Exhibit 99.1
News Release
FOR IMMEDIATE RELEASE
UNIONBANCORP, INC. REPORTS THIRD QUARTER EARNINGS
OTTAWA, IL, November 1, 2004 - 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:
o 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.
o The net interest margin remained relatively stable over the previous
four quarters, reported at 3.38% at the end of the third quarter 2004.
o 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.
o Net charge-offs for the third quarter were 0.10% of average loans, as
compared to 0.52% for third quarter 2003.
o 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.
o 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.
o 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.
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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.
Contact: Dewey R. Yaeger Kurt R. Stevenson
President and Senior Vice President and
Chief Executive Officer Chief Financial Officer
UnionBancorp, Inc. UnionBancorp, Inc.
dewey.yaeger@ubcd.com kurt.stevenson@ubcd.com
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Accompanying Financial Statements and Tables
Accompanying this press release is the following unaudited financial
information:
o Unaudited Quarterly and Year to Date Highlights
o Unaudited Consolidated Balance Sheets
o Unaudited Consolidated Statements of Income
o 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)
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September 30, December 31,
2004 2003
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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
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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)
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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
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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
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(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.