Unity Bancorp Announces Repurchase of Subordinated Debentures

CLINTON, N.J., Feb. 29, 2016 (GLOBE NEWSWIRE) -- Unity Bancorp, Inc. (NASDAQ:UNTY), parent company of Unity Bank, announced today that the Company repurchased $5.0 million of its outstanding subordinated debentures on February 26, 2016, reducing its outstanding subordinated debt to $10 million.  The subordinated debentures were repurchased at a price of $0.5475 per dollar, resulting in a pre-tax gain of approximately $2.25 million on the transaction.

The subordinated debentures were previously issued by Unity (NJ) Statutory Trust III, a statutory business trust and wholly-owned subsidiary of Unity Bancorp, Inc., on December 19, 2006 and were due on December 19, 2036.  The floating interest rate was 3 month Libor plus 165 basis points and repriced quarterly. 

These securities qualified as Tier I capital under the terms of the Dodd-Frank Wall Street Reform and Consumer Protection Act and thus repurchasing them reduced Tier I capital.  Below are our reported December 31, 2015 capital ratios and pro forma ratios.  All ratios are in excess of those required to be “well-capitalized.”
“Although the securities were an inexpensive form of capital, the discount was too large to pass up,” said James A Hughes, President and CEO.  “The transaction will be accretive to Book value per share of approximately $0.18.  I am confident that our earnings will generate ample capital to continue our growth in 2016 and beyond.”