EX-99.1 2 exh99-1.htm THIRD QUARTER EARNINGS PRESS RELEASE exh99-1.htm
                                      
Unity Bancorp, Inc.
64 Old Highway 22
Clinton, NJ 08809
800 618-BANK
                                     www.unitybank.com
NewsNewsNewsNewsNews
 
For Immediate Release:
 
October 22, 2009

News Media & Financial Analyst Contact:
Alan J. Bedner, EVP
Chief Financial Officer
(908) 713-4308


Unity Bancorp Reports Third Quarter and Nine Month Results
 

 
Clinton, NJ - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported a net loss attributable to common shareholders of $1.1 million or ($0.16) per diluted share for the quarter ended September 30, 2009, compared to a net loss of $1.0 million or ($0.14) per diluted share, for the third quarter of 2008.  For the nine months ended September 30, 2009, the Company reported a net loss attributable to common shareholders of $2.3 million, or ($0.33) per diluted share, compared to net income of $1.3 million, or $0.19 per diluted share, for the same period a year ago.

James A. Hughes, Unity Bancorp’s President and CEO, said, “As a result of continued stress in our Small Business (“SBA”) portfolio, we substantially increased our loan loss provision this quarter.  The increase was necessary to bolster our reserves so that we can aggressively deal with problem credits.   We anticipate elevated provisions until economic conditions improve.  Meanwhile, we are continuing to grow our customer relationships and invest in our future.  This year we are having record core deposit growth, and we are extremely optimistic that our redefined strategic plan will enhance our franchise.  Our capital levels continue to be strong and we expect 2010 to be a year of turnaround for our performance.”

Net Interest Income
 
Since September 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 reprice in the current lower rate environment. For the quarter ended September 30, 2009, net interest income was $6.9 million, flat from the quarter ended June 30, 2009, and a decrease of 3.2% from the quarter ended September 30, 2008.
 
Factors affecting third quarter net interest income include:
 
·  
The yield on interest-earning assets decreased 81 basis points to 5.64% from 6.45% for the same period last year.
 
·  
The cost of interest-bearing liabilities decreased 48 basis points to 2.80% from 3.28% for the same period last year.
 
·  
Average earning assets, consisting primarily of loans, rose 7.4%.
 
·  
Net interest margin was 3.17%, a 38 basis point decline from 3.55% in the third quarter of 2008.
 
Year-to-date, net interest income was $20.5 million, flat from prior year 2008.  Factors affecting year-to-date net interest income include:
 
·  
Net interest margin for the nine months ended 2009 was 3.20%, a decline of 41 basis points from the same period last year.
 
·  
The yield on earning assets decreased from 6.64% for the first nine months of 2008, to 5.81% for the first nine months of 2009.
 
·  
The cost of interest-bearing liabilities decreased from 3.43% for the first nine months of 2008, to 2.98% for the first nine 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 impacted noninterest income by substantially reducing gains on sales of SBA loans.
 
 
 
For the quarter ended September 30, 2009, noninterest income increased $1.5 million from the quarter ended September 30, 2008. Noninterest income was affected by the following factors:
 
·  
Service charges on deposit accounts remained relatively flat compared to the prior year period.
 
·  
Loan fee income amounted to $398 thousand, an increase of 19.2% due to increased loan prepayment fees.
 
·  
There were no other-than-temporary impairment charges on investment securities, compared to $946 thousand in the prior year period.
 
·  
Gains on the sale of residential mortgage loans amounted to $71 thousand.
 
·  
There were no sales of SBA loans, compared to gains of $215 thousand a year ago.
 
·  
Gains on the sales of investment securities amounted to $158 thousand compared to a loss of $512 thousand in the prior year period.
 
For the nine months ended September 30, 2009, noninterest income amounted to $1.6 million, a decline of $534 thousand from the nine months ended September 30, 2008. Noninterest income was affected by the following factors:
 
·  
Service charges on deposit accounts 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 $1.2 million in the prior year period.
 
·  
Gains on sales of SBA loans amounted to $29 thousand, compared to $1.2 million a year ago.
 
·  
Gains on the sales of residential mortgage loans amounted to $184 thousand, compared to $21 thousand from the prior year period.
 
·  
Gains on the sale of investment securities amounted to $675 thousand, compared to a loss of $393 thousand from the prior year period.
 
Noninterest Expense
 
As a result of current market conditions, the Company effected head-count reductions, primarily related to the closing of SBA loan production offices and instituted a salary freeze.  In addition, the Company undertook other expense saving measures.  However, these expense reductions were offset by increases in FDIC insurance premiums.
 
For the quarter ended September 30, 2009, noninterest expenses were $6.1 million, an increase of 5.7% from the quarter ended September 30, 2008. The following factors affected our noninterest expense:
 
·  
Compensation and benefits expense amounted to $2.9 million, a decrease of $39 thousand, or 1.3% due to reduced head count.
 
·  
Communications and delivery, and occupancy expense declined by 4.2% and 13.5%, respectively, due to reduced communications costs from renegotiated contracts, a decline in capital expenditures and a reduction in rental expense from a renegotiated lease.
 
·  
FF&E and professional services expense remained flat from the prior year period.
 
·  
Loan collection costs increased $109 thousand, due to increased collection costs on delinquent loans.
 
·  
FDIC insurance premiums increased $234 thousand, due to the increase in FDIC insurance rates.
 
For the nine months ended September 30, 2009, noninterest expenses were $17.9 million, an increase of 4.1% from the same period a year ago. The following factors affected our noninterest expense:
 
·  
Compensation and benefits expense amounted to $8.4 million, a decrease of $762 thousand, or 8.3% due to reduced head count.
 
·  
Communications and delivery, and occupancy expense declined by 6.8% and 8.2%, respectively, due to reduced communications costs from renegotiated contracts and a decline in capital expenditures and a reduction in rental expense from a renegotiated lease.
 
·  
FF&E expense increased $157 thousand, primarily due to depreciation expense on new equipment and software and increased software maintenance charges.
 
·  
Professional fees increased $154 thousand, due to increased consulting, legal and audit costs.
 
·  
Loan collection costs increased $248 thousand, due to increased collection costs on delinquent loans.
 
·  
FDIC insurance premiums increased $1.1 million, due primarily to the increase in FDIC insurance rates and a $408 thousand special assessment in the second quarter of 2009.
 
 
 
 
Financial Condition
 
At September 30, 2009, total assets were $922.7 million, a 6.8% increase from a year ago.
 
·  
Total loans decreased $28.5 million, or 4.2%, from $685.0 million at September 30, 2008. SBA 7(a), SBA 504, commercial and residential loans decreased 1.7%, 13.1%, 4.5%, and 3.0%, respectively, partially offset by an increase in consumer loans of 3.1%.
 
·  
Total securities increased $72.1 million as Unity took advantage of favorable credit spreads to invest excess liquidity.
 
·  
Total deposits increased 9.6% or $66.0 million to $750.7 million at September 30, 2009.  This increase was due to a $115.7 million increase in savings deposits, a $4.8 million increase in interest- bearing checking accounts and a $1.4 million increase in demand deposits. These increases were partially offset by a $55.9 million decrease in time deposits.  The increase in savings accounts and checking accounts is due to a high yield savings product that requires a related checking account.  During the remainder of 2009, the Company expects continued migration of time deposits to lower rate accounts.
 
·  
Total borrowed funds decreased $30.0 million from a year ago.
 
·  
Shareholders’ equity was $67.4 million at September 30, 2009, an increase of $20.8 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 $6.88.
 
·  
At September 30, 2009 the leverage, Tier I and Total Risk Based Capital ratios were 9.08%, 11.83% and 13.09%, respectively, all in excess of the ratios required to be deemed “well capitalized”.
 
Credit Quality
 
·  
Nonperforming assets totaled $27.5 million at September 30, 2009, or 4.17% of total loans and other real estate owned (“OREO”) compared to $11.0 million, or 1.60% of total loans and OREO a year ago. The SBA 7(a), SBA 504, commercial and residential and consumer nonaccrual loans were $5.8, $6.0, $6.5 and $6.4 million, respectively.  OREO amounted to $2.8 million.  The increase in nonperforming assets was primarily related to an increase in SBA and residential mortgage accounts.  The majority of nonperforming assets are secured by real estate.
 
·  
The allowance for loan losses totaled $12.4 million at September 30, 2009, or 1.90% of total loans. The provision for loan losses for the third quarter of 2009 amounted to $3.0 million, an increase of $900 thousand from the same period a year ago.  The provision for loan losses for the nine months ended September 30, 2009, amounted to $6.0 million, an increase of $2.8 million from the same period a year ago.
 
·  
Net charge-offs were $1.2 million for the three months ended September 30, 2009, compared to $1.1 million for the same period a year ago.  Net charge-offs were $3.9 million for the nine months ended September 30, 2009, compared to $1.7 million for the same period a year ago.
 
Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $923 million in assets and $751 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.  
SUMMARY FINANCIAL HIGHLIGHTS
  
September 30, 2009
  
                               
                               
                               
                     
2009.Q3 VS.
  
                        2009.Q2       2008.Q3  
Amounts in thousands, except percentages and per share amounts
  
9/30/2009
    
6/30/2009
    
9/30/2008
    
%
    
%
  
                                   
BALANCE SHEET DATA:
                                  
Total Assets
   $ 922,689     $ 913,446     $ 864,083       1.0 %     6.8 %
Total Deposits
     750,665       731,763       684,680       2.6 %     9.6 %
Total Loans
     656,520       665,331       685,023       -1.3 %     -4.2 %
Total Securities
     171,501       164,794       99,410       4.1 %     72.5 %
Total Shareholders' Equity
     67,385       67,064       46,539       0.5 %     44.8 %
Allowance for loan losses
     (12,445 )     (10,665 )     (9,913 )     16.7 %     25.5 %
                                         
FINANCIAL DATA - QUARTER TO DATE:
                                        
Net Income (loss) Before Taxes
    $ (1,090 )    $ (1,752 )    $ (1,141 )     -37.8 %     -4.5 %
Income taxes (benefit)
     (343 )     (552 )     (139 )     -37.9 %     146.8 %
Net income (loss)
     (747 )     (1,200 )     (1,002 )     -37.8 %     -25.4 %
Preferred Dividends & Discount Accretion
     371       372       -       -0.3 %     100.0 %
Loss Attributable to Common Shareholders
    $ (1,118 )    $ (1,572 )    $ (1,002 )     -28.9 %     11.6 %
                                         
Net Loss Per Share - Basic
    $ (0.16 )    $ (0.22 )    $ (0.14 )     -28.9 %     11.4 %
Net Loss Per Share - Diluted
    $ (0.16 )    $ (0.22 )    $ (0.14 )     -29.1 %     12.7 %
                                         
Return on Average Assets
     -0.33 %     -0.54 %     -0.47 %     -39.2 %     -30.5 %
Return on Average Common Equity
     -9.14 %     -12.97 %     -8.45 %     -29.6 %     8.1 %
Efficiency Ratio
     77.72 %     80.58 %     70.51 %     -3.6 %     10.2 %
                                         
FINANCIAL DATA - YEAR TO DATE:
                                        
Net Income (loss) Before Taxes
    $ (1,774 )    $ (685 )    $ 2,328       159.0 %     -176.2 %
Income taxes (benefit)
     (559 )     (216 )     982       158.8 %     -156.9 %
Net income (loss)
     (1,215 )     (469 )     1,346       159.1 %     -190.3 %
Preferred Dividends & Discount Accretion
     1,122       751       -       49.4 %     100.0 %
(Loss Attributable) Income Available to Common Shareholders
    $ (2,337 )    $ (1,220 )    $ 1,346       91.6 %     -273.6 %
                                         
Net (Loss) Income Per Share - Basic
    $ (0.33 )    $ (0.17 )    $ 0.19       91.6 %     -272.9 %
Net (Loss) Income Per Share - Diluted
    $ (0.33 )    $ (0.17 )    $ 0.19       91.2 %     -276.0 %
                                         
Return on Average Assets (annualized)
     -0.18 %     -0.11 %     0.22 %     71.6 %     -180.4 %
Return on Average Common Equity (annualized)
     -6.38 %     -5.02 %     3.77 %     26.9 %     -269.3 %
Efficiency Ratio
     77.12 %     76.82 %     70.68 %     0.4 %     9.1 %
                                         
SHARE INFORMATION:
                                        
Market Price Per Share
    $ 4.20      $ 3.55      $ 4.00       18.3 %     5.0 %
Dividends Paid Per Share
     -       -       -       0.0 %     0.0 %
Book Value Per Common Share
     6.88       6.85       6.55       0.4 %     5.1 %
Average Diluted Shares Outstanding (QTD)
     7,190       7,168       7,259       0.3 %     -1.0 %
                                         
CAPITAL RATIOS:
                                        
Total Equity to Total Assets
     7.30 %     7.34 %     5.39 %     -0.5 %     35.6 %
Leverage Ratio
     9.08 %     9.30 %     7.42 %     -2.3 %     22.4 %
Tier 1 Risk-Based Capital Ratio
     11.83 %     11.88 %     9.07 %     -0.4 %     30.4 %
Total Risk-Based Capital Ratio
     13.09 %     13.13 %     10.33 %     -0.3 %     26.7 %
                                         
CREDIT QUALITY AND RATIOS:
                                        
Nonperforming Assets
     27,461       23,240       10,954       18.2 %     150.7 %
QTD Net Chargeoffs (annualized) to QTD Average Loans
     0.73 %     0.69 %     0.67 %     6.6 %     8.8 %
Allowance for Loan Losses to Total Loans
     1.90 %     1.60 %     1.45 %     18.3 %     31.0 %
Nonperforming Assets to Total Loans and OREO
     4.17 %     3.49 %     1.60 %     19.3 %     160.6 %
Nonperforming Assets to Total Assets
     2.98 %     2.54 %     1.27 %     17.0 %     134.8 %
                                         

 
 
 

                               
UNITY BANCORP, INC.     
CONSOLIDATED BALANCE SHEETS             
September 30, 2009   
                               
                               
                     
2009.Q3 VS.
  
                        2009.Q2       2008.Q3  
Amounts in thousands
  
9/30/2009
    
6/30/2009
    
9/30/2008
    
%
    
%
  
                                   
ASSETS
                                  
Cash and due from banks
   $ 17,035     $ 17,295     $ 21,987       -1.5 %     -22.5 %
Federal funds sold and interest-bearing deposits
     48,853       37,232       29,356       31.2 %     66.4 %
Cash and cash equivalents
     65,888       54,527       51,343       20.8 %     28.3 %
                                         
Securities available for sale
     140,906       132,719       70,144       6.2 %     100.9 %
Securities held to maturity
     30,595       32,075       29,266       -4.6 %     4.5 %
Total securities
     171,501       164,794       99,410       4.1 %     72.5 %
                                         
SBA loans held for sale
     21,364       23,161       19,863       -7.8 %     7.6 %
SBA loans held to maturity
     79,342       82,157       82,551       -3.4 %     -3.9 %
SBA 504 loans
     71,432       72,619       82,227       -1.6 %     -13.1 %
Commercial loans
     298,019       299,411       311,988       -0.5 %     -4.5 %
Residential mortgage loans
     124,313       125,466       128,216       -0.9 %     -3.0 %
Consumer loans
     62,050       62,517       60,178       -0.7 %     3.1 %
Total loans
     656,520       665,331       685,023       -1.3 %     -4.2 %
Allowance for loan losses
     (12,445 )     (10,665 )     (9,913 )     16.7 %     25.5 %
Net loans
     644,075       654,666       675,110       -1.6 %     -4.6 %
                                         
Premises and equipment, net
     11,911       12,067       12,475       -1.3 %     -4.5 %
Bank owned life insurance (BOLI)
     5,946       5,890       5,727       1.0 %     3.8 %
Federal Home Loan Bank stock
     4,677       5,127       5,307       -8.8 %     -11.9 %
Accrued interest receivable
     4,230       4,263       4,364       -0.8 %     -3.1 %
Goodwill and other intangibles
     1,563       1,566       1,577       -0.2 %     -0.9 %
Loan servicing asset
     977       1,142       1,721       -14.4 %     -43.2 %
Other assets
     11,921       9,404       7,049       26.8 %     69.1 %
                                         
Total Assets
   $ 922,689     $ 913,446     $ 864,083       1.0 %     6.8 %
                                         
LIABILITIES AND SHAREHOLDERS' EQUITY
                                  
Noninterest-bearing checking
   $ 83,534     $ 83,639     $ 82,167       -0.1 %     1.7 %
Total interest-bearing checking
     92,401       84,842       87,587       8.9 %     5.5 %
Total savings
     263,758       211,876       148,026       24.5 %     78.2 %
Time deposits, under $100,000
     209,050       239,893       274,845       -12.9 %     -23.9 %
Time deposits, $100,000 and over
     101,922       111,513       92,055       -8.6 %     10.7 %
Total deposits
     750,665       731,763       684,680       2.6 %     9.6 %
                                         
Borrowed Funds
     85,000       95,000       115,000       -10.5 %     -26.1 %
Subordinated debentures
     15,465       15,465       15,465       0.0 %     0.0 %
Accrued interest payable
     797       847       869       -5.9 %     -8.3 %
Accrued expenses and other liabilities
     3,377       3,307       1,530       2.1 %     120.7 %
Total Liabilities
     855,304       846,382       817,544       1.1 %     4.6 %
                                         
Cumulative Perpetual Preferred stock
     18,418       18,305       -       0.6 %     100.0 %
Common stock
     55,351       55,264       52,453       0.2 %     5.5 %
Retained earnings (deficit)
     (1,253 )     (135 )     591       828.1 %     -312.0 %
Treasury stock at cost
     (4,169 )     (4,169 )     (4,169 )     0.0 %     0.0 %
Accumulated other comprehensive loss
     (962 )     (2,201 )     (2,336 )     -56.3 %     -58.8 %
Total Shareholders' Equity
     67,385       67,064       46,539       0.5 %     44.8 %
                                         
Total Liabilities and Shareholders' Equity
   $ 922,689     $ 913,446     $ 864,083       1.0 %     6.8 %
                                         
Common Shares at Period End:
                                        
Shares Issued
     7,544       7,544       7,535                  
Shares Outstanding
     7,119       7,119       7,110                  
Treasury Shares
     425       425       425                  

 
 
 

                               
UNITY BANCORP, INC.
  
QTD CONSOLIDATED STATEMENTS OF INCOME  
September 30, 2009
  
                               
                               
                         
    For the Three Months Ended       
2009.Q3 VS.
  
                       2009.Q2      2008.Q3  
Amounts in thousands, except percentages and per share amounts
  
9/30/2009
    
6/30/2009
    
9/30/2008
    
%
    
%
  
                               
Interest Income - Cash
   $ 32     $ 29     $ 113       10.3 %     -71.7 %
Interest Income - FHLB/ACBB Stock
     101       122       58       -17.2 %     74.1 %
                                         
Interest Income - AFS Investments
     1,482       1,509       907       -1.8 %     63.4 %
Interest Income - HTM Investments
     389       391       381       -0.5 %     2.1 %
Interest Income - Total Investments
     1,871       1,900       1,288       -1.5 %     45.3 %
                                         
Interest Income - SBA Loans
     1,498       1,564       2,043       -4.2 %     -26.7 %
Interest Income - SBA 504 Loans
     1,147       1,285       1,424       -10.7 %     -19.5 %
Interest Income - Commercial Loans
     4,973       5,051       5,453       -1.5 %     -8.8 %
Interest Income - Mortgage Loans
     1,772       1,783       1,720       -0.6 %     3.0 %
Interest Income - Consumer Loans
     791       797       866       -0.8 %     -8.7 %
Interest Income - Total Loans
     10,181       10,480       11,506       -2.9 %     -11.5 %
                                         
Total Interest Income
     12,185       12,531       12,965       -2.8 %     -6.0 %
                                         
Interest Expense - Total Checking
     264       267       404       -1.1 %     -34.7 %
Interest Expense - Total Savings
     1,032       912       774       13.2 %     33.3 %
Interest Expense - Total CDs
     2,950       3,409       3,553       -13.5 %     -17.0 %
Interest Expense - Borrowings
     1,081       1,085       1,152       -0.4 %     -6.2 %
Total Interest Expense
     5,327       5,673       5,883       -6.1 %     -9.5 %
                                         
Net Interest Income Before Provision
     6,858       6,858       7,082       0.0 %     -3.2 %
Provision for Loan Losses
     3,000       1,500       2,100       100.0 %     42.9 %
Net Interest Income After Provision
     3,858       5,358       4,982       -28.0 %     -22.6 %
                                         
Branch Fee Income
     373       335       381       11.3 %     -2.1 %
Loan Fee Income
     398       294       334       35.4 %     19.2 %
Bank Owned Life Insurance (BOLI)
     56       55       53       1.8 %     5.7 %
Gain (Loss) on Sale of Mortgage Loans
     71       49       -       44.9 %     100.0 %
Gain (Loss) on Sale of SBA Loans
     -       -       215       0.00 %     -100.0 %
Gain (Loss) on Sale of SBA 504 Loans
     -       -       -       0.00 %     0.00 %
Other-than-temporary impairment charges
     -       (1,749 )     (946 )     -100.0 %     -100.0 %
Net security gains (losses)
     158       2       (512 )     7800.0 %     -130.9 %
Other Income
     106       107       131       -0.9 %     -19.1 %
Total Noninterest Income (Loss)
     1,162       (907 )     (344 )     -228.1 %     -437.8 %
                                         
Total Compensation and Benefits
     2,909       2,853       2,948       2.0 %     -1.3 %
Occupancy Expense
     595       647       688       -8.0 %     -13.5 %
Communications and Delivery Expense
     531       482       554       10.2 %     -4.2 %
Furniture, Fixtures and Equipment Expense
     414       471       423       -12.1 %     -2.1 %
Professional Services Expense
     274       260       285       5.4 %     -3.9 %
Loan Expense
     315       180       206       75.0 %     52.9 %
FDIC Insurance Expense
     351       708       117       -50.4 %     200.0 %
Advertising Expense
     147       151       158       -2.6 %     -7.0 %
Other Expense
     574       451       400       27.3 %     43.5 %
Total Noninterest Expense
     6,110       6,203       5,779       -1.5 %     5.7 %
                                         
Net Income (Loss) Before Taxes
     (1,090 )     (1,752 )     (1,141 )     -37.8 %     -4.5 %
Income taxes (benefit)
     (343 )     (552 )     (139 )     -37.9 %     146.8 %
Net Income (Loss)
     (747 )     (1,200 )     (1,002 )     -37.8 %     -25.4 %
Preferred Dividends & Discount Accretion
     371       372       -       -0.3 %     100.0 %
Loss Attributable to Common Shareholders
   $ (1,118 )   $ (1,572 )   $ (1,002 )     -28.9 %     11.6 %
                                         
Effective Tax Rate
     31.47 %     31.51 %     12.18 %                
                                         
Net Loss Per Share - Basic
     (0.16 )     (0.22 )     (0.14 )                
Net Loss Per Share - Diluted
     (0.16 )     (0.22 )     (0.14 )                
                                         
Average Shares Outstanding - Basic
     7,119       7,119       7,107                  
Average Shares Outstanding - Diluted
     7,190       7,168       7,259                  

 
 
 

                         
UNITY BANCORP, INC.
  
YTD CONSOLIDATED STATEMENTS OF INCOME
  
September 30, 2009
  
                         
                         
                         
   
CURRENT YTD
    
PRIOR YTD
    
CURRENT YTD VS. PRIOR YTD
  
Amounts in thousands, except percentages and per share amounts
  
9/30/2009
    
9/30/2008
      $       %  
                           
Interest Income - Cash
   $ 78     $ 404     $ (326 )     -80.7 %
Interest Income - FHLB/ACBB Stock
     219       234       (15 )     -6.4 %
                                 
Interest Income - AFS Investments
     4,670       2,714       1,956       72.1 %
Interest Income - HTM Investments
     1,167       1,216       (49 )     -4.0 %
Interest Income - Total Investments
     5,837       3,930       1,907       48.5 %
                                 
Interest Income - SBA Loans
     4,668       6,399       (1,731 )     -27.1 %
Interest Income - SBA 504 Loans
     3,663       4,134       (471 )     -11.4 %
Interest Income - Commercial Loans
     15,040       16,145       (1,105 )     -6.8 %
Interest Income - Mortgage Loans
     5,419       4,008       1,411       35.2 %
Interest Income - Consumer Loans
     2,383       2,613       (230 )     -8.8 %
Interest Income - Total Loans
     31,173       33,299       (2,126 )     -6.4 %
                                 
Total Interest Income
     37,307       37,867       (560 )     -1.5 %
                                 
Interest Expense - Total Checking
     801       1,120       (319 )     -28.5 %
Interest Expense - Total Savings
     2,588       3,041       (453 )     -14.9 %
Interest Expense - Total CDs
     10,084       9,779       305       3.1 %
Interest Expense - Borrowings
     3,344       3,372       (28 )     -0.8 %
Total Interest Expense
     16,817       17,312       (495 )     -2.9 %
                                 
Net Interest Income Before Provision
     20,490       20,555       (65 )     -0.3 %
Provision for Loan Losses
     6,000       3,200       2,800       87.5 %
Net Interest Income After Provision
     14,490       17,355       (2,865 )     -16.5 %
                                 
Branch Fee Income
     1,038       1,042       (4 )     -0.4 %
Loan Fee Income
     946       936       10       1.1 %
Bank Owned Life Insurance (BOLI)
     166       157       9       5.7 %
Gain (Loss) on Sale of Mortgage Loans
     184       21       163       776.2 %
Gain (Loss) on Sale of SBA Loans
     29       1,208       (1,179 )     -97.6 %
Gain (Loss) on Sale of SBA 504 Loans
     -       -       -       0.00 %
Other-than-temporary impairment charges
     (1,749 )     (1,201 )     (548 )     45.6 %
Net security gains (losses)
     675       (393 )     1,068       -271.8 %
Other Income
     316       369       (53 )     -14.4 %
Total Noninterest Income (Loss)
   $ 1,605     $ 2,139     $ (534 )     -25.0 %
                                 
Total Compensation and Benefits
     8,386       9,148       (762 )     -8.3 %
Occupancy Expense
     1,929       2,102       (173 )     -8.2 %
Communications and Delivery Expense
     1,554       1,668       (114 )     -6.8 %
Furniture, Fixtures and Equipment Expense
     1,381       1,224       157       12.8 %
Professional Services Expense
     780       626       154       24.6 %
Loan Expense
     694       446       248       55.6 %
FDIC Insurance Expense
     1,361       291       1,070       367.7 %
Advertising Expense
     373       299       74       24.7 %
Other Expense
     1,411       1,362       49       3.6 %
Total Noninterest Expense
     17,869       17,166       703       4.1 %
                                 
Net Income (Loss) Before Taxes
     (1,774 )     2,328       (4,102 )     -176.2 %
Income taxes (benefit)
     (559 )     982       (1,541 )     -156.9 %
Net Income (Loss)
     (1,215 )     1,346       (2,561 )     -190.3 %
Preferred Dividends & Discount Accretion
     1,122       -       1,122       100.0 %
(Loss Attributable) Income Available to Common Shareholders
   $ (2,337 )   $ 1,346     $ (3,683 )     -273.6 %
                                 
Effective Tax Rate
     31.5 %     42.2 %                
                                 
Net (Loss) Income Per Share - Basic
     (0.33 )     0.19                  
Net (Loss) Income Per Share - Diluted
     (0.33 )     0.19                  
                                 
Average Shares Outstanding - Basic
     7,119       7,091                  
Average Shares Outstanding - Diluted
     7,170       7,268                  

 
 
 

                                     
UNITY BANCORP, INC.  
QUARTER TO DATE NET INTEREST MARGIN   
September 30, 2009  
                                     
                                     
   
For the Three Months Ended
  
    September 30, 2009     June 30, 2009  
Amounts in thousands, except percentages
  
Average Balance
    
Interest
    
Rate/Yield
    
Average Balance
    
Interest
    
Rate/Yield
  
                                     
Interest-earning Assets:
                                    
Federal funds sold and interest-bearing deposits
   $ 32,940     $ 32       0.39 %   $ 14,153     $ 29       0.82 %
Federal Home Loan Bank stock
     4,677       101       8.57 %     4,972       122       9.84 %
                                                 
Securities available for sale
     131,360       1,495       4.55 %     130,751       1,522       4.66 %
Securities held to maturity
     31,418       407       5.18 %     34,457       409       4.75 %
Total securities
     162,778       1,902       4.67 %     165,208       1,931       4.68 %
                                                 
SBA Loans
     102,691       1,498       5.83 %     102,255       1,564       6.12 %
SBA 504 loans
     71,764       1,147       6.34 %     74,209       1,285       6.95 %
Commercial loans
     301,010       4,973       6.55 %     303,589       5,051       6.67 %
Residential mortgage loans
     123,786       1,772       5.73 %     124,227       1,783       5.74 %
Consumer loans
     62,459       791       5.02 %     63,280       797       5.05 %
Total loans
     661,710       10,181       6.12 %     667,560       10,480       6.29 %
                                                 
Total Interest-earning Assets
     862,105     $ 12,216       5.64 %     851,893     $ 12,562       5.91 %
                                                 
Noninterest-earning assets:
                                                
Cash and due from banks
     18,502                       18,397                  
Allowance for loan losses
     (11,478 )                     (11,095 )                
Other assets
     34,355                       32,770                  
Total Noninterest-earning Assets
     41,379                       40,072                  
                                                 
Total Assets
   $ 903,484                     $ 891,965                  
                                                 
                                                 
Interest-bearing Liabilities:
                                                
Total interest-bearing checking
   $ 88,284     $ 264       1.19 %   $ 85,313     $ 267       1.26 %
Total savings
     239,427       1,032       1.71 %     189,977       912       1.93 %
Total time deposits
     323,484       2,950       3.62 %     360,885       3,409       3.79 %
Total Interest-bearing Deposits
     651,195       4,246       2.59 %     636,175       4,588       2.89 %
Total borrowings
     100,465       1,081       4.21 %     107,163       1,085       4.01 %
                                                 
Total Interest-bearing Liabilities
     751,660     $ 5,327       2.80 %     743,338     $ 5,673       3.05 %
                                                 
Noninterest-bearing Liabilities:
                                                
Noninterest-bearing checking
     79,965                       77,630                  
Other Liabilities
     4,945                       4,148                  
Total Noninterest-bearing Liabilities
     84,910                       81,778                  
                                                 
Total Shareholders' Equity
     66,914                       66,849                  
                                                 
Total Liabilities and Shareholders' Equity
   $ 903,484                     $ 891,965                  
                                                 
Net Interest Spread
             6,889       2.84 %             6,889       2.86 %
Tax-equivalent Basis Adjustment
             (31 )                     (31 )        
Net Interest Income
            $ 6,858                      $ 6,858          
Net Interest Margin
                     3.17 %                     3.24 %
                                                 

 
 
 

                                     
UNITY BANCORP, INC.   
QUARTER TO DATE NET INTEREST MARGIN   
September 30, 2009     
                                     
                                     
   
For the Three Months Ended
  
   
September 30, 2009
    
September 30, 2008
  
Amounts in thousands, except percentages
  
Average Balance
    
Interest
    
Rate/Yield
    
Average Balance
    
Interest
    
Rate/Yield
  
                                     
Interest-earning Assets:
                                    
Federal funds sold and interest-bearing deposits
   $ 32,940     $ 32       0.39 %   $ 24,118     $ 113       1.86 %
Federal Home Loan Bank stock
     4,677       101       8.57 %     4,415       58       5.23 %
                                                 
Securities available for sale
     131,360       1,495       4.55 %     72,658       920       5.06 %
Securities held to maturity
     31,418       407       5.18 %     31,209       399       5.11 %
Total securities
     162,778       1,902       4.67 %     103,867       1,319       5.08 %
                                                 
SBA Loans
     102,691       1,498       5.83 %     102,383       2,043       7.98 %
SBA 504 loans
     71,764       1,147       6.34 %     76,288       1,424       7.43 %
Commercial loans
     301,010       4,973       6.55 %     317,338       5,453       6.84 %
Residential mortgage loans
     123,786       1,772       5.73 %     114,058       1,720       6.03 %
Consumer loans
     62,459       791       5.02 %     59,933       866       5.75 %
Total loans
     661,710       10,181       6.12 %     670,000       11,506       6.84 %
                                                 
Total Interest-earning Assets
     862,105     $ 12,216       5.64 %     802,400     $ 12,996       6.45 %
                                                 
Noninterest-earning assets:
                                                
Cash and due from banks
     18,502                       19,166                  
Allowance for loan losses
     (11,478 )                     (9,092 )                
Other assets
     34,355                       32,229                  
Total Noninterest-earning Assets
     41,379                       42,303                  
                                                 
Total Assets
   $ 903,484                     $ 844,703                  
                                                 
                                                 
Interest-bearing Liabilities:
                                                
Total interest-bearing checking
   $ 88,284     $ 264       1.19 %   $ 87,903     $ 404       1.83 %
Total savings
     239,427       1,032       1.71 %     161,707       774       1.90 %
Total time deposits
     323,484       2,950       3.62 %     353,743       3,553       4.00 %
Total Interest-bearing Deposits
     651,195       4,246       2.59 %     603,353       4,731       3.12 %
Total borrowings
     100,465       1,081       4.21 %     110,684       1,152       4.14 %
                                                 
Total Interest-bearing Liabilities
     751,660     $ 5,327       2.80 %     714,037     $ 5,883       3.28 %
                                                 
Noninterest-bearing Liabilities:
                                                
Noninterest-bearing checking
     79,965                       81,157                  
Other Liabilities
     4,945                       2,321                  
Total Noninterest-bearing Liabilities
     84,910                       83,478                  
                                                 
Total Shareholders' Equity
     66,914                       47,188                  
                                                 
Total Liabilities and Shareholders' Equity
   $ 903,484                     $ 844,703                  
                                                 
Net Interest Spread
             6,889       2.84 %             7,113       3.17 %
Tax-equivalent Basis Adjustment
             (31 )                    $ (31 )        
Net Interest Income
            $ 6,858                       7,082          
Net Interest Margin
                     3.17 %                     3.55 %
                                                 

 
 
 

                                     
UNITY BANCORP, INC.   
YEAR TO DATE NET INTEREST MARGIN             
September 30, 2009          
                                     
                                     
                                     
   
September 30, 2009
    
September 30, 2008
  
Amounts in thousands, except percentages
  
Average Balance
    
Interest
    
Rate/Yield
    
Average Balance
    
Interest
    
Rate/Yield
  
                                     
Interest-earning Assets:
                                    
Federal funds sold and interest-bearing deposits
   $ 19,222     $ 78       0.54 %   $ 23,135     $ 404       2.33 %
Federal Home Loan Bank stock
     5,190       219       5.64 %     4,330       234       7.22 %
                                                 
Securities available for sale
     133,446       4,709       4.71 %     73,337       2,789       5.07 %
Securities held to maturity
     33,277       1,222       4.90 %     32,297       1,270       5.24 %
Total securities
     166,723       5,931       4.74 %     105,634       4,059       5.12 %
                                                 
SBA Loans
     103,321       4,668       6.02 %     100,674       6,399       8.47 %
SBA 504 loans
     74,266       3,663       6.59 %     73,324       4,134       7.53 %
Commercial loans
     303,234       15,040       6.63 %     308,173       16,145       7.00 %
Residential mortgage loans
     125,667       5,419       5.75 %     89,551       4,008       5.97 %
Consumer loans
     62,630       2,383       5.09 %     58,679       2,613       5.95 %
Total loans
     669,118       31,173       6.22 %     630,401       33,299       7.05 %
                                                 
Total Interest-earning Assets
     860,253     $ 37,401       5.81 %     763,500     $ 37,996       6.64 %
                                                 
Noninterest-earning assets:
                                                
Cash and due from banks
     18,838                       16,189                  
Allowance for loan losses
     (11,173 )                     (8,866 )                
Other assets
     33,409                       31,268                  
Total Noninterest-earning Assets
     41,074                       38,591                  
                                                 
Total Assets
   $ 901,327                     $ 802,091                  
                                                 
                                                 
Interest-bearing Liabilities:
                                                
Total interest-bearing checking
   $ 86,232     $ 801       1.24 %   $ 83,050     $ 1,120       1.80 %
Total savings
     192,559       2,588       1.80 %     179,254       3,041       2.27 %
Total time deposits
     357,073       10,084       3.78 %     304,298       9,779       4.29 %
Total Interest-bearing Deposits
     635,864       13,473       2.83 %     566,602       13,940       3.29 %
Total borrowings
     116,427       3,344       3.79 %     107,345       3,372       4.20 %
                                                 
Total Interest-bearing Liabilities
     752,291     $ 16,817       2.98 %     673,947     $ 17,312       3.43 %
                                                 
Noninterest-bearing Liabilities:
                                                
Noninterest-bearing checking
     77,730                       78,259                  
Other Liabilities
     4,297                       2,354                  
Total Noninterest-bearing Liabilities
     82,027                       80,613                  
                                                 
Total Shareholders' Equity
     67,009                       47,531                  
                                                 
Total Liabilities and Shareholders' Equity
   $ 901,327                     $ 802,091                  
                                                 
Net Interest Spread
             20,584       2.83 %             20,684       3.21 %
Tax-equivalent Basis Adjustment
             (94 )                     (129 )        
Net Interest Income
            $ 20,490                      $ 20,555          
Net Interest Margin
                     3.20 %                     3.61 %
                                                 

 
 
 


                               
UNITY BANCORP, INC.
  
ALLOWANCE FOR LOAN LOSSES AND LOAN QUALITY SCHEDULES
  
September 30, 2009
  
                               
                               
                               
Amounts in thousands, except percentages
  
9/30/2009
    
6/30/2009
    
3/31/2009
    
12/31/2008
    
9/30/2008
  
                               
ALLOWANCE FOR LOAN LOSSES:
                              
Balance, Beginning of Quarter
   $ 10,665     $ 10,307     $ 10,326     $ 9,913     $ 8,945  
Provision for Loan Losses Charged to Expense
     3,000       1,500       1,500       1,300       2,100  
      13,665       11,807       11,826       11,213       11,045  
Less: Chargeoffs
                                        
           SBA loans
     448       323       1,106       310       423  
           SBA 504 loans
     -       112       200       500       500  
           Commercial loans
     673       798       249       148       200  
           Residential mortgage loans
     125       33       58       -       -  
          Consumer loans
     11       11       -       5       78  
                  Total Chargeoffs
     1,257       1,277       1,613       963       1,201  
Add: Recoveries
                                        
          SBA loans
     14       56       33       72       40  
          SBA 504 loans
     22       -       5       -       -  
          Commercial loans
     (1 )     79       53       4       29  
          Residential mortgage loans
     -       -       -       -       -  
          Consumer loans
     2       -       3       -       -  
                Total Recoveries
     37       135       94       76       69  
Net Chargeoffs
     1,220       1,142       1,519       887       1,132  
Balance, End of Quarter
   $ 12,445     $ 10,665     $ 10,307     $ 10,326     $ 9,913  
                                         
LOAN QUALITY INFORMATION:
                                        
Nonperforming loans
   $ 24,687     $ 22,774     $ 19,886     $ 16,120     $ 10,636  
Other real estate owned (OREO)
     2,774       466       763       710       318  
Total nonperforming assets
     27,461       23,240       20,649       16,830       10,954  
Less:  Amount guaranteed by Small Business Administration
     1,759       3,214       2,426       1,983     $ 998  
Net nonperforming assets
   $ 25,702     $ 20,026     $ 18,223     $ 14,847     $ 9,956  
                                         
Loans 90 Days Past Due & Still Accruing
   $ 1,609     $ 781     $ 853     $ 2,536     $ 3,532  
                                         
Allowance for Loan Losses to:
                                        
Total Loans at Quarter End
     1.90 %     1.60 %     1.54 %     1.51 %     1.45 %
Nonperforming loans
     50.41 %     46.83 %     51.83 %     64.06 %     93.19 %
Total nonperforming assets
     45.32 %     45.89 %     49.92 %     61.36 %     90.50 %
Net nonperforming assets
     48.42 %     53.26 %     56.56 %     69.55 %     99.57 %
 
                                  
QTD net chargeoffs (annualized) to QTD average loans
     0.73 %     0.69 %     0.91 %     0.52 %     0.67 %
Nonperforming Loans to Total Loans
     3.76 %     3.42 %     2.97 %     2.35 %     1.55 %
Nonperforming Assets to Total Loans & OREO
     4.17 %     3.49 %     3.08 %     2.45 %     1.60 %
Nonperforming Assets to Total Assets
     2.98 %     2.54 %     2.33 %     1.87 %     1.27 %

 
 
 


                               
UNITY BANCORP, INC.
  
QUARTERLY FINANCIAL DATA
  
September 30, 2009
  
                               
                               
Amounts in thousands, except percentages and per share amounts
  
9/30/2009
    
6/30/2009
    
3/31/2009
    
12/31/2008
    
9/30/2008
  
                               
SUMMARY OF INCOME:
                              
Total Interest Income
   $ 12,185     $ 12,531     $ 12,590     $ 12,898     $ 12,965  
Total Interest Expense
     5,327       5,673       5,816       6,162       5,883  
Net Interest Income Before Provision
     6,858       6,858       6,774       6,736       7,082  
Provision for Loan Losses
     3,000       1,500       1,500       1,300       2,100  
Net Interest Income After Provision
     3,858       5,358       5,274       5,436       4,982  
Total Noninterest Income (Loss)
     1,162       (907 )     1,348       555       (344 )
Total Noninterest Expense
     6,110       6,203       5,555       5,773       5,779  
Net Income (loss) Before Taxes
     (1,090 )     (1,752 )     1,067       218       (1,141 )
Income taxes (benefit)
     (343 )     (552 )     336       (366 )     (139 )
Net income (loss)
     (747 )     (1,200 )     731       584       (1,002 )
Preferred Dividends & Discount Accretion
     371       372       379       110       -  
(Loss Attributable) Income Available to Common Shareholders
   $ (1,118 )   $ (1,572 )   $ 352     $ 474     $ (1,002 )
                                         
Net (Loss) Income Per Share - Basic
   $ (0.16 )   $ (0.22 )   $ 0.05     $ 0.07     $ (0.14 )
Net (Loss) Income Per Share - Diluted
   $  (0.16 )   $ (0.22 )   $ 0.05     $ 0.07     $ (0.14 )
                                         
COMMON SHARE DATA:
                                        
Market Price Per Share
     4.20       3.55       3.19       3.90       4.00  
Dividends Paid
     -       -       -       -       -  
Book Value Per Common Share
     6.88       6.85       6.93       6.99       6.55  
Average Shares Outstanding - Basic
     7,119       7,119       7,119       7,113       7,107  
Average Shares Outstanding - Diluted
     7,190       7,168       7,148       7,190       7,259  
Shares Outstanding
     7,119       7,119       7,119       7,119       7,110  
                                         
OPERATING RATIOS (Annualized):
                                        
Return on Average Assets
     -0.33 %     -0.54 %     0.33 %     0.26 %     -0.47 %
Return on Average Common Equity
     -9.14 %     -12.97 %     2.90 %     3.56 %     -8.45 %
Efficiency Ratio
     77.72 %     80.58 %     73.02 %     75.81 %     70.51 %
                                         
BALANCE SHEET DATA:
                                        
Total Assets
   $ 922,689     $ 913,446     $ 886,677     $ 898,310     $ 864,083  
Total deposits
     750,665       731,763       703,266       707,117       684,680  
Total loans
     656,520       665,331       669,902       685,946       685,023  
Total securities
     171,501       164,794       158,022       149,509       99,410  
Total Shareholders' Equity
     67,385       67,064       67,525       67,803       46,539  
Allowance for loan losses
     (12,445 )     (10,665 )     (10,307 )     (10,326 )     (9,913 )
                                         
TAX EQUIVALENT YIELDS AND RATES:
                                        
Interest-earning Assets
     5.64 %     5.91 %     5.87 %     6.18 %     6.45 %
Interest-bearing Liabilities
     2.80 %     3.05 %     3.10 %     3.30 %     3.28 %
Net Interest Spread
     2.84 %     2.86 %     2.77 %     2.88 %     3.17 %
Net Interest Margin
     3.17 %     3.24 %     3.14 %     3.25 %     3.55 %
                                         
CREDIT QUALITY:
                                        
Nonperforming Assets
     27,461       23,240       20,649       16,830       10,954  
QTD Net Chargeoffs (annualized) to QTD Average Loans
     0.73 %     0.69 %     0.91 %     0.52 %     0.67 %
Allowance for Loan Losses to Total Loans
     1.90 %     1.60 %     1.54 %     1.51 %     1.45 %
Nonperforming Assets to Total Loans and OREO
     4.17 %     3.49 %     3.08 %     2.45 %     1.60 %
Nonperforming Assets to Total Assets
     2.98 %     2.54 %     2.33 %     1.87 %     1.27 %
                                         
CAPITAL RATIOS AND OTHER:
                                        
Total Equity to Total Assets
     7.30 %     7.34 %     7.62 %     7.55 %     5.39 %
Leverage Ratio
     9.08 %     9.30 %     9.28 %     9.54 %     7.42 %
Tier 1 Risk-Based Capital Ratio
     11.83 %     11.88 %     12.32 %     12.02 %     9.07 %
Total Risk-Based Capital Ratio
     13.09 %     13.13 %     13.57 %     13.27 %     10.33 %
Number of Banking Offices
     16       16       16       16       16  
Number of ATMs
     19       19       19       19       19  
Number of Employees
     175       168       162       167       176