CLINTON, N.J., July 25, 2016 (GLOBE NEWSWIRE) -- Unity Bancorp, Inc. (NASDAQ:UNTY), parent company of Unity Bank, reported increased quarterly and year-to-date earnings.  Major contributing factors included strong loan growth, expanded net interest margin, increased levels of noninterest income and expense control. 

Net income was $2.8 million, or $0.33 per diluted share, for the three months ended June 30, 2016, a 16.3% increase compared to net income of $2.4 million, or $0.28 per diluted share, for the same period a year ago.  Return on average assets and average common equity for the quarter were 1.03% and 13.59%, respectively, compared to 1.01% and 13.35% for the same period a year ago. 

Year-to-date net income was $7.0 million, or $0.82 per diluted share, for the six months ended June 30, 2016, a 61.0% increase compared to net income of $4.4 million, or $0.51 per diluted share, for the same period a year ago.  Return on average assets and average common equity for the period were 1.28% and 17.25%, respectively, compared to 0.92% and 12.23% for the same period a year ago. 

During the first quarter, the Company repurchased $5.2 million of its outstanding subordinated 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.   Net income, excluding the nonrecurring gain on the repurchased subordinated debentures, was $5.6 million, or $0.65 per diluted share, for the six months ended June 30, 2016, compared to net income of $4.4 million, or $0.51 per diluted share, for the same period a year ago.  Return on average assets and average common equity for the six months ended June 30, 2016 would have been 1.01% and 13.63%, respectively, compared to 0.92% and 12.23% for the same period a year ago. 

Management believes excluding the nonrecurring gain from year-to-date 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. 

Second quarter highlights also included:

• Announced plans to open our 17^th branch location in Emerson, New Jersey.
• Total loans increased 11.4% compared to June 30, 2015.
• Total deposits increased 11.9% and noninterest-bearing demand deposits grew 19.8% since June 30, 2015. 
• Net interest income increased 11.6% compared to the prior year’s quarter due to strong loan growth. 
• Net interest margin increased to 3.61% this quarter compared to 3.48% in the prior quarter due to a reduced Fed Funds balance.
• Credit quality continues to improve.  Nonperforming loans fell 26.0% from June 30, 2015.

Mr. James A. Hughes, President and CEO, commented on this quarter’s performance, stating “During the second quarter we continued to execute on our plan and delivered another quarter of strong financial results.  We continue to build a platform for future growth and profitability.  That platform consists of high quality professionals that reach out to every small business in our footprint and sell our personalized banking services.  It is our culture of service that brings results.”

Net Interest Income

Net interest income, our core driver of earnings, increased $973 thousand to $9.3 million for the quarter ended June 30, 2016 compared to the prior year’s period, while year-to-date, net interest income increased $1.9 million to $18.3 million.  This increase was the result of strong commercial, residential mortgage and consumer loan growth over the past year.  Quarterly average commercial loans increased $52.2 million, average residential mortgage loans have increased $20.8 million and consumer loans increased $14.9 million compared to the second quarter in 2015.

The cost of interest-bearing liabilities equaled 1.05% for the quarterly and year-to-date periods.  While the quarterly cost of deposits increased 12 basis points to 0.82%, the cost of borrowed funds and subordinated debentures decreased 82 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 and a promotional savings product.

The net interest margin was 3.61% for the quarter-ended June 30, 2016, an increase of 13 basis points from the quarter-ended March 31, 2016.  The increase in the net interest margin for the quarter was due to lower yielding fed funds being deployed in the loan portfolio and the restructuring of our FHLB borrowing.  

Provision for Loan Losses

The provision for loan losses was $400 thousand for the three months ended June 30, 2016 and $600 thousand for the six months ended June 30, 2016.  In the prior year’s periods, there was no loan loss provision during the quarter ended June 30, 2015 and a $200 thousand loan loss provision for the six months ended June 30, 2015.   The increase in the quarterly and year-to-date provision for 2016 versus 2015 was due to higher net charge-offs in each period.  Net charge-offs were $276 thousand for the quarter and $601 thousand year-to-date at June 30, 2016, compared to net recoveries of $223 thousand and net charge-offs of $347 thousand for the quarter and year-to-date periods ended June 30, 2015.   

Noninterest Income

Noninterest income increased $341 thousand to $2.2 million for the three months ended June 30, 2016, compared to the same period last year.  Quarterly noninterest income increased due to gains on the sale of Small Business Administration (SBA) loans.   Year-to-date, noninterest income increased $716 thousand to $4.3 million due to SBA and mortgage loan gains on sale along with security gains.

SBA loan sales during the second quarter of 2016 totaled $7.2 million with a net gain of $637 thousand.  There were no sales during the prior year’s quarter.  Year-to-date, SBA loan sales totaled $10.6 million in 2016 and $3.5 million in 2015 with net gains on sale of $945 thousand and $363 thousand, respectively. 

During the quarter, $26.0 million in residential mortgage loans were sold at a gain of $593 thousand, compared to $27.1 million in loans sold at a gain of $687 thousand during the prior year’s quarter.  Our mortgage pipeline remains strong and we expect a good year in mortgage originations.  

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

• Branch fee income declined in the quarterly and year-to-date periods due to lower levels of overdraft fees, partially offset by increased fees from commercial checking accounts.
• Service and loan fee income declined in the quarterly and year-to-date periods due to reduced loan payoff fees.
• Security gains totaled $81 thousand and $28 thousand for the quarters ended June 30, 2016 and 2015, respectively. Year-to-date, security gains were $175 thousand and $28 thousand.

Noninterest Expense

Noninterest expenses increased $76 thousand or 1.1% to $6.7 million for the quarter and $184 thousand or 1.4% for the six months ended June 30, 2016.  The increases in both periods were due to higher compensation and employee benefit expenses such as medical insurance, retirement and 401(k) plan benefits and other expense items such as director fees and employee training and education expenses.  These increases were partially offset by reduced occupancy expenses.       

Financial Condition

At June 30, 2016, total assets were $1.1 billion, an increase of $43.5 million from year-end 2015:

• Total loans increased $26.1 million or 2.9%, from year-end 2015 to $915.0 million at June 30, 2016. Commercial, consumer and residential mortgage loan portfolios increased $16.2 million, $7.2 million and $4.3 million, respectively. 
• Other assets increased due to the purchase of the Company’s Clinton, New Jersey headquarters for $4.12 million.
• Total deposits increased $17.7 million or 2.0%, to $912.2 million at June 30, 2016.  Noninterest-bearing demand deposits increased $24.8 million and savings deposits grew $16.7 million, while interest-bearing demand and time deposits declined $13.4 million and $10.4 million, respectively.  The declines were due to reduced levels of municipal deposits from year-end and a roll-off of institutional certificates of deposit.
• Borrowed funds increased $22.0 million to $114.0 million at June 30, 2016, due to increased overnight borrowings of $12.0 million compared to year-end 2015 and the addition of a $10.0 million Federal Home Loan Bank (FHLB) borrowing.  Also, during the six month period, $10.0 million in FHLB 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 $85.0 million at June 30, 2016, an increase of $6.5 million from year-end 2015, due to year-to-date net income less the dividends paid to shareholders and a decrease in accumulated other comprehensive income due to the fluctuation in interest rates.
• Book value per common share was $10.01 as of June 30, 2016.
• At June 30, 2016, the leverage, common equity Tier I, Tier I and Total Risk Based Capital ratios were 8.52%, 9.70%, 10.85% and 12.11% respectively, all in excess of the ratios required to be deemed “well-capitalized”. 

Credit Quality

• Nonperforming assets totaled $8.2 million at June 30, 2016, or 0.90% 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 9.9% to $6.5 million at June 30, 2016 from year-end.
• OREO increased $111 thousand to $1.7 million at June 30, 2016 from year-end.
• The allowance for loan losses totaled $12.8 million at June 30, 2016, or 1.39% of total loans compared to $12.4 million and 1.51% at June 30, 2015.
• Net charge-offs were $276 thousand for the three months ended June 30, 2016, compared to net recoveries of $223 thousand for the same period a year ago.  Net charge-offs were $601 thousand for six months ended June 30, 2016, compared to $347 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 $912 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
June 30, 2016
																		Jun. 30, 2016 vs.
																		Mar. 31, 2016				Jun. 30, 2015
(In thousands, except percentages and per share amounts)		Jun. 30, 2016					Mar. 31, 2016					Jun. 30, 2015						%				%
BALANCE SHEET DATA:
Total assets		$		1,128,370			$		1,120,955			$		1,024,303					0.7		%		10.2		%
Total deposits				912,198					926,819					815,427					(1.6	)			11.9
Total loans				915,043					886,990					821,696					3.2				11.4
Total securities				73,994					66,729					74,375					10.9				(0.5	)
Total shareholders' equity				84,967					82,276					73,690					3.3				15.3
Allowance for loan losses				(12,758	)				(12,634	)				(12,404	)				(1.0	)			2.9
FINANCIAL DATA - QUARTER TO DATE:
Income before provision for income taxes and gain on subordinated debenture		$		4,448			$		4,196			$		3,610					6.0				23.2
Provision for income taxes				1,624					1,464					1,182					10.9				37.4
Net income before gain on subordinated debenture		$		2,824			$		2,732			$		2,428					3.4				16.3
Gain on subordinated debenture, net of tax				-					1,473					-				NM				NM
Net income		$		2,824			$		4,205			$		2,428					(32.8	)			16.3
Net income before gain on subordinated debenture per:
Common share - basic		$		0.33			$		0.32			$		0.29					3.1				13.8
Common share - diluted		$		0.33			$		0.31			$		0.28					6.5				17.9
Net income per:
Common share - basic		$		0.33			$		0.50			$		0.29					(34.0	)			13.8
Common share - diluted		$		0.33			$		0.48			$		0.28					(31.3	)			17.9
Net income before gain on subordinated debenture ratios:
Return on average assets				1.03		%			1.00		%			1.01		%			3.0				2.0
Return on average equity				13.59		%			13.67		%			13.35		%			(0.6	)			1.8
Efficiency ratio				58.53		%			60.56		%			64.99		%			(3.4	)			(9.9	)
Net income ratios:
Return on average assets				1.03		%			1.54		%			1.01		%			(33.1	)			2.0
Return on average equity				13.59		%			21.05		%			13.35		%			(35.4	)			1.8
Efficiency ratio				58.53		%			50.16		%			64.99		%			16.7				(9.9	)
Net interest margin				3.61		%			3.48		%			3.70		%			3.7				(2.4	)
FINANCIAL DATA - YEAR TO DATE:
Income before provision for income taxes and gain on subordinated debenture		$		8,643								$		6,569									31.6
Provision for income taxes				3,087										2,202									40.2
Net income before gain on subordinated debenture		$		5,556								$		4,367									27.2
Gain on subordinated debenture, net of tax				1,473										-								NM
Net income		$		7,029								$		4,367									61.0
Net income before gain on subordinated debenture per:
Common share - basic		$		0.66								$		0.52									26.9
Common share - diluted		$		0.65								$		0.51									27.5
Net income per:
Common share - basic		$		0.83								$		0.52									59.6
Common share - diluted		$		0.82								$		0.51									60.8
Net income before gain on subordinated debenture ratios:
Return on average assets				1.01		%								0.92		%							9.8
Return on average equity				13.63		%								12.23		%							11.4
Efficiency ratio				59.53		%								66.12		%							(10.0	)
Net income ratios:
Return on average assets				1.28		%								0.92		%							39.1
Return on average equity				17.25		%								12.23		%							41.0
Efficiency ratio				54.06		%								66.12		%							(18.2	)
Net interest margin				3.55		%								3.67		%							(3.3	)
SHARE INFORMATION:
Market price per share		$		12.71			$		11.37			$		9.79					11.8				29.8
Dividends paid		$		0.04			$		0.04			$		0.03					-				0.3
Book value per common share		$		10.01			$		9.72			$		8.75					3.0				14.4
Average diluted shares outstanding (QTD)				8,608					8,682					8,524					(0.9	)			1.0
CAPITAL RATIOS:
Total equity to total assets				7.53		%			7.34		%			7.19		%			2.6				4.7
Leverage ratio				8.52		%			8.31		%			9.09		%			2.5				(6.3	)
Common equity tier 1 risk-based capital ratio				9.70		%			9.77		%			9.39		%		n/a				n/a
Tier 1 risk-based capital ratio				10.85		%			10.97		%			11.33		%			(1.1	)			(4.2	)
Total risk-based capital ratio				12.11		%			12.22		%			12.59		%			(0.9	)			(3.8	)
CREDIT QUALITY AND RATIOS:
Nonperforming assets		$		8,243			$		8,304			$		11,102					(0.7	)			(25.8	)
QTD net chargeoffs (annualized) to QTD average loans				0.12		%			0.15		%			(0.11	)	%			(20.0	)			209.1
Allowance for loan losses to total loans				1.39		%			1.42		%			1.51		%			(2.1	)			(7.9	)
Nonperforming assets to total loans and OREO				0.90		%			0.93		%			1.35		%			(3.2	)			(33.3	)
Nonperforming assets to total assets				0.73		%			0.74		%			1.08		%			(1.4	)	%		(32.4	)	%

UNITY BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 2016
																		Jun. 30, 2016 vs.
																		December 31, 2015				Jun. 30, 2015
(In thousands, except percentages)		Jun. 30, 2016					December 31, 2015					Jun. 30, 2015						%				%
ASSETS
Cash and due from banks		$		20,169			$		22,681			$		28,240					(11.1	)	%		(28.6	)	%
Federal funds sold and interest-bearing deposits				75,908					65,476					62,202					15.9				22.0
Cash and cash equivalents				96,077					88,157					90,442					9.0				6.2
Securities:
Securities available for sale				45,266					52,865					55,766					(14.4	)			(18.8	)
Securities held to maturity				28,728					18,471					18,609					55.5				54.4
Total securities				73,994					71,336					74,375					3.7				(0.5	)
Loans:
SBA loans held for sale				13,245					13,114					11,368					1.0				16.5
SBA loans held for investment				40,006					39,393					39,663					1.6				0.9
SBA 504 loans				27,038					29,353					29,125					(7.9	)			(7.2	)
Commercial loans				481,713					465,518					428,371					3.5				12.5
Residential mortgage loans				268,774					264,523					243,259					1.6				10.5
Consumer loans				84,267					77,057					69,910					9.4				20.5
Total loans				915,043					888,958					821,696					2.9				11.4
Allowance for loan losses				(12,758	)				(12,759	)				(12,404	)				-				2.9
Net loans				902,285					876,199					809,292					3.0				11.5
Premises and equipment, net				20,397					15,171					15,385					34.4				32.6
Bank owned life insurance ("BOLI")				13,568					13,381					13,190					1.4				2.9
Deferred tax assets				6,223					5,968					5,928					4.3				5.0
Federal Home Loan Bank ("FHLB") stock				5,092					4,600					5,635					10.7				(9.6	)
Accrued interest receivable				3,953					3,884					3,690					1.8				7.1
Other real estate owned ("OREO")				1,702					1,591					2,265					7.0				(24.9	)
Goodwill and other intangibles				1,516					1,516					1,516					-				-
Other assets				3,563					3,063					2,585					16.3				37.8
Total assets		$		1,128,370			$		1,084,866			$		1,024,303					4.0		%		10.2		%
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand		$		210,024			$		185,267			$		175,287					13.4		%		19.8		%
Interest-bearing demand				117,189					130,605					117,988					(10.3	)			(0.7	)
Savings				318,184					301,447					284,369					5.6				11.9
Time, under $100,000				144,394					134,468					113,846					7.4				26.8
Time, $100,000 and over, under $250,000				91,770					104,106					100,039					(11.8	)			(8.3	)
Time, $250,000 and over				30,637					38,600					23,898					(20.6	)			28.2
Total deposits				912,198					894,493					815,427					2.0				11.9
Borrowed funds				114,000					92,000					115,000					23.9				(0.9	)
Subordinated debentures				10,310					15,465					15,465					(33.3	)			(33.3	)
Accrued interest payable				368					461					418					(20.2	)			(12.0	)
Accrued expenses and other liabilities				6,527					3,977					4,303					64.1				51.7
Total liabilities				1,043,403					1,006,396					950,613					3.7				9.8
Shareholders' equity:
Common stock				59,844					59,371					59,067					0.8				1.3
Retained earnings				25,916					19,566					15,055					32.5				72.1
Accumulated other comprehensive loss				(793	)				(467	)				(432	)			NM				NM
Total shareholders' equity				84,967					78,470					73,690					8.3				15.3
Total liabilities and shareholders' equity		$		1,128,370			$		1,084,866			$		1,024,303					4.0		%		10.2		%
Issued and outstanding common shares				8,487					8,436					8,425

 

UNITY BANCORP, INC.
QTD CONSOLIDATED STATEMENTS OF INCOME
NON-GAAP
June 30, 2016
												Jun. 30, 2016 vs.
		For the three months ended										Mar. 31, 2016												Jun. 30, 2015
(In thousands, except percentages and per share amounts)		Jun. 30, 2016			Mar. 31, 2016			Jun. 30, 2015				$					%							$					%
INTEREST INCOME
Federal funds sold and interest-bearing deposits		$	41		$	44		$	6			$		(3	)					(6.8		)	%	$		35					583.3		%
FHLB stock			55			52			38					3						5.8						17					44.7
Securities:
Taxable			427			363			363					64						17.6						64					17.6
Tax-exempt			55			62			71					(7	)					(11.3		)				(16	)				(22.5	)
Total securities			482			425			434					57						13.4						48					11.1
Loans:
SBA loans			788			721			605					67						9.3						183					30.2
SBA 504 loans			344			385			369					(41	)					(10.6		)				(25	)				(6.8	)
Commercial loans			5,860			5,676			5,276					184						3.2						584					11.1
Residential mortgage loans			2,937			2,942			2,716					(5	)					(0.2		)				221					8.1
Consumer loans			980			931			774					49						5.3						206					26.6
Total loans			10,909			10,655			9,740					254						2.4						1,169					12.0
Total interest income			11,487			11,176			10,218					311						2.8						1,269					12.4
INTEREST EXPENSE
Interest-bearing demand deposits			124			137			103					(13	)					(9.5		)				21					20.4
Savings deposits			381			366			271					15						4.1						110					40.6
Time deposits			954			951			725					3						0.3						229					31.6
Borrowed funds and subordinated debentures			686			735			750					(49	)					(6.7		)				(64	)				(8.5	)
Total interest expense			2,145			2,189			1,849					(44	)					(2.0		)				296					16.0
Net interest income			9,342			8,987			8,369					355						4.0						973					11.6
Provision for loan losses			400			200			-					200						100.0						400					100.0
Net interest income after provision for loan losses			8,942			8,787			8,369					155						1.8						573					6.8
NONINTEREST INCOME
Branch fee income			286			333			373					(47	)					(14.1		)				(87	)				(23.3	)
Service and loan fee income			267			255			466					12						4.7						(199	)				(42.7	)
Gain on sale of SBA loans held for sale, net			637			308			-					329						106.8						637					100.0
Gain on sale of mortgage loans, net			593			715			687					(122	)					(17.1		)				(94	)				(13.7	)
BOLI income			93			94			95					(1	)					(1.1		)				(2	)				(2.1	)
Net security gains			81			94			28					(13	)					(13.8	)					53					189.3
Other income			277			217			244					60						27.6						33					13.5
Total noninterest income			2,234			2,016			1,893					218						10.8						341					18.0
NONINTEREST EXPENSE
Compensation and benefits			3,709			3,549			3,481					160						4.5						228					6.5
Occupancy			513			618			601					(105	)					(17.0		)				(88	)				(14.6	)
Processing and communications			600			598			614					2						0.3						(14	)				(2.3	)
Furniture and equipment			395			420			422					(25	)					(6.0		)				(27	)				(6.4	)
Professional services			239			255			242					(16	)					(6.3		)				(3	)				(1.2	)
Loan costs			59			198			160					(139	)					(70.2		)				(101	)				(63.1	)
OREO expenses			82			24			67					58						241.7						15					22.4
Deposit insurance			165			160			150					5						3.1						15					10.0
Advertising			303			241			343					62						25.7						(40	)				(11.7	)
Other expenses			663			544			572					119						21.9						91					15.9
Total noninterest expense			6,728			6,607			6,652					121						1.8						76					1.1
Income before provision for income taxes and gain on subordinated debenture			4,448			4,196			3,610					252						6.0						838					23.2
Provision for income taxes			1,624			1,464			1,182					160						10.9						442					37.4
Net income before gain on subordinated debenture		$	2,824		$	2,732		$	2,428			$		92						3.4			%	$		396					16.3		%
Gain on subordinated debenture, net of tax			-			1,473			-					(1,473	)			NM								-				NM
Net income		$	2,824		$	4,205		$	2,428			$		(1,381	)					(32.8		)	%	$		396					16.3		%
Effective tax rate			36.5	%		34.9	%		32.7	%
Net income before gain on subordinated debenture per:
Common share - basic		$	0.33		$	0.32		$	0.29
Common share - diluted		$	0.33		$	0.31		$	0.28
Net income per:
Common share - basic		$	0.33		$	0.50		$	0.29
Common share - diluted		$	0.33		$	0.48		$	0.28
Weighted average common shares outstanding - Basic			8,471			8,459			8,425
Weighted average common shares outstanding - Diluted			8,608			8,682			8,524

 

UNITY BANCORP, INC.
YTD CONSOLIDATED STATEMENTS OF INCOME
June 30, 2016
		For the six months ended June 30,							Current YTD vs. Prior YTD
(In thousands, except percentages and per share amounts)		2016			2015				$					%
INTEREST INCOME
Federal funds sold and interest-bearing deposits		$	85		$	16			$		69					431.3		%
FHLB stock			107			81					26					32.1
Securities:
Taxable			791			750					41					5.5
Tax-exempt			117			143					(26	)				(18.2	)
Total securities			908			893					15					1.7
Loans:
SBA loans			1,509			1,284					225					17.5
SBA 504 loans			729			715					14					2.0
Commercial loans			11,538			10,342					1,196					11.6
Residential mortgage loans			5,878			5,298					580					10.9
Consumer loans			1,911			1,473					438					29.7
Total loans			21,565			19,112					2,453					12.8
Total interest income			22,665			20,102					2,563					12.7
INTEREST EXPENSE
Interest-bearing demand deposits			261			209					52					24.9
Savings deposits			748			535					213					39.8
Time deposits			1,904			1,411					493					34.9
Borrowed funds and subordinated debentures			1,421			1,558					(137	)				(8.8	)
Total interest expense			4,334			3,713					621					16.7
Net interest income			18,331			16,389					1,942					11.8
Provision for loan losses			600			200					400					200.0
Net interest income after provision for loan losses			17,731			16,189					1,542					9.5
NONINTEREST INCOME
Branch fee income			619			719					(100	)				(13.9	)
Service and loan fee income			522			762					(240	)				(31.5	)
Gain on sale of SBA loans held for sale, net			945			363					582					160.3
Gain on sale of mortgage loans, net			1,308			1,031					277					26.9
BOLI income			187			189					(2	)				(1.1	)
Net security gains			175			28					147					525.0
Other income			494			442					52					11.8
Total noninterest income			4,250			3,534					716					20.3
NONINTEREST EXPENSE
Compensation and benefits			7,258			6,952					306					4.4
Occupancy			1,131			1,273					(142	)				(11.2	)
Processing and communications			1,198			1,210					(12	)				(1.0	)
Furniture and equipment			815			795					20					2.5
Professional services			494			478					16					3.3
Loan costs			257			382					(125	)				(32.7	)
OREO expenses			105			103					2					1.9
Deposit insurance			326			333					(7	)				(2.1	)
Advertising			544			525					19					3.6
Other expenses			1,210			1,103					107					9.7
Total noninterest expense			13,338			13,154					184					1.4
Income before provision for income taxes and gain on subordinated debenture			8,643			6,569					2,074					31.6
Provision for income taxes			3,087			2,202					885					40.2
Net income before gain on subordinated debenture		$	5,556		$	4,367			$		1,189					27.2		%
Gain on subordinated debenture, net of tax			1,473			-					1,473					100.0
Net income		$	7,029		$	4,367			$		2,662					61.0		%
Effective tax rate			35.6	%		33.5	%
Net income before gain on subordinated debenture per:
Common share - basic			0.66			0.52
Common share - diluted			0.65			0.51
Net income per:
Common share - basic			0.83			0.52
Common share - diluted			0.82			0.51
Weighted average common shares outstanding - Basic			8,465			8,421
Weighted average common shares outstanding - Diluted			8,597			8,519

 

UNITY BANCORP, INC.
QUARTER TO DATE NET INTEREST MARGIN
June 30, 2016
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
		For the three months ended
		June 30, 2016													March 31, 2016
		Average Balance					Interest					Rate/Yield			Average Balance					Interest					Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits		$		62,652			$		41				0.26	%	$		78,681			$		44				0.22	%
FHLB stock				4,904					55				4.51				4,549					52				4.60
Securities:
Taxable				62,561					427				2.75				59,152					363				2.47
Tax-exempt				8,177					83				4.08				9,548					94				3.96
Total securities (A)				70,738					510				2.90				68,700					457				2.68
Loans:
SBA loans				56,719					788				5.59				53,942					721				5.38
SBA 504 loans				27,273					344				5.07				29,232					385				5.30
Commercial loans				474,573					5,860				4.97				463,927					5,676				4.92
Residential mortgage loans				264,599					2,937				4.46				264,208					2,942				4.48
Consumer loans				82,295					980				4.79				78,328					931				4.78
Total loans (B)				905,459					10,909				4.85				889,637					10,655				4.82
Total interest-earning assets		$		1,043,753			$		11,515				4.44	%	$		1,041,567			$		11,208				4.33	%
Noninterest-earning assets:
Cash and due from banks				25,993													27,006
Allowance for loan losses				(12,850	)												(12,926	)
Other assets				49,250													45,486
Total noninterest-earning assets				62,393													59,566
Total assets		$		1,106,146											$		1,101,133
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits		$		129,263			$		124				0.39	%	$		131,339			$		137				0.42	%
Total savings deposits				310,329					381				0.49				310,251					366				0.47
Total time deposits				275,700					954				1.39				282,110					951				1.36
Total interest-bearing deposits				715,292					1,459				0.82				723,700					1,454				0.81
Borrowed funds and subordinated debentures				106,277					686				2.60				104,350					735				2.83
Total interest-bearing liabilities		$		821,569			$		2,145				1.05	%	$		828,050			$		2,189				1.06	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits				194,649													187,226
Other liabilities				6,370													5,528
Total noninterest-bearing liabilities				201,019													192,754
Total shareholders' equity				83,558													80,329
Total liabilities and shareholders' equity		$		1,106,146											$		1,101,133
Net interest spread							$		9,370				3.39	%						$		9,019				3.27	%
Tax-equivalent basis adjustment									(28	)												(32	)
Net interest income							$		9,342											$		8,987
Net interest margin													3.61	%												3.48	%
(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
June 30, 2016
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
		For the three months ended
		June 30, 2016													June 30, 2015
		Average Balance					Interest					Rate/Yield			Average Balance					Interest					Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits		$		62,652			$		41				0.26	%	$		20,259			$		6				0.12	%
FHLB stock				4,904					55				4.51				3,720					38				4.10
Securities:
Taxable				62,561					427				2.75				63,834					363				2.28
Tax-exempt				8,177					83				4.08				11,803					105				3.57
Total securities (A)				70,738					510				2.90				75,637					468				2.48
Loans:
SBA loans				56,719					788				5.59				47,249					605				5.14
SBA 504 loans				27,273					344				5.07				29,539					369				5.01
Commercial loans				474,573					5,860				4.97				422,371					5,276				5.01
Residential mortgage loans				264,599					2,937				4.46				243,821					2,716				4.47
Consumer loans				82,295					980				4.79				67,353					774				4.61
Total loans (B)				905,459					10,909				4.85				810,333					9,740				4.82
Total interest-earning assets		$		1,043,753			$		11,515				4.44	%	$		909,949			$		10,252				4.52	%
Noninterest-earning assets:
Cash and due from banks				25,993													24,768
Allowance for loan losses				(12,850	)												(12,430	)
Other assets				49,250													43,596
Total noninterest-earning assets				62,393													55,934
Total assets		$		1,106,146											$		965,883
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits		$		129,263			$		124				0.39	%	$		123,663			$		103				0.33	%
Total savings deposits				310,329					381				0.49				287,911					271				0.38
Total time deposits				275,700					954				1.39				220,403					725				1.32
Total interest-bearing deposits				715,292					1,459				0.82				631,977					1,099				0.70
Borrowed funds and subordinated debentures				106,277					686				2.60				87,944					750				3.42
Total interest-bearing liabilities		$		821,569			$		2,145				1.05	%	$		719,921			$		1,849				1.03	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits				194,649													168,585
Other liabilities				6,370													4,413
Total noninterest-bearing liabilities				201,019													172,998
Total shareholders' equity				83,558													72,964
Total liabilities and shareholders' equity		$		1,106,146											$		965,883
Net interest spread							$		9,370				3.39	%						$		8,403				3.49	%
Tax-equivalent basis adjustment									(28	)												(34	)
Net interest income							$		9,342											$		8,369
Net interest margin													3.61	%												3.70	%
(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.
YEAR TO DATE NET INTEREST MARGIN
June 30, 2016
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
		For the six months ended
		June 30, 2016													June 30, 2015
		Average Balance					Interest					Rate/Yield			Average Balance					Interest					Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits		$		70,666			$		85				0.24	%	$		28,722			$		16				0.11	%
FHLB stock				4,726					107				4.55				3,783					81				4.32
Securities:
Taxable				60,856					791				2.61				65,431					750				2.31
Tax-exempt				8,863					176				3.99				11,893					212				3.59
Total securities (A)				69,719					967				2.79				77,324					962				2.51
Loans:
SBA loans				55,331					1,509				5.48				47,824					1,284				5.41
SBA 504 loans				28,253					729				5.19				31,457					715				4.58
Commercial loans				469,248					11,538				4.94				414,278					10,342				5.03
Residential mortgage loans				264,403					5,878				4.47				235,022					5,298				4.55
Consumer loans				80,312					1,911				4.79				64,868					1,473				4.58
Total loans (B)				897,547					21,565				4.83				793,449					19,112				4.86
Total interest-earning assets		$		1,042,658			$		22,724				4.38	%	$		903,278			$		20,171				4.50	%
Noninterest-earning assets:
Cash and due from banks				26,500													27,324
Allowance for loan losses				(12,888	)												(12,565	)
Other assets				47,369													43,403
Total noninterest-earning assets				60,981													58,162
Total assets		$		1,103,639											$		961,440
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits		$		130,301			$		261				0.40	%	$		125,120			$		209				0.34	%
Total savings deposits				310,290					748				0.48				288,953					535				0.37
Total time deposits				278,904					1,904				1.37				215,939					1,411				1.32
Total interest-bearing deposits				719,495					2,913				0.81				630,012					2,155				0.69
Borrowed funds and subordinated debentures				105,314					1,421				2.71				89,916					1,558				3.49
Total interest-bearing liabilities		$		824,809			$		4,334				1.05	%	$		719,928			$		3,713				1.04	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits				190,938													165,176
Other liabilities				5,948													4,359
Total noninterest-bearing liabilities				196,886													169,535
Total shareholders' equity				81,944													71,977
Total liabilities and shareholders' equity		$		1,103,639											$		961,440
Net interest spread							$		18,390				3.33	%						$		16,458				3.46	%
Tax-equivalent basis adjustment									(59	)												(69	)
Net interest income							$		18,331											$		16,389
Net interest margin													3.55	%												3.67	%
(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
June 30, 2016
Amounts in thousands, except percentages		Jun. 30, 2016			Mar. 31, 2016			Dec. 31, 2015					Sept. 30, 2015			Jun. 30, 2015
ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period		$	12,634		$	12,759		$		12,421			$	12,404		$		12,181
Provision for loan losses charged to expense			400			200				100				200				-
			13,034			12,959				12,521				12,604				12,181
Less: Chargeoffs
SBA loans			142			86				151				86				6
SBA 504 loans			-			-				-				-				-
Commercial loans			152			228				52				10				147
Residential mortgage loans			-			-				-				50				-
Consumer loans			-			28				41				52				7
Total chargeoffs			294			342				244				198				160
Add: Recoveries
SBA loans			4			11				6				10				2
SBA 504 loans			-			-				-				-				-
Commercial loans			13			6				476				5				370
Residential mortgage loans			-			-				-				-				10
Consumer loans			1			-				-				-				1
Total recoveries			18			17				482				15				383
Net chargeoffs (recoveries)			276			325				(238	)			183				(223	)
Balance, end of period		$	12,758		$	12,634		$		12,759			$	12,421		$		12,404
LOAN QUALITY INFORMATION:
Nonperforming loans (1)		$	6,541		$	6,887		$		7,260			$	10,742		$		8,837
Other real estate owned ("OREO")			1,702			1,417				1,591				1,759				2,265
Nonperforming assets			8,243			8,304				8,851				12,501				11,102
Less:  Amount guaranteed by SBA			134			243				288				225				267
Net nonperforming assets		$	8,109		$	8,061		$		8,563			$	12,276		$		10,835
Loans 90 days past due & still accruing		$	485		$	-		$		-			$	272		$		273
Performing Troubled Debt Restructurings (TDRs)		$	772		$	844		$		3,015			$	3,268		$		3,360
(1) Nonperforming TDRs included in nonperforming loans			161			293				293				2,808				2,843
Total TDRs		$	933		$	1,137		$		3,308			$	6,076		$		6,203
Allowance for loan losses to:
Total loans at quarter end			1.39	%		1.42	%			1.44		%		1.45	%			1.51		%
Nonperforming loans (1)			195.05			183.45				175.74				115.63				140.36
Nonperforming assets			154.77			152.14				144.15				99.36				111.73
Net nonperforming assets			157.33			156.73				149.00				101.18				114.48
QTD net chargeoffs (annualized) to QTD average loans:
SBA loans			0.98	%		0.56	%			1.05		%		0.57	%			0.03		%
SBA 504 loans			-			-				-				-				-
Commercial loans			0.12			0.19				(0.37	)			-				(0.21	)
Residential mortgage loans			-			-				-				0.08				(0.02	)
Consumer loans			-			0.14				0.21				0.28				0.04
Total loans			0.12	%		0.15	%			(0.11	)	%		0.09	%			(0.11	)	%
Nonperforming loans to total loans			0.71	%		0.78	%			0.82		%		1.26	%			1.08		%
Nonperforming loans and TDRs to total loans			0.80			0.87				1.16				1.64				1.48
Nonperforming assets to total loans and OREO			0.90			0.93				0.99				1.46				1.35
Nonperforming assets to total assets			0.73			0.74				0.82				1.19				1.08

 

UNITY BANCORP, INC.
QUARTERLY FINANCIAL DATA
NON-GAAP
June 30, 2016
(In thousands, except percentages and per share amounts)		Jun. 30, 2016					Mar. 31, 2016					Dec. 31, 2015					Sept. 30, 2015					Jun. 30, 2015
SUMMARY OF INCOME:
Total interest income		$		11,487			$		11,176			$		10,995			$		10,554			$		10,218
Total interest expense				2,145					2,189					2,015					1,932					1,849
Net interest income				9,342					8,987					8,980					8,622					8,369
Provision for loan losses				400					200					100					200					-
Net interest income after provision for loan losses				8,942					8,787					8,880					8,422					8,369
Total noninterest income				2,234					2,016					1,920					2,275					1,893
Total noninterest expense				6,728					6,607					6,846					6,852					6,652
Income before provision for income taxes and gain on  subordinated debenture				4,448					4,196					3,954					3,845					3,610
Provision for income taxes				1,624					1,464					1,315					1,294					1,182
Net income before gain on subordinated debenture		$		2,824			$		2,732			$		2,639			$		2,551			$		2,428
Gain on subordinated debenture, net of tax				-					1,473					-					-					-
Net income		$		2,824			$		4,205			$		2,639			$		2,551			$		2,428
Net income per common share - Basic		$		0.33			$		0.50			$		0.31			$		0.30			$		0.29
Net income per common share - Diluted		$		0.33			$		0.48			$		0.31			$		0.30			$		0.28
COMMON SHARE DATA:
Market price per share		$		12.71			$		11.37			$		12.47			$		9.77			$		9.79
Dividends paid		$		0.04			$		0.04			$		0.04			$		0.04			$		0.03
Book value per common share		$		10.01			$		9.72			$		9.30			$		9.02			$		8.75
Weighted average common shares outstanding - Basic				8,471					8,459					8,430					8,427					8,425
Weighted average common shares outstanding - Diluted				8,608		`			8,682					8,547					8,536					8,524
Issued and outstanding common shares				8,487					8,468					8,436					8,429					8,425
OPERATING RATIOS (Annualized):
Return on average assets				1.03		%			1.54		%			1.00		%			1.00		%			1.01		%
Return on average equity				13.59					21.05					13.59					13.54					13.35
Efficiency ratio				58.53					50.16					62.81					62.88					64.99
BALANCE SHEET DATA:
Total assets		$		1,128,370			$		1,120,955			$		1,084,866			$		1,052,711			$		1,024,303
Total deposits				912,198					926,819					894,493					866,247					815,427
Total loans				915,043					886,990					888,958					855,560					821,696
Total securities				73,994					66,729					71,336					71,492					74,375
Total shareholders' equity				84,967					82,276					78,470					76,065					73,690
Allowance for loan losses				(12,758	)				(12,634	)				(12,759	)				(12,421	)				(12,404	)
TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets				4.44		%			4.33		%			4.40		%			4.41		%			4.52		%
Interest-bearing liabilities				1.05					1.06					1.02					1.01					1.03
Net interest spread				3.39					3.27					3.38					3.40					3.49
Net interest margin				3.61					3.48					3.60					3.60					3.70
CREDIT QUALITY:
Nonperforming assets				8,243					8,304					8,851					12,501					11,102
QTD net chargeoffs (annualized) to QTD average loans				0.12		%			0.15		%			(0.11	)	%			0.09		%			(0.11	)	%
Allowance for loan losses to total loans				1.39					1.42					1.44					1.45					1.51
Nonperforming assets to total loans and OREO				0.90					0.93					0.99					1.46					1.35
Nonperforming assets to total assets				0.73					0.74					0.82					1.19					1.08
CAPITAL RATIOS AND OTHER:
Total equity to total assets				7.53		%			7.34		%			7.23		%			7.23		%			7.19		%
Leverage ratio				8.52					8.31					8.82					8.92					9.09
Common equity tier 1 risk-based capital ratio				9.70					9.77					9.37					9.37					9.39
Tier 1 risk-based capital ratio				10.85					10.97					11.18					11.25					11.33
Total risk-based capital ratio				12.11					12.22					12.43					12.50					12.59
Number of banking offices				15					15					15					15					15
Number of ATMs				16					16					16					16					16
Number of employees				172					172					162					163					177

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Alan J. Bedner, EVP
Chief Financial Officer
(908) 713-4308

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