UnionBancorp, Inc. Announces Second Quarter EarningsOTTAWA, IL -- 07/28/2006 -- Scott A. Yeoman, President and Chief Executive Officer of UnionBancorp, Inc. (NASDAQ: UBCD), reported net income for the second quarter ended June 30, 2006 of $1,294,000 or $0.33 per diluted share compared to $1,382,000 or $0.33 per diluted share earned in the second quarter of 2005. For the six months ended June 30, 2006, net income equaled $2,940,000 or $0.74 per diluted share compared to $2,346,000 or $0.55 per diluted share earned in the same period during 2005.
Commenting on the quarter, Yeoman said, "Excluding nonrecurring activity for the 2006 and 2005 quarters, we were pleased to report an 8% improvement in earnings. We continue to enjoy acceptable customer retention levels and improved customer service while expense controls remain firmly on target. This, combined with continued favorable asset quality trends, has yielded a strong start in the first half of 2006. As we move into the latter half of the year, we will continue to focus on our sales and service efforts in an attempt to help offset the anticipated flat yield curve. We will remain committed to attracting high quality commercial relationships and reaping the benefits of strong credit quality."
Second Quarter 2006 Highlights:
- -- On June 30, 2006, UnionBancorp, Inc. and Centrue Financial Corporation
(NASDAQ: TRUE) announced that they have signed a definitive agreement to
join forces in a merger of equals transaction. Under the terms of the
agreement, Centrue shareholders will receive shares of UnionBancorp common
stock, using a fixed exchange ratio of 1.2 shares of UnionBancorp common
stock for each share of Centrue common stock outstanding. The combined
company will adopt the Centrue name and change its stock market ticker
symbol to TRUE. The merger is subject to approval by UnionBancorp's and
Centrue's stockholders and banking regulators and other customary
conditions. The transaction is expected to be completed during the fourth
quarter of 2006.
- -- Earnings per share were unchanged compared to the second quarter of
2005.
- -- The Company's earnings were positively impacted by a $300,000 negative
provision for loan losses largely based on continued improvements in the
quality of the loan portfolio, which was partially offset by a loss on sale
of securities of $88,000 in order to better position the securities
portfolio. Excluding these items, net income for the quarter would have
equaled $1,163,000 or $0.29 per diluted share.
- -- The second quarter of 2005 results were positively impacted by a
$251,000 reduction in state income taxes and $90,000 of interest received
due to the receipt of a tax refund related to amended tax returns
outstanding from prior years. Excluding these items, net income for the
second quarter of 2005 would have equaled $1,076,000 or $0.25 per diluted
share.
- -- Due to the flat yield curve, the net interest margin decreased to
3.37% during the second quarter of 2006 as compared with 3.59% for the same
period in 2005 and 3.50% in the first quarter of 2006.
- -- The loan portfolio decreased to $403.5 million as compared to $417.5
million at December 31, 2005. Of this decrease in balances, approximately
$7.7 million or 55% was related to the pay-off of action list credits
refinanced by a competitor.
- -- The level of nonperforming loans to end of period loans totaled 0.70%
as of June 30, 2006 compared to 0.95% at June 30, 2005 and 0.96% on
December 31, 2005.
- -- Net charge-offs for the second quarter of 2006 were 0.09% of average
loans as compared to 0.19% for the same period 2005.
- -- The Company's Board of Directors approved the payment of a $0.12
quarterly cash dividend on the Company's common stock, marking the 85th
consecutive quarter of dividends paid to stockholders.
Net Interest Margin
The net interest margin for the second quarter of 2006 was reported at 3.37% as compared to 3.59% for the same period in 2005. The expectation of a flat yield curve is likely to maintain pressure on margins for the remainder of 2006.
Tax-equivalent net interest income decreased $360,000 to $5,078,000 for the second quarter of 2006 as compared to $5,438,000 for the second quarter of 2005. This change in net interest income was largely related to a decrease in volume and a shift in the mix of earning assets. Also contributing to the decline was a decrease in non-interest bearing deposits and an increase in time deposits.
Noninterest Income and Expense
Excluding $88,000 in securities losses from the second quarter of 2006 and $90,000 in interest received due to the receipt of a tax refund in the second quarter of 2005, noninterest income decreased $156,000 or 8.0% during the second quarter of 2006 as compared to the same period in 2005. The change was primarily related to a production level decrease in revenue generated from the mortgage banking division and lower brokerage and insurance revenue and losses related to investment activity.
Noninterest expense experienced a decrease of $498,000 or 8.9% during the second quarter of 2006 as compared to the same period in 2005. This decrease was largely due to the reduction of salary and benefit costs, and lower accounting and professional fees. These savings were offset by a modest increase in furniture and fixture expense.
Asset Quality
General asset quality trends continued to improve as the level of nonperforming loans to end of period loans totaled 0.70% as of June 30, 2006 compared to 0.95% at June 30, 2005 and 0.96% on December 31, 2005. Additionally, the reserve coverage ratio (allowance to nonperforming loans) was reported at 244.05% as of June 30, 2006 as compared to 238.83% as of June 30, 2005 and 208.84% as of December 31, 2005.
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 Global 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 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 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,
-------------------- --------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Operating Highlights
Net income $ 1,294 $ 1,382 $ 2,940 $ 2,346
Return on average total
assets 0.79% 0.83% 0.89% 0.71%
Return on average
stockholders equity 7.93 7.94 9.03 6.73
Net interest margin 3.37 3.59 3.44 3.56
Efficiency ratio 74.80 74.27 74.70 75.81
Per Share Data
Diluted earnings per
common share $ 0.33 $ 0.33 $ 0.74 $ 0.55
Book value per common share $ 17.31 $ 17.40 $ 17.31 $ 17.40
Diluted weighted average
common shares outstanding 3,787,231 4,054,804 3,809,813 4,083,477
Period end common shares
outstanding 3,742,751 3,923,018 3,742,751 3,923,018
Stock Performance Data
Market Price:
Quarter End $ 20.10 $ 22.00 $ 20.10 $ 22.00
High $ 21.12 $ 22.00 $ 21.48 $ 22.00
Low $ 19.44 $ 20.10 $ 19.44 $ 20.10
Period end price to
book value 1.16 1.26 1.16 1.26
UnionBancorp, Inc.
Unaudited Consolidated Balance Sheets (In Thousands)
June 30, December 31,
2006 2005
--------- ---------
ASSETS
Cash and cash equivalents $ 30,265 $ 24,358
Securities available-for-sale 182,914 196,440
Loans 403,455 417,525
Allowance for loan losses (6,848) (8,362)
--------- ---------
Net loans 396,607 409,163
Cash surrender value of life insurance 15,775 15,498
Mortgage servicing rights 2,373 2,533
Premises and equipment, net 13,789 13,908
Goodwill 6,963 6,963
Intangible assets, net 446 533
Other real estate 1,390 203
Other assets 6,309 6,623
--------- ---------
Total assets $ 656,831 $ 676,222
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest-bearing $ 56,119 $ 57,832
Interest-bearing 466,576 486,009
--------- ---------
Total deposits 522,695 543,841
Federal funds purchased and securities
sold under agreements to repurchase 7,297 612
Advances from the Federal Home
Loan Bank 46,700 50,000
Notes payable 8,824 9,468
Series B mandatory redeemable
preferred stock 831 831
Other liabilities 5,180 5,395
--------- ---------
Total liabilities 591,527 610,147
--------- ---------
Stockholders' equity
Series A convertible preferred stock 500 500
Common stock 4,698 4,684
Surplus 23,381 23,167
Retained earnings 50,775 48,837
Accumulated other comprehensive income (1,204) 95
--------- ---------
78,150 77,283
Treasury stock, at cost (12,846) (11,208)
--------- ---------
Total stockholders' equity 65,304 66,075
--------- ---------
Total liabilities and
stockholders' equity $ 656,831 $ 676,222
========= =========
UnionBancorp, Inc.
Unaudited Consolidated Statements of Income
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Interest income
Loans $ 7,194 $ 6,751 $ 14,349 $ 13,201
Securities
Taxable 2,030 1,484 4,025 2,909
Exempt from federal income
taxes 210 263 426 521
Federal funds sold and other 42 47 59 56
--------- --------- --------- ---------
Total interest income 9,476 8,545 18,859 16,687
Interest expense
Deposits 3,845 2,571 7,324 4,890
Federal funds purchased
and securities sold under
agreements to repurchase 51 37 123 111
Advances from the Federal
Home Loan Bank 455 550 938 1,133
Series B Mandatory
Redeemable 13 13 25 25
Notes payable 161 94 315 163
--------- --------- --------- ---------
Total interest expense 4,525 3,265 8,725 6,322
--------- --------- --------- ---------
Net interest income 4,951 5,280 10,134 10,365
Provision for loan losses (300) - (1,100) 100
--------- --------- --------- ---------
Net interest income after
Provision for loan losses 5,251 5,280 11,234 10,265
Noninterest income
Service charges 495 525 935 1,008
Trust income 199 187 418 402
Mortgage banking income 281 364 527 704
Insurance commissions
and fees 414 472 793 893
Bank owned life insurance
(BOLI) 137 135 277 269
Securities gains, net (88) - (88) -
Gain (loss) on sale of
assets (9) 1 (9) 3
Other income 268 347 604 602
--------- --------- --------- ---------
1,697 2,031 3,457 3,881
Noninterest expenses
Salaries and employee
benefits 2,910 3,366 5,955 6,842
Occupancy expense, net 346 385 789 779
Furniture and equipment
expense 521 461 1,033 885
Marketing 98 128 209 224
Supplies and printing 65 86 162 163
Telephone 118 106 235 213
Other real estate owned
expense 2 29 8 34
Amortization of intangible
assets 43 43 87 87
Other expenses 1,026 1,023 1,985 1,946
--------- --------- --------- ---------
5,129 5,627 10,463 11,173
--------- --------- --------- ---------
Income before income taxes 1,819 1,684 4,228 2,973
Income taxes 525 302 1,288 627
--------- --------- --------- ---------
Net income 1,294 1,382 2,940 2,346
Preferred stock dividends 52 52 104 104
--------- --------- --------- ---------
Net income for common
stockholders $ 1,242 $ 1,330 $ 2,836 $ 2,242
========= ========= ========= =========
Basic earnings per share $ 0.33 $ 0.33 $ 0.75 $ 0.56
========= ========= ========= =========
Diluted earnings per
common share $ 0.33 $ 0.33 $ 0.74 $ 0.55
========= ========= ========= =========
UnionBancorp, Inc.
Unaudited Selected Quarterly Consolidated Financial Data
(In Thousands, Except Share Data)
Quarters Ended
------------------------------------------------------
06/30/06 03/31/06 12/31/05 09/30/05 06/30/05
---------- ---------- ---------- ---------- ----------
(Dollars in Thousands, Except Per Share Data)
Statement of Income
Data
Interest income $ 9,476 $ 9,383 $ 9,290 $ 8,720 $ 8,545
Interest expense (4,525) (4,200) (3,886) (3,504) (3,265)
---------- ---------- ---------- ---------- ----------
Net interest income 4,951 5,183 5,404 5,216 5,280
Provision for loan
losses (300) (800) 100 50 -
---------- ---------- ---------- ---------- ----------
Net interest
income after
provision for
loan losses 5,251 5,983 5,304 5,166 5,280
Noninterest income 1,697 1,760 1,707 2,014 2,031
Noninterest expense 5,129 5,334 6,042 5,750 5,627
---------- ---------- ---------- ---------- ----------
Income before
income taxes 1,819 2,409 969 1,430 1,684
Provision
(benefit) for
income taxes 525 763 203 369 302
---------- ---------- ---------- ---------- ----------
Net income $ 1,294 $ 1,646 $ 766 $ 1,061 $ 1,382
========== ========== ========== ========== ==========
Net income on
common stock $ 1,242 $ 1,594 $ 715 $ 1,009 $ 1,330
========== ========== ========== ========== ==========
Per Share Data
Basic earnings
per common share $ 0.33 $ 0.42 $ 0.19 $ 0.26 $ 0.33
Diluted earnings
per common share 0.33 0.42 0.19 0.25 0.33
Cash dividends on
common stock 0.12 0.12 0.11 0.11 0.11
Dividend payout
ratio for common
stock 36.15% 28.17% 58.60% 41.92% 32.48%
Book value per
common share $ 17.31 $ 17.33 $ 17.23 $ 17.42 $ 17.40
Basic weighted
average common
shares
outstanding 3,742,716 3,786,559 3,839,693 3,895,365 3,993,164
Diluted weighted
average common
shares
outstanding 3,787,231 3,837,708 3,898,320 3,958,948 4,054,804
Period-end common
shares
outstanding 3,742,751 3,742,651 3,806,876 3,855,776 3,923,018
Balance Sheet Data
Securities $ 182,914 $ 201,195 $ 196,440 $ 197,580 $ 192,593
Loans 403,455 406,617 417,525 405,884 404,462
Allowance for
loan losses 6,848 7,506 8,362 8,493 9,159
Assets 656,831 661,707 676,222 664,643 665,424
Deposits 522,695 530,928 543,841 522,943 521,200
Stockholders'
equity 65,304 65,369 66,075 67,664 68,749
Earnings Performance Data
Return on average
total assets 0.79% 0.99% 0.45% 0.64% 0.83%
Return on average
stockholders'
equity 7.93 10.14 4.54 6.18 7.94
Net interest
margin ratio 3.37 3.50 3.60 3.53 3.59
Efficiency
ratio (1) 74.80 74.60 82.44 77.09 74.27
Asset Quality Ratios
Nonperforming
assets to total
end of period
assets 0.64% 0.59% 0.62% 0.59% 0.68%
Nonperforming
loans to total
end of period
loans 0.70 0.82 0.96 0.92 0.95
Net loan charge-
offs to total
average loans 0.09 0.01 0.06 0.17 0.19
Allowance for
loan losses to
total end of
period loans 1.70 1.85 2.00 2.09 2.26
Allowance for
loan losses to
nonperforming
loans 244.05 223.93 208.84 227.94 238.83
Capital Ratios
Average equity to
average assets 9.94% 9.80% 10.01% 10.33% 10.38%
Total capital to
risk adjusted
assets 13.69 13.46 13.33 13.92 14.26
Tier 1 leverage
ratio 9.38 9.18 9.03 9.30 9.42
(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.
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
