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Unity Bancorp Reports Quarterly Net Income Increased 59% and Six Month Net Income Increased 55%

20:00 EDT 19 Jul 2015 | Globe Newswire

CLINTON, N.J., July 20, 2015 (GLOBE NEWSWIRE) -- Unity Bancorp, Inc. (NASDAQ:UNTY), parent company of Unity Bank, reported increased second quarter and year-to-date earnings. Major contributing factors included strong loan growth, increased deposits and improved credit quality. Both commercial and consumer lending were up; with over ten percent growth in residential mortgages year-to-date. 

"Our growth is a reflection of our investment in our communities and employees," reported James A. Hughes, President and CEO.  "Our customers tell us what they need, and we deliver.  When our communities grow, we grow.  It's a win-win."

Net income was $2.4 million, or $0.28 per diluted share, for the three months ended June 30, 2015, a 58.9% increase compared to net income of $1.5 million, or $0.20 per diluted share, for the same period a year ago. Return on average assets and average common equity for the quarter were 1.01% and 13.35%, respectively, compared to 0.68% and 10.31% for the same period a year ago. 

Highlights include:

  • 7.9% loan growth since year-end 2014 - 18.3% growth in consumer loans, 10.1% growth in residential mortgage loans, and 6.6% growth in commercial loans.
  • 14.7% increase in noninterest-bearing demand deposits since year-end 2014.
  • 14.6% increase in net interest income compared to the prior year's quarter due to strong loan growth. 
  • Net interest margin of 3.70% this quarter compared to 3.49% in the prior year's quarter.
  • Improved credit quality metrics and reduced loan loss provision – net recoveries posted compared to net charge-offs in the prior year's quarter and a 25.9% decrease in nonperforming loans.   

"I am extremely pleased with the operating results of the Bank," said James A. Hughes, President and CEO.  "The record earnings are the direct result of an organization that focuses on sales and service.  With a vast array of products that are tailored to our customers' needs, we are experiencing very strong loan and deposit growth.  I am proud to see the continued improvement in the bank's progress, as it is a direct reflection of a great team of employees that are providing the highest level of service to our valued customers." 

For the six months ended June 30, 2015, net income totaled $4.4 million, or $0.51 per diluted share, compared to $2.8 million or $0.37 per diluted share in the prior year's period. Return on average assets and average common equity for the six month periods were 0.92% and 12.23%, respectively, compared to 0.64% and 9.70% for the same period a year ago. 

Net Interest Income

Our core source of earnings, net interest income, increased $1.1 million to $8.4 million for the quarter ended June 30, 2015 compared to the prior year's period. This increase was the result of the strong loan growth in residential mortgage, commercial and consumer loans. Quarterly average residential mortgage loans have increased $58.8 million, average commercial loans increased $52.0 million and consumer loans increased $19.6 million compared to the comparable quarter in 2014. Partially offsetting this increase was the lower level of interest income due to our smaller investment portfolio and the slight increase in deposit interest expense.

The net interest margin increased 21 basis points to 3.70% for the quarter ended June 30, 2015 compared to 3.49% for the prior year's quarter.  The expansion in the net interest margin was due to strong loan growth, lower security balances and the repayment of $10 million in high rate borrowings. 

Provision for Loan Losses

There was no provision for loan losses posted in the quarter ended June 30, 2015, compared to $550 thousand for the prior year period. For the six months ended June 30, 2015, the provision for loan losses was $200 thousand compared to $1.2 million for the same period last year. The decrease was the result of lower levels of net charge-offs facilitated by recoveries and reduced nonperforming assets. 

Noninterest Income

Noninterest income increased $253 thousand to $1.9 million for the three months ended June 30, 2015, compared to the same period last year. For the six months ended June 30, 2015, noninterest income increased $368 thousand to $3.5 million, compared to the same period a year ago.   Quarterly and year-to-date noninterest income increased due to higher gains on the sale of mortgage loans and increased service and loan fee income.  

During the quarter, $49.8 million in residential mortgage loans were originated, of which $24.0 million were sold at a gain of $687 thousand, compared to $36.3 million originated and $11.1 million sold at a gain of $188 thousand during the prior year's quarter. For the six month period, $86.9 million in residential mortgage loans were originated, of which $42.2 million were sold at a gain of $1.0 million, compared to $58.5 million originated and $28.6 million sold at a gain of $553 thousand in the first half of 2014. All residential mortgage loans originated in 2015 that are held in portfolio for investment are adjustable rate mortgages or 15 year or less fixed rate mortgages. 

Service and loan fee income increased $181 thousand and $182 thousand respectively for the three and six months ended June 30, 2015 due to increased loan processing and payoff charges. 

In addition to the noninterest income increases noted above, other notable items included: 1) there were no SBA loan sales this quarter and 2) gains on the sale of securities were significantly less at $28 thousand this quarter compared to $268 thousand in the prior year's quarter.

Noninterest Expense

Noninterest expense increased $508 thousand to $6.7 million for the quarter and increased $751 thousand to $13.2 million for the six months ended June 30, 2015, respectively. The majority of the increase in each period was due to higher compensation and benefits expenses. Compensation and benefits expenses have increased over the past twelve months due to increased head count in loan origination and support staff; as well as higher mortgage commission expense due to the larger volume of mortgages originated. 

Other expense increases included: higher software maintenance expense, advertising, marketing agreements and seasonal events expense as well as director fees. OREO expenses for the quarterly and six month periods decreased due to lower property tax, maintenance, utility and legal costs to hold these properties. 

Financial Condition

At June 30, 2015, total assets were $1.02 billion, an increase of $15.5 million from year-end 2014:

  • Total loans increased $59.9 million or 7.9%, from year-end 2014 to $821.7 million at June 30, 2015. The majority of the growth came in our commercial, residential mortgage and consumer loan portfolios which increased $26.4 million, $22.4 million and $10.8 million, respectively. 
  • Total deposits increased $21.1 million or 2.7%, to $815.4 million at June 30, 2015, due primarily to increased time deposits and noninterest-bearing demand deposits, partially offset by decreased savings deposits and interest-bearing demand deposits. 
  • Shareholders' equity was $73.7 million at June 30, 2015, an increase of $3.6 million from year-end 2014, due to year-to-date net income less the dividends paid.
  • Book value per common share was $8.75 as of June 30, 2015.
  • At June 30, 2015, the leverage, common equity Tier I, Tier I and Total Risk Based Capital ratios were 9.09%, 9.39%, 11.33% and 12.59% respectively, all in excess of the ratios required to be deemed "well-capitalized". 

Credit Quality

  • Nonperforming assets totaled $11.1 million at June 30, 2015, or 1.35% of total loans and OREO, compared to $12.5 million or 1.64% of total loans and OREO at year-end 2014.  
  • Nonperforming loans decreased 22.2% to $8.8 million at June 30, 2015 from year-end.
  • OREO increased $1.1 million to $2.3 million at June 30, 2015 from year-end.
  • The allowance for loan losses totaled $12.4 million at June 30, 2015, or 1.51% of total loans compared to $12.6 million and 1.65% at December 31, 2014.
  • Net recoveries were $223 thousand for the three months ended June 30, 2015, compared to net charge-offs of $499 thousand for the same period a year ago. For the six months ended June 30, 2015, net charge-offs were $347 thousand, a decrease of $1.1 million compared to the prior year's period.

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $1.0 billion in assets and $815 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 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 those items included in our Annual Report on Form 10-K under the heading "Item IA-Risk Factors" as well as 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.

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

 
UNITY BANCORP, INC.
SUMMARY FINANCIAL HIGHLIGHTS 
June 30, 2015
           
         
        June 30, 2015 vs.
        March 31, 2015 June 30, 2014
(In thousands, except percentages and per share amounts) June 30, 2015 March 31, 2015 June 30, 2014  %   % 
BALANCE SHEET DATA:          
Total assets $ 1,024,303 $ 1,035,404 $ 932,414  (1.1)%  9.9%
Total deposits  815,427  789,441  728,083  3.3  12.0
Total loans  821,696  784,642  708,889  4.7  15.9
Total securities  74,375  77,308  90,470  (3.8)  (17.8)
Total shareholders' equity  73,690  71,987  60,477  2.4  21.8
Allowance for loan losses  (12,404)  (12,181)  (12,858)  1.8  (3.5)
           
FINANCIAL DATA - QUARTER TO DATE:          
Income before provision for income taxes $ 3,610 $ 2,959 $ 2,251  22.0  60.4
Provision for income taxes  1,182  1,020  723  15.9  63.5
Net income  $ 2,428 $ 1,939 $ 1,528  25.2  58.9
           
Net income per common share - Basic  $ 0.29  0.23  0.20  26.1  45.0
Net income per common share - Diluted  $ 0.28  0.23  0.20  21.7  40.0
           
Return on average assets  1.01%  0.82%  0.68%  23.2  48.5
Return on average equity   13.35%  11.08%  10.31%  20.5  29.5
Efficiency ratio  64.99%  67.30%  70.81%  (3.4)  (8.2)
Net interest margin  3.70%  3.64%  3.49%  1.6  6.0
           
FINANCIAL DATA - YEAR TO DATE:          
Income before provision for income taxes $ 6,569   $ 4,206    56.2
Provision for income taxes  2,202    1,385    59.0
Net income  $ 4,367   $ 2,821    54.8
           
Net income per common share - Basic  $ 0.52   $ 0.37   $ 40.5
Net income per common share - Diluted  $ 0.51   $ 0.37   $ 37.8
           
Return on average assets  0.92%    0.64%    43.8
Return on average equity   12.23%    9.70%    26.1
Efficiency ratio  66.12%    71.36%    (7.3)
Net interest margin  3.67%    3.53%    4.0
           
SHARE INFORMATION:          
Market price per share $ 9.79 $ 9.08 $ 9.28  7.8  5.5
Dividends paid $ 0.03 $ 0.03 $ 0.02  --   0.5
Book value per common share $ 8.75 $ 8.55 $ 7.95  2.3  10.1
Average diluted shares outstanding (QTD)  8,524  8,514  7,690  0.1  10.8
           
CAPITAL RATIOS:          
Total equity to total assets  7.19%  6.95%  6.49%  3.5  10.8
Leverage ratio  9.09%  8.94%  8.24%  1.7 10.3
Common equity tier 1 risk-based capital ratio  9.39%  9.25%  n/a   n/a  n/a
Tier 1 risk-based capital ratio  11.33%  11.22%  10.86%  1.0  4.3
Total risk-based capital ratio  12.59%  12.48%  12.12%  0.9  3.9
           
CREDIT QUALITY AND RATIOS:          
Nonperforming assets $ 11,102 $ 11,116 $ 13,044 $ (0.1) $ (14.9)
QTD net chargeoffs (annualized) to QTD average loans  (0.11)%  0.30%  0.29%  (136.7)%  (137.9)%
Allowance for loan losses to total loans  1.51%  1.55%  1.81%  (2.6)%  (16.6)%
Nonperforming assets to total loans
and OREO
 1.35%  1.41%  1.84%  (4.3)%  (26.6)%
Nonperforming assets to total assets  1.08%  1.07%  1.40%  0.9%  (22.9)%
         
           
           
(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.
 
UNITY BANCORP, INC.
CONSOLIDATED BALANCE SHEETS 
June 30, 2015
           
         
         June 30, 2015 vs. 
        December 31, 2014 June 30, 2014
(In thousands, except percentages) June 30, 2015 December 31, 2014 June 30, 2014  %   % 
ASSETS          
Cash and due from banks $ 28,240 $ 29,351 $ 35,197  (3.8)%  (19.8)%
Federal funds sold and interest-bearing deposits  62,202  100,470  60,141  (38.1)  3.4
Cash and cash equivalents  90,442  129,821  95,338  (30.3)  (5.1)
Securities:          
Securities available for sale  55,766  60,073  68,734  (7.2)  (18.9)
Securities held to maturity  18,609  20,009  21,736  (7.0)  (14.4)
Total securities  74,375  80,082  90,470  (7.1)  (17.8)
Loans:          
SBA loans held for sale  11,368  5,179  6,444  119.5  76.4
SBA loans held for investment  39,663  40,401  46,890  (1.8)  (15.4)
SBA 504 loans  29,125  34,322  34,452  (15.1)  (15.5)
Commercial loans  428,371  401,949  375,976  6.6  13.9
Residential mortgage loans  243,259  220,878  196,184  10.1  24.0
Consumer loans   69,910  59,096  48,943  18.3  42.8
Total loans  821,696  761,825  708,889  7.9  15.9
Allowance for loan losses  (12,404)  (12,551)  (12,858)  1.2  3.5
Net loans   809,292  749,274  696,031  8.0  16.3
Premises and equipment, net  15,385  15,231  15,469  1.0  (0.5)
Bank owned life insurance ("BOLI")  13,190  13,001  12,941  1.5  1.9
Deferred tax assets  5,928  5,860  6,149  1.2  (3.6)
Federal Home Loan Bank ("FHLB") stock  5,635  6,032  6,378  (6.6)  (11.6)
Accrued interest receivable  3,690  3,518  3,283  4.9  12.4
Other real estate owned ("OREO")  2,265  1,162  1,115  94.9  103.1
Goodwill and other intangibles  1,516  1,516  1,516  --   -- 
Other assets  2,585  3,291  3,724  (21.5)  (30.6)
Total assets $ 1,024,303 $ 1,008,788 $ 932,414  1.5%  9.9%
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
Liabilities:          
Deposits:          
Noninterest-bearing demand $ 175,287 $ 152,785 $ 144,848  14.7%  21.0%
Interest-bearing demand   117,988  128,875  110,590  (8.4)  6.7
Savings   284,369  300,348  256,991  (5.3)  10.7
Time, under $100,000  113,846  113,119  114,605  0.6  (0.7)
Time, $100,000 and over  123,937  99,214  101,049  24.9  22.7
Total deposits  815,427  794,341  728,083  2.7  12.0
Borrowed funds  115,000  125,000  125,000  (8.0)  (8.0)
Subordinated debentures  15,465  15,465  15,465  --   -- 
Accrued interest payable  418  474  466  (11.8)  (10.3)
Accrued expenses and other liabilities  4,303  3,385  2,923  27.1  47.2
Total liabilities  950,613  938,665  871,937  1.3  9.0
Shareholders' equity:          
Common stock  59,067  58,785  52,356  0.5  12.8
Retained earnings  15,055  11,195  8,114  34.5  85.5
Accumulated other comprehensive (loss) income  (432)  143  7  NM   NM 
Total shareholders' equity  73,690  70,123  60,477  5.1  21.8
Total liabilities and shareholders' equity $ 1,024,303 $ 1,008,788 $ 932,414  1.5%  9.9%
         
Issued and outstanding common shares  8,425  8,388  7,607    
 
UNITY BANCORP, INC.
QTD CONSOLIDATED STATEMENTS OF INCOME 
June 30, 2015
         
         June 30, 2015 vs. 
   For the three months ended  March 31, 2015 June 30, 2014
(In thousands, except percentages and per share amounts) June 30, 2015 March 31, 2015 June 30, 2014  $   %   $   % 
INTEREST INCOME              
Federal funds sold and interest-bearing deposits $ 6 $ 9 $ 10 $ (3)  (33.3)% $ (4)  (40.0)%
FHLB stock  38  44  40  (6)  (13.6)  (2)  (5.0)
Securities:              
Taxable  363  387  552  (24)  (6.2)  (189)  (34.2)
Tax-exempt  71  72  90  (1)  (1.4)  (19)  (21.1)
Total securities  434  459  642  (25)  (5.4)  (208)  (32.4)
Loans:              
SBA loans  605  679  643  (74)  (10.9)  (38)  (5.9)
SBA 504 loans  369  346  433  23  6.6  (64)  (14.8)
Commercial loans  5,276  5,066  4,738  210  4.1  538  11.4
Residential mortgage loans  2,716  2,582  2,052  134  5.2  664  32.4
Consumer loans  774  699  544  75  10.7  230  42.3
Total loans  9,740  9,372  8,410  368  3.9  1,330  15.8
Total interest income  10,218  9,884  9,102  334  3.4  1,116  12.3
INTEREST EXPENSE              
Interest-bearing demand deposits  103  106  109  (3)  (2.8)  (6)  (5.5)
Savings deposits  271  264  188  7  2.7  83  44.1
Time deposits  725  686  693  39  5.7  32  4.6
Borrowed funds and subordinated debentures  750  808  807  (58)  (7.2)  (57)  (7.1)
Total interest expense  1,849  1,864  1,797  (15)  (0.8)  52  2.9
Net interest income   8,369  8,020  7,305  349  4.4  1,064  14.6
Provision for loan losses  --   200  550  (200)  (100.0)  (550)  (100.0)
Net interest income after provision for loan losses  8,369  7,820  6,755  549  7.0  1,614  23.9
NONINTEREST INCOME              
Branch fee income  373  346  342  27  7.8  31  9.1
Service and loan fee income  466  296  285  170  57.4  181  63.5
Gain on sale of SBA loans held for sale, net  --   363  255  (363)  (100.0)  (255)  (100.0)
Gain on sale of mortgage loans, net  687  344  188  343  99.7  499  265.4
Net security gains   28  --   268  28  100.0   (240)  (89.6)
Other income  339  292  302  47  16.1  37  12.3
Total noninterest income  1,893  1,641  1,640  252  15.4  253  15.4
NONINTEREST EXPENSE              
Compensation and benefits  3,481  3,472  3,122  9  0.3  359  11.5
Occupancy  601  672  619  (71)  (10.6)  (18)  (2.9)
Processing and communications  614  596  597  18  3.0  17  2.8
Furniture and equipment  422  373  379  49  13.1  43  11.3
Professional services  242  236  247  6  2.5  (5)  (2.0)
Loan costs  160  221  174  (61)  (27.6)  (14)  (8.0)
OREO expenses  67  35  95  32  91.4  (28)  (29.5)
Deposit insurance  150  183  171  (33)  (18.0)  (21)  (12.3)
Advertising  343  182  287  161  88.5  56  19.5
Other expenses  572  532  453  40  7.5  119  26.3
Total noninterest expense  6,652  6,502  6,144  150  2.3  508  8.3
Income before provision for income taxes  3,610  2,959  2,251  651  22.0  1,359  60.4
Provision for income taxes  1,182  1,020  723  162  15.9  459  63.5
Net income  $ 2,428 $ 1,939 $ 1,528 $ 489  25.2% $ 900  58.9%
         
Effective tax rate  32.7%  34.5%  32.1%        
               
Net income per common share - Basic  $ 0.29 $ 0.23 $ 0.20        
Net income per common share - Diluted  $ 0.28 $ 0.23 $ 0.20        
               
Weighted average common shares outstanding - Basic  8,425  8,417  7,605        
Weighted average common shares outstanding - Diluted  8,524  8,514  7,690        
               
               
(1) Defined as net income adjusted for dividends accrued and accretion of discount on perpetual preferred stock divided by weighted average shares outstanding.
 
UNITY BANCORP, INC.
YTD CONSOLIDATED STATEMENTS OF INCOME
June 30, 2015
       
         
   For the six months ended June 30,  Current YTD vs. Prior YTD
(In thousands, except percentages and per share amounts) 2015 2015  $   % 
INTEREST INCOME        
Federal funds sold and interest-bearing deposits $ 16 $ 19 $ (3)  (15.8)%
FHLB stock  81  87  (6)  (6.9)
Securities:        
Taxable  750  1,278  (528)  (41.3)
Tax-exempt  143  195  (52)  (26.7)
Total securities  893  1,473  (580)  (39.4)
Loans:        
SBA loans  1,284  1,226  58  4.7
SBA 504 loans  715  832  (117)  (14.1)
Commercial loans  10,342  9,340  1,002  10.7
Residential mortgage loans  5,298  4,110  1,188  28.9
Consumer loans  1,473  1,039  434  41.8
Total loans  19,112  16,547  2,565  15.5
Total interest income  20,102  18,126  1,976  10.9
INTEREST EXPENSE        
Interest-bearing demand deposits  209  220  (11)  (5.0)
Savings deposits  535  370  165  44.6
Time deposits  1,411  1,337  74  5.5
Borrowed funds and subordinated debentures  1,558  1,606  (48)  (3.0)
Total interest expense  3,713  3,533  180  5.1
Net interest income   16,389  14,593  1,796  12.3
Provision for loan losses  200  1,150  (950)  (82.6)
Net interest income after provision for loan losses  16,189  13,443  2,746  20.4
NONINTEREST INCOME        
Branch fee income  719  718  1  0.1
Service and loan fee income  762  580  182  31.4
Gain on sale of SBA loans held for sale, net  363  337  26  7.7
Gain on sale of mortgage loans, net  1,031  553  478  86.4
BOLI income  189  192  (3)  (1.6)
Net security gains   28  378  (350)  (92.6)
Other income  442  408  34  8.3
Total noninterest income  3,534  3,166  368  11.6
NONINTEREST EXPENSE        
Compensation and benefits  6,952  6,340  612  9.7
Occupancy  1,273  1,279  (6)  (0.5)
Processing and communications  1,210  1,179  31  2.6
Furniture and equipment  795  735  60  8.2
Professional services  478  458  20  4.4
Loan costs  382  344  38  11.0
OREO expenses  103  342  (239)  (69.9)
Deposit insurance  333  349  (16)  (4.6)
Advertising  525  438  87  19.9
Other expenses  1,103  939  164  17.5
Total noninterest expense  13,154  12,403  751  6.1
Income before provision for income taxes  6,569  4,206  2,363  56.2
Provision for income taxes  2,202  1,385  817  59.0
Net income   $ 4,367 $ 2,821 $ 1,546  54.8%
       
Effective tax rate  33.5%  32.9%    
         
Net income per common share - Basic  $ 0.52 $ 0.37    
Net income per common share - Diluted  $ 0.51 $ 0.37    
         
Weighted average common shares outstanding - Basic  8,421  7,596    
Weighted average common shares outstanding - Diluted  8,519  7,672    
         
         
(1) Defined as net income adjusted for dividends accrued and accretion of discount on perpetual preferred stock divided by weighted average shares outstanding.
 
UNITY BANCORP, INC.
QUARTER TO DATE NET INTEREST MARGIN 
June 30, 2015
             
             
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
  For the three months ended
  June 30, 2015 March 31, 2015
  Average Balance Interest  Rate/Yield  Average Balance Interest  Rate/Yield 
ASSETS            
Interest-earning assets:            
Federal funds sold and interest-bearing deposits $ 20,259 $ 6  0.12% $ 37,280 $ 9  0.10%
FHLB stock 3,720 38  4.10 3,847 44  4.64
Securities:            
Taxable 63,834 363  2.28 67,046 387  2.34
Tax-exempt 11,803 105  3.57 11,984 106  3.59
Total securities (A) 75,637 468  2.48 79,030 493  2.53
Loans:            
SBA loans 47,249 605  5.14 48,405 679  5.69
SBA 504 loans 29,539 369  5.01 33,397 346  4.20
Commercial loans 422,371 5,276  5.01 406,095 5,066  5.06
Residential mortgage loans 243,821 2,716  4.47 226,125 2,582  4.63
Consumer loans  67,353 774  4.61 62,355 699  4.55
Total loans (B) 810,333 9,740  4.82 776,377 9,372  4.90
Total interest-earning assets $ 909,949 $ 10,252  4.52% $ 896,534 $ 9,918  4.49%
             
Noninterest-earning assets:            
Cash and due from banks 24,768     29,908    
Allowance for loan losses  (12,430)      (12,701)    
Other assets 43,596     43,206    
Total noninterest-earning assets 55,934     60,413    
Total assets $ 965,883     $ 956,947    
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Interest-bearing liabilities:            
Total interest-bearing demand deposits $ 123,663 $ 103  0.33% $ 126,593 $ 106  0.34%
Total savings deposits 287,911 271  0.38 290,006 264  0.37
Total time deposits 220,403 725  1.32 211,425 686  1.32
Total interest-bearing deposits 631,977 1,099  0.70 628,024 1,056  0.68
Borrowed funds and subordinated debentures 87,944 750  3.42 91,909 808  3.57
Total interest-bearing liabilities $ 719,921 $ 1,849  1.03% $ 719,933 $ 1,864  1.05%
             
Noninterest-bearing liabilities:            
Noninterest-bearing demand deposits 168,585     161,729    
Other liabilities 4,413     4,307    
Total noninterest-bearing liabilities 172,998     166,036    
Total shareholders' equity 72,964     70,978    
Total liabilities and shareholders' equity $ 965,883     $ 956,947    
             
Net interest spread   $ 8,403  3.49%   $ 8,054  3.44%
Tax-equivalent basis adjustment    (34)      (34)  
Net interest income   $ 8,369     $ 8,020  
Net interest margin      3.70%      3.64%
             
(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, 2015
             
             
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
  For the three months ended
  June 30, 2015 June 30, 2014
  Average Balance Interest  Rate/Yield  Average Balance Interest  Rate/Yield 
ASSETS            
Interest-earning assets:            
Federal funds sold and interest-bearing deposits $ 20,259 $ 6  0.12% $ 47,859 $ 10  0.08%
FHLB stock 3,720 38  4.10 4,149 40  3.87
Securities:            
Taxable 63,834 363  2.28 85,598 552  2.58
Tax-exempt 11,803 105  3.57 14,608 133  3.64
Total securities (A) 75,637 468  2.48 100,206 685  2.73
Loans:            
SBA loans 47,249 605  5.14 53,965 643  4.77
SBA 504 loans 29,539 369  5.01 34,415 433  5.05
Commercial loans 422,371 5,276  5.01 370,345 4,738  5.13
Residential mortgage loans 243,821 2,716  4.47 185,016 2,052  4.44
Consumer loans  67,353 774  4.61 47,737 544  4.57
Total loans (B) 810,333 9,740  4.82 691,478 8,410  4.87
Total interest-earning assets $ 909,949 $ 10,252  4.52% $ 843,692 $ 9,145  4.34%
             
Noninterest-earning assets:            
Cash and due from banks 24,768     24,368    
Allowance for loan losses  (12,430)      (13,037)    
Other assets 43,596     45,410    
Total noninterest-earning assets 55,934     56,741    
Total assets $ 965,883     $ 900,433    
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Interest-bearing liabilities:            
Total interest-bearing demand deposits $ 123,663 $ 103  0.33% $ 128,351 $ 109  0.34%
Total savings deposits 287,911 271  0.38 261,419 188  0.29
Total time deposits 220,403 725  1.32 213,122 693  1.30
Total interest-bearing deposits 631,977 1,099  0.70 602,892 990  0.66
Borrowed funds and subordinated debentures 87,944 750  3.42 91,069 807  3.51
Total interest-bearing liabilities $ 719,921 $ 1,849  1.03% $ 693,961 $ 1,797  1.03%
             
Noninterest-bearing liabilities:            
Noninterest-bearing demand deposits 168,585     143,720    
Other liabilities 4,413     3,332    
Total noninterest-bearing liabilities 172,998     147,052    
Total shareholders' equity 72,964     59,420    
Total liabilities and shareholders' equity $ 965,883     900,433    
             
Net interest spread   $ 8,403  3.49%   $ 7,348  3.31%
Tax-equivalent basis adjustment    (34)      (43)  
Net interest income   $ 8,369     $ 7,305  
Net interest margin      3.70%      3.49%
             
(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, 2015
             
             
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
  For the six months ended
  June 30, 2015 June 30, 2014
  Average Balance Interest  Rate/Yield  Average Balance Interest  Rate/Yield 
ASSETS            
Interest-earning assets:            
Federal funds sold and interest-bearing deposits $ 28,722 $ 16  0.11% $ 44,960 $ 19  0.09%
FHLB stock 3,783 81  4.32 4,069 87  4.31
Securities:            
Taxable 65,431 750  2.31 89,183 1,278  2.87
Tax-exempt 11,893 212  3.59 15,718 289  3.68
Total securities (A) 77,324 962  2.51 104,901 1,567  2.99
Loans:            
SBA loans 47,824 1,284  5.41 54,375 1,226  4.51
SBA 504 loans 31,457 715  4.58 33,075 832  5.07
Commercial loans 414,278 10,342  5.03 367,360 9,340  5.13
Residential mortgage loans 235,022 5,298  4.55 183,048 4,110  4.49
Consumer loans  64,868 1,473  4.58 46,843 1,039  4.47
Total loans (B) 793,449 19,112  4.86 684,701 16,547  4.86
Total interest-earning assets $ 903,278 $ 20,171  4.50% $ 838,631 $ 18,220  4.37%
             
Noninterest-earning assets:            
Cash and due from banks 27,324     23,881    
Allowance for loan losses  (12,565)      (13,222)    
Other assets 43,403     44,510    
Total noninterest-earning assets 58,162     55,169    
Total assets $ 961,440     $ 893,800    
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Interest-bearing liabilities:            
Total interest-bearing demand deposits $ 125,120 $ 209  0.34% $ 129,761 $ 220  0.34%
Total savings deposits 288,953 535  0.37 263,856 370  0.28
Total time deposits 215,939 1,411  1.32 209,148 1,337  1.29
Total interest-bearing deposits 630,012 2,155  0.69 602,765 1,927  0.64
Borrowed funds and subordinated debentures 89,916 1,558  3.49 91,167 1,606  3.50
Total interest-bearing liabilities $ 719,928 $ 3,713  1.04% $ 693,932 $ 3,533  1.02%
             
Noninterest-bearing liabilities:            
Noninterest-bearing demand deposits 165,176     137,976    
Other liabilities 4,359     3,251    
Total noninterest-bearing liabilities 169,535     141,227    
Total shareholders' equity 71,977     58,641    
Total liabilities and shareholders' equity $ 961,440     $ 893,800    
             
Net interest spread   $ 16,458  3.46%   $ 14,687  3.35%
Tax-equivalent basis adjustment    (69)      (94)  
Net interest income   $ 16,389     $ 14,593  
Net interest margin      3.67%      3.53%
             
(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.
QUARTERLY ALLOWANCE FOR LOAN LOSSES AND LOAN QUALITY SCHEDULES 
June 30, 2015
           
           
Amounts in thousands, except percentages  June 30, 2015 March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014
ALLOWANCE FOR LOAN LOSSES:          
Balance, beginning of period $ 12,181 $ 12,551 $ 12,918 $ 12,858 $ 12,807
Provision for loan losses charged to expense  -- 200 850 550 550
  12,181 12,751 13,768 13,408 13,357
Less: Chargeoffs          
SBA loans 6 128 569 232 199
SBA 504 loans  -- 589  --  --  --
Commercial loans 147 100 377 72 134
Residential mortgage loans  --  -- 362 201 5
Consumer loans 7 30  -- 211 203
Total chargeoffs 160 847 1,308 716 541
Add: Recoveries          
SBA loans 2 37 12 111 10
SBA 504 loans  --  --  --  --  --
Commercial loans 370 201 31 95 31
Residential mortgage loans 10 39 40 20  --
Consumer loans 1  -- 8  -- 1
Total recoveries 383 277 91 226 42
Net chargeoffs (recoveries)  (223) 570 1,217 490 499
Balance, end of period $ 12,404 $ 12,181 $ 12,551 $ 12,918 $ 12,858
           
LOAN QUALITY INFORMATION:          
Nonperforming loans (1) $ 8,837 $ 9,141 $ 11,368 $ 11,212 $ 11,929
Other real estate owned ("OREO") 2,265 1,975 1,162 1,658 1,115
Nonperforming assets 11,102 11,116 12,530 12,870 13,044
Less: Amount guaranteed by SBA 267 270 1,569 200 2,305
Net nonperforming assets $ 10,835 $ 10,846 $ 10,961 $ 12,670 $ 10,739
           
 Loans 90 days past due & still accruing  $ 273 $ 5 $ 890 $ --  $ --
           
Performing Troubled Debt Restructurings (TDRs) $ 3,360 $ 3,458 $ 3,548 $ 4,194 $ 6,965
(1) Nonperforming TDRs included in nonperforming loans 2,843 2,911 2,960 3,473 741
Total TDRs $ 6,203 $ 6,369 $ 6,508 $ 7,667 $ 7,706
           
Allowance for loan losses to:          
Total loans at quarter end  1.51%  1.55%  1.65%  1.74%  1.81%
Nonperforming loans (1)  140.36  133.26  110.41  115.22  107.79
Nonperforming assets  111.73  109.58  100.17  100.37  98.57
Net nonperforming assets  114.48  112.31  114.51  101.96  119.73
           
QTD net chargeoffs (annualized) to QTD average loans:          
SBA loans  0.03%  0.76%  4.35%  0.90%  1.40%
SBA 504 loans  --   7.15  --   --   -- 
Commercial loans  (0.21)  (0.10)  0.34  (0.02)  0.11
Residential mortgage loans  (0.02)  (0.07)  0.59  0.36  0.01
Consumer loans  0.04  0.20  (0.05)  1.58  1.70
Total loans  (0.11)%  0.30%  0.63%  0.27%  0.29%
           
Nonperforming loans to total loans  1.08%  1.16%  1.49%  1.51%  1.68%
Nonperforming loans and TDRs to total loans  1.48  1.61  1.96  2.07  2.67
Nonperforming assets to total loans and OREO  1.35  1.41  1.64  1.73  1.84
Nonperforming assets to total assets  1.08  1.07  1.24  1.33  1.40
 
UNITY BANCORP, INC.
QUARTERLY FINANCIAL DATA 
June 30, 2015
           
(In thousands, except percentages and per share amounts) June 30, 2015 March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014
SUMMARY OF INCOME:          
Total interest income $ 10,218 $ 9,884 $ 9,802 $ 9,491 $ 9,102
Total interest expense 1,849 1,864 1,914 1,859 1,797
Net interest income 8,369 8,020 7,888 7,632 7,305
Provision for loan losses  -- 200 850 550 550
Net interest income after provision for loan losses 8,369 7,820 7,038 7,082 6,755
Total noninterest income 1,893 1,641 1,660 1,853 1,640
Total noninterest expense 6,652 6,502 6,045 6,241 6,144
Income before provision for income taxes 3,610 2,959 2,653 2,694 2,251
Provision for income taxes 1,182 1,020 952 808 723
Net income  $ 2,428 $ 1,939 $ 1,701 $ 1,886 $ 1,528
           
Net income per common share - Basic  $ 0.29 $ 0.23 $ 0.21 $ 0.24 $ 0.20
Net income per common share - Diluted  $ 0.28 $ 0.23 $ 0.20 $ 0.24 $ 0.20
           
COMMON SHARE DATA:          
Market price per share $ 9.79 $ 9.08 $ 9.43 $ 9.63 $ 9.28
Dividends paid $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.02
Book value per common share $ 8.75 $ 8.55 $ 8.36 $ 8.17 $ 7.95
Weighted average common shares outstanding - Basic 8,425 8,417 8,378 7,847 7,605
           
Weighted average common shares outstanding - Diluted 8,524 8,514 8,478 7,946 7,690
Issued and outstanding common shares 8,425 8,423 8,388 8,370 7,607
           
OPERATING RATIOS (Annualized):          
Return on average assets  1.01%  0.82%  0.70%  0.82%  0.68%
Return on average equity   13.35  11.08  9.78  11.89  10.31
Efficiency ratio  64.99  67.30  63.68  65.80  70.81
           
BALANCE SHEET DATA:          
Total assets $ 1,024,303 $ 1,035,404 $ 1,008,788 $ 969,593 $ 932,414
Total deposits 815,427 789,441 794,341 781,920 728,083
Total loans 821,696 784,642 761,825 744,366 708,889
Total securities 74,375 77,308 80,082 86,879 90,470
Total shareholders' equity 73,690 71,987 70,123 68,384 60,477
Allowance for loan losses  (12,404)  (12,181)  (12,551)  (12,918)  (12,858)
           
TAX EQUIVALENT YIELDS AND RATES:          
Interest-earning assets  4.52%  4.49%  4.35%  4.43%  4.34%
Interest-bearing liabilities  1.03  1.05  1.03  1.05  1.03
Net interest spread  3.49  3.44  3.32  3.38  3.31
Net interest margin  3.70  3.64  3.49  3.56  3.49
           
CREDIT QUALITY:          
Nonperforming assets 11,102 11,116 12,530 12,870 13,044
QTD net chargeoffs (annualized) to QTD average loans  (0.11)%  0.30%  0.63%  0.27%  0.29%
Allowance for loan losses to total loans  1.51  1.55  1.65  1.74  1.81
Nonperforming assets to total loans and OREO  1.35  1.41  1.64  1.73  1.84
Nonperforming assets to total assets  1.08  1.07  1.24  1.33  1.40
           
CAPITAL RATIOS AND OTHER:          
Total equity to total assets  7.19%  6.95%  6.95%  7.05%  6.49%
Leverage ratio 9.09  8.94  8.71  8.96  8.24
Common equity tier 1 risk-based capital ratio  9.39  9.25  n/a   n/a   n/a 
Tier 1 risk-based capital ratio  11.33  11.22  11.57  11.58  10.86
Total risk-based capital ratio  12.59  12.48  12.83  12.84  12.12
Number of banking offices  15  15  15  15  15
Number of ATMs  16  16  16  16  16
Number of employees  177  166  169  163  171
CONTACT: News Media & Financial Analyst Contact:
         Alan J. Bedner, EVP
         Chief Financial Officer
         (908) 713-4308

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