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Unity Bancorp Reports 16% Increase in Quarterly Net Income

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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 17th 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