the Mississippi River in Western Illinois. UnionBancorp common stock is listed on The Nasdaq 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 This release may contain "forward-looking" statements. Forward-looking statements are identifiable by the inclusion of such qualifications as "expects", "intends", "believes", "may", "likely" or other indications that the particular statements are not based upon fact but are rather based upon the Company's beliefs as of the date of this release. Actual events and results may differ significantly from those described in such forward-looking statements, due to changes in the economy, interest rates or other factors. For additional information about these factors, please review our filings with the Securities and Exchange Commission. 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 -- Unaudited Selected Quarterly Consolidated Financial Data UnionBancorp, Inc. Unaudited Quarterly and Year to Date Highlights (In Thousands, Except Share Data) Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 Operating Highlights Net income $913 $1,446 $1,713 $3,253 Return on average total assets 0.49% 0.74% 0.45% 0.84% Return on average stockholders equity 5.44 8.10 5.05 9.37 Net interest margin 3.31 3.66 3.33 3.77 Efficiency ratio 82.45 69.30 81.38 67.83 Per Share Data Diluted earnings per common share $0.21 $0.34 $0.39 $0.77 Book value per common share $16.47 $17.55 $16.47 $17.55 Diluted weighted average common shares outstanding 4,115,166 4,068,284 4,114,251 4,053,126 Period end common shares outstanding 4,038,800 3,998,946 4,038,800 3,998,946 Stock Performance Data Market Price: Quarter End $19.46 $20.00 $19.46 $20.00 High $23.00 $20.48 $23.00 $20.48 Low $19.25 $16.05 $19.25 $15.15 Period end price to book value 1.18 1.14 1.18 1.14 UnionBancorp, Inc. Unaudited Consolidated Balance Sheets (In Thousands) June 30, December 31, 2004 2003 ASSETS Cash and cash equivalents $26,972 $22,198 Securities available-for-sale 211,733 252,248 Loans 453,676 476,812 Allowance for loan losses (10,224) (9,011) Net loans 443,452 467,801 Cash surrender value of life insurance 14,725 14,379 Mortgage servicing rights 2,804 2,775 Premises and equipment, net 16,200 16,576 Goodwill 7,642 7,642 Intangible assets, net 1,129 1,232 Other real estate 164 227 Other assets 7,198 8,344 Total assets $732,019 $793,422 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Deposits Non-interest-bearing $77,072 $89,424 Interest-bearing 506,540 548,608 Total deposits 583,612 638,032 Federal funds purchased and securities sold under agreements to repurchase 1,336 1,533 Advances from the Federal Home Loan Bank 67,700 72,450 Notes payable 7,296 7,873 Series B mandatory redeemable preferred stock 831 831 Other liabilities 4,212 4,656 Total liabilities 664,987 725,375 Stockholders' equity Series A convertible preferred stock 500 500 Common stock 4,640 4,628 Surplus 22,572 22,484 Retained earnings 44,412 43,609 Accumulated other comprehensive income 221 2,141 Unearned compensation under stock option plans - (2) 72,345 73,360 Treasury stock, at cost (5,313) (5,313) Total stockholders' equity 67,032 68,047 Total liabilities and stockholders' equity $732,019 $793,422 UnionBancorp, Inc. Unaudited Consolidated Statements of Income (In Thousands, Except Per Share Data) Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 Interest income Loans $7,035 $8,281 $14,303 $16,820 Securities Taxable 1,485 1,689 3,390 3,577 Exempt from federal income taxes 318 398 643 793 Federal funds sold and other 5 13 15 31 Total interest income 8,843 10,381 18,351 21,221 Interest expense Deposits 2,456 3,189 5,287 6,647 Federal funds purchased and securities sold under agreements to repurchase 40 40 53 70 Advances from the Federal Home Loan Bank 728 770 1,499 1,457 Series B Mandatory Redeemable 13 - 25 - Notes payable 75 81 155 165 Total interest expense 3,312 4,080 7,019 8,339 Net interest income 5,531 6,301 11,332 12,882 Provision for loan losses 500 1,257 1,250 1,869 Net interest income after Provision for loan losses 5,031 5,044 10,082 11,013 Noninterest income Service charges 803 794 1,514 1,550 Merchant fee income 12 210 68 489 Trust income 180 146 364 323 Mortgage banking income 647 1,192 1,215 2,221 Insurance commissions and fees 608 641 1,241 1,235 Securities gains, net 10 129 10 221 Gain on sale of assets 466 309 725 309 Other income 464 666 977 1,338 3,190 4,087 6,114 7,686 Noninterest expenses Salaries and employee benefits 4,136 3,979 8,286 7,809 Occupancy expense, net 559 470 1,111 968 Furniture and equipment expense 573 524 1,130 1,017 Supplies and printing 115 122 230 248 Telephone 142 281 296 538 Other real estate owned expense (3) 40 4 168 Amortization of intangible assets 51 52 103 106 Other expenses 1,456 1,701 2,848 3,332 7,029 7,169 14,008 14,186 Income before income taxes 1,192 1,962 2,188 4,513 Income taxes 279 516 475 1,260 Net income 913 1,446 1,713 3,253 Preferred stock dividends 52 64 104 128 Net income for common stockholders $861 $1,382 $1,609 $3,125 Basic earnings per share $0.21 $0.34 $0.40 $0.78 Diluted earnings per common share $0.21 $0.34 $0.39 $0.77 UnionBancorp, Inc. Unaudited Selected Quarterly Consolidated Financial Data (In Thousands, Except Share Data) Quarters Ended 06/30/04 03/31/04 12/31/03 09/30/03 06/30/03 (Dollars in Thousands, Except Per Share Data) Statement of Income Data Interest income $8,843 $9,508 $9,591 $10,274 $10,381 Interest expense (3,312) (3,707) (3,847) (3,775) (4,080) Net interest income 5,531 5,801 5,744 6,499 6,301 Provision for loan losses 500 750 2,011 4,356 1,257 Net interest income after provision for loan losses 5,031 5,051 3,733 2,143 5,044 Noninterest income 3,190 2,924 2,774 3,259 4,087 Noninterest expense 7,029 6,979 7,260 7,161 7,169 Income (loss) before income taxes 1,192 996 (753) (1,759) 1,962 Provision (benefit) for income taxes 279 196 (499) (890) 516 Net income $913 $800 $(254) $(869) $1,446 Net income on common stock $861 $748 $(254) $(934) $1,382 Per Share Data Basic earnings per common shares $0.21 $0.19 $(0.07) $(0.23) $0.34 Diluted earnings per common shares 0.21 0.18 (0.07) (0.23) 0.34 Cash dividends on common stock 0.10 0.10 0.09 0.09 0.09 Dividend payout ratio for common stock 46.92% 53.96% -- -- 18.56% Year-end book value per common share $16.47 $16.88 $16.77 $16.87 $17.55 Basic weighted average common shares outstanding 4,037,347 4,031,181 4,010,111 4,000,546 3,994,564 Diluted weighted average common shares outstanding 4,115,166 4,114,385 4,098,841 4,097,793 4,068,284 Period-end common shares outstanding 4,038,800 4,035,900 4,026,850 4,000,646 3,998,946 Balance Sheet Data Securities $211,733 $250,282 $252,248 $235,508 $220,937 Loans 453,676 466,591 476,812 483,042 476,386 Allowance for loan losses 10,224 9,882 9,011 9,082 7,253 Assets 732,019 776,399 793,422 792,481 772,931 Deposits 583,612 614,975 638,032 622,952 606,955 Stockholders' equity 67,032 68,619 68,047 67,989 70,701 Earnings Performance Data Return on average total assets 0.49% 0.41% (0.10)% (0.45)% 0.74% Return on average stockholders' equity 5.44 4.67 (1.10) (4.98) 8.10 Net interest margin ratio 3.31 3.34 3.29 3.76 3.66 Efficiency ratio (a) 82.45 80.33 85.04 71.59 69.30 Asset Quality Ratios Nonperforming assets to total end of period assets 0.81% 0.95% 1.10% 1.30% 0.84% Nonperforming loans to total end of period loans 1.28 1.53 1.78 2.11 1.29 Net loan charge- offs to total average loans 0.03 (0.03) 0.44 0.52 0.10 Allowance for loan losses to total end of period loans 2.25 2.12 1.89 1.88 1.52 Allowance for loan losses to nonperforming loans 176.43 138.13 106.30 89.01 117.69 Capital Ratios Average equity to average assets 8.92% 8.72% 8.63% 8.94% 9.04% Total capital to risk adjusted assets 12.73 12.32 12.52 12.20 12.63 Tier 1 leverage ratio 8.38 7.83 7.60 7.63 8.01 (a) 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., +1-800-352-8223 Web site: http://www.ubcd.com/

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