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

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8-K - 8-K - UNITY BANCORP INC /NJ/	unty-20151021x8k.htm

Unity Bancorp, Inc.

64 Old Highway 22

Clinton, NJ 08809

800-618-BANK

www.unitybank.com

NewsNewsNewsNewsNews

For Immediate Release:

October 21, 2015

News Media & Financial Analyst Contact:

Alan J. Bedner, EVP

Chief Financial Officer

(908) 713-4308

Unity Bancorp Reports Quarterly Net Income Increased 35%

and Nine Month Net Income Increased 47%

Clinton, NJ - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported increased third quarter and year-to-date earnings. Major contributing factors included strong loan growth, increased deposits and improved credit quality. Commercial, residential mortgage and consumer lending were up; with over ten percent growth year-to-date for each.

“Our loan growth is a reflection of our commitment to the funding needs of our communities,” reported James A Hughes, President and CEO. “We customize our products for our customers and we are entrepreneurial in our approach to providing solutions. That is the strength of Community Banking; knowing our customers and understanding their needs.”

Net income was $2.6 million, or $0.30 per diluted share, for the three months ended September 30, 2015, a 35% increase compared to net income of $1.9 million, or $0.24 per diluted share, for the same period a year ago. Return on average assets and average common equity for the quarter were 1.00% and 13.54%, respectively, compared to 0.82% and 11.89% for the same period a year ago.

Highlights include:

12.3% loan growth since year-end 2014 – 25.7% growth in consumer loans, 15.7% growth in residential mortgage loans, and 10.2% growth in commercial loans.

14.7% increase in noninterest-bearing demand deposits since year-end 2014.

13.0% increase in net interest income compared to the prior year’s quarter due to strong loan growth.

Net interest margin of 3.60% this quarter compared to 3.56% in the prior year’s quarter.

Improved credit quality metrics and reduced loan loss provision – $307 thousand decrease in net charge-offs compared to the prior year’s quarter and a 9.1% decrease in nonperforming loans.

“I am extremely pleased with the performance of the Bank,” said James A Hughes, President and CEO. “The sustained improvement in earnings is the direct result of our sales and service culture. We are experiencing record mortgage and SBA loan origination volume which has contributed to our increased noninterest income. I remain very optimistic about our future and I look forward to reporting our continued success.”

For the nine months ended September 30, 2015, net income totaled $6.9 million, or $0.81 per diluted share, compared to $4.7 million or $0.61 per diluted share in the prior year’s period. Return on average assets and average common equity for the nine month periods were 0.95% and 12.69%, respectively, compared to 0.70% and 10.47% for the same period a year ago.

Net Interest Income

Our core source of earnings, net interest income, increased $1.0 million to $8.6 million for the quarter ended September 30, 2015 compared to the prior year’s period. This increase was the result of the strong loan growth in residential mortgage, commercial and consumer loans. Average residential mortgage loans have increased $53.0 million, average commercial loans increased $52.3 million and consumer loans increased $19.6 million for the quarter-ended September 30, 2015 compared to the comparable quarter in 2014. Partially offsetting this increase was the lower level of interest income due to a reduced investment portfolio and the slight increase in deposit interest expense.

The net interest margin increased 4 basis points to 3.60% for the quarter ended September 30, 2015 compared to 3.56% for the prior year’s quarter. The expansion in the net interest margin was due to strong loan growth, partially offset by lower investment security balances.

Provision for Loan Losses

The provision for loan losses totaled $200 thousand for the quarter ended September 30, 2015, compared to $550 thousand for the prior year period. For the nine months ended September 30, 2015, the provision for loan losses was $400 thousand compared to $1.7 million for the same period last year. The decrease was the result of lower levels of net charge-offs and reduced nonperforming assets.

Noninterest Income

Noninterest income increased $422 thousand to $2.3 million for the three months ended September 30, 2015, compared to the same period last year. For the nine months ended September 30, 2015, noninterest income increased $790 thousand to $5.8 million, compared to the same period a year ago. Quarterly and year-to-date noninterest income increased due to higher gains on the sale of mortgage loans.

During the quarter, $57.7 million in residential mortgage loans were originated, of which $35.7 million were sold at a gain of $926 thousand, compared to $40.1 million originated and $16.5 million sold at a gain of $263 thousand during the prior year’s quarter. For the nine month period, $144.7 million in residential mortgage loans were originated, of which $77.9 million were sold at a gain of $2.0 million, compared to $98.7 million originated and $45.1 million sold at a gain of $816 thousand in the prior year’s period. All residential mortgage loans originated in 2015 that are held in portfolio for investment are adjustable rate mortgages or 15 year or less fixed rate mortgages.

In addition to the noninterest income increases noted above, other notable items included: 1) $3.4 million in SBA loan sales this quarter at a net gain of $308 thousand and 2) a decline in BOLI income from the prior year periods as those periods included a death benefit.

Noninterest Expense

Noninterest expense increased $611 thousand to $6.9 million for the quarter and increased $1.4 million to $20.0 million for the nine months ended September 30, 2015, respectively. The majority of the increase in each period was due to higher compensation and benefits expenses which rose $600 thousand for the quarter and $1.2 million for the nine month period. Compensation and benefits expenses have increased over the past twelve months due to increased head count in loan origination and support staff. In addition, mortgage commission expense increased due to the larger volume of mortgages originated and benefits expense increased due to the addition of a supplemental executive retirement plan (“SERP”).

Other expense fluctuations included: higher software maintenance and technology consulting expense, audit expenses related to Federal Deposit Insurance Corporation Improvement Act (“FDICIA”) testing and director fees, while OREO expenses for the quarterly and nine month periods decreased due to lower property tax, maintenance, utility and legal costs to hold these properties.

Financial Condition

At September 30, 2015, total assets were $1.1 billion, an increase of $43.9 million from year-end 2014:

Total loans increased $93.7 million or 12.3%, from year-end 2014 to $855.6 million at September 30, 2015. The majority of the growth came in our commercial, residential mortgage and consumer loan portfolios which increased $41.0 million, $34.6 million and $15.2 million, respectively.

Total deposits increased $71.9 million or 9.1%, to $866.2 million at September 30, 2015, due primarily to increased time deposits and noninterest-bearing demand deposits, partially offset by decreased savings deposits and interest-bearing demand deposits.

Shareholders’ equity was $76.1 million at September 30, 2015, an increase of $5.9 million from year-end 2014, due to year-to-date net income less the dividends paid.

Book value per common share was $9.02 as of September 30, 2015.

At September 30, 2015, the leverage, common equity Tier I, Tier I and Total Risk Based Capital ratios were 8.92%, 9.37%, 11.25% and 12.50% respectively, all in excess of the ratios required to be deemed “well-capitalized”.

Credit Quality

Nonperforming assets totaled $12.5 million at September 30, 2015, or 1.46% of total loans and OREO, compared to $12.5 million or 1.64% of total loans and OREO at year-end 2014.

Nonperforming loans decreased 5.5% to $10.7 million at September 30, 2015 from year-end.

OREO increased $597 thousand to $1.8 million at September 30, 2015 from year-end.

The allowance for loan losses totaled $12.4 million at September 30, 2015, or 1.45% of total loans compared to $12.6 million and 1.65% at December 31, 2014.

Net charge-offs were $183 thousand for the three months ended September 30, 2015, compared to $490 thousand for the same period a year ago. For the nine months ended September 30, 2015, net charge-offs were $530 thousand, a decrease of $1.4 million compared to the prior year’s period.

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $1.1 billion in assets and $866 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 assumption.9ns 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

September 30, 2015



										September 30, 2015 vs.
										June 30, 2015		September 30, 2014
(In thousands, except percentages and per share amounts)	September 30, 2015			June 30, 2015			September 30, 2014			%		%
BALANCE SHEET DATA:
Total assets	$	1,052,711		$	1,024,303		$	969,593		2.8	%	8.6	%
Total deposits		866,247			815,427			781,920		6.2		10.8
Total loans		855,560			821,696			744,366		4.1		14.9
Total securities		71,492			74,375			86,879		(3.9)		(17.7)
Total shareholders' equity		76,065			73,690			68,384		3.2		11.2
Allowance for loan losses		(12,421)			(12,404)			(12,918)		0.1		(3.8)

FINANCIAL DATA - QUARTER TO DATE:
Income before provision for income taxes	$	3,845		$	3,610		$	2,694		6.5		42.7
Provision for income taxes		1,294			1,182			808		9.5		60.1
Net income	$	2,551		$	2,428		$	1,886		5.1		35.3

Net income per common share - Basic	$	0.30		$	0.29		$	0.24		3.4		25.0
Net income per common share - Diluted	$	0.30		$	0.28		$	0.24		7.1		25.0

Return on average assets		1.00	%		1.01	%		0.82	%	(1.0)		22.0
Return on average equity		13.54	%		13.35	%		11.89	%	1.4		13.9
Efficiency ratio		62.88	%		64.99	%		65.80	%	(3.2)		(4.4)
Net interest margin		3.60	%		3.70	%		3.56	%	(2.7)		1.1

FINANCIAL DATA - YEAR TO DATE:
Income before provision for income taxes	$	10,414					$	6,900				50.9
Provision for income taxes		3,496						2,193				59.4
Net income	$	6,918					$	4,707				47.0

Net income per common share - Basic	$	0.82					$	0.61				34.4
Net income per common share - Diluted	$	0.81					$	0.61				32.8

Return on average assets		0.95	%					0.70	%			35.7
Return on average equity		12.69	%					10.47	%			21.2
Efficiency ratio		64.97	%					69.40	%			(6.4)
Net interest margin		3.65	%					3.54	%			3.1

SHARE INFORMATION:
Market price per share	$	9.77		$	9.79		$	9.63		(0.2)		1.5
Dividends paid	$	0.04		$	0.03		$	0.03		0.3		0.3
Book value per common share	$	9.02		$	8.75		$	8.17		3.1		10.4
Average diluted shares outstanding (QTD)		8,536			8,524			7,946		0.1		7.4

CAPITAL RATIOS:
Total equity to total assets		7.23	%		7.19	%		7.05	%	0.6		2.6
Leverage ratio		8.92	%		9.09	%		8.96	%	(1.9)		(0.4)
Common equity tier 1 risk-based capital ratio		9.37	%		9.39	%		n/a		n/a		n/a
Tier 1 risk-based capital ratio		11.25	%		11.33	%		11.58	%	(0.7)		(2.8)
Total risk-based capital ratio		12.50	%		12.59	%		12.84	%	(0.7)		(2.6)

CREDIT QUALITY AND RATIOS:
Nonperforming assets	$	12,501		$	11,102		$	12,870		12.6		(2.9)
QTD net chargeoffs (annualized) to QTD average loans		0.09	%		(0.11)	%		0.27	%	181.8		(66.7)
Allowance for loan losses to total loans		1.45	%		1.51	%		1.74	%	(4.0)		(16.7)
Nonperforming assets to total loans and OREO		1.46	%		1.35	%		1.73	%	8.1		(15.6)
Nonperforming assets to total assets		1.19	%		1.08	%		1.33	%	10.2	%	(10.5)	%

(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

September 30, 2015



							December 31, 2014		September 30, 2014
(In thousands, except percentages)	September 30, 2015		December 31, 2014		September 30, 2014		%		%
ASSETS
Cash and due from banks	$	21,863	$	29,351	$	29,384	(25.5)	%	(25.6)	%
Federal funds sold and interest-bearing deposits		66,994		100,470		72,205	(33.3)		(7.2)
Cash and cash equivalents		88,857		129,821		101,589	(31.6)		(12.5)
Securities:
Securities available for sale		53,470		60,073		66,054	(11.0)		(19.1)
Securities held to maturity		18,022		20,009		20,825	(9.9)		(13.5)
Total securities		71,492		80,082		86,879	(10.7)		(17.7)
Loans:
SBA loans held for sale		13,937		5,179		7,835	169.1		77.9
SBA loans held for investment		39,728		40,401		44,502	(1.7)		(10.7)
SBA 504 loans		29,221		34,322		34,152	(14.9)		(14.4)
Commercial loans		442,970		401,949		391,338	10.2		13.2
Residential mortgage loans		255,447		220,878		211,450	15.7		20.8
Consumer loans		74,257		59,096		55,089	25.7		34.8
Total loans		855,560		761,825		744,366	12.3		14.9
Allowance for loan losses		(12,421)		(12,551)		(12,918)	1.0		(3.8)
Net loans		843,139		749,274		731,448	12.5		15.3
Premises and equipment, net		15,297		15,231		15,420	0.4		(0.8)
Bank owned life insurance ("BOLI")		13,285		13,001		12,907	2.2		2.9
Deferred tax assets		6,107		5,860		6,066	4.2		0.7
Federal Home Loan Bank ("FHLB") stock		4,510		6,032		4,907	(25.2)		(8.1)
Accrued interest receivable		3,704		3,518		3,422	5.3		8.2
Other real estate owned ("OREO")		1,759		1,162		1,658	51.4		6.1
Goodwill and other intangibles		1,516		1,516		1,516	-		-
Other assets		3,045		3,291		3,781	(7.5)		(19.5)
Total assets	$	1,052,711	$	1,008,788	$	969,593	4.4	%	8.6	%

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	175,298	$	152,785	$	149,272	14.7	%	17.4	%
Interest-bearing demand		123,984		128,875		117,260	(3.8)		5.7
Savings		299,017		300,348		292,108	(0.4)		2.4
Time, under $100,000		124,348		113,119		115,143	9.9		8.0
Time, $100,000 and over		143,600		99,214		108,137	44.7		32.8
Total deposits		866,247		794,341		781,920	9.1		10.8
Borrowed funds		90,000		125,000		100,000	(28.0)		(10.0)
Subordinated debentures		15,465		15,465		15,465	-		-
Accrued interest payable		460		474		476	(3.0)		(3.4)
Accrued expenses and other liabilities		4,474		3,385		3,348	32.2		33.6
Total liabilities		976,646		938,665		901,209	4.0		8.4
Shareholders' equity:
Common stock		59,205		58,785		58,638	0.7		1.0
Retained earnings		17,270		11,195		9,751	54.3		77.1
Accumulated other comprehensive (loss) income		(410)		143		(5)	NM		NM
Total shareholders' equity		76,065		70,123		68,384	8.5		11.2
Total liabilities and shareholders' equity	$	1,052,711	$	1,008,788	$	969,593	4.4	%	8.6	%

Issued and outstanding common shares		8,429		8,388		8,370

UNITY BANCORP, INC.

QTD CONSOLIDATED STATEMENTS OF INCOME

September 30, 2015



										September 30, 2015 vs.
	For the three months ended									June 30, 2015					September 30, 2014
(In thousands, except percentages and per share amounts)	September 30, 2015			June 30, 2015			September 30, 2014			$		%			$		%
INTEREST INCOME
Federal funds sold and interest-bearing deposits	$	11		$	6		$	12		$	5		83.3	%	$	(1)		(8.3)	%
FHLB stock		36			38			40			(2)		(5.3)			(4)		(10.0)
Securities:
Taxable		349			363			461			(14)		(3.9)			(112)		(24.3)
Tax-exempt		71			71			81			-		-			(10)		(12.3)
Total securities		420			434			542			(14)		(3.2)			(122)		(22.5)
Loans:
SBA loans		696			605			636			91		15.0			60		9.4
SBA 504 loans		353			369			419			(16)		(4.3)			(66)		(15.8)
Commercial loans		5,378			5,276			4,926			102		1.9			452		9.2
Residential mortgage loans		2,811			2,716			2,327			95		3.5			484		20.8
Consumer loans		849			774			589			75		9.7			260		44.1
Total loans		10,087			9,740			8,897			347		3.6			1,190		13.4
Total interest income		10,554			10,218			9,491			336		3.3			1,063		11.2
INTEREST EXPENSE
Interest-bearing demand deposits		108			103			98			5		4.9			10		10.2
Savings deposits		255			271			216			(16)		(5.9)			39		18.1
Time deposits		839			725			725			114		15.7			114		15.7
Borrowed funds and subordinated debentures		730			750			820			(20)		(2.7)			(90)		(11.0)
Total interest expense		1,932			1,849			1,859			83		4.5			73		3.9
Net interest income		8,622			8,369			7,632			253		3.0			990		13.0
Provision for loan losses		200			-			550			200		100.0			(350)		(63.6)
Net interest income after provision for loan losses		8,422			8,369			7,082			53		0.6			1,340		18.9
NONINTEREST INCOME
Branch fee income		399			373			388			26		7.0			11		2.8
Service and loan fee income		306			466			292			(160)		(34.3)			14		4.8
Gain on sale of SBA loans held for sale, net		308			-			295			308		100.0			13		4.4
Gain on sale of mortgage loans, net		926			687			263			239		34.8			663		252.1
BOLI income		95			95			400			-		-			(305)		(76.3)
Net security gains		-			28			-			(28)		(100.0)			-		-
Other income		241			244			215			(3)		(1.2)			26		12.1
Total noninterest income		2,275			1,893			1,853			382		20.2			422		22.8
NONINTEREST EXPENSE
Compensation and benefits		3,814			3,481			3,214			333		9.6			600		18.7
Occupancy		598			601			604			(3)		(0.5)			(6)		(1.0)
Processing and communications		631			614			667			17		2.8			(36)		(5.4)
Furniture and equipment		393			422			377			(29)		(6.9)			16		4.2
Professional services		251			242			159			9		3.7			92		57.9
Loan costs		265			160			225			105		65.6			40		17.8
OREO expenses		15			67			71			(52)		(77.6)			(56)		(78.9)
Deposit insurance		163			150			166			13		8.7			(3)		(1.8)
Advertising		203			343			291			(140)		(40.8)			(88)		(30.2)
Other expenses		519			572			467			(53)		(9.3)			52		11.1
Total noninterest expense		6,852			6,652			6,241			200		3.0			611		9.8
Income before provision for income taxes		3,845			3,610			2,694			235		6.5			1,151		42.7
Provision for income taxes		1,294			1,182			808			112		9.5			486		60.1
Net income	$	2,551		$	2,428		$	1,886		$	123		5.1	%	$	665		35.3	%

Effective tax rate		33.7	%		32.7	%		30.0	%

Net income per common share - Basic	$	0.30	$	0.29	$	0.24
Net income per common share - Diluted	$	0.30	$	0.28	$	0.24

Weighted average common shares outstanding - Basic		8,427		8,425		7,847
Weighted average common shares outstanding - Diluted		8,536		8,524		7,946

(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.

YTD CONSOLIDATED STATEMENTS OF INCOME

September 30, 2015



	For the nine months ended September 30,						Current YTD vs. Prior YTD
(In thousands, except percentages and per share amounts)	2015			2014			$		%
INTEREST INCOME
Federal funds sold and interest-bearing deposits	$	26		$	31		$	(5)		(16.1)	%
FHLB stock		117			127			(10)		(7.9)
Securities:
Taxable		1,100			1,740			(640)		(36.8)
Tax-exempt		213			275			(62)		(22.5)
Total securities		1,313			2,015			(702)		(34.8)
Loans:
SBA loans		1,980			1,863			117		6.3
SBA 504 loans		1,068			1,251			(183)		(14.6)
Commercial loans		15,720			14,264			1,456		10.2
Residential mortgage loans		8,108			6,438			1,670		25.9
Consumer loans		2,322			1,628			694		42.6
Total loans		29,198			25,444			3,754		14.8
Total interest income		30,654			27,617			3,037		11.0
INTEREST EXPENSE
Interest-bearing demand deposits		317			318			(1)		(0.3)
Savings deposits		789			586			203		34.6
Time deposits		2,250			2,062			188		9.1
Borrowed funds and subordinated debentures		2,289			2,426			(137)		(5.6)
Total interest expense		5,645			5,392			253		4.7
Net interest income		25,009			22,225			2,784		12.5
Provision for loan losses		400			1,700			(1,300)		(76.5)
Net interest income after provision for loan losses		24,609			20,525			4,084		19.9
NONINTEREST INCOME
Branch fee income		1,118			1,106			12		1.1
Service and loan fee income		1,068			872			196		22.5
Gain on sale of SBA loans held for sale, net		671			633			38		6.0
Gain on sale of mortgage loans, net		1,957			816			1,141		139.8
BOLI income		284			593			(309)		(52.1)
Net security gains		28			378			(350)		(92.6)
Other income		683			621			62		10.0
Total noninterest income		5,809			5,019			790		15.7
NONINTEREST EXPENSE
Compensation and benefits		10,767			9,553			1,214		12.7
Occupancy		1,871			1,882			(11)		(0.6)
Processing and communications		1,841			1,847			(6)		(0.3)
Furniture and equipment		1,189			1,112			77		6.9
Professional services		729			617			112		18.2
Loan costs		647			569			78		13.7
OREO expenses		117			414			(297)		(71.7)
Deposit insurance		496			515			(19)		(3.7)
Advertising		728			729			(1)		(0.1)
Other expenses		1,619			1,406			213		15.1
Total noninterest expense		20,004			18,644			1,360		7.3
Income before provision for income taxes		10,414			6,900			3,514		50.9
Provision for income taxes		3,496			2,193			1,303		59.4
Net income	$	6,918		$	4,707		$	2,211		47.0	%

Effective tax rate		33.6	%		31.8	%

Net income per common share - Basic	$	0.82		$	0.61
Net income per common share - Diluted	$	0.81		$	0.61


Weighted average common shares outstanding - Basic	8,423	7,680
Weighted average common shares outstanding - Diluted	8,524	7,765

UNITY BANCORP, INC.

QTD NET INTEREST MARGIN

September 30, 2015


(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
	For the three months ended
	September 30, 2015							June 30, 2015
	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits	$	34,465	$	11		0.13	%	$	20,259	$	6		0.12	%
FHLB stock		3,517		36		4.06			3,720		38		4.10
Securities:
Taxable		61,542		349		2.25			63,834		363		2.28
Tax-exempt		11,612		105		3.59			11,803		105		3.57
Total securities (A)		73,154		454		2.46			75,637		468		2.48
Loans:
SBA loans		53,325		696		5.18			47,249		605		5.14
SBA 504 loans		29,268		353		4.79			29,539		369		5.01
Commercial loans		433,285		5,378		4.92			422,371		5,276		5.01
Residential mortgage loans		254,765		2,811		4.38			243,821		2,716		4.47
Consumer loans		72,641		849		4.64			67,353		774		4.61
Total loans (B)		843,284		10,087		4.75			810,333		9,740		4.82
Total interest-earning assets	$	954,420	$	10,588		4.40	%	$	909,949	$	10,252		4.52	%

Noninterest-earning assets:
Cash and due from banks		24,990							24,768
Allowance for loan losses		(12,619)							(12,430)
Other assets		44,098							43,596
Total noninterest-earning assets		56,469							55,934
Total assets	$	1,010,889						$	965,883

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	125,405	$	108		0.34	%	$	123,663	$	103		0.33	%
Total savings deposits		290,413		255		0.35			287,911		271		0.38
Total time deposits		256,216		839		1.30			220,403		725		1.32
Total interest-bearing deposits		672,034		1,202		0.71			631,977		1,099		0.70
Borrowed funds and subordinated debentures		83,383		730		3.47			87,944		750		3.42
Total interest-bearing liabilities	$	755,417	$	1,932		1.01	%	$	719,921	$	1,849		1.03	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		176,085							168,585
Other liabilities		4,663							4,413
Total noninterest-bearing liabilities		180,748							172,998
Total shareholders' equity		74,724							72,964
Total liabilities and shareholders' equity	$	1,010,889						$	965,883

Net interest spread			$	8,656		3.39	%			$	8,403		3.49	%
Tax-equivalent basis adjustment				(34)							(34)
Net interest income			$	8,622						$	8,369
Net interest margin						3.60	%						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 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

September 30, 2015


(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
	For the three months ended
	September 30, 2015							September 30, 2014
	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits	$	34,465	$	11		0.13	%	$	38,754	$	12		0.12	%
FHLB stock		3,517		36		4.06			3,948		40		4.02
Securities:
Taxable		61,542		349		2.25			75,685		461		2.44
Tax-exempt		11,612		105		3.59			13,348		119		3.57
Total securities (A)		73,154		454		2.46			89,033		580		2.61
Loans:
SBA loans		53,325		696		5.18			53,400		636		4.76
SBA 504 loans		29,268		353		4.79			34,310		419		4.85
Commercial loans		433,285		5,378		4.92			380,983		4,926		5.13
Residential mortgage loans		254,765		2,811		4.38			201,793		2,327		4.61
Consumer loans		72,641		849		4.64			53,000		589		4.41
Total loans (B)		843,284		10,087		4.75			723,486		8,897		4.89
Total interest-earning assets	$	954,420	$	10,588		4.40	%	$	855,221	$	9,529		4.43	%

Noninterest-earning assets:
Cash and due from banks		24,990							29,873
Allowance for loan losses		(12,619)							(12,980)
Other assets		44,098							44,656
Total noninterest-earning assets		56,469							61,549
Total assets	$	1,010,889						$	916,770

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	125,405	$	108		0.34	%	$	116,646	$	98		0.33	%
Total savings deposits		290,413		255		0.35			271,356		216		0.32
Total time deposits		256,216		839		1.30			221,584		725		1.30
Total interest-bearing deposits		672,034		1,202		0.71			609,586		1,039		0.68
Borrowed funds and subordinated debentures		83,383		730		3.47			91,574		820		3.50
Total interest-bearing liabilities	$	755,417	$	1,932		1.01	%	$	701,160	$	1,859		1.05	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		176,085							148,724
Other liabilities		4,663							3,921
Total noninterest-bearing liabilities		180,748							152,645
Total shareholders' equity		74,724							62,965
Total liabilities and shareholders' equity	$	1,010,889						$	916,770

Net interest spread			$	8,656		3.39	%			$	7,670		3.38	%
Tax-equivalent basis adjustment				(34)							(38)
Net interest income			$	8,622						$	7,632
Net interest margin						3.60	%						3.56	%

(A)

(B)

The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued.

UNITY BANCORP, INC.

YEAR TO DATE NET INTEREST MARGIN

September 30, 2015


(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
	For the nine months ended
	September 30, 2015							September 30, 2014
	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits	$	30,657	$	26		0.11	%	$	42,869	$	31		0.10	%
FHLB stock		3,694		117		4.23			4,028		127		4.22
Securities:
Taxable		64,121		1,100		2.29			84,634		1,740		2.74
Tax-exempt		11,798		315		3.57			14,920		407		3.64
Total securities (A)		75,919		1,415		2.49			99,554		2,147		2.87
Loans:
SBA loans		49,678		1,980		5.33			54,047		1,863		4.60
SBA 504 loans		30,720		1,068		4.65			33,491		1,251		4.99
Commercial loans		420,682		15,720		5.00			371,951		14,264		5.13
Residential mortgage loans		241,675		8,108		4.49			189,365		6,438		4.53
Consumer loans		67,488		2,322		4.60			48,918		1,628		4.45
Total loans (B)		810,243		29,198		4.82			697,772		25,444		4.87
Total interest-earning assets	$	920,513	$	30,756		4.47	%	$	844,223	$	27,749		4.39	%

Noninterest-earning assets:
Cash and due from banks		26,537							25,900
Allowance for loan losses		(12,583)							(13,141)
Other assets		43,637							44,559
Total noninterest-earning assets		57,591							57,318
Total assets	$	978,104						$	901,541

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	125,216	$	317		0.34	%	$	125,341	$	318		0.34	%
Total savings deposits		289,445		789		0.36			266,384		586		0.29
Total time deposits		229,512		2,250		1.31			213,339		2,062		1.29
Total interest-bearing deposits		644,173		3,356		0.69			605,064		2,966		0.65
Borrowed funds and subordinated debentures		87,714		2,289		3.49			91,304		2,426		3.50
Total interest-bearing liabilities	$	731,887	$	5,645		1.03	%	$	696,368	$	5,392		1.02	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		168,852							141,598
Other liabilities		4,463							3,477
Total noninterest-bearing liabilities		173,315							145,075
Total shareholders' equity		72,902							60,098
Total liabilities and shareholders' equity	$	978,104						$	901,541

Net interest spread			$	25,111		3.44	%			$	22,357		3.37	%
Tax-equivalent basis adjustment				(102)							(132)
Net interest income			$	25,009						$	22,225
Net interest margin						3.65	%						3.54	%

UNITY BANCORP, INC.

QUARTERLY ALLOWANCE FOR LOAN LOSSES AND LOAN QUALITY SCHEDULES

September 30, 2015


Amounts in thousands, except percentages	September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014			September 30, 2014
ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period	$	12,404		$	12,181		$	12,551		$	12,918		$	12,858
Provision for loan losses charged to expense		200			-			200			850			550
		12,604			12,181			12,751			13,768			13,408
Less: Chargeoffs
SBA loans		86			6			128			569			232
SBA 504 loans		-			-			589			-			-
Commercial loans		10			147			100			377			72
Residential mortgage loans		50			-			-			362			201
Consumer loans		52			7			30			-			211
Total chargeoffs		198			160			847			1,308			716
Add: Recoveries
SBA loans		10			2			37			12			111
SBA 504 loans		-			-			-			-			-
Commercial loans		5			370			201			31			95
Residential mortgage loans		-			10			39			40			20
Consumer loans		-			1			-			8			-
Total recoveries		15			383			277			91			226
Net chargeoffs (recoveries)		183			(223)			570			1,217			490
Balance, end of period	$	12,421		$	12,404		$	12,181		$	12,551		$	12,918

LOAN QUALITY INFORMATION:
Nonperforming loans (1)	$	10,742		$	8,837		$	9,141		$	11,368		$	11,212
Other real estate owned ("OREO")		1,759			2,265			1,975			1,162			1,658
Nonperforming assets		12,501			11,102			11,116			12,530			12,870
Less: Amount guaranteed by SBA		225			267			270			1,569			200
Net nonperforming assets	$	12,276		$	10,835		$	10,846		$	10,961		$	12,670

Loans 90 days past due & still accruing	$	272		$	273		$	5		$	890			-

Performing Troubled Debt Restructurings (TDRs)	$	3,268		$	3,360		$	3,458		$	3,548		$	4,194
(1) Nonperforming TDRs included in nonperforming loans		2,808			2,843			2,911			2,960			3,473
Total TDRs	$	6,076		$	6,203		$	6,369		$	6,508		$	7,667

Allowance for loan losses to:
Total loans at quarter end		1.45	%		1.51	%		1.55	%		1.65	%		1.74	%
Nonperforming loans (1)		115.63			140.36			133.26			110.41			115.22
Nonperforming assets		99.36			111.73			109.58			100.17			100.37
Net nonperforming assets		101.18			114.48			112.31			114.51			101.96

QTD net chargeoffs (annualized) to QTD average loans:
SBA loans		0.57	%		0.03	%		0.76	%		4.35	%		0.90	%
SBA 504 loans		-			-			7.15			-			-
Commercial loans		-			(0.21)			(0.10)			0.34			(0.02)
Residential mortgage loans		0.08			(0.02)			(0.07)			0.59			0.36
Consumer loans		0.28			0.04			0.20			(0.05)			1.58
Total loans		0.09	%		(0.11)	%		0.30	%		0.63	%		0.27	%

Nonperforming loans to total loans		1.26	%		1.08	%		1.16	%		1.49	%		1.51	%
Nonperforming loans and TDRs to total loans		1.64			1.48			1.61			1.96			2.07
Nonperforming assets to total loans and OREO		1.46			1.35			1.41			1.64			1.73
Nonperforming assets to total assets		1.19			1.08			1.07			1.24			1.33

UNITY BANCORP, INC.

QUARTERLY FINANCIAL DATA

September 30, 2015


(In thousands, except percentages and per share amounts)	September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014			September 30, 2014
SUMMARY OF INCOME:
Total interest income	$	10,554		$	10,218		$	9,884		$	9,802		$	9,491
Total interest expense		1,932			1,849			1,864			1,914			1,859
Net interest income		8,622			8,369			8,020			7,888			7,632
Provision for loan losses		200			-			200			850			550
Net interest income after provision for loan losses		8,422			8,369			7,820			7,038			7,082
Total noninterest income		2,275			1,893			1,641			1,660			1,853
Total noninterest expense		6,852			6,652			6,502			6,045			6,241
Income before provision for income taxes		3,845			3,610			2,959			2,653			2,694
Provision for income taxes		1,294			1,182			1,020			952			808
Net income	$	2,551		$	2,428		$	1,939		$	1,701		$	1,886

Net income per common share - Basic	$	0.30		$	0.29		$	0.23		$	0.21		$	0.24
Net income per common share - Diluted	$	0.30		$	0.28		$	0.23		$	0.20		$	0.24

COMMON SHARE DATA:
Market price per share	$	9.77		$	9.79		$	9.08		$	9.43		$	9.63
Dividends paid	$	0.04		$	0.03		$	0.03		$	0.03		$	0.03
Book value per common share	$	9.02		$	8.75		$	8.55		$	8.36		$	8.17
Weighted average common shares outstanding - Basic		8,427			8,425			8,417			8,378			7,847
Weighted average common shares outstanding - Diluted		8,536			8,524			8,514			8,478			7,946
Issued and outstanding common shares		8,429			8,425			8,423			8,388			8,370

OPERATING RATIOS (Annualized):
Return on average assets		1.00	%		1.01	%		0.82	%		0.70	%		0.82	%
Return on average equity		13.54			13.35			11.08			9.78			11.89
Efficiency ratio		62.88			64.99			67.30			63.68			65.80

BALANCE SHEET DATA:
Total assets	$	1,052,711		$	1,024,303		$	1,035,404		$	1,008,788		$	969,593
Total deposits		866,247			815,427			789,441			794,341			781,920
Total loans		855,560			821,696			784,642			761,825			744,366
Total securities		71,492			74,375			77,308			80,082			86,879
Total shareholders' equity		76,065			73,690			71,987			70,123			68,384
Allowance for loan losses		(12,421)			(12,404)			(12,181)			(12,551)			(12,918)

TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets		4.40	%		4.52	%		4.49	%		4.35	%		4.43	%
Interest-bearing liabilities		1.01			1.03			1.05			1.03			1.05
Net interest spread		3.39			3.49			3.44			3.32			3.38
Net interest margin		3.60			3.70			3.64			3.49			3.56

CREDIT QUALITY:
Nonperforming assets		12,501			11,102			11,116			12,530			12,870
QTD net chargeoffs (annualized) to QTD average loans		0.09	%		(0.11)	%		0.30	%		0.63	%		0.27	%
Allowance for loan losses to total loans		1.45			1.51			1.55			1.65			1.74
Nonperforming assets to total loans and OREO		1.46			1.35			1.41			1.64			1.73
Nonperforming assets to total assets		1.19			1.08			1.07			1.24			1.33

CAPITAL RATIOS AND OTHER:
Total equity to total assets		7.23	%		7.19	%		6.95	%		6.95	%		7.05	%
Leverage ratio		8.92			9.09			8.94			8.71			8.96

Common equity tier 1 risk-based capital ratio	9.37	9.39	9.25	n/a	n/a
Tier 1 risk-based capital ratio	11.25	11.33	11.22	11.57	11.58
Total risk-based capital ratio	12.50	12.59	12.48	12.83	12.84
Number of banking offices	15	15	15	15	15
Number of ATMs	16	16	16	16	16
Number of employees	163	177	166	169	163

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

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 - October 21, 2015

Attached files

UNITY BANCORP INC /NJ/ Reports