University Bancorp Acquires Hyrex Servicing, LLC for $5.5 Million

Rhea-AI Summary

University Bancorp (OTCQB:UNIB) has acquired Hyrex Servicing, for $5.5 million through its subsidiary, Hyrex Servicing Holding Company, Hyrex Servicing, based in Ann Arbor, Michigan, is a Fannie Mae and Freddie Mac approved Primary Servicer licensed to own mortgage servicing rights (MSR) in 42 states and the District of Columbia. The acquisition is expected to increase University Bank's Tier 1 Capital by over $3.14 million and release an additional $550,000 in capital.

UNIB reported net income of $2,129,852 or $0.43 per share in Q1 2024, compared to $855,818 or $0.17 per share in Q1 2023. Shareholders' equity rose to $86,348,746, equivalent to $16.70 per share. University Bank is now licensed to originate forward and reverse mortgage loans in all 50 states and D.C.

Positive

• Acquisition of Hyrex Servicing for $5.5 million enhances UNIB's mortgage servicing capabilities
• Increase in University Bank's Tier 1 Capital by over $3.14 million
• Net income growth to $2,129,852 in Q1 2024 from $855,818 in Q1 2023
• Shareholders' equity increased to $86,348,746
• University Bank now licensed for mortgage origination in all 50 states and D.C.

Negative

• Initial $5.5 million cash outlay for acquisition may impact short-term liquidity
• Potential integration challenges and operational risks associated with the acquisition

ANN ARBOR, MI / ACCESSWIRE / August 1, 2024 / University Bancorp, Inc. (OTCQB:UNIB)(or "UNIB") announced that it has completed an internal corporate restructuring by acquiring Hyrex Servicing, LLC ("Hyrex Servicing") from University Bank, through its wholly owned subsidiary, Hyrex Servicing Holding Company, LLC. Hyrex Servicing Holding Company, LLC paid $5.5 million for Hyrex Servicing.

Hyrex Servicing, based in Ann Arbor, Michigan, is a Fannie Mae and Freddie Mac approved Primary Servicer and currently licensed or otherwise able to own mortgage servicing rights ("MSR") in 42 states, plus the District of Columbia. It has applied for or is in the process of applying for licenses to own MSRs in the remaining eight states. In addition, it can also own whole loans across all 50 states, plus the District of Columbia.

Through its ability to own and manage mortgage related assets, both whole loans and MSRs, Hyrex Servicing plans to partner with third party investment advisors and institutional investors who do not have the necessary licensing or operational framework to invest in such assets. Hyrex Servicing will generate revenue through Primary Servicing or other similar fees based upon the unpaid principal balance of these mortgage related assets on its balance sheet. As Hyrex Servicing partners with more investors and grows the number of assets on its balance sheet, these fees are expected to increase Hyrex Servicing's enterprise value.

Because Hyrex Servicing owned $3.98 million of MSRs at the time of the acquisition, the sale will increase University Bank's Tier 1 Capital by over $3.14 million, while lowering total assets by $5.5 million, which would also release $550,000 in Tier 1 Capital at University Bank, for a total of $3.69 million of capital being released by the transaction. As a result, under the dividend policy of University Bank within a few months the net impact on UNIB's working capital will be reduced to $1.81 million.

As Hyrex Servicing grows the assets on its balance sheet, some of the MSRs being purchased by third-party money management firms are anticipated to be sourced from University Bank and its affiliates, freeing additional Tier 1 Capital at University Bank over time, in the amount of about $7 million. Hyrex Servicing also utilizes University Bank as its primary depository, and Midwest Loan Services as its primary subservicer.

Financial & Operational Update

UNIB had net income of $2,129,852 or $0.43 per share in the first quarter of 2024, versus net income of $855,818, or $0.17 per share in the first quarter of 2023. Shareholders equity at 3/31/2024 rose to $86,348,746, equivalent to $16.70 per share, as calculated using the 5,169,518 shares of UNIB common stock outstanding at 3/31/2024. University Bank is now licensed to originate forward and reverse mortgage loans in all 50 states and the District of Columbia.

Shareholders and investors are encouraged to refer to the additional financial information including the investor presentations, audited financial statements, strategic plan and prior press releases, available on our investor relations web page at: www.university-bank.com/bancorp/.

Ann Arbor-based University Bancorp owns:

• 100% of University Bank, a bank based in Ann Arbor, Michigan;

• 100% of Crescent Assurance, PCC, a captive insurance company licensed in Washington DC; and

• 100% of Hyrex Servicing, based in Ann Arbor, Michigan.

University Bank together with its Michigan-based subsidiaries, holds and manages a total of over $40 billion in financial assets for over 198,000 customers, and our 492 employees make us the 5th largest bank based in Michigan. University Bank is an FDIC-insured, locally owned and managed community bank, and meets the financial needs of its community through its creative and innovative services. Founded in 1890, University Bank® is the 15th oldest bank headquartered in Michigan. We are proud to have been selected as the "Community Bankers of the Year" by American Banker magazine and as the recipient of the American Bankers Association's Community Bank Award. University Bank is a Member FDIC. The members of University Bank's corporate family, ranked by their size of revenues are:

• UIF, a faith-based banking firm based in Southfield, MI;

• University Lending Group, a retail residential mortgage originator based in Clinton Township, MI;

• Midwest Loan Services, a residential mortgage subservicer based in Houghton, MI;

• Community Banking, based in Ann Arbor, MI, which provides traditional community banking services in the Ann Arbor area;

• Ann Arbor Insurance Centre, an independent insurance agency based in Ann Arbor.

• Reverse Mortgage Lending, a reverse residential mortgage lender based in Southfield, MI; and

• Mortgage Warehouse Lending, a mortgage warehouse lender based in Southfield, MI.

CAUTIONARY STATEMENT: This press release contains certain forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements concerning future growth in assets, assets under management, pre-tax income and net income, budgeted income levels, the sustainability of past results, mortgage origination levels and margins, valuations, and other expectations and/or goals. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, economic, competitive, governmental and technological factors affecting our operations, markets, products, services, interest rates and fees for services. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We undertake no obligation to update any information or forward-looking statement.

Contact: Stephen Lange Ranzini, President and CEO
Phone: 734-741-5858, Ext. 9226
Email: ranzini@university-bank.com

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SOURCE: University Bancorp, Inc.

View the original press release on accesswire.com

FAQ

What is the acquisition price of Hyrex Servicing by University Bancorp (UNIB)?

University Bancorp (UNIB) acquired Hyrex Servicing, for $5.5 million through its subsidiary, Hyrex Servicing Holding Company,

How will the Hyrex Servicing acquisition affect University Bank's capital?

The acquisition is expected to increase University Bank's Tier 1 Capital by over $3.14 million and release an additional $550,000 in capital.

What was University Bancorp's (UNIB) net income for Q1 2024?

University Bancorp (UNIB) reported a net income of $2,129,852 or $0.43 per share in the first quarter of 2024.

In how many states is Hyrex Servicing licensed to own mortgage servicing rights?

Hyrex Servicing is currently licensed or able to own mortgage servicing rights (MSR) in 42 states, plus the District of Columbia.