EX-99.1 2 v081443_ex99-1.htm Unassociated Document
NYTH117 CL-AA 14:07 Unity Bancorp Reports Second Quarter Earnings
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+ NJY ED1 FC1 IRW RWB TNW (UNITY BANCORP 905711 NY)
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j...k/njprn r f bc-NJ-UnityBanc-2Q-Earn 07-19


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17:00 07/19
%
[STK] UNTY
[IN] FIN
[SU] ERN
TO BUSINESS EDITOR:

Unity Bancorp Reports Second Quarter Earnings

CLINTON, N.J., July 19 /PRNewswire-FirstCall/ -- Unity Bancorp, Inc. (Nasdaq: UNTY), parent company of Unity Bank, reported net income of $1.5 million, or $0.21 per diluted share, for the quarter ended June 30, 2007, compared to net income of $1.6 million, or $0.23 per diluted share, for the quarter ended June 30, 2006. Return on average assets and average common equity for the second quarter of 2007 were 0.89% and 13.14%, respectively, as compared to 1.03% and 15.39%, respectively, for the second quarter of 2006.

For the six months ended June 30, 2007, net income was $3.0 million, or $0.41 per diluted share, compared to $3.3 million, or $0.45 per diluted share for the same period a year ago. Return on average assets and average common equity for the six months ended June 30, 2007, were 0.88% and 12.94%, respectively, as compared to 1.05% and 15.82%, respectively, for the prior year's comparable period.

"During the second quarter of 2007, we had significant growth in both our loan and deposit portfolios, in addition to an improvement in credit quality," said Unity President and Chief Executive Officer, James A. Hughes. "Although the rate environment continues to be a challenge, we will continue to grow our earning asset base, which will have a favorable effect on future earnings."

Net interest income was $6.1 million for the second quarter of 2007, consistent from the same period a year ago. Net interest income was benefited by an increase in interest-earning assets offset by a decrease in net interest margin. Net interest margin was 3.71% for the second quarter of 2007, compared to 3.99% for the second quarter of 2006.

Net interest income was $12.1 million for the six months ended June 30, 2007, consistent from the same period a year ago. Net interest income was benefited by an increase in interest-earning assets offset by a decrease in net interest margin. Net interest margin was 3.73% for the six months ended 2007, compared to 4.05% for the same period a year ago.
 
The provision for loan losses for the second quarter of 2007 was $350 thousand, compared to $250 thousand for the second quarter of 2006. Net loan charge-offs for the quarter ended June 30, 2007 were $110 thousand, compared to net charge-offs of $113 thousand for the quarter ended June 30, 2006. The provision for loan losses was $550 thousand for the six months ended June 30, 2007, flat from the same period a year ago. Net loan charge-offs for the six months ended June 30, 2007 were $177 thousand, compared to $185 thousand for the same period a year ago.

 

Total noninterest income for the second quarter of 2007 was $1.7 million, up 6.1%, from the same period a year ago. Service charges on deposits for the second quarter were $339 thousand, a decrease of $70 thousand, compared to the second quarter of 2006, primarily due to fee waivers and the acceleration of the electronic clearing of checks "Check 21". Service and loan fees were $380 thousand for the second quarter of 2007, down $26 thousand from a year ago. Gains on sales of SBA loans amounted to $824 thousand for the second quarter of 2007, compared to $558 thousand for the quarter ended June 30, 2006, primarily due to the higher volume of loans sold, offset by reduced premiums.

Total noninterest income for the six months ended June 30, 2007, was $3.4 million, down 6.1% from the same period a year ago. Service charges on deposits for the six months ended were $688 thousand, a decrease of $154 thousand, compared to the same period a year ago, primarily due to the waiving of fees and the acceleration of Check 21. Service and loan fees were $746 thousand for the second quarter of 2007, down $55 thousand from the same period a year ago. Gains on sales of SBA loans amounted to $1.5 million for the six months ended June 30, 2007, compared to $1.3 million for the same period a year ago, primarily due to the higher volume of loans sold offset by reduced premiums.

Total noninterest expenses for the second quarter of 2007 were $5.3 million, an increase of 5.3% from the prior year's comparable quarter. Compensation and benefits increased 2.2% due to annual cost of living increases and rising health insurance costs, partially offset by a planned reduction in the employee base. Loan servicing costs increased due to collection expenses associated with non-accrual loans.

Total noninterest expenses for the six months ended June 30, 2007, were $10.7 million, an increase of 4.2% from the same period a year ago. Compensation and benefits increased 5.4% due to cost of living increases and rising health insurance costs, partially offset by a planned reduction in the employee base. Processing and communications increased 3.1% due to increased transactional volume due to a larger customer base. Loan servicing costs increased $103 thousand due to collection expenses associated with past due loans.
 
Total assets at June 30, 2007, were $732.4 million, a 9.2% increase from June 30, 2006. The increase in assets from the prior year was primarily due to growth in the Company's loan portfolio. Total loans at June 30, 2007, were $541.4 million, an 11.7% increase from June 30, 2006. The growth in the loan portfolio occurred in commercial, consumer and residential lending.  
 
 
At June 30, 2007, the allowance for loan losses was $8.0 million, or 1.48% of total loans, compared to 1.50% at December 31, 2006 and June 30, 2006. Non-performing assets at June 30, 2007, were $5.0 million, or 0.92% of total loans and other real estate owned, "OREO", a decline of $4.1 million in non performing assets as compared to $9.1 million or 1.80% of total loans and OREO at December 31, 2006, and an increase of $2.4 million in non performing, as compared to $2.6 million or 0.53% of total loans and OREO from June 30, 2006. Included in non-performing assets at June 30, 2007, are approximately $1.5 million of loans guaranteed by the SBA. Credit quality improved during the quarter due to the resolution of certain problem credits.

Total deposits at June 30, 2007, were $596.1 million, a 3.4% increase from June 30, 2006. This increase was primarily the result of growth in time deposits and savings accounts, partially offset by the decline in interest bearing checking accounts and demand deposit accounts. Savings accounts increased $30.4 million, or 16.2% from June 30, 2006, due to a high-yield savings product. Time deposits increased $28.7 million, or 15.1% from June 30, 2006, due to time deposit promotions.

"During the second quarter of 2007, the Company implemented remote deposit capture. We believe this will increase the number of transactional relationships inside and outside of our local market areas," said Mr. Hughes. "In addition, we will be opening our sixteenth branch in the third quarter 2007. This will be our second office in the Lehigh Valley Pennsylvania area."

Total shareholders' equity was $48.2 million at June 30, 2007, an 11.0% increase from June 30, 2006. The increase in shareholders' equity was primarily due to retained profits and an increase in other comprehensive income, partially offset by the payment of cash dividends and the purchase of treasury stock. During the quarter, the Company took advantage of the Company's reduced market valuation and purchased 78 thousand shares of treasury stock.

As of June 30, 2007, the Company's Tier I leverage capital ratio was 9.28%, Tier I risk-based capital ratio was 11.12%, and total risk-based capital ratio was 13.78%. All regulatory capital ratios exceeded the well-capitalized, federal capital adequacy requirements as of June 30, 2007.

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $732 million in assets and $596 million in deposits. Unity Bank provides financial services to retail, corporate and small business customers through its 15 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.
Consolidated Financial Highlights
(Dollars in thousands, except per share data)
 
 
                      
   
Jun. 30,
  
Mar. 31,
  
Jun. 30,
  
Jun. 07
  
vs.
  
   
2007
  
2007
  
2006
  
Mar. 07
  
Jun. 06
  
BALANCE SHEET DATA:
                      
Assets
  
$
732,403
  
$
681,302
  
$
670,870
    
7.5
%
  
9.2
%
Deposits
    
596,093
    
541,399
    
576,376
    
10.1
    
3.4
  
Loans
    
541,385
    
515,562
    
484,622
    
5.0
    
11.7
  
Securities
    
102,730
    
104,318
    
108,979
    
(1.5
)
  
(5.7
)
Shareholders' equity
   
48,242
    
47,825
    
43,446
    
0.9
    
11.0
  
Allowance for loan losses
    
7,997
    
7,757
    
7,257
    
3.1
    
10.2
  
                                 
FINANCIAL DATA - QUARTER TO DATE:
                                
Net income before taxes
  
$
2,218
  
$
2,081
  
$
2,429
    
6.6
%
  
(8.7
)%
Federal and state income tax provision
    
676
    
630
    
792
    
7.3
    
(14.6
)
Net income
    
1,542
    
1,451
    
1,637
    
6.3
    
(5.8
)
Per share-basic
    
0.22
    
0.21
    
0.24
    
4.8
    
(8.3
)
Per share-diluted
    
0.21
    
0.20
    
0.23
    
5.0
    
(8.7
)
Return on average assets
    
0.89
%
  
0.87
%
  
1.03
%
  
2.3
    
(13.6
)
Return on average common equity
    
13.14
    
12.74
    
15.39
    
3.1
    
(14.6
)
Efficiency ratio
    
67.22
    
70.46
    
65.12
    
(4.6
)
  
3.2
  
                                 
FINANCIAL DATA - YEAR TO DATE:
                                
Net income before taxes
  
$
4,299
    
-
  
$
4,928
    
-
    
(12.8
)%
Federal and state income tax provision
   
1,306
    
-
    
1,634
    
-
    
(20.1
)
Net income
    
2,993
    
-
    
3,294
    
-
    
(9.1
)
Per share-basic
    
0.43
    
-
    
0.48
    
-
    
(10.4
)
Per share-diluted
    
0.41
    
-
    
0.45
    
-
    
(8.9
)
Return on average assets
    
0.88
%
  
-
    
1.05
%
  
-
    
(16.2
)
Return on average common equity
    
12.94
    
-
    
15.82
    
-
    
(18.2
)
Efficiency ratio
    
68.83
    
-
    
65.19
    
-
    
5.6
  
                                 
SHARE INFORMATION:
                                
Closing price per share
  
$
11.45
  
$
11.30
  
$
14.75
    
1.4
%
  
(22.4
)%
Cash dividends declared
    
0.05
    
0.05
    
0.05
    
-
    
-
  
Book value per share
    
6.87
    
6.84
    
6.29
    
0.4
    
9.2
  
Average diluted shares outstanding (QTD)
    
7,295
    
7,301
    
7,250
    
(0.1
)
  
0.6
  
                                 
CAPITAL RATIOS:
                                
Total equity to total assets
    
6.59
%
  
7.02
%
  
6.48
%
  
(6.1
)%
  
1.7
%
Tier I capital to average assets (leverage)
    
9.28
    
9.24
    
8.22
    
0.4
    
12.9
  
Tier I capital to risk-adjusted assets
   
11.12
    
11.43
    
9.85
    
(2.7
)
  
12.9
  
Total risk-based capital
    
13.78
    
14.21
    
11.10
    
(3.0
)
  
24.1
  
                                 
CREDIT QUALITY AND RATIOS:
                                
Nonperforming assets
 
$
4,977
  
$
6,771
  
$
2,552
    
(26.5
)%
  
95.0
%
Net charge offs to average loans (QTD)
    
0.08
%
  
0.05
%
  
0.10
%
  
60.0
    
(20.0
)
Allowance for loan losses to total loans
   
1.48
    
1.50
    
1.50
    
(1.3
)
  
(1.3
)
Nonperforming assets to total loans and OREO
    
0.92
    
1.31
    
0.53
    
(29.8
)
  
73.6
  


Unity Bancorp, Inc.
Consolidated Balance Sheets
(In thousands)
 
 
 
Jun. 30,
 
Mar. 31,
 
Jun. 30,
 
Jun. 07
 
vs.
 
 
 
2007
 
2007
 
2006
 
Mar. 07
 
Jun. 06
  
ASSETS
                      
Cash and due from banks
  
$
14,696
  
$
15,697
  
$
13,709
    
(6.4
)%
  
7.2
%
Federal funds sold and interest bearing deposits
   
51,063
    
23,417
    
42,631
   
118.1
    
19.8
  
Securities:
                                
Available for sale
    
66,199
    
66,197
    
68,104
    
-
    
(2.8
)
Held to maturity
    
36,531
    
38,121
    
40,875
   
(4.2
)
  
(10.6
)
Total securities
    
102,730
   
104,318
   
108,979
   
(1.5
)
  
(5.7
)
Loans:
                                
SBA - Held for sale
    
8,914
    
9,298
    
24,384
   
(4.1
)
  
(63.4
)
SBA - Held to Maturity
    
66,634
    
68,314
    
59,111
   
(2.5
)
  
12.7
  
Commercial
    
342,328
   
318,905
   
297,826
    
7.3
    
14.9
  
Residential mortgage
    
69,417
    
63,615
    
55,966
    
9.1
    
24.0
  
Consumer
    
54,092
    
55,430
    
47,335
   
(2.4
)
  
14.3
  
Total loans
    
541,385
   
515,562
   
484,622
    
5.0
    
11.7
  
Less: Allowance for loan losses
    
7,997
    
7,757
    
7,257
    
3.1
    
10.2
  
Net loans
    
533,388
   
507,805
   
477,365
    
5.0
    
11.7
  
Goodwill and other intangibles
    
1,596
    
1,599
    
1,611
   
(0.2
)
  
(0.9
)
Premises and equipment, net
    
11,614
    
11,525
    
10,954
    
0.8
    
6.0
  
Accrued interest receivable
    
3,687
    
3,594
    
3,460
    
2.6
    
6.6
  
Loan servicing asset
    
2,289
    
2,261
    
2,424
    
1.2
    
(5.6
)
Bank Owned Life Insurance
    
5,467
    
5,421
    
5,279
    
0.8
    
3.6
  
Other assets
    
5,873
    
5,665
    
4,458
    
3.7
    
31.7
  
Total Assets
  
$
732,403
  
$
681,302
  
$
670,870
    
7.5
%
  
9.2
%
                                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                                
Deposits:
                                
Noninterest-bearing demand deposits
  
$
74,731
  
$
75,928
  
$
81,721
    
(1.6
)%
  
(8.6
)%
Interest-bearing deposits:
                                
Interest bearing checking
    
84,107
    
89,313
   
116,497
   
(5.8
)
  
(27.8
)
Savings
    
218,273
   
214,636
   
187,841
    
1.7
    
16.2
  
Time, under $100,000
    
138,440
   
105,724
    
124,652
    
30.9
    
11.1
  
Time, $100,000 and over
    
80,542
    
55,798
    
65,665
   
44.3
    
22.7
  
Total deposits
    
596,093
   
541,399
   
576,376
   
10.1
    
3.4
  
Borrowed funds and subordinated debentures
    
84,744
    
89,744
    
49,279
   
(5.6
)
  
72.0
  
Accrued interest payable
    
595
    
523
    
313
   
13.8
    
90.1
  
Accrued expenses and other liabilities
    
2,729
    
1,811
    
1,456
   
50.7
    
87.4
  
Total liabilities
    
684,161
   
633,477
   
627,424
    
8.0
    
9.0
  
Commitments and Contingencies
    
-
    
-
    
-
              
                                 
Shareholders' equity:
                                
Common stock, no par value, 12,500 shares authorized
    
49,087
    
44,677
    
43,866
    
9.9
    
11.9
  
Retained earnings
    
1,435
    
4,067
    
1,555
   
(64.7
)
  
(7.7
)
Treasury stock at cost
    
(1,121
)
  
(242
)
  
(242
)
  
363.2
    
363.2
  
Accumulated other comprehensive loss, net of tax
    
(1,159
)
  
(677
)
  
(1,733
)
  
71.2
    
(33.1
)
Total shareholders' equity
    
48,242
    
47,825
    
43,446
    
0.9
    
11.0
  
Total Liabilities and Shareholders' Equity
  
$
732,403
  
$
681,302
  
$
670,870
    
7.5
%
  
9.2
%
                                 
COMMON SHARES AT PERIOD END:
                                
Issued
    
7,122
    
7,019
    
6,932
              
Outstanding
    
7,020
    
6,995
    
6,908
              
Treasury
    
102
    
24
    
24
              
 
N/M= Not meaningful

 
Unity Bancorp, Inc. 
Consolidated Statements of Income
(In thousands, except per share data) 
 
                       
   
Jun. 30,
  
Mar. 31,
  
Jun. 30,
  
Jun. 07
 
vs.
  
FOR THE THREE MONTHS ENDED:
  
2007
  
2007
  
2006
  
Mar. 07
 
Jun. 06
  
INTEREST INCOME
                      
Fed funds sold and interest on deposits
  
$
221
  
$
262
  
$
354
    
(15.6
)%
  
(37.6
)%
Securities:
                                
Available for sale
    
778
    
780
    
709
    
(0.3
)
  
9.7
  
Held to maturity
    
478
    
540
    
467
 
  
(11.5
)
2.4
  
Total securities
    
1,256
    
1,320
    
1,176
    
(4.8
)
  
6.8
  
Loans:
                                
SBA
    
2,202
    
2,340
    
2,179
    
(5.9
)
  
1.1
  
Commercial
    
6,378
    
5,988
    
5,368
    
6.5
    
18.8
  
Residential mortgage
    
967
    
888
    
788
    
8.9
    
22.7
  
Consumer
    
951
    
904
    
779
    
5.2
    
22.1
  
Total loan interest income 
   
10,498
    
10,120
    
9,114
    
3.7
    
15.2
  
Total interest income
    
11,975
   
11,702
   
10,644
    
2.3
    
12.5
  
INTEREST EXPENSE
                                
Interest bearing demand deposits
    
477
    
552
    
653
   
(13.6
)
  
(27.0
)
Savings deposits
    
2,122
    
2,171
    
1,704
    
(2.3
)
  
24.5
  
Time deposits
    
2,153
    
1,970
    
1,671
    
9.3
    
28.8
  
Borrowed funds and subordinated debentures
    
1,136
    
990
    
583
    
14.7
    
94.9
  
Total interest expense
    
5,888
    
5,683
    
4,611
    
3.6
    
27.7
  
Net interest income
    
6,087
    
6,019
    
6,033
    
1.1
    
0.9
  
Provision for loan losses
    
350
    
200
    
250
    
75.0
    
40.0
  
Net interest income after provision for loan losses
    
5,737
    
5,819
    
5,783
    
(1.4
)
  
(0.8
)
NONINTEREST INCOME
                                
Service charges on deposit accounts
    
339
    
349
    
409
    
(2.9
)
  
(17.1
)
Service and loan fee income
    
380
    
366
    
406
    
3.8
    
(6.4
)
Gain on SBA loan sales
    
824
    
679
    
558
    
21.4
    
47.7
  
Gain on Mortgage loan sales
    
19
    
9
    
110
   
111.1
    
(82.7
)
Gain on sales of other loans
    
-
    
-
    
-
    
-
    
(100.0
)
Bank owned life insurance
    
46
    
49
    
47
    
(6.1
)
  
(2.1
)
Net securities gains
    
-
    
10
    
-
   
100.0
    
100.0
  
Other income
    
140
    
217
    
117
   
(35.5
)
  
19.7
  
Total noninterest income
    
1,748
    
1,679
    
1,647
    
4.1
    
6.1
  
NONINTEREST EXPENSES
                                
Compensation and benefits
    
2,723
    
2,955
    
2,664
    
(7.9
)
  
2.2
  
Processing and communications
    
563
    
550
    
553
    
2.4
    
1.8
  
Occupancy, net
    
644
    
673
    
646
    
(4.3
)
  
(0.3
)
Furniture and equipment
    
394
    
400
    
381
    
(1.5
)
  
3.4
  
Professional fees
    
162
    
136
    
151
    
19.1
    
7.3
  
Loan servicing costs
    
169
    
90
    
55
    
87.8
    
207.3
  
Advertising
    
105
    
94
    
148
    
11.7
    
(29.1
)
Other
    
507
    
519
    
403
    
(2.3
)
  
25.8
  
Total noninterest expenses
    
5,267
    
5,417
    
5,001
    
(2.8
)
  
5.3
  
Income before taxes
    
2,218
    
2,081
    
2,429
    
6.6
    
(8.7
)
Federal and state income tax provision
    
676
    
630
    
792
    
7.3
    
(14.6
)
Net Income
  
$
1,542
  
$
1,451
  
$
1,637
    
6.3
%
  
(5.8
)%
                                 
Net Income Per Common Share- Basic
  
$
0.22
  
$
0.21
  
$
0.24
    
4.8
%
  
(8.3
)%
Net Income Per Common Share- Diluted
  
$
0.21
  
$
0.20
  
$
0.23
    
5.0
%
  
(8.7
)%
                                 
AVERAGE COMMON SHARES OUTSTANDING:
                                
Basic
    
6,985
    
6,976
    
6,903
              
Diluted
    
7,295
    
7,301
    
7,250
              
 
Federal and state income tax
 

Unity Bancorp, Inc. 
Consolidated Statements of Income 
(Dollars in thousands, except per share data)
 
Jun. 30,
  
Jun. 30,
 
Jun. 30
  
Jun. 07
vs.
  
YEAR TO DATE
  
2007
  
2006
  
Jun. 06
  
INTEREST INCOME
  
 
  
 
  
 
  
Fed funds sold and interest on deposits
  
$
483
  
$
561
    
(13.9
)%
Securities:
              
Available for sale
    
1,558
    
1,417
    
10.0
  
Held to maturity
    
1,018
    
943
    
8.0
  
Total securities
    
2,576
    
2,360
    
9.2
  
Loans:
              
SBA
    
4,542
    
4,332
    
4.8
  
Commercial
    
12,366
    
10,260
    
20.5
  
Residential mortgage
    
1,855
    
1,608
    
15.4
  
Consumer
    
1,855
    
1,523
    
21.8
  
Total loan interest income
    
20,618
    
17,723
    
16.3
  
Total interest income
    
23,677
    
20,644
    
14.7
  
INTEREST EXPENSE
              
Interest bearing demand deposits
    
1,029
    
1,347
    
(23.6
)
Savings deposits
    
4,293
    
2,896
    
48.2
  
Time deposits
    
4,123
    
3,170
    
30.1
  
Borrowed funds and subordinated debentures
    
2,126
    
1,145
    
85.7
  
Total interest expense
    
11,571
    
8,558
    
35.2
  
Net interest income
    
12,106
    
12,086
    
0.2
  
Provision for loan losses
    
550
    
550
    
0.0
  
Net interest income after
              
provision for loan losses
    
11,556
    
11,536
    
0.2
  
NONINTEREST INCOME
              
Service charges on deposit accounts
    
688
    
842
    
(18.3
)
Service and loan fee income
    
746
    
801
    
(6.9
)
Gain on SBA loan sales
    
1,503
    
1,258
    
19.5
  
Gain on Mortgage loan sales
    
28
    
172
    
(83.7
)
Gains on sales of other loans
    
0
    
82
    
(100.0
)
Bank owned life insurance
    
95
    
94
    
1.1
  
Net securities gains
    
10
    
-
    
100.0
  
Other income
    
357
    
400
    
(10.8
)
Total noninterest income
    
3,427
    
3,649
    
(6.1
)
NONINTEREST EXPENSES
              
Compensation and benefits
    
5,678
    
5,389
    
5.4
  
Processing and communications
    
1,113
    
1,080
    
3.1
  
Occupancy, net
    
1,317
    
1,294
    
1.8
  
Furniture and equipment
    
794
    
774
    
2.6
  
Professional fees
    
298
    
283
    
5.3
  
Loan servicing costs
    
259
    
156
    
66.0
  
Advertising
    
199
    
318
    
(37.4
)
Other
    
1,026
    
963
    
6.5
  
Total noninterest expenses
    
10,684
    
10,257
    
4.2
  
Income before taxes
    
4,299
    
4,928
    
(12.8
)
Federal and state income tax provision
    
1,306
    
1,634
    
(20.1
)
Net Income
  
$
2,993
  
$
3,294
    
(9.1
)%
Net Income Per Common Share-Basic
  
$
0.43
  
$
0.48
    
(10.4
)%
Net Income Per Common Share-Diluted
  
$
0.41
  
$
0.45
    
(8.9
)%
 
              
Average common shares outstanding:
              
Basic
    
6,981
    
6,893
      
Diluted
    
7,298
    
7,246
      

 
Unity Bancorp, Inc.
Consolidated Average Balance Sheets
with Resultant Interest and Rates
(Tax-equivalent basis, dollars in thousands)
 
 
 
Three Months Ended
 
 
 
June 30, 2007
 
March 31, 2007
  
   
Balance
 
Interest
 
Rate
 
Balance
 
Interest
 
Rate
  
ASSETS
                          
Interest-earning assets:
                          
                           
Federal funds sold and interest-bearing deposits with banks
  
$
19,029
  
$
221
    
4.66
%
$
20,650
  
$
262
    
5.15
%
Securities:
                                      
Available for sale
   
65,132
    
790
    
4.85
    
64,905
    
792
    
4.88
  
Held to maturity
    
37,501
    
496
    
5.29
    
42,287
    
558
    
5.28
  
Total securities
    
102,633
    
1,286
    
5.01
    
107,192
    
1,350
    
5.04
  
Loans, net of unearned discount:
                                      
SBA
    
83,080
    
2,202
   
10.60
    
81,783
    
2,340
   
11.44
  
Commercial
    
335,081
    
6,378
    
7.63
    
318,638
    
5,988
    
7.62
  
Residential mortgage
    
65,256
    
967
    
5.93
    
62,903
    
888
    
5.65
  
Consumer
    
55,227
    
951
    
6.91
    
53,419
    
904
    
6.86
  
Total loans
    
538,644
   
10,498
    
7.81
    
516,743
   
10,120
    
7.91
  
Total interest-earning assets
   
660,306
   
12,005
    
7.28
    
644,585
   
11,732
    
7.34
  
Noninterest-earning assets:
                                      
Cash and due from banks
    
12,170
    
 
          
12,228
              
Allowance for loan losses
    
(8,022
)
  
 
 
        
(7,877
)
            
Other assets
    
29,092
    
 
          
29,495
              
Total noninterest-earning assets
    
33,240
    
 
          
33,846
              
Total Assets
  
$
693,546
  
 
 
        
$
678,431
              
                                       
LIABILITIES AND SHAREHOLDERS' EQUITY
                              
Interest-bearing liabilities:
                                      
Interest-bearing demand deposits
  
$
84,729
    
477
    
2.26
  
$
97,570
    
552
    
2.29
  
Savings deposits
    
211,478
    
2,122
    
4.02
    
210,879
    
2,171
    
4.18
  
Time deposits
    
184,727
    
2,153
    
4.67
    
170,508
    
1,970
    
4.69
  
Total interest-bearing deposits
    
480,934
    
4,752
    
3.96
    
478,957
    
4,693
    
3.97
  
Borrowed funds and subordinated debentures
    
87,815
    
1,136
    
5.19
    
75,133
    
990
    
5.34
  
Total interest-bearing liabilities
    
568,749
    
5,888
    
4.15
    
554,090
    
5,683
    
4.16
  
Noninterest-bearing liabilities:
                                      
Demand deposits
    
75,469
    
 
          
75,222
              
Other liabilities
    
2,262
    
 
          
2,927
              
Total noninterest-bearing liabilities
    
77,731
    
 
          
78,149
              
Shareholders' equity
    
47,066
    
 
          
46,192
              
Total Liabilities and Shareholders' Equity
  
$
693,546
  
 
 
        
$
678,431
              
                                       
Net interest spread
    
 
    
6,117
 
  
3.13
%
  
 
 
  
6,049
     3.18
%
Tax-equivalent basis adjustment
    
 
 
  
(30
)
              
(30
)
      
Net interest income
  
 
 
  
$
6,087
              
$
 6,019        
                                       
Net interest margin
    
 
 
  
 
 
   3.71
%
               3.75
%


Unity Bancorp, Inc.
Consolidated Average Balance Sheets
with Resultant Interest and Rates
(Tax-equivalent basis, dollars in thousands)
 
   
Three Months Ended
  
 
  
June 30, 2007
  
June 30, 2006
  
 
  
Balance
  
Interest
 
Rate
  
Balance
 
Interest
 
Rate
  
ASSETS
                          
Interest-earning assets:
                          
                           
Federal funds sold and interest-bearing deposits with banks
  
$
19,029
  
$
221
    
4.66
%
$
30,005
  
$
354
    
4.73
%
Securities:
                                      
Available for sale
   
65,132
    
790
    
4.85
    
62,831
    
722
    
4.60
  
Held to maturity
    
37,501
    
496
    
5.29
    
38,283
    
467
    
4.88
  
Total securities
    
102,633
    
1,286
    
5.01
    
101,114
    
1,189
    
4.70
  
Loans, net of unearned discount:
                                      
SBA
    
83,080
    
2,202
   
10.60
    
83,708
    
2,179
   
10.41
  
Commercial
    
335,081
    
6,378
    
7.63
    
286,943
    
5,368
    
7.50
  
Residential mortgage
    
65,256
    
967
    
5.93
    
58,135
    
788
    
5.42
  
Consumer
    
55,227
    
951
    
6.91
    
46,690
    
779
    
6.69
  
Total loans
    
538,644
   
10,498
    
7.81
    
475,476
    
9,114
    
7.68
  
Total interest-earning assets
   
660,306
   
12,005
    
7.28
    
606,595
   
10,657
    
7.04
  
Noninterest-earning assets:
                                      
Cash and due from banks
    
12,170
    
 
          
12,535
              
Allowance for loan losses
    
(8,022
)
  
 
 
        
(7,478
)
            
Other assets
    
29,092
    
 
          
28,355
              
Total noninterest-earning assets
    
33,240
                 33,412              
Total Assets
  
$
693,546
  
 
 
        
$
640,007
              
                                       
LIABILITIES AND SHAREHOLDERS' EQUITY
                            
Interest-bearing liabilities:
                                      
Interest-bearing demand deposits
  
$
84,729
    
477
    
2.26
  
$
116,303
    
653
    
2.25
  
Savings deposits
    
211,478
    
2,122
    
4.02
    
184,168
    
1,704
    
3.71
  
Time deposits
    
184,727
    
2,153
    
4.67
    
167,245
    
1,671
    
4.01
  
Total interest-bearing deposits
    
480,934
    
4,752
    
3.96
    
467,716
    
4,028
    
3.45
  
Borrowed funds and subordinated debentures
    
87,815
    
1,136
    
5.19
    
49,279
    
583
    
4.75
  
Total interest-bearing liabilities
    
568,749
    
5,888
    
4.15
    
516,995
    
4,611
    
3.58
  
Noninterest-bearing liabilities:
                                      
Demand deposits
    
75,469
    
 
          
78,764
              
Other liabilities
    
2,262
    
 
          
1,589
              
Total noninterest-bearing liabilities
    
77,731
    
 
          
80,353
              
Shareholders' equity
    
47,066
    
 
          
42,659
              
Total Liabilities and Shareholders' Equity
  
$
693,546
  
 
 
        
$
640,007
              
                                       
Net interest spread
    
 
    
6,117
 
  
3.13
%
  
 
 
  
6,046
    
3.46
%
Tax-equivalent basis adjustment
    
 
 
  
(30
)
              
(13
)
      
Net interest income
  
 
 
  
$
6,087
            
$
6,033
        
Net interest margin
    
 
  
 
    
3.71
%
              
3.99
%
 
 
Unity Bancorp, Inc. 
Consolidated Average Balance Sheets 
with Resultant Interest and Rates 
(Tax-equivalent basis, dollars in thousands) 

   
Year to Date
  
   
June 30, 2007
  
June 30, 2006
  
   
Balance
  
Interest
  
Rate
  
Balance
  
Interest
  
Rate
  
ASSETS
                          
Interest-earning assets:
                          
                           
Federal funds sold and interest-bearing deposits with banks
  
$
19,835
  
$
483
    
4.91
%
$
24,778
  
$
561
    
4.57
%
Securities:
                                      
Available for sale
    
65,019
    
1,582
    
4.87
    
63,816
    
1,443
    
4.52
  
Held to maturity
    
39,881
    
1,054
    
5.29
    
38,784
    
943
    
4.86
  
Total securities
    
104,900
    
2,636
    
5.03
    
102,600
    
2,386
    
4.65
  
Loans, net of unearned discount:
                                      
SBA
    
82,435
    
4,542
    
11.02
    
84,813
    
4,332
    
10.22
  
Commercial
    
326,905
    
12,366
    
7.63
    
279,176
    
10,260
    
7.41
  
Residential mortgage
    
64,086
    
1,855
    
5.79
    
59,622
    
1,608
    
5.39
  
Consumer
    
54,328
    
1,855
    
6.89
    
46,596
    
1,523
    
6.59
  
Total loans
    
527,754
    
20,618
    
7.86
    
470,207
    
17,723
    
7.58
  
Total interest-earning assets
    
652,489
    
23,737
    
7.32
    
597,585
    
20,670
    
6.95
  
Noninterest-earning assets:
                                      
Cash and due from banks
    
12,199
                
12,119
              
Allowance for loan losses
    
(7,950
)
              
(7,317
)
            
Other assets
    
29,292
                
27,605
              
Total noninterest-earning assets
    
33,541
                
32,407
              
Total Assets
  
$
686,030
              
$
629,992
              
                                       
LIABILITIES AND SHAREHOLDERS' EQUITY
                            
Interest-bearing liabilities:
                                      
Interest-bearing demand deposits
  
$
91,114
    
1,029
    
2.28
  
$
122,194
    
1,347
    
2.22
  
Savings deposits
    
211,180
    
4,293
    
4.10
    
171,185
    
2,896
    
3.41
  
Time deposits
    
177,657
    
4,123
    
4.68
    
164,902
    
3,170
    
3.88
  
Total interest-bearing deposits
    
479,951
    
9,445
    
3.97
    
458,281
    
7,413
    
3.26
  
Borrowed funds and subordinated debentures
    
81,509
    
2,126
    
5.26
    
49,279
    
1,145
    
4.69
  
Total interest-bearing liabilities
    
561,460
    
11,571
    
4.16
    
507,560
    
8,558
    
3.40
  
Noninterest-bearing liabilities:
                                      
Demand deposits
    
75,346
                
78,473
              
Other liabilities
    
2,593
                
1,961
              
Total noninterest-bearing liabilities
    
77,939
                
80,434
              
Shareholders' equity
    
46,631
                
41,998
              
Total Liabilities and Shareholders' Equity
  
$
686,030
              
$
629,992
              
 
                                      
Net interest spread
        
12,166
    
3.16
%
  
 
    
12,112
    
3.55
%
Tax-equivalent basis adjustment
          
(60
)
  
 
      
(26
)
  
 
Net interest income
  
 
 
  
$
12,106
          
$
12,086
      
                           
Net interest margin
            
3.73
%
          
4.05
%
 
 
Unity Bancorp, Inc. 
Allowance for Loan Losses and Loan Quality Schedules 
(Dollars in thousands) 
 

   
06/30/2007
  
03/31/2007
  
12/31/2006
  
09/30/2006
  
06/30/2006
  
ALLOWANCE FOR LOAN LOSSES:
  
 
  
 
  
 
  
 
  
 
  
Balance, beginning
  
$
7,757
  
$
7,624
  
$
7,480
  
$
7,257
  
$
7,120
  
Provision charged to expense
    
350
    
200
    
600
    
400
    
250
  
     
8,107
    
7,824
    
8,080
    
7,657
    
7,370
  
Less: Charge offs SBA
    
124
    
116
    
320
    
141
    
66
  
Commercial
    
5
    
-
    
196
    
50
    
48
  
Residential mortgage
     -     -     -     -     -  
Consumer
    
-
    
2
    
10
    
3
    
14
  
Total Charge Offs
    
129
    
118
    
526
    
194
    
128
  
Add: Recoveries SBA
    
12
    
41
    
20
    
-
    
-
  
Commercial
    
2
    
6
    
50
    
12
    
2
  
Residential mortgage
     -     -     -     -     -  
Consumer
    
5
    
4
    
-
    
5
    
13
  
Total Recoveries
    
19
    
51
    
70
    
17
    
15
  
Net Charge Offs
    
110
    
67
    
456
    
177
    
113
  
Balance, ending
  
$
7,997
  
$
7,757
  
$
7,624
  
$
7,480
  
$
7,257
  
 
                      
LOAN QUALITY INFORMATION:
                      
Nonperforming loans
  
$
4,611
  
$
6,515
  
$
8,909
  
$
6,473
  
$
2,552
  
Other real estate owned, net
    
366
    
256
    
211
    
-
    
-
  
Nonperforming assets
  
$
4,977
  
$
6,771
  
$
9,120
  
$
6,473
  
$
2,552
  
 
                      
Loans 90 days past due and still accruing
  
$
167
  
$
145
  
$
78
  
$
658
  
$
-
  
 
                      
Allowance for loan losses to:
                      
Total loans at period end
    
1.48
%
  
1.50
%
  
1.50
%
  
1.50
%
  
1.50
%
Nonperforming loans
    
173.43
    
119.06
    
85.58
    
115.56
    
284.37
  
Nonperforming assets
    
160.68
    
114.56
    
83.60
    
115.56
    
284.37
  
Net charge offs to average loans (QTD)
    
0.08
    
0.05
    
0.35
    
0.14
    
0.10
  
Net charge offs to average loans (YTD)
    
0.07
    
0.05
    
0.17
    
0.10
    
0.08
  
Nonperforming loans to total loans
    
0.85
    
1.26
    
1.75
    
1.30
    
0.53
  
Nonperforming assets to total loans and OREO
    
0.92
    
1.31
    
1.80
    
1.30
    
0.53
  
 
 
Unity Bancorp, Inc.
Quarterly Financial Data

   
06/30/07
  
03/31/07
  
12/31/06
  
09/30/06
  
06/30/06
  
SUMMARY OF INCOME (in thousands) :
  
 
  
 
  
 
  
 
  
 
  
Interest income
  
$
11,975
  
$
11,702
  
$
11,275
  
$
11,258
  
$
10,644
  
Interest expense
    
5,888
    
5,683
    
5,560
    
5,314
    
4,611
  
Net interest income
    
6,087
    
6,019
    
5,715
    
5,944
    
6,033
  
Provision for loan losses
    
350
    
200
    
600
    
400
    
250
  
Net interest income after provision
    
5,737
    
5,819
    
5,115
    
5,544
    
5,783
  
Noninterest income
    
1,748
    
1,679
    
1,746
    
2,243
    
1,647
  
Noninterest expense
    
5,267
    
5,417
    
5,472
    
5,316
    
5,001
  
Income before income taxes
    
2,218
    
2,081
    
1,389
    
2,471
    
2,429
  
Federal and state income tax provision
    
676
    
630
    
465
    
844
    
792
  
Net Income
    
1,542
    
1,451
    
924
    
1,627
    
1,637
  
Net Income per Common Share:
                      
Before non-recurring items:
                      
Basic
  
$
0.22
  
$
0.21
  
$
0.13
  
$
0.24
  
$
0.24
  
Diluted
    
0.21
    
0.20
    
0.13
    
0.22
    
0.23
  
COMMON SHARE DATA:
                      
Cash dividends declared
  
$
0.05
  
$
0.05
  
$
0.05
  
$
0.05
  
$
0.05
  
Book value at quarter end
    
6.87
    
6.84
    
6.65
    
6.59
    
6.29
  
Market value at quarter end
    
11.45
    
11.30
    
14.01
    
14.55
    
14.75
  
Average common shares outstanding: (000's)
                      
Basic
    
6,985
    
6,976
    
6,941
    
6,921
    
6,903
  
Diluted
    
7,295
    
7,301
    
7,263
    
7,271
    
7,250
  
Common shares outstanding at period end (000's)
    
7,020
    
6,995
    
6,949
    
6,930
    
6,908
  
OPERATING RATIOS:
                      
Return on average assets
    
0.89
%
  
0.87
%
  
0.55
%
  
1.00
%
  
1.03
%
Return on average common equity
    
13.14
    
12.74
    
8.05
    
15.26
    
15.39
  
Efficiency ratio
    
67.22
    
70.46
    
73.34
    
65.48
    
65.12
  
BALANCE SHEET DATA (in thousands):
                      
Assets
  
$
732,403
  
$
681,302
  
$
694,106
  
$
671,811
  
$
670,870
  
Deposits
    
596,093
   
541,399
   
566,465
   
557,451
   
576,376
  
Loans
    
541,385
   
515,562
   
507,690
    
498,842
   
484,622
  
Shareholders' equity
    
48,242
    
47,825
    
46,228
    
45,643
    
43,446
  
Allowance for loan losses
    
7,997
    
7,757
    
7,624
    
7,480
    
7,257
  
TAX-EQUIVALENT YIELDS AND RATES:
                      
Interest-earning assets
    
7.28
%
  
7.34
%
  
7.05
%
  
7.13
%
  
7.04
%
Interest-bearing liabilities
    
4.15
    
4.16
    
4.03
    
3.87
    
3.58
  
Net interest spread
    
3.13
    
3.18
    
3.02
    
3.26
    
3.46
  
Net interest margin
    
3.71
    
3.75
    
3.60
    
3.79
    
3.99
  
CREDIT QUALITY:
                      
Nonperforming assets (in thousands)
  
$
4,977
  
$
6,771
  
$
9,120
  
$
6,473
  
$
2,552
  
Allowance for loan losses to period-end loans
    
1.48
%
  
1.50
%
  
1.50
%
  
1.50
%
  
1.50
%
Net charge offs to average loans
    
0.08
    
0.05
    
0.35
    
0.14
    
0.10
  
Nonperforming assets to loans and OREO
    
0.92
    
1.31
    
1.80
    
1.30
    
0.53
  
CAPITAL AND OTHER:
                      
Total equity to assets
    
6.59
%
  
7.02
%
  
6.66
%
  
6.79
%
  
6.48
%
Tier I capital to average assets (leverage)
    
9.28
    
9.24
    
9.13
    
9.12
    
8.22
  
Tier I capital to risk-adjusted assets
    
11.12
    
11.43
    
10.92
    
10.92
    
9.85
  
Total capital to risk-adjusted assets
    
13.78
    
14.21
    
13.72
    
12.91
    
11.10
  
Number of banking offices
    
15
    
15
    
15
    
14
    
14
  
Number of ATMs
    
18
    
18
    
18
    
17
    
17
  
Number of employees
    
195
    
179
    
185
    
205
    
191
  
 
 
Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with $732 million in assets and $596 million in deposits. Unity Bank provides financial services to retail, corporate & small business customers through its 15 retail service centers located in Hunterdon, Middlesex, Somerset, Union and Warren counties in New Jersey and Northampton county in Pennsylvania. For additional information about Unity visit our website at www.unitybank.com or call (800) 618-BANK.

This letter 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.

SOURCE     Unity Bancorp, Inc.
-0-   07/19/2007
/CONTACT: Alan J. Bedner, EVP, Chief Financial Officer of Unity Bancorp, Inc., +1-908-713-4308 /
/Web site: http://www.unitybank.com /
(UNTY)

CO:
Unity Bancorp, Inc.
ST:
New Jersey
IN:
FIN
SU:
ERN