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

February 3, 2010

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 February 3, 2010 announcing results for the three and twelve month periods ended December 31, 2009, the full text of which is incorporated by reference to this Item.

Item 9.01 Financial Statements and Exhibits.

(d)		Exhibits
EXHIBIT
99.1	Press release issued by the Registrant on February 3, 2010

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: February 3, 2010	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 February 3, 2010

EX-99.1

                                      

Unity Bancorp, Inc.

64 Old Highway 22

Clinton, NJ 08809

800 618-BANK

www.unitybank.com

NewsNewsNewsNewsNews

For Immediate Release:  February 3, 2010

News Media & Financial Analyst Contact:

Alan J. Bedner, EVP

Chief Financial Officer

(908) 713-4308

Unity Bancorp Reports Fourth Quarter and Year End Results

Clinton, NJ - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported a net loss attributable to common shareholders of $239 thousand or ($0.03) per diluted share for the quarter ended December 31, 2009, compared to net income available to common shareholders of $474 thousand or $0.07 per diluted share for the fourth quarter of 2008.  The Company recognized an impairment charge during the quarter of $862 thousand, or $0.08 per diluted share after tax, due to further deterioration of the underlying collateral for two pooled trust preferred securities.  Excluding impairment charges, net income available to common shareholders would have been $330 thousand or $0.05 per diluted share for the quarter ended December 31, 2009, compared to net income available to common shareholders of $698 thousand, or $0.10 per diluted share for the same period a year ago.

For the year ended December 31, 2009, the Company reported a net loss attributable to common shareholders of $2.6 million, or ($0.36) per diluted share, compared to net income available to common shareholders of $1.8 million, or $0.25 per diluted share, for the same period a year ago.  Earnings for 2009 were materially impacted by an impairment charge of $2.6 million, or $0.24 per diluted share after tax, on the two pooled trust preferred securities noted above and a one-time FDIC special assessment of $408 thousand, or $0.04 per diluted share after tax in June 2009. Excluding impairment charges and the FDIC special assessment, net loss attributable to common shareholders would have been $584 thousand or ($0.08) per diluted share for the year ended December 31, 2009, compared to net income available to common shareholders of $2.8 million or $0.39 per diluted share for 2008.

James A. Hughes, Unity Bancorp’s President and CEO, said, “We are facing the most challenging economic environment in decades.  Our loss for 2009 was the result of the magnitude of the recession and its impact on our customers and our investment portfolio.  While New Jersey has fared much better than other states, our portfolio of Commercial and SBA loans continues to be a challenge.  Although there have been recent signs of stability, the recovery is expected to be slow and measured.  We continue to remain positive and have focused on growing our customer relationships and investing in our future.  This year we had 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 turnaround year for our performance.”

Net Interest Income

For the quarter ended December 31, 2009, net interest income was $7.3 million, an increase of $477 thousand or 7.0% from the quarter ended September 30, 2009, and an increase of $599 thousand or 8.9% from the quarter ended December 31, 2008.  Quarter over quarter, net interest margin expanded as higher cost certificates of deposit repriced in a lower rate environment.   Factors affecting fourth quarter net interest income include:

·   The yield on interest-earning assets decreased 73 basis points to 5.45% from 6.18% for the same period last year.

·   The cost of interest-bearing liabilities decreased 85 basis points to 2.44% from 3.29% for the same period last year.

·   Average earning assets, consisting primarily of loans, rose 6.3%.

·   Net interest margin was 3.30%, a 7 basis point increase from 3.23% in the fourth quarter of 2008.

Year-to-date, net interest income was $27.8 million, an increase of $537 thousand or 2.0% from 2008.  Factors affecting year-to-date net interest income include:

·   The yield on interest-earning assets decreased from 6.52% for 2008, to 5.71% for 2009.

·   The cost of interest-bearing liabilities decreased from 3.39% for 2008, to 2.84% for 2009.

·   Average earning assets, consisting primarily of loans, rose 11.0%.

·   Net interest margin for the year ended December 31, 2009 was 3.22%, a decline of 29 basis points from 2008.

Noninterest Income

Historically, Unity had generated significant revenue from the sale of its SBA loans.  In the fourth quarter of 2008, Unity exited the National SBA program and closed all SBA loan production offices outside its primary trade area.  Consequently, revenue on the sale of SBA loans will no longer be material to total revenue.

For the quarter ended December 31, 2009, noninterest income was flat from the quarter ended December 31, 2008. Noninterest income was affected by the following factors:

·   Service charges on deposit accounts increased $28 thousand, or 8.0% compared to the prior year period, primarily due to a larger account base.

·   Loan fee income declined $66 thousand, or 19.7% due to a decrease in loan prepayment fees.

·   Other-than-temporary impairment charges on investment securities amounted to $862 thousand, compared to $339 thousand in the prior year period.

·   Gains on the sale of residential mortgage loans amounted to $33 thousand.

·   Gains on the sale of SBA loans amounted to $364 thousand, compared $9 thousand a year ago.

·   Gains on the sales of investment securities amounted to $180 thousand, compared to $15 thousand in the prior year period.

For the year ended December 31, 2009, noninterest income amounted to $2.1 million, a decrease of $554 thousand from the year ended December 31, 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 $2.6 million, compared to $1.5 million in the prior year period.

·   Gains on sales of SBA loans amounted to $393 thousand, compared to $1.2 million a year ago.

·   Gains on the sales of residential mortgage loans amounted to $217 thousand, compared to $40 thousand in the prior year period.

·   Gains on the sale of investment securities amounted to $855 thousand, compared to a loss of $378 thousand in the prior year period.

Noninterest Expense

As a result of current market conditions, the Company undertook many expense saving measures.  However, these expense reductions were offset by increases in FDIC insurance premiums.

For the quarter ended December 31, 2009, noninterest expenses were $6.1 million, an increase of $303 thousand or 5.2% from the quarter ended December 31, 2008. The following factors affected our noninterest expense:

·   Compensation and benefits expense amounted to $2.9 million, flat from the prior year period.

·   Communications and delivery expense declined $60 thousand or 10.3%, due to reduced communications costs from renegotiated contracts and a decline in capital expenditures.

·   Occupancy expense declined $48 thousand or 7.2%, due to 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 amounted to $330 thousand, an increase of $114 thousand or 52.8%, due to increased collection costs on delinquent loans.

·   FDIC insurance premiums amounted to $346 thousand, an increase of $48 thousand or 16.1%, due to the increase in FDIC insurance rates.

·   Other expenses amounted to $531 thousand, an increase of $238 thousand or 81.2%, due primarily to increases in other real estate owned (“OREO”) expenses.

For the year ended December 31, 2009, noninterest expenses were $23.9 million, an increase of $1.0 million, or 4.4% from the same period a year ago. The following factors affected our noninterest expense:

·   Compensation and benefits expense amounted to $11.2 million, a decrease of $742 thousand or 6.2%, due to reduced head count.

·   Communications and delivery expense amounted to $2.1 million, a decrease of $174 thousand or 7.7%, due to reduced communications costs from renegotiated contracts and a decline in capital expenditures.

·   Occupancy expense amounted to $2.6 million, a decline of $221 thousand or 8.0%, due a reduction in rental expense from a renegotiated lease.

·   FF&E expense amounted to $1.8 million, an increase of $154 thousand or 9.2%, primarily due to depreciation expense on new equipment and software and increased software maintenance charges.

·   Professional fees amounted to $1.0 million, an increase of $144 thousand or 16.0%, due to increased consulting, legal and audit costs.

·   Loan collection costs amounted to $1.0 million, an increase of $361 thousand or 54.5%, due to increased collection costs on delinquent loans.

·   FDIC insurance premiums amounted to $1.7 million, an increase of $1.1 million, due primarily to the increase in FDIC insurance rates and a $408 thousand special assessment in the second quarter of 2009.

  ·  Other expenses amounted to $1.9 million, an increase of $289 thousand or 17.5%, due primarily to increases in other real estate owned (“OREO”) expenses.

Financial Condition

At December 31, 2009, total assets were $930.4 million, a 3.6% increase from a year ago.

·   Total loans decreased $28.9 million or 4.2%, from $685.9 million at December 31, 2008. SBA 7(a), SBA 504, commercial and consumer loans decreased 5.8%, 8.0%, 4.7%, and 3.6%, respectively.

·   Total securities increased $19.5 million as Unity took advantage of favorable credit spreads to invest excess liquidity.

·   Total deposits increased 7.2% or $51.1 million to $758.2 million at December 31, 2009.  This increase was due to a $151.5 million increase in savings deposits, a $13.0 million increase in interest- bearing checking accounts and a $6.0 million increase in demand deposits. These increases were partially offset by a $119.3 million decrease in time deposits.

·   Total borrowed funds decreased $20.0 million from a year ago.

·   Shareholders’ equity was $67.9 million at December 31, 2009, flat from a year ago.

·   Book value per common share was $6.91.

·   At December 31, 2009 the leverage, Tier I and Total Risk Based Capital ratios were 8.83%, 11.75% and 13.01%, respectively, all in excess of the ratios required to be deemed “well capitalized”.

Credit Quality

·   Nonperforming assets totaled $27.0 million at December 31, 2009, or 4.10% of total loans and other real estate owned (“OREO”) compared to $27.5 million, or 4.17% of total loans and OREO at September 30, 2009 and $16.8 million, or 2.45% of total loans and OREO a year ago. The SBA 7(a), SBA 504, commercial, residential and consumer nonaccrual loans were $6.6 million, $5.6 million, $7.4 million, $5.6 million and $387 thousand, respectively.  OREO amounted to $1.5 million.  The increase in nonperforming assets was primarily related to an increase in SBA, residential mortgage and commercial accounts.  Almost all nonperforming assets are secured by real estate.

·   The allowance for loan losses totaled $13.8 million at December 31, 2009, or 2.11% of total loans. The provision for loan losses for the fourth quarter of 2009 amounted to $2.0 million, an increase of $700 thousand from the same period a year ago.  The provision for loan losses for year ended December 31, 2009, amounted to $8.0 million, an increase of $3.5 million from the same period a year ago.

·   Net charge-offs were $603 thousand for the three months ended December 31, 2009, compared to $887 thousand for the same period a year ago.  Net charge-offs were $4.5 million for the year ended December 31, 2009, compared to $2.6 million for the same period a year ago.

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $930 million in assets and $758 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
December 31, 2009
										2009.Q4 VS.
											2009.Q3			2008.Q4
Amounts in thousands, except percentages and per share amounts	12/31/2009			9/30/2009			12/31/2008			%			%
BALANCE SHEET DATA:
Total Assets	$	930,357		$	922,689		$	898,310			0.8	%		3.6	%
Total Deposits		758,239			750,665			707,117			1.0	%		7.2	%
Total Loans		657,016			656,520			685,946			0.1	%		-4.2	%
Total Securities		169,022			171,501			149,509			-1.4	%		13.1	%
Total Shareholders' Equity		67,865			67,385			67,803			0.7	%		0.1	%
Allowance for Loan Losses		(13,842	)		(12,445	)		(10,326	)		11.2	%		34.0	%
FINANCIAL DATA - QUARTER TO DATE:
Net Income (Loss) Before Taxes		(206	)		(1,090	)		218			-81.1	%		-194.5	%
Income Tax Benefit		(340	)		(343	)		(366	)		-0.9	%		-7.1	%
Net Income (Loss)		134			(747	)		584			-117.9	%		-77.1	%
Preferred Dividends & Discount Accretion		373			372			110			0.3	%		239.1	%
Income Available (Loss Attributable) to Common Shareholders		(239	)		(1,119	)		474			-78.6	%		-150.4	%
Net Income (Loss) Per Share - Basic		(0.03	)		(0.16	)		0.07			-78.7	%		-150.3	%
Net Income (Loss) Per Share - Diluted		(0.03	)		(0.16	)		0.07			-78.7	%		-150.9	%
Return on Average Assets		0.06	%		-0.33	%		0.26	%		-117.5	%		-78.3	%
Return on Average Common Equity		-1.95	%		-9.14	%		3.56	%		-78.7	%		-154.6	%
Efficiency Ratio		71.05	%		77.72	%		75.81	%		-8.6	%		-6.3	%
FINANCIAL DATA - YEAR TO DATE:
Net Income (Loss) Before Taxes		(1,979	)		(1,774	)		2,546			11.6	%		-177.7	%
Income Taxes (Benefit)		(898	)		(559	)		616			60.6	%		-245.8	%
Net Income (Loss)		(1,081	)		(1,215	)		1,930			-11.0	%		-156.0	%
Preferred Dividends & Discount Accretion		1,496			1,123			110			33.2	%		1260.0	%
Income Available (Loss Attributable) to Common Shareholders		(2,577	)		(2,338	)		1,820			10.2	%		-241.6	%
Net Income (Loss) Per Share - Basic		(0.36	)		(0.33	)		0.26			9.6	%		-241.1	%
Net Income (Loss) Per Share - Diluted		(0.36	)		(0.33	)		0.25			9.6	%		-244.5	%
Return on Average Assets		-0.12	%		-0.18	%		0.23	%		-33.9	%		-151.8	%
Return on Average Common Equity		-5.29	%		6.38	%		3.72	%		-182.8	%		-242.1	%
Efficiency Ratio		75.49	%		77.12	%		71.90	%		-2.1	%		5.0	%
SHARE INFORMATION:
Market Price Per Share		4.02			4.20			3.90			-4.3	%		3.1	%
Dividends Paid Per Share		-			-			0.10			0.0	%		-100.0	%
Book Value Per Common Share		6.91			6.88			6.99			0.4	%		-1.2	%
Average Diluted Shares Outstanding (QTD)		7,126			7,119			7,190			0.1	%		-0.9	%
CAPITAL RATIOS:
Total Equity to Total Assets		7.29	%		7.30	%		7.55	%		-0.1	%		-3.4	%
Leverage Ratio		8.83	%		9.08	%		9.54	%		-2.8	%		-7.4	%
Tier 1 Risk-Based Capital Ratio		11.75	%		11.83	%		12.02	%		-0.7	%		-2.2	%
Total Risk-Based Capital Ratio		13.01	%		13.09	%		13.27	%		-0.6	%		-2.0	%
CREDIT QUALITY AND RATIOS:
Nonperforming Assets		27,026			27,461			16,830			-1.6	%		60.6	%
QTD Net Chargeoffs (annualized) to QTD Average Loans		0.36	%		0.73	%		0.52	%		-50.5	%		-31.0	%
Allowance for Loan Losses to Total Loans		2.11	%		1.90	%		1.51	%		11.1	%		40.0	%
Nonperforming Assets to Total Loans and OREO		4.10	%		4.17	%		2.45	%		-1.5	%		67.4	%
Nonperforming Assets to Total Assets		2.90	%		2.98	%		1.87	%		-2.4	%		55.1	%

UNITY BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2009
										2009.Q4 VS.
											2009.Q3			2008.Q4
Amounts in thousands, except percentages	12/31/2009			9/30/2009			12/31/2008			%			%
ASSETS
Cash and due from banks	$	23,517		$	17,035		$	18,902			38.1	%		24.4	%
Federal funds sold and interest-bearing deposits		50,118			48,853			15,529			2.6	%		222.7	%
Cash and cash equivalents		73,635			65,888			34,431			11.8	%		113.9	%
Securities available for sale		140,770			140,906			117,348			-0.1	%		20.0	%
Securities held to maturity		28,252			30,595			32,161			-7.7	%		-12.2	%
Total securities		169,022			171,501			149,509			-1.4	%		13.1	%
SBA loans held for sale		21,406			21,364			22,181			0.2	%		-3.5	%
SBA loans held to maturity		77,844			79,342			83,127			-1.9	%		-6.4	%
SBA 504 loans		70,683			71,432			76,802			-1.0	%		-8.0	%
Commercial loans		293,739			298,019			308,165			-1.4	%		-4.7	%
Residential mortgage loans		133,059			124,313			133,110			7.0	%		0.0	%
Consumer loans		60,285			62,050			62,561			-2.8	%		-3.6	%
Total loans		657,016			656,520			685,946			0.1	%		-4.2	%
Allowance for loan losses		(13,842	)		(12,445	)		(10,326	)		11.2	%		34.0	%
Net loans		643,174			644,075			675,620			-0.1	%		-4.8	%
Premises and equipment, net		11,773			11,911			12,580			-1.2	%		-6.4	%
Deferred taxes		7,308			7,256			5,656			0.7	%		29.2	%
Bank owned life insurance (BOLI)		6,002			5,946			5,780			0.9	%		3.8	%
Prepaid FDIC Insurance		4,739			-			-			100.0	%		100.0	%
Federal Home Loan Bank stock		4,677			4,677			4,857			0.0	%		-3.7	%
Accrued interest receivable		4,225			4,230			4,712			-0.1	%		-10.3	%
Goodwill and other intangibles		1,559			1,563			1,574			-0.3	%		-1.0	%
Loan servicing asset		897			977			1,503			-8.2	%		-40.3	%
Other assets		3,346			4,665			2,088			-28.3	%		60.2	%
Total Assets	$	930,357		$	922,689		$	898,310			0.8	%		3.6	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing checking	$	80,100		$	83,534		$	74,090			-4.1	%		8.1	%
Total interest-bearing checking		100,046			92,401			87,046			8.3	%		14.9	%
Total savings		286,334			263,758			134,875			8.6	%		112.3	%
Time deposits, under $100,000		183,377			209,050			270,275			-12.3	%		-32.2	%
Time deposits, $100,000 and over		108,382			101,922			140,831			6.3	%		-23.0	%
Total deposits		758,239			750,665			707,117			1.0	%		7.2	%
Borrowed funds		85,000			85,000			105,000			0.0	%		-19.0	%
Subordinated debentures		15,465			15,465			15,465			0.0	%		0.0	%
Accrued interest payable		710			797			805			-10.9	%		-11.8	%
Accrued expenses and other liabilities		3,078			3,377			2,120			-8.9	%		45.2	%
Total Liabilities		862,492			855,304			830,507			0.8	%		3.9	%
Cumulative perpetual preferred stock		18,533			18,418			18,064			0.6	%		2.6	%
Common stock		55,454			55,351			55,179			0.2	%		0.5	%
Retained earnings (deficit)		(1,492	)		(1,253	)		1,085			19.1	%		-237.5	%
Treasury stock at cost		(4,169	)		(4,169	)		(4,169	)		0.0	%		0.0	%
Accumulated other comprehensive loss		(461	)		(962	)		(2,356	)		-52.1	%		-80.4	%
Total Shareholders' Equity		67,865			67,385			67,803			0.7	%		0.1	%
Total Liabilities and Shareholders' Equity	$	930,357		$	922,689		$	898,310			0.8	%		3.6	%
Common Shares at Period End:
Shares Issued		7,569			7,544			7,544
Shares Outstanding		7,144			7,119			7,119
Treasury Shares		425			425			425

UNITY BANCORP, INC.
QTD CONSOLIDATED STATEMENTS OF INCOME
December 31, 2009
										2009.Q4 VS.
	For the Three Months Ended									2009.Q3			2008.Q4
Amounts in thousands, except percentages and per share amounts	12/31/2009			9/30/2009			12/31/2008				%			%
Interest Income - Cash and Cash Equivalents	$	41		$	32		$	67			28.1	%		-38.8	%
Interest Income - FHLB/ACBB Stock		54			101			6			-46.5	%		800.0	%
Interest Income - AFS Investments		1,466			1,482			959			-1.1	%		52.9	%
Interest Income - HTM Investments		353			389			366			-9.3	%		-3.6	%
Interest Income - Total Investments		1,819			1,871			1,325			-2.8	%		37.3	%
Interest Income - SBA Loans		1,578			1,498			1,971			5.3	%		-19.9	%
Interest Income - SBA 504 Loans		1,158			1,147			1,438			1.0	%		-19.5	%
Interest Income - Commercial Loans		4,840			4,973			5,279			-2.7	%		-8.3	%
Interest Income - Mortgage Loans		1,834			1,772			1,963			3.5	%		-6.6	%
Interest Income - Consumer Loans		777			791			849			-1.8	%		-8.5	%
Interest Income - Total Loans		10,187			10,181			11,500			0.1	%		-11.4	%
Total Interest Income		12,101			12,185			12,898			-0.7	%		-6.2	%
Interest Expense - Total Checking		261			264			348			-1.1	%		-25.0	%
Interest Expense - Total Savings		985			1,032			603			-4.6	%		63.3	%
Interest Expense - Total CDs		2,442			2,950			4,057			-17.2	%		-39.8	%
Interest Expense - Borrowings		1,078			1,081			1,154			-0.3	%		-6.6	%
Total Interest Expense		4,766			5,327			6,162			-10.5	%		-22.7	%
Net Interest Income Before Provision		7,335			6,858			6,736			7.0	%		8.9	%
Provision for Loan Losses		2,000			3,000			1,300			-33.3	%		53.8	%
Net Interest Income After Provision		5,335			3,858			5,436			38.3	%		-1.9	%
Branch Fee Income		379			373			351			1.6	%		8.0	%
Loan Fee Income		269			398			335			-32.4	%		-19.7	%
Bank Owned Life Insurance (BOLI)		56			56			53			0.0	%		5.7	%
Gain on Sale of Mortgage Loans		33			71			19			-53.5	%		73.7	%
Gain on Sale of SBA Loans		364			-			9			100.0	%		3944.4	%
Other-than-temporary Impairment Charges		(862	)		-			(339	)		-100.0	%		154.0	%
Net Security Gains		180			158			15			13.9	%		1070.1	%
Other Income		116			106			112			9.4	%		3.6	%
Total Noninterest Income		535			1,162			555			-54.0	%		-3.6	%
Total Compensation and Benefits		2,857			2,909			2,837			-1.8	%		0.7	%
Occupancy Expense		623			595			671			4.7	%		-7.2	%
Communications and Delivery Expense		523			531			583			-1.5	%		-10.3	%
Furniture, Fixtures and Equipment Expense		448			414			451			8.2	%		-0.7	%
Professional Services Expense		262			274			272			-4.4	%		-3.7	%
Loan Collection Costs		330			315			216			4.8	%		52.8	%
FDIC Insurance Expense		346			351			298			-1.4	%		16.1	%
Advertising Expense		156			147			152			6.1	%		2.6	%
Other Expense		531			574			293			-7.5	%		81.2	%
Total Noninterest Expense		6,076			6,110			5,773			-0.6	%		5.2	%
Net Income (Loss) Before Taxes		(206	)		(1,090	)		218			-81.1	%		-194.5	%
Income Tax Benefit		(340	)		(343	)		(366	)		-0.9	%		-7.1	%
Net Income (Loss)		134			(747	)		584			-117.9	%		-77.1	%
Preferred Dividends & Discount Accretion		373			372			110			0.3	%		239.1	%
Income Available (Loss Attributable) to Common Shareholders	$	(239	)	$	(1,119	)	$	474			-78.6	%		-150.4	%
Effective Tax Rate		165.0	%		31.5	%		-167.9	%
Net Income (Loss) Per Share - Basic	$	(0.03	)	$	(0.16	)	$	0.07
Net Income (Loss) Per Share - Diluted	$	(0.03	)	$	(0.16	)	$	0.07
Average Shares Outstanding - Basic		7,126			7,119			7,113
Average Shares Outstanding - Diluted		7,126			7,119			7,190

UNITY BANCORP, INC.
YTD CONSOLIDATED STATEMENTS OF INCOME
December 31, 2009
	CURRENT YTD			PRIOR YTD			CURRENT YTD VS. PRIOR YTD
Amounts in thousands, except percentages and per share amounts	12/31/2009			12/31/2008			$			%
Interest Income - Cash and Cash Equivalents	$	117		$	471		$	(354	)	-75.2	%
Interest Income - FHLB/ACBB Stock		277			240			37		15.4	%
Interest Income - AFS Investments		6,136			3,673			2,463		67.1	%
Interest Income - HTM Investments		1,520			1,582			(62	)	-3.9	%
Interest Income - Total Investments		7,656			5,255			2,401		45.7	%
Interest Income - SBA Loans		6,246			8,370			(2,124	)	-25.4	%
Interest Income - SBA 504 Loans		4,821			5,572			(751	)	-13.5	%
Interest Income - Commercial Loans		19,881			21,424			(1,543	)	-7.2	%
Interest Income - Mortgage Loans		7,252			5,971			1,281		21.5	%
Interest Income - Consumer Loans		3,160			3,462			(302	)	-8.7	%
Interest Income - Total Loans		41,360			44,799			(3,439	)	-7.7	%
Total Interest Income		49,410			50,765			(1,355	)	-2.7	%
Interest Expense - Total Checking		1,063			1,468			(405	)	-27.6	%
Interest Expense - Total Savings		3,574			3,644			(70	)	-1.9	%
Interest Expense - Total CDs		12,523			13,836			(1,313	)	-9.5	%
Interest Expense - Borrowings		4,422			4,526			(104	)	-2.3	%
Total Interest Expense		21,582			23,474			(1,892	)	-8.1	%
Net Interest Income Before Provision		27,828			27,291			537		2.0	%
Provision for Loan Losses		8,000			4,500			3,500		77.8	%
Net Interest Income After Provision		19,828			22,791			(2,963	)	-13.0	%
Branch Fee Income		1,418			1,393			25		1.8	%
Loan Fee Income		1,214			1,271			(57	)	-4.5	%
Bank Owned Life Insurance (BOLI)		222			210			12		5.7	%
Gain on Sale of Mortgage Loans		217			40			177		442.5	%
Gain on Sale of SBA Loans		393			1,217			(824	)	-67.7	%
Other-than-temporary Impairment Charges		(2,611	)		(1,540	)		(1,071	)	69.5	%
Net Security Gains		855			(378	)		1,233		-326.2	%
Other Income		432			481			(49	)	-10.2	%
Total Noninterest Income		2,140			2,694			(554	)	-20.6	%
Total Compensation and Benefits		11,243			11,985			(742	)	-6.2	%
Occupancy Expense		2,552			2,773			(221	)	-8.0	%
Communications and Delivery Expense		2,077			2,251			(174	)	-7.7	%
Furniture, Fixtures and Equipment Expense		1,829			1,675			154		9.2	%
Professional Services Expense		1,042			898			144		16.0	%
Loan Collection Costs		1,023			662			361		54.5	%
FDIC Insurance Expense		1,707			589			1,118		189.8	%
Advertising Expense		530			451			79		17.5	%
Other Expense		1,944			1,655			289		17.5	%
Total Noninterest Expense		23,947			22,939			1,008		4.4	%
Net Income (Loss) Before Taxes		(1,979	)		2,546			(4,525	)	-177.7	%
Income Taxes (Benefit)		(898	)		616			(1,514	)	-245.8	%
Net Income (Loss)		(1,081	)		1,930			(3,011	)	-156.0	%
Preferred Dividends & Discount Accretion		1,496			110			1,386		1260.0	%
Income Available (Loss Attributable) to Common Shareholders	$	(2,577	)	$	1,820		$	(4,397	)	-241.6	%
Effective Tax Rate		45.4	%		24.2	%
Net Income (Loss) Per Share - Basic	$	(0.36	)	$	0.26
Net Income (Loss) Per Share - Diluted	$	(0.36	)	$	0.25
Average Shares Outstanding - Basic		7,121			7,097
Average Shares Outstanding - Diluted		7,121			7,267

UNITY BANCORP, INC.
QUARTER TO DATE NET INTEREST MARGIN
December 31, 2009
	For the Three Months Ended
	December 31, 2009									September 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	$	50,730		$	41			0.32	%	$	32,940		$	32			0.39	%
Federal Home Loan Bank stock		4,677			54			4.58	%		4,677			101			8.57	%
Securities available for sale (A)		141,742			1,479			4.17	%		131,360			1,495			4.55	%
Securities held to maturity (A)		29,369			371			5.05	%		31,418			407			5.18	%
Total securities		171,111			1,850			4.32	%		162,778			1,902			4.67	%
SBA loans		102,170			1,578			6.18	%		102,691			1,498			5.83	%
SBA 504 loans		71,295			1,158			6.44	%		71,764			1,147			6.34	%
Commercial loans		295,718			4,840			6.49	%		301,010			4,973			6.55	%
Residential mortgage loans		128,871			1,834			5.69	%		123,786			1,772			5.73	%
Consumer loans		62,038			777			4.97	%		62,459			791			5.02	%
Total loans		660,092			10,187			6.14	%		661,710			10,181			6.12	%
Total Interest-earning Assets		886,610		$	12,132			5.45	%		862,105		$	12,216			5.64	%
Noninterest-earning assets:
Cash and due from banks		19,273									18,502
Allowance for loan losses		(13,347	)								(11,478	)
Other assets		35,406									34,355
Total Noninterest-earning Assets		41,332									41,379
Total Assets	$	927,942								$	903,484
Interest-bearing Liabilities:
Total interest-bearing checking	$	99,196		$	261			1.04	%	$	88,284		$	264			1.19	%
Total savings		278,710			985			1.40	%		239,427			1,032			1.71	%
Total time deposits		294,229			2,442			3.29	%		323,484			2,950			3.62	%
Total Interest-bearing Deposits		672,135			3,688			2.18	%		651,195			4,246			2.59	%
Total borrowings		100,465			1,078			4.20	%		100,465			1,081			4.21	%
Total Interest-bearing Liabilities		772,600		$	4,766			2.44	%		751,660		$	5,327			2.80	%
Noninterest-bearing Liabilities:
Noninterest-bearing checking		83,770									79,965
Other liabilities		4,358									4,945
Total Noninterest-bearing Liabilities		88,128									84,910
Total Shareholders' Equity		67,214									66,914
Total Liabilities and Shareholders' Equity	$	927,942								$	903,484
Net Interest Spread					7,366			3.01	%					6,889			2.84	%
Tax-equivalent Basis Adjustment (A)					(31	)								(31	)
Net Interest Income					7,335									6,858
Net Interest Margin								3.30	%								3.17	%
(A) Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 34 percent and applicable state rates.

UNITY BANCORP, INC.
QUARTER TO DATE NET INTEREST MARGIN
December 31, 2009
	For the Three Months Ended
	December 31, 2009									December 31, 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	$	50,730		$	41			0.32	%	$	37,262		$	67			0.72	%
Federal Home Loan Bank stock		4,677			54			4.58	%		4,422			6			0.54	%
Securities available for sale (A)		141,742			1,479			4.17	%		76,941			972			5.05	%
Securities held to maturity (A)		29,369			371			5.05	%		29,962			384			5.13	%
Total securities		171,111			1,850			4.32	%		106,903			1,356			5.07	%
SBA loans		102,170			1,578			6.18	%		103,682			1,971			7.60	%
SBA 504 loans		71,295			1,158			6.44	%		78,466			1,438			7.29	%
Commercial loans		295,718			4,840			6.49	%		310,474			5,279			6.76	%
Residential mortgage loans		128,871			1,834			5.69	%		131,557			1,963			5.97	%
Consumer loans		62,038			777			4.97	%		61,114			849			5.53	%
Total loans		660,092			10,187			6.14	%		685,293			11,500			6.69	%
Total Interest-earning Assets		886,610		$	12,132			5.45	%		833,880		$	12,929			6.18	%
Noninterest-earning assets:
Cash and due from banks		19,273									21,520
Allowance for loan losses		(13,347	)								(10,111	)
Other assets		35,406									32,855
Total Noninterest-earning Assets		41,332									44,264
Total Assets	$	927,942								$	878,144
Interest-bearing Liabilities:
Total interest-bearing checking	$	99,196		$	261			1.04	%	$	88,166		$	348			1.57	%
Total savings		278,710			985			1.40	%		137,602			603			1.74	%
Total time deposits		294,229			2,442			3.29	%		407,239			4,057			3.96	%
Total Interest-bearing Deposits		672,135			3,688			2.18	%		633,007			5,008			3.15	%
Total borrowings		100,465			1,078			4.20	%		110,802			1,154			4.08	%
Total Interest-bearing Liabilities		772,600		$	4,766			2.44	%		743,809		$	6,162			3.29	%
Noninterest-bearing Liabilities:
Noninterest-bearing checking		83,770									78,351
Other liabilities		4,358									3,058
Total Noninterest-bearing Liabilities		88,128									81,409
Total Shareholders' Equity		67,214									52,926
Total Liabilities and Shareholders' Equity	$	927,942								$	878,144
Net Interest Spread					7,366			3.01	%					6,767			2.90	%
Tax-equivalent Basis Adjustment (A)					(31	)								(31	)
Net Interest Income					7,335									6,736
Net Interest Margin								3.30	%								3.23	%
(A) Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 34 percent and applicable state rates.

UNITY BANCORP, INC.
YEAR TO DATE NET INTEREST MARGIN
December 31, 2009
	December 31, 2009									December 31, 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	$	27,163		$	117			0.43	%	$	26,686		$	471			1.76	%
Federal Home Loan Bank stock		5,061			277			5.47	%		4,353			240			5.51	%
Securities available for sale (A)		135,537			6,189			4.57	%		74,243			3,761			5.07	%
Securities held to maturity (A)		32,292			1,593			4.93	%		31,710			1,654			5.22	%
Total securities		167,829			7,782			4.64	%		105,953			5,415			5.11	%
SBA loans		103,031			6,246			6.06	%		101,430			8,370			8.25	%
SBA 504 loans		73,517			4,821			6.56	%		74,617			5,572			7.47	%
Commercial loans		301,340			19,881			6.60	%		308,751			21,424			6.94	%
Residential mortgage loans		126,474			7,252			5.73	%		100,110			5,971			5.96	%
Consumer loans		62,481			3,160			5.06	%		59,291			3,462			5.84	%
Total loans		666,843			41,360			6.20	%		644,199			44,799			6.95	%
Total Interest-earning Assets	$	866,896		$	49,536			5.71	%	$	781,191		$	50,925			6.52	%
Noninterest-earning assets:
Cash and due from banks		18,948									17,529
Allowance for loan losses		(11,721	)								(9,179	)
Other assets		33,913									31,667
Total Noninterest-earning Assets		41,140									40,017
Total Assets	$	908,036								$	821,208
Interest-bearing Liabilities:
Total interest-bearing checking	$	89,500		$	1,063			1.19	%	$	84,336		$	1,468			1.74	%
Total savings		214,274			3,574			1.67	%		168,784			3,644			2.16	%
Total time deposits		341,233			12,523			3.67	%		330,174			13,836			4.19	%
Total Interest-bearing Deposits		645,007			17,160			2.66	%		583,294			18,948			3.25	%
Total borrowings		112,403			4,422			3.88	%		108,214			4,526			4.18	%
Total Interest-bearing Liabilities	$	757,410		$	21,582			2.84	%	$	691,508		$	23,474			3.39	%
Noninterest-bearing Liabilities:
Noninterest-bearing checking		79,252									78,282
Other liabilities		4,313									2,531
Total Noninterest-bearing Liabilities		83,565									80,813
Total Shareholders' Equity		67,061									48,887
Total Liabilities and Shareholders' Equity	$	908,036								$	821,208
Net Interest Spread				$	27,954			2.87	%				$	27,451			3.13	%
Tax-equivalent Basis Adjustment (A)					(126	)								(160	)
Net Interest Income				$	27,828								$	27,291
Net Interest Margin								3.22	%								3.51	%
(A) Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 34 percent and applicable state rates.

UNITY BANCORP, INC.
ALLOWANCE FOR LOAN LOSSES AND LOAN QUALITY SCHEDULES
December 31, 2009
Amounts in thousands, except percentages	12/31/2009			9/30/2009			6/30/2009			3/31/2009			12/31/2008
ALLOWANCE FOR LOAN LOSSES:
Balance, Beginning of Quarter	$	12,445		$	10,665		$	10,307		$	10,326		$	9,913
Provision for Loan Losses Charged to Expense		2,000			3,000			1,500			1,500			1,300
		14,445			13,665			11,807			11,826			11,213
Less: Chargeoffs
SBA loans		-			448			323			1,106			310
SBA 504 loans		500			-			112			200			500
Commercial loans		125			674			798			249			148
Residential mortgage loans		-			125			33			58			-
Consumer loans		5			11			11			-			5
Total Chargeoffs		630			1,258			1,277			1,613			963
Add: Recoveries
SBA loans		23			14			56			33			72
SBA 504 loans		-			22			-			5			-
Commercial loans		3			-			79			53			4
Residential mortgage loans		-			-			-			-			-
Consumer loans		1			2			-			3			-
Total Recoveries		27			38			135			94			76
Net Chargeoffs		603			1,220			1,142			1,519			887
Balance, End of Quarter		13,842			12,445			10,665			10,307			10,326
LOAN QUALITY INFORMATION:
Nonperforming loans	$	25,496		$	24,687		$	22,774		$	19,886		$	16,120
Other real estate owned (OREO)		1,530			2,774			466			763			710
Total nonperforming assets		27,026			27,461			23,240			20,649			16,830
Less:  Amount guaranteed by Small Business Administration		1,931			1,759			3,214			2,426		$	1,983
Net nonperforming assets		25,095			25,702			20,026			18,223			14,847
Loans 90 Days Past Due & Still Accruing	$	2,286		$	1,609		$	781		$	853		$	2,536
Allowance for Loan Losses to:
Total Loans at Quarter End		2.11	%		1.90	%		1.60	%		1.54	%		1.51	%
Nonperforming loans		54.29	%		50.41	%		46.83	%		51.83	%		64.06	%
Total nonperforming assets		51.22	%		45.32	%		45.89	%		49.92	%		61.35	%
Net nonperforming assets		55.16	%		48.42	%		53.26	%		56.56	%		69.55	%
QTD net chargeoffs (annualized) to QTD average loans:
SBA loans		-0.09	%		1.68	%		1.05	%		4.14	%		0.91	%
SBA 504 loans		2.78	%		-0.12	%		0.61	%		1.03	%		2.54	%
Commercial loans		0.16	%		0.89	%		0.95	%		0.26	%		0.18	%
Residential mortgage loans		0.00	%		0.40	%		0.11	%		0.18	%		0.00	%
Consumer loans		0.03	%		0.06	%		0.07	%		-0.02	%		0.03	%
Total Loans		0.36	%		0.73	%		0.69	%		0.91	%		0.52	%
Nonperforming Loans to Total Loans		3.88	%		3.76	%		3.42	%		2.97	%		2.35	%
Nonperforming Assets to Total Loans & OREO		4.10	%		4.17	%		3.49	%		3.08	%		2.45	%
Nonperforming Assets to Total Assets		2.90	%		2.98	%		2.54	%		2.33	%		1.87	%

UNITY BANCORP, INC.
QUARTERLY FINANCIAL DATA
December 31, 2009
Amounts in thousands, except percentages and per share amounts	12/31/2009			9/30/2009			6/30/2009			3/31/2009			12/31/2008
SUMMARY OF INCOME:
Total Interest Income	$	12,101		$	12,185		$	12,531		$	12,590		$	12,898
Total Interest Expense		4,766			5,327			5,673			5,816			6,162
Net Interest Income Before Provision		7,335			6,858			6,858			6,774			6,736
Provision for Loan Losses		2,000			3,000			1,500			1,500			1,300
Net Interest Income After Provision		5,335			3,858			5,358			5,274			5,436
Total Noninterest Income (Loss)		535			1,162			(907	)		1,348			555
Total Noninterest Expense		6,076			6,110			6,203			5,555			5,773
Net Income (Loss) Before Taxes		(206	)		(1,090	)		(1,752	)		1,067			218
Income Taxes (Benefit)		(340	)		(343	)		(552	)		336			(366	)
Net Income (Loss)		134			(747	)		(1,200	)		731			584
Preferred Dividends & Discount Accretion		373			372			372			379			110
Income Available (Loss Attributable) to Common Shareholders	$	(239	)	$	(1,119	)	$	(1,572	)	$	352		$	474
Net Income (Loss) Per Share - Basic		(0.03	)		(0.16	)		(0.22	)		0.05			0.07
Net Income (Loss) Per Share - Diluted		(0.03	)		(0.16	)		(0.22	)		0.05			0.07
COMMON SHARE DATA:
Market Price Per Share		4.02			4.20			3.55			3.19			3.90
Dividends Paid		-			-			-			-			-
Book Value Per Common Share		6.91			6.88			6.85			6.93			6.99
Average Shares Outstanding - Basic		7,126			7,119			7,119			7,119			7,113
Average Shares Outstanding - Diluted		7,126			7,119			7,119			7,147			7,190
Shares Outstanding		7,144			7,119			7,119			7,119			7,119
OPERATING RATIOS (Annualized):
Return on Average Assets		0.06	%		-0.33	%		-0.54	%		0.33	%		0.26	%
Return on Average Common Equity		-1.95	%		-9.14	%		-12.97	%		2.90	%		3.56	%
Efficiency Ratio		71.05	%		77.72	%		80.58	%		73.02	%		75.81	%
BALANCE SHEET DATA:
Total Assets	$	930,357		$	922,689		$	913,446		$	886,677		$	898,310
Total Deposits		758,239			750,665			731,763			703,266			707,117
Total Loans		657,016			656,520			665,331			669,902			685,946
Total Securities		169,022			171,501			164,794			158,022			149,509
Total Shareholders' Equity		67,865			67,385			67,064			67,525			67,803
Allowance for Loan Losses		(13,842	)		(12,445	)		(10,665	)		(10,307	)		(10,326	)
TAX EQUIVALENT YIELDS AND RATES:
Interest-earning Assets		5.45	%		5.64	%		5.91	%		5.87	%		6.18	%
Interest-bearing Liabilities		2.44	%		2.80	%		3.05	%		3.10	%		3.29	%
Net Interest Spread		3.01	%		2.84	%		2.86	%		2.77	%		2.90	%
Net Interest Margin		3.30	%		3.17	%		3.24	%		3.14	%		3.23	%
CREDIT QUALITY:
Nonperforming Assets		27,026			27,461			23,240			20,649			16,830
QTD Net Chargeoffs (annualized) to QTD Average Loans		0.36	%		0.73	%		0.69	%		0.91	%		0.52	%
Allowance for Loan Losses to Total Loans		2.11	%		1.90	%		1.60	%		1.54	%		1.51	%
Nonperforming Assets to Total Loans and OREO		4.10	%		4.17	%		3.49	%		3.08	%		2.45	%
Nonperforming Assets to Total Assets		2.90	%		2.98	%		2.54	%		2.33	%		1.87	%
CAPITAL RATIOS AND OTHER:
Total Equity to Total Assets		7.29	%		7.30	%		7.34	%		7.62	%		7.55	%
Leverage Ratio		8.83	%		9.08	%		9.30	%		9.28	%		9.54	%
Tier 1 Risk-Based Capital Ratio		11.75	%		11.83	%		11.88	%		12.32	%		12.02	%
Total Risk-Based Capital Ratio		13.01	%		13.09	%		13.13	%		13.57	%		13.27	%
Number of Banking Offices		16			16			16			16			16
Number of ATMs		19			19			19			19			19
Number of Employees		174			175			168			162			167