Clinton, NJ, July 19, 2018 - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income of $5.4 million, or $0.49 per diluted share, for the quarter ended June 30, 2018, compared to $3.4 million, or $0.32 per diluted share, for the prior year’s second quarter. Approximately $794 thousand, or $0.07 per diluted share, of this increase is attributed to the lower effective tax rate due to the tax reform bill.
For the six months ended June 30, 2018, Unity reported net income of $10.6 million, or $0.98 per diluted share, compared to $6.6 million, or $0.62 per diluted share for the prior year’s period. Approximately $1.5 million, or $0.14 per diluted share, of this increase is attributed to the lower effective tax rate due to the tax reform bill. Second Quarter Earnings Highlights • Net interest income, our primary driver of earnings, increased $2.0 million to $13.1 million for the quarter ended June 30, 2018, compared to the prior year’s quarter due to strong loan growth and an increased net interest margin. • Net interest margin expanded 16 basis points to 3.95%, compared to 3.79% for the prior year’s quarter. The net interest margin declined slightly from 3.99% in the prior sequential quarter ended March 31, 2018, due to the rising cost of deposits. • The provision for loan losses increased to $550 thousand during the quarter ended June 30, 2018, compared to $400 thousand in the prior year’s quarter due to the growth in the loan portfolio. • Noninterest expense increased $737 thousand compared to the prior year’s quarter but was consistent with the prior sequential quarter at $8.2 million. The year-over-year increase was the result of expansion costs from two additional branches and increased headcount which resulted in higher compensation, benefits, occupancy and equipment expenses. • The effective tax rate declined to 20.0% for the quarter compared to 35.6% in the prior year’s quarter, as a result of the “Tax Cuts and Jobs Act,” which was enacted December 22, 2017, and lowered the corporate tax rate. The effective tax rate in the quarter also benefited from the exercise of stock options. The effective tax rate increased slightly compared to the prior sequential quarter ended March 31, 2018, due to the recent NJ tax legislation and is expected to increase in the future as a result. Balance Sheet Highlights • Total loans increased $75.8 million or 6.5%, from year-end 2017 to $1.2 billion at June 30, 2018. Commercial, residential mortgage and consumer loan portfolios increased $44.6 million, $33.2 million, and $8.6 million, respectively, partially offset by a decline of $10.6 million in SBA loans. Our pipeline in all categories remains strong. • Total deposits increased $103.3 million, or 9.9%, to $1.1 billion at June 30, 2018. Growth was the result of a combination of retail and broker generated time deposits. • Borrowed funds decreased $55.0 million to $220.0 million at June 30, 2018, due to decreased overnight borrowings, the maturity of a repo and an FHLB advance being called. • Shareholders’ equity was $128.1 million at June 30, 2018, an increase of $10.0 million from year-end 2017, due to retained net income. • Book value per common share was $11.94 as of June 30, 2018. • At June 30, 2018, the leverage, common equity Tier I, Tier I and Total Risk Based Capital ratios were 9.63%, 11.05%, 11.92% and 13.14% respectively, all in excess of the ratios required to be deemed “well-capitalized.” • Credit quality remains strong with nonperforming assets to total assets of 0.35% at June 30, 2018. Other Highlights • Opened our 19th branch in Bethlehem, PA. • Unity Bank received 5-Star Rating from BauerFinancial. 2 Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $1.5 billion in assets and $1.1 billion in deposits. Unity Bank provides financial services to retail, corporate and small business customers through its 19 retail service centers located in Bergen, Hunterdon, Middlesex, Somerset, Union and Warren Counties in New Jersey and Northampton County in Pennsylvania. For additional information about Unity, visit our website at www.unitybank.com , or call 800- 618-BANK