EX-99.1 2 a1q18earningsexhibit991.htm EXHIBIT 99.1 Exhibit


For Immediate Release
News Media & Financial Analyst Contact:
Unity Bancorp, Inc. (NSDQ: UNTY)
Alan J. Bedner, EVP and CFO
April 24, 2018
(908) 713-4308

ulogo.jpg Unity Bancorp Reports ulogoa01.jpg
Record Earnings up 64% over Prior Year Quarter

primagea01.jpg





Clinton, NJ, April 24, 2018 - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income of $5.2 million, or $0.48 per     diluted share, for the quarter ended March 31, 2018, compared to $3.2 million, or $0.30 per diluted share, for the prior year’s first quarter.  Approximately, $590 thousand or $0.05 per diluted share, of this increase was due to the lower effective tax rate due to the tax reform bill.
Earnings Highlights

•
Net interest income, our primary driver of earnings, increased $2.5 million to $12.9 million for the quarter ended March 31, 2018 compared to the prior year’s first quarter due to strong loan growth and an increased net interest margin.
•
Net interest margin expanded 29 basis points to 3.99%, compared to 3.70% for the prior year’s first quarter. Higher yields on our earning assets exceeded the rising costs of deposits.
•
The provision for loan losses increased to $500 thousand during the quarter ended March 31, 2018 compared to $250 thousand in the prior year’s quarter due to the growth in the loan portfolio.
•
Noninterest expense increased $754 thousand compared to the prior year’s quarter. During 2017, we added two branches and increased headcount which resulted in higher compensation, benefits and occupancy expenses.
•
The effective tax rate declined to 19.1% as a result of the “Tax Cuts and Jobs Act”, which was enacted December 22, 2017 and lowered the corporate tax rate. The Company expects an effective tax rate of 22% going forward. The effective tax rate in the first quarter benefited from the exercise of stock options.

Balance Sheet Highlights

•
Total loans increased $24.4 million or 2.1%, from year-end 2017 to $1.2 billion at March 31, 2018. Residential mortgage, commercial and consumer loan portfolios increased $15.7 million, $8.1 million, and $3.4 million, respectively. Our pipeline in all categories remains strong.
•
Total deposits increased $74.4 million, or 7.1%, to $1.1 billion at March 31, 2018. Time deposits, savings deposits and noninterest-bearing demand deposits have increased $55.6 million, $11.7 million and $9.2 million, respectively.
•
Borrowed funds decreased $94.0 million to $181.0 million at March 31, 2018, due to decreased overnight borrowings and the maturity of a repo.
•
Shareholders’ equity was $123.1 million at March 31, 2018, an increase of $5.0 million from year-end 2017, due to retained net income.
•
Book value per common share was $11.50 as of March 31, 2018.
•
At March 31, 2018, the leverage, common equity Tier I, Tier I and Total Risk Based Capital ratios were 9.46%, 11.14%, 12.07% and 13.24% respectively, all in excess of the ratios required to be deemed “well-capitalized”.
•
Credit quality remains strong with nonperforming assets to total assets of 0.30% at March 31, 2018.

Other Highlights
•
Named one of the Best Places to work in NJ from NJ BIZ for the second year in a row.
•
Opened our 18th branch in Ramsey, NJ.
•
Ranked 43rd by S&P Global of all community banks with assets between $1 billion and $10 billion, achieving Top 10%.

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $1.4 billion in assets and $1.1 billion in deposits. Unity Bank provides financial services to retail, corporate and small business customers through its 18 retail service centers located in Bergen, Hunterdon, Middlesex, Somerset, Union and Warren Counties in New Jersey and Northampton County in 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 assumptions 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
March 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mar 31, 2018 vs.
 
 
 
 
 
 
 
 
 
 
Dec 31, 2017
 
Mar 31, 2017
 
(In thousands, except percentages and per share amounts)
 
Mar 31, 2018
 
Dec 31, 2017
 
Mar 31, 2017
 
 
 %
 
 %
 
BALANCE SHEET DATA:
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
1,439,902

 
$
1,455,496

 
$
1,226,168

 
 
(1.1
) %
 
17.4
 %
 
Total deposits
 
1,117,514

 
1,043,137

 
980,703

 
 
7.1

 
14.0

 
Total loans
 
1,195,110

 
1,170,674

 
1,000,677

 
 
2.1

 
19.4

 
Total securities
 
67,521

 
69,800

 
73,022

 
 
(3.3
)
 
(7.5
)
 
Total shareholders' equity
 
123,104

 
118,105

 
109,305

 
 
4.2

 
12.6

 
Allowance for loan losses
 
(14,196
)
 
(13,556
)
 
(12,681
)
 
 
4.7

 
11.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
FINANCIAL DATA - QUARTER TO DATE:
 
 
 
 
 
 
 
 
 
 
Income before provision for income taxes
 
$
6,464

 
$
6,408

 
$
4,904

 
 
0.9

 
31.8

 
Provision for income taxes
 
1,235

 
2,175

 
1,712

 
 
(43.2
)
 
(27.9
)
 
Impact of Tax Reform Bill
 
—

 
1,733

 
—

 
 
(100.0
)
 
—

 
Net income
 
$
5,229

 
$
2,500

 
$
3,192

 
 
109.2

 
63.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per common share - basic
 
$
0.49

 
$
0.24

 
$
0.30

 
 
104.2

 
63.3

 
Net income per common share - diluted
 
$
0.48

 
$
0.23

 
$
0.30

 
 
108.7

 
60.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Performance ratios:
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
1.53

%
0.74

%
1.07

%
 
106.8

 
43.0

 
Return on average equity
 
17.69

%
8.54

%
12.02

%
 
107.1

 
47.2

 
Efficiency ratio
 
54.00

%
52.45

%
59.08

%
 
3.0

 
(8.6
)
 
Net interest margin
 
3.99

%
3.91

%
3.70

%
 
2.0

 
7.8

 
Noninterest expense to average assets
 
2.40

%
2.25

%
2.50

%
 
6.7

 
(4.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SHARE INFORMATION:
 
 
 
 
 
 
 
 
 
 
 
 
Market price per share
 
$
22.00

 
$
19.75

 
$
16.95

 
 
11.4

 
29.8

 
Dividends paid
 
$
0.06

 
$
0.06

 
$
0.05

 
 
—

 
20.0

 
Book value per common share
 
$
11.50

 
$
11.13

 
$
10.38

 
 
3.3

 
10.8

 
Average diluted shares outstanding (QTD)
 
10,853

 
10,794

 
10,705

 
 
0.5

 
1.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
CAPITAL RATIOS:
 
 
 
 
 
 
 
 
 
 
 
 
Total equity to total assets
 
8.55

%
8.11

%
8.91

%
 
5.4

 
(4.0
)
 
Leverage ratio
 
9.46

%
9.37

%
9.72

%
 
1.0

 
(2.7
)
 
Common equity tier 1 risk-based capital ratio
 
11.14

%
10.81

%
11.46

%
 
3.1

 
(2.8)
 
Tier 1 risk-based capital ratio
 
12.07

%
11.75

%
12.53

%
 
2.7

 
(3.7
)
 
Total risk-based capital ratio
 
13.24

%
12.87

%
13.78

%
 
2.9

 
(3.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CREDIT QUALITY AND RATIOS:
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming assets
 
$
4,333

 
$
3,420

 
$
8,930

 
 
26.7

 
(51.5
)
 
QTD net (recoveries) chargeoffs (annualized) to QTD average loans
 
(0.05
)
%
0.02

%
0.06

%
 
(350.0
)
 
(183.3
)
 
Allowance for loan losses to total loans
 
1.19

%
1.16

%
1.27

%
 
2.6

 
(6.3
)
 
Nonperforming assets to total loans
and OREO
 
0.36

%
0.29

%
0.89

%
 
24.1

 
(59.6
)
 
Nonperforming assets to total assets
 
0.30

%
0.23

%
0.73

%
 
30.4
 %
 
(58.9
) %
 
 
 
 
 
 
 
 
 
 
 
 
 
 





UNITY BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
March 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mar 31, 2018 vs.
 
 
 
 
 
 
 
 
 
 
Dec 31, 2017
 
Mar 31, 2017
 
(In thousands, except percentages)
 
Mar 31, 2018
 
Dec 31, 2017
 
Mar 31, 2017
 
 
 %
 
 %
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
 
$
17,044

 
$
23,701

 
$
18,345

 
 
(28.1
) %
 
(7.1
) %
 
Federal funds sold and interest-bearing deposits
 
99,243

 
126,553

 
84,859

 
 
(21.6
)
 
17.0

 
Cash and cash equivalents
 
116,287

 
150,254

 
103,204

 
 
(22.6
)
 
12.7

 
Securities:
 
 
 
 
 
 
 
 
 
 
 
 
Securities available for sale
 
51,353

 
53,493

 
52,246

 
 
(4
)
 
(1.7
)
 
Securities held to maturity
 
16,168

 
16,307

 
20,776

 
 
(0.9
)
 
(22.2
)
 
Total securities
 
67,521

 
69,800

 
73,022

 
 
(3.3
)
 
(7.5
)
 
Loans:
 
 
 
 
 
 
 
 
 
 
 
 
SBA loans held for sale
 
21,579

 
22,810

 
12,163

 
 
(5.4
)
 
77.4

 
SBA loans held for investment
 
42,734

 
43,999

 
42,403

 
 
(2.9
)
 
0.8

 
Commercial loans
 
636,684

 
628,865

 
544,449

 
 
1.2

 
16.9

 
Residential mortgage loans
 
380,857

 
365,145

 
305,578

 
 
4.3

 
24.6

 
Consumer loans
 
113,256

 
109,855

 
96,084

 
 
3.1

 
17.9

 
Total loans
 
1,195,110

 
1,170,674

 
1,000,677

 
 
2.1

 
19.4

 
Allowance for loan losses
 
(14,196
)
 
(13,556
)
 
(12,681
)
 
 
4.7

 
11.9

 
Net loans
 
1,180,914

 
1,157,118

 
987,996

 
 
2.1

 
19.5

 
Premises and equipment, net
 
23,405

 
23,470

 
23,261

 
 
(0.3
)
 
0.6

 
Bank owned life insurance ("BOLI")
 
24,398

 
24,227

 
13,847

 
 
0.7

 
76.2

 
Deferred tax assets
 
4,059

 
4,017

 
5,552

 
 
1.0

 
(26.9
)
 
Federal Home Loan Bank ("FHLB") stock
 
9,308

 
12,863

 
5,992

 
 
(27.6
)
 
55.3

 
Accrued interest receivable
 
5,898

 
5,447

 
4,483

 
 
8.3

 
31.6

 
Other real estate owned ("OREO")
 
56

 
426

 
1,172

 
 
(86.9
)
 
(95.2
)
 
Goodwill and other intangibles
 
1,516

 
1,516

 
1,516

 
 
—

 
—

 
Other assets
 
6,540

 
6,358

 
6,123

 
 
2.9

 
6.8

 
Total assets
 
$
1,439,902

 
$
1,455,496

 
$
1,226,168

 
 
(1.1
) %
 
17.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing demand
 
$
265,346

 
$
256,119

 
$
220,750

 
 
3.6
 %
 
20.2
 %
 
Interest-bearing demand
 
162,848

 
164,997

 
146,091

 
 
(1.3
)
 
11.5

 
Savings
 
408,255

 
396,557

 
389,802

 
 
2.9

 
4.7

 
Time deposits
 
281,065

 
225,464

 
224,060

 
 
24.7

 
25.4

 
Total deposits
 
1,117,514

 
1,043,137

 
980,703

 
 
7.1

 
14.0

 
Borrowed funds
 
181,000

 
275,000

 
120,000

 
 
(34.2
)
 
50.8

 
Subordinated debentures
 
10,310

 
10,310

 
10,310

 
 
—

 
—

 
Accrued interest payable
 
410

 
436

 
405

 
 
(6.0
)
 
1.2

 
Accrued expenses and other liabilities
 
7,564

 
8,508

 
5,445

 
 
(11.1
)
 
38.9

 
Total liabilities
 
1,316,798

 
1,337,391

 
1,116,863

 
 
(1.5
)
 
17.9

 
Shareholders' equity:
 
 
 
 
 
 
 
 
 
 
 
 
Common stock
 
87,361

 
86,782

 
85,757

 
 
0.7

 
1.9

 
Retained earnings
 
35,713

 
31,117

 
23,414

 
 
14.8

 
52.5

 
Accumulated other comprehensive (loss)
 
30

 
206

 
134

 
 
 NM
 
 NM
 
Total shareholders' equity
 
123,104

 
118,105

 
109,305

 
 
4.2

 
12.6

 
Total liabilities and shareholders' equity
 
$
1,439,902

 
$
1,455,496

 
$
1,226,168

 
 
(1.1
) %
 
17.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issued and outstanding common shares
 
10,709

 
10,615

 
10,535

 
 
 
 
 
 




UNITY BANCORP, INC.
QTD CONSOLIDATED STATEMENTS OF INCOME
March 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mar 31, 2018 vs.
 
 
 
 For the three months ended
 
 
Dec 31, 2017
 
Mar 31, 2017
 
(In thousands, except percentages and per share amounts)
 
Mar 31, 2018
 
Dec 31, 2017
 
Mar 31, 2017
 
 
$
 
%
 
$
 
%
 
INTEREST INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal funds sold, interest-bearing deposits and repos
 
$
205

 
$
257

 
$
129

 
 
$
(52
)
 
(20.2
)%
 
$
76

 
58.9
%
 
FHLB stock
 
134

 
119

 
93

 
 
15

 
12.6

 
41

 
44.1

 
Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
 
492

 
488

 
491

 
 
4

 
0.8

 
1

 
0.2

 
Tax-exempt
 
31

 
31

 
44

 
 
—

 
—

 
(13
)
 
(29.5
)
 
Total securities
 
523

 
519

 
535

 
 
4

 
0.8

 
(12
)
 
(2.2
)
 
Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SBA loans
 
1,183

 
1,023

 
854

 
 
160

 
15.6

 
329

 
38.5

 
Commercial loans
 
7,726

 
7,590

 
6,467

 
 
136

 
1.8

 
1,259

 
19.5

 
Residential mortgage loans
 
4,340

 
4,046

 
3,384

 
 
294

 
7.3

 
956

 
28.3

 
Consumer loans
 
1,529

 
1,490

 
1,132

 
 
39

 
2.6

 
397

 
35.1

 
Total loans
 
14,778

 
14,149

 
11,837

 
 
629

 
4.4

 
2,941

 
24.8

 
Total interest income
 
15,640

 
15,044

 
12,594

 
 
596

 
4.0

 
3,046

 
24.2

 
INTEREST EXPENSE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
 
224

 
183

 
153

 
 
41

 
22.4

 
71

 
46.4

 
Savings deposits
 
776

 
744

 
583

 
 
32

 
4.3

 
193

 
33.1

 
Time deposits
 
1,000

 
837

 
804

 
 
163

 
19.5

 
196

 
24.4

 
Borrowed funds and subordinated debentures
 
768

 
780

 
664

 
 
(12
)
 
(1.5
)
 
104

 
15.7

 
Total interest expense
 
2,768

 
2,544

 
2,204

 
 
224

 
8.8

 
564

 
25.6

 
Net interest income
 
12,872

 
12,500

 
10,390

 
 
372

 
3.0

 
2,482

 
23.9

 
Provision for loan losses
 
500

 
500

 
250

 
 
—

 
—

 
250

 
100.0

 
Net interest income after provision for loan losses
 
12,372

 
12,000

 
10,140

 
 
372

 
3.1

 
2,232

 
22.0

 
NONINTEREST INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Branch fee income
 
330

 
354

 
331

 
 
(24
)
 
(6.8
)
 
(1
)
 
(0.3
)
 
Service and loan fee income
 
564

 
628

 
512

 
 
(64
)
 
(10.2
)
 
52

 
10.2

 
Gain on sale of SBA loans held for sale, net
 
547

 
268

 
485

 
 
279

 
104.1

 
62

 
12.8

 
Gain on sale of mortgage loans, net
 
424

 
343

 
532

 
 
81

 
23.6

 
(108
)
 
(20.3
)
 
BOLI income
 
171

 
181

 
88

 
 
(10
)
 
(5.5
)
 
83

 
94.3

 
Net security losses
 
(15
)
 
(7
)
 
—

 
 
(8
)
 
(114.3
)
 
(15
)
 
(100.0
)
 
Other income
 
265

 
270

 
256

 
 
(5
)
 
(1.9
)
 
9

 
3.5

 
Total noninterest income
 
2,286

 
2,037

 
2,204

 
 
249

 
12.2

 
82

 
3.7

 
NONINTEREST EXPENSE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation and benefits
 
4,834

 
4,455

 
4,095

 
 
379

 
8.5

 
739

 
18.0

 
Occupancy
 
690

 
591

 
600

 
 
99

 
16.8

 
90

 
15.0

 
Processing and communications
 
689

 
659

 
604

 
 
30

 
4.6

 
85

 
14.1

 
Furniture and equipment
 
536

 
542

 
511

 
 
(6
)
 
(1.1
)
 
25

 
4.9

 
Professional services
 
251

 
298

 
226

 
 
(47
)
 
(15.8
)
 
25

 
11.1

 
Loan collection & OREO expenses
 
6

 
(30
)
 
341

 
 
36

 
120.0

 
(335
)
 
(98.2
)
 
Other loan expenses
 
33

 
38

 
83

 
 
(5
)
 
(13.2
)
 
(50
)
 
(60.2
)
 
Deposit insurance
 
186

 
170

 
76

 
 
16

 
9.4

 
110

 
144.7

 
Advertising
 
319

 
321

 
236

 
 
(2
)
 
(0.6
)
 
83

 
35.2

 
Director fees
 
162

 
141

 
197

 
 
21

 
14.9

 
(35
)
 
(17.8
)
 
Other expenses
 
488

 
444

 
471

 
 
44

 
9.9

 
17

 
3.6

 
Total noninterest expense
 
8,194

 
7,629

 
7,440

 
 
565

 
7.4

 
754

 
10.1

 
Income before provision for income taxes
 
6,464

 
6,408

 
4,904

 
 
56

 
0.9

 
1,560

 
31.8

 
Provision for income taxes
 
1,235

 
2,175

 
1,712

 
 
(940
)
 
(43.2
)
 
(477
)
 
(27.9
)
 
Impact of Tax Reform Bill
 
—

 
1,733

 
—

 
 
(1,733
)
 
(100.0
)
 
—

 
—

 
Net income
 
$
5,229

 
$
2,500

 
$
3,192

 
 
$
2,729

 
109.2
%
 
$
2,037

 
63.8
%
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective tax rate
 
19.1
%
 
61.0
%
 
34.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per common share - basic
 
$
0.49

 
$
0.24

 
$
0.30

 
 
 
 
 
 
 
 
 
 
Net income per common share - diluted
 
$
0.48

 
$
0.23

 
$
0.30

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - Basic
 
10,678

 
10,604

 
10,509

 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - Diluted
 
10,853

 
10,794

 
10,705

 
 
 
 
 
 
 
 
 
 





UNITY BANCORP, INC.
QUARTER TO DATE NET INTEREST MARGIN
March 31, 2018
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
 
 
For the three months ended
 
 
March 31, 2018
 
December 31, 2017
 
 
Average Balance
 
Interest
 
 Rate/Yield
 
Average Balance
 
Interest
 
 Rate/Yield
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
Federal funds sold, interest-bearing deposits and repos
 
$
48,936

 
$
205

 
1.70
%
 
$
61,621

 
$
257

 
1.65
%
FHLB stock
 
7,799

 
134

 
6.97

 
7,523

 
119

 
6.28

Securities:
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
 
63,393

 
492

 
3.15

 
65,967

 
488

 
2.93

Tax-exempt
 
5,349

 
38

 
2.88

 
5,469

 
47

 
3.41

Total securities (A)
 
68,742

 
530

 
3.13

 
71,436

 
535

 
2.97

Loans:
 
 
 
 
 
 
 
 
 
 
 
 
SBA loans
 
68,376

 
1,183

 
7.02

 
63,275

 
1,023

 
6.41

Commercial loans
 
632,409

 
7,726

 
4.95

 
611,863

 
7,590

 
4.92

Residential mortgage loans
 
371,061

 
4,340

 
4.74

 
344,636

 
4,046

 
4.66

Consumer loans
 
110,947

 
1,529

 
5.59

 
109,300

 
1,490

 
5.41

Total loans (B)
 
1,182,793

 
14,778

 
5.07

 
1,129,074

 
14,149

 
4.97

Total interest-earning assets
 
$
1,308,270

 
$
15,647

 
4.85
%
 
$
1,269,654

 
$
15,060

 
4.71
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
 
23,244

 
 
 
 
 
23,248

 
 
 
 
Allowance for loan losses
 
(13,949
)
 
 
 
 
 
(13,373
)
 
 
 
 
Other assets
 
65,686

 
 
 
 
 
65,785

 
 
 
 
Total noninterest-earning assets
 
74,981

 
 
 
 
 
75,660

 
 
 
 
Total assets
 
$
1,383,251

 
 
 
 
 
$
1,345,314

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Total interest-bearing demand deposits
 
$
178,385

 
$
224

 
0.51
%
 
$
167,918

 
$
183

 
0.43
%
Total savings deposits
 
403,222

 
776

 
0.78

 
406,281

 
744

 
0.73

Total time deposits
 
252,000

 
1,000

 
1.61

 
220,062

 
837

 
1.51

Total interest-bearing deposits
 
833,607

 
2,000

 
0.97

 
794,261

 
1,764

 
0.88

Borrowed funds and subordinated debentures
 
167,458

 
768

 
1.86

 
166,669

 
780

 
1.86

Total interest-bearing liabilities
 
$
1,001,065

 
$
2,768

 
1.12
%
 
$
960,930

 
$
2,544

 
1.05
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing demand deposits
 
252,128

 
 
 
 
 
258,616

 
 
 
 
Other liabilities
 
10,165

 
 
 
 
 
9,615

 
 
 
 
Total noninterest-bearing liabilities
 
262,293

 
 
 
 
 
268,231

 
 
 
 
Total shareholders' equity
 
119,893

 
 
 
 
 
116,153

 
 
 
 
Total liabilities and shareholders' equity
 
$
1,383,251

 
 
 
 
 
$
1,345,314

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest spread
 
 
 
$
12,879

 
3.73
%
 
 
 
$
12,516

 
3.66
%
Tax-equivalent basis adjustment
 
 
 
(7
)
 
 
 
 
 
(16
)
 
 
Net interest income
 
 
 
$
12,872

 
 
 
 
 
$
12,500

 
 
Net interest margin
 
 
 
 
 
3.99
%
 
 
 
 
 
3.91
%
(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 nondeductable portion of interest expense, assuming a federal tax rate of 21 percent in 2018 35 percent in 2017 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
March 31, 2018
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
 
 
For the three months ended
 
 
March 31, 2018
 
March 31, 2017
 
 
Average Balance
 
Interest
 
 Rate/Yield
 
Average Balance
 
Interest
 
 Rate/Yield
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
Federal funds sold, interest-bearing deposits and repos
 
$
48,936

 
$
205

 
1.70
%
 
$
77,943

 
$
129

 
0.67
%
FHLB stock
 
7,799

 
134

 
6.97

 
5,776

 
93

 
6.53

Securities:
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
 
63,393

 
492

 
3.15

 
64,148

 
491

 
3.10

Tax-exempt
 
5,349

 
38

 
2.88

 
6,443

 
67

 
4.22

Total securities (A)
 
68,742

 
530

 
3.13

 
70,591

 
558

 
3.22

Loans:
 
 
 
 
 
 
 
 
 
 
 
 
SBA loans
 
68,376

 
1,183

 
7.02

 
57,960

 
854

 
5.98

Commercial loans
 
632,409

 
7,726

 
4.95

 
538,593

 
6,467

 
4.87

Residential mortgage loans
 
371,061

 
4,340

 
4.74

 
297,203

 
3,384

 
4.62

Consumer loans
 
110,947

 
1,529

 
5.59

 
94,217

 
1,132

 
4.87

Total loans (B)
 
1,182,793

 
14,778

 
5.07

 
987,973

 
11,837

 
4.86

Total interest-earning assets
 
$
1,308,270

 
$
15,647

 
4.85
%
 
$
1,142,283

 
$
12,617

 
4.48
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
 
23,244

 
 
 
 
 
23,578

 
 
 
 
Allowance for loan losses
 
(13,949
)
 
 
 
 
 
(12,785
)
 
 
 
 
Other assets
 
65,686

 
 
 
 
 
55,493

 
 
 
 
Total noninterest-earning assets
 
74,981

 
 
 
 
 
66,286

 
 
 
 
Total assets
 
$
1,383,251

 
 
 
 
 
$
1,208,569

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Total interest-bearing demand deposits
 
$
178,385

 
$
224

 
0.51
%
 
$
152,392

 
$
153

 
0.41
%
Total savings deposits
 
403,222

 
776

 
0.78

 
378,439

 
583

 
0.62

Total time deposits
 
252,000

 
1,000

 
1.61

 
222,307

 
804

 
1.47

Total interest-bearing deposits
 
833,607

 
2,000

 
0.97

 
753,138

 
1,540

 
0.83

Borrowed funds and subordinated debentures
 
167,458

 
768

 
1.86

 
125,499

 
664

 
2.15

Total interest-bearing liabilities
 
$
1,001,065

 
$
2,768

 
1.12
%
 
$
878,637

 
$
2,204

 
1.02
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing demand deposits
 
252,128

 
 
 
 
 
215,405

 
 
 
 
Other liabilities
 
10,165

 
 
 
 
 
6,792

 
 
 
 
Total noninterest-bearing liabilities
 
262,293

 
 
 
 
 
222,197

 
 
 
 
Total shareholders' equity
 
119,893

 
 
 
 
 
107,735

 
 
 
 
Total liabilities and shareholders' equity
 
$
1,383,251

 
 
 
 
 
$
1,208,569

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest spread
 
 
 
$
12,879

 
3.73
%
 
 
 
$
10,413

 
3.46
%
Tax-equivalent basis adjustment
 
 
 
(7
)
 
 
 
 
 
(23
)
 
 
Net interest income
 
 
 
$
12,872

 
 
 
 
 
$
10,390

 
 
Net interest margin
 
 
 
 
 
3.99
%
 
 
 
 
 
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 nondeductable portion of interest expense, assuming a federal tax rate of 21 percent in 2018 and 35 percent in 2017 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
March 31, 2018
Amounts in thousands, except percentages
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
ALLOWANCE FOR LOAN LOSSES:
 
 
 
 
 
 
 
 
 
 
Balance, beginning of period
 
$
13,556

 
$
13,113

 
$
12,800

 
$
12,681

 
$
12,579

Provision for loan losses charged to expense
 
500

 
500

 
500

 
400

 
250

 
 
14,056

 
13,613

 
13,300

 
13,081

 
12,829

Less: Chargeoffs
 
 
 
 
 
 
 
 
 
 
SBA loans
 
81

 
—

 
34

 
150

 
109

Commercial loans
 
—

 
—

 
31

 
120

 
76

Residential mortgage loans
 
—

 
50

 
5

 
—

 
—

Consumer loans
 
6

 
83

 
170

 
17

 
66

Total chargeoffs
 
87

 
133

 
240

 
287

 
251

Add: Recoveries
 
 
 
 
 
 
 
 
 
 
SBA loans
 
64

 
45

 
36

 
3

 
37

Commercial loans
 
16

 
31

 
15

 
3

 
53

Residential mortgage loans
 
13

 
—

 
—

 
—

 
12

Consumer loans
 
134

 
—

 
2

 
—

 
1

Total recoveries
 
227

 
76

 
53

 
6

 
103

Net chargeoffs
 
(140
)
 
57

 
187

 
281

 
148

Balance, end of period
 
$
14,196

 
$
13,556

 
$
13,113

 
$
12,800

 
$
12,681

 
 
 
 
 
 
 
 
 
 
 
LOAN QUALITY INFORMATION:
 
 
 
 
 
 
 
 
 
 
Nonperforming loans (1)
 
$
4,277

 
$
2,994

 
$
3,742

 
$
5,681

 
$
7,758

Other real estate owned ("OREO")
 
56

 
426

 
707

 
581

 
1,172

Nonperforming assets
 
4,333

 
3,420

 
4,449

 
6,262

 
8,930

Less: Amount guaranteed by SBA
 
27

 
27

 
27

 
41

 
60

Net nonperforming assets
 
$
4,306

 
$
3,393

 
$
4,422

 
$
6,221

 
$
8,870

 
 
 
 
 
 
 
 
 
 
 
 Loans 90 days past due & still accruing
 
$
—

 
$
60

 
$
2,216

 
$
230

 
$
—

 
 
 
 
 
 
 
 
 
 
 
Performing Troubled Debt Restructurings (TDRs)
 
$
774

 
$
786

 
$
—

 
$
—

 
$
—

(1) Nonperforming TDRs included in nonperforming loans
 
—

 
—

 
—

 
—

 
—

Total TDRs
 
$
774

 
$
786

 
$
—

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses to:
 
 
 
 
 
 
 
 
 
 
Total loans at quarter end
 
1.19
%
 
1.16
%
 
1.20
%
 
1.22
%
 
1.27
%
Nonperforming loans (1)
 
331.91

 
452.77

 
350.43

 
225.31

 
163.46

Nonperforming assets
 
327.63

 
396.37

 
294.74

 
204.41

 
142.00

Net nonperforming assets
 
329.68

 
399.53

 
296.54

 
205.75

 
142.97

 
 
 
 
 
 
 
 
 
 
 
QTD net chargeoffs (annualized) to QTD average loans:
 
 
 
 
 
 
 
 
 
 
SBA loans
 
0.10
%
 
(0.28
)%
 
(0.01
)%
 
1.06
%
 
0.50
%
Commercial loans
 
(0.01
)
 
(0.02
)
 
0.01

 
0.08

 
0.02

Residential mortgage loans
 
(0.01
)
 
0.06

 
0.01

 
—

 
(0.02
)
Consumer loans
 
(0.47
)
 
0.30

 
0.62

 
0.07

 
0.28

Total loans
 
(0.05
)%
 
0.02
%
 
0.07
%
 
0.11
%
 
0.06
%
 
 
 
 
 
 
 
 
 
 
 
Nonperforming loans to total loans
 
0.36
%
 
0.26
%
 
0.34
%
 
0.54
%
 
0.78
%
Nonperforming loans and TDRs to total loans
 
0.42

 
0.32

 
0.34

 
0.54

 
0.78

Nonperforming assets to total loans and OREO
 
0.36

 
0.29

 
0.41

 
0.60

 
0.89

Nonperforming assets to total assets
 
0.30

 
0.23

 
0.33

 
0.49

 
0.73





UNITY BANCORP, INC.
QUARTERLY FINANCIAL DATA
March 31, 2018
(In thousands, except percentages and per share amounts)
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
SUMMARY OF INCOME:
 
 
 
 
 
 
 
 
 
 
Total interest income
 
$
15,640

 
$
14,195

 
$
13,477

 
$
12,594

 
$
12,280

Total interest expense
 
2,768

 
2,378

 
2,327

 
2,204

 
2,225

Net interest income
 
12,872

 
11,817

 
11,150

 
10,390

 
10,055

Provision for loan losses
 
500

 
500

 
400

 
250

 
200

Net interest income after provision for loan losses
 
12,372

 
11,317

 
10,750

 
10,140

 
9,855

Total noninterest income
 
2,286

 
2,008

 
2,021

 
2,204

 
2,373

Total noninterest expense
 
8,194

 
7,554

 
7,421

 
7,440

 
7,303

Income before provision for income taxes
 
6,464

 
5,771

 
5,350

 
4,904

 
4,925

Provision for income taxes
 
1,235

 
2,014

 
1,906

 
1,712

 
1,765

DTA Tax Rate Adjustment
 
—

 
—

 
—

 
—

 
—

Net income
 
$
5,229

 
$
3,757

 
$
3,444

 
$
3,192

 
$
3,160

 
 
 
 
 
 
 
 
 
 
 
Net income per common share - Basic
 
$
0.49

 
$
0.36

 
$
0.33

 
$
0.30

 
$
0.33

Net income per common share - Diluted
 
$
0.48

 
$
0.35

 
$
0.32

 
$
0.30

 
$
0.32

 
 
 
 
 
 
 
 
 
 
 
COMMON SHARE DATA:
 
 
 
 
 
 
 
 
 
 
Market price per share
 
$
22.00

 
$
19.75

 
$
19.80

 
$
17.20

 
$
16.95

Dividends paid
 
$
0.06

 
$
0.06

 
$
0.06

 
$
0.06

 
$
0.05

Book value per common share
 
$
11.50

 
$
11.13

 
$
10.94

 
$
10.64

 
$
10.38

 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - Basic
 
10,678

 
10,604

 
10,572

 
10,546

 
10,509

Weighted average common shares outstanding - Diluted
 
10,853

 
10,794

 
10,761

 
10,735

 
10,705

Issued and outstanding common shares
 
10,709

 
10,615

 
10,586

 
10,567

 
10,535

 
 
 
 
 
 
 
 
 
 
 
OPERATING RATIOS (Annualized):
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
1.53
%
 
0.74
%
 
1.17
%
 
1.11
%
 
1.07
%
Return on average equity
 
17.69

 
8.54

 
13.00

 
12.47

 
12.02

Efficiency ratio
 
54.00

 
52.45

 
54.86

 
56.41

 
59.08

Noninterest expense to average assets
 
2.40

 
2.25

 
2.35

 
2.39

 
2.50

 
 
 
 
 
 
 
 
 
 
 
BALANCE SHEET DATA:
 
 
 
 
 
 
 
 
 
 
Total assets
 
1,439,902

 
1,455,496

 
1,329,834

 
1,275,517

 
1,226,168

Total deposits
 
1,117,514

 
1,043,137

 
1,043,632

 
1,003,967

 
980,703

Total loans
 
1,195,110

 
1,170,674

 
1,092,873

 
1,046,804

 
1,000,677

Total securities
 
67,521

 
69,800

 
72,105

 
75,066

 
73,022

Total shareholders' equity
 
123,104

 
118,105

 
115,814

 
112,447

 
109,305

Allowance for loan losses
 
(14,196
)
 
(13,556
)
 
(13,113
)
 
(12,800
)
 
(12,681
)
 
 
 
 
 
 
 
 
 
 
 
TAX EQUIVALENT YIELDS AND RATES:
 
 
 
 
 
 
 
 
 
 
Interest-earning assets
 
4.85
%
 
4.71
%
 
4.66
%
 
4.58
%
 
4.48
%
Interest-bearing liabilities
 
1.12

 
1.05

 
1.04

 
1.03

 
1.02

Net interest spread
 
3.73

 
3.66

 
3.62

 
3.55

 
3.46

Net interest margin
 
3.99

 
3.91

 
3.88

 
3.79

 
3.70

 
 
 
 
 
 
 
 
 
 
 
CREDIT QUALITY:
 
 
 
 
 
 
 
 
 
 
Nonperforming assets
 
4,333

 
3,420

 
4,449

 
6,262

 
8,930

QTD net chargeoffs (annualized) to QTD average loans
 
(0.05
)%
 
0.02
%
 
0.07
%
 
0.11
%
 
0.06
%
Allowance for loan losses to total loans
 
1.19

 
1.16

 
1.20

 
1.22

 
1.27

Nonperforming assets to total loans and OREO
 
0.36

 
0.29

 
0.41

 
0.60

 
0.89

Nonperforming assets to total assets
 
0.30

 
0.23

 
0.33

 
0.49

 
0.73

 
 
 
 
 
 
 
 
 
 
 




(In thousands, except percentages and per share amounts)
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
CAPITAL RATIOS AND OTHER:
 
 
 
 
 
 
 
 
 
 
Total equity to total assets
 
8.55

 
8.11

 
8.71

 
8.82

 
8.91

Leverage ratio
 
9.46

 
9.37

 
9.70

 
9.66

 
9.72

Common equity tier 1 risk-based capital ratio
 
11.14

 
10.81

 
11.27

 
11.32

 
11.46

Tier 1 risk-based capital ratio
 
12.07

 
11.75

 
12.26

 
12.34

 
12.53

Total risk-based capital ratio
 
13.24

 
12.87

 
13.30

 
13.59

 
13.78

Number of banking offices
 
18

 
18

 
17

 
17

 
17

Number of ATMs
 
19

 
19

 
18

 
18

 
18

Number of employees
 
199

 
199

 
166

 
186

 
181


UNITY BANCORP, INC.
Reconciliation of GAAP vs. Non-GAAP Financials
March 31, 2018

 
 
QTD
 
QTD
 
QTD
 
QTD
 
QTD
(In thousands, except percentages and per share amounts)
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
GAAP
 
 
 
 
 
 
 
 
 
 
Income before provision for income taxes
 
$
6,464

 
$
6,408

 
$
5,771

 
$
5,350

 
$
4.904

Provision for income taxes
 
1,235

 
3,908

 
2,014

 
1,906

 
1,712

Net income
 
$
5,229

 
$
2,500

 
$
3,757

 
$
3,444

 
$
3,192

 
 
 
 
 
 
 
 
 
 
 
Effective tax rate
 
19.1
%
 
61.0
%
 
34.9
%
 
35.6
%
 
34.9
%
 
 
 
 
 
 
 
 
 
 
 
Net income per:
 
 
 
 
 
 
 
 
 
 
Common share - basic
 
$
0.49

 
$
0.24

 
$
0.36

 
$
0.33

 
$
0.30

Common share - diluted
 
$
0.48

 
$
0.23

 
$
0.35

 
$
0.32

 
$
0.3

 
 
 
 
 
 
 
 
 
 
 
Performance ratios:
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
1.53
%
 
0.74
%
 
1.17
%
 
1.11
%
 
1.07
%
Return on average equity
 
17.69
%
 
8.54
%
 
13.00
%
 
12.47
%
 
12.02
%
 
 
 
 
 
 
 
 
 
 
 
NON-GAAP
 
 
 
 
 
 
 
 
 
 
Income before provision for income taxes
 
$
6,464

 
$
6,408

 
$
5,771

 
$
5,350

 
$
4,904

Provision for income taxes
 
1,235

 
3,908

 
2,014

 
1,906

 
1,712

Net income before nonrecurring adjustments (GAAP)
 
5,229

 
2,500

 
3,757

 
3,444

 
3,192

Nonrecurring adjustments:
 
 
 
 
 
 
 
 
 
 
Impact of Tax Reform Bill
 
—

 
1,733

 
—

 
—

 
—

Core net income (Non-GAAP)
 
$
5,229

 
$
4,233

 
$
3,757

 
$
3,444

 
$
3,192

 
 
 
 
 
 
 
 
 
 
 
Effective tax rate
 
19.1
%
 
33.9
%
 
34.9
%
 
35.6
%
 
34.9
%
 
 
 
 
 
 
 
 
 
 
 
Core net income per:
 
 
 
 
 
 
 
 
 
 
Common share - basic
 
$
0.49

 
$
0.40

 
$
0.36

 
$
0.33

 
$
0.30

Common share - diluted
 
$
0.48

 
$
0.39

 
$
0.35

 
$
0.32

 
$
0.30

 
 
 
 
 
 
 
 
 
 
 
Core performance ratios:
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
1.53
%
 
1.25
%
 
1.17
%
 
1.11
%
 
1.07
%
Return on average equity
 
17.69
%
 
14.46
%
 
13.00
%
 
12.47
%
 
12.02
%