EX-99.1 2 exh99-1.htm FOURTH 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:  February 3, 2010

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


Unity Bancorp Reports Fourth Quarter and Year End Results

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

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

James A. Hughes, Unity Bancorp’s President and CEO, said, “We are facing the most challenging economic environment in decades.  Our loss for 2009 was the result of the magnitude of the recession and its impact on our customers and our investment portfolio.  While New Jersey has fared much better than other states, our portfolio of Commercial and SBA loans continues to be a challenge.  Although there have been recent signs of stability, the recovery is expected to be slow and measured.  We continue to remain positive and have focused on growing our customer relationships and investing in our future.  This year we had record core deposit growth, and we are extremely optimistic that our redefined strategic plan will enhance our franchise.  Our capital levels continue to be strong and we expect 2010 to be a turnaround year for our performance.”


Net Interest Income
 
For the quarter ended December 31, 2009, net interest income was $7.3 million, an increase of $477 thousand or 7.0% from the quarter ended September 30, 2009, and an increase of $599 thousand or 8.9% from the quarter ended December 31, 2008.  Quarter over quarter, net interest margin expanded as higher cost certificates of deposit repriced in a lower rate environment.   Factors affecting fourth quarter net interest income include:
 
·  
The yield on interest-earning assets decreased 73 basis points to 5.45% from 6.18% for the same period last year.
 
·  
The cost of interest-bearing liabilities decreased 85 basis points to 2.44% from 3.29% for the same period last year.
 
·  
Average earning assets, consisting primarily of loans, rose 6.3%.
 
·  
Net interest margin was 3.30%, a 7 basis point increase from 3.23% in the fourth quarter of 2008.
 
Year-to-date, net interest income was $27.8 million, an increase of $537 thousand or 2.0% from 2008.  Factors affecting year-to-date net interest income include:
 
·  
The yield on interest-earning assets decreased from 6.52% for 2008, to 5.71% for 2009.
 
·  
The cost of interest-bearing liabilities decreased from 3.39% for 2008, to 2.84% for 2009.
 
·  
Average earning assets, consisting primarily of loans, rose 11.0%.
 
·  
Net interest margin for the year ended December 31, 2009 was 3.22%, a decline of 29 basis points from 2008.
 
 
Noninterest Income
 
Historically, Unity had generated significant revenue from the sale of its SBA loans.  In the fourth quarter of 2008, Unity exited the National SBA program and closed all SBA loan production offices outside its primary trade area.  Consequently, revenue on the sale of SBA loans will no longer be material to total revenue.
 
For the quarter ended December 31, 2009, noninterest income was flat from the quarter ended December 31, 2008. Noninterest income was affected by the following factors:
 
·  
Service charges on deposit accounts increased $28 thousand, or 8.0% compared to the prior year period, primarily due to a larger account base.
 
·  
Loan fee income declined $66 thousand, or 19.7% due to a decrease in loan prepayment fees.
 
·  
Other-than-temporary impairment charges on investment securities amounted to $862 thousand, compared to $339 thousand in the prior year period.
 
·  
Gains on the sale of residential mortgage loans amounted to $33 thousand.
 
·  
Gains on the sale of SBA loans amounted to $364 thousand, compared $9 thousand a year ago.
 
·  
Gains on the sales of investment securities amounted to $180 thousand, compared to $15 thousand in the prior year period.
 
For the year ended December 31, 2009, noninterest income amounted to $2.1 million, a decrease of $554 thousand from the year ended December 31, 2008. Noninterest income was affected by the following factors:
 
·  
Service charges on deposit accounts and loan fee income remained relatively flat compared to the prior year period.
 
·  
Other-than-temporary impairment charges on investment securities amounted to $2.6 million, compared to $1.5 million in the prior year period.
 
·  
Gains on sales of SBA loans amounted to $393 thousand, compared to $1.2 million a year ago.
 
·  
Gains on the sales of residential mortgage loans amounted to $217 thousand, compared to $40 thousand in the prior year period.
 
·  
Gains on the sale of investment securities amounted to $855 thousand, compared to a loss of $378 thousand in the prior year period.
 
 
Noninterest Expense
 
As a result of current market conditions, the Company undertook many expense saving measures.  However, these expense reductions were offset by increases in FDIC insurance premiums.
 
For the quarter ended December 31, 2009, noninterest expenses were $6.1 million, an increase of $303 thousand or 5.2% from the quarter ended December 31, 2008. The following factors affected our noninterest expense:
 
·  
Compensation and benefits expense amounted to $2.9 million, flat from the prior year period.
 
·  
Communications and delivery expense declined $60 thousand or 10.3%, due to reduced communications costs from renegotiated contracts and a decline in capital expenditures.
 
·  
Occupancy expense declined $48 thousand or 7.2%, due to a reduction in rental expense from a renegotiated lease.
 
·  
FF&E and professional services expense remained flat from the prior year period.
 
·  
Loan collection costs amounted to $330 thousand, an increase of $114 thousand or 52.8%, due to increased collection costs on delinquent loans.
 
·  
FDIC insurance premiums amounted to $346 thousand, an increase of $48 thousand or 16.1%, due to the increase in FDIC insurance rates.
 
·  
Other expenses amounted to $531 thousand, an increase of $238 thousand or 81.2%, due primarily to increases in other real estate owned (“OREO”) expenses.
 
For the year ended December 31, 2009, noninterest expenses were $23.9 million, an increase of $1.0 million, or 4.4% from the same period a year ago. The following factors affected our noninterest expense:
 
·  
Compensation and benefits expense amounted to $11.2 million, a decrease of $742 thousand or 6.2%, due to reduced head count.
 
·  
Communications and delivery expense amounted to $2.1 million, a decrease of $174 thousand or 7.7%, due to reduced communications costs from renegotiated contracts and a decline in capital expenditures.
 
·  
Occupancy expense amounted to $2.6 million, a decline of $221 thousand or 8.0%, due a reduction in rental expense from a renegotiated lease.
 
·  
FF&E expense amounted to $1.8 million, an increase of $154 thousand or 9.2%, primarily due to depreciation expense on new equipment and software and increased software maintenance charges.
 
·  
Professional fees amounted to $1.0 million, an increase of $144 thousand or 16.0%, due to increased consulting, legal and audit costs.
 
·  
Loan collection costs amounted to $1.0 million, an increase of $361 thousand or 54.5%, due to increased collection costs on delinquent loans.
 
·  
FDIC insurance premiums amounted to $1.7 million, an increase of $1.1 million, due primarily to the increase in FDIC insurance rates and a $408 thousand special assessment in the second quarter of 2009.
 
  · 
Other expenses amounted to $1.9 million, an increase of $289 thousand or 17.5%, due primarily to increases in other real estate owned (“OREO”) expenses.
 
 
Financial Condition
 
At December 31, 2009, total assets were $930.4 million, a 3.6% increase from a year ago.
 
·  
Total loans decreased $28.9 million or 4.2%, from $685.9 million at December 31, 2008. SBA 7(a), SBA 504, commercial and consumer loans decreased 5.8%, 8.0%, 4.7%, and 3.6%, respectively.
 
·  
Total securities increased $19.5 million as Unity took advantage of favorable credit spreads to invest excess liquidity.
 
·  
Total deposits increased 7.2% or $51.1 million to $758.2 million at December 31, 2009.  This increase was due to a $151.5 million increase in savings deposits, a $13.0 million increase in interest- bearing checking accounts and a $6.0 million increase in demand deposits. These increases were partially offset by a $119.3 million decrease in time deposits.
 
·  
Total borrowed funds decreased $20.0 million from a year ago.
 
·  
Shareholders’ equity was $67.9 million at December 31, 2009, flat from a year ago.
 
·  
Book value per common share was $6.91.
 
·  
At December 31, 2009 the leverage, Tier I and Total Risk Based Capital ratios were 8.83%, 11.75% and 13.01%, respectively, all in excess of the ratios required to be deemed “well capitalized”.
 
 
Credit Quality
 
·  
Nonperforming assets totaled $27.0 million at December 31, 2009, or 4.10% of total loans and other real estate owned (“OREO”) compared to $27.5 million, or 4.17% of total loans and OREO at September 30, 2009 and $16.8 million, or 2.45% of total loans and OREO a year ago. The SBA 7(a), SBA 504, commercial, residential and consumer nonaccrual loans were $6.6 million, $5.6 million, $7.4 million, $5.6 million and $387 thousand, respectively.  OREO amounted to $1.5 million.  The increase in nonperforming assets was primarily related to an increase in SBA, residential mortgage and commercial accounts.  Almost all nonperforming assets are secured by real estate.
 
·  
The allowance for loan losses totaled $13.8 million at December 31, 2009, or 2.11% of total loans. The provision for loan losses for the fourth quarter of 2009 amounted to $2.0 million, an increase of $700 thousand from the same period a year ago.  The provision for loan losses for year ended December 31, 2009, amounted to $8.0 million, an increase of $3.5 million from the same period a year ago.
 
·  
Net charge-offs were $603 thousand for the three months ended December 31, 2009, compared to $887 thousand for the same period a year ago.  Net charge-offs were $4.5 million for the year ended December 31, 2009, compared to $2.6 million for the same period a year ago.
 
Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $930 million in assets and $758 million in deposits.  Unity Bank provides financial services to retail, corporate and small business customers through its 16 retail service centers located in Hunterdon, Middlesex, Somerset, Union and Warren Counties in New Jersey and Northampton County, Pennsylvania.  For additional information about Unity, visit our website at www.unitybank.com, or call 800- 618-BANK.

This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance.  These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond the company’s control and could impede its ability to achieve these goals.  These factors include general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, and results of regulatory exams, among other factors
 
 
 
 
 
                               
UNITY BANCORP, INC.
SUMMARY FINANCIAL HIGHLIGHTS
December 31, 2009
 
                              
                               
                               
                               
                     
2009.Q4 VS.
  
                        2009.Q3       2008.Q4  
Amounts in thousands, except percentages and per share amounts
  
12/31/2009
    
9/30/2009
    
12/31/2008
    
%
    
%
  
                                   
BALANCE SHEET DATA:
                                  
Total Assets
   $ 930,357     $ 922,689     $ 898,310       0.8 %     3.6 %
Total Deposits
     758,239       750,665       707,117       1.0 %     7.2 %
Total Loans
     657,016       656,520       685,946       0.1 %     -4.2 %
Total Securities
     169,022       171,501       149,509       -1.4 %     13.1 %
Total Shareholders' Equity
     67,865       67,385       67,803       0.7 %     0.1 %
Allowance for Loan Losses
     (13,842 )     (12,445 )     (10,326 )     11.2 %     34.0 %
                                         
FINANCIAL DATA - QUARTER TO DATE:
                                        
Net Income (Loss) Before Taxes
     (206 )     (1,090 )     218       -81.1 %     -194.5 %
Income Tax Benefit
     (340 )     (343 )     (366 )     -0.9 %     -7.1 %
Net Income (Loss)
     134       (747 )     584       -117.9 %     -77.1 %
Preferred Dividends & Discount Accretion
     373       372       110       0.3 %     239.1 %
Income Available (Loss Attributable) to Common Shareholders
     (239 )     (1,119 )     474       -78.6 %     -150.4 %
                                         
Net Income (Loss) Per Share - Basic
     (0.03 )     (0.16 )     0.07       -78.7 %     -150.3 %
Net Income (Loss) Per Share - Diluted
     (0.03 )     (0.16 )     0.07       -78.7 %     -150.9 %
                                         
Return on Average Assets
     0.06 %     -0.33 %     0.26 %     -117.5 %     -78.3 %
Return on Average Common Equity
     -1.95 %     -9.14 %     3.56 %     -78.7 %     -154.6 %
Efficiency Ratio
     71.05 %     77.72 %     75.81 %     -8.6 %     -6.3 %
                                         
FINANCIAL DATA - YEAR TO DATE:
                                        
Net Income (Loss) Before Taxes
     (1,979 )     (1,774 )     2,546       11.6 %     -177.7 %
Income Taxes (Benefit)
     (898 )     (559 )     616       60.6 %     -245.8 %
Net Income (Loss)
     (1,081 )     (1,215 )     1,930       -11.0 %     -156.0 %
Preferred Dividends & Discount Accretion
     1,496       1,123       110       33.2 %     1260.0 %
Income Available (Loss Attributable) to Common Shareholders
     (2,577 )     (2,338 )     1,820       10.2 %     -241.6 %
                                         
Net Income (Loss) Per Share - Basic
     (0.36 )     (0.33 )     0.26       9.6 %     -241.1 %
Net Income (Loss) Per Share - Diluted
     (0.36 )     (0.33 )     0.25       9.6 %     -244.5 %
                                         
Return on Average Assets
     -0.12 %     -0.18 %     0.23 %     -33.9 %     -151.8 %
Return on Average Common Equity
    -5.29 %     6.38 %     3.72 %     -182.8 %     -242.1 %
Efficiency Ratio
     75.49 %     77.12 %     71.90 %     -2.1 %     5.0 %
                                         
SHARE INFORMATION:
                                        
Market Price Per Share
     4.02       4.20       3.90       -4.3 %     3.1 %
Dividends Paid Per Share
     -       -       0.10       0.0 %     -100.0 %
Book Value Per Common Share
     6.91       6.88       6.99       0.4 %     -1.2 %
Average Diluted Shares Outstanding (QTD)
     7,126       7,119       7,190       0.1 %     -0.9 %
                                         
CAPITAL RATIOS:
                                        
Total Equity to Total Assets
     7.29 %     7.30 %     7.55 %     -0.1 %     -3.4 %
Leverage Ratio
     8.83 %     9.08 %     9.54 %     -2.8 %     -7.4 %
Tier 1 Risk-Based Capital Ratio
     11.75 %     11.83 %     12.02 %     -0.7 %     -2.2 %
Total Risk-Based Capital Ratio
     13.01 %     13.09 %     13.27 %     -0.6 %     -2.0 %
                                         
CREDIT QUALITY AND RATIOS:
                                        
Nonperforming Assets
     27,026       27,461       16,830       -1.6 %     60.6 %
QTD Net Chargeoffs (annualized) to QTD Average Loans
     0.36 %     0.73 %     0.52 %     -50.5 %     -31.0 %
Allowance for Loan Losses to Total Loans
     2.11 %     1.90 %     1.51 %     11.1 %     40.0 %
Nonperforming Assets to Total Loans and OREO
     4.10 %     4.17 %     2.45 %     -1.5 %     67.4 %
Nonperforming Assets to Total Assets
     2.90 %     2.98 %     1.87 %     -2.4 %     55.1 %
                                         

 
 
 

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

 
 
 

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

 
 
 

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

 
 
 

                                     
 UNITY BANCORP, INC.  
QUARTER TO DATE NET INTEREST MARGIN   
December 31, 2009  
       
       
    For the Three Months Ended   
    December 31, 2009      September 30, 2009    
Amounts in thousands, except percentages
  
Average Balance
    
Interest
    
Rate/Yield
    
Average Balance
    
Interest
    
Rate/Yield
  
                                     
Interest-earning Assets:
                                    
Federal funds sold and interest-bearing deposits
   $ 50,730     $ 41       0.32 %   $ 32,940     $ 32       0.39 %
Federal Home Loan Bank stock
     4,677       54       4.58 %     4,677       101       8.57 %
                                                 
Securities available for sale (A)   
     141,742       1,479       4.17 %     131,360       1,495       4.55 %
Securities held to maturity (A)
     29,369       371       5.05 %     31,418       407       5.18 %
Total securities
     171,111       1,850       4.32 %     162,778       1,902       4.67 %
                                                 
SBA loans
     102,170       1,578       6.18 %     102,691       1,498       5.83 %
SBA 504 loans
     71,295       1,158       6.44 %     71,764       1,147       6.34 %
Commercial loans
     295,718       4,840       6.49 %     301,010       4,973       6.55 %
Residential mortgage loans
     128,871       1,834       5.69 %     123,786       1,772       5.73 %
Consumer loans
     62,038       777       4.97 %     62,459       791       5.02 %
Total loans
     660,092       10,187       6.14 %     661,710       10,181       6.12 %
                                                 
Total Interest-earning Assets
     886,610     $ 12,132       5.45 %     862,105     $ 12,216       5.64 %
                                                 
Noninterest-earning assets:
                                                
Cash and due from banks
     19,273                       18,502                  
Allowance for loan losses
     (13,347 )                     (11,478 )                
Other assets
     35,406                       34,355                  
Total Noninterest-earning Assets
     41,332                       41,379                  
                                                 
Total Assets
   $ 927,942                     $ 903,484                  
                                                 
                                                 
Interest-bearing Liabilities:
                                                
Total interest-bearing checking
   $ 99,196     $ 261       1.04 %   $ 88,284     $ 264       1.19 %
Total savings
     278,710       985       1.40 %     239,427       1,032       1.71 %
Total time deposits
     294,229       2,442       3.29 %     323,484       2,950       3.62 %
Total Interest-bearing Deposits
     672,135       3,688       2.18 %     651,195       4,246       2.59 %
Total borrowings
     100,465       1,078       4.20 %     100,465       1,081       4.21 %
                                                 
Total Interest-bearing Liabilities
     772,600     $ 4,766       2.44 %     751,660     $ 5,327       2.80 %
                                                 
Noninterest-bearing Liabilities:
                                                
Noninterest-bearing checking
     83,770                       79,965                  
Other liabilities
     4,358                       4,945                  
Total Noninterest-bearing Liabilities
     88,128                       84,910                  
                                                 
Total Shareholders' Equity
     67,214                       66,914                  
                                                 
Total Liabilities and Shareholders' Equity
   $ 927,942                     $ 903,484                  
                                                 
Net Interest Spread
             7,366       3.01 %             6,889       2.84 %
Tax-equivalent Basis Adjustment (A)
             (31 )                     (31 )        
Net Interest Income
             7,335                       6,858          
Net Interest Margin
                     3.30 %                     3.17 %
                                                 
                                                 
(A) Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 34 percent and applicable state rates.

 
 
 

                                     
                                     
UNITY BANCORP, INC.  
 QUARTER TO DATE NET INTEREST MARGIN  
 December 31, 2009  
       
       
    For the Three Months Ended    
    December 31, 2009      December 31, 2008    
Amounts in thousands, except percentages
  
Average Balance
    
Interest
    
Rate/Yield
    
Average Balance
    
Interest
    
Rate/Yield
  
                                     
Interest-earning Assets:
                                    
Federal funds sold and interest-bearing deposits
   $ 50,730     $ 41       0.32 %   $ 37,262     $ 67       0.72 %
Federal Home Loan Bank stock
     4,677       54       4.58 %     4,422       6       0.54 %
                                                 
Securities available for sale (A)
     141,742       1,479       4.17 %     76,941       972       5.05 %
Securities held to maturity (A)
     29,369       371       5.05 %     29,962       384       5.13 %
Total securities
     171,111       1,850       4.32 %     106,903       1,356       5.07 %
                                                 
SBA loans
     102,170       1,578       6.18 %     103,682       1,971       7.60 %
SBA 504 loans
     71,295       1,158       6.44 %     78,466       1,438       7.29 %
Commercial loans
     295,718       4,840       6.49 %     310,474       5,279       6.76 %
Residential mortgage loans
     128,871       1,834       5.69 %     131,557       1,963       5.97 %
Consumer loans
     62,038       777       4.97 %     61,114       849       5.53 %
Total loans
     660,092       10,187       6.14 %     685,293       11,500       6.69 %
                                                 
Total Interest-earning Assets
     886,610     $ 12,132       5.45 %     833,880     $ 12,929       6.18 %
                                                 
Noninterest-earning assets:
                                                
Cash and due from banks
     19,273                       21,520                  
Allowance for loan losses
     (13,347 )                     (10,111 )                
Other assets
     35,406                       32,855                  
Total Noninterest-earning Assets
     41,332                       44,264                  
                                                 
Total Assets
   $ 927,942                     $ 878,144                  
                                                 
                                                 
Interest-bearing Liabilities:
                                                
Total interest-bearing checking
   $ 99,196     $ 261       1.04 %   $ 88,166     $ 348       1.57 %
Total savings
     278,710       985       1.40 %     137,602       603       1.74 %
Total time deposits
     294,229       2,442       3.29 %     407,239       4,057       3.96 %
Total Interest-bearing Deposits
     672,135       3,688       2.18 %     633,007       5,008       3.15 %
Total borrowings
     100,465       1,078       4.20 %     110,802       1,154       4.08 %
                                                 
Total Interest-bearing Liabilities
     772,600     $ 4,766       2.44 %     743,809     $ 6,162       3.29 %
                                                 
Noninterest-bearing Liabilities:
                                                
Noninterest-bearing checking
     83,770                       78,351                  
Other liabilities
     4,358                       3,058                  
Total Noninterest-bearing Liabilities
     88,128                       81,409                  
                                                 
Total Shareholders' Equity
     67,214                       52,926                  
                                                 
Total Liabilities and Shareholders' Equity
   $ 927,942                     $ 878,144                  
                                                 
Net Interest Spread
             7,366       3.01 %             6,767       2.90 %
Tax-equivalent Basis Adjustment (A)
             (31 )                     (31 )        
Net Interest Income
             7,335                       6,736          
Net Interest Margin
                     3.30 %                     3.23 %
                                                 
                                                 
(A) Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 34 percent and applicable state rates.

 
 
 

UNITY BANCORP, INC.  
YEAR TO DATE NET INTEREST MARGIN       
 December 31, 2009  
                                     
                                     
                                     
    December 31, 2009      December 31, 2008   
Amounts in thousands, except percentages
  
Average Balance
    
Interest
    
Rate/Yield
    
Average Balance
    
Interest
    
Rate/Yield
  
                                     
Interest-earning Assets:
                                    
Federal funds sold and interest-bearing deposits
   $ 27,163     $ 117       0.43 %   $ 26,686     $ 471       1.76 %
Federal Home Loan Bank stock
     5,061       277       5.47 %     4,353       240       5.51 %
                                                 
Securities available for sale (A)
     135,537       6,189       4.57 %     74,243       3,761       5.07 %
Securities held to maturity (A)
     32,292       1,593       4.93 %     31,710       1,654       5.22 %
Total securities
     167,829       7,782       4.64 %     105,953       5,415       5.11 %
                                                 
SBA loans
     103,031       6,246       6.06 %     101,430       8,370       8.25 %
SBA 504 loans
     73,517       4,821       6.56 %     74,617       5,572       7.47 %
Commercial loans
     301,340       19,881       6.60 %     308,751       21,424       6.94 %
Residential mortgage loans
     126,474       7,252       5.73 %     100,110       5,971       5.96 %
Consumer loans
     62,481       3,160       5.06 %     59,291       3,462       5.84 %
Total loans
     666,843       41,360       6.20 %     644,199       44,799       6.95 %
                                                 
Total Interest-earning Assets
   $ 866,896     $ 49,536       5.71 %   $ 781,191     $ 50,925       6.52 %
                                                 
Noninterest-earning assets:
                                                
Cash and due from banks
     18,948                       17,529                  
Allowance for loan losses
     (11,721 )                     (9,179 )                
Other assets
     33,913                       31,667                  
Total Noninterest-earning Assets
     41,140                       40,017                  
                                                 
Total Assets
   $ 908,036                     $ 821,208                  
                                                 
                                                 
Interest-bearing Liabilities:
                                                
Total interest-bearing checking
   $ 89,500     $ 1,063       1.19 %   $ 84,336     $ 1,468       1.74 %
Total savings
     214,274       3,574       1.67 %     168,784       3,644       2.16 %
Total time deposits
     341,233       12,523       3.67 %     330,174       13,836       4.19 %
Total Interest-bearing Deposits
     645,007       17,160       2.66 %     583,294       18,948       3.25 %
Total borrowings
     112,403       4,422       3.88 %     108,214       4,526       4.18 %
                                                 
Total Interest-bearing Liabilities
   $ 757,410     $ 21,582       2.84 %   $ 691,508     $ 23,474       3.39 %
                                                 
Noninterest-bearing Liabilities:
                                                
Noninterest-bearing checking
     79,252                       78,282                  
Other liabilities
     4,313                       2,531                  
Total Noninterest-bearing Liabilities
     83,565                       80,813                  
                                                 
Total Shareholders' Equity
     67,061                       48,887                  
                                                 
Total Liabilities and Shareholders' Equity
   $ 908,036                     $ 821,208                  
                                                 
Net Interest Spread
           $ 27,954       2.87 %           $ 27,451       3.13 %
Tax-equivalent Basis Adjustment (A)
             (126 )                     (160 )        
Net Interest Income
           $ 27,828                     $ 27,291          
Net Interest Margin
                     3.22 %                     3.51 %
                                                 
                                                 
(A) Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 34 percent and applicable state rates.

 
 
 

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

 
 
 

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