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Unity Bancorp Reports Quarterly Net Income Increased 35% and Nine Month Net Income Increased 47%

CLINTON, N.J., Oct. 21, 2015 (GLOBE NEWSWIRE) -- 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)%

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

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.
QUARTER 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 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.
QUARTER 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 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) 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
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 %
(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
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


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

Source:Unity Bancorp, Inc.