University Bancorp Announces 1 for 2 Reverse Stock Split to Preserve NASDAQ Small-Cap Listing;...

Business Editors

ANN ARBOR, Mich.--(BUSINESS WIRE)--Sept. 12, 2002

University Bancorp, Inc. (Nasdaq:UNIB) (the "Company") announced that its board of directors has approved a 1 for 2 reverse stock split to preserve the Company's listing on the NASDAQ Small-Cap Market.

The Company recently received a NASDAQ Staff Determination indicating that the Company fails to comply with the $1 minimum bid price requirement for continued listing set forth in Marketplace Rules 4310(c)(4) and 4310(c)(8)(D), and that its securities are, therefore, subject to delisting from the NASDAQ Small-Cap Market. The Company has requested a hearing before a NASDAQ Listing Qualifications Panel to review the Staff Determination. There can be no assurance the Panel will grant the Company's request for continued listing, however the Company believes that the pending reverse stock split is sufficient grounds for the Panel to approve the appeal.

President Stephen Lange Ranzini commented, "We had delayed our annual shareholders meeting for this year just in case a reverse stock split was needed. Our common stock has been trading consistently between $0.70 and $1.00 for most of the past six months, and we had delayed a reverse stock split in the hopes that several positive corporate developments would have a positive impact on the share price to get it consistently over $1.00 per share.

"Having received notice from NASDAQ that we have run out of time, the board of directors has resolved to submit a reverse stock split immediately to the Company's shareholders. A majority of the shareholders have indicated that they will vote at a special meeting to be held October 25, 2002 in favor of the resolution to carry out a 1 for 2 reverse stock split. We intend to issue the proxy statement in the next few days to the SEC and then mail the proxy to our shareholders by September 25, 2002."

Operations Update. The Company's University Bank subsidiary booked net income in July of $64,380 and $73,401 in August. President Stephen Ranzini commented, "We are anticipating the Company itself will report net income for the third quarter between $75,000 and $150,000, excluding the potential unusual gain from the sale of Midwest Loan Services."

The Company is also close to closing on two major transactions (as described in our most recent 10-Q): the sale of our headquarters building which should close at the end of September for a $300,000 gain (the gain per GAAP will be booked at the rate of $12,500 a month for 24 months), and the sale of our Bank's Midwest Loan Services subsidiary, for about a $1 million initial gain and a multi-year earn-out over time of up to another $2 million.

Ann Arbor-based University Bancorp (Nasdaq:UNIB) owns 100% of University Bank. The Bank is a $45 million asset, FDIC-insured, locally owned and managed Community Bank. The Bank's commissioned business development officers are focused on the local business community, calling on business owners directly at their offices. Other Bank specialties include residential mortgages, commercial real estate lending, highly competitive deposit products for business owners, and insurance and broker-dealer investments through the Bank's wholly-owned subsidiary University Insurance and Investment Services, Inc. In addition to its Community Banking operations, University Bancorp specializes in mortgage subservicing through the Bank's Houghton-based 80%-owned subsidiary, Midwest Loan Services, Inc. and also owns 6.1% of Michigan BIDCO, Inc., an Ann Arbor-based mezzanine capital lender.

Any prediction of the future contained in this press release is inherently not assured. Investors should read the risk factors listed in the Company's 2001 SEC 10-K, beginning on page 22 and any prediction in this release is intended to be covered by the Safe Harbor provisions of Section 21E of the Securities Exchange Act of 1934.