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

July 30, 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 July 30, 2009 announcing results for the three and six month periods ended June 30, 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 July 30, 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: July 30, 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 July 30, 2009

EX-99.1

                                      

Unity Bancorp, Inc.

64 Old Highway 22

Clinton, NJ 08809

800 618-BANK

            www.unitybank.com

NewsNewsNewsNewsNews

For Immediate Release:

July 30, 2009

News Media & Financial Analyst Contact:

Alan J. Bedner, EVP

Chief Financial Officer

(908) 713-4308

Unity Bancorp Reports Second Quarter and Six Month Results

Clinton, NJ - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported a net loss available to common shareholders of $1.6 million or ($0.22) per diluted share for the quarter ended June 30, 2009, compared to net income of $1.1 million or $0.15 per diluted share, for the second quarter of 2008.  For the six months ended June 30, 2009, the Company reported a net loss available to common shareholders of $1.2 million, or ($0.17) per diluted share, compared to net income of $2.3 million, or $0.32 per diluted share, for the same period a year ago.

Second quarter results were substantially impacted by the following items:

·   The Company recognized a pre-tax impairment charge during the quarter of $1.7 million, or $0.17 per diluted share, due to further deterioration of the underlying collateral for two pooled trust preferred securities.  The securities, which had a cost basis of $3.0 million, had been previously written down $300 thousand in December of 2008.  After the above charge the two issues of pooled trust preferred securities have a remaining book value of approximately $929 thousand.

·    The FDIC imposed a special assessment equal to 5 basis points of an insured depository institution's assets minus Tier 1 capital as of June 30, 2009. The Company recognized a charge of approximately $408 thousand, or $0.04 per diluted share, in the second quarter for this special assessment. The special assessment is payable on September 30, 2009.

On an ongoing operating basis, absent these two events, net income per diluted share would have been $0.03 for the six months ended June 30, 2009.

James A. Hughes, Unity Bancorp’s President and CEO, said, “We are very disappointed to report the impairment charges related to our pooled trust preferred securities.   We believe that the impairment charge is due to the severe financial and economic crisis affecting our country.  Unity Bancorp is financially stable and well positioned to rise above the uncertainty of the current volatile economy.  We will continue to monitor the economic situation proactively, striving to maintain strong capital ratios and reserves to enhance shareholder value. We have taken proactive steps to decrease our expense base.  In the fourth quarter of 2008, Unity exited the National SBA program as a line of business and closed all SBA loan production offices outside our primary trade area.  We will continue to offer SBA loans as a credit product to customers in our markets.  We continue to experience challenges with our existing small business customers.  As a result, we expect to continue to have elevated provisions for loan losses for 2009.  We will continue to be aggressive in working with delinquent borrowers and are making every attempt to bring credit quality to more normalized levels.”

Net Interest Income

Since June 30, 2008, the Federal Open Market Committee has lowered interest rates 175 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 June 30, 2009, net interest income was $6.9 million, an increase of 1.2% from the quarter ended March 31, 2009, and flat from the quarter ended June 30 2008.  Factors affecting second quarter net interest income include:

·   The yield on interest-earning assets decreased 66 basis points to 5.91% from 6.57% for the same period last year.

·   The cost of interest-bearing liabilities decreased 26 basis points from 3.31% to 3.05% in the second quarter of 2009.

·   Average earning assets, consisting primarily of loans, rose 13.1%.

·   Net interest margin was 3.24%, a 42 basis point decline from 3.66% in the second quarter of 2008.

Year-to-date, net interest income was $13.6 million, or 1.2% higher than the $13.5 million reported for the first six months of 2008.

·   Net interest margin for the six months ended 2009 was 3.22%, a decline of 43 basis points from the same period last year.

·   The yield on earning assets decreased from 6.75% for the first six months of 2008, to 5.90% for the first six months of 2009.

·   The cost of interest-bearing liabilities decreased from 3.52% for the first six months of 2008, to 3.07% for the first six months of 2009.

Noninterest Income

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

For the quarter ended June 30, 2009, noninterest income declined $1.9 million from the quarter ended June 30, 2008. Noninterest income was affected by the following factors:

·   Service charges on deposit accounts and service and loan fee income remained relatively flat compared to the prior year period.

·   Other-than-temporary impairment charges on investment securities amounted to $1.7 million, compared to $255 thousand in the prior year period.

·   There were no sales of SBA loans, compared to gains of $417 thousand a year ago.

·   Gains on the sales of residential mortgage loans amounted to $49 thousand.

For the six months ended June 30, 2009, noninterest income amounted to $441 thousand, a decline of $2.0 million from the six months ended June 30, 2008. Noninterest income was affected by the following factors:

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

·   Service and loan fee income remained relatively flat compared to the prior year period.

·   Other-than-temporary impairment charges on investment securities amounted to $1.7 million, compared to $255 thousand in the prior year period.

·   Gains on sales on SBA loans amounted to $29 thousand, compared to $993 thousand a year ago.

·   Gains on the sales of residential mortgage loans amounted to $113 thousand, compared to $21 thousand from the prior year period.

Noninterest Expense

As a result of current market conditions, the Company effected significant head-count reductions in the fourth quarter of 2008, primarily related to the closing of SBA loan production offices.  In addition, the Company undertook other expense saving measures, which will benefit 2009.  However, these expense reductions were partially offset by increases in FDIC insurance premiums.

For the quarter ended June 30, 2009, noninterest expenses were $6.2 million, an increase of 10.4% from the quarter ended June 30, 2008. Excluding the $408 thousand second quarter FDIC insurance special assessment, noninterest expenses were comparable to those of the same period a year ago. The following factors affected our noninterest expense:

·   Compensation and benefits expense amounted to $2.9 million, a decrease of $127 thousand, or 4.3% due to reduced head count.

·   Communications and delivery, and occupancy expense declined by 11.4% and 9.3%, respectively, due to reduced communications costs from renegotiated contracts and a decline in capital expenditures.

·   FF&E expense increased $58 thousand, primarily due to depreciation expense on new equipment and software and increased software maintenance charges.

·   Professional fees increased $117 thousand, due to increased consulting, legal and audit costs.

·   Loan collection costs increased $42 thousand, due to increased collection costs on delinquent loans.

·   FDIC insurance premiums increased $597 thousand, due primarily to the increase in FDIC insurance rates and the $408 thousand special assessment.

For the six months ended June 30, 2009, noninterest expenses were $11.8 million, an increase of 3.3% from the same period a year ago. The following factors affected our noninterest expense:

·   Compensation and benefits expense amounted to $5.5 million, a decrease of $723 thousand, or 11.7% due to reduced head count.

·   Communications and delivery, and occupancy expense declined by 8.2% and 5.7%, respectively, due to reduced communications costs from renegotiated contracts and a decline in capital expenditures.

·   FF&E expense increased $165 thousand, primarily due to depreciation expense on new equipment and software and increased software maintenance charges.

·   Professional fees increased $165 thousand, due to increased consulting, legal and audit costs.

·   Loan collection costs increased $139 thousand, due to increased collection costs on delinquent loans.

·   FDIC insurance premiums increased $835 thousand, due primarily to the increase in FDIC insurance rates and the $408 thousand second quarter special assessment.

Financial Condition

At June 30, 2009, total assets were $913.4 million, a 9.7% increase from a year ago.

·   Total loans increased $22.3 million, or 3.5%, from $643.0 million at June 30, 2008. SBA 7(a), SBA 504, residential and consumer loans increased 3.7%, 2.7%, 31.9%, and 5.9%, respectively, offset by a decline in commercial loans of 5.4%.

·   Total securities increased $57.8 million as Unity took advantage of favorable credit spreads to invest excess liquidity.

·   Total deposits increased 8.9% or $59.9 million to $731.8 million at June 30, 2009.  This increase was due to a $30.0 million increase in time deposits, a $31.2 million increase in savings accounts and a $2.4 million increase in demand deposits. These increases were partially offset by a $3.7 million decrease in interest bearing checking accounts.  The increase in savings accounts is due to a new product that requires a related checking account.  During 2009, the Company expects continued migration of time deposits in to its lower cost accounts.

·   Total borrowed funds were flat from a year ago.

·   Shareholders’ equity was $67.1 million at June 30, 2009, an increase of $19.1 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 $6.85.

·   At June 30, 2009 the leverage, Tier I and Total Risk Based Capital ratios were 9.30%, 11.61% and 12.86%, respectively, all in excess of the ratios required to be deemed “well capitalized”.

Credit Quality

·   Nonperforming assets totaled $23.2 million at June 30, 2009, or 3.49% of total loans and “OREO” compared to $6.9 million, or 1.07% of total loans and “OREO” a year ago. The commercial, SBA and residential nonaccrual loans were $5.5, $11.8 and $5.7 million respectively.  The increase in nonperforming assets was primarily related to an increase in the SBA and residential mortgage accounts.  The majority of SBA and Commercial nonaccrual loans are secured by real estate.

·   The allowance for loan losses totaled $10.7 million at June 30, 2009, or 1.60% of total loans. The provision for loan losses for the second quarter of 2009 amounted to $1.5 million, an increase of $850 thousand from the same period a year ago.  The provision for the six months ended June 30, 2009, amounted to $3.0 million, an increase of $1.9 million from the same period a year ago.

·   Net charge-offs were $1.1 million for the three months ended June 30, 2009, compared to $355 thousand for the same period a year ago.  Net charge-offs were $2.7 million for the six months ended June 30, 2009, compared to $538 thousand for the same period a year ago.  The increase in net charge-offs for the quarter was primarily related to a workout settlement with a large non-performing loan.

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $913 million in assets and $732 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

UNITY BANCORP, INC.
SUMMARY FINANCIAL HIGHLIGHTS
June 30, 2009
										2009.Q2 VS.
											2009.Q1			2008.Q2
	6/30/2009			3/31/2009			6/30/2008			%			%
BALANCE SHEET DATA:
Total Assets	$	913,446		$	886,677		$	832,315			3.0	%		9.7	%
Total Deposits		731,763			703,266			671,881			4.1	%		8.9	%
Total Loans		665,331			669,902			643,039			-0.7	%		3.5	%
Total Securities		164,794			158,022			106,972			4.3	%		54.1	%
Total Shareholders' Equity		67,064			67,525			47,951			-0.7	%		39.9	%
Allowance for loan losses		(10,665	)		(10,307	)		(8,945	)		3.5	%		19.2	%
FINANCIAL DATA - QUARTER TO DATE:
Net Income Before Taxes		(1,752	)		1,067			1,599			-264.2	%		-209.6	%
Income taxes		(552	)		336			495			-264.3	%		-211.5	%
Net income		(1,200	)		731			1,104			-264.2	%		-208.7	%
Preferred Dividends & Discount Accretion		372			379			-			-1.8	%		100.0	%
Income Available to Common Shareholders		(1,572	)		352			1,104			-546.6	%		-242.4	%
Net Income Per Share - Basic		(0.22	)		0.05			0.16			-546.6	%		-241.8	%
Net Income Per Share - Diluted		(0.22	)		0.05			0.15			-545.3	%		-244.5	%
Return on Average Assets		-0.54	%		0.33	%		0.56	%		-265.4	%		-196.0	%
Return on Average Common Equity		-12.97	%		2.90	%		9.29	%		-546.7	%		-239.6	%
Efficiency Ratio		80.58	%		73.02	%		69.59	%		10.3	%		15.8	%
FINANCIAL DATA - YEAR TO DATE:
Net Income Before Taxes		(685	)		1,067			3,469			-164.2	%		-119.7	%
Income taxes		(216	)		336			1,121			-164.3	%		-119.3	%
Net income		(469	)		731			2,348			-164.2	%		-120.0	%
Preferred Dividends & Discount Accretion		751			379			-			98.2	%		100.0	%
Income Available to Common Shareholders		(1,220	)		352			2,348			-446.7	%		-152.0	%
Net Income Per Share - Basic		(0.17	)		0.05			0.33			-446.7	%		-151.7	%
Net Income Per Share - Diluted		(0.17	)		0.05			0.32			-446.1	%		-152.8	%
Return on Average Assets		-0.11	%		0.33	%		0.60	%		-132.2	%		-117.7	%
Return on Average Common Equity		-5.02	%		2.90	%		9.87	%		-273.2	%		-150.9	%
Efficiency Ratio		76.82	%		73.02	%		70.76	%		5.2	%		8.6	%
SHARE INFORMATION:
Market Price Per Share		3.55			3.19			6.62			11.3	%		-46.4	%
Dividends Paid Per Share		-			-			0.05			0.0	%		-100.0	%
Book Value Per Common Share		6.85			6.93			6.76			-1.2	%		1.3	%
Average Diluted Shares Outstanding (QTD)		7,168			7,148			7,275			0.3	%		-1.5	%
CAPITAL RATIOS:
Total Equity to Total Assets		7.34	%		7.62	%		5.76	%		-3.6	%		27.4	%
Leverage Ratio		9.11	%		9.28	%		8.01	%		-1.9	%		13.7	%
Tier 1 Risk-Based Capital Ratio		11.16	%		12.32	%		9.42	%		-9.4	%		18.4	%
Total Risk-Based Capital Ratio		12.41	%		13.57	%		10.67	%		-8.6	%		16.3	%
CREDIT QUALITY AND RATIOS:
Nonperforming Assets		23,240			20,649			6,887			12.5	%		237.4	%
Net Chargeoffs to Average Loans (QTD)		0.69	%		0.91	%		0.23	%		-24.5	%		197.0	%
Allowance for Loan Losses to Total Loans		1.60	%		1.54	%		1.39	%		4.2	%		15.2	%
Nonperforming Assets to Total Loans and OREO		3.49	%		3.08	%		1.07	%		13.4	%		226.0	%
Nonperforming Assets to Total Assets		2.54	%		2.33	%		0.83	%		9.2	%		207.5	%

UNITY BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 2009
										2009.Q2 VS.
											2009.Q1			2008.Q2
	6/30/2009			3/31/2009			6/30/2008			%			%
ASSETS
Cash and due from banks	$	17,295		$	17,896		$	20,368			-3.4	%		-15.1	%
Federal funds sold and interest-bearing deposits		37,232			12,329			33,678			202.0	%		10.6	%
Cash and cash equivalents		54,527			30,225			54,046			80.4	%		0.9	%
Securities available for sale		132,719			122,873			77,110			8.0	%		72.1	%
Securities held to maturity		32,075			35,149			29,862			-8.7	%		7.4	%
Total securities		164,794			158,022			106,972			4.3	%		54.1	%
SBA loans held for sale		23,161			22,559			25,605			2.7	%		-9.5	%
SBA loans held to maturity		82,157			80,008			75,988			2.7	%		8.1	%
SBA 504 loans		72,619			75,556			70,724			-3.9	%		2.7	%
Commercial loans		299,411			303,991			316,578			-1.5	%		-5.4	%
Residential mortgage loans		125,466			125,007			95,100			0.4	%		31.9	%
Consumer loans		62,517			62,781			59,044			-0.4	%		5.9	%
Total loans		665,331			669,902			643,039			-0.7	%		3.5	%
Allowance for loan losses		(10,665	)		(10,307	)		(8,945	)		3.5	%		19.2	%
Net loans		654,666			659,595			634,094			-0.7	%		3.2	%
Premises and equipment, net		12,067			12,329			12,372			-2.1	%		-2.5	%
Bank owned life insurance (BOLI)		5,890			5,835			5,674			0.9	%		3.8	%
Federal Home Loan Bank stock		5,127			4,947			4,407			3.6	%		16.3	%
Accrued interest receivable		4,263			4,328			4,095			-1.5	%		4.1	%
Goodwill and other intangibles		1,566			1,570			1,581			-0.3	%		-0.9	%
Loan servicing asset		1,142			1,320			1,877			-13.5	%		-39.2	%
Other assets		9,404			8,506			7,197			10.6	%		30.7	%
Total Assets	$	913,446		$	886,677		$	832,315			3.0	%		9.7	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing checking	$	83,639		$	75,857		$	81,273			10.3	%		2.9	%
Total interest-bearing checking		84,842			85,390			88,551			-0.6	%		-4.2	%
Total savings		211,876			163,606			180,665			29.5	%		17.3	%
Time deposits, under $100,000		239,893			258,890			236,241			-7.3	%		1.5	%
Time deposits, $100,000 and over		111,513			119,523			85,151			-6.7	%		31.0	%
Total deposits		731,763			703,266			671,881			4.1	%		8.9	%
Borrowed funds		95,000			97,000			95,000			-2.1	%		0.0	%
Subordinated debentures		15,465			15,465			15,465			0.0	%		0.0	%
Accrued interest payable		847			841			779			0.7	%		8.7	%
Accrued expenses and other liabilities		3,307			2,580			1,239			28.2	%		166.9	%
Total Liabilities		846,382			819,152			784,364			3.3	%		7.9	%
Cumulative Perpetual Preferred stock		18,305			18,194			-			0.6	%		100.0	%
Common stock		55,264			55,179			52,281			0.2	%		5.7	%
Retained earnings		(135	)		1,437			1,593			-109.4	%		-108.5	%
Treasury stock at cost		(4,169	)		(4,169	)		(4,169	)		0.0	%		0.0	%
Accumulated other comprehensive loss		(2,201	)		(3,116	)		(1,754	)		-29.4	%		25.5	%
Total Shareholders' Equity		67,064			67,525			47,951			-0.7	%		39.9	%
Total Liabilities and Shareholders' Equity	$	913,446		$	886,677		$	832,315			3.0	%		9.7	%
Common Shares at Period End:
Shares Issued		7,544			7,544			7,520
Shares Outstanding		7,119			7,119			7,095
Treasury Shares		425			425			425

UNITY BANCORP, INC.
QTD CONSOLIDATED STATEMENTS OF INCOME
June 30, 2009
				2009.Q2 VS.
	For the Three Months Ended			2009.Q1	2008.Q2
	6/30/2009	3/31/2009	6/30/2008	%	%
Interest Income - Cash	29	13	111	123.1%	-73.9%
Interest Income - FHLB/ACBB Stock	122	-	76	100.0%	60.5%
Interest Income - AFS Investments	1,509	1,679	932	-10.1%	61.9%
Interest Income - HTM Investments	391	386	398	1.3%	-1.8%
Interest Income - Total Investments	1,900	2,065	1,330	-8.0%	42.9%
Interest Income - SBA Loans	1,564	1,607	2,028	-2.7%	-22.9%
Interest Income - SBA 504 Loans	1,285	1,231	1,260	4.4%	2.0%
Interest Income - Commercial Loans	5,051	5,016	5,407	0.7%	-6.6%
Interest Income - Mortgage Loans	1,783	1,864	1,209	-4.3%	47.5%
Interest Income - Consumer Loans	797	794	846	0.4%	-5.8%
Interest Income - Total Loans	10,480	10,512	10,750	-0.3%	-2.5%
Total Interest Income	12,531	12,590	12,267	-0.5%	2.2%
Interest Expense - Total Checking	267	270	350	-1.1%	-23.7%
Interest Expense - Total Savings	912	644	918	41.6%	-0.7%
Interest Expense - Total CDs	3,409	3,723	3,006	-8.4%	13.4%
Interest Expense - Borrowings	1,085	1,179	1,155	-8.0%	-6.1%
Total Interest Expense	5,673	5,816	5,429	-2.5%	4.5%
Net Interest Income Before Provision	6,858	6,774	6,838	1.2%	0.3%
Provision for Loan Losses	1,500	1,500	650	0.0%	130.8%
Net Interest Income After Provision	5,358	5,274	6,188	1.6%	-13.4%
Branch Fee Income	335	330	341	1.5%	-1.8%
Loan Fee Income	294	252	302	16.7%	-2.6%
Bank Owned Life Insurance (BOLI)	55	55	53	0.0%	3.8%
Gain (Loss) on Sale of Mortgage Loans	49	64	-	-23.4%	100.0%
Gain (Loss) on Sale of SBA Loans	-	29	417	-100.0%	-100.0%
Other-than-temporary impairment charges	(1,749)	-	(255)	-100.0%	585.9%
Net security gains (losses)	2	515	49	-99.6%	-95.9%
Other Income	107	103	121	3.9%	-11.6%
Total Noninterest Income	(907)	1,348	1,028	-167.3%	-188.2%
Total Compensation and Benefits	2,853	2,624	2,980	8.7%	-4.3%
Occupancy Expense	647	687	713	-5.8%	-9.3%
Communications and Delivery Expense	482	541	544	-10.9%	-11.4%
Furniture, Fixtures and Equipment Expense	471	495	413	-4.8%	14.0%
Professional Services Expense	260	246	143	5.7%	81.8%
Loan Expense	180	198	138	-9.1%	30.4%
FDIC Insurance Expense	708	301	111	135.2%	537.8%
Advertising Expense	151	75	79	101.3%	91.1%
Other Expense	451	388	496	16.2%	-9.1%
Total Noninterest Expense	6,203	5,555	5,617	11.7%	10.4%
Net Income Before Taxes	(1,752)	1,067	1,599	-264.2%	-209.6%
Income taxes	(552)	336	495	-264.3%	-211.5%
Net income	(1,200)	731	1,104	-264.2%	-208.7%
Preferred Dividends & Discount Accretion	372	379	-	-1.8%	100.0%
Income Available to Common Shareholders	(1,572)	352	1,104	-546.6%	-242.4%
Effective Tax Rate	31.51%	31.49%	30.96%
Net Income Per Share - Basic	(0.22)	0.05	0.16
Net Income Per Share - Diluted	(0.22)	0.05	0.15
Average Shares Outstanding - Basic	7,119	7,119	7,092
Average Shares Outstanding - Diluted	7,168	7,148	7,275

UNITY BANCORP, INC.
YTD CONSOLIDATED STATEMENTS OF INCOME
June 30, 2009
	CURRENT YTD			PRIOR YTD			CURRENT YTD VS. PRIOR YTD
	6/30/2009			6/30/2008			$			%
Interest Income - Cash		46			291			(245	)	-84.2	%
Interest Income - FHLB/ACBB Stock		118			176			(58	)	-33.0	%
Interest Income - AFS Investments		3,188			1,807			1,381		76.4	%
Interest Income - HTM Investments		777			835			(58	)	-6.9	%
Interest Income - Total Investments		3,965			2,642			1,323		50.1	%
Interest Income - SBA Loans		3,171			4,356			(1,185	)	-27.2	%
Interest Income - SBA 504 Loans		2,516			2,710			(194	)	-7.2	%
Interest Income - Commercial Loans		10,067			10,692			(625	)	-5.8	%
Interest Income - Mortgage Loans		3,646			2,288			1,358		59.4	%
Interest Income - Consumer Loans		1,592			1,747			(155	)	-8.9	%
Interest Income - Total Loans		20,992			21,793			(801	)	-3.7	%
Total Interest Income		25,121			24,902			219		0.9	%
Interest Expense - Total Checking		537			716			(179	)	-25.0	%
Interest Expense - Total Savings		1,556			2,267			(711	)	-31.4	%
Interest Expense - Total CDs		7,133			6,226			907		14.6	%
Interest Expense - Borrowings		2,263			2,220			43		1.9	%
Total Interest Expense		11,489			11,429			60		0.5	%
Net Interest Income Before Provision		13,632			13,473			159		1.2	%
Provision for Loan Losses		3,000			1,100			1,900		172.7	%
Net Interest Income After Provision		10,632			12,373			(1,741	)	-14.1	%
Branch Fee Income		665			661			4		0.6	%
Loan Fee Income		547			602			(55	)	-9.1	%
Bank Owned Life Insurance (BOLI)		110			104			6		5.8	%
Gain (Loss) on Sale of Mortgage Loans		113			21			92		438.1	%
Gain (Loss) on Sale of SBA Loans		29			993			(964	)	-97.1	%
Other-than-temporary impairment charges		(1,749	)		(255	)		(1,494	)	585.9	%
Net security gains (losses)		517			119			398		334.5	%
Other Income		209			238			(29	)	-12.2	%
Total Noninterest Income		441			2,483			(2,042	)	-82.2	%
Total Compensation and Benefits		5,477			6,200			(723	)	-11.7	%
Occupancy Expense		1,334			1,414			(80	)	-5.7	%
Communications and Delivery Expense		1,023			1,114			(91	)	-8.2	%
Furniture, Fixtures and Equipment Expense		966			801			165		20.6	%
Professional Services Expense		506			341			165		48.4	%
Loan Expense		379			240			139		57.9	%
FDIC Insurance Expense		1,009			174			835		479.9	%
Advertising Expense		226			141			85		60.3	%
Other Expense		838			962			(124	)	-12.9	%
Total Noninterest Expense		11,758			11,387			371		3.3	%
Net Income Before Taxes		(685	)		3,469			(4,154	)	-119.7	%
Income taxes		(216	)		1,121			(1,337	)	-119.3	%
Net income		(469	)		2,348			(2,817	)	-120.0	%
Preferred Dividends & Discount Accretion		751			-			751		100.0	%
Income Available to Common Shareholders		(1,220	)		2,348			(3,568	)	-152.0	%
Net Income Per Share - Basic		(0.17	)		0.33
Net Income Per Share - Diluted		(0.17	)		0.32
Average Shares Outstanding - Basic		7,119			7,084
Average Shares Outstanding - Diluted		7,158			7,274

UNITY BANCORP, INC.
QUARTER TO DATE NET INTEREST MARGIN
June 30, 2009
	For the Three Months Ended
	June 30, 2009									March 31, 2009
	Average Balance			Interest			Rate/Yield			Average Balance			Interest			Rate/Yield
Interest-earning Assets:
Federal funds sold and interest-bearing deposits	$	14,153		$	29			0.82	%	$	10,324		$	13			0.51	%
Federal Home Loan Bank stock		4,972			122			9.84	%		5,936			-			0.00	%
Securities available for sale		130,751			1,522			4.66	%		138,302			1,692			4.89	%
Securities held to maturity		34,457			409			4.75	%		33,984			404			4.76	%
Total securities		165,208			1,931			4.68	%		172,286			2,096			4.87	%
SBA Loans		102,255			1,564			6.12	%		105,044			1,607			6.12	%
SBA 504 loans		74,209			1,285			6.95	%		76,882			1,231			6.49	%
Commercial loans		303,589			5,051			6.67	%		305,148			5,016			6.67	%
Residential mortgage loans		124,227			1,783			5.74	%		129,045			1,864			5.78	%
Consumer loans		63,280			797			5.05	%		62,148			794			5.18	%
Total loans		667,560			10,480			6.29	%		678,267			10,512			6.26	%
Total Interest-earning Assets		851,893		$	12,562			5.91	%		866,813		$	12,621			5.87	%
Noninterest-earning assets:
Cash and due from banks		18,397									19,627
Allowance for loan losses		(11,095	)								(10,939	)
Other assets		32,770									33,179
Total Noninterest-earning Assets		40,072									41,867
Total Assets	$	891,965								$	908,680
Interest-bearing Liabilities:
Total interest-bearing checking	$	85,313		$	267			1.26	%	$	85,064		$	270			1.29	%
Total savings		189,977			912			1.93	%		147,260			644			1.77	%
Total time deposits		360,885			3,409			3.79	%		387,554			3,723			3.90	%
Total Interest-bearing Deposits		636,175			4,588			2.89	%		619,878			4,637			3.03	%
Total borrowings		107,163			1,085			4.01	%		142,109			1,179			3.36	%
Total Interest-bearing Liabilities		743,338		$	5,673			3.05	%		761,987		$	5,816			3.10	%
Noninterest-bearing Liabilities:
Noninterest-bearing checking		77,630									75,546
Other Liabilities		4,148									3,879
Total Noninterest-bearing Liabilities		81,778									79,425
Total Shareholders' Equity		66,849									67,268
Total Liabilities and Shareholders' Equity	$	891,965								$	908,680
Net Interest Spread					6,889			2.85	%					6,805			2.77	%
Tax-equivalent Basis Adjustment					(31	)								(31	)
Net Interest Income					6,858									6,774
Net Interest Margin								3.24	%								3.14	%

UNITY BANCORP, INC.
QUARTER TO DATE NET INTEREST MARGIN
June 30, 2009
	Three Months Ended
	June 30, 2009									June 30, 2008
	Average Balance			Interest			Rate/Yield			Average Balance			Interest			Rate/Yield
Interest-earning Assets:
Federal funds sold and interest-bearing deposits	$	14,153		$	29			0.82	%	$	22,351		$	111			2.00	%
Federal Home Loan Bank stock		4,972			122			9.84	%		4,400			76			6.95	%
Securities available for sale		130,751			1,522			4.66	%		76,613			961			5.02	%
Securities held to maturity		34,457			409			4.75	%		31,547			416			5.27	%
Total securities		165,208			1,931			4.68	%		108,160			1,377			5.09	%
SBA Loans		102,255			1,564			6.12	%		101,006			2,028			8.03	%
SBA 504 loans		74,209			1,285			6.95	%		69,308			1,260			7.31	%
Commercial loans		303,589			5,051			6.67	%		309,081			5,407			7.04	%
Residential mortgage loans		124,227			1,783			5.74	%		79,985			1,209			6.05	%
Consumer loans		63,280			797			5.05	%		58,608			846			5.81	%
Total loans		667,560			10,480			6.29	%		617,988			10,750			6.99	%
Total Interest-earning Assets		851,893		$	12,562			5.91	%		752,899		$	12,314			6.57	%
Noninterest-earning assets:
Cash and due from banks		18,397									14,377
Allowance for loan losses		(11,095	)								(8,814	)
Other assets		32,770									31,262
Total Noninterest-earning Assets		40,072									36,825
Total Assets	$	891,965								$	789,724
Interest-bearing Liabilities:
Total interest-bearing checking	$	85,313		$	267			1.26	%	$	82,195		$	350			1.71	%
Total savings		189,977			912			1.93	%		185,674			918			1.99	%
Total time deposits		360,885			3,409			3.79	%		282,182			3,006			4.28	%
Total Interest-bearing Deposits		636,175			4,588			2.89	%		550,051			4,274			3.13	%
Total borrowings		107,163			1,085			4.01	%		110,464			1,155			4.21	%
Total Interest-bearing Liabilities		743,338		$	5,673			3.05	%		660,515		$	5,429			3.31	%
Noninterest-bearing Liabilities:
Noninterest-bearing checking		77,630									78,879
Other Liabilities		4,148									2,553
Total Noninterest-bearing Liabilities		81,778									81,432
Total Shareholders' Equity		66,849									47,777
Total Liabilities and Shareholders' Equity	$	891,965								$	789,724
Net Interest Spread					6,889			2.85	%					6,885			3.26	%
Tax-equivalent Basis Adjustment					(31	)								(47	)
Net Interest Income					6,858									6,838
Net Interest Margin								3.24	%								3.66	%

UNITY BANCORP, INC.
YEAR TO DATE NET INTEREST MARGIN
June 30, 2009
	June 30, 2009									June 30, 2008
	Average Balance			Interest			Rate/Yield			Average Balance			Interest			Rate/Yield
Interest-earning Assets:
Federal funds sold and interest-bearing deposits	$	12,249		$	46			0.76	%	$	22,638		$	291			2.59	%
Federal Home Loan Bank stock		5,451			118			4.37	%		4,287			176			8.26	%
Securities available for sale		134,506			3,251			4.83	%		73,685			1,869			5.07	%
Securities held to maturity		34,221			813			4.75	%		32,847			871			5.30	%
Total securities		168,727			4,064			4.82	%		106,532			2,740			5.14	%
SBA Loans		103,641			3,171			6.12	%		99,810			4,356			8.73	%
SBA 504 loans		75,538			2,516			6.72	%		71,827			2,710			7.59	%
Commercial loans		304,365			10,067			6.67	%		303,539			10,692			7.08	%
Residential mortgage loans		126,623			3,646			5.76	%		77,163			2,288			5.93	%
Consumer loans		62,717			1,592			5.12	%		58,045			1,747			6.05	%
Total loans		672,884			20,992			6.27	%		610,384			21,793			7.17	%
Total Interest-earning Assets		859,311		$	25,220			5.90	%		743,841		$	25,000			6.75	%
Noninterest-earning assets:
Cash and due from banks		19,009									14,684
Allowance for loan losses		(11,017	)								(8,752	)
Other assets		32,928									30,783
Total Noninterest-earning Assets		40,920									36,715
Total Assets	$	900,231								$	780,556
Interest-bearing Liabilities:
Total interest-bearing checking	$	85,189		$	537			1.27	%	$	80,597		$	716			1.79	%
Total savings		168,736			1,556			1.86	%		188,124			2,267			2.42	%
Total time deposits		374,147			7,133			3.84	%		279,304			6,226			4.48	%
Total Interest-bearing Deposits		628,072			9,226			2.96	%		548,025			9,209			3.38	%
Total borrowings		124,540			2,263			3.61	%		105,657			2,220			4.23	%
Total Interest-bearing Liabilities		752,612		$	11,489			3.07	%		653,682		$	11,429			3.52	%
Noninterest-bearing Liabilities:
Noninterest-bearing checking		76,594									76,794
Other Liabilities		3,967									2,372
Total Noninterest-bearing Liabilities		80,561									79,166
Total Shareholders' Equity		67,058									47,708
Total Liabilities and Shareholders' Equity	$	900,231								$	780,556
Net Interest Spread					13,731			2.83	%					13,571			3.23	%
Tax-equivalent Basis Adjustment					(100	)								(98	)
Net Interest Income					13,631									13,473
Net Interest Margin								3.22	%								3.65	%

UNITY BANCORP, INC.
ALLOWANCE FOR LOAN LOSSES AND LOAN QUALITY SCHEDULES
June 30, 2009
	6/30/2009			3/31/2009			12/31/2008			9/30/2008			6/30/2008
ALLOWANCE FOR LOAN LOSSES:
Balance, Beginning of Quarter	$	10,307		$	10,326		$	9,913		$	8,945		$	8,650
Provision for Loan Losses Charged to Expense		1,500			1,500			1,300			2,100			650
		11,807			11,826			11,213			11,045			9,300
Less: Chargeoffs
SBA loans		323			1,106			310			423			249
SBA 504 loans		112			200			500			500			-
Commercial loans		798			249			148			200			60
Residential mortgage loans		33			58			-			-			-
Consumer loans		11			-			5			78			56
Total Chargeoffs		1,277			1,613			963			1,201			365
Add: Recoveries
SBA loans		56			33			72			40			5
SBA 504 loans		-			5			-			-			-
Commercial loans		79			53			4			29			4
Residential mortgage loans		-			-			-			-			-
Consumer loans		-			3			-			-			1
Total Recoveries		135			94			76			69			10
Net Chargeoffs		1,142			1,519			887			1,132			355
Balance, End of Quarter		10,665			10,307			10,326			9,913			8,945
LOAN QUALITY INFORMATION:
Nonperforming loans	$	22,774		$	19,886		$	16,120		$	10,636		$	6,621
Other real estate owned (OREO)		466			763			710			318			266
Total nonperforming assets		23,240			20,649			16,830			10,954			6,887
Less:  Amount guaranteed by Small Business Administration		3,214			2,426		$	1,983		$	998		$	686
Net nonperforming assets		20,026			18,223			14,847			9,956			6,201
Loans 90 Days Past Due & Still Accruing	$	781		$	853		$	2,536		$	3,532		$	76
Allowance for Loan Losses to:
Total Loans at Quarter End		1.60	%		1.54	%		1.51	%		1.45	%		1.39	%
Nonperforming loans		46.83	%		51.83	%		64.06	%		93.19	%		135.10	%
Total nonperforming assets		45.89	%		49.92	%		61.35	%		90.50	%		129.88	%
Net nonperforming assets		53.26	%		56.56	%		69.55	%		99.57	%		144.26	%
Net chargeoffs to average loans		0.69	%		0.91	%		0.52	%		0.67	%		0.23	%
Nonperforming Loans to Total Loans		3.42	%		2.97	%		2.35	%		1.55	%		1.03	%
Nonperforming Assets to Total Loans & OREO		3.49	%		3.08	%		2.45	%		1.60	%		1.07	%
Nonperforming Assets to Total Assets		2.54	%		2.33	%		1.87	%		1.27	%		0.83	%

UNITY BANCORP, INC.
QUARTERLY FINANCIAL DATA
June 30, 2009
	6/30/2009			3/31/2009			12/31/2008			9/30/2008			6/30/2008
SUMMARY OF INCOME:
Total Interest Income	$	12,531		$	12,590		$	12,898		$	12,965		$	12,267
Total Interest Expense		5,673			5,816			6,162			5,883			5,429
Net Interest Income Before Provision		6,858			6,774			6,736			7,082			6,838
Provision for Loan Losses		1,500			1,500			1,300			2,100			650
Net Interest Income After Provision		5,358			5,274			5,436			4,982			6,188
Total Noninterest Income		(907	)		1,348			555			(344	)		1,028
Total Noninterest Expense		6,203			5,555			5,773			5,779			5,617
Net Income Before Taxes		(1,752	)		1,067			218			(1,141	)		1,599
Income taxes		(552	)		336			(366	)		(139	)		495
Net income		(1,200	)		731			584			(1,002	)		1,104
Preferred Dividends & Discount Accretion		372			379			110			-			-
Income Available to Common Shareholders	$	(1,572	)	$	352		$	474		$	(1,002	)	$	1,104
Net Income Per Share - Basic		(0.22	)		0.05			0.07			(0.14	)		0.16
Net Income Per Share - Diluted		(0.22	)		0.05			0.07			(0.14	)		0.15
COMMON SHARE DATA:
Market Price Per Share		3.55			3.19			3.90			4.00			6.62
Dividends Paid		-			-			-			-			0.05
Book Value Per Common Share		6.85			6.93			6.99			6.55			6.76
Average Shares Outstanding - Basic		7,119			7,119			7,113			7,107			7,092
Average Shares Outstanding - Diluted		7,168			7,148			7,190			7,259			7,275
Shares Outstanding		7,119			7,119			7,119			7,110			7,095
OPERATING RATIOS:
Return on Average Assets		-0.54	%		0.33	%		0.26	%		-0.47	%		0.56	%
Return on Average Common Equity		-12.97	%		2.90	%		3.56	%		-8.45	%		9.29	%
Efficiency Ratio		80.58	%		73.02	%		75.81	%		70.51	%		69.59	%
BALANCE SHEET DATA:
Total Assets	$	913,446		$	886,677		$	898,310		$	864,083		$	832,315
Total deposits		731,763			703,266			707,117			684,680			671,881
Total loans		665,331			669,902			685,946			685,023			643,039
Total securities		164,794			158,022			149,509			99,410			106,972
Total Shareholders' Equity		67,064			67,525			67,803			46,539			47,951
Allowance for loan losses		(10,665	)		(10,307	)		(10,326	)		(9,913	)		(8,945	)
TAX EQUIVALENT YIELDS AND RATES:
Interest-earning Assets		5.91	%		5.87	%		6.18	%		6.45	%		6.57	%
Interest-bearing Liabilities		3.05	%		3.10	%		3.30	%		3.28	%		3.31	%
Net Interest Spread		2.85	%		2.77	%		2.88	%		3.17	%		3.26	%
Net Interest Margin		3.24	%		3.14	%		3.25	%		3.55	%		3.66	%
CREDIT QUALITY:
Nonperforming Assets		23,240			20,649			16,830			10,954			6,887
Net Chargeoffs to Average Loans		0.69	%		0.91	%		0.52	%		0.67	%		0.23	%
Allowance for Loan Losses to Total Loans		1.60	%		1.54	%		1.51	%		1.45	%		1.39	%
Nonperforming Assets to Total Loans and OREO		3.49	%		3.08	%		2.45	%		1.60	%		1.07	%
Nonperforming Assets to Total Assets		2.54	%		2.33	%		1.87	%		1.27	%		0.83	%
CAPITAL RATIOS AND OTHER:
Total Equity to Total Assets		7.34	%		7.62	%		7.55	%		5.39	%		5.76	%
Leverage Ratio		9.11	%		9.28	%		9.54	%		7.42	%		8.01	%
Tier 1 Risk-Based Capital Ratio		11.16	%		12.32	%		12.02	%		9.07	%		9.42	%
Total Risk-Based Capital Ratio		12.41	%		13.57	%		13.27	%		10.33	%		10.67	%
Number of Banking Offices		16			16			16			16			16
Number of ATMs		19			19			19			19			19
Number of Employees		168			162			167			176			191