UBCD Unionbancorp

UnionBancorp, Inc. Reports Third Quarter Earnings OTTAWA, Ill., Nov. 1 /PRNewswire-FirstCall/ -- Dewey R. Yaeger, President and Chief Executive Officer of UnionBancorp, Inc. (NASDAQ:UBCD), announced third quarter earnings of $2,617,000 or $0.62 per diluted share. Third quarter 2004 earnings included an approximate $1.7 million net gain on sale associated with the Company's divestiture of five western Illinois branch locations. Third quarter 2004 earnings compare to a net loss of $869,000 or $0.23 per diluted share earned in the third quarter of 2003. The Company's third quarter 2003 results were adversely impacted by a $4.4 million provision for loan losses. For the nine months ended September 30, 2004, net income equaled $4,330,000 or $1.02 per diluted share compared to $2,384,000 or $0.54 per diluted share earned in the same period during 2003. Commenting on the quarter, Yaeger stated, "The completion of several key strategic initiatives, including the sale of five of our western Illinois branch offices, has allowed us to re-focus on our core business operations. We are encouraged by continued improvement in asset quality trends, particularly in our levels of nonperforming loans and charge-offs. Going forward, our strategic growth efforts will focus largely on heightened revenue." Third Quarter 2004 Highlights: -- The Company completed the sale of five of its western Illinois branch offices on September 10, 2004, selling $40.4 million in loans and $88.6 million in deposits to First Bankers Trust Company of Quincy. The transaction, which effectively exited the Company from the western Illinois market, yielded a net gain on sale (after impairment of intangible assets, taxes and applicable expenses) of approximately $1.7 million and reduced the Company's net footings by $40.9 million. -- The net interest margin remained relatively stable over the previous four quarters, reported at 3.38% at the end of the third quarter 2004. -- The level of nonperforming loans to total end of period loans totaled 1.09% as of September 30, 2004, compared to 2.11% on September 30, 2003 and 1.78% at December 31, 2003. -- Net charge-offs for the third quarter were 0.10% of average loans, as compared to 0.52% for third quarter 2003. -- The reserve coverage ratio (allowance to nonperforming loans) was reported at 220.20% as of September 30, 2004 as compared to 89.01% as of September 30, 2003 and 106.30% as of December 31, 2003. -- Loan demand in the third quarter remained soft, as total loans decreased $62.9 million to $413.9 million since December 31, 2003. Of the $60.9 million decrease in loans, $40.4 million or 64.23% was associated with the sale of the Company's western Illinois branch offices. The remaining decrease was due to tighter underwriting standards, a continued softening of overall loan demand and normal paydowns. -- The Company's Board of Directors approved the payment of a $0.10 quarterly cash dividend on the Company's common stock, marking the 78th consecutive quarter of dividends paid to stockholders. Net Interest Margin The net interest margin for third quarter 2004 was 3.38%, up slightly from 3.34% for third quarter 2003, 3.34% from first quarter 2004 and 3.31% for the second quarter 2004. Tax-equivalent net interest income decreased to $5.5 million for third quarter 2004 as compared to $6.7 million for 2003's third quarter. This decrease resulted from repricing of earning assets 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 the sale of the five western Illinois branch locations, decreased from $3,200,000 to $2,359,000. 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) and a decline in service charge fee income. Noninterest expense, excluding $987,000 in impairment charges and related expenses due to the sale of the Company's five western Illinois branch locations, experienced a $634,000 or 9% decrease on a quarter-over-quarter basis. The significant improvement was primarily a result of decreased salary and benefits costs. Asset Quality During the first nine months of 2004, the loan portfolio decreased 13.2% to $413.9 million, as compared to $476.8 million at December 31, 2003. Of the $62.9 million decrease in loans, $40.4 million or 64.2% was associated with the sale of the Company's five western Illinois branch offices. The remaining decrease 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 1.09% as of September 30, 2004 compared to 2.11% on September 30, 2003 and 1.78% at December 31, 2003. Net charge-offs for the third quarter were 0.10% of average loans, as compared to 0.52% for third quarter 2003. The reserve coverage ratio (allowance to nonperforming loans) was reported at 220.20% as of September 30, 2004 as compared to 89.01% as of September 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. 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 Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Operating Highlights Net income/(loss) $2,617 $(869) $4,330 $2,384 Return on average total assets 1.46% (0.45)% 0.77% 0.41% Return on average stockholders equity 15.40 (4.98) 8.51 4.57 Net interest margin 3.38 3.76 3.34 3.77 Efficiency ratio 81.85 71.59 81.37 69.06 Per Share Data Diluted earnings/(loss) per common share $0.62 $(0.23) $1.02 $0.54 Book value per common share $17.38 $16.87 $17.38 $16.87 Diluted weighted average common shares outstanding 4,105,872 4,097,793 4,111,378 4,069,255 Period end common shares outstanding 4,030,800 4,000,646 4,030,800 4,000,646 Stock Performance Data Market Price: Quarter End $20.52 $20.82 $20.52 $20.82 High $20.88 $22.52 $23.00 $22.52 Low $19.20 $19.25 $19.20 $15.15 Period end price to book value 1.18 1.23 1.18 1.23 UnionBancorp, Inc. Unaudited Consolidated Balance Sheets (In Thousands) September 30, December 31, 2004 2003 ASSETS Cash and cash equivalents $27,732 $22,198 Securities available-for-sale 190,385 252,248 Loans 413,941 476,812 Allowance for loan losses (9,962) (9,011) Net loans 403,979 467,801 Cash surrender value of life insurance 14,853 14,379 Mortgage servicing rights 2,808 2,775 Premises and equipment, net 13,933 16,576 Goodwill 6,963 7,642 Intangible assets, net 759 1,232 Other real estate 90 227 Other assets 6,316 8,344 Total assets $667,818 $793,422 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Deposits Non-interest-bearing $66,358 $89,424 Interest-bearing 445,210 548,608 Total deposits 511,568 638,032 Federal funds purchased and securities sold under agreements to repurchase 1,033 1,533 Federal Home Loan Bank Advances 70,400 72,450 Notes payable 7,650 7,873 Series B mandatory redeemable preferred stock 831 831 Other liabilities 5,775 4,656 Total liabilities 597,257 725,375 Stockholders' equity Series A convertible preferred stock 500 500 Common stock 4,640 4,628 Surplus 22,572 22,484 Retained earnings 46,574 43,609 Accumulated other comprehensive income 1,744 2,141 Unearned compensation under stock option plans - (2) 76,030 73,360 Treasury stock, at cost (5,469) (5,313) Total stockholders' equity 70,561 68,047 Total liabilities and stockholders' equity $667,818 $793,422 UnionBancorp, Inc. Unaudited Consolidated Statements of Income (In Thousands, Except Per Share Data) Three Months Ended Nine Months Ended Sept. 30, Sept. 30, 2004 2003 2004 2003 Interest income Loans $6,872 $8,378 $21,175 $25,198 Securities Taxable 1,304 1,502 4,694 5,079 Exempt from federal income taxes 312 379 955 1,172 Federal funds sold and other 17 15 32 46 Total interest income 8,505 10,274 26,856 31,495 Interest expense Deposits 2,347 2,896 7,634 9,543 Federal funds purchased and securities sold under agreements to repurchase 14 26 67 96 Advances from the Federal Home Loan Bank 691 771 2,190 2,228 Series B Mandatory Redeemable 12 - 37 - Notes payable 78 82 233 247 Total interest expense 3,142 3,775 10,161 12,114 Net interest income 5,363 6,499 16,695 19,381 Provision for loan losses 200 4,356 1,450 6,225 Net interest income after Provision for loan losses 5,163 2,143 15,245 13,156 Noninterest income Service charges 742 790 2,256 2,340 Trust income 179 180 543 503 Mortgage banking income 450 1,101 1,665 3,322 Insurance commissions and fees 513 580 1,754 1,815 Securities gains, net 122 59 132 280 Gain on sale of assets 4,240 - 4,965 309 Other income 475 549 1,520 2,376 6,721 3,259 12,835 10,945 Noninterest expenses Salaries and employee benefits 3,828 4,256 12,114 12,065 Occupancy expense, net 613 478 1,724 1,446 Furniture and equipment expense 563 518 1,693 1,535 Supplies and printing 91 111 321 359 Telephone 129 199 425 737 Other real estate owned expense 4 - 8 168 Amortization of intangible assets 264 72 367 178 Goodwill impairment on branch sale 679 - 679 - Other expenses 1,343 1,527 4,191 4,859 7,514 7,161 21,522 21,347 Income before income taxes 4,370 (1,759) 6,558 2,754 Income taxes 1,753 (890) 2,228 370 Net income (loss) 2,617 (869) 4,330 2,384 Preferred stock dividends 52 65 156 193 Net income for common stockholders $2,565 $(934) $4,174 $2,191 Basic earnings per share $0.64 $(0.23) $1.03 $0.55 Diluted earnings per common share $0.62 $(0.23) $1.02 $0.54 UnionBancorp, Inc. Unaudited Selected Quarterly Consolidated Financial Data (In Thousands, Except Share Data) Quarters Ended 09/30/04 06/30/04 03/31/04 12/31/03 09/30/03 (Dollars in Thousands, Except Per Share Data) Statement of Income Data Interest income $8,505 $8,843 $9,508 $9,591 $10,274 Interest expense (3,142) (3,312) (3,707) (3,847) (3,775) Net interest income 5,363 5,531 5,801 5,744 6,499 Provision for loan losses 200 500 750 2,011 4,356 Net interest income after provision for loan losses 5,163 5,031 5,051 3,733 2,143 Noninterest income 6,721 3,190 2,924 2,774 3,259 Noninterest expense 7,514 7,029 6,979 7,260 7,161 Income (loss) before income taxes 4,370 1,192 996 (753) (1,759) Provision (benefit) for income taxes 1,753 279 196 (499) (890) Net income/(loss) $2,617 $913 $800 $(254) $(869) Net income/(loss) on common stock $2,565 $861 $748 $(254) $(934) Per Share Data Basic earnings/ (loss) per common shares $0.64 $0.21 $0.19 $(0.07) $(0.23) Diluted earnings/ (loss) per common shares 0.62 0.21 0.18 (0.07) (0.23) Cash dividends on common stock 0.10 0.10 0.10 0.09 0.09 Dividend payout ratio for common stock 15.71% 46.92% 53.96% -- -- Year-end book value per common share $17.38 $16.47 $16.88 $16.77 $16.87 Basic weighted average common shares outstanding 4,034,365 4,037,347 4,031,181 4,010,111 4,000,546 Diluted weighted average common shares outstanding 4,105,872 4,115,166 4,114,385 4,098,841 4,097,793 Period-end common shares outstanding 4,030,800 4,038,800 4,035,900 4,026,850 4,000,646 Balance Sheet Data Securities $190,385 $211,733 $250,282 $252,248 $235,508 Loans 413,941 453,676 466,591 476,812 483,042 Allowance for loan losses 9,962 10,224 9,882 9,011 9,082 Assets 667,818 732,019 776,399 793,422 792,481 Deposits 511,568 583,612 614,975 638,032 622,952 Stockholders' equity 70,561 67,032 68,619 68,047 67,989 Earnings Performance Data Return on average total assets 1.46% 0.49% 0.41% (0.10)% (0.45)% Return on average stockholders' equity 15.40 5.44 4.67 (1.10) (4.98) Net interest margin ratio 3.38 3.31 3.34 3.29 3.76 Efficiency ratio (1) 81.85 82.45 80.33 85.04 71.59 Asset Quality Ratios Nonperforming assets to total end of period assets 0.69% 0.81% 0.95% 1.10% 1.30% Nonperforming loans to total end of period loans 1.09 1.28 1.53 1.78 2.11 Net loan charge- offs to total average loans 0.10 0.03 (0.03) 0.44 0.52 Allowance for loan losses to total end of period loans 2.41 2.25 2.12 1.89 1.88 Allowance for loan losses to nonperforming loans 220.20 176.43 138.13 106.30 89.01 Capital Ratios Average equity to average assets 9.47% 8.92% 8.72% 8.63% 8.94% Total capital to risk adjusted assets 14.36 12.73 12.32 12.52 12.20 Tier 1 leverage ratio 9.55 8.38 7.83 7.60 7.63 (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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