CLINTON, N.J., April 25, 2016 (GLOBE NEWSWIRE) -- Unity Bancorp, Inc. (NASDAQ:UNTY), parent company of Unity Bank, reported a 41% increase in earnings, excluding the effect of a nonrecurring gain during the quarter. Major contributing factors included strong loan growth, increased levels of noninterest income, improved credit quality and expense control.

Net income, excluding a nonrecurring gain on the repurchase of subordinated debentures, was $2.7 million, or $0.31 per diluted share, for the three months ended March 31, 2016, a 41% increase compared to net income of $1.9 million, or $0.23 per diluted share, for the same period a year ago. Return on average assets and average common equity for the quarter, excluding the nonrecurring gain, were 1.00% and 13.67%, respectively, compared to 0.82% and 11.08% for the same period a year ago.

During the quarter, the Company repurchased $5.0 million of its outstanding subordinated “capital qualifying” debentures at a price of $0.5475 per dollar, thus reducing its outstanding subordinated debt to $10.3 million. The repurchase resulted in a nonrecurring pre-tax gain of approximately $2.26 million. James A. Hughes, President and CEO stated, “Although the securities were an inexpensive form of Tier I capital, the discount opportunity was too large to pass up.” Management believes excluding the nonrecurring gain from net income and reporting it in a format which is not in compliance with generally accepted accounting principles (“non-GAAP”) is beneficial to the reader and provides better comparability of the Company’s performance over both periods.

Net income, including the nonrecurring gain on the repurchase of subordinated debentures, was $4.2 million, or $0.48 per diluted share, for the three months ended March 31, 2016, compared to net income of $1.9 million, or $0.23 per diluted share, for the same period a year ago. Return on average assets and average common equity for the quarter were 1.54% and 21.05%, respectively, compared to 0.82% and 11.08% for the same period a year ago.

First quarter highlights also included:

  • Announced plans to open a 16th branch location in Somerville, New Jersey.
  • Purchased our Clinton, Corporate headquarters for $4.1 million.
  • Noninterest-bearing demand deposits rose 1.5% and total deposits increased 3.6% since year-end 2015.
  • Net interest income increased 12.1% compared to the prior year’s quarter due to strong loan growth. 
  • Net interest margin declined to 3.48% this quarter compared to 3.64% in the prior year’s quarter due to a larger Fed Funds balance.
  • Credit quality continued to improve. Loan charge-offs declined and nonperforming loans fell 24.7%.

Mr. Hughes commented on this quarter’s performance, stating, “I am a firm believer that it is our culture of service that gives us the competitive edge. Our strategy is simple; to reach out to every small business in our footprint and sell our personalized banking services. It is our focus on our mission that drives us. It is our culture of respect and service that brings our results. We have a team of highly engaged bankers that make Unity a great place to work and bank.”

Net Interest Income

Net interest income, our core driver of earnings, increased $967 thousand to $9.0 million for the quarter ended March 31, 2016 compared to the prior year’s period. This increase was the result of strong commercial, residential mortgage and consumer loan growth over the past year. Quarterly average commercial loans increased $57.8 million, average residential mortgage loans have increased $38.1 million and consumer loans increased $16.0 million compared to the first quarter in 2015.

The cost of interest-bearing liabilities equaled 1.06% and 1.05% respectively. While the cost of deposits rose 13 basis points to 0.81%, the cost of borrowed funds and subordinated debentures decreased 74 basis points compared to the prior year due to the modification of borrowings with the Federal Home Loan Bank (“FHLB”) over the past year. The increase in the cost of deposits was primarily driven by the intentional growth of five year time deposits.

The net interest margin decreased 16 basis points to 3.48% for the quarter ended March 31, 2016 compared to 3.64% for the prior year’s quarter. This decrease may be attributed to a larger balance of Fed Funds and an increase in interest paid on deposits.

Provision for Loan Losses

The provision for loan losses was stable at $200 thousand for the quarters ended March 31, 2016 and 2015. Quarterly net charge-offs declined $245 thousand to $325 thousand compared to the first quarter 2015 and nonperforming loans have declined 25% to $6.9 million.

Noninterest Income

Noninterest income increased $375 thousand to $2.0 million for the three months ended March 31, 2016, compared to the same period last year. Quarterly noninterest income increased due to higher gains on the sale of residential mortgage loans.

During the quarter, $25.0 million in residential mortgage loans were sold at a gain of $715 thousand, compared to $15.0 million in loans sold at a gain of $344 thousand during the prior year’s quarter. Our mortgage pipeline remains strong and we expect a good year in mortgage originations. Since 2014, all residential mortgage loans that are held for investment are adjustable rate mortgages or fixed rate mortgages with a term of 15 years or less.

In addition to the increase in noninterest income related to gains on mortgage sales noted above, other notable items included:

  • Branch fee income declined in the quarterly period due to lower levels of overdraft fees, partially offset by increased fees from our commercial analysis checking accounts.
  • Service and loan fee income declined in the quarterly period due to reduced loan late charges and payoff fees, combined with lower SBA servicing fees as our serviced loan portfolio declined compared to the same quarter a year ago. 
  • SBA loan sales totaled $3.5 million during each quarter with net gains on sale of $308 thousand and $363 thousand, respectively. Lower net gains on sale were realized during the first quarter 2016 due to the sale of shorter-term loans with lower premiums on sale compared to the prior year’s quarter.
  • Security gains totaled $94 thousand for the quarter. There were no gains on the sale of securities in the quarter-ended March 31, 2015.

Noninterest Expense

Noninterest expense increased $105 thousand or 1.6% to $6.6 million for the quarter. The increases were due to higher employee benefit expenses such as medical insurance, retirement and 401(k) plan benefits, higher network and software related maintenance costs to upgrade our technology, and advertising expenses. Occupancy expenses fell due to lower seasonal snow removal expense and property rental expense due to the purchase of our headquarters. In addition, loan and OREO expenses have declined as credit quality improves.

Financial Condition

At March 31, 2016, total assets were $1.1 billion, an increase of $36.1 million from year-end 2015:

  • Total loans decreased $2.0 million or 0.2%, from year-end 2015 to $887.0 million at March 31, 2016. Consumer and commercial loan portfolios increased $2.1 million and $1.7 million, respectively. Residential mortgage loans decreased $3.6 million while SBA loans remained flat after $3.5 million in sales. The decline in total loans was due to slightly lower production levels, large prepayments and the sale of residential portfolio loans. Our pipeline in all categories remains strong and loan growth is expected in future quarters.
  • Other assets increased due to the purchase of the Company’s Clinton, New Jersey headquarters for $4.12 million.
  • Total deposits increased $32.3 million or 3.6%, to $926.8 million at March 31, 2016 due to our eSavings promotion and $10.0 million in brokered time deposits.
  • Borrowed funds increased $3.0 million to $95.0 million at March 31, 2016, due to reduced overnight borrowings of $7.0 million compared to year-end 2015 and the addition of a $10.0 million adjustable rate borrowing. Also, during the quarter, $10.0 million in Federal Home Loan Bank borrowings at an average cost of 4.27% were extended to 2020 at an average rate of 2.10%.
  • Subordinated debentures decreased from year-end due to the repurchase of $5.0 million at a discount of $0.5475 per dollar.
  • Shareholders’ equity was $82.3 million at March 31, 2016, an increase of $3.8 million from year-end 2015, due to year-to-date net income less the dividends paid to shareholders.
  • Book value per common share was $9.72 as of March 31, 2016.
  • At March 31, 2016, the leverage, common equity Tier I, Tier I and Total Risk Based Capital ratios were 8.31%, 9.77%, 10.97% and 12.22% respectively, all in excess of the ratios required to be deemed “well-capitalized”.

Credit Quality

  • Nonperforming assets totaled $8.3 million at March 31, 2016, or 0.93% of total loans and OREO, compared to $8.9 million or 0.99% of total loans and OREO at year-end 2015.
  • Nonperforming loans decreased 5.14% to $6.9 million at March 31, 2016 from year-end.
  • OREO decreased $174 thousand to $1.4 million at March 31, 2016 from year-end.
  • The allowance for loan losses totaled $12.6 million at March 31, 2016, or 1.42% of total loans compared to $12.2 million and 1.55% at March 31, 2015.
  • Net charge-offs were $325 thousand for the three months ended March 31, 2016, compared to $570 thousand for the same period a year ago.

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $1.1 billion in assets and $927 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     
NON-GAAP    
March 31, 2016    
                                 
                                 
                  Mar. 31, 2016 vs.    
                  Dec. 31, 2015   Mar. 31, 2015    
(In thousands, except percentages and per share amounts)   Mar. 31, 2016   Dec. 31, 2015   Mar. 31, 2015      %     %     
BALANCE SHEET DATA:                                
Total assets   $     1,120,955     $   1,084,866     $   1,035,404         3.3   %   8.3   %  
Total deposits         926,819         894,493         789,441         3.6       17.4      
Total loans         886,990         888,958         784,642         (0.2 )     13.0      
Total securities         66,729         71,336         77,308         (6.5 )     (13.7 )    
Total shareholders' equity         82,276         78,470         71,987         4.9       14.3      
Allowance for loan losses         (12,634 )       (12,759 )       (12,181 )       1.0       3.7      
                                 
FINANCIAL DATA - QUARTER TO DATE:                                
Income before provision for income taxes and gain on subordinated debenture   $     4,196     $   3,954     $   2,959         6.1       41.8      
Provision for income taxes         1,464         1,315         1,020         11.3       43.5      
Net income before gain on subordinated debenture   $     2,732     $   2,639     $   1,939         3.5       40.9      
Gain on subordinated debenture, net of tax         1,473         -         -         NM       NM      
Net income   $     4,205     $   2,639     $   1,939         59.3       116.9      
                                 
Net income before gain on subordinated debenture per:                                
Common share - basic   $     0.32     $   0.31     $   0.23         3.2       39.1      
Common share - diluted   $     0.31     $   0.31     $   0.23         -       34.8      
                                 
Net income per:                                
Common share - basic   $     0.50     $   0.31     $   0.23         61.3       117.4      
Common share - diluted   $     0.48     $   0.31     $   0.23         54.8       108.7      
                                 
Net income before gain on subordinated debenture ratios:                                
Return on average assets         1.00   %   1.00   %     0.82   %     -       22.0      
Return on average equity         13.67   %   13.59   %     11.08   %     0.6       23.4      
Efficiency ratio         60.05   %   62.81   %     67.30   %     (4.4 )     (10.8 )    
                                 
Net income ratios:                                
Return on average assets         1.54   %   1.00   %     0.82   %     54.0       87.8      
Return on average equity         21.05   %   13.59   %     11.08   %     54.9       90.0      
Efficiency ratio         50.16   %   62.81   %     67.30   %     (20.1 )     (25.5 )    
                                 
Net interest margin         3.48   %   3.60   %     3.64   %     (3.3 )     (4.4 )    
                                 
SHARE INFORMATION:                                
Market price per share   $     11.37     $   12.47     $   9.08         (8.8 )     25.2      
Dividends paid   $     0.04     $   0.04     $   0.03         -       0.3      
Book value per common share   $     9.72     $   9.30     $   8.55         4.5       13.7      
Average diluted shares outstanding (QTD)         8,682         8,547         8,514         1.6       2.0      
                                 
CAPITAL RATIOS:                                
Total equity to total assets         7.34   %   7.23   %     6.95   %     1.5       5.6      
Leverage ratio         8.31   %   8.82   %     8.94   %     (5.8 )     (7.0 )    
Common equity tier 1 risk-based capital ratio         9.77   %   9.37   %     9.25   %     n/a       n/a      
Tier 1 risk-based capital ratio         10.97   %   11.18   %     11.22   %     (1.9 )     (2.2 )    
Total risk-based capital ratio         12.22   %   12.43   %     12.48   %     (1.7 )     (2.1 )    
                                 
CREDIT QUALITY AND RATIOS:                                
Nonperforming assets   $     8,304     $   8,851     $   11,116         (6.2 )     (25.3 )    
QTD net chargeoffs (annualized) to QTD average loans         0.15   %   (0.11 ) %     0.30   %     236.4       (50.0 )    
Allowance for loan losses to total loans         1.42   %   1.44   %     1.55   %     (1.4 )     (8.4 )    
Nonperforming assets to total loans
and OREO
        0.93   %   0.99   %     1.41   %     (6.1 )     (34.0 )    
Nonperforming assets to total assets         0.74   %     0.82   %     1.07   %     (9.8 ) %   (30.8 ) %  
                                 
                                 

 

                               
UNITY BANCORP, INC.  
CONSOLIDATED BALANCE SHEETS  
March 31, 2016  
                               
                               
                      Mar. 31, 2016 vs.    
                      Dec. 31, 2015   Mar. 31, 2015    
(In thousands, except percentages)   Mar. 31, 2016   Dec. 31, 2015     Mar. 31, 2015      %     %     
ASSETS                              
Cash and due from banks   $     26,919     22,681     $   25,282         18.7   %   6.5   %  
Federal funds sold and interest-bearing deposits         99,554       65,476         108,563         52.0       (8.3 )    
Cash and cash equivalents         126,473       88,157         133,845         43.5       (5.5 )    
Securities:                              
Securities available for sale         48,566       52,865         57,875         (8.1 )     (16.1 )    
Securities held to maturity         18,163       18,471         19,433         (1.7 )     (6.5 )    
Total securities         66,729       71,336         77,308         (6.5 )     (13.7 )    
Loans:                              
SBA loans held for sale         13,224       13,114         6,929         0.8       90.9      
SBA loans held for investment         38,863       39,393         39,155         (1.3 )     (0.7 )    
SBA 504 loans         27,482       29,353         29,893         (6.4 )     (8.1 )    
Commercial loans         467,266       465,518         410,742         0.4       13.8      
Residential mortgage loans         260,957       264,523         235,371         (1.3 )     10.9      
Consumer loans         79,198       77,057         62,552         2.8       26.6      
Total loans         886,990       888,958         784,642         (0.2 )     13.0      
Allowance for loan losses         (12,634 )     (12,759 )       (12,181 )       1.0       3.7      
Net loans         874,356       876,199         772,461         (0.2 )     13.2      
Premises and equipment, net         19,211       15,171         15,465         26.6       24.2      
Bank owned life insurance ("BOLI")         13,475       13,381         13,095         0.7       2.9      
Deferred tax assets         6,029       5,968         5,743         1.0       5.0      
Federal Home Loan Bank ("FHLB") stock         4,735       4,600         7,382         2.9       (35.9 )    
Accrued interest receivable         3,839       3,884         3,637         (1.2 )     5.6      
Other real estate owned ("OREO")         1,417       1,591         1,975         (10.9 )     (28.3 )    
Goodwill and other intangibles         1,516       1,516         1,516         -       -      
Other assets         3,175       3,063         2,977         3.7       6.7      
Total assets   $     1,120,955     1,084,866     $   1,035,404         3.3   %   8.3   %  
                               
LIABILITIES AND SHAREHOLDERS' EQUITY                        
Liabilities:                              
Deposits:                              
Noninterest-bearing demand   $     188,026     185,267     $   163,535         1.5   %   15.0   %  
Interest-bearing demand         128,774       130,605         124,110         (1.4 )     3.8      
Savings         320,982       301,447         290,843         6.5       10.4      
Time, under $100,000         145,784       134,468         112,671         8.4       29.4      
Time, $100,000 and over, under $250,000         106,419       104,106         78,411         2.2       35.7      
Time, $250,000 and over         36,834       38,600         19,871         (4.6 )     85.4      
Total deposits         926,819       894,493         789,441         3.6       17.4      
Borrowed funds         95,000       92,000         155,000         3.3       (38.7 )    
Subordinated debentures         10,310       15,465         15,465         (33.3 )     (33.3 )    
Accrued interest payable         390       461         478         (15.4 )     (18.4 )    
Accrued expenses and other liabilities         6,160       3,977         3,033         54.9       103.1      
Total liabilities         1,038,679       1,006,396         963,417         3.2       7.8      
Shareholders' equity:                              
Common stock         59,546       59,371         58,927         0.3       1.1      
Retained earnings         23,431       19,566         12,880         19.8       81.9      
Accumulated other comprehensive (loss) income         (701 )     (467 )       180         NM       NM      
Total shareholders' equity         82,276       78,470         71,987         4.9       14.3      
Total liabilities and shareholders' equity   $     1,120,955     1,084,866     $   1,035,404         3.3   %   8.3   %  
                               
Issued and outstanding common shares         8,468       8,436         8,423                
                               

 

                                               
UNITY BANCORP, INC. 
QTD CONSOLIDATED STATEMENTS OF INCOME
NON-GAAP
March 31, 2016
                                               
             
                         Mar. 31, 2016 vs.   
     For the three months ended      Dec. 31, 2015   Mar. 31, 2015  
(In thousands, except percentages and per share amounts)   Mar. 31, 2016   Dec. 31, 2015   Mar. 31, 2015      $     %     $     %   
INTEREST INCOME                                              
Federal funds sold and interest-bearing deposits   $   44   $ 13   $ 9     $   31         238.5   % $   35         388.9   %
FHLB stock     52     37     44         15         40.5         8         18.2    
Securities:                                              
Taxable       363     360     387         3         0.8         (24 )       (6.2 )  
Tax-exempt       62     70     72         (8 )       (11.4 )       (10 )       (13.9 )  
Total securities       425     430     459         (5 )       (1.2 )       (34 )       (7.4 )  
Loans:                                                
SBA loans     721     713     679         8         1.1         42         6.2    
SBA 504 loans     385     346     346         39         11.3         39         11.3    
Commercial loans     5,676     5,637     5,066         39         0.7         610         12.0    
Residential mortgage loans   2,942     2,939     2,582         3         0.1         360         13.9    
Consumer loans       931     880     699         51         5.8         232         33.2    
Total loans     10,655     10,515     9,372         140         1.3         1,283         13.7    
Total interest income      11,176     10,995     9,884         181         1.6         1,292         13.1    
INTEREST EXPENSE                                              
Interest-bearing demand deposits   137     121     106         16         13.2         31         29.2    
Savings deposits     366     298     264         68         22.8         102         38.6    
Time deposits     951     910     686         41         4.5         265         38.6    
Borrowed funds and subordinated debentures       735     686     808         49         7.1         (73 )       (9.0 )  
Total interest expense       2,189      2,015     1,864         174         8.6         325         17.4    
Net interest income       8,987     8,980     8,020         7         0.1         967         12.1    
Provision for loan losses       200     100     200         100         100.0         -         -    
Net interest income after provision for loan losses       8,787     8,880     7,820         (93 )       (1.0 )       967         12.4    
NONINTEREST INCOME                                              
Branch fee income     333     402     346         (69 )       (17.2 )       (13 )       (3.8 )  
Service and loan fee income   255     266     296         (11 )       (4.1 )       (41 )       (13.9 )  
Gain on sale of SBA loans held for sale, net       308     533     363         (225 )       (42.2 )       (55 )       (15.2 )  
Gain on sale of mortgage loans, net       715     379     344         336         88.7         371         107.8    
BOLI income     94     96     94         (2 )       (2.1 )       -         -    
Net security gains     94     -     -         94         100.0         94         100.0    
Other income       217     244     198         (27 )       (11.1 )       19         9.6    
Total noninterest income       2,016     1,920     1,641         96         5.0         375         22.9    
NONINTEREST EXPENSE                                              
Compensation and benefits   3,549     3,528     3,472         21         0.6         77         2.2    
Occupancy       618     644     672         (26 )       (4.0 )       (54 )       (8.0 )  
Processing and communications   598     620     596         (22 )       (3.5 )       2         0.3    
Furniture and equipment     420     455     373         (35 )       (7.7 )       47         12.6    
Professional services     255     213     236         42         19.7         19         8.1    
Loan costs       198     113     221         85         75.2         (23 )       (10.4 )  
OREO expenses     24     265     35         (241 )       (90.9 )       (11 )       (31.4 )  
Deposit insurance     160     173     183         (13 )       (7.5 )       (23 )       (12.6 )  
Advertising       241     302     182         (61 )       (20.2 )       59         32.4    
Other expenses       544     533     532         11         2.1         12         2.3    
Total noninterest expense       6,607     6,846     6,502         (239 )       (3.5 )       105         1.6    
Income before provision for income taxes and gain on subordinated debenture       4,196     3,954     2,959         242         6.1         1,237         41.8    
Provision for income taxes       1,464     1,315     1,020         149         11.3         444         43.5    
Net income before gain on subordinated debenture   $   2,732   $ 2,639   $ 1,939     $   93         3.5   % $   793         40.9   %
Gain on subordinated debenture, net of tax       1,473     -     -         1,473         NM         1,473         NM    
Net income   $   4,205   $ 2,639   $ 1,939     $   1,566         59.3   % $   2,266         116.9   %
                                               
Effective tax rate     34.9 %   33.3 %   34.5 %                          
                                               
Net income before gain on subordinated debenture per:                                      
Common share - basic   $   0.32   $ 0.31   $ 0.23                            
Common share - diluted $   0.31   $ 0.31   $ 0.23                            
                                               
Net income per:                                            
Common share - basic   $   0.50   $ 0.31   $ 0.23                            
Common share - diluted $   0.48   $ 0.31   $ 0.23                            
                                               
Weighted average common shares outstanding - Basic       8,459     8,430     8,417                            
Weighted average common shares outstanding - Diluted       8,682     8,547     8,514                            
                                               

 

                                         
UNITY BANCORP, INC.  
QUARTER TO DATE NET INTEREST MARGIN  
March 31, 2016  
                                         
                             
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)    
    For the three months ended    
    March 31, 2016   December 31, 2015    
        Average Balance     Interest    Rate/Yield    Average Balance   Interest    Rate/Yield     
ASSETS                                        
Interest-earning assets:                                      
Federal funds sold and interest-bearing deposits $   78,681     $   44         0.22 % $   47,421     $   13       0.11 %  
FHLB stock     4,549         52         4.60       3,700         37       3.97    
Securities:                                        
Taxable       59,152         363         2.47       59,425         360       2.40    
Tax-exempt       9,548         94         3.96       11,564         104       3.57    
Total securities (A)       68,700         457         2.68       70,989         464       2.59    
Loans:                                        
SBA loans       53,942         721         5.38       54,912         713       5.15    
SBA 504 loans       29,232         385         5.30       29,319         346       4.68    
Commercial loans       463,927         5,676         4.92       452,494         5,637       4.94    
Residential mortgage loans       264,208         2,942         4.48       259,938         2,939       4.49    
Consumer loans       78,328         931         4.78       75,789         880       4.61    
Total loans (B)       889,637         10,655         4.82       872,452         10,515       4.78    
Total interest-earning assets   $   1,041,567     $   11,208         4.33 % $   994,562     $   11,029       4.40 %  
                                         
Noninterest-earning assets:                                    
Cash and due from banks     27,006                     24,214                  
Allowance for loan losses       (12,926 )                   (12,801 )                
Other assets       45,486                     44,055                  
Total noninterest-earning assets       59,566                     55,468                  
Total assets   $   1,101,133                 $   1,050,030                  
                                         
LIABILITIES AND SHAREHOLDERS' EQUITY                                  
Interest-bearing liabilities:                                    
Total interest-bearing demand deposits $   131,339     $   137         0.42 % $   131,800     $   121       0.36 %  
Total savings deposits     310,251         366         0.47       295,013         298       0.40    
Total time deposits       282,110         951         1.36       271,647         910       1.33    
Total interest-bearing deposits       723,700         1,454         0.81       698,460         1,329       0.75    
Borrowed funds and subordinated debentures       104,350         735         2.83       87,465         686       3.11    
Total interest-bearing liabilities   $   828,050     $   2,189         1.06 % $   785,925     $   2,015       1.02 %  
                                         
Noninterest-bearing liabilities:                                    
Noninterest-bearing demand deposits   187,226                     182,024                  
Other liabilities       5,528                     5,056                  
Total noninterest-bearing liabilities       192,754                     187,080                  
Total shareholders' equity       80,329                     77,025                  
Total liabilities and shareholders' equity   $   1,101,133                 $   1,050,030                  
                                         
Net interest spread       $   9,019         3.27 %       $   9,014       3.38 %  
Tax-equivalent basis adjustment               (32 )                   (34 )          
Net interest income         $   8,987                 $   8,980            
Net interest margin                   3.48 %               3.60 %  
                                         
(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 35 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  
March 31, 2016  
                                         
                             
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)    
    For the three months ended    
    March 31, 2016   March 31, 2015    
    Average Balance   Interest    Rate/Yield    Average Balance   Interest    Rate/Yield     
ASSETS                                        
Interest-earning assets:                                      
Federal funds sold and interest-bearing deposits   $   78,681     $   44         0.22 % $   37,280     $   9       0.10 %  
FHLB stock       4,549         52         4.60       3,847         44       4.64    
Securities:                                        
Taxable       59,152         363         2.47       67,046         387       2.34    
Tax-exempt       9,548         94         3.96       11,984         106       3.59    
Total securities (A)       68,700         457         2.68       79,030         493       2.53    
Loans:                                        
SBA loans       53,942         721         5.38       48,405         679       5.69    
SBA 504 loans       29,232         385         5.30       33,397         346       4.20    
Commercial loans       463,927         5,676         4.92       406,095         5,066       5.06    
Residential mortgage loans       264,208         2,942         4.48       226,125         2,582       4.63    
Consumer loans       78,328         931         4.78       62,355         699       4.55    
Total loans (B)       889,637         10,655         4.82       776,377         9,372       4.90    
Total interest-earning assets   $   1,041,567     $   11,208         4.33 % $   896,534     $   9,918       4.49 %  
                                         
Noninterest-earning assets:                                    
Cash and due from banks     27,006                     29,908                  
Allowance for loan losses       (12,926 )                   (12,701 )                
Other assets       45,486                     43,206                  
Total noninterest-earning assets       59,566                     60,413                  
Total assets   $   1,101,133                 $   956,947                  
                                         
LIABILITIES AND SHAREHOLDERS' EQUITY                                  
Interest-bearing liabilities:                                    
Total interest-bearing demand deposits $   131,339     $   137         0.42 % $   126,593     $   106       0.34 %  
Total savings deposits     310,251         366         0.47       290,006         264       0.37    
Total time deposits       282,110         951         1.36       211,425         686       1.32    
Total interest-bearing deposits       723,700         1,454         0.81       628,024         1,056       0.68    
Borrowed funds and subordinated debentures       104,350         735         2.83       91,909         808       3.57    
Total interest-bearing liabilities   $   828,050     $   2,189         1.06 % $   719,933     $   1,864       1.05 %  
                                         
Noninterest-bearing liabilities:                                    
Noninterest-bearing demand deposits   187,226                     161,729                  
Other liabilities       5,528                     4,307                  
Total noninterest-bearing liabilities       192,754                     166,036                  
Total shareholders' equity       80,329                     70,978                  
Total liabilities and shareholders' equity   $   1,101,133                 $   956,947                  
                                         
Net interest spread       $   9,019         3.27 %       $   8,054       3.44 %  
Tax-equivalent basis adjustment               (32 )                   (34 )          
Net interest income         $   8,987                 $   8,020            
Net interest margin                   3.48 %               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 35 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  
March 31, 2016  
                                 
                                 
Amounts in thousands, except percentages    Mar. 31, 2016   Dec. 31, 2015   Sept. 30, 2015   Jun. 30, 2015   Mar. 31, 2015  
ALLOWANCE FOR LOAN LOSSES:                                
Balance, beginning of period $ 12,759   $   12,421     $ 12,404   $   12,181     $   12,551    
Provision for loan losses charged to expense     200       100       200       -         200    
      12,959       12,521       12,604       12,181         12,751    
Less: Chargeoffs                                
SBA loans     86       151       86       6         128    
SBA 504 loans       -       -       -       -         589    
Commercial loans     228       52       10       147         100    
Residential mortgage loans       -       -       50       -         -    
Consumer loans     28       41       52       7         30    
Total chargeoffs     342       244       198       160         847    
Add: Recoveries                                
SBA loans     11       6       10       2         37    
SBA 504 loans       -       -       -       -         -    
Commercial loans     6       476       5       370         201    
Residential mortgage loans       -       -       -       10         39    
Consumer loans       -       -       -       1         -    
Total recoveries     17       482       15       383         277    
Net chargeoffs (recoveries)     325       (238 )     183       (223 )       570    
Balance, end of period   $ 12,634   $   12,759     $ 12,421   $   12,404     $   12,181    
                                 
LOAN QUALITY INFORMATION:                            
Nonperforming loans (1) $ 6,887   $   7,260     $ 10,742   $   8,837     $   9,141    
Other real estate owned ("OREO")     1,417       1,591       1,759       2,265         1,975    
Nonperforming assets     8,304       8,851       12,501       11,102         11,116    
Less:  Amount guaranteed by SBA     243       288       225       267         270    
Net nonperforming assets   $ 8,061   $   8,563     $ 12,276   $   10,835     $   10,846    
                                 
Loans 90 days past due & still accruing $  -   $   -     $ 272   $   273     $   5    
                                 
Performing Troubled Debt Restructurings (TDRs) $ 844   $   3,015     $ 3,268   $   3,360     $   3,458    
(1) Nonperforming TDRs included in nonperforming loans     293       293       2,808       2,843         2,911    
Total TDRs   $ 1,137   $   3,308     $ 6,076   $   6,203     $   6,369    
                                 
Allowance for loan losses to:                            
Total loans at quarter end       1.42 %     1.44   %   1.45 %     1.51   %     1.55   %
Nonperforming loans (1)       183.45       175.74       115.63       140.36         133.26    
Nonperforming assets       152.14       144.15       99.36       111.73         109.58    
Net nonperforming assets       156.73       149.00       101.18       114.48         112.31    
                                 
QTD net chargeoffs (annualized) to QTD average loans:                                
SBA loans       0.56 %     1.05   %   0.57 %     0.03   %     0.76   %
SBA 504 loans       -        -       -       -         7.15    
Commercial loans       0.19       (0.37 )     -       (0.21 )       (0.10 )  
Residential mortgage loans       -        -       0.08       (0.02 )       (0.07 )  
Consumer loans       0.14       0.21       0.28       0.04         0.20    
     Total loans       0.15 %     (0.11 ) %   0.09 %     (0.11 ) %     0.30   %
                                 
Nonperforming loans to total loans   0.78 %     0.82   %   1.26 %     1.08   %     1.16   %
Nonperforming loans and TDRs to total loans       0.87       1.16       1.64       1.48         1.61    
Nonperforming assets to total loans and OREO       0.93       0.99       1.46       1.35         1.41    
Nonperforming assets to total assets       0.74       0.82       1.19       1.08         1.07    
                                 

 

                                   
UNITY BANCORP, INC.  
QUARTERLY FINANCIAL DATA  
NON-GAAP  
March 31, 2016