Unity Bancorp Reports Quarterly Net Income Increased 35% and Nine Month Net Income Increased 47%

CLINTON, N.J., Oct. 21, 2015 (GLOBE NEWSWIRE) — Unity Bancorp, Inc. (NASDAQ:UNTY), parent company of Unity Bank, reported increased third quarter and year-to-date earnings.   Major contributing factors included strong loan growth, increased deposits and improved credit quality.  Commercial, residential mortgage and consumer lending were up; with over ten percent growth year-to-date for each. 

“Our loan growth is a reflection of our commitment to the funding needs of our communities,” reported James A Hughes, President and CEO.  “We customize our products for our customers and we are entrepreneurial in our approach to providing solutions.  That is the strength of Community Banking; knowing our customers and understanding their needs.” 

Net income was $2.6 million, or $0.30 per diluted share, for the three months ended September 30, 2015, a 35% increase compared to net income of $1.9 million, or $0.24 per diluted share, for the same period a year ago.  Return on average assets and average common equity for the quarter were 1.00% and 13.54%, respectively, compared to 0.82% and 11.89% for the same period a year ago. 

Highlights include:

  • 12.3% loan growth since year-end 2014 – 25.7% growth in consumer loans, 15.7% growth in residential mortgage loans, and 10.2% growth in commercial loans.
  • 14.7% increase in noninterest-bearing demand deposits since year-end 2014.
  • 13.0% increase in net interest income compared to the prior year’s quarter due to strong loan growth. 
  • Net interest margin of 3.60% this quarter compared to 3.56% in the prior year’s quarter.
  • Improved credit quality metrics and reduced loan loss provision – $307 thousand decrease in net charge-offs compared to the prior year’s quarter and a 9.1% decrease in nonperforming loans.   

“I am extremely pleased with the performance of the Bank,” said James A Hughes, President and CEO.  “The sustained improvement in earnings is the direct result of our sales and service culture.  We are experiencing record mortgage and SBA loan origination volume which has contributed to our increased noninterest income.  I remain very optimistic about our future and I look forward to reporting our continued success.”

For the nine months ended September 30, 2015, net income totaled $6.9 million, or $0.81 per diluted share, compared to $4.7 million or $0.61 per diluted share in the prior year’s period.  Return on average assets and average common equity for the nine month periods were 0.95% and 12.69%, respectively, compared to 0.70% and 10.47% for the same period a year ago. 

Net Interest Income

Our core source of earnings, net interest income, increased $1.0 million to $8.6 million for the quarter ended September 30, 2015 compared to the prior year’s period.  This increase was the result of the strong loan growth in residential mortgage, commercial and consumer loans.  Average residential mortgage loans have increased $53.0 million, average commercial loans increased $52.3 million and consumer loans increased $19.6 million for the quarter-ended September 30, 2015 compared to the comparable quarter in 2014. Partially offsetting this increase was the lower level of interest income due to a reduced investment portfolio and the slight increase in deposit interest expense.

The net interest margin increased 4 basis points to 3.60% for the quarter ended September 30, 2015 compared to 3.56% for the prior year’s quarter.  The expansion in the net interest margin was due to strong loan growth, partially offset by lower investment security balances. 

Provision for Loan Losses

The provision for loan losses totaled $200 thousand for the quarter ended September 30, 2015, compared to $550 thousand for the prior year period.  For the nine months ended September 30, 2015, the provision for loan losses was $400 thousand compared to $1.7 million for the same period last year.  The decrease was the result of lower levels of net charge-offs and reduced nonperforming assets. 

Noninterest Income

Noninterest income increased $422 thousand to $2.3 million for the three months ended September 30, 2015, compared to the same period last year. For the nine months ended September 30, 2015, noninterest income increased $790 thousand to $5.8 million, compared to the same period a year ago.   Quarterly and year-to-date noninterest income increased due to higher gains on the sale of mortgage loans.   

During the quarter, $57.7 million in residential mortgage loans were originated, of which $35.7 million were sold at a gain of $926 thousand, compared to $40.1 million originated and $16.5 million sold at a gain of $263 thousand during the prior year’s quarter. For the nine month period, $144.7 million in residential mortgage loans were originated, of which $77.9 million were sold at a gain of $2.0 million, compared to $98.7 million originated and $45.1 million sold at a gain of $816 thousand in the prior year’s period.  All residential mortgage loans originated in 2015 that are held in portfolio for investment are adjustable rate mortgages or 15 year or less fixed rate mortgages. 

In addition to the noninterest income increases noted above, other notable items included:  1) $3.4 million in SBA loan sales this quarter at a net gain of $308 thousand and 2) a decline in BOLI income from the prior year periods as those periods included a death benefit.

Noninterest Expense

Noninterest expense increased $611 thousand to $6.9 million for the quarter and increased $1.4 million to $20.0 million for the nine months ended September 30, 2015, respectively.  The majority of the increase in each period was due to higher compensation and benefits expenses which rose $600 thousand for the quarter and $1.2 million for the nine month period.  Compensation and benefits expenses have increased over the past twelve months due to increased head count in loan origination and support staff.   In addition, mortgage commission expense increased due to the larger volume of mortgages originated and benefits expense increased due to the addition of a supplemental executive retirement plan (“SERP”). 

Other expense fluctuations included:  higher software maintenance and technology consulting expense,  audit expenses related to Federal Deposit Insurance Corporation Improvement Act (“FDICIA”) testing and director fees, while OREO expenses for the quarterly and nine month periods decreased due to lower property tax, maintenance, utility and legal costs to hold these properties. 

Financial Condition

At September 30, 2015, total assets were $1.1 billion, an increase of $43.9 million from year-end 2014:

  • Total loans increased $93.7 million or 12.3%, from year-end 2014 to $855.6 million at September 30, 2015. The majority of the growth came in our commercial, residential mortgage and consumer loan portfolios which increased $41.0 million, $34.6 million and $15.2 million, respectively. 
  • Total deposits increased $71.9 million or 9.1%, to $866.2 million at September 30, 2015, due primarily to increased time deposits and noninterest-bearing demand deposits, partially offset by decreased savings deposits and interest-bearing demand deposits. 
  • Shareholders’ equity was $76.1 million at September 30, 2015, an increase of $5.9 million from year-end 2014, due to year-to-date net income less the dividends paid.
  • Book value per common share was $9.02 as of September 30, 2015.
  • At September 30, 2015, the leverage, common equity Tier I, Tier I and Total Risk Based Capital ratios were 8.92%, 9.37%, 11.25% and 12.50% respectively, all in excess of the ratios required to be deemed “well-capitalized”. 

Credit Quality

  • Nonperforming assets totaled $12.5 million at September 30, 2015, or 1.46% of total loans and OREO, compared to $12.5 million or 1.64% of total loans and OREO at year-end 2014.  
  • Nonperforming loans decreased 5.5% to $10.7 million at September 30, 2015 from year-end.
  • OREO increased $597 thousand to $1.8 million at September 30, 2015 from year-end.
  • The allowance for loan losses totaled $12.4 million at September 30, 2015, or 1.45% of total loans compared to $12.6 million and 1.65% at December 31, 2014.
  • Net charge-offs were $183 thousand for the three months ended September 30, 2015, compared to $490 thousand for the same period a year ago.  For the nine months ended September 30, 2015, net charge-offs were $530 thousand, a decrease of $1.4 million compared to the prior year’s period.

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $1.1 billion in assets and $866 million in deposits.  Unity Bank provides financial services to retail, corporate and small business customers through its 15 retail service centers located in Hunterdon, Middlesex, Somerset, Union and Warren Counties in New Jersey and Northampton County, Pennsylvania.  For additional information about Unity, visit our website at www.unitybank.com , or call 800-618-BANK.

This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance.  These statements may be identified by use of the words “believe”, “expect”, “intend”, “anticipate”, “estimate”, “project” or similar expressions.  These statements involve certain risks, uncertainties, estimates and assumption.9ns made by management, which are subject to factors beyond the company’s control and could impede its ability to achieve these goals.  These factors include those items included in our Annual Report on Form 10-K under the heading “Item IA-Risk Factors” as well as general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, our ability to manage and reduce the level of our nonperforming assets, and results of regulatory exams, among other factors.

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

 

                                 
UNITY BANCORP, INC.    
SUMMARY FINANCIAL HIGHLIGHTS    
September 30, 2015    
                                 
                                 
                  September 30, 2015 vs.    
                  June 30, 2015   September 30, 2014    
(In thousands, except percentages and per share amounts)   September 30, 2015   June 30, 2015   September 30, 2014      %     %     
BALANCE SHEET DATA:                                
Total assets   $     1,052,711     $     1,024,303     $     969,593           2.8   %     8.6   %  
Total deposits         866,247           815,427           781,920           6.2         10.8      
Total loans         855,560           821,696           744,366           4.1         14.9      
Total securities         71,492           74,375           86,879           (3.9 )       (17.7 )    
Total shareholders’ equity         76,065           73,690           68,384           3.2         11.2      
Allowance for loan losses         (12,421 )         (12,404 )         (12,918 )         0.1         (3.8 )    
                                 
FINANCIAL DATA – QUARTER TO DATE:                                
Income before provision for income taxes   $     3,845     $     3,610     $     2,694           6.5         42.7      
Provision for income taxes         1,294           1,182           808           9.5         60.1      
Net income   $     2,551     $     2,428     $     1,886           5.1         35.3      
                                 
Net income per common share – Basic   $     0.30     $     0.29     $     0.24           3.4         25.0      
Net income per common share – Diluted   $     0.30     $     0.28     $     0.24           7.1         25.0      
                                 
Return on average assets         1.00   %     1.01   %       0.82   %       (1.0 )       22.0      
Return on average equity         13.54   %     13.35   %       11.89   %       1.4         13.9      
Efficiency ratio         62.88   %     64.99   %       65.80   %       (3.2 )       (4.4 )    
Net interest margin         3.60   %     3.70   %       3.56   %       (2.7 )       1.1      
                                 
FINANCIAL DATA – YEAR TO DATE:                                
Income before provision for income taxes   $     10,414           $     6,900               50.9      
Provision for income taxes         3,496                 2,193               59.4      
Net income   $     6,918           $     4,707               47.0      
                                 
Net income per common share – Basic   $     0.82           $     0.61               34.4      
Net income per common share – Diluted   $     0.81           $     0.61               32.8      
                                 
Return on average assets         0.95   %           0.70   %           35.7      
Return on average equity         12.69   %           10.47   %           21.2      
Efficiency ratio         64.97   %           69.40   %           (6.4 )    
Net interest margin         3.65   %           3.54   %           3.1      
                                 
SHARE INFORMATION:                                
Market price per share   $     9.77     $     9.79     $     9.63           (0.2 )       1.5      
Dividends paid   $     0.04     $     0.03     $     0.03           0.3         0.3      
Book value per common share   $     9.02     $     8.75     $     8.17           3.1         10.4      
Average diluted shares outstanding (QTD)         8,536           8,524           7,946           0.1         7.4      
                                 
CAPITAL RATIOS:                                
Total equity to total assets         7.23   %     7.19   %       7.05   %       0.6         2.6      
Leverage ratio         8.92   %     9.09   %       8.96   %       (1.9 )       (0.4 )    
Common equity tier 1 risk-based capital ratio         9.37   %     9.39   %     n/a         n/a        n/a      
Tier 1 risk-based capital ratio         11.25   %     11.33   %       11.58   %       (0.7 )       (2.8 )    
Total risk-based capital ratio         12.50   %     12.59   %       12.84   %       (0.7 )       (2.6 )    
                                 
CREDIT QUALITY AND RATIOS:                                
Nonperforming assets   $     12,501     $     11,102     $     12,870           12.6         (2.9 )    
QTD net chargeoffs (annualized) to QTD average loans         0.09   %     (0.11 ) %       0.27   %       181.8         (66.7 )    
Allowance for loan losses to total loans         1.45   %     1.51   %       1.74   %       (4.0 )       (16.7 )    
Nonperforming assets to total loans
and OREO
        1.46   %     1.35   %       1.73   %       8.1         (15.6 )    
Nonperforming assets to total assets         1.19   %       1.08   %       1.33   %       10.2   %     (10.5 ) %  
                                 
                                 

 

                                 
      UNITY BANCORP, INC.    
      CONSOLIDATED BALANCE SHEETS    
      September 30, 2015    
                                 
                                 
                        December 31, 2014   September 30, 2014    
(In thousands, except percentages)   September 30, 2015   December 31, 2014   September 30, 2014      %     %     
ASSETS                                
Cash and due from banks   $     21,863     $     29,351     $     29,384           (25.5 ) %     (25.6 ) %  
Federal funds sold and interest-bearing deposits         66,994           100,470           72,205           (33.3 )       (7.2 )    
Cash and cash equivalents         88,857           129,821           101,589           (31.6 )       (12.5 )    
Securities:                                
Securities available for sale         53,470           60,073           66,054           (11.0 )       (19.1 )    
Securities held to maturity         18,022           20,009           20,825           (9.9 )       (13.5 )    
Total securities         71,492           80,082           86,879           (10.7 )       (17.7 )    
Loans:                                
SBA loans held for sale         13,937           5,179           7,835           169.1         77.9      
SBA loans held for investment         39,728           40,401           44,502           (1.7 )       (10.7 )    
SBA 504 loans         29,221           34,322           34,152           (14.9 )       (14.4 )    
Commercial loans         442,970           401,949           391,338           10.2         13.2      
Residential mortgage loans         255,447           220,878           211,450           15.7         20.8      
Consumer loans         74,257           59,096           55,089           25.7         34.8      
Total loans         855,560           761,825           744,366           12.3         14.9      
Allowance for loan losses         (12,421 )         (12,551 )         (12,918 )         1.0         (3.8 )    
Net loans         843,139           749,274           731,448           12.5         15.3      
Premises and equipment, net         15,297           15,231           15,420           0.4         (0.8 )    
Bank owned life insurance (“BOLI”)         13,285           13,001           12,907           2.2         2.9      
Deferred tax assets         6,107           5,860           6,066           4.2         0.7      
Federal Home Loan Bank (“FHLB”) stock         4,510           6,032           4,907           (25.2 )       (8.1 )    
Accrued interest receivable         3,704           3,518           3,422           5.3         8.2      
Other real estate owned (“OREO”)         1,759           1,162           1,658           51.4         6.1      
Goodwill and other intangibles         1,516           1,516           1,516           –          –       
Other assets         3,045           3,291           3,781           (7.5 )       (19.5 )    
Total assets   $     1,052,711     $     1,008,788     $     969,593           4.4   %     8.6   %  
                                 
LIABILITIES AND SHAREHOLDERS’ EQUITY                          
Liabilities:                                
Deposits:                                
Noninterest-bearing demand   $     175,298     $     152,785     $     149,272           14.7   %     17.4   %  
Interest-bearing demand         123,984           128,875           117,260           (3.8 )       5.7      
Savings         299,017           300,348           292,108           (0.4 )       2.4      
Time, under $100,000         124,348           113,119           115,143           9.9         8.0      
Time, $100,000 and over         143,600           99,214           108,137           44.7         32.8      
Total deposits         866,247           794,341           781,920           9.1         10.8      
Borrowed funds         90,000           125,000           100,000           (28.0 )       (10.0 )    
Subordinated debentures         15,465           15,465           15,465           –          –       
Accrued interest payable         460           474           476           (3.0 )       (3.4 )    
Accrued expenses and other liabilities         4,474           3,385           3,348           32.2         33.6      
Total liabilities         976,646           938,665           901,209           4.0         8.4      
Shareholders’ equity:                                
Common stock         59,205           58,785           58,638           0.7         1.0      
Retained earnings         17,270           11,195           9,751           54.3         77.1      
Accumulated other comprehensive (loss) income         (410 )         143           (5 )       NM       NM      
Total shareholders’ equity         76,065           70,123           68,384           8.5         11.2      
Total liabilities and shareholders’ equity   $     1,052,711     $     1,008,788     $     969,593           4.4   %     8.6   %  
                                 
Issued and outstanding common shares         8,429           8,388           8,370                
                                 

 

                                                     
      UNITY BANCORP, INC.  
      QTD CONSOLIDATED STATEMENTS OF INCOME  
      September 30, 2015  
                                                     
             
                               September 30, 2015 vs.   
     For the three months ended      June 30, 2015   September 30, 2014  
(In thousands, except percentages and per share amounts)   September 30, 2015   June 30, 2015   September 30, 2014      $     %     $     %   
INTEREST INCOME                                                    
Federal funds sold and interest-bearing deposits   $   11     $   6     $   12       $     5           83.3   % $     (1 )         (8.3 ) %
FHLB stock       36         38         40             (2 )         (5.3 )         (4 )         (10.0 )  
Securities:                                                    
Taxable       349         363         461             (14 )         (3.9 )         (112 )         (24.3 )  
Tax-exempt       71         71         81             –            –            (10 )         (12.3 )  
Total securities       420         434         542             (14 )         (3.2 )         (122 )         (22.5 )  
Loans:                                                    
SBA loans       696         605         636             91           15.0           60           9.4    
SBA 504 loans       353         369         419             (16 )         (4.3 )         (66 )         (15.8 )  
Commercial loans       5,378         5,276         4,926             102           1.9           452           9.2    
Residential mortgage loans       2,811         2,716         2,327             95           3.5           484           20.8    
Consumer loans       849         774         589             75           9.7           260           44.1    
Total loans       10,087         9,740         8,897             347           3.6           1,190           13.4    
Total interest income       10,554         10,218         9,491             336           3.3           1,063           11.2    
INTEREST EXPENSE                                                    
Interest-bearing demand deposits       108         103         98             5           4.9           10           10.2    
Savings deposits       255         271         216             (16 )         (5.9 )         39           18.1    
Time deposits       839         725         725             114           15.7           114           15.7    
Borrowed funds and subordinated debentures       730         750         820             (20 )         (2.7 )         (90 )         (11.0 )  
Total interest expense       1,932         1,849         1,859             83           4.5           73           3.9    
Net interest income       8,622         8,369         7,632             253           3.0           990           13.0    
Provision for loan losses       200         –          550             200          100.0           (350 )         (63.6 )  
Net interest income after provision for loan losses       8,422         8,369         7,082             53           0.6           1,340           18.9    
NONINTEREST INCOME                                                    
Branch fee income       399         373         388             26           7.0           11           2.8    
Service and loan fee income       306         466         292             (160 )         (34.3 )         14           4.8    
Gain on sale of SBA loans held for sale, net       308         –          295             308          100.0           13           4.4    
Gain on sale of mortgage loans, net       926         687         263             239           34.8           663           252.1    
BOLI income       95         95         400             –            –            (305 )         (76.3 )  
Net security gains                 28         –              (28 )         (100.0 )         –            –     
Other income       241         244         215             (3 )         (1.2 )         26           12.1    
Total noninterest income       2,275         1,893         1,853             382           20.2           422           22.8    
NONINTEREST EXPENSE                                                    
Compensation and benefits       3,814         3,481         3,214             333           9.6           600           18.7    
Occupancy       598         601         604             (3 )         (0.5 )         (6 )         (1.0 )  
Processing and communications       631         614         667             17           2.8           (36 )         (5.4 )  
Furniture and equipment       393         422         377             (29 )         (6.9 )         16           4.2    
Professional services       251         242         159             9           3.7           92           57.9    
Loan costs       265         160         225             105           65.6           40           17.8    
OREO expenses       15         67         71             (52 )         (77.6 )         (56 )         (78.9 )  
Deposit insurance       163         150         166             13           8.7           (3 )         (1.8 )  
Advertising       203         343         291             (140 )         (40.8 )         (88 )         (30.2 )  
Other expenses       519         572         467             (53 )         (9.3 )         52           11.1    
Total noninterest expense       6,852         6,652         6,241             200           3.0           611           9.8    
Income before provision for income taxes       3,845         3,610         2,694             235           6.5           1,151           42.7    
Provision for income taxes       1,294         1,182         808             112           9.5           486           60.1    
Net income   $   2,551     $   2,428     $   1,886       $     123           5.1   % $     665           35.3   %
                                                     
Effective tax rate       33.7   %     32.7   %     30.0   %                          
                                                     
Net income per common share – Basic   $   0.30     $   0.29     $   0.24                              
Net income per common share – Diluted   $   0.30     $   0.28     $   0.24                              
                                                     
Weighted average common shares outstanding – Basic       8,427         8,425         7,847                              
Weighted average common shares outstanding – Diluted       8,536         8,524         7,946                              
                                                     

 

                                   
UNITY BANCORP, INC.    
YTD CONSOLIDATED STATEMENTS OF INCOME    
September 30, 2015    
                                   
               
     For the nine months ended September 30,      Current YTD vs. Prior YTD    
(In thousands, except percentages and per share amounts)   2015   2014      $     %     
INTEREST INCOME                                  
Federal funds sold and interest-bearing deposits   $   26     $   31       $     (5 )         (16.1 ) %  
FHLB stock       117         127             (10 )         (7.9 )    
Securities:                                  
Taxable       1,100         1,740             (640 )         (36.8 )    
Tax-exempt       213         275             (62 )         (22.5 )    
Total securities       1,313         2,015             (702 )         (34.8 )    
Loans:                                  
SBA loans       1,980         1,863             117           6.3      
SBA 504 loans       1,068         1,251             (183 )         (14.6 )    
Commercial loans       15,720         14,264             1,456           10.2      
Residential mortgage loans       8,108         6,438             1,670           25.9      
Consumer loans       2,322         1,628             694           42.6      
Total loans       29,198         25,444             3,754           14.8      
Total interest income       30,654         27,617             3,037           11.0      
INTEREST EXPENSE                                  
Interest-bearing demand deposits       317         318             (1 )         (0.3 )    
Savings deposits       789         586             203           34.6      
Time deposits       2,250         2,062             188           9.1      
Borrowed funds and subordinated debentures       2,289         2,426             (137 )         (5.6 )    
Total interest expense       5,645         5,392             253           4.7      
Net interest income       25,009         22,225             2,784           12.5      
Provision for loan losses       400         1,700             (1,300 )         (76.5 )    
Net interest income after provision for loan losses       24,609         20,525             4,084           19.9      
NONINTEREST INCOME                                  
Branch fee income       1,118         1,106             12           1.1      
Service and loan fee income       1,068         872             196           22.5      
Gain on sale of SBA loans held for sale, net       671         633             38           6.0      
Gain on sale of mortgage loans, net       1,957         816             1,141           139.8      
BOLI income       284         593             (309 )         (52.1 )    
Net security gains       28         378             (350 )         (92.6 )    
Other income       683         621             62           10.0      
Total noninterest income       5,809         5,019             790           15.7      
NONINTEREST EXPENSE                                  
Compensation and benefits       10,767         9,553             1,214           12.7      
Occupancy       1,871         1,882             (11 )         (0.6 )    
Processing and communications       1,841         1,847             (6 )         (0.3 )    
Furniture and equipment       1,189         1,112             77           6.9      
Professional services       729         617             112           18.2      
Loan costs       647         569             78           13.7      
OREO expenses       117         414             (297 )         (71.7 )    
Deposit insurance       496         515             (19 )         (3.7 )    
Advertising       728         729             (1 )         (0.1 )    
Other expenses       1,619         1,406             213           15.1      
Total noninterest expense       20,004         18,644             1,360           7.3      
Income before provision for income taxes       10,414         6,900             3,514           50.9      
Provision for income taxes       3,496         2,193             1,303           59.4      
Net income   $   6,918     $   4,707       $     2,211           47.0   %  
                                   
Effective tax rate       33.6   %   31.8   %                
                                   
Net income per common share – Basic   $   0.82     $   0.61                    
Net income per common share – Diluted   $   0.81     $   0.61                    
                                   
Weighted average common shares outstanding – Basic       8,423         7,680                    
Weighted average common shares outstanding – Diluted       8,524         7,765                    
                                   

 

                                           
      UNITY BANCORP, INC.    
      QUARTER TO DATE NET INTEREST MARGIN    
      September 30, 2015    
                                           
                               
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)                    
    For the three months ended    
    September 30, 2015   June 30, 2015    
    Average Balance   Interest    Rate/Yield    Average Balance   Interest  Rate/Yield     
ASSETS                                          
Interest-earning assets:                                          
Federal funds sold and interest-bearing deposits   $   34,465     $   11         0.13   % $   20,259     $   6       0.12   %  
FHLB stock       3,517         36         4.06         3,720         38       4.10      
Securities:                                          
Taxable       61,542         349         2.25         63,834         363       2.28      
Tax-exempt       11,612         105         3.59         11,803         105       3.57      
Total securities (A)       73,154         454         2.46         75,637         468       2.48      
Loans:                                          
SBA loans       53,325         696         5.18         47,249         605       5.14      
SBA 504 loans       29,268         353         4.79         29,539         369       5.01      
Commercial loans       433,285         5,378         4.92         422,371         5,276       5.01      
Residential mortgage loans       254,765         2,811         4.38         243,821         2,716       4.47      
Consumer loans       72,641         849         4.64         67,353         774       4.61      
Total loans (B)       843,284         10,087         4.75         810,333         9,740       4.82      
Total interest-earning assets   $   954,420     $   10,588         4.40   % $   909,949     $   10,252       4.52   %  
                                           
Noninterest-earning assets:                                          
Cash and due from banks       24,990                       24,768                  
Allowance for loan losses         (12,619 )                       (12,430 )                
Other assets       44,098                       43,596                  
Total noninterest-earning assets       56,469                       55,934                  
Total assets   $   1,010,889                   $   965,883                  
                                           
LIABILITIES AND SHAREHOLDERS’ EQUITY                                          
Interest-bearing liabilities:                                          
Total interest-bearing demand deposits   $   125,405     $   108         0.34   % $   123,663     $   103       0.33   %  
Total savings deposits       290,413         255         0.35         287,911         271       0.38      
Total time deposits       256,216         839         1.30         220,403         725       1.32      
Total interest-bearing deposits       672,034         1,202         0.71         631,977         1,099       0.70      
Borrowed funds and subordinated debentures       83,383         730         3.47         87,944         750       3.42      
Total interest-bearing liabilities   $   755,417     $   1,932         1.01   % $   719,921     $   1,849       1.03   %  
                                           
Noninterest-bearing liabilities:                                          
Noninterest-bearing demand deposits       176,085                       168,585                  
Other liabilities       4,663                       4,413                  
Total noninterest-bearing liabilities       180,748                       172,998                  
Total shareholders’ equity       74,724                       72,964                  
Total liabilities and shareholders’ equity   $   1,010,889                   $   965,883                  
                                           
Net interest spread         $   8,656         3.39   %       $   8,403       3.49   %  
Tax-equivalent basis adjustment               (34 )                       (34 )          
Net interest income         $   8,622                   $   8,369            
Net interest margin                   3.60   %               3.70   %  
                                           
(A) Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 34 percent and applicable state rates.    
(B) The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued.    
                                           

 

                                           
      UNITY BANCORP, INC.    
      QUARTER TO DATE NET INTEREST MARGIN    
      September 30, 2015    
                                           
                               
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)                    
    For the three months ended    
    September 30, 2015   September 30, 2014    
    Average Balance   Interest    Rate/Yield    Average Balance   Interest  Rate/Yield     
ASSETS                                          
Interest-earning assets:                                          
Federal funds sold and interest-bearing deposits   $   34,465     $   11         0.13   % $   38,754     $   12       0.12   %  
FHLB stock       3,517         36         4.06         3,948         40       4.02      
Securities:                                          
Taxable       61,542         349         2.25         75,685         461       2.44      
Tax-exempt       11,612         105         3.59         13,348         119       3.57      
Total securities (A)       73,154         454         2.46         89,033         580       2.61      
Loans:                                          
SBA loans       53,325         696         5.18         53,400         636       4.76      
SBA 504 loans       29,268         353         4.79         34,310         419       4.85      
Commercial loans       433,285         5,378         4.92         380,983         4,926       5.13      
Residential mortgage loans       254,765         2,811         4.38         201,793         2,327       4.61      
Consumer loans       72,641         849         4.64         53,000         589       4.41      
Total loans (B)       843,284         10,087         4.75         723,486         8,897       4.89      
Total interest-earning assets   $   954,420     $   10,588         4.40   % $   855,221     $   9,529       4.43   %  
                                           
Noninterest-earning assets:                                          
Cash and due from banks       24,990                       29,873                  
Allowance for loan losses         (12,619 )                       (12,980 )                
Other assets       44,098                       44,656                  
Total noninterest-earning assets       56,469                       61,549                  
Total assets   $   1,010,889                   $   916,770                  
                                           
LIABILITIES AND SHAREHOLDERS’ EQUITY                                          
Interest-bearing liabilities:                                          
Total interest-bearing demand deposits   $   125,405     $   108         0.34   % $   116,646     $   98       0.33   %  
Total savings deposits       290,413         255         0.35         271,356         216       0.32      
Total time deposits       256,216         839         1.30         221,584         725       1.30      
Total interest-bearing deposits       672,034         1,202         0.71         609,586         1,039       0.68      
Borrowed funds and subordinated debentures       83,383         730         3.47         91,574         820       3.50      
Total interest-bearing liabilities   $   755,417     $   1,932         1.01   % $   701,160     $   1,859       1.05   %  
                                           
Noninterest-bearing liabilities:                                          
Noninterest-bearing demand deposits       176,085                       148,724                  
Other liabilities       4,663                       3,921                  
Total noninterest-bearing liabilities       180,748                       152,645                  
Total shareholders’ equity       74,724                       62,965                  
Total liabilities and shareholders’ equity   $   1,010,889                   $   916,770                  
                                           
Net interest spread         $   8,656         3.39   %       $   7,670       3.38   %  
Tax-equivalent basis adjustment               (34 )                       (38 )          
Net interest income         $   8,622                   $   7,632            
Net interest margin                   3.60   %               3.56   %  
                                           
(A) Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 34 percent and applicable state rates.    
(B) The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued.     
                                           

 

                                             
    UNITY BANCORP, INC.    
    YEAR TO DATE NET INTEREST MARGIN    
    September 30, 2015    
                                             
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)        
    For the nine months ended    
    September 30, 2015   September 30, 2014    
    Average Balance   Interest    Rate/Yield    Average Balance   Interest    Rate/Yield     
ASSETS                                            
Interest-earning assets:                                            
Federal funds sold and interest-bearing deposits   $   30,657     $   26         0.11   % $   42,869     $   31         0.10   %  
FHLB stock       3,694         117         4.23         4,028         127         4.22      
Securities:                                            
Taxable       64,121         1,100         2.29         84,634         1,740         2.74      
Tax-exempt       11,798         315         3.57         14,920         407         3.64      
Total securities (A)       75,919         1,415         2.49         99,554         2,147         2.87      
Loans:                                            
SBA loans       49,678         1,980         5.33         54,047         1,863         4.60      
SBA 504 loans       30,720         1,068         4.65         33,491         1,251         4.99      
Commercial loans       420,682         15,720         5.00         371,951         14,264         5.13      
Residential mortgage loans       241,675         8,108         4.49         189,365         6,438         4.53      
Consumer loans       67,488         2,322         4.60         48,918         1,628         4.45      
Total loans (B)       810,243         29,198         4.82         697,772         25,444         4.87      
Total interest-earning assets   $   920,513     $   30,756         4.47   % $   844,223     $   27,749         4.39   %  
                                             
Noninterest-earning assets:                                            
Cash and due from banks       26,537                       25,900                    
Allowance for loan losses         (12,583 )                       (13,141 )                  
Other assets       43,637                       44,559                    
Total noninterest-earning assets       57,591                       57,318                    
Total assets   $   978,104                   $   901,541                    
                                             
LIABILITIES AND SHAREHOLDERS’ EQUITY                                            
Interest-bearing liabilities:                                            
Total interest-bearing demand deposits   $   125,216     $   317         0.34   % $   125,341     $   318         0.34   %  
Total savings deposits       289,445         789         0.36         266,384         586         0.29      
Total time deposits       229,512         2,250         1.31         213,339         2,062         1.29      
Total interest-bearing deposits       644,173         3,356         0.69         605,064         2,966         0.65      
Borrowed funds and subordinated debentures       87,714         2,289         3.49         91,304         2,426         3.50      
Total interest-bearing liabilities   $   731,887     $   5,645         1.03   % $   696,368     $   5,392         1.02   %  
                                             
Noninterest-bearing liabilities:                                            
Noninterest-bearing demand deposits       168,852                       141,598                    
Other liabilities       4,463                       3,477                    
Total noninterest-bearing liabilities       173,315                       145,075                    
Total shareholders’ equity       72,902                       60,098                    
Total liabilities and shareholders’ equity   $   978,104                   $   901,541                    
                                             
Net interest spread         $   25,111         3.44   %       $   22,357         3.37   %  
Tax-equivalent basis adjustment               (102 )                       (132 )            
Net interest income         $   25,009                   $   22,225              
Net interest margin                   3.65   %                 3.54   %  
                                             
(A) Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 34 percent and applicable state rates.    
(B) The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued.    
                                             

 

                                   
      UNITY BANCORP, INC.  
      QUARTERLY ALLOWANCE FOR LOAN LOSSES AND LOAN QUALITY SCHEDULES  
      September 30, 2015  
                                   
                                   
Amounts in thousands, except percentages   September 30, 2015   June 30, 2015   March 31, 2015   December 31, 2014   September 30, 2014  
ALLOWANCE FOR LOAN LOSSES:                                  
Balance, beginning of period   $ 12,404     $   12,181     $   12,551     $   12,918     $   12,858    
Provision for loan losses charged to expense     200           –          200         850         550    
      12,604         12,181         12,751         13,768         13,408    
Less: Chargeoffs                                  
SBA loans     86         6         128         569         232    
SBA 504 loans     –            –          589           –            –     
Commercial loans     10         147         100         377         72    
Residential mortgage loans     50           –            –          362         201    
Consumer loans     52         7         30           –          211    
Total chargeoffs     198         160         847         1,308         716    
Add: Recoveries                                  
SBA loans     10         2         37         12         111    
SBA 504 loans       –            –            –            –            –     
Commercial loans     5         370         201         31         95    
Residential mortgage loans       –          10         39         40         20    
Consumer loans       –          1           –          8           –     
Total recoveries     15         383         277         91         226    
Net chargeoffs (recoveries)     183           (223 )       570         1,217         490    
Balance, end of period   $ 12,421     $   12,404     $   12,181     $   12,551     $   12,918    
                                   
LOAN QUALITY INFORMATION:                                  
Nonperforming loans (1)   $ 10,742     $   8,837     $   9,141     $   11,368     $   11,212    
Other real estate owned (“OREO”)     1,759         2,265         1,975         1,162         1,658    
Nonperforming assets     12,501         11,102         11,116         12,530         12,870    
Less:  Amount guaranteed by SBA     225         267         270         1,569         200    
Net nonperforming assets   $ 12,276     $   10,835     $   10,846     $   10,961     $   12,670    
                                   
Loans 90 days past due & still accruing   $ 272     $   273     $   5     $   890           –     
                                   
Performing Troubled Debt Restructurings (TDRs)   $ 3,268     $   3,360     $   3,458     $   3,548     $   4,194    
(1) Nonperforming TDRs included in nonperforming loans     2,808         2,843         2,911         2,960         3,473    
Total TDRs   $ 6,076     $   6,203     $   6,369     $   6,508     $   7,667    
                                   
Allowance for loan losses to:                                  
Total loans at quarter end       1.45   %       1.51   %       1.55   %       1.65   %       1.74   %
Nonperforming loans (1)       115.63           140.36           133.26           110.41           115.22    
Nonperforming assets       99.36           111.73           109.58           100.17           100.37    
Net nonperforming assets       101.18           114.48           112.31           114.51           101.96    
                                   
QTD net chargeoffs (annualized) to QTD average loans:                                  
SBA loans       0.57   %       0.03   %       0.76   %       4.35   %       0.90   %
SBA 504 loans                   –            7.15           –            –     
Commercial loans                   (0.21 )         (0.10 )         0.34           (0.02 )  
Residential mortgage loans       0.08           (0.02 )         (0.07 )         0.59           0.36    
Consumer loans       0.28           0.04           0.20           (0.05 )         1.58    
Total loans       0.09   %     (0.11 ) %       0.30   %       0.63   %       0.27   %
                                   
Nonperforming loans to total loans       1.26   %       1.08   %       1.16   %       1.49   %       1.51   %
Nonperforming loans and TDRs to total loans       1.64           1.48           1.61           1.96           2.07    
Nonperforming assets to total loans and OREO       1.46           1.35           1.41           1.64           1.73    
Nonperforming assets to total assets       1.19           1.08           1.07           1.24           1.33    
                                   

 

                                   
      UNITY BANCORP, INC.    
      QUARTERLY FINANCIAL DATA    
      September 30, 2015    
                                   
                                   
(In thousands, except percentages and per share amounts)   September 30, 2015   June 30, 2015   March 31, 2015   December 31, 2014   September 30, 2014    
SUMMARY OF INCOME:                                  
Total interest income   $   10,554     $   10,218     $   9,884     $   9,802     $   9,491      
Total interest expense       1,932         1,849         1,864         1,914         1,859      
Net interest income       8,622         8,369         8,020         7,888         7,632      
Provision for loan losses       200           –          200         850         550      
Net interest income after provision for loan losses       8,422         8,369         7,820         7,038         7,082      
Total noninterest income       2,275         1,893         1,641         1,660         1,853      
Total noninterest expense       6,852         6,652         6,502         6,045         6,241      
Income before provision for income taxes       3,845         3,610         2,959         2,653         2,694      
Provision for income taxes       1,294         1,182         1,020         952         808      
Net income   $   2,551     $   2,428     $   1,939     $   1,701     $   1,886      
                                   
Net income per common share – Basic   $     0.30     $     0.29     $     0.23     $     0.21     $     0.24      
Net income per common share – Diluted   $     0.30     $     0.28     $     0.23     $     0.20     $     0.24