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

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8-K - 8-K - UNITY BANCORP INC /NJ/	unty-20150720x8k.htm

Unity Bancorp, Inc.

64 Old Highway 22

Clinton, NJ 08809

800-618-BANK

www.unitybank.com

NewsNewsNewsNewsNews

For Immediate Release:

July 20, 2015

News Media & Financial Analyst Contact:

Alan J. Bedner, EVP

Chief Financial Officer

(908) 713-4308

Unity Bancorp Reports Quarterly Net Income Increased 59%

and Six Month Net Income Increased 55%

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

“Our growth is a reflection of our investment in our communities and employees” reported James A. Hughes, President and CEO. “Our customers tell us what they need, and we deliver. When our communities grow, we grow. It’s a win-win.”

Net income was $2.4 million, or $0.28 per diluted share, for the three months ended June 30, 2015, a 58.9% increase compared to net income of $1.5 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 1.01% and 13.35%, respectively, compared to 0.68% and 10.31% for the same period a year ago.

Highlights include:

7.9% loan growth since year-end 2014 - 18.3% growth in consumer loans, 10.1% growth in residential mortgage loans, and 6.6% growth in commercial loans.

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

14.6% increase in net interest income compared to the prior year’s quarter due to strong loan growth.

Net interest margin of 3.70% this quarter compared to 3.49% in the prior year’s quarter.

Improved credit quality metrics and reduced loan loss provision – net recoveries posted compared to net charge-offs in the prior year’s quarter and a 25.9% decrease in nonperforming loans.

“I am extremely pleased with the operating results of the Bank,” said James A. Hughes, President and CEO. “The record earnings are the direct result of an organization that focuses on sales and service. With a vast array of products that are tailored to our customers’ needs, we are experiencing very strong loan and deposit growth. I am proud to see the continued improvement in the bank’s progress, as it is a direct reflection of a great team of employees that are providing the highest level of service to our valued customers.”

For the six months ended June 30, 2015, net income totaled $4.4 million, or $0.51 per diluted share, compared to $2.8 million or $0.37 per diluted share in the prior year’s period. Return on average assets and average common equity for the six month periods were 0.92% and 12.23%, respectively, compared to 0.64% and 9.70% for the same period a year ago.

Net Interest Income

Our core source of earnings, net interest income, increased $1.1 million to $8.4 million for the quarter ended June 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. Quarterly average residential mortgage loans have increased $58.8 million, average commercial loans increased $52.0 million and consumer loans increased $19.6 million compared to the comparable quarter in 2014. Partially offsetting this increase was the lower level of interest income due to our smaller investment portfolio and the slight increase in deposit interest expense.

The net interest margin increased 21 basis points to 3.70% for the quarter ended June 30, 2015 compared to 3.49% for the prior year’s quarter. The expansion in the net interest margin was due to strong loan growth, lower security balances and the repayment of $10 million in high rate borrowings.

Provision for Loan Losses

There was no provision for loan losses posted in the quarter ended June 30, 2015, compared to $550 thousand for the prior year period. For the six months ended June 30, 2015, the provision for loan losses was $200 thousand compared to $1.2 million for the same period last year. The decrease was the result of lower levels of net charge-offs facilitated by recoveries and reduced nonperforming assets.

Noninterest Income

Noninterest income increased $253 thousand to $1.9 million for the three months ended June 30, 2015, compared to the same period last year. For the six months ended June 30, 2015, noninterest income increased $368 thousand to $3.5 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 and increased service and loan fee income.

During the quarter, $49.8 million in residential mortgage loans were originated, of which $24.0 million were sold at a gain of $687 thousand, compared to $36.3 million originated and $11.1 million sold at a gain of $188 thousand during the prior year’s quarter. For the six month period, $86.9 million in residential mortgage loans were originated, of which $42.2 million were sold at a gain of $1.0 million, compared to $58.5 million originated and $28.6 million sold at a gain of $553 thousand in the first half of 2014. 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.

Service and loan fee income increased $181 thousand and $182 thousand respectively for the three and six months ended June 30, 2015 due to increased loan processing and payoff charges.

In addition to the noninterest income increases noted above, other notable items included: 1) there were no SBA loan sales this quarter and 2) gains on the sale of securities were significantly less at $28 thousand this quarter compared to $268 thousand in the prior year’s quarter.

Noninterest Expense

Noninterest expense increased $508 thousand to $6.7 million for the quarter and increased $751 thousand to $13.2 million for the six months ended June 30, 2015, respectively. The majority of the increase in each period was due to higher compensation and benefits expenses. Compensation and benefits expenses have increased over the past twelve months due to increased head count in loan origination and support staff; as well as higher mortgage commission expense due to the larger volume of mortgages originated.

Other expense increases included: higher software maintenance expense, advertising, marketing agreements and seasonal events expense as well as director fees. OREO expenses for the quarterly and six month periods decreased due to lower property tax, maintenance, utility and legal costs to hold these properties.

Financial Condition

At June 30, 2015, total assets were $1.02 billion, an increase of $15.5 million from year-end 2014:

Total loans increased $59.9 million or 7.9%, from year-end 2014 to $821.7 million at June 30, 2015. The majority of the growth came in our commercial, residential mortgage and consumer loan portfolios which increased $26.4 million, $22.4 million and $10.8 million, respectively.

Total deposits increased $21.1 million or 2.7%, to $815.4 million at June 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 $73.7 million at June 30, 2015, an increase of $3.6 million from year-end 2014, due to year-to-date net income less the dividends paid.

Book value per common share was $8.75 as of June 30, 2015.

At June 30, 2015, the leverage, common equity Tier I, Tier I and Total Risk Based Capital ratios were 9.09%, 9.39%, 11.33% and 12.59% respectively, all in excess of the ratios required to be deemed “well-capitalized”.

Credit Quality

Nonperforming assets totaled $11.1 million at June 30, 2015, or 1.35% 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 22.2% to $8.8 million at June 30, 2015 from year-end.

OREO increased $1.1 million to $2.3 million at June 30, 2015 from year-end.

The allowance for loan losses totaled $12.4 million at June 30, 2015, or 1.51% of total loans compared to $12.6 million and 1.65% at December 31, 2014.

Net recoveries were $223 thousand for the three months ended June 30, 2015, compared to net charge-offs of $499 thousand for the same period a year ago. For the six months ended June 30, 2015, net charge-offs were $347 thousand, a decrease of $1.1 million compared to the prior year’s period.

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $1.0 billion in assets and $815 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

June 30, 2015



										June 30, 2015 vs.
										March 31, 2015		June 30, 2014
(In thousands, except percentages and per share amounts)	June 30, 2015			March 31, 2015			June 30, 2014			%		%
BALANCE SHEET DATA:
Total assets	$	1,024,303		$	1,035,404		$	932,414		(1.1)	%	9.9	%
Total deposits		815,427			789,441			728,083		3.3		12.0
Total loans		821,696			784,642			708,889		4.7		15.9
Total securities		74,375			77,308			90,470		(3.8)		(17.8)
Total shareholders' equity		73,690			71,987			60,477		2.4		21.8
Allowance for loan losses		(12,404)			(12,181)			(12,858)		1.8		(3.5)

FINANCIAL DATA - QUARTER TO DATE:
Income before provision for income taxes	$	3,610		$	2,959		$	2,251		22.0		60.4
Provision for income taxes		1,182			1,020			723		15.9		63.5
Net income	$	2,428		$	1,939		$	1,528		25.2		58.9

Net income per common share - Basic	$	0.29		$	0.23		$	0.20		26.1		45.0
Net income per common share - Diluted	$	0.28		$	0.23		$	0.20		21.7		40.0

Return on average assets		1.01	%		0.82	%		0.68	%	23.2		48.5
Return on average equity		13.35	%		11.08	%		10.31	%	20.5		29.5
Efficiency ratio		64.99	%		67.30	%		70.81	%	(3.4)		(8.2)
Net interest margin		3.70	%		3.64	%		3.49	%	1.6		6.0

FINANCIAL DATA - YEAR TO DATE:
Income before provision for income taxes	$	6,569					$	4,206				56.2
Provision for income taxes		2,202						1,385				59.0
Net income	$	4,367					$	2,821				54.8

Net income per common share - Basic	$	0.52					$	0.37				40.5
Net income per common share - Diluted	$	0.51					$	0.37				37.8

Return on average assets		0.92	%					0.64	%			43.8
Return on average equity		12.23	%					9.70	%			26.1
Efficiency ratio		66.12	%					71.36	%			(7.3)
Net interest margin		3.67	%					3.53	%			4.0

SHARE INFORMATION:
Market price per share	$	9.79		$	9.08		$	9.28		7.8		5.5
Dividends paid	$	0.03		$	0.03		$	0.02		-		0.5
Book value per common share	$	8.75		$	8.55		$	7.95		2.3		10.1
Average diluted shares outstanding (QTD)		8,524			8,514			7,690		0.1		10.8

CAPITAL RATIOS:
Total equity to total assets		7.19	%		6.95	%		6.49	%	3.5		10.8
Leverage ratio		9.09	%		8.94	%		8.24	%	1.7		10.3
Common equity tier 1 risk-based capital ratio		9.39	%		9.25			n/a		n/a		n/a
Tier 1 risk-based capital ratio		11.33	%		11.22	%		10.86	%	1.0		4.3
Total risk-based capital ratio		12.59	%		12.48	%		12.12	%	0.9		3.9


CREDIT QUALITY AND RATIOS:
Nonperforming assets	$	11,102		$	11,116		$	13,044		(0.1)		(14.9)
QTD net chargeoffs (annualized) to QTD average loans		(0.11)	%		0.30	%		0.29	%	(136.7)		(137.9)
Allowance for loan losses to total loans		1.51	%		1.55	%		1.81	%	(2.6)		(16.6)
Nonperforming assets to total loans and OREO		1.35	%		1.41	%		1.84	%	(4.3)		(26.6)
Nonperforming assets to total assets		1.08	%		1.07	%		1.40	%	0.9	%	(22.9)	%

(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

June 30, 2015



							June 30, 2015 vs.
							December 31, 2014		June 30, 2014
(In thousands, except percentages)	June 30, 2015		December 31, 2014		June 30, 2014		%		%
ASSETS
Cash and due from banks	$	28,240	$	29,351	$	35,197	(3.8)	%	(19.8)	%
Federal funds sold and interest-bearing deposits		62,202		100,470		60,141	(38.1)		3.4
Cash and cash equivalents		90,442		129,821		95,338	(30.3)		(5.1)
Securities:
Securities available for sale		55,766		60,073		68,734	(7.2)		(18.9)
Securities held to maturity		18,609		20,009		21,736	(7.0)		(14.4)
Total securities		74,375		80,082		90,470	(7.1)		(17.8)
Loans:
SBA loans held for sale		11,368		5,179		6,444	119.5		76.4
SBA loans held for investment		39,663		40,401		46,890	(1.8)		(15.4)
SBA 504 loans		29,125		34,322		34,452	(15.1)		(15.5)
Commercial loans		428,371		401,949		375,976	6.6		13.9
Residential mortgage loans		243,259		220,878		196,184	10.1		24.0
Consumer loans		69,910		59,096		48,943	18.3		42.8
Total loans		821,696		761,825		708,889	7.9		15.9
Allowance for loan losses		(12,404)		(12,551)		(12,858)	1.2		3.5
Net loans		809,292		749,274		696,031	8.0		16.3
Premises and equipment, net		15,385		15,231		15,469	1.0		(0.5)
Bank owned life insurance ("BOLI")		13,190		13,001		12,941	1.5		1.9
Deferred tax assets		5,928		5,860		6,149	1.2		(3.6)
Federal Home Loan Bank ("FHLB") stock		5,635		6,032		6,378	(6.6)		(11.6)
Accrued interest receivable		3,690		3,518		3,283	4.9		12.4
Other real estate owned ("OREO")		2,265		1,162		1,115	94.9		103.1
Goodwill and other intangibles		1,516		1,516		1,516	-		-
Other assets		2,585		3,291		3,724	(21.5)		(30.6)
Total assets	$	1,024,303	$	1,008,788	$	932,414	1.5	%	9.9	%

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	175,287	$	152,785	$	144,848	14.7	%	21.0	%
Interest-bearing demand		117,988		128,875		110,590	(8.4)		6.7
Savings		284,369		300,348		256,991	(5.3)		10.7
Time, under $100,000		113,846		113,119		114,605	0.6		(0.7)
Time, $100,000 and over		123,937		99,214		101,049	24.9		22.7
Total deposits		815,427		794,341		728,083	2.7		12.0
Borrowed funds		115,000		125,000		125,000	(8.0)		(8.0)
Subordinated debentures		15,465		15,465		15,465	-		-
Accrued interest payable		418		474		466	(11.8)		(10.3)
Accrued expenses and other liabilities		4,303		3,385		2,923	27.1		47.2
Total liabilities		950,613		938,665		871,937	1.3		9.0
Shareholders' equity:
Common stock		59,067		58,785		52,356	0.5		12.8
Retained earnings		15,055		11,195		8,114	34.5		85.5
Accumulated other comprehensive (loss) income		(432)		143		7	NM		NM
Total shareholders' equity		73,690		70,123		60,477	5.1		21.8

Total liabilities and shareholders' equity	$	1,024,303	$	1,008,788	$	932,414	1.5	%	9.9	%

Issued and outstanding common shares		8,425		8,388		7,607

UNITY BANCORP, INC.

QTD CONSOLIDATED STATEMENTS OF INCOME

June 30, 2015



										June 30, 2015 vs.
	For the three months ended									March 31, 2015					June 30, 2014
(In thousands, except percentages and per share amounts)	June 30, 2015			March 31, 2015			June 30, 2014			$		%			$		%
INTEREST INCOME
Federal funds sold and interest-bearing deposits	$	6		$	9		$	10		$	(3)		(33.3)	%	$	(4)		(40.0)	%
FHLB stock		38			44			40			(6)		(13.6)			(2)		(5.0)
Securities:
Taxable		363			387			552			(24)		(6.2)			(189)		(34.2)
Tax-exempt		71			72			90			(1)		(1.4)			(19)		(21.1)
Total securities		434			459			642			(25)		(5.4)			(208)		(32.4)
Loans:
SBA loans		605			679			643			(74)		(10.9)			(38)		(5.9)
SBA 504 loans		369			346			433			23		6.6			(64)		(14.8)
Commercial loans		5,276			5,066			4,738			210		4.1			538		11.4
Residential mortgage loans		2,716			2,582			2,052			134		5.2			664		32.4
Consumer loans		774			699			544			75		10.7			230		42.3
Total loans		9,740			9,372			8,410			368		3.9			1,330		15.8
Total interest income		10,218			9,884			9,102			334		3.4			1,116		12.3
INTEREST EXPENSE
Interest-bearing demand deposits		103			106			109			(3)		(2.8)			(6)		(5.5)
Savings deposits		271			264			188			7		2.7			83		44.1
Time deposits		725			686			693			39		5.7			32		4.6
Borrowed funds and subordinated debentures		750			808			807			(58)		(7.2)			(57)		(7.1)
Total interest expense		1,849			1,864			1,797			(15)		(0.8)			52		2.9
Net interest income		8,369			8,020			7,305			349		4.4			1,064		14.6
Provision for loan losses		-			200			550			(200)		(100.0)			(550)		(100.0)
Net interest income after provision for loan losses		8,369			7,820			6,755			549		7.0			1,614		23.9
NONINTEREST INCOME
Branch fee income		373			346			342			27		7.8			31		9.1
Service and loan fee income		466			296			285			170		57.4			181		63.5
Gain on sale of SBA loans held for sale, net		-			363			255			(363)		(100.0)			(255)		(100.0)
Gain on sale of mortgage loans, net		687			344			188			343		99.7			499		265.4
Net security gains		28			-			268			28		100.0			(240)		(89.6)
Other income		339			292			302			47		16.1			37		12.3
Total noninterest income		1,893			1,641			1,640			252		15.4			253		15.4
NONINTEREST EXPENSE
Compensation and benefits		3,481			3,472			3,122			9		0.3			359		11.5
Occupancy		601			672			619			(71)		(10.6)			(18)		(2.9)
Processing and communications		614			596			597			18		3.0			17		2.8
Furniture and equipment		422			373			379			49		13.1			43		11.3
Professional services		242			236			247			6		2.5			(5)		(2.0)
Loan costs		160			221			174			(61)		(27.6)			(14)		(8.0)
OREO expenses		67			35			95			32		91.4			(28)		(29.5)
Deposit insurance		150			183			171			(33)		(18.0)			(21)		(12.3)
Advertising		343			182			287			161		88.5			56		19.5
Other expenses		572			532			453			40		7.5			119		26.3
Total noninterest expense		6,652			6,502			6,144			150		2.3			508		8.3
Income before provision for income taxes		3,610			2,959			2,251			651		22.0			1,359		60.4
Provision for income taxes		1,182			1,020			723			162		15.9			459		63.5
Net income	$	2,428		$	1,939		$	1,528		$	489		25.2	%	$	900		58.9	%

Effective tax rate		32.7	%		34.5	%		32.1	%

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

Weighted average common shares outstanding - Basic		8,425		8,417		7,605
Weighted average common shares outstanding - Diluted		8,524		8,514		7,690

(1)

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

UNITY BANCORP, INC.

YTD CONSOLIDATED STATEMENTS OF INCOME

June 30, 2015



	For the six months ended June 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	$	16		$	19		$	(3)		(15.8)	%
FHLB stock		81			87			(6)		(6.9)
Securities:
Taxable		750			1,278			(528)		(41.3)
Tax-exempt		143			195			(52)		(26.7)
Total securities		893			1,473			(580)		(39.4)
Loans:
SBA loans		1,284			1,226			58		4.7
SBA 504 loans		715			832			(117)		(14.1)
Commercial loans		10,342			9,340			1,002		10.7
Residential mortgage loans		5,298			4,110			1,188		28.9
Consumer loans		1,473			1,039			434		41.8
Total loans		19,112			16,547			2,565		15.5
Total interest income		20,102			18,126			1,976		10.9
INTEREST EXPENSE
Interest-bearing demand deposits		209			220			(11)		(5.0)
Savings deposits		535			370			165		44.6
Time deposits		1,411			1,337			74		5.5
Borrowed funds and subordinated debentures		1,558			1,606			(48)		(3.0)
Total interest expense		3,713			3,533			180		5.1
Net interest income		16,389			14,593			1,796		12.3
Provision for loan losses		200			1,150			(950)		(82.6)
Net interest income after provision for loan losses		16,189			13,443			2,746		20.4
NONINTEREST INCOME
Branch fee income		719			718			1		0.1
Service and loan fee income		762			580			182		31.4
Gain on sale of SBA loans held for sale, net		363			337			26		7.7
Gain on sale of mortgage loans, net		1,031			553			478		86.4
BOLI income		189			192			(3)		(1.6)
Net security gains		28			378			(350)		(92.6)
Other income		442			408			34		8.3
Total noninterest income		3,534			3,166			368		11.6
NONINTEREST EXPENSE
Compensation and benefits		6,952			6,340			612		9.7
Occupancy		1,273			1,279			(6)		(0.5)
Processing and communications		1,210			1,179			31		2.6
Furniture and equipment		795			735			60		8.2
Professional services		478			458			20		4.4
Loan costs		382			344			38		11.0
OREO expenses		103			342			(239)		(69.9)
Deposit insurance		333			349			(16)		(4.6)
Advertising		525			438			87		19.9
Other expenses		1,103			939			164		17.5
Total noninterest expense		13,154			12,403			751		6.1
Income before provision for income taxes		6,569			4,206			2,363		56.2
Provision for income taxes		2,202			1,385			817		59.0
Net income	$	4,367		$	2,821		$	1,546		54.8	%

Effective tax rate		33.5	%		32.9	%

Net income per common share - Basic	$	0.52	$	0.37
Net income per common share - Diluted	$	0.51	$	0.37

Weighted average common shares outstanding - Basic		8,421		7,596
Weighted average common shares outstanding - Diluted		8,519		7,672

UNITY BANCORP, INC.

QTD NET INTEREST MARGIN

June 30, 2015


(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
	For the three months ended
	June 30, 2015							March 31, 2015
	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits	$	20,259	$	6		0.12	%	$	37,280	$	9		0.10	%
FHLB stock		3,720		38		4.10			3,847		44		4.64
Securities:
Taxable		63,834		363		2.28			67,046		387		2.34
Tax-exempt		11,803		105		3.57			11,984		106		3.59
Total securities (A)		75,637		468		2.48			79,030		493		2.53
Loans:
SBA loans		47,249		605		5.14			48,405		679		5.69
SBA 504 loans		29,539		369		5.01			33,397		346		4.20
Commercial loans		422,371		5,276		5.01			406,095		5,066		5.06
Residential mortgage loans		243,821		2,716		4.47			226,125		2,582		4.63
Consumer loans		67,353		774		4.61			62,355		699		4.55
Total loans (B)		810,333		9,740		4.82			776,377		9,372		4.90
Total interest-earning assets	$	909,949	$	10,252		4.52	%	$	896,534	$	9,918		4.49	%

Noninterest-earning assets:
Cash and due from banks		24,768							29,908
Allowance for loan losses		(12,430)							(12,701)
Other assets		43,596							43,206
Total noninterest-earning assets		55,934							60,413
Total assets	$	965,883						$	956,947

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	123,663	$	103		0.33	%	$	126,593	$	106		0.34	%
Total savings deposits		287,911		271		0.38			290,006		264		0.37
Total time deposits		220,403		725		1.32			211,425		686		1.32
Total interest-bearing deposits		631,977		1,099		0.70			628,024		1,056		0.68
Borrowed funds and subordinated debentures		87,944		750		3.42			91,909		808		3.57
Total interest-bearing liabilities	$	719,921	$	1,849		1.03	%	$	719,933	$	1,864		1.05	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		168,585							161,729
Other liabilities		4,413							4,307
Total noninterest-bearing liabilities		172,998							166,036
Total shareholders' equity		72,964							70,978
Total liabilities and shareholders' equity	$	965,883						$	956,947

Net interest spread			$	8,403		3.49	%			$	8,054		3.44	%
Tax-equivalent basis adjustment				(34)							(34)
Net interest income			$	8,369						$	8,020
Net interest margin						3.70	%						3.64	%

(A)

Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 34 percent and applicable state rates.

(B)

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

UNITY BANCORP, INC.

QTD NET INTEREST MARGIN

June 30, 2015


(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
	For the three months ended
	June 30, 2015							June 30, 2014
	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits	$	20,259	$	6		0.12	%	$	47,859	$	10		0.08	%
FHLB stock		3,720		38		4.10			4,149		40		3.87
Securities:
Taxable		63,834		363		2.28			85,598		552		2.58
Tax-exempt		11,803		105		3.57			14,608		133		3.64
Total securities (A)		75,637		468		2.48			100,206		685		2.73
Loans:
SBA loans		47,249		605		5.14			53,965		643		4.77
SBA 504 loans		29,539		369		5.01			34,415		433		5.05
Commercial loans		422,371		5,276		5.01			370,345		4,738		5.13
Residential mortgage loans		243,821		2,716		4.47			185,016		2,052		4.44
Consumer loans		67,353		774		4.61			47,737		544		4.57
Total loans (B)		810,333		9,740		4.82			691,478		8,410		4.87
Total interest-earning assets	$	909,949	$	10,252		4.52	%	$	843,692	$	9,145		4.34	%

Noninterest-earning assets:
Cash and due from banks		24,768							24,368
Allowance for loan losses		(12,430)							(13,037)
Other assets		43,596							45,410
Total noninterest-earning assets		55,934							56,741
Total assets	$	965,883						$	900,433

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	123,663	$	103		0.33	%	$	128,351	$	109		0.34	%
Total savings deposits		287,911		271		0.38			261,419		188		0.29
Total time deposits		220,403		725		1.32			213,122		693		1.30
Total interest-bearing deposits		631,977		1,099		0.70			602,892		990		0.66
Borrowed funds and subordinated debentures		87,944		750		3.42			91,069		807		3.51
Total interest-bearing liabilities	$	719,921	$	1,849		1.03	%	$	693,961	$	1,797		1.03	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		168,585							143,720
Other liabilities		4,413							3,332
Total noninterest-bearing liabilities		172,998							147,052
Total shareholders' equity		72,964							59,420
Total liabilities and shareholders' equity	$	965,883						$	900,433

Net interest spread			$	8,403		3.49	%			$	7,348		3.31	%
Tax-equivalent basis adjustment				(34)							(43)
Net interest income			$	8,369						$	7,305
Net interest margin						3.70	%						3.49	%

(A)

(B)

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

UNITY BANCORP, INC.

YEAR TO DATE NET INTEREST MARGIN

June 30, 2015


(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)
	For the six months ended
	June 30, 2015							June 30, 2014
	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits	$	28,722	$	16		0.11	%	$	44,960	$	19		0.09	%
FHLB stock		3,783		81		4.32			4,069		87		4.31
Securities:
Taxable		65,431		750		2.31			89,183		1,278		2.87
Tax-exempt		11,893		212		3.59			15,718		289		3.68
Total securities (A)		77,324		962		2.51			104,901		1,567		2.99
Loans:
SBA loans		47,824		1,284		5.41			54,375		1,226		4.51
SBA 504 loans		31,457		715		4.58			33,075		832		5.07
Commercial loans		414,278		10,342		5.03			367,360		9,340		5.13
Residential mortgage loans		235,022		5,298		4.55			183,048		4,110		4.49
Consumer loans		64,868		1,473		4.58			46,843		1,039		4.47
Total loans (B)		793,449		19,112		4.86			684,701		16,547		4.86
Total interest-earning assets	$	903,278	$	20,171		4.50	%	$	838,631	$	18,220		4.37	%

Noninterest-earning assets:
Cash and due from banks		27,324							23,881
Allowance for loan losses		(12,565)							(13,222)
Other assets		43,403							44,510
Total noninterest-earning assets		58,162							55,169
Total assets	$	961,440						$	893,800

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	125,120	$	209		0.34	%	$	129,761	$	220		0.34	%
Total savings deposits		288,953		535		0.37			263,856		370		0.28
Total time deposits		215,939		1,411		1.32			209,148		1,337		1.29
Total interest-bearing deposits		630,012		2,155		0.69			602,765		1,927		0.64
Borrowed funds and subordinated debentures		89,916		1,558		3.49			91,167		1,606		3.50
Total interest-bearing liabilities	$	719,928	$	3,713		1.04	%	$	693,932	$	3,533		1.02	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		165,176							137,976
Other liabilities		4,359							3,251
Total noninterest-bearing liabilities		169,535							141,227
Total shareholders' equity		71,977							58,641
Total liabilities and shareholders' equity	$	961,440						$	893,800

Net interest spread			$	16,458		3.46	%			$	14,687		3.35	%
Tax-equivalent basis adjustment				(69)							(94)
Net interest income			$	16,389						$	14,593
Net interest margin						3.67	%						3.53	%

UNITY BANCORP, INC.

QUARTERLY ALLOWANCE FOR LOAN LOSSES AND LOAN QUALITY SCHEDULES

June 30, 2015


Amounts in thousands, except percentages	June 30, 2015			March 31, 2015			December 31, 2014			September 30, 2014			June 30, 2014
ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period	$	12,181		$	12,551		$	12,918		$	12,858		$	12,807
Provision for loan losses charged to expense		-			200			850			550			550
		12,181			12,751			13,768			13,408			13,357
Less: Chargeoffs
SBA loans		6			128			569			232			199
SBA 504 loans		-			589			-			-			-
Commercial loans		147			100			377			72			134
Residential mortgage loans		-			-			362			201			5
Consumer loans		7			30			-			211			203
Total chargeoffs		160			847			1,308			716			541
Add: Recoveries
SBA loans		2			37			12			111			10
SBA 504 loans		-			-			-			-			-
Commercial loans		370			201			31			95			31
Residential mortgage loans		10			39			40			20			-
Consumer loans		1			-			8			-			1
Total recoveries		383			277			91			226			42
Net chargeoffs (recoveries)		(223)			570			1,217			490			499
Balance, end of period	$	12,404		$	12,181		$	12,551		$	12,918		$	12,858

LOAN QUALITY INFORMATION:
Nonperforming loans (1)	$	8,837		$	9,141		$	11,368		$	11,212		$	11,929
Other real estate owned ("OREO")		2,265			1,975			1,162			1,658			1,115
Nonperforming assets		11,102			11,116			12,530			12,870			13,044
Less: Amount guaranteed by SBA		267			270			1,569			200			2,305
Net nonperforming assets	$	10,835		$	10,846		$	10,961		$	12,670		$	10,739

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

Performing Troubled Debt Restructurings (TDRs)	$	3,360		$	3,458		$	3,548		$	4,194		$	6,965
(1) Nonperforming TDRs included in nonperforming loans		2,843			2,911			2,960			3,473			741
Total TDRs	$	6,203		$	6,369		$	6,508		$	7,667		$	7,706

Allowance for loan losses to:
Total loans at quarter end		1.51	%		1.55	%		1.65	%		1.74	%		1.81	%
Nonperforming loans (1)		140.36			133.26			110.41			115.22			107.79
Nonperforming assets		111.73			109.58			100.17			100.37			98.57
Net nonperforming assets		114.48			112.31			114.51			101.96			119.73

QTD net chargeoffs (annualized) to QTD average loans:
SBA loans		0.03	%		0.76	%		4.35	%		0.90	%		1.40	%
SBA 504 loans		-			7.15			-			-			-
Commercial loans		(0.21)			(0.10)			0.34			(0.02)			0.11
Residential mortgage loans		(0.02)			(0.07)			0.59			0.36			0.01
Consumer loans		0.04			0.20			(0.05)			1.58			1.70
Total loans		(0.11)	%		0.30	%		0.63	%		0.27	%		0.29	%

Nonperforming loans to total loans		1.08	%		1.16	%		1.49	%		1.51	%		1.68	%
Nonperforming loans and TDRs to total loans		1.48			1.61			1.96			2.07			2.67
Nonperforming assets to total loans and OREO		1.35			1.41			1.64			1.73			1.84
Nonperforming assets to total assets		1.08			1.07			1.24			1.33			1.40

UNITY BANCORP, INC.

QUARTERLY FINANCIAL DATA

June 30, 2015


(In thousands, except percentages and per share amounts)	June 30, 2015			March 31, 2015			December 31, 2014			September 30, 2014			June 30, 2014
SUMMARY OF INCOME:
Total interest income	$	10,218		$	9,884		$	9,802		$	9,491		$	9,102
Total interest expense		1,849			1,864			1,914			1,859			1,797
Net interest income		8,369			8,020			7,888			7,632			7,305
Provision for loan losses		-			200			850			550			550
Net interest income after provision for loan losses		8,369			7,820			7,038			7,082			6,755
Total noninterest income		1,893			1,641			1,660			1,853			1,640
Total noninterest expense		6,652			6,502			6,045			6,241			6,144
Income before provision for income taxes		3,610			2,959			2,653			2,694			2,251
Provision for income taxes		1,182			1,020			952			808			723
Net income	$	2,428		$	1,939		$	1,701		$	1,886		$	1,528

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

COMMON SHARE DATA:
Market price per share	$	9.79		$	9.08		$	9.43		$	9.63		$	9.28
Dividends paid	$	0.03		$	0.03		$	0.03		$	0.03		$	0.02
Book value per common share	$	8.75		$	8.55		$	8.36		$	8.17		$	7.95
Weighted average common shares outstanding - Basic		8,425			8,417			8,378			7,847			7,605
Weighted average common shares outstanding - Diluted		8,524			8,514			8,478			7,946			7,690
Issued and outstanding common shares		8,425			8,423			8,388			8,370			7,607

OPERATING RATIOS (Annualized):
Return on average assets		1.01	%		0.82	%		0.70	%		0.82	%		0.68	%
Return on average equity		13.35			11.08			9.78			11.89			10.31
Efficiency ratio		64.99			67.30			63.68			65.80			70.81

BALANCE SHEET DATA:
Total assets	$	1,024,303		$	1,035,404		$	1,008,788		$	969,593		$	932,414
Total deposits		815,427			789,441			794,341			781,920			728,083
Total loans		821,696			784,642			761,825			744,366			708,889
Total securities		74,375			77,308			80,082			86,879			90,470
Total shareholders' equity		73,690			71,987			70,123			68,384			60,477
Allowance for loan losses		(12,404)			(12,181)			(12,551)			(12,918)			(12,858)

TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets		4.52	%		4.49	%		4.35	%		4.43	%		4.34	%
Interest-bearing liabilities		1.03			1.05			1.03			1.05			1.03
Net interest spread		3.49			3.44			3.32			3.38			3.31
Net interest margin		3.70			3.64			3.49			3.56			3.49

CREDIT QUALITY:
Nonperforming assets		11,102			11,116			12,530			12,870			13,044
QTD net chargeoffs (annualized) to QTD average loans		(0.11)	%		0.30	%		0.63	%		0.27	%		0.29	%
Allowance for loan losses to total loans		1.51			1.55			1.65			1.74			1.81
Nonperforming assets to total loans and OREO		1.35			1.41			1.64			1.73			1.84
Nonperforming assets to total assets		1.08			1.07			1.24			1.33			1.40

CAPITAL RATIOS AND OTHER:
Total equity to total assets	7.19	%	6.95	%	6.95	%	7.05	%	6.49	%
Leverage ratio	9.09		8.94		8.71		8.96		8.24
Common equity tier 1 risk-based capital ratio	9.39		9.25		n/a		n/a		n/a
Tier 1 risk-based capital ratio	11.33		11.22		11.57		11.58		10.86
Total risk-based capital ratio	12.59		12.48		12.83		12.84		12.12
Number of banking offices	15		15		15		15		15
Number of ATMs	16		16		16		16		16
Number of employees	177		166		169		163		171

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

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

UNITY BANCORP INC /NJ/ - FORM 8-K - EX-99.1 - July 20, 2015

Attached files

UNITY BANCORP INC /NJ/ Reports