UnionBancorp, Inc. Announces Year-End and Fourth Quarter ResultsOTTAWA, IL -- 02/10/2006 -- Scott A. Yeoman, President and Chief Executive Officer of UnionBancorp, Inc. (NASDAQ: UBCD), reported net income for the year ended December 31, 2005 of $4,173,000 or $0.99 per diluted share compared to $4,803,000 or $1.12 per diluted share earned in the year ended December 31, 2004. Earnings for the period ended December 31, 2004 included an approximate $1,700,000, or $0.41 per diluted share, net gain on sale (after allocating a portion of the intangible assets and goodwill, taxes and applicable expenses) associated with the Company's divestiture of five western Illinois sales and service center locations. Excluding this gain on sale from 2004, net income for the period ended December 31, 2004 would have equaled $3,103,000 or $0.71 per diluted share.
The Company reported fourth quarter 2005 net income of $766,000 or $0.19 per diluted share compared to $473,000 or $0.10 per diluted share earned in the fourth quarter of 2004. During the quarter, the Company incurred approximately $413,000 in nonrecurring expenses related to organizational restructuring severance costs, loss on sale of securities and other one-time events. Excluding these nonrecurring items, net income for the quarter would have equaled $1,019,000 or $0.24 per diluted share.
"We are pleased to have ended the year with a notably stronger fourth quarter, as we experienced heightened loan production and an improved net interest margin," remarked Yeoman on the results. "These trends are particularly encouraging when coupled with year-over-year improvements in our level of charge-offs and non-performing loans and the continued strength of our reserve. We remain deeply committed to maintaining strong asset quality while elevating our focus on business development opportunities. A series of sales improvement initiatives undertaken during 2005, including a more structured sales training and sales calling program, have rejuvenated our commercial relationship managers and retail bankers and are beginning to positively impact bottom-line performance."
Fourth Quarter 2005 Highlights:
- -- Earnings per share increased 80.0% compared to the fourth quarter of
2004 and decreased 24.0% compared to third quarter 2005 levels.
- -- The net interest margin, reported at 3.60% at the end of the fourth
quarter 2005, showed an increase over the 3.33% level for the fourth
quarter 2004 and 3.53% reported during the third quarter 2005.
- -- Due to continued improvement in the trends of asset quality,
contributions to the provision for loan losses decreased $200,000 as
compared to the fourth quarter of 2004.
- -- The level of non-performing loans to total end of period loans totaled
0.96% as of December 31, 2005 compared to 1.01% at December 31, 2004.
- -- Total loans decreased $1.8 million for the period ended December 31,
2005 to $417.5 million as compared with December 31, 2004. Strong loan
production experienced in the fourth quarter of 2005 helped to partially
offset the reduction of high-balance, high-risk credits from the portfolio
and soft loan demand from the first three quarters of the year.
- -- The Company's Board of Directors, in a continuing effort to enhance
stockholder value, approved the payment of an $0.11 quarterly cash dividend
on the Company's common stock, marking the 83rd consecutive quarter of
dividends paid to stockholders.
- -- The Company repurchased 55,400 shares of Company common stock under
the Company's stock repurchase plan.
- -- The Company announced plans to sell the deposits of its Mendota sales
and service center during the first quarter of 2006.
Net Interest Margin
The net interest margin for the fourth quarter of 2005 was reported at 3.60%, up from 3.33% for the fourth quarter of 2004 and from 3.53% for the third quarter of 2005. This year-over-year increase was primarily a result of the overall rising interest rate environment and a more disciplined approach to pricing. Tax-equivalent net interest income increased 8.1% to $5,544,000 for the fourth quarter of 2005 as compared to $5,129,000 for the fourth quarter of 2004.
Noninterest Income and Expense
Exclusive of net securities gains from both periods, noninterest income experienced a $187,000 or 9.5% decrease for the fourth quarter of 2004 compared to the fourth quarter of 2005. The quarter-over-quarter decrease was primarily related to volume related reduction in overdraft fees (included in service charges) and decreases in revenue generated from the insurance business unit and the mortgage banking division (including gains on sale and servicing income, net of non-cash amortization charges).
Exclusive of $334,000 in nonrecurring expenses from 2005 and $245,000 in the fourth quarter of 2004 related to the write-down of a closed sales and service center building, noninterest expense experienced a $377,000 or 6.2% decrease for the fourth quarter of 2005 when compared to the fourth quarter of 2004.
Asset Quality
During 2005, the loan portfolio decreased 0.4% to $417.5 million, as compared to $419.3 million at December 31, 2004. The decrease in the portfolio was largely due to normal paydowns and the reduction of high-balance, high-risk credits from the portfolio. The level of nonperforming loans to total end of period loans totaled 0.96% on December 31, 2005 compared to 1.01% on December 31, 2004. Net charge-offs for the fourth quarter were 0.06% of average loans, as compared to 0.13% for the fourth quarter of 2004. The reserve coverage ratio (allowance to nonperforming loans) was reported at 208.84% as of December 31, 2005 as compared to 231.60% as of December 31, 2004.
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 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 1933, 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 matters; 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
- -- Unaudited Selected Quarterly Consolidated Financial Data
UnionBancorp, Inc.
Unaudited Quarterly and Year to Date Highlights (In Thousands, Except Share Data)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ ------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Operating Highlights
Net income $ 766 $ 473 $ 4,173 $ 4,803
Return on average
total assets 0.45% 0.28% 0.63% 0.65%
Return on average
stockholders' equity 4.54 2.78 6.06 7.06
Net interest margin 3.60 3.33 3.56 3.34
Efficiency ratio 82.44 88.32 77.78 82.90
Per Share Data
Diluted earnings per
common share $ 0.19 $ 0.10 $ 0.99 $ 1.12
Book value per common
share $ 17.23 $ 17.30 $ 17.23 $ 17.30
Period end diluted
weighted average
common shares
outstanding 3,898,320 4,109,357 4,002,908 4,109,999
Period end common
shares outstanding 3,806,876 4,032,144 3,806,876 4,032,144
Stock Performance Data
Market Price:
Quarter End $ 21.30 $ 21.25 $ 21.30 $ 21.25
High $ 22.00 $ 21.94 $ 22.00 $ 23.00
Low $ 20.25 $ 20.29 $ 20.10 $ 19.20
Period end price to
book value 1.24 1.23 1.24 1.23
UnionBancorp, Inc.
Unaudited Consolidated Balance Sheets (In Thousands)
December 31, December 31,
Assets 2005 2004
------------ ------------
Cash and cash equivalents $ 24,358 $ 22,802
Securities available-for-sale 196,440 191,661
Loans 417,525 419,275
Allowance for loan losses (8,362) (9,732)
------------ ------------
Net loans 409,163 409,543
Cash value of life insurance 15,498 14,953
Mortgage servicing rights 2,533 2,772
Premises and equipment 13,908 13,463
Goodwill 6,963 6,963
Intangible assets, net 533 703
Other real estate 203 420
Other assets 6,623 6,266
------------ ------------
Total assets $ 676,222 $ 669,546
============ ============
Liabilities and stockholders' equity
Liabilities
Deposits:
Noninterest-bearing $ 57,832 $ 55,800
Interest-bearing 486,009 456,677
------------ ------------
Total deposits 543,841 512,477
Federal funds purchased and securities
sold under agreements to repurchase 612 12,722
Advances from the Federal Home Loan Bank 50,000 61,900
Notes payable 9,468 6,629
Series B mandatory redeemable preferred
stock 831 831
Other liabilities 5,395 4,740
------------ ------------
Total liabilities 610,147 599,299
Stockholders' equity
Convertible preferred stock 500 500
Common stock 4,684 4,641
Surplus 23,167 22,632
Retained earnings 48,837 46,592
Accumulated other comprehensive income 95 1,351
------------ ------------
77,283 75,716
Treasury stock, at cost (11,208) (5,469)
------------ ------------
Total stockholders' equity 66,075 70,247
------------ ------------
Total liabilities and stockholders'
equity $ 676,222 $ 669,546
============ ============
UnionBancorp, Inc.
Unaudited Consolidated Statements of Income (In Thousands, Except Per Share Data)
Three Months Ended Twelve Months ending
December 31, December 31,
------------------ --------------------
2006 2005 2005 2004
---- ---- ---- ----
Interest income
Loans $ 7,176 $ 6,543 $ 27,251 $ 27,718
Securities
Taxable 1,833 1,231 6,331 5,925
Exempt from federal income
taxes 231 266 993 1,221
Federal funds sold and other 50 16 122 48
-------- -------- -------- --------
Total interest income 9,290 8,056 34,697 34,912
Interest expense
Deposits 3,188 2,275 10,910 9,909
Federal funds purchased and
securities sold under agreements
to repurchase 42 31 197 98
Advances from the Federal Home
Loan Bank 509 697 2,128 2,887
Series B Mandatory Reedmable 13 13 50 50
Notes payable and other 134 73 427 306
-------- -------- -------- --------
Total interest expense 3,886 3,089 13,712 13,250
-------- -------- -------- --------
Net interest income before
provision for loan losses 5,404 4,967 20,985 21,662
Provision for loan losses 100 300 250 1,924
-------- -------- -------- --------
Net interest income after
provision for loan losses 5,304 4,667 20,735 19,738
-------- -------- -------- --------
Noninterest income:
Service charges 498 610 1,996 2,866
Trust income 216 197 811 740
Mortgage banking income 289 355 1,350 2,020
Insurance commissions and fees 378 480 1,818 2,234
Bank owned life insurance (BOLI) 138 99 545 573
Securities gains, net (79) (9) (79) 123
Gain on sale of assets - (5) 4 4,263
Other income 267 237 1,157 1,283
-------- -------- -------- --------
1,707 1,964 7,602 14,102
-------- -------- -------- --------
Noninterest expense:
Salaries and employee benefits 3,549 3,296 13,789 15,410
Occupancy expense, net 385 737 1,571 2,461
Furniture and equipment expense 532 522 1,935 2,215
Marketing 155 153 496 615
Supplies and printing 110 114 359 435
Telephone 104 121 430 546
Other real estate owned expense 13 - 59 8
Amortization of intangible assets 43 56 174 337
Other expenses 1,151 1,331 4,152 4,954
-------- -------- -------- --------
6,042 6,330 22,965 26,981
-------- -------- -------- --------
Income before income taxes 969 301 5,372 6,859
Income taxes 203 (172) 1,199 2,056
-------- -------- -------- --------
Net income 766 473 4,173 4,803
======== ======== ======== ========
Preferred stock dividends 51 52 207 207
-------- -------- -------- --------
Net income available for common
stockholders 715 421 3,966 4,596
======== ======== ======== ========
Basic earnings per common share $ 0.19 $ 0.10 $ 1.01 $ 1.14
======== ======== ======== ========
Diluted earnings per common
share $ 0.19 $ 0.10 $ 0.99 $ 1.12
======== ======== ======== ========
UnionBancorp, Inc.
Unaudited Selected Quarterly Consolidated Financial Data (In Thousands, Except Share Data)
Quarters Ended
12/31/2005 9/30/2005 6/30/2005 3/31/2005 12/31/2004
Statement of ---------- ---------- ---------- ---------- ----------
Income Data
Interest
income $ 9,290 $ 8,720 $ 8,545 $ 8,142 $ 8,056
Interest
expense (3,886) (3,504) (3,265) (3,057) (3,089)
Net interest ---------- ---------- ---------- ---------- ----------
income 5,404 5,216 5,280 5,085 4,967
Provision for
loan losses 100 50 - 100 300
Net ---------- ---------- ---------- ---------- ----------
interest
income after
provision for
loan losses 5,304 5,166 5,280 4,985 4,667
Noninterest
income 1,707 2,014 2,031 1,850 1,969
Noninterest
expense 6,042 5,750 5,627 5,546 6,335
Income before ---------- ---------- ---------- ---------- ----------
income taxes 969 1,430 1,684 1,289 301
Provision
(benefit)
for income
taxes 203 369 302 325 (172)
---------- ---------- ---------- ---------- ----------
Net income $ 766 $ 1,061 $ 1,382 $ 964 $ 473
Net income on ========== ========== ========== =========== ==========
common
stock $ 715 $ 1,009 $ 1,330 $ 912 $ 421
========== ========== ========== =========== ==========
Per Share Data
Basic
earnings
per common
shares $ 0.19 $ 0.26 $ 0.33 $ 0.23 $ 0.10
Diluted earnings
per common shares 0.19 0.25 0.33 0.22 0.10
Cash dividends on
common stock 0.11 0.11 0.11 0.11 0.10
Dividend payout
ratio for common
stock 58.60% 41.92% 32.48% 48.79% 110.21%
Book value per
common share $ 17.23 $ 17.42 $ 17.40 $ 17.27 $ 17.30
Basic weighted
average common
shares
outstanding 3,839,693 3,895,365 3,993,164 4,049,579 4,031,552
Diluted
weighted average
common shares
outstanding 3,898,320 3,958,948 4,054,804 4,116,342 4,109,357
Period end common
shares
outstanding 3,806,876 3,855,776 3,923,018 4,047,610 4,032,144
Balance Sheet Data
Securities $ 196,440 $ 197,580 $ 192,593 $ 185,766 $ 191,661
Loans 417,525 405,884 404,462 421,523 419,275
Allowance for
loan losses 8,362 8,493 9,159 9,948 9,732
Total assets 676,222 664,643 665,424 661,424 669,546
Total deposits 543,841 522,943 521,200 503,301 512,477
Stockholders'
equity 66,075 67,664 68,749 70,410 70,247
Earnings Performance Data
Return on average
total assets 0.45% 0.64% 0.83% 0.59% 0.28%
Return on average
stockholders'
equity 4.54 6.18 7.94 5.52 2.78
Net interest
margin ratio 3.60 3.53 3.59 3.52 3.33
Efficiency
ratio (1) 82.44 77.09 74.27 77.42 88.32
Asset Quality Ratios
Non performing
assets to total
assets 0.62% 0.59% 0.68% 0.61% 0.69%
Non performing
loans to total
loans 0.96 0.92 0.95 1.19 1.01
Net loan
charge-offs to
average loans 0.06 0.17 0.19 (0.03) 0.13
Allowance for
loan losses
to total loans 2.00 2.09 2.26 2.36 2.32
Allowance for
loan losses to
non performing
loans 208.84 227.94 238.83 198.09 231.60
Capital Ratios
Average equity to
average assets 10.01% 10.33% 10.38% 10.61% 9.98%
Total capital to
risk adjusted
assets 13.33 13.92 14.26 14.33 14.30
Tier 1 leverage 9.03 9.30 9.42 9.75 9.54
(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 provision for loan losses and total noninterest
income excluding securities gains and losses and gains on sale of
assets.
Contact:
Scott A. Yeoman
President and Chief Executive Officer UnionBancorp, Inc.
scott.yeoman@ubcd.com
Kurt R. Stevenson
Senior Executive Vice President and Chief Financial Officer
UnionBancorp, Inc.
kurt.stevenson@ubcd.com
