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Unity Bancorp Reports Quarterly Net Income Increased 55% and Annual Earnings Increased 49%

CLINTON, N.J., Jan. 27, 2016 (GLOBE NEWSWIRE) -- Unity Bancorp, Inc. (NASDAQ:UNTY), parent company of Unity Bank, reported increased fourth 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 16% annual growth in total loans.

“The performance this year is a reflection of the power of an organization that focuses on culture,” reported James A Hughes, President and CEO. “Our employees joined together to provide an exceptional banking experience for the benefit of all our stakeholders. As a result of their efforts, we had an exceptional year, and I have never felt more energized about our future.”

Net income was $2.6 million, or $0.31 per diluted share, for the three months ended December 31, 2015, a 55% increase compared to net income of $1.7 million, or $0.20 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 13.59%, respectively, compared to 0.70% and 9.78% for the same period a year ago.

Highlights include:

  • 16.7% loan growth since year-end 2014 – 30.4% growth in consumer loans, 19.8% growth in residential mortgage loans, and 15.8% growth in commercial loans.
  • 21.3% increase in noninterest-bearing demand deposits since year-end 2014.
  • 13.8% 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 3.49% in the prior year’s quarter.
  • Improved credit quality metrics and reduced loan loss provision due to a significant reduction in loan charge-offs and a 36.1% decrease in nonperforming loans.

“In 2016, we will continue on our journey of growth and increased profitability,” said James A Hughes, President and CEO. “Strategically, we will set our sights on growing our branches, improving our array of products and continuing our investment in technology to maintain our relevance to our customer base.”

For the twelve months ended December 31, 2015, net income totaled $9.6 million, or $1.12 per diluted share, compared to $6.4 million or $0.81 per diluted share in the prior year. Return on average assets and average common equity for the year ended December 31, 2015 were 0.96% and 12.92%, respectively, compared to 0.70% and 10.28% for the prior year.

Net Interest Income

Our core source of earnings, net interest income, increased $1.1 million to $9.0 million for the quarter ended December 31, 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. Quarterly average commercial loans increased $51.3 million, average residential mortgage loans have increased $42.9 million and consumer loans increased $17.9 million compared to the comparable quarter in 2014. Partially offsetting this increase was the lower level of interest income from our reduced investment portfolio and a slight increase in deposit interest expense.

The net interest margin increased 11 basis points to 3.60% for the quarter ended December 31, 2015 compared to 3.49% for the prior year’s quarter. The expansion in the net interest margin was due to strong loan growth and the increase in noninterest-bearing demand deposits, partially offset by lower balances of investment securities.

Provision for Loan Losses

The provision for loan losses totaled $100 thousand for the quarter ended December 31, 2015, compared to $850 thousand for the prior year period. For the twelve months ended December 31, 2015, the provision for loan losses was $500 thousand compared to $2.6 million for the same period last year. The decrease was the result of significantly lower levels of net charge-offs and reduced nonperforming assets. Quarterly net charge-offs declined $1.5 million compared to the fourth quarter 2014, while annual net charge-offs decreased $2.8 million.

Noninterest Income

Noninterest income increased $260 thousand to $1.9 million for the three months ended December 31, 2015, compared to the same period last year. For the year ended December 31, 2015, noninterest income increased $1.1 million to $7.7 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 residential mortgage and SBA loans.

During the quarter, $36.3 million in residential mortgage loans were originated, of which $16.3 million were sold at a gain of $379 thousand, compared to $31.1 million originated and $14.1 million sold at a gain of $323 thousand during the prior year’s quarter. For the twelve month period, $181.0 million in residential mortgage loans were originated, of which $94.3 million were sold at a gain of $2.3 million, compared to $129.8 million originated and $59.2 million sold at a gain of $1.1 million in the prior year. All residential mortgage loans originated in 2015 that are held in portfolio for investment are adjustable rate mortgages or fixed rate mortgages with a term of 15 years or less.

SBA loan sales totaled $7.2 million with net gains on sale of $533 thousand for the quarter. There were $4.0 million in SBA loan sales with net gains of $342 thousand in the prior year’s quarter. For the year, SBA loan sales totaled $14.1 million with net gains of $1.2 million in 2015 and $10.4 million with net gains of $975 thousand in 2014. The increased sale volume is directly related to the increase in the origination of SBA loans within our lending area.

In addition to the noninterest income increases noted above, other notable items included:

  • Branch fee income rose in both the quarterly and year over year periods due to increased fees as our volume of commercial checking account customers has risen.
  • Service and loan fee income declined in the quarterly period due to reduced loan late charges and payoff fees, combined with lower SBA servicing fees as our serviced loan portfolio declined compared to the same quarter a year ago. For the year, increased loan volume drove loan processing and mortgage application fees higher, offsetting the decline in SBA servicing income.
  • BOLI income declined for the year as the prior year’s period included a death benefit.

Noninterest Expense

Noninterest expense increased $801 thousand to $6.8 million for the quarter and increased $2.2 million to $26.9 million for the year ended December 31, 2015, respectively. The majority of the increase was due to higher compensation and benefits expenses of $331 thousand for the quarter and $1.5 million for the year. Compensation and benefits expenses have increased over the past twelve months due to increased head count in loan origination and support staff, and a lower overall vacancy rate when compared to the prior year. In addition, mortgage commission expense increased due to the larger volume of mortgages originated. Benefits expense also increased due to the adoption of supplemental executive retirement plans.

Other expense fluctuations included: higher software maintenance and network monitoring expense, increased audit expenses related to Federal Deposit Insurance Corporation Improvement Act (“FDICIA”) testing and director fees. As credit quality improved this year, our loan and OREO expenses have decreased despite an OREO expense increase quarter over quarter due to a $263 thousand loss on a sale in the fourth quarter.

Financial Condition

At December 31, 2015, total assets were $1.1 billion, an increase of $76.1 million from year-end 2014:

  • Total loans increased $127.1 million or 16.7%, from year-end 2014 to $889.0 million at December 31, 2015. The majority of the growth came in our commercial, residential mortgage and consumer loan portfolios which increased $63.6 million, $43.6 million and $18.0 million, respectively.
  • Total deposits increased $100.2 million or 12.6%, to $894.5 million at December 31, 2015, due primarily to increased time deposits and noninterest-bearing demand deposits.
  • Borrowed funds decreased $33.0 million to $92.0 million at December 31, 2015, due to reduced overnight borrowings of $7.0 million compared to $50.0 million at year-end 2014. In addition, during the quarter, $20.0 million in Federal Home Loan Bank borrowings at an average cost of 4.11% were extended to 2020 at an average rate of 2.08%.
  • Shareholders’ equity was $78.5 million at December 31, 2015, an increase of $8.3 million from year-end 2014, due to year-to-date net income less the dividends paid to shareholders.
  • Book value per common share was $9.30 as of December 31, 2015.
  • At December 31, 2015, the leverage, common equity Tier I, Tier I and Total Risk Based Capital ratios were 8.82%, 9.37%, 11.18% and 12.43% respectively, all in excess of the ratios required to be deemed “well-capitalized”.

Credit Quality

  • Nonperforming assets totaled $8.9 million at December 31, 2015, or 0.99% 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 36.1% to $7.3 million at December 31, 2015 from year-end.
  • OREO increased $429 thousand to $1.6 million at December 31, 2015 from year-end.
  • The allowance for loan losses totaled $12.8 million at December 31, 2015, or 1.44% of total loans compared to $12.6 million and 1.65% at December 31, 2014.
  • Net recoveries were $238 thousand for the three months ended December 31, 2015, compared to net charge-offs of $1.2 million for the same period a year ago. For the year ended December 31, 2015, net charge-offs were $292 thousand, a decrease of $2.8 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 $894 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, 2015
Dec. 31, 2015 vs.
Sept. 30, 2015 Dec. 31, 2014
(In thousands, except percentages and per share amounts) Dec. 31, 2015 Sept. 30, 2015
Dec. 31, 2014 % %
BALANCE SHEET DATA:
Total assets $ 1,084,866 $ 1,052,711 $ 1,008,788 3.1 % 7.5 %
Total deposits 894,493 866,247 794,341 3.3 12.6
Total loans 888,958 855,560 761,825 3.9 16.7
Total securities 71,336 71,492 80,082 (0.2) (10.9)
Total shareholders' equity 78,470 76,065 70,123 3.2 11.9
Allowance for loan losses (12,759) (12,421) (12,551) 2.7 1.7
FINANCIAL DATA - QUARTER TO DATE:
Income before provision for income taxes $ 3,954 $ 3,845 $ 2,653 2.8 49.0
Provision for income taxes 1,315 1,294 952 1.6 38.1
Net income $ 2,639 $ 2,551 $ 1,701 3.4 55.1
Net income per common share - Basic $ 0.31 $ 0.30 $ 0.21 3.3 47.6
Net income per common share - Diluted $ 0.31 $ 0.30 $ 0.20 3.3 55.0
Return on average assets 1.00 % 1.00 % 0.70 % - 42.9
Return on average equity 13.59 % 13.54 % 9.78 % 0.4 39.0
Efficiency ratio 62.81 % 62.88 % 63.68 % (0.1) (1.4)
Net interest margin 3.60 % 3.60 % 3.49 % - 3.2
FINANCIAL DATA - YEAR TO DATE:
Income before provision for income taxes $ 14,368 $ 9,553 50.4
Provision for income taxes 4,811 3,145 53.0
Net income $ 9,557 $ 6,408 49.1
Net income per common share - Basic $ 1.13 $ 0.82 37.8
Net income per common share - Diluted $ 1.12 $ 0.81 38.3
Return on average assets 0.96 % 0.70 % 37.1
Return on average equity 12.92 % 10.28 % 25.7
Efficiency ratio 64.41 % 67.90 % (5.1)
Net interest margin 3.63 % 3.53 % 2.8
SHARE INFORMATION:
Market price per share $ 12.47 $ 9.77 $ 9.43 27.6 32.2
Dividends paid $ 0.04 $ 0.04 $ 0.03 - 0.3
Book value per common share $ 9.30 $ 9.02 $ 8.36 3.1 11.2
Average diluted shares outstanding (QTD) $ 8,547 $ 8,536 $ 8,478 0.1 0.8
CAPITAL RATIOS:
Total equity to total assets 7.23 % 7.23 % 6.95 % - 4.0
Leverage ratio 8.82 % 8.92 % 8.71 % (1.1) 1.3
Common equity tier 1 risk-based capital ratio 9.37 % 9.37 % n/a n/a n/a
Tier 1 risk-based capital ratio 11.18 % 11.25 % 11.57 % (0.6) (3.4)
Total risk-based capital ratio 12.43 % 12.50 % 12.83 % (0.6) (3.1)
CREDIT QUALITY AND RATIOS:
Nonperforming assets $ 8,851 $ 12,501 $ 12,530 (29.2) (29.4)
QTD net chargeoffs (annualized) to QTD average loans (0.11)% 0.09 % 0.63 % (222.2) (117.5)
Allowance for loan losses to total loans 1.44 % 1.45 % 1.65 % (0.7) (12.7)
Nonperforming assets to total loans and OREO 0.99 % 1.46 % 1.64 % (32.2) (39.6)
Nonperforming assets to total assets 0.82 % 1.19 % 1.24 % (31.1)% (33.9)%


UNITY BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2015
`
Dec. 31, 2015 vs.
Sept. 30, 2015 Dec. 31, 2014
(In thousands, except percentages) Dec. 31, 2015 Sept. 30, 2015 Dec. 31, 2014 % %
ASSETS
Cash and due from banks $ 22,681 $ 21,863 $ 29,351 3.7 % (22.7)%
Federal funds sold and interest-bearing deposits 65,476 66,994 100,470 (2.3) (34.8)
Cash and cash equivalents 88,157 88,857 129,821 (0.8) (32.1)
Securities:
Securities available for sale 52,865 53,470 60,073 (1.1) (12.0)
Securities held to maturity 18,471 18,022 20,009 2.5 (7.7)
Total securities 71,336 71,492 80,082 (0.2) (10.9)
Loans:
SBA loans held for sale 13,114 13,937 5,179 (5.9) 153.2
SBA loans held for investment 39,393 39,728 40,401 (0.8) (2.5)
SBA 504 loans 29,353 29,221 34,322 0.5 (14.5)
Commercial loans 465,518 442,970 401,949 5.1 15.8
Residential mortgage loans 264,523 255,447 220,878 3.6 19.8
Consumer loans 77,057 74,257 59,096 3.8 30.4
Total loans 888,958 855,560 761,825 3.9 16.7
Allowance for loan losses (12,759) (12,421) (12,551) (2.7) 1.7
Net loans 876,199 843,139 749,274 3.9 16.9
Premises and equipment, net 15,171 15,297 15,231 (0.8) (0.4)
Bank owned life insurance ("BOLI") 13,381 13,285 13,001 0.7 2.9
Deferred tax assets 5,968 6,107 5,860 (2.3) 1.8
Federal Home Loan Bank ("FHLB") stock 4,600 4,510 6,032 2.0 (23.7)
Accrued interest receivable 3,884 3,704 3,518 4.9 10.4
Other real estate owned ("OREO") 1,591 1,759 1,162 (9.6) 36.9
Goodwill and other intangibles 1,516 1,516 1,516 - -
Other assets 3,063 3,045 3,291 0.6 (6.9)
Total assets $ 1,084,866 $ 1,052,711 $ 1,008,788 3.1 % 7.5 %
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand $ 185,267 $ 175,298 $ 152,785 5.7 % 21.3 %
Interest-bearing demand 130,605 123,984 128,875 5.3 1.3
Savings 301,447 299,017 300,348 0.8 0.4
Time, under $100,000 134,468 124,348 113,119 8.1 18.9
Time, $100,000 and over, under $250,000 104,106 115,912 81,532 (10.2) 27.7
Time, $250,000 and over 38,600 27,688 17,682 39.4 118.3
Total deposits 894,493 866,247 794,341 3.3 12.6
Borrowed funds 92,000 90,000 125,000 2.2 (26.4)
Subordinated debentures 15,465 15,465 15,465 - -
Accrued interest payable 461 460 474 0.2 (2.7)
Accrued expenses and other liabilities 3,977 4,474 3,385 (11.1) 17.5
Total liabilities 1,006,396 976,646 938,665 3.0 7.2
Shareholders' equity:
Common stock 59,371 59,205 58,785 0.3 1.0
Retained earnings 19,566 17,270 11,195 13.3 74.8
Accumulated other comprehensive (loss) income (467) (410) 143 NM NM
Total shareholders' equity 78,470 76,065 70,123 3.2 11.9
Total liabilities and shareholders' equity $ 1,084,866 $ 1,052,711 $ 1,008,788 3.1 % 7.5 %
Issued and outstanding common shares 8,436 8,429 8,388


UNITY BANCORP, INC.
QTD CONSOLIDATED STATEMENTS OF INCOME
December 31, 2015
Dec. 31, 2015 vs.
For the three months ended Sept. 30, 2015 Dec. 31, 2014
(In thousands, except percentages and per share amounts) Dec. 31, 2015 Sept. 30, 2015 Dec. 31, 2014 $ % $ %
INTEREST INCOME
Federal funds sold and interest-bearing deposits $ 13 $ 11 $ 13 $ 2 18.2 %$ - - %
FHLB stock 37 36 38 1 2.8 (1) (2.6)
Securities:
Taxable 360 349 444 11 3.2 (84) (18.9)
Tax-exempt 70 71 79 (1) (1.4) (9) (11.4)
Total securities 430 420 523 10 2.4 (93) (17.8)
Loans:
SBA loans 713 696 605 17 2.4 108 17.9
SBA 504 loans 346 353 425 (7) (2.0) (79) (18.6)
Commercial loans 5,637 5,378 5,064 259 4.8 573 11.3
Residential mortgage loans 2,939 2,811 2,461 128 4.6 478 19.4
Consumer loans 880 849 673 31 3.7 207 30.8
Total loans 10,515 10,087 9,228 428 4.2 1,287 13.9
Total interest income 10,995 10,554 9,802 441 4.2 1,193 12.2
INTEREST EXPENSE
Interest-bearing demand deposits 121 108 112 13 12.0 9 8.0
Savings deposits 298 255 270 43 16.9 28 10.4
Time deposits 910 839 715 71 8.5 195 27.3
Borrowed funds and subordinated debentures 686 730 817 (44) (6.0) (131) (16.0)
Total interest expense 2,015 1,932 1,914 83 4.3 101 5.3
Net interest income 8,980 8,622 7,888 358 4.2 1,092 13.8
Provision for loan losses 100 200 850 (100) 100.0 (750) (88.2)
Net interest income after provision for loan losses 8,880 8,422 7,038 458 5.4 1,842 26.2
NONINTEREST INCOME
Branch fee income 402 399 362 3 0.8 40 11.0
Service and loan fee income 266 306 388 (40) (13.1) (122) (31.4)
Gain on sale of SBA loans held for sale, net 533 308 342 225 100.0 191 55.8
Gain on sale of mortgage loans, net 379 926 323 (547) (59.1) 56 17.3
Net security gains - - 55 - - (55) (100.0)
Other income 340 336 190 4 1.2 150 78.9
Total noninterest income 1,920 2,275 1,660 (355) (15.6) 260 15.7
NONINTEREST EXPENSE
Compensation and benefits 3,528 3,814 3,197 (286) (7.5) 331 10.4
Occupancy 644 598 596 46 7.7 48 8.1
Processing and communications 620 631 615 (11) (1.7) 5 0.8
Furniture and equipment 455 393 397 62 15.8 58 14.6
Professional services 213 251 131 (38) (15.1) 82 62.6
Loan costs 113 265 211 (152) (57.4) (98) (46.4)
OREO expenses 265 15 72 250 1,666.7 193 268.1
Deposit insurance 173 163 162 10 6.1 11 6.8
Advertising 302 203 269 99 48.8 33 12.3
Other expenses 533 519 395 14 2.7 138 34.9
Total noninterest expense 6,846 6,852 6,045 (6) (0.1) 801 13.3
Income before provision for income taxes 3,954 3,845 2,653 109 2.8 1,301 49.0
Provision for income taxes 1,315 1,294 952 21 1.6 363 38.1
Net income $ 2,639 $ 2,551 $ 1,701 $ 88 3.4 %$ 938 55.1 %
Effective tax rate 33.3 % 33.7 % 35.9 %
Net income per common share - Basic $ 0.31 $ 0.30 $ 0.21
Net income per common share - Diluted $ 0.31 $ 0.30 $ 0.20
Weighted average common shares outstanding - Basic 8,430 8,427 8,378
Weighted average common shares outstanding - Diluted 8,547 8,536 8,478


UNITY BANCORP, INC.
YTD CONSOLIDATED STATEMENTS OF INCOME
December 31, 2015
`
For the twelve months ended December 31, Current YTD vs. Prior YTD
(In thousands, except percentages and per share amounts) 2015
2014
$ %
INTEREST INCOME
Federal funds sold and interest-bearing deposits $ 39 $ 44 $ (5) (11.4)%
FHLB stock 155 165 (10) (6.1)
Securities:
Taxable 1,459 2,183 (724) (33.2)
Tax-exempt 284 355 (71) (20.0)
Total securities 1,743 2,538 (795) (31.3)
Loans:
SBA loans 2,693 2,467 226 9.2
SBA 504 loans 1,414 1,676 (262) (15.6)
Commercial loans 21,357 19,329 2,028 10.5
Residential mortgage loans 11,048 8,898 2,150 24.2
Consumer loans 3,202 2,301 901 39.2
Total loans 39,714 34,671 5,043 14.5
Total interest income 41,651 37,418 4,233 11.3
INTEREST EXPENSE
Interest-bearing demand deposits 438 430 8 1.9
Savings deposits 1,088 856 232 27.1
Time deposits 3,160 2,777 383 13.8
Borrowed funds and subordinated debentures 2,974 3,243 (269) (8.3)
Total interest expense 7,660 7,306 354 4.8
Net interest income 33,991 30,112 3,879 12.9
Provision for loan losses 500 2,550 (2,050) (80.4)
Net interest income after provision for loan losses 33,491 27,562 5,929 21.5
NONINTEREST INCOME
Branch fee income 1,520 1,469 51 3.5
Service and loan fee income 1,334 1,260 74 5.9
Gain on sale of SBA loans held for sale, net 1,204 975 229 23.5
Gain on sale of mortgage loans, net 2,336 1,139 1,197 105.1
BOLI income 380 559 (179) (32.0)
Net security gains 28 433 (405) (93.5)
Other income 927 844 83 9.8
Total noninterest income 7,729 6,679 1,050 15.7
NONINTEREST EXPENSE
Compensation and benefits 14,295 12,750 1,545 12.1
Occupancy 2,515 2,478 37 1.5
Processing and communications 2,461 2,461 - -
Furniture and equipment 1,643 1,510 133 8.8
Professional services 942 748 194 25.9
Loan costs 759 780 (21) (2.7)
OREO expenses 382 485 (103) (21.2)
Deposit insurance 669 677 (8) (1.2)
Advertising 1,030 998 32 3.2
Other expenses 2,156 1,801 355 19.7
Total noninterest expense 26,852 24,688 2,164 8.8
Income before provision for income taxes 14,368 9,553 4,815 50.4
Provision for income taxes 4,811 3,145 1,666 53.0
Net income $ 9,557 $ 6,408 $ 3,149 49.1 %
Effective tax rate 33.5 % 32.9 %
Net income per common share - Basic $ 1.13 $ 0.82
Net income per common share - Diluted $ 1.12 $ 0.81
Weighted average common shares outstanding - Basic 8,425 7,856
Weighted average common shares outstanding - Diluted 8,529 7,945


UNITY BANCORP, INC.
QUARTER TO DATE NET INTEREST MARGIN
December 31, 2015
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
For the three months ended
December 31, 2015 September 30, 2015
Average Balance Interest Rate/Yield Average Balance Interest Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits $ 47,421 $ 13 0.11 % $ 34,465 $ 11 0.13 %
FHLB stock 3,700 37 3.97 3,517 36 4.06
Securities:
Taxable 59,425 360 2.40 61,542 349 2.25
Tax-exempt 11,564 104 3.57 11,612 105 3.59
Total securities (A) 70,989 464 2.59 73,154 454 2.46
Loans:
SBA loans 54,912 713 5.15 53,325 696 5.18
SBA 504 loans 29,319 346 4.68 29,268 353 4.79
Commercial loans 452,494 5,637 4.94 433,285 5,378 4.92
Residential mortgage loans 259,938 2,939 4.49 254,765 2,811 4.38
Consumer loans 75,789 880 4.61 72,641 849 4.64
Total loans (B) 872,452 10,515 4.78 843,284 10,087 4.75
Total interest-earning assets $ 994,562 $ 11,029 4.40 % $ 954,420 $ 10,588 4.41 %
Noninterest-earning assets:
Cash and due from banks 24,214 24,990
Allowance for loan losses (12,801) (12,619)
Other assets 44,055 44,098
Total noninterest-earning assets 55,468 56,469
Total assets $ 1,050,030 $ 1,010,889
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits $ 131,800 $ 121 0.36 % $ 125,405 $ 108 0.34 %
Total savings deposits 295,013 298 0.40 290,413 255 0.35
Total time deposits 271,647 910 1.33 256,216 839 1.30
Total interest-bearing deposits 698,460 1,329 0.75 672,034 1,202 0.71
Borrowed funds and subordinated debentures 87,465 686 3.11 83,383 730 3.47
Total interest-bearing liabilities $ 785,925 $ 2,015 1.02 % $ 755,417 $ 1,932 1.01 %
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits 182,024 176,085
Other liabilities 5,056 4,663
Total noninterest-bearing liabilities 187,080 180,748
Total shareholders' equity 77,025 74,724
Total liabilities and shareholders' equity $ 1,050,030 $ 1,010,889
Net interest spread $ 9,014 3.38 % $ 8,656 3.40 %
Tax-equivalent basis adjustment (34) (34)
Net interest income $ 8,980 $ 8,622
Net interest margin 3.60 % 3.60 %
(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, 2015
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
For the three months ended
December 31, 2015 December 31, 2014
Average Balance Interest Rate/Yield Average Balance Interest Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits $ 47,421 $ 13 0.11 % $ 50,929 $ 13 0.10 %
FHLB stock 3,700 37 3.97 3,807 38 3.96
Securities:
Taxable 59,425 360 2.40 71,542 444 2.48
Tax-exempt 11,564 104 3.57 13,226 117 3.54
Total securities (A) 70,989 464 2.59 84,768 561 2.65
Loans:
SBA loans 54,912 713 5.15 50,816 605 4.76
SBA 504 loans 29,319 346 4.68 34,533 425 4.88
Commercial loans 452,494 5,637 4.94 401,215 5,064 5.01
Residential mortgage loans 259,938 2,939 4.49 217,008 2,461 4.54
Consumer loans 75,789 880 4.61 57,923 673 4.61
Total loans (B) 872,452 10,515 4.78 761,495 9,228 4.82
Total interest-earning assets $ 994,562 $ 11,029 4.40 % $ 900,999 $ 9,840 4.35 %
Noninterest-earning assets:
Cash and due from banks 24,214 30,346
Allowance for loan losses (12,801) (13,074)
Other assets 44,055 43,577
Total noninterest-earning assets 55,468 60,849
Total assets $ 1,050,030 $ 961,848
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits $ 131,800 $ 121 0.36 % $ 126,788 $ 112 0.35 %
Total savings deposits 295,013 298 0.40 298,166 270 0.36
Total time deposits 271,647 910 1.33 219,866 715 1.29
Total interest-bearing deposits 698,460 1,329 0.75 644,820 1,097 0.68
Borrowed funds and subordinated debentures 87,465 686 3.11 91,009 817 3.51
Total interest-bearing liabilities $ 785,925 $ 2,015 1.02 % $ 735,829 $ 1,914 1.03 %
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits 182,024 152,359
Other liabilities 5,056 4,616
Total noninterest-bearing liabilities 187,080 156,975
Total shareholders' equity 77,025 69,044
Total liabilities and shareholders' equity $ 1,050,030 $ 961,848
Net interest spread $ 9,014 3.38 % $ 7,926 3.32 %
Tax-equivalent basis adjustment (34) (38)
Net interest income $ 8,980 $ 7,888
Net interest margin 3.60 % 3.49 %
(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, 2015
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
For the twelve months ended
December 31, 2015 December 31, 2014
Average Balance Interest Rate/Yield Average Balance Interest Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits $ 34,883 $ 39 0.11 % $ 44,900 $ 44 0.10 %
FHLB stock 3,695 155 4.19 3,972 165 4.15
Securities:
Taxable 62,937 1,459 2.32 81,334 2,183 2.68
Tax-exempt 11,739 421 3.59 14,493 526 3.63
Total securities (A) 74,676 1,880 2.52 95,827 2,709 2.83
Loans:
SBA loans 50,997 2,693 5.28 53,232 2,467 4.63
SBA 504 loans 30,366 1,414 4.66 33,754 1,676 4.97
Commercial loans 428,702 21,357 4.98 379,327 19,329 5.10
Residential mortgage loans 246,278 11,048 4.49 196,333 8,898 4.53
Consumer loans 69,580 3,202 4.60 51,188 2,301 4.50
Total loans (B) 825,923 39,714 4.81 713,834 34,671 4.86
Total interest-earning assets $ 939,177 $ 41,788 4.45 % $ 858,533 $ 37,589 4.38 %
Noninterest-earning assets:
Cash and due from banks 25,952 27,021
Allowance for loan losses (12,638) (13,124)
Other assets 43,742 44,312
Total noninterest-earning assets 57,056 58,209
Total assets $ 996,233 $ 916,742
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits $ 126,876 $ 438 0.35 % $ 125,706 $ 430 0.34 %
Total savings deposits 290,848 1,088 0.37 274,395 856 0.31
Total time deposits 240,132 3,160 1.32 214,984 2,777 1.29
Total interest-bearing deposits 657,856 4,686 0.71 615,085 4,063 0.66
Borrowed funds and subordinated debentures 87,652 2,974 3.39 91,230 3,243 3.55
Total interest-bearing liabilities $ 745,508 $ 7,660 1.03 % $ 706,315 $ 7,306 1.03 %
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits 172,172 144,310
Other liabilities 4,611 3,764
Total noninterest-bearing liabilities 176,783 148,074
Total shareholders' equity 73,942 62,353
Total liabilities and shareholders' equity $ 996,233 $ 916,742
Net interest spread $ 34,128 3.42 % $ 30,283 3.35 %
Tax-equivalent basis adjustment (137) (171)
Net interest income $ 33,991 $ 30,112
Net interest margin 3.63 % 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, 2015
Amounts in thousands, except percentages December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 December 31, 2014
ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period $ 12,421 $12,404 $12,181 $12,551 $12,918
Provision for loan losses charged to expense 100 200 - 200 850
12,521 12,604 12,181 12,751 13,768
Less: Chargeoffs
SBA loans 151 86 6 128 569
SBA 504 loans - - - 589 -
Commercial loans 52 10 147 100 377
Residential mortgage loans - 50 - - 362
Consumer loans 41 52 7 30 -
Total chargeoffs 244 198 160 847 1,308
Add: Recoveries
SBA loans 6 10 2 37 12
SBA 504 loans - - - - -
Commercial loans 476 5 370 201 31
Residential mortgage loans - - 10 39 40
Consumer loans - - 1 - 8
Total recoveries 482 15 383 277 91
Net chargeoffs (recoveries) (238) 183 (223) 570 1,217
Balance, end of period $ 12,759 $12,421 $12,404 $12,181 $12,551
LOAN QUALITY INFORMATION:
Nonperforming loans (1) $ 7,260 $10,742 $8,837 $9,141 $11,368
Other real estate owned ("OREO") 1,591 1,759 2,265 1,975 1,162
Nonperforming assets 8,851 12,501 11,102 11,116 12,530
Less: Amount guaranteed by SBA 288 225 267 270 1,569
Net nonperforming assets $ 8,563 $12,276 $10,835 $10,846 $10,961
Loans 90 days past due & still accruing $ - $272 $273 $5 $890
Performing Troubled Debt Restructurings (TDRs) $ 2,995 $3,268 $3,360 $3,458 $3,548
(1) Nonperforming TDRs included in nonperforming loans 162 2,808 2,843 2,911 2,960
Total TDRs $ 3,157 $6,076 $6,203 $6,369 $6,508
Allowance for loan losses to:
Total loans at quarter end 1.44 % 1.45 % 1.51 % 1.55 % 1.65 %
Nonperforming loans (1) 175.74 115.63 140.36 133.26 110.41
Nonperforming assets 144.15 99.36 111.73 109.58 100.17
Net nonperforming assets 149.00 101.18 114.48 112.31 114.51
QTD net chargeoffs (annualized) to QTD average loans:
SBA loans 1.05 % 0.57 % 0.03 % 0.76 % 4.35 %
SBA 504 loans - - - 7.15 -
Commercial loans (0.37) - (0.21) (0.10) 0.34
Residential mortgage loans - 0.08 (0.02) (0.07) 0.59
Consumer loans 0.21 0.28 0.04 0.20 (0.05)
Total loans (0.11)% 0.09 % (0.11)% 0.30 % 0.63 %
Nonperforming loans to total loans 0.82 % 1.26 % 1.08 % 1.16 % 1.49 %
Nonperforming loans and TDRs to total loans 1.15 1.64 1.48 1.61 1.96
Nonperforming assets to total loans and OREO 0.99 1.46 1.35 1.41 1.64
Nonperforming assets to total assets 0.82 1.19 1.08 1.07 1.24

UNITY BANCORP, INC.
QUARTERLY FINANCIAL DATA
December 31, 2015
(In thousands, except percentages and per share amounts) December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 December 31, 2014
SUMMARY OF INCOME:
Total interest income $ 10,995 $ 10,554 $ 10,218 $ 9,884 $ 9,802
Total interest expense 2,015 1,932 1,849 1,864 1,914
Net interest income 8,980 8,622 8,369 8,020 7,888
Provision for loan losses 100 200 - 200 850
Net interest income after provision for loan losses 8,880 8,422 8,369 7,820 7,038
Total noninterest income 1,920 2,275 1,893 1,641 1,660
Total noninterest expense 6,846 6,852 6,652 6,502 6,045
Income before provision for income taxes 3,954 3,845 3,610 2,959 2,653
Provision for income taxes 1,315 1,294 1,182 1,020 952
Net income $ 2,639 $ 2,551 $ 2,428 $ 1,939 $ 1,701
Net income per common share - Basic $ 0.31 $ 0.30 $ 0.29 $ 0.23 $ 0.21
Net income per common share - Diluted $ 0.31 $ 0.30 $ 0.28 $ 0.23 $ 0.20
COMMON SHARE DATA:
Market price per share $ 12.47 $ 9.77 $ 9.79 $ 9.08 $ 9.43
Dividends paid $ 0.04 $ 0.04 $ 0.03 $ 0.03 $ 0.03
Book value per common share $ 9.30 $ 9.02 $ 8.75 $ 8.55 $ 8.36
Weighted average common shares outstanding - Basic 8,430 8,427 8,425 8,417 8,378
Weighted average common shares outstanding - Diluted 8,547 ` 8,536 8,524 8,514 8,478
Issued and outstanding common shares 8,436 8,429 8,425 8,423 8,388
OPERATING RATIOS (Annualized):
Return on average assets 1.00 % 1.00 % 1.01 % 0.82 % 0.70 %
Return on average equity 13.59 13.54 13.35 11.08 9.78
Efficiency ratio 62.81 62.88 64.99 67.30 63.68
BALANCE SHEET DATA:
Total assets $ 1,084,866 $ 1,052,711 $ 1,024,303 $ 1,035,404 $ 1,008,788
Total deposits 894,493 866,247 815,427 789,441 794,341
Total loans 888,958 855,560 821,696 784,642 761,825
Total securities 71,336 71,492 74,375 77,308 80,082
Total shareholders' equity 78,470 76,065 73,690 71,987 70,123
Allowance for loan losses (12,759) (12,421) (12,404) (12,181) (12,551)
TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets 4.40 % 4.41 % 4.52 % 4.49 % 4.35 %
Interest-bearing liabilities 1.02 1.01 1.03 1.05 1.03
Net interest spread 3.38 3.40 3.49 3.44 3.32
Net interest margin 3.60 3.60 3.70 3.64 3.49
CREDIT QUALITY:
Nonperforming assets 8,851 12,501 11,102 11,116 12,530
QTD net chargeoffs (annualized) to QTD average loans (0.11)% 0.09 % (0.11)% 0.30 % 0.63 %
Allowance for loan losses to total loans 1.44 1.45 1.51 1.55 1.65
Nonperforming assets to total loans and OREO 0.99 1.46 1.35 1.41 1.64
Nonperforming assets to total assets 0.82 1.19 1.08 1.07 1.24
CAPITAL RATIOS AND OTHER:
Total equity to total assets 7.23 % 7.23 % 7.19 % 6.95 % 6.95 %
Leverage ratio 8.82 8.92 9.09 8.94 8.71
Common equity tier 1 risk-based capital ratio 9.37 9.37 9.39 9.25 n/a
Tier 1 risk-based capital ratio 11.18 11.25 11.33 11.22 11.57
Total risk-based capital ratio 12.43 12.50 12.59 12.48 12.83
Number of banking offices 15 15 15 15 15
Number of ATMs 16 16 16 16 16
Number of employees 162 163 177 166 169



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

Source:Unity Bancorp, Inc.