CLINTON, N.J., July 25, 2017 (GLOBE NEWSWIRE) -- Unity Bancorp, Inc. (NASDAQ:UNTY), parent company of Unity Bank, reported a 22.0% increase in quarterly earnings and a 19.4% increase in year-to-date earnings.  The year-to-date results exclude the effect of a nonrecurring gain during the prior year’s period.   Contributing factors included strong loan and deposit growth, increased net interest income and expanded net interest margins.

Net income for the three months ended June 30, 2017 was $3.4 million, or $0.32 per diluted share, a 22.0 percent increase compared to net income of $2.8 million, or $0.30 per diluted share, for the three months ended June 30, 2016.  Return on average assets and average common equity for the quarter were 1.11% and 12.47%, respectively, compared to 1.03% and 13.59% for the same period a year ago.

Year-to-date net income was $6.6 million, or $0.62 per diluted share, for the six months ended June 30, 2017.  Year-to-date net income, excluding the nonrecurring gain on the repurchase of subordinated debentures, was $5.6 million, or $0.59 per diluted share, for the same period a year ago.  Current year-to-date net income represents a 19.4% increase over the prior year’s year-to-date net income excluding the nonrecurring gain.  Return on average assets and average common equity for the period were 1.09% and 12.25%, respectively, compared to 1.01% and 13.63% for the same period a year ago.

In February 2016, the Company repurchased $5.0 million of its outstanding subordinated “capital qualifying” 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.  Management believes excluding the nonrecurring gain from 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.

Net income for the six months ended June 30, 2017 declined 5.6% compared to the prior year period net income, which included the nonrecurring gain on the repurchase of subordinated debentures, of $7.0 million or $0.74 per diluted share.   Return on average assets and average common equity for the six months ended June 30, 2017 was 1.09% and 12.25%, respectively compared to 1.28% and 17.25% for the prior year period, including the nonrecurring gain.

Second quarter highlights included:

• 7.5% loan growth from year-end:  15.4% increase in consumer loans, 9.1% increase in residential mortgage loans and 7.1% increase in commercial loans.
• 6.2% deposit growth:  11.1% increase in savings deposits and 7.7% increase in noninterest-bearing demand deposits.
• Net interest income increased 19.4% to $11.2 million compared to the prior year’s quarter due to earning asset growth and improved margins.
• Net interest margin increased to 3.79% this quarter compared to 3.61% in the prior year’s quarter due to strong loan growth and the benefit of a rising rate environment.
• Credit quality continues to improve.  Nonperforming loans fell 21.5% to $5.7 million.

“We had another quarter of record earnings,” stated James A. Hughes, President and CEO.  “Loan and deposit growth remains extremely robust and I expect that to continue for the remainder of this year.  Our newest branches add geographic presence and situational opportunity to our growth plans and are ahead of our projections.  We are actively looking for new branch opportunities, and we feel confident that we can continue to expand our franchise while we grow our profitability.  Our balance sheet is well positioned and has benefited from the increase in interest rates.”

Net Interest Income

Net interest income, our core driver of earnings, increased $1.8 million to $11.2 million for the quarter ended June 30, 2017 compared to the prior year’s quarter.  In addition, the net interest margin expanded 18 basis points to 3.79%, compared to 3.61% for the prior year’s quarter.  For the six months ended June 30, 2017, net interest income increased $3.2 million to $21.5 million, and the net interest margin expanded 20 basis points to 3.75%.  Each period benefited from strong loan growth and the rising interest rate environment.  We expect continued improvement in our net interest margin due to rising rates.

The yield on earning assets increased 14 basis points to 4.58% for the quarter ended June 30, 2017 compared to 4.44% for the prior year’s quarter.  This increase was the result of strong commercial, residential mortgage and consumer loan growth over the prior year’s period and the benefit of a rising rate environment.  Quarterly average commercial loans increased $58.1 million, average residential mortgage loans have increased $47.1 million and consumer loans increased $18.6 million compared to the second quarter in 2016.  Our loan growth was somewhat mitigated by unusually high levels of payoffs.

The cost of interest-bearing liabilities fell 2 basis points to 1.03% for the quarter ended June 30, 2017.  While the cost of deposits increased 3 basis points to 0.85%, the cost of borrowed funds and subordinated debentures decreased 46 basis points compared to the prior year due to the modification of borrowings with the Federal Home Loan Bank (“FHLB”) and the addition of new borrowing at lower rates over the past year.   The increase in the cost of deposits was primarily driven by the growth in savings deposits.

Provision for Loan Losses

The provision for loan losses was $400 thousand for each of the quarters ended June 30, 2017 and June 30, 2016.  Year-to-date the provision for loan losses increased $50 thousand to $650 thousand for the six months ended June 30, 2017.  Quarterly net charge-offs were flat at $281 thousand and $276 thousand for each quarter, respectively.  Year-to-date charge-offs declined $172 thousand to $429 thousand for the six months ended June 30, 2017.

Noninterest Income

Noninterest income decreased $213 thousand to $2.0 million for the three months ended June 30, 2017, compared to the same period last year due to a lower volume of sales of both mortgage and SBA loans.  Year-to-date noninterest income remained relatively flat at $4.2 million for the six month period.

Quarterly gains on the sale of mortgage loans declined $329 thousand and year-to-date gains dropped $512 thousand due to lower sales volumes in each period.  The decline in sales was a result of management electing to hold more residential loans in portfolio for long term investment.  Mortgage loan sale volume totaled $16.7 million for the three months ended June 30, 2017 compared to $26.0 million in sales in the prior year’s period.  Year-to-date, mortgage loan sales volume totaled $42.3 million and $51.1 million for the periods ended June 30, 2017 and 2016, respectively.

Gains on the sale of SBA loans decreased due to a lower volume of loan sales this quarter compared with the prior year’s quarter.  SBA loan sales totaled $5.3 million with net gains on sale of $479 thousand for the quarter ended June 30, 2017, compared to $7.2 million in sales and a net gain of $637 thousand in the prior year’s quarter.   Year-to-date, gains on the sale of $11.3 million in SBA loans were $963 thousand compared to $945 thousand on $10.6 million sold in the prior year-to-date period.

Other notable items included branch fee income and service and loan income.  Branch fee income increased in the quarterly and year-to-date periods due to increased fees from commercial checking accounts and overdraft fees.  Service and loan fee income increased $245 thousand and $502 thousand in the quarterly and year-to-date periods, respectively due to loan payoff fees and processing fees.

Noninterest Expense

Noninterest expense increased $693 thousand, or 10.3%, to $7.4 million for the quarter and increased $1.5 million, or 11.4%, to $14.9 million for the six month period ended June 30, 2017.  These increases are  attributed to costs of expanding our retail and lending network, such as compensation and occupancy expenses.  Notable items for the periods include:

• Compensation and benefits expense increased $590 thousand to $4.3 million for the three months ended June 30, 2017 and increased $1.1 million to $8.4 million for the six months ended June 30, 2017.  Compensation and benefit expenses have risen in each of these periods due to the addition of two new retail branches, additional lending and operational staff.
• Occupancy expenses increased $77 thousand for the quarter and $59 thousand year-to-date due to the addition of two new retail branches.
• Furniture and equipment expense increased $118 thousand and $209 thousand for the quarter and year-to-date periods, respectively due to continued investment in technology in the form of equipment, network maintenance and software.
• Year-to-date, loan collection and OREO expenses increased as the result of a $253 thousand loss on the sale of an OREO property in the first quarter of 2017.
• Deposit insurance expense declined for the quarter and year-to-date period as our assessment rate dropped as a result of the capital raise in December 2016.

Financial Condition

At June 30, 2017, total assets were $1.3 billion, an increase of $85.6 million from year-end 2016:

• Total securities increased $13.5 million due to purchases of $25.7 million during the period.
• Total loans increased $73.4 million or 7.5%, from year-end 2016 to $1.0 billion at June 30, 2017. Commercial, residential mortgage and consumer loan portfolios increased $36.1 million, $26.3 million and $14.1 million, respectively.  SBA loans declined on sales of $11.3 million.  Our pipeline in all categories remains strong and loan growth is expected in future quarters.
• Total deposits increased $58.2 million or 6.2%, to $1.0 billion at June 30, 2017.  Savings deposits and noninterest-bearing demand deposits have increased $40.3 million and $16.6 million, respectively.
• Borrowed funds increased $21.0 million to $142.0 million at June 30, 2017 due to increased overnight borrowings.
• Shareholders’ equity was $112.4 million at June 30, 2017, an increase of $6.2 million from year-end 2016, due to retained net income.
• Book value per common share was $10.64 as of June 30, 2017.
• At June 30, 2017, the leverage, common equity Tier I, Tier I and Total Risk Based Capital ratios were 9.66%, 11.32%, 12.34% and 13.59% respectively, all in excess of the ratios required to be deemed “well-capitalized”.

Credit Quality

• Nonperforming assets totaled $6.3 million at June 30, 2017, or 0.60% of total loans and OREO, compared to $8.3 million or 0.85% of total loans and OREO at year-end 2016.
• The allowance for loan losses totaled $12.8 million at June 30, 2017, or 1.22% of total loans compared to $12.8 million and 1.39% at June 30, 2016.
• Net charge-offs were $281 thousand for the three months ended June 30, 2017, compared to $276 thousand for the same period a year ago.  Year-to-date net charge-offs were $429 thousand compared to $601 thousand for the prior year’s period.

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $1.3 billion in assets and $1.0 billion in deposits.  Unity Bank provides financial services to retail, corporate and small business customers through its 17 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.

UNITY BANCORP, INC.
SUMMARY FINANCIAL HIGHLIGHTS
NON-GAAP
June 30, 2017
															June 30, 2017 vs.
															March 31, 2017			June 30, 2016
(In thousands, except percentages and per share amounts)		June 30, 2017				March 31, 2017				June 30, 2016					%			%
BALANCE SHEET DATA:
Total assets		$	1,275,517			$	1,226,168			$	1,128,370				4.0		%	13.0		%
Total deposits			1,003,967				980,703				912,198				2.4			10.1
Total loans			1,046,804				1,000,677				915,043				4.6			14.4
Total securities			75,066				73,022				73,994				2.8			1.4
Total shareholders' equity			112,447				109,305				84,967				2.9			32.3
Allowance for loan losses			(12,800	)			(12,681	)			(12,758	)			(0.9	)		0.3
FINANCIAL DATA - QUARTER TO DATE:
Income before provision for income taxes		$	5,350			$	4,904			$	4,448				9.1			20.3
Provision for income taxes			1,906				1,712				1,624				11.3			17.4
Net income before gain on subordinated debenture		$	3,444			$	3,192			$	2,824				7.9			22.0
Net income per:
Common share - basic		$	0.33			$	0.30			$	0.30				10.0			10.0
Common share - diluted		$	0.32			$	0.30			$	0.30				6.7			6.7
Performance ratios:
Return on average assets			1.11		%		1.07		%		1.03		%		3.7			7.8
Return on average equity			12.47		%		12.02		%		13.59		%		3.7			(8.2	)
Efficiency ratio			56.41		%		59.08		%		58.53		%		(4.5	)		(3.6	)
Net interest margin			3.79		%		3.70		%		3.61		%		2.4			5.0
FINANCIAL DATA - YEAR TO DATE:
Income before provision for income taxes and gain on subordinated debenture		$	10,254							$	8,643							18.6
Provision for income taxes			3,618								3,087							17.2
Net income before gain on subordinated debenture		$	6,636							$	5,556							19.4
Gain on subordinated debenture, net of tax			-								1,473							NM
Net income		$	6,636							$	7,029							(5.6	)
Net income before gain on subordinated debenture per:
Common share - basic		$	0.63							$	0.60							5.0
Common share - diluted		$	0.62							$	0.59							5.1
Net income per:
Common share - basic		$	0.63							$	0.75							(16.0	)
Common share - diluted		$	0.62							$	0.74							(16.2	)
Net income before gain on subordinated debenture performance ratios:
Return on average assets			1.09		%						1.01		%					(14.8	)
Return on average equity			12.25		%						13.63		%					(29.0	)
Efficiency ratio			57.71		%						59.53		%					6.8
Performance ratios:
Return on average assets			1.09		%						1.28		%					(14.8	)
Return on average equity			12.25		%						17.25		%					(29.0	)
Efficiency ratio			57.71		%						54.06		%					6.8
Net interest margin			3.75		%						3.55		%					5.6
SHARE INFORMATION:
Market price per share		$	17.20			$	16.95			$	11.56				1.5			48.8
Dividends paid quarterly		$	0.06			$	0.05			$	0.04				0.2			0.5
Book value per common share		$	10.64			$	10.38			$	9.10				2.5			16.9
Average diluted shares outstanding (QTD)			10,735				10,705				9,468				0.3			13.4
CAPITAL RATIOS:
Total equity to total assets			8.82		%		8.91		%		7.53		%		(1.0	)		17.1
Leverage ratio			9.66		%		9.72		%		8.52		%		(0.6	)		13.4
Common equity tier 1 risk-based capital ratio			11.32		%		11.46		%		9.70		%		(1.2	)		16.7
Tier 1 risk-based capital ratio			12.34		%		12.53		%		10.85		%		(1.5	)		13.7
Total risk-based capital ratio			13.59		%		13.78		%		12.11		%		(1.4	)		12.2
CREDIT QUALITY AND RATIOS:
Nonperforming assets		$	6,262			$	8,930			$	8,243				(29.9	)		(24.0	)
QTD net chargeoffs (annualized) to QTD average loans			0.11		%		0.06		%		0.12		%		83.3			(8.3	)
Allowance for loan losses to total loans			1.22		%		1.27		%		1.39		%		(3.9	)		(12.2	)
Nonperforming assets to total loans and OREO			0.60		%		0.89		%		0.90		%		(32.6	)		(33.3	)
Nonperforming assets to total assets			0.49		%		0.73		%		0.73		%		(32.9	)	%	(32.9	)	%
All share information has been adjusted for the 10% stock dividend paid September 30, 2016

UNITY BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 2017
															June 30, 2017 vs.
															December 31, 2016			June 30, 2016
(In thousands, except percentages)		June 30, 2017				December 31, 2016				June 30, 2016					%			%
ASSETS
Cash and due from banks		$	21,745			$	22,105			$	20,169				(1.6	)	%	7.8		%
Fed funds, interest bearing deposits and repos			83,070				83,790				75,908				(0.9	)		9.4
Cash and cash equivalents			104,815				105,895				96,077				(1.0	)		9.1
Securities:
Securities available for sale			54,825				40,568				45,266				35.1			21.1
Securities held to maturity			20,241				20,979				28,728				(3.5	)		(29.5	)
Total securities			75,066				61,547				73,994				22.0			1.4
Loans:
SBA loans held for sale			13,950				14,773				13,245				(5.6	)		5.3
SBA loans held for investment			43,329				42,492				40,006				2.0			8.3
SBA 504 loans			23,153				26,344				27,038				(12.1	)		(14.4	)
Commercial loans			545,308				509,171				481,713				7.1			13.2
Residential mortgage loans			315,396				289,093				268,774				9.1			17.3
Consumer loans			105,668				91,541				84,267				15.4			25.4
Total loans			1,046,804				973,414				915,043				7.5			14.4
Allowance for loan losses			(12,800	)			(12,579	)			(12,758	)			1.8			0.3
Net loans			1,034,004				960,835				902,285				7.6			14.6
Premises and equipment, net			23,134				23,398				20,397				(1.1	)		13.4
Bank owned life insurance ("BOLI")			13,936				13,758				13,568				1.3			2.7
Deferred tax assets			5,617				5,512				6,223				1.9			(9.7	)
Federal Home Loan Bank ("FHLB") stock			7,101				6,037				5,092				17.6			39.5
Accrued interest receivable			4,669				4,462				3,953				4.6			18.1
Other real estate owned ("OREO")			581				1,050				1,702				(44.7	)		(65.9	)
Goodwill and other intangibles			1,516				1,516				1,516				-			-
Other assets			5,078				5,896				3,563				(13.9	)		42.5
Total assets		$	1,275,517			$	1,189,906			$	1,128,370				7.2		%	13.0		%
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand		$	232,545			$	215,963			$	210,024				7.7		%	10.7		%
Interest-bearing demand			149,703				145,654				117,189				2.8			27.7
Savings			403,722				363,462				318,184				11.1			26.9
Time, under $100,000			123,225				123,724				144,394				(0.4	)		(14.7	)
Time, $100,000 and over, under $250,000			72,926				75,567				91,770				(3.5	)		(20.5	)
Time, $250,000 and over			21,846				21,353				30,637				2.3			(28.7	)
Total deposits			1,003,967				945,723				912,198				6.2			10.1
Borrowed funds			142,000				121,000				114,000				17.4			24.6
Subordinated debentures			10,310				10,310				10,310				-			-
Accrued interest payable			410				430				368				(4.7	)		11.4
Accrued expenses and other liabilities			6,383				6,152				6,527				3.8			(2.2	)
Total liabilities			1,163,070				1,083,615				1,043,403				7.3			11.5
Shareholders' equity:
Common stock			86,112				85,383				59,844				0.9			43.9
Retained earnings			26,137				20,748				25,916				26.0			0.9
Accumulated other comprehensive income (loss)			198				160				(793	)			NM			NM
Total shareholders' equity			112,447				106,291				84,967				5.8			32.3
Total liabilities and shareholders' equity		$	1,275,517			$	1,189,906			$	1,128,370				7.2		%	13.0		%
Issued and outstanding common shares			10,567				10,477				9,336
NM=Not meaningful

UNITY BANCORP, INC.
QTD CONSOLIDATED STATEMENTS OF INCOME
June 30, 2017
													June 30, 2017 vs.
		For the three months ended											March 31, 2017								June 30, 2016
(In thousands, except percentages and per share amounts)		June 30, 2017			March 31, 2017			June 30, 2016					$				%				$				%
INTEREST INCOME
Fed funds, interest bearing deposits and repos		$	203		$	129		$	41				$	74				57.4		%	$	162				395.1		%
FHLB stock			73			93			55					(20	)			(21.5	)			18				32.7
Securities:
Taxable			538			491			427					47				9.6				111				26.0
Tax-exempt			44			44			55					-				-				(11	)			(20.0	)
Total securities			582			535			482					47				8.8				100				20.7
Loans:
SBA loans			886			854			788					32				3.7				98				12.4
SBA 504 loans			309			301			344					8				2.7				(35	)			(10.2	)
Commercial loans			6,573			6,166			5,860					407				6.6				713				12.2
Residential mortgage loans			3,584			3,384			2,937					200				5.9				647				22.0
Consumer loans			1,267			1,132			980					135				11.9				287				29.3
Total loans			12,619			11,837			10,909					782				6.6				1,710				15.7
Total interest income			13,477			12,594			11,487					883				7.0				1,990				17.3
INTEREST EXPENSE
Interest-bearing demand deposits			161			153			124					8				5.2				37				29.8
Savings deposits			678			583			381					95				16.3				297				78.0
Time deposits			814			804			954					10				1.2				(140	)			(14.7	)
Borrowed funds and subordinated debentures			674			664			686					10				1.5				(12	)			(1.7	)
Total interest expense			2,327			2,204			2,145					123				5.6				182				8.5
Net interest income			11,150			10,390			9,342					760				7.3				1,808				19.4
Provision for loan losses			400			250			400					150				60.0				-				-
Net interest income after provision for loan losses			10,750			10,140			8,942					610				6.0				1,808				20.2
NONINTEREST INCOME
Branch fee income			344			331			286					13				3.9				58				20.3
Service and loan fee income			512			512			267					-				-				245				91.8
Gain on sale of SBA loans held for sale, net			479			485			637					(6	)			(1.2	)			(158	)			(24.8	)
Gain on sale of mortgage loans, net			264			531			593					(267	)			(50.3	)			(329	)			(55.5	)
BOLI income			89			88			93					1				1.1				(4	)			(4.3	)
Net security gains			16			-			81					16				100.0				(65	)			(80.2	)
Other income			317			257			277					60				23.3				40				14.4
Total noninterest income			2,021			2,204			2,234					(183	)			(8.3	)			(213	)			(9.5	)
NONINTEREST EXPENSE
Compensation and benefits			4,299			4,095			3,709					204				5.0				590				15.9
Occupancy			590			600			513					(10	)			(1.7	)			77				15.0
Processing and communications			632			604			643					28				4.6				(11	)			(1.7	)
Furniture and equipment			513			511			395					2				0.4				118				29.9
Professional services			251			226			239					25				11.1				12				5.0
Loan collection & OREO expenses			38			341			100					(303	)			(88.9	)			(62	)			(62.0	)
Other loan expenses			18			83			(2	)				(65	)			(78.3	)			20				1,000.0
Deposit insurance			144			76			165					68				89.5				(21	)			(12.7	)
Advertising			323			236			303					87				36.9				20				6.6
Director fees			149			197			139					(48	)			(24.4	)			10				7.2
Other expenses			464			471			524					(7	)			(1.5	)			(60	)			(11.5	)
Total noninterest expense			7,421			7,440			6,728					(19	)			(0.3	)			693				10.3
Income before provision for income taxes			5,350			4,904			4,448					446				9.1				902				20.3
Provision for income taxes			1,906			1,712			1,624					194				11.3				282				17.4
Net income		$	3,444		$	3,192		$	2,824				$	252				7.9		%	$	620				22.0		%
Effective tax rate			35.6	%		34.9	%		36.5		%
Net income per common share - Basic		$	0.33		$	0.30		$	0.30
Net income per common share - Diluted		$	0.32		$	0.30		$	0.30
Weighted average common shares outstanding - Basic			10,546			10,509			9,318
Weighted average common shares outstanding - Diluted			10,735			10,705			9,468

 

UNITY BANCORP, INC.
YTD CONSOLIDATED STATEMENTS OF INCOME
NON-GAAP
June 30, 2017
		For the six months ended June 30,							Current YTD vs. Prior YTD
(In thousands, except percentages and per share amounts)		2017			2016				$				%
INTEREST INCOME
Fed funds, interest bearing deposits and repos		$	332		$	85			$	247				290.6		%
FHLB stock			166			107				59				55.1
Securities:
Taxable			1,030			791				239				30.2
Tax-exempt			88			117				(29	)			(24.8	)
Total securities			1,118			908				210				23.1
Loans:
SBA loans			1,739			1,509				230				15.2
SBA 504 loans			610			729				(119	)			(16.3	)
Commercial loans			12,740			11,538				1,202				10.4
Residential mortgage loans			6,967			5,878				1,089				18.5
Consumer loans			2,400			1,911				489				25.6
Total loans			24,456			21,565				2,891				13.4
Total interest income			26,072			22,665				3,407				15.0
INTEREST EXPENSE
Interest-bearing demand deposits			314			261				53				20.3
Savings deposits			1,261			748				513				68.6
Time deposits			1,618			1,904				(286	)			(15.0	)
Borrowed funds and subordinated debentures			1,338			1,421				(83	)			(5.8	)
Total interest expense			4,531			4,334				197				4.5
Net interest income			21,541			18,331				3,210				17.5
Provision for loan losses			650			600				50				8.3
Net interest income after provision for loan losses			20,891			17,731				3,160				17.8
NONINTEREST INCOME
Branch fee income			675			619				56				9.0
Service and loan fee income			1,024			522				502				96.2
Gain on sale of SBA loans held for sale, net			963			945				18				1.9
Gain on sale of mortgage loans, net			796			1,308				(512	)			(39.1	)
BOLI income			178			187				(9	)			(4.8	)
Net security gains			16			175				(159	)			(90.9	)
Other income			573			494				79				16.0
Total noninterest income			4,225			4,250				(25	)			(0.6	)
NONINTEREST EXPENSE
Compensation and benefits			8,394			7,258				1,136				15.7
Occupancy			1,190			1,131				59				5.2
Processing and communications			1,236			1,287				(51	)			(4.0	)
Furniture and equipment			1,024			815				209				25.6
Professional services			477			494				(17	)			(3.4	)
Loan collection & OREO expenses			379			172				207				120.3
Other loan expenses			102			101				1				1.0
Deposit insurance			220			326				(106	)			(32.5	)
Advertising			560			544				16				2.9
Director fees			346			274				72				26.3
Other expenses			934			936				(2	)			(0.2	)
Total noninterest expense			14,862			13,338				1,524				11.4
Income before provision for income taxes and gain on subordinated debenture			10,254			8,643				1,611				18.6
Provision for income taxes			3,618			3,087				531				17.2
Net income before gain on subordinated debenture			6,636			5,556				1,080				19.4
Gain on subordinated debenture, net of tax			-			1,473				(1,473	)			(100.0	)
Net income		$	6,636		$	7,029			$	(393	)			(5.6	)	%
Effective tax rate			35.3	%		35.6	%
Net income before gain on subordinated debenture per:
Common share - basic		$	0.63		$	0.60
Common share - diluted		$	0.62		$	0.59
Net income per:
Common share - basic		$	0.63		$	0.75
Common share - diluted		$	0.62		$	0.74
Weighted average common shares outstanding - Basic			10,528			9,311
Weighted average common shares outstanding - Diluted			10,720			9,456

 

UNITY BANCORP, INC.
QUARTER TO DATE NET INTEREST MARGIN
June 30, 2017
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
		For the three months ended
		June 30, 2017											March 31, 2017
		Average Balance				Interest				Rate/Yield			Average Balance				Interest				Rate/Yield
ASSETS
Interest-earning assets:
Fed funds, interest bearing deposits and repos		$	76,656			$	203				1.06	%	$	77,943			$	129				0.67	%
FHLB stock			5,912				73				4.95			5,776				93				6.53
Securities:
Taxable			67,102				538				3.22			64,148				491				3.10
Tax-exempt			6,764				67				3.97			6,443				67				4.22
Total securities (A)			73,866				605				3.29			70,591				558				3.21
Loans:
SBA loans			55,650				886				6.39			57,960				854				5.98
SBA 504 loans			23,986				309				5.17			26,050				301				4.69
Commercial loans			532,659				6,573				4.95			512,543				6,166				4.88
Residential mortgage loans			311,730				3,584				4.61			297,203				3,384				4.62
Consumer loans			100,889				1,267				5.04			94,217				1,132				4.87
Total loans (B)			1,024,914				12,619				4.94			987,973				11,837				4.86
Total interest-earning assets		$	1,181,348			$	13,500				4.58	%	$	1,142,283			$	12,617				4.48	%
Noninterest-earning assets:
Cash and due from banks			23,055											23,578
Allowance for loan losses			(12,916	)										(12,785	)
Other assets			55,367											55,493
Total noninterest-earning assets			65,506											66,286
Total assets		$	1,246,854										$	1,208,569
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits		$	157,896			$	161				0.41	%	$	152,392			$	153				0.41	%
Total savings deposits			397,813				678				0.68			378,439				583				0.62
Total time deposits			221,636				814				1.47			222,307				804				1.47
Total interest-bearing deposits			777,345				1,653				0.85			753,138				1,540				0.83
Borrowed funds and subordinated debentures			126,057				674				2.14			125,499				664				2.15
Total interest-bearing liabilities		$	903,402			$	2,327				1.03	%	$	878,637			$	2,204				1.02	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			225,909											215,405
Other liabilities			6,752											6,792
Total noninterest-bearing liabilities			232,661											222,197
Total shareholders' equity			110,791											107,735
Total liabilities and shareholders' equity		$	1,246,854										$	1,208,569
Net interest spread						$	11,173				3.55	%					$	10,413				3.46	%
Tax-equivalent basis adjustment							(23	)										(23	)
Net interest income						$	11,150										$	10,390
Net interest margin											3.79	%										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.
QUARTER TO DATE NET INTEREST MARGIN
June 30, 2017
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
		For the three months ended
		June 30, 2017											June 30, 2016
		Average Balance				Interest				Rate/Yield			Average Balance				Interest				Rate/Yield
ASSETS
Interest-earning assets:
Fed funds, interest bearing deposits and repos		$	76,656			$	203				1.06	%	$	62,652			$	41				0.26	%
FHLB stock			5,912				73				4.95			4,904				55				4.51
Securities:
Taxable			67,102				538				3.22			62,561				427				2.75
Tax-exempt			6,764				67				3.97			8,177				83				4.08
Total securities (A)			73,866				605				3.29			70,738				510				2.90
Loans:
SBA loans			55,650				886				6.39			56,719				788				5.59
SBA 504 loans			23,986				309				5.17			27,273				344				5.07
Commercial loans			532,659				6,573				4.95			474,573				5,860				4.97
Residential mortgage loans			311,730				3,584				4.61			264,599				2,937				4.46
Consumer loans			100,889				1,267				5.04			82,295				980				4.79
Total loans (B)			1,024,914				12,619				4.94			905,459				10,909				4.85
Total interest-earning assets		$	1,181,348			$	13,500				4.58	%	$	1,043,753			$	11,515				4.44	%
Noninterest-earning assets:
Cash and due from banks			23,055											25,993
Allowance for loan losses			(12,916	)										(12,850	)
Other assets			55,367											49,250
Total noninterest-earning assets			65,506											62,393
Total assets		$	1,246,854										$	1,106,146
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits		$	157,896			$	161				0.41	%	$	129,263			$	124				0.39	%
Total savings deposits			397,813				678				0.68			310,329				381				0.49
Total time deposits			221,636				814				1.47			275,700				954				1.39
Total interest-bearing deposits			777,345				1,653				0.85			715,292				1,459				0.82
Borrowed funds and subordinated debentures			126,057				674				2.14			106,277				686				2.60
Total interest-bearing liabilities		$	903,402			$	2,327				1.03	%	$	821,569			$	2,145				1.05	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			225,909											194,649
Other liabilities			6,752											6,370
Total noninterest-bearing liabilities			232,661											201,019
Total shareholders' equity			110,791											83,558
Total liabilities and shareholders' equity		$	1,246,854										$	1,106,146
Net interest spread						$	11,173				3.55	%					$	9,370				3.39	%
Tax-equivalent basis adjustment							(23	)										(28	)
Net interest income						$	11,150										$	9,342
Net interest margin											3.79	%										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.
YEAR TO DATE NET INTEREST MARGIN
June 30, 2017
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
		For the six months ended
		June 30, 2017											June 30, 2016
		Average Balance				Interest				Rate/Yield			Average Balance				Interest				Rate/Yield
ASSETS
Interest-earning assets:
Fed funds, interest bearing deposits and repos		$	77,297			$	332				0.87	%	$	70,666			$	85				0.24	%
FHLB stock			5,844				166				5.73			4,726				107				4.55
Securities:
Taxable			65,635				1,030				3.16			60,856				791				2.61
Tax-exempt			6,603				132				4.03			8,863				176				3.99
Total securities (A)			72,238				1,162				3.24			69,719				967				2.79
Loans:
SBA loans			56,798				1,739				6.17			55,331				1,509				5.48
SBA 504 loans			25,012				610				4.92			28,253				729				5.19
Commercial loans			522,658				12,740				4.92			469,248				11,538				4.94
Residential mortgage loans			304,507				6,967				4.61			264,403				5,878				4.47
Consumer loans			97,571				2,400				4.96			80,312				1,911				4.79
Total loans (B)			1,006,546				24,456				4.90			897,547				21,565				4.83
Total interest-earning assets		$	1,161,925			$	26,116				4.53	%	$	1,042,658			$	22,724				4.38	%
Noninterest-earning assets:
Cash and due from banks			23,315											26,500
Allowance for loan losses			(12,851	)										(12,888	)
Other assets			55,428											47,369
Total noninterest-earning assets			65,892											60,981
Total assets		$	1,227,817										$	1,103,639
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits		$	155,159			$	314				0.41	%	$	130,301			$	261				0.40	%
Total savings deposits			388,179				1,261				0.66			310,290				748				0.48
Total time deposits			221,970				1,618				1.47			278,904				1,904				1.37
Total interest-bearing deposits			765,308				3,193				0.84			719,495				2,913				0.81
Borrowed funds and subordinated debentures			125,780				1,338				2.15			105,314				1,421				2.71
Total interest-bearing liabilities		$	891,088			$	4,531				1.02	%	$	824,809			$	4,334				1.05	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			220,686											190,938
Other liabilities			6,771											5,948
Total noninterest-bearing liabilities			227,457											196,886
Total shareholders' equity			109,272											81,944
Total liabilities and shareholders' equity		$	1,227,817										$	1,103,639
Net interest spread						$	21,585				3.51	%					$	18,390				3.33	%
Tax-equivalent basis adjustment							(44	)										(59	)
Net interest income						$	21,541										$	18,331
Net interest margin											3.75	%										3.55	%
(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, 2017
Amounts in thousands, except percentages		Jun. 30, 2017			Mar. 31, 2017				Dec. 31, 2016			Sept. 30, 2016			Jun. 30, 2016
ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period		$	12,681		$	12,579			$	12,685		$	12,758		$	12,634
Provision for loan losses charged to expense			400			250				200			420			400
			13,081			12,829				12,885			13,178			13,034
Less: Chargeoffs
SBA loans			150			109				189			140			142
Commercial loans			120			76				19			376			152
Residential mortgage loans			-			-				101			-			-
Consumer loans			17			66				2			-			-
Total chargeoffs			287			251				311			516			294
Add: Recoveries
SBA loans			3			37				1			17			4
Commercial loans			3			53				4			6			13
Residential mortgage loans			-			12				-			-			-
Consumer loans			-			1				-			-			1
Total recoveries			6			103				5			23			18
Net chargeoffs (recoveries)			281			148				306			493			276
Balance, end of period		$	12,800		$	12,681			$	12,579		$	12,685		$	12,758
LOAN QUALITY INFORMATION:
Nonperforming loans (1)		$	5,681		$	7,758			$	7,237		$	6,527		$	6,541
Other real estate owned ("OREO")			581			1,172				1,050			1,703			1,702
Nonperforming assets			6,262			8,930				8,287			8,230			8,243
Less:  Amount guaranteed by SBA			41			60				60			624			134
Net nonperforming assets		$	6,221		$	8,870			$	8,227		$	7,606		$	8,109
Loans 90 days past due & still accruing		$	230		$	-			$	-		$	-		$	485
Performing Troubled Debt Restructurings (TDRs)		$	-		$	-			$	-		$	665		$	772
(1) Nonperforming TDRs included in nonperforming loans			-			-				153			154			161
Total TDRs		$	-		$	-			$	153		$	819		$	933
Allowance for loan losses to:
Total loans at quarter end			1.22	%		1.27		%		1.29	%		1.34	%		1.39	%
Nonperforming loans (1)			225.31			163.46				173.82			194.35			195.05
Nonperforming assets			204.41			142.00				151.79			154.13			154.77
Net nonperforming assets			205.75			142.97				152.90			166.78			157.33
QTD net chargeoffs (annualized) to QTD average loans:
SBA loans			1.06	%		0.50		%		1.26	%		0.86	%		0.98	%
Commercial loans			0.09			0.02				0.01			0.30			0.12
Residential mortgage loans			-			(0.02	)			0.14			-			-
Consumer loans			0.07			0.28				0.01			-			-
Total loans			0.11	%		0.06		%		0.13	%		0.21	%		0.12	%
Nonperforming loans to total loans			0.54	%		0.78		%		0.74	%		0.69	%		0.71	%
Nonperforming loans and TDRs to total loans			0.54			0.78				0.74			0.76			0.80
Nonperforming assets to total loans and OREO			0.60			0.89				0.85			0.86			0.90
Nonperforming assets to total assets			0.49			0.73				0.70			0.71			0.73

UNITY BANCORP, INC.
QUARTERLY FINANCIAL DATA
June 30, 2017
(In thousands, except percentages and per share amounts)		Jun. 30, 2017				Mar. 31, 2017				Dec. 31, 2016				Sept. 30, 2016				Jun. 30, 2016
SUMMARY OF INCOME:
Total interest income		$	13,477			$	12,594			$	12,280			$	12,081			$	11,487
Total interest expense			2,327				2,204				2,225				2,208				2,145
Net interest income			11,150				10,390				10,055				9,873				9,342
Provision for loan losses			400				250				200				420				400
Net interest income after provision for loan losses			10,750				10,140				9,855				9,453				8,942
Total noninterest income			2,021				2,204				2,373				2,173				2,234
Total noninterest expense			7,421				7,440				7,303				6,993				6,728
Income before provision for income taxes			5,350				4,904				4,925				4,633				4,448
Provision for income taxes			1,906				1,712				1,765				1,613				1,624
Net income		$	3,444			$	3,192			$	3,160			$	3,020			$	2,824
Net income per common share - Basic		$	0.33			$	0.30			$	0.33			$	0.32			$	0.30
Net income per common share - Diluted		$	0.32			$	0.30			$	0.32			$	0.32			$	0.30
COMMON SHARE DATA:
Market price per share		$	17.20			$	16.95			$	15.70			$	12.82			$	11.56
Dividends paid		$	0.06			$	0.05			$	0.05			$	0.05			$	0.04
Book value per common share		$	10.64			$	10.38			$	10.14			$	9.45			$	9.10
Weighted average common shares outstanding - Basic			10,546				10,509				9,700				9,339				9,318
Weighted average common shares outstanding - Diluted			10,735				10,705				9,878				9,496				9,468
Issued and outstanding common shares			10,567				10,535				10,477				9,331				9,336
PERFORMANCE RATIOS (Annualized):
Return on average assets			1.11		%		1.07		%		1.07		%		1.05		%		1.03		%
Return on average equity			12.47				12.02				13.47				13.90				13.59
Efficiency ratio			56.41				59.08				59.90				58.11				58.53
BALANCE SHEET DATA:
Total assets		$	1,275,517			$	1,226,168			$	1,189,906			$	1,152,896			$	1,128,370
Total deposits			1,003,967				980,703				945,723				933,320				912,198
Total loans			1,046,804				1,000,677				973,414				949,832				915,043
Total securities			75,066				73,022				61,547				72,360				73,994
Total shareholders' equity			112,447				109,305				106,291				88,152				84,967
Allowance for loan losses			(12,800	)			(12,681	)			(12,579	)			(12,685	)			(12,758	)
TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets			4.58		%		4.48		%		4.40		%		4.45		%		4.44		%
Interest-bearing liabilities			1.03				1.02				1.03				1.04				1.05
Net interest spread			3.55				3.46				3.37				3.41				3.39
Net interest margin			3.79				3.70				3.60				3.63				3.61
CREDIT QUALITY:
Nonperforming assets		$	6,262			$	8,930			$	8,287			$	8,230			$	8,243
QTD net chargeoffs (annualized) to QTD average loans			0.11		%		0.06		%		0.13		%		0.21		%		0.12		%
Allowance for loan losses to total loans			1.22				1.27				1.29				1.34				1.39
Nonperforming assets to total loans and OREO			0.60				0.89				0.85				0.86				0.90
Nonperforming assets to total assets			0.49				0.73				0.70				0.71				0.73
CAPITAL RATIOS AND OTHER:
Total equity to total assets			8.82		%		8.91		%		8.93		%		7.65		%		7.53		%
Leverage ratio			9.66				9.72				9.73				8.49				8.52
Common equity tier 1 risk-based capital ratio			11.32				11.46				11.49				9.63				9.70
Tier 1 risk-based capital ratio			12.34				12.53				12.58				10.74				10.85
Total risk-based capital ratio			13.59				13.78				13.84				11.48				12.11
Number of banking offices			17				17				17				15				15
Number of ATMs			18				18				18				16				16
Number of employees			186				181				184				180				172

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

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