University Bancorp, Inc. (OTCQB:UNIB) reported unaudited consolidated net income attributable to its common stock shareholders of $4,919,946 for the third quarter of 2026. The result represented $0.95 per share based on average shares outstanding of 5,169,518. Fully diluted consolidated net income per share was $0.76.
#Third-quarter and nine-month results
For 2Q2026, University Bancorp reported unaudited net income of $2,350,713, or $0.45 per share, based on average shares outstanding of 5,169,518. Fully diluted net income per share for that quarter was $0.36.
For the nine months ended September 30, 2026, consolidated net income was $16,175,544, equal to $3.13 per share on average shares outstanding of 5,169,518. The corresponding figures for the nine months ended September 30, 2025, were $6,156,316 and $1.19 per share. Fully diluted net income per share was $2.50 for 9M2026, compared with $1.19 for 9M2025.
At September 30, 2026, shareholders’ equity attributable to University Bancorp common stock shareholders stood at $115,106,703, or $22.27 per share based on 5,169,518 shares outstanding. On a fully diluted basis, equity was $21.62 per share based on 6,481,854 shares outstanding.
The company reported annualized return on equity of 19.8% for 3Q2026. Annualized ROE for the trailing twelve months ended September 30, 2026, was 19.1%, based on initial shareholders’ equity of $94,514,946 at September 30, 2025.
#Factors affecting 2026 earnings
University Bancorp said factors at University Bank had an overall net positive impact of $15.3 million before taxes on year-to-date earnings in 2026.
The fair market value of mortgage servicing rights increased $9.4 million during 3Q2026. The corresponding increases were $4.2 million in 2Q2026 and $1.1 million in 1Q2026.
The fair market value of the hedged mortgage origination pipeline decreased by $415,000 during 3Q2026, after increasing by $431,000 in 2Q2026 and $367,000 in 1Q2026. The Allowance for Loan Losses increased from the prior quarter by $116,000 in 3Q2026, following increases of $157,000 in 2Q2026 and $32,000 in 1Q2026.
#Subordinated notes and Bank of Whittier acquisition
On September 29, 2026, University Bancorp closed a $25,000,000 private placement of Fixed-to-Floating Rate Subordinated Notes due 2036. The Notes carry a fixed interest rate of 8.125% for the first five years. After that period, interest will reset quarterly at three-month SOFR plus 355 basis points.
The Notes may be redeemed by University Bancorp without penalty, in whole or in part, beginning on October 30, 2031. The company also entered into a $25,000,000 5-year forward interest rate swap agreement at 4.70%, which it said effectively fixes the interest rate for the second five years of the term at 8.25%.
University Bancorp said the proceeds were used to redeem all but $711,000 of the $19,465,298.04 in Notes issued in connection with the July 1, 2026 acquisition of Greater Pacific Bancshares and Bank of Whittier, N.A. The proceeds were also used to pay down amounts outstanding on the company’s line of credit. The remaining acquisition Notes had a weighted average interest rate of 7.80%.
University Bancorp acquired 100% of Greater Pacific Bancshares and Bank of Whittier, N.A. on July 1, 2026, for a purchase price of $37.2 million. The company said 48% was paid in cash and the remainder in Notes. Management anticipates that the transaction will be accretive to earnings per share over time.
Following the acquisition, the company said 25 tasks had been completed. These included purchasing a portfolio of about $42 million of residential loans from UIF, approving the transfer of Bank of Whittier’s residential servicing to Midwest Loan Services effective November 1st, and approving an $11 million special dividend by Bank of Whittier to University Bancorp.
A third-party stress test indicated that additional loan losses of $3.7 million would be incurred under a depressionary economic scenario using the CCARS stress test assumptions. After the special dividend, the test indicated Bank of Whittier would have $17.0 million of Tier 1 Capital and a 9.9% Tier 1 Capital Ratio.
#Payments Hub and lending operations
On September 16, 2026, University Bancorp said it had formed a strategic alliance with a FinTech firm to support the launch of an OND-based Payments Hub at University Bank. The FinTech will serve as the pilot customer, and University Bancorp invested a total of $2.2 million in equity of the firm.
University Bank is licensed for conventional mortgage lending and home equity lending in all 50 states. The company said it had completed the rollout of its 1st Mortgage HELOC programme in the 47 states where it offers the product. Year-to-date 1st Mortgage HELOC originations totalled $252.6 million at September 30, 2026.
Management was negotiating to sell a portfolio of $150.2 million of 1st Mortgage HELOCs to an institutional investor at a price of 103% of UPB plus 25 basis points of servicing, on a retained servicing basis. The company said the transaction was targeted to close in the 4th quarter of 2026 and that it would explore regular quarterly sales going forward.
#Liquidity, investments and servicing activity
At September 30, 2026, University Bancorp reported $63.5 million of cash and equity investment securities available for working capital needs and investment opportunities. It also had a $12.5 million line of credit, with a balance due of $7.6 million.
Immediately after quarter-end, $18.8 million of cash was used to repay Notes issued in the Bank of Whittier acquisition. The company said $34.3 million of working capital, measured at market value, was invested in publicly traded investments concentrated in four large investments.
Fitch Ratings had initiated an investment grade institutional servicer rating for Midwest Loan Services, a division of University Bank. University Bancorp said the rating would enable Midwest to compete for subservicing underlying securitization transactions and support Hyrex Servicing’s ability to attract Assets Under Management.
#Company structure
University Bancorp is an Ann Arbor-based Federal Reserve regulated financial holding company. Its subsidiaries include University Bank, Bank of Whittier, N.A., Crescent Assurance, PCC, and Hyrex Servicing.
#Key Takeaways
- University Bancorp reported unaudited 3Q2026 net income of $4,919,946, or $0.95 per share.
- Fully diluted net income per share was $0.76 for 3Q2026 and $2.50 for 9M2026.
- The company closed a $25,000,000 subordinated Notes placement on September 29, 2026.
- University Bancorp completed the July 1, 2026 acquisition of Greater Pacific Bancshares and Bank of Whittier, N.A., for $37.2 million.
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