University Bncp Stock Price, News & Analysis

University Bancorp, Inc. (UNIB) is a Federal Reserve regulated financial holding company based in Ann Arbor, Michigan. Through its wholly owned subsidiaries and affiliated businesses, the company is active in commercial banking, mortgage banking, mortgage servicing, faith-based financial services, insurance and wealth management. Its primary operating subsidiary is University Bank, an FDIC-insured, locally owned and managed community bank that traces its roots to 1890 and is described as the 15th oldest bank headquartered in Michigan.

Corporate Structure and Core Businesses

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, a master mortgage servicing firm based in Ann Arbor, Michigan. According to multiple company disclosures, University Bank together with its Michigan-based subsidiaries holds and manages tens of billions of dollars in financial assets for well over one hundred thousand customers, and the organization is described as the 5th largest bank based in Michigan by this measure.

Within University Bank, operations are organized into several business units that are ranked by revenue contribution in company materials:

• UIF, a faith-based banking firm based in Southfield, Michigan.
• University Lending Group, a retail residential mortgage originator based in Clinton Township, Michigan.
• Midwest Loan Services, a residential mortgage subservicer based in Houghton, Michigan.
• Community Banking, based in Ann Arbor, Michigan, which provides traditional community banking services in the Ann Arbor area and, in some disclosures, wealth management services.
• Ann Arbor Insurance Centre, an independent insurance agency based in Ann Arbor, Michigan.
• Reverse Mortgage Lending, a reverse residential mortgage lender based in Southfield, Michigan (identified in several company updates).
• Mortgage Warehouse Lending, a mortgage warehouse lender based in Southfield, Michigan.

Community Banking and Awards

University Bank is characterized by the company as an FDIC-insured, locally owned and managed community bank that meets the financial needs of its community through what it describes as creative and innovative services. The bank has been recognized in industry publications, having been selected as "Community Bankers of the Year" by American Banker magazine and as a recipient of the American Bankers Association's Community Bank Award, according to repeated company press releases. These distinctions are presented by the company as evidence of its community banking focus and long operating history in Michigan.

Faith-Based Financial Services

A distinctive element of University Bancorp’s profile is its emphasis on faith-based financial services. UIF, based in Southfield, Michigan, is described by the company as a faith-based banking firm and as one of the leading providers of faith-based financial services in the U.S. In various disclosures, UIF is associated with faith-based deposit accounts and financing products, and the company reports that faith-based deposits at University Bank have grown to significant levels.

University Bancorp has also announced definitive agreements to acquire Greater Pacific Bancshares, Bank of Whittier, N.A. (BOW), and American Finance House LARIBA, which the company describes as pioneers of the faith-based financial services industry in the United States. Company materials state that BOW was the first provider of faith-based banking services in the U.S., and that LARIBA, founded in 1987, was for a period the first and only provider of faith-based financing in the country. Following closing of these transactions, BOW is expected to become a wholly owned subsidiary of University Bancorp, and LARIBA is expected to be merged into UIF Corporation, an indirect subsidiary of UNIB. The company highlights these planned acquisitions as expanding its ability to provide faith-based financing in the United States and as complementary to existing UIF activities.

Mortgage Origination and Servicing

Mortgage-related activities are a major part of the University Bancorp corporate family. University Lending Group operates as a retail residential mortgage originator, and the company reports that University Bank is licensed to originate forward and reverse mortgage loans in all 50 states and the District of Columbia. Company communications describe a mix of portfolio lending and secondary market sales, with portfolio loans held for investment including adjustable-rate products and home equity lines of credit.

Midwest Loan Services functions as a residential mortgage subservicer. Company updates note that Midwest services a large number of mortgages for institutional clients and that it manages non-interest-bearing escrow deposits associated with these loans. The firm has experienced both headwinds from client mortgage servicing rights (MSR) sales and growth from new institutional relationships, including onboarding large blocks of mortgages from institutional investors.

Hyrex Servicing, based in Ann Arbor, Michigan, is another key component of the mortgage platform. It is described as a Fannie Mae and Freddie Mac approved primary servicer that is licensed or otherwise able to own mortgage servicing rights in most U.S. states and is in the process of expanding its licensing footprint. Hyrex can own whole loans across all 50 states plus the District of Columbia. The company states that Hyrex plans to partner with third-party investment advisors and institutional investors that lack the licensing or operational infrastructure to invest directly in mortgage-related assets. Hyrex is expected to generate revenue through primary servicing or similar fees based on the unpaid principal balance of mortgage assets on its balance sheet.

Insurance and Captive Insurance

Through Crescent Assurance, PCC, University Bancorp participates in the captive insurance sector. Crescent Assurance is chartered in Washington, DC and is described as a captive insurance company owned by UNIB. Company disclosures state that Crescent Assurance was established using the broader authority available to financial holding companies and that it has generated positive net income relative to its initial capital investment.

Ann Arbor Insurance Centre, an independent insurance agency based in Ann Arbor, Michigan, is another insurance-related entity within the corporate family. Company materials indicate that this agency has grown its revenue over many years and that management views its market value as higher than its book value plus related goodwill and intangibles.

Wealth Management and Trust Services

University Bancorp and University Bank also emphasize wealth management and trust services. The company reports that University Bank’s Community Banking unit provides wealth management in addition to traditional community banking services. In a detailed press release, the bank describes a wealth management division led by a Certified Financial Planner professional who offers planning and consulting services that integrate financial, aging, caregiving and legacy planning, including trust-related considerations.

Wealth management activities are further supported by University Bank’s relationship with LPL Financial. Company disclosures state that securities and advisory services are offered through LPL Financial, a registered investment advisor and broker-dealer, and that insurance products are offered through LPL or its licensed affiliates. University Bank and University Investment Services are not themselves registered as a broker-dealer or investment advisor, and registered representatives of LPL offer products and services using the University Investment Services name while also being employees of University Bank. The company provides standard regulatory disclosures indicating that securities and insurance offered through LPL or its affiliates are not insured by the FDIC or any other government agency, are not bank guaranteed, are not bank deposits or obligations, and may lose value.

Trust and estate services are another component of the broader wealth strategy. University Bancorp has disclosed that University Bank agreed to acquire additional shares of Credit Union Trust, a full-service trust bank and credit union service organization based in Troy, Michigan. The transaction is expected to increase University Bank’s ownership in Credit Union Trust to just under half of the outstanding shares. Credit Union Trust assists individuals, families and companies with trust and estate administration, wealth management and education, and company materials note that it has grown its assets under management to well over one hundred million dollars.

Investment Activities and Capital Management

As a financial holding company, University Bancorp also engages in investment and capital management activities at the parent level. Company disclosures describe a portfolio of publicly traded financial services-related investments, including significant positions in firms such as Currency Exchange International and, at times, other financial institutions. In some periods, the company has also held positions in other publicly traded entities and derivative instruments, as described in its press releases.

On the capital side, University Bancorp has issued subordinated debt and senior unsecured notes to institutional investors and has arranged credit facilities to support its growth strategy. It has also completed an equity investment transaction with a fund managed by Castle Creek Capital Partners, involving a new class of convertible perpetual noncumulative preferred stock. Company materials describe the key terms of this preferred stock, including dividend rates, conversion features, redemption options and associated governance rights such as board representation and information rights. The company notes that it does not expect this preferred stock to qualify as Additional Tier 1 Capital under existing Federal Reserve regulations and that it is not currently required to comply with Tier 1 capital ratio requirements at the consolidated level below a specified asset threshold.

Risk Management and Credit Culture

University Bancorp and University Bank provide extensive quantitative disclosures about loan portfolio performance, allowance for loan losses, delinquency levels and capital ratios. Company communications emphasize what management describes as a conservative credit culture, referencing long-term data on loan provisions and net charge-offs over multiple economic cycles. The bank has engaged an outside vendor to perform stress testing analysis under a severely adverse economic scenario, and company materials summarize projected loan losses and capital impacts under that scenario, as well as the role of existing allowances and capital resources.

Strategic Direction

Across its public communications, University Bancorp highlights several strategic themes: expanding portfolio lending when market conditions favor holding loans, building out mortgage servicing and MSR-related capabilities through Midwest Loan Services and Hyrex Servicing, growing faith-based financial services through UIF and planned acquisitions such as Bank of Whittier and LARIBA, and developing wealth management and trust offerings, including through Credit Union Trust and partnerships with LPL Financial. The company also notes that it has opted to be designated as a financial holding company to access a broader range of investment and business development options, including the formation of its captive insurance subsidiary and the development of Hyrex Servicing.

Stock Information and Trading

University Bancorp’s common stock trades on the OTCQB market under the symbol UNIB. Company press releases refer to regular quarterly cash dividends on common stock and describe shareholder meetings where matters such as board elections and changes to authorized share capital are considered. The company has also indicated that certain investors in its preferred stock have registration rights that could, under specified conditions, require UNIB to become an SEC reporting public company in the future.

FAQs

• What is University Bancorp, Inc. (UNIB)?
  University Bancorp, Inc. is a Federal Reserve regulated financial holding company based in Ann Arbor, Michigan. It owns University Bank, Crescent Assurance, PCC, and Hyrex Servicing, and oversees a group of businesses involved in community banking, mortgage origination, mortgage servicing, faith-based financial services, insurance and related activities.
• What is the relationship between University Bancorp and University Bank?
  University Bancorp owns 100% of University Bank, which is an FDIC-insured, locally owned and managed community bank headquartered in Michigan. University Bank is the primary operating subsidiary of UNIB and, together with its Michigan-based subsidiaries, holds and manages a large base of financial assets for customers.
• How does University Bancorp participate in faith-based financial services?
  Faith-based financial services are provided primarily through UIF, a faith-based banking firm based in Southfield, Michigan, which is part of the University Bank corporate family. University Bancorp has also signed definitive agreements to acquire Greater Pacific Bancshares, Bank of Whittier, N.A., and American Finance House LARIBA, which it describes as pioneers in the U.S. faith-based financial services industry.
• What mortgage-related businesses does University Bancorp operate?
  Mortgage activities include University Lending Group, a retail residential mortgage originator; Midwest Loan Services, a residential mortgage subservicer; Reverse Mortgage Lending, a reverse residential mortgage lender; Mortgage Warehouse Lending, a mortgage warehouse lender; and Hyrex Servicing, which owns and manages mortgage servicing rights and whole loans in partnership with institutional investors.
• What is Hyrex Servicing and why is it important to UNIB?
  Hyrex Servicing is a wholly owned subsidiary based in Ann Arbor, Michigan. It is a Fannie Mae and Freddie Mac approved primary servicer that can own mortgage servicing rights in many states and is expanding its licensing footprint. Hyrex plans to partner with third-party investment advisors and institutional investors that lack the necessary licensing or operational framework to own mortgage-related assets, and it earns servicing or similar fees based on the unpaid principal balance of those assets.
• What is Crescent Assurance, PCC?
  Crescent Assurance, PCC is a captive insurance company licensed in Washington, DC and owned 100% by University Bancorp. It was formed after UNIB elected to be treated as a financial holding company, and company disclosures state that it has generated net income relative to its initial capital investment.
• How does University Bancorp approach wealth management and trust services?
  Wealth management is provided through University Bank’s Community Banking and wealth management division, and through a relationship with LPL Financial, which offers securities and advisory services under the University Investment Services name. University Bank also invests in trust and estate services through Credit Union Trust, a full-service trust bank and credit union service organization in which University Bank has agreed to increase its ownership stake.
• What disclosures does the company provide about investment and insurance products?
  Company materials state that securities and advisory services are offered through LPL Financial, a registered investment advisor and broker-dealer, and that insurance products are offered through LPL or its licensed affiliates. They emphasize that these securities and insurance products are not insured by the FDIC or any other government agency, are not bank guaranteed, are not bank deposits or obligations, and may lose value.
• Where does UNIB’s stock trade and what kind of investor communications does it provide?
  UNIB’s common stock trades on the OTCQB market under the symbol UNIB. The company issues detailed press releases that include financial results, capital actions, acquisition agreements, and strategic updates, and it refers investors to its financial statements, investor presentations, strategic plan and prior press releases for more information.
• Is University Bancorp focused only on Michigan?
  While University Bancorp and University Bank are based in Michigan and many subsidiaries are Michigan-based, company disclosures state that University Bank is licensed to originate forward and reverse mortgage loans in all 50 states and the District of Columbia, and that Hyrex Servicing can own mortgage-related assets across all 50 states plus the District of Columbia.