×

Unity Bancorp Reports 34% Increase in Quarterly Earnings and 55% Increase in Annual Earnings

CLINTON, N.J., Jan. 29, 2015 (GLOBE NEWSWIRE) -- Unity Bancorp, Inc. (Nasdaq:UNTY), parent company of Unity Bank, reported net income available to common shareholders of $1.7 million, or $0.20 per diluted share, for the three months ended December 31, 2014, a 34.4% increase compared to net income available to common shareholders of $1.3 million, or $0.17 per diluted share, for the same period a year ago. Return on average assets and average common equity for the quarter were 0.70% and 9.78%, respectively, compared to 0.57% and 8.87% for the same period a year ago.

Highlights include:

  • Robust loan growth of 12.2% since December 31, 2013 – 28.1% growth in consumer loans, 21.3% growth in residential mortgage loans and 10.6% growth in commercial loans.
  • Strong deposit growth of 7.5% since December 31, 2013 due to savings and noninterest-bearing demand deposit growth.
  • Core earnings growth – 11.7% increase in net interest income compared to the prior year's quarter due to strong loan growth.
  • Net interest margin of 3.49% this quarter compared to 3.42% in the prior year's quarter.
  • Improved credit quality metrics due to a 25.6% decrease in nonperforming loans compared to the prior year's quarter.

"This was a year of solid performance for Unity," reported James A. Hughes, President and CEO. "Our strong loan and deposit growth in 2014 was the result of our commitment to being the best financial service provider in the markets that we serve. Our exceptional employees provide remarkable service on a daily basis to ensure a loyal and happy customer base. It is this commitment to excellence which drives our success. We are in great markets, and have a wide array of financial products that are delivered by our highly motivated team of professionals. In 2015, I am convinced that we will build on what we have achieved and that our financial performance will continue to significantly strengthen. We are eagerly awaiting the challenges of tomorrow."

For the year ended December 31, 2014, net income available to common shareholders totaled $6.4 million, or $0.81 per diluted share, compared to $4.1 million or $0.53 per diluted share in the prior period. Return on average assets and average common equity for the twelve month periods were 0.70% and 10.28%, respectively, compared to 0.61% and 7.22% for the same period a year ago.

Net Interest Income

Net interest income increased $825 thousand to $7.9 million for the quarter and increased $2.7 million to $30.1 million for the year ended December 31, 2014 compared to the prior year's periods. The increases in each period were the result of momentum from the strong growth in commercial, residential mortgage and consumer loan volume. Quarterly average commercial loans increased $44.3 million, average residential mortgage loans increased $40.1 million and consumer loans increased $12.2 million compared to the comparable quarter in 2013. The increase in interest income for the quarter and year to date was due to a larger loan portfolio, offset by a smaller investment portfolio and the increase in interest paid on deposits.

The net interest margin increased 7 basis points to 3.49% for the quarter ended December 31, 2014 compared to 3.42% the prior year's quarter. For the year, the net interest margin remained stable at 3.53%. We expect net interest income to continue to expand in future quarters due to strong loan growth as our net interest margin remains stable.

Provision for Loan Losses

The provision for loan losses was $850 thousand for the quarter and $2.6 million for the year ended December 31, 2014, compared to $800 thousand and $2.4 million for the comparable prior year periods. The increase was due to elevated levels of charge-offs.

Noninterest Income

Noninterest income increased $189 thousand to $1.7 million for the three months ended December 31, 2014, compared to the same period last year. Quarterly noninterest income increased due to gains on the sale of SBA loans and gains on the sale of securities, partially offset by declines in branch fee income. For the year ended December 31, 2014, noninterest income increased $75 thousand or 1.1% to $6.7 million.

SBA loan sales totaled $4.0 million with net gains on sale of $342 thousand for the quarter. There were no loan sales during the fourth quarter 2013. For the year, SBA loan sales totaled $10.4 million with net gains of $975 thousand in 2014 and $6.3 million with net gains on sale of $628 thousand in 2013.

Quarterly gains on the sale of mortgage loans were stable. During the fourth quarter, $14.1 million in residential mortgage loans were sold at a gain of $323 thousand, compared to $15.8 million sold at a gain of $312 thousand during the prior year's quarter. Approximately $4.0 million of the sold loans were previously originated 30 year fixed rate loans in our portfolio that were sold to reduce interest rate risk. For the twelve month period, $59.2 million in residential mortgage loans were sold at a gain of $1.1 million, compared to $78.4 million sold at a gain of $1.7 million during the prior year's period. All residential mortgage loans originated in 2014 that are held in portfolio for investment are adjustable rate mortgages or 15 year fully amortizing mortgages.

Security gains totaled $55 thousand for the quarter, compared to $22 thousand in the prior year's quarter. For the year, security gains totaled $433 thousand versus $390 thousand in the prior year.

Branch fee income, which consists of service charges and overdraft fees, declined $50 thousand and $36 thousand in the quarterly and annual periods, respectively. The decreases were due to a lower volume of overdraft fees.

For the twelve months ended December 31, 2014, BOLI income increased $212 thousand due to a death benefit.

Service and loan fee income decreased for the quarter and year to date periods due to lower SBA loan servicing income as the volume of serviced loans declined. During the twelve month period, reduced late charges, payoff and prepayment penalties were partially offset by increased processing fees.

Noninterest Expense

Noninterest expense increased $183 thousand to $6.0 million for the quarter and $691 thousand to $24.7 million for the year ended December 31, 2014. The primary drivers of the increases during both periods were compensation, processing and communications, furniture and equipment and advertising expenses. Details of significant fluctuations are below.

  • Compensation and benefits expenses increased in both periods primarily due to higher salary expense as we expanded our commercial lending staff, increased our year-end bonus accruals and realized increased benefits costs such as medical insurance.
  • Occupancy expenses declined in both periods. For the quarterly period, depreciation on leasehold improvements, snow removal and property repairs and maintenance fell compared to the prior year. For the annual period, occupancy expenses fell due to lower rental expense and leasehold improvement depreciation as a result of purchasing three of our previously leased locations.
  • Processing and communications expenses continued to expand as we added products and services to remain competitive. This category includes the rising costs of providing our customers with products and services such as electronic banking, online bill payment, and ATM/debit cards. In addition, it includes the associated rise in data processing costs of our core banking system and electronic access expenses such as communication line costs.
  • Furniture and equipment expense increased during each period due to rising costs of technology such as computer network and software maintenance costs.
  • Advertising expenses increased in both periods due to the use of television and radio media, core deposit promotional expenses as well as seasonal involvement in various community events.
  • OREO expenses decreased this quarter but remained slightly elevated for the twelve month period as we worked through the collection process and incurred expenses such as property maintenance and legal costs, as well as delinquent taxes and losses on sale.

Financial Condition

At December 31, 2014, total assets were $1.0 billion, an increase of $87.7 million from the prior year-end:

  • Total securities decreased $27.4 million or 25.5%, from year-end to $80.1 million at December 31, 2014. During the year, we strategically sold longer dated investments in order to reduce the portfolio's average life and duration.
  • Total loans increased $83.1 million or 12.2%, from year-end 2013 to $761.8 million at December 31, 2014. The majority of the growth came in our residential mortgage, commercial and consumer loan portfolios which increased $38.8 million, $38.6 million and $13.0 million, respectively.
  • Total deposits increased $55.6 million or 7.5%, to $794.3 million at December 31, 2014, due primarily to an increase in savings, noninterest-bearing demand deposits and time deposits partially offset by a decline in interest-bearing demand deposits. Savings deposits increased due to our promotion during the third and fourth quarters while time deposits have increased in response to our 15 month and 5 year term promotions. The noninterest-bearing demand deposits increase consists of commercial deposit customer relationships.
  • Shareholders' equity was $70.1 million at December 31, 2014, an increase of $13.0 million from year-end 2013, due primarily to the $6.2 million net proceeds from the rights offering plus year-to-date net income less the dividends paid.
  • Book value per common share was $8.36 as of December 31, 2014.
  • At December 31, 2014, the leverage, Tier I and Total Risk Based Capital ratios were 8.71%, 11.57% and 12.83% respectively, all in excess of the ratios required to be deemed "well-capitalized".

Credit Quality

  • Nonperforming assets totaled $12.5 million at December 31, 2014, or 1.64% of total loans and OREO, compared to $15.9 million or 2.34% of total loans and OREO at year-end 2013. During the quarter the Company transferred four loans into nonaccrual totaling approximately $3.1 million.
  • Accruing troubled debt restructurings ("TDRs") decreased $3.9 million from year-end to $3.5 million. This decrease was due to the transfer of three loans totaling approximately $3.0 million into nonaccrual status during the year and principal pay downs. There have been no new TDRs recognized in 2014.
  • OREO increased $529 thousand to $1.2 million at December 31, 2014.
  • The allowance for loan losses totaled $12.6 million at December 31, 2014, or 1.65% of total loans compared to $13.1 million and 1.94% at December 31, 2013.
  • Net charge-offs were $1.2 million for the three months ended December 31, 2014, consistent with the same period a year ago. For the twelve months ended December 31, 2014, net charge-offs were $3.1 million compared to $4.0 million at December 31, 2013.

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $1.0 billion in assets and $794 million in deposits. Unity Bank provides financial services to retail, corporate and small business customers through its 15 retail service centers located in Hunterdon, Middlesex, Somerset, Union and Warren Counties in New Jersey and Northampton County, Pennsylvania. For additional information about Unity, visit our website at www.unitybank.com, or call 800-618-BANK.

This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance. These statements may be identified by use of the words "believe", "expect", "intend", "anticipate", "estimate", "project" or similar expressions. These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond the company's control and could impede its ability to achieve these goals. These factors include those items included in our Annual Report on Form 10-K under the heading "Item IA-Risk Factors" as well as general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, our ability to manage and reduce the level of our nonperforming assets, and results of regulatory exams, among other factors.

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

UNITY BANCORP, INC.
SUMMARY FINANCIAL HIGHLIGHTS
December 31, 2014
December 31, 2014 vs.
September 30, 2014 December 31, 2013
(In thousands, except percentages and per share amounts) December 31, 2014 September 30, 2014 December 31, 2013 % %
BALANCE SHEET DATA:
Total assets $ 1,008,788 $ 969,593 $ 921,118 4.0% 9.5%
Total deposits 794,341 781,920 738,698 1.6 7.5
Total loans 761,825 744,366 678,701 2.3 12.2
Total securities 80,082 86,879 107,514 (7.8) (25.5)
Total shareholders' equity 70,123 68,384 57,173 2.5 22.7
Allowance for loan losses (12,551) (12,918) (13,141) (2.8) (4.5)
FINANCIAL DATA - QUARTER TO DATE:
Income before provision for income taxes $ 2,653 $ 2,694 $ 1,872 (1.5) 41.7
Provision for income taxes 952 808 606 17.8 57.1
Net income 1,701 1,886 1,266 (9.8) 34.4
Preferred stock dividends and discount accretion -- -- -- -- --
Income available to common shareholders $ 1,701 $ 1,886 $ 1,266 (9.8) 34.4
Net income per common share - Basic (1) $ 0.20 $ 0.24 $ 0.17 (16.7) 17.6
Net income per common share - Diluted (1) $ 0.20 $ 0.24 $ 0.17 (16.7) 17.6
Return on average assets 0.70% 0.82% 0.57% (14.6) 22.8
Return on average equity (2) 9.78% 11.89% 8.87% (17.7) 10.3
Efficiency ratio 63.68% 65.80% 68.87% (3.2) (7.5)
FINANCIAL DATA - YEAR TO DATE:
Income before provision for income taxes $ 9,553 $ 7,682 24.4
Provision for income taxes 3,145 2,567 22.5
Net income 6,408 5,115 25.3
Preferred stock dividends and discount accretion -- 988 (100.0)
Income available to common shareholders $ 6,408 $ 4,127 55.3
Net income per common share - Basic (1) $ 0.82 $ 0.55 49.1
Net income per common share - Diluted (1) $ 0.81 $ 0.53 52.8
Return on average assets 0.70% 0.61% 14.8
Return on average equity (2) 10.28% 7.22% 42.4
Efficiency ratio 67.90% 71.34% (4.8)
SHARE INFORMATION:
Market price per share $ 9.43 $ 9.63 $ 7.66 (2.1) 23.1
Dividends paid $ 0.03 $ 0.03 $ 0.01 -- 2.0
Book value per common share $ 8.36 $ 8.17 $ 7.55 2.3 10.7
Average diluted shares outstanding (QTD) 8,478 7,946 7,618 6.7 11.3
CAPITAL RATIOS:
Total equity to total assets 6.95% 7.05% 6.21% (1.4) 11.9
Leverage ratio 8.71% 8.96% 8.08% (2.8) 7.8
Tier 1 risk-based capital ratio 11.57% 11.58% 10.74% (0.1) 7.7
Total risk-based capital ratio 12.83% 12.84% 11.99% (0.1) 7.0
CREDIT QUALITY AND RATIOS:
Nonperforming assets $ 12,530 $ 12,870 $ 15,916 (2.6) (21.3)
QTD net chargeoffs (annualized) to QTD average loans 0.63% 0.27% 0.72% 133.3 (12.5)
Allowance for loan losses to total loans 1.65% 1.74% 1.94% (5.2) (14.9)
Nonperforming assets to total loans and OREO 1.64% 1.73% 2.34% (5.2) (29.9)
Nonperforming assets to total assets 1.24% 1.33% 1.73% (6.8)% (28.3)%
(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
December 31, 2014
December 31, 2014 vs.
September 30, 2014 December 31, 2013
(In thousands, except percentages) December 31, 2014 September 30, 2014 December 31, 2013 % %
ASSETS
Cash and due from banks $ 29,351 $ 29,384 $ 24,272 (0.1)% 20.9%
Federal funds sold and interest-bearing deposits 100,470 72,205 75,132 39.1 33.7
Cash and cash equivalents 129,821 101,589 99,404 27.8 30.6
Securities:
Securities available for sale 60,073 66,054 81,133 (9.1) (26.0)
Securities held to maturity 20,009 20,825 26,381 (3.9) (24.2)
Total securities 80,082 86,879 107,514 (7.8) (25.5)
Loans:
SBA loans held for sale 5,179 7,835 6,673 (33.9) (22.4)
SBA loans held for investment 40,401 44,502 48,918 (9.2) (17.4)
SBA 504 loans 34,322 34,152 31,564 0.5 8.7
Commercial loans 401,949 391,338 363,340 2.7 10.6
Residential mortgage loans 220,878 211,450 182,067 4.5 21.3
Consumer loans 59,096 55,089 46,139 7.3 28.1
Total loans 761,825 744,366 678,701 2.3 12.2
Allowance for loan losses (12,551) (12,918) (13,141) 2.8 4.5
Net loans 749,274 731,448 665,560 2.4 12.6
Premises and equipment, net 15,231 15,420 15,672 (1.2) (2.8)
Bank owned life insurance ("BOLI") 13,001 12,907 12,749 0.7 2.0
Deferred tax assets 5,860 6,066 6,752 (3.4) (13.2)
Federal Home Loan Bank stock 6,032 4,907 5,392 22.9 11.9
Accrued interest receivable 3,518 3,422 3,272 2.8 7.5
Other real estate owned ("OREO") 1,162 1,658 633 (29.9) 83.6
Goodwill and other intangibles 1,516 1,516 1,516 -- --
Other assets 3,291 3,781 2,654 (13.0) 24.0
Total assets $ 1,008,788 $ 969,593 $ 921,118 4.0% 9.5%
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand deposits $ 152,785 $ 149,272 $ 136,035 2.4% 12.3%
Interest-bearing demand deposits 128,875 117,260 130,806 9.9 (1.5)
Savings deposits 300,348 292,108 266,503 2.8 12.7
Time deposits, under $100,000 113,119 115,143 108,258 (1.8) 4.5
Time deposits, $100,000 and over 99,214 108,137 97,096 (8.3) 2.2
Total deposits 794,341 781,920 738,698 1.6 7.5
Borrowed funds 125,000 100,000 107,000 25.0 16.8
Subordinated debentures 15,465 15,465 15,465 -- --
Accrued interest payable 474 476 454 (0.4) 4.4
Accrued expenses and other liabilities 3,385 3,348 2,328 1.1 45.4
Total liabilities 938,665 901,209 863,945 4.2 8.6
Shareholders' equity:
Common stock 58,785 58,638 52,051 0.3 12.9
Retained earnings 11,195 9,751 5,598 14.8 100.0
Accumulated other comprehensive income (loss) 143 (5) (476) 2,960.0 130.0
Total shareholders' equity 70,123 68,384 57,173 2.5 22.7
Total liabilities and shareholders' equity $ 1,008,788 $ 969,593 $ 921,118 4.0% 9.5%
Issued and outstanding common shares 8,388 8,370 7,577
UNITY BANCORP, INC.
QTD CONSOLIDATED STATEMENTS OF INCOME
December 31, 2014
December 31, 2014 vs.
For the three months ended September 30, 2014 December 31, 2013
(In thousands, except percentages and per share amounts) December 31, 2014 September 30, 2014 December 31, 2013 $ % $ %
INTEREST INCOME
Federal funds sold and interest-bearing deposits $ 13 $ 12 $ 9 $ 1 8.3% $ 4 44.4%
Federal Home Loan Bank stock 38 40 40 (2) (5.0) (2) (5.0)
Securities:
Taxable 444 461 585 (17) (3.7) (141) (24.1)
Tax-exempt 79 81 106 (2) (2.5) (27) (25.5)
Total securities 523 542 691 (19) (3.5) (168) (24.3)
Loans:
SBA loans 605 636 519 (31) (4.9) 86 16.6
SBA 504 loans 425 419 408 6 1.4 17 4.2
Commercial loans 5,064 4,926 4,684 138 2.8 380 8.1
Residential mortgage loans 2,461 2,327 1,953 134 5.8 508 26.0
Consumer loans 673 589 462 84 14.3 211 45.7
Total loans 9,228 8,897 8,026 331 3.7 1,202 15.0
Total interest income 9,802 9,491 8,766 311 3.3 1,036 11.8
INTEREST EXPENSE
Interest-bearing demand deposits 112 98 102 14 14.3 10 9.8
Savings deposits 270 216 186 54 25.0 84 45.2
Time deposits 715 725 598 (10) (1.4) 117 19.6
Borrowed funds and subordinated debentures 817 820 817 (3) (0.4) -- --
Total interest expense 1,914 1,859 1,703 55 3.0 211 12.4
Net interest income 7,888 7,632 7,063 256 3.4 825 11.7
Provision for loan losses 850 550 800 300 54.5 50 6.3
Net interest income after provision for loan losses 7,038 7,082 6,263 (44) (0.6) 775 12.4
NONINTEREST INCOME
Branch fee income 362 388 412 (26) (6.7) (50) (12.1)
Service and loan fee income 388 292 396 96 32.9 (8) (2.0)
Gain on sale of SBA loans held for sale, net 342 295 21 47 15.9 321 1,528.6
Gain on sale of mortgage loans, net 323 263 312 60 22.8 11 3.5
Net security gains (2) 55 -- 22 55 NM 33 150.0
Other income 190 615 308 (425) (69.1) (118) (38.3)
Total noninterest income 1,660 1,853 1,471 (193) (10.4) 189 12.8
NONINTEREST EXPENSE
Compensation and benefits 3,197 3,214 2,925 (17) (0.5) 272 9.3
Occupancy 596 604 652 (8) (1.3) (56) (8.6)
Processing and communications 615 667 588 (52) (7.8) 27 4.6
Furniture and equipment 397 377 368 20 5.3 29 7.9
Professional services 131 159 194 (28) (17.6) (63) (32.5)
Loan costs 211 225 229 (14) (6.2) (18) (7.9)
OREO expenses 72 71 94 1 1.4 (22) (23.4)
Deposit insurance 162 166 173 (4) (2.4) (11) (6.4)
Advertising 269 291 228 (22) (7.6) 41 18.0
Other expenses 395 467 411 (72) (15.4) (16) (3.9)
Total noninterest expense 6,045 6,241 5,862 (196) (3.1) 183 3.1
Income before provision for income taxes 2,653 2,694 1,872 (41) (1.5) 781 41.7
Provision for income taxes 952 808 606 144 17.8 346 57.1
Net income 1,701 1,886 1,266 (185) (9.8) 435 34.4
Preferred stock dividends and discount accretion -- -- -- -- -- -- --
Income available to common shareholders $ 1,701 $ 1,886 $ 1,266 $ (185) (9.8)% $ 435 34.4%
Effective tax rate 35.9% 30.0% 32.4%
Net income per common share - Basic (1) $ 0.20 $ 0.24 $ 0.17
Net income per common share - Diluted (1) $ 0.20 $ 0.24 $ 0.17
Weighted average common shares outstanding - Basic 8,378 7,847 7,560
Weighted average common shares outstanding - Diluted 8,478 7,946 7,618
(1) Defined as net income adjusted for dividends accrued and accretion of discount on perpetual preferred stock divided by weighted average shares outstanding.
(2) "NM" equals "not meaningful"
UNITY BANCORP, INC.
YTD CONSOLIDATED STATEMENTS OF INCOME
December 31, 2014
For the twelve months ended December 31, Current YTD vs. Prior YTD
(In thousands, except percentages and per share amounts) 2014 2013 $ %
INTEREST INCOME
Federal funds sold and interest-bearing deposits $ 44 $ 39 $ 5 12.8%
Federal Home Loan Bank stock 165 159 6 3.8
Securities:
Taxable 2,183 2,443 (260) (10.6)
Tax-exempt 355 460 (105) (22.8)
Total securities 2,538 2,903 (365) (12.6)
Loans:
SBA loans 2,467 2,660 (193) (7.3)
SBA 504 loans 1,676 1,911 (235) (12.3)
Commercial loans 19,329 17,322 2,007 11.6
Residential mortgage loans 8,898 7,013 1,885 26.9
Consumer loans 2,301 1,947 354 18.2
Total loans 34,671 30,853 3,818 12.4
Total interest income 37,418 33,954 3,464 10.2
INTEREST EXPENSE
Interest-bearing demand deposits 430 383 47 12.3
Savings deposits 856 710 146 20.6
Time deposits 2,777 2,191 586 26.7
Borrowed funds and subordinated debentures 3,243 3,245 (2) (0.1)
Total interest expense 7,306 6,529 777 11.9
Net interest income 30,112 27,425 2,687 9.8
Provision for loan losses 2,550 2,350 200 8.5
Net interest income after provision for loan losses 27,562 25,075 2,487 9.9
NONINTEREST INCOME
Branch fee income 1,469 1,505 (36) (2.4)
Service and loan fee income 1,260 1,370 (110) (8.0)
Gain on sale of SBA loans held for sale, net 975 628 347 55.3
Gain on sale of mortgage loans, net 1,139 1,650 (511) (31.0)
BOLI income 559 347 212 61.1
Net security gains 433 390 43 11.0
Other income 844 714 130 18.2
Total noninterest income 6,679 6,604 75 1.1
NONINTEREST EXPENSE
Compensation and benefits 12,750 12,251 499 4.1
Occupancy 2,478 2,571 (93) (3.6)
Processing and communications 2,461 2,309 152 6.6
Furniture and equipment 1,510 1,478 32 2.2
Professional services 748 828 (80) (9.7)
Loan costs 780 822 (42) (5.1)
OREO expenses 485 458 27 5.9
Deposit insurance 677 666 11 1.7
Advertising 998 747 251 33.6
Other expenses 1,801 1,867 (66) (3.5)
Total noninterest expense 24,688 23,997 691 2.9
Income before provision for income taxes 9,553 7,682 1,871 24.4
Provision for income taxes 3,145 2,567 578 22.5
Net income 6,408 5,115 1,293 25.3
Preferred stock dividends and discount accretion -- 988 (988) (100.0)
Income available to common shareholders $ 6,408 $ 4,127 $ 2,281 55.3%
Effective tax rate 32.9% 33.4%
Net income per common share - Basic (1) $ 0.82 $ 0.55
Net income per common share - Diluted (1) $ 0.81 $ 0.53
Weighted average common shares outstanding - Basic 7,856 7,547
Weighted average common shares outstanding - Diluted 7,945 7,810
(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.
QUARTER TO DATE NET INTEREST MARGIN
December 31, 2014
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
For the three months ended
December 31, 2014 September 30, 2014
Average Balance Interest Rate/Yield Average Balance Interest Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits $ 50,929 $ 13 0.10% $ 38,754 $ 12 0.12%
Federal Home Loan Bank stock 3,807 38 3.96 3,948 40 4.02
Securities:
Taxable 71,542 444 2.48 75,685 461 2.44
Tax-exempt 13,226 117 3.54 13,348 119 3.57
Total securities (A) 84,768 561 2.65 89,033 580 2.61
Loans:
SBA loans 50,816 605 4.76 53,400 636 4.76
SBA 504 loans 34,533 425 4.88 34,310 419 4.85
Commercial loans 401,215 5,064 5.01 380,983 4,926 5.13
Residential mortgage loans 217,008 2,461 4.54 201,793 2,327 4.61
Consumer loans 57,923 673 4.61 53,000 589 4.41
Total loans (B) 761,495 9,228 4.82 723,486 8,897 4.89
Total interest-earning assets $ 900,999 $ 9,840 4.35% $ 855,221 $ 9,529 4.43%
Noninterest-earning assets:
Cash and due from banks 30,346 29,873
Allowance for loan losses (13,074) (12,980)
Other assets 43,577 44,656
Total noninterest-earning assets 60,849 61,549
Total assets $ 961,848 $ 916,770
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits $ 126,788 $ 112 0.35% $ 116,646 $ 98 0.33%
Savings deposits 298,166 270 0.36 271,356 216 0.32
Time deposits 219,866 715 1.29 221,584 725 1.30
Total interest-bearing deposits 644,820 1,097 0.68 609,586 1,039 0.68
Borrowed funds and subordinated debentures 91,009 817 3.51 91,574 820 3.50
Total interest-bearing liabilities $ 735,829 $ 1,914 1.03% $ 701,160 $ 1,859 1.05%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits 152,359 148,724
Other liabilities 4,616 3,921
Total noninterest-bearing liabilities 156,975 152,645
Total shareholders' equity 69,044 62,965
Total liabilities and shareholders' equity $ 961,848 $ 916,770
Net interest spread $ 7,926 3.32% $ 7,670 3.38%
Tax-equivalent basis adjustment (38) (38)
Net interest income $ 7,888 $ 7,632
Net interest margin 3.49% 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.
QUARTER TO DATE NET INTEREST MARGIN
December 31, 2014
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
For the three months ended
December 31, 2014 December 31, 2013
Average Balance Interest Rate/Yield Average Balance Interest Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits $ 50,929 $ 13 0.10% $ 46,533 $ 9 0.08%
Federal Home Loan Bank stock 3,807 38 3.96 4,009 40 3.96
Securities:
Taxable 71,542 444 2.48 89,275 585 2.62
Tax-exempt 13,226 117 3.54 16,975 157 3.70
Total securities (A) 84,768 561 2.65 106,250 742 2.79
Loans:
SBA loans 50,816 605 4.76 55,536 519 3.74
SBA 504 loans 34,533 425 4.88 33,253 408 4.87
Commercial loans 401,215 5,064 5.01 356,939 4,684 5.21
Residential mortgage loans 217,008 2,461 4.54 176,880 1,953 4.42
Consumer loans 57,923 673 4.61 45,708 462 4.01
Total loans (B) 761,495 9,228 4.82 668,316 8,026 4.78
Total interest-earning assets $ 900,999 $ 9,840 4.35% $ 825,108 $ 8,817 4.25%
Noninterest-earning assets:
Cash and due from banks 30,346 23,877
Allowance for loan losses (13,074) (13,653)
Other assets 43,577 43,147
Total noninterest-earning assets 60,849 53,371
Total assets $ 961,848 $ 878,479
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits $ 126,788 $ 112 0.35% $ 122,977 $ 102 0.33%
Savings deposits 298,166 270 0.36 268,745 186 0.27
Time deposits 219,866 715 1.29 186,200 598 1.27
Total interest-bearing deposits 644,820 1,097 0.68 577,922 886 0.60
Borrowed funds and subordinated debentures 91,009 817 3.51 91,738 817 3.48
Total interest-bearing liabilities $ 735,829 $ 1,914 1.03% $ 669,660 $ 1,703 0.99%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits 152,359 149,252
Other liabilities 4,616 2,946
Total noninterest-bearing liabilities 156,975 152,198
Total shareholders' equity 69,044 56,621
Total liabilities and shareholders' equity $ 961,848 $ 878,479
Net interest spread $ 7,926 3.32% $ 7,114 3.26%
Tax-equivalent basis adjustment (38) (51)
Net interest income $ 7,888 $ 7,063
Net interest margin 3.49% 3.42%
(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.
YEAR TO DATE NET INTEREST MARGIN
December 31, 2014
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
For the twelve months ended
December 31, 2014 December 31, 2013
Average Balance Interest Rate/Yield Average Balance Interest Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits $ 44,900 $ 44 0.10% $ 39,971 $ 39 0.10%
Federal Home Loan Bank stock 3,972 165 4.15 4,007 159 3.97
Securities:
Taxable 81,334 2,183 2.68 93,132 2,443 2.62
Tax-exempt 14,493 526 3.63 18,587 681 3.66
Total securities (A) 95,827 2,709 2.82 111,719 3,124 2.79
Loans:
SBA loans 53,232 2,467 4.63 60,891 2,660 4.37
SBA 504 loans 33,754 1,676 4.97 37,920 1,911 5.04
Commercial loans 379,327 19,329 5.10 328,229 17,322 5.28
Residential mortgage loans 196,333 8,898 4.53 155,237 7,013 4.52
Consumer loans 51,188 2,301 4.50 45,705 1,947 4.26
Total loans (B) 713,834 34,671 4.86 627,982 30,853 4.92
Total interest-earning assets $ 858,533 $ 37,589 4.38% $ 783,679 $ 34,175 4.37%
Noninterest-earning assets:
Cash and due from banks 27,021 22,728
Allowance for loan losses (13,124) (14,423)
Other assets 44,312 41,688
Total noninterest-earning assets 58,209 49,993
Total assets $ 916,742 $ 833,672
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits $ 125,706 $ 430 0.34% $ 118,289 $ 383 0.32%
Savings deposits 274,395 856 0.31 277,891 710 0.26
Time deposits 214,984 2,777 1.29 146,115 2,191 1.50
Total interest-bearing deposits 615,085 4,063 0.66 542,295 3,284 0.61
Borrowed funds and subordinated debentures 91,230 3,243 3.55 91,475 3,245 3.55
Total interest-bearing liabilities $ 706,315 $ 7,306 1.03% $ 633,770 $ 6,529 1.03%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits 144,310 130,768
Other liabilities 3,764 3,164
Total noninterest-bearing liabilities 148,074 133,932
Total shareholders' equity 62,353 65,970
Total liabilities and shareholders' equity $ 916,742 $ 833,672
Net interest spread $ 30,283 3.35% $ 27,646 3.34%
Tax-equivalent basis adjustment (171) (221)
Net interest income $ 30,112 $ 27,425
Net interest margin 3.53% 3.53%
(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
December 31, 2014
Amounts in thousands, except percentages December 31, 2014 September 30, 2014 June 30, 2014 March 31, 2014 December 31, 2013
ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period $ 12,918 $ 12,858 $ 12,807 $ 13,141 $ 13,550
Provision for loan losses charged to expense 850 550 550 600 800
13,768 13,408 13,357 13,741 14,350
Less: Chargeoffs
SBA loans 569 232 199 53 128
SBA 504 loans -- -- -- 92 203
Commercial loans 377 72 134 454 564
Residential mortgage loans 362 201 5 172 125
Consumer loans -- 211 203 179 300
Total chargeoffs 1,308 716 541 950 1,320
Add: Recoveries
SBA loans 12 111 10 7 93
SBA 504 loans -- -- -- -- 3
Commercial loans 31 95 31 9 14
Residential mortgage loans 40 20 -- -- --
Consumer loans 8 -- 1 -- 1
Total recoveries 91 226 42 16 111
Net chargeoffs 1,217 490 499 934 1,209
Balance, end of period $ 12,551 $ 12,918 $ 12,858 $ 12,807 $ 13,141
LOAN QUALITY INFORMATION:
Nonperforming loans (1) $ 11,368 $ 11,212 $ 11,929 $ 12,046 $ 15,283
Other real estate owned ("OREO") 1,162 1,658 1,115 2,467 633
Nonperforming assets 12,530 12,870 13,044 14,513 15,916
Less: Amount guaranteed by SBA 1,569 200 2,305 1,320 540
Net nonperforming assets $ 10,961 $ 12,670 $ 10,739 $ 13,193 $ 15,376
Loans 90 days past due & still accruing $ 890 $ -- $ -- $ 5 $ 19
Performing Troubled Debt Restructurings (TDRs) $ 3,548 $ 4,194 $ 6,965 $ 7,363 $ 7,452
(1) Nonperforming TDRs included in nonperforming loans 2,960 3,473 741 448 467
Total TDRs $ 6,508 $ 7,667 $ 7,706 $ 7,811 $ 7,919
Allowance for loan losses to:
Total loans at quarter end 1.65% 1.74% 1.81% 1.87% 1.94%
Nonperforming loans (1) 110.41 115.22 107.79 106.32 85.98
Nonperforming assets 100.17 100.37 98.57 88.25 82.56
Net nonperforming assets 114.51 101.96 119.73 97.07 85.46
QTD net chargeoffs (annualized) to QTD average loans:
SBA loans 4.35% 0.90% 1.40% 0.34% 0.25%
SBA 504 loans -- -- -- 1.18 2.39
Commercial loans 0.34 (0.02) 0.11 0.50 0.61
Residential mortgage loans 0.59 0.36 0.01 0.39 0.28
Consumer loans (0.05) 1.58 1.70 1.58 2.60
Total loans 0.63% 0.27% 0.29% 0.56% 0.72%
Nonperforming loans to total loans 1.49% 1.51% 1.68% 1.76% 2.25%
Nonperforming loans and TDRs to total loans 1.96 2.07 2.67 2.84 3.35
Nonperforming assets to total loans and OREO 1.64 1.73 1.84 2.11 2.34
Nonperforming assets to total assets 1.24 1.33 1.40 1.51 1.73
UNITY BANCORP, INC.
QUARTERLY FINANCIAL DATA
December 31, 2014
(In thousands, except percentages and per share amounts) December 31, 2014 September 30, 2014 June 30, 2014 March 31, 2014 December 31, 2013
SUMMARY OF INCOME:
Total interest income $ 9,802 $ 9,491 $ 9,102 $ 9,023 $ 8,766
Total interest expense 1,914 1,859 1,797 1,736 1,703
Net interest income 7,888 7,632 7,305 7,287 7,063
Provision for loan losses 850 550 550 600 800
Net interest income after provision for loan losses 7,038 7,082 6,755 6,687 6,263
Total noninterest income 1,660 1,853 1,640 1,526 1,471
Total noninterest expense 6,045 6,241 6,144 6,258 5,862
Income before provision for income taxes 2,653 2,694 2,251 1,955 1,872
Provision for income taxes 952 808 723 662 606
Net income 1,701 1,886 1,528 1,293 1,266
Preferred stock dividends and discount accretion -- -- -- -- --
Income available to common shareholders $ 1,701 $ 1,886 $ 1,528 $ 1,293 $ 1,266
Net income per common share - Basic (1) $ 0.20 $ 0.24 $ 0.20 $ 0.17 $ 0.17
Net income per common share - Diluted (1) $ 0.20 $ 0.24 $ 0.20 $ 0.17 $ 0.17
COMMON SHARE DATA:
Market price per share $ 9.43 $ 9.63 $ 9.28 $ 7.95 $ 7.66
Dividends paid $ 0.03 $ 0.03 $ 0.02 $ 0.02 $ 0.01
Book value per common share $ 8.36 $ 8.17 $ 7.95 $ 7.74 $ 7.55
Weighted average common shares outstanding - Basic 8,378 7,847 7,605 7,586 7,560
Weighted average common shares outstanding - Diluted 8,478 7,946 7,690 7,654 7,618
Issued and outstanding common shares 8,388 8,370 7,607 7,602 7,577
OPERATING RATIOS (Annualized):
Return on average assets 0.70% 0.82% 0.68% 0.59% 0.57%
Return on average equity (2) 9.78 11.89 10.31 9.06 8.87
Efficiency ratio 63.68 65.80 70.81 71.91 68.87
BALANCE SHEET DATA:
Total assets $ 1,008,788 $ 969,593 $ 932,414 $ 961,168 $ 921,118
Total deposits 794,341 781,920 728,083 767,624 738,698
Total loans 761,825 744,366 708,889 683,951 678,701
Total securities 80,082 86,879 90,470 109,459 107,514
Total shareholders' equity 70,123 68,384 60,477 58,810 57,173
Allowance for loan losses (12,551) (12,918) (12,858) (12,807) (13,141)
TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets 4.35% 4.43% 4.34% 4.39% 4.25%
Interest-bearing liabilities 1.03 1.05 1.03 1.01 0.99
Net interest spread 3.32 3.38 3.31 3.38 3.26
Net interest margin 3.49 3.56 3.49 3.57 3.42
CREDIT QUALITY:
Nonperforming assets 12,530 12,870 13,044 14,513 15,916
QTD net chargeoffs (annualized) to QTD average loans 0.63% 0.27% 0.29% 0.56% 0.72%
Allowance for loan losses to total loans 1.65 1.74 1.81 1.87 1.94
Nonperforming assets to total loans and OREO 1.64 1.73 1.84 2.11 2.34
Nonperforming assets to total assets 1.24 1.33 1.40 1.51 1.73
CAPITAL RATIOS AND OTHER:
Total equity to total assets 6.95% 7.05% 6.49% 6.12% 6.21%
Leverage ratio 8.71 8.96 8.24 8.19 8.08
Tier 1 risk-based capital ratio 11.57 11.58 10.86 10.77 10.74
Total risk-based capital ratio 12.83 12.84 12.12 12.03 11.99
Number of banking offices 15 15 15 15 15
Number of ATMs 16 16 16 16 16
Number of employees 169 163 171 162 163
(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).

CONTACT: News Media & Financial Analyst Contact: Alan J. Bedner, EVP Chief Financial Officer (908) 713-4308

Source:Unity Bancorp, Inc.