SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FOR
ANNUAL AND TRANSITIONAL REPORTS PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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(Mark One) |
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the fiscal year ended December 31, 2003 |
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OR |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to |
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Commission file number 1-12431 |
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Unity Bancorp, Inc.
(Exact Name of Registrant as Specified in Its Charter)
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New Jersey |
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22-3282551 |
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(State or Other Jurisdiction |
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(I.R.S. Employer |
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64 Old Highway 22, Clinton, NJ |
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08809 |
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(Address of Principal Executive Offices) |
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(Zip Code) |
Registrant’s telephone number, including area code (908) 730-7630
Securities registered pursuant to Section 12(b) of the Exchange Act: None.
Securities registered pursuant to Section 12(g) of the Exchange Act:
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Common Stock, no par value per share |
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(Title of Class) |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2) Yes o No ý
As of June 30, 2003, the aggregate market value of the registrant’s Common Stock, no par value per share, held by non-affiliates of the registrant was $35,089,683 and 3,440,165 shares of the Common Stock were outstanding. As of March 15, 2004, 5,472,588 shares of the registrant’s Common Stock were outstanding.
Documents incorporated by reference:
Portions of Unity Bancorp’s Annual Report to Shareholders for the fiscal year ended December 31, 2003 are incorporated by reference into Parts I, II and IV of this Annual Report on Form 10-K.
Portions of Unity Bancorp’s Proxy Statement for the Annual Meeting of Shareholders to be filed no later than 120 days from December 31, 2003 are incorporated by reference into Part III of this Annual Report on Form 10-K.
Index to Form 10-K
1
Item 1. Business
a) General
Unity Bancorp, Inc. (the “Company” or “Registrant”) is a bank holding company incorporated under the laws of the State of New Jersey to serve as a holding company for Unity Bank (the “Bank”). The Company was originally organized under the laws of the State of Delaware in 1991 and subsequently, in 2002, effected a re-incorporation merger to become a New Jersey corporation. The Company was organized at the direction of the Board of Directors of the Bank for the purpose of acquiring all of the capital stock of the Bank. Pursuant to the New Jersey Banking Act of 1948 (the “Banking Act”), and pursuant to approval of the shareholders of the Bank, the Company acquired the Bank and became its holding company on December 1, 1994. The only significant activity of the Company is ownership and supervision of the Bank. The Company also owns 100% of Unity (NJ) Statutory Trust I. The trust has issued $9.3 million of preferred securities to investors.
The Bank opened for business on September 16, 1991. The Bank received its charter from the New Jersey Department of Banking and Insurance on September 13, 1991. The Bank is a full-service commercial bank, providing a wide range of business and consumer financial services through its main office in Clinton, New Jersey and thirteen New Jersey branches located in Clinton, Colonia, Edison, Flemington, Highland Park, Linden, North Plainfield, Scotch Plains, South Plainfield, Springfield, Union, Bridgewater, and Whitehouse. The Bank’s primary service area encompasses the Route 22/Route 78 corridor between the Bank’s Clinton, New Jersey main office and its Linden, New Jersey branch.
The principal executive offices of the Company are located at 64 Old Highway 22, Clinton, New Jersey 08809, and the telephone number is (908) 730-7630. The Company’s website address is www.unitybank.com.
Business of the Company
The Company’s primary business is ownership and supervision of the Bank. The Company, through the Bank, conducts a traditional and community-oriented commercial banking business, and offers services including personal and business checking accounts and time deposits, money market accounts and regular savings accounts. The Company structures its specific services and charges in a manner designed to attract the business of the small and medium sized business and professional community as well as that of individuals residing, working and shopping in its service area. The Company engages in a wide range of lending activities and offers commercial, Small Business Administration (“SBA” ), consumer, mortgage, home equity and personal loans.
Service Areas
The Company’s primary service area is defined as the neighborhoods served by the Bank’s offices. The Bank’s main office, located in Clinton, in combination with its Flemington and Whitehouse offices, serves the greater area of Hunterdon County. The Bank’s North Plainfield and Bridgewater offices serve those communities located in the northern, eastern and central parts of Somerset County, and the southernmost communities of Union County. The Bank’s Springfield, Scotch Plains, Linden, Union, and Springfield offices serve the majority of the communities in Union County, and the southwestern communities of Essex County. The offices in South Plainfield, Highland Park, Edison, and Colonia Township extend the Company’s service area into Middlesex County.
Competition
The Company is located in an extremely competitive area. The Company’s service area is already serviced by major regional banks, large thrift institutions and by a variety of credit unions. In addition, since passage of the Gramm-Leach-Bliley Financial Modernization Act of 1999 (the “Modernization Act”), securities firms and insurance companies have been allowed to acquire or form financial institutions, thereby increasing competition in the financial services market. Most of the Company’s competitors have substantially more capital and therefore greater lending limits than the Company. The Company’s competitors generally have established positions in the service area and have greater resources than the Company with which to pay for advertising, physical facilities, personnel and interest on deposited funds. The Company relies on the competitive pricing of its loans, deposits and other services as well as its ability to provide local decision making and personal service in order to compete with these larger institutions.
Employees
At December 31, 2003, the Company employed 147 full-time and 24 part-time employees. None of the Company’s employees are represented by any collective bargaining units. The Company believes that its relations with its employees are good.
2
Executive Officers of Registrant
The following table sets forth certain information as of December 31, 2003 about each executive officer of the Company who is not also a director.
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Name, Age and Position |
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Officer Since |
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Principal Occupation During Past Five Years |
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John Kauchak, 50, Chief Operations |
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2002 |
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Previously, Mr. Kauchak was the head of Deposit Operations for Unity Bank from 1996 to 2002. |
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Michael T. Bono, 61,
Chief Retail |
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2001 |
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Previously, Mr. Bono was a Commercial Lending Officer for Unity Bank from 1995 to 2001. |
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Michael F. Downes, 41, |
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2001 |
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Previously, Mr. Downes was a Commercial Lending Officer for Unity Bank from 1996 to 2001. |
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Alan J. Bedner, 33 |
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2003 |
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Previously, Mr. Bedner was Controller for Unity Bank from 2001 to 2003. Previously Mr. Bedner was an AVP of Financial and Regulatory Reporting at Summit Bancorp from 1996 to 2001. |
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Kelly Stashko, 44 |
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2003 |
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Previously, Ms. Stashko was the head of the IT/Marketing Group for Unity Bank from 1996 to 2003. |
SUPERVISION AND REGULATION
General Supervision and Regulation
Bank holding companies and banks are extensively regulated under both federal and state law. These laws and regulations are intended to protect depositors, not stockholders. To the extent that the following information describes statutory and regulatory provisions, it is qualified in its entirety by reference to the particular statutory and regulatory provisions. Any change in the applicable law or regulation may have a material effect on the business and prospects of the Company and the Bank. Over the past several years, a number of legislative proposals have been debated in Congress concerning modernization of the nation’s financial system. Many of these proposals would substantially alter the current regulatory framework, particularly as it relates to bank holding companies and their powers. Management of the Company is unable to predict, at this time, which, if any, of these legislative proposals may ultimately be adopted and the impact of any such regulatory proposals on the business of the Company.
General Bank Holding Company Regulation
General. As a bank holding company registered under the Bank Holding Company Act of 1956, as amended, (the “BHCA”), the Company is subject to the regulation and supervision of the Federal Reserve Board (the “FRB”). The Company is required to file with the FRB annual reports and other information regarding its business operations and those of its subsidiaries. Under the BHCA, the Company’s activities and those of its subsidiaries are limited to banking, managing or controlling banks, furnishing services to or performing services for its subsidiaries or engaging in any other activity which the FRB determines to be so closely related to banking or managing or controlling banks as to be properly incident thereto.
3
The BHCA requires, among other things, the prior approval of the FRB in any case where a bank holding company proposes to (i) acquire all or substantially all of the assets of any other bank, (ii) acquire direct or indirect ownership or control of more than 5% of the outstanding voting stock of any bank (unless it owns a majority of such bank’s voting shares), or (iii) merge or consolidate with any other bank holding company. The FRB will not approve any acquisition, merger, or consolidation that would have a substantially anti-competitive effect, unless the anti-competitive impact of the proposed transaction is clearly outweighed by a greater public interest in meeting the convenience and needs of the community to be served. The FRB also considers capital adequacy and other financial and managerial resources and future prospects of the companies and the banks concerned, together with the convenience and needs of the community to be served, when reviewing acquisitions or mergers.
The BHCA also generally prohibits a bank holding company, with certain limited exceptions, from (i) acquiring or retaining direct or indirect ownership or control of more than 5% of the outstanding voting stock of any company which is not a bank or bank holding company, or (ii) engaging directly or indirectly in activities other than those of banking, managing or controlling banks, or performing services for its subsidiaries; unless such non-banking business is determined by the FRB to be so closely related to banking or managing or controlling banks as to be properly incident thereto. In making such determinations, the FRB is required to weigh the expected benefits to the public, such as greater convenience, increased competition or gains in efficiency, against the possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interest, or unsound banking practices.
The BHCA was substantially amended through the Modernization Act. The Modernization Act permits bank holding companies and banks, which meet certain capital, management and Community Reinvestment Act standards to engage in a broader range of nonbanking activities. In addition, bank holding companies, which elect to become financial holding companies, may engage in certain banking and nonbanking activities without prior FRB approval. Finally, the Modernization Act imposes certain new privacy requirements on all financial institutions and their treatment of consumer information. At this time, the Company has elected not to become a financial holding company, as it does not engage in any nonbanking activities.
There are a number of obligations and restrictions imposed on bank holding companies and their depository institution subsidiaries by law and regulatory policy that are designed to minimize potential loss to the depositors of such depository institutions and the Federal Deposit Insurance Corporation (the “FDIC”) insurance funds in the event the depository institution becomes in danger of default. Under a policy of the FRB with respect to bank holding company operations, a bank holding company is required to serve as a source of financial strength to its subsidiary depository institutions and to commit resources to support such institutions in circumstances where it might not do so absent such policy. The FRB also has the authority under the BHCA to require a bank holding company to terminate any activity or to relinquish control of a non-bank subsidiary upon the FRB’s determination that such activity or control constitutes a serious risk to the financial soundness and stability of any bank subsidiary of the bank holding company.
Capital Adequacy Guidelines for Bank Holding Companies. The FRB has adopted risk-based capital guidelines for bank holding companies. The risk-based capital guidelines are designed to make regulatory capital requirements more sensitive to differences in risk profile among banks and bank holding companies, to account for off-balance sheet exposure, and to minimize disincentives for holding liquid assets. Under these guidelines, assets and off-balance sheet items are assigned to broad risk categories each with appropriate weights. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance sheet items.
The risk-based guidelines apply on a consolidated basis to bank holding companies with consolidated assets of $150 million or more. The minimum ratio of total capital to risk-weighted assets (including certain off-balance sheet activities, such as standby letters of credit) is 8%. At least 4% of the total capital is required to be “Tier I,” consisting of common stockholders’ equity and certain preferred stock, less certain goodwill items and other intangible assets. The remainder, “Tier II Capital,” may consist of (a) the allowance for loan losses of up to 1.25% of risk-weighted assets, (b) excess of qualifying preferred stock, (c) hybrid capital instruments, (d) debt, (e) mandatory convertible securities, and (f) qualifying subordinated debt. Total capital is the sum of Tier I and Tier II capital less reciprocal holdings of other banking organizations’ capital instruments, investments in unconsolidated subsidiaries and any other deductions as determined by the FRB (determined on a case-by-case basis or as a matter of policy after formal rule-making).
Bank holding company assets are given risk-weights of 0%, 20%, 50% and 100%. In addition, certain off-balance sheet items are given similar credit conversion factors to convert them to asset equivalent amounts to which an appropriate risk-weight will apply. These computations result in the total risk-weighted assets. Most loans are assigned to the 100% risk category, except for performing first mortgage loans fully secured by residential property which carry a 50% risk-weighting and performing, guaranteed portions of unsold SBA loans which carry a 20% risk-weighting. Most investment securities (including, primarily, general obligation claims of states or other political subdivisions of the United States) are assigned to the 20% category, except for municipal or state revenue bonds, which have a 50% risk-weight, and direct obligations of the U.S. Treasury or obligations backed by the full faith and credit of the U.S. Government, which have a 0% risk-weight. In converting off-balance sheet items, direct credit substitutes (including general guarantees and standby letters of credit backing financial obligations) are given a 100% risk-weighting.
4
Transaction related contingencies such as standby letters of credit backing non-financial obligations and undrawn commitments (including commercial credit lines with an initial maturity or more than one year) have a 50% risk-weighting. Short-term commercial letters of credit have a 20% risk-weighting and certain short-term unconditionally cancelable commitments have a 0% risk-weighting.
In addition to the risk-based capital guidelines, the FRB has adopted a minimum Tier I capital (leverage) ratio, under which a bank holding company must maintain a minimum level of Tier I capital to average total consolidated assets of at least 3% in the case of a bank holding company that has the highest regulatory examination rating and is not contemplating significant growth or expansion. All other bank holding companies are expected to maintain a leverage ratio of at least 100 to 200 basis points above the stated minimum.
The Company is currently in compliance with these minimum Federal capital requirements.
General Bank Regulation
As a New Jersey-chartered commercial bank, the Bank is subject to the regulation, supervision, and control of the New Jersey Department of Banking and Insurance (the “Department”). As an FDIC-insured institution, the Bank is subject to regulation, supervision and control of the FDIC, an agency of the federal government. The regulations of the FDIC and the Department affect virtually all activities of the Bank, including the minimum level of capital that the Bank must maintain, the ability of the Bank to pay dividends, the ability of the Bank to expand through new branches or acquisitions and various other matters.
Insurance of Deposits. The Bank’s deposits are insured up to a maximum of $100,000 per depositor under the Savings Association Insurance Fund of the FDIC. Pursuant to the Federal Deposit Insurance Corporation Improvements Act of 1991 (“FDICIA”), the FDIC has established a risk-based assessment system. Premium assessments under this system are based upon: (i) the probability that the insurance fund will incur a loss with respect to the institution; (ii) the likely amount of the loss; and (iii) the revenue needs of the insurance fund. To effectuate this system, the FDIC has developed a matrix that sets the assessment premium for a particular institution in accordance with its capital level and overall rating by the primary regulator.
Dividend Rights. Under the Banking Act, a bank may declare and pay dividends only if, after payment of the dividend, the capital stock of the bank will be unimpaired and either the bank will have a surplus of not less than 50% of its capital stock or the payment of the dividend will not reduce the bank’s surplus.
5
The table below provides a cross-reference to portions of Unity Bancorp. Inc.’s Annual Report to Shareholders for the year ended December 31, 2003 (Exhibit 13 hereto), which to the extent indicated, is incorporated by reference herein. Information that is not applicable is indicated by (N/A):
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Description of Financial Data |
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Annual
Report |
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I. |
Distribution of Assets, Liabilities, and Stockholders’ Equity; Interest Rates and Interest Differential |
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A. Analysis of Net Interest Earnings |
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6 |
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B. Average Balance Sheets |
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7 |
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C. Rate/Volume Analysis |
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8 |
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II. |
Investment Portfolio |
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A. Book value of investment securities |
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24 |
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B. Investment securities by range of maturity with corresponding average yields |
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25 |
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C. Securities of issuers exceeding ten percent of stockholders’ equity |
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N/A |
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III. |
Loan Portfolio |
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A. Types of loans |
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10 |
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B. Maturities and sensitivities of loans to changes in interest rates |
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10 |
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C. Risk elements |
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1) Nonaccrual, past due and restructured loans |
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11 |
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2) Potential problem loans |
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11 |
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3) Foreign outstandings |
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N/A |
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4) Loan concentrations |
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10 |
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D. Other interest bearing assets |
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N/A |
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IV. |
Summary of Loan Loss Experience |
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A. Analysis of the allowance for loan losses |
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12 |
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B. Allocation of the allowance for loan losses |
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12 |
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V. |
Deposits |
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A. Average amount and average rate paid on major categories of deposits |
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7 |
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B. Other categories of deposits |
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N/A |
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C. Deposits by foreign depositors in domestic offices |
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N/A |
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D. Time deposits of $100,000 or more by remaining maturity |
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26 |
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E. Time deposits of $100,000 or more by foreign offices |
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N/A |
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VI. |
Return on Equity and Assets |
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5 |
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VII. |
Short-term Borrowings |
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27 |
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6
Item 2. Properties
The Company presently conducts its business through its main office located at 64 Old Highway 22, Clinton, New Jersey, and its thirteen branch offices.
The following table sets forth certain information regarding the Company’s properties from which it conducts business as of December 31, 2003.
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Location |
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Leased |
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Date
Leased |
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Lease |
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2003
Annual |
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Clinton, NJ |
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Leased |
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1996 |
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2009 |
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$ |
413,178 |
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Colonia, NJ |
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Leased |
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1995 |
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2005 |
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36,271 |
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Flemington, NJ |
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Leased |
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1995 |
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2006 |
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57,715 |
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Linden, NJ |
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Owned |
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1991 |
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— |
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— |
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Highland Park, NJ |
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Leased |
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1999 |
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2009 |
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39,913 |
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North Plainfield, NJ |
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Owned |
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1991 |
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— |
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— |
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Scotch Plains, NJ |
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Owned |
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1996 |
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2003 |
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75,246 |
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Springfield, NJ |
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Leased |
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1995 |
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2006 |
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32,115 |
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South Plainfield, NJ |
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Leased |
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1999 |
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2009 |
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59,312 |
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Union, NJ |
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Owned |
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2002 |
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— |
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— |
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Edison, NJ |
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Leased |
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1999 |
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2009 |
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49,017 |
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Whitehouse, NJ |
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Owned |
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1998 |
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— |
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— |
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Bridgewater, NJ |
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Leased |
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2003 |
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2008 |
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34,582 |
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Item 3. Legal Proceedings
On February 2, 2004, the Company and the Bank were named as defendants (along with the Federal Deposit Insurance Corporation (“FDIC”)) in a lawsuit initiated by Robert J. Van Volkenburgh (Former Chairman of the Board and Chief Executive Officer of the Company and the Bank as well as beneficial owner of more than 5% of the outstanding shares of the Company’s common stock) in the Superior Court of New Jersey, Hunterdon County alleging that: (i) the Company and the Bank wrongfully terminated his Employment Agreement, and in connection with such alleged wrongful termination, breached the terms of a Supplemental Executive Retirement Plan (“SERP”) established for the benefit of Mr. Van Volkenburgh in accordance with such Employment Agreement; and (ii) the Company and the Bank breached the terms of an August 14, 2000 agreement entered into with Mr. Van Volkenburgh whereunder, among other things, he resigned his positions with the Company and the Bank. Mr. Van Volkenburgh filed such complaint in the Superior Court of New Jersey, Law Division, Hunterdon County against the Company, the Bank and the FDIC seeking money damages alleged to be due under his Employment Agreement and the related SERP, as well as other relief. Based solely upon the allegations of that complaint, Mr. Van Volkenburgh claims that he is entitled to (i) payment of his last annual salary of $280,000 for each of three years plus other amounts, (ii) payment of 60% of that annual salary for each of 20 additional years, and (iii) attorney’s fees, costs, interest and punitive damages. Mr. Van Volkenburgh also seeks various declaratory relief relative to the FDIC’s jurisdiction over certain aspects of the dispute. Mr. Van Volkenburgh previously filed a similar complaint in the Superior Court of New Jersey, which complaint was voluntarily dismissed in September 2002. The Company and the Bank expressly deny any liability to Mr. Van Volkenburgh under the Employment Agreement, the SERP, any other contractual, common law, or statutory basis, or otherwise, and intend to assert a variety of substantive defenses to Mr. Van Volkenburgh’s claim. The Company and the Bank have reviewed the relevant circumstances and believe that they acted properly and that the outcome of the lawsuit will not have a material impact on the consolidated financial position or results of operations of the Company.
On February 20, 2003, the Bank was named as a defendant in a lawsuit initiated by Commerce Bank, N.A. and Commerce Bank/Shore, N.A. in the Superior Court of New Jersey, Essex County alleging that the Bank, as payor of certain checks written against certain deposit accounts held at the Bank, improperly refused to honor approximately $4,000,000 of checks. Commerce Bank, N.A. and Commerce Bank/Shore, N.A. have petitioned the Superior Court of New Jersey, Essex County for compensatory and consequential damages of $4,028,584.44, interest, attorney’s fees and costs of suit. On March 12, 2004, the aforesaid Court granted Commerce Bank, N.A. partial summary judgment in the approximate amount of $1,800,000 of its aforesaid claim. The Bank intends to appeal such partial summary judgment. The Bank has reviewed the relevant circumstances and believes that it acted properly and that the outcome of the lawsuit will not have a material impact on the consolidated financial position or results of operations of the Company.
From time to time, the Company is subject to other legal proceedings and claims in the ordinary course of business. The Company currently is not aware of any such legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on the business, financial condition, or operating results of the Company.
7
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted for a vote of the Company’s shareholders during the fourth quarter of fiscal 2003.
Item 5. Market for Common Equity, Related Stockholder Matters and Purchases of Equity Securities
(a) Market Information
The Company’s Common Stock is quoted on the NASDAQ National Market under the symbol “UNTY”. The following table sets forth the high and low bid prices of the Common Stock as reported on the NASDAQ National Market for the periods indicated.
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High |
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Low |
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Year Ended December 31, 2003: |
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4th Quarter |
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$ |
12.30 |
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$ |
10.50 |
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3rd Quarter |
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11.50 |
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10.34 |
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2nd Quarter |
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11.25 |
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7.88 |
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1st Quarter |
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10.06 |
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7.70 |
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Year Ended December 31, 2002: |
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4th Quarter |
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$ |
8.10 |
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$ |
6.07 |
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3rd Quarter |
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6.76 |
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5.82 |
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2nd Quarter |
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6.90 |
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5.24 |
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1st Quarter |
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8.48 |
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5.79 |
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(b) Holders
As of March 15, 2004, there were approximately 592 shareholders of record of the Company’s Common Stock.
(c) Dividends
On September 22, 2003, the Company announced a $0.03 per share cash dividend payable on October 31, 2003 to shareholders of record as of October 15, 2003.
On December 23, 2003, the Company announced a $0.03 per share cash dividend payable on January 31, 2004 to shareholders of record as of January 15, 2004.
No cash dividends were paid on the Company’s common stock during the 2002 fiscal year.
(d) Securities Authorized for Issuance under Equity Compensation Plans
The following table provides information with respect to the equity securities that are authorized for issuance under the Company’s compensation plans as of December 31, 2003.
EQUITY COMPENSATION PLAN INFORMATION
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Number of
securities to |
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Weighted-average |
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Number of
securities |
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Equity compensation plans approved by security holders |
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870,251 |
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$ |
6.24 |
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53,393 |
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Equity compensation plans not approved by security holders |
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— |
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— |
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— |
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Total |
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870,251 |
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$ |
6.24 |
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53,393 |
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8
Item 6. Selected Financial Data
The information under the caption “Selected Consolidated Financial Data” on page 5 of the Company’s Annual Report to Shareholders for the year ended December 31, 2003 is incorporated by reference herein.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The information under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 6 through 16 of the Company’s Annual Report to Shareholders for the year ended December 31, 2003 is incorporated by reference herein.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
The information under the caption “Market Risk” on pages of 13 and 14 of the Company’s Annual Report to Shareholders for the year ended December 31, 2003 is incorporated by reference herein.
Item 8. Financial Statements and Supplementary Data
The Financial Statements and Notes to Consolidated Financial Statements on pages 17 through 31 of the Company’s Annual Report to Shareholders for the year ended December 31, 2003 are incorporated by reference herein.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
(a) Evaluation of disclosure controls and proceedings.
Based on their evaluation as of the end of the period covered by this Annual Report on Form 10-K, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the “Exchange Act”)) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
(b) Changes in internal controls.
There were not any significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
9
Item 10. Directors and Executive Officers; Compliance with Section 16(a) of the Exchange Act
The information concerning the directors and executive officers of the Company under the caption “Election of Directors” and the information under the captions “Compliance with Section 16(a) of the Securities Exchange Act of 1934”and “Governance of the Company — Audit Committee” in the Proxy Statement for the Company’s 2004 Annual Meeting of Shareholders is incorporated by reference herein. It is expected that such Proxy Statement will be filed with the Securities and Exchange Commission no later than April 30, 2004.
Also, refer to the information under the caption “Executive Officers of Registrant” in Part I of this Annual Report on Form 10-K for a description of the Company’s executive officers who are not also directors.
The Company has adopted an Ethics Policy applicable to its directors, officers, and employees. Such Ethics Policy incorporates guidelines designed by the Company to deter wrongdoing and to promote honest and ethical conduct and compliance with applicable laws and regulations. It also incorporates the Company’s expectations of its employees that enable the Company to provide accurate and timely disclosure in its filings with the Securities and Exchange Commission and other public communications. A copy of such Ethics Policy is attached to this Annual Report on Form 10-K (Exhibit 14 hereto). If any substantive amendments are made to the Ethics Policy or if the Company grants any waiver, including any implicit waiver, from a provision of the Ethics Policy to any of its executive officers and directors, the Company will disclose the nature of such amendment or waiver in a Current Report on Form 8-K.
Item 11. Executive Compensation
The information concerning executive compensation under the caption “Executive Compensation” (other than the “Board of Directors Report on Executive Compensation” and the “Performance Graph”) in the Proxy Statement for the Company’s 2004 Annual Meeting of Shareholders is incorporated by reference herein. It is expected that such Proxy Statement will be filed with the Securities and Exchange Commission no later than April 30, 2004.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information concerning the security ownership of certain beneficial owners and management under the caption “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement for the Company’s 2004 Annual Meeting of Shareholders is incorporated by reference herein. It is expected that such Proxy Statement will be filed with the Securities and Exchange Commission no later than April 30, 2004.
Item 13. Certain Relationships and Related Transactions
The information concerning certain relationships and related transactions under the caption “Certain Transactions with Management” in the Proxy Statement for the Company’s 2004 Annual Meeting of Shareholders is incorporated by reference herein. It is expected that such Proxy Statement will be filed with the Securities and Exchange Commission no later than April 30, 2004.
Item 14. Principal Accountant Fees and Services
The information concerning principal accountant fees and services as well as related pre-approval policies under the caption “Independent Public Accountants” in the Proxy Statement for the Company’s 2004 Annual Meeting of Shareholders is incorporated by reference herein. It is expected that such Proxy Statement will be filed with the Securities and Exchange Commission no later than April 30, 2004.
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Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) FINANCIAL STATEMENTS.
The following Consolidated Financial Statements of the Company and subsidiaries included in the Company’s Annual Report to Shareholders for the year ended December 31, 2003 are incorporated by reference in Part II, Item 8.
Independent Auditors’ Report (page 17)
Consolidated Balance Sheets (page 18)
Consolidated Statements of Operations (page 19)
Consolidated Statements of Changes in Shareholders’ Equity (page 20)
Consolidated Statements of Cash Flows (page 21)
Notes to Consolidated Financial Statements (pages 22 through 31)
(b) EXHIBITS.
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Exhibit |
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Description of Exhibits |
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3(i) |
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Certificate of Incorporation of the Company, as amended (2) |
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3(ii) |
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Bylaws of the Company (7) |
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4(i) |
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Form of Stock Certificate (7) |
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10(i) |
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1994 Stock Option Plan for Non-Employee Directors (1) |
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10(ii) |
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1997 Stock Option Plan (3) |
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10(iii) |
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1997 Stock Bonus Plan (3) |
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10(iv) |
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1998 Stock Option Plan (4) |
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10(v) |
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1999 Stock Option Plan (5) |
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10(vi) |
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Employment Agreement dated March 23, 2004 with James A. Hughes |
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10(vii) |
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Settlement Agreement and General Release dated December 31, 2003 with Anthony J. Feraro |
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10(viii) |
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Retention Agreement dated March 23, 2004 with Michael T. Bono |
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10(ix) |
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Retention Agreement dated March 23, 2004 with Michael F. Downes |
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10(x) |
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Retention Agreement dated March 23, 2004 with Alan J. Bedner |
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10(xi) |
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Retention Agreement dated March 23, 2004 with John Kauchak |
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10(xii) |
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Retention Agreement dated March 23, 2004 with Kelly Stashko |
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10(xiii) |
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2002 Stock Option Plan (6) |
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10(xiv) |
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Second Amendment dated September 19, 2003 to Lease Agreement between Unity Bank and Clinton Unity Group |
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10(xv) |
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Real Estate Purchase Agreement dated October 23, 2003 between Unity Bank and Premiere Development II, LLC |
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13 |
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Portion of Unity Bancorp. Inc. 2003 Annual Report to Shareholders |
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14 |
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Ethics Policy |
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21 |
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Subsidiaries of the Registrant |
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23 |
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Consent of KPMG LLP |
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31.1 |
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Certification of President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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31.2 |
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Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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31.3 |
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Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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32.1 |
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Certification of President, Chief Executive Officer, and Chief Financial Officer pursuant to Section 906 |
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(1) |
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Previously filed with the Securities and Exchange Commission as an Exhibit to the Registration Statement on Form S-4 (File No. 33-76392) and incorporated by reference herein. |
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(2) |
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Previously filed with the Securities and Exchange Commission as an Exhibit to the Current Report on Form 8-K filed on July 22, 2002 and incorporated by reference herein. |
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(3) |
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Previously filed with the Securities and Exchange Commission as an Exhibit to the Proxy Statement for the Annual Meeting of Shareholders filed on April 4, 1997. |
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(4) |
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Previously filed with the Securities and Exchange Commission as an Exhibit to the Proxy Statement for the Annual Meeting of Shareholders filed on March 30, 1998. |
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(5) |
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Previously filed with the Securities and Exchange Commission as an Exhibit to the Proxy Statement for the Annual Meeting of Shareholders filed on April 2, 1999. |
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(6) |
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Previously filed with the Securities and Exchange Commission as an Exhibit to the Proxy Statement for the Annual Meeting of Shareholders filed on April 10, 2002. |
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(7) |
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Previously filed with the Securities and Exchange Commission as an Exhibit to the Annual Report on Form 10-K filed March 26, 2003. |
(c) REPORTS ON FORM 8-K.
The following reports on Form 8-K were filed during the three months ended December 31, 2003:
On October 16, 2003, the Company filed a Current Report on Form 8-K pursuant to Item 12 (Results of Operations and Financial Condition) announcing earnings for the third quarter of 2003.
On October 31, 2003, the Company filed a Current Report on Form 8-K pursuant to Item 5 (Other Events and Regulation FD Disclosure) to attach the October 31, 2003 President’s message.
On December 4, 2003, the Company filed a Current Report on Form 8-K pursuant to Item 5 (Other Events and Regulation FD Disclosure) announcing the receipt of a NASDAQ Staff Determination.
On December 23, 2003, the Company filed a Current Report on Form 8-K pursuant to Item 5 (Other Events and Regulation FD Disclosure) announcing the declaration of a cash dividend of $0.03 per share payable on January 31, 2004.
On December 31, 2003, the Company filed a Current Report on Form 8-K pursuant to Item 5 (Other Events and Regulation FD Disclosure) announcing Anthony J. Feraro’s resignation and the promotions of James A. Hughes to President and Alan J. Bedner to Chief Financial Officer.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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UNITY BANCORP, INC. |
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By: |
/s/ Alan J. Bedner |
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Alan J. Bedner |
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Executive Vice President, |
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March 26, 2004 |
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(Date) |
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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NAME |
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TITLE |
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DATE |
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/s/ |
David D. Dallas |
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Chairman of the Board, Chief |
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March 26, 2004 |
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David D. Dallas |
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/s/ |
James A. Hughes |
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President and Director |
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March 26, 2004 |
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James A. Hughes |
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/s/ |
Alan J. Bedner |
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Chief Financial Officer (Principal |
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March 26, 2004 |
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Alan J. Bedner |
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/s/ |
Frank Ali |
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Director |
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March 26, 2004 |
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Frank Ali |
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/s/ |
Dr. Mark S. Brody |
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Director |
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March 26, 2004 |
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Dr. Mark S. Brody |
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/s/ |
Robert H. Dallas, II |
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Director |
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March 26, 2004 |
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Robert H. Dallas, II |
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/s/ |
Samuel Stothoff |
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Director |
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March 26, 2004 |
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Samuel Stothoff |
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/s/ |
Donna Butler, Esq. |
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Director |
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March 26, 2004 |
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Donna Butler, Esq. |
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/s/ |
Charles S. Loring |
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Director |
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March 26, 2004 |
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Charles S. Loring |
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/s/ |
Peter P. DeTommaso |
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Director |
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March 26, 2004 |
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Peter P. DeTommaso |
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/s/ |
Allen Tucker |
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Director |
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March 26, 2004 |
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Allen Tucker |
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