Clinton, NJ, April 24, 2018 - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income of $5.2 million, or $0.48 per diluted share, for the quarter ended March 31, 2018, compared to $3.2 million, or $0.30 per diluted share, for the prior year’s first quarter. Approximately $590 thousand, or $0.05 per diluted share, of this increase was due to the lower effective tax rate due to the tax reform bill.
• Net interest income, our primary driver of earnings, increased $2.5 million to $12.9 million for the quarter ended March 31, 2018 compared to the prior year’s first quarter due to strong loan growth and an increased net interest margin.
• Net interest margin expanded 29 basis points to 3.99%, compared to 3.70% for the prior year’s first quarter. Higher yields on our earning assets exceeded the rising costs of deposits.
• The provision for loan losses increased to $500 thousand during the quarter ended March 31, 2018 compared to $250 thousand in the prior year’s quarter due to the growth in the loan portfolio.
• Noninterest expense increased $754 thousand compared to the prior year’s quarter. During 2017, we added two branches and increased headcount which resulted in higher compensation, benefits and occupancy expenses.
• The effective tax rate declined to 19.1% as a result of the “Tax Cuts and Jobs Act”, which was enacted December 22, 2017 and lowered the corporate tax rate. The Company expects an effective tax rate of 22% going forward. The effective tax rate in the first quarter benefited from the exercise of stock options.
Balance Sheet Highlights
• Total loans increased $24.4 million or 2.1%, from year-end 2017 to $1.2 billion at March 31, 2018. Residential mortgage, commercial and consumer loan portfolios increased $15.7 million, $8.1 million, and $3.4 million, respectively. Our pipeline in all categories remains strong.
• Total deposits increased $74.4 million, or 7.1%, to $1.1 billion at March 31, 2018. Time deposits, savings deposits and noninterest-bearing demand deposits have increased $55.6 million, $11.7 million and $9.2 million, respectively.
• Borrowed funds decreased $94.0 million to $181.0 million at March 31, 2018, due to decreased overnight borrowings and the maturity of a repo.
• Shareholders’ equity was $123.1 million at March 31, 2018, an increase of $5.0 million from year-end 2017, due to retained net income.
• Book value per common share was $11.50 as of March 31, 2018. • At March 31, 2018, the leverage, common equity Tier I, Tier I and Total Risk Based Capital ratios were 9.46%, 11.14%, 12.07% and 13.24% respectively, all in excess of the ratios required to be deemed “well-capitalized”. • Credit quality remains strong with nonperforming assets to total assets of 0.30% at March 31, 2018.
• Named one of the Best Places to work in NJ from NJ BIZ for the second year in a row.
• Opened our 18th branch in Ramsey, NJ.
• Ranked 43rd by S&P Global of all community banks with assets between $1 billion and $10 billion, achieving Top 10%.
Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $1.4 billion in assets and $1.1 billion in deposits. Unity Bank provides financial services to retail, corporate and small business customers through its 18 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.
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