8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

April 23, 2009

Date of Report (Date of earliest event reported)

UNITY BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

New Jersey

(State or Other Jurisdiction of Incorporation)

1-12431	22-3282551
(Commission File Number)	(I.R.S. Employer Identification No.)

64 OLD HIGHWAY 22, CLINTON, NEW JERSEY, 08809

(Address of Principal Executive Office) (Zip Code)

(908) 730-7630

(Registrant's Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 r Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 r Soliciting material pursuant to Rule 14a12 under the Exchange Act (17 CFR 240.14a-12)

 r Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 r Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operation and Financial Condition

The Registrant issued a press release on April 23, 2009 announcing results for the quarter ended March 31, 2009, the full text of which is incorporated by reference to this Item.

Item 9.01 Financial Statements and Exhibits.

(d)		Exhibits
EXHIBIT
99.1	Press release issued by the Registrant on April 23, 2009

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

	UNITY BANCORP, INC.
	(Registrant)                                                                                                                      ;
Date: April 23, 2009	By:	/s/     Alan J. Bedner
		Alan J. Bedner   EVP and Chief Financial Officer

EXHIBIT INDEX

EXHIBIT #	DESCRIPTION
99.1	Press release issued by the Registrant on April 23, 2009

EX-99.1

                                      

Unity Bancorp, Inc.

64 Old Highway 22

Clinton, NJ 08809

800 618-BANK

 www.unitybank.com

NewsNewsNewsNewsNews

For Immediate Release:

April 23, 2009

News Media & Financial Analyst Contact:

Alan J. Bedner, EVP

Chief Financial Officer

(908) 713-4308

Unity Bancorp Reports First Quarter Earnings

Clinton, NJ - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income of $731 thousand or $0.05 per diluted share, for the quarter ended March 31, 2009, compared to net income of $584 thousand or $0.07 per diluted share, for the quarter ended December 31, 2008, and $1.2 million, or $0.17 per diluted share, for the quarter ended March 31, 2008.  Earnings per share for the first quarter of 2009 have been adjusted to reflect the full impact of the dividend on the preferred stock issued to the United States Treasury on December 5, 2008.  Return on average assets and average common equity for the quarter ended March 31, 2009, was 0.33% and 2.90%, respectively, as compared to 0.26% and 3.56%, respectively, for the quarter ended December 31, 2008 and 0.65% and 10.50%, respectively, for the quarter ended March 31, 2008.

James A. Hughes, Unity Bancorp’s President and CEO, said, “The times are indeed challenging; however they are also a time of great opportunity.  As the larger banks contract inward, it is time for community banks to increase market share by selling the message that when it comes to banking, smaller is better.  We approach these opportunities as a well capitalized institution, ready to lend in our communities.” Mr. Hughes added, “I am pleased that our operating results increased quarter over quarter and that Unity continues to remain a profitable institution.  However, operating results continue to be affected by the downturn in the economy.  We have taken proactive steps to decrease our expense base.  In the fourth quarter of 2008, Unity decided to exit the SBA program as a line of business and closed all SBA loan production offices outside our primary trade area.  We now offer SBA loans only as an additional credit product to customers in our markets. The decision to reduce our SBA activity was made due to deterioration in the loan portfolio and the reduced profitability on the sale of this product into the secondary markets.  We continue to experience challenges with our existing small business customers, many of which continue to experience stress due to the economy.  As a result, we will continue to have elevated provisions for loan losses.  We continue to be aggressive in working with and managing delinquent borrowers and are making every attempt to bring credit quality to more normalized levels.”

Net Interest Income

Since March 31, 2008, the Federal Open Market Committee has lowered interest rates 200 basis points in an attempt to stimulate economic activity. These decreases have resulted in lower yields on earning assets in addition to lower funding costs.  During the remainder of 2009, we expect net interest margin to expand as higher cost certificates of deposit re-price in the current lower rate environment. For the quarter ended March 31, 2009, net interest income was $6.8 million, an increase of 2.1% from March 31, 2008.  Factors affecting first quarter net interest income include:

·   The yield on interest-earning assets decreased 106 basis points to 5.87% from 6.93% for the same period last year.

·   The cost of interest-bearing liabilities decreased 63 basis points from 3.73% to 3.10% in the first quarter of 2009.

·   Average earning assets, consisting primarily of loans, rose 18.0%.

·   Net interest margin was 3.14%, a 50 basis point decline from 3.64% in the first quarter of 2008.

Noninterest Income

Historically, Unity has generated noninterest income from gains on the sale of its SBA loans.  In the fourth quarter of 2008, Unity decided to exit the SBA program as a line of business and closed all SBA loan production offices outside its primary trade area.  Consequently, this decision will result in reduced noninterest income.

For the quarter ended March 31, 2009, noninterest income was $1.3 million, a decrease of 7.4% from March 31, 2008. Non-interest income was affected by the following factors:

·   Service charges on deposit accounts remained relatively flat compared to the prior year’s period.

·   Service and loan fee income decreased 16% to $252 thousand in 2009, due to lower levels of prepayment fees.

·   Net security gains amounted to $515 thousand, compared to $70 thousand from the prior period.  The gains were the result of the sale of approximately $20 million dollars of fixed income securities.

·   Gains on sales of SBA loans amounted to $29 thousand, compared to $576 thousand a year ago.

·   Gains on the sales of residential mortgage loans amounted to $64 thousand, compared to $21 thousand from the prior year’s period.

Noninterest Expense

As a result of current market conditions, there were significant head-count reductions enacted in the fourth quarter of 2008, primarily related to the closing of SBA loan production offices outside of the Company’s primary trade area.  In addition, the Company undertook other expense saving measures which will benefit 2009.  However, these expense reductions will be partially offset by increases in FDIC insurance premiums.  In addition, the banking industry and the Company will be assessed a substantial one-time FDIC insurance premium in either the second or third quarter of 2009, depending on final legislation.

For the quarter ended March 31, 2009, noninterest expenses were $5.6 million, a decrease of 3.7% from March 31, 2008. The following factors affected our noninterest expense:

·   Compensation and benefits expense amounted to $2.6 million, a decrease of $596 thousand, or 18.5% due to reduced head count.

·   Processing and communications and occupancy expense declined by 5.1% and 2.0%, respectively, due to reduced communications costs from renegotiated contracts and a decline in capital expenditures.

·   FF&E expense increased $107 thousand, primarily due to depreciation expense on new equipment and software and increased software maintenance charges.

·   Professional fees increased $48 thousand, due to increased consulting, legal and audit costs.

·   Loan collection costs increased $96 thousand, due to increased collection costs on delinquent loans.

·   FDIC insurance premiums increased $238 thousand, due primarily to the increase in FDIC insurance rates.

Financial Condition

At March 31, 2009, total assets were $886.7 million, a 9.8% increase from a year ago.

·   Total loans increased $67.0 million, or 11.1%, from $602.9 million at March 31, 2008. The increase was across all product lines. SBA 7(a), SBA 504, commercial, residential and consumer loans increased 7.5%, 7.3%, 0.6%, 62.9% and 8.1%, respectively.  Growth in the residential mortgage portfolio was due to a decision to originate and retain Jumbo mortgages.

·   Total securities increased $43.7 million as Unity took advantage of favorable credit spreads to invest excess liquidity.

·   Total deposits increased 9.5% or $61.0 million to $703.3 million at March 31, 2009.  This increase was due to an $82.0 million increase in time deposits and a $9.1 million increase in interest-bearing checking accounts. These increases were partially offset by a $5.1 million decrease in demand deposits and a $25.0 million decline in savings deposits.  During 2009, the Company expects run off in time deposits to migrate to its lower cost accounts.

·   Total borrowed funds increased $2.0 million to support the growth in the investment portfolio.

·   Shareholders’ equity was $67.5 million at March 31, 2009, an increase of $19.6 million, primarily due to the issuance of $20.6 million of preferred stock under the U.S. Department of Treasury’s Capital Purchase Program.

·   Book value per common share was $6.93.

·   At March 31, 2009 the leverage, Tier I and total risk based capital ratios were 9.28%, 12.32% and 13.57%, respectively.

Credit Quality

·   Nonperforming assets totaled $20.7 million at March 31, 2009, or 3.1% of total loans and “OREO” compared to $4.4 million, or 0.7% of total loans and “OREO” a year ago. The increase in nonperforming assets was primarily related to the credit deterioration in the SBA 7(a) and SBA 504 portfolios, most of which is secured by real estate.

·   The allowance for loan losses totaled $10.3 million at March 31, 2009, or 1.54% of total loans. The provision for loan losses for the first three months of 2009 amounted to $1.5 million, an increase of $1.1 million from the same period a year ago.

·   Net charge-offs were $1.5 million for the first three months of 2009, compared to $183 thousand for the same period a year ago.  The increase in net charge-offs for the quarter was primarily related to credit deterioration in SBA 7(a) and 504 loans.

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $900 million in assets and $700 million in deposits.  Unity Bank provides financial services to retail, corporate and small business customers through its 16 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 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 general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, and results of regulatory exams, among other factors.

Unity Bancorp, Inc.
Consolidated Financial Highlights
(Dollars in thousands, except per share data)
										March 09 vs.
BALANCE SHEET DATA:	March 31, 2009			December 31, 2008			March 31, 2008			December 08			March 08
Assets	$	886,677		$	898,310		$	807,874			(1.3	) %	9.8	%
Deposits		703,266			707,117			642,282			(0.5	)	9.5
Loans		669,902			685,946			602,943			(2.3	)	11.1
Securities		158,022			149,509			114,348			5.7		38.2
Shareholders' equity		67,525			67,803			47,896			(0.4	)	41.0
Allowance for loan losses		10,307			10,326			8,650			(0.2	)	19.2
FINANCIAL DATA - QUARTER TO DATE:
Net income before taxes	$	1,067		$	218		$	1,870			389.4	%	(42.9	) %
Federal and state income tax provision (benefit)		336			(366	)		626			(191.8	)	(46.3	)
Net income		731			584			1,244			25.2		(41.2	)
Per share-basic		0.05			0.07			0.18			(28.6	)	(72.2	)
Per share-diluted		0.05			0.07			0.17			(28.6	)	(70.6	)
Return on average assets		0.33	%		0.26	%		0.65	%		26.9		(49.2	)
Return on average common equity		2.90			3.56			10.50			(18.4	)	(72.3	)
Efficiency ratio		73.02			75.81			71.95			(3.7	)	1.5
SHARE INFORMATION:
Closing price per share	$	3.19		$	3.90		$	7.48			(18.2	) %	(57.3	) %
Cash dividends declared		0.00			0.00			0.05			-		-
Book value per common share		6.93			6.99			6.76			(0.9	)	2.5
Average diluted shares outstanding (QTD)		7,148			7,190			7,271			(0.6	)	(1.7	)
CAPITAL RATIOS:
Total equity to total assets		7.62	%		7.55	%		6.28	%		0.9	%	21.3	%
Tier I capital to average assets (leverage)		9.28			9.54			8.06			(2.7	)	15.1
Tier I capital to risk-adjusted assets		12.32			12.02			9.66			2.5		27.5
Total risk-based capital		13.57			13.27			10.91			2.3		24.4
CREDIT QUALITY AND RATIOS:
Nonperforming assets	$	20,650		$	16,830		$	4,408			22.7	%	368.5	%
Net charge offs to average loans (QTD)		0.91	%		0.52	%		0.12	%		75.0		658.3
Allowance for loan losses to total loans		1.54			1.51			1.43			2.0		7.7
Nonperforming assets to total loans and OREO		3.08			2.45			0.73			25.7		321.9

Unity Bancorp, Inc.
Consolidated Balance Sheets
(In thousands)										March 09 vs.
	March 31, 2009			December 31, 2008			March 31, 2008			December 08			March 08
ASSETS
Cash and due from banks	$	17,896		$	18,902		$	19,698			(5.3	)%		(9.1	)%
Federal funds sold and interest-bearing deposits		12,329			15,529			44,042			(20.6	)		(72.0	)
Securities:
Available for sale		122,873			117,348			79,726			4.7			54.1
Held to maturity		35,149			32,161			34,622			9.3			1.5
Total securities		158,022			149,509			114,348			5.7			38.2
Loans:
SBA - held for sale		22,559			22,181			23,632			1.7			(4.5	)
SBA - held to maturity		80,008			83,127			71,798			(3.8	)		11.4
SBA 504 Loans		75,556			76,802			70,446			(1.6	)		7.3
Commercial		303,991			308,165			302,249			(1.4	)		0.6
Residential mortgage		125,007			133,110			76,734			(6.1	)		62.9
Consumer		62,781			62,561			58,084			0.4			8.1
Total loans		669,902			685,946			602,943			(2.3	)		11.1
Less: Allowance for loan losses		10,307			10,326			8,650			(0.2	)		19.2
Net loans		659,595			675,620			594,293			(2.4	)		11.0
Goodwill and other intangibles		1,570			1,574			1,585			(0.3	)		(0.9	)
Premises and equipment, net		12,329			12,580			12,067			(2.0	)		2.2
Accrued interest receivable		4,328			4,712			4,131			(8.1	)		4.8
Loan servicing asset		1,320			1,503			1,990			(12.2	)		(33.7	)
Bank Owned Life Insurance		5,835			5,780			5,622			1.0			3.8
FHLB/ACBB Stock		4,947			4,857			4,170			1.9			18.6
Other assets		8,506			7,744			5,928			9.8			43.5
Total Assets	$	886,677		$	898,310		$	807,874			(1.3	)%		9.8	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand deposits	$	75,857		$	74,090		$	80,960			2.4	%		(6.3	)%
Interest-bearing deposits:
Interest bearing checking		85,390			87,046			76,256			(1.9	)		12.0
Savings		163,606			134,875			188,628			21.3			(13.3	)
Time, under $100,000		258,890			270,275			211,739			(4.2	)		22.3
Time, $100,000 and over		119,523			140,831			84,699			(15.1	)		41.1
Total deposits		703,266			707,117			642,282			(0.5	)		9.5
Borrowed funds and subordinated debentures		112,465			120,465			110,465			(6.6	)		1.8
Accrued interest payable		841			805			794			4.5			5.9
Accrued expenses and other liabilities		2,580			2,120			6,437			21.7			(59.9	)
Total liabilities		819,152			830,507			759,978			(1.4	)		7.8
Commitments and Contingencies		-			-			-
Shareholders' equity:
Common stock, no par value, 12,500 shares authorized		55,179			55,179			49,600			-			11.2
Preferred stock, no par value, 500 shares authorized		18,194			18,064			-			0.7			-
Retained earnings		1,437			1,085			3,379			32.4			(57.5	)
Treasury stock at cost		(4,169	)		(4,169	)		(4,169	)		-			-
Accumulated other comprehensive loss, net of tax		(3,116	)		(2,356	)		(914	)		32.3			240.9
Total shareholders' equity		67,525			67,803			47,896			(0.4	)		41.0
Total Liabilities and Shareholders' Equity	$	886,677		$	898,310		$	807,874			(1.3	)%		9.8	%
COMMON SHARES AT PERIOD END:
Issued		7,544			7,544			7,509
Outstanding		7,119			7,119			7,084
Treasury		425			425			425
N/M= Not meaningful

Unity Bancorp, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
								March 09vs.
FOR THE THREE MONTHS ENDED:	March 31, 2009		December 31, 2008			March 31, 2008		December 08			March 08
INTEREST INCOME
Fed funds sold and interest-bearing deposits	$	13	$	67		$	180		(80.6	)%		(92.8	)%
FHLB/ACBB Stock		-		6			100		-			-
Securities:
Available for sale		1,679		959			875		75.1			91.9
Held to maturity		386		366			437		5.5			(11.7	)
Total securities		2,065		1,325			1,312		55.8			57.4
Loans:
SBA		1,607		1,971			2,328		(18.5	)		(31.0	)
SBA 504		1,231		1,438			1,450		(14.4	)		(15.1	)
Commercial		5,016		5,279			5,285		(5.0	)		(5.1	)
Residential mortgage		1,864		1,963			1,079		(5.0	)		72.8
Consumer		794		849			901		(6.5	)		(11.9	)
Total loans		10,512		11,500			11,043		(8.6	)		(4.8	)
Total interest income		12,590		12,898			12,635		(2.4	)		(0.4	)
INTEREST EXPENSE
Interest-bearing demand deposits		270		348			366		(22.4	)		(26.2	)
Savings deposits		644		603			1,349		6.8			(52.3	)
Time deposits		3,723		4,057			3,220		(8.2	)		15.6
Borrowed funds and subordinated debentures		1,179		1,154			1,065		2.2			10.7
Total interest expense		5,816		6,162			6,000		(5.6	)		(3.1	)
Net interest income		6,774		6,736			6,635		0.6			2.1
Provision for loan losses		1,500		1,300			450		15.4			233.3
Net interest income after provision for loan losses		5,274		5,436			6,185		(3.0	)		(14.7	)
NONINTEREST INCOME
Service charges on deposit accounts		330		351			320		(6.0	)		3.1
Service and loan fee income		252		335			300		(24.8	)		(16.0	)
Gain on Mortgage loan sales		64		19			21		236.8			204.8
Gain on SBA loan sales		29		9			576		222.2			(95.0	)
Bank owned life insurance		55		53			51		3.8			7.8
Net securities (loss) gains		515		(324	)		70		100.0			100.0
Other income		103		112			117		(8.0	)		(12.0	)
Total noninterest income		1,348		555			1,455		142.9			(7.4	)
NONINTEREST EXPENSE
Compensation and benefits		2,624		2,837			3,220		(7.5	)		(18.5	)
Processing and communications		541		583			570		(7.2	)		(5.1	)
Occupancy, net		687		671			701		2.4			(2.0	)
Furniture and equipment		495		451			388		9.8			27.6
Professional services		246		272			198		(9.6	)		24.2
Loan collection costs		198		216			102		(8.3	)		94.1
Advertising		75		152			62		(50.7	)		21.0
FDIC Insurance		301		298			63		1.0			377.8
Other		388		293			466		32.4			(16.7	)
Total noninterest expense		5,555		5,773			5,770		(3.8	)		(3.7	)
Income before taxes		1,067		218			1,870		389.4			(42.9	)
Federal and state income tax provision (benefit)		336		(366	)		626		(191.8	)		(46.3	)
Net Income	$	731	$	584		$	1,244		25.2	%		(41.2	)%
Preferred dividends & discount accretion		379		110			-		245.6			-
Income available to common shareholders	$	352	$	474		$	1,244		(25.8	)%		(71.7	)%
Net Income Per Common Share-Basic	$	0.05	$	0.07		$	0.18		(28.6	)%		(72.2	)%
Net Income Per Common Share-Diluted	$	0.05	$	0.07		$	0.17		(28.6	)%		(70.6	)%
Weighted average common shares outstanding:
Basic		7,119		7,113			7,076
Diluted		7,148		7,190			7,271

Unity Bancorp, Inc.
Consolidated Average Balance Sheets
with Resultant Interest and Rates
(Tax-equivalent basis, dollars in thousands)
	Three Months Ended
	March 31, 2009									December 31, 2008
	Balance			Interest			Rate			Balance			Interest			Rate
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits with banks	$	10,324		$	13			0.51	%	$	37,262		$	67			0.72	%
FHLB/ACBB Stock		5,936			-			-			4,422			6			0.54
Securities:
Available for sale		138,302			1,692			4.89			76,941			972			5.05
Held to maturity		33,984			404			4.76			29,962			384			5.13
Total securities		172,286			2,096			4.87			106,903			1,356			5.07
Loans, net of unearned discount:
SBA		105,044			1,607			6.12			103,682			1,971			7.60
SBA 504		76,882			1,231			6.49			78,466			1,438			7.29
Commercial		305,148			5,016			6.67			310,474			5,279			6.76
Residential mortgage		129,045			1,864			5.78			131,557			1,963			5.97
Consumer		62,148			794			5.18			61,114			849			5.53
Total loans		678,267			10,512			6.26			685,293			11,500			6.69
Total interest-earning assets		866,813			12,621			5.87			833,880			12,929			6.18
Noninterest-earning assets:
Cash and due from banks		19,627									21,520
Allowance for loan losses		(10,939	)								(10,111	)
Other assets		33,179									32,855
Total noninterest-earning assets		41,867									44,264
Total Assets	$	908,680								$	878,144
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	85,064			270			1.29		$	88,166			348			1.57
Savings deposits		147,260			644			1.77			137,602			603			1.74
Time deposits		387,554			3,723			3.90			407,239			4,057			3.96
Total interest-bearing deposits		619,878			4,637			3.03			633,007			5,008			3.15
Borrowed funds and subordinated debentures		142,109			1,179			3.36			110,802			1,154			4.14
Total interest-bearing liabilities		761,987			5,816			3.10			743,809			6,162			3.30
Noninterest-bearing liabilities:
Demand deposits		75,546									78,351
Other liabilities		3,879									3,058
Total noninterest-bearing liabilities		79,425									81,409
Shareholders' equity		67,268									52,926
Total Liabilities and Shareholders' Equity	$	908,680								$	878,144
Net interest spread					6,805			2.77	%					6,767			2.88	%
Tax-equivalent basis adjustment					(31	)								(31	)
Net interest income				$	6,774								$	6,736
Net interest margin								3.14	%								3.25	%

Unity Bancorp, Inc.
Consolidated Average Balance Sheets
with Resultant Interest and Rates
(Tax-equivalent basis, dollars in thousands)
	Three Months Ended
	March 31, 2009									March 31, 2008
	Balance			Interest			Rate			Balance			Interest			Rate
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits with banks	$	10,324		$	13			0.51	%	$	22,925		$	180			3.16	%
Federal Home Loan Bank stock		5,936			0			-			4,174			100			9.64
Securities:
Available for sale		138,302			1,692			4.89			70,757			908			5.13
Held to maturity		33,984			404			4.76			34,147			455			5.33
Total securities		172,286			2,096			4.87			104,904			1,363			5.20
Loans, net of unearned discount:
SBA		105,044			1,607			6.12			98,614			2,328			9.44
SBA 504		76,882			1,231			6.49			74,345			1,450			7.84
Commercial		305,148			5,016			6.67			297,998			5,285			7.13
Residential mortgage		129,045			1,864			5.78			74,341			1,079			5.81
Consumer		62,148			794			5.18			57,482			901			6.30
Total loans		678,267			10,512			6.26			602,780			11,043			7.36
Total interest-earning assets		866,813			12,621			5.87			734,783			12,686			6.93
Noninterest-earning assets:
Cash and due from banks		19,627									14,991
Allowance for loan losses		(10,939	)								(8,690	)
Other assets		33,179									30,304
Total noninterest-earning assets		41,867									36,605
Total Assets	$	908,680								$	771,388
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	85,064			270			1.29		$	78,999			366			1.86
Savings deposits		147,260			644			1.77			190,574			1,349			2.85
Time deposits		387,554			3,723			3.90			276,426			3,220			4.69
Total interest-bearing deposits		619,878			4,637			3.03			545,999			4,935			3.64
Borrowed funds and subordinated debentures		142,109			1,179			3.36			100,850			1,065			4.25
Total interest-bearing liabilities		761,987			5,816			3.10			646,849			6,000			3.73
Noninterest-bearing liabilities:
Demand deposits		75,546									74,709
Other liabilities		3,879									2,191
Total noninterest-bearing liabilities		79,425									76,900
Shareholders' equity		67,268									47,639
Total Liabilities and Shareholders' Equity	$	908,680								$	771,388
Net interest spread					6,805			2.77	%					6,686			3.20	%
Tax-equivalent basis adjustment					(31	)								(51	)
Net interest income				$	6,774								$	6,635
Net interest margin								3.14	%								3.64	%

Unity Bancorp, Inc.
Allowance for Loan Losses and Loan Quality Schedules
(Dollars in thousands)
	3/31/2009			12/31/2008			9/30/2008			6/30/2008			3/31/2008
ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of quarter	$	10,326		$	9,913		$	8,945		$	8,650		$	8,183
Provision charged to expense		1,500			1,300			2,100			650			450
		11,826			11,213			11,045			9,300			8,633
Less: Charge-offs
SBA		1,106			310			423			249			264
SBA 504		200			500			500			-			-
Commercial		249			148			200			60			-
Residential mortgage		58			-			-			0			25
Consumer		-			5			78			56			6
Total Charge-offs		1,613			963			1,201			365			295
Add: Recoveries
SBA		33			72			40			5			60
SBA 504		5			-			-			0			-
Commercial		53			4			29			4			2
Residential mortgage		-			-			-			0			-
Consumer		3			0			-			1			50
Total Recoveries		94			76			69			10			112
Net Charge-offs		1,519			887			1,132			355			183
Balance, end of quarter	$	10,307		$	10,326		$	9,913		$	8,945		$	8,650
LOAN QUALITY INFORMATION:
Nonperforming loans	$	19,887		$	16,120		$	10,636		$	6,621		$	4,142
Other real estate owned, net		763			710			318			266			266
Nonperforming assets	$	20,650		$	16,830		$	10,954		$	6,887		$	4,408
Loans 90 days past due and still accruing	$	854		$	2,536		$	3,532		$	76		$	546
Allowance for loan losses to:
Total loans at period end		1.54	%		1.51	%		1.45	%		1.39	%		1.43	%
Nonperforming loans		51.83			64.06			93.20			135.10			208.85
Nonperforming assets		49.91			61.36			90.50			129.88			196.23
Net charge offs to average loans (QTD)		0.91			0.52			0.67			0.23			0.12
Net charge offs to average loans (YTD)		0.91			0.40			0.35			0.18			0.12
Nonperforming loans to total loans		2.97			2.35			1.55			1.03			0.69
Nonperforming assets to total loans and OREO		3.08			2.45			1.60			1.07			0.73

Unity Bancorp, Inc.
Quarterly Financial Data
	03/31/09			12/31/08			09/30/08			06/30/08			03/31/08
SUMMARY OF INCOME (in thousands) :
Interest income	$	12,590		$	12,898		$	12,965		$	12,267		$	12,635
Interest expense		5,816			6,162			5,883			5,429			6,000
Net interest income		6,774			6,736			7,082			6,838			6,635
Provision for loan losses		1,500			1,300			2,100			650			450
Net interest income after provision		5,274			5,436			4,982			6,188			6,185
Noninterest income		1,348			555			(344	)		1,028			1,455
Noninterest expense		5,555			5,773			5,779			5,617			5,770
Income before income taxes		1,067			218			(1,141	)		1,599			1,870
Federal and state income tax provision (benefit)		336			(366	)		(139	)		495			626
Net Income (loss)		731			584			(1,002	)		1,104			1,244
Basic	$	0.05		$	0.07		$	(0.14	)	$	0.16		$	0.18
Diluted		0.05			0.07			(0.14	)		0.15			0.17
COMMON SHARE DATA:
Cash dividends declared	$	-		$	-		$	-		$	0.05		$	0.05
Book value per common share at quarter end		6.93			6.99			6.55			6.76			6.76
Market value at quarter end		3.19			3.90			4.00			6.95			7.48
Average common shares outstanding: (000's)
Basic		7,119			7,113			7,107			7,092			7,076
Diluted		7,148			7,190			7,259			7,275			7,271
Common shares outstanding at period end (000's)		7,119			7,119			7,110			7,095			7,084
OPERATING RATIOS:
Return on average assets		0.33	%		0.26	%		(0.50	)%		0.56	%		0.65	%
Return on average common equity		2.90			3.56			(8.39	)		9.29			10.50
Efficiency ratio		73.02			75.81			70.51			69.59			71.95
BALANCE SHEET DATA (in thousands):
Assets	$	886,677		$	898,310		$	864,083		$	832,315		$	807,874
Deposits		703,266			707,117			684,680			671,881			642,282
Loans		669,902			685,946			685,023			643,039			602,943
Shareholders' equity		67,525			67,803			46,539			47,951			47,896
Allowance for loan losses		10,307			10,326			9,913			8,945			8,650
TAX-EQUIVALENT YIELDS AND RATES:
Interest-earning assets		5.87	%		6.18	%		6.45	%		6.57	%		6.93	%
Interest-bearing liabilities		3.10			3.30			3.28			3.31			3.73
Net interest spread		2.77			2.88			3.17			3.26			3.20
Net interest margin		3.14			3.25			3.55			3.66			3.64
CREDIT QUALITY:
Nonperforming assets (in thousands)	$	20,650		$	16,830		$	10,954		$	6,887		$	4,408
Allowance for loan losses to period-end loans		1.54	%		1.51	%		1.45	%		1.39	%		1.43	%
Net charge offs to average loans		0.91			0.52			0.67			0.23			0.12
Nonperforming assets to loans and OREO		3.08			2.45			1.60			1.07			0.73
CAPITAL AND OTHER:
Total equity to assets		7.62	%		7.55	%		5.39	%		5.76	%		5.93	%
Tier I capital to average assets (leverage)		9.28			9.54			7.42			8.01			8.06
Tier I capital to risk-adjusted assets		12.32			12.02			9.07			9.42			9.66
Total capital to risk-adjusted assets		13.57			13.27			10.33			10.67			10.91
Number of banking offices		16			16			16			16			17
Number of ATMs		19			19			19			19			20
Number of employees		162			167			176			191			188