EX-99.1 2 ex99-1.htm FOURTH QUARTER EARNINGS RELEASE ex99-1.htm


Unity Bancorp Logo
Unity Bancorp, Inc.
64 Old Highway 22
Clinton, NJ 08809
800 618-BANK
www.unitybank.com

NewsNewsNewsNewsNews

For Immediate Release:

February 3, 2011

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


Unity Bancorp Reports Year End and Fourth Quarter Results

Clinton, NJ - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income available to common shareholders of $719 thousand, or $0.10 per diluted share, for the year ended December 31, 2010, compared to a net loss of $2.6 million, or $0.36 per diluted share for the same period a year ago.  Return on average assets and average common equity for 2010 were 0.26% and 1.43%, respectively.
 
James A. Hughes, President and CEO, stated, “We are pleased to report positive financial developments this quarter.”  Mr. Hughes continued, “During the quarter, we had resolution to many problem credits.  This resulted in a 27 percent decline in nonperforming assets from the prior quarter.  We continue to remain optimistic about the opportunities ahead.  We have also seen continued expansion in our net interest margin and had a record year in residential mortgage loan transactions.”
 
Annual results were substantially impacted by the following items:

·  
2010 earnings were impacted by a $1.1 million increase in expenses on other real estate owned (“OREO”), or $0.09 per diluted share after tax. The increase in OREO expense is attributed to the write-down and subsequent disposal of several properties that were foreclosed upon in the fourth quarter of 2010.
 
·  
2009 earnings were materially impacted by an impairment charge of $2.6 million, or $0.24 per diluted share after tax, related to two pooled trust preferred securities and a one-time FDIC special assessment of $408 thousand, or $0.04 per diluted share in June 2009. Excluding the 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.


For the quarter ended December 31, 2010, the Company reported a net loss available to common shareholders of $299 thousand or $0.04 per diluted share, compared to a net loss of $239 thousand or $0.03 per diluted share for the fourth quarter of 2009.  Return on average assets and average common equity for the fourth quarter of 2010 were 0.04% and (2.31)%, respectively.

Fourth quarter results were substantially impacted by the following items:

·  
During the fourth quarter of 2010, the Company booked an additional $750 thousand provision for loan losses and realized a $619 thousand increase in OREO expenses. Excluding these charges, net income available to common shareholders would have been $523 thousand or $0.07 per diluted share for the quarter ended December 31, 2010.
 
·  
During the fourth quarter of 2009, the Company recognized an impairment charge 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.

Net Interest Income
 
Net interest income was $30.0 million, or 7.8% higher in 2010 than the $27.8 million reported for 2009.    Factors affecting net interest income include:
 
 
·  
The yield on earning assets decreased from 5.71% in 2009 to 5.38% in 2010. This was a result of interest-earning assets re-pricing in a low rate environment.
 
 
·  
The cost of interest-bearing liabilities decreased from 2.84% for 2009 to 1.97% for 2010.  All interest-bearing deposit costs declined with the largest decline in time deposits.
 
 
·  
Net interest margin for 2010 was 3.67%, an increase of 45 basis points from the same period last year.
 
 
 
 
 
Noninterest Income
 
 
For the year ended December 31, 2010, noninterest income amounted to $5.1 million, an increase of $2.9 million from the prior year period.  Excluding the effect of the OTTI charge noted above and net security gains, noninterest income increased $1.1 million.  Noninterest income was affected by the following factors:
 
 
·  
Branch fee income remained relatively flat compared to the prior year period.
 
 
·  
Service and loan fee income decreased $235 thousand compared to the prior year period due to lower levels of prepayment fees.
 
 
·  
Gains on sales on SBA loans amounted to $500 thousand, compared to $393 thousand a year ago.
 
 
·  
Gains on the sales of residential mortgage loans amounted to $1.1 million, compared to $217 thousand from the prior year period due to a significant increase in the origination of mortgage loans.
 
 
·  
There were no other-than-temporary impairment (“OTTI”) charges on investment securities recognized during 2010, compared to $2.6 million in the prior year period.
 
 
·  
The increase in the cash surrender value of bank owned life insurance (“BOLI”) was the result of the Company purchasing $2.5 million in BOLI to help offset the rising cost of employee benefits.
 
 
·  
Gains on the sales of investment securities amounted to $85 thousand, compared to $855 thousand in the prior year period.
 
 

Noninterest Expense
 
 
For the twelve months ended December 31, 2010, noninterest expenses were $25.0 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 $11.9 million, an increase of $632 thousand or 5.6%, due to higher employee medical benefits costs and increased residential mortgage commissions due to a larger sales volume, partially offset by lower incentive bonus payments.
 
 
·  
Professional fees decreased $305 thousand, due to decreased legal, loan review and audit costs.
 
 
·  
OREO expense increased $1.1 million, due to increased real estate carrying costs, valuation adjustments and losses on the sale of OREO properties.
 
 
·  
FDIC insurance premiums decreased $406 thousand, due to the $408 thousand second quarter 2009 special assessment.
 
 
Financial Condition
 
 
At December 31, 2010, total assets were $818.4 million, a 12.0% decrease from the prior year-end.
 
 
·  
Total loans decreased $41.1 million or 6.3%, from $657.0 million at December 31, 2009. The decrease occurred across all loan categories with SBA 7(a), SBA 504, commercial, residential mortgages and consumer loans decreasing 13.2%, 9.1%, 4.3%, 3.5% and 7.2%, respectively.   Loan demand has been sluggish due to the economy.  In addition, Unity has exited the national SBA program, adopting a local SBA program.
 
 
·  
Total securities decreased $40.8 million since December 31, 2009, as Unity received $49.8 million in principal payments, sold $16.4 million and had $24.8 million in bonds called during 2010, partially offset by $50.5 million in purchases.
 
 
·  
Core deposits, excluding time deposits, increased $7.7 million during the twelve month period to $474.2 million.  The increase was due primarily to an $11.2 million increase in noninterest-bearing demand deposits and a $5.5 million increase in interest-bearing demand deposits.  Time deposits decreased $111.2 million for the twelve months ended December 31, 2010 due to planned run off of a maturing high rate promotion that was done late in 2008 to bolster liquidity.
 
 
·  
Shareholders’ equity was $70.1 million at December 31, 2010, an increase of $2.2 million from year-end 2009.
 
 
·  
Book value per common share was $7.08, compared to $6.91 at year-end.
 
 
·  
At December 31, 2010 the leverage, Tier I and Total Risk Based Capital ratios were 9.97%, 13.04% and 14.30%, respectively, all in excess of the ratios required to be deemed “well-capitalized”.
 
 
 
 
 
Credit Quality
 
 
·  
Nonperforming assets totaled $24.0 million at December 31, 2010, or 3.88% of total loans and OREO, compared to $27.0 million or 4.10% of total loans and OREO a year ago.
 
 
·  
The SBA, commercial, residential mortgages, SBA 504 and consumer nonaccrual loans were $8.2 million, $5.5 million, $5.1 million, $2.7 million and $249 thousand, respectively.  The majority of nonaccrual loans are secured by real estate.
 
 
·  
OREO assets totaled $2.3 million at December 31, 2010, an increase of $816 thousand, compared to $1.5 million a year ago.
 
 
·  
The allowance for loan losses totaled $14.4 million at December 31, 2010, or 2.33% of total loans. The provision for loan losses for the quarter and year ended December 31, 2010 was $2.75 million and $7.25 million, respectively, compared to $2.0 million and $8.0 million for the quarter and twelve month periods of 2009.
 
 
·  
Net charge-offs were $2.5 million for the three months ended December 31, 2010, compared to $603 thousand for the same period a year ago.  Net charge-offs were $6.7 million for the twelve months ended December 31, 2010, compared to $4.5 million for the same period a year ago.
 
 
Mr. Hughes added, “Unity continues to work diligently to address problem loans.  The decrease in nonperforming assets was related to the sale of many problem assets.   For the near term, the size of our loan loss provision will remain the most important single factor in our earnings.  However, we are hopeful we will see further improvement in credit quality in 2011.”
 
 
Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $818 million in assets and $655 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.
 
 
 
 
 
 
 
 
 
  UNITY BANCORP, INC.
  SUMMARY FINANCIAL HIGHLIGHTS
  December 31, 2010
                       
                       
                       
               
2010.Q4 VS.
  
                2010.Q3   2009.Q4  
Amounts in thousands, except percentages and per share amounts
  
12/31/2010
  
9/30/2010
  
12/31/2009
  
%
  
%
  
                       
BALANCE SHEET DATA:
                      
Total assets
   $ 818,410   $ 846,385   $ 930,357   -3.3 % -12.0 %
Total deposits
     654,788     670,158     758,239   -2.3 % -13.6 %
Total loans
     615,936     629,516     657,016   -2.2 % -6.3 %
Total securities
     128,242     134,820     169,022   -4.9 % -24.1 %
Total shareholders' equity
     70,085     70,730     67,865   -0.9 % 3.3 %
Allowance for loan losses
     (14,364 )   (14,163 )   (13,842 ) 1.4 % 3.8 %
                             
FINANCIAL DATA - QUARTER TO DATE:
                            
Income (loss) before provision (benefit) for income taxes
   $ 36   $ 968   $ (206 ) -96.3 % 117.5 %
Provision (benefit) for income taxes
     (50 )   242     (340 ) -120.7 % 85.3 %
Net income (loss)
     86     726     134   -88.2 % -35.8 %
Preferred stock dividends & discount accretion
     385     385     373   0.0 % 3.2 %
Income available (loss attributable) to common shareholders
   $ (299 ) $ 341   $ (239 ) -187.7 % -25.1 %
                             
Net income (loss) per common share - Basic
   $ (0.04 ) $ 0.05   $ (0.03 ) -180.0 % -33.3 %
Net income (loss) per common share - Diluted
   $ (0.04 ) $ 0.05   $ (0.03 ) -180.0 % -33.3 %
                             
Return (loss) on average assets
     0.04 %   0.34 %   0.06 % -88.2 % -33.3 %
Return (loss) on average equity
     -2.31 %   2.66 %   -1.95 % -186.8 % -18.5 %
Effficiency ratio
     70.65 %   72.47 %   71.05 % -2.5 % -0.6 %
                             
FINANCIAL DATA - YEAR TO DATE:
                            
Income (loss) before provision (benefit) for income taxes
   $ 2,829   $ 2,794   $ (1,979 ) 1.3 % 243.0 %
Provision (benefit) for income taxes
     589     639     (898 ) -7.8 % 165.6 %
Net income (loss)
     2,240     2,155     (1,081 ) 3.9 % 307.2 %
Preferred stock dividends & discount accretion
     1,521     1,136     1,496   33.9 % 1.7 %
Income available (loss attributable) to common shareholders
   $ 719   $ 1,019   $ (2,577 ) -29.4 % 127.9 %
                             
Net income (loss) per common share - Basic
   $ 0.10   $ 0.14   $ (0.36 ) -29.5 % 127.7 %
Net income (loss) per common share - Diluted
   $ 0.10   $ 0.14   $ (0.36 ) -29.6 % 126.7 %
                             
Return (loss) on average assets
     0.26 %   0.33 %   -0.12 % -21.2 % 316.7 %
Return (loss) on average equity
     1.43 %   2.72 %   -5.29 % -47.4 % 127.0 %
Effficiency ratio
     71.43 %   71.72 %   75.49 % -0.4 % -5.4 %
                             
SHARE INFORMATION:
                            
Market price per share
     6.05     5.25     4.02   15.2 % 50.5 %
Dividends paid
     -     -     -   0.0 % 0.0 %
Book value per common share
     7.08     7.19     6.91   -1.5 % 2.4 %
Average diluted shares outstanding (QTD)
     7,209     7,467     7,126   -3.5 % 1.2 %
                             
CAPITAL RATIOS:
                            
Total equity to total assets
     8.56 %   8.36 %   7.29 % 2.5 % 17.4 %
Leverage ratio
     9.97 %   9.83 %   8.83 % 1.4 % 12.8 %
Tier 1 risk-based capital ratio
     13.04 %   12.67 %   11.75 % 3.0 % 11.0 %
Total risk-based capital ratio
     14.30 %   13.93 %   13.01 % 2.7 % 9.9 %
                             
CREDIT QUALITY AND RATIOS:
                            
Nonperforming assets
   $ 24,008   $ 33,077   $ 27,026   -27.4 % -11.2 %
QTD net chargeoffs (annualized) to QTD average loans
     1.62 %   0.80 %   0.36 % 101.4 % 347.0 %
Allowance for loan losses to total loans
     2.33 %   2.25 %   2.11 % 3.7 % 10.7 %
Nonperforming assets to total loans and OREO
     3.88 %   5.21 %   4.10 % -25.4 % -5.4 %
Nonperforming assets to total assets
     2.93 %   3.91 %   2.90 % -24.9 % 1.0 %
                             
                             
 
 
 


                               
  UNITY BANCORP, INC.
  CONSOLIDATED BALANCE SHEETS
  December 31, 2010
                               
                               
                               
                     
2010.Q4 VS.
  
                        2010.Q3       2009.Q4  
Amounts in thousands, except percentages
  
12/31/2010
    
9/30/2010
    
12/31/2009
    
%
    
%
  
                                   
ASSETS
                                  
Cash and due from banks
   $ 17,637     $ 16,928     $ 23,517       4.2 %     -25.0 %
Federal funds sold and interest-bearing deposits
     26,289       30,379       50,118       -13.5 %     -47.5 %
Cash and cash equivalents
     43,926       47,307       73,635       -7.1 %     -40.3 %
                                         
Securities available for sale
     107,131       111,777       140,770       -4.2 %     -23.9 %
Securities held to maturity
     21,111       23,043       28,252       -8.4 %     -25.3 %
Total securities
     128,242       134,820       169,022       -4.9 %     -24.1 %
                                         
SBA loans held for sale
     10,397       19,021       21,406       -45.3 %     -51.4 %
SBA loans held to maturity
     75,741       72,197       77,844       4.9 %     -2.7 %
SBA 504 loans
     64,276       65,075       70,683       -1.2 %     -9.1 %
Commercial loans
     281,205       284,875       293,739       -1.3 %     -4.3 %
Residential mortgage loans
     128,400       131,479       133,059       -2.3 %     -3.5 %
Consumer loans
     55,917       56,869       60,285       -1.7 %     -7.2 %
Total loans
     615,936       629,516       657,016       -2.2 %     -6.3 %
Allowance for loan losses
     (14,364 )     (14,163 )     (13,842 )     1.4 %     3.8 %
Net loans
     601,572       615,353       643,174       -2.2 %     -6.5 %
                                         
Premises and equipment, net
     10,967       11,137       11,773       -1.5 %     -6.8 %
Deferred tax assets
     7,550       7,168       7,308       5.3 %     3.3 %
Bank owned life insurance (BOLI)
     8,812       8,732       6,002       0.9 %     46.8 %
Prepaid FDIC insurance
     3,266       3,545       4,739       -7.9 %     -31.1 %
Federal Home Loan Bank stock
     4,206       4,656       4,677       -9.7 %     -10.1 %
Accrued interest receivable
     3,791       3,750       4,225       1.1 %     -10.3 %
Other real estate owned (OREO)
     2,346       5,773       1,530       -59.4 %     53.3 %
Goodwill and other intangibles
     1,544       1,548       1,559       -0.3 %     -1.0 %
Other assets
     2,188       2,596       2,713       -15.7 %     -19.4 %
                                         
Total assets
   $ 818,410     $ 846,385     $ 930,357       -3.3 %     -12.0 %
                                         
LIABILITIES AND SHAREHOLDERS' EQUITY
                                  
Noninterest-bearing demand deposits
   $ 91,272     $ 87,837     $ 80,100       3.9 %     13.9 %
Interest-bearing demand deposits
     105,530       100,350       100,046       5.2 %     5.5 %
Savings deposits
     277,394       292,372       286,334       -5.1 %     -3.1 %
Time deposits, under $100,000
     119,478       124,851       183,377       -4.3 %     -34.8 %
Time deposits, $100,000 and over
     61,114       64,748       108,382       -5.6 %     -43.6 %
Total deposits
     654,788       670,158       758,239       -2.3 %     -13.6 %
                                         
Borrowed funds
     75,000       86,044       85,000       -12.8 %     -11.8 %
Subordinated debentures
     15,465       15,465       15,465       0.0 %     0.0 %
Accrued interest payable
     556       618       710       -10.0 %     -21.7 %
Accrued expenses and other liabilities
     2,516       3,370       3,078       -25.3 %     -18.3 %
Total liabilities
     748,325       775,655       862,492       -3.5 %     -13.2 %
                                         
Cumulative perpetual preferred stock
     19,019       18,894       18,533       0.7 %     2.6 %
Common stock
     55,884       55,798       55,454       0.2 %     0.8 %
Retained earnings (deficit)
     (772 )     (473 )     (1,492 )     -63.2 %     48.3 %
Treasury stock at cost
     (4,169 )     (4,169 )     (4,169 )     0.0 %     0.0 %
Accumulated other comprehensive income (loss)
     123       680       (461 )     -81.9 %     126.7 %
Total shareholders' equity
     70,085       70,730       67,865       -0.9 %     3.3 %
                                         
Total liabilities and shareholders' equity
   $ 818,410     $ 846,385     $ 930,357       -3.3 %     -12.0 %
                                         
Issued common shares
     7,636       7,632       7,569                  
Outstanding common shares
     7,211       7,207       7,144                  
Treasury shares
     425       425       425                  
 
 
 




UNITY BANCORP, INC.
QTD CONSOLIDATED STATEMENTS OF INCOME
   December 31, 2010
                                       
                                       
                                       
                   
2010.Q4 VS.
  
     
For the Three Months Ended
       2010.Q3      2009.Q4  
Amounts in thousands, except percentages and per share amounts
  
12/31/2010
  
9/30/2010
    
12/31/2009
       $   %      $       %  
                                             
INTEREST INCOME
                                            
Federal funds sold and interest-bearing deposits
   $ 11   $ 21     $ 38     $ (10 )   -47.6 %   $ (27 )     -71.1 %
Federal Home Loan Bank stock
     86     65       54       21     32.3 %     32       59.3 %
                                                     
Securities available for sale
     881     1,071       1,469       (190 )   -17.7 %     (588 )     -40.0 %
Securities held to maturity
     259     270       353       (11 )   -4.1 %     (94 )     -26.6 %
Total securities
     1,140     1,341       1,822       (201 )   -15.0 %     (682 )     -37.4 %
                                                     
SBA loans
     1,287     1,225       1,578       62     5.1 %     (291 )     -18.4 %
SBA 504 loans
     1,034     1,093       1,158       (59 )   -5.4 %     (124 )     -10.7 %
Commercial loans
     4,585     4,454       4,840       131     2.9 %     (255 )     -5.3 %
Residential mortgage loans
     1,955     1,808       1,834       147     8.1 %     121       6.6 %
Consumer loans
     752     719       777       33     4.6 %     (25 )     -3.2 %
Total loans
     9,613     9,299       10,187       314     3.4 %     (574 )     -5.6 %
                                                     
Total interest income
     10,850     10,726       12,101       124     1.2 %     (1,251 )     -10.3 %
                                                     
INTEREST EXPENSE
                                                    
Interest-bearing demand deposits
     143     148       261       (5 )   -3.4 %     (118 )     -45.2 %
Savings deposits
     561     639       985       (78 )   -12.2 %     (424 )     -43.0 %
Time deposits
     1,222     1,450       2,442       (228 )   -15.7 %     (1,220 )     -50.0 %
Borrowed funds and subordinated debentures
     1,064     1,077       1,078       (13 )   -1.2 %     (14 )     -1.3 %
Total interest expense
     2,990     3,314       4,766       (324 )   -9.8 %     (1,776 )     -37.3 %
                                                     
Net interest income
     7,860     7,412       7,335       448     6.0 %     525       7.2 %
Provision for loan losses
     2,750     1,500       2,000       1,250     83.3 %     750       37.5 %
Net interest income after provision for loan losses
     5,110     5,912       5,335       (802 )   -13.6 %     (225 )     -4.2 %
                                                     
NONINTEREST INCOME
                                                    
Branch fee income
     373     359       379       14     3.9 %     (6 )     -1.6 %
Service and loan fee income
     274     251       269       23     9.2 %     5       1.9 %
Gain on sale of SBA loans held for sale, net
     83     269       364       (186 )   -69.1 %     (281 )     -77.2 %
Gain on sale of mortgage loans
     548     247       33       301     121.9 %     515       1560.6 %
Bank owned life insurance (BOLI)
     80     79       56       1     1.3 %     24       42.9 %
Other-than-temporary impairment charges
     -     -       (862 )     -     0.0 %     862       100.0 %
Net security gains
     43     35       180       8     22.9 %     (137 )     -76.1 %
Other income
     127     220       116       (93 )   -42.3 %     11       9.5 %
Total noninterest income (loss)
     1,528     1,460       535     $ 68     4.7 %   $ 993       185.6 %
                                                     
NONINTEREST EXPENSE
                                                    
Compensation and benefits
     3,094     2,960       2,857       134     4.5 %     237       8.3 %
Occupancy
     612     624       623       (12 )   -1.9 %     (11 )     -1.8 %
Processing and communications
     530     529       523       1     0.2 %     7       1.3 %
Furniture and equipment
     444     440       448       4     0.9 %     (4 )     -0.9 %
Professional services
     80     229       262       (149 )   -65.1 %     (182 )     -69.5 %
Loan collection costs
     266     272       330       (6 )   -2.2 %     (64 )     -19.4 %
OREO expense
     647     482       28       165     34.2 %     619       2210.7 %
Deposit insurance
     317     333       346       (16 )   -4.8 %     (29 )     -8.4 %
Advertising
     146     130       156       16     12.3 %     (10 )     -6.4 %
Other expenses
     466     405       503       61     15.1 %     (37 )     -7.4 %
Total noninterest expense
     6,602     6,404       6,076       198     3.1 %     526       8.7 %
                                                     
Income (loss) before provision (benefit) for income taxes
     36     968       (206 )     (932 )   -96.3 %     242       117.5 %
Provision (benefit) for income taxes
     (50 )   242       (340 )     (292 )   -120.7 %     290       85.3 %
Net income (loss)
     86     726       134       (640 )   -88.2 %     (48 )     -35.8 %
Preferred stock dividends & discount accretion
     385     385       373       -     0.0 %     12       3.2 %
Income available (loss attributable) to common shareholders
   $ (299 ) $ 341     $ (239 )   $ (640 )   -187.7 %   $ (60 )     -25.1 %
                                                     
Effective tax rate
     -138.9 %   25.0 %     165.0 %                              
                                                     
Net income (loss) per common share - Basic
   $ (0.04 ) $ 0.05     $ (0.03 )                              
Net income (loss) per common share - Diluted
   $ (0.04 ) $ 0.05     $ (0.03 )                              
                                                     
Weighted average common shares outstanding - Basic
     7,209     7,176       7,126                                
Weighted average common shares outstanding - Diluted
     7,209     7,467       7,126                                
 
 
 


                         
  UNITY BANCORP, INC.
  YTD CONSOLIDATED STATEMENTS OF INCOME
  December 31, 2010
                         
                         
                         
   
Current YTD
    
Prior YTD
    
Current YTD VS. Prior YTD
  
Amounts in thousands, except percentages and per share amounts
  
12/31/2010
    
12/31/2009
      $       %  
                           
INTEREST INCOME
                          
Federal funds sold and interest-bearing deposits
   $ 87     $ 117     $ (30 )     -25.6 %
Federal Home Loan Bank stock
     235       277       (42 )     -15.2 %
                                 
Securities available for sale
     4,287       6,136       (1,849 )     -30.1 %
Securities held to maturity
     1,117       1,520       (403 )     -26.5 %
Total securities
     5,404       7,656       (2,252 )     -29.4 %
                                 
SBA loans
     5,264       6,246       (982 )     -15.7 %
SBA 504 loans
     4,305       4,821       (516 )     -10.7 %
Commercial loans
     18,130       19,881       (1,751 )     -8.8 %
Residential mortgage loans
     7,684       7,252       432       6.0 %
Consumer loans
     2,926       3,160       (234 )     -7.4 %
Total loans
     38,309       41,360       (3,051 )     -7.4 %
                                 
Total interest income
     44,035       49,410       (5,375 )     -10.9 %
                                 
INTEREST EXPENSE
                                
Interest-bearing demand deposits
     737       1,063       (326 )     -30.7 %
Savings deposits
     2,829       3,574       (745 )     -20.8 %
Time deposits
     6,173       12,523       (6,350 )     -50.7 %
Borrowed funds and subordinated debentures
     4,296       4,422       (126 )     -2.8 %
Total interest expense
     14,035       21,582       (7,547 )     -35.0 %
                                 
Net interest income
     30,000       27,828       2,172       7.8 %
Provision for loan losses
     7,250       8,000       (750 )     -9.4 %
Net interest income after provision for loan losses
     22,750       19,828       2,922       14.7 %
                                 
NONINTEREST INCOME
                                
Branch fee income
     1,424       1,418       6       0.4 %
Service and loan fee income
     979       1,214       (235 )     -19.4 %
Gain on sale of SBA loans held for sale, net
     500       393       107       27.2 %
Gain on sale of mortgage loans
     1,052       217       835       384.8 %
Bank owned life insurance (BOLI)
     310       222       88       39.6 %
Other-than-temporary impairment charges
     -       (2,611 )     2,611       100.0 %
Net security gains
     85       855       (770 )     -90.1 %
Other income
     719       432       287       66.4 %
Total noninterest income
     5,069       2,140       2,929       136.9 %
                                 
NONINTEREST EXPENSE
                                
Compensation and benefits
     11,875       11,243       632       5.6 %
Occupancy
     2,522       2,552       (30 )     -1.2 %
Processing and communications
     2,139       2,077       62       3.0 %
Furniture and equipment
     1,755       1,829       (74 )     -4.0 %
Professional services
     737       1,042       (305 )     -29.3 %
Loan collection costs
     964       1,023       (59 )     -5.8 %
OREO expense
     1,316       220       1,096       498.2 %
Deposit insurance
     1,301       1,707       (406 )     -23.8 %
Advertising
     624       530       94       17.7 %
Other expenses
     1,757       1,724       33       1.9 %
Total noninterest expense
     24,990       23,947       1,043       4.4 %
                                 
Income (loss) before provision (benefit) for income taxes
     2,829       (1,979 )     4,808       243.0 %
Provision (benefit) for income taxes
     589       (898 )     1,487       165.6 %
Net income (loss)
     2,240       (1,081 )     3,321       307.2 %
Preferred stock dividends & discount accretion
     1,521       1,496       25       1.7 %
Income available (loss attributable) to common shareholders
   $ 719     $ (2,577 )   $ 3,296       127.9 %
                                 
Effective tax rate
     20.8 %     45.4 %                
                                 
Net income (loss) per common share - Basic
   $ 0.10     $ (0.36 )                
Net income (loss) per common share - Diluted
   $ 0.10     $ (0.36 )                
                                 
Weighted average common shares outstanding - Basic
     7,173       7,121                  
Weighted average common shares outstanding - Diluted
     7,447       7,121                  
                                 
 
 
 



                                     
  UNITY BANCORP, INC.
  QUARTER TO DATE NET INTEREST MARGIN
  December 31, 2010
                                     
                                     
   
For the Three Months Ended
   
December 31, 2010
    
September 30, 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
   $ 36,274     $ 11       0.12 %   $ 30,939     $ 21       0.27 %
Federal Home Loan Bank stock
     4,597       86       7.42 %     4,656       65       5.54 %
                                                 
Securities available for sale
     108,718       906       3.33 %     115,876       1,085       3.75 %
Securities held to maturity
     21,292       264       4.96 %     22,148       275       4.97 %
Total securities (A)
     130,010       1,170       3.60 %     138,024       1,360       3.94 %
                                                 
SBA loans
     90,426       1,287       5.69 %     94,723       1,225       5.17 %
SBA 504 loans
     64,874       1,034       6.32 %     65,506       1,093       6.62 %
Commercial loans
     282,184       4,585       6.45 %     283,267       4,454       6.24 %
Residential mortgage loans
     129,696       1,955       6.03 %     132,031       1,808       5.48 %
Consumer loans
     57,029       752       5.23 %     57,315       719       4.98 %
Total loans (A), (B)
     624,209       9,613       6.13 %     632,842       9,299       5.85 %
                                                 
Total interest-earning assets
   $ 795,090     $ 10,880       5.45 %   $ 806,461     $ 10,745       5.30 %
                                                 
Noninterest-earning assets:
                                                
Cash and due from banks
     18,339                       20,469                  
Allowance for loan losses
     (14,681 )                     (14,725 )                
Other assets
     42,696                       41,374                  
Total noninterest-earning assets
     46,354                       47,118                  
                                                 
Total assets
   $ 841,444                     $ 853,579                  
                                                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                                          
Interest-bearing liabilities:
                                                
Interest-bearing demand deposits
   $ 104,900     $ 143       0.54 %   $ 95,348     $ 148       0.62 %
Savings deposits
     284,853       561       0.78 %     290,017       639       0.87 %
Time deposits
     183,997       1,222       2.63 %     203,346       1,450       2.83 %
Total interest-bearing deposits
     573,750       1,926       1.33 %     588,711       2,237       1.51 %
Borrowed funds and subordinated debentures
     100,080       1,064       4.16 %     103,296       1,077       4.08 %
                                                 
Total interest-bearing liabilities
   $ 673,830     $ 2,990       1.75 %   $ 692,007     $ 3,314       1.89 %
                                                 
Noninterest-bearing liabilities:
                                                
Noninterest-bearing demand deposits
     93,049                       87,644                  
Other liabilities
     4,196                       4,115                  
Total noninterest-bearing liabilities
     97,245                       91,759                  
                                                 
Total shareholders' equity
     70,369                       69,813                  
                                                 
Total liabilities and shareholders' equity
   $ 841,444                     $ 853,579                  
                                                 
Net interest spread
           $ 7,890       3.70 %           $ 7,431       3.41 %
Tax-equivalent basis adjustment
             (30 )                     (19 )        
Net interest income
           $ 7,860                     $ 7,412          
Net interest margin
                     3.94 %                     3.66 %
                                                 
(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.
  
(B) The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued.
  
 
 
 




                                     
  UNITY BANCORP, INC.
  QUARTER TO DATE NET INTEREST MARGIN
  December 31, 2010
                                     
                                     
   
For the Three Months Ended
   
December 31, 2010
    
December 31, 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
   $ 36,274     $ 11       0.12 %   $ 50,730     $ 38       0.30 %
Federal Home Loan Bank stock
     4,597       86       7.42 %     4,677       54       4.58 %
                                                 
Securities available for sale
     108,718       906       3.33 %     141,742       1,482       4.18 %
Securities held to maturity
     21,292       264       4.96 %     29,369       371       5.05 %
Total securities (A)
     130,010       1,170       3.60 %     171,111       1,853       4.33 %
                                                 
SBA loans
     90,426       1,287       5.69 %     102,170       1,578       6.18 %
SBA 504 loans
     64,874       1,034       6.32 %     71,295       1,158       6.44 %
Commercial loans
     282,184       4,585       6.45 %     295,718       4,840       6.49 %
Residential mortgage loans
     129,696       1,955       6.03 %     128,871       1,834       5.69 %
Consumer loans
     57,029       752       5.23 %     62,038       777       4.97 %
Total loans (A), (B)
     624,209       9,613       6.13 %     660,092       10,187       6.14 %
                                                 
Total interest-earning assets
   $ 795,090     $ 10,880       5.45 %   $ 886,610     $ 12,132       5.45 %
                                                 
Noninterest-earning assets:
                                                
Cash and due from banks
     18,339                       19,273                  
Allowance for loan losses
     (14,681 )                     (13,347 )                
Other assets
     42,696                       35,406                  
Total noninterest-earning assets
     46,354                       41,332                  
                                                 
Total assets
   $ 841,444                     $ 927,942                  
                                                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                                          
Interest-bearing liabilities:
                                                
Interest-bearing demand deposits
   $ 104,900     $ 143       0.54 %   $ 99,196     $ 261       1.04 %
Savings deposits
     284,853       561       0.78 %     278,710       985       1.40 %
Time deposits
     183,997       1,222       2.63 %     294,229       2,442       3.29 %
Total interest-bearing deposits
     573,750       1,926       1.33 %     672,135       3,688       2.18 %
Borrowed funds and subordinated debentures
     100,080       1,064       4.16 %     100,465       1,078       4.20 %
                                                 
Total interest-bearing liabilities
   $ 673,830     $ 2,990       1.75 %   $ 772,600     $ 4,766       2.44 %
                                                 
Noninterest-bearing liabilities:
                                                
Noninterest-bearing demand deposits
     93,049                       83,770                  
Other liabilities
     4,196                       4,358                  
Total noninterest-bearing liabilities
     97,245                       88,128                  
                                                 
Total shareholders' equity
     70,369                       67,214                  
                                                 
Total liabilities and shareholders' equity
   $ 841,444                     $ 927,942                  
                                                 
Net interest spread
           $ 7,890       3.70 %           $ 7,366       3.01 %
Tax-equivalent basis adjustment
             (30 )                     (31 )        
Net interest income
           $ 7,860                     $ 7,335          
Net interest margin
                     3.94 %                     3.30 %
                                                 
(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.
  
(B) The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued.
  
 
 
 



                                     
  UNITY BANCORP, INC.
  YEAR TO DATE NET INTEREST MARGIN
  December 31, 2010
                                     
                                     
   
For the Twelve Months Ended
   
December 31, 2010
    
December 31, 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
   $ 35,349     $ 87       0.25 %   $ 27,163     $ 117       0.43 %
Federal Home Loan Bank stock
     4,646       235       5.06 %     5,061       277       5.47 %
                                                 
Securities available for sale
     118,984       4,353       3.66 %     135,537       6,189       4.57 %
Securities held to maturity
     23,496       1,149       4.89 %     32,292       1,593       4.93 %
Total securities (A)
     142,480       5,502       3.86 %     167,829       7,782       4.64 %
                                                 
SBA loans
     95,353       5,264       5.52 %     103,031       6,246       6.06 %
SBA 504 loans
     66,767       4,305       6.45 %     73,517       4,821       6.56 %
Commercial loans
     285,771       18,130       6.34 %     301,340       19,881       6.60 %
Residential mortgage loans
     132,414       7,684       5.80 %     126,474       7,252       5.73 %
Consumer loans
     58,200       2,926       5.03 %     62,481       3,160       5.06 %
Total loans (A), (B)
     638,505       38,309       6.00 %     666,843       41,360       6.20 %
                                                 
Total interest-earning assets
   $ 820,980     $ 44,133       5.38 %   $ 866,896     $ 49,536       5.71 %
                                                 
Noninterest-earning assets:
                                                
Cash and due from banks
     20,672                       18,948                  
Allowance for loan losses
     (14,667 )                     (11,721 )                
Other assets
     41,817                       33,913                  
Total noninterest-earning assets
     47,822                       41,140                  
                                                 
Total assets
   $ 868,802                     $ 908,036                  
                                                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                                          
Interest-bearing liabilities:
                                                
Interest-bearing demand deposits
   $ 100,729     $ 737       0.73 %   $ 89,500     $ 1,063       1.19 %
Savings deposits
     289,156       2,829       0.98 %     214,274       3,574       1.67 %
Time deposits
     216,488       6,173       2.85 %     341,233       12,523       3.67 %
Total interest-bearing deposits
     606,373       9,739       1.61 %     645,007       17,160       2.66 %
Borrowed funds and subordinated debentures
     101,449       4,296       4.18 %     112,403       4,422       3.88 %
                                                 
Total interest-bearing liabilities
   $ 707,822     $ 14,035       1.97 %   $ 757,410     $ 21,582       2.84 %
                                                 
Noninterest-bearing liabilities:
                                                
Noninterest-bearing demand deposits
     87,684                       79,252                  
Other liabilities
     4,174                       4,313                  
Total noninterest-bearing liabilities
     91,858                       83,565                  
                                                 
Total shareholders' equity
     69,122                       67,061                  
                                                 
Total liabilities and shareholders' equity
   $ 868,802                     $ 908,036                  
                                                 
Net interest spread
           $ 30,098       3.41 %           $ 27,954       2.87 %
Tax-equivalent basis adjustment
             (98 )                     (126 )        
Net interest income
           $ 30,000                     $ 27,828          
Net interest margin
                     3.67 %                     3.22 %
                                                 
(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.
  
(B) The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued.
  
 
 
 




                               
  UNITY BANCORP, INC.
  ALLOWANCE FOR LOAN LOSSES AND LOAN QUALITY SCHEDULES
  December 31, 2010
                               
                               
                               
Amounts in thousands, except percentages
  
12/31/2010
    
9/30/2010
    
6/30/2010
    
3/31/2010
    
12/31/2009
  
                               
ALLOWANCE FOR LOAN LOSSES:
                              
Balance, beginning of period
   $ 14,163     $ 13,946     $ 14,055     $ 13,842     $ 12,445  
Provision for loan losses charged to expense
     2,750       1,500       1,500       1,500       2,000  
      16,913       15,446       15,555       15,342       14,445  
Less: Chargeoffs
                                        
SBA loans
     445       389       517       -       -  
SBA 504 loans
     798       -       -       750       500  
Commercial loans
     1,115       989       1,038       485       125  
Residential mortgage loans
     190       95       115       100       -  
Consumer loans
     234       9       2       -       5  
Total chargeoffs
     2,782       1,482       1,672       1,335       630  
Add: Recoveries
                                        
SBA loans
     128       17       53       45       23  
SBA 504 loans
     -       -       -       -       -  
Commercial loans
     105       178       10       3       3  
Residential mortgage loans
     -       -       -       -       -  
Consumer loans
     -       4       -       -       1  
Total recoveries
     233       199       63       48       27  
Net chargeoffs
     2,549       1,283       1,609       1,287       603  
Balance, end of period
   $ 14,364     $ 14,163     $ 13,946     $ 14,055     $ 13,842  
                                         
LOAN QUALITY INFORMATION:
                                        
Nonperforming loans
   $ 21,662     $ 27,304     $ 26,071     $ 26,654     $ 25,496  
Other real estate owned (OREO)
     2,346       5,773       3,728       3,318       1,530  
Nonperforming assets
     24,008       33,077       29,799       29,972       27,026  
Less:  Amount guaranteed by Small Business Administration
     2,706       2,094       1,436       2,205       1,931  
Net nonperforming assets
   $ 21,302     $ 30,983     $ 28,363     $ 27,767     $ 25,095  
                                         
Loans 90 days past due & still accruing
   $ 374     $ 2,467     $ 2,780     $ 3,061     $ 2,286  
                                         
Allowance for loan losses to:
                                        
Total loans at quarter end
     2.33 %     2.25 %     2.19 %     2.16 %     2.11 %
Nonperforming loans
     66.31 %     51.87 %     53.49 %     52.73 %     54.29 %
Nonperforming assets
     59.83 %     42.82 %     46.80 %     46.89 %     51.22 %
Net nonperforming assets
     67.43 %     45.71 %     49.17 %     50.62 %     55.16 %
                                         
QTD net chargeoffs (annualized) to QTD average loans:
                                  
SBA loans
     1.39 %     1.56 %     1.89 %     -0.19 %     -0.09 %
SBA 504 loans
     4.88 %     0.00 %     0.00 %     4.32 %     2.78 %
Commercial loans
     1.42 %     1.14 %     1.44 %     0.67 %     0.16 %
Residential mortgage loans
     0.58 %     0.29 %     0.35 %     0.30 %     0.00 %
Consumer loans
     1.63 %     0.03 %     0.01 %     0.00 %     0.03 %
Total loans
     1.62 %     0.80 %     1.00 %     0.80 %     0.36 %
                                         
Nonperforming loans to total loans
     3.52 %     4.34 %     4.09 %     4.09 %     3.88 %
Nonperforming assets to total loans and OREO
     3.88 %     5.21 %     4.65 %     4.58 %     4.10 %
Nonperforming assets to total assets
     2.93 %     3.91 %     3.43 %     3.37 %     2.90 %
 
 
 



                               
  UNITY BANCORP, INC.
  QUARTERLY FINANCIAL DATA
  December 31, 2010
                               
                               
                               
                               
                               
Amounts in thousands, except percentages and per share amounts
  
12/31/2010
    
9/30/2010
    
6/30/2010
    
3/31/2010
    
12/31/2009
  
                               
SUMMARY OF INCOME:
                              
Total interest income
   $ 10,850     $ 10,726     $ 10,944     $ 11,513     $ 12,101  
Total interest expense
     2,990       3,314       3,681       4,049       4,766  
Net interest income
     7,860       7,412       7,263       7,464       7,335  
Provision for loan losses
     2,750       1,500       1,500       1,500       2,000  
Net interest income after provision for loan losses
     5,110       5,912       5,763       5,964       5,335  
Total noninterest income (loss)
     1,528       1,460       1,170       910       535  
Total noninterest expense
     6,602       6,404       6,040       5,941       6,076  
Income (loss) before provision (benefit) for income taxes
     36       968       893       933       (206 )
Provision (benefit) for income taxes
     (50 )     242       212       185       (340 )
Net income (loss)
     86       726       681       748       134  
Preferred stock dividends & discount accretion
     385       385       379       373       373  
Income available (loss attributable) to common shareholders
   $ (299 )   $ 341     $ 302     $ 375     $ (239 )
                                         
Net income (loss) per common share - Basic
   $ (0.04 )   $ 0.05     $ 0.04     $ 0.05     $ (0.03 )
Net income (loss) per common share - Diluted
   $ (0.04 )   $ 0.05     $ 0.04     $ 0.05     $ (0.03 )
                                         
COMMON SHARE DATA:
                                        
Market price per share
   $ 6.05     $ 5.25     $ 5.35     $ 5.29     $ 4.02  
Dividends paid
   $ -     $ -     $ -     $ -     $ -  
Book value per common share
   $ 7.08     $ 7.19     $ 7.11     $ 7.00     $ 6.91  
QTD weighted average shares - basic
     7,209       7,176       7,156       7,150       7,126  
QTD weighted average shares - diluted
     7,209       7,467       7,475       7,294       7,126  
Outstanding common shares
     7,211       7,207       7,154       7,156       7,144  
                                         
OPERATING RATIOS (Annualized):
                                        
Return (loss) on average assets
     0.04 %     0.34 %     0.31 %     0.34 %     0.06 %
Return (loss) on average equity
     -2.31 %     2.66 %     2.43 %     3.09 %     -1.95 %
Effficiency ratio
     70.65 %     72.47 %     71.66 %     70.98 %     71.05 %
                                         
BALANCE SHEET DATA:
                                        
Total assets
   $ 818,410     $ 846,385     $ 869,735     $ 889,927     $ 930,357  
Total deposits
     654,788       670,158       693,232       714,802       758,239  
Total loans
     615,936       629,516       637,180       651,200       657,016  
Total securities
     128,242       134,820       143,662       138,442       169,022  
Total shareholders' equity
     70,085       70,730       69,633       68,712       67,865  
Allowance for loan losses
     (14,364 )     (14,163 )     (13,946 )     (14,055 )     (13,842 )
                                         
TAX EQUIVALENT YIELDS AND RATES:
                                        
Interest-earning assets
     5.45 %     5.30 %     5.28 %     5.47 %     5.45 %
Interest-bearing liabilities
     1.75 %     1.89 %     2.04 %     2.20 %     2.44 %
Net interest spread
     3.70 %     3.41 %     3.24 %     3.27 %     3.01 %
Net interest margin
     3.94 %     3.66 %     3.51 %     3.57 %     3.30 %
                                         
CREDIT QUALITY:
                                        
Nonperforming assets
   $ 24,008     $ 33,077     $ 29,799     $ 29,972     $ 27,026  
QTD net chargeoffs (annualized) to QTD average loans
     1.62 %     0.80 %     1.00 %     0.80 %     0.36 %
Allowance for loan losses to total loans
     2.33 %     2.25 %     2.19 %     2.16 %     2.11 %
Nonperforming assets to total loans and OREO
     3.88 %     5.21 %     4.65 %     4.58 %     4.10 %
Nonperforming assets to total assets
     2.93 %     3.91 %     3.43 %     3.37 %     2.90 %
                                         
CAPITAL RATIOS AND OTHER:
                                        
Total equity to total assets
     8.56 %     8.36 %     8.01 %     7.72 %     7.29 %
Leverage ratio
     9.97 %     9.83 %     9.43 %     9.18 %     8.83 %
Tier 1 risk-based capital ratio
     13.04 %     12.67 %     12.39 %     12.02 %     11.75 %
Total risk-based capital ratio
     14.30 %     13.93 %     13.65 %     13.28 %     13.01 %
Number of banking offices
     16       16       16       16       16  
Number of ATMs
     18       18       18       19       19  
Number of employees
     172       173       165       171       174