ex99-1.htm

Unity Bancorp, Inc.

64 Old Highway 22

Clinton, NJ 08809

800 618-BANK

www.unitybank.com

NewsNewsNewsNewsNews

For Immediate Release:

July 28, 2011

News Media & Financial Analyst Contact:

Alan J. Bedner, EVP

Chief Financial Officer

(908) 713-4308

Unity Bancorp Reports Second Quarter and Six Month Results

Clinton, NJ - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income available to common shareholders of $249 thousand, or $0.03 per diluted share, for the quarter ended June 30, 2011, compared to net income available to common shareholders of $302 thousand, or $0.04 per diluted share for the same period a year ago. Return on average assets and average common equity for the quarter were 0.32% and 1.95%, respectively.

For the six months ended June 30, 2011, Unity reported net income available to common shareholders of $85 thousand or $.01 per diluted share compared to net income available to common shareholders of $677 thousand, or $.09 per diluted share for the same period a year ago.

Net income available to common shareholders for both periods was adversely impacted by Unity’s decision during the second quarter to close two of its underperforming branches. The closures will take place in the third quarter. As a result of this decision, $215 thousand in residual lease and fixed asset disposal expenses were realized in the second quarter. Excluding these expenses, net income available to common shareholders for the three month period ending June 30, 2011, would have been $399 thousand or $.05 per diluted share. For the six month period, net income available to common shareholders would have been $236 thousand or $.03 per diluted share.

James A. Hughes, President and CEO, stated, “Many of our borrowers continue to face the challenges of a difficult economic environment resulting in elevated loan loss provisions.” Mr. Hughes continued, “On a positive note, during the quarter, we continued to report an improving margin. In addition, in the third quarter we are closing two of our unprofitable branches (Colonia and Springfield) which will result in future cost savings. The two branches had combined deposits of $39.1 million, half of which we expect to retain.”

Net Interest Income

Net interest income for the quarter and six months ended June 30, 2011, improved due to expanded spreads as our funding costs fell. Net interest income increased $208 thousand to $7.5 million and $219 thousand to $14.9 million for the three and six months ended June 30, 2011, respectively. Factors affecting net interest income for the quarter and year-to-date periods included:

·	The yield on earning assets was flat at 5.28% for the quarter ended June 30, 2011 compared to the same period a year ago. For the six month period, the yield on earning assets fell 6 basis points to 5.31%.

·	The cost of interest-bearing liabilities decreased in each period: 37 basis points for the quarter to 1.67% for 2011 and 43 basis points year-to-date to 1.69%.

·	Average interest earning assets fell $55.3 million and $64.0 million during the three and six month periods, respectively.

·	Net interest margin expanded 37 basis points to 3.88% for the quarter and 36 basis points to 3.90% for the six months ended June 30, 2011.

Noninterest Income

For the three months ended March 31, 2011, noninterest income amounted to $1.4 million, an increase of $277 thousand from the prior year’s period. Noninterest income was affected by the following factors:

·	Branch fee income, which consists of deposit service charge and overdraft fees, increased 1.8 percent compared to the prior year’s quarter, as increased overdraft activity offset reduced deposit account service charges.

·	Service and loan fee income increased $139 thousand compared to the prior year’s period due to higher levels of payoff and other processing related fees.

·	Gains on sales on SBA loans amounted to $399 thousand on $4.9 million in sales, compared to $147 thousand on $1.4 million in sales the prior period.

·	Gains on the sales of residential mortgage loans amounted to $87 thousand, compared to $112 thousand from the prior year period.

·	Losses on the sales of investment securities amounted to $39 thousand, compared to gains of $4 thousand in the prior quarter.

For the six months ended June 30, 2011, noninterest income amounted to $2.7 million, an increase of $622 thousand from the prior year’s period. Noninterest income was affected by the following factors:

·	Branch fee income decreased 1.7 percent to $680 thousand due to lower deposit account service charge activity.

·	Service and loan fee income increased $173 thousand compared to the prior year’s period due to higher levels of payoff and other processing related fees.

·	Gains on sales on SBA loans amounted to $510 thousand on $6.0 million in sales, compared to $147 thousand on $1.4 million in sales the prior period.

·	Gains on the sales of residential mortgages were $256 thousand, flat from the prior period.

·	Gains on the sales of investment securities amounted to $87 thousand, compared to $8 thousand in the prior year period.

Noninterest Expense

Noninterest expense for the three and six month periods ended June 30, 2011 was adversely impacted by the decision to close two underperforming branches. These expenses totaled $215 thousand and include the residual lease obligation and fixed asset disposals. Noninterest expenses would have been flat for the quarterly periods and would have increased $210 thousand or 1.75% for the six month period had the decision not been made.

For the three months ended June 30, 2011, noninterest expenses were $6.2 million, an increase of $207 thousand or 3.4% from the same period a year ago. The following factors affected our noninterest expense:

·	Compensation and benefits expense amounted to $2.9 million, an increase of $58 thousand or 2.1%, due to higher employee medical benefits costs and increased residential mortgage commissions.

·	Occupancy expense increased $219 thousand or 36.0% due to branch closure related expenses.

·	OREO expense increased $66 thousand, due to increased real estate carrying costs and valuation adjustments.

For the six months ended June 30, 2011, noninterest expenses were $12.4 million, an increase of $425 thousand or 3.5% from the same period a year ago. The following factors affected our noninterest expense:

·	Compensation and benefits expense amounted to $5.9 million, an increase of $116 thousand or 2.0%, due to higher employee medical benefits costs and increased residential mortgage commissions.

·	Occupancy expense increased $261 thousand, or 20.3%, due to branch closure related expenses and snow removal expenses.

·	OREO expense increased $258 thousand, due to increased real estate carrying costs and valuation adjustments.

Financial Condition

At June 30, 2011, total assets were $806.2 million, a 1.5% decrease from the prior year-end.

Total loans decreased $831 thousand, or 0.1%, from $615.9 million at December 31, 2010 to $615.1 million at June 30, 2011. The decrease occurred across the following loan categories with SBA 7(a), SBA 504 and consumer loans decreasing 1.1%, 13.2%, and 7.8%, respectively. Commercial loans increased 2.3% while residential mortgage loans increased 5.0%. Loan demand continues to be sluggish due to the weak economy.

·	Total securities decreased $13.1 million since December 31, 2010, due to sales and prepayments.

Core deposits, excluding time deposits, decreased $268 thousand during the six month period to $473.9 million. The decrease was due primarily to a $8.3 million increase in savings deposits and a $3.3 million increase in noninterest-bearing demand deposits, offset by an $11.8 million decrease in interest-bearing demand deposits. Time deposits decreased $13.4 million for the six months ended June 30, 2011 due to planned run off of a maturing high rate promotion that was completed late in 2008 to bolster liquidity.

·	Shareholders’ equity was $72.2 million at June 30, 2011, an increase of $2.1 million from year-end 2010, primarily due to the increase in other comprehensive income.

·	Book value per common share was $7.14 as of June 30, 2011.

·	At June 30, 2011 the leverage, Tier I and Total Risk Based Capital ratios were 10.41%, 13.41% and 14.68%, respectively, all in excess of the ratios required to be deemed “well-capitalized”.

Credit Quality

·	Nonperforming assets totaled $27.8 million at June 30, 2011, or 4.50% of total loans and OREO, compared to $29.8 million or 4.65% of total loans and OREO a year ago.

·	The SBA, SBA 504, commercial, residential mortgage and consumer nonaccrual loans were $7.9 million, $4.0 million, $8.9 million, $4.0 million and $270 thousand, respectively. The majority of nonaccrual loans are secured by real estate.

·	OREO assets totaled $2.7 million at June 30, 2011, a decrease of $1.0 million, compared to $3.7 million a year ago.

The allowance for loan losses totaled $16.0 million at June 30, 2011, or 2.60% of total loans. The provision for loan losses for the quarter ended June 30, 2011 was $1.75 million compared to $1.5 million for the prior year’s quarter. The provision for loan losses for the six months ended June 30, 2011 was $4.3 million compared to $3.0 million for the prior year’s period.

·	Net charge-offs were $1.0 million for the three months ended June 30, 2011, compared to $1.6 million for the same period a year ago. Net charge-offs were $2.6 million for the six months ended June 30, 2011, compared to $2.9 million for the same period a year ago.

Mr. Hughes added, “Unity continues to work diligently to address problem loans. However, the process is slow due to the backlog in the court systems. In addition, real estate values continue to be depressed. 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 the near future.”

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $806 million in assets and $641 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
	June 30, 2011



										June 30, 2011 vs.
										March 31, 2011			June 30, 2010
Amounts in thousands, except percentages and per share amounts	June 30, 2011			March 31, 2011			June 30, 2010			%			%

BALANCE SHEET DATA:
Total assets	$	806,163		$	820,833		$	869,735			-1.8	%		-7.3	%
Total deposits		641,167			656,776			693,232			-2.4	%		-7.5	%
Total loans		615,105			614,522			637,180			0.1	%		-3.5	%
Total securities		115,188			120,815			143,662			-4.7	%		-19.8	%
Total shareholders' equity		72,207			70,381			69,633			2.6	%		3.7	%
Allowance for loan losses		(16,018	)		(15,275	)		(13,946	)		4.9	%		14.9	%

FINANCIAL DATA - QUARTER TO DATE:
Income (loss) before provision (benefit) for income taxes	$	921		$	72		$	893			1179.2	%		3.1	%
Provision (benefit) for income taxes		277			(148	)		212			287.2	%		30.7	%
Net income (loss)		644			220			681			192.7	%		-5.4	%
Preferred stock dividends & discount accretion		395			384			379			2.9	%		4.2	%
Income available (loss attributable) to common shareholders	$	249		$	(164	)	$	302			251.8	%		-17.5	%

Net income (loss) per common share - Basic (1)	$	0.03		$	(0.02	)	$	0.04			250.0	%		-25.0	%
Net income (loss) per common share - Diluted (1)	$	0.03		$	(0.02	)	$	0.04			250.0	%		-25.0	%

Return (loss) on average assets		0.32	%		0.11	%		0.31	%		190.9	%		3.2	%
Return (loss) on average equity (2)		1.95	%		-1.31	%		2.43	%		248.9	%		-19.8	%
Efficiency ratio		69.74	%		71.56	%		71.66	%		-2.5	%		-2.7	%

FINANCIAL DATA - YEAR TO DATE:
Income (loss) before provision (benefit) for income taxes	$	992			-		$	1,826			-			-45.7	%
Provision (benefit) for income taxes		129			-			397			-			-67.5	%
Net income (loss)		863			-			1,429			-			-39.6	%
Preferred stock dividends & discount accretion		778			-			752			-			3.5	%
Income available (loss attributable) to common shareholders	$	85			-		$	677			-			-87.4	%

Net income (loss) per common share - Basic (1)	$	0.01			-		$	0.09			-			-87.5	%
Net income (loss) per common share - Diluted (1)	$	0.01			-		$	0.09			-			-87.9	%

Return (loss) on average assets		0.21	%		-			0.32	%		-			-34.4	%
Return (loss) on average equity (2)		0.34	%		-			2.76	%		-			-87.7	%
Efficiency ratio		70.64	%		-			71.32	%		-			-1.0	%

SHARE INFORMATION:
Market price per share		6.79			6.95			5.35			-2.3	%		26.9	%
Dividends paid		-			-			-			0.0	%		0.0	%
Book value per common share		7.14			7.09			7.11			0.7	%		0.4	%
Average diluted shares outstanding (QTD)		7,710			7,219			7,475			6.8	%		3.1	%

CAPITAL RATIOS:
Total equity to total assets		8.96	%		8.57	%		8.01	%		4.5	%		11.9	%
Leverage ratio		10.41	%		10.15	%		9.43	%		2.6	%		10.4	%
Tier 1 risk-based capital ratio		13.41	%		13.04	%		12.39	%		2.8	%		8.2	%
Total risk-based capital ratio		14.68	%		14.30	%		13.65	%		2.7	%		7.5	%

CREDIT QUALITY AND RATIOS:
Nonperforming assets	$	27,821		$	26,525		$	29,799			4.9	%		-6.6	%
QTD net chargeoffs (annualized) to QTD average loans		0.66	%		1.05	%		1.00	%		-37.1	%		-34.5	%
Allowance for loan losses to total loans		2.60	%		2.49	%		2.19	%		4.8	%		19.0	%
Nonperforming assets to total loans and OREO		4.50	%		4.30	%		4.65	%		4.8	%		-3.1	%
Nonperforming assets to total assets		3.45	%		3.23	%		3.43	%		6.8	%		0.7	%


(1) Defined as net income adjusted for dividends accrued and accretion of discount on perpetual preferred stock divided by weighted average shares outstanding.
(2) Defined as net income adjusted for dividends accrued and accretion of discount on perpetual preferred stock divided by average shareholders' equity (excluding preferred stock).

	UNITY BANCORP, INC.
	CONSOLIDATED BALANCE SHEETS
	June 30, 2011



										June 30, 2011 vs.
										March 31, 2011			June 30, 2010
Amounts in thousands, except percentages	June 30, 2011			March 31, 2011			June 30, 2010			%			%

ASSETS
Cash and due from banks	$	12,915		$	15,478		$	18,016			-16.6	%		-28.3	%
Federal funds sold and interest-bearing deposits		33,367			39,880			37,478			-16.3	%		-11.0	%
Cash and cash equivalents		46,282			55,358			55,494			-16.4	%		-16.6	%

Securities available for sale		101,872			103,238			121,628			-1.3	%		-16.2	%
Securities held to maturity		13,316			17,577			22,034			-24.2	%		-39.6	%
Total securities		115,188			120,815			143,662			-4.7	%		-19.8	%

SBA loans held for sale		13,753			9,933			22,093			38.5	%		-37.7	%
SBA loans held to maturity		71,429			74,657			73,298			-4.3	%		-2.5	%
SBA 504 loans		55,810			60,092			65,343			-7.1	%		-14.6	%
Commercial loans		287,785			283,135			285,173			1.6	%		0.9	%
Residential mortgage loans		134,782			132,512			132,993			1.7	%		1.3	%
Consumer loans		51,546			54,193			58,280			-4.9	%		-11.6	%
Total loans		615,105			614,522			637,180			0.1	%		-3.5	%
Allowance for loan losses		(16,018	)		(15,275	)		(13,946	)		4.9	%		14.9	%
Net loans		599,087			599,247			623,234			0.0	%		-3.9	%

Premises and equipment, net		10,650			10,782			11,348			-1.2	%		-6.2	%
Bank owned life insurance (BOLI)		8,959			8,885			8,653			0.8	%		3.5	%
Deferred tax assets		6,756			7,833			7,485			-13.7	%		-9.7	%
Federal Home Loan Bank stock		4,088			4,206			4,656			-2.8	%		-12.2	%
Accrued interest receivable		3,692			3,725			3,972			-0.9	%		-7.0	%
Other real estate owned (OREO)		2,722			2,602			3,728			4.6	%		-27.0	%
Prepaid FDIC insurance		2,720			2,994			3,836			-9.2	%		-29.1	%
Goodwill and other intangibles		1,537			1,541			1,552			-0.3	%		-1.0	%
Other assets		4,482			2,845			2,115			57.5	%		111.9	%

Total assets	$	806,163		$	820,833		$	869,735			-1.8	%		-7.3	%

LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing demand deposits	$	94,547		$	91,247		$	87,908			3.6	%		7.6	%
Interest-bearing demand deposits		93,730			101,878			98,316			-8.0	%		-4.7	%
Savings deposits		285,651			293,750			291,355			-2.8	%		-2.0	%
Time deposits, under $100,000		106,880			110,050			143,617			-2.9	%		-25.6	%
Time deposits, $100,000 and over		60,359			59,851			72,036			0.8	%		-16.2	%
Total deposits		641,167			656,776			693,232			-2.4	%		-7.5	%

Borrowed funds		75,000			75,000			87,672			0.0	%		-14.5	%
Subordinated debentures		15,465			15,465			15,465			0.0	%		0.0	%
Accrued interest payable		570			569			661			0.2	%		-13.8	%
Accrued expenses and other liabilities		1,754			2,642			3,072			-33.6	%		-42.9	%
Total liabilities		733,956			750,452			800,102			-2.2	%		-8.3	%

Cumulative perpetual preferred stock		19,278			19,146			18,770			0.7	%		2.7	%
Common stock		53,590			52,842			55,592			1.4	%		-3.6	%
Retained earnings (deficit)		(1,757	)		(2,006	)		(815	)		12.4	%		-115.6	%
Treasury stock, at cost		-			-			(4,169	)		0.00	%		100.0	%
Accumulated other comprehensive income (loss)		1,096			399			255			174.7	%		329.8	%
Total shareholders' equity		72,207			70,381			69,633			2.6	%		3.7	%

Total liabilities and shareholders' equity	$	806,163		$	820,833		$	869,735			-1.8	%		-7.3	%

Issued common shares		7,412			7,222			7,579
Outstanding common shares		7,412			7,222			7,154
Treasury shares		-			-			425

	UNITY BANCORP, INC.
	QTD CONSOLIDATED STATEMENTS OF INCOME
	June 30, 2011


										June 30, 2011 vs.
	For the Three Months Ended									March 31, 2011					June 30, 2010
Amounts in thousands, except percentages and per share amounts	June 30, 2011			March 31, 2011			June 30, 2010			$			%		$			%

INTEREST INCOME
Federal funds sold and interest-bearing deposits	$	9		$	11		$	29		$	(2	)	-18.2	%	$	(20	)	-69.0	%
Federal Home Loan Bank stock		35			66			49			(31	)	-47.0	%		(14	)	-28.6	%

Securities available for sale		891			864			1,054			27		3.1	%		(163	)	-15.5	%
Securities held to maturity		180			287			250			(107	)	-37.3	%		(70	)	-28.0	%
Total securities		1,071			1,151			1,304			(80	)	-7.0	%		(233	)	-17.9	%

SBA loans		1,191			1,236			1,300			(45	)	-3.6	%		(109	)	-8.4	%
SBA 504 loans		834			955			1,091			(121	)	-12.7	%		(257	)	-23.6	%
Commercial loans		4,581			4,306			4,488			275		6.4	%		93		2.1	%
Residential mortgage loans		1,846			1,831			1,959			15		0.8	%		(113	)	-5.8	%
Consumer loans		629			686			724			(57	)	-8.3	%		(95	)	-13.1	%
Total loans		9,081			9,014			9,562			67		0.7	%		(481	)	-5.0	%

Total interest income		10,196			10,242			10,944			(46	)	-0.4	%		(748	)	-6.8	%

INTEREST EXPENSE
Interest-bearing demand deposits		143			139			188			4		2.9	%		(45	)	-23.9	%
Savings deposits		584			581			728			3		0.5	%		(144	)	-19.8	%
Time deposits		1,045			1,097			1,687			(52	)	-4.7	%		(642	)	-38.1	%
Borrowed funds and subordinated debentures		953			950			1,078			3		0.3	%		(125	)	-11.6	%
Total interest expense		2,725			2,767			3,681			(42	)	-1.5	%		(956	)	-26.0	%

Net interest income		7,471			7,475			7,263			(4	)	-0.1	%		208		2.9	%
Provision for loan losses		1,750			2,500			1,500			(750	)	-30.0	%		250		16.7	%
Net interest income after provision for loan losses		5,721			4,975			5,763			746		15.0	%		(42	)	-0.7	%

NONINTEREST INCOME
Branch fee income		337			344			331			(7	)	-2.0	%		6		1.8	%
Service and loan fee income		384			243			245			141		58.0	%		139		56.7	%
Gain on sale of SBA loans held for sale, net		399			111			147			288		259.5	%		252		171.4	%
Gain on sale of mortgage loans		87			169			112			(82	)	-48.5	%		(25	)	-22.3	%
Bank owned life insurance (BOLI)		74			73			78			1		1.4	%		(4	)	-5.1	%
Net security gains		(39	)		125			4			(164	)	-131.2	%		(43	)	-1075.0	%
Other income		205			190			253			15		7.9	%		(48	)	-19.0	%
Total noninterest income		1,447			1,255			1,170		$	192		15.3	%	$	277		23.7	%

NONINTEREST EXPENSE
Compensation and benefits		2,880			3,057			2,822			(177	)	-5.8	%		58		2.1	%
Occupancy		827			720			608			107		14.9	%		219		36.0	%
Processing and communications		537			507			555			30		5.9	%		(18	)	-3.2	%
Furniture and equipment		410			384			447			26		6.8	%		(37	)	-8.3	%
Professional services		192			202			199			(10	)	-5.0	%		(7	)	-3.5	%
Loan collection costs		201			224			243			(23	)	-10.3	%		(42	)	-17.3	%
OREO expense		223			222			157			1		0.5	%		66		42.0	%
Deposit insurance		282			319			320			(37	)	-11.6	%		(38	)	-11.9	%
Advertising		205			118			241			87		73.7	%		(36	)	-14.9	%
Other expenses		490			405			448			85		21.0	%		42		9.4	%
Total noninterest expense		6,247			6,158			6,040			89		1.4	%		207		3.4	%

Income (loss) before provision (benefit) for income taxes		921			72			893			849		1179.2	%		28		3.1	%
Provision (benefit) for income taxes		277			(148	)		212			425		287.2	%		65		30.7	%
Net income (loss)		644			220			681			424		192.7	%		(37	)	-5.4	%
Preferred stock dividends & discount accretion		395			384			379			11		2.9	%		16		4.2	%
Income available (loss attributable) to common shareholders	$	249		$	(164	)	$	302		$	413		251.8	%	$	(53	)	-17.5	%

Effective tax rate		30.1	%		-205.6	%		23.7	%

Net income (loss) per common share - Basic	$	0.03		$	(0.02	)	$	0.04
Net income (loss) per common share - Diluted	$	0.03		$	(0.02	)	$	0.04

Weighted average common shares outstanding - Basic		7,271			7,219			7,156
Weighted average common shares outstanding - Diluted		7,710			7,219			7,475

UNITY BANCORP, INC.
YTD CONSOLIDATED STATEMENTS OF INCOME
June 30, 2011



	Current YTD			Prior YTD			Current YTD VS. Prior YTD
Amounts in thousands, except percentages and per share amounts	June 30, 2011			June 30, 2010						$		%

INTEREST INCOME
Federal funds sold and interest-bearing deposits	$	20		$	55		$	(35	)		-63.6	%
Federal Home Loan Bank stock		101			83			18			21.7	%

Securities available for sale		1,754			2,334			(580	)		-24.9	%
Securities held to maturity		468			588			(120	)		-20.4	%
Total securities		2,222			2,922			(700	)		-24.0	%

SBA loans		2,427			2,752			(325	)		-11.8	%
SBA 504 loans		1,789			2,177			(388	)		-17.8	%
Commercial loans		8,887			9,092			(205	)		-2.3	%
Residential mortgage loans		3,677			3,921			(244	)		-6.2	%
Consumer loans		1,315			1,455			(140	)		-9.6	%
Total loans		18,095			19,397			(1,302	)		-6.7	%

Total interest income		20,438			22,457			(2,019	)		-9.0	%

INTEREST EXPENSE
Interest-bearing demand deposits		283			446			(163	)		-36.5	%
Savings deposits		1,165			1,629			(464	)		-28.5	%
Time deposits		2,140			3,500			(1,360	)		-38.9	%
Borrowed funds and subordinated debentures		1,904			2,155			(251	)		-11.6	%
Total interest expense		5,492			7,730			(2,238	)		-29.0	%

Net interest income		14,946			14,727			219			1.5	%
Provision for loan losses		4,250			3,000			1,250			41.7	%
Net interest income after provision for loan losses		10,696			11,727			(1,031	)		-8.8	%

NONINTEREST INCOME
Branch fee income		680			692			(12	)		-1.7	%
Service and loan fee income		627			454			173			38.1	%
Gain on sale of SBA loans held for sale, net		510			147			363			246.9	%
Gain on sale of mortgage loans		256			258			(2	)		-0.8	%
Bank owned life insurance (BOLI)		147			151			(4	)		-2.6	%
Net security gains		87			8			79			987.5	%
Other income		395			370			25			6.8	%
Total noninterest income		2,702			2,080			622			29.9	%

NONINTEREST EXPENSE
Compensation and benefits		5,937			5,821			116			2.0	%
Occupancy		1,546			1,285			261			20.3	%
Processing and communications		1,044			1,080			(36	)		-3.3	%
Furniture and equipment		794			870			(76	)		-8.7	%
Professional services		394			428			(34	)		-7.9	%
Loan collection costs		425			427			(2	)		-0.5	%
OREO expense		445			187			258			138.0	%
Deposit insurance		601			650			(49	)		-7.5	%
Advertising		323			348			(25	)		-7.2	%
Other expenses		897			885			12			1.4	%
Total noninterest expense		12,406			11,981			425			3.5	%

Income before provision for income taxes		992			1,826			(834	)		-45.7	%
Provision for income taxes		129			397			(268	)		-67.5	%
Net income		863			1,429			(566	)		-39.6	%
Preferred stock dividends & discount accretion		778			752			26			3.5	%
Income available to common shareholders	$	85		$	677		$	(592	)		-87.4	%

Effective tax rate		13.0	%		21.7	%

Net income per common share - Basic	$	0.01		$	0.09
Net income per common share - Diluted	$	0.01		$	0.09

Weighted average common shares outstanding - Basic		7,245			7,153
Weighted average common shares outstanding - Diluted		7,688			7,392

	UNITY BANCORP, INC.
	QUARTER TO DATE NET INTEREST MARGIN
	June 30, 2011


	For the Three Months Ended
	June 30, 2011									March 31, 2011
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	$	40,499		$	9			0.09	%	$	33,252		$	11			0.13	%
Federal Home Loan Bank stock		4,097			35			3.43	%		4,206			66			6.36	%

Securities available for sale		103,750			939			3.62	%		105,027			912			3.47	%
Securities held to maturity		14,841			185			4.99	%		19,516			292			5.98	%
Total securities (A)		118,591			1,124			3.79	%		124,543			1,204			3.87	%

SBA loans		85,678			1,191			5.56	%		85,861			1,236			5.76	%
SBA 504 loans		58,999			834			5.67	%		61,998			955			6.25	%
Commercial loans		284,503			4,581			6.46	%		282,605			4,306			6.18	%
Residential mortgage loans		132,386			1,846			5.58	%		130,745			1,831			5.60	%
Consumer loans		52,316			629			4.82	%		54,849			686			5.07	%
Total loans (B)		613,882			9,081			5.93	%		616,058			9,014			5.91	%

Total interest-earning assets	$	777,069		$	10,249			5.28	%	$	778,059		$	10,295			5.34	%

Noninterest-earning assets:
Cash and due from banks		16,243									17,764
Allowance for loan losses		(16,050	)								(15,054	)
Other assets		39,903									39,767
Total noninterest-earning assets		40,096									42,477

Total assets	$	817,165								$	820,536

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	104,149		$	143			0.55	%	$	103,550		$	139			0.54	%
Savings deposits		286,738			584			0.82	%		289,805			581			0.81	%
Time deposits		168,448			1,045			2.49	%		174,620			1,097			2.55	%
Total interest-bearing deposits		559,335			1,772			1.27	%		567,975			1,817			1.30	%
Borrowed funds and subordinated debentures		90,465			953			4.17	%		90,465			950			4.20	%

Total interest-bearing liabilities	$	649,800		$	2,725			1.67	%	$	658,440		$	2,767			1.70	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		92,090									88,797
Other liabilities		4,760									3,530
Total noninterest-bearing liabilities		96,850									92,327

Total shareholders' equity		70,515									69,769

Total liabilities and shareholders' equity	$	817,165								$	820,536

Net interest spread				$	7,524			3.61	%				$	7,528			3.64	%
Tax-equivalent basis adjustment					(53	)								(53	)
Net interest income				$	7,471								$	7,475
Net interest margin								3.88	%								3.92	%

(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
	June 30, 2011


	For the Three Months Ended
	June 30, 2011									June 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	$	40,499		$	9			0.09	%	$	41,695		$	29			0.28	%
Federal Home Loan Bank stock		4,097			35			3.43	%		4,656			49			4.22	%

Securities available for sale		103,750			939			3.62	%		120,333			1,068			3.55	%
Securities held to maturity		14,841			185			4.99	%		23,300			256			4.39	%
Total securities (A)		118,591			1,124			3.79	%		143,633			1,324			3.69	%

SBA loans		85,678			1,191			5.56	%		98,214			1,300			5.29	%
SBA 504 loans		58,999			834			5.67	%		66,318			1,091			6.60	%
Commercial loans		284,503			4,581			6.46	%		285,709			4,488			6.30	%
Residential mortgage loans		132,386			1,846			5.58	%		133,379			1,959			5.87	%
Consumer loans		52,316			629			4.82	%		58,718			724			4.95	%
Total loans (B)		613,882			9,081			5.93	%		642,338			9,562			5.97	%

Total interest-earning assets	$	777,069		$	10,249			5.28	%	$	832,322		$	10,964			5.28	%

Noninterest-earning assets:
Cash and due from banks		16,243									21,959
Allowance for loan losses		(16,050	)								(14,678	)
Other assets		39,903									42,289
Total noninterest-earning assets		40,096									49,570

Total assets	$	817,165								$	881,892

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	104,149		$	143			0.55	%	$	100,108		$	188			0.75	%
Savings deposits		286,738			584			0.82	%		292,543			728			1.00	%
Time deposits		168,448			1,045			2.49	%		227,722			1,687			2.97	%
Total interest-bearing deposits		559,335			1,772			1.27	%		620,373			2,603			1.68	%
Borrowed funds and subordinated debentures		90,465			953			4.17	%		101,907			1,078			4.18	%

Total interest-bearing liabilities	$	649,800		$	2,725			1.67	%	$	722,280		$	3,681			2.04	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		92,090									86,772
Other liabilities		4,760									4,313
Total noninterest-bearing liabilities		96,850									91,085

Total shareholders' equity		70,515									68,527

Total liabilities and shareholders' equity	$	817,165								$	881,892

Net interest spread				$	7,524			3.61	%				$	7,283			3.24	%
Tax-equivalent basis adjustment					(53	)								(20	)
Net interest income				$	7,471								$	7,263
Net interest margin								3.88	%								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.
(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
	June 30, 2011


	For the Six Months Ended
	June 30, 2011									June 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	$	36,896		$	20			0.11	%	$	37,119		$	55			0.30	%
Federal Home Loan Bank stock		4,151			101			4.91	%		4,666			83			3.59	%

Securities available for sale		104,385			1,849			3.54	%		125,784			2,361			3.75	%
Securities held to maturity		17,166			478			5.57	%		25,300			610			4.82	%
Total securities (A)		121,551			2,327			3.83	%		151,084			2,971			3.93	%

SBA loans		85,769			2,427			5.66	%		98,177			2,752			5.61	%
SBA 504 loans		60,490			1,789			5.96	%		68,370			2,177			6.42	%
Commercial loans		283,559			8,887			6.32	%		288,865			9,092			6.35	%
Residential mortgage loans		131,570			3,677			5.59	%		133,991			3,921			5.85	%
Consumer loans		53,576			1,315			4.95	%		59,246			1,455			4.95	%
Total loans (B)		614,964			18,095			5.92	%		648,649			19,397			6.01	%

Total interest-earning assets	$	777,562		$	20,543			5.31	%	$	841,518		$	22,506			5.37	%

Noninterest-earning assets:
Cash and due from banks		16,999									21,961
Allowance for loan losses		(15,555	)								(14,630	)
Other assets		39,835									41,596
Total noninterest-earning assets		41,279									48,927

Total assets	$	818,841								$	890,445

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	103,851		$	283			0.55	%	$	101,343		$	446			0.89	%
Savings deposits		288,263			1,165			0.81	%		290,906			1,629			1.13	%
Time deposits		171,517			2,140			2.52	%		239,682			3,500			2.94	%
Total interest-bearing deposits		563,631			3,588			1.28	%		631,931			5,575			1.78	%
Borrowed funds and subordinated debentures		90,465			1,904			4.19	%		101,207			2,155			4.24	%

Total interest-bearing liabilities	$	654,096		$	5,492			1.69	%	$	733,138		$	7,730			2.12	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		90,453									84,978
Other liabilities		4,148									4,192
Total noninterest-bearing liabilities		94,601									89,170

Total shareholders' equity		70,144									68,137

Total liabilities and shareholders' equity	$	818,841								$	890,445

Net interest spread				$	15,051			3.62	%				$	14,776			3.25	%
Tax-equivalent basis adjustment					(105	)								(49	)
Net interest income				$	14,946								$	14,727
Net interest margin								3.90	%								3.54	%

(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
	June 30, 2011



Amounts in thousands, except percentages	6/30/2011			3/31/2011			12/31/2010			9/30/2010			6/30/2010

ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period	$	15,275		$	14,364		$	14,163		$	13,946		$	14,055
Provision for loan losses charged to expense		1,750			2,500			2,750			1,500			1,500
		17,025			16,864			16,913			15,446			15,555
Less: Chargeoffs
SBA loans		592			711			445			389			517
SBA 504 loans		-			-			798			-			-
Commercial loans		646			848			1,115			989			1,038
Residential mortgage loans		-			142			190			95			115
Consumer loans		131			-			234			9			2
Total chargeoffs		1,369			1,701			2,782			1,482			1,672
Add: Recoveries
SBA loans		71			8			128			17			53
SBA 504 loans		-			-			-			-			-
Commercial loans		291			98			105			178			10
Residential mortgage loans		-			4			-			-			-
Consumer loans		-			2			-			4			-
Total recoveries		362			112			233			199			63
Net chargeoffs		1,007			1,589			2,549			1,283			1,609
Balance, end of period	$	16,018		$	15,275		$	14,364		$	14,163		$	13,946

LOAN QUALITY INFORMATION:
Nonperforming loans	$	25,099		$	23,923		$	21,662		$	27,304		$	26,071
Other real estate owned (OREO)		2,722			2,602			2,346			5,773			3,728
Nonperforming assets		27,821			26,525			24,008			33,077			29,799
Less: Amount guaranteed by Small Business Administration		2,857			3,355			2,706			2,094			1,436
Net nonperforming assets	$	24,964		$	23,170		$	21,302		$	30,983		$	28,363

Loans 90 days past due & still accruing	$	2,858		$	4,248		$	374		$	2,467		$	2,780

Allowance for loan losses to:
Total loans at quarter end		2.60	%		2.49	%		2.33	%		2.25	%		2.19	%
Nonperforming loans		63.82	%		63.85	%		66.31	%		51.87	%		53.49	%
Nonperforming assets		57.58	%		57.59	%		59.83	%		42.82	%		46.80	%
Net nonperforming assets		64.16	%		65.93	%		67.43	%		45.71	%		49.17	%

QTD net chargeoffs (annualized) to QTD average loans:
SBA loans		2.44	%		3.32	%		1.39	%		1.56	%		1.89	%
SBA 504 loans		0.00	%		0.00	%		4.88	%		0.00	%		0.00	%
Commercial loans		0.50	%		1.08	%		1.42	%		1.14	%		1.44	%
Residential mortgage loans		0.00	%		0.43	%		0.58	%		0.29	%		0.35	%
Consumer loans		1.00	%		-0.01	%		1.63	%		0.03	%		0.01	%
Total loans		0.66	%		1.05	%		1.62	%		0.80	%		1.00	%

Nonperforming loans to total loans		4.08	%		3.89	%		3.52	%		4.34	%		4.09	%
Nonperforming assets to total loans and OREO		4.50	%		4.30	%		3.88	%		5.21	%		4.65	%
Nonperforming assets to total assets		3.45	%		3.23	%		2.93	%		3.91	%		3.43	%

	UNITY BANCORP, INC.
	QUARTERLY FINANCIAL DATA
	June 30, 2011



Amounts in thousands, except percentages and per share amounts	6/30/2011			3/31/2011			12/31/2010			9/30/2010			6/30/2010

SUMMARY OF INCOME:
Total interest income	$	10,196		$	10,242		$	10,850		$	10,726		$	10,944
Total interest expense		2,725			2,767			2,990			3,314			3,681
Net interest income		7,471			7,475			7,860			7,412			7,263
Provision for loan losses		1,750			2,500			2,750			1,500			1,500
Net interest income after provision for loan losses		5,721			4,975			5,110			5,912			5,763
Total noninterest income (loss)		1,447			1,255			1,528			1,460			1,170
Total noninterest expense		6,247			6,158			6,602			6,404			6,040
Income (loss) before provision (benefit) for income taxes		921			72			36			968			893
Provision (benefit) for income taxes		277			(148	)		(50	)		242			212
Net income (loss)		644			220			86			726			681
Preferred stock dividends & discount accretion		395			384			385			385			379
Income available (loss attributable) to common shareholders	$	249		$	(164	)	$	(299	)	$	341		$	302

Net income (loss) per common share - Basic	$	0.03		$	(0.02	)	$	(0.04	)	$	0.05		$	0.04
Net income (loss) per common share - Diluted	$	0.03		$	(0.02	)	$	(0.04	)	$	0.05		$	0.04

COMMON SHARE DATA:
Market price per share	$	6.79		$	6.95		$	6.05		$	5.25		$	5.35
Dividends paid	$	-		$	-		$	-		$	-		$	-
Book value per common share	$	7.14		$	7.09		$	7.08		$	7.19		$	7.11
QTD weighted average shares - basic		7,271			7,219			7,209			7,176			7,156
QTD weighted average shares - diluted		7,710			7,219			7,209			7,467			7,475
Outstanding common shares		7,412			7,222			7,211			7,207			7,154

OPERATING RATIOS (Annualized):
Return (loss) on average assets		0.32	%		0.11	%		0.04	%		0.34	%		0.31	%
Return (loss) on average equity		1.95	%		-1.31	%		-2.31	%		2.66	%		2.43	%
Efficiency ratio		69.74	%		71.56	%		70.65	%		72.47	%		71.66	%

BALANCE SHEET DATA:
Total assets	$	806,163		$	820,833		$	818,410		$	846,385		$	869,735
Total deposits		641,167			656,776			654,788			670,158			693,232
Total loans		615,105			614,522			615,936			629,516			637,180
Total securities		115,188			120,815			128,242			134,820			143,662
Total shareholders' equity		72,207			70,381			70,085			70,730			69,633
Allowance for loan losses		(16,018	)		(15,275	)		(14,364	)		(14,163	)		(13,946	)

TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets		5.28	%		5.34	%		5.45	%		5.30	%		5.28	%
Interest-bearing liabilities		1.67	%		1.70	%		1.75	%		1.89	%		2.04	%
Net interest spread		3.61	%		3.64	%		3.70	%		3.41	%		3.24	%
Net interest margin		3.88	%		3.92	%		3.94	%		3.66	%		3.51	%

CREDIT QUALITY:
Nonperforming assets	$	27,821		$	26,525		$	24,008		$	33,077		$	29,799
QTD net chargeoffs (annualized) to QTD average loans		0.66	%		1.05	%		1.62	%		0.80	%		1.00	%
Allowance for loan losses to total loans		2.60	%		2.49	%		2.33	%		2.25	%		2.19	%
Nonperforming assets to total loans and OREO		4.50	%		4.30	%		3.88	%		5.21	%		4.65	%
Nonperforming assets to total assets		3.45	%		3.23	%		2.93	%		3.91	%		3.43	%

CAPITAL RATIOS AND OTHER:
Total equity to total assets		8.96	%		8.57	%		8.56	%		8.36	%		8.01	%
Leverage ratio		10.41	%		10.15	%		9.97	%		9.83	%		9.43	%
Tier 1 risk-based capital ratio		13.41	%		13.04	%		13.04	%		12.67	%		12.39	%
Total risk-based capital ratio		14.68	%		14.30	%		14.30	%		13.93	%		13.65	%
Number of banking offices		16			16			16			16			16
Number of ATMs		17			18			18			18			18
Number of employees		169			170			172			173			165