EX-99.1 2 v090553_ex99-1.htm Unassociated Document
 
   
Unity Bancorp, Inc.
64 Old Highway 22
Clinton, NJ 08809
800 618-BANK 
www.unitybank.com
 
 
NewsNewsNewsNewsNews       

For Immediate Release: 

October 18, 2007     

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


Unity Bancorp Reports Third Quarter Earnings

Clinton, NJ - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income of $1.1 million, or $0.15 per diluted share, for the quarter ended September 30, 2007, compared to net income of $1.6 million, or $0.22 per diluted share, for the quarter ended September 30, 2006. Return on average assets and average common equity for the third quarter of 2007 were 0.57% and 8.89%, respectively, as compared to 1.00% and 15.26%, respectively, for the third quarter of 2006.

For the nine months ended September 30, 2007, net income was $4.0 million, or $0.56 per diluted share, compared to $4.9 million, or $0.68 per diluted share for the same period a year ago. Return on average assets and average common equity for the nine months ended September 30, 2007, were 0.77% and 11.57%, respectively, as compared to 1.02% and 15.54%, respectively, for the prior year’s comparable period.

“Earnings for the quarter were impacted by the Company’s previously announced strategic decision to retain a significant portion of the Company’s currently originated SBA 7(a) loans in the portfolio, rather than selling them to the secondary market. While this change in strategy has resulted in reduced short term earnings, we are confident that this strategy will increase long term earnings and enhance shareholder value through increased interest income,” said Unity President and Chief Executive Officer, James A. Hughes. “During the third quarter of 2007, we had significant growth in both our loan and deposit portfolios, in addition to a reduction in non-performing assets.”

Total assets at September 30, 2007, were $746.8 million, an 11.2% increase from September 30, 2006. The increase in assets from the prior year was primarily due to growth in the Company’s loan portfolio. Total loans at September 30, 2007, were $567.6 million, a 13.8% increase from September 30, 2006. The growth in the loan portfolio occurred in SBA, commercial, consumer and residential lending.

At September 30, 2007, the allowance for loan losses was $8.2 million, or 1.44% of total loans, compared to 1.50% of total loans at September 30, 2006. Non-performing assets at September 30, 2007, were $4.3 million, or 0.76% of total loans and other real estate owned, “OREO”, a decline of $2.2 million in non-performing assets, compared to $6.5 million or 1.30% of total loans and OREO at September 30, 2006. Included in non-performing assets at September 30, 2007, are approximately $781 thousand of loans guaranteed by the SBA. Credit quality improved during the quarter due to the resolution of certain problem credits.
 
Total deposits at September 30, 2007, were $612.2 million, a 9.8% increase from September 30, 2006. This increase was primarily the result of growth in time deposits accounts, partially offset by the decline in interest bearing checking, non-interest bearing checking and savings accounts. Time deposits increased $89.9 million, or 51.8% from September 30, 2006, due to time deposit promotions.
 
“During the third quarter of 2007, the Company implemented remote deposit capture, permitting customers to deposit checks electronically from their offices. We believe this will increase the number of transactional relationships inside and outside of our local market areas,” said Mr. Hughes. “In addition, we opened our sixteenth branch in the third quarter 2007. This is our second office in the Lehigh Valley, Pennsylvania area.”

Total shareholders’ equity was $47.3 million at September 30, 2007, a 3.5% increase from September 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 repurchased 207 thousand shares of treasury stock at an average cost of $10.43 per share.
.
Net interest income was $6.0 million for the third quarter of 2007, consistent with 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 3.44% for the third quarter of 2007, compared to 3.79% for the third quarter of 2006. The decline in net interest margin was the result of higher interest expense from deposits that were used to fund loan growth.

Net interest income was $18.1 million for the nine months ended September 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 3.63% for the nine months ended 2007, compared to 3.96% for the same period a year ago.

The provision for loan losses for the third quarter of 2007 was $450 thousand, compared to $400 thousand for the third quarter of 2006. Net loan charge-offs for the quarter ended September 30, 2007 were $264 thousand, compared to net charge-offs of $177 thousand for the quarter ended September 30, 2006. The provision for loan losses was $1.0 million for the nine months ended September 30, 2007, compared to $950 thousand from the same period a year ago. Net loan charge-offs for the nine months ended September 30, 2007 were $441 thousand, compared to $362 thousand for the same period a year ago.

Total noninterest income for the third quarter of 2007 was $1.5 million, down 34.9%, from the same period a year ago. Gains on sales of SBA loans amounted to $316 thousand for the third quarter of 2007, compared to $927 thousand for the quarter ended September 30, 2006, reflecting the change in strategy discussed above. Service charges on deposits for the third quarter were $338 thousand, a decrease of $48 thousand, compared to the third quarter of 2006, primarily due to the acceleration of the electronic clearing of checks under “Check 21”. Service and loan fees were $428 thousand for the third quarter of 2007, down $63 thousand from a year ago.

2
Total noninterest income for the nine months ended September 30, 2007, was $4.9 million, down 17.1% from the same period a year ago. Gains on sales of SBA loans amounted to $1.8 million for the nine months ended September 30, 2007, compared to $2.2 million for the same period a year ago, primarily due to the lower volume of loans sold. Service charges on deposits for the nine months ended were $1.0 million, a decrease of $202 thousand, compared to the same period a year ago, primarily due to the acceleration of “Check 21”. Service and loan fees were $1.2 million for the nine months ended September 30, 2007, down $118 thousand from the same period a year ago.

Total noninterest expenses for the third quarter of 2007 were $5.5 million, an increase of 3.5% from the prior year’s comparable quarter. Compensation and benefits were flat as annual cost of living increases and rising health insurance costs were partially offset by a planned reduction in the employee base. Occupancy and furniture and equipment expenses increased 10.8% and 12.6% for the third quarter of 2007, compared to the same period a year ago due to the addition of two branches.

Total noninterest expenses for the nine months ended September 30, 2007, were $16.2 million, an increase of 3.9% from the same period a year ago. Compensation and benefits increased 3.6% due to cost of living increases and rising health insurance costs. Processing and communications increased 7.5% due to increased transactional volume due to a larger customer base. Occupancy and furniture and equipment expenses increased 4.7% and 5.8% for the third quarter of 2007, compared to the same period a year ago due to branch expansion. Loan servicing costs increased $112 thousand due to collection expenses associated with past due loans.

As of September 30, 2007, the Company’s Tier I leverage capital ratio was 8.17%, Tier I risk-based capital ratio was 10.26%, and total risk-based capital ratio was 11.52%. During the third quarter of 2007 the Company redeemed $9.3 million of Trust Preferred Debt at a rate of 3.40% over 3-month LIBOR. The Company issued $15.5 million in Trust Preferred Securities at a rate of 1.63% over 3-month LIBOR late in 2006 to pre-fund the redemption. All regulatory capital ratios exceeded the well-capitalized, federal capital adequacy requirements as of September 30, 2007.

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $747 million in assets and $612 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.
 
3

Unity Bancorp, Inc.
Consolidated Financial Highlights
(Dollars in thousands, except per share data)
 

                 
 Sep. 07 vs.
 
BALANCE SHEET DATA:
 
Sep. 30, 2007
 
 Jun. 30, 2007
 
Sep. 30, 2006
 
 Jun. 07
 
Sep. 06
  
                          
Assets
  
$
746,821
  
$
732,403
 
$
671,811
   
2.0
%
  
11.2
%
Deposits
    
612,215
   
596,093
   
557,451
   
2.7
   
9.8
 
Loans
    
567,597
   
541,385
   
498,842
   
4.8
   
13.8
 
Securities
    
112,196
   
102,730
   
112,817
   
9.2
   
(0.6
)
Shareholders' equity
    
47,261
   
48,242
   
45,643
   
(2.0
)
  
3.5
 
Allowance for loan losses
    
8,183
   
7,997
   
7,480
   
2.3
   
9.4
 
                                 
FINANCIAL DATA - QUARTER TO DATE:
                            
Net income before taxes
  
$
1,482
  
$
2,218
 
$
2,471
   
(33.2
)%
  
(40.0
)%
Federal and state income tax provision
    
430
   
676
   
844
   
(36.4
)
  
(49.1
)
Net income
    
1,052
   
1,542
   
1,627
   
(31.8
)
  
(35.3
)
Per share-basic
    
0.15
   
0.22
   
0.24
   
(31.8
)
  
(37.5
)
Per share-diluted
    
0.15
   
0.21
   
0.22
   
(28.6
)
  
(31.8
)
Return on average assets
    
0.57
%
  
0.89
%
  
1.00
%
  
(36.0
)
  
(43.0
)
Return on average common equity
    
8.89
   
13.14
   
15.26
   
(32.3
)
  
(41.7
)
Efficiency ratio
    
74.23
   
67.22
   
65.48
   
10.4
   
13.4
 
                                 
FINANCIAL DATA - YEAR TO DATE:
                                
Net income before taxes
  
$
5,781
    
-
 
$
7,399
   
-
   
(21.9
)%
Federal and state income tax provision
    
1,736
   
-
   
2,478
   
-
   
(29.9
)
Net income
    
4,045
   
-
   
4,921
   
-
   
(17.8
)
Per share-basic
    
0.58
   
-
   
0.71
   
-
   
(18.3
)
Per share-diluted
    
0.56
   
-
   
0.68
   
-
   
(17.6
)
Return on average assets
    
0.77
%
  
-
   
1.02
%
  
-
   
(24.5
)
Return on average common equity
    
11.57
   
-
   
15.54
   
-
   
(25.5
)
Efficiency ratio
    
70.57
   
-
   
65.29
   
-
   
8.1
 
                                 
SHARE INFORMATION:
                                
Closing price per share
  
$
11.08
  
$
11.45
 
$
14.55
   
(3.2
)%
  
(23.9
)%
Cash dividends declared
    
0.05
   
0.05
   
0.05
   
-
   
-
 
Book value per share
    
6.94
   
6.87
   
6.59
   
1.0
   
5.3
 
Average diluted shares outstanding (QTD)
    
7,107
   
7,295
   
7,271
   
(2.6
)
  
(2.3
)
                                 
CAPITAL RATIOS:
                            
Total equity to total assets
    
6.33
%
  
6.59
%
  
6.79
%
  
(3.9
)%
  
(6.8
)%
Tier I capital to average assets (leverage)
    
8.17
   
9.21
   
9.12
   
(11.3
)
  
(10.4
)
Tier I capital to risk-adjusted assets
    
10.26
   
11.07
   
10.92
   
(7.3
)
  
(6.0
)
Total risk-based capital
    
11.52
   
13.72
   
12.91
   
(16.0
)
  
(10.8
)
                             
CREDIT QUALITY AND RATIOS:
                            
Nonperforming assets
  
$
4,319
  
$
4,977
 
$
6,473
   
(13.2
)%
  
(33.3
)%
Net charge offs to average loans (QTD)
    
0.19
%
  
0.08
%
  
0.14
%
  
137.5
   
35.7
 
Allowance for loan losses to total loans
    
1.44
   
1.48
   
1.50
   
(2.7
)
  
(4.0
)
Nonperforming assets to total loans and OREO
    
0.76
   
0.92
   
1.30
   
(17.4
)
  
(41.5
)
 
 

Unity Bancorp, Inc.
Consolidated Balance Sheets
(In thousands)
 
 
                        
 Sep. 07 vs.
 
 
 
Sep. 30, 2007
 
 
 
 Jun. 30, 2007
 
 
 
 Sep. 30, 2006
 
 Jun. 07
 
Sep. 06
  
ASSETS
                                 
Cash and due from banks
  
$
12,826
        
$
14,696
       
$
16,399
   
(12.7
)%
  
(21.8
)%
Federal funds sold and interest bearing deposits
    
32,495
         
51,063
         
22,383
   
(36.4
)
  
45.2
 
Securities:
                                        
Available for sale
    
76,700
         
66,199
         
68,907
   
15.9
   
11.3
 
Held to maturity
    
35,496
         
36,531
         
43,910
   
(2.8
)
  
(19.2
)
Total securities
    
112,196
         
102,730
         
112,817
   
9.2
   
(0.6
)
Loans:
                                        
SBA - Held for sale
    
17,014
         
8,914
         
18,474
   
90.9
   
(7.9
)
SBA - Held to Maturity
    
66,255
         
66,634
         
61,885
   
(0.6
)
  
7.1
 
Commercial
   
356,964
         
342,328
         
308,646
   
4.3
   
15.7
 
Residential mortgage
    
72,177
         
69,417
         
61,787
   
4.0
   
16.8
 
Consumer
    
55,187
         
54,092
         
48,050
   
2.0
   
14.9
 
Total loans
    
567,597
         
541,385
         
498,842
   
4.8
   
13.8
 
Less: Allowance for loan losses
    
8,183
         
7,997
         
7,480
   
2.3
   
9.4
 
Net loans
    
559,414
         
533,388
         
491,362
   
4.9
   
13.8
 
Goodwill and other intangibles
    
1,592
         
1,596
         
1,607
   
(0.3
)
  
(0.9
)
Premises and equipment, net
    
11,729
         
11,614
         
11,123
   
1.0
   
5.4
 
Accrued interest receivable
    
4,073
   
#
    
#3,687
   
#
    
#3,724
   
10.5
   
9.4
 
Loan servicing asset
    
2,139
   
#
    
#2,289
   
#
    
#2,307
   
(6.6
)
  
(7.3
)
Bank Owned Life Insurance
    
5,520
         
5,467
   
#
    
#5,325
   
1.0
   
3.7
 
Other assets
    
4,837
         
5,873
         
4,764
   
(17.6
)
  
1.5
 
Total Assets
  
$
746,821
        
$
732,403
       
$
671,811
   
2.0
%
  
11.2
%
                                         
LIABILITIES AND SHAREHOLDERS' EQUITY
                                        
Deposits:
                                        
Noninterest-bearing demand deposits
  
$
73,355
        
$
74,731
       
$
77,057
   
(1.8
)%
  
(4.8
)%
Interest-bearing deposits:
                                        
Interest bearing checking
    
81,985
         
84,107
         
111,142
   
(2.5
)
  
(26.2
)
Savings
   
193,387
         
218,273
         
195,626
   
(11.4
)
  
(1.1
)
Time, under $100,000
    
181,776
         
138,440
         
115,082
   
31.3
   
58.0
 
Time, $100,000 and over
    
81,712
         
80,542
         
58,544
   
1.5
   
39.6
 
Total deposits
    
612,215
         
596,093
         
557,451
   
2.7
   
9.8
 
Borrowed funds and subordinated debentures
    
85,465
         
84,744
         
67,089
   
0.9
   
27.4
 
Accrued interest payable
    
757
         
595
         
360
   
27.2
   
110.3
 
Accrued expenses and other liabilities
    
1,123
         
2,729
         
1,268
   
(58.8
)
  
(11.4
)
Total liabilities
    
699,560
         
684,161
         
626,168
   
2.3
   
11.7
 
Commitments and Contingencies
    
-
         
-
         
-
         
Shareholders' equity:
                                        
Common stock, no par value, 12,500 shares authorized
    
49,282
         
49,087
         
44,118
   
0.4
   
11.7
 
Retained earnings
    
2,128
         
1,435
         
2,851
   
48.3
   
(25.4
)
Treasury stock at cost
    
(3,218
)
        
(1,121
)
        
(242
)
  
187.1
   
1,229.8
 
Accumulated other comprehensive loss, net of tax
    
(931
)
        
(1,159
)
        
(1,084
)
  
(19.7
)
  
(14.1
)
Total shareholders' equity
    
47,261
         
48,242
         
45,643
   
(2.0
)
  
3.5
 
Total Liabilities and Shareholders' Equity
  
$
746,821
        
$
732,403
       
$
671,811
   
2.0
%
  
11.2
%
                                         
COMMON SHARES AT PERIOD END:
                                        
Issued
    
7,122
         
7,104
         
6,954
         
Outstanding
    
6,813
         
7,002
         
6,930
         
Treasury
    
309
         
102
         
24
         
N/M= Not meaningful
                                         
 
 

Unity Bancorp, Inc.
                         
Consolidated Statements of Income
                         
(In thousands, except per share data)
                         
                 
 Sep. 07 vs.
 
FOR THE THREE MONTHS ENDED:
 
Sep. 30, 2007
 
 Jun. 30, 2007
 
 Sep. 30, 2006
 
 Jun. 07
 
Sep. 06
  
INTEREST INCOME
                         
Fed funds sold and interest on deposits
  
$
390
  
$
221
 
$
270
   
76.5
%
  
44.4
%
Securities:
                            
Available for sale
    
954
   
778
   
846
   
22.6
   
12.8
 
Held to maturity
    
452
   
478
   
548
   
(5.4
)
  
(17.5
)
Total securities
    
1,406
   
1,256
   
1,394
   
11.9
   
0.9
 
Loans:
                            
SBA
    
2,190
   
2,202
   
2,175
   
(0.5
)
  
0.7
 
Commercial
    
6,600
   
6,378
   
5,779
   
3.5
   
14.2
 
Residential mortgage
   
1,047
   
967
   
810
   
8.3
   
29.3
 
Consumer
    
933
   
951
   
830
   
(1.9
)
  
12.4
 
Total loan interest income
    
10,770
   
10,498
   
9,594
   
2.6
   
12.3
 
Total interest income
    
12,566
   
11,975
   
11,258
   
4.9
   
11.6
 
INTEREST EXPENSE
                            
Interest bearing demand deposits
    
451
   
477
   
637
   
(5.5
)
  
(29.2
)
Savings deposits
    
1,995
   
2,122
   
1,971
   
(6.0
)
  
1.2
 
Time deposits
    
2,994
   
2,153
   
1,968
   
39.1
   
52.1
 
Borrowed funds and subordinated debentures
    
1,153
   
1,136
   
738
   
1.5
   
56.2
 
Total interest expense
    
6,593
   
5,888
   
5,314
   
12.0
   
24.1
 
Net interest income
    
5,973
   
6,087
   
5,944
   
(1.9
)
  
0.5
 
Provision for loan losses
    
450
   
350
   
400
   
28.6
   
12.5
 
Net interest income after provision for loan losses
    
5,523
   
5,737
   
5,544
   
(3.7
)
  
(0.4
)
NONINTEREST INCOME
                            
Service charges on deposit accounts
    
338
   
339
   
386
   
(0.3
)
  
(12.4
)
Service and loan fee income
   
428
   
380
   
491
   
12.6
   
(12.8
)
Gain on SBA loan sales
    
316
   
824
   
927
   
(61.7
)
  
(65.9
)
Gain on Mortgage loan sales
    
33
   
19
   
119
   
73.7
   
(72.3
)
Gain on sales of other loans
    
-
   
-
   
-
   
-
   
(100.0
)
Bank owned life insurance
    
53
   
46
   
47
   
15.2
   
12.8
 
Net securities gains
    
22
   
-
   
69
   
100.0
   
100.0
 
Other income
    
270
   
140
   
204
   
92.9
   
32.4
 
Total noninterest income
    
1,460
   
1,748
   
2,243
   
(16.5
)
  
(34.9
)
NONINTEREST EXPENSES
                            
Compensation and benefits
    
2,816
   
2,723
   
2,809
   
3.4
   
0.2
 
Processing and communications
    
645
   
563
   
555
   
14.6
   
16.2
 
Occupancy, net
    
699
   
644
   
631
   
8.5
   
10.8
 
Furniture and equipment
    
419
   
394
   
372
   
6.3
   
12.6
 
Professional fees
    
116
   
162
   
222
   
(28.4
)
  
(47.7
)
Loan servicing costs
    
184
   
169
   
175
   
8.9
   
5.1
 
Advertising
    
113
   
105
   
101
   
7.6
   
11.9
 
Other
   
509
   
507
   
451
   
0.4
   
12.9
 
Total noninterest expenses
    
5,501
   
5,267
   
5,316
   
4.4
   
3.5
 
Income before taxes
    
1,482
   
2,218
   
2,471
   
(33.2
)
  
(40.0
)
Federal and state income tax provision
    
430
   
676
   
844
   
(36.4
)
  
(49.1
)
Net Income
  
$
1,052
  
$
1,542
 
$
1,627
   
(31.8
)%
  
(35.3
)%
                             
                                 
Net Income Per Common Share-Basic
  
$
0.15
  
$
0.22
 
$
0.24
   
(31.8
)%
  
(37.5
)%
Net Income Per Common Share-Diluted
  
$
0.15
  
$
0.21
 
$
0.22
   
(28.6
)%
  
(31.8
)%
                                 
AVERAGE COMMON SHARES OUTSTANDING:
                                
Basic
    
6,871
   
6,985
   
6,921
             
Diluted
    
7,107
   
7,295
   
7,271
             
 
 

Unity Bancorp, Inc.
                
Consolidated Statements of Income
                
(Dollars in thousands, except per share data)
                
            
 Sep. 07 vs.
 
YEAR TO DATE
 
Sep. 30, 2007
 
 Sep. 30, 2006
 
 Sep. 06
  
INTEREST INCOME
                
Fed funds sold and interest on deposits
  
$
873
  
$
831
   
5.1
%
Securities:
                  
Available for sale
    
2,512
   
2,263
   
11.0
 
Held to maturity
    
1,470
   
1,491
   
(1.4
)
Total securities
    
3,982
   
3,754
   
6.1
 
Loans:
                  
SBA
    
6,732
   
6,507
   
3.5
 
Commercial
    
18,966
   
16,039
   
18.2
 
Residential mortgage
    
2,902
   
2,418
   
20.0
 
Consumer
    
2,788
   
2,353
   
18.5
 
Total loan interest income
    
31,388
   
27,317
   
14.9
 
Total interest income
    
36,243
   
31,902
   
13.6
 
INTEREST EXPENSE
                  
Interest bearing demand deposits
    
1,480
   
1,984
   
(25.4
)
Savings deposits
    
6,288
   
4,867
   
29.2
 
Time deposits
    
7,117
   
5,138
   
38.5
 
Borrowed funds and subordinated debentures
    
3,279
   
1,883
   
74.1
 
Total interest expense
    
18,164
   
13,872
   
30.9
 
Net interest income
    
18,079
   
18,030
   
0.3
 
Provision for loan losses
    
1,000
   
950
   
5.3
 
Net interest income after provision for loan losses
    
17,079
   
17,080
   
0.0
 
NONINTEREST INCOME
                  
Service charges on deposit accounts
    
1,026
   
1,228
   
(16.4
)
Service and loan fee income
   
1,174
   
1,292
   
(9.1
)
Gain on SBA loan sales
    
1,819
   
2,185
   
(16.8
)
Gain on Mortgage loan sales
    
61
   
291
   
(79.0
)
Gains on sales of other loans
    
0
   
82
   
(100.0
)
Bank owned life insurance
    
148
   
140
   
5.7
 
Net securities gains
    
32
   
69
   
100.0
 
Other income
    
627
   
605
   
3.6
 
Total noninterest income
    
4,887
   
5,892
   
(17.1
)
NONINTEREST EXPENSES
                  
Compensation and benefits
    
8,494
   
8,198
   
3.6
 
Processing and communications
    
1,758
   
1,635
   
7.5
 
Occupancy, net
    
2,016
   
1,925
   
4.7
 
Furniture and equipment
    
1,213
   
1,146
   
5.8
 
Professional fees
    
414
   
505
   
(18.0
)
Loan servicing costs
    
443
   
331
   
33.8
 
Advertising
    
312
   
419
   
(25.5
)
Other
   
1,535
   
1,414
   
8.6
 
Total noninterest expenses
    
16,185
   
15,573
   
3.9
 
Income before taxes
    
5,781
   
7,399
   
(21.9
)
Federal and state income tax provision
    
1,736
   
2,478
   
(29.9
)
Net Income
  
$
4,045
  
$
4,921
   
(17.8
)%
                     
                     
Net Income Per Common Share-Basic
  
$
0.58
  
$
0.71
   
(18.3
)%
Net Income Per Common Share-Diluted
 
$
0.56
  
$
0.68
   
(17.6
)%
               
Average common shares outstanding:
               
Basic
    
6,944
   
6,902
     
Diluted
    
7,234
   
7,254
       
 
 

Unity Bancorp, Inc.
Consolidated Average Balance Sheets
with Resultant Interest and Rates
(Tax-equivalent basis, dollars in thousands)
 
   
Three Months Ended
 
 
 
September 30, 2007
 
 June 30, 2007
 
 
 
Balance
 
Interest
 
Rate
 
 Balance
 
Interest
 
Rate
  
ASSETS
                           
Interest-earning assets:
                           
   
 
  
 
  
 
  
  
  
 
  
 
  
Federal funds sold and interest-bearing deposits with banks
  
$
31,449
  
$
390
    
4.92
%
$
19,029
 
$
221
    
4.66
%
Securities:
                              
Available for sale
    
75,031
   
976
   
5.20
   
65,132
   
790
   
4.85
 
Held to maturity
    
36,047
   
471
   
5.23
   
37,501
   
496
   
5.29
 
Total securities
    
111,078
   
1,447
   
5.21
   
102,633
   
1,286
   
5.01
 
Loans, net of unearned discount:
                                  
SBA
    
81,693
   
2,190
   
10.72
   
83,080
   
2,202
   
10.60
 
Commercial
   
350,555
   
6,600
   
7.47
   
335,081
   
6,378
   
7.63
 
Residential mortgage
    
71,401
   
1,047
   
5.87
   
65,256
   
967
   
5.93
 
Consumer
    
54,064
   
933
   
6.85
   
55,227
   
951
   
6.91
 
Total loans
    
557,713
   
10,770
   
7.68
   
538,644
   
10,498
   
7.81
 
Total interest-earning assets
    
700,240
   
12,607
   
7.16
   
660,306
   
12,005
   
7.28
 
Noninterest-earning assets:
                                      
Cash and due from banks
    
14,911
               
12,170
             
Allowance for loan losses
    
(8,330
)
              
(8,022
)
            
Other assets
    
29,503
               
29,092
             
Total noninterest-earning assets
    
36,084
               
33,240
             
Total Assets
  
$
736,324
              
$
693,546
             
                                       
LIABILITIES AND SHAREHOLDERS' EQUITY
                                      
Interest-bearing liabilities:
                                      
Interest-bearing demand deposits
  
$
79,188
    
451
   
2.26
 
$
84,729
   
477
   
2.26
 
Savings deposits
    
199,483
   
1,995
   
3.97
   
211,478
   
2,122
   
4.02
 
Time deposits
    
243,358
   
2,994
   
4.88
   
184,727
   
2,153
   
4.67
 
Total interest-bearing deposits
    
522,029
   
5,440
   
4.13
   
480,934
   
4,752
   
3.96
 
Borrowed funds and subordinated debentures
    
89,892
   
1,153
   
5.09
   
87,815
   
1,136
   
5.19
 
Total interest-bearing liabilities
    
611,921
   
6,593
   
4.27
   
568,749
   
5,888
   
4.15
 
Noninterest-bearing liabilities:
                                      
Demand deposits
    
75,218
               
75,469
             
Other liabilities
    
2,216
               
2,262
             
Total noninterest-bearing liabilities
    
77,434
               
77,731
             
Shareholders' equity
    
46,969
               
47,066
             
Total Liabilities and Shareholders' Equity
  
$
736,324
              
$
693,546
             
                                       
Net interest spread
          
6,014
   
2.89
%
        
6,117
   
3.13
%
Tax-equivalent basis adjustment
          
(41
)
            
(30
)
      
Net interest income
        
$
5,973
              
$
6,087
        
                                       
Net interest margin
                
3.44
%
              
3.71
%
 
 

Unity Bancorp, Inc.
Consolidated Average Balance Sheets
with Resultant Interest and Rates
(Tax-equivalent basis, dollars in thousands)
 
   
Three Months Ended
 
 
 
September 30, 2007
 
 September 30, 2006
 
 
 
Balance
 
Interest
 
Rate
 
 Balance
 
Interest
 
Rate
  
ASSETS
                           
Interest-earning assets:
                           
                    
 
  
 
  
Federal funds sold and interest-bearing deposits with banks
  
$
31,449
  
$
390
    
4.92
%
$
20,698
 
$
270
    
5.18
%
Securities:
                            
Available for sale
    
75,031
   
976
   
5.20
   
70,911
   
859
   
4.85
 
Held to maturity
    
36,047
   
471
   
5.23
   
43,514
   
558
   
5.13
 
Total securities
    
111,078
   
1,447
   
5.21
   
114,425
   
1,417
   
4.95
 
Loans, net of unearned discount:
                                
SBA
    
81,693
   
2,190
   
10.72
   
83,021
   
2,175
   
10.48
 
Commercial
   
350,555
   
6,600
   
7.47
   
305,862
   
5,779
   
7.50
 
Residential mortgage
    
71,401
   
1,047
   
5.87
   
57,569
   
810
   
5.63
 
Consumer
    
54,064
   
933
   
6.85
   
47,792
   
830
   
6.89
 
Total loans
    
557,713
   
10,770
   
7.68
   
494,244
   
9,594
   
7.72
 
Total interest-earning assets
    
700,240
   
12,607
   
7.16
   
629,367
   
11,281
   
7.13
 
Noninterest-earning assets:
                                  
Cash and due from banks
    
14,911
             
13,012
             
Allowance for loan losses
    
(8,330
)
            
(7,569
)
            
Other assets
    
29,503
             
33,163
             
Total noninterest-earning assets
    
36,084
             
38,606
             
Total Assets
  
$
736,324
            
$
667,973
             
                                   
LIABILITIES AND SHAREHOLDERS' EQUITY
                                    
Interest-bearing liabilities:
                                  
Interest-bearing demand deposits
  
$
79,188
    
451
   
2.26
 
$
116,043
   
637
   
2.18
 
Savings deposits
    
199,483
   
1,995
   
3.97
   
192,835
   
1,971
   
4.06
 
Time deposits
    
243,358
   
2,994
   
4.88
   
178,442
   
1,968
   
4.38
 
Total interest-bearing deposits
    
522,029
   
5,440
   
4.13
   
487,320
   
4,576
   
3.73
 
Borrowed funds and subordinated debentures
    
89,892
   
1,153
   
5.09
   
57,172
   
738
   
5.12
 
Total interest-bearing liabilities
    
611,921
   
6,593
   
4.27
   
544,492
   
5,314
   
3.87
 
Noninterest-bearing liabilities:
                                  
Demand deposits
    
75,218
             
77,897
             
Other liabilities
    
2,216
             
2,702
             
Total noninterest-bearing liabilities
    
77,434
             
80,599
             
Shareholders' equity
    
46,969
             
42,882
             
Total Liabilities and Shareholders' Equity
  
$
736,324
            
$
667,973
             
                                     
Net interest spread
          
6,014
   
2.89
%
        
5,967
   
3.26
%
Tax-equivalent basis adjustment
          
(41
)
            
(23
)
      
Net interest income
        
$
5,973
            
$
5,944
        
Net interest margin
                
3.44
%
              
3.79
%
 
 

Unity Bancorp, Inc.
Consolidated Average Balance Sheets
with Resultant Interest and Rates
(Tax-equivalent basis, dollars in thousands)
 
   
Year to Date
 
 
 
September 30, 2007
 
 September 30, 2006
 
 
 
Balance
 
Interest
 
Rate
 
 Balance
 
Interest
 
Rate
  
ASSETS
                           
Interest-earning assets:
                           
                            
Federal funds sold and interest-bearing deposits with banks
  
$
23,749
  
$
873
    
4.91
%
$
23,403
 
$
831
    
4.75
%
Securities:
                                  
Available for sale
    
68,393
   
2,558
   
4.99
   
66,207
   
2,302
   
4.64
 
Held to maturity
    
38,589
   
1,525
   
5.27
   
40,378
   
1,501
   
4.96
 
Total securities
    
106,982
   
4,083
   
5.09
   
106,585
   
3,803
   
4.76
 
Loans, net of unearned discount:
                                      
SBA
    
82,185
   
6,732
   
10.92
   
84,209
   
6,507
   
10.30
 
Commercial
   
334,875
   
18,966
   
7.57
   
288,169
   
16,039
   
7.44
 
Residential mortgage
    
66,551
   
2,902
   
5.81
   
58,930
   
2,418
   
5.47
 
Consumer
    
54,239
   
2,788
   
6.87
   
46,999
   
2,353
   
6.69
 
Total loans
    
537,850
   
31,388
   
7.79
   
478,307
   
27,317
   
7.63
 
Total interest-earning assets
    
668,581
   
36,344
   
7.26
   
608,295
   
31,951
   
7.02
 
Noninterest-earning assets:
                                  
Cash and due from banks
    
13,113
               
12,420
           
Allowance for loan losses
    
(8,078
)
              
(7,402
)
            
Other assets
    
29,363
               
29,478
             
Total noninterest-earning assets
    
34,398
               
34,496
             
Total Assets
  
$
702,979
              
$
642,791
             
                                       
LIABILITIES AND SHAREHOLDERS' EQUITY
                                      
Interest-bearing liabilities:
                                      
Interest-bearing demand deposits
  
$
87,095
    
1,480
   
2.27
 
$
120,121
   
1,984
   
2.21
 
Savings deposits
    
207,238
   
6,288
   
4.06
   
178,481
   
4,867
   
3.65
 
Time deposits
    
199,798
   
7,117
   
4.76
   
169,465
   
5,138
   
4.05
 
Total interest-bearing deposits
    
494,131
   
14,885
   
4.03
   
468,067
   
11,989
   
3.42
 
Borrowed funds and subordinated debentures
    
84,334
   
3,279
   
5.20
   
51,939
   
1,883
   
4.85
 
Total interest-bearing liabilities
    
578,465
   
18,164
   
4.20
   
520,006
   
13,872
   
3.57
 
Noninterest-bearing liabilities:
                                      
Demand deposits
    
75,303
               
78,279
             
Other liabilities
    
2,466
               
2,210
             
Total noninterest-bearing liabilities
    
77,769
               
80,489
             
Shareholders' equity
    
46,745
               
42,296
             
Total Liabilities and Shareholders' Equity
  
$
702,979
              
$
642,791
             
                                       
Net interest spread
          
18,180
   
3.06
%
        
18,079
   
3.45
%
Tax-equivalent basis adjustment
          
(101
)
              
(49
)
      
Net interest income
        
$
18,079
              
$
18,030
        
Net interest margin
                
3.63
%
              
3.96
%
 
 

Unity Bancorp, Inc.
Allowance for Loan Losses and Loan Quality Schedules
(Dollars in thousands)
 
 
   
9/30/2007
 
6/30/2007
 
3/31/2007
 
12/31/2006
 
9/30/2006
  
ALLOWANCE FOR LOAN LOSSES:
                      
Balance, beginning
 
$
7,997
  
$
7,757
  
$
7,624
  
$
7,480
  
$
7,257
  
Provision charged to expense
    
450
   
350
   
200
   
600
   
400
 
     
8,447
   
8,107
   
7,824
   
8,080
   
7,657
 
Less: Charge offs
                                
SBA
    
270
   
124
   
116
   
320
   
141
 
Commercial
    
24
   
5
   
-
   
196
   
50
 
Residential mortgage
    
-
   
-
   
-
   
-
   
-
 
Consumer
    
28
   
-
   
2
   
10
   
3
 
Total Charge Offs
    
322
   
129
   
118
   
526
   
194
 
Add: Recoveries
                                
SBA
    
41
   
12
   
41
   
20
   
-
 
Commercial
    
7
   
2
   
6
   
50
   
12
 
Residential mortgage
    
-
   
-
   
-
   
-
   
-
 
Consumer
    
10
   
5
   
4
   
-
   
5
 
Total Recoveries
    
58
   
19
   
51
   
70
   
17
 
Net Charge Offs
    
264
   
110
   
67
   
456
   
177
 
Balance, ending
  
$
8,183
  
$
7,997
  
$
7,757
  
$
7,624
  
$
7,480
  
-
                               
                                 
LOAN QUALITY INFORMATION:
                                
Nonperforming loans
  
$
4,185
  
$
4,611
  
$
6,515
  
$
8,909
  
$
6,473
  
Other real estate owned, net
    
134
   
366
   
256
   
211
   
-
 
Nonperforming assets
  
$
4,319
  
$
4,977
  
$
6,771
  
$
9,120
  
$
6,473
  
                                 
Loans 90 days past due and still accruing
  
$
340
  
$
167
  
$
145
  
$
78
  
$
658
  
                                 
Allowance for loan losses to:
                                
Total loans at period end
    
1.44
%
  
1.48
%
  
1.50
%
  
1.50
%
  
1.50
 
Nonperforming loans
    
195.53
   
173.43
   
119.06
   
85.58
   
115.56
 
Nonperforming assets
    
189.47
   
160.68
   
114.56
   
83.60
   
115.56
 
Net charge offs to average loans (QTD)
    
0.19
   
0.08
   
0.05
   
0.35
   
0.14
 
Net charge offs to average loans (YTD)
    
0.11
   
0.07
   
0.05
   
0.17
   
0.10
 
Nonperforming loans to total loans
    
0.74
   
0.85
   
1.26
   
1.75
   
1.30
 
Nonperforming assets to total loans and OREO
    
0.76
   
0.92
   
1.31
   
1.80
   
1.30
 
 
 
 

Unity Bancorp, Inc.
 
  
Quarterly Financial Data
 
  
   
09/30/07
 
06/30/07
 
03/31/07
 
12/31/06
 
09/30/06
  
SUMMARY OF INCOME (in thousands) :
                      
Interest income
  
$
12,566
  
$
11,975
  
$
11,702
  
$
11,275
  
$
11,258
  
Interest expense
    
6,593
   
5,888
   
5,683
   
5,560
   
5,314
 
Net interest income
    
5,973
   
6,087
   
6,019
   
5,715
   
5,944
 
Provision for loan losses
    
450
   
350
   
200
   
600
   
400
 
Net interest income after provision
    
5,523
   
5,737
   
5,819
   
5,115
   
5,544
 
Noninterest income
    
1,460
   
1,748
   
1,679
   
1,746
   
2,243
 
Noninterest expense
    
5,501
   
5,267
   
5,417
   
5,472
   
5,316
 
Income before income taxes
    
1,482
   
2,218
   
2,081
   
1,389
   
2,471
 
Federal and state income tax provision
    
430
   
676
   
630
   
465
   
844
 
Net Income
    
1,052
   
1,542
   
1,451
   
924
   
1,627
 
Net Income per Common Share:
                              
Basic
  
$
0.15
  
$
0.22
  
$
0.21
  
$
0.13
  
$
0.24
  
Diluted
    
0.15
   
0.21
   
0.20
   
0.13
   
0.22
 
                                 
COMMON SHARE DATA:
                                
Cash dividends declared
  
$
0.05
  
$
0.05
  
$
0.05
  
$
0.05
  
$
0.05
  
Book value at quarter end
    
6.94
   
6.87
   
6.84
   
6.65
   
6.59
 
Market value at quarter end
    
11.08
   
11.45
   
11.30
   
14.01
   
14.55
 
Average common shares outstanding: (000's)
                                
Basic
    
6,871
   
6,985
   
6,976
   
6,941
   
6,921
 
Diluted
    
7,107
   
7,295
   
7,301
   
7,263
   
7,271
 
Common shares outstanding at period end (000's)
    
6,813
   
7,002
   
6,995
   
6,949
   
6,930
 
                                 
OPERATING RATIOS:
                                
Return on average assets
    
0.57
%
  
0.89
%
  
0.87
%
  
0.55
%
  
1.00
 
Return on average common equity
    
8.89
   
13.14
   
12.74
   
8.05
   
15.26
 
Efficiency ratio
    
74.23
   
67.22
   
70.46
   
73.34
   
65.48
 
                                 
BALANCE SHEET DATA (in thousands):
                                
Assets
  
$
746,821
  
$
732,403
  
$
681,302
  
$
694,106
  
$
671,811
  
Deposits
    
612,215
   
596,093
   
541,399
   
566,465
   
557,451
 
Loans
    
567,597
   
541,385
   
515,562
   
507,690
   
498,842
 
Shareholders' equity
    
47,261
   
48,242
   
47,825
   
46,228
   
45,643
 
Allowance for loan losses
    
8,183
   
7,997
   
7,757
   
7,624
   
7,480
 
                                 
TAX-EQUIVALENT YIELDS AND RATES:
                               
Interest-earning assets
    
7.16
%
  
7.28
%
  
7.34
%
  
7.05
%
  
7.13
 
Interest-bearing liabilities
    
4.27
   
4.15
   
4.16
   
4.03
   
3.87
 
Net interest spread
    
2.89
   
3.13
   
3.18
   
3.02
   
3.26
 
Net interest margin
    
3.44
   
3.71
   
3.75
   
3.60
   
3.79
 
                                 
CREDIT QUALITY:
                                
Nonperforming assets (in thousands)
  
$
4,319
  
$
4,977
  
$
6,771
  
$
9,120
  
$
6,473
  
Allowance for loan losses to period-end loans
    
1.44
%
  
1.48
%
  
1.50
%
  
1.50
%
  
1.50
 
Net charge offs to average loans
   
0.19
   
0.08
   
0.05
   
0.35
   
0.14
 
Nonperforming assets to loans and OREO
    
0.76
   
0.92
   
1.31
   
1.80
   
1.30
 
                                 
CAPITAL AND OTHER:
                                
Total equity to assets
    
6.33
%
  
6.59
%
  
7.02
%
  
6.66
%
  
6.79
 
Tier I capital to average assets (leverage)
    
8.17
   
9.21
   
9.24
   
9.13
   
9.12
 
Tier I capital to risk-adjusted assets
    
10.26
   
11.07
   
11.43
   
10.92
   
10.92
 
Total capital to risk-adjusted assets
    
11.52
   
13.72
   
14.21
   
13.72
   
12.91
 
Number of banking offices
    
16
   
15
   
15
   
15
   
14
 
Number of ATMs
    
19
   
18
   
18
   
18
   
17
 
Number of employees
    
197
   
195
   
179
   
185
   
205
 
 

SOURCE Unity Bancorp, Inc.
-0- 10/18/2007
/CONTACT: Alan J. Bedner, EVP, Chief Financial Officer, Unity Bancorp, Inc., +1-908-713-4308 /
/Web site: http://www.unitybank.com /
(UNTY)