UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                    FORM 10-K
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934
                           for the fiscal year ended
                                December 31, 2004
                                       OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
           For the transition period from ____________ to ___________

                         Commission file number 0-16023

                            UNIVERSITY BANCORP, INC.
             (Exact name of registrant as specified in its charter)
         Delaware                                        38-2929531
------------------------------------            ---------------------------
(State or other jurisdiction of                (I.R.S. Employer incorporation)
         Identification No.

959 Maiden Lane, Ann Arbor, Michigan                    48105
------------------------------------                 ---------
(Address of principal executive offices)             (Zip Code)

Registrant's telephone number, including area code (734) 741-5858
                                                   --------------

Securities registered pursuant to section 12(b) of the Act: NONE Securities
registered pursuant to section 12(g) of the Act:
         Common Stock, par value $.010 per share

     Indicate by check mark  whether the  registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.
         Yes   X     No
              ---       ---

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of  registrant's  knowledge,  in  definitive  proxy  or  other  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [X]

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). Yes ___ No _X___

     The number of shares  outstanding  of the  Registrant's  Common Stock as of
March 7 2005:  4,143,878 shares.  The aggregate market value of the voting stock
held by  non-affiliates  of the Registrant based on $1.46 per share, the closing
price for the Registrant's Common Stock on June 30, 2004, as reported by NASDAQ,
was approximately $1,681,311.

* For purposes of this calculation shares of the Registrant held by directors
and officers of the Registrant and by other affiliates have been excluded.

                               Page 1 of 86 pages
                 Exhibit index on sequentially numbered page 77


<PAGE>



PART I.

Item 1. - Business

General

     University  Bancorp,  Inc.  The  Company  is a Delaware  corporation  which
operates as a bank holding company for its wholly-owned  subsidiary,  University
Bank. The Company changed its name to `University Bancorp,  Inc.' from `Newberry
Bancorp, Inc.' in 1996, in order to better identify itself with the Bank.

     University  Bank. The Bank is a state  chartered  community  bank. The Bank
began  business in 1890 and was  chartered by the state of Michigan in 1908.  In
1994,  we sold the bank's  offices in Newberry,  Michigan and Sault Ste.  Marie,
Michigan.  In 1995 we  relocated  the Bank's main office to Ann Arbor,  Michigan
and,  changed the Bank's  name from `The  Newberry  State  Bank' to  `University
Bank'to more closely identify with its current place of business. Ann Arbor is a
university  town,  home to the University of Michigan and is the largest city in
Washtenaw County,  just west of the Detroit  Metropolitan  Statistical Area. The
Bank's primary  market area is defined as the City of Ann Arbor and  surrounding
areas in greater Washtenaw County.

     Midwest Loan Services.  In 1995, University Bank acquired 80% of the common
stock  of  Midwest  Loan  Services  ("Midwest").   Midwest  specializes  in  the
origination,  servicing and  subservicing  of mortgage  loans for various credit
unions, financial institutions and mortgage brokers. Most of their servicing and
subservicing portfolio is comprised of residential mortgage loans sold to Fannie
Mae,  Freddie Mac and other  private  residential  mortgage  conduits,  the most
important of which is a jumbo and subprime  loan conduit  established  by Lehman
Brothers.

     University  Insurance  &  Investment  Services.  In 1996,  University  Bank
established an insurance and investment  products sales agency.  This subsidiary
of the Bank,  called  "University  Insurance & Investment  Services,  Inc." (the
Agency) is based in the Bank's Ann Arbor  office.  The Agency is licensed by the
State of Michigan to sell insurance as agent for licensed insurance companies. A
d/b/a of the Agency,  University  Insurance Center,  commenced business in 1999,
adding a full service property and casualty  insurance agency offering insurance
for homes, autos, apartments and businesses in addition to the original products
which included life and health care insurance,  annuities and mutual fund sales.
Employees of the Agency are also  licensed to sell  investment  products such as
annuities and mutual funds,  and the President of the Bank, who is also Chairman
of the Agency,  also offers  broker-dealer  investment  services including money
management through a clearing arrangement with Equitas America LLC and Pershing,
a division of the Bank of New York.


Employees

         The Company employed 63 full-time equivalents as of March 3, 2005:

                  University Bank, Ann Arbor                24
                  Midwest Loan Services                     35
                  University Insurance & Investment          4

<PAGE>



Lines of Business

Deposit Products & Services

     University Bank offers  traditional retail savings products and services to
its customers.  These include demand deposit and NOW  interest-bearing  checking
accounts,  money market  deposit  accounts,  regular  savings  accounts and term
deposit certificates ranging in maturity from three to three hundred months. The
Bank  also  offers  Sharia'a  compliant   profit-sharing   deposits  for  Muslim
depositors. The Bank also offers free access to 24-Hour ATM machines,  telephone
banking,  internet banking, debit cards, online bill payment,  Western Union(TM)
money  transfer  services  and Gold  VISA  accounts.  From time to time to raise
liquidity,  the Bank relies on brokers to sell CDs. At December  31,  2004,  the
Bank had approximately $3.7 million in CDs issued through brokers.

Lending Products

     University Bank offers a range of traditional lending products,
including commercial small business loans, residential real estate mortgage
loans, home equity loans, commercial real estate mortgage loans, consumer
installment loans, and land development and construction loans. The Bank also
offers Sharia'a compliant mortgage alternative loan transactions (MALTs) for
Muslim customers.

Classifications of the loan portfolio as of December 31, 2004 are as follows:

                                                    Amount
                                                Outstanding(1)        % of Total
       Commercial, Real Estate & Other            $15,079,343            35.07%
       Residential Construction                     1,238,530             2.88%
       Residential Real estate                     20,761,659            48.28%
       Residential Home equity                      5,542,571            12.89%
       Consumer                                       173,363             0.40%
       Credit Card                                    204,334             0.48%
                                                 ------------          ---------
         Gross Loans                              $42,999,800           100.00%
                                                 ============          =========

(1) - Excludes loans held for sale.

     The Bank's loan portfolio is  geographically  concentrated in Ann Arbor and
Washtenaw County, Michigan. The ability of individual loan customers
to honor their debts is partially dependent on the local economy. The Ann Arbor
area is primarily dependent on the education, healthcare, services and
manufacturing (automotive and other) industries.

     Most of the Bank's  commercial loans are secured by commercial real estate.
Commercial  real estate loans have a loan to value ratio typically less than 80%
at the time the loan is  originated.  In no cases is the loan to value ratio for
commercial  real estate loans  greater than 85%. The primary risk of  commercial
loans is that the area's  economy  declines  and rents  decrease  while  vacancy
increases,  thereby  decreasing  the  value of the  building.  If the  guarantor
suffers a financial reverse, the Bank is then exposed to a loss.

     Residential loans typically have a loan to value ratio less than 80% at the
time the loan is originated,  unless the borrower's  financial  position is very
strong,  in which case a loan to value  ratio of up to 90% or  private  mortgage
insurance is considered. To meet the Bank's goals for first time homebuyers, the
Bank has  originated 97% to 100% loan to value  residential  loans and currently
has about $2 million of these loans in its loan


<PAGE>

portfolio.  Home equity secured  residential  loans have loan to value ratios of
less than 90% at time of origination in the case of fixed rate  fully-amortizing
loans and 80% for home equity lines of credit, with a few exceptions with higher
ratios for borrowers with strong  credit.  As of December 31, 2004, the Bank had
also originated $8.46 million of mortgage  alternative loan  transactions  which
are Sharia'a-compliant  mortgage alternatives for Muslim customers.  The primary
risk of  residential  lending is that home  prices drop  (typically  this occurs
during  recessions)  and  borrowers  walk  away  from  their  home or  file  for
bankruptcy.  All of the Bank's  construction  loans are  secured by  residential
properties with a loan to value ratio of 80% or less. The Bank controls the risk
of construction  lending by performing  inspections prior to disbursing  interim
construction funds to avoid cost overruns.

              The Bank makes few unsecured loans, typically for borrowers who
have a high net worth, but even in these cases; the Bank usually takes
collateral out of an abundance of caution. Most of the Bank's credit card loans
are secured by residential properties. Consumer loans are generally secured by
vehicles (primarily cars or trucks). The primary risk of these loans is that the
value of the car depreciates faster than the loan balance amortizes, and the
borrower loses their job or has a severe medical problem in their family. In
these circumstances, the collateral could be insufficient to repay the loan if
the borrower files for bankruptcy. In addition, if the economy is soft, used
vehicle prices tend to deteriorate creating additional risk of insufficient
collateral in the event of a default.

     The Bank makes very few business loans that are not secured by real estate.
Business  Lines of Credit are typically  made up to a 50% ratio of inventory and
other  equipment  at  current  market  value,  and 70% of  current  receivables.
Business Manager Loans are also structured as Lines of Credit and are secured by
individual  receivables  up to 90% of face  value  individually  purchased  with
recourse to the  borrower and  additional  insurance to protect the bank against
fraud and  bankruptcy  of the issuer of the account  that is  receivable  to the
borrower.  The primary  risk of this type of lending  backed by non-real  estate
business  assets  is  that if the  business  suffers  a  financial  reverse,  an
unscrupulous  borrower can easily  dissipate the collateral,  causing the Bank a
loss. For this reason, the Bank de-emphasizes this type of lending.

     Typically  with respect to all personal and  residential  loans, a ratio of
total debt payments to total income of all borrowers  and  guarantors  less than
42% is required.  With respect to commercial  real estate and business  loans, a
ratio  of  income  to all debt  payments  of  greater  than  1.25x is  required.
Therefore,  the Bank  typically  has both income and asset backing to secure its
loans. However,  there can always be valid reasons to have exceptions to each
rule. The Bank's loan committee retains the power to take unusual  circumstances
into account when evaluating each loan request versus the Bank's policies. Loans
that are  lacking  current  demonstrated  income are  classified  and  increased
reserves are  established  for those loans.  Loans that are lacking both current
demonstrated  income and asset backing are allocated even higher  reserves equal
to the amount  estimated to be realized upon the sale of the collateral less all
estimated costs.

Mortgage Banking

     The  Bank  and  Midwest   originate   internally  or  via  other  financial
institutions residential home loans that generally qualify for sale to secondary
market  investors  under the  underwriting  criteria  of the  Federal  Home Loan
Mortgage  Corporation,   the  Federal  National  Mortgage  Association  and  the
Government  National  Mortgage   Association.   Loans  purchased  or  originated
<PAGE>

internally  are either sold directly to FHLMC,  FNMA or GNMA, or are pooled into
mortgage-backed  securities  and the  securities  are sold to  investors  in the
secondary market.  With the exception of Midwest,  the Bank is currently selling
the servicing rights on all mortgages  originated that are sold to the secondary
market.  Some residential  mortgages are held in the Bank's loan portfolio as an
investment.

     University Bank became a seller/servicer and began originating Federal Home
Loan  Mortgage  Corporation  (FHLMC)  insured  mortgages  in 1991  and  became a
seller/servicer  and began  originating  Federal National  Mortgage  Association
(FNMA)  insured   mortgages   1994.  The  Bank  has  also  been  approved  as  a
seller/servicer of Government National Mortgage Association (GNMA) mortgages for
many years but only began using its license in 1999 to originate  and sell these
loans without retaining the servicing rights. Midwest is also licensed with FNMA
and FHLMC.

Mortgage Servicing and Subservicing

     Mortgage  servicing  firms receive  monthly  payments from loan  customers,
aggregate and account for these payments,  and send the funds to mortgage-backed
securities holders, including pension funds and financial institutions. For some
mortgage customers, escrow funds are also accumulated,  and funds sent to taxing
authorities  and  insurance  companies as needed.  Mortgage  servicers  also dun
delinquent accounts and foreclose loans, if required. Mortgage servicers receive
a fixed  monthly  fee for  performing  this  service.  When these  services  are
performed  for the Bank,  it is called  `servicing'.  When  these  services  are
performed  for other  institutions,  it is  called  `subservicing'.  The  Bank's
80%-owned subsidiary,  Midwest, specializes in subservicing residential mortgage
loans  sold to FNMA and FHLMC  and other  non-agency  private  conduits  for the
account of credit unions, other financial institutions and mortgage brokers.

Investment Securities

     The Bank maintains  surplus  available  funds in investments  consisting of
short-term money market instruments,  U.S. government bonds, U.S. federal agency
obligations and mortgage-backed securities backed by federal agency obligations.
The Bank's President, who is a licensed Registered Representative, manages these
investments.  All  purchase/sale  decisions  are subject to the review and prior
approval  of the  Asset  Liability  Committee  of the  Bank  and  the  Board  of
Directors.  The  securities  portfolio  provides a source of  liquidity  to meet
Bank's operating needs. At December 31, 2004, the portfolio had a net unrealized
loss of $51,356  versus a net  unrealized  loss of $38,795 at December 31, 2003,
and $81,997 at December 31, 2002.

     Information  regarding  securities where cost exceeded more than 10% of the
Company's stockholders' equity at December 31, 2004 is as follows:
<Table>
<CAPTION>


Issuer                             Coupon       Yield        Final Maturity       Market Value       Amortized Cost
------                             ------       -----             ---------             ------                -----
<S>          <C>                                    <C>                             <C>                 <C>
FHLBI equity (1)                       VAR          4.34%         None              $921,700            $921,700
FNMA CMO 93-205H (2)                   PO           3.02%       9/25/23              384,504             411,725
GNMA (various)                         VAR          5.87%       6/20/22              722,103             746,239
</TABLE>



    (1)    The rate varies quarterly. The Bank is required to maintain the
           investment in Federal Home Loan Bank of Indianapolis common stock in
           an amount related to the Bank's single family mortgage related assets
           and FHLBI advances. Shares can be redeemed or sold at par value to
           the FHLBI upon five year prior notice.
<PAGE>

    (2)    This Principal Only strip has an expected average life of about five
           years.  The bond is rated AAA.

Competition

Community Banking, Ann Arbor

         The attraction and retention of deposits depend on the Bank's ability
to provide investment opportunities that satisfy the requirements of investors
with respect to rate of return, liquidity, risk and other factors. The Bank
competes for these deposits by offering personal service and attention, fair and
competitive rates, low fees, and a variety of savings programs including
tax-deferred retirement programs.

         The Bank competes for loan originations primarily through the quality
of services provided to the loan customers, competitive interest rates and
reasonable loan fees, rapid and local decision-making and the range of services
offered. Competition in originating loans comes principally from other
commercial banks, credit unions, insurance companies, mortgage banking companies
and savings and loans.

The following table shows market share of deposits for Washtenaw County by
financial institution for June 2004, June 2003 and June 2002, respectively from
the FDIC and National Credit Union Association's annual branch deposit survey.

                                            2004           2003           2002
     National City                          13.28%         12.81%         12.51%
     TCF National                           12.19%         14.03%         15.63%
     Comerica                               11.47%         11.03%         11.08%
     Bank One                                9.80%          8.79%          8.89%
     Bank of Ann Arbor                       7.21%          6.06%          4.59%
     Keybank                                 6.16%          6.19%          6.41%
     University of Michigan CU               5.92%          5.51%          5.21%
     Standard Federal                        5.85%          4.19%          4.95%
     Ann Arbor Commerce                      5.62%          5.61%          5.22%
     Flagstar                                5.51%          4.86%          4.91%
     Huron River Area CU                     3.57%          3.54%          3.36%
     Chelsea State                           3.27%          3.09%          3.09%
     United Bank & Trust                     2.84%          2.53%          2.56%
     Midwest Financial CU                    2.70%          2.41%          2.24%
     Citizens                                2.52%          2.54%          2.61%
     Republic                                2.11%          2.00%          2.03%
     Bank of Washtenaw                       1.26%          1.13%          1.05%
     Automotive FCU                          1.22%          1.28%          1.31%
     Charter One                             0.84%          0.87%          0.71%
     University Bank                         0.83%          0.76%          0.89%
     Ypsilanti Area FCU                      0.41%          0.42%          0.39%
     Eastern Michigan University CU          0.27%          0.27%          0.24%
     Guaranty Bank                           0.17%          0.01%          0.06%
     Milan FCU                               0.04%          0.03%          0.03%
     Ann Arbor Postal FCU                    0.02%          0.03%          0.03%
     Total deposits (in billions)            $5.14          $4.89          $4.53
     Annual Increase                         5.12%          7.95%          4.23%

<PAGE>

         Total deposits in the county increased 5.07% to $5.14 billion from June
2003 to June 2004. Total deposits in the county increased 8.01% to $4.89 billion
from June 2002 to June 2003. In attracting deposits, the Bank's primary
competitors for deposits are mutual funds, other commercial banks, credit
unions, savings and loans and insurance companies.


         The Bank's main office is adjacent to the University of Michigan
Hospital complex. The complex employs a total of 7,800 persons. While the Bank
competes with all of these financial institutions for loans and deposits and in
particular the eight financial institutions that have branch offices in the
northeast Ann Arbor market area, the major competitor in the immediate local
deposit market is Midwest Financial Credit Union, formerly known as Hospital &
Health Services Credit Union. The Bank's main office was formerly the
headquarters of this credit union, which moved its office to a new office
building three miles from the Medical Center Complex.

         Banks owned by out-of-state holding companies dominate the Ann Arbor
banking market. The University of Michigan Credit Union is the largest
locally-owned financial institution. The only locally-owned community financial
institutions, excluding University Bank, are University of Michigan Credit
Union, Bank of Ann Arbor, Huron River Area Credit Union, Midwest Financial
Credit Union, Automotive Federal Credit Union and several smaller credit unions.

Mortgage Banking

         The Bank and Midwest's retail mortgage origination operations encounter
competition for the origination of residential real estate loans primarily from
savings institutions, commercial banks, insurance companies and other mortgage
banking firms. Many of these firms have a well-established customer and/or
borrower client base. Some competitors, primarily savings institutions,
insurance companies and commercial banks, have the ability to create unique loan
products from time to time because they are able to hold the loans in their own
portfolio rather than sell into the secondary market. The Bank's ability to hold
mortgage loans in its portfolio helps it to compete more effectively. Most loans
sold into the secondary market, however, go to the same sources, those being
FHLMC, FNMA, and GNMA. Most lenders have access to these secondary market
sources; therefore, competition often becomes more a matter of service and
pricing than that of product. As a mortgage loan originator and a purchaser of
mortgage loans through correspondents, Midwest and the Bank must be able to
compete with respect to the types of loan products offered by competitors to
borrowers and correspondents, including the price of the loan in terms of
origination fees or fee premium or discount, loan processing costs, interest
rates, and the service provided by our staff. An important element to competing
is master purchase agreements negotiated periodically with FNMA and FHLMC with
low and competitive loan guarantee fees, a wide variety of mortgage programs,
and a variety of flexible underwriting criteria. Our ability to secure these
master purchase agreements is dependent upon the performance from a quality
perspective of loans previously sold to the agencies.

         During lower interest rate environments, competition for loans is less
intense due to the large number of loans available for origination. As interest
rates rise and the number of loans available for origination diminishes,
competition becomes quite intense and companies with larger investor bases,
flexibility with respect to type of product offered and

<PAGE>

greater  experience  in  dealing in these  types of markets  tend to be the most
successful.

         The Bank also originates residential loans to be held in portfolio, and
management believes that this product together with the product offerings from
FHLMC, FNMA and GNMA are sufficient for the Bank to meet its customers' needs.
The Bank also is licensed as a HUD Title 1 and Multi-family seller/servicer, but
has no plans at this time to expand utilization of HUD or GNMA programs.

         Mortgage Servicing and Subservicing. Servicing competition is somewhat
less intense than the loan origination aspect of mortgage banking. Due to net
worth and management requirements, many mortgage origination companies do not
have the capacity to service loans. Falling interest rates present competitive
challenges for the mortgage servicing operation in that mortgagors are more
likely to refinance existing mortgages. The quality of service and the ability
of the origination operation to compete on price and service are important in
retaining these customers by refinancing them internally, rather than losing the
refinancing transaction to a competitor. Increased refinancing activity as a
result of falling interest rates decreases profitability of mortgage servicing
by increasing amortization charges on purchased mortgage servicing rights.

         In the subservicing business, Midwest competes primarily with about 30
firms nationwide, including specialized subservicing units of mortgage banking
companies, and specialized firms owned by banks and savings and loans. Most of
these companies have substantially larger financial resources than Midwest, and
some of them are also located in rural areas with low prevailing wages.

         Midwest is located in Houghton, Michigan in the western upper peninsula
of Michigan. Personnel and occupancy costs are the largest costs in a mortgage
servicing operation. However, the prevailing wages and occupancy costs in the
upper peninsula of Michigan are generally lower than the national average.
Midwest has developed a unique business extranet website for its business
partners and their retail customers. Through its website at www.subservice.com,
Midwest provides the opportunity for all customers to access their mortgage
information 24 hours a day 7 days a week in an environment which provides
seamless access to all information. Business partners have access to all
mortgage data as easily as if it were serviced on their in-house computer
system. Customers can access all information about their accounts and perform
any type of transaction through the internet. As a result of low personnel
costs, its internet technology and the relationships it has developed in the
credit union industry over time, the Company believes that Midwest' mortgage
servicing operation has a competitive advantage.


Regulation

      Primary Regulators of University Bancorp. The Company is a bank holding
company registered under the Federal Bank Holding Company Act of 1956. The
Federal Reserve Bank of Chicago is the Company's primary regulator and the
Company is subject to regulation, supervision and examination by the Federal
Reserve. The Company is required to file semi-annual reports with the Federal
Reserve and other information as required under the rules of the Board of
Governors of the Federal Reserve System. Additionally, the Federal Reserve Board
possesses enforcement powers over bank holding companies and their non-bank
subsidiaries to prevent or remedy actions that represent unsafe or unsound
practices or violations of applicable statutes and
<PAGE>

regulations.  Among these  powers is the ability to bar the payment of dividends
by banks and bank holding companies.

         Acquisitions. The Company is generally prohibited from engaging in
non-banking activities since it is a bank holding company. The Company cannot
acquire more than 5% of the shares of another company engaged in non-banking
activities. The Company can only acquire direct or indirect control of more than
5% of the voting shares of a company engaged in a banking related activity with
the prior approval by the Federal Reserve Board to acquire these shares or by
regulatory exemption. The Federal Reserve Board has identified specific banking
related activities in which a bank holding company may engage with notice to the
Federal Reserve. The Federal Reserve considers managerial, capital and other
financial factors, including the impact on local competition of any proposal and
past performance under the Community Reinvestment Act in acting on acquisition
or merger applications. Bank holding companies may acquire other banks located
in any state in the United States without regard to geographic restrictions or
reciprocity requirements imposed by state law, but subject to certain
conditions, including limitations on the aggregate amount of deposits that may
be held by the acquiring company and all of its insured depository institution
affiliates.

         Commitments. In connection with obtaining the consent of the Federal
Reserve to a 1989 merger transaction when the Company obtained public listing on
the NASDAQ Small-Cap Market, certain commitments were made to the Federal
Reserve. Management agreed that the Employee Stock Ownership Plan would not
purchase more than 10% of the common stock or 5% of any other class of our
voting shares, without the prior approval of the Federal Reserve. Management
also agreed not to incur additional debt or to have the Bank pay dividends to us
without the prior approval of the Federal Reserve.

         Capital Requirements. The Federal Reserve Board imposes certain capital
requirements on the Company under the Federal Bank Holding Company Act,
including a minimum leverage ratio and a minimum ratio of "qualifying" capital
to risk-weighted assets. These requirements are described below under "Capital
Regulations". The Federal Reserve uses capital adequacy guidelines in its
examination and regulation of bank holding companies. If capital falls below
minimum guidelines, a bank holding company may, among other things, be denied
approval to acquire or establish additional banks or non-bank businesses. The
"prompt corrective action" provisions of federal law and regulation authorizes
the Federal Reserve to restrict the payment of dividends to us from an insured
bank which fails to meet specified capital levels.

         Source of Strength. In accordance with Federal Reserve Board policy,
the Company is expected to act as a source of financial strength to the Bank and
to commit resources to support the Bank in circumstances in which the Company
may not otherwise wish to do so. Under the Federal Bank Holding Company Act, the
Federal Reserve may require a bank holding company to terminate any activity or
relinquish control of a bank subsidiary if the agency determines that
divestiture may aid the depository institution's financial condition. In
addition, if the Commissioner deems our Bank's capital to be impaired, the
Commissioner may require the Bank to restore its capital by a special assessment
upon us as University Bank's sole stockholder. If the Company were to fail to
pay an assessment, the directors of the Bank would be required, under Michigan
law, to sell the shares of the Bank's stock owned by the Company to the highest
bidder at either a public or private auction and use the proceeds of the sale to
restore the Bank's capital.
<PAGE>

         Financial Holding Companies. Beginning March 11, 2000, bank holding
companies may apply to become Financial Holding Companies. We have not applied
to become a Financial Holding Company. Financial Holding Companies may engage in
a wider range of non-banking activities than Bank Holding Companies, including
greater authority to engage in securities and insurance activities. The expanded
powers are available to a bank holding company only if the bank holding company
and its bank subsidiaries remain well-capitalized and well-managed. The new law
also imposes various restrictions on transactions between the depository
institution subsidiaries of bank holding companies and their non-bank
affiliates. These restrictions are intended to protect the depository
institutions from the risks of the new non-banking activities permitted to
affiliates.

      Public Company Regulation. Our common stock is registered with the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). We are therefore subject to the information, proxy solicitation, insider
trading and other restrictions and requirements of the SEC under the Exchange
Act. The Sarbanes-Oxley Act of 2002 provides for numerous changes to the
reporting, accounting, corporate governance and business practices of companies
as well as financial and other professionals who have involvement with the U.S.
public markets.

         The Sarbanes-Oxley Act was enacted in 2002. This Act is not a banking
law, but applies to all public companies, including the Corporation.
Sarbanes-Oxley is designed to restore investor confidence. Sarbanes-Oxley adopts
new standards of corporate governance and imposes new requirements on the board
and management of public companies. The chief executive officer and chief
financial officer of a public company must now certify the financial statements
of the company. New definitions of "independent directors" have been adopted,
and new responsibilities and duties have been established for the audit and
other committees of the board. In addition, the reporting requirements for
insider stock transactions have been revised, requiring most transactions to be
reported within two business days.

         Section 404 of the Sarbanes-Oxley Act. requires a company to include in
its annual reports a report by management on the company's internal control over
financial reporting and an accompanying auditor's report. The Commission
extended the original Section 404 compliance dates for all issuers in February
2004. Under the latest extension, the Company must re-measure its market
capitalization as of June 30, 2005 to determine if it will be classified as an
accelerated filer. The Company does not expect to be an accelerated filer and,
therefore, must begin to comply with the internal control over financial
reporting requirements for its first fiscal year ending on or after July 15,
2006. This is a one-year extension from the previously established July 15,
2005, compliance date for non-accelerated filers and foreign private issuers.
         While complying with Sarbanes-Oxley will result in increased costs to
the Corporation, the additional costs are not expected to have a material effect
on the Corporation

         Primary Regulators of University Bank. The Bank is a Michigan banking
corporation and its deposit accounts are insured by the Bank Insurance Fund
(BIF) of the Federal Deposit Insurance Corporation (FDIC). As a
Michigan-chartered commercial bank, University Bank is subject to the
examination, supervision, reporting and enforcement powers of the Commissioner,
as the chartering authority for Michigan banks, and the FDIC, as administrator
of the BIF. These agencies and the federal and state laws applicable to the Bank
and its operations, extensively regulate various aspects of the banking business
including, among other things, reserves against loans, capital
<PAGE>

levels relative to operations, lending activities and practices,  collateral for
loans,  establishment of branches,  mergers,  acquisitions  and  consolidations,
payment of dividends, internal controls, permissible types and amounts of loans,
investments and other activities,  interest rates on loans and on deposits,  and
the safety and soundness and scope of banking practices. As an insured bank,
University Bank is also required to file quarterly reports and other information
as required with the FDIC.

         All subsidiaries of University Bank including Midwest and University
Insurance & Investment Services are all also subject to all regulations
applicable to University Bank itself, including regular on-site examination by
both the OFIS and the FDIC.

         Other Regulators. As a FHLMC, FNMA, and HUD Title 1 and Title 2 and HUD
multifamily seller/servicer, University Bank's mortgage banking operation is
subject to regulation and regular on-site examination by FHLMC, FNMA and HUD.

         Other Regulations.  University Bank and its subsidiaries are also
subject to various regulations including:
o        the Community Reinvestment Act,
o        the Federal Truth-in-Lending Act,
o        the Home Mortgage Disclosure Act,
o        the Gramm-Leach Bliley Privacy Act
o        the Patriot Act
o        the Check 21 Act
o        the Equal Credit Opportunity Act,
o        the Fair Credit Reporting Act,
o        the Fair Debt Collection Act,
o        the Right to Privacy Act,
o        the Real Estate Settlement Procedures Act,
o        the Bank Secrecy Act,
o        the Electronic Funds Transfer Act,
o        Federal Reserve regulations,
o        State usury laws, and
o        Federal laws concerning interest rates.

Also, University Bank may not engage in any activity not authorized by the
Michigan Banking Code unless it is authorized by the Commissioner of the OFIS as
being closely related to banking.

         These laws and regulations are primarily intended to protect depositors
and the deposit insurance fund of the FDIC, not the Bank or the Company's
stockholders. The following is a summary of certain statutes and regulations
affecting University Bank. The following information is qualified in its
entirety by reference to the particular statutory and regulatory provisions.

         Various changes to the Federal Deposit Insurance Act (FDIA) are
currently proposed in Congress. Any change in applicable laws, regulations or
regulatory policies of various governmental regulatory authorities may have a
material effect on the Company's business, operations and prospects. Those
authorities include, but are not limited to, the Board of Governors of the
Federal Reserve System, the FDIC, the Commissioner of the Michigan Office of
Financial and Insurance Services, the Internal Revenue Service, and state taxing
authorities. The Company is unable to predict the nature or extent of
<PAGE>

the effects that fiscal or monetary  policies,  economic controls or new federal
or state legislation may have on future business and earnings.

     Deposit Insurance. As an FDIC-insured institution, the Bank is required to
pay deposit insurance premium assessments to the FDIC. The FDIC has adopted a
risk-based assessment system under which all insured depository institutions are
placed into one of nine categories and assessed insurance premiums, based upon
their respective levels of capital and results of supervisory evaluation. Banks
classified as well-capitalized, as defined by the FDIC, and considered healthy
pay the lowest premium while institutions that are less than adequately
capitalized, as defined by the FDIC, and considered to be of substantial
supervisory concern pay the highest premium. A risk classification of all
insured institutions is made by the FDIC for each semi-annual assessment period.

     The Federal Deposit Insurance Act (FDIA) requires the FDIC to establish
assessment rates at levels that will maintain the Deposit Insurance Fund at a
mandated reserve ratio of not less than 1.25% of estimated insured deposits.

     The FDIC may terminate the deposit insurance of any insured depository
institution if the FDIC determines, after a hearing, that the institution or its
directors have engaged or are engaging in unsafe or unsound practices, or have
violated any applicable law, regulation, order, or any condition imposed in
writing by, or written agreement with, the FDIC, or if the institution is in an
unsafe or unsound condition to continue operations. The FDIC may also suspend
deposit insurance temporarily during the hearing process for a permanent
termination of insurance if the institution has no tangible capital.

     Commissioner Assessments. Michigan banks are required to pay supervisory
fees to the Commissioner to fund the operations of the Commissioner. The amount
of supervisory fees paid by a bank is based upon the bank's total assets, as
reported to the Commissioner.

     FICO Assessments. Pursuant to federal legislation enacted in 1996,
University Bank, as a member of the BIF, is subject to assessments to cover the
payments on outstanding obligations of the Financing Corporation (FICO). FICO
was created in 1987 to finance the re-capitalization of the Federal Savings and
Loan Insurance Corporation, the predecessor to the FDIC's Savings Association
Insurance Fund (SAIF), which insures the deposits of thrift institutions.
Between January 1, 2000 and the maturity of the outstanding FICO obligations in
2019, BIF members and SAIF members will share the cost of the interest on the
FICO bonds on a pro rata basis. It is estimated that FICO assessments during
this period will be less than 0.025% of deposits. In addition, the Federal Home
Loan Banks, including the Federal Home Loan Bank of Indianapolis, in which
University Bank is an investor, pay 20% of their annual net income to a sinking
fund to retire the FICO bonds until they are paid in full.

     Capital Regulations. The FDIC has established the following minimum capital
standards for  state-chartered,  FDIC-insured  non-member banks, like University
Bank:

              o   a leverage requirement consisting of a minimum ratio of Tier 1
                  capital to total assets of 3% for the most highly-rated banks
                  with minimum requirements of 4% to 5% for all others;
              o   and a risk-based capital requirement consisting of a minimum
                  ratio of total capital to total risk-weighted assets of 8%, at
                  least one-half of which must be Tier 1 capital.
<PAGE>

Tier 1 capital consists principally of stockholders' equity. These capital
requirements are minimum requirements. Higher capital levels will be required if
warranted by the particular circumstances or risk profiles of individual
institutions. For example, FDIC regulations provide that higher capital may be
required to take adequate account of, among other things, interest rate risk and
the risks posed by concentrations of credit, nontraditional activities or
securities trading activities.

     Federal law provides the federal banking regulators with broad power to
take prompt corrective action to resolve the problems of undercapitalized
institutions. Depending upon the capital category to which an institution is
assigned, the regulators' corrective powers include: requiring the submission of
a capital restoration plan; placing limits on asset growth and restrictions on
activities; requiring the institution to issue additional capital stock,
including additional voting stock, or to be acquired; restricting transactions
with affiliates; restricting the interest rate the institution may pay on
deposits; ordering a new election of directors of the institution; requiring
that senior executive officers or directors be dismissed; prohibiting the
institution from accepting deposits from correspondent banks; requiring the
institution to divest certain subsidiaries; prohibiting the payment of principal
or interest on subordinated debt; and ultimately, appointing a receiver for the
institution.

     In general, a depository institution may be reclassified to a lower
category than is indicated by its capital levels if the appropriate federal
depository institution regulatory agency determines the institution to be
otherwise in an unsafe or unsound condition or to be engaged in an unsafe or
unsound practice. This could include a failure by the institution, following
receipt of a less-than-satisfactory rating on its most recent examination
report, to correct the deficiency.

     The extent of the regulators' powers depends on whether the institution in
question is "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," or "critically undercapitalized." An
institution is critically undercapitalized if it has a tangible equity to total
assets ratio that is equal to or less than 2%. An institution is well
capitalized if it has a total risk-based capital ratio of 10% or greater, core
risk-based capital of 6% or greater, and a leverage ratio of 5% or greater, and
the institution is not subject to an order, written agreement, capital
directive, or prompt corrective action directive to meet and maintain a specific
capital level for any capital measure. An institution is adequately capitalized
if it has a total risk-based capital ratio of not less than 8%, a core
risk-based capital of not less than 4%, and a leverage ratio of not less than
4%.

         These capital guidelines can affect the Bank in several ways. Capital
levels are currently adequate, however, rapid growth, poor loan portfolio
performance, or poor earnings performance, or a combination of these factors,
could change our capital position in a relatively short period of time, making
an additional capital infusion necessary. In general, if the FDIC's assessment
of a Bank's financial and managerial strength changes negatively, the Bank's
cost of FDIC insurance will rise in subsequent semi-annual periods. A financial
institution may also be ordered to restrict its growth, dispose of certain
assets, rescind agreements or contracts, or take other actions as determined by
the ordering agency to be appropriate.

         Dividends. Under Michigan law, the Bank is restricted as to the maximum
amount of dividends it may pay on its common stock. The Bank may not pay
dividends except out of net profits after deducting its losses and bad debts.
The Bank may not declare or pay a dividend unless the Bank will have
<PAGE>

a surplus  amounting  to at least 20% of its  capital  after the  payment of the
dividend.  If the Bank has a surplus less than the amount of its capital, it may
not  declare or pay any  dividend  until an amount  equal to at least 10% of net
profits for the
preceding one-half year (in the case of quarterly or semi-annual dividends) or
full-year (in the case of annual dividends) has been transferred to surplus. The
Bank may not declare or pay any dividend until the cumulative dividends on any
issued preferred stock have been paid in full.

     Federal law generally prohibits the Bank from making any capital
distribution, including payment of a dividend, or paying any management fee to
us if the Bank would thereafter be undercapitalized. The FDIC may prevent the
Bank from paying dividends if the Bank is in default of payment of any
assessment due to the FDIC. In addition, the FDIC may prohibit the payment of
dividends by the Bank, if a payment is determined, by reason of the financial
condition of the Bank, to be an unsafe and unsound banking practice. The Company
has an agreement with the Federal Reserve Bank of Chicago that requires us to
seek permission before paying any cash dividends. The Bank can pay dividends to
the Company with the permission of the Commissioner of OFIS provided that the
Bank has audited net income for the prior year and provided that the Bank's
cumulative earnings deficit is erased through retained earnings. The deficit
currently is $1,978,688.

     Insider Transactions. The Bank is subject to certain restrictions imposed
by the Federal Reserve Act including any extensions of credit to us, investments
in our stock or other securities, and the acceptance of our stock as collateral
for loans. Certain limitations and reporting requirements are also placed on
extensions of credit by the Bank to its directors and officers, to our directors
and officers, to our principal stockholders, and to "related interests" of the
directors, officers and principal stockholders. In addition, federal law and
regulations may affect the terms upon which any person becoming one of our
directors or officers or one of our principal stockholders may obtain credit
from banks with which the Bank maintains a correspondent relationship.

     Safety and Soundness Standards. Federal banking agencies have adopted
guidelines to promote the safety and soundness of federally insured depository
institutions. These guidelines establish standards for internal controls,
information systems, internal audit systems, loan documentation, credit
underwriting, interest rate exposure, asset growth, compensation, fees and
benefits, asset quality and earnings.

         In general, the guidelines prescribe the goals to be achieved in each
area, and each institution is responsible for establishing its own procedures to
achieve those goals. If an institution fails to comply with any of the standards
set forth in the guidelines, the institution's primary federal regulator may
require the institution to submit a plan for achieving and maintaining
compliance. The preamble to the guidelines states that the agencies expect to
require a compliance plan from an institution whose failure to meet one or more
of the standards is of the severity that it could threaten the safe and sound
operation of the institution. Failure to submit an acceptable compliance plan,
or failure to adhere to a compliance plan that has been accepted by the
appropriate regulator, would constitute grounds for further enforcement action.

     State Bank Activities. Under federal law and FDIC regulations, FDIC-insured
state banks are prohibited, subject to certain exceptions, from making or
retaining equity investments of a type, or in an amount, that are not
permissible for a national bank. Federal law, as implemented by FDIC
regulations, also prohibits FDIC-insured state banks and their subsidiaries,

<PAGE>

subject to certain exceptions, from engaging as principal in any activity that
is not permitted for a national bank or its subsidiary, respectively, unless the
bank meets, and continues to meet, its minimum regulatory capital requirements
and the FDIC determines the activity would not pose a significant risk to the
deposit insurance fund of which the bank is a member. Impermissible investments
and activities must be divested or discontinued within certain time frames set
by the FDIC in accordance with federal law.

     Consumer Protection Laws. The Bank's business includes making a variety of
 types of loans to individuals.  In making these loans, the Bank is subject to
state usury and regulatory laws, and various federal statutes, including:

      o  the Equal Credit Opportunity Act,
      o  the Fair Credit Reporting Act,
      o  the Truth in Lending Act,
      o  the Real Estate Settlement Procedures Act, and
      o  the Home Mortgage Disclosure Act.

Regulations flowing from these laws prohibit discrimination, specify disclosures
to be made to borrowers regarding credit and settlement costs, and regulate the
mortgage loan servicing activities of Midwest, including the maintenance and
operation of escrow accounts and the transfer of mortgage loan servicing.

         In receiving deposits, the Bank is subject to extensive regulation
under State and federal law and regulations, including: o the Truth in Savings
Act,
      o  the Expedited Funds Availability Act,
      o  the Bank Secrecy Act,
      o  the Electronic Funds Transfer Act and
      o  the Federal Deposit Insurance Act
      o  the Patriot Act
      o  the Check 21 Act
      o  the Gram-Leach Bliley Privacy Act.

         Violation of these laws could result in the imposition of significant
damages and fines upon the Bank and its directors and officers.

         Real Estate Lending Regulations. Federal regulators have adopted
uniform standards for appraisals of loans secured by real estate or made to
finance improvements to real estate. Banks are required to establish and
maintain written internal real estate lending policies consistent with safe and
sound banking practices and appropriate to the size of the institution and the
nature and scope of its operations. The regulations establish maximum loan to
value ratio limitations on real estate loans, which generally are equal to or
greater than the loan to value limitations established under the Bank's lending
policies.

     Branching Authority. Michigan banks, including University Bank, have
authority under Michigan law to establish branches anywhere in the State of
Michigan, subject to receipt of all required regulatory approvals, including
approval of the Commissioner and the FDIC. The Riegle-Neal Interstate Banking
and Branching Efficiency Act of 1994 allows banks to establish interstate branch
networks through acquisitions of other banks, subject to certain conditions,
including certain limitations on the aggregate amount of deposits that may be
held by the surviving bank and all of its insured depository institution
affiliates. The establishment of de novo interstate branches or the acquisition
of individual branches of a bank in another state, rather
<PAGE>

than the acquisition of an out-of-state bank in its entirety, is allowed only if
specifically authorized by state law.

         The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
allowed individual states to "opt-out" of interstate branching authority by
enacting appropriate legislation prior to June 1, 1997. Michigan did not opt
out, and now permits both U.S. and non-U.S. banks to establish branch offices in
Michigan. The Michigan Banking Code permits the following in appropriate
circumstances and with the approval of the Commissioner:

     o   acquisition of all or substantially all of the assets of a
         Michigan-chartered bank by an FDIC-insured bank, savings
         bank, or savings and loan association located in another state;
     o   acquisition by a Michigan-chartered bank of all or substantially all
         of the assets of an FDIC-insured bank, savings
         bank or savings and loan association located in another state;
     o   consolidation of one or more Michigan-chartered banks and FDIC-insured
         banks, savings banks or savings and loan associations located in other
         states having laws permitting this consolidation, with the resulting
         organization chartered by Michigan;
     o   establishment by a foreign bank, which has not previously designated
         any other state as its home state under the International Banking Act
         of 1978, of branches located in Michigan;
     o   establishment or acquisition of branches in Michigan by FDIC-insured
         banks located in other states, the District of Columbia or U.S.
         territories or protectorates having laws permitting Michigan-chartered
         banks to establish branches in these jurisdictions.

Further, the Michigan Banking Code permits the following, upon written notice to
the Commissioner:

     o   acquisition by a Michigan-chartered bank of one or more branches, not
         comprising all or substantially all of the assets, of an FDIC-insured
         bank, savings bank or savings and loan association located in another
         state, the District of Columbia, or a U.S. territory or protectorate;
     o   establishment by Michigan-chartered banks of branches located in
         other states, the District of Columbia, or U.S. territories or
         protectorates; and
     o   consolidation of one or more Michigan-chartered banks and FDIC-insured
         banks, savings banks or savings and loan associations located in other
         states, with the resulting organization chartered by one of the other
         states.


         Primary Regulator of Midwest. Midwest is an approved seller/servicer of
single family mortgage loans for FNMA, FHLMC and HUD Title II (GNMA), and is
subject to their rules, regulations and examinations.

         Primary Regulator of University Insurance & Investment Services.
University Insurance & Investment Services is licensed by the State of
Michigan's Office of Financial and Insurance Services, Insurance Division as
both a life and health and a property casualty insurance agency, and is subject
to their rules, regulations and examinations. University Insurance & Investment
Services also sells broker-dealer investment products and it and its licensed
employees are subject to the rules, regulations and examinations of the National
Association of Securities Dealers, the Securities & Exchange Commission, and the
Insurance Division of Michigan's Office of Financial and Insurance Services.
<PAGE>


Item 2. - Properties

Properties

         In June 2003, the Bank sold a building in Ann Arbor, Michigan that is
the Bank's main office and sole branch location to Lowertown Development, LLC
("Lowertown") for $1,173,833, which represented a gain of $342,851. As part of
this transaction, the Bank received an option to purchase 10,000 square feet of
office space in a new facility to be constructed by Lowertown which was valued
at $200,000. Simultaneously, the Bank entered into a 24 month lease agreement
with Lowertown to leaseback the building sold. The lease included 5 six-month
options to extend the lease until the earlier of the completion of the new
building or December 2007. Lowertown is developing the neighboring area with a
major office, retail and apartment development. Under the terms of the
agreement, the Bank has an option to purchase 10,000 square feet of office space
in this new development for fair market value up to a maximum of $2,000,000. It
is currently anticipated that the new facility will be occupied in February
2007. Both the gain on the sale of the building and the purchase option are
being amortized into income over the life of the expected lease term. Lowertown
is obligated to pay the Bank $200,000 if the office space is not completed prior
to the end of the extended lease period in December 2007.


         The Bank leases a site that includes a registered historic building in
Ann Arbor, at the corner of Washtenaw Avenue and Stadium Boulevard as a ATM
drive-through location, and an off-site storage facility. The minimum lease
period ends May 2006 with two optional five-year extensions. The Bank also owns
1/3 of the Company which owns the site, Tuomy, LLC.

         The Bank leases an ATM location in Ann Arbor at the corner of State and
Liberty near the University of Michigan Campus. The minimum period of this lease
ends December 2005.

         Midwest leases an office in Houghton, Michigan under a year-to-year
lease.

         The Company believes that the office facilities are adequate to support
the anticipated level of future expansion of business.


Contractual Obligations

The following table summarizes the existing contractual obligations of the
Company:
                                            Payments Due By Period
                                            ----------------------
                                     Less than      1-3        3-5     More than
                          Total         year       years      years     5 years
                          ---------------------------------------------------
Operating leases        $   769,153  $  196,752  $  393,504 $178,897   $       0
Certificates of deposit  12,440,182   8,152,465   3,636,762  209,614     441,341
Long term borrowings         34,000      34,000           0        0           0
                        -----------  ----------  ---------- --------   ---------
Totals                  $13,243,335  $8,383,217  $4,030,266 $388,511   $ 441,341
                        ===========  ==========  ========== ========   =========
Item 3. - Legal Proceedings

         At December 31, 2004 the Company had no outstanding legal proceedings
that would have a material affect on the financial statements.
<PAGE>

Item 4. - Submission of Matters to a Vote of Security Holders

         No matters were submitted during the fourth quarter of 2004 to a vote
of our shareholders.


PART II.

Item 5. - Market for Registrant's Common Equity and Related Stockholder Matters

Common Stock and Dividend Information

     Our common stock trades on the NASDAQ Small-Cap Market under the symbol
UNIB. The high and low sales prices of our common stock as quoted by NASDAQ, for
each quarter since January 1, 2003 are listed below:

                                         High                Low

2005
First Quarter through March 7           $2.24              $1.63

2004
First Quarter                           $2.80              $2.05
Second Quarter                           2.47               1.30
Third Quarter                            1.72               1.05
Fourth Quarter                           3.48               0.60

2003
First Quarter                           $3.00              $0.62
Second Quarter                           2.25               0.91
Third Quarter                            5.73               1.06
Fourth Quarter                           3.38               2.22



As of the March 7, 2005 we had approximately 540 stockholders including
approximately 200 beneficial owners of shares held by brokerage firms or other
institutions.

     Our shareholders authorized a 1 for 2 reverse stock split in November 2002;
however, management has opted, at this time, not to implement the reverse stock
split. No cash dividends have been paid on our common stock. We do not currently
anticipate declaring or paying dividends in 2005.

Certain Sales of Equity Securities

         We sold 18,421 shares of our common stock at $1.90 in a private
placement in February 2005.

<PAGE>

<table>
<CAPTION>

Item 6. - Selected Financial Data

                            University Bancorp, Inc.
                 Selected Consolidated Financial and Other Data
                  (Dollars in Thousands Except Per Share Data)

<S>                                                       <C>            <C>             <C>             <C>             <C>
                                                          2004           2003            2002            2001            2000
                                                          ----           ----            ----            ----            ----
Summary of operations (1)
Interest income                                         $2,744         $2,732          $3,194          $3,543          $3,315
Interest expense                                           784            842           1,039           1,805           2,074
Net interest income                                      1,960          1,890           2,155           1,738           1,241
Provision for loan losses                                 (88)            189             100              40             111
Net interest income after
  provision for loan losses                              2,048           1,701          2,055           1,698           1,130
Net gain (loss) on securities                                -             (54)            70              13              18
Profit(loss)from investment in  Michigan BIDCO
                                                             -              -              -            (115)             235
Gain on the sale of mortgage loans                         340            756             236              67              40
Other non-interest income                                3,482          5,230           4,205           3,990           2,357
Non-interest expense                                     6,375          7,619           6,291           5,960           4,695

Income (loss) before tax                                 (505)             14             206           (307)           (915)
Income tax expense (benefit)                                80           (80)               -               -               -
Net (loss)income                                         (585)             94             206           (307)           (915)

Selected Year End Balances
Total assets                                            50,786         43,549          46,249          45,623          47,671
Loans, net                                              42,647         34,474          32,784          34,447          35,644
Loans, held for sale                                       846            206           1,551           2,138             268
Cash, cash equivalents and
  investment securities                                  2,838          4,701           6,521           3,946           5,340
Deposits                                                44,588         38,808          41,920          40,198          38,179
Short-term borrowings                                    2,416              -               -              92           4,094
Long-term borrowings                                        34            166             298           1,658             926
Minority interest                                          440            445             360             305             283
Stockholders' equity                                     3,002          3,435           3,156           2,737           2,042

Per Share Data
Common shares, year-end                                  4,125          4,027           3,900           3,753           2,028
Weighted avg shares, year-end                            4,085          3,940           3,859           2,278           2,027
Cash dividends                                               -              -               -               -               -
Net income (loss)- basic and diluted                   $(0.14)          $0.02           $0.05         ($0.13)         ($0.45)
Book value of common shares                              $0.73          $0.85           $0.81           $0.73           $0.65

Selected Ratios
Net yield on earning assets                              4.68%          4.78%           5.30%           4.37%           3.33%
Return on average assets                               (1.24)%          0.22%           0.47%         (0.67%)         (2.06%)
Return on average equity                              (18.18)%          2.80%           7.43%        (12.49%)        (53.56%)
Average equity to avg. assets                            6.82%          7.75%           6.26%           5.38%           3.84%
</TABLE>

<PAGE>








Item 7. - Management's Discussion and Analysis of Financial Condition and
Results of Operations

         The purpose of the following discussion and analysis is to assist the
reader in understanding and evaluating the changes in financial position and
results of operations over the past several years. Investors should refer to the
consolidated financial statements, the related notes thereto, and statistical
information presented elsewhere in this report when reading this section of the
report.

         The cautionary statements described below are for the purpose of
qualifying for the "safe harbor" provisions of Section 21E of the Securities
Exchange Act of 1934.

                          Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States of America.
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and the related disclosures. On an on-going basis, we evaluate these
estimates, including those related to the allowance for loan losses, servicing
rights, other real estate owned and deferred tax assets. Estimates are based on
historical experience, information received from third parties and on various
other assumptions that are believed to be reasonable under the circumstances,
which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.

ALLOWANCE FOR LOAN LOSSES - The allowance for loan losses is determined based on
management estimates of the amount required for losses inherent in the
portfolio. These estimates are based on past loan loss experience, known and
inherent risks in the portfolio, information about specific borrower situations
and estimated collateral values, economic conditions, and other factors.
Allocations of the allowance may be made for specific loans, but the entire
allowance is available for any loan that, in management's judgment, should be
charged-off.

SERVICING RIGHTS - Servicing rights are evaluated quarterly for possible
impairment and are valued based on the lower of amortized cost or fair value of
the rights, using independent appraisals and grouping of the underlying loans as
to type, term and interest rates. Assumptions as to prepayment speeds and
retention rates may change and thereby impact the valuation. Any impairment of a
grouping is reported as a valuation allowance.

OTHER REAL ESTATE OWNED - Real estate properties acquired in collection of a
loan are recorded at fair value upon acquisition based on appraisals. Any
reduction to fair value from the carrying value of the related loan at the time
of foreclosure is accounted for as a loan loss. Subsequent reductions in the
value of the real estate owned are charged to earnings when probable and
estimable. Changes in real estate value in the future may impact the carrying
value.

DEFERRED TAX ASSETS - Deferred tax assets are recorded based on estimates of
future taxable income and utilization of existing net operating loss
carry-forwards. A valuation allowance adjusts deferred tax assets to the net

<PAGE>

amount that is more likely than not to be realized. Actual results will impact
the estimates of these deferred tax assets.


                                  RISK FACTORS

         Our business involves a high degree of risk. The reader of this report
should carefully consider the risks and uncertainties described below and the
other information in this report before deciding whether to invest in shares of
our common stock. If any of the following risks actually occur, our business,
financial condition and results of operations could be materially adversely
affected. This could cause the trading price of our common stock to decline,
with the loss of all or part of an investment in our common stock.

         Described below, are the material risks of investing in University
Bancorp's common stock. Investors should carefully consider these prior to
purchasing any shares.

University Bank Has Incurred Significant Losses And May Never Achieve Sustained
 Profitability

     University Bank sold its profitable Upper Peninsula operations in late 1994
and relocated to Ann Arbor in early 1996. University Bank had a net loss from
operations each year between 1995 and 2001 and again in 2004. University Bank
had a profit in 2002 and 2003. Although the Bank has been profitable for the
past five months ending February 28, 2005, the Bank's future profitability is
not assured. Management of the Bank believes that as the size of loan portfolio
and retail deposits continue to increase that the Bank should become more
profitable, but there is no assurance that expenses will not rise at a faster
rate than expected as the Bank grows. There is no assurance that University Bank
will grow to a size that will enable it to sustain profitability. University
Bancorp had an accumulated deficit from operations of $2,490,224 at December 31,
2004.

The Company's Stock Is Controlled By Insiders Of The Company, Which May Not
Provide You With The Best Possible Return On Your Investment

     Insiders  hold a majority of the shares  outstanding  of the  Company.  The
Ranzini Group (Mr.  Stephen Lange Ranzini,  Dr. Joseph Lange  Ranzini,  Mr. Paul
Lange  Ranzini,  Orpheus  Capital,  L.P.  and the  Ranzini  Family  Trust  dated
12/20/89)  beneficially owns 2,995,968,  or 72.21% of the issued and outstanding
shares  at March 7,  2005.  These  individuals  are able to exert a  significant
measure of control over University Bancorp's affairs and policies.  This control
could be used,  for  example,  to help  prevent  an  acquisition  of  University
Bancorp,  precluding  shareholders from possibly  realizing any possible premium
that may be offered for the common stock by a potential acquirer.

Your Ownership Of The Company May Be Further Diluted If The Bank Requires
Additional Capital

     There can be no assurance that the Bank will not need additional capital in
the future to support the Bank's growth or to counter operating losses. Funds
necessary to meet the Bank's working capital needs and to finance its expansion
might not be available. If additional equity securities are needed to finance
future expansion, such sale could result in significant dilution to the existing
shareholders.
<PAGE>

The Small Size Of University Bank Limits Its Ability To Compete With Larger
Financial Institutions

     University Bank faces strong competition for deposits, loans and other
financial services from numerous Michigan and out-of-state banks, thrifts,
credit unions and other financial institutions. Some of the financial
institutions with which University Bank competes are not subject to the same
degree of regulation as University Bank. Many of these financial institutions
aggressively compete for business in the Ann Arbor area. Most of the Bank's
competitors have been in business for many years, have established customer
bases, have numerous branches, have substantially higher lending limits, and
offer certain services that we do not provide. The dominant competitors in the
Ann Arbor area are TCF National Bank, National City Bank, Comerica Bank, Chase
Bank and Key Bank. There can be no assurance that University Bank will be able
to compete effectively with these competitors unless it can continue to grow its
operations.


The Year Ended December 31, 2004 Compared to the Years Ended December 31, 2003
and 2002

Summary of Results of Operations


     The Company's net loss was $584,820 in 2004, versus net income of $94,442
in 2003 and $205,598 in 2002. Basic and diluted (loss) earnings per share for
2004, 2003 and 2002 were $(0.14), $0.02 and $0.05, respectively.

      The net loss in 2004 includes an $80,000 tax expense. This resulted from a
reduction in a deferred tax asset which was not expected to be realized in the
future due to the loss in 2004 from operations. Net income in 2003 included an
income tax benefit of $80,000.

      Community Banking incurred a pretax loss of $388,000 during the current
year as opposed to a loss of $301,000 in 2003. In 2004, Community Banking
incurred approximately $305,000 in expense related to the resolution of other
real estate owned. Additionally, Community Banking recorded a $156,000
impairment charge against the investment in Michigan Capital Fund, L.P. I. The
charge will eliminate related expense and will therefore increase income by
$100,000 in 2005 and $56,000 in 2006. Community Banking is a tax benefit partner
in a low to moderate income housing partnership. The investment provides
Community Banking with tax credits that can be used to offset federal income
taxes. The Company's overall tax status does not allow for the tax credits to be
carried as an asset. Accordingly, an impairment charge was deemed appropriate.
The expenses for other real estate owned and the impairment more than offset
general operational improvement in Community Banking in 2004 as compared to
2003, including a 23.1% increase in loans and a 14.9% increase in deposits.

     Midwest  had a loss of $27,000 in 2004 as compared to income of $426,000 in
2003. In 2003,  Midwest  benefited  from a significant  volume of income derived
from the high level of mortgage  refinancing  due to lower rates.  In 2004, this
income was substantially  less. Income at Midwest was negatively impacted in the
first half of 2004 by investments of about $30,000 a month in overhead  intended
to grow Midwest's jumbo and non-standard originations through a secondary market
conduit established with Lehman Brothers.  The decrease in mortgage originations
offset  improvements  in other areas  including a 21% increase in mortgage loans
subserviced, to 18,233 loans at December 31, 2004.
<PAGE>

         Community Banking incurred a pre-tax loss of $301,000 in 2003 as
opposed to pre-tax income of $20,000 in 2002. A drop in net interest margin and
an increase in the provision for loan losses accounted for most of this
variance. In contrast, pre-tax income at Midwest increased to $426,000 in 2003
from $281,000 in 2002. Income at Midwest increased with rapidly increasing
mortgage originations and a 61% increase in mortgage loans sub-serviced, to
15,033 loans from 9,319.

      The following table summarizes the pre-tax (loss)income of each profit
center of the Company for the years ended December 31, 2004, 2003, and 2002 (in
thousands):

                                               2004        2003       2002
                                               ----        ----       ----
         Community Banking                   $(388)      $(301)    $   20
         Midwest Loan Services                 (27)        426        281
         Corporate Office                      (90)       (111)      (95)
                                             -------     -------   ------
         Total                               $(505)      $  14     $  206
                                             =======     =======   ======


         Net Interest Income

         Net interest income increased to $1,960,313 for year ended December 31,
2004 from $1,890,462 for same period in 2003. The yield on average earning
assets dropped from 6.91% in 2003 to 6.55% in 2004. This drop occurred as loans
repriced in a generally lower medium term interest rate environment throughout
most of 2004. Additionally, the mix of assets changed. The Company increased its
single family real estate loans while other loans dropped. Single family real
estate loans have a lower yield as compared with commercial and installment
loans. Management directed its efforts in increasing this category since real
estate loans, specifically single family homes, tend to have lower credit risk.
Overall, average interest bearing assets increased to $41,921,020 in 2004 from
$39,511,963 in 2003.

         The cost of interest bearing liabilities decreased from 2.21% for the
2003 period to 1.98% in 2004. Average interest bearing liabilities increased to
$39,575,806 in 2004 from $38,113,218 in 2003. The decrease in interest bearing
liabilities occurred despite rapidly rising short term interest rates because
the bank increased its mix of lower cost deposits relative to higher cost
deposits.

         The net yield on interest earning assets decreased from 4.78% in 2003
to 4.68% in 2004 due principally to lower yields on loans. In an effort to
improve margins, management is targeting lower cost deposits to fund asset
growth.

         For 2003, net interest income declined 12.29% year-over-year, falling
to $1,890,462 for the year ended December 31, 2003 compared to $2,155,289 for
the prior year. During 2002 and 2003 short term interest rates remained at
45-year lows while long-term interest rates showed a decline. Net interest
income for 2003 declined from the previous period because the average yield on
earning assets declined at a higher rate than the average yield on interest
bearing deposits. The yield on average earning assets dropped from 7.85% in 2002
to 6.91% in 2003. The cost of interest bearing liabilities decreased from 2.66%
for the 2002 period to 2.21% for the year ended December 31, 2003. The net yield
on interest earning assets decreased from 5.30% to 4.78%. In 2003, management
actively sought to attract lower cost deposits to offset the decline in the net
yield.

      The following tables present for the average balances, the interest earned
or paid, and the weighted average yield for the period indicated:


<PAGE>


<table>
<CAPTION>

NET INTEREST INCOME

                                                                                              2004
                                                                       ---------------------------------------------------
                                                                            Average           Interest         Average
                                                                            Balance           Inc(Exp)          Yield
                                                                       ---------------------------------------------------
Interest Earning Assets:
<S>                                                                           <C>                <C>                <C>
          Commercial Loans                                                   $17,007,088        $1,258,106          7.40%
          Real Estate Loans (1)                                               20,309,592         1,220,300          6.01%
          Installment Loans                                                    1,917,802           157,151          8.19%
                                                                       --------------------------------------
              Total Loans                                                     39,234,482         2,635,557          6.72%
                                                                       --------------------------------------
     Investment Securities                                                     2,403,795           104,988          4.37%
     Federal Funds & Bank Deposits                                               282,744             3,726          1.32%
                                                                       --------------------------------------
          Total Interest Bearing
             Assets                                                           41,921,021         2,744,271          6.55%
                                                                       --------------------------------------
Interest Bearing Liabilities:
     Deposit Accounts:
         Demand                                                                6,651,566            61,350          0.92%
         Savings                                                                 449,143             4,758          1.06%
         Time                                                                 11,831,102           328,683          2.78%
         Money Market Accts                                                   19,571,919           367,262          1.88%
         Short-term Borrowings                                                   972,076            16,999          1.75%
         Long-term Borrowings                                                    100,000             4,907          4.91%
                                                                       --------------------------------------
         Total Interest Bearing
            Liabilities                                                       39,575,806           783,959          1.98%
                                                                       --------------------------------------
Net earning assets, net interest
   income, and interest rate spread                                          $ 2,345,215        $1,960,312          4.57%
                                                                       ======================================
Net yield on interest-earning assets                                                                                4.68%

     (1) Actual yields; not adjusted to take into account tax-equivalent yields.

</TABLE>

<PAGE>
<TABLE>

<CAPTION>


NET INTEREST INCOME
                                                                                              2003
                                                                       ---------------------------------------------------
                                                                            Average           Interest         Average
                                                                            Balance           Inc(Exp)          Yield
                                                                       ---------------------------------------------------
Interest Earning Assets:
<S>                                                                           <C>                <C>                <C>
          Commercial Loans                                                   $18,283,474        $1,450,349          7.93%
          Real Estate Loans (1)                                               14,353,880           928,763          6.47%
          Installment Loans                                                    2,102,820           175,398          8.34%
                                                                       --------------------------------------
              Total Loans                                                     34,740,174         2,554,510          7.35%
                                                                       --------------------------------------
     Investment Securities                                                     3,789,545           165,571          4.37%
     Federal Funds & Bank Deposits                                               982,244            12,018          1.22%
                                                                       --------------------------------------
          Total Interest Bearing
             Assets                                                           39,511,963         2,732,099          6.91%
                                                                        --------------------------------------
Interest Bearing Liabilities:
     Deposit Accounts:
         Demand                                                                6,365,212            56,167          0.88%
         Savings                                                                 409,633             4,634          1.13%
         Time                                                                 13,658,810           420,932          3.08%
         Money Market Accts                                                   17,220,500           344,827          2.00%
         Short-term Borrowings                                                   227,063             2,933          1.29%
         Long-term Borrowings                                                    232,000            12,144          5.23%
                                                                       ------------------------------------
         Total Interest Bearing
            Liabilities                                                       38,113,218           841,637          2.21%
                                                                       ------------------------------------
Net earning assets, net interest
   income, and interest rate spread .........................................$ 1,398,745        $1,890,462          4.70%
                                                                       ====================================
Net yield on interest-earning assets
                                                                                                                    4.78%

(1) Actual yields; not adjusted to take into account tax-equivalent yields.
</TABLE>
<PAGE>

NET INTEREST INCOME
<TABLE>
<CAPTION>

                                                                                              2002
                                                                       ---------------------------------------------------
                                                                            Average           Interest         Average
                                                                            Balance           Inc(Exp)          Yield
                                                                       ---------------------------------------------------
  Interest Earning Assets:
<S>                                                                           <C>                <C>                <C>
          Commercial Loans                                                   $18,047,370        $1,459,892          8.09%
          Real Estate Loans (1)                                               14,104,750         1,049,280          7.44%
          Installment Loans                                                    3,237,782           296,532          9.16%
                                                                       --------------------------------------
              Total Loans                                                     35,389,902         2,805,704          7.93%
                                                                       --------------------------------------
     Investment Securities                                                     3,809,545           366,793          9.63%
     Federal Funds & Bank Deposits                                             1,470,693            21,955          1.49%
                                                                       ------------------------------------
          Total Interest Bearing
             Assets                                                           40,670,140         3,194,452          7.85%
                                                                       --------------------------------------
Interest Bearing Liabilities:
     Deposit Accounts:
         Demand                                                                5,287,117            58,291          1.10%
         Savings                                                                 423,482             4,825          1.14%
         Time                                                                 20,029,396           671,929          3.35%
         Money Market Accts                                                   12,282,311           271,887          2.21%
         Short-term Borrowings                                                   472,079            11,556          2.45%
         Long-term Borrowings                                                    572,547            20,675          3.61%
                                                                       ------------------------------------
         Total Interest Bearing
            Liabilities                                                       39,066,932         1,039,163          2.66%
                                                                       ------------------------------------
 Net earning assets, net interest
   income, and interest rate spread                                          $ 1,603,208        $2,155,289          5.19%
                                                                       ======================================
 Net yield on interest-earning assets                                                                               5.30%

     (1) Actual yields; not adjusted to take into account tax-equivalent yields.
</TABLE>

         The tables above do not specify the average level of non-interest
bearing demand deposits, which were $2,768,253, $1,979,705, and $2,432,737 for
the years ended December 31, 2004, 2003 and 2002, respectively.

              The following table presents information regarding fluctuations in
our interest income and interest expense for the periods indicated. For each
category of interest-earning asset and interest-bearing liability, information
is provided on changes attributable to (1) changes in volume (changes in volume
multiplied by old rate); and (2) changes in rate (changes in rate multiplied by
old volume); with the rate/volume variance allocated to changes in rate:

<PAGE>
<TABLE>
<CAPTION>

RATE VOLUME TABLE
                                                --------------------------------------------------------------------
                                                                               2004 - 2003
                                                --------------------------------------------------------------------
                                                              Change                  Change
                                                              Due To                  Due To                Total
                                                              Volume                   Rate                Change
Interest Income:
<S>                                                          <C>                    <C>                  <C>
   Commercial Loans                                          $ (97,777)           $  (94,466)            $(192,243)
   Real Estate Mortgage Loans                                   361,888              (70,351)               291,537
   Installment/Consumer Loans                                  (15,206)               (3,041)              (18,247)
   Investment Securities                                       (60,524)                  (59)              (60,583)
   Federal Funds & Bank Deposits                                (9,154)                   862               (8,292)
                                                  ------------------------------------------------------------------
                           Total Interest Income                179,227             (167,055)                12,172
                                                  ------------------------------------------------------------------
Interest Bearing Liabilities:
   Demand Deposits                                                2,584                 2,599                 5,183
   Savings Deposits                                                 430                 (306)                   124
   Time Deposits                                               (53,129)              (39,120)              (92,249)
   Money Market Accounts                                         45,058              (22,623)                22,435
   Short-term Borrowings                                         12,697                 1,369                14,066
   Long-term Borrowings                                         (6,520)                 (717)               (7,237)
                                                  ------------------------------------------------------------------
      Total Interest Expense                                      1,120              (58,798)              (57,678)
                                                  ------------------------------------------------------------------
           Net Interest Income                               $  178,107           $ (108,257)            $   69,850
                                                ====================================================================


RATE VOLUME TABLE
                                                --------------------------------------------------------------------
                                                                               2003 - 2002
                                                 --------------------------------------------------------------------
                                                              Change                  Change
                                                              Due To                  Due To                Total
                                                              Volume                   Rate                Change
Interest Income:
   Commercial Loans                                            $ 18,950            $ (28,493)            $  (9,543)
   Real Estate Mortgage Loans                                    18,245             (138,762)             (120,517)
   Installment/Consumer Loans                                  (96,551)              (24,583)             (121,134)
   Investment Securities                                        (1,916)             (199,306)             (201,222)
   Federal Funds & Bank Deposits                                (6,439)               (3,498)               (9,937)
                                                  ------------------------------------------------------------------
 Total Interest Income                                         (67,711)             (394,642)             (462,353)
                                                  ------------------------------------------------------------------

Interest Bearing Liabilities:
   Demand Deposits                                               10,687              (12,811)               (2,124)
   Savings Deposits                                               (157)                  (34)                 (191)
   Time Deposits                                              (199,868)              (51,129)             (250,997)
   Money Market Accounts                                        100,884              (27,944)                72,940
   Short-term Borrowings                                        (4,515)               (4,108)               (8,623)
   Long-term Borrowings                                        (15,446)                 6,915               (8,531)
                                                  ------------------------------------------------------------------
      Total Interest Expense                                  (108,415)              (89,111)             (197,526)
                                                  ------------------------------------------------------------------
           Net Interest Income                                 $ 40,704            $(305,531)            $(264,827)
                                                ====================================================================
</TABLE>
<PAGE>




     Loan  Portfolio

     Information regarding the Bank's loan portfolio as of December 31, 2004 and
2003 is set forth under Note 5 to University  Bancorp's  consolidated  financial
statements included with this report.

Provision for Loan Losses

     The Bank  charges  to  operations  a  provision  for loan  losses  which is
intended to create an  allowance  for future loan losses  inherent in the Bank's
portfolio.  Each year's provision reflects  management's  analysis of the amount
necessary  to maintain  the  allowance  for loan  losses at a level  adequate to
absorb anticipated losses. In its evaluation,  management considers factors like
historical  loan  loss  experience,   specifically   identified  problem  loans,
composition  and growth of the loan  portfolio,  current and projected  economic
conditions,  and other pertinent factors. A loan is charged-off by management as
a loss when deemed  uncollectible,  although  collection  efforts  continue  and
future recoveries may occur.

     Non-performing  loans  are  defined  as loans  which  have  been  placed on
non-accrual  status and loans over 90 days past due as to  principal or interest
and  still  in  an  accrual  status.  Where  serious  doubt  exists  as  to  the
collectibility of a loan, the accrual of interest is discontinued. See Note 5 of
the  Consolidated  Financial  Statements  for additional  information  regarding
impaired  and  past  due  loans.  Non-performing  loans  amounted  to  $648,020,
$1,117,127  and $679,560at  December 31, 2004,  2003and 2002,  respectively.  At
December 31, 2004, there were loans totaling $371,109 that were past due over 90
days, but still accruing interest.  Payments were made to bring these loans to a
current status shortly after year end.

     The provision for loan losses in 2004 was $(87,500) compared to $189,400 in
2003 and  $100,000  in 2002.  In 2004,  the  analysis  of the loan loss  reserve
resulted in a reduction in the  provision of $87,500.  This  resulted from lower
chargeoffs, payoffs of previously classified problem loans and an improvement in
the quality of the loans in the  portfolio.  The Bank  determined  the  required
reserve was less than in previous years.

           Loans charged off, net of recoveries, were $13,494, $143,501 and
$270,874 in 2004, 2003 and 2002, respectively. The allowance for possible loan
losses totaled $353,124, $454,118 and $408,219 at the end of 2004, 2003 and
2002, respectively. The following table summarizes the loan loss expense for the
Bank for the years ended December 31, 2004, 2003 and 2002.

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES ($ amounts in thousands)
<TABLE>
<CAPTION>

                                                                         2004           2003            2002
                                                                         ----           ----            ----
<S>                                                                     <C>            <C>             <C>
Balance at beginning of the period                                      $ 454          $ 408           $ 579
Charge offs - Domestic:
  Commercial loans                                                         64            227             270
  Real estate mortgages                                                     5              -               -
  Installment loans                                                         -             13              17
                                                           ------------------- -------------- ---------------
    Subtotal                                                               69            240             287
                                                           ------------------- -------------- ---------------
Recoveries - Domestic:
  Commercial loans                                                         54             94              13
  Real estate mortgages                                                     2              -               -
  Installment loans                                                         -              3               3
                                                           ------------------- -------------- ---------------
    Subtotal                                                               56             97              16
                                                           ------------------- -------------- ---------------
Net charge offs                                                            13            143             271
                                                           ------------------- -------------- ---------------
Provision for loan losses                                                (88)            189             100
                                                           ------------------- -------------- ---------------
Balance at end of period                                                $ 353          $ 454           $ 408
                                                           =================== ============== ===============
Ratio of net charge offs during
  period to average loans
  outstanding during period                                             0.03%          0.41%           0.77%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES ($ amounts in thousands)

                                                           Allocated portion
                                                             of allowance             Percentage of loans in each
                                                             at December 31             category to total loans

                                                           2004            2003           2004           2003
                                                           ----            ----           ----           ----
Loan category:
Domestic:
<S>                                                       <C>             <C>           <C>            <C>
  Commercial loans                                        $ 129           $ 350         43.35%         56.26%
  Real estate mortgages                                     175              40         51.76%         35.05%
  Installment loans                                          49              43          4.89%          8.69%
Unallocated                                                   -              21            N/A            N/A
                                                  -------------- --------------- -------------- --------------
                                                          $ 353           $ 454         100.0%         100.0%
                                                  ============== =============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>

                                                               At                            At
                                                        December 31, 2004            December 31, 2003
                                                  ------------------------------ ---------------------------
<S>         <C>                                            <C>                          <C>
Total loans (1)                                            $42,999,800                  $34,928,586
Reserve for loan losses                                    $   353,124                  $   454,118
Reserve/Loans %                                                  0.82%                        1.30%
(1) Excludes loans held for sale.
</TABLE>

         The Bank's overall loan portfolio is geographically concentrated in Ann
Arbor and the future performance of these loans is dependent upon the
performance of relatively limited geographical areas. As a result of the weak
Michigan economy, the Bank's future loss ratios may exceed historical loss
ratios.
      Management believes that the allowance for loan losses is adequate to
absorb losses inherent in the loan portfolio, although the ultimate adequacy of
the allowance for loan losses is dependent upon future economic factors beyond
our control. A downturn in the general nationwide economy will tend to
aggravate, for example, the problems of local loan customers currently facing
some difficulties. A general nationwide business expansion could result in fewer
loan customers being unable to repay their loans.

Non-Interest Income and Non-Interest Expense

         Non-interest income. Total non-interest income decreased to $3,822,548
for the year ended December 31, 2004 from $5,932,492 for period ended in 2003.
The decrease was principally a result of decreases in loan origination and gain
on the sales of mortgage loans at Midwest. In 2003, the rates on mortgages were
historically low which spurred an increase in the re-financing market. In 2004,
the rates were still relatively low, but the re-financing activity decreased
significantly. The Bank's wholly-owned insurance and investment subsidiary,
University Insurance & Investment Services, enjoyed a record year, producing
$219,631 in fee income compared to $168,577, a 30% increase.

         Non-interest income was $5,932,492 in 2003 compared to $4,441,019 in
2002. Income generated in this category is principally from Midwest. During
2003, the mortgage re-financing market was stimulated by record low long-term
interest rates. Midwest and the Bank significantly increased income from loan
origination, loan sub-servicing fee income, and gain on the sale of mortgage
loans originated for sale into the secondary market. University Insurance &
Investment Services produced $168,577 in fee income compared to $113,870, a
48.0% increase.
<PAGE>

      Mortgage banking. At December 31, 2004, Midwest was sub-servicing 18,233
mortgages, an increase of 21.12% from 15,033 mortgages at December 31, 2003. The
balance of loans sub-serviced was $2.3 billion at December 31, 2004 as compared
with over $2.0 billion at December 31, 2003. Mortgage banking, servicing and
origination fees, and gain on the sale of loans decreased to $3,300,052 in 2004
from $5,267,418 in 2003. In 2003, the market for mortgage refinancing was
extremely active due to historically low rates. In 2004, mortgage refinancing
activity curtailed sharply. In 2005, mortgage rates are expected to rise and
this will further retard the re-financing market. Midwest has devoted
significant resources during 2004 to diversify its mortgage originations away
from the refinancing market and to increase the volume of its purchase business
by establishing the Lehman Brothers conduit and by increasing the number of
credit unions that originate mortgages through Midwest's outsourcing origination
services Mortgage banking, servicing and origination fees, and gain on the sale
of loans increased to $5,267,418 in 2003 from $4,040,363 in 2002. In 2003,
Midwest originated 670 mortgage loans, an increase of 31% over last year. During
the year, Midwest increased its credit union partners so that at year-end 2003
it had credit union partners with a total of 1,585,000 active members,
20,434,000 potential members and aggregate assets of $11.48 billion.

       Securities. Proceeds from sales of marketable and non marketable equity
securities included in proceeds from sales of investment securities was $49,981
for the year ended December 31, 2003. Gross losses of $446 were realized in this
period.
       Proceeds from sales of available for sale debt securities were $0,
$58,879 and $1,034,160 for the years ended December 31, 2004, 2003 and 2002,
respectively, excluding sales associated with the Bank's mortgage banking
operation. There were gross gains of $3,607, $0 and $69,733 on 2004, 2003 and
2002 sales, respectively and a gross loss of $54,011 on 2003 sales.
       At December 31, 2004 gross unrealized losses in our available-for-sale
securities were $51,357 and gross unrealized gains were $0. At December 31, 2002
gross unrealized losses in our available-for-sale securities were $38,795 and
gross unrealized gains were $0.

     Non-interest expense. Non-interest expense decreased to $6,375,181 in the
period ended December 31, 2004 from $7,619,112 for the same period in 2003. The
decrease was due principally to decreases in salaries and benefits, mortgage
banking expense, and amortization of servicing rights. The higher mortgage
interest rates in 2004 resulted in lower income from mortgage origination as
well as lower expenses. These decreases in costs were partially offset by an
increase in other real estate owned expense and an impairment charge as noted
previously.

      In 2003, non-interest expenses increased by $1,328,402 or 21.1% to
$7,619,112 million from $6,290,710 in 2002. All but $200,353 of the increase was
due to increased non-interest expenses at Midwest, as Midwest's origination and
sub-servicing activity increased. As the volume expanded Midwest increased its
workforce to perform the required tasks. Other servicing and sub-servicing
related expenses, such as occupancy, supplies and postage also increased.
Non-interest expense was also impacted by an increase in the amortization of the
mortgage servicing rights due to the low long-term interest rate environment.
Personnel expenses at Community Banking were higher due to higher commissions
paid to mortgage and deposit origination personnel.

Income Taxes

         Income tax expense (benefit) in 2004 was $80,000, and $(80,000) and $0
in 2003 and 2002. The tax benefit recognized in 2003
<PAGE>

was reversed in 2004 because of the operating  loss  recognized  during the year
and uncertainty of recoverability of the deferred tax asset. The tax benefit was
recognized  because of the operating  profit in 2003, and therefore a portion of
existing net operating loss  carry-forwards  were reasonably  expected to reduce
future  amounts of taxable  income.  In 2002 no tax benefit was  realized due to
prior period net taxable  losses from  operations  and  uncertainties  of future
taxable income. The effective tax (benefit) rate was 34% or 2004, (34)% for 2003
and 0% for 2002.

         At December 31, 2004, the Company had net operating loss carryforwards
that could be utilized to shelter approximately $2,080,000 of future taxable
income. Realization of income tax benefits are not recorded in the financial
statements as realization of these benefits is dependent upon generating
sufficient future taxable income. See footnote 13 to the financial statements
for more information.


Liquidity and Capital Resources

         Liquidity. Loans receivable, net of reserves and excluding loans held
for sale, increased to $42.65 million from $34.47 million in 2004 and 2003,
respectively. Cash and cash equivalents including Federal Funds sold on an
overnight basis at the end of 2004 were $1.73 million, while securities were
$1.11 million. At year-end 2004, the Bank had an unused line of credit from the
Federal Home Loan Bank of Indianapolis of $1.6 million, and an unused line of
credit from the Federal Reserve Bank of Chicago of $5.7 million.
         University Bank, as an FDIC-insured bank, is subject to certain
regulations that require the maintenance of minimum liquidity levels of cash and
eligible investments. The Bank has historically exceeded this minimum as a
result of its investments in federal funds sold, U.S. government and U.S. agency
securities and cash. In addition, University Bancorp had $5,626 in cash at the
end of 2004 to meet cash needs, primarily operating expenses and interest and
principal reductions on the University Bancorp's note payable. The balance of
the loan was $34,000 and $166,000 at year-end 2004 and 2003. The note was paid
in full in early 2005. Management intends that the cash on hand, the exercise of
stock options and possible sale of stock will be sufficient to cover our
operating expenses during 2005 and 2006.
         Capital. The Company's total stockholders' equity at December 31, 2004
was approximately $3.00 million (or 6.0% of total assets) compared to $3.43
million (or 7.9% of total assets) at December 31, 2003. The Bank's Tier 1
Capital at December 31, 2004 was $3.16 million or 6.5% of the Bank's total
regulatory assets. The risk-adjusted capital ratio of 9.5% exceeded the 8.0%
level which categorized the Bank as "adequately capitalized" as defined by the
FDIC. At December 31, 2003, the Bank's 12.3% risk-based capital ratio exceeded
the FDIC's threshold of 10.0% which placed the Bank in the "well capitalized"
category. The following table provides detailed information about the Bank's
risk-adjusted assets and actual capital percentages:

<PAGE>

           TIER 1 CAPITAL                                 2004            2003
                                                       --------         --------

 Total Equity Capital                                    $2,880          $3,511
 Add: Unrealized losses on available-for-sale
 securities                                                 52              39
 Add: Minority interest                                    440             445
 Less: Other identifiable intangible assets                214             287
                                                       --------         --------
 Total Tier 1 Capital                                    3,158           3,708
      TIER 2 CAPITAL
 Allowance for loan & lease losses                         353             454
    Less: Excess Allowance                                   0              33
                                                       --------         --------
 Total Tier 2 Capital                                      353             421
                                                       --------         --------
 Total Tier 1 & Tier 2 Capital                          $3,511          $4,129
                                                       ========        =========
           CAPITAL RATIOS
 Tier 1/Total Average Assets                             6.45%           8.58%
 Tier 1/Total Risk-Weighted Assets                       8.52%          11.03%
 Tier 1 & 2/Total Risk-Weighted Assets                   9.47%          12.28%


Recently Issued Accounting Standards

       In December 2004, the Financial Accounting Standards Board, or FASB,
issued SFAS No. 123(R) (revised 2004), Share-Based Payment. SFAS No. 123(R)
requires that the compensation cost relating to share-based payment transactions
be recognized in financial statements. The cost will be measured based on the
fair value of the instruments issued. SFAS No. 123(R) covers a wide range of
share-based compensation arrangements including share options, restricted share
plans, performance-based awards, share appreciation rights and employee share
purchase plans. SFAS No. 123(R) replaces SFAS No. 123 and supersedes APB Opinion
No. 25. As originally issued in 1995, SFAS No. 123 established as preferable the
fair-value-based method of accounting for share-based payment transactions with
employees. However, that Statement permitted entities the option of continuing
to apply the guidance in Opinion 25, as long as the footnotes to financial
statements disclosed what net income would have been had the preferable
fair-value-based method been used. We will be required to apply SFAS No. 123(R)
as of the first interim reporting period that begins after June 15, 2005, and we
plan to adopt it using the modified-prospective method, effective July 1, 2005.
We are currently evaluating the impact SFAS No. 123(R) will have on us. Based on
our preliminarily analysis, the impact of the additional compensation expense
will not be material during as a result of this new accounting standard.


Recent Events

         The Bank signed an amendment on March 31, 2005 to its agreement with
Lower Town Development Group, LLC, the developer of the site on which its
current headquarters is located that could produce income of approx. $850,000
with respect to 2005 minus relocation costs estimated to be $100,000. Under the
agreement, if University Bank, in is sole discretion, can give notice on or
before June 15, 2005 that it will vacate the premises commonly known as 959
Maiden Lane, Ann Arbor, Michigan by August 1, 2005, Lower Town
<PAGE>

Development Group, LLC shall pay to University Bank $800,000 upon the closing of
the  construction  financing  pertaining to the project  commonly known as Lower
Town or December 31, 2005,  which ever occurs first;  and Lower Town Development
Group,  L.L.C.  shall pay the $200,000  that was  deferred  from the sale of 959
Maiden Lane on or before  December  31,  2005.  The  purchase  price for the new
10,000 ft2  headquarters  under the  Agreement  shall be  $2,000,000  instead of
$1,800,000.  Management of the Bank is advised by local real estate experts that
the market value of the 10,000 ft2 headquarters office condominium that is being
built for it is worth $2,400,000 to $2,600,000 in the current market.

ITEM 7A.  MARKET RISK

Impact of Inflation

         The primary impact of inflation on our operations is reflected in
increased operating costs. Since our assets and liabilities are primarily
monetary in nature, changes in interest rates have a more significant impact on
our performance than the general effects of inflation. However, to the extent
that inflation affects interest rates, it also affects our net income.

Quantitative and Qualitative Disclosures about Market Risk

     All financial institutions are significantly affected by fluctuations in
interest rates commonly referred to as "interest rate risk." The principal
exposure of a financial institution's earnings to interest rate risk is the
difference in time between interest rate adjustments or maturities on
interest-earning assets compared to the time between interest rate adjustments
or maturities on interest-bearing liabilities. This difference is commonly
referred to as a financial institution's "gap position." In periods when
interest rates are increasing, a negative gap position will result in generally
lower earnings as long-term assets are repricing upward slower than short-term
liabilities. However during a declining rate environment, the opposite effect on
earnings is true, with earnings rising due to long-term assets repricing
downward slower than short-term liabilities.

         Rising long term and short term interest rates tend to increase the
value of Midwest' investment in mortgage servicing rights and improve Midwest'
current return on these rights by lowering required amortization rates on the
rights and decreasing the opportunity for customers to refinance those loans.
Rising interest rates tend to decrease new mortgage origination activity,
negatively impacting current income from the Bank's retail mortgage banking
operations and Midwest's mortgage banking operations. Rising interest rates also
slow Midwest' rate of growth, but increases the duration of its existing
mortgages being sub-serviced under contract.

     The Bank's securities portfolio is designed to offset a portion of the
market value risk associated with the servicing rights. During period of
declining interest rates, the estimated duration period for the Bank's FNMA CMO
tends to shorten, thus accelerating the income from the accretion of the bond's
discount. This income mitigates the rapid amortization of the servicing rights.
In a rising rate environment, the accretion of income on the bond tends to
lessen.

     The table on the following page details our interest sensitivity gap
between interest-earning assets and interest bearing liabilities at December 31,
2004. Certain items in the table are based upon various assumptions that may not
necessarily reflect future experience, and therefore, certain assets and
liabilities may in fact mature or re-price differently from what is illustrated.
The one-year static gap position at December 31, 2004 was estimated at ($15.2
million) or (29.83%):
<PAGE>

<TABLE>
<CAPTION>


                                      Asset/Liability Position Analysis as of December 31, 2004
                                                       (Dollar amounts in Thousands)
                                                          Maturing or Repricing in

                                         3 Mos      91 Days to        1 - 3        3 - 5      Over 5      ALL
ASSETS                                  Or Less       1 Year          Years        Years      Years      Other        Total
------                                  -------       ------          -----        -----      -----      -----        -----

<S>                                          <C>            <C>            <C>        <C>        <C>         <C>         <C>
    Loans - net                            $ 9,919          2,943          8,777      18,355     3,204       (353)     $ 42,845
    Non-accrual loans                                           -              -           -         -         648          648
    Securities                                 100            500              -           -       506           -        1,106
    Other assets                               922              -              -           -         -       3,532        4,454
    Cash and Due from
      Banks                                     56              -              -           -                 1,676        1,732
                                      ------------------------------------------------------------------------------------------
      Total assets                          10,997          3,443          8,777      18,355     3,710       5,503       50,785
                                      ------------------------------------------------------------------------------------------

LIABILITIES
-----------
    Time deposits                            2,487          5,665          3,637         218       433                   12,440
    Demand -interest
      Bearing                                9,497           9,497         8,107       1,500         -           -       28,600
    Demand - non interest                        -              -             -            -         -       3,047        3,047
    Savings                                      -              -            500           -         -           -          500
    Other borrowings                         2,450              -              -           -         -           -        2,450
    Other liabilities                            -                                         -         -         746          746
    Stockholders' equity                         -               -             -           -         -       3,002        3,002
                                      ------------------------------------------------------------------------------------------
      Total liabilities                   $ 14,434         15,161         12,244       1,718       433       6,795     $ 50,785
                                      ------------------------------------------------------------------------------------------
              Gap                          (3,437)       (11,718)        (3,467)      16,637     3,277     (1,292)            -
                                      ==========================================================================================
              Cumulative gap               (3,437)       (15,155)       (18,622)     (1,985)     1,292          -
                                      =============================================================================
              Gap percentage                -6.77%        -29.83%        -36.65%      -3.91%     2.54%       0.00%
                                      =============================================================================
</TABLE>


The following repricing information is provided for the Bank's investment
portfolio, using book values, as of December 31, 2004:

Investment Portfolio Maturities ($ amounts in thousands) and Yield by Type:
<TABLE>
<CAPTION>

                         Maturity or Repricing Interval:
                                                      Less Than          1 Year to       5 Years to        More Than
                                                       One Year            5 Years         10 Years         10 Years
                                                       --------            -------         --------         --------
Government Agencies:
<S>                                                          <C>                <C>              <C>          <C>
  Amount                                                     $0                 $0               $0           $1,157
  Yield                                                      0%                 0%               0%            4.86%

</TABLE>

Additional information regarding the Bank's investments is set forth under Note
4 to the consolidated financial statements.
<PAGE>


The following information illustrates maturities and sensitivities of the
Bank's loan portfolio to changes in interest rates as of December 31, 2004:

<TABLE>
<CAPTION>

Loan Portfolio Maturities by Type ($ amounts in thousands):

                                                 Maturity Interval:
                                                     Less Than          1 Year to          More Than
                                                      One Year           5 Years            5 Years             Total
                                                      --------           -------            -------             -----
<S>                                                    <C>              <C>                  <C>             <C>
Commercial                                             $ 6,099          $ 10,548             $2,314          $ 18,961
Real Estate Mortgage (1)                                 2,348            20,938                754            24,039
Installment/Consumer                                         0                 0                 0                  0
                                                       -------          --------           --------          --------
      Total                                            $ 8,446          $ 31,486           $  3,068          $ 43,000
                                                       =======          ========           ========          ========
</TABLE>
<TABLE>
<CAPTION>


                                                      Maturity            Maturity
                                                      Less Than          More Than
                                                      One Year            One Year            Total
<S>                                                     <C>              <C>                <C>
Total Variable Rate Loans                               $5,211           $ 24,244           $ 29,455
Total Fixed Rate Loans                                   3,235             10,310             13,545
                                                        ------           --------           --------
      Total Loans (1)                                   $8,446           $ 34,553           $ 43,000
                                                        ======           ========           ========
</TABLE>

(1) Excludes loans held for sale of $846,400 and the allowance for loan losses.

<PAGE>




Item 8. - Financial Statements and Supplementary Data

















                            UNIVERSITY BANCORP, INC.

                              --------------------

                        CONSOLIDATED FINANCIAL STATEMENTS

                              --------------------

                          DECEMBER 31, 2004, 2003 2002


<PAGE>





             Report of Independent Registered Public Accounting Firm


Board of Directors and Stockholder
University Bancorp, Inc.

We have audited the accompanying consolidated balance sheet of University
Bancorp, Inc. and subsidiaries as of December 31, 2004 and 2003, and the related
consolidated statements of operations, comprehensive income (loss),
stockholders' equity, and cash flows for each of the three years ended December
31, 2004. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the financial statements of
Midwest Loan Services, Inc., an eighty percent owned subsidiary, which
statements reflect total assets of 5.2 percent and 5.4 percent as of December
31, 2004 and 2003, respectively, and total revenues of 44.7 percent, 48.7
percent and 39.9 percent, respectively, for each of the three years ended
December 31, 2004. Those statements were audited by other auditors, whose report
thereon has been furnished to us, and our opinion, insofar as it relates to the
amounts included for Midwest Loan Services, Inc., is based solely on the report
of the other auditors.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audits included procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, based on our audits and the report of the other auditors the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of University Bancorp, Inc. and
subsidiaries as of December 31, 2004 and 2003, and the results of their
operations and their cash flows for the each of the three years ended December
31, 2004 in conformity with accounting principles generally accepted in the
United States of America.


/S/ GRANT THORNTON LLP


Southfield, Michigan
March 29, 2005

<PAGE>
<TABLE>
<CAPTION>


                                                           UNIVERSITY BANCORP, INC.
                                                         Consolidated Balance Sheets
                                                          December 31, 2004 and 2003

                                                                               December 31,          December 31,
ASSETS                                                                            2004                   2003
                                                                               -------------          -------------
<S>                                                                            <C>                  <C>
Cash and due from banks                                                        $  1,731,569         $  2,171,189
Securities available for sale, at market                                          1,106,607            1,649,169
Federal Home Loan Bank Stock                                                        921,700              881,100
Loans held for sale, at the lower of cost or market                                 846,400              206,008
Loans                                                                            42,999,800           34,928,586
Allowance for loan losses                                                         (353,124)            (454,118)
                                                                               --------------       -------------
     Loans, net                                                                  42,646,676           34,474,468

Premises and equipment, net                                                         946,704              829,807
Investment in Michigan BIDCO Inc.                                                         0              629,258
Investment in Michigan Capital Fund LPI                                                   0              256,244
Mortgage servicing rights, net                                                    1,097,786            1,031,575
Real estate owned, net                                                              534,043              429,500
Accounts receivable                                                                  30,949              122,067
Accrued interest receivable                                                         148,344              129,808
Prepaid expenses                                                                    250,249              183,143
Goodwill                                                                            103,914              103,914
Other assets                                                                        420,757              451,290
                                                                               -------------        -------------
      TOTAL ASSETS                                                             $ 50,785,698         $ 43,548,540
                                                                               ============         =============

                                                                 -Continued-
</TABLE>


<PAGE>


<TABLE>
<CAPTION>


                                                           UNIVERSITY BANCORP, INC.
                                                   Consolidated Balance Sheets (continued)
                                                          December 31, 2004 and 2003

                                                                               December 31,          December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY                                               2004                  2003
                                                                               -------------        -------------
Liabilities:
Deposits:
<S>                                                                            <C>                  <C>
  Demand - non interest bearing                                                $  3,047,397         $  3,146,688
  Demand - interest bearing                                                      28,600,355           25,827,337
  Savings                                                                           499,865              377,545
  Time                                                                           12,440,182            9,455,982
                                                                               ------------         -------------
     Total Deposits                                                              44,587,799           38,807,552
Short term borrowings                                                             2,416,000                    0
Long term borrowings                                                                 34,000              166,000
Accounts payable                                                                    115,230              289,150
Accrued interest payable                                                             50,296               51,613
Other liabilities                                                                   140,629              354,273
                                                                               ------------         -------------
     Total Liabilities                                                           47,343,954           39,668,588
Minority Interest                                                                   440,118              445,324
Stockholders' equity:
  Preferred stock, $0.001 par value;
    $1,000  liquidation value;
    Authorized - 500,000 shares;                                    -
  Common stock, $0.01 par value;
    Authorized - 5,000,000 shares;
    Issued - 4,240,641 shares in 2004 and
         4,141,732 shares in 2003                                                    42,406               41,417
  Additional paid-in-capital                                                      5,841,331            5,677,940
  Accumulated deficit                                                           (2,490,224)          (1,905,404)
  Treasury stock - 115,184 shares in 2004
    and 2003                                                                      (340,530)            (340,530)
  Accumulated other comprehensive loss,
    unrealized losses on securities
    available for sale, net                                                        (51,357)              (38,795)
                                                                               -------------        -------------
     Total Stockholders' Equity                                                   3,001,626            3,434,628
                                                                               -------------        -------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                $ 50,785,698         $ 43,548,540
                                                                               ==============       =============
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>


<PAGE>

<TABLE>
<CAPTION>



                                         UNIVERSITY BANCORP, INC.
                                  Consolidated Statements of Operations
                           For the Years Ended December 31, 2004, 2003 and 2002

                                                           2004             2003               2002
                                                     ----------------- ---------------- -------------------
Interest income:

<S>                                                      <C>               <C>                <C>
  Interest and fees on loans                              $ 2,635,557      $ 2,554,510        $ 2,805,704
  Interest on securities:
   U.S. Government and agencies                                48,064           81,269            270,127
   Other securities                                            56,924           84,302             96,666
   Other interest income                                        3,726           12,018             21,955
                                                    ------------------ ---------------- ------------------
     Total interest income                                  2,744,271        2,732,099          3,194,452
                                                    ------------------ ---------------- ------------------
Interest expense:
  Interest on deposits:
   Demand deposits                                            428,611          400,994            330,178
   Savings deposits                                             4,758            4,634              4,825
   Time certificates of deposit                               328,683          420,932            671,929
  Short term borrowings                                        16,999            2,933             11,556
  Long term borrowings                                          4,907           12,144             20,675
                                                    ------------------ ---------------- ------------------
     Total interest expense                                   783,958          841,637          1,039,163
                                                    ------------------ ---------------- ------------------
     Net interest income                                    1,960,313        1,890,462          2,155,289
(Credit) provision for loan losses                           (87,500)          189,400            100,000
                                                    ------------------ ---------------- ------------------
     Net interest income after
      (credit)  provision for loan
      losses                                                2,047,813        1,701,062          2,055,289
                                                    ------------------ ---------------- ------------------
Other income:
   Loan servicing and subservicing
      fees                                                  1,409,283        1,128,293            713,427
  Initial loan set-up and other fees                        1,550,620        3,382,955          3,090,838
  Gain on sale of mortgage loans                              340,149          756,170            236,098
  Insurance & investment fee income                           219,631          168,577            113,870
  Deposit service charges and fees                            112,163          110,608             92,955
  Net security (losses)gains                                    (446)         (54,011)             69,733
  Gain on the sale and leaseback of
   premises                                                   184,873          217,053                  -
  Other                                                         6,275          222,847            124,098
                                                    ------------------ ---------------- ------------------
     Total other income                                     3,822,548        5,932,492          4,441,019
                                                    ------------------ ---------------- ------------------
                   -Continued-
</TABLE>



<PAGE>


<TABLE>
<CAPTION>



                                       UNIVERSITY BANCORP, INC.
                           Consolidated Statements of Operations (continued)
                         For the Years Ended December 31, 2004, 2003 and 2002

                                                          2004              2003              2002
                                                    ------------------ ---------------- ------------------
Other expenses:
<S>                                                       <C>              <C>                <C>
  Salaries and benefits                                   $ 2,866,849      $ 3,358,060        $ 2,929,540
  Occupancy, net                                              415,156          422,767            349,186
  Data processing and equipment                               569,297          487,701            433,239
  Legal and audit expense                                     217,414          202,865            173,139
  Consulting fees                                             137,569          173,132            181,545
  Mortgage banking expense                                    246,346          710,907            579,040
  Servicing rights amortization                               448,553          871,175            529,048
  Advertising                                                 145,592          142,996             92,944
  Memberships and training                                    132,467          118,581            103,095
  Travel and entertainment                                    103,875          121,631             91,330
  Supplies and postage                                        207,141          244,615            199,338
  Insurance                                                   134,163           89,532             87,662
  Other operating expenses                                    750,759          675,150            541,604
                                                    ------------------ ---------------- ------------------
     Total other expenses                                   6,375,181        7,619,112          6,290,710
                                                    ------------------ ---------------- ------------------
(Loss)income before income taxes                            (504,820)           14,442            205,598
Income tax expense(benefit)                                    80,000         (80,000)                  0
                                                    ------------------------------------------------------
     Net (loss)income                                     $ (584,820)      $    94,442        $   205,598
Basic and diluted (loss)income per common share           $    (0.14)      $      0.02        $      0.05
                                                    ================== ================ ==================
Weighted average shares outstanding -Basic                  4,085,244        3,940,433          3,859,433
Weighted average shares outstanding -Diluted                4,085,244        4,074,415          4,058,342

The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>

<PAGE>




<TABLE>
<CAPTION>


                                                UNIVERSITY BANCORP, INC.
                                  Consolidated Statements of Comprehensive (Loss)Income
                                  For the Years Ended December 31, 2004, 2003 and 2002

                                                               2004                   2003                    2002
                                                        --------------------    ------------------      ------------------
<S>                                                              <C>                      <C>                    <C>
Net (loss) income                                                $(584,820)              $ 94,442                $205,598
Other comprehensive (loss)income:
   Unrealized (losses) gains on
    securities available for sale                                  (13,008)              (11,042)                 155,081
   Less:  reclassification
    adjustment for accumulated
   (Losses) gains included in net
    (Loss) income                                                     (446)              (54,011)                  69,733
                                                        --------------------    ------------------      ------------------
                                                                   (12,562)                42,969                  85,348
                                                        --------------------    ------------------      ------------------
Comprehensive (loss)income                                       $(597,382)              $137,411                $290,946
                                                        ====================    ==================      ==================


 The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>



<PAGE>

<TABLE>
<CAPTION>


                                               UNIVERSITY BANCORP, INC.
                                    Consolidated Statements of Stockholders' Equity
                                For the years ended December 31, 2004, 2003, and 2002


                                      Common Stock $.01                 Treasury Stock                   Accumulated
                                        Par Value           Additional                       Retained       Other        Total
                                      Number of   Par        Paid In    Number of             Earnings   Comprehensive Stockholders'
                                       Shares     Value      Capital    Shares     Cost        (Deficit)      Loss       Equity
                                      ---------------------------------------------------------------------------------------------

<S>             <C>                    <C>        <C>      <C>         <C>         <C>        <C>            <C>         <C>
Balance January 1, 2002                3,867,732  $38,677  $5,411,018  (115,184)   $(340,530) $(2,205,444)   $(167,112)  $2,736,609
Issuance of common stock at
 weighted average price of
 $1.00 per share, net of
 expenses of $18,587                     147,000    1,470     126,943                                                       128,413
Decrease in unrealized loss on
 securities available for
 sale, net of tax                                                                                               85,348       85,348
Net lncome                                                                                        205,598                   205,598
                                       ---------------------------------------------------------------------------------------------
December 31, 2002                       4,014,732  40,147   5,537,961    (115,184)  (340,530)  (1,999,846)     (81,764)   3,155,968
                                       ---------------------------------------------------------------------------------------------
Issuance of common stock at
 weighted average price of
 $1.11 per share, net of
 expenses of $0.00                        127,000   1,270     139,980                                                       141,250
Decrease in unrealized loss on
 securities available for
 sale, net of tax                                                                                              42,969        42,969
Net Income                                                                                          94,442                   94,442
                                       ---------------------------------------------------------------------------------------------
December 31, 2003                       4,141,732   41,417  5,677,940    (115,184)  (340,530)   (1,905,404)    (38,795)   3,434,629
                                       ---------------------------------------------------------------------------------------------
Issuance of common stock at
 weighted average price of
 $1.58 per share, net of
expenses of $0.00                        103,909     989     163,391                                                         164,380

Decrease in unrealized loss
 on securities available for
 sale, net of tax                                                                                             (12,562)      (12,562)
Net Loss                                                                                         (584,820)                 (542,820)
                                       ---------------------------------------------------------------------------------------------
December 31, 2004                      4,245,641  $42,406  $5,841,331    (115,184) $(340,530) $(2,490,224)   $(51,357)    $3,043,627
                                       =============================================================================================
The accompanying notes are an integral part of the consolidated financial statement
</TABLE>


<PAGE>

<TABLE>
<CAPTION>


                                                       UNIVERSITY BANCORP, INC.
                                                 Consolidated Statements of Cash Flows
                                         For the years ended December 30, 2004, 2003 and 2002

                                                                               2004                2003                2002
                                                                         ------------------  ------------------ -------------------
     Cash flow provided by (used in) operating activities:
<S>                                                                          <C>               <C>               <C>
     Net (loss)income                                                        $   (584,820)     $        94,442   $         205,598
     Adjustments to reconcile net (loss) income to net cash (used in)
     provided by operating activities:
         Depreciation                                                              318,584             305,740             195,070
         Amortization                                                              704,797             971,175             629,048
         Provision for loan loss                                                  (87,500)             189,400             100,000
         Gain on sale of mortgages                                               (340,149)           (756,170)           (236,098)
         Gain on the sale and leaseback of premises                              (184,873)           (217,053)                   -
         Loss(gain) on other real estate owned                                      64,695           (134,668)                   -
         Accretion on securities                                                  (11,562)            (15,836)           (259,463)
         Deferred income tax expense (benefit)                                      80,000            (80,000)
         Originations of mortgage loans                                       (52,016,364)       (129,039,261)         (70,457,559)
         Proceeds from mortgage loan sales                                      51,716,121         131,140,418          71,280,448
         Net loss (gain) on sale of securities                                         446              54,011            (69,733)
         Net change in:
           Other assets                                                          (538,295)         (1,025,362)           (268,115)
           Other liabilities                                                     (270,275)             265,470            (64,580)
                                                                        -------------------  ------------------ -------------------
     Net cash (used in) provided by operating activities                       (1,149,195)           1,752,306           1,054,616
                                                                        -------------------  ------------------ -------------------

     Cash flow provided by (used in) investing activities:
           Purchase of investment securities                                       (8,853)            (98,533)         (2,139,503)
           Proceeds from sales of investment
             securities                                                             49,981              59,879           1,034,160
           Proceeds from maturities/pay downs of
             investment securities                                                 529,247           1,497,117             651,486
           Proceeds from sale of other real estate
             owned                                                                 585,784             572,250
           Loans granted, net of repayments                                    (8,239,730)          (1,880,053)            859,898
           Proceeds from sale of premises                                                0           1,033,464
           Premises and equipment expenditures                                   (435,481)           (231,056)           (128,954)
                                                                        -------------------  ------------------ -------------------
     Net cash (used in) provided by investing activities                       (7,519,052)             953,068             277,087
                                                                        -------------------  ------------------ -------------------
</TABLE>


<PAGE>

<TABLE>
<CAPTION>



                                                     UNIVERSITY BANCORP, INC.
                                            Consolidated Statements of Cash Flows
                                       For the years ended December 30, 2004, 2003 and 2002

                                                                               2004                2003              2002
                                                                         ------------------  ------------------ ---------------


     Cash flow provided by (used in) financing activities:
<S>                                                                              <C>               <C>               <C>
           Change in deposits                                                    5,780,247         (3,112,904)       1,722,875
           Change in short term borrowings                                       2,416,000                 0          (91,566)

           Principal payments on long term borrowings                            (132,000)         (132,000)       (1,359,506)
           Issuance of common stock                                                164,380           141,250           128,413
                                                                         ------------------ ----------------- -----------------
            Net cash provided by (used in) financing
             activities                                                          8,228,627       (3,103,654)           400,216
                                                                         ------------------ ----------------- -----------------

               Net change in cash and cash
                 equivalents                                                     (439,620)         (398,280)         1,731,919
     Cash and cash equivalents:
          Beginning of year                                                      2,171,189         2,569,469           837,550
                                                                         ------------------ ----------------- -----------------
          End of year                                                        $   1,731,569    $    2,171,189     $   2,569,469
                                                                         ================== ================= =================

     Supplemental disclosure of cash flow information:
           Cash paid for interest                                           $      785,275    $      887,092     $   1,119,502

     Supplemental disclosure of non-cash transactions:
           Mortgage loans converted to other real estate owned              $      755,022    $            0     $    $703,198
           Michigan BIDCO Preferred stock exchanged for a 7.5%
     promissory note                                                        $      600,000    $            0     $           0


</TABLE>



The accompanying notes are an integral part of the consolidated financial
statements.


<PAGE>


1. Summary of significant accounting policies

        Principles of Consolidation and Nature of Operations
        The consolidated financial statements of University Bancorp, Inc. (the
        Company) include the operations of its wholly-owned subsidiary,
        University Bank (the Bank), the Bank's wholly-owned subsidiary,
        University Insurance & Investment Services, Inc. (Agency) and an 80%
        owned subsidiary, Midwest Loan Services, Inc. ("Midwest"). The accounts
        are maintained on an accrual basis in accordance with generally accepted
        accounting principles and predominant practices within the banking and
        mortgage banking industries. All significant intercompany balances and
        transactions have been eliminated in preparing the consolidated
        financial statements.

        The Company is a bank holding company. University Bank, which is located
        in Michigan, is a full service community bank, which offers all
        customary banking services, including the acceptance of checking,
        savings and time deposits. The Bank also makes commercial, real estate,
        personal, home improvement, automotive and other installment, credit
        card and consumer loans, and provides fee based services such as annuity
        and mutual fund sales, stock brokerage and money management, life
        insurance, property casualty insurance and foreign currency exchange.
        The Bank's customer base is primarily located in the Ann Arbor, Michigan
        area. The Bank established its main office in Ann Arbor in February
        1996, by relocating from the eastern upper peninsula of Michigan.

        University Bank's loan portfolio is concentrated in Ann Arbor and
        Washtenaw County, Michigan. While the loan portfolio is diversified, the
        customers' ability to honor their debts is partially dependent on the
        local economy. The Ann Arbor area is primarily dependent on the
        education, healthcare, services and manufacturing (automotive and other)
        industries. Most real estate loans are secured by residential or
        commercial real estate and business assets secure most business loans.
        Generally, installment loans are secured by various items of personal
        property.

        The Agency is engaged in the sale of insurance products including life,
        health, property and casualty, and investment products including
        annuities, mutual funds, stock brokerage and money management. The
        Agency is located in the Bank's Ann Arbor main office. The Agency also
        has a limited partnership investment in low-income housing tax credits
        through Michigan Capital Fund for Housing Limited Partnership I with
        financing assistance from the General Partner, Michigan Capital Fund for
        Housing.

        Midwest is engaged in the business of servicing and subservicing
        residential mortgage loans. Midwest began operations in 1992 and was
        acquired by University Bank in December, 1995. Midwest is based in
        Houghton, Michigan, and also originates mortgage loans for itself and
        other financial institutions, including the Bank (See Note 3).

<PAGE>


1. Summary of significant accounting policies (continued)


        Use of Estimates in Preparing Financial Statements:
        --------------------------------------------------
        The preparation of financial statements in conformity with generally
        accepted accounting principles requires management to make estimates and
        assumptions based upon available information. These estimates and
        assumptions affect the reported amounts and disclosures. Actual results
        could differ from those estimates.

        The significant estimates incorporated into these consolidated financial
        statements which are more susceptible to change in the near term include
        the value of mortgage servicing rights, the allowance for loan losses,
        the identification and valuation of impaired loans, the valuation of
        other real estate owned, the fair value of financial instruments, and
        the valuation of deferred tax assets.

        Cash flow reporting
        For purposes of the Consolidated Statements of Cash Flows, cash and cash
        equivalents is defined to include the cash on hand, non-interest bearing
        deposits in other institutions, federal funds sold and other investments
        with a maturity of three months or less when purchased. Net cash flows
        are reported for customer loan and deposit transactions and interest
        bearing deposits with other banks.

        Securities
        Securities are classified as available for sale when they might be sold
        before maturity. Securities available for sale are carried at fair
        value, with unrealized holding gains and losses reported in other
        comprehensive income or loss. Realized gains are based on specific
        identification of amortized cost. Securities are written down to fair
        value when a decline in fair value is not temporary. Interest income
        includes amortization of purchase premium or discount. Other securities
        such as Federal Home Loan Bank stock are carried at cost.

        Loans
        Loans are reported at the principal balance outstanding, net of unearned
        interest, deferred loan fees and costs, and an allowance for loan
        losses. Interest income is reported on the interest method and includes
        amortization of net deferred loan fees and costs over the loan term.
        Interest income is not reported when full loan repayment is in doubt,
        typically when payments are past due over 90 days. Payments received on
        such loans are reported as principal reductions, unless all interest and
        principal payments in arrears are paid in full.


<PAGE>


1. Summary of significant accounting policies (continued)

       Mortgage banking activities
       Mortgage banking activities includes retail and servicing operations.
       Mortgage loans held for sale are valued at the lower of cost or market as
       determined by bid prices for loans in the secondary market. The loans are
       sold without recourse, except in the event that documentation errors are
       made during the origination process. Loan servicing and subservicing fees
       are contractually based and are recognized monthly as earned over the
       life of the loans.

        Allowance for loan losses
        The allowance for loan losses is a valuation allowance for probable
        credit losses, increased by the provision for loan losses and recoveries
        and decreased by charge-offs. Management estimates the balance required
        based on past loan loss experience, known and inherent risks in the
        portfolio, information about specific borrower situations and estimated
        collateral values, economic conditions, and other factors. Allocations
        of the allowance may be made for specific loans, but the entire
        allowance is available for any loan that, in management's judgment,
        should be charged-off.

        Loan impairment is reported when full payment under the loan terms is
        not expected. Impairment is evaluated in total for smaller-balance loans
        of similar nature such as residential mortgage, consumer, and credit
        card loans, and on an individual loan basis for other loans. If a loan
        is impaired, a portion of the allowance is allocated so that the loan is
        reported, net, at the present value of estimated future cash flows using
        the loan's existing rate or at the fair value of collateral if repayment
        is expected solely from the collateral. Loans are evaluated for
        impairment when payments are delayed, typically 90 days or more, or when
        it is probable that all principal and interest amounts will not be
        collected according to the original terms of the loan.

        Premises and equipment
        Bank premises and equipment are stated at cost less accumulated
        depreciation. Depreciation is computed primarily on the straight-line
        method for bank premises and the accelerated method for equipment and
        land improvements over their estimated useful lives. The Company uses
        the following useful lives as of December 31, 2004:

                  Buildings and building improvements            39 years
                  Land and leasehold improvements                15 years
                  Furniture, fixtures, and equipment            3-7 years
                  Software                                      2-5 years

        Other real estate owned
        Real estate properties acquired in collection of a loan are recorded at
        fair value upon foreclosure. Any reduction to fair value from the
        carrying value of the related loan is accounted for as a loan loss.


<PAGE>


1. Summary of significant accounting policies (continued)

        After acquisition, a valuation allowance reduces the reported amount to
        the lower of the initial amount or fair value less costs to sell.
        Expenses, gains and losses on disposition, and changes in the valuation
        allowance are reported in other expenses.

        Servicing rights
        Servicing rights represent both purchased rights and the allocated value
        of servicing rights retained on loans originated and sold. Servicing
        rights are expensed in proportion to, and over the period of, estimated
        net servicing revenues. Impairment is evaluated based on the fair value
        of the rights, using grouping of the underlying loans as to type, term
        and interest rates. Any impairment of a grouping is reported as a
        valuation allowance.

        Income taxes
        Income tax expense/benefit is the sum of the current year estimated tax
        obligation or refund per the income tax return and the change in the
        estimated future tax effects of temporary differences and
        carry-forwards. Deferred tax assets or liabilities are computed by
        applying enacted income tax rates to the expected reversals of temporary
        differences between financial reporting and income tax reporting, and by
        considering carry-forwards for operating losses and tax credits. A
        valuation allowance adjusts deferred tax assets to the net amount that
        is more likely than not to be realized.

        Retirement plan
        The Bank has a 401(K) Plan that allows an employee to contribute up to
        15% of salary pre-tax, to the allowable limit prescribed by the Internal
        Revenue Service. Management has discretion to make matching
        contributions to the Plan. However, the Bank made no matching
        contributions for the years ended December 31, 2004, 2003 and 2002.

        Employees Stock Ownership Plan (ESOP)
        The Company has a noncontributory ESOP covering all full-time employees
        who have met certain service requirements. The employees' share in the
        Company's contribution is based on their current compensation as a
        percentage of the total employee compensation. As shares are contributed
        to the plan they are allocated to employees and compensation expense is
        recorded at the shares' fair value. The Company made no contribution in
        2004, 2003 and 2002.

        Stock options
       At December 31, 2004, the Company has a stock-based employee compensation
       plan, which is described more fully in Note 8. The Company accounts for
       those plans under the recognition and measurement principles of APB
       Opinion No. 25, Accounting for Stock Issued to Employees, and related
       Interpretations. No stock-based employee compensation cost is reflected
       in net income, as all options granted under those plans had an exercise
       price greater than or equal to the market value of the underlying common
       stock on the date of grant. The following table illustrates the effect on
       net (loss) income and earnings per share if the company

<PAGE>
<TABLE>
<CAPTION>


1. Summary of significant accounting policies (continued)
       had applied the fair value recognition provisions of FASB Statement No.
       123, Accounting for Stock-Based Compensation, to stock-based employee
       compensation.

                                                         Years Ended December 31,
                                                     2004            2003       2002
                                                     ----           ----        ----

<S>                                                <C>            <C>          <C>
       Net (loss) income, as reported              $(584,820)     $94,442     $205,578

       Deduct: Total stock-based employee
       compensation expense determined
       under fair value based method for
       all awards, net of tax                          5,600        5,000        6,000
                                                  -----------   ----------   ----------
       Pro forma net (loss) income                 $(590,420)     $89,442     $199,578
                                                  ===========   ==========   ==========
       Basic and Diluted (Loss) earnings per share:
         As reported                                $(0.14)         $0.02         $0.05
         Pro forma                                  $(0.14)         $0.02         $0.05
</TABLE>

        Dividend restriction
       Banking regulations require the maintenance of certain capital levels and
       may limit the amount of dividends that may be paid by the bank to the
       holding company or by the holding company to shareholders. In addition,
       the Bank cannot pay a dividend until it has net retained earnings or
       unless it receives a waiver from the State of Michigan banking
       regulators. The accumulated deficit of the Bank was $1,978,688 and
       $1,483,994 at December 31, 2004 and 2003, respectively.

        (Loss) earnings per share
       Basic earnings per share are computed by dividing net (loss) income
       available to common shareholders by the weighted average common shares
       outstanding. Diluted earnings per share reflect the potential dilution
       that would occur if dilutive securities were exercised or converted into
       common stock. The following table presents a reconciliation of the
       weighted average common shares outstanding for the earnings per share
       calculation for the years ended December 31:

                                               2004         2003       2002
                                              -----       -----        -----
       Weighted average shares outstanding  4,085,244   3,940,433   3,859,433

       Net dilutive effect of stock options    -          133,982     198,909
                                            ----------------------------------
       Diluted average shares outstanding   4,085,244   4,074,415   4,058,342
                                            =================================

        For December 31, 2004, the Company incurred a net loss. Accordingly,
        anti-dilutive impact of the effect of stock options is not shown.

<PAGE>


1. Summary of significant accounting policies (continued)

        Comprehensive (Loss) Income
        Comprehensive (loss) income includes both the net loss and the change in
        unrealized gains and losses on securities available for sale.

        Segment Reporting
        The Company's segments are determined by the products and services
        offered, primarily distinguished between banking and mortgage banking
        operations. Loans, investments, and deposits provide the revenues in the
        banking operation, and servicing fees, underwriting fees and loan sales
        provide the revenues in mortgage banking. All operations are domestic.

        Reclassification
        Certain items in the 2003 and 2002 consolidated financial statements and
        notes have been reclassified to conform to the 2004 presentation.

2. Michigan BIDCO, Inc.
        BIDCO was incorporated for the purpose of providing financing to small
        businesses located in Michigan for the purpose of creating business and
        industrial development in the State of Michigan. BIDCO is licensed under
        the Michigan BIDCO Act, and is regulated by the Michigan Office of
        Financial and Insurance Services, Bank and Trust Division. The President
        of the Company serves as Chairman and President of BIDCO.

       At December 31, 2003 University Bancorp owned 6.10% of the BIDCO and the
       Bank held a $600,000, 7.5% note collateralized by all assets of the
       company. The note was paid off in December 2004. Additionally, the shares
       of the BIDCO were sold. At December 31, 2004, the company no longer had a
       financial interest in the BIDCO

3.       Secondary Market Operations
        Midwest provides servicing and subservicing of real estate mortgage
        loans for University Bank and several other financial institutions. The
        unpaid principal balance of these loans was approximately $2.31 billion,
        $1.94 billion and $1.06 billion as of December 31, 2004, 2003 and 2002
        respectively. Custodial escrow balances maintained in connection with
        these respective loans was $30.2 million, $26.8 million, and $23.4
        million, at December 31, 2003, 2002 and 2001 respectively. Most of these
        funds are off balance sheet and maintained at various financial
        institutions. The following summarizes the operations of Midwest for the
        years ended December 31:

<PAGE>

<TABLE>
<CAPTION>

3.       Secondary Market Operations (continued)

                                                                            2004                 2003                  2002
                                                            --------------------- -------------------- ---------------------
<S>                                                                   <C>                  <C>                     <C>
      Loan servicing and subservicing fees                            $1,127,416           $1,128,293              $713,427
      Loan set-up and other fees                                       1,550,620            2,865,708             2,677,966
      Interest income                                                     35,533               42,940                45,922
      Gain on sale of loans                                             340,149               756,170               236,098
                                                            --------------------- -------------------- ---------------------
           Total income                                                3,053,717            4,793,111             3,673,413

      Salaries and benefits                                            1,518,595            1,646,483             1,348,884
      Amortization of servicing rights                                   448,553              865,977               522,081
      Interest expense                                                    11,320                3,798                 2,520
      Other operating expenses                                         1,104,106            1,851,073             1,365,091
                                                            --------------------- -------------------- ---------------------
           Total expenses                                              3,080,308            4,367,331             3,238,576
                                                            --------------------- -------------------- ---------------------
      (Loss)income of  Midwest                                        $  (26,591)          $  425,780            $  434,837
                                                            ===================== ==================== =====================
</TABLE>

        University Bank and Midwest sell conforming residential mortgage loans
        to the secondary market. These loans are owned by other institutions and
        are not included in the Company's consolidated balance sheets. Such
        mortgage loans have been sold predominately without recourse or with
        limited recourse. The unpaid principal balance of these loans was $120.6
        million, $112.3 million and $87.0 million at December 31, 2004, 2003 and
        2002 respectively.

        The following summarizes the activity pertaining to mortgage servicing
        rights, along with the aggregate activity in related valuation
        allowances. Table A is calculated net of the valuation allowance
        described in Table B.
<TABLE>
<CAPTION>

      Table A                                                           2004                2003                2002
                                                         ------------------- ------------------- -------------------
      Mortgage servicing rights:
<S>                    <C>                                        <C>                 <C>                  <C>
      Balance, January 1                                          $1,031,575          $1,014,939           $ 606,537
      Additions - originated                                         514,764             887,811             937,450
      Amortization expense                                         (380,553)           (472,175)           (480,048)
                                                         ------------------- ------------------- -------------------
      Adjustment for asset impairment change                        (68,000)           (399,000)            (49,000)
                                                         ------------------- ------------------- -------------------
      Balance, December 31                                       $1,097,786          $1,031,575           $1,014,939
                                                         =================== =================== ===================


      Table B
      Valuation allowances:
      Balance, January 1                                           $ 448,000            $ 49,000               $   0
      Additions                                                       68,000             399,000              49,000
                                                         ------------------- ------------------- -------------------
      Balance, December 31                                         $ 516,000           $ 448,000            $ 49,000
                                                         =================== =================== ===================
</TABLE>

        Market interest rate conditions can quickly affect the value of mortgage
        servicing rights in a positive or negative fashion, as long-term
        interest rates rise and fall. The amortization of these rights is based
        upon the level of principal pay downs received and expected prepayments
        of the mortgage loans. The servicing rights are recorded at the lower of
        cost or market.

<PAGE>

4.     Securities available for sale (continued)
       The following is a summary of the amortized cost, gross unrealized gains,
       gross unrealized losses and fair value of securities available for sale
       at December 31, 2004, 2003 and 2002:
<TABLE>
<CAPTION>

   December 31, 2004
                                         Amortized        Unrealized            Fair
                                            Cost       Gains      Losses       Value
     U.S. agency mortgage-backed
<S>                                     <C>          <C>          <C>        <C>
             securities                 $1,157,964   $   -        $(51,356)  $1,106,607
                                         =========    ========   =========   =========

   December 31, 2003
                                         Amortized        Unrealized            Fair
                                            Cost      Gains       Losses       Value
     U.S. agency mortgage-backed
             Secuities                  $1,675,648   $   -        $(38,795)  $1,636,853
     Stocks                                 12,316       -          -            12,316
                                        ---------    --------    -------     ---------
                                       $1,687,964    $   -        $(38,795)  $1,649,169
                                       ==========    ========    =========   =========

   December 31, 2002
                                          Amortized      Unrealized             Fair
                                            Cost         Gains    Losses       Value
     U.S. agency mortgage-backed
             Securities                $3,184,835    $   -        $(81,997)  $3,102,838
                                       ==========    =======     =========   =========
</TABLE>


        At December 31, 2004 and 2003, the fair value of securities pledged to
        secure certain borrowings were $1,106,607 and $1,649,169, respectively.
        Unrealized losses at December 31, 2004 and 2003 have existed for longer
        than twelve months. This decline is considered temporary as the values
        of the mortgage-backed securities fluctuate based on changes in current
        interest rates and prepayment assumptions related to the underlying
        mortgages. Furthermore, the Company expects to hold these securities
        sufficiently long enough to recover these unrealized losses.

      Sales of available for sale securities:   2004       2003       2002
                                                ----       ----       ----
               Proceeds                      $49,981     $59,879   $1,034,160
               Realized gains                  3,605           -       69,733
               Realized losses                 4,051      54,011         -

        The scheduled maturity date of the securities available for sale at
December 31, 2004 is:

                                                   Amortized         Fair
                                                     Cost           Value
                     2005-2008                   $        0       $        0
                     2009-2013                            0                0
                     After 2013                   1,157,964        1,106,607
                                                 ----------       ----------
                                                 $1,157,964       $1,106,607
                                                 ==========       ==========


<PAGE>

<TABLE>
<CAPTION>



5.      Loans
        Major classifications of loans are as follows as of December 31:

                                                                   2004                  2003                  2002
                                                                   ----                  ----                  ----
<S>                                                        <C>                   <C>                   <C>
      Commercial                                           $ 15,079,343          $ 15,943,127          $ 16,550,325
      Real estate - mortgage                                 24,657,078            15,687,265            11,633,060
      Real estate -construction                               1,238,530             1,270,789             2,113,747
      Installment                                             1,820,515             1,905,793             2,799,490
      Credit cards                                              204,334               121,612                95,412
                                                          -------------         -------------         -------------
         Gross Loans                                         42,999,800            34,928,586            33,192,034
      Allowance for loan losses                               (353,124)             (454,118)             (408,219)
                                                          -------------         -------------         -------------
         Net Loans                                         $ 42,646,676          $ 34,474,468          $ 32,783,815
                                                          =============         =============         =============
</TABLE>
<TABLE>
<CAPTION>


     Changes in the allowance for loan losses were as follows:
                                                                            2004             2003              2002
                                                                            ----             ----              ----
<S>                                                                    <C>              <C>               <C>
      Balance, beginning of year                                       $ 454,118        $ 408,219         $ 579,113
      Provision charged to operations                                   (87,500)          189,400           100,000
      Recoveries                                                          55,512           97,008            16,570
      Charge-offs                                                       (69,006)        (240,509)         (287,464)
                                                                       ---------        ---------         ---------
      Balance, end of year                                             $ 353,124        $ 454,118         $ 408,219
                                                                       =========        =========         =========



        At December 31, 2004, there are loans totaling $371,109 that were past
        due over 90 days but still accruing interest. These loans were brought
        current shortly after December 31, 2004. There are no past due loans
        over 90 days and still accruing interest at December 31, 2003 and 2002.
        Non-accrual loans at December 31 are summarized as follows:

                                                                            2004             2003              2002
                                                                            ----             ----              ----
      Non accrual loans:
      Real estate - mortgage and construction loans                    $ 591,791        $   907,599       $ 102,713
      Installment loans                                                   16,739              5,128          67,546
      Commercial loans (non real estate)                                  39,490            204,400         509,301
                                                                       ---------        -----------       ---------
                                                                       $ 648,020        $ 1,117,127       $ 679,560
                                                                       =========        ===========       =========


        Information regarding impaired loans for the years ended December 31, is
as follows:

      Impaired loans:                                                       2004             2003              2002
      --------------                                                        ----             ----              ----
      Loans with no allowance allocated                                $  83,319        $         0       $       0
      Loans with allowance allocated                                   $ 564,701        $ 1,117,127       $ 679,560
      Amount of allowance for loan losses allocated                    $  83,548        $   291,754       $ 177,069

      Impaired loans:
      Average balance during the year                                  $ 719,667        $   946,261       $ 531,823
      Interest Income recognized thereon                               $       0        $     6,248       $   8,412
      Cash-basis interest income recognized                            $       0        $     6,248       $   8,412
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

6.     Premises and equipment
        Classifications at December 31 are summarized as follows:
                                                                            2004             2003              2002
                                                                            ----             ----              ----
<S>                                                                  <C>                <C>              <C>
      Land                                                           $    32,811        $    32,811      $  132,931
      Buildings and improvements                                         234,984            234,984       1,157,624
      Furniture, fixtures,equipment and
      software                                                         2,756,982          2,327,279       2,108,391
                                                                    ------------       ------------     -----------
                                                                       3,024,777          2,595,074       3,398,946
        Less:  accumulated depreciation                              (2,078,073)        (1,765,267)     (1,678,044)
                                                                    ------------       ------------    ------------
            Net premises and equipment                               $   946,704        $   829,807     $ 1,720,902
                                                                    ============       ============    ============
</TABLE>

                In June 2003, the Bank sold its main office and sole branch
       location to Lowertown Development, LLC ("Lowertown") for $1,173,833, and
       a gain of $342,851. As part of this transaction, the Bank received an
       option to purchase 10,000 square feet of office space in a new facility
       to be constructed by Lowertown which was valued at $200,000.
       Simultaneously, the Bank entered into a 24 month lease agreement with
       Lowertown to leaseback the building sold. The lease included 5 six-month
       options to extend the lease until the earlier of the completion of the
       new building or December 2007. Lowertown is developing the neighboring
       area with a major office, retail and apartment development. Under the
       terms of the agreement, the Bank has an option to purchase 10,000 square
       feet of office space in this new development for fair market value up to
       a maximum of $2,000,000. It is currently anticipated that the new
       facility will be occupied in February 2007. Both the gain on the sale of
       the building and the purchase option are being amortized into income over
       the life of the expected lease term. Lowertown is obligated to pay the
       Bank $200,000 if the office space is not completed prior to the end of
       the extended lease period in December 2007.

        Depreciation expense amounted to $318,584, $305,741 and $290,516 for the
        years ended December 31, 2004, 2003 and 2002, respectively.

        The Bank began leasing its Maiden Lane building in June 2003. The rent
        for 2004 totaled $106,740. The Bank leases an ATM drive-thru location in
        Ann Arbor for $28,656 per year and one off-site ATM location for $9,000
        per year. Midwest leases its office space for approximately $50,424 per
        year in Houghton, Michigan. Total rental expense for all operating
        leases was $192,663, $144,778 and $55,861 in 2004, 2003 and 2002.

7.   Time deposits
        Time deposit liabilities issued in denominations of $100,000 or more
        were $1,854,614 and $2,632,451 at December 31, 2004 and 2003
        respectively.

        At December 31, 2004, stated maturities of time deposits were:

                          2005                         $8,199,043
                          2006                          3,068,588
                          2007                            521,596
                          2008                             95,870
                          2009                            113,744
                    Thereafter                            441,341
                                                     -------------
                                                      $12,440,182
                                                     =============
<PAGE>

        7. Time deposits (continued)
        The Bank had issued through brokers $3,651,000 and $1,101,000 of time
        deposits as of December 31, 2004 and 2003, respectively. These time
        deposits have maturities ranging from one to five months and are
        included in the table above. These deposits are issued in denominations
        of less than $100,000.

        The Bank had deposits of $1,400,430 and $1,550,233 from directors,
        officers and their affiliates as of December 31, 2004 and 2003,
        respectively.

8.       Stock options
        In 1995, the Company adopted a stock option and stock award plan (the
        1995 Stock Plan), which provides for the grant of incentive stock
        options, as defined in Section 422(b) of the Internal Revenue Code of
        1986, as amended, as well as the grant of non-qualified stock options
        and other stock awards. The plan provides for the grant to officers,
        directors and key employees of the Company, and independent contractors
        providing services to the Company, of options to purchase and other
        awards of common stock. The exercise price of options granted under the
        plan shall be determined by the Board of Directors, or a compensation
        committee thereof. Options shall expire on the date specified by the
        Board of Directors or such committee, but not more than 10 years from
        the
       date of grant (or five years from the date of grant for incentive stock
       options if the grantee owned 10% of the Company's voting stock at the
       date of grant). Unless amended, the 1995 Stock Plan will terminate on
       November 15, 2005. The following table summarizes the activity relating
       to options to purchase the Company's common stock:


                                                    Number of   Weighted Average
                                                     Options    Exercise price

      Outstanding at December 31, 2001               251,909       $1.60
      Forfeited - 2002                               (47,000)       1.61
      Granted - 2002 ($0.08 Fair Value)               75,000        1.00
                                                   ----------
      Outstanding at December 31, 2002               279,909        1.44
      Granted - 2003 ($0.10 Fair Value)               54,000        1.85
      Exercised - 2003                               (36,000)       1.33
      Forfeited - 2003                               (26,500)       1.26
                                                   ----------
      Outstanding at December 31, 2003               271,409        1.60
                                                   ----------
      Granted - 2004 ($0.46 Fair Value)               64,500        2.29
      Exercised - 2004                              (103,909)       1.65
      Forfeited - 2004                               (36,000)       2.00
                                                   ----------
      Outstanding at December 31,  2004              196,000        1.69
                                                  ===========

        At December 31, 2004:
        Number of options immediately exercisable                     117,200
        Weighted average exercise price of immediately
         exercisable options                                            $1.39
        Range of exercise price of options outstanding          $1.00 - $2.47
        Weighted-average remaining life of options outstanding     4.62 years
<PAGE>

8.       Stock options (continued)

        The following summarizes assumptions used to value stock options.


                                          2004            2003             2002
                                          ----            ----             ----

           Risk-free interest rate       4.50%          4.00%            4.13%
           Expected option life        5.0 years      5.0 years        5.0 years
           Expected stock price
              Volatility                 23.4%          22.5%            21.2%
           Expected dividends              $0              $0               $0


9. Employee stock ownership plan (ESOP)
        The employees' allocation of ESOP assets is based on their current
        compensation, after 1 year of service and upon reaching the age of 21.
        The annual contribution to the ESOP is at the discretion of the Board of
        Directors. Assets of the plan are comprised entirely of 77,018 shares of
        the Company's stock at December 31, 2004 and 2003, all of which were
        fully allocated at December 31, 2004. Upon retirement from the plan,
        participants can receive distributions of their allocated shares of the
        Company's stock. The assets of the ESOP are held in trust and were
        valued at approximately $139,000, and $199,000 at December 31, 2004 and
        2003, respectively.

10.      Minority Interest
        The Bank owns an 80% interest in the common stock of Midwest, with the
        remaining 20% owned by the President of Midwest. At December 31, 2004
        and 2003, total common stockholders' equity of Midwest was $2,200,229
        and $2,226,820 resulting in a $440,118 and $445,324 minority interest
        reflected on the Company's consolidated balance sheet, respectively. The
        results of Midwest's operations for 2004, 2003 and 2002 are included in
        the Company's consolidated statement of operations.

11.      Commitments and contingencies
        The Bank is party to financial instruments with off-balance sheet risk
        in the normal course of business to meet the financing needs of its
        customers. These financial instruments include commitments to buy, sell
        and fund loans, letters of credit and unused lines of credit. The Bank's
        exposure to credit loss in the event of non-performance is equal to or
        less than the contractual amount of these instruments. The Bank follows
        the same credit policy to make such commitments as that followed by
        loans recorded in the consolidated financial statements. The following
        is a summary of commitments as of December 31:

                                     2004          2003            2002
                                     ----          ----            ----
      Unused lines of credit      $ 4,907,000   $ 3,762,000     $2,094,000
      Commitments to fund loans     3,366,000     2,562,000      3,748,000
      Foreign exchange futures                      75,000
                                  -----------   -----------     ----------
           Total                  $ 8,273,000   $ 6,399,000     $5,842,000
                                  ===========   ===========     ==========
<PAGE>

12.      Related party transactions
        The Company's President also serves as President and Chairman of
        Michigan BIDCO. As such, the President is actively involved in the
        BIDCO's operations, including investment activity and estimation of the
        fair value of its equity investments. In December, 2004, the BIDCO paid
        in full its $600,000 note to the Bank. Additionally, the Bancorp sold
        its 6.10% in the BIDCO. At December 31, 2004, neither the Bank nor the
        Bancorp had a financial interest in or with BIDCO.

        The Bank had loans outstanding of $44,232 and $280,690 to related
        officers and directors at December 31, 2004 and 2003, respectively.
        During 2004, two loans totaling $620,000 were originated. There were no
        related party loans that were originated during 2003 that were
        outstanding at year end. During 2003, a construction line of credit
        issued in 2002 was terminated. Available lines of credit to related
        parties at the December 31, 2004 and 2003, totaled $118,768 and $156,373
        respectively. Related party loans were made in the normal course of
        business and were performing pursuant to terms at December 31, 2004.

13.      Income taxes
        At December 31, 2004 income tax expense of $80,000 was recorded due to
        uncertainties as to the future benefits of the net operating losses.

        At December 31, 2003, the Company recorded an $80,000 tax benefit as a
        deferred tax asset which represented a portion of the existing net
        operating loss carry-forward that was expected to be utilized to offset
        future taxable income.

        The net deferred tax asset at December 31, 2004 and 2003 is comprised
        of the following:

                                                   2004                2003

      Allowance for loan losses              $    123,732        $   276,579
      Net operating loss carry-forward            707,369            487,663
      Tax credit carry-forward                  1,111,810            989,123
      Deferred gain on sale leaseback              71,715             85,568
      Donation carry-forward                        9,058             46,819
      Other                                       138,189             57,708
                                            -------------        ------------
            Deferred tax assets                 2,161,873          1,943,460
                                            -------------        ------------

      Servicing rights                          (373,247)          (339,009)
      Depreciation                               (32,839)           (32,661)
                                            -------------        ------------
           Deferred tax liabilities             (406,086)          (371,670)
                                            -------------        ------------
           Net deferred tax asset               1,755,787          1,571,790
           Valuation allowance for
            deferred tax assets               (1,755,787)        (1,491,790)
                                            -------------        ------------
           Net deferred tax asset            $          0         $   80,000
                                            =============        ============

       The Company has net operating loss carry-forwards of approximately
       $2,080,000 which expire beginning in 2012 and general business credit
       carry-forwards of approximately $1,112,000 which expire beginning in
       2011. Financial statement tax expense amounts differ from the amounts
       computed by applying the statutory federal tax rate of 34% to pretax
       income because of operating losses and valuation allowances recorded to
       reduce deferred tax assets as noted above.


<PAGE>




14.      Short Term Borrowings
        The Bank had a line of credit available from the Federal Home Loan Bank
        (the FHLB) in the amount of $4.0 million and $3.0 million at December
        31, 2004 and 2003, respectively. At December 31, 2004, borrowings were
        secured by the pledge of specific mortgage loans held for investment
        with unpaid principal balances of $5.4 million and available-for-sale
        securities with a balance of $1.1 million.

        The Bank had a line of credit available from the Federal Reserve Bank of
        Chicago (the FRB) in the amount of $5.7 million. There were no amounts
        outstanding on this line from the FRB at December 31, 2004 and 2003.
        Borrowings are secured by the pledge of specific commercial loans held
        for investment with unpaid principal balances of $7.8 million. The
        following information provides a summary of short-term borrowings for
        the years indicated:
                                                  2004               2003
                                                  ----               ----
      Amount outstanding at the end of
      the year and interest rate             $2,416,000  1.65%  $      0

      Maximum amount of borrowing outstanding
       at any month end during the year      $2,601,000         $991,000

         Average amount outstanding during the
          year and weighted average rate     $972,076    1.75%  $227,063  1.29%

15.      Long Term Borrowings
        The Company had a note payable to North Country Bank & Trust (NCB&T)
        secured by the stock of the Bank with a balance of $34,000 and $166,000
        at December 31, 2004 and 2003, respectively. The note has a maturity
        date of February 15, 2005. Interest is payable quarterly at the prime
        rate of NCB&T plus 1.00 percent.

        Dividends by the Bank to the holding company in excess of the prior
        year's annual net income are not permitted without prior permission from
        NCB&T under the terms of the Company's credit facility.

16.      Regulatory matters
       University Bank is subject to various regulatory capital requirements
       administered by the federal banking agencies. Failure to meet minimum
       capital requirements can initiate certain mandatory and possibly
       additional discretionary, actions by regulators that, if undertaken,
       could have a direct material effect on the Company's financial
       statements. Under capital adequacy guidelines and the regulatory
       framework for prompt corrective action, the Bank must meet specific
       capital guidelines that involve quantitative measures of the Bank's
       assets, liabilities, and certain off-balance-sheet items as calculated
       under regulatory accounting practices. The Bank's capital amounts and
       classification are also subject to qualitative judgments by regulators
       about components, risk weightings, and other factors.

       The Bank is also subject to prompt corrective action capital requirement
       regulations set forth by the FDIC. The FDIC requires the Bank to maintain
       a minimum of total capital and Tier 1 capital (as defined) to
       risk-weighted assets (as defined), and of Tier I capital (as defined) to
<PAGE>

16.      Regulatory matters (continued)

       average total assets (as defined). As of December 31, 2004, the Bank did
       not meet all capital adequacy requirements to which it is subject as the
       Bank presently has a written understanding with its regulators that the
       Bank will maintain the ratio of Tier 1 Capital to average assets at 7% or
       more. Management has submitted a plan of corrective action to the FDIC.
       This plan includes the possible issuance of preferred stock.

       As of December 31, 2004, the most recent guidelines from the FDIC
       categorized the Bank as "adequately capitalized" under the regulatory
       framework for prompt corrective action. At December 31, 2003 the Bank was
       classified as "well capitalized." To be categorized as "well
       capitalized," or "adequately capitalized" the Bank must maintain minimum
       total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set
       forth in the table.

<TABLE>
<CAPTION>

                                                                               To Be Adequately           To Be Well
                                                                                 Capitalized              Capitalized
                                                                                 Under Prompt             Under Prompt
                                                                              Corrective Action           Corrective Action
                                                                                  Provisions              Provisions

                                         Amount        Ratio        Amount           Ratio      Amount              Ratio
As of December 31, 2004:

Total capital (to risk
<S>                                     <C>             <C>         <C>               <C>        <C>                <C>
 weighted assets)                       $3,515,000      9.5 %       $2,965,000        8.0 %      $3,706,000         10.0 %
Tier I capital (to risk
 weighted assets)                        3,158,000      8.5 %        1,482,000        4.0 %       2,224,000          6.0 %
Tier I capital (to
 average assets)                         3,158,000      6.5 %        1,959,000        4.0 %       2,449,000          5.0 %


As of December 31, 2003:

Total capital (to risk
 weighted assets)                       $4,129,000     12.3 %       $2,689,000        8.0 %      $3,362,000         10.0 %
Tier I capital (to risk
 weighted assets)                        3,708,000     11.0 %        1,345,000        4.0 %       2,017,000          6.0 %
Tier I capital (to
  average assets)                        3,708,000      8.6 %        1,728,000        4.0 %       2,160,000          5.0 %
</TABLE>


17.      Management's Plan Regarding Continuing Operations
        At December 31, 2004, University Bancorp had an accumulated deficit of
        $2,490,224 and recurring losses from operations for 3 of the past 5
        years. University Bancorp's operations are intended to continue in the
        future. Management has reviewed operating results, prepared projections
        of possible future results, performed other analyses of its operations
        to reduce operating costs and entered new product lines of business.

<PAGE>

17. Management's Plan Regarding Continuing Operations (continued)

        Management of the Company has implemented a plan to improve core
        earnings by adding low-cost deposits, adjusting fees, growing the loan
        portfolio of the Bank, reducing loan delinquencies, liquidating other
        real estate owned, improving the synergy between its subsidiary
        operations, and eliminating inefficient or redundant costs at the Bank
        level. Both the Bank and Midwest are projected to have net income in
        2005, however, the Company's continued operation is dependent upon its
        ability to maintain profitable operations and retain adequate capital
        levels.

18.      Fair Value of Financial Instruments
        The following methods and assumptions were used to estimate fair values
        for financial instruments. The carrying amount is considered to estimate
        fair value for cash and short-term instruments, demand deposits,
        short-term borrowings, accrued interest, and variable rate loans or
        deposits that reprice frequently and fully. Securities fair values are
        based on quoted market prices or, if no quotes are available, on the
        rate and term of the security and on information about the issuer. For
        fixed rate loans or deposits and for variable rate loan or deposits with
        infrequent repricing or repricing limits, the fair value is estimated by
        the discounted cash flow analysis using current market rates for the
        estimated life and credit risk. Fair values for impaired loans are
        estimated using discounted cash flow analyses of underlying collateral
        values, where applicable. Fair value of loans held for sale is based on
        market estimates. Fair value of mortgage servicing rights is estimated
        using discounted cash flows based on current market interest rates net
        of estimated costs of servicing loans. Fair value of mortgage
        subservicing rights is based on a multiple of servicing contract
        revenue. The fair value of debt is based on currently available rates
        for similar financing. The fair value of off-balance sheet items is
        based on the fees or cost that would normally be charged to enter into
        or terminate such agreements. Fair value of unrecognized financial
        instruments includes commitments to extend credit and the fair value of
        letters of credit is considered immaterial.


<PAGE>


18.      Fair Value of Financial Instruments (continued)

        The carrying amounts and fair values of the Company's financial
instruments were as follows:

                                                  December 31, 2004
                                                Carrying        Fair
        Financial Assets                        Amount         Value
        ----------------                        ------         -----
        Cash and short term investments     $ 1,732,000   $ 1,732,000
        Securities available for sale         1,106,000     1,106,000
        Federal Home Loan Bank stock            922,000       922,000
        Loans held for sale                     846,000       846,000
        Loans, net                           42,647,000    43,436,000
        Mortgage servicing rights             1,097,000     1,097,000
        Accrued interest receivable             148,000       148,000

        Financial Liabilities
        Deposits                             44,588,000    44,640,000
        Short term borrowings                 2,416,000     2,416,000
        Long term borrowings                     34,000        34,000
        Accrued interest payable                 50,000        50,000



                                                  December 31, 2003
                                                Carrying       Fair
        Financial Assets                        Amount         Value
        ----------------                        ------         -----
        Cash and short term investments     $ 2,171,000   $ 2,171,000
        Securities available for sale         1,649,000     1,649,000
        Federal Home Loan Bank stock            881,100       881,100
        Loans held for sale                     206,000       206,000
        Loans, net                           34,474,000    35,630,000
        Mortgage servicing rights             1,032,000     1,032,000
        Accrued interest receivable             130,000       130,000

        Financial Liabilities
        Deposits                             38,808,000    39,048,000
        Long term borrowings                    166,000       166,000
        Accrued interest payable                 52,000        52,000


19.      Segment Reporting

        The Company's operations include two primary segments: retail banking
        and mortgage banking. Through its banking subsidiary's branch in Ann
        Arbor, the Company provides traditional community banking services such
        as accepting deposits, making loans, and providing cash management
        services to individuals and local businesses. Mortgage banking
        activities includes servicing of residential mortgage loans for others
        (See Note 2).

<PAGE>


19.      Segment Reporting (continued)


        The Company's two reportable segments are strategic business units that
        are separately managed as they offer different products and services and
        have different marketing strategies. In addition, the mortgage banking
        segment services a different customer base from that of the retail
        banking segment.

        The segment financial information provided below has been derived from
        the internal profitability reporting system used by management to
        monitor and manage the financial performance of the Company. The
        accounting policies of the three segments are the same as those
        described in the summary of significant accounting policies. The Company
        evaluates segment performance based on profit or loss before income
        taxes, not including nonrecurring gains and losses. Certain indirect
        expenses have been allocated based on actual volume measurements and
        other criteria, as appropriate. The Company accounts for transactions
        between segments at current market prices. Segment profit is measured
        before allocation of corporate overhead and income tax expense.


        Information about reportable segments for the year ended December 31,
2004 follows:

<TABLE>
<CAPTION>
                                                              Retail         Mortgage
                                                             Banking          Banking              Totals
<S>                                                        <C>              <C>                 <C>
     Interest income                                       $2,708,738       $   35,533          $2,744,271
     Gain on the sale of mortgage
       loans                                                        0          340,149             340,149
     Other non-interest income                                804,363        2,678,036           3,482,399
     Interest expense                                         772,031           11,927             783,958
     Provision for loan losses                               (87,500)                0            (87,500)
     Salaries and benefits                                  1,348,254        1,518,595           2,866,849
     Occupancy                                                284,147          131,009             415,156
     Other operating expense                                1,660,699        1,432,476           3,093,175
     (Loss) income before tax
        expense                                             (464,531)         (40,289)           (504,820)
     Income tax (benefit) expense                              93,698         (13,698)              80,000
     Segment (loss) profit                                  (558,229)         (26,591)           (584,820)
     Segment assets                                        48,545,358        2,240,340          50,785,698
     Capital expenditures                                     252,530          182,951             435,481
     Depreciation                                             150,776          167,808             318,584
     Amortization                                             258,510          446,287             704,797


<PAGE>

19.      Segment Reporting (continued)


        Information about reportable segments for the year ended December 31,
2003 follows:

                                                              Retail         Mortgage
                                                             Banking          Banking              Totals
      Interest income                                     $2,689,157          $42,942          $2,732,099
      Gain on the sale of mortgage
         loans                                                     0          756,170             756,170
      Other non-interest income                            1,182,413        3,993,999           5,176,322
      Interest expense                                       836,734            4,903             841,637
      Provision for loan losses                              189,400                0             189,400
      Salaries and benefits                                1,711,577        1,646,483           3,358,060
      Occupancy                                              245,931          176,836             422,767
      Other operating expense                              1,524,729        2,313,466           3,838,285
      (Loss) income before tax
         expense                                           (636,801)          651,423              14,442
      Income tax (benefit) expense                         (305,643)          225,643            (80,000)
      Segment (loss) profit                                (331,158)          425,780              94,442
      Segment assets                                      40,667,106        2,356,200          43,023,306
      Capital expenditures                                   108,309          122,747             231,056
      Depreciation                                           153,744          151,996             305,740
      Amortization                                           105,198          865,977             971,175

        Information about reportable segments for the year ended December 31,
2002 follows:


                                                              Retail         Mortgage
                                                             Banking          Banking              Totals
      Interest income                                     $3,148,530          $45,922          $3,194,452
      Gain on the sale of mortgage
         loans                                                     0          236,098             236,098
      Other non-interest income                              813,528        3,391,393           4,204,921
      Interest expense                                     1,036,643            2,520           1,039,163
      Provision for loan losses                              110,000         (11,000)             100,000
      Salaries and benefits                                1,580,656        1,348,884           2,929,540
      Occupancy                                              185,859          163,327             349,186
      Other operating expense                              1,246,494        1,755,051           3,001,545
      (Loss) income before tax
        expense                                            (229,239)          434,837             205,598
      Income tax (benefit) expense                         (153,665)          153,665                   0
      Segment (loss) profit                                 (75,574)          281,172             205,598
      Segment assets                                      44,078,661        2,170,652          46,249,313
      Capital expenditures                                    22,255          106,699             128,954
      Depreciation                                            75,831          119,239             195,070
      Amortization                                           106,967         $522,081             629,048

</TABLE>



<PAGE>


<TABLE>

<CAPTION>


20.      Quarterly Financial Data -Unaudited
       The following tables represent summarized data for each of the quarters
       in 2004 and 2003 (in thousands, except loss per share data).
                                                                                         2004
                                                             ------------------------------------------------------------------
                                                             Quarter           Quarter            Quarter             Quarter
                                                              Ended             Ended              Ended               Ended
                                                              March 31          June 30          September 30        December 31
<S>                                                             <C>               <C>                 <C>                 <C>
Interest income                                                 $635              $643                $720                $746
Interest expense                                                 187               184                 198                 215
                                                             -----------------------------------------------------------------
Net interest income                                              448               459                 522                 531
Provision for losses                                              23                23                (28)               (106)
                                                             -----------------------------------------------------------------
Net interest income after
Provision for losses                                             425               436                 550                 637
Loan set-up and other fees                                       383               508                 311                 370
Loan servicing and subservicing fees                             334               348                 357                 349
Gain on sale of loans                                             89                69                  65                 117
Other non-interest income                                        158               147                 120                  99
Non-interest expense                                           1,574             1,594               1,539               1,669
                                                            ------------------------------------------------------------------
Income tax expense                                                 -                 -                  80                   -
                                                            ------------------------------------------------------------------
Net (loss) available to common shareholders                   ($185)             ($86)              ($216)               ($97)
                                                            ==================================================================
Basic and diluted loss per share                             ($0.05)           ($0.02)             ($0.05)             ($0.02)
                                                           ===================================================================
Weighted average shares outstanding                        4,058,108         4,090,548           4,090,548           4,101,011
                                                           ===================================================================
</TABLE>



<PAGE>



<TABLE>
<CAPTION>

20.      Quarterly Financial Data -Unaudited (continued)

                                                                                         2003
                                                              -----------------------------------------------------------------
                                                                Quarter           Quarter           Quarter            Quarter
                                                                Ended             Ended              Ended             Ended
                                                                March 31          June 30         September 30       December 31
                                                             -----------------------------------------------------------------
<S>                                                             <C>               <C>                <C>                 <C>
Interest income                                                 $ 695             $ 681              $ 671               $ 685
Interest expense                                                  227               218                195                 202
                                                               -----------------------------------------------------------------
Net interest income                                               468               463                476                 483
Provision (credit)for losses                                      106                39                 22                  22
                                                               -----------------------------------------------------------------
Net interest income after
   Provision for losses                                           362               424                454                 461
Loan set-up and other fees                                        822             1,068                965                 528
Loan servicing and subservicing fees                              201               232                280                 415
Gain on sale of loans                                             184               305                180                  87
Other non-interest income                                         115                90                277                 183
Non-interest expense                                            1,611             2,105              2,124               1,779
                                                             -----------------------------------------------------------------
Income before tax benefit                                          73                14                 32               (105)
                                                             -----------------------------------------------------------------
Income tax benefit                                                  -                 -               (80)                   -
                                                             -----------------------------------------------------------------
Net earnings(loss) available to common                           $ 73              $ 14              $ 112             $ (105)
shareholders
                                                            ==================================================================
Basic and diluted earnings (loss) per share                    $ 0.02            $ 0.00              $0.03             $(0.03)
                                                           ===================================================================
Weighted average shares outstanding                         3,899,548         3,899,548          3,951,944           4,009,309
                                                           ===================================================================

</TABLE>


<PAGE>





21.       Parent Company Only Condensed Financial Information
                             Condensed Balance Sheet

                                             December 31,          December 31,
                                                 2004                  2003
                                         --------------------- -----------------
   ASSETS
   Cash and cash equivalents                $    5,626            $      669
   Securities available for sale                  -                   12,316
   Investment in University Bank             3,050,721             3,557,977
   Investment in Michigan BIDCO                 -                     29,258
   Other assets                                  3,137                 3,768
                                           -----------           -----------
      Total Assets                         $ 3,059,484           $ 3,603,988
                                           ===========           ===========
   LIABILITIES AND STOCKHOLDERS' EQUITY
   Notes payable                              $ 34,000             $ 166,000
   Accounts payable                             23,601                 2,000
   Accrued interest payable                        257                 1,361
                                           -----------           -----------
      Total Liabilities                         57,858               169,361
   Stockholders' Equity                      3,001,626             3,434,627
                                           -----------           -----------
      Total Liabilities and
       Stockholders' Equity                $ 3,059,484            $3,603,988
                                           ===========           ===========


<PAGE>




21   Parent Company Only Condensed Financial Information (continued)
                         Condensed Statements of Income

                                                2004        2003       2002
                                            -----------  ---------   --------
     INCOME:
        Interest and dividends on
           investments                      $      266   $   339     $   328
        Net security losses                       (446)  (26,574)         -
                                            -----------  ---------   -------
                    Total (loss)income           (180)   (26,235)        328

     EXPENSES:
        Interest                                 4,907     12,144     20,675
        Public listing                          45,696     43,088     38,202
        Professional fees                       36,976     24,000     33,513
        Other miscellaneous                      2,726      5,250      3,014
                                            ----------   --------    -------
                    Total Expense               90,305     84,482     95,404
     Loss before federal income taxes
          and equity in undistributed
          net loss of subsidiaries            (90,125)  (110,717)    (95,076)
     Federal income taxes                           -          -           -
                                            ----------   --------    -------
     Loss before equity in undistributed
          net loss of subsidiaries            (90,125)  (110,717)    (95,076)
     Equity in undistributed net
         (loss)income of subsidiaries        (494,695)    205,159    300,674
                                            ----------   --------   --------
     Net(loss)income                        $(584,820)   $ 94,442   $205,598
                                            ==========   ========   ========
<PAGE>

<TABLE>
<CAPTION>


21. Parent Company Only Condensed Financial Information (continued)
                                 Condensed Statements of Cash Flows
                                                                                                  For Year Ended
                                                                                      2004            2003               2002
                                                                                   ----------     ------------       ----------
      Cash flow provided by (used in) investing activities:
<S>                                                                                <C>            <C>                <C>
      Net Income (Loss)                                                            $ (584,820)    $     94,442       $ 205,598
      Adjustments to reconcile net loss to net cash provided by
      (used in) operating activities:
       Amortization of goodwill                                                             -                -                -
       Loss on sale of investments                                                        446           27,783                -
       Decrease (increase) in receivable from affiliate                                     -                -          286,196
       Decrease (increase) in other assets                                                631            (407)            (256)
       Decrease (increase) in other liabilities                                        20,498         (97,414)         (71,050)
       Decrease (increase) investment in subsidiaries                                 494,695        (205,159)        (300,673)
       Decrease in investment in Michigan BIDCO                                             -                -                -
                                                                                   ----------     ------------       ----------
         Net cash (used in) provided by operating activities                         (68,551)        (180,755)          119,815
                                                                                   ----------     ------------       ----------
      Cash flow from investing activities:
       Purchase of available for sale securities                                      (8,853)         (98,563)
       Proceeds from sale of available for sale securities                             49,981           58,464                -
                                                                                   ----------     ------------       ----------
         Net cash provided by (used in) investing activities                           41,128         (40,099)
                                                                                   ----------     ------------       ----------
      Cash flow from financing activities:
       Principal payment on notes payable                                           (132,000)        (132,000)        (132,000)
       Issuance of common stock                                                       164,380          141,250          128,413
                                                                                   ----------     ------------       ----------
         Net cash provided by (used in) financing activities                           32,380            9,250          (3,587)
                                                                                   ----------     ------------       ----------
                 Net change in cash and cash equivalents                                4,957        (211,604)          116,228
           Cash and cash equivalents:
             Beginning of year                                                            669          212,273           96,045
                                                                                   ----------     ------------       ----------
             End of year                                                           $    5,626     $        669       $  212,273
                                                                                   ==========     ============       ==========
          Supplemental disclosure of cash flow information:
           Cash paid during the year for:
             Interest                                                              $    6,011     $     12,755           60,686


</TABLE>



<PAGE>






Item 9.         Changes in and Disagreements with Accountants on Accounting and
                Financial Disclosures.

         None

ITEM 9A.        Controls and Procedures.

               (a) Evaluation of Disclosure  Controls and Procedures.  As of the
               end   of   the    period    covered    by   this    report,    an
               -----------------------------------------------------  evaluation
               was carried out under the supervision and with the  participation
               of  the  Company's  management,  including  our  Chief  Executive
               Officer and Chief Financial Officer,  of the effectiveness of the
               design and operation of our  disclosure  controls and  procedures
               (as defined in Rules 13a-14(c) under the Securities  Exchange Act
               of 1934). Based upon that evaluation, the Chief Executive Officer
               and Chief Financial  Officer  concluded that, except as described
               below, the operation of these disclosure  controls and procedures
               were   effective  for   gathering,   analyzing   and   disclosing
               information  required  to be  disclosed  in  connection  with the
               Company's  filing of its Annual  Report on Form 10-K for the year
               ended  December 31,  2004.  During the course of the audit of our
               financial  statements  for the year ended  December 31, 2004, our
               independent  registered  public  accounting  firm, Grant Thornton
               LLP, indicated that the following material  deficiencies,  in the
               aggregate,   constitute  a  material  weakness  in  our  internal
               controls pursuant to standards  established by the Public Company
               Accounting Oversight Board:

                  (1)      The Company lacks sufficiently formalized accounting
                           policies and procedures, including written procedures
                           for the preparation of the Quarterly Report on Form
                           10-Q in accordance with applicable SEC guidelines.

                  (2)      The Company's manual procedures for performing
                           consolidations increase the possibility that errors
                           could occur and our dual controls may not be
                           sufficient to guarantee avoidance of all errors in
                           consolidation.

                  (3)      The Company may have insufficient staff in the
                           accounting and financial reporting departments to
                           meet the needs of Sarbanes-Oxley Section 404
                           standards by June 2006

                  (4)      The Company  replaced  its core  banking  software
                           application  during the summer of 2004.  The core
                           banking system is now out-sourced to a service
                           bureau whereas  previously the bank maintained the
                           core banking system in house.  During the transition
                           and for a period  afterwards it was necessary to
                           give certain members of senior management additional
                           access rights for training and the transition
                           requirements in the new system. In March 2005,
                           access rights for the banking software were revised
                           and access rights were reassigned to levels
                           appropriate for a routine  operating  environment.
                           The controls in the new core banking  application in
                           place today are  significantly  better than the
                           overall control levels in the system that was
                           replaced.

                  Management has begun implementing plans to address each of
                  items 1-3, further improving on the systems and procedures
                  already in place. Management believes that its plans with
                  respect to each of these items will be completed and
                  implemented in the second quarter of 2005.


                  With respect to policies and procedures for the Quarterly
                  Report on Form 10-Q, management notes that it uses a checklist
                  prepared by the American Institute of Certified Public
                  Accountants to assist in the preparation of SEC reports and
                  that it maintains a reference library of SEC and accounting
                  handbooks. Management is implementing plans to further
                  formalize its procedures and
<PAGE>

                  expects to complete and implement this in the second quarter
                  of 2005.

                  Management believes that the Company's general ledger and core
                  processing systems for each entity in the consolidation are
                  effective and are consistent with systems used by others in
                  our industry. We have evaluated our procedures and made
                  changes to increase the automation and dual controls for
                  preparing consolidated results.

                  Management believes that the current staff in the accounting
                  and financial reporting is sufficient and properly trained to
                  implement appropriate internal controls and to generate
                  accurate financial statements. We continue to provide training
                  and to document our systems and procedures to make sure that
                  the Company is able to comply with the internal control report
                  requirements by the applicable deadline.

         (b)      Changes in Internal Controls. Except as described above, there
                  were no significant changes in the Company's internal controls
                  over financial reporting during the fourth quarter of the
                  fiscal year ended December 31, 2004, that have materially
                  affected, or are reasonably likely to materially affect, the
                  Company's internal control over financial reporting

Item 9B. - Recent Events

         On March 31, 2005, the Bank signed a Fourth Amendment to its Purchase
Agreement dated September 14, 2002, with Lower Town Development Group, LLC, the
developer of the site on which the Bank's current headquarters is located. The
Purchase Agreement, as amended, contemplates that the Bank will purchase an
office condominium from Lower Town Development Group, LLC, an entity affiliated
with the current owner and lessor of the Bank's headquarters. The office
condominium would be built on land currently occupied by the Bank's
headquarters.

         The Bank has previously sold and leased back its headquarters facility
at 959 Maiden Lane, Ann Arbor, Michigan. The purchaser of the property, an
affiliate of Lower Town Development Group, L.L.C., owes the Bank a deferred
payment of $200,000. Under the amended purchase agreement, if University Bank,
in is sole discretion, can give notice on or before June 15, 2005 that it will
vacate its 959 Maiden Lane, Ann Arbor, Michigan headquarters by August 1, 2005,
then Lower Town Development Group, LLC agrees to pay University Bank $800,000.
The $800,000 will be payable upon either (i) the closing of the construction
financing pertaining to the office condominium project or (ii) by December 31,
2005, whichever occurs first. The amended purchase agreement provides that the
purchase price for the new 10,000 square foot headquarters will be $2,000,000
instead of $1,800,000.

<PAGE>

PART III.

Item 10. - Directors and Executive Officers of the Registrant

         The information required by this item is incorporated by reference
herein from the portions of the Company's Proxy Statement for its 2004 Annual
Meeting (the "Proxy Statement") to be under the captions:

         Election of Directors
         Executive Officers
         Section 16(a) Beneficial Ownership Reporting Compliance

We have adopted a Code of Ethics for all employees. A copy of the Code of Ethics
is available upon request by writing to the Chief Financial Officer, University
Bancorp, Inc.,959 Maiden Land, Ann Arbor, Michigan 48105.


Item 11. - Executive Compensation

         The information required by this item is incorporated by reference
herein from the portions of the Company's Proxy Statement to be under the
captions:

         Executive Compensation
         Compensation Plans

Item 12. -  Security Ownership of Certain Beneficial Owners and Management

         The information required by this item is incorporated by reference
herein from the portion of the Company's Proxy Statement to be under the
caption:

         Security Ownership of Certain Beneficial Owners and
            Management

                      Equity Compensation Plan Information

The University Bancorp, Inc. 1995 Stock Option Plan authorizes stock options for
issuance to employees, consultants and directors in exchange for services.


The following table sets forth certain information regarding the above
referenced equity compensation plan as of December 31, 2004.
<PAGE>

<TABLE>
<CAPTION>


                                              Equity Compensation Plan Information
                                                     (a)                   (b)                   (c)
                                                  Number of                                   Number of
                                               securities to be                          securities remaining
                                             issued upon exercise    Weighted-average    available for future
  Plan Category                                 of outstanding      exercise price of    ssuance under equity
                                             options, warrants and  outstanding options,   compensation plans
                                                  rights (1)       warrants and rights  (excluding securities
                                                                                         reflected in column (a))
Equity compensation
plans approved by
<S>                                                <C>                    <C>                     <C>
security holders                                   196,000                $1.69                   0
Equity compensation
plans not approved
by security holders                                   0                     NA                    0
      Total                                        196,000                $1.69                   0
</TABLE>

(1) University Bancorp has not granted rights or warrants applicable to this
chart.

Item 13. - Certain Relationships and Related Transactions

         The information required by this item is incorporated by reference
herein from the portion of the Company's Proxy Statement to be under the
caption:

         Certain Relationships and Related Transactions

ITEM 14: Principal Accountant Fees and Services.

        Information relating to principal accountant fees and services is
contained on page 20, under the caption "Independent Public Accountants" in the
University Bancorp, Inc. definitive Proxy Statement dated April 30, 2005,
relating to the 2004 Annual Meeting of Stockholders and the information within
that section is incorporated by reference.


<PAGE>



PART IV.

Item 15. - Exhibits, Financial Statement Schedules

(a) Index of Financial Statements:
                  The following statements are filed as part of this Report:

                  Audited consolidated balance sheets as of December 31, 2004
                  and December 31, 2003, and consolidated statements of
                  operations, comprehensive (loss) income, stockholders' equity
                  and cash flows for the years ended December 31, 2004, 2003,
                  and 2002 of the Company.


         (b) Schedules to the consolidated financial statements required by
         Article 9 of Regulation S-X are not required under the related
         instructions or are inapplicable, and therefore have been omitted.

      (c) Form S-8 relating to the University Bancorp, Inc. 1995 Stock Option
Plan

         (d)   Exhibits:

         (3) Certificate of Incorporation and By-laws:

         3.1          Composite Certificate of Incorporation of the Company, as
                      amended (incorporated by reference to Exhibit 3.1 to the
                      Company's Quarterly Report on Form 10-Q for the quarter
                      ended June 30, 1996).

         3.1.1        Certificate of Amendment, dated June 10, 1998, of the
                      Company's Certificate of Incorporation (incorporated by
                      reference to Exhibit 3.1.1 to the Company's Quarterly
                      Report on Form 10-Q for the quarter ended June 30, 1998).

         3.2          Composite By-laws of the Company (incorporated by
                      reference to Exhibit 3.2 to the Company's Annual Report
                      on Form 10-K for the year ended December 31, 1989).

         (10) Material Contracts.

         10.1         Loan Agreement and Promissory Note dated December 31, 1997
                      issued to North Country Bank & Trust (incorporated by
                      reference to Exhibit 10.1 to the Company's Annual Report
                      on Form 10-K for the year ended December 31, 1997).

         10.2         University Bancorp, Inc. Employee Stock Ownership Plan
                      (the "ESOP"), as amended November 27, 1990 (incorporated
                      by reference to Exhibit 10.2 to the Company's Annual
                      Report on Form 10-K for the year ended December 31, 1990).
                      *

         10.2.1       Amendment to the ESOP, effective as of December 31, 1991
                      (incorporated by reference to Exhibit 10.2.A to the
                      Company's Annual Report on Form 10-K for the year ended
                      December 31, 1991). *

         10.3         University Bank 401(k) Profit Sharing Plan, adopted August
                      1, 1996, effective as of January 1, 1996 (incorporated by
                      reference to Exhibit 10.3 to the Company's Annual Report
                      on Form 10-K for the year ended December 31, 1996). *
<PAGE>

         10.4         1995 Stock Plan of the Company (incorporated by reference
                      to Exhibit A to the definitive Proxy Statement of the
                      Company for 1996 Annual Meeting of Stockholders). *

         10.4.1       Form of Stock Option Agreement related to the 1995 Stock
                      Plan (incorporated by reference to Exhibit 10.7.1 to the
                      Annual Report on Form 10-K for the year ended December 31,
                      1995). *

         10.5         Letter, dated December 1, 1989, from Federal Reserve Bank
                      of Minneapolis (incorporated by reference to Exhibit
                      10.9).


         10.6         Federal Income Tax Allocation Agreement Between Newberry
                      State Bank and Newberry Holding Inc. dated March 21, 1992
                      (incorporated by reference to Exhibit 10.11).

         10.6.1       Federal Income Tax Allocation Agreement Between Newberry
                      Holding Inc. and University Bancorp, Inc. dated May 21,
                      1991 (incorporated by reference to Exhibit 10.11.1).


         21           Subsidiaries of Registrant: List of subsidiaries filed
                      herewith.

         23.1         Reports of Independent Auditors, Richard C. Woodbury,
                      P.C., dated February 25, 2005 regarding Midwest Loan
                      Services, Inc.

         23.2         Consent of Grant Thornton, LLP, Certified Public
                      Accountants

         31.1         Certification pursuant to Section 302 of the
                      Sarbanes-Oxley Act of 2002

         31.2         Certification pursuant to Section 302 of the
                      Sarbanes-Oxley Act of 2002

         32.1         Certificate of the Chief Executive Officer and of
                      University Bancorp, Inc. pursuant to 18 U.S.C. Section
                      1350, as adopted pursuant to Section 906 of the
                      Sarbanes-Oxley Act of 2002.

         32.1        Certificate of the Chief Financial Officer of University
                     Bancorp, Inc. pursuant to 18 U.S.C. Section 1350, as
                     adopted pursuant to Section 906 of the Sarbanes-Oxley
                     Act of 2002.



<PAGE>




 SIGNATURES

         Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                              UNIVERSITY BANCORP, INC.


                              By:      /s/Stephen Lange Ranzini
                                       Stephen Lange Ranzini,
                                       President and Chief Executive Officer
                              Date:    March 29, 2005
                                            By:      /s/Nicholas K. Fortson
                                       Chief Financial Officer
                              Date:    March 29, 2005

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

         Signature                        Title                        Date

/s/Stephen Lange Ranzini            Director, President          March 29, 2005
------------------------
Stephen Lange Ranzini

/s/Robert Goldthorpe                Director, Chairman           March 29, 2005
--------------------
Robert Goldthorpe

/s/Gary Baker                       Director                     March 29, 2005
-------------
Gary Baker

/s/Michael Talley                   Director                     March 29, 2005
-----------------
Michael Talley

/s/Dr. Joseph L. Ranzini            Director                     March 29, 2005
------------------------
Dr. Joseph Lange Ranzini

/s/Paul Lange Ranzini               Director                     March 29, 2005
---------------------
Paul Lange Ranzini

/s/Charles McDowell                 Director                     March 29, 2005
-------------------
Charles McDowell



<PAGE>

<TABLE>
<CAPTION>


                                Index of Exhibits

<S>                                                                            <C>
                                                                                Sequentially
         Exhibit Number and Description                                         Numbered Page

(3) Certificate of Incorporation and By-laws:

3.1      Composite Certificate of Incorporation of the Company, as amended
         (incorporated by reference to Exhibit 3.1 to the June 30, 1996 10-Q").

3.1.1    Certificate of Amendment, dated June 10, 1998, of the Company's
         Certificate of Incorporation (incorporated by reference to Exhibit
         3.1.1 to the June 30, 1998 10-Q").

3.2      Composite By-laws of the Company (incorporated by reference to Exhibit
         3.2 to the 1989 10-K).

(10) Material Contracts.

10.1     Loan Agreement and Promissory Note dated December 31, 1997 issued to
         North Country Bank & Trust (incorporated by reference to Exhibit 10.1
         to the 1997 10-K"))

10.2     University Bancorp, Inc. Employee Stock Ownership Plan (the "ESOP"), as
         amended November 27, 1990 (incorporated by reference to Exhibit 10.2 to
         the 1990 10-K).

10.2.1   Amendment to the ESOP, effective as of December 31, 1991 (incorporated
         by reference to Exhibit 10.2.A to the 1991 10-K).

10.3     University Bank 401(k) Profit Sharing Plan, adopted August 1, 1996,
         effective as of January 1, 1996 (incorporated by reference to Exhibit
         10.3 to the 1996 10-K).

10.4     1995 Stock Plan of the Company (incorporated by reference to Exhibit A
         to the definitive Proxy Statement of the Company for the 1996 Annual
         Meeting of Stockholders (the "1996 Proxy).

10.4.1   Form of Stock Option Agreement related to the 1995 Stock Plan
         (incorporated by reference to Exhibit 10.7.1 to the 1995 10-K).

10.5     Letter, dated December 1, 1989, from Federal Reserve Bank of
         Minneapolis (incorporated by reference to Exhibit 10.9 to the 1989
         10-K).

10.6     Federal Income Tax Allocation Agreement Between
         Newberry State Bank and Newberry Holding Inc. dated
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

         March 21, 1992 (incorporated by reference to
         Exhibit 10.11 to the 1991 10-K).

10.6.1   Federal Income Tax Allocation Agreement Between
         Newberry Holding Inc. and University Bancorp, Inc.
         dated May 21, 1991 (incorporated by reference to
         Exhibit 10.11.1 to the 1991 10-K).

<C>                                                                                       <C>
21       Subsidiaries of Registrant.                                                      79

23.1     Reports of Independent Auditors, Richard C. Woodbury, P.C., dated
         February 25, 2005 regarding Midwest Loan Services, Inc.                          80

23.2     Consent of Grant Thornton, LLP, Independent Registered Public  Accounting
              Firm                                                                        81

23.3     Consent of Richard C. Woodbury, P.C., Independent
              Registered Public Accounting Firm                                           82


31.3        Certification pursuant to Section 302 of the Sarbanes-Oxley
               Act of 2002                                                                83

31.4     Certification pursuant to Section 302 of the Sarbanes-Oxley
               Act of 2002                                                                84

32.2     Certificate of the Chief Executive Officer and of University
          Bancorp, Inc. pursuant to 18 U.S.C. Section 1350, as adopted
          pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                      85

32.2     Certificate of the Chief Financial Officer of University
          Bancorp, Inc. pursuant to 18 U.S.C. Section 1350, as adopted
          pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                      86

</TABLE>

<PAGE>




                     Exhibit 21. Subsidiaries of Registrant.

         University Bank, a Michigan state chartered bank.

         University Insurance & Investment Services, Inc., a Michigan
         Corporation (100% owned by Bank)

         Midwest Loan Services, Inc., a Michigan Corporation (80% owned by
         University Bank)





<PAGE>



EXHIBIT 23.1
                            Richard C. Woodbury, P.C.
                           Certified Public Accountant
                             20017 E. Sharon Avenue
                             Houghton, MI 49931-1904
                             ----------------------
                              Phone: (906) 482-1305
                               Fax: (906) 482-9555
                      Email: rwoodbury@charterinternet.com
                             Website: www.rcwpc.com
                          INDEPENDENT AUDITOR'S REPORT

         Board of Directors
         Midwest Loan Services, Inc.
         Houghton, MI  49931

         We have audited the accompanying balance sheet of Midwest Loan
         Services, Inc., as of December 31, 2004 and 2003, and the related
         statements of income, retained earnings, and cash flows for the years
         then ended. These financial statements are the responsibility of the
         Company's management. Our responsibility is to express an opinion on
         these financial statements based on our audit.

         We conducted our audit in accordance with auditing standards generally
         accepted in the United States of America and the standards applicable
         to financial audits contained in Governmental Auditing Standards,
         issued by the Comptroller General of the United States. Those standards
         require that we plan and perform the audit to obtain reasonable
         assurance about whether the financial statements are free of material
         misstatement. An audit includes examining, on a test basis, evidence
         supporting the amounts and disclosures in the financial statements. An
         audit also includes assessing the accounting principles used and
         significant estimates made by management, as well as evaluating the
         overall financial statement presentation. We believe that our audit
         provides a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
         fairly, in all material respects, the financial position of Midwest
         Loan Services Inc. as of December 31, 2004, and the results of its
         operations and its cash flows for the year then ended in conformity
         with accounting principles generally accepted in the United States of
         America.

         In accordance with Government Auditing Standards, we have also issued
         our report dated February 26, 2004, on our consideration of Midwest
         Loan Services, Inc., internal control and on our tests of its
         compliance with certain provisions of laws, regulations, contracts, and
         grants. Those reports are an integral part of the audit performed in
         accordance with Government Auditing Standards and should be read in
         conjunction with this report in considering the results of our audit.

         The accompanying supplemental information (shown on pages 18-24) is
         presented for the purposes of additional analysis and is not a required
         part of the basic financial statements of Midwest Loan Services Inc.
         Such information has been subjected to the auditing procedures applied
         in the audit of the basic financial statements and, In our opinion, is
         fairly stated, in all material respects, in relation to the financial
         statements taken as a whole.




         Richard C. Woodbury, CPA
         February 25, 2005
<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


We have issued our report dated March 29, 2005 accompanying the consolidated
financial statements incorporated by reference in the annual report of
University Bancorp, Inc. on Form 10-K for the year ended December 31, 2004. We
hereby consent to the incorporation by reference of said report in the
Registration Statement of University Bancorp, Inc. on Form S-8 (File No. 333-
109930 ) effective October 23, 2003.


/S/ GRANT THORNTON LLP


Southfield, Michigan
April 13, 2005




<PAGE>



EXHIBIT 23.3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUTING FIRM

We have issued our report dated February 25, 2005 accompanying the consolidated
financial statements incorporated by reference in the annual report of
University Bancorp, Inc. on Form 10-K for the year ended December 31, 2004. We
hereby consent to the incorporation by reference of said report in the
Registration Statement of University Bancorp, Inc. on form S-8 (File No.
333-10993) effective October 23, 2003.

/S/ Richard C. Woodbury, P.C., CPA


Houghton, Michigan
April 13,  2005



<PAGE>



Exhibit 31.1
                           FORM 10-K 302 CERTIFICATION
                                        I
I, Stephen Ranzini certify that:

1)                I have reviewed this annual report on Form 10-K of University
                  Bancorp, Inc.;

2)                Based on my knowledge, this annual report does not contain any
                  untrue statement of a material fact or omit to state a
                  material fact necessary to make the statements made, in light
                  of the circumstances under which such statements were made,
                  not misleading with respect to the period covered by this
                  annual report;

3)                Based on my knowledge, the financial statements, and other
                  financial information included in this annual report, fairly
                  present in all material respects the financial condition,
                  results of operations and cash flows of the registrant as of,
                  and for, the periods presented in this annual report;

4)                The registrant's other certifying officers and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-15(e) and 15d-15(e)) for the registrant and have:

a)                designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this annual report is being
                  prepared;

b)                evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

c)                disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter (the registrant's
                  fourth fiscal quarter in the case of the annual report) that
                  has materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

5.                The registrant's other certifying officers and I have
                  disclosed, based on our most recent evaluation of internal
                  control over financial reporting, to the registrant's auditors
                  and the audit committee of registrant's board of directors (or
                  persons performing the equivalent functions):
a.                all significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

b.                any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal control over financial reporting. s; and

     Date:    March 29, 2005             /s/Stephen Lange Ranzini
           ------------------             ----------------------------------
                                          Stephen Lange Ranzini
                                          President and Chief Executive Officer
<PAGE>

     Exhibit 31.2
                           FORM 10-K 302 CERTIFICATION

I, Nicholas K. Fortson certify that:

1)                I have reviewed this annual report on Form 10-K of University
                  Bancorp, Inc.;

2)                Based on my knowledge, this annual report does not contain any
                  untrue statement of a material fact or omit to state a
                  material fact necessary to make the statements made, in light
                  of the circumstances under which such statements were made,
                  not misleading with respect to the period covered by this
                  annual report;

3)                Based on my knowledge, the financial statements, and other
                  financial information included in this annual report, fairly
                  present in all material respects the financial condition,
                  results of operations and cash flows of the registrant as of,
                  and for, the periods presented in this annual report;

4)                The registrant's other certifying officers and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-15(e) and 15d-15(e)) for the registrant and have:

d)                designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this annual report is being
                  prepared;

e)                evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

f)                disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter (the registrant's
                  fourth fiscal quarter in the case of the annual report) that
                  has materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

6.                The registrant's other certifying officers and I have
                  disclosed, based on our most recent evaluation of internal
                  control over financial reporting, to the registrant's auditors
                  and the audit committee of registrant's board of directors (or
                  persons performing the equivalent functions):
a.                all significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

b.                any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal control over financial reporting. s; and

     Date:    March 29, 2005             /s/Nicholas K. Fortson
           ------------------             ----------------------
                                            Nicholas K. Fortson
                                            Chief Financial Officer
<PAGE>

     Exhibit 32.1










                             CERTIFICATION PURSUANT
                           TO 18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of University Bancorp, Inc. (the
"Registrant") on Form 10-K for the period ended December 31, 2002 as filed with
the Securities and Exchange Commission on March 29, 2005, hereof (the "Report"),
the undersigned officers certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Registrant.




                                     University Bancorp, Inc


Date:    March 29, 2005              By:   /s/ Stephen Lange Ranzini
      ------------------                   --------------------------
                                           Stephen Lange Ranzini
                                           President and Chief Executive Officer



<PAGE>



     Exhibit 32.2


                             CERTIFICATION PURSUANT
                           TO 18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the annual report of University Bancorp, Inc. (the
"Registrant") on Form 10-K for the period ended December 31, 2002 as filed with
the Securities and Exchange Commission on March 29, 2005, hereof (the "Report"),
the undersigned officers certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, and



(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Registrant.





                                 University Bancorp, Inc



Date:    March 29, 2005         By:    /s/ Nicholas K. Fortson
                                       -----------------------
                                       Nicholas K. Fortson
                                       Chief Financial Officer