UNITY BANCORP INC /NJ/ - FORM 8-K - EX-99.1 - FIRST QUARTER EARNINGS RELEASE

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8-K - UNITY BANCORP 8K - UNITY BANCORP INC /NJ/	form8k.htm

Unity Bancorp, Inc.

64 Old Highway 22

Clinton, NJ 08809

800 618-BANK

www.unitybank.com

NewsNewsNewsNewsNews

For Immediate Release:

April 28, 2011

News Media & Financial Analyst Contact:

Alan J. Bedner, EVP

Chief Financial Officer

(908) 713-4308

Unity Bancorp Reports First Quarter Results

Clinton, NJ - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported a net loss attributable to common shareholders of $164 thousand, or $0.02 per diluted share, for the quarter ended March 31, 2011, compared to net income available to common shareholders of $375 thousand, or $0.05 per diluted share for the same period a year ago. Return on average assets and average common equity for the quarter were 0.11% and (1.31)%, respectively. Quarterly results were substantially impacted by the additional $1 million loan loss provision as well as increased other real estate owned (“OREO”) and loan collection costs.

James A. Hughes, President and CEO, stated, “Our borrowers continue to face the challenges of a difficult economic environment resulting in elevated loan loss provisions.” Mr. Hughes continued, “On a positive note, during the quarter, we reported an improving margin and growth in core deposits.”

Net Interest Income

Net interest income was stable at $7.5 million for the three months ended March 31, 2011 and 2010, as average interest earning assets decreased $72.8 million. Factors affecting net interest income include:

·	The yield on earning assets decreased from 5.47% in 2010 to 5.34% in 2011.

·	The cost of interest-bearing liabilities decreased 50 basis points from 2.20% for 2010 to 1.70% for 2011.

·	Net interest margin expanded 35 basis points to 3.92%.

Noninterest Income

For the three months ended March 31, 2011, noninterest income amounted to $1.3 million, an increase of $345 thousand from the prior year’s period. Noninterest income was affected by the following factors:

·	Branch fee income of $344 thousand, which consists of deposit service charge and overdraft fees, decreased 5 percent compared to the prior year’s quarter, due to lower overdraft activity.

·	Service and loan fee income increased $34 thousand compared to the prior year’s period due to higher levels of late charge fees.

·	Gains on sales on SBA loans amounted to $111 thousand on $1.1 million in sales. There were no gains recognized during the first quarter of 2010.

·	Gains on the sales of residential mortgage loans amounted to $169 thousand, compared to $145 thousand from the prior year period due to an increased volume of mortgage loans originated.

·	Gains on the sales of investment securities amounted to $125 thousand, compared to $4 thousand in the prior year period.

Noninterest Expense

For the three months ended March 31, 2011, noninterest expenses were $6.2 million, an increase of $217 thousand or 3.7% from the same period a year ago. The following factors affected our noninterest expense:

·	Compensation and benefits expense amounted to $3.1 million, an increase of $58 thousand or 1.9%, due to higher employee medical benefits costs and increased residential mortgage commissions due to a larger sales volume, partially offset by lower incentive bonus payments.

·	Occupancy expense increased $43 thousand or 6.4% due primarily to seasonal snow removal expenses.

·	Loan collection costs increased $40 thousand due to increased legal and appraisal costs.

·	OREO expense increased $192 thousand, due to increased real estate carrying costs and valuation adjustments on OREO properties.

·	The provision for income taxes includes the reversal of $150 thousand of a valuation reserve for deferred taxes related to the net operating loss carry-forward deferred tax asset.

Financial Condition

At March 31, 2011, total assets were $820.8 million, a 0.3% increase from the prior year-end.

Total loans decreased $1.4 million or 0.2%, from $615.9 million at December 31, 2010 to $614.5 million at March 31, 2011. The decrease occurred across the following loan categories with SBA 7(a), SBA 504 and consumer loans decreasing 1.8%, 6.5%, and 3.1%, respectively. Commercial loans increased 0.7% while residential mortgage loans increased 3.2%. Loan demand has been weak due to the economy.

·	Total securities decreased $7.4 million since December 31, 2010, due to sales and prepayments.

Core deposits, excluding time deposits, increased $12.7 million during the three month period to $486.9 million. The increase was due primarily to a $16.4 million increase in savings deposits, partially offset by a $3.7 million decrease in interest-bearing demand deposits. Time deposits decreased $10.7 million for the three months ended March 31, 2011 due to planned run off of a maturing high rate promotion that was done late in 2008 to bolster liquidity.

·	Shareholders’ equity was $70.4 million at March 31, 2011, an increase of $296 thousand from year-end 2010.

·	Book value per common share was $7.09 as of March 31, 2011.

·	At March 31, 2011 the leverage, Tier I and Total Risk Based Capital ratios were 10.21%, 13.12% and 14.39%, respectively, all in excess of the ratios required to be deemed “well-capitalized”.

Credit Quality

·	Nonperforming assets totaled $26.5 million at March 31, 2011, or 4.30% of total loans and OREO, compared to $30.0 million or 4.58% of total loans and OREO a year ago.

·	The SBA, commercial, residential mortgages, SBA 504 and consumer nonaccrual loans were $9.1 million, $5.8 million, $4.4 million, $4.3 million and $406 thousand, respectively. The majority of nonaccrual loans are secured by real estate.

·	OREO assets totaled $2.6 million at March 31, 2011, a decrease of $716 thousand, compared to $3.3 million a year ago.

·	The allowance for loan losses totaled $15.3 million at March 31, 2011, or 2.49% of total loans. The provision for loan losses for the quarter ended March 31, 2011 was $2.5 million compared to $1.5 million for the prior year’s quarter.

·	Net charge-offs were $1.6 million for the three months ended March 31, 2011, compared to $1.3 million for the same period a year ago.

Mr. Hughes added, “Unity continues to work diligently to address problem loans. For the near term, the size of our loan loss provision will remain the most important single factor in our earnings. However, we are hopeful we will see further improvement in credit quality in 2011.”

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $821 million in assets and $657 million in deposits. Unity Bank provides financial services to retail, corporate and small business customers through its 16 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 general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, our ability to manage and reduce the level of our nonperforming assets, and results of regulatory exams, among other factors.

UNITY BANCORP, INC.
SUMMARY FINANCIAL HIGHLIGHTS
March 31, 2011



										March 31, 2011 vs.
										December 31, 2010			March 31, 2010
Amounts in thousands, except percentages and per share amounts	March 31, 2011			December 31, 2010			March 31, 2010			%			%

BALANCE SHEET DATA:
Total assets	$	820,833		$	818,410		$	889,927			0.3	%		-7.8	%
Total deposits		656,776			654,788			714,802			0.3	%		-8.1	%
Total loans		614,522			615,936			651,200			-0.2	%		-5.6	%
Total securities		120,815			128,242			138,442			-5.8	%		-12.7	%
Total shareholders' equity		70,381			70,085			68,712			0.4	%		2.4	%
Allowance for loan losses		(15,275	)		(14,364	)		(14,055	)		6.3	%		8.7	%

FINANCIAL DATA - QUARTER TO DATE:
Income (loss) before provision (benefit) for income taxes	$	72		$	36		$	933			100.0	%		-92.3	%
Provision (benefit) for income taxes		(148	)		(50	)		185			-196.0	%		-180.0	%
Net income (loss)		220			86			748			155.8	%		-70.6	%
Preferred stock dividends & discount accretion		384			385			373			-0.3	%		2.9	%
Income available (loss attributable) to common shareholders	$	(164	)	$	(299	)	$	375			45.2	%		-143.7	%

Net income (loss) per common share - Basic (1)	$	(0.02	)	$	(0.04	)	$	0.05			50.0	%		-140.0	%
Net income (loss) per common share - Diluted (1)	$	(0.02	)	$	(0.04	)	$	0.05			50.0	%		-140.0	%

Return (loss) on average assets		0.11	%		0.04	%		0.34	%		175.0	%		-67.6	%
Return (loss) on average equity (2)		-1.31	%		-2.31	%		3.09	%		43.3	%		-142.4	%
Efficiency ratio		71.56	%		70.65	%		70.98	%		1.3	%		0.8	%

SHARE INFORMATION:
Market price per share	$	6.95		$	6.05		$	5.29			14.9	%		31.4	%
Dividends paid		-			-			-			0.0	%		0.0	%
Book value per common share		7.09			7.08			7.00			0.2	%		1.4	%
Average diluted shares outstanding (QTD)		7,219			7,209			7,294			0.1	%		-1.0	%

CAPITAL RATIOS:
Total equity to total assets		8.57	%		8.56	%		7.72	%		0.1	%		11.1	%
Leverage ratio		10.21	%		9.97	%		9.18	%		2.4	%		11.2	%
Tier 1 risk-based capital ratio		13.12	%		13.04	%		12.02	%		0.6	%		9.2	%
Total risk-based capital ratio		14.39	%		14.30	%		13.28	%		0.6	%		8.4	%

CREDIT QUALITY AND RATIOS:
Nonperforming assets	$	26,525		$	24,008		$	29,972			10.5	%		-11.5	%
QTD net chargeoffs (annualized) to QTD average loans		1.05	%		1.62	%		0.80	%		-35.4	%		31.3	%
Allowance for loan losses to total loans		2.49	%		2.33	%		2.16	%		6.6	%		15.2	%
Nonperforming assets to total loans and OREO		4.30	%		3.88	%		4.58	%		10.7	%		-6.1	%
Nonperforming assets to total assets		3.23	%		2.93	%		3.37	%		10.2	%		-4.1	%

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

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

UNITY BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
March 31, 2011




										March 31, 2011 vs.
										December 31, 2010			March 31, 2010
Amounts in thousands, except percentages	March 31, 2011			December 31, 2010			March 31, 2010			%			%

ASSETS
Cash and due from banks	$	15,478		$	17,637		$	22,654			-12.2	%		-31.7	%
Federal funds sold and interest-bearing deposits		39,880			26,289			43,734			51.7	%		-8.8	%
Cash and cash equivalents		55,358			43,926			66,388			26.0	%		-16.6	%

Securities available for sale		103,238			107,131			113,465			-3.6	%		-9.0	%
Securities held to maturity		17,577			21,111			24,977			-16.7	%		-29.6	%
Total securities		120,815			128,242			138,442			-5.8	%		-12.7	%

SBA loans held for sale		9,933			10,397			22,617			-4.5	%		-56.1	%
SBA loans held to maturity		74,657			75,741			75,191			-1.4	%		-0.7	%
SBA 504 loans		60,092			64,276			67,000			-6.5	%		-10.3	%
Commercial loans		283,135			281,205			292,557			0.7	%		-3.2	%
Residential mortgage loans		132,512			128,400			135,596			3.2	%		-2.3	%
Consumer loans		54,193			55,917			58,239			-3.1	%		-6.9	%
Total loans		614,522			615,936			651,200			-0.2	%		-5.6	%
Allowance for loan losses		(15,275	)		(14,364	)		(14,055	)		6.3	%		8.7	%
Net loans		599,247			601,572			637,145			-0.4	%		-5.9	%

Premises and equipment, net		10,782			10,967			11,525			-1.7	%		-6.4	%
Bank owned life insurance (BOLI)		8,885			8,812			8,574			0.8	%		3.6	%
Deferred tax assets		7,833			7,550			7,856			3.7	%		-0.3	%
Federal Home Loan Bank stock		4,206			4,206			4,677			0.0	%		-10.1	%
Accrued interest receivable		3,725			3,791			4,009			-1.7	%		-7.1	%
Prepaid FDIC insurance		2,994			3,266			4,136			-8.3	%		-27.6	%
Other real estate owned (OREO)		2,602			2,346			3,318			10.9	%		-21.6	%
Goodwill and other intangibles		1,541			1,544			1,555			-0.2	%		-0.9	%
Other assets		2,845			2,188			2,302			30.0	%		23.6	%

Total assets	$	820,833		$	818,410		$	889,927			0.3	%		-7.8	%

LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing demand deposits	$	91,247		$	91,272		$	84,858			0.0	%		7.5	%
Interest-bearing demand deposits		101,878			105,530			102,846			-3.5	%		-0.9	%
Savings deposits		293,750			277,394			291,870			5.9	%		0.6	%
Time deposits, under $100,000		110,050			119,478			149,934			-7.9	%		-26.6	%
Time deposits, $100,000 and over		59,851			61,114			85,294			-2.1	%		-29.8	%
Total deposits		656,776			654,788			714,802			0.3	%		-8.1	%

Borrowed funds		75,000			75,000			86,554			0.0	%		-13.3	%
Subordinated debentures		15,465			15,465			15,465			0.0	%		0.0	%
Accrued interest payable		569			556			706			2.3	%		-19.4	%
Accrued expenses and other liabilities		2,642			2,516			3,688			5.0	%		-28.4	%
Total liabilities		750,452			748,325			821,215			0.3	%		-8.6	%

Cumulative perpetual preferred stock		19,146			19,019			18,650			0.7	%		2.7	%
Common stock		52,842			55,884			55,536			-5.4	%		-4.9	%
Retained earnings (deficit)		(2,006	)		(772	)		(1,117	)		-159.8	%		-79.6	%
Treasury stock, at cost		-			(4,169	)		(4,169	)		100.0	%		100.0	%
Accumulated other comprehensive income (loss)		399			123			(188	)		224.4	%		312.2	%
Total shareholders' equity		70,381			70,085			68,712			0.4	%		2.4	%

Total liabilities and shareholders' equity	$	820,833		$	818,410		$	889,927			0.3	%		-7.8	%

Issued common shares		7,222			7,636			7,581
Outstanding common shares		7,222			7,211			7,156
Treasury shares		-			425			425

UNITY BANCORP, INC.
QTD CONSOLIDATED STATEMENTS OF INCOME
March 31, 2011



										March 31, 2011 vs.
	For the Three Months Ended									December 31, 2010					March 31, 2010
Amounts in thousands, except percentages and per share amounts	March 31, 2011			December 31, 2010			March 31, 2010			$			%		$			%

INTEREST INCOME
Federal funds sold and interest-bearing deposits	$	11		$	11		$	26		$	-		0.0	%	$	(15	)	-57.7	%
Federal Home Loan Bank stock		66			86			34			(20	)	-23.3	%		32		94.1	%

Securities available for sale		864			881			1,280			(17	)	-1.9	%		(416	)	-32.5	%
Securities held to maturity		287			259			338			28		10.8	%		(51	)	-15.1	%
Total securities		1,151			1,140			1,618			11		1.0	%		(467	)	-28.9	%

SBA loans		1,236			1,287			1,452			(51	)	-4.0	%		(216	)	-14.9	%
SBA 504 loans		955			1,034			1,087			(79	)	-7.6	%		(132	)	-12.1	%
Commercial loans		4,306			4,585			4,604			(279	)	-6.1	%		(298	)	-6.5	%
Residential mortgage loans		1,831			1,955			1,961			(124	)	-6.3	%		(130	)	-6.6	%
Consumer loans		686			752			731			(66	)	-8.8	%		(45	)	-6.2	%
Total loans		9,014			9,613			9,835			(599	)	-6.2	%		(821	)	-8.3	%

Total interest income		10,242			10,850			11,513			(608	)	-5.6	%		(1,271	)	-11.0	%

INTEREST EXPENSE
Interest-bearing demand deposits		139			143			258			(4	)	-2.8	%		(119	)	-46.1	%
Savings deposits		581			561			901			20		3.6	%		(320	)	-35.5	%
Time deposits		1,097			1,222			1,813			(125	)	-10.2	%		(716	)	-39.5	%
Borrowed funds and subordinated debentures		950			1,064			1,077			(114	)	-10.7	%		(127	)	-11.8	%
Total interest expense		2,767			2,990			4,049			(223	)	-7.5	%		(1,282	)	-31.7	%

Net interest income		7,475			7,860			7,464			(385	)	-4.9	%		11		0.1	%
Provision for loan losses		2,500			2,750			1,500			(250	)	-9.1	%		1,000		66.7	%
Net interest income after provision for loan losses		4,975			5,110			5,964			(135	)	-2.6	%		(989	)	-16.6	%

NONINTEREST INCOME
Branch fee income		344			373			362			(29	)	-7.8	%		(18	)	-5.0	%
Service and loan fee income		243			274			209			(31	)	-11.3	%		34		16.3	%
Gain on sale of SBA loans held for sale, net		111			83			-			28		33.7	%		111		100.0	%
Gain on sale of mortgage loans		169			548			145			(379	)	-69.2	%		24		16.6	%
Bank owned life insurance (BOLI)		73			80			73			(7	)	-8.8	%		-		0.0	%
Net security gains		125			43			4			82		190.7	%		121		3025.0	%
Other income		190			127			117			63		49.6	%		73		62.4	%
Total noninterest income		1,255			1,528			910			(273	)	-17.9	%		345		37.9	%

NONINTEREST EXPENSE
Compensation and benefits		3,057			3,094			2,999			(37	)	-1.2	%		58		1.9	%
Occupancy		720			612			677			108		17.6	%		43		6.4	%
Processing and communications		507			530			524			(23	)	-4.3	%		(17	)	-3.2	%
Furniture and equipment		384			444			423			(60	)	-13.5	%		(39	)	-9.2	%
Professional services		202			80			229			122		152.5	%		(27	)	-11.8	%
Loan collection costs		224			266			184			(42	)	-15.8	%		40		21.7	%
OREO expense		222			647			30			(425	)	-65.7	%		192		640.0	%
Deposit insurance		319			317			330			2		0.6	%		(11	)	-3.3	%
Advertising		118			146			106			(28	)	-19.2	%		12		11.3	%
Other expenses		405			466			439			(61	)	-13.1	%		(34	)	-7.7	%
Total noninterest expense		6,158			6,602			5,941			(444	)	-6.7	%		217		3.7	%

Income (loss) before provision (benefit) for income taxes		72			36			933			36		100.0	%		(861	)	-92.3	%
Provision (benefit) for income taxes		(148	)		(50	)		185			(98	)	-196.0	%		(333	)	-180.0	%
Net income (loss)		220			86			748			134		155.8	%		(528	)	-70.6	%
Preferred stock dividends & discount accretion		384			385			373			(1	)	-0.3	%		11		2.9	%
Income available (loss attributable) to common shareholders	$	(164	)	$	(299	)	$	375		$	135		45.2	%	$	(539	)	-143.7	%

Effective tax rate		-205.6	%		-138.9	%		19.8	%

Net income (loss) per common share - Basic (1)	$	(0.02	)	$	(0.04	)	$	0.05
Net income (loss) per common share - Diluted (1)	$	(0.02	)	$	(0.04	)	$	0.05

Weighted average common shares outstanding - Basic		7,219			7,209			7,150
Weighted average common shares outstanding - Diluted		7,219			7,209			7,294

(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
March 31, 2011



	For the Three Months Ended
	March 31, 2011									December 31, 2010
Amounts in thousands, except percentages	Average Balance			Interest			Rate/Yield			Average Balance			Interest			Rate/Yield

ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits	$	33,252		$	11			0.13	%	$	36,274		$	11			0.12	%
Federal Home Loan Bank stock		4,206			66			6.36	%		4,597			86			7.42	%

Securities available for sale		105,027			912			3.47	%		108,718			906			3.33	%
Securities held to maturity		19,516			292			5.98	%		21,292			264			4.96	%
Total securities (A)		124,543			1,204			3.87	%		130,010			1,170			3.60	%

SBA loans		85,861			1,236			5.76	%		90,426			1,287			5.69	%
SBA 504 loans		61,998			955			6.25	%		64,874			1,034			6.32	%
Commercial loans		282,605			4,306			6.18	%		282,184			4,585			6.45	%
Residential mortgage loans		130,745			1,831			5.60	%		129,696			1,955			6.03	%
Consumer loans		54,849			686			5.07	%		57,029			752			5.23	%
Total loans (A), (B)		616,058			9,014			5.91	%		624,209			9,613			6.13	%

Total interest-earning assets	$	778,059		$	10,295			5.34	%	$	795,090		$	10,880			5.45	%

Noninterest-earning assets:
Cash and due from banks		17,764									18,339
Allowance for loan losses		(15,054	)								(14,681	)
Other assets		39,767									42,696
Total noninterest-earning assets		42,477									46,354

Total assets	$	820,536								$	841,444

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	103,550		$	139			0.54	%	$	104,900		$	143			0.54	%
Savings deposits		289,805			581			0.81	%		284,853			561			0.78	%
Time deposits		174,620			1,097			2.55	%		183,997			1,222			2.63	%
Total interest-bearing deposits		567,975			1,817			1.30	%		573,750			1,926			1.33	%
Borrowed funds and subordinated debentures		90,465			950			4.20	%		100,080			1,064			4.16	%

Total interest-bearing liabilities	$	658,440		$	2,767			1.70	%	$	673,830		$	2,990			1.75	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		88,797									93,049
Other liabilities		3,530									4,196
Total noninterest-bearing liabilities		92,327									97,245

Total shareholders' equity		69,769									70,369

Total liabilities and shareholders' equity	$	820,536								$	841,444

Net interest spread				$	7,528			3.64	%				$	7,890			3.70	%
Tax-equivalent basis adjustment					(53	)								(30	)
Net interest income				$	7,475								$	7,860
Net interest margin								3.92	%								3.94	%

(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
March 31, 2011



	For the Three Months Ended
	March 31, 2011									March 31, 2010
Amounts in thousands, except percentages	Average Balance			Interest			Rate/Yield			Average Balance			Interest			Rate/Yield

ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits	$	33,252		$	11			0.13	%	$	32,493		$	26			0.32	%
Federal Home Loan Bank stock		4,206			66			6.36	%		4,677			34			2.95	%

Securities available for sale		105,027			912			3.47	%		131,295			1,294			3.94	%
Securities held to maturity		19,516			292			5.98	%		27,323			354			5.18	%
Total securities (A)		124,543			1,204			3.87	%		158,618			1,648			4.16	%

SBA loans		85,861			1,236			5.76	%		98,140			1,452			5.92	%
SBA 504 loans		61,998			955			6.25	%		70,444			1,087			6.26	%
Commercial loans		282,605			4,306			6.18	%		292,055			4,604			6.39	%
Residential mortgage loans		130,745			1,831			5.60	%		134,611			1,961			5.83	%
Consumer loans		54,849			686			5.07	%		59,779			731			4.96	%
Total loans (A), (B)		616,058			9,014			5.91	%		655,029			9,835			6.06	%

Total interest-earning assets	$	778,059		$	10,295			5.34	%	$	850,817		$	11,543			5.47	%

Noninterest-earning assets:
Cash and due from banks		17,764									21,962
Allowance for loan losses		(15,054	)								(14,581	)
Other assets		39,767									40,896
Total noninterest-earning assets		42,477									48,277

Total assets	$	820,536								$	899,094

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	103,550		$	139			0.54	%	$	102,593		$	258			1.02	%
Savings deposits		289,805			581			0.81	%		289,251			901			1.26	%
Time deposits		174,620			1,097			2.55	%		251,774			1,813			2.92	%
Total interest-bearing deposits		567,975			1,817			1.30	%		643,618			2,972			1.87	%
Borrowed funds and subordinated debentures		90,465			950			4.20	%		100,500			1,077			4.29	%

Total interest-bearing liabilities	$	658,440		$	2,767			1.70	%	$	744,118		$	4,049			2.20	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		88,797									83,164
Other liabilities		3,530									4,069
Total noninterest-bearing liabilities		92,327									87,233

Total shareholders' equity		69,769									67,743

Total liabilities and shareholders' equity	$	820,536								$	899,094

Net interest spread				$	7,528			3.64	%				$	7,494			3.27	%
Tax-equivalent basis adjustment					(53	)								(30	)
Net interest income				$	7,475								$	7,464
Net interest margin								3.92	%								3.57	%

(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.
ALLOWANCE FOR LOAN LOSSES AND LOAN QUALITY SCHEDULES
March 31, 2011




Amounts in thousands, except percentages	3/31/2011			12/31/2010			9/30/2010			6/30/2010			3/31/2010

ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period	$	14,364		$	14,163		$	13,946		$	14,055		$	13,842
Provision for loan losses charged to expense		2,500			2,750			1,500			1,500			1,500
		16,864			16,913			15,446			15,555			15,342
Less: Chargeoffs
SBA loans		761			445			389			517			-
SBA 504 loans		-			798			-			-			750
Commercial loans		848			1,115			989			1,038			485
Residential mortgage loans		92			190			95			115			100
Consumer loans		-			234			9			2			-
Total chargeoffs		1,701			2,782			1,482			1,672			1,335
Add: Recoveries
SBA loans		8			128			17			53			45
SBA 504 loans		-			-			-			-			-
Commercial loans		98			105			178			10			3
Residential mortgage loans		4			-			-			-			-
Consumer loans		2			-			4			-			-
Total recoveries		112			233			199			63			48
Net chargeoffs		1,589			2,549			1,283			1,609			1,287
Balance, end of period	$	15,275		$	14,364		$	14,163		$	13,946		$	14,055

LOAN QUALITY INFORMATION:
Nonperforming loans	$	23,923		$	21,662		$	27,304		$	26,071		$	26,654
Other real estate owned (OREO)		2,602			2,346			5,773			3,728			3,318
Nonperforming assets		26,525			24,008			33,077			29,799			29,972
Less: Amount guaranteed by Small Business Administration		3,355			2,706			2,094			1,436			2,205
Net nonperforming assets	$	23,170		$	21,302		$	30,983		$	28,363		$	27,767

Loans 90 days past due & still accruing	$	4,248		$	374		$	2,467		$	2,780		$	3,061

Allowance for loan losses to:
Total loans at quarter end		2.49	%		2.33	%		2.25	%		2.19	%		2.16	%
Nonperforming loans		63.85	%		66.31	%		51.87	%		53.49	%		52.73	%
Nonperforming assets		57.59	%		59.83	%		42.82	%		46.80	%		46.89	%
Net nonperforming assets		65.93	%		67.43	%		45.71	%		49.17	%		50.62	%

QTD net chargeoffs (annualized) to QTD average loans:
SBA loans		3.56	%		1.39	%		1.56	%		1.89	%		-0.19	%
SBA 504 loans		0.00	%		4.88	%		0.00	%		0.00	%		4.32	%
Commercial loans		1.08	%		1.42	%		1.14	%		1.44	%		0.67	%
Residential mortgage loans		0.27	%		0.58	%		0.29	%		0.35	%		0.30	%
Consumer loans		-0.01	%		1.63	%		0.03	%		0.01	%		0.00	%
Total loans		1.05	%		1.62	%		0.80	%		1.00	%		0.80	%

Nonperforming loans to total loans		3.89	%		3.52	%		4.34	%		4.09	%		4.09	%
Nonperforming assets to total loans and OREO		4.30	%		3.88	%		5.21	%		4.65	%		4.58	%
Nonperforming assets to total assets		3.23	%		2.93	%		3.91	%		3.43	%		3.37	%

UNITY BANCORP, INC.
QUARTERLY FINANCIAL DATA
March 31, 2011




Amounts in thousands, except percentages and per share amounts	3/31/2011			12/31/2010			9/30/2010			6/30/2010			3/31/2010

SUMMARY OF INCOME:
Total interest income	$	10,242		$	10,850		$	10,726		$	10,944		$	11,513
Total interest expense		2,767			2,990			3,314			3,681			4,049
Net interest income		7,475			7,860			7,412			7,263			7,464
Provision for loan losses		2,500			2,750			1,500			1,500			1,500
Net interest income after provision for loan losses		4,975			5,110			5,912			5,763			5,964
Total noninterest income (loss)		1,255			1,528			1,460			1,170			910
Total noninterest expense		6,158			6,602			6,404			6,040			5,941
Income (loss) before provision (benefit) for income taxes		72			36			968			893			933
Provision (benefit) for income taxes		(148	)		(50	)		242			212			185
Net income (loss)		220			86			726			681			748
Preferred stock dividends & discount accretion		384			385			385			379			373
Income available (loss attributable) to common shareholders	$	(164	)	$	(299	)	$	341		$	302		$	375

Net income (loss) per common share - Basic (1)	$	(0.02	)	$	(0.04	)	$	0.05		$	0.04		$	0.05
Net income (loss) per common share - Diluted (1)	$	(0.02	)	$	(0.04	)	$	0.05		$	0.04		$	0.05

COMMON SHARE DATA:
Market price per share	$	6.95		$	6.05		$	5.25		$	5.35		$	5.29
Dividends paid	$	-		$	-		$	-		$	-		$	-
Book value per common share	$	7.09		$	7.08		$	7.19		$	7.11		$	7.00
QTD weighted average shares - basic		7,219			7,209			7,176			7,156			7,150
QTD weighted average shares - diluted		7,219			7,209			7,467			7,475			7,294
Outstanding common shares		7,222			7,211			7,207			7,154			7,156

OPERATING RATIOS (Annualized):
Return (loss) on average assets		0.11	%		0.04	%		0.34	%		0.31	%		0.34	%
Return (loss) on average equity (2)		-1.31	%		-2.31	%		2.66	%		2.43	%		3.09	%
Efficiency ratio		71.56	%		70.65	%		72.47	%		71.66	%		70.98	%

BALANCE SHEET DATA:
Total assets	$	820,833		$	818,410		$	846,385		$	869,735		$	889,927
Total deposits		656,776			654,788			670,158			693,232			714,802
Total loans		614,522			615,936			629,516			637,180			651,200
Total securities		120,815			128,242			134,820			143,662			138,442
Total shareholders' equity		70,381			70,085			70,730			69,633			68,712
Allowance for loan losses		(15,275	)		(14,364	)		(14,163	)		(13,946	)		(14,055	)

TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets		5.34	%		5.45	%		5.30	%		5.28	%		5.47	%
Interest-bearing liabilities		1.70	%		1.75	%		1.89	%		2.04	%		2.20	%
Net interest spread		3.64	%		3.70	%		3.41	%		3.24	%		3.27	%
Net interest margin		3.92	%		3.94	%		3.66	%		3.51	%		3.57	%

CREDIT QUALITY:
Nonperforming assets	$	26,525		$	24,008		$	33,077		$	29,799		$	29,972
QTD net chargeoffs (annualized) to QTD average loans		1.05	%		1.62	%		0.80	%		1.00	%		0.80	%
Allowance for loan losses to total loans		2.49	%		2.33	%		2.25	%		2.19	%		2.16	%
Nonperforming assets to total loans and OREO		4.30	%		3.88	%		5.21	%		4.65	%		4.58	%
Nonperforming assets to total assets		3.23	%		2.93	%		3.91	%		3.43	%		3.37	%

CAPITAL RATIOS AND OTHER:
Total equity to total assets		8.57	%		8.56	%		8.36	%		8.01	%		7.72	%
Leverage ratio		10.21	%		9.97	%		9.83	%		9.43	%		9.18	%
Tier 1 risk-based capital ratio		13.12	%		13.04	%		12.67	%		12.39	%		12.02	%
Total risk-based capital ratio		14.39	%		14.30	%		13.93	%		13.65	%		13.28	%
Number of banking offices		16			16			16			16			16
Number of ATMs		18			18			18			18			19
Number of employees		170			172			173			165			171

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

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

UNITY BANCORP INC /NJ/ - FORM 8-K - EX-99.1 - FIRST QUARTER EARNINGS RELEASE - April 28, 2011

Attached files

UNITY BANCORP INC /NJ/ Reports