UBCD Unionbancorp

UnionBancorp, Inc. Announces Third Quarter Results OTTAWA, Ill., Nov. 13 /PRNewswire-FirstCall/ -- Dewey R. Yaeger, President and Chief Executive Officer of UnionBancorp, Inc. , announced a third quarter net loss of $869,000 or $0.23 per diluted share. This compares to net income of $1,146,000 or $0.27 per diluted share for the same period in 2002. The Company's quarterly results were adversely impacted by a $3.8 million increase in the provision for loan losses as compared to the third quarter 2002. For the nine months ended September 30, 2003, net income equaled $2,384,000 or $0.54 per diluted share compared to $2,640,000 or $0.61 per diluted share earned in the same period during 2002. The Company also announced the appointment of Dewey R. Yaeger to the position of President and Chief Executive Officer of UnionBancorp, Inc. Mr. Yaeger, who first joined the Company in April 2003 as a Senior Vice President and Chief Credit Officer, had been serving in an interim capacity as President and CEO since the resignation of Charles J. Grako on September 2, 2003. As a result of this appointment, the Company has discontinued its search for a President and CEO, as had been previously disclosed. "Dewey brings with him an impressive 40 plus year career in the banking industry and a proven track record of high quality performance," commented McDonnell on the announcement. "The Board of Directors has been extremely pleased with the level of leadership he has displayed and the plans put in place in the very short time Dewey has been with the organization. His experience with balancing strong credit quality with a progressive sales and service environment will be critical as we move the organization forward in this extremely competitive arena." Following the Board's action, Yaeger stated, "I am extremely excited with the challenge that lies ahead and the Board's decision to allow me an opportunity to positively impact the Company. Like many other financial institutions, we have had our share of obstacles in recent years. The employees and management team are prepared to embrace a new level of performance, and I am confident in our ability to set and execute a results- oriented strategic plan to enable us to achieve those goals." Yaeger most recently served as the President and Chief Executive Officer of Castle Bank, N.A. headquartered in De Kalb, Illinois. His extensive experience encompasses a heavy emphasis on commercial lending and management of mid-sized financial institutions. Yaeger is located at the UB Financial Center in Ottawa, Illinois. Third Quarter 2003 Highlights: -- The net interest margin remained relatively stable, increasing slightly to 3.76% in the third quarter 2003 as compared to 3.74% during the same period 2002. Tax-equivalent net interest income increased to $6.7 million from $6.6 million a year ago. -- Noninterest income, excluding securities gains, increased $247,000 or 8.4% during the third quarter 2003 versus the third quarter of 2002 and was primarily driven by the continued strong performance of the mortgage banking division and other noninterest revenue product lines. -- The mortgage banking division continued to experience record levels of production, as originations for the third quarter 2003 grew to $82.4 million from $49.3 million for the same period of 2002. -- Noninterest expenses decreased $279,000 or 3.8% during the third quarter of 2003 in comparison to the third quarter of 2002, primarily as a result of an improvement in other real estate owned expense due to the resolution of foreclosed assets. -- As a result of the continued deterioration of two previously identified watch credits, the Company specifically provided $3.5 million (or approximately $0.53 per fully diluted share, net after-tax) to its allowance for loan losses during the third quarter of 2003 for the anticipated losses that will be incurred on these two credits. -- The Company is in the final stages of constructing its newest branch facility in Yorkville, Illinois, one of the fastest growing Chicago suburbs. The facility is expected to open during the fourth quarter and will be located in the new Yorkville Marketplace development at the intersection of Routes 34 and 47. -- The Company's Board of Directors approved the payment of a $0.09 quarterly cash dividend on the Company's common stock, marking the 74th consecutive quarter of dividends paid to stockholders. Net Interest Margin The net interest margin remained relatively unchanged at 3.76% during the third quarter 2003 as compared with 3.74% for the same period 2002. The margin's stability was primarily attributable to a decrease in funding rates due to the continued low interest rate environment. Also contributing to the minor variance were management's steps taken throughout the year to insulate net interest income against the potential for rising interest rates and the impact of refinance related prepayments and calls on mortgage backed securities. The expectation of continued low interest rates is likely to maintain pressure on the margin throughout the remainder of 2003. Tax- equivalent net interest income was reported at $6.7 million for the third quarter of 2003 as compared to $6.6 million for the third quarter 2002. Noninterest Income and Expense Noninterest income, excluding securities gains, increased $247,000 or 8.4% during the third quarter of 2003 as compared to the same period in 2002. The increase was largely attributable to the continued strong revenue generation from mortgage banking income. Also contributing to the improvement were increases in overdraft and nsf charges, insurance commissions and fees due to increased brokerage activities and revenue generated from incremental investments in bank-owned life insurance. Noninterest expense experienced a $279,000 or 3.8% decrease during the third quarter of 2003 as compared to the same period in 2002. The decrease was primarily attributable to an improvement in other real estate owned expense due to the resolution of foreclosed assets. Also contributing to the change was a decrease in merchant expense due to the divestiture of the POS product line in the second quarter. These decreases were partially offset by an increase in salary and employee benefits related to commissions in the mortgage banking and financial services business lines. Asset Quality During the first nine months of 2003, the loan portfolio remained relatively unchanged at $483.0 million, as compared to $483.2 million at December 31, 2002. The decrease resulted from 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 2.11% as of September 30, 2003 compared to 1.15% on September 30, 2002 and 0.99% at December 31, 2002. Net charge-offs for the third quarter were 0.52% of average loans, as compared to 0.25% for third quarter 2002. The reserve coverage ratio (allowance to nonperforming loans) was reported at 89.01% as of September 30, 2003 as compared to 120.79% as of September 30, 2002 and 135.50% as of December 31, 2002. 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. and Subsidiaries Unaudited Quarterly and Year to Date Highlights (In Thousands, Except Share Data) Three Months Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 Operating Highlights Net income (loss) $(869) $1,146 $2,384 $2,640 Return on average total assets (0.45)% 0.60% 0.41% 0.47% Return on average stockholders equity (4.98)% 6.82% 4.57% 5.38% Net interest margin 3.76% 3.74% 3.77% 3.74% Efficiency ratio 71.59% 69.32% 69.06% 72.07% Per Share Data Diluted earnings (loss) per common share $(0.23) $0.27 $0.54 $0.61 Book value per common share $16.87 $16.68 $16.87 $16.68 Diluted weighted average common shares outstanding 4,097,793 4,028,164 4,069,255 4,024,629 Period end common shares outstanding 4,000,646 3,980,946 4,000,646 3,980,946 Stock Performance Data Market Price: Quarter End $20.82 $14.85 $20.82 $14.85 High $22.52 $15.95 $22.52 $15.95 Low $19.25 $14.56 $15.15 $13.73 Period end price to book value 1.23 0.89 1.23 0.89 UnionBancorp, Inc. and Subsidiaries Unaudited Consolidated Balance Sheets September 30, 2003 and December 31, 2002 (In Thousands, Except Share Data) September 30, December 31, 2003 2002 ASSETS Cash and cash equivalents $33,706 $38,962 Securities available-for-sale 235,508 227,229 Loans 483,042 483,229 Allowance for loan losses (9,082) (6,450) Net loans 473,960 476,779 Cash surrender value of life insurance 14,226 13,776 Mortgage servicing rights 2,666 2,640 Premises and equipment, net 15,627 14,055 Goodwill 7,642 7,642 Intangible assets, net 695 873 Other real estate 145 1,557 Other assets 8,306 8,103 Total assets $792,481 $791,616 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Deposits Non-interest-bearing $77,911 $90,606 Interest-bearing 545,041 551,352 Total deposits 622,952 641,958 Federal funds purchased and securities sold under agreements to repurchase 15,523 3,588 Advances from the Federal Home Loan Bank 72,450 61,750 Notes payable 7,925 8,275 Other liabilities 4,811 7,150 Total liabilities 723,661 722,721 Mandatory redeemable preferred stock 831 831 Stockholders' equity Series A convertible preferred stock 500 500 Common stock 4,601 4,571 Surplus 22,138 21,856 Retained earnings 44,227 43,113 Accumulated other comprehensive income 1,843 3,171 Unearned compensation under stock option plans (7) (23) 73,302 73,188 Treasury stock, at cost (5,313) (5,124) Total stockholders' equity 67,989 68,064 Total liabilities and stockholders' equity $792,481 $791,616 UnionBancorp, Inc. and Subsidiaries Unaudited Consolidated Statements of Income (Loss) Three Months and Nine Months Ended September 30, 2003 and 2002 (In Thousands, Except Per Share Data) Three Months Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 Interest income Loans $8,378 $8,911 $25,198 $27,422 Securities Taxable 1,502 1,865 5,079 5,507 Exempt from federal income taxes 379 425 1,172 1,288 Federal funds sold and other 15 37 46 103 Total interest income 10,274 11,238 31,495 34,320 Interest expense Deposits 2,896 4,057 9,543 13,350 Federal funds purchased and securities sold under agreements to repurchase 26 46 96 124 Advances from the Federal Home Loan Bank 771 690 2,228 1,813 Notes payable 82 86 247 265 Total interest expense 3,775 4,879 12,114 15,552 Net interest income 6,499 6,359 19,381 18,768 Provision for loan losses 4,356 519 6,225 3,056 Net interest income after Provision for loan losses 2,143 5,840 13,156 15,712 Noninterest income Service charges 790 708 2,340 1,953 Merchant fee income 39 330 528 881 Trust income 180 180 503 551 Mortgage banking income 1,101 678 3,322 1,877 Insurance commissions and fees 580 558 1,815 1,602 Securities gains, net 59 107 280 407 Other income 510 499 2,157 1,630 3,259 3,060 10,945 8,901 Noninterest expenses Salaries and employee benefits 4,256 3,747 12,065 11,354 Occupancy expense, net 478 469 1,446 1,360 Furniture and equipment expense 518 474 1,535 1,349 Supplies and printing 111 110 359 380 Telephone 199 241 737 768 Other real estate owned expense - 544 168 718 Amortization of intangible assets 72 101 178 303 Other expenses 1,527 1,754 4,859 5,129 7,161 7,440 21,347 21,361 Income (loss) before income taxes (1,759) 1,460 2,754 3,252 Income taxes (890) 314 370 612 Net income (loss) (869) 1,146 2,384 2,640 Preferred stock dividends 65 65 193 193 Net income (loss) for common stockholders $(934) $1,081 $2,191 $2,447 Basic earnings (loss) per share $(0.23) $0.27 $0.55 $0.61 Diluted earnings (loss) per common share $(0.23) $0.27 $0.54 $0.61 UnionBancorp, Inc. Unaudited Selected Quarterly Consolidated Financial Data (In Thousands, Except Share Data) Quarters Ended 09/30/03 06/30/03 03/31/03 12/31/02 09/30/02 (Dollars in Thousands, Except Per Share Data) Statement of Income Data Interest income $10,274 $10,381 $10,840 $11,189 $11,238 Interest expense 3,775 4,080 4,259 4,634 4,879 Net interest income 6,499 6,301 6,581 6,555 6,359 Provision for loan losses 4,356 1,257 612 518 519 Net interest income after provision for loan losses 2,143 5,044 5,969 6,037 5,840 Noninterest income 3,259 4,087 3,599 3,554 3,060 Noninterest expense 7,161 7,169 7,017 7,665 7,440 Income (loss) before income taxes (1,759) 1,962 2,551 1,926 1,460 Provision (benefit) for income taxes (890) 516 744 522 314 Net income (loss) $(869) $1,446 $1,807 $1,404 $1,146 Net income (loss) on common stock $(934) $1,382 $1,743 $1,340 $1,081 Per Share Data Basic earnings (loss) per common shares $(0.23) $0.34 $0.44 $0.34 $0.27 Diluted earnings (loss) per common shares (0.23) 0.34 0.43 0.33 0.27 Cash dividends on common stock 0.09 0.09 0.09 0.08 0.08 Dividend payout ratio for common stock -- 18.56% 20.60% 23.73% 29.42% Book value per common share $16.87 $17.55 $17.29 $16.97 $16.68 Basic weighted average common shares out- standing 4,000,546 3,994,564 3,984,319 3,980,946 3,979,919 Diluted weighted average common shares out- standing 4,097,793 4,068,284 4,044,782 4,035,124 4,028,164 Period-end common shares out- standing 4,000,646 3,998,946 3,986,046 3,980,946 3,980,946 Balance Sheet Data Securities $235,508 $220,937 $230,123 $227,229 $213,077 Loans 483,042 476,386 477,406 483,229 489,148 Allowance for loan losses 9,082 7,253 6,498 6,450 6,808 Assets 792,481 772,931 779,424 791,616 769,844 Deposits 622,952 606,955 626,076 641,958 623,157 Stockholders' equity 67,989 70,701 69,423 68,064 66,897 Earnings Performance Data Return on average total assets (0.45)% 0.74% 0.94% 0.71% 0.60% Return on average stockholders' equity (4.98) 8.10 10.58 8.22 6.82 Net interest margin ratio 3.76 3.66 3.89 3.72 3.74 Efficiency ratio (A) 71.59 69.30 66.38 70.86 69.32 Asset Quality Ratios Nonperforming assets to total end of period assets 1.30% 0.84% 0.68% 0.80% 1.06% Nonperforming loans to total end of period loans 2.11 1.29 0.86 0.99 1.15 Net loan charge-offs to total average loans 0.52 0.10 0.12 0.11 0.25 Allowance for loan losses to total end of period loans 1.88 1.52 1.38 1.33 1.39 Allowance for loan losses to nonperforming loans 89.01 117.69 159.58 135.50 120.79 Capital Ratios Average equity to average assets 8.94% 9.04% 8.89% 8.63% 8.92% Total capital to risk adjusted assets 12.20 12.63 12.26 11.84 12.05 Tier 1 leverage ratio 7.63 8.01 7.79 7.48 7.55 (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, Vice President and Chief Financial Officer, , both of UnionBancorp, Inc., +1-800-352-8223 Web site: http://www.ubcd.com/

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