University Bancorp Reports 2007 Results

Market Wire, April, 2008

University Bancorp, Inc. (NASDAQ: UNIB) reported audited net income of $645,000 versus a net loss of $402,000 in 2006. Basic and diluted earnings (loss) per share for 2007 and 2006 were $0.14 and $(0.10), respectively. For the fourth quarter the unaudited net loss in 2007 was $372,000 or ($0.09) per share versus net loss in 2006 of $52,000 or $(0.01) per share.

Significant progress during the year was made with the following key metrics:

--  Common stockholders' return on equity rose to 13.2% for the year
--  Portfolio loans and financings increased by 15.4% to $58.75 million
--  Net interest & financing income increased by 24.3% to $3.43 million
--  Custodial escrow deposits increased by 29.51% to $34.6 million
--  Total loans subserviced increased by 7.5% to $4.3 billion
--  Mortgages subserviced increased by 4.5% to 33,937
    

Fourth quarter 2007 earnings were negatively impacted by $333,000 in write-downs on mortgage servicing rights held by our Midwest Loan Services subsidiary due to the sharp drop in long term interest rates during the quarter. Also, Community Banking booked a $172,000 additional allowance for loan losses during the quarter to bolster its reserves. 2007 results were negatively impacted also by the loss of a key account at Midwest Loan Services in April, which reduced our mortgages subserviced by over 7,000 loans. This was the first loss of a major customer since the year 2000 and the first ever credit union customer relationship lost by Midwest.

2006 results were negatively impacted by one-time costs of $260,844 related to the restructuring of an agreement of our Islamic subsidiary to reduce future obligations under the original terms of that agreement.

At December 31, 2007, the Bank's Tier 1 leverage capital ratio was 9.7%, down from 10.2% at September 30, 2007 as the increased custodial escrow and Islamic deposits expanded the bank's balance sheet as planned.

President Stephen Lange Ranzini noted, "In the context of an ongoing Michigan recession, a 13% return on equity for the year for our bank is a very respectable result. Since we did not engage in any of the now criticized practices that have caused other financial institutions large financial losses and because we have been able to take advantage of recent turmoil in the financial markets to increase our income by sharply increasing the size of our AAA rated bond portfolio at excellent spreads, we are anticipating a record year in 2008 unless the economy declines more sharply than anticipated."

                                  (Unaudited)
                                    For the          For the
                                 Quarter Ended      Year Ended
                                  December 31,      December 31,
                                   (in 000s)         (in 000s)
                                 2007     2006      2007    2006
Net interest &
 financing income              $   857  $    842   $3,429  $2,759
Provision for loan &
 financing losses                  172        47      264     153
Securities gains                    11         -       89       -
Total other income               1,279     1,186    6,192   4,468
Total other expense              2,460     2,022    8,598   7,361
Minority interest in
 consolidated subsidiaries'
 earnings                          (27)       31      270     135
Income tax benefit                  86        20       66      20
Net income (loss)              $  (372) $    (52)  $  645  $ (402)
Basic earnings
 (loss) per common share       $ (0.09) $  (0.01)  $ 0.14  $(0.10)
Diluted earnings
 (loss) per common share       $ (0.09) $  (0.01)  $ 0.14  $(0.10)
Average shares outstanding
     Basic                       4,248     4,248    4,248   4,223
     Diluted                     4,248     4,248    4,285   4,223
Net interest & profit margin      4.62%     4.84%    4.75%   4.76%

Period-end:                       December 31,
                                 2007     2006
  Loans & financings including
   those held for sale        $ 60,063  $ 52,879
  Allowance for loan &
   financing losses                686       466
  Deposits                      78,657    78,882
  Assets                        88,238    87,272
  Equity                         5,984     5,251
  Book value per common share $   1.29  $   1.15

The following table summarizes the pre-tax net income (loss) of each profit center of the Company for the three and twelve months ended December 31, 2007 and 2006 (in thousands):

2007                         Three Months     Year
Community & Islamic Banking  $  (636)       $(1,650)
Midwest Loan Services            191          2,584
Corporate Office                 (33)           (87)
Eliminations                      22           (268)
                             ----------------------
Total                        $  (456)       $   579
                             ======================

2006                         Three Months     Year
Community & Islamic Banking  $  (301)       $  (951)
Midwest Loan Services            280          1,015
Corporate Office                 (18)          (351)
Eliminations                     (36)          (135)
                             ----------------------
Total                        $   (75)       $  (422)
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