University Bancorp, Inc. Issues $15 Mm of Senior Unsecured Notes

Rhea-AI Summary

University Bancorp (OTCQB:UNIB) has issued $15 million in Senior Unsecured Notes to institutional investors, maturing on January 31, 2030, with a fixed interest rate of 9.25% per annum. The company has the option to redeem the Notes starting January 31, 2028. As of September 30, 2024, the company also had $28 million of Subordinated Notes outstanding and a $10 million Line of Credit. The company's cash and equity investment securities totaled $19.7 million as of September 30, 2024. Notably, the shareholders' equity of University Bank, the company's wholly-owned subsidiary, surpassed $100 million as of August 31, 2024, marking a significant milestone.

Positive

• Issued $15 million in Senior Unsecured Notes, providing additional capital
• Fixed interest rate of 9.25% per annum on the new Notes
• Option to redeem Notes starting January 31, 2028, offering flexibility
• $19.7 million in cash and equity investment securities available
• University Bank's shareholders' equity surpassed $100 million milestone

Negative

• Increased debt with $15 million in new Senior Unsecured Notes
• Higher interest expenses due to 9.25% interest rate on new Notes
• $28 million of Subordinated Notes outstanding
• $6.5 million drawn on the Line of Credit as of September 30, 2024

ANN ARBOR, MI / ACCESSWIRE / October 17, 2024 / University Bancorp, Inc. (OTCQB:UNIB) announced that it has issued to institutional investors $15 million in Senior Unsecured Notes (the "Notes"). The Notes mature January 31, 2030. The Issue Price to Investors was at 100%, and the Notes pay interest fixed at 9.25% per annum. The Company may, at its option, beginning with the Interest Payment Date of January 31, 2028, but not prior thereto and on any scheduled Interest Payment Date thereafter, redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption.

Piper Sandler & Co. acted as placement agent for the offering.

At 9/30/2024, the Company also had $28 million of Subordinated Notes outstanding and a $10 million Line of Credit.

The Subordinated Notes, which mature 1/31/2033, pay interest for the first five years fixed at 8.25% and then float at a variable rate of 4.87% over SOFR for the second five years, however the Company entered into an interest rate swap agreement which effectively fixes the interest rate for the second five years of the term at 8.08%. The Company may, at its option, beginning with the Interest Payment Date of January 31, 2028, but not prior thereto and on any scheduled Interest Payment Date thereafter, redeem the Subordinated Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Subordinated Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption.

The Company also has a $10 million Line of Credit available, the draws on which were paid in full with the proceeds of the Senior Unsecured Bonds and have no amount currently drawn. This line of credit matures October 2025 with interest at Prime Rate, capped at 6.25%.

At 9/30/2024 cash & equity investment securities at University Bancorp, Inc., available to meet working capital needs and to support investment opportunities at the Company, were $19.7 million and there was $6.5 million drawn on the Line of Credit.

The Company is also pleased to announce that as of August 31, 2024, the shareholders' equity of the Company's wholly-owned subsidiary, University Bank, passed the $100 million mark for the first time. While a $2.3 million dividend was paid by University Bank to the Company in late September that took the shareholders equity of University Bank under this benchmark as of quarter-end, 9/30/2024, this is a significant milestone that is expected to be achieved again in the near future and on an ongoing basis.

The Senior Unsecured Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. This news release does not constitute an offer to sell, or a solicitation of an offer to buy, any securities of the Company in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Shareholders and investors are encouraged to refer to the financial information including the investor presentations, audited financial statements, strategic plan and prior press releases, available on our investor relations web page at: http://www.university-bank.com/bancorp/. A detailed income statement, balance sheet and other financial information for University Bank as of 6/30/2024 is be available here: https://www.university-bank.com/wp-content/uploads/2024/06/University-Bank-Detailed-Financial-Information-June-2024.pdf.

About UNIB

Ann Arbor-based University Bancorp is a Federal Reserve regulated financial holding company that 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.

University Bank together with its Michigan-based subsidiaries, holds and manages a total of over $40 billion in financial assets for over 195,000 customers, and our 507 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, 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

SOURCE: University Bancorp, Inc.

View the original press release on accesswire.com

FAQ

What is the maturity date of University Bancorp's (UNIB) new Senior Unsecured Notes?

The new Senior Unsecured Notes issued by University Bancorp (UNIB) mature on January 31, 2030.

What is the interest rate on University Bancorp's (UNIB) newly issued Senior Unsecured Notes?

The Senior Unsecured Notes issued by University Bancorp (UNIB) pay a fixed interest rate of 9.25% per annum.

When can University Bancorp (UNIB) start redeeming the new Senior Unsecured Notes?

University Bancorp (UNIB) can start redeeming the new Senior Unsecured Notes beginning with the Interest Payment Date of January 31, 2028.

How much cash and equity investment securities did University Bancorp (UNIB) have as of September 30, 2024?

As of September 30, 2024, University Bancorp (UNIB) had $19.7 million in cash and equity investment securities available to meet working capital needs and support investment opportunities.