CLINTON, N.J., Oct. 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 $3.0 million, or $0.32 per diluted share, for the three months ended September 30, 2016, an 18.4% increase compared to net income of $2.6 million, or $0.27 per diluted share, for the same period a year ago.  Return on average assets and average common equity for the quarter were 1.05% and 13.90%, respectively, compared to 1.00% and 13.54% for the same period a year ago. 

Year-to-date net income was $10.0 million, or $1.06 per diluted share, for the nine months ended September 30, 2016, a 45.3% increase compared to net income of $6.9 million, or $0.74 per diluted share, for the same period a year ago.  Return on average assets and average common equity for the period were 1.20% and 16.09%, respectively, compared to 0.95% and 12.69% for the same period a year ago. 

During the first quarter, the Company repurchased $5.0 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 $8.6 million, or $0.91 per diluted share, for the nine months ended September 30, 2016, compared to net income of $6.9 million, or $0.74 per diluted share, for the same period a year ago.  Return on average assets and average common equity for the nine months ended September 30, 2016, excluding the gain, would have been 1.03% and 13.73%, respectively, compared to 0.95% and 12.69% 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. 

Third quarter highlights included:

• Opening our 16^th branch location in Emerson, New Jersey.  Our 17^th branch in Somerville, New Jersey, is expected to open in November 2016.
• Ringing NASDAQ’s closing bell to commemorate our 25^th Anniversary.
• Increasing the quarterly cash dividend 25% to $.05 per common share from $.04 as well as paying a 10% stock dividend to shareholders.
• Total loans increased 11.0% compared to September 30, 2015.
• Total deposits increased 7.7% and noninterest-bearing demand deposits grew 19.3% since September 30, 2015. 
• Net interest income increased 14.5% compared to the prior year’s quarter due to strong loan growth. 
• Net interest margin increased to 3.63% this quarter compared to 3.60% in the prior year’s quarter.
• Credit quality has continued to improve.   

“We had record earnings and strong financial results for the third quarter,” stated James A. Hughes, President and CEO.  “We are now focusing on growing our market presence.  We opened our Emerson branch on October 17^th and we anticipate opening our Somerville office in November.  In addition, we have hired two seasoned lenders in the Lehigh Valley market, so we will now be looking for opportunities in Pennsylvania.  We are extremely excited about our future and look forward to the challenges ahead.”

Net Interest Income
Net interest income increased $1.3 million to $9.9 million for the quarter ended September 30, 2016 compared to the prior year’s period, while year-to-date, net interest income increased $3.2 million to $28.2 million.  The net interest margin was 3.63% for the quarter-ended September 30, 2016, an increase of 3 basis points from the quarter-ended September 30, 2015 and 3.58% for the nine months ended September 30, 2016 compared to 3.65% in the prior year’s period.  The increase in the net interest margin for the quarter was due to growth in our loan portfolio and the restructuring of our FHLB borrowings.  

Each period saw continued strong commercial, residential mortgage and consumer loan growth over the prior year period.  Quarterly average commercial loans increased $57.5 million, average residential mortgage loans have increased $21.6 million and consumer loans increased $13.0 million compared to the third quarter in 2015.

The cost of interest-bearing liabilities has remained relatively stable at 1.04% for the quarter and 1.05% for the year-to-date periods.  The quarterly cost of deposits increased 13 basis points to 0.84% due to the intentional growth of five year time deposits and a promotional savings product.  The quarterly cost of borrowed funds and subordinated debentures decreased 121 basis points compared to the prior year due to the modification of borrowings with the Federal Home Loan Bank (“FHLB”) over the past year.  

Provision for Loan Losses

The provision for loan losses was $420 thousand for the three months ended September 30, 2016 and $1.0 million for the nine months ended September 30, 2016.  In the prior year’s periods, there was a $200 thousand loan loss provision during the quarter ended September 30, 2015 and a $400 thousand loan loss provision for the nine months ended September 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 $493 thousand for the quarter and $1.1 million year-to-date at September 30, 2016, compared to net charge-offs of $183 thousand and $530 thousand for the quarter and year-to-date periods ended September 30, 2015.   

Noninterest Income
Noninterest income decreased $102 thousand to $2.2 million for the three months ended September 30, 2016, compared to the same period last year.  While gains on the sale of SBA and mortgage loans were consistent with the prior quarter, noninterest income decreased due to lower branch and loan fee income.  Year-to-date, noninterest income increased $613 thousand to $6.4 million due to higher gains on the sale of SBA loans and securities, partially offset by lower branch and loan fee income.

Notable items included: 

• Branch fee income declined in the quarterly and year-to-date periods due to lower levels of overdraft fees and service charges from commercial checking accounts.
• Service and loan fee income declined in the quarterly and year-to-date periods due to the write-down of a mortgage servicing asset as a result of large principal pay-downs on a sold mortgage pool.  On a year-to-date basis, service and loan fee income was also impacted by lower loan payoff charges and processing fees.
• SBA loan sales during the third quarter of 2016 totaled $7.8 million with a net gain of $639 thousand.  During the prior year’s quarter, SBA loan sales totaled $3.4 million with a net gain of $308 thousand.  Year-to-date, SBA loan sales totaled $18.4 million in 2016 and $6.9 million in 2015 with net gains on sale of $1.6 million and $671 thousand, respectively. 
• During the quarter, $25.6 million in residential mortgage loans were sold at a gain of $609 thousand, compared to $35.7 million in loans sold at a gain of $926 thousand during the prior year’s quarter.  Year-to-date, $76.7 million in residential mortgage loans were sold at a gain of $1.9 million compared to $77.9 million in loans sold at a gain of $2.0 million during the prior year’s period.  Our mortgage pipeline remains strong.    

Noninterest Expense

Noninterest expenses increased $141 thousand or 2.1% to $7.0 million for the quarter and $324 thousand or 1.6% for the nine months ended September 30, 2016.  The increases in each period, evidence investment in Unity’s retail network, corporate infrastructure and its staff. 

In 2016, our compensation and benefits expense has risen as we expand our branch network, lending and support staff.  This additional headcount has resulted in higher salary and benefit expense.  This year, we also committed to our future by purchasing the Clinton, New Jersey corporate headquarters building, which resulted in lower occupancy expenses.  However, investment in our retail network through the addition of branches in Emerson and Somerville, New Jersey will increase future occupancy expenses.  Furniture and equipment expense has increased due to investment in our technology infrastructure through network and software upgrades that will improve our efficiency and keep our data secure.  Advertising expenses have risen in support of our retail and lending sales as well as the branch expansions.  Other expenses that increased were officer and employee training and director compensation fees.  OREO costs remain elevated as legal and property tax expenses are incurred on these properties. 

Financial Condition
At September 30, 2016, total assets were $1.2 billion, an increase of $68.0 million from year-end 2015:

• Total loans increased $60.9 million or 6.8%, from year-end 2015 to $949.8 million at September 30, 2016. Commercial, residential mortgage and consumer loan portfolios increased $30.5 million, $17.8 million and $11.0 million, respectively. 
• Other assets increased due to the purchase of the Company’s Clinton, New Jersey headquarters, as well as two new branch sites in Emerson, New Jersey and the Somerville, New Jersey, both of which were purchased facilities.
• Total deposits increased $38.8 million or 4.3%, to $933.3 million at September 30, 2016.  Savings deposits grew $43.3 million and noninterest-bearing demand deposits increased $23.9 million, while time deposits declined $25.6 million and noninterest-bearing demand deposits declined $2.8 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 $23.0 million to $115.0 million at September 30, 2016, due to the addition of $30.0 million Federal Home Loan Bank (FHLB) term borrowings partially offset by reduced overnight borrowings.  Also, during the nine 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 $88.2 million at September 30, 2016, an increase of $9.7 million from year-end 2015 due to year-to-date net income less the dividends paid to shareholders.  During the quarter, a $.05 cash dividend and a 10 percent stock dividend were paid.
• Book value per common share was $9.45 as of September 30, 2016.
• At September 30, 2016, the leverage, common equity Tier I, Tier I and Total Risk Based Capital ratios were 8.49%, 9.63%, 10.74% and 11.48% respectively, all in excess of the ratios required to be deemed “well-capitalized”. 

Credit Quality

• Nonperforming assets totaled $8.2 million at September 30, 2016, or 0.86% 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 10.1% to $6.5 million at September 30, 2016 from year-end.
• OREO increased $112 thousand to $1.7 million at September 30, 2016 from year-end.
• The allowance for loan losses totaled $12.7 million at September 30, 2016, or 1.34% of total loans compared to $12.4 million and 1.45% at September 30, 2015.
• Net charge-offs were $493 thousand for the three months ended September 30, 2016, compared to $183 thousand for the same period a year ago.  Net charge-offs were $1.1 million for nine months ended September 30, 2016, compared to $530 thousand for the same period a year ago. 

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $1.2 billion in assets and $933 million in deposits.  Unity Bank provides financial services to retail, corporate and small business customers through its 16 retail service centers located in Bergen, 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
September 30, 2016
																		Sept. 30, 2016 vs.
																		Jun. 30, 2016				Sept. 30, 2015
(In thousands, except percentages and per share amounts)		Sept. 30, 2016					Jun. 30, 2016					Sept. 30, 2015						%				%
BALANCE SHEET DATA:
Total assets		$		1,152,896			$		1,128,370			$		1,052,711					2.2		%		9.5		%
Total deposits				933,320					912,198					866,247					2.3				7.7
Total loans				949,832					915,043					855,560					3.8				11.0
Total securities				72,360					73,994					71,492					(2.2	)			1.2
Total shareholders' equity				88,152					84,967					76,065					3.7				15.9
Allowance for loan losses				(12,685	)				(12,758	)				(12,421	)				0.6				2.1
FINANCIAL DATA - QUARTER TO DATE:
Income before provision for income taxes and gain on subordinated debenture		$		4,633			$		4,448			$		3,845					4.2				20.5
Provision for income taxes				1,613					1,624					1,294					(0.7	)			24.7
Net income		$		3,020			$		2,824			$		2,551					6.9				18.4
Net income per:
Common share - basic		$		0.32			$		0.30			$		0.28					6.7				14.3
Common share - diluted		$		0.32			$		0.30			$		0.27					6.7				18.5
Performance ratios:
Return on average assets				1.05		%			1.03		%			1.00		%			1.9				5.0
Return on average equity				13.90		%			13.59		%			13.54		%			2.3				2.7
Efficiency ratio				58.11		%			58.53		%			62.88		%			(0.7	)			(7.6	)
Net interest margin				3.63		%			3.61		%			3.60		%			0.6				0.8
FINANCIAL DATA - YEAR TO DATE:
Income before provision for income taxes and gain on subordinated debenture		$		13,276								$		10,414									27.5
Provision for income taxes				4,700										3,496									34.4
Net income before gain on subordinated debenture		$		8,576								$		6,918									24.0
Gain on subordinated debenture, net of tax				1,473										-									NM
Net income		$		10,049								$		6,918									45.3
Net income before gain on subordinated debenture per:
Common share - basic		$		0.92								$		0.75									22.7
Common share - diluted		$		0.91								$		0.74									23.0
Net income per:
Common share - basic		$		1.08								$		0.75									44.0
Common share - diluted		$		1.06								$		0.74									43.2
Net income before gain on subordinated debenture ratios:
Return on average assets				1.03		%								0.95		%							8.4
Return on average equity				13.73		%								12.69		%							8.2
Efficiency ratio				59.03		%								64.97		%							(9.1	)
Performance ratios:
Return on average assets				1.20		%								0.95		%							26.3
Return on average equity				16.09		%								12.69		%							26.8
Efficiency ratio				55.39		%								64.97		%							(14.7	)
Net interest margin				3.58		%								3.65		%							(1.9	)
SHARE INFORMATION:
Market price per share		$		12.82			$		11.56			$		8.89					10.9				44.2
Dividends paid		$		0.05			$		0.04			$		0.04					0.3				0.3
Book value per common share		$		9.45			$		9.10			$		8.20					3.8				15.2
Average diluted shares outstanding (QTD)				9,496					9,468					9,389					0.3				1.1
CAPITAL RATIOS:
Total equity to total assets				7.65		%			7.53		%			7.23		%			1.6				5.8
Leverage ratio				8.49		%			8.52		%			8.92		%			(0.4	)			(4.8	)
Common equity tier 1 risk-based capital ratio				9.63		%			9.70		%			9.37		%			n/a				n/a
Tier 1 risk-based capital ratio				10.74		%			10.85		%			11.25		%			(1.0	)			(4.5	)
Total risk-based capital ratio				11.48		%			12.11		%			12.50		%			(5.2	)			(8.2	)
CREDIT QUALITY AND RATIOS:
Nonperforming assets		$		8,230			$		8,243			$		12,501					(0.2	)			(34.2	)
QTD net chargeoffs (annualized) to QTD average loans				0.21		%			0.12		%			0.09		%			75.0				133.3
Allowance for loan losses to total loans				1.34		%			1.39		%			1.45		%			(3.6	)			(7.6	)
Nonperforming assets to total loans and OREO				0.86		%			0.90		%			1.46		%			(4.4	)			(41.1	)
Nonperforming assets to total assets				0.71		%			0.73		%			1.19		%			(2.7	)	%		(40.3	)	%
All share information has been adjusted for the 10% stock dividend paid September 30, 2016

			UNITY BANCORP, INC.
			CONSOLIDATED BALANCE SHEETS
			September 30, 2016
																		Sept. 30, 2016 vs.
																		December 31, 2015				Sept. 30, 2015
(In thousands, except percentages)		Sept. 30, 2016					December 31, 2015					Sept. 30, 2015						%				%
ASSETS
Cash and due from banks		$		23,811			$		22,681			$		21,863					5.0		%		8.9		%
Federal funds sold and interest-bearing deposits				60,859					65,476					66,994					(7.1	)			(9.2	)
Cash and cash equivalents				84,670					88,157					88,857					(4.0	)			(4.7	)
Securities:
Securities available for sale				44,186					52,865					53,470					(16.4	)			(17.4	)
Securities held to maturity				28,174					18,471					18,022					52.5				56.3
Total securities				72,360					71,336					71,492					1.4				1.2
Loans:
SBA loans held for sale				15,611					13,114					13,937					19.0				12.0
SBA loans held for investment				41,795					39,393					39,728					6.1				5.2
SBA 504 loans				26,067					29,353					29,221					(11.2	)			(10.8	)
Commercial loans				496,008					465,518					442,970					6.5				12.0
Residential mortgage loans				282,317					264,523					255,447					6.7				10.5
Consumer loans				88,034					77,057					74,257					14.2				18.6
Total loans				949,832					888,958					855,560					6.8				11.0
Allowance for loan losses				(12,685	)				(12,759	)				(12,421	)				0.6				2.1
Net loans				937,147					876,199					843,139					7.0				11.1
Premises and equipment, net				22,302					15,171					15,297					47.0				45.8
Bank owned life insurance ("BOLI")				13,664					13,381					13,285					2.1				2.9
Deferred tax assets				6,008					5,968					6,107					0.7				(1.6	)
Federal Home Loan Bank ("FHLB") stock				5,767					4,600					4,510					25.4				27.9
Accrued interest receivable				4,165					3,884					3,704					7.2				12.4
Other real estate owned ("OREO")				1,703					1,591					1,759					7.0				(3.2	)
Goodwill and other intangibles				1,516					1,516					1,516					-				-
Other assets				3,594					3,063					3,045					17.3				18.0
Total assets		$		1,152,896			$		1,084,866			$		1,052,711					6.3		%		9.5		%
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand		$		209,122			$		185,267			$		175,298					12.9		%		19.3		%
Interest-bearing demand				127,845					130,605					123,984					(2.1	)			3.1
Savings				344,772					301,447					299,017					14.4				15.3
Time, under $100,000				134,448					134,468					124,348					-				8.1
Time, $100,000 and over, under $250,000				86,366					104,106					115,912					(17.0	)			(25.5	)
Time, $250,000 and over				30,767					38,600					27,688					(20.3	)			11.1
Total deposits				933,320					894,493					866,247					4.3				7.7
Borrowed funds				115,000					92,000					90,000					25.0				27.8
Subordinated debentures				10,310					15,465					15,465					(33.3	)			(33.3	)
Accrued interest payable				446					461					460					(3.3	)			(3.0	)
Accrued expenses and other liabilities				5,668					3,977					4,474					42.5				26.7
Total liabilities				1,064,744					1,006,396					976,646					5.8				9.0
Shareholders' equity:
Common stock				70,450					59,371					59,205					18.7				19.0
Retained earnings				18,117					19,566					17,270					(7.4	)			4.9
Accumulated other comprehensive loss				(415	)				(467	)				(410	)				NM				NM
Total shareholders' equity				88,152					78,470					76,065					12.3				15.9
Total liabilities and shareholders' equity		$		1,152,896			$		1,084,866			$		1,052,711					6.3		%		9.5		%
Issued and outstanding common shares				9,331					9,279					9,272
NM=Not meaningful

			UNITY BANCORP, INC.
			QTD CONSOLIDATED STATEMENTS OF INCOME
			NON-GAAP
			September 30, 2016
												Sept. 30, 2016 vs.
		For the three months ended										Jun. 30, 2016										Sept. 30, 2015
(In thousands, except percentages and per share amounts)		Sept. 30, 2016			Jun. 30, 2016			Sept. 30, 2015				$					%					$					%
INTEREST INCOME
Federal funds sold and interest-bearing deposits		$	50		$	41		$	11			$		9					22.0		%	$		39					354.5		%
FHLB stock			67			55			36					12					21.8					31					86.1
Securities:
Taxable			456			427			349					29					6.8					107					30.7
Tax-exempt			43			55			71					(12	)				(21.8	)				(28	)				(39.4	)
Total securities			499			482			420					17					3.5					79					18.8
Loans:
SBA loans			822			788			696					34					4.3					126					18.1
SBA 504 loans			321			344			353					(23	)				(6.7	)				(32	)				(9.1	)
Commercial loans			6,138			5,860			5,378					278					4.7					760					14.1
Residential mortgage loans			3,138			2,937			2,811					201					6.8					327					11.6
Consumer loans			1,046			980			849					66					6.7					197					23.2
Total loans			11,465			10,909			10,087					556					5.1					1,378					13.7
Total interest income			12,081			11,487			10,554					594					5.2					1,527					14.5
INTEREST EXPENSE
Interest-bearing demand deposits			129			124			108					5					4.0					21					19.4
Savings deposits			458			381			255					77					20.2					203					79.6
Time deposits			920			954			839					(34	)				(3.6	)				81					9.7
Borrowed funds and subordinated debentures			701			686			730					15					2.2					(29	)				(4.0	)
Total interest expense			2,208			2,145			1,932					63					2.9					276					14.3
Net interest income			9,873			9,342			8,622					531					5.7					1,251					14.5
Provision for loan losses			420			400			200					20					5.0					220					110.0
Net interest income after provision for loan losses			9,453			8,942			8,422					511					5.7					1,031					12.2
NONINTEREST INCOME
Branch fee income			321			286			399					35					12.2					(78	)				(19.5	)
Service and loan fee income			274			267			306					7					2.6					(32	)				(10.5	)
Gain on sale of SBA loans held for sale, net			639			637			308					2					0.3					331					107.5
Gain on sale of mortgage loans, net			609			593			926					16					2.7					(317	)				(34.2	)
BOLI income			97			93			95					4					4.3					2					2.1
Net security gains			11			81			-					(70	)				(86.4	)				11					100.0
Other income			222			277			241					(55	)				(19.9	)				(19	)				(7.9	)
Total noninterest income			2,173			2,234			2,275					(61	)				(2.7	)				(102	)				(4.5	)
NONINTEREST EXPENSE
Compensation and benefits			3,872			3,709			3,814					163					4.4					58					1.5
Occupancy			611			513			598					98					19.1					13					2.2
Processing and communications			647			600			631					47					7.8					16					2.5
Furniture and equipment			432			395			393					37					9.4					39					9.9
Professional services			216			239			251					(23	)				(9.6	)				(35	)				(13.9	)
Loan costs			86			59			265					27					45.8					(179	)				(67.5	)
OREO expenses			74			82			15					(8	)				(9.8	)				59					393.3
Deposit insurance			168			165			163					3					1.8					5					3.1
Advertising			304			303			203					1					0.3					101					49.8
Other expenses			583			663			519					(80	)				(12.1	)				64					12.3
Total noninterest expense			6,993			6,728			6,852					265					3.9					141					2.1
Income before provision for income taxes and gain on subordinated debenture			4,633			4,448			3,845					185					4.2					788					20.5
Provision for income taxes			1,613			1,624			1,294					(11	)				(0.7	)				319					24.7
Net income		$	3,020		$	2,824		$	2,551			$		196					6.9		%	$		469					18.4		%
Effective tax rate			34.8	%		36.5	%		33.7	%
Net income per:
Common share - basic		$	0.32		$	0.30		$	0.28
Common share - diluted		$	0.32		$	0.30		$	0.27
Weighted average common shares outstanding - Basic			9,339			9,318			9,270
Weighted average common shares outstanding - Diluted			9,496			9,468			9,389

UNITY BANCORP, INC.
YTD CONSOLIDATED STATEMENTS OF INCOME
September 30, 2016
		For the nine months ended September 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		$	135		$	26			$		109					419.2		%
FHLB stock			173			117					56					47.9
Securities:
Taxable			1,246			1,100					146					13.3
Tax-exempt			160			213					(53	)				(24.9	)
Total securities			1,406			1,313					93					7.1
Loans:
SBA loans			2,331			1,980					351					17.7
SBA 504 loans			1,050			1,068					(18	)				(1.7	)
Commercial loans			17,676			15,720					1,956					12.4
Residential mortgage loans			9,017			8,108					909					11.2
Consumer loans			2,956			2,322					634					27.3
Total loans			33,030			29,198					3,832					13.1
Total interest income			34,744			30,654					4,090					13.3
INTEREST EXPENSE
Interest-bearing demand deposits			390			317					73					23.0
Savings deposits			1,206			789					417					52.9
Time deposits			2,824			2,250					574					25.5
Borrowed funds and subordinated debentures			2,122			2,289					(167	)				(7.3	)
Total interest expense			6,542			5,645					897					15.9
Net interest income			28,202			25,009					3,193					12.8
Provision for loan losses			1,020			400					620					155.0
Net interest income after provision for loan losses			27,182			24,609					2,573					10.5
NONINTEREST INCOME
Branch fee income			940			1,118					(178	)				(15.9	)
Service and loan fee income			796			1,068					(272	)				(25.5	)
Gain on sale of SBA loans held for sale, net			1,584			671					913					136.1
Gain on sale of mortgage loans, net			1,917			1,957					(40	)				(2.0	)
BOLI income			283			284					(1	)				(0.4	)
Net security gains			186			28					158					564.3
Other income			716			683					33					4.8
Total noninterest income			6,422			5,809					613					10.6
NONINTEREST EXPENSE
Compensation and benefits			11,130			10,767					363					3.4
Occupancy			1,742			1,871					(129	)				(6.9	)
Processing and communications			1,845			1,841					4					0.2
Furniture and equipment			1,247			1,189					58					4.9
Professional services			710			729					(19	)				(2.6	)
Loan costs			343			647					(304	)				(47.0	)
OREO expenses			179			117					62					53.0
Deposit insurance			494			496					(2	)				(0.4	)
Advertising			848			728					120					16.5
Other expenses			1,790			1,619					171					10.6
Total noninterest expense			20,328			20,004					324					1.6
Income before provision for income taxes and gain on subordinated debenture			13,276			10,414					2,862					27.5
Provision for income taxes			4,700			3,496					1,204					34.4
Net income before gain on subordinated debenture		$	8,576		$	6,918			$		1,658					24.0		%
Gain on subordinated debenture, net of tax			1,473			-					1,473					100.0
Net income		$	10,049		$	6,918			$		3,131					45.3		%
Effective tax rate			35.3	%		33.6	%
Net income before gain on subordinated debenture per:
Common share - basic		$	0.92		$	0.75
Common share - diluted		$	0.91		$	0.74
Net income per:
Common share - basic		$	1.08		$	0.75
Common share - diluted		$	1.06		$	0.74
Weighted average common shares outstanding - Basic			9,320			9,265
Weighted average common shares outstanding - Diluted			9,468			9,377

			UNITY BANCORP, INC.
			QUARTER TO DATE NET INTEREST MARGIN
			September 30, 2016
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
		For the three months ended
		September 30, 2016													June 30, 2016
		Average Balance					Interest					Rate/Yield			Average Balance					Interest					Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits		$		70,628			$		50				0.28	%	$		62,652			$		41				0.26	%
FHLB stock				5,728					67				4.65				4,904					55				4.51
Securities:
Taxable				63,871					456				2.84				62,561					427				2.75
Tax-exempt				6,478					66				4.05				8,177					83				4.08
Total securities (A)				70,349					522				2.95				70,738					510				2.90
Loans:
SBA loans				57,122					822				5.72				56,719					788				5.59
SBA 504 loans				26,562					321				4.81				27,273					344				5.07
Commercial loans				490,776					6,138				4.98				474,573					5,860				4.97
Residential mortgage loans				276,413					3,138				4.52				264,599					2,937				4.46
Consumer loans				85,632					1,046				4.86				82,295					980				4.79
Total loans (B)				936,505					11,465				4.87				905,459					10,909				4.85
Total interest-earning assets		$		1,083,210			$		12,104				4.45	%	$		1,043,753			$		11,515				4.44	%
Noninterest-earning assets:
Cash and due from banks				19,831													25,993
Allowance for loan losses				(12,769	)												(12,850	)
Other assets				52,000													49,250
Total noninterest-earning assets				59,062													62,393
Total assets		$		1,142,272											$		1,106,146
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits		$		129,310			$		129				0.40	%	$		129,263			$		124				0.39	%
Total savings deposits				331,588					458				0.55				310,329					381				0.49
Total time deposits				256,884					920				1.42				275,700					954				1.39
Total interest-bearing deposits				717,782					1,507				0.84				715,292					1,459				0.82
Borrowed funds and subordinated debentures				123,136					701				2.26				106,277					686				2.60
Total interest-bearing liabilities		$		840,918			$		2,208				1.04	%	$		821,569			$		2,145				1.05	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits				197,937													194,649
Other liabilities				16,990													6,370
Total noninterest-bearing liabilities				214,927													201,019
Total shareholders' equity				86,427													83,558
Total liabilities and shareholders' equity		$		1,142,272											$		1,106,146
Net interest spread							$		9,896				3.41	%						$		9,370				3.39	%
Tax-equivalent basis adjustment									(23	)												(28	)
Net interest income							$		9,873											$		9,342
Net interest margin													3.63	%												3.61	%
(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
			September 30, 2016
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
		For the three months ended
		September 30, 2016													September 30, 2015
		Average Balance					Interest					Rate/Yield			Average Balance					Interest					Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits		$		70,628			$		50				0.28	%	$		34,465			$		11				0.13	%
FHLB stock				5,728					67				4.65				3,517					36				4.06
Securities:
Taxable				63,871					456				2.84				61,542					349				2.25
Tax-exempt				6,478					66				4.05				11,612					105				3.59
Total securities (A)				70,349					522				2.95				73,154					454				2.46
Loans:
SBA loans				57,122					822				5.72				53,325					696				5.18
SBA 504 loans				26,562					321				4.81				29,268					353				4.79
Commercial loans				490,776					6,138				4.98				433,285					5,378				4.92
Residential mortgage loans				276,413					3,138				4.52				254,765					2,811				4.38
Consumer loans				85,632					1,046				4.86				72,641					849				4.64
Total loans (B)				936,505					11,465				4.87				843,284					10,087				4.75
Total interest-earning assets		$		1,083,210			$		12,104				4.45	%	$		954,420			$		10,588				4.40	%
Noninterest-earning assets:
Cash and due from banks				19,831													24,990
Allowance for loan losses				(12,769	)												(12,619	)
Other assets				52,000													44,098
Total noninterest-earning assets				59,062													56,469
Total assets		$		1,142,272											$		1,010,889
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits		$		129,310			$		129				0.40	%	$		125,405			$		108				0.34	%
Total savings deposits				331,588					458				0.55				290,413					255				0.35
Total time deposits				256,884					920				1.42				256,216					839				1.30
Total interest-bearing deposits				717,782					1,507				0.84				672,034					1,202				0.71
Borrowed funds and subordinated debentures				123,136					701				2.26				83,383					730				3.47
Total interest-bearing liabilities		$		840,918			$		2,208				1.04	%	$		755,417			$		1,932				1.01	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits				197,937													176,085
Other liabilities				16,990													4,663
Total noninterest-bearing liabilities				214,927													180,748
Total shareholders' equity				86,427													74,724
Total liabilities and shareholders' equity		$		1,142,272											$		1,010,889
Net interest spread							$		9,896				3.41	%						$		8,656				3.39	%
Tax-equivalent basis adjustment									(23	)												(34	)
Net interest income							$		9,873											$		8,622
Net interest margin													3.63	%												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.
		YEAR TO DATE NET INTEREST MARGIN
		September 30, 2016
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
		For the nine months ended
		September 30, 2016													September 30, 2015
		Average Balance					Interest					Rate/Yield			Average Balance					Interest					Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits		$		70,654			$		135				0.26	%	$		30,657			$		26				0.11	%
FHLB stock				5,063					173				4.56				3,694					117				4.23
Securities:
Taxable				61,869					1,246				2.69				64,121					1,100				2.29
Tax-exempt				8,062					241				3.99				11,798					315				3.57
Total securities (A)				69,931					1,487				2.84				75,919					1,415				2.49
Loans:
SBA loans				55,932					2,331				5.57				49,678					1,980				5.33
SBA 504 loans				27,685					1,050				5.07				30,720					1,068				4.65
Commercial loans				476,477					17,676				4.96				420,682					15,720				5.00
Residential mortgage loans				268,436					9,017				4.49				241,675					8,108				4.49
Consumer loans				82,098					2,956				4.81				67,488					2,322				4.60
Total loans (B)				910,628					33,030				4.85				810,243					29,198				4.82
Total interest-earning assets		$		1,056,276			$		34,825				4.40	%	$		920,513			$		30,756				4.47	%
Noninterest-earning assets:
Cash and due from banks				24,261													26,537
Allowance for loan losses				(12,848	)												(12,583	)
Other assets				48,922													43,637
Total noninterest-earning assets				60,335													57,591
Total assets		$		1,116,611											$		978,104
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits		$		129,968			$		390				0.40	%	$		125,216			$		317				0.34	%
Total savings deposits				317,441					1,206				0.51				289,445					789				0.36
Total time deposits				271,511					2,824				1.39				229,512					2,250				1.31
Total interest-bearing deposits				718,920					4,420				0.82				644,173					3,356				0.69
Borrowed funds and subordinated debentures				111,298					2,122				2.55				87,714					2,289				3.49
Total interest-bearing liabilities		$		830,218			$		6,542				1.05	%	$		731,887			$		5,645				1.03	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits				193,288													168,852
Other liabilities				9,656													4,463
Total noninterest-bearing liabilities				202,944													173,315
Total shareholders' equity				83,449													72,902
Total liabilities and shareholders' equity		$		1,116,611											$		978,104
Net interest spread							$		28,283				3.35	%						$		25,111				3.44	%
Tax-equivalent basis adjustment									(81	)												(102	)
Net interest income							$		28,202											$		25,009
Net interest margin													3.58	%												3.65	%
(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
			September 30, 2016
Amounts in thousands, except percentages		Sept. 30, 2016			Jun. 30, 2016			Mar. 31, 2016			Dec. 31, 2015					Sept. 30, 2015
ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period		$	12,758		$	12,634		$	12,759		$		12,421			$	12,404
Provision for loan losses charged to expense			420			400			200				100				200
			13,178			13,034			12,959				12,521				12,604
Less: Chargeoffs
SBA loans			140			142			86				151				86
Commercial loans			376			152			228				52				10
Residential mortgage loans			-			-			-				-				50
Consumer loans			-			-			28				41				52
Total chargeoffs			516			294			342				244				198
Add: Recoveries
SBA loans			17			4			11				6				10
Commercial loans			6			13			6				476				5
Consumer loans			-			1			-				-				-
Total recoveries			23			18			17				482				15
Net chargeoffs (recoveries)			493			276			325				(238	)			183
Balance, end of period		$	12,685		$	12,758		$	12,634		$		12,759			$	12,421
LOAN QUALITY INFORMATION:
Nonperforming loans (1)		$	6,527		$	6,541		$	6,887		$		7,260			$	10,742
Other real estate owned ("OREO")			1,703			1,702			1,417				1,591				1,759
Nonperforming assets			8,230			8,243			8,304				8,851				12,501
Less:  Amount guaranteed by SBA			624			134			243				288				225
Net nonperforming assets		$	7,606		$	8,109		$	8,061		$		8,563			$	12,276
Loans 90 days past due & still accruing		$	-		$	485		$	-		$		-			$	272
Performing Troubled Debt Restructurings (TDRs)		$	665		$	772		$	844		$		3,015			$	3,268
(1) Nonperforming TDRs included in nonperforming loans			154			161			293				293				2,808
Total TDRs		$	819		$	933		$	1,137		$		3,308			$	6,076
Allowance for loan losses to:
Total loans at quarter end			1.34	%		1.39	%		1.42	%			1.44		%		1.45	%
Nonperforming loans (1)			194.35			195.05			183.45				175.74				115.63
Nonperforming assets			154.13			154.77			152.14				144.15				99.36
Net nonperforming assets			166.78			157.33			156.73				149.00				101.18
QTD net chargeoffs (annualized) to QTD average loans:
SBA loans			0.86	%		0.98	%		0.56	%			1.05		%		0.57	%
Commercial loans			0.30			0.12			0.19				(0.37	)			-
Residential mortgage loans			-			-			-				-				0.08
Consumer loans			-			-			0.14				0.21				0.28
Total loans			0.21	%		0.12	%		0.15	%			(0.11	)	%		0.09	%
Nonperforming loans to total loans			0.69	%		0.71	%		0.78	%			0.82		%		1.26	%
Nonperforming loans and TDRs to total loans			0.76			0.80			0.87				1.16				1.64
Nonperforming assets to total loans and OREO			0.86			0.90			0.93				0.99				1.46
Nonperforming assets to total assets			0.71			0.73			0.74				0.82				1.19

			UNITY BANCORP, INC.
			QUARTERLY FINANCIAL DATA
			NON-GAAP
			September 30, 2016
(In thousands, except percentages and per share amounts)		Sept. 30, 2016					Jun. 30, 2016					Mar. 31, 2016					Dec. 31, 2015					Sept. 30, 2015
SUMMARY OF INCOME:
Total interest income		$		12,081			$		11,487			$		11,176			$		10,995			$		10,554
Total interest expense				2,208					2,145					2,189					2,015					1,932
Net interest income				9,873					9,342					8,987					8,980					8,622
Provision for loan losses				420					400					200					100					200
Net interest income after provision for loan losses				9,453					8,942					8,787					8,880					8,422
Total noninterest income				2,173					2,234					2,016					1,920					2,275
Total noninterest expense				6,993					6,728					6,607					6,846					6,852
Income before provision for income taxes and gain on  subordinated debenture				4,633					4,448					4,196					3,954					3,845
Provision for income taxes				1,613					1,624					1,464					1,315					1,294
Net income before gain on subordinated debenture		$		3,020			$		2,824			$		2,732			$		2,639			$		2,551
Gain on subordinated debenture, net of tax				-					-					1,473					-					-
Net income		$		3,020			$		2,824			$		4,205			$		2,639			$		2,551
Net income per common share - Basic		$		0.32			$		0.30			$		0.45			$		0.28			$		0.28
Net income per common share - Diluted		$		0.32			$		0.30			$		0.44			$		0.28			$		0.27
COMMON SHARE DATA:
Market price per share		$		12.82			$		11.56			$		10.34			$		11.34			$		8.89
Dividends paid		$		0.05			$		0.04			$		0.04			$		0.04			$		0.04
Book value per common share		$		9.45			$		9.10			$		8.83			$		8.46			$		8.20
Weighted average common shares outstanding - Basic				9,339					9,318					9,304					9,273					9,270
Weighted average common shares outstanding - Diluted				9,496					9,468					9,550					9,402					9,389
Issued and outstanding common shares				9,331					9,336					9,315					9,279					9,272
OPERATING RATIOS (Annualized):
Return on average assets				1.05		%			1.03		%			1.54		%			1.00		%			1.00		%
Return on average equity				13.90					13.59					21.05					13.59					13.54
Efficiency ratio				58.11					58.53					50.16					62.81					62.88
BALANCE SHEET DATA:
Total assets		$		1,152,896			$		1,128,370			$		1,120,955			$		1,084,866			$		1,052,711
Total deposits				933,320					912,198					926,819					894,493					866,247
Total loans				949,832					915,043					886,990					888,958					855,560
Total securities				72,360					73,994					66,729					71,336					71,492
Total shareholders' equity				88,152					84,967					82,276					78,470					76,065
Allowance for loan losses				(12,685	)				(12,758	)				(12,634	)				(12,759	)				(12,421	)
TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets				4.45		%			4.44		%			4.33		%			4.40		%			4.40		%
Interest-bearing liabilities				1.04					1.05					1.06					1.02					1.01
Net interest spread				3.41					3.39					3.27					3.38					3.39
Net interest margin				3.63					3.61					3.48					3.60					3.60
CREDIT QUALITY:
Nonperforming assets				8,230					8,243					8,304					8,851					12,501
QTD net chargeoffs (annualized) to QTD average loans				0.21		%			0.12		%			0.15		%			(0.11	)	%			0.09		%
Allowance for loan losses to total loans				1.34					1.39					1.42					1.44					1.45
Nonperforming assets to total loans and OREO				0.86					0.90					0.93					0.99					1.46
Nonperforming assets to total assets				0.71					0.73					0.74					0.82					1.19
CAPITAL RATIOS AND OTHER:
Total equity to total assets				7.65		%			7.53		%			7.34		%			7.23		%			7.23		%
Leverage ratio				8.49					8.52					8.31					8.82					8.92
Common equity tier 1 risk-based capital ratio				9.63					9.70					9.77					9.37					9.37
Tier 1 risk-based capital ratio				10.74					10.85					10.97					11.18					11.25
Total risk-based capital ratio				11.48					12.11					12.22					12.43					12.50
Number of banking offices				15					15					15					15					15
Number of ATMs				16					16					16					16					16
Number of employees				180					172					172					162					163

News Media & Financial Analyst Contact:
Alan J. Bedner, EVP
Chief Financial Officer
(908) 713-4308

Legal Disclaimer:

EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.