CLINTON, N.J., April 22, 2015 (GLOBE NEWSWIRE) — Unity Bancorp, Inc. (Nasdaq:UNTY), parent company of Unity Bank, reported net income of $1.9 million, or $0.23 per diluted share, for the three months ended March 31, 2015, a 50.0% increase compared to net income of $1.3 million, or $0.17 per diluted share, for the same period a year ago. Return on average assets and average common equity for the quarter were 0.82% and 11.08%, respectively, compared to 0.59% and 9.06% for the same period a year ago.
- 3.0% loan growth since year-end 2014 – 6.6% growth in residential mortgage loans, 5.8% growth in consumer loans and 2.2% growth in commercial loans.
- 10.1% increase in net interest income compared to the prior year's quarter due to strong loan growth.
- Net interest margin of 3.64% this quarter compared to 3.57% in the prior year's quarter.
- Improved credit quality metrics and reduced loan loss provision - 24.1% decrease in nonperforming loans and lower level of net charge-offs compared to the prior year's quarter.
"Our continued earnings momentum is a direct result of our commitment to providing exceptional service to our customers," reported James A. Hughes, President and CEO. "We are realizing record loan volume, as all of our loan departments are exceeding their goals. I have never been more confident about our ability to continue to grow market share, which in turn will result in increased shareholder value. I know this year will be a defining year for Unity, as we continue to build an organization that focuses on service and sales. I look forward to reporting our future successes."
Net Interest Income
Our core source of earnings, net interest income, increased $733 thousand to $8.0 million for the quarter ended March 31, 2015 compared to the prior year's period. This increase was the result of the strong loan growth over the past twelve months in commercial, residential mortgage and consumer loans. Quarterly average residential mortgage loans have increased $45.1 million, average commercial loans increased $41.8 million and consumer loans increased $16.4 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 increase in deposit interest expense.
The net interest margin increased 7 basis points to 3.64% for the quarter ended March 31, 2015 compared to 3.57% for the prior year's quarter. We expect net interest income and net interest margin to continue to expand in future quarters due to strong loan growth.
Provision for Loan Losses
The provision for loan losses decreased $400 thousand to $200 thousand for the quarter ended March 31, 2015, compared to $600 thousand for the prior year period. The decrease was the result of improving credit quality as evidenced by lower levels of net charge-offs and reduced nonperforming assets.
Noninterest income increased $115 thousand to $1.6 million for the three months ended March 31, 2015, compared to the same period last year. Quarterly noninterest income increased due to higher gains on the sale of SBA loans. SBA loan sales totaled $3.5 million with net gains on sale of $363 thousand this quarter compared to sales of $928 thousand and net gains of $83 thousand in the prior year's quarter.
Quarterly gains on the sale of mortgage loans decreased slightly on a lower sales volume. During the quarter, $37.1 million in residential mortgage loans were originated, of which $15.0 million were sold at a gain of $344 thousand, compared to $22.2 million originated and $17.4 million sold at a gain of $365 thousand during the prior year's quarter. Approximately $7.5 million of the loans sold during the first quarter 2014 were from our portfolio, with the remainder consisting of new production.
Security gains totaled $110 thousand for the prior year's quarter. There were no security gains or losses on sales realized during the quarter.
Branch fee income, which consists of service charges and overdraft fees, declined $31 thousand in the quarter. The decreases were due to a lower volume of overdraft fees.
Noninterest expense increased $244 thousand to $6.5 million for the quarter ended March 31, 2015. Compensation and benefits expenses have increased over the past twelve months due to increased head count in loan origination and support staff. Other expense increases included professional services, advertising, marketing agreements and promotional gift expense as well as director fees. Other real estate owned ("OREO") expenses decreased $212 thousand this quarter compared to a year ago due to the disposition of properties which had higher holding costs such as property maintenance, taxes and legal costs in the prior year's period.
At March 31, 2015, total assets were $1.0 billion, an increase of $26.6 million from year-end 2014:
- Total loans increased $22.8 million or 3.0%, from year-end 2014 to $784.6 million at March 31, 2015. The majority of the growth came in our residential mortgage, commercial and consumer loan portfolios which increased $14.5 million, $8.8 million and $3.5 million, respectively.
- Total deposits decreased $4.9 million or 0.6%, to $789.4 million at March 31, 2015, due primarily to decreased savings, interest-bearing demand and time deposits, partially offset by an increase in noninterest-bearing demand deposits. The decreased savings and interest-bearing demand deposit balances were due to seasonal reductions in municipal deposits.
- Shareholders' equity was $72.0 million at March 31, 2015, an increase of $1.9 million from year-end 2014, due to year-to-date net income less the dividends paid.
- Book value per common share was $8.55 as of March 31, 2015.
- At March 31, 2015, the leverage, common equity Tier I, Tier I and Total Risk Based Capital ratios were 8.93%, 9.25, 11.22% and 12.48% respectively, all in excess of the ratios required to be deemed "well-capitalized".
- Nonperforming assets totaled $11.1 million at March 31, 2015, or 1.41% 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 19.6% to $9.1 million at March 31, 2015 from year-end.
- OREO increased $813 thousand to $2.0 million at March 31, 2015 from year-end.
- The allowance for loan losses totaled $12.2 million at March 31, 2015, or 1.55% of total loans compared to $12.6 million and 1.65% at December 31, 2014.
- Net charge-offs were $570 thousand for the three months ended March 31, 2015, down from $934 thousand for the same period a year ago.