EX-99.1 2 exh99-1.htm SECOND QUARTER 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:  July 22, 2010

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

Unity Bancorp Reports Second Quarter and Six Month Earnings

Clinton, NJ - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income  available to common shareholders of $302 thousand or $0.04 per diluted share for the quarter ended June 30, 2010, compared to a net loss of $1.6 million or $0.22 per diluted share, for the second quarter of 2009.  Return on average assets and average common equity for the second quarter of 2010 were 0.31% and 2.43%, respectively, compared to (0.54)% and (12.97)%, respectively, for the second quarter of 2009.

For the six months ended June 30, 2010, the Company reported net income available to common shareholders of $677 thousand, or $0.09 per diluted share, compared to a net loss of $1.2 million, or $0.17 per diluted share, for the same period a year ago.  Return on average assets and average common equity for the six month period were 0.32% and 2.76%, respectively, compared to (0.11)% and (5.03)%, respectively, for 2009.

Second quarter and six month results in 2009 were substantially impacted by the following items:

·
The Company recognized a pre-tax other-than-temporary impairment (“OTTI”) charge during the second quarter of $1.7 million, or $0.17 per diluted share, due to the deterioration of the underlying collateral of two pooled trust preferred securities.
 
·  
The FDIC imposed a special assessment equal to 5 basis points of an insured depository institution's assets minus Tier 1 capital as of June 30, 2009. The Company recognized a charge of approximately $408 thousand, or $0.04 per diluted share, in the second quarter for this special assessment.

On an ongoing operating basis, absent these two events, net income per diluted share would have been $0.03 for the six months ended June 30, 2009.
 
James A. Hughes, President and CEO, stated, “We are pleased to once again report positive earnings despite the significant impact the recession has had on many of our borrowers.”  Mr. Hughes continued “Net income was driven by strong margins, increased demand deposits, and continued expense management. We remain positive and continue to grow our customer relationships as we prepare for our future.”
 
Mr. Hughes added, “During this challenging time, Unity continues to work diligently to assertively address problem loans.  We are making progress in working these accounts.  We are encouraged by the resolution of several problem credits in the quarter.  For the near term, the size of our loan loss provision will remain the most important single factor in our earnings.  However, we believe that with stabilization in our credit quality and a rebound in overall economic activity, we are well positioned for future growth.”
 
 
Net Interest Income
 
For the quarter ended June 30, 2010, net interest income was $7.3 million, an increase of $405 thousand or 5.9% from the quarter ended June 30 2009.  Factors affecting second quarter net interest income include:
 
 
·  
The yield on interest-earning assets decreased 63 basis points to 5.28% from 5.91% for the same period last year. This was a result of interest-earning assets re-pricing in a low rate environment.
 
·  
The cost of interest-bearing liabilities decreased 101 basis points to 2.04% from 3.05% a year ago. All interest-bearing deposit costs declined with the largest decline in savings deposits.
 
·  
Net interest margin was 3.51%, a 27 basis point increase from 3.24% in the second quarter of 2009. This increase was driven by the reduced cost of funds.
 
 
 
 
Page 1 of 12
 
 
Year-to-date, net interest income was $14.7 million, or 8.0% higher than the $13.6 million reported for the first six months of 2009.
 
 
·  
The yield on earning assets decreased from 5.89% for the first six months of 2009, to 5.37% for the first six months of 2010. This was a result of interest-earning assets re-pricing in a low rate environment.
 
·  
The cost of interest-bearing liabilities decreased from 3.07% for the first six months of 2009, to 2.12% for the first six months of 2010.  All interest-bearing deposit costs declined with the largest decline in time deposits.
 
·  
Net interest margin for the six months ended June 30, 2010 was 3.54%, an increase of 33 basis points from the same period last year.
 
 
Noninterest Income
 
 
For the quarter ended June 30, 2010, noninterest income totaled $1.2 million, an increase of $2.1 million from the quarter ended June 30, 2009.  Excluding the effect of the OTTI charge noted above, noninterest income increased $328 thousand.  The following factors impacted the quarter’s noninterest income:
 
 
·  
Branch fee income remained relatively flat compared to the prior year period.
 
·  
Service and loan fee income declined $49 thousand due to a lower level of loan prepayment fees.
 
·  
There were $147 thousand in gains on the sales of SBA loans, compared to no gains in the prior year’s quarter.
 
·  
Gains on the sales of residential mortgage loans totaled $112 thousand compared to $49 thousand the prior year.
 
·  
The quarterly increase in the cash surrender value of bank owned life insurance (“BOLI”) increased $23 thousand to $78 thousand.  This was the result of the Company purchasing $2.5 million in BOLI to help offset the rising cost of employee benefits during the first quarter of 2010.
 
 
For the six months ended June 30, 2010, noninterest income amounted to $2.1 million, an increase of $1.6 million from the six months ended June 30, 2009.  Excluding the effect of the OTTI charge noted above, noninterest income decreased $110 thousand.  Noninterest income was affected by the following factors:
 
 
·  
Branch fee income increased $27 thousand compared to the prior year period as higher commercial analysis fees offset a reduction in overdraft fees.
 
·  
Service and loan fee income decreased $93 thousand compared to the prior year period due to lower levels of prepayment fees.
 
·  
Gains on sales on SBA loans amounted to $147 thousand, compared to $29 thousand a year ago.
 
·  
Gains on the sales of residential mortgage loans amounted to $258 thousand, compared to $113 thousand from the prior year period.
 
·  
The six month increase in the cash surrender value of bank owned life insurance (“BOLI”) increased $41 thousand to $151 thousand.  This was the result of the Company purchasing $2.5 million in BOLI to help offset the rising cost of employee benefits during the first quarter of 2010.
 
·  
Gains on the sales of investment securities amounted to $8 thousand, compared to $517 thousand in the prior year period.
 
 
Noninterest Expense
 
 
For the quarter ended June 30, 2010, noninterest expenses were $6.0 million, a decrease of 2.6% from the quarter ended June 30, 2009. Excluding the $408 thousand second quarter 2009 FDIC insurance special assessment, noninterest expenses increased $245 thousand or 4.2% compared to those of the same period a year ago. The following factors affected our noninterest expense:
 
 
·  
Compensation and benefits expense amounted to $2.8 million, a decrease of $31 thousand or 1.1%.   This was the result of lower incentive bonus payments, partially offset by an increase in compensation and employee medical benefits costs.
 
·  
Occupancy expense declined by $39 thousand or 6.0%, due to a reduction in rental expense from a renegotiated lease and a decline in depreciation expense from capital expenditures.
 
·  
Communications and delivery expense increased $73 thousand or 15.1%, due to increased data processing line costs, items processing and ATM expenses.
 
·  
FF&E expense decreased $24 thousand or 5.1%, primarily due to decreased software and equipment maintenance expense, partially offset by increased network maintenance expense.
 
·  
Professional fees decreased $61 thousand, due to decreased loan review and audit costs.
 
·  
Loan collection costs increased $63 thousand, due to increased collection costs on delinquent loans.
 
·  
Other real estate owned (“OREO”) expense increased $144 thousand, due to increased maintenance and valuation related expenses on OREO properties.
 
·  
FDIC insurance premiums decreased $388 thousand, due to the $408 thousand special assessment in the second quarter of 2009.
 
·  
Advertising expenses increased $90 thousand or 59.6%, due to increased marketing efforts.
 
 
 
Page 2 of 12
 
For the six months ended June 30, 2010, noninterest expenses were $12.0 million, an increase of $223 thousand or 1.9% from the same period a year ago. Excluding the $408 thousand second quarter 2009 FDIC insurance special assessment, noninterest expenses increased $631 thousand or 5.6% compared to those of the same period a year ago. The following factors affected our noninterest expense:
 
 
·  
Compensation and benefits expense amounted to $5.8 million, an increase of $344 thousand or 6.3%, due to increased compensation, higher employee medical benefits costs and increased residential mortgage commissions due to a larger sales volume.
 
·  
Occupancy expense declined by $49 thousand or 3.7%, due primarily to a reduction in rental expense from a renegotiated lease, offset in part by an increase in seasonal snow removal fees.
 
·  
Communications and delivery expense increased $57 thousand or 5.6%, due primarily to increased data processing line costs.
 
·  
FF&E expense decreased $96 thousand, primarily due to decreased depreciation expense as capital expenditures declined and decreased software maintenance charges.
 
·  
Professional fees decreased $78 thousand, due to decreased consulting, loan review and audit costs.
 
·  
Loan collection costs increased $48 thousand, due to increased collection costs on delinquent loans.
 
·  
OREO expense increased $170 thousand, due to increased maintenance and valuation related expenses on OREO properties.
 
·  
FDIC insurance premiums decreased $359 thousand, due primarily to the $408 thousand second quarter 2009 special assessment.
 
·  
Advertising expenses increased $122 thousand or 54.0%, due to increased marketing efforts.
 
 
Financial Condition
 
 
At June 30, 2010, total assets were $869.7 million, a 6.5% decrease from year-end.
 
 
·  
Total loans decreased $19.8 million or 3.0%, from $657.0 million at December 31, 2009. SBA 7(a), SBA 504, commercial and consumer loans decreased 3.9%, 7.6%, 2.9%, and 3.3%, respectively.  Residential loans remained flat from year-end.  Loan balances for the remainder of 2010 are expected to remain flat to down as the Company is no longer generating loans outside of its market place and has decided to portfolio a limited number of fixed rate residential mortgages due to interest rate risk.  The Company continues to focus on stabilizing credit quality and preserving capital until economic conditions improve.
 
·  
Total securities decreased $25.4 million since year-end as Unity received $26.4 million in principal payments, sold $10.7 million and had $9.8 million in bonds called during the six month period, partially offset by $21.0 million in purchases.
 
·  
Core deposits, excluding time deposits, increased $11.1 million during the six month period to $477.6 million.  The increase was due to a $7.8 million increase in demand deposits and a $5.0 million increase in savings deposits, partially offset by a $1.7 million decrease in interest-bearing checking accounts.  Time deposits decreased $76.1 million for the six months ended June 30, 2010 due to planned run off of a maturing high rate promotion that was done late in 2008 to bolster liquidity.
 
·  
Shareholders’ equity was $69.6 million at June 30, 2010, an increase of $1.8 million from year-end.
 
·  
Book value per common share was $7.11, compared to $6.91 at year-end.
 
·  
 At June 30, 2009 the leverage, Tier I and Total Risk Based Capital ratios were 9.42%, 12.39% and 13.65%, respectively, all in excess of the ratios required to be deemed “well-capitalized”.
 
 
Credit Quality
 
 
·  
Nonperforming assets totaled $29.8 million at June 30, 2010, or 4.65% of total loans and OREO compared to $23.2 million, or 3.49% of total loans and OREO a year ago.
 
·  
The commercial, residential, SBA, SBA 504 and consumer nonaccrual loans were $9.5 million, $6.5 million, $6.2 million, $3.4 million and $427 thousand, respectively.  The majority of nonaccrual loans are secured by real estate.
 
·  
The allowance for loan losses totaled $13.9 million at June 30, 2010, or 2.19% of total loans. The provision for loan losses for the quarter and six months ended June 30, 2010 were consistent with the prior year periods at $1.5 million and $3.0 million, respectively.
 
·  
Net charge-offs were $1.6 million for the three months ended June 30, 2010, compared to $1.1 million for the same period a year ago.  Net charge-offs were $2.9 million for the six months ended June 30, 2010, compared to $2.7 million for the same period a year ago.
 
 

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $870 million in assets and $693 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 may be identified by use of the words “believe”, “expect”, “intend”, “anticipate”, “estimate”, “project” or similar expressions.  These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond the company’s control and could impede its ability to achieve these goals.  These factors include general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, our ability to manage and reduce the level of our nonperforming assets, and results of regulatory exams, among other factors.


 
Page 3 of 12
 

UNITY BANCORP, INC.
  
SUMMARY FINANCIAL HIGHLIGHTS
  
June 30, 2010
  
                               
                               
                               
                     
2010.Q2 VS.
  
                        2010.Q1       2009.Q2  
Amounts in thousands, except percentages and per share amounts
  
6/30/2010
    
3/31/2010
    
6/30/2009
    
%
    
%
  
                                   
BALANCE SHEET DATA:
                                  
Total assets
   $ 869,735     $ 889,927     $ 913,446       -2.3 %     -4.8 %
Total deposits
     693,232       714,802       731,763       -3.0 %     -5.3 %
Total loans
     637,180       651,200       665,331       -2.2 %     -4.2 %
Total securities
     143,662       138,442       164,794       3.8 %     -12.8 %
Total shareholders' equity
     69,633       68,712       67,064       1.3 %     3.8 %
Allowance for loan losses
     (13,946 )     (14,055 )     (10,665 )     -0.8 %     30.8 %
                                         
FINANCIAL DATA - QUARTER TO DATE:
                                        
Income (loss) before provision (benefit) for income taxes
   $ 893     $ 933     $ (1,752 )     -4.3 %     151.0 %
Provision (benefit) for income taxes
     212       185       (552 )     14.6 %     138.4 %
Net income (loss)
     681       748       (1,200 )     -9.0 %     156.8 %
Preferred stock dividends & discount accretion
     379       373       372       1.6 %     1.9 %
Income available (loss attributable) to common shareholders
   $ 302     $ 375     $ (1,572 )     -19.5 %     119.2 %
                                         
Net income (loss) per common share - Basic
   $ 0.04     $ 0.05     $ (0.22 )     -20.0 %     118.2 %
Net income (loss) per common share - Diluted
   $ 0.04     $ 0.05     $ (0.22 )     -20.0 %     118.2 %
                                         
Return (loss) on average assets
     0.31 %     0.34 %     -0.54 %     -8.8 %     157.4 %
Return (loss) on average equity
     2.43 %     3.09 %     -12.97 %     -21.4 %     118.7 %
Effficiency ratio
     71.66 %     70.98 %     80.58 %     1.0 %     -11.1 %
                                         
FINANCIAL DATA - YEAR TO DATE:
                                        
Income (loss) before provision (benefit) for income taxes
   $ 1,826     $ 933     $ (685 )     95.7 %     366.6 %
Provision (benefit) for income taxes
     397       185       (216 )     114.6 %     283.8 %
Net income (loss)
     1,429       748       (469 )     91.0 %     404.7 %
Preferred stock dividends & discount accretion
     752       373       751       101.6 %     0.1 %
Income available (loss attributable) to common shareholders
   $ 677     $ 375     $ (1,220 )     80.5 %     155.5 %
                                         
Net income (loss) per common share - Basic
   $ 0.09     $ 0.05     $ (0.17 )     80.7 %     155.3 %
Net income (loss) per common share - Diluted
   $ 0.09     $ 0.05     $ (0.17 )     78.2 %     153.5 %
                                         
Return (loss) on average assets
     0.32 %     0.34 %     -0.11 %     -5.9 %     390.9 %
Return (loss) on average equity
     2.76 %     3.09 %     -5.03 %     -10.7 %     154.9 %
Effficiency ratio
     71.32 %     70.98 %     76.82 %     0.5 %     -7.2 %
                                         
SHARE INFORMATION:
                                        
Market price per share
     5.35       5.29       3.55       1.1 %     50.7 %
Dividends paid
     -       -       -       0.0 %     0.0 %
Book value per common share
     7.11       7.00       6.85       1.6 %     3.8 %
Average diluted shares outstanding (QTD)
     7,475       7,294       7,119       2.5 %     5.0 %
                                         
CAPITAL RATIOS:
                                        
Total Equity to Total Assets
     8.01 %     7.72 %     7.34 %     3.7 %     9.0 %
Leverage Ratio
     9.42 %     9.18 %     9.30 %     2.6 %     1.3 %
Tier 1 Risk-Based Capital Ratio
     12.39 %     12.02 %     11.88 %     3.1 %     4.3 %
Total Risk-Based Capital Ratio
     13.65 %     13.28 %     13.13 %     2.8 %     4.0 %
                                         
CREDIT QUALITY AND RATIOS:
                                        
Nonperforming assets
   $ 29,799     $ 29,972     $ 23,240       -0.6 %     28.2 %
QTD net chargeoffs (annualized) to QTD average loans
     1.00 %     0.80 %     0.69 %     26.1 %     46.4 %
Allowance for loan losses to total loans
     2.19 %     2.16 %     1.60 %     1.4 %     36.5 %
Nonperforming assets to total loans and OREO
     4.65 %     4.58 %     3.49 %     1.5 %     33.2 %
Nonperforming assets to total assets
     3.43 %     3.37 %     2.54 %     1.7 %     34.7 %
                                         
                                         

 
Page 4 of 12
 

UNITY BANCORP, INC.
  
CONSOLIDATED BALANCE SHEETS
  
June 30, 2010
  
                               
                     
2010.Q2 VS.
  
                        2010.Q1       2009.Q2  
Amounts in thousands, except percentages
  
6/30/2010
    
3/31/2010
    
6/30/2009
    
%
    
%
  
                                   
ASSETS
                                  
Cash and due from banks
   $ 18,016     $ 22,654     $ 17,295       -20.5 %     4.2 %
Federal funds sold and interest-bearing deposits
     37,478       43,734       37,232       -14.3 %     0.7 %
Cash and cash equivalents
     55,494       66,388       54,527       -16.4 %     1.8 %
                                         
Securities available for sale
     121,628       113,465       132,719       7.2 %     -8.4 %
Securities held to maturity
     22,034       24,977       32,075       -11.8 %     -31.3 %
Total securities
     143,662       138,442       164,794       3.8 %     -12.8 %
                                         
SBA loans held for sale
     22,093       22,617       23,161       -2.3 %     -4.6 %
SBA loans held to maturity
     73,298       75,191       82,157       -2.5 %     -10.8 %
SBA 504 loans
     65,343       67,000       72,619       -2.5 %     -10.0 %
Commercial loans
     285,173       292,557       299,411       -2.5 %     -4.8 %
Residential mortgage loans
     132,993       135,596       125,466       -1.9 %     6.0 %
Consumer loans
     58,280       58,239       62,517       0.1 %     -6.8 %
Total loans
     637,180       651,200       665,331       -2.2 %     -4.2 %
Allowance for loan losses
     (13,946 )     (14,055 )     (10,665 )     -0.8 %     30.8 %
Net loans
     623,234       637,145       654,666       -2.2 %     -4.8 %
                                         
Premises and equipment, net
     11,348       11,525       12,067       -1.5 %     -6.0 %
Deferred tax assets
     7,485       7,856       7,610       -4.7 %     -1.6 %
Bank owned life insurance (BOLI)
     8,653       8,574       5,890       0.9 %     46.9 %
Prepaid FDIC insurance
     3,836       4,136       -       -7.3 %     100.0 %
Federal Home Loan Bank stock
     4,656       4,677       5,127       -0.4 %     -9.2 %
Accrued interest receivable
     3,972       4,009       4,263       -0.9 %     -6.8 %
Other real estate owned (OREO)
     3,728       3,318       466       12.4 %     700.0 %
Goodwill and other intangibles
     1,552       1,555       1,566       -0.2 %     -0.9 %
SBA servicing assets
     660       758       1,142       -12.9 %     -42.2 %
Other assets
     1,455       1,544       1,328       -5.8 %     9.6 %
                                         
Total assets
   $ 869,735     $ 889,927     $ 913,446       -2.3 %     -4.8 %
                                         
LIABILITIES AND SHAREHOLDERS' EQUITY
                                  
Noninterest-bearing demand deposits
   $ 87,908     $ 84,858     $ 83,639       3.6 %     5.1 %
Interest-bearing demand deposits
     98,316       102,846       84,842       -4.4 %     15.9 %
Savings deposits
     291,355       291,870       211,876       -0.2 %     37.5 %
Time deposits, under $100,000
     143,617       149,934       239,893       -4.2 %     -40.1 %
Time deposits, $100,000 and over
     72,036       85,294       111,513       -15.5 %     -35.4 %
Total deposits
     693,232       714,802       731,763       -3.0 %     -5.3 %
                                         
Borrowed funds
     87,672       86,554       95,000       1.3 %     -7.7 %
Subordinated debentures
     15,465       15,465       15,465       0.0 %     0.0 %
Accrued interest payable
     661       706       847       -6.4 %     -22.0 %
Accrued expenses and other liabilities
     3,072       3,688       3,307       -16.7 %     -7.1 %
Total liabilities
     800,102       821,215       846,382       -2.6 %     -5.5 %
                                         
Cumulative perpetual preferred stock
     18,770       18,650       18,305       0.6 %     2.5 %
Common stock
     55,592       55,536       55,264       0.1 %     0.6 %
Retained earnings (deficit)
     (815 )     (1,117 )     (135 )     27.0 %     -503.7 %
Treasury stock at cost
     (4,169 )     (4,169 )     (4,169 )     0.0 %     0.0 %
Accumulated other comprehensive income (loss)
     255       (188 )     (2,201 )     235.6 %     111.6 %
Total shareholders' equity
     69,633       68,712       67,064       1.3 %     3.8 %
                                         
Total liabilities and shareholders' equity
   $ 869,735     $ 889,927     $ 913,446       -2.3 %     -4.8 %
                                         
Issued common shares
     7,579       7,581       7,544                  
Outstanding common shares
     7,154       7,156       7,119                  
Treasury shares
     425       425       425                  

 
Page 5 of 12
 

UNITY BANCORP, INC.
  
QTD CONSOLIDATED STATEMENTS OF INCOME
  
June 30, 2010
  
                                           
                     
2010.Q2 VS.
  
      For the Three Months Ended              2009.Q2  
Amounts in thousands, except percentages and per share amounts
  
6/30/2010
    
3/31/2010
    
6/30/2009
             $   %         $   %
                                                 
INTEREST INCOME
                                                
Federal funds sold and interest-bearing deposits
   $ 29     $ 26     $ 29     $ 3       11.5 %   $ -       0.0 %
Federal Home Loan Bank stock
     49       34       122       15       44.1 %     (73 )     -59.8 %
                                                         
Securities available for sale
     1,054       1,280       1,509       (226 )     -17.7 %     (455 )     -30.2 %
Securities held to maturity
     250       338       391       (88 )     -26.0 %     (141 )     -36.1 %
Total securities
     1,304       1,618       1,900       (314 )     -19.4 %     (596 )     -31.4 %
                                                         
SBA loans
     1,300       1,452       1,564       (152 )     -10.5 %     (264 )     -16.9 %
SBA 504 loans
     1,091       1,087       1,285       4       0.4 %     (194 )     -15.1 %
Commercial loans
     4,488       4,604       5,051       (116 )     -2.5 %     (563 )     -11.1 %
Residential mortgage loans
     1,959       1,961       1,783       (2 )     -0.1 %     176       9.9 %
Consumer loans
     724       731       797       (7 )     -1.0 %     (73 )     -9.2 %
Total loans
     9,562       9,835       10,480       (273 )     -2.8 %     (918 )     -8.8 %
Total interest income
     10,944       11,513       12,531       (569 )     -4.9 %     (1,587 )     -12.7 %
                                                         
INTEREST EXPENSE
                                                        
Interest-bearing demand deposits
     188       258       267       (70 )     -27.1 %     (79 )     -29.6 %
Savings deposits
     728       901       912       (173 )     -19.2 %     (184 )     -20.2 %
Time deposits
     1,687       1,813       3,409       (126 )     -6.9 %     (1,722 )     -50.5 %
Borrowed funds and subordinated debentures
     1,078       1,077       1,085       1       0.1 %     (7 )     -0.6 %
Total interest expense
     3,681       4,049       5,673       (368 )     -9.1 %     (1,992 )     -35.1 %
Net interest income
     7,263       7,464       6,858       (201 )     -2.7 %     405       5.9 %
Provision for loan losses
     1,500       1,500       1,500       -       0.0 %     -       0.0 %
Net interest income after provision for loan losses
     5,763       5,964       5,358       (201 )     -3.4 %     405       7.6 %
                                                         
NONINTEREST INCOME
                                                        
Branch fee income
     331       362       335       (31 )     -8.6 %     (4 )     -1.2 %
Service and loan fee income
     245       209       294       36       17.2 %     (49 )     -16.7 %
Gain on sale of SBA loans held for sale, net
     147       -       -       147       100.0 %     147       100.0 %
Gain on sale of mortgage loans
     112       145       49       (33 )     -22.8 %     63       128.6 %
Bank owned life insurance (BOLI)
     78       73       55       5       6.8 %     23       41.8 %
Other-than-temporary impairment charges
     -       -       (1,749 )     -       0.0 %     1,749       100.0 %
Net security gains
     4       4       2       -       0.0 %     2       100.0 %
Other income
     253       117       107       136       116.2 %     146       136.4 %
Total noninterest income (loss)
     1,170       910       (907 )   $ 260       28.6 %   $ 2,077       -229.0 %
                                                         
NONINTEREST EXPENSE
                                                        
Compensation and benefits
     2,822       2,999       2,853       (177 )     -5.9 %     (31 )     -1.1 %
Occupancy
     608       677       647       (69 )     -10.2 %     (39 )     -6.0 %
Processing and communications
     555       524       482       31       5.9 %     73       15.1 %
Furniture and equipment
     447       423       471       24       5.7 %     (24 )     -5.1 %
Professional services
     199       229       260       (30 )     -13.1 %     (61 )     -23.5 %
Loan collection costs
     243       184       180       59       32.1 %     63       35.0 %
OREO expenses
     157       30       13       127       423.3 %     144       1107.7 %
Deposit insurance
     320       330       708       (10 )     -3.0 %     (388 )     -54.8 %
Advertising
     241       106       151       135       127.4 %     90       59.6 %
Other expenses
     448       439       438       9       2.1 %     10       2.3 %
Total noninterest expense
     6,040       5,941       6,203       99       1.7 %     (163 )     -2.6 %
                                                         
Income (loss) before provision (benefit) for income taxes
     893       933       (1,752 )     (40 )     -4.3 %     2,645       151.0 %
Provision (benefit) for income taxes
     212       185       (552 )     27       14.6 %     764       138.4 %
Net income (loss)
     681       748       (1,200 )     (67 )     -9.0 %     1,881       156.8 %
Preferred stock dividends & discount accretion
     379       373       372       6       1.6 %     7       1.9 %
Income available (loss attributable) to common shareholders
   $ 302     $ 375     $ (1,572 )   $ (73 )     -19.5 %   $ 1,874       119.2 %
                                                         
Effective tax rate
     23.7 %     19.8 %     31.5 %                                
                                                         
Net income (loss) per common share - Basic
   $ 0.04     $ 0.05     $ (0.22 )                                
Net income (loss) per common share - Diluted
   $ 0.04     $ 0.05     $ (0.22 )                                
                                                         
Weighted average common shares outstanding - Basic
     7,156       7,150       7,119                                  
Weighted average common shares outstanding - Diluted
     7,475       7,294       7,119                                  
                                                         

 
Page 6 of 12
 

                         
UNITY BANCORP, INC.
  
YTD CONSOLIDATED STATEMENTS OF INCOME
  
June 30, 2010
  
                         
                         
   
CURRENT YTD
    
PRIOR YTD
    
CURRENT YTD VS. PRIOR YTD
  
Amounts in thousands, except percentages and per share amounts
  
6/30/2010
    
6/30/2009
      $       %  
                           
INTEREST INCOME
                          
Federal funds sold and interest-bearing deposits
   $ 55     $ 46     $ 9       19.6 %
Federal Home Loan Bank stock
     83       118       (35 )     -29.7 %
                                 
Securities available for sale
     2,334       3,188       (854 )     -26.8 %
Securities held to maturity
     588       777       (189 )     -24.3 %
Total securities
     2,922       3,965       (1,043 )     -26.3 %
                                 
SBA loans
     2,752       3,171       (419 )     -13.2 %
SBA 504 loans
     2,177       2,516       (339 )     -13.5 %
Commercial loans
     9,092       10,067       (975 )     -9.7 %
Residential mortgage loans
     3,921       3,646       275       7.5 %
Consumer loans
     1,455       1,592       (137 )     -8.6 %
Total loans
     19,397       20,992       (1,595 )     -7.6 %
                                 
Total interest income
     22,457       25,121       (2,664 )     -10.6 %
                                 
INTEREST EXPENSE
                                
Interest-bearing demand deposits
     446       537       (91 )     -16.9 %
Savings deposits
     1,629       1,556       73       4.7 %
Time deposits
     3,500       7,133       (3,633 )     -50.9 %
Borrowed funds and subordinated debentures
     2,155       2,263       (108 )     -4.8 %
Total interest expense
     7,730       11,489       (3,759 )     -32.7 %
                                 
Net interest income
     14,727       13,632       1,095       8.0 %
Provision for loan losses
     3,000       3,000       -       0.0 %
Net interest income after provision for loan losses
     11,727       10,632       1,095       10.3 %
                                 
NONINTEREST INCOME
                                
Branch fee income
     692       665       27       4.1 %
Service and loan fee income
     454       547       (93 )     -17.0 %
Gain on sale of SBA loans held for sale, net
     147       29       118       406.9 %
Gain on sale of mortgage loans
     258       113       145       128.3 %
Bank owned life insurance (BOLI)
     151       110       41       37.3 %
Other-than-temporary impairment charges
     -       (1,749 )     1,749       100.0 %
Net security gains
     8       517       (509 )     -98.5 %
Other income
     370       209       161       77.0 %
Total noninterest income
     2,080       441       1,639       371.7 %
                                 
NONINTEREST EXPENSE
                                
Compensation and benefits
     5,821       5,477       344       6.3 %
Occupancy
     1,285       1,334       (49 )     -3.7 %
Processing and communications
     1,080       1,023       57       5.6 %
Furniture and equipment
     870       966       (96 )     -9.9 %
Professional services
     428       506       (78 )     -15.4 %
Loan collection costs
     427       379       48       12.7 %
OREO expenses
     187       17       170       1000.0 %
Deposit insurance
     650       1,009       (359 )     -35.6 %
Advertising
     348       226       122       54.0 %
Other expenses
     885       821       64       7.8 %
Total noninterest expense
     11,981       11,758       223       1.9 %
                                 
Income (loss) before provision (benefit) for income taxes
     1,826       (685 )     2,511       366.6 %
Provision (benefit) for income taxes
     397       (216 )     613       283.8 %
Net income (loss)
     1,429       (469 )     1,898       404.7 %
Preferred stock dividends & discount accretion
     752       751       1       0.1 %
Income available (loss attributable) to common shareholders
   $ 677     $ (1,220 )   $ 1,897       155.5 %
                                 
Effective tax rate
     21.7 %     31.5 %                
                                 
Net income (loss) per common share - Basic
   $ 0.09     $ (0.17 )                
Net income (loss) per common share - Diluted
   $ 0.09     $ (0.17 )                
                                 
Weighted average common shares outstanding - Basic
     7,153       7,119                  
Weighted average common shares outstanding - Diluted
     7,392       7,119                  

 
Page 7 of 12
 

     UNITY BANCORP, INC.  
   
QUARTER TO DATE NET INTEREST MARGIN
  
   
June 30, 2010
  
                                     
                                     
   
For the Three Months Ended
  
   
June 30, 2010
    
March 31, 2010
  
Amounts in thousands, except percentages
  
Average Balance
    
Interest
    
Rate/Yield
    
Average Balance
    
Interest
    
Rate/Yield
  
                                     
ASSETS
                                    
Interest-earning assets:
                                    
Federal funds sold and interest-bearing deposits
   $ 41,695     $ 29       0.28 %   $ 32,493     $ 26       0.32 %
Federal Home Loan Bank stock
     4,656       49       4.22 %     4,677       34       2.95 %
                                                 
Securities available for sale
     120,333       1,068       3.55 %     131,295       1,294       3.94 %
Securities held to maturity
     23,300       256       4.39 %     27,323       354       5.18 %
Total securities (A)
     143,633       1,324       3.69 %     158,618       1,648       4.16 %
                                                 
SBA loans
     98,214       1,300       5.29 %     98,140       1,452       5.92 %
SBA 504 loans
     66,318       1,091       6.60 %     70,444       1,087       6.26 %
Commercial loans
     285,709       4,488       6.30 %     292,055       4,604       6.39 %
Residential mortgage loans
     133,379       1,959       5.87 %     134,611       1,961       5.83 %
Consumer loans
     58,718       724       4.95 %     59,779       731       4.96 %
Total loans
     642,338       9,562       5.97 %     655,029       9,835       6.06 %
                                                 
Total interest-earning assets
   $ 832,322     $ 10,964       5.28 %   $ 850,817     $ 11,543       5.47 %
                                                 
Noninterest-earning assets:
                                                
Cash and due from banks
     21,959                       21,962                  
Allowance for loan losses
     (14,678 )                     (14,581 )                
Other assets
     42,289                       40,896                  
Total noninterest-earning assets
     49,570                       48,277                  
                                                 
Total assets
   $ 881,892                     $ 899,094                  
                                                 
LIABILITIES AND SHAREHOLDERS' EQUITY                                                
Interest-bearing liabilities:
                                                
Interest-bearing demand deposits
   $ 100,108     $ 188       0.75 %   $ 102,593     $ 258       1.02 %
Savings deposits
     292,543       728       1.00 %     289,251       901       1.26 %
Time deposits
     227,722       1,687       2.97 %     251,774       1,813       2.92 %
Total interest-bearing deposits
     620,373       2,603       1.68 %     643,618       2,972       1.87 %
Borrowed funds and subordinated debentures
     101,907       1,078       4.18 %     100,500       1,077       4.29 %
                                                 
Total interest-bearing liabilities
   $ 722,280     $ 3,681       2.04 %   $ 744,118     $ 4,049       2.20 %
                                                 
Noninterest-bearing liabilities:
                                                
Noninterest-bearing demand deposits
     86,772                       83,164                  
Other liabilities
     4,313                       4,069                  
Total noninterest-bearing liabilities
     91,085                       87,233                  
                                                 
Total shareholders' equity
     68,527                       67,743                  
                                                 
Total liabilities and shareholders' equity
   $ 881,892                     $ 899,094                  
                                                 
Net interest spread
           $ 7,283       3.24 %           $ 7,494       3.27 %
Tax-equivalent basis adjustment
             (20 )                     (30 )        
Net interest income
           $ 7,263                     $ 7,464          
Net interest margin
                     3.51 %                     3.57 %
                                                 
(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.
  

 
Page 8 of 12
 

 UNITY BANCORP, INC.  
QUARTER TO DATE NET INTEREST MARGIN
  
 June 30, 2010  
                                     
                                     
   
For the Three Months Ended
  
   
June 30, 2010
    
June 30, 2009
  
Amounts in thousands, except percentages
  
Average Balance
    
Interest
    
Rate/Yield
    
Average Balance
    
Interest
    
Rate/Yield
  
                                     
ASSETS
                                    
Interest-earning assets:
                                    
Federal funds sold and interest-bearing deposits
   $ 41,695     $ 29       0.28 %   $ 14,153     $ 29       0.82 %
Federal Home Loan Bank stock
     4,656       49       4.22 %     4,972       122       9.84 %
                                                 
Securities available for sale
     120,333       1,068       3.55 %     130,751       1,522       4.66 %
Securities held to maturity
     23,300       256       4.39 %     34,457       409       4.75 %
Total securities (A)
     143,633       1,324       3.69 %     165,208       1,931       4.68 %
                                                 
SBA loans
     98,214       1,300       5.29 %     102,255       1,564       6.12 %
SBA 504 loans
     66,318       1,091       6.60 %     74,209       1,285       6.95 %
Commercial loans
     285,709       4,488       6.30 %     303,589       5,051       6.67 %
Residential mortgage loans
     133,379       1,959       5.87 %     124,227       1,783       5.74 %
Consumer loans
     58,718       724       4.95 %     63,280       797       5.05 %
Total loans
     642,338       9,562       5.97 %     667,560       10,480       6.29 %
                                                 
Total interest-earning assets
   $ 832,322     $ 10,964       5.28 %   $ 851,893     $ 12,562       5.91 %
                                                 
Noninterest-earning assets:
                                                
Cash and due from banks
     21,959                       18,397                  
Allowance for loan losses
     (14,678 )                     (11,095 )                
Other assets
     42,289                       32,770                  
Total noninterest-earning assets
     49,570                       40,072                  
                                                 
Total assets
   $ 881,892                     $ 891,965                  
                                                 
LIABILITIES AND SHAREHOLDERS' EQUITY                                                
Interest-bearing liabilities:
                                                
Interest-bearing demand deposits
   $ 100,108     $ 188       0.75 %   $ 85,313     $ 267       1.26 %
Savings deposits
     292,543       728       1.00 %     189,977       912       1.93 %
Time deposits
     227,722       1,687       2.97 %     360,885       3,409       3.79 %
Total interest-bearing deposits
     620,373       2,603       1.68 %     636,175       4,588       2.89 %
Borrowed funds and subordinated debentures
     101,907       1,078       4.18 %     107,163       1,085       4.01 %
                                                 
Total interest-bearing liabilities
   $ 722,280     $ 3,681       2.04 %   $ 743,338     $ 5,673       3.05 %
                                                 
Noninterest-bearing liabilities:
                                                
Noninterest-bearing demand deposits
     86,772                       77,630                  
Other liabilities
     4,313                       4,148                  
Total noninterest-bearing liabilities
     91,085                       81,778                  
                                                 
Total shareholders' equity
     68,527                       66,849                  
                                                 
Total liabilities and shareholders' equity
   $ 881,892                     $ 891,965                  
                                                 
Net interest spread
           $ 7,283       3.24 %           $ 6,889       2.86 %
Tax-equivalent basis adjustment
             (20 )                     (31 )        
Net interest income
           $ 7,263                     $ 6,858          
Net interest margin
                     3.51 %                     3.24 %
                                                 
(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.
  

 
Page 9 of 12
 

 UNITY BANCORP, INC.  
YEAR TO DATE NET INTEREST MARGIN
  
 June 30, 2010  
   
 
                                
                                     
   
June 30, 2010
    
June 30, 2009
  
Amounts in thousands, except percentages
  
Average Balance
    
Interest
    
Rate/Yield
    
Average Balance
    
Interest
    
Rate/Yield
  
                                     
ASSETS
                                    
Interest-earning assets:
                                    
Federal funds sold and interest-bearing deposits
   $ 37,119     $ 55       0.30 %   $ 12,249     $ 46       0.76 %
Federal Home Loan Bank stock
     4,666       83       3.59 %     5,451       118       4.37 %
                                                 
Securities available for sale
     125,784       2,361       3.75 %     134,506       3,214       4.78 %
Securities held to maturity
     25,300       610       4.82 %     34,221       813       4.75 %
Total securities (A)
     151,084       2,971       3.93 %     168,727       4,027       4.77 %
                                                 
SBA loans
     98,177       2,752       5.61 %     103,641       3,171       6.12 %
SBA 504 loans
     68,370       2,177       6.42 %     75,538       2,516       6.72 %
Commercial loans
     288,865       9,092       6.35 %     304,365       10,067       6.67 %
Residential mortgage loans
     133,991       3,921       5.85 %     126,623       3,646       5.76 %
Consumer loans
     59,246       1,455       4.95 %     62,717       1,592       5.12 %
Total loans
     648,649       19,397       6.01 %     672,884       20,992       6.27 %
                                                 
Total interest-earning assets
   $ 841,518     $ 22,506       5.37 %   $ 859,311     $ 25,183       5.89 %
                                                 
Noninterest-earning assets:
                                                
Cash and due from banks
     21,961                       19,009                  
Allowance for loan losses
     (14,630 )                     (11,017 )                
Other assets
     41,596                       32,928                  
Total noninterest-earning assets
     48,927                       40,920                  
                                                 
Total assets
   $ 890,445                     $ 900,231                  
                                                 
LIABILITIES AND SHAREHOLDERS' EQUITY                                                
Interest-bearing liabilities:
                                                
Interest-bearing demand deposits
   $ 101,343     $ 446       0.89 %   $ 85,189     $ 537       1.27 %
Savings deposits
     290,906       1,629       1.13 %     168,736       1,556       1.86 %
Time deposits
     239,682       3,500       2.94 %     374,147       7,133       3.84 %
Total interest-bearing deposits
     631,931       5,575       1.78 %     628,072       9,226       2.96 %
Borrowed funds and subordinated debentures
     101,207       2,155       4.24 %     124,540       2,263       3.61 %
                                                 
Total interest-bearing liabilities
   $ 733,138     $ 7,730       2.12 %   $ 752,612     $ 11,489       3.07 %
                                                 
Noninterest-bearing liabilities:
                                                
Noninterest-bearing demand deposits
     84,978                       76,594                  
Other liabilities
     4,192                       3,967                  
Total noninterest-bearing liabilities
     89,170                       80,561                  
                                                 
Total shareholders' equity
     68,137                       67,058                  
                                                 
Total liabilities and shareholders' equity
   $ 890,445                     $ 900,231                  
                                                 
Net interest spread
           $ 14,776       3.25 %           $ 13,694       2.82 %
Tax-equivalent basis adjustment
             (49 )                     (62 )        
Net interest income
           $ 14,727                     $ 13,632          
Net interest margin
                     3.54 %                     3.21 %
                                                 
(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.
  

 
Page 10 of 12
 

   
 
                    
 UNITY BANCORP, INC.  
ALLOWANCE FOR LOAN LOSSES AND LOAN QUALITY SCHEDULES
  
 June 30, 2010  
   
 
                          
                               
Amounts in thousands, except percentages
  
6/30/2010
    
3/31/2010
    
12/31/2009
    
9/30/2009
    
6/30/2009
  
                               
ALLOWANCE FOR LOAN LOSSES:
                              
Balance, beginning of period
   $ 14,055     $ 13,842     $ 12,445     $ 10,665     $ 10,307  
Provision for loan losses charged to expense
     1,500       1,500       2,000       3,000       1,500  
      15,555       15,342       14,445       13,665       11,807  
Less: Chargeoffs
                                        
SBA loans
     517       -       -       448       323  
SBA 504 loans
     -       750       500       -       112  
Commercial loans
     1,038       485       125       674       798  
Residential mortgage loans
     115       100       -       125       33  
Consumer loans
     2       -       5       11       11  
Total chargeoffs
     1,672       1,335       630       1,258       1,277  
Add: Recoveries
                                        
SBA loans
     53       45       23       14       56  
SBA 504 loans
     -       -       -       22       -  
Commercial loans
     10       3       3       -       79  
Residential mortgage loans
     -       -       -       -       -  
Consumer loans
     -       -       1       2       -  
Total recoveries
     63       48       27       38       135  
Net chargeoffs
     1,609       1,287       603       1,220       1,142  
Balance, end of period
   $ 13,946     $ 14,055     $ 13,842     $ 12,445     $ 10,665  
                                         
LOAN QUALITY INFORMATION:
                                        
Nonperforming loans
   $ 26,071     $ 26,654     $ 25,496     $ 24,687     $ 22,774  
Other real estate owned (OREO)
     3,728       3,318       1,530       2,774       466  
Nonperforming assets
     29,799       29,972       27,026       27,461       23,240  
Less:  Amount guaranteed by Small Business Administration
     1,436       2,205       1,931       1,759       3,214  
Net nonperforming assets
   $ 28,363     $ 27,767     $ 25,095     $ 25,702     $ 20,026  
                                         
Loans 90 days past due & still accruing
   $ 2,780     $ 3,061     $ 2,286     $ 1,609     $ 781  
                                         
Allowance for loan losses to:
                                        
Total loans at quarter end
     2.19 %     2.16 %     2.11 %     1.90 %     1.60 %
Nonperforming loans
     53.49 %     52.73 %     54.29 %     50.41 %     46.83 %
Nonperforming assets
     46.80 %     46.89 %     51.22 %     45.32 %     45.89 %
Net nonperforming assets
     49.17 %     50.62 %     55.16 %     48.42 %     53.26 %
                                         
QTD net chargeoffs (annualized) to QTD average loans:
                                  
SBA loans
     1.89 %     -0.19 %     -0.09 %     1.68 %     1.05 %
SBA 504 loans
     0.00 %     4.32 %     2.78 %     -0.12 %     0.61 %
Commercial loans
     1.44 %     0.67 %     0.16 %     0.89 %     0.95 %
Residential mortgage loans
     0.35 %     0.30 %     0.00 %     0.40 %     0.11 %
Consumer loans
     0.01 %     0.00 %     0.03 %     0.06 %     0.07 %
Total loans
     1.00 %     0.80 %     0.36 %     0.73 %     0.69 %
                                         
Nonperforming loans to total loans
     4.09 %     4.09 %     3.88 %     3.76 %     3.42 %
Nonperforming assets to total loans and OREO
     4.65 %     4.58 %     4.10 %     4.17 %     3.49 %
Nonperforming assets to total assets
     3.43 %     3.37 %     2.90 %     2.98 %     2.54 %

 
Page 11 of 12
 

                               
 UNITY BANCORP, INC.  
QUARTERLY FINANCIAL DATA
  
 June 30, 2010  
   
 
                        
                               
Amounts in thousands, except percentages and per share amounts
  
6/30/2010
    
3/31/2010
    
12/31/2009
    
9/30/2009
    
6/30/2009
  
                               
SUMMARY OF INCOME:
                              
Total interest income
   $ 10,944     $ 11,513     $ 12,101     $ 12,185     $ 12,531  
Total interest expense
     3,681       4,049       4,766       5,327       5,673  
Net interest income
     7,263       7,464       7,335       6,858       6,858  
Provision for loan losses
     1,500       1,500       2,000       3,000       1,500  
Net interest income after provision for loan losses
     5,763       5,964       5,335       3,858       5,358  
Total noninterest income (loss)
     1,170       910       535       1,162       (907 )
Total noninterest expense
     6,040       5,941       6,076       6,110       6,203  
Income (loss) before provision (benefit) for income taxes
     893       933       (206 )     (1,090 )     (1,752 )
Provision (benefit) for income taxes
     212       185       (340 )     (343 )     (552 )
Net income (loss)
     681       748       134       (747 )     (1,200 )
Preferred stock dividends & discount accretion
     379       373       373       372       372  
Income available (loss attributable) to common shareholders
   $ 302     $ 375     $ (239 )   $ (1,119 )   $ (1,572 )
                                         
Net income (loss) per common share - Basic
   $ 0.04     $ 0.05     $ (0.03 )   $ (0.16 )   $ (0.22 )
Net income (loss) per common share - Diluted
   $ 0.04     $ 0.05     $ (0.03 )   $ (0.16 )   $ (0.22 )
                                         
COMMON SHARE DATA:
                                        
Market price per share
   $ 5.35     $ 5.29     $ 4.02     $ 4.20     $ 3.55  
Dividends paid
   $ -     $ -     $ -     $ -     $ -  
Book value per common share
   $ 7.11     $ 7.00     $ 6.90     $ 6.88     $ 6.85  
QTD weighted average shares
     7,156       7,150       7,126       7,119       7,119  
QTD weighted average diluted shares
     7,475       7,294       7,126       7,119       7,119  
Outstanding common shares
     7,154       7,156       7,144       7,119       7,119  
                                         
OPERATING RATIOS (Annualized):
                                        
Return (loss) on average assets
     0.31 %     0.34 %     0.06 %     -0.33 %     -0.54 %
Return (loss) on average equity
     2.43 %     3.09 %     -1.94 %     -9.14 %     -12.97 %
Effficiency ratio
     71.66 %     70.98 %     71.05 %     77.72 %     80.58 %
                                         
BALANCE SHEET DATA:
                                        
Total assets
   $ 869,735     $ 889,927     $ 930,357     $ 922,689     $ 913,446  
Total deposits
     693,232       714,802       758,239       750,665       731,763  
Total loans
     637,180       651,200       657,016       656,520       665,331  
Total securities
     143,662       138,442       169,022       171,501       164,794  
Total shareholders' equity
     69,633       68,712       67,865       67,385       67,064  
Allowance for loan losses
     (13,946 )     (14,055 )     (13,842 )     (12,445 )     (10,665 )
                                         
TAX EQUIVALENT YIELDS AND RATES:
                                        
Interest-earning Assets
     5.28 %     5.47 %     5.45 %     5.64 %     5.91 %
Interest-bearing Liabilities
     2.04 %     2.20 %     2.44 %     2.80 %     3.05 %
Net Interest Spread
     3.24 %     3.27 %     3.01 %     2.84 %     2.86 %
Net Interest Margin
     3.51 %     3.57 %     3.30 %     3.17 %     3.24 %
                                         
CREDIT QUALITY:
                                        
Nonperforming Assets
   $ 29,799     $ 29,972     $ 27,026     $ 27,461     $ 23,240  
QTD Net Chargeoffs (annualized) to QTD Average Loans
     1.00 %     0.80 %     0.36 %     0.73 %     0.69 %
Allowance for Loan Losses to Total Loans
     2.19 %     2.16 %     2.11 %     1.90 %     1.60 %
Nonperforming Assets to Total Loans and OREO
     4.65 %     4.58 %     4.10 %     4.17 %     3.49 %
Nonperforming Assets to Total Assets
     3.43 %     3.37 %     2.90 %     2.98 %     2.54 %
                                         
CAPITAL RATIOS AND OTHER:
                                        
Total Equity to Total Assets
     8.01 %     7.72 %     7.29 %     7.30 %     7.34 %
Leverage Ratio
     9.42 %     9.18 %     8.83 %     9.08 %     9.30 %
Tier 1 Risk-Based Capital Ratio
     12.39 %     12.02 %     11.75 %     11.83 %     11.88 %
Total Risk-Based Capital Ratio
     13.65 %     13.28 %     13.01 %     13.09 %     13.13 %
Number of Banking Offices
     16       16       16       16       16  
Number of ATMs
     18       19       19       19       19  
Number of Employees
     165       171       174       175       168  

 
Page 12 of 12