UNITY BANCORP INC /NJ/ - FORM 8-K - EX-99.1

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8-K - 8-K - UNITY BANCORP INC /NJ/	unty-20130425x8k.htm

Unity Bancorp, Inc.

64 Old Highway 22

Clinton, NJ 08809

800-618-BANK

www.unitybank.com

NewsNewsNewsNewsNews

For Immediate Release:

April 25, 2013

News Media & Financial Analyst Contact:

Alan J. Bedner, EVP

Chief Financial Officer

(908) 713-4308

Unity Bancorp Reports 56.6% Increase in Earnings

Clinton, NJ - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income available to common shareholders of $797 thousand, or $0.10 per diluted share, for the three months ended March 31, 2013, a 56.6% increase compared to $509 thousand, or $0.07 per diluted share, for the same period a year ago. Return on average assets and average common equity for the quarter were 0.59% and 5.65%, respectively, compared to 0.45% and 3.81% for the same period a year ago.

×	A 9.1% increase in commercial loans from a year ago.

×	A 33.1% decrease in nonperforming assets from a year ago.

×	A 45.8 % decrease in the loan loss provision compared to prior period’s quarter.

×	Noninterest-bearing deposits reached record high of $118.2 million.

×	Negotiated the purchase contract for three of our currently leased branch locations, which closed April 17, 2013, that will result in estimated future cost savings in excess of $200 thousand.

×	Entered into a marketing agreement with Venture VR LLC, a real estate agency in Elmwood Park, New Jersey to increase loan referrals.

“This was our strongest quarter in over five years and we are headed in the right direction,” reported James A. Hughes, President and CEO. “Loan demand is gaining momentum, core deposits are growing and there was significant improvement in asset quality. We are no longer looking in the rear view mirror; we are looking forward to further earnings increases and balance sheet growth.”

Net Interest Income

Net interest income decreased $119 thousand to $6.7 million for the three months ended March 31, 2013, compared to the prior year’s quarter and the net interest margin narrowed 4 basis points to 3.52%. This decrease was the result of lower yields on our securities and loan portfolios. Our net interest income continues to be influenced by the sustained low interest rate environment, which the Federal Open Market Committee (“FOMC”) of the Federal Reserve Board believes is appropriate based on its unemployment and inflationary targets. This rate environment has resulted in a tighter net interest margin as our earning assets re-price at lower rates. The yield on earning assets fell 38 basis points to 4.33% for the quarter ending March 31, 2013 when compared to the same period in 2012. Partially offsetting these declines are lower funding costs from reduced deposit rates, a significantly lower volume of time deposits and the expiration of a higher rate interest rate swap agreement. The cost of interest-bearing liabilities decreased 37 basis points to 1.04% for the three month period.

Noninterest Income

Noninterest income increased $110 thousand to $1.8 million for the three months ended March 31, 2013, compared to the same period last year. The increase was driven by higher gains on the sale of residential mortgage and SBA loans, partially offset by lower levels of branch fee income. Factors affecting noninterest income were:

×	Branch fee income, which consists of deposit service charges and overdraft fees, decreased $39 thousand for the quarterly period due to lower overdraft fees.

×	Gains on sales of SBA loans increased $84 thousand for the quarter due to higher premiums on the sale of $2.3 million in loans during the period.

×	Gains on sales of residential mortgage loans increased $66 thousand on a higher volume of loan sales. For the three month period, $22.6 million in residential mortgage loans were sold compared to $21.2 million in the first quarter of 2012.

Noninterest Expense

Noninterest expense increased $167 thousand to $6.1 million for the three months ended March 31, 2013, compared to the first quarter of 2012. Other noteworthy expenses include:

×	Occupancy expense increased $85 thousand due to higher seasonal snow removal expenses, increased building depreciation expenses related to the Washington branch opened in late March 2012, and additional rental expense due to the termination of a sublease during 2012.

×	Processing and communication expenses increased $27 thousand due to expenses related to our check cashing, merchant services and mortgage businesses.

×	Deposit insurance expense decreased $22 thousand for the quarter ended March 31, 2013 due to a lower assessment basis.

×	Advertising expenses decreased $26 thousand for the quarter ended March 31, 2013 due to a reduction in promotional gift expenses, the expiration of a third party marketing agreement and reduced promotional marketing.

×	Other expenses increased $106 thousand for the quarter due to higher employee recruiting, increased director fees and an increase to the reserve for unfunded loan commitments.

Financial Condition

At March 31, 2013, total assets were $827.2 million, an increase of $7.5 million from the prior year end.

×	Total securities increased $8.3 million since December 31, 2012, due to $21.3 million in security purchases, partially offset by sales and prepayments.

×	Total loans increased $9.5 million or 1.6%, to $596.6 million at March 31, 2013. The Company plans to continue shrinking its out of market SBA portfolio. Future loan growth is expected in both the commercial and residential portfolios. The net increase was the result of the following:

o	Commercial loans increased $9.1 million or 3.0%,

o	Residential mortgage loans increased $4.3 million or 3.2%,

o	SBA 504 loans decreased $1.7 million or 4.0%,

o	SBA 7(a) loans decreased $2.1 million or 3.2%, and

o	Consumer loans remained stable at $46.4 million.

×	Core deposits, which exclude time deposits, increased $5.1 million during the quarter to $528.9 million, due to growth in retail deposits. The net changes by product type include:

o	A $3.7 million increase in noninterest-bearing demand deposits,

o	An $802 thousand increase in savings deposits, and

o	A $536 thousand increase in interest-bearing demand deposits.

×	Time deposits decreased $1.7 million from year-end.

×	Shareholders’ equity was $78.2 million at March 31, 2013, an increase of $647 thousand from year-end 2012, primarily due to the increase in net income.

×	Book value per common share was $7.67 as of March 31, 2013.

×	At March 31, 2013 the leverage, Tier I and Total Risk Based Capital ratios were 11.12%, 14.54% and 15.80% respectively, all in excess of the ratios required to be deemed “well-capitalized”.

Credit Quality

“Nonperforming assets have declined $3.3 million or 17.3% to $16.0 million since year-end 2012 and they have declined $7.9 million or 33.1% since March 31, 2012. We expect to have continued success in resolving problem credits in 2013,” said James A. Hughes. “Many of our problem commercial and SBA relationships have been resolved and the majority of our larger problem relationships are behind us. We anticipate declines in charge-offs and provisions for loan losses in future periods.”

×	Nonperforming assets totaled $16.0 million at March 31, 2013 or 2.67% of total loans and OREO, compared to $19.3 million or 3.28% of total loans and OREO at year-end 2012.

×	The allowance for loan losses totaled $14.3 million at March 31, 2013 or 2.40% of total loans. The provision for loan losses for the quarter ended March 31, 2013 was $650 thousand compared to $1.2 million for the prior year’s quarter.

×	Net charge-offs were $1.1 million for the three months ended March 31, 2013, compared to $1.2 million for the same period a year ago.

×	Troubled debt restructurings (“TDRs”) increased $1.5 million from year-end to $16.2 million. At March 31, 2013, 93.3% of our TDRs were performing.

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $827 million in assets and $652 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.

UNITY BANCORP, INC.

SUMMARY FINANCIAL HIGHLIGHTS

March 31, 2013



										March 31, 2013 vs.
										December 31, 2012		March 31, 2012
(In thousands, except percentages and per share amounts)	March 31, 2013			December 31, 2012			March 31, 2012			%		%
BALANCE SHEET DATA:
Total assets	$	827,182		$	819,730		$	810,198		0.9	%	2.1	%
Total deposits		652,117			648,760			643,101		0.5		1.4
Total loans		596,571			587,036			582,752		1.6		2.4
Total securities		119,334			111,053			128,061		7.5		(6.8)
Total shareholders' equity		78,157			77,510			74,002		0.8		5.6
Allowance for loan losses		(14,345)			(14,758)			(16,339)		2.8		12.2

FINANCIAL DATA - QUARTER TO DATE:
Income before provision for income taxes	$	1,738		$	1,810		$	1,364		(4.0)		27.4
Provision for income taxes		538			643			459		(16.3)		17.2
Net income		1,200			1,167			905		2.8		32.6
Preferred stock dividends and discount accretion		403			408			396		(1.2)		1.8
Income available to common shareholders	$	797		$	759		$	509		5.0		56.6

Net income per common share - Basic (1)	$	0.11		$	0.10		$	0.07		10.0		57.1
Net income per common share - Diluted (1)	$	0.10		$	0.10		$	0.07		-		42.9

Return on average assets		0.59	%		0.57	%		0.45	%	3.5		31.1
Return on average equity (2)		5.65	%		5.34	%		3.81	%	5.8		48.3
Efficiency ratio		73.91	%		70.66	%		71.80	%	4.6		2.9

FINANCIAL DATA - YEAR TO DATE:
Income before provision for income taxes	$	1,738					$	1,364				27.4
Provision for income taxes		538						459				17.2
Net income		1,200						905				32.6
Preferred stock dividends and discount accretion		403						396				1.8
Income available to common shareholders	$	797					$	509				56.6

Net income per common share - Basic (1)	$	0.11					$	0.07				57.1
Net income per common share - Diluted (1)	$	0.10					$	0.07				42.9

Return on average assets		0.59	%					0.45	%			31.1
Return on average equity (2)		5.65	%					3.81	%			48.3
Efficiency ratio		73.91	%					71.80	%			2.9

SHARE INFORMATION:
Market price per share	$	6.51		$	6.24		$	6.24		4.3		4.3
Dividends paid	$	-		$	-		$	-		-		-
Book value per common share	$	7.67		$	7.62		$	7.28		0.7		5.4
Average diluted shares outstanding (QTD)		7,845			7,818			7,792		0.3		0.7

CAPITAL RATIOS:
Total equity to total assets		9.45	%		9.46	%		9.13	%	(0.1)		3.5
Leverage ratio		11.12	%		11.14	%		10.67	%	(0.2)		4.2
Tier 1 risk-based capital ratio		14.54	%		14.85	%		14.44	%	(2.1)		0.7
Total risk-based capital ratio		15.80	%		16.12	%		15.71	%	(2.0)		0.6

CREDIT QUALITY AND RATIOS:
Nonperforming assets	$	15,956		$	19,294		$	23,831		(17.3)		(33.0)
QTD net chargeoffs (annualized) to QTD average loans		0.73	%		0.90	%		0.83	%	(18.9)		(12.0)
Allowance for loan losses to total loans		2.40	%		2.51	%		2.80	%	(4.4)		(14.3)
Nonperforming assets to total loans and OREO		2.67	%		3.28	%		4.08	%	(18.6)		(34.6)
Nonperforming assets to total assets		1.93	%		2.35	%		2.94	%	(17.9)	%	(34.4)	%

(1)	Defined as net income adjusted for dividends accrued and accretion of discount on perpetual preferred stock divided by weighted average shares outstanding.

(2)	Defined as net income adjusted for dividends accrued and accretion of discount on perpetual preferred stock divided by average shareholders' equity (excluding preferred stock).

UNITY BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

March 31, 2013



							March 31, 2013 vs.
							December 31, 2012		March 31, 2012
(In thousands, except percentages)	March 31, 2013		December 31, 2012		March 31, 2012		%		%
ASSETS
Cash and due from banks	$	18,392	$	23,705	$	17,986	(22.4)	%	2.3	%
Federal funds sold and interest-bearing deposits		61,584		70,487		53,831	(12.6)		14.4
Cash and cash equivalents		79,976		94,192		71,817	(15.1)		11.4
Securities:
Securities available for sale		91,067		89,538		110,181	1.7		(17.3)
Securities held to maturity		28,267		21,515		17,880	31.4		58.1
Total securities		119,334		111,053		128,061	7.5		(6.8)
Loans:
SBA loans held for sale		6,556		6,937		8,015	(5.5)		(18.2)
SBA loans held to maturity		56,868		58,593		62,251	(2.9)		(8.6)
SBA 504 loans		39,784		41,438		47,651	(4.0)		(16.5)
Commercial loans		310,649		301,564		284,861	3.0		9.1
Residential mortgage loans		136,345		132,094		132,192	3.2		3.1
Consumer loans		46,369		46,410		47,782	(0.1)		(3.0)
Total loans		596,571		587,036		582,752	1.6		2.4
Allowance for loan losses		(14,345)		(14,758)		(16,339)	2.8		12.2
Net loans		582,226		572,278		566,413	1.7		2.8

Premises and equipment, net		15,747		12,062		12,321	30.6		27.8
Bank owned life insurance ("BOLI")		9,472		9,402		9,179	0.7		3.2
Deferred tax assets		6,241		5,954		7,115	4.8		(12.3)
Federal Home Loan Bank stock		3,989		3,989		4,088	-		(2.4)
Accrued interest receivable		3,362		3,298		3,672	1.9		(8.4)
Other real estate owned ("OREO")		1,052		1,826		1,625	(42.4)		(35.3)
Prepaid FDIC insurance		1,788		1,929		2,386	(7.3)		(25.1)
Goodwill and other intangibles		1,516		1,516		1,526	-		(0.7)
Other assets		2,479		2,231		1,995	11.1		24.3

Total assets	$	827,182	$	819,730	$	810,198	0.9	%	2.1	%

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand deposits	$	118,166	$	114,424	$	108,618	3.3	%	8.8	%
Interest-bearing demand deposits		115,374		114,838		103,018	0.5		12.0
Savings deposits		295,335		294,533		281,535	0.3		4.9
Time deposits, under $100,000		75,374		76,994		94,513	(2.1)		(20.3)
Time deposits, $100,000 and over		47,868		47,971		55,417	(0.2)		(13.6)
Total deposits		652,117		648,760		643,101	0.5		1.4

Borrowed funds		75,000		75,000		75,000	-		-
Subordinated debentures		15,465		15,465		15,465	-		-
Accrued interest payable		438		434		498	0.9		(12.0)
Accrued expenses and other liabilities		6,005		2,561		2,132	134.5		181.7
Total liabilities		749,025		742,220		736,196	0.9		1.7

Shareholders' equity:
Cumulative perpetual preferred stock		20,263		20,115		19,683	0.7		2.9
Common stock		54,357		54,274		53,846	0.2		0.9
Retained earnings (deficit)		2,584		1,788		(345)	44.5		849.0
Accumulated other comprehensive income		953		1,333		818	(28.5)		16.5
Total shareholders' equity		78,157		77,510		74,002	0.8		5.6

Total liabilities and shareholders' equity	$	827,182	$	819,730	$	810,198	0.9	%	2.1	%

Preferred shares		21		21		21
Issued and outstanding common shares		7,548		7,534		7,463

UNITY BANCORP, INC.

QTD CONSOLIDATED STATEMENTS OF INCOME

March 31, 2013



										March 31, 2013 vs.
	For the three months ended									December 31, 2012					March 31, 2012
(In thousands, except percentages and per share amounts)	March 31, 2013			December 31, 2012			March 31, 2012			$		%			$		%
INTEREST INCOME
Federal funds sold and interest-bearing deposits	$	14		$	16		$	32		$	(2)		(12.5)	%	$	(18)		(56.3)	%
Federal Home Loan Bank stock		44			44			51			-		-			(7)		(13.7)
Securities:
Taxable		647			644			752			3		0.5			(105)		(14.0)
Tax-exempt		120			103			142			17		16.5			(22)		(15.5)
Total securities		767			747			894			20		2.7			(127)		(14.2)
Loans:
SBA loans		777			779			924			(2)		(0.3)			(147)		(15.9)
SBA 504 loans		651			548			759			103		18.8			(108)		(14.2)
Commercial loans		4,001			4,270			4,183			(269)		(6.3)			(182)		(4.4)
Residential mortgage loans		1,550			1,577			1,655			(27)		(1.7)			(105)		(6.3)
Consumer loans		509			521			560			(12)		(2.3)			(51)		(9.1)
Total loans		7,488			7,695			8,081			(207)		(2.7)			(593)		(7.3)
Total interest income		8,313			8,502			9,058			(189)		(2.2)			(745)		(8.2)
INTEREST EXPENSE
Interest-bearing demand deposits		101			119			136			(18)		(15.1)			(35)		(25.7)
Savings deposits		177			251			354			(74)		(29.5)			(177)		(50.0)
Time deposits		546			575			913			(29)		(5.0)			(367)		(40.2)
Borrowed funds and subordinated debentures		800			820			847			(20)		(2.4)			(47)		(5.5)
Total interest expense		1,624			1,765			2,250			(141)		(8.0)			(626)		(27.8)
Net interest income		6,689			6,737			6,808			(48)		(0.7)			(119)		(1.7)
Provision for loan losses		650			800			1,200			(150)		(18.8)			(550)		(45.8)
Net interest income after provision for loan losses		6,039			5,937			5,608			102		1.7			431		7.7
NONINTEREST INCOME
Branch fee income		347			397			386			(50)		(12.6)			(39)		(10.1)
Service and loan fee income		304			297			302			7		2.4			2		0.7
Gain on sale of SBA loans held for sale, net		241			262			157			(21)		(8.0)			84		53.5
Gain on sale of mortgage loans, net		477			748			411			(271)		(36.2)			66		16.1
BOLI income		70			76			73			(6)		(7.9)			(3)		(4.1)
Net security gains		226			59			224			167		283.1			2		0.9
Other income		160			169			162			(9)		(5.3)			(2)		(1.2)
Total noninterest income		1,825			2,008			1,715			(183)		(9.1)			110		6.4
NONINTEREST EXPENSE
Compensation and benefits		3,176			3,054			3,182			122		4.0			(6)		(0.2)
Occupancy		694			683			609			11		1.6			85		14.0
Processing and communications		561			549			534			12		2.2			27		5.1
Furniture and equipment		365			395			362			(30)		(7.6)			3		0.8
Professional services		190			192			190			(2)		(1.0)			-		-
Loan collection costs		177			229			180			(52)		(22.7)			(3)		(1.7)
OREO expenses		127			86			124			41		47.7			3		2.4
Deposit insurance		149			163			171			(14)		(8.6)			(22)		(12.9)
Advertising		120			210			146			(90)		(42.9)			(26)		(17.8)
Other expenses		567			574			461			(7)		(1.2)			106		23.0
Total noninterest expense		6,126			6,135			5,959			(9)		(0.1)			167		2.8
Income before provision for income taxes		1,738			1,810			1,364			(72)		(4.0)			374		27.4
Provision for income taxes		538			643			459			(105)		(16.3)			79		17.2
Net income		1,200			1,167			905			33		2.8			295		32.6
Preferred stock dividends and discount accretion		403			408			396			(5)		(1.2)			7		1.8
Income available to common shareholders	$	797		$	759		$	509		$	38		5.0	%	$	288		56.6	%

Effective tax rate		31.0	%		35.5	%		33.7	%

Net income per common share - Basic (1)	$	0.11		$	0.10		$	0.07
Net income per common share - Diluted (1)	$	0.10		$	0.10		$	0.07

Weighted average common shares outstanding - Basic		7,538			7,514			7,460
Weighted average common shares outstading - Diluted		7,845			7,818			7,792

(1)	Defined as net income adjusted for dividends accrued and accretion of discount on perpetual preferred stock divided by weighted average shares outstanding.

UNITY BANCORP, INC.

QTD NET INTEREST MARGIN

March 31, 2013


	For the three months ended
	March 31, 2013							December 31, 2012
	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits	$	62,530	$	14		0.09	%	$	61,710	$	16		0.10	%
Federal Home Loan Bank stock		3,989		44		4.47			3,990		44		4.39
Securities:
Taxable		100,062		647		2.59			95,626		644		2.69
Tax-exempt		18,475		178		3.85			14,172		153		4.32
Total securities (A)		118,537		825		2.79			109,798		797		2.91
Loans:
SBA loans		65,386		777		4.75			66,669		779		4.67
SBA 504 loans		41,135		651		6.42			41,584		548		5.24
Commercial loans		304,790		4,001		5.32			304,413		4,270		5.58
Residential mortgage loans		135,886		1,550		4.56			133,799		1,577		4.71
Consumer loans		46,111		509		4.48			46,571		521		4.45
Total loans (B)		593,308		7,488		5.09			593,036		7,695		5.17
Total interest-earning assets	$	778,364	$	8,371		4.33	%	$	768,534	$	8,552		4.44	%

Noninterest-earning assets:
Cash and due from banks		19,737							18,386
Allowance for loan losses		(14,998)							(15,566)
Other assets		37,905							38,312
Total noninterest-earning assets		42,644							41,132
Total assets	$	821,008						$	809,666

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	118,668	$	101		0.35	%	$	112,958	$	119		0.42	%
Savings deposits		295,520		177		0.24			287,047		251		0.35
Time deposits		122,695		546		1.80			126,233		575		1.81
Total interest-bearing deposits		536,883		824		0.62			526,238		945		0.72
Borrowed funds and subordinated debentures		90,465		800		3.54			90,498		820		3.55
Total interest-bearing liabilities	$	627,348	$	1,624		1.04	%	$	616,736	$	1,765		1.14	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		113,000							113,164
Other liabilities		3,242							3,181
Total noninterest-bearing liabilities		116,242							116,345
Total shareholders' equity		77,418							76,585
Total liabilities and shareholders' equity	$	821,008						$	809,666

Net interest spread			$	6,747		3.29	%			$	6,787		3.30	%
Tax-equivalent basis adjustment				(58)							(50)
Net interest income			$	6,689						$	6,737
Net interest margin						3.52	%						3.51	%

(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 34 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.

QTD NET INTEREST MARGIN

March 31, 2013


	For the three months ended
	March 31, 2013							March 31, 2012
	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits	$	62,530	$	14		0.09	%	$	64,660	$	32		0.20	%
Federal Home Loan Bank stock		3,989		44		4.47			4,088		51		5.02
Securities:
Taxable		100,062		647		2.59			102,624		752		2.93
Tax-exempt		18,475		178		3.85			17,851		210		4.71
Total securities (A)		118,537		825		2.79			120,475		962		3.19
Loans:
SBA loans		65,386		777		4.75			71,760		924		5.15
SBA 504 loans		41,135		651		6.42			51,710		759		5.90
Commercial loans		304,790		4,001		5.32			284,237		4,183		5.92
Residential mortgage loans		135,886		1,550		4.56			132,824		1,655		4.98
Consumer loans		46,111		509		4.48			47,608		560		4.73
Total loans (B)		593,308		7,488		5.09			588,139		8,081		5.52
Total interest-earning assets	$	778,364	$	8,371		4.33	%	$	777,362	$	9,126		4.71	%

Noninterest-earning assets:
Cash and due from banks		19,737							15,949
Allowance for loan losses		(14,998)							(16,788)
Other assets		37,905							40,287
Total noninterest-earning assets		42,644							39,448
Total assets	$	821,008						$	816,810

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	118,668	$	101		0.35	%	$	108,988	$	136		0.50	%
Savings deposits		295,520		177		0.24			283,261		354		0.50
Time deposits		122,695		546		1.80			156,999		913		2.34
Total interest-bearing deposits		536,883		824		0.62			549,248		1,403		1.03
Borrowed funds and subordinated debentures		90,465		800		3.54			90,465		847		3.70
Total interest-bearing liabilities	$	627,348	$	1,624		1.04	%	$	639,713	$	2,250		1.41	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		113,000							100,496
Other liabilities		3,242							3,249
Total noninterest-bearing liabilities		116,242							103,745
Total shareholders' equity		77,418							73,352
Total liabilities and shareholders' equity	$	821,008						$	816,810

Net interest spread			$	6,747		3.29	%			$	6,876		3.30	%
Tax-equivalent basis adjustment				(58)							(68)
Net interest income			$	6,689						$	6,808
Net interest margin						3.52	%						3.56	%

(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 34 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

March 31, 2013


Amounts in thousands, except percentages	March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012			March 31, 2012
ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period	$	14,758		$	15,294		$	16,284		$	16,339		$	16,348
Provision for loan losses charged to expense		650			800			1,000			1,000			1,200
		15,408			16,094			17,284			17,339			17,548
Less: Chargeoffs
SBA loans		570			251			254			213			615
SBA 504 loans		200			-			481			100			227
Commercial loans		375			1,190			1,428			540			346
Residential mortgage loans		125			152			65			494			113
Consumer loans		59			-			31			25			-
Total chargeoffs		1,329			1,593			2,259			1,372			1,301
Add: Recoveries
SBA loans		137			22			195			249			53
SBA 504 loans		25			50			15			15			28
Commercial loans		101			184			58			53			11
Residential mortgage loans		2			-			-			-			-
Consumer loans		1			1			1			-			-
Total recoveries		266			257			269			317			92
Net chargeoffs		1,063			1,336			1,990			1,055			1,209
Balance, end of period	$	14,345		$	14,758		$	15,294		$	16,284		$	16,339

LOAN QUALITY INFORMATION:
Nonperforming loans (1)	$	14,904		$	17,468		$	17,334		$	19,831		$	22,206
Other real estate owned ("OREO")		1,052			1,826			1,456			2,355			1,625
Nonperforming assets		15,956			19,294			18,790			22,186			23,831
Less: Amount guaranteed by SBA		1,863			1,849			566			526			555
Net nonperforming assets	$	14,093		$	17,445		$	18,224		$	21,660		$	23,276

Loans 90 days past due & still accruing	$	632		$	109		$	1,630		$	2,443		$	3,165

Performing Troubled Debt Restructurings (TDRs)	$	15,068		$	13,576		$	17,250		$	20,541		$	20,985
(1) Nonperforming TDRs included above		1,084			1,087			1,628			871			2,287
Total TDRs	$	16,152		$	14,663		$	18,878		$	21,412		$	23,272

Allowance for loan losses to:
Total loans at quarter end		2.40	%		2.51	%		2.56	%		2.69	%		2.80	%
Nonperforming loans (1)		96.25			84.49			88.23			82.11			73.58
Nonperforming assets		89.90			76.49			81.39			73.40			68.56
Net nonperforming assets		101.79			84.60			83.92			75.18			70.20

QTD net chargeoffs (annualized) to QTD average loans:
SBA loans		2.69	%		1.37	%		0.35	%		(0.21)	%		3.15	%
SBA 504 loans		1.73			(0.48)			4.16			0.73			1.55
Commercial loans		0.36			1.31			1.77			0.65			0.47
Residential mortgage loans		0.37			0.45			0.19			1.49			0.34
Consumer loans		0.51			(0.01)			0.26			0.22			-
Total loans		0.73	%		0.90	%		1.32	%		0.71	%		0.83	%

Nonperforming loans to total loans		2.50	%		2.98	%		2.90	%		3.28	%		3.81	%
Nonperforming loans and TDRs to total loans		5.02			5.29			5.79			6.67			7.41
Nonperforming assets to total loans and OREO		2.67			3.28			3.14			3.65			4.08
Nonperforming assets to total assets		1.93			2.35			2.34			2.83			2.94

UNITY BANCORP, INC.

QUARTERLY FINANCIAL DATA

March 31, 2013


(In thousands, except percentages and per share amounts)	March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012			March 31, 2012
SUMMARY OF INCOME:
Total interest income	$	8,313		$	8,502		$	8,871		$	8,772		$	9,058
Total interest expense		1,624			1,765			1,844			1,915			2,250
Net interest income		6,689			6,737			7,027			6,857			6,808
Provision for loan losses		650			800			1,000			1,000			1,200
Net interest income after provision for loan losses		6,039			5,937			6,027			5,857			5,608
Total noninterest income		1,825			2,008			1,774			1,841			1,715
Total noninterest expense		6,126			6,135			5,999			6,204			5,959
Income before provision for income taxes		1,738			1,810			1,802			1,494			1,364
Provision for income taxes		538			643			606			518			459
Net income		1,200			1,167			1,196			976			905
Preferred stock dividends and discount accretion		403			408			397			401			396
Income available to common shareholders	$	797		$	759		$	799		$	575		$	509

Net income per common share - Basic (1)	$	0.11		$	0.10		$	0.11		$	0.08		$	0.07
Net income per common share - Diluted (1)	$	0.10		$	0.10		$	0.10		$	0.07		$	0.07

COMMON SHARE DATA:
Market price per share	$	6.51		$	6.24		$	6.13		$	6.00		$	6.24
Dividends paid	$	-		$	-		$	-		$	-		$	-
Book value per common share	$	7.67		$	7.62		$	7.52		$	7.38		$	7.28
Weighted average common shares outstanding - Basic		7,538			7,514			7,473			7,462			7,460
Weighted average common shares outstanding - Diluted		7,845			7,818			7,782			7,784			7,792
Issued and outstanding common shares		7,548			7,534			7,503			7,461			7,463

OPERATING RATIOS (Annualized):
Return on average assets		0.59	%		0.57	%		0.60	%		0.49	%		0.45	%
Return on average equity (2)		5.65			5.34			5.74			4.25			3.81
Efficiency ratio		73.91			70.66			68.22			73.72			71.80

BALANCE SHEET DATA:
Total assets	$	827,182		$	819,730		$	802,675		$	785,111		$	810,198
Total deposits		652,117			648,760			633,126			616,443			643,101
Total loans		596,571			587,036			596,910			604,901			582,752
Total securities		119,334			111,053			106,437			114,846			128,061
Total shareholders' equity		78,157			77,510			76,387			74,901			74,002
Allowance for loan losses		(14,345)			(14,758)			(15,294)			(16,284)			(16,339)

TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets		4.33	%		4.44	%		4.70	%		4.70	%		4.71	%
Interest-bearing liabilities		1.04			1.14			1.19			1.25			1.41
Net interest spread		3.29			3.30			3.51			3.45			3.30
Net interest margin		3.52			3.51			3.72			3.68			3.56

CREDIT QUALITY:
Nonperforming assets		15,956			19,294			18,790			22,186			23,831
QTD net chargeoffs (annualized) to QTD average loans		0.73	%		0.90	%		1.32	%		0.71	%		0.83	%
Allowance for loan losses to total loans		2.40			2.51			2.56			2.69			2.80
Nonperforming assets to total loans and OREO		2.67			3.28			3.14			3.65			4.08
Nonperforming assets to total assets		1.93			2.35			2.34			2.83			2.94

CAPITAL RATIOS AND OTHER:
Total equity to total assets		9.45	%		9.46	%		9.52	%		9.54	%		9.13	%
Leverage ratio		11.12			11.14			11.20			11.08			10.67
Tier 1 risk-based capital ratio		14.54			14.85			14.52			14.22			14.44
Total risk-based capital ratio		15.80			16.12			15.78			15.49			15.71
Number of banking offices		15			15			15			15			15
Number of ATMs		16			16			16			16			16
Number of employees		166			165			161			169			171

1)	Defined as net income adjusted for dividends accrued and accretion of discount on perpetual preferred stock divided by weighted average shares outstanding.

2)	Defined as net income adjusted for dividends accrued and accretion of discount on perpetual preferred stock divided by average shareholders' equity (excluding preferred stock).

UNITY BANCORP INC /NJ/ - FORM 8-K - EX-99.1 - April 25, 2013

Attached files

UNITY BANCORP INC /NJ/ Reports