SECURITIES AND EXCHANGE COMMISSION
FOR ANNUAL AND TRANSITIONAL REPORTS PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(X)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year endedDecember 31, 20132016
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to ________ Commission file number 1-12431 (Exact Name of Registrant as Specified in Its Charter)
New Jersey
| 22-3282551
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| New Jersey | 22-3282551 |
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
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64 Old Highway 22, Clinton, NJ | 08809 |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code(908) 730-7630 Securities registered pursuant to Section 12(b) of the Exchange Act:
Common Stock, no par valueNASDAQ
(Title of Each Class) (Name of Exchange on Which Registered)
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Common Stock, no par value | | NASDAQ |
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| (Title of Each Class) | | (Name of Exchange on Which Registered) |
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐ Accelerated filer ☐
Non-accelerated filer
☐ Smaller reporting company x☒
Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act
As of June 30,
2013,2016, the aggregate market value of the registrant’s Common Stock, no par value per share, held by non-affiliates of the registrant was
$35,705,836$74,804,082 and
5,028,9915,885,451 shares of the Common Stock were outstanding to non-affiliates. As of February 28,
2014, 7,579,3772017, 10,497,869 shares of the registrant’s Common Stock were outstanding.
Documents incorporated by reference:
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| | Portions of Unity Bancorp’s Annual Report to Shareholders for the fiscal year ended December 31, 2013 are incorporated by reference into Parts I, II and IV of this Annual Report on Form 10-K.
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| | Portions of Unity Bancorp’s Proxy Statement for the Annual Meeting of Shareholders to be filed no later than 120 days from December 31, 2013 are incorporated by reference into Part IIIPortions of Unity Bancorp’s Annual Report to Shareholders for the fiscal year ended December 31, 2016 are incorporated by reference into Parts I, II and IV of this Annual Report on Form 10-K.
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Portions of Unity Bancorp’s Proxy Statement for the Annual Meeting of Shareholders to be filed no later than 120 days from December 31, 2016 are incorporated by reference into Part III of this Annual Report on Form 10-K.
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| Description of Financial Data | | Page |
Part I | | | |
Item 1. | Business | | |
| a) General | | 4
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| b) Statistical Information | | 10
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Item 1A. | Risk Factors | | 11
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Item 1B. | Unresolved Staff Comments | | 17
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Item 2. | Properties | | 17
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Item 3. | Legal Proceedings | | 17
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Item 4. | Mine Safety Disclosures | | 17
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Part II | | | |
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | | 18
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Item 6. | Selected Financial Data | | 19
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Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations | | 19
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Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | | 19
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Item 8. | Financial Statements and Supplementary Data | | 19
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Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | | 19
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Item 9A. | Controls and Procedures | | 19
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Item 9B. | Other Information – None | | 19
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Part III | | | |
Item 10. | Directors, Executive Officers and Corporate Governance; Compliance with Section 16(a) of the Exchange Act | | 20
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Item 11. | Executive Compensation | | 20
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Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | 20
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Item 13. | Certain Relationships and Related Transactions and Director Independence | | 21
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Item 14. | Principal Accountant Fees and Services | | 21
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Part IV | | | |
Item 15. | Exhibits and Financial Statement Schedules | | 21
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| Signatures | | 24
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a)General
Unity Bancorp, Inc., (the "Company" or "Registrant"), is a bank holding company incorporated under the laws of the State of New Jersey to serve as a holding company for Unity Bank (the “Bank”). The Company was organized at the direction of the Board of Directors of the Bank for the purpose of acquiring all of the capital stock of the Bank. Pursuant to the New Jersey Banking Act of 1948 (the "Banking Act"), and pursuant to approval of the shareholders of the Bank, the Company acquired the Bank and became its holding company on December 1, 1994. The
only significantprimary activity of the Company is ownership and supervision of the Bank. The Company also owns 100% of the common equity of Unity (NJ) Statutory Trust
II and Unity (NJ) Statutory Trust III.II. The
trusts havetrust has issued $10.3
million and $5.2 million of preferred securities to
investors, respectively.investors. The Company serves as a holding company for its wholly-owned subsidiary, Unity Risk Management, Inc. Unity Risk Management, Inc. is the Bank's captive insurance company that insures risks to the bank not provided by the traditional commercial insurance market.
The Bank opened for business on September 16, 1991. The Bank received its charter from the New Jersey Department of Banking and Insurance on September 13, 1991. The Bank is a full-service commercial bank, providing a wide range of business and consumer financial services through its main office in Clinton, New Jersey and
fourteenfifteen additional New Jersey branches located in
Clinton, Edison,
Emerson, Flemington, Highland Park, Linden, Middlesex, North Plainfield, Phillipsburg, Scotch Plains, Somerset,
Somerville, South Plainfield, Union, Washington and Whitehouse. In addition, the Bank has one Pennsylvania branch located in Forks Township.
The Bank also operates a loan production office in Bergen County, New Jersey. The Bank's primary service area encompasses the Route 22/Route 78 corridors between the Forks Township, Pennsylvania office and its Linden, New Jersey branch.
The principal executive offices of the Company are located at 64 Old Highway 22, Clinton, New Jersey 08809, and the telephone number is
(908) 730-7630.(800) 618-2265. The Company’s website address is www.unitybank.com.
The Company's primary business is ownership and supervision of the Bank. The Company, through the Bank, conducts a traditional and community-oriented commercial banking business and offers services, including personal and business checking accounts, time deposits, money market accounts and regular savings accounts. The Company structures its specific services and charges in a manner designed to attract the business of the small and medium sized business and professional community, as well as that of individuals residing, working and shopping in its service area. The Company engages in a wide range of lending activities and offers commercial, Small Business Administration (“SBA”), consumer, mortgage, home equity and personal loans.
The Company's primary service area is defined as the neighborhoods served by the Bank's offices. The Bank's main office, located in Clinton, NJ, in combination with its Flemington and Whitehouse offices, serves the greater area of Hunterdon County. The Bank's North Plainfield,
Somerset and
SomersetSomerville offices serve those communities located in the northern, eastern and central parts of Somerset County and the southernmost communities of Union County. The Bank's Scotch Plains, Linden, and Union offices serve the majority of the communities in Union County and the southwestern communities of Essex County. The offices in Middlesex, South Plainfield, Highland Park, and Edison extend the Company's service area into Middlesex County. The Bank’s Phillipsburg and Washington offices serve Warren County. The
Bank's Emerson office serves Bergen County. The Bank’s Forks Township office serves Northampton County, Pennsylvania.
The Company is located in an extremely competitive area. The Company's service area is also serviced by national banks, major regional banks, large thrift institutions and a variety of credit unions. In addition, since passage of the Gramm-Leach-Bliley Financial Modernization Act of 1999 (the “Modernization Act”), securities firms and insurance companies have been allowed to acquire or form financial institutions, thereby increasing competition in the financial services market. Most of the Company's competitors have substantially more capital, and therefore greater lending limits than the Company. The Company's competitors generally have established positions in the service area and have greater resources than the Company with which to pay for advertising, physical facilities, personnel and interest on deposited funds. The Company relies on the competitive pricing of its loans, deposits and other services, as well as its ability to provide local decision-making and personal service in order to compete with these larger institutions.
At December 31,
2013,2016, the Company employed
148175 full-time and
3019 part-time employees. None of the Company's employees are represented by any collective bargaining units. The Company believes that its relations with its employees are good.
Executive Officers of Registrant
The following table sets forth certain information as of December 31,
2013,2016, regarding each executive officer of the Company who is not also a director.
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| Name, Age and Position | | Officer Since | | Principal Occupation During Past Five Years |
John Kauchak, 60,63, Chief Operating Officer and Executive Vice President of the Company and Bank | 2002
| 2002 | | Previously, Mr. Kauchak was the head of Deposit Operations for Unity Bank from 1996 to 2002. |
Alan J. Bedner, 43,45, Chief Financial Officer and Executive Vice President of the Company and Bank | 2003
| 2003 | | Previously, Mr. Bedner was Controller for Unity Bank from 2001 to 2003. |
Janice Bolomey, 45,49, Chief Administrative Officer and Executive Vice President of the Company and Bank | 2013
| 2013 | | Previously, Ms. Bolomey was Director of Sales for Unity Bank from 2002 to 2013. |
SUPERVISION AND REGULATION
General Supervision and Regulation
Bank holding companies and banks are extensively regulated under both federal and state law, and these laws are subject to change. As an example, in the summer of 2010, Congress passed, and the President signed, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) (discussed below). These laws and regulations are intended to protect depositors, not stockholders. To the extent that the following information describes statutory and regulatory provisions, it is qualified in its entirety by reference to the particular statutory and regulatory provisions. Any change in the applicable law or regulation may have a material effect on the business and prospects of the Company and the Bank. Management of the Company is unable to predict, at this time, the impact of future changes to laws and regulations.
General Bank Holding Company Regulation
General: As a bank holding company registered under the Bank Holding Company Act of 1956, as amended, (the "BHCA"), the Company is subject to the regulation and supervision of the Federal Reserve Board (the “FRB”). The Company is required to file with the FRB annual reports and other information regarding its business operations and those of its subsidiaries. Under the BHCA, the Company's activities and those of its subsidiaries are limited to banking, managing or controlling banks, furnishing services to or performing services for its subsidiaries or engaging in any other activity which the FRB determines to be so closely related to banking or managing or controlling banks as to be properly incident thereto.
The BHCA requires, among other things, the prior approval of the FRB in any case where a bank holding company proposes to; (i) acquire all or substantially all of the assets of any other bank; (ii) acquire direct or indirect ownership or control of more than 5% of the outstanding voting stock of any bank (unless it owns a majority of such bank's voting shares); or (iii) merge or consolidate with any other bank holding company. The FRB will not approve any acquisition, merger or consolidation that would have a substantially anti-competitive effect, unless the anti-competitive impact of the proposed transaction is clearly outweighed by a greater public interest in meeting the convenience and needs of the community to be served. The FRB also considers capital adequacy and other financial and managerial resources and future prospects of the companies and the banks concerned, together with the convenience and needs of the community to be served, when reviewing acquisitions or mergers.
The BHCA also generally prohibits a bank holding company, with certain limited exceptions, from; (i) acquiring or retaining direct or indirect ownership or control of more than 5% of the outstanding voting stock of any company which is not a bank or bank holding company; or (ii) engaging directly or indirectly in activities other than those of banking, managing or controlling banks, or performing services for its subsidiaries, unless such non-banking business is determined by the FRB to be so closely related to banking or managing or controlling banks as to be properly incident thereto. In making such determinations, the FRB is required to weigh the expected benefits to the public such as greater convenience, increased competition or gains in efficiency, against the possible adverse effects such as undue concentration of resources, decreased or unfair competition, conflicts of interest or unsound banking practices.
The BHCA was substantially amended through the Modernization Act. The Modernization Act permits bank holding companies and banks, which meet certain capital, management and Community Reinvestment Act standards, to engage in a broader range of non-banking activities. In addition, bank holding companies, which elect to become financial holding companies, may engage in certain banking and non-banking activities without prior FRB approval. Finally, the Modernization Act imposes certain privacy requirements on all financial institutions and their treatment of consumer information.
At this time, theThe Company has elected
not to become a financial holding company.
There are a number of obligations and restrictions imposed on bank holding companies and their depository institution subsidiaries by law and regulatory policy that are designed to minimize potential loss to the depositors of such depository institutions and the Federal Deposit Insurance Corporation (the “FDIC”) insurance fund in the event the depository institution becomes in danger of default. Under regulations of the FRB, a bank holding company is required to serve as a source of financial strength to its subsidiary depository institutions and to commit resources to support such institutions in circumstances where it might not do so absent such policy. The FRB also has the authority under the BHCA to require a bank holding company to terminate any activity or to relinquish control of a non-bank subsidiary upon the FRB's determination that such activity or control constitutes a serious risk to the financial soundness and stability of any bank subsidiary of the bank holding company.
Capital Adequacy Guidelines for Bank Holding Companies: The FRB has adopted risk-based capital guidelines for bank holding companies. The risk-based capital guidelines are designed to make regulatory capital requirements more sensitive to differences in risk profile among banks
In December 2010 and
bank holding companies, to account for off-balance sheet exposure and to minimize disincentives for holding liquid assets. Under these guidelines, assets and off-balance sheet items are assigned to broad-risk categories, each with appropriate weights. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance sheet items.The risk-based guidelines apply on a consolidated basis to bank holding companies with consolidated assets of $500 million or more. The minimum ratio of total capital to risk-weighted assets (including certain off-balance sheet activities, such as standby letters of credit) is 8%. At least 4% of the total capital is required to be "Tier I," consisting of common stockholders' equity and certain preferred stock and other qualifying hybrid instruments, less certain goodwill items and other intangible assets. The remainder, "Tier II Capital," may consist of the allowance for loan losses of up to 1.25% of risk-weighted assets and certain other securities which do not qualify as Tier I capital. Total capital is the sum of Tier I and Tier II capital, less reciprocal holdings of other banking organizations' capital instruments, investments in unconsolidated subsidiaries and any other deductions as determined by the FRB (determined on a case-by-case basis or as a matter of policy after formal rule-making).
Bank holding company assets are given risk-weights of 0%, 20%, 50% and 100%. In addition, certain off-balance sheet items are given similar credit conversion factors to convert them to asset-equivalent amounts to which an appropriate risk-weighting will apply. These computations result in the total risk-weighted assets. Most loans are assigned to the 100% risk category, except for performing first-mortgage loans that are fully secured by residential property, which carry a 50% risk-weighting. Most investment securities (including, primarily, general obligation claims of states or other political subdivisions of the United States) are assigned to the 20% category, except for municipal or state revenue bonds, which have a 50% risk-weighting, and direct obligations of the U.S. Treasury or obligations backed by the full faith and credit of the U.S. Government, which have a 0% risk-weighting. In converting off-balance sheet items, direct credit substitutes (including general guarantees and standby letters of credit backing financial obligations) are given a 100% risk-weighting. Transaction-related contingencies, such as standby letters of credit backing non-financial obligations and undrawn commitments (including commercial credit lines with an initial maturity of more than one year), have a 50% risk-weighting. Short-term commercial letters of credit have a 20% risk-weighting and certain short-term unconditionally cancelable commitments have a 0% risk-weighting.
In addition to the risk-based capital guidelines, the FRB has adopted a minimum Tier I capital (leverage) ratio, under which a bank holding company must maintain a minimum level of Tier I capital to average total consolidated assets of at least 3% in the case of a bank holding company that has the highest regulatory examination rating and is not contemplating significant growth or expansion. All other bank holding companies are expected to maintain a leverage ratio of at least 100 to 200 basis points above the stated minimum.
The Company is currently in compliance with these minimum Federal capital requirements. However, recently adopted regulations will change the Company’s capital requirements in the future.
The Group of Governors and Heads of Supervision, the oversight body ofJanuary 2011, the Basel Committee on Banking Supervision adopted Basel III in September 2010, which constitutes a set(the “Basel Committee”) published the final texts of reforms on capital reform measures designedand liquidity generally referred to strengthen the regulation, supervision and risk management of banking organizations worldwide.as “Basel III.” In order to implement Basel III and certain additional capital changes required by the Dodd-Frank Act, on July 9, 2013, the FRB, approved, as an interim final rule, the regulatory capital requirements for U.S. bank holding companies, such as us, substantially similar to final rules issued by the FDIC and the Office of the Comptroller of the Currency.
Currency adopted final rules (the “New Rules”), which implement certain provisions of Basel III and the Dodd-Frank Act. The interim final rule includes newNew Rules replaced the existing general risk-based capital rules of the various banking agencies with a single, integrated regulatory capital framework. The New Rules require higher capital cushions and leveragemore stringent criteria for what qualifies as regulatory capital. The New Rules were effective for the Bank and the Company on January 1, 2015.
Under the New Rules, the Company and the Bank are required to maintain the following minimum capital ratios, thatexpressed as a percentage of risk-weighted assets:
•Common Equity Tier 1 Capital Ratio of 4.5% (the “CET1”);
•Tier 1 Capital Ratio (CET1 capital plus “Additional Tier 1 capital”) of 6.0%; and
•Total Capital Ratio (Tier 1 capital plus Tier 2 capital) of 8.0%.
In addition, the Company and the Bank will be phased-in from 2015subject to 2019. The rule includes a new common equityleverage ratio of 4% (calculated as Tier 1 capital to average consolidated assets as reported on the consolidated financial statements).
The New Rules also require a “capital conservation buffer.” When fully phased in on January 1 2019, the Company and the Bank will be required to maintain a 2.5% capital conservation buffer, which is composed entirely of CET1, on top of the minimum risk-weighted asset ratios described above, resulting in the following minimum capital ratios:
•CET1 of 7%;
•Tier 1 Capital Ratio of 8.5%; and
•Total Capital Ratio of 10.5%.
The purpose of the capital conservation buffer is to absorb losses during periods of economic stress. Banking institutions with a CET1, Tier 1 Capital Ratio and Total Capital Ratio above the minimum set forth above but below the capital conservation buffer will face constraints on their ability to pay dividends, repurchase equity and pay discretionary bonuses to executive officers, based on the amount of the shortfall. The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level, and it increases by 0.625% on each subsequent January 1 until it reaches 2.5% on January 1, 2019.
The New Rules provide for several deductions from and adjustments to CET1, which are being phased in between January 1, 2015 and January 1, 2018. For example, mortgage servicing rights, deferred tax assets dependent upon future taxable income and significant investments in common equity issued by nonconsolidated financial entities must be deducted from CET1 to the extent that any one of those categories exceeds 10% of CET1 or all such categories in the aggregate exceed 15% of CET1.
Under the New Rules, banking organizations such as the Company and the Bank may make a one-time permanent election regarding the treatment of accumulated other comprehensive income items in determining regulatory capital ratios. Effective as of January 1, 2015, the Company and the Bank elected to exclude accumulated other comprehensive income items for purposes of determining regulatory capital.
While the New Rules generally require the phase-out of non-qualifying capital instruments such as trust preferred securities and cumulative perpetual preferred stock, holding companies with less than $15 billion in total consolidated assets as of December 31, 2009, such as the Company, may permanently include non-qualifying instruments that were issued and included in Tier 1 or Tier 2 capital prior to May 19, 2010 in Additional Tier 1 or Tier 2 capital until they redeem such instruments or until the instruments mature.
The New Rules prescribe a standardized approach for calculating risk-weighted assets. Depending on the nature of the assets, the risk categories generally range from 0% for U.S. Government and agency securities, to 600% for certain equity exposures, and result in higher risk weights for a variety of asset categories. In addition, the New Rules provide more advantageous risk weights for derivatives and repurchase-style transactions cleared through a qualifying central counterparty and increase the scope of eligible guarantors and eligible collateral for purposes of credit risk mitigation.
Consistent with the Dodd-Frank Act, the New Rules adopt alternatives to credit ratings for calculating the risk-weighting for certain assets.
Pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), each federal banking agency has promulgated regulations, specifying the levels at which an insured depository institution such as the Bank would be considered “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” or “critically undercapitalized,” and providing for certain mandatory and discretionary supervisory actions based on the capital level of the institution. To qualify to engage in financial activities under the Gramm-Leach-Bliley Act, all depository institutions must be “well capitalized.”
The New Rules also revised the regulations implementing these provisions of FDICIA, to change the capital levels applicable to each designation. Under the New Rules, an institution will be classified as “well capitalized” if it (i) has a total risk-based capital ratio of
4.5% andat least 10.0 percent, (ii) has a Tier 1 risk-based capital ratio of at least 8.0 percent, (iii) has a Tier 1 leverage ratio of at least 5.0 percent, (iv) has a common equity Tier 1 capital
conservation bufferratio of
2.5%at least 6.5%, and (v) meets certain other requirements. An institution will be classified as “adequately capitalized” if it (i) has a total risk-based capital ratio of
risk-weighted assets, which is in addition to theat least 8.0 percent, (ii) has a Tier 1
and Total risk-based capital
requirements. The interim final rule also raises the minimum ratio of
at least 6.0 percent, (iii) has a Tier 1 leverage ratio of at least 4.0 percent, (iv) has a common equity Tier 1 capital
to risk-weighted assets from 4.0% to 6.0%ratio of at least 4.5%, and
requires(v) does not meet the definition of “well capitalized.” An institution will be classified as “undercapitalized” if it (i) has a
minimumtotal risk-based capital ratio of less than 8.0 percent, (ii) has a Tier 1 risk-based capital ratio of less than 6.0 percent, (iii) has a Tier 1 leverage ratio of
4.0%. The required minimum ratio of total capital to risk-weighted assets will remain 8.0%. The new risk-based capital requirements (except for the capital conservation buffer) will become effective on January 1, 2015. The capital conservation buffer will be phased in over four years beginning on January 1, 2016, withless than 4.0 percent, or (iv) has a
maximum buffer of 0.625% of risk-weighted assets for 2016, 1.25% for 2017, 1.875% for 2018, and 2.5% for 2019 and thereafter. Failure to maintain the required capital conservation buffer will result in limitations on capital distributions and on discretionary bonuses to executive officers.The following chart compares the risk-based capital required under existing rules to those prescribed under the interim final rule under the phase-in period described above:
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| | Current Treatment | | Treatment in Final Rule | |
Leverage ratio | | 4.00 | % | 4.00 | % |
Common equity tier 1 capital (CET1) ratio | | N/A | | 4.50 | % |
Additional tier 1 | | N/A | | 1.50 | % |
Tier 1 capital ratio | | 4.00 | % | 6.00 | % |
Tier 2 | | 4.00 | % | 2.00 | % |
Total capital ratio | | 8.00 | % | 8.00 | % |
Capital conservation buffer | | N/A | | 2.50 | % |
The interim final rule also implements revisions and clarifications consistent with Basel III regarding the various components ofcommon equity Tier 1 capital includingratio of less than 4.5%. An institution will be classified as “significantly undercapitalized” if it (i) has a total risk-based capital ratio of less than 6.0 percent, (ii) has a Tier 1 risk-based capital ratio of less than 4.0 percent, (iii) has a Tier 1 leverage ratio of less than 3.0 percent, or (iv) has a common equity unrealized gains and losses and instruments that will no longer qualify as Tier 1 capital. The interim final rule also sets forth certain changes for the calculationcapital ratio of risk-weighted assets that weless 3.0%. An institution will be requiredclassified as “critically undercapitalized” if it has a tangible equity to implement beginning January 1, 2015. Managementtotal assets ratio that is currently evaluating the provisions of the interim final rule and its expected impact. Based on our current capital composition and levels, management does not presently anticipate that the interim final rule presentsequal to or less than 2.0 percent. An insured depository institution may be deemed to be in a material risk to our financial condition or results of operations.
lower capitalization category if it receives an unsatisfactory examination rating.
As a New Jersey-chartered commercial bank, the Bank is subject to the regulation, supervision, and control of the New Jersey Department of Banking and Insurance (the “Department”). As an FDIC-insured institution, the Bank is subject to regulation, supervision and control of the FDIC, an agency of the federal government. The regulations of the FDIC and the Department affect virtually all activities of the Bank, including the minimum level of capital that the Bank must maintain, the ability of the Bank to pay dividends, the ability of the Bank to expand through new branches or acquisitions and various other matters.
Insurance of Deposits: The Dodd-Frank Act has caused significant changes in the FDIC’s insurance of deposit accounts. Among other things, the Dodd-Frank Act permanently increased the FDIC deposit insurance limit to $250 thousand per depositor. On February 7, 2011 the FDIC announced the approval of the assessment system mandated by the Dodd-Frank Act. Dodd-Frank required that the base on which deposit insurance assessments are charged be revised from one based on domestic deposits to one based on assets. The FDIC’s rule to base the assessment
base on average total consolidated assets minus average tangible equity instead of domestic deposits lowered assessments for many community banks with less than $10 billion in assets and reduced the Company’s costs.
Dividend Rights: Under the Banking Act, a bank may declare and pay dividends only if, after payment of the dividend, the capital stock of the bank will be unimpaired and either the bank will have a surplus of not less than 50% of its capital stock or the payment of the dividend will not reduce the bank's surplus. Unless and until the Company develops other lines of business, payments of dividends from the Bank will remain the Company’s primary source of income and the primary source of funds for dividend payments to the shareholders of the Company. Capital Requirements: The FDIC imposes on the Bank minimum regulatory requirements that are substantially the same as those applicable to the Company under FRB regulations discussed above.
Sarbanes-Oxley Act
On July 30, 2002, the Sarbanes-Oxley Act (“SOX”) was enacted. SOX is not a banking law, but applies to all public companies, including the Company. The stated goals of SOX are to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. SOX is the most far-reaching U.S. securities legislation enacted in some time. SOX generally applies to all companies, both U.S. and non-U.S., that file or are required to file periodic reports with the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended.
SOX includes very specific additional disclosure requirements and corporate governance rules and requires the SEC and securities exchanges to adopt extensive additional disclosure, corporate governance and other related rules and mandates further studies of specific issues by the SEC. SOX represents significant federal involvement in matters traditionally left to state regulatory systems such as, the regulation of the accounting profession, and to state corporate law, such as the relationship between a board of directors and management and between a board of directors and its committees.
SOX addresses, among other matters:
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| | certification of financial statements by the Chief Executive Officer and the Chief Financial Officer;
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| | the forfeiture of bonuses or other incentive-based compensation and profits from the sale of an issuer’s securities by directors and senior officers in the twelve-month period following initial publication of any financial statements that later require restatement;
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| | a prohibition on insider trading during pension plan black-out periods;
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| | disclosure of off-balance sheet transactions;
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| | a prohibition on personal loans to officers and directors, unless subject to Federal Reserve Regulation O;
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| | expedited filing requirements for Form 4 statements of changes of beneficial ownership of securities required to be filed by officers, directors and 10% shareholders;
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| | disclosure of whether or not a company has adopted a code of ethics;
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| | “real time” filing of periodic reports;
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| | auditor independence; and
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| | various increased criminal penalties for violations of securities laws.
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Complying with the requirements of SOX as implemented by the SEC has increased our compliance costs and could make it more difficult to attract and retain board members.
Dodd-Frank Wall Street Reform and Consumer Protection Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), enacted on July 21, 2010, significantly changed the bank regulatory landscape and has impacted and will continue to impact the lending, deposit, investment, trading and operating activities of insured depository institutions and their holding companies. The Dodd-Frank Act requires various federal agencies to adopt a broad range of new rules and regulations. The Dodd-Frank Act, among other things:
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| | capped debit card interchange fees for institutions with $10 billion in assets or more at $0.21 plus 5 basis points times the transaction amount, a substantially lower rate than the average rate in effect prior to adoption of the Dodd-Frank Act;
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| | provided for an increase in the FDIC assessment for depository institutions with assets of $10 billion or more, increases in the minimum reserve ratio for the DIF from 1.15% to 1.35% and changes the basis for determining FDIC premiums from deposits to assets;
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capped debit card interchange fees for institutions with $10 billion in assets or more at $0.21 plus 5 basis points times the transaction amount, a substantially lower rate than the average rate in effect prior to adoption of the Dodd-Frank Act; | ×
| | permanently increased the deposit insurance coverage to $250 thousand and allowed depository institutions to pay interest on checking accounts;
|
provided for an increase in the FDIC assessment for depository institutions with assets of $10 billion or more, increases in the minimum reserve ratio for the DIF from 1.15% to 1.35% and changes the basis for determining FDIC premiums from deposits to assets; | ×
| | created a new Consumer Financial Protection Bureau (“CFPB”) that has rulemaking authority for a wide range of consumer financial protection laws that apply to all banks and has broad authority to enforce these laws;
|
permanently increased the deposit insurance coverage to $250 thousand and allowed depository institutions to pay interest on checking accounts; | ×
| | provided for new disclosure and other requirements relating to executive compensation and corporate governance;
|
created a new Consumer Financial Protection Bureau (“CFPB”) that has rulemaking authority for a wide range of consumer financial protection laws that apply to all banks and has broad authority to enforce these laws; | ×
| | changed standards for Federal preemption of state laws related to federally-chartered institutions and their subsidiaries;
|
provided for new disclosure and other requirements relating to executive compensation and corporate governance; | ×
| | provided mortgage reform provisions regarding a customer’s ability to repay, restricting variable rate lending by requiring the ability to repay to be determined for variable rate loans by using the maximum rate that will apply during the first five years of a variable rate loan term, and making more loans subject to provisions for higher cost loans, new disclosures, and certain other revisions; and
|
changed standards for Federal preemption of state laws related to federally-chartered institutions and their subsidiaries; | ×
| | created a financial stability oversight council that will recommend to the Federal Reserve increasingly strict rules for capital, leverage, liquidity, risk managementprovided mortgage reform provisions regarding a customer’s ability to repay, restricting variable rate lending by requiring the ability to repay to be determined for variable rate loans by using the maximum rate that will apply during the first five years of a variable rate loan term, and making more loans subject to provisions for higher cost loans, new disclosures, and certain other revisions; and other requirements as companies grow in size and complexity.
|
created a financial stability oversight council that will recommend to the Federal Reserve increasingly strict rules for capital, leverage, liquidity, risk management and other requirements as companies grow in size and complexity.
The Dodd-Frank Act also imposes new obligations on originators of residential mortgage loans, such as the Bank. Among other things, the Dodd-Frank Act requires originators to make a reasonable and good faith determination based on documented information that a borrower has a reasonable ability to repay a particular mortgage loan over the long term. If the originator cannot meet this standard, the
loanmortgage may be unenforceable. The Dodd-Frank Act contains an exception from this ability-to-repay rule for “Qualified Mortgages”. A rule issued by the CFPB in January 2013, and effective January 10, 2014, sets forth specific underwriting criteria for a loan to qualify as a Qualified Mortgage. The criteria generally exclude loans that (1) are interest-only, (2) have excessive upfront points or fees, or (3) have negative amortization features, balloon payments, or terms in excess of 30 years. The underwriting criteria also impose a maximum debt to income ratio of 43%, based upon documented and verifiable information. If a loan meets these criteria and is not a “higher priced loan” as defined in FRB regulations, the CFPB rule establishes a safe harbor preventing a consumer from asserting the failure of the originator to establish the consumer’s ability to repay. However, a consumer may assert the lender’s failure to comply with the ability-to-repay rule for all residential mortgage loans other than Qualified Mortgages, and may challenge whether a loan in fact qualified as a Qualified Mortgage.
Although the majority of residential mortgages historically originated by the Bank would be considered Qualified Mortgages, the Bank has and may continue to make residential mortgage loans that would not qualify.
The Bank is still evaluating the impact of the recently issued Qualified Mortgage definition and related ability-to-repay rules, as well as other rules recently issued by the by the CFPB related to mortgage origination and servicing, to determine if such rules will have any long-term impact on its mortgage loan origination and servicing activities. As a result of such rules, the Bank might experience increased compliance costs, loan losses, litigation related expenses and delays in taking title to real estate collateral, if these loans do not perform and borrowers challenge whether the Bank satisfied the ability-to-repay rule upon originating the loan.
The requirements of the Dodd-Frank Act and other regulatory reforms continue to be implemented.
In addition, as a result of the 2016 election, many commentators believe that some portions of the Dodd-Frank Act may be replaced or amended. It is difficult to predict at this time what specific impact certain provisions and yet-to-be-finalized rules and regulations will have on us, including any regulations promulgated by the CFPB. Financial reform legislation and rules could have adverse implications on the financial industry, the competitive environment, and our ability to conduct business. Management will have to apply resources to ensure compliance with all applicable provisions of regulatory reforms, including the Dodd-Frank Act and any implementing rules, which may increase our costs of operations and adversely impact our earnings.
| a)
| | Statistical Information
|
b)Statistical Information
The table below provides a cross-reference to portions of Unity Bancorp. Inc.’s Annual Report to Shareholders for the year ended December 31,
20132016 (Exhibit 13 hereto), which, to the extent indicated, is incorporated by reference herein. Information that is not applicable is indicated by (N/A):
| | |
| | | |
| Description of Financial Data | | Exhibit 13 Pages |
| | |
I. Distribution of Assets, Liabilities, and Stockholders' Equity; Interest Rates and Interest Differential | | |
|
A. Analysis of Net Interest Earnings | | 26 24 |
|
B. Average Balance Sheets | | 27 26 |
|
C. Rate/Volume Analysis | | 29 28 |
|
| | |
|
II. Investment Portfolio | | |
|
A. Book value of investment securities | | 59 62 |
|
B. Investment securities by range of maturity with corresponding average yields | | 59 62 |
|
C. Securities of issuers exceeding ten percent of stockholders' equity | | N/A |
|
| | |
|
III. Loan Portfolio | | |
|
A. Types of loans | | 32 31 |
|
B. Maturities and sensitivities of loans to changes in interest rates | | 34 33 |
|
C. Risk elements | | |
|
1) Nonaccrual, past due and restructured loans | | 36 35 |
|
2) Potential problem loans | | 36 35 |
|
3) Foreign outstandings | | N/A |
|
4) Loan concentrations | | 32 33 |
|
D. Other interest-bearing assets | | N/A |
|
| | |
|
IV. Summary of Loan Loss Experience | | |
|
A. Analysis of the allowance for loan losses | | 37 36 |
|
B. Allocation of the allowance for loan losses | | 38 37 |
|
| | |
|
V. Deposits | | |
|
A. Average amount and average rate paid on major categories of deposits | | 27 26 |
|
B. Other categories of deposits | | N/A |
|
C. Deposits by foreign depositors in domestic offices | | N/A |
|
D. Time deposits of $100,000 or more by remaining maturity | | 73 76 |
|
E. Time deposits of $100,000 or more by foreign offices | | N/A |
|
| | |
|
VI. Return on Equity and Assets | | 25 24 |
|
| | |
|
VII. Short-term Borrowings | | |
|
A. Amounts outstanding | | 73 77 |
|
B. Maximum amount of borrowings in each category outstanding at any month-end | | 73 77 |
|
C. Average amount outstanding | | 73 77 |
|
Our business, financial condition, results of operations and the trading price of our securities can be materially and adversely affected by many events and conditions including the following:
We have been and may continue to be adversely affected by national financial markets and economic conditions, as well as local conditions.
Our business and results of operations are affected by the financial markets and general economic conditions in the United States, including factors such as the level and volatility of interest rates, inflation, home prices, unemployment and under-employment levels, bankruptcies, household income, consumer spending, investor confidence and the strength of the U.S. economy. The deterioration of any of these conditions can adversely affect our securities and loan portfolios, our level of charge-offs and provision for credit losses, our capital levels, liquidity and our results of operations.
In addition, we are affected by the economic conditions within our New Jersey and Pennsylvania trade areas.
Though there have been signs of improvement, economic growth in these areas has been slow to recover. Unlike larger banks that are more geographically diversified, we provide banking and financial services primarily to customers in the
sixseven counties in the New Jersey market and one county in Pennsylvania in which we have branches, so any decline in the economy of New Jersey or eastern Pennsylvania could have an adverse impact on us.
Our loans, the ability of borrowers to repay these loans, and the value of collateral securing these loans are impacted by economic conditions. Our financial results, the credit quality of our existing loan portfolio, and the ability to generate new loans with acceptable yield and credit characteristics may be adversely affected by changes in prevailing economic conditions, including declines in real estate values, changes in interest rates, adverse employment conditions and the monetary and fiscal policies of the federal government. Although economic conditions in our primary market have fared better than other areas of the United States, we cannot assure you that these conditions will continue to prevail. We cannot assure you that positive trends or developments discussed in this annual report will continue or that negative trends or developments will not have a significant adverse effect on us.
A significant portion of our loan portfolio is secured by real estate, and events that negatively impact the real estate market could hurt our business.
A significant portion of our loan portfolio is secured by real estate. As of December 31,
2013,2016, approximately 96 percent of our loans had real estate as a primary or secondary component of collateral. The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended.
Continued weakening ofWeakness in the real estate market in our primary market areas could result in an increase in the number of borrowers who default on their loans and a reduction in the value of the collateral securing their loans, which in turn could have an adverse effect on our profitability and asset quality. Any future declines in home prices in the New Jersey and Pennsylvania markets we serve also may result in increases in delinquencies and losses in our loan portfolios. Stress in the real estate market, combined with
weakany weakness in economic conditions and
continuedany future elevated unemployment levels could drive losses beyond that which is provided for in our allowance for loan losses. In that event, our earnings could be adversely affected.
Our offering of alternative credit products may expose us to increased lending risks.
The Dodd-Frank Act imposes new obligations on originators of residential mortgage loans. Among other things, the Dodd-Frank Act requires originators to make a reasonable and good faith determination based on documented information that a borrower has a reasonable ability to repay a particular mortgage loan over the long term. If the originator cannot meet this standard, the loan may be unenforceable. The Dodd-Frank Act contains an exception from this ability-to-repay rule for “Qualified Mortgages”. A rule issued by the CFPB in January 2013, and effective January 10, 2014, sets forth specific underwriting criteria for a loan to qualify as a Qualified Mortgage. The criteria generally exclude loans that (1) are interest-only, (2) have excessive upfront points or fees, or (3) have negative amortization features, balloon payments, or terms in excess of 30 years. The underwriting criteria also impose a maximum debt to income ratio of 43%, based upon documented and verifiable information. If a loan meets these criteria and is not a “higher priced loan” as defined in Federal Reserve regulations, the CFPB rule establishes a safe harbor preventing a consumer from asserting the failure of the originator to establish the consumer’s ability to repay. However, a consumer may assert the lender’s failure to comply with the ability-to-repay rule for all residential mortgage loans other than Qualified Mortgages.
Although the majority of residential mortgages historically originated by the Bank would be considered Qualified Mortgages, the Bank has and may continue to make residential mortgage loans that would not qualify. The Bank
is still evaluatinghas evaluated the impact of the
recently issued Qualified Mortgage definition and related ability-to-repay rules, as well as other rules recently issued by the by the CFPB related to mortgage origination and servicing,
to determine if such rulesand does not believe it will have any long-term impact on its mortgage loan origination and servicing activities. As a result of such rules, the Bank might experience increased compliance costs, loan losses, litigation related expenses and delays in taking title to real estate collateral, if these loans do not perform and borrowers challenge whether the Bank satisfied the ability-to-repay rule upon originating the loan.
There is a risk that the SBA will not honor their guarantee.
The Company has historically been a participant in various SBA lending programs which guarantee up to 90% of the principal on the underlying loan. There is a risk that the SBA will not honor their guarantee if a loan is not underwritten and administered to SBA guidelines. The Company follows the underwriting guidelines of the SBA; however our ability to manage this will depend on our ability to continue to attract, hire and retain skilled employees who have knowledge of the SBA program.
There is a risk that we may not be repaid in a timely manner, or at all, for loans we make.
The risk of nonpayment (or deferred or delayed payment) of loans is inherent in commercial banking. Such nonpayment, or delayed or deferred payment of loans to the Company, if they occur, may have a material adverse effect on our earnings and overall financial condition. Additionally, in compliance with applicable banking laws and regulations, the Company maintains an allowance for loan losses created through charges against earnings. As of December 31,
2013,2016, the Company’s allowance for loan losses was
$13.1$12.6 million, or
1.941.29 percent of our total loan portfolio and
85.98173.82 percent of our nonperforming loans. The Company’s marketing focus on small to medium size businesses may result in the assumption by the Company of certain lending risks that are different from or greater than those which would apply to loans made to larger companies. We seek to minimize our credit risk exposure through credit controls, which include evaluation of potential borrowers’ available collateral, liquidity and cash flow. However, there can be no assurance that such procedures will actually reduce loan losses.
We have a significant level of nonperforming assets, and this has, and will continue, to affect our results of operations.
At December 31, 2013, our total nonperforming assets equaled $15.9 million or 2.34 percent of total loans and OREO. This is a significant level of nonperforming assets compared to our peer group institutions. Our level of nonperforming assets reflects the general economic slowdown in our marketplace and its effect on our borrowers, and our focus on SBA lending, which may entail greater credit risk than other types of lending. This deterioration in credit quality has negatively impacted our results of operations, through additional provisions for loan losses and reduced interest income, and will continue to impact our performance until these assets are resolved. In addition, future increases in our nonperforming assets will further negatively affect our results of operations. We can give you no assurance that our nonperforming assets will not increase further.
Our allowance for loan losses may not be adequate to cover actual losses.
Like all financial institutions, we maintain an allowance for loan losses to provide for loan defaults and nonperformance. Our allowance for loan losses may not be adequate to cover actual losses, and future provisions for loan losses could materially and adversely affect the results of our operations. Risks within the loan portfolio are analyzed on a continuous basis by management; and, periodically, by an independent loan review function and by the Audit Committee. A risk system, consisting of multiple-grading categories, is utilized as an analytical tool to assess risk and the appropriate level of loss reserves. Along with the risk system, management further evaluates risk characteristics of the loan portfolio under current economic conditions and considers such factors as the financial condition of the borrowers, past and expected loan loss experience and other factors management feels deserve recognition in establishing an adequate reserve. This risk assessment process is performed at least quarterly and, as adjustments become necessary, they are realized in the periods in which they become known. The amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates that may be beyond our control, and these losses may exceed current estimates. State and federal regulatory agencies, as an integral part of their examination process, review our loans and allowance for loan losses and
have in the past requiredmay require an increase in our allowance for loan losses. Although we believe that our allowance for loan losses is adequate to cover probable and reasonably estimated losses, we cannot assure you that we will not further increase the allowance for loan losses or that our regulators will not require us to increase this allowance. Either of these occurrences could adversely affect our earnings.
We are subject to interest rate risk and variations in interest rates may negatively affect our financial performance.
Net interest income, the difference between interest earned on our interest-earning assets and interest paid on interest-bearing liabilities, represents a significant portion of our earnings. Both increases and decreases in the interest rate environment may reduce our profits. Interest rates are subject to factors which are beyond our control, including general economic conditions, competition and policies of various governmental and regulatory agencies, such as the Federal Reserve Board. Changes in monetary policy, including changes in interest rates, could influence not only the interest Unity receives on loans and investment securities and the amount of interest it pays on deposits and borrowings, but such changes could also affect (i) Unity’s ability to originate loans and obtain deposits, (ii) the fair value of Unity’s financial assets and liabilities, including the held to maturity and available for sale securities portfolios, and (iii) the average duration of Unity’s interest-earning assets. This also includes the risk that interest-earning assets may be more responsive to changes in interest rates than interest-bearing liabilities, or vice versa (repricing risk), the risk that the individual interest rates or rate indices underlying various interest-earning assets and interest-bearing liabilities may not change in the same degree over a given time period (basis risk), and the risk of changing interest rate relationships across the spectrum of interest-earning asset and interest-bearing liability maturities (yield curve risk).
The banking business is subject to significant government regulations.
We are subject to extensive governmental supervision, regulation and control. These laws and regulations are subject to change, and may require substantial modifications to our operations or may cause us to incur substantial additional compliance costs. These laws and regulations are designed to protect depositors and the public, but not our shareholders. In addition, future legislation and government policy could adversely affect the commercial banking industry and our operations. Such governing laws can be anticipated to continue to be the subject of future modification. Our management cannot predict what effect any such future modifications will have on our operations. In addition, the primary focus of Federal and state banking regulation is the protection of depositors and not the shareholders of the regulated institutions.
For example, the
recently adopted Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) has resulted in substantial new compliance costs, and may restrict certain sources of revenue. The Dodd-Frank Act was signed into law on July 21, 2011. Generally, the Act is effective the day after it was signed into law, but different effective dates apply to specific sections of the law, many of which will not become effective until various Federal regulatory agencies have promulgated rules implementing the statutory provisions. Uncertainty remains as to the ultimate impact of the Dodd-Frank Act, which could have a material adverse impact either on the financial services industry as a whole, or on our business, results of operations and financial condition. The Dodd-Frank Act, among other things:
| ×
| | capped debit card interchange fees for institutions with $10 billion in assets or more at $0.21 plus 5 basis points times the transaction amount, a substantially lower rate than the average rate in effect prior to adoption of the Dodd-Frank Act;
|
| ×
| | provided for an increase in the FDIC assessment for depository institutions with assets of $10 billion or more, increases in the minimum reserve ratio for the DIF from 1.15% to 1.35% and changes the basis for determining FDIC premiums from deposits to assets;
|
| ×
| | permanently increased the deposit insurance coverage to $250 thousand and allowed depository institutions to pay interest on checking accounts;
|
capped debit card interchange fees for institutions with $10 billion in assets or more at $0.21 plus 5 basis points times the transaction amount, a substantially lower rate than the average rate in effect prior to adoption of the Dodd-Frank Act; | ×
| | created a new Consumer Financial Protection Bureau (“CFPB”) that has rulemaking authority for a wide range of consumer financial protection laws that apply to all banks and has broad authority to enforce these laws;
|
provided for an increase in the FDIC assessment for depository institutions with assets of $10 billion or more, increases in the minimum reserve ratio for the DIF from 1.15% to 1.35% and changes the basis for determining FDIC premiums from deposits to assets; | ×
| | provided for new disclosure and other requirements relating to executive compensation and corporate governance;
|
permanently increased the deposit insurance coverage to $250 thousand and allowed depository institutions to pay interest on checking accounts; | ×
| | changed standards for Federal preemption of state laws related to federally-chartered institutions and their subsidiaries;
|
created a new Consumer Financial Protection Bureau (“CFPB”) that has rulemaking authority for a wide range of consumer financial protection laws that apply to all banks and has broad authority to enforce these laws; | ×
| | provided mortgage reform provisions regarding a customer’s ability to repay, restricting variable rate lending by requiring the ability to repay to be determined for variable rate loans by using the maximum rate that will apply during the first five years of a variable rate loan term, and making more loans subject to provisions for higher cost loans, new disclosures, and certain other revisions; and
|
provided for new disclosure and other requirements relating to executive compensation and corporate governance; | ×
| | created a financial stability oversight council that will recommend to the Federal Reserve increasingly strict rules for capital, leverage, liquidity, risk management and other requirements as companies grow in size and complexity.
|
changed standards for Federal preemption of state laws related to federally-chartered institutions and their subsidiaries;13
provided mortgage reform provisions regarding a customer’s ability to repay, restricting variable rate lending by requiring the ability to repay to be determined for variable rate loans by using the maximum rate that will apply during the first five years of a variable rate loan term, and making more loans subject to provisions for higher cost loans, new disclosures, and certain other revisions; and
created a financial stability oversight council that will recommend to the Federal Reserve increasingly strict rules for capital, leverage, liquidity, risk management and other requirements as companies grow in size and complexity.
In addition, inin order to implement Basel III and certain additional capital changes required by the Dodd-Frank Act, on July 9, 2013, the FRB approved, as an interim final rule, the regulatory capital requirements for U.S. bank holding companies, such as us, substantially similar to final rules issued by the FDIC and the Office of the Comptroller of the Currency. These new requirements are likely to increase our capital requirements in future periods. See “Supervisions and Regulation – General Bank Holding Company Regulation.Capital Adequacy Guidelines.” These provisions, as well as any other aspects of current or proposed regulatory or legislative changes to laws applicable to the financial industry, may impact the profitability of our business activities and may change certain of our business practices, including the ability to offer new products, obtain financing, attract deposits, make loans, and achieve satisfactory interest spreads, and could expose us to additional costs, including increased compliance costs. These changes also may require us to invest significant management attention and resources to make any necessary changes to operations in order to comply, and could therefore also materially and adversely affect our business, financial condition and results of operations.
Our management is actively reviewing the provisions of the Dodd-Frank Act and Basel III, many of which are to be phased-in over the next several
months and years, and assessing the probable impact on our operations. However, the ultimate effect of these changes on the financial services industry in general, and us in particular, is uncertain at this time.
We are subject to changes in accounting policies or accounting standards.
Understanding Unity’s accounting policies is fundamental to understanding our financial results. Some of these policies require the use of estimates and assumptions that may affect the value of assets or liabilities and financial results. Unity has identified its accounting policies regarding the allowance for loan losses, security valuations and impairments, goodwill and income taxes to be critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain. Under each of these policies, it is possible that materially different amounts would be reported under different conditions, using different assumptions, or as new information becomes available.
From time to time, the FASB and the SEC change their guidance governing the form and content of Unity’s external financial statements. In addition, accounting standard setters and those who interpret U.S. generally accepted accounting principles (“
U.S. GAAP”), such as the FASB, SEC, banking regulators and Unity’s outside auditors, may change or even reverse their previous interpretations or positions on how these standards should be applied. Such changes are expected to continue, and may accelerate based on the FASB and International Accounting Standards Board commitments to achieving convergence between U.S. GAAP and International Financial Reporting Standards. Changes in U.S. GAAP and changes in current interpretations are beyond Unity’s control, can be hard to predict and could materially impact how Unity reports its financial results and condition. In certain cases, Unity could be required to apply a new or revised guidance retroactively or apply existing guidance differently (also retroactively) which may result in Unity restating prior period financial statements for material amounts. Additionally, significant changes to U.S. GAAP may require costly technology changes, additional training and personnel, and other expenses that will negatively impact our results of operations.
Declines in value may adversely impact the investment portfolio.
As of December 31,
2013,2016, we had approximately
$81.1$40.6 million and
$26.4$21.0 million in available for sale and held to maturity investment securities, respectively. We may be required to record impairment charges in earnings related to credit losses on our investment securities if they suffer a decline in value that is considered other-than-temporary. Additionally, (a) if we intend to sell a security or (b) it is more likely than not that we will be required to sell the security prior to recovery of its amortized cost basis, we will be required to recognize an other-than-temporary impairment charge in the statement of income equal to the full amount of the decline in fair value below amortized cost. Factors, including lack of liquidity, absence of reliable pricing information, adverse actions by regulators, or unanticipated changes in the competitive environment could have a negative effect on our investment portfolio and may result in other-than-temporary impairment on our investment securities in future periods.
Liquidity risk is the potential that Unity will be unable to meet its obligations as they come due because of an inability to liquidate assets or obtain adequate funding in a timely basis, at a reasonable cost and within acceptable risk tolerances.
Liquidity is required to fund various obligations, including credit commitments to borrowers, mortgage and other loan originations, withdrawals by depositors, repayment of borrowings, dividends to shareholders, operating expenses and capital expenditures.
Liquidity is derived primarily from retail deposit growth and retention; principal and interest payments on loans; principal and interest payments on investment securities; sale, maturity and prepayment of investment securities; net cash provided from operations and access to other funding sources.
Our access to funding sources in amounts adequate to finance our activities could be impaired by factors that affect us specifically or the financial services industry in general. Factors that could detrimentally impact our access to liquidity sources include a decrease in the level of our business activity due to persistent weakness, or downturn, in the economy or adverse regulatory action against us. Our ability to borrow could also be impaired by factors that are not necessarily specific to us, such as a severe disruption of the financial markets or negative views and expectations about the prospects for the financial services industry as a whole.
We are in competition with many other banks, including larger commercial banks which have greater resources than us.
The banking industry within the State of New Jersey is highly competitive. The Company’s principal market area is also served by branch offices of large commercial banks and thrift institutions. In addition, in 1999 the Gramm-Leach-Bliley Financial
Modernization Act was passed into law. The Modernization Act permits other financial entities, such as insurance companies and securities firms, to acquire or form financial institutions, thereby further increasing competition. A number of our competitors have substantially greater resources than we do to expend upon advertising and marketing, and their substantially greater capitalization enables them to make much larger loans. Our success depends a great deal upon our judgment that large and mid-size financial institutions do not adequately serve small businesses in our principal market area and upon our ability to compete favorably for such customers. In addition to competition from larger institutions, we also face competition for individuals and small businesses from
recently formedsmall community banks seeking to compete as “hometown” institutions. Most of these
newsmaller institutions have focused their marketing efforts on the smaller end of the small business market we serve.
Future offerings of common stock may adversely affect the market price of our stock.
In the future, if our or the Bank’s capital ratios fall below the prevailing regulatory required minimums, we or the Bank could be forced to raise additional capital by making additional offerings of common stock or preferred stock. Additional equity offerings may dilute the holdings of our existing shareholders or reduce the market price of our common stock, or both.
We cannot predict how changes in technology will impact our business.
The financial services market, including banking services, is increasingly affected by advances in technology, including developments in:
•debit cards/smart cards
Our ability to compete successfully in the future will depend on whether we can anticipate and respond to technological changes. To develop these and other new technologies, we will likely have to make additional capital investments. Although we continually invest in new technology, we cannot assure you that we will have sufficient resources or access to the necessary proprietary technology to remain competitive in the future.
The Company’s information systems may experience an interruption or breach in security.
The Company relies heavily on communications and information systems to conduct its business. Any failure, interruption or breach in security of these systems could result in failures or disruptions in the Company’s customer-relationship management, general ledger, deposit, loan and other systems.
We are further exposed to the risk that our external vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as us) and to the risk that our (or our vendors’) business continuity and data security systems prove to be inadequate. We maintain a system of comprehensive policies and a control framework designed to monitor vendor risks including, among other things, (i) changes in the vendor’s organizational structure or internal controls, (ii) changes in the vendor’s financial condition, (iii) changes in the vendor’s support for existing products and services and (iv) changes in the vendor’s strategic focus. In addition we maintain cyber liability insurance to mitigate against any loss incurred.
While the Company has policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of its information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur; or, if they do occur, that they will be adequately addressed. The occurrence of any failures, interruptions or security breaches of the Company’s information systems could damage the Company’s reputation, result in a loss of customer business, subject the Company to additional regulatory scrutiny or expose the Company to civil litigation and possible financial liability; any of which could have a material adverse effect on the Company’s financial condition and results of operations.
Our business strategy could be adversely affected if we are not able to attract and retain skilled employees and manage our expenses.
We expect to continue to experience growth in the scope of our operations and, correspondingly, in the number of our employees and customers. We may not be able to successfully manage our business as a result of the strain on our management and operations that may result from this growth. Our ability to manage this growth will depend upon our ability to continue to attract, hire and retain skilled employees. Our success will also depend on the ability of our officers and key employees to continue to implement and improve our operational and other systems, to manage multiple, concurrent customer relationships and to hire, train and manage our employees.
Hurricanes or other adverse weather events could negatively affect our local economies or disrupt our operations, which would have an adverse effect on our business or results of operations.
Hurricanes and other weather events can disrupt our operations, result in damage to our properties and negatively affect the local economies in which we operate. In addition, these weather events may result in a decline in value or destruction of properties securing our loans and an increase in delinquencies, foreclosures and loan losses.
Risk of tax reform on deferred tax assets.
Corporate tax reform has been a key policy initiative of the current administration with noise that the corporate tax rate will decline from 35% down to 15%. While this is welcome news for most companies, it would result in write-downs of deferred tax assets for many Companies. Unity is at risk of having to write-down its deferred tax assets given a decline in the corporate tax rate.
Item 1B. Unresolved Staff Comments: None The Company presently conducts its business through its main office located at 64 Old Highway 22, Clinton, New Jersey, and its
fourteenseventeen branch offices. The Company’s facilities are adequate to meet
theirits needs.
The following table sets forth certain information regarding the Company’s properties from which it conducts business as of December 31,
2013.2016. | | | | |
Location | Leased or Owned | Date Leased or Acquired | Lease Expiration | 2013 Annual Rental Fee |
North Plainfield, NJ | Owned | 1991 | - | - |
Clinton, NJ | Leased | 1996 | 2018 | 436,662 |
Linden, NJ | Owned | 1997 | - | - |
Whitehouse, NJ | Owned | 1998 | - | - |
Union, NJ | Owned | 2002 | - | - |
Scotch Plains, NJ | Owned | 2004 | - | - |
Flemington, NJ | Owned | 2005 | - | - |
Phillipsburg, NJ | Leased | 2005 | 2015 | 96,952 |
Forks Township, PA | Leased | 2006 | 2015 | 56,776 |
Middlesex, NJ | Owned | 2007 | - | - |
Somerset, NJ | Leased | 2012 | 2017 | 101,979 |
Highland Park, NJ | Owned | 2013 | - | 28,387 |
South Plainfield, NJ | Owned | 2013 | - | 34,219 |
Edison, NJ | Owned | 2013 | - | 39,483 |
|
| | | | | | | | | |
| Location | | Leased or Owned | | Date Leased or Acquired | | Lease Expiration | | 2016 Annual Rental Fee |
| North Plainfield, NJ | | Owned | | 1991 | | — | | — |
|
| Linden, NJ | | Owned | | 1997 | | — | | — |
|
| Whitehouse, NJ | | Owned | | 1998 | | — | | — |
|
| Union, NJ | | Owned | | 2002 | | — | | — |
|
| Scotch Plains, NJ | | Owned | | 2004 | | — | | — |
|
| Flemington, NJ | | Owned | | 2005 | | — | | — |
|
| Phillipsburg, NJ | | Leased | | 2005 | | 2018 | | 104,322 |
|
| Forks Township, PA | | Leased | | 2006 | | 2019 | | 57,528 |
|
| Middlesex, NJ | | Owned | | 2007 | | — | | — |
|
| Somerset, NJ | | Leased | | 2012 | | 2022 | | 119,445 |
|
| Washington, NJ | | Owned | | 2012 | | — | | — |
|
| Highland Park, NJ | | Owned | | 2013 | | — | | — |
|
| South Plainfield, NJ | | Owned | | 2013 | | — | | — |
|
| Edison, NJ | | Owned | | 2013 | | — | | — |
|
| Clinton, NJ (1) | | Owned | | 2016 | | — | | 75,954 |
|
| Somerville, NJ | | Owned | | 2016 | | — | | — |
|
| Emerson, NJ | | Owned | | 2016 | | — | | — |
|
(1) In March 2016, the Company purchased its previously leased Clinton, NJ headquarters for $4.1 million.
Item 3. Legal Proceedings: From time to time, the Company is subject to
other legal proceedings and claims in the ordinary course of business. The Company currently is not aware of any such legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on the business, financial condition, or operating results of the Company.
Item 4. MineSafetyDisclosures: N/A
Item5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities: The Company’s Common Stock is quoted on the NASDAQ Global Market under the symbol “UNTY.” The following table sets forth the high and low
closingsales prices of the Common Stock as reported on the NASDAQ Global Market for the periods indicated.
| | | | | | | | | |
For the year ended December 31, 2013: | | High | | Low | | Cash Dividend Paid |
4th Quarter | | $ | 7.98 | | $ | 7.10 | | $ | 0.01 |
3rd Quarter | | | 8.13 | | | 6.74 | | | 0.01 |
2nd Quarter | | | 7.55 | | | 6.22 | | | 0.01 |
1st Quarter | | | 6.74 | | | 5.85 | | | - |
| | | | | | | | | |
For the year ended December 31, 2012: | | High | | Low | | Cash Dividend Paid |
4th Quarter | | $ | 6.25 | | $ | 5.50 | | $ | - |
3rd Quarter | | | 6.23 | | | 5.55 | | | - |
2nd Quarter | | | 6.40 | | | 5.91 | | | - |
1st Quarter | | | 6.67 | | | 5.80 | | | - |
|
| | | | | | | | | | | | |
| For the year ended December 31, 2016 | | High | | Low | | Cash Dividend Paid |
| 4th Quarter | | $ | 17.10 |
| | $ | 11.85 |
| | $ | 0.050 |
|
| 3rd Quarter | | 12.18 |
| | 10.83 |
| | 0.046 |
|
| 2nd Quarter | | 12.27 |
| | 10.20 |
| | 0.036 |
|
| 1st Quarter | | 12.36 |
| | 8.75 |
| | 0.036 |
|
| For the year ended December 31, 2015 | | High | | Low | | Cash Dividend Paid |
| 4th Quarter | | $ | 11.83 |
| | $ | 8.75 |
| | $ | 0.036 |
|
| 3rd Quarter | | 9.31 |
| | 8.64 |
| | 0.036 |
|
| 2nd Quarter | | 9.09 |
| | 8.18 |
| | 0.027 |
|
| 1st Quarter | | 9.09 |
| | 8.08 |
| | 0.027 |
|
All stock information has been adjusted for the 10% stock dividend paid September 30, 2016.
As of February 1, 2014,March 3, 2017, there were approximately 412390 shareholders of record of the Company’s Common Stock. See table in Item 5(a) above.
(d)Repurchase Plan
On October 21, 2002, the Company authorized the repurchase of up to 10 percent of its outstanding common stock. The amount and timing of purchases is dependent upon a number of factors, including the price and availability of the Company’s shares, general market conditions and competing alternate uses of funds. As of December 31, 2016, the Company had repurchased a total of 556 thousand shares, of which 131 thousand shares have been retired, leaving 153 thousand shares remaining to be repurchased under the plan. There were no shares repurchased during 2016 or 2015.
Item 6. Selected Financial Data:
The information under the caption, “Selected Consolidated Financial Data,” in the Company’s Annual Report to Shareholders for the year ended December 31,
2013,2016, is incorporated by reference herein.
Item7. Management’s Discussion and Analysis of Financial Condition and Results of Operations: The information under the caption, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the Company’s Annual Report to Shareholders for the year ended December 31,
2013,2016, is incorporated by reference herein.
Item7A. Quantitative and Qualitative Disclosures About Market Risk: The information under the caption, “Market Risk,” in the Company’s Annual Report to Shareholders for the year ended December 31,
2013,2016, is incorporated by reference herein.
Item8. Financial Statements and Supplementary Data: The Financial Statements and Notes to Consolidated Financial Statements in the Company’s Annual Report to Shareholders for the year ended December 31,
2013,2016, are incorporated by reference herein.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure:
None
None.
Item 9A. Controls and Procedures:
(a)Evaluation of disclosure controls and procedures: Based on their evaluation, as of the end of the period covered by this Annual Report on Form 10-K, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the “Exchange Act”)) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
(b)Management’s Report on Internal Control Over Financial Reporting: The information under the caption, “Management’s Report on Internal Control Over Financial Reporting,” in the Company’s Annual Report to Shareholders for the year ended December 31,
2013,2016, is incorporated by reference herein.
(c)Changes in internal controls: There were not any significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Item 9B. Other Information:
Item10. Directors, Executive Officers and Corporate Governance; Compliance with Section 16(a) of the Exchange Act: The information concerning the directors and executive officers of the Company under the caption “Election of Directors,” and the information under the captions, “Compliance with Section 16(a) of the Securities Exchange Act of 1934,” and, "Governance of the Company," in the Proxy Statement for the Company’s
20142017 Annual Meeting of Shareholders, is incorporated by reference herein. It is expected that such Proxy Statement will be filed with the Securities and Exchange Commission no later than April
28, 2014.30, 2017.
Also, refer to the information under the caption, “Executive Officers of Registrant,” in Part I of this Annual Report on Form 10-K for a description of the Company’s executive officers, who are not also directors.
Item 11. Executive Compensation:
The information concerning executive compensation under the caption, “Executive Compensation,” in the Proxy Statement for the Company’s
20142017 Annual Meeting of Shareholders, is incorporated by reference herein. It is expected that such Proxy Statement will be filed with the Securities and Exchange Commission no later than April
28, 2014.30, 2017.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters:
The information concerning the security ownership of certain beneficial owners and management under the caption, “Security Ownership of Certain Beneficial Owners and Management,” in the Proxy Statement for the Company’s
20142017 Annual Meeting of Shareholders is incorporated by reference herein. It is expected that such Proxy Statement will be filed with the Securities and Exchange Commission no later than April
28, 2014.30, 2017.
Securities Authorized for Issuance under Equity Compensation Plans
The following table provides information with respect to the equity securities that are authorized for issuance under the Company’s
equity compensation plans as of December 31,
2013.2016. | | | | | | | | | |
Equity Compensation Plan Information |
| | Number of securities to be issued upon exercise of outstanding options, warrants and rights (A) | | Weighted-average exercise price of outstanding options, warrants and rights (B) | | Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (A)) (C) |
Equity compensation stock option plans approved by security holders | | | 448,975 | | $ | 6.70 | | | 87,241 |
Equity compensation plans approved by security holders (Restricted stock plan) | | | 95,625 | | | - | | | 232,838 |
Equity compensation plans not approved by security holders | | | N/A | | | N/A | | | N/A |
Total | | | 544,600 | | $ | 5.52 | | | 320,079 |
There were no share repurchases during 2013 or 2012.
|
| | | | | | | | | | |
| Equity Compensation Plan Information |
| | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (A) | | Weighted-average exercise price of outstanding options, warrants and rights (B) | | Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (A)) (C) |
| Equity compensation stock option plans approved by security holders | | 552,759 |
| | $ | 7.26 |
| | 79,472 |
|
| Equity compensation plans approved by security holders (Restricted stock plan) | | 97,203 |
| | — |
| | 149,804 |
|
| Equity compensation plans not approved by security holders | | N/A |
| | N/A |
| | N/A |
|
| Total | | 649,962 |
| | $ | 6.17 |
| | 229,276 |
|
Item13. Certain Relationships and Related Transactions and Director Independence: The information concerning certain relationships and related transactions under the caption, “Interest of Management and Others in Certain Transactions; Review, Approval or Ratification of Transactions with Related Persons,” in the Proxy Statement for the Company’s
20142017 Annual Meeting of Shareholders is incorporated by reference herein. It is expected that such Proxy Statement will be filed with the Securities and Exchange Commission no later than April
28, 2014.30, 2017.
Item14. Principal Accountant Fees and Services: The information concerning principal accountant fees and services, as well as related pre-approval policies, under the caption, “Independent Registered Public Accounting Firm,” in the Proxy Statement for the Company’s
20142017 Annual Meeting of Shareholders is incorporated by reference herein. It is expected that such Proxy Statement will be filed with the Securities and Exchange Commission no later than April
28, 2014.30, 2017.
Item15. Exhibits and Financial Statement Schedules: a)FINANCIAL STATEMENTS:
The following Consolidated Financial Statements of the Company and subsidiaries included in the Company’s Annual Report to Shareholders for the year ended December 31,
2013,2016, are incorporated by reference in Part II, Item 8.
•Report of Independent Registered Public Accounting Firm
•Consolidated Balance Sheets
•Consolidated Statements of Income
•Consolidated Statements of Comprehensive Income
•Consolidated Statements of Changes in Shareholders’ Equity
•Consolidated Statements of Cash Flows
•Notes to Consolidated Financial Statements
b)EXHIBITS:
| ·
| | Report of Independent Registered Public Accounting Firm
|
| ·
| | Consolidated Balance Sheets
|
| ·
| | Consolidated Statements of Income
|
| ·
| | Consolidated Statements of Comprehensive Income
|
| ·
| | Consolidated Statements of Changes in Shareholders’ Equity
|
| ·
| | Consolidated Statements of Cash Flows
|
| ·
| | Notes to Consolidated Financial Statements
|
| | |
| | |
| Exhibit Number | | Description of Exhibits |
3(i) | | Certificate of Incorporation of the Company, as amended (2) (1) |
3(ii) | | Bylaws of the Company (7) (5) |
4(i) | | Form of Stock Certificate (7) (5) |
10(i) | | 1994 Stock Option Plan (1)
|
10(ii)
| | 1997 Stock Option Plan (3)
|
10(iii)
| | 1998 Stock Option Plan (4) (2) |
10(iv)
10(ii) | | 1999 Stock Option Plan (5) (3) |
10(v)
10(iii) | | Amended and Restated Employment Agreement dated March 23, 2004June 4, 2015 with James A. Hughes (8) (11) |
10(vi)
10(iv) | | Retention Agreement dated March 23, 2004September 18, 2014 with Alan J. Bedner (8) (9) |
10(vii)
10(v) | | Retention Agreement dated March 23, 2004September 18, 2014 with John Kauchak (8) (9) |
10(viii)
10(vi) | | Retention Agreement dated September 18, 2014 with Janice Bolomey (9) |
| 10(vii) | | 2002 Stock Option Plan (6)(4) |
10(ix)
10(viii) | | Second Amendment dated September 19, 2003 to Lease Agreement between Unity Bank and Clinton Unity Group (8)
|
10(x)
| | Real Estate Purchase Agreement dated October 23, 2003 between Unity Bank and Premiere Development II, LLC (8)
|
10(xi)
| | 2004 Stock Bonus Plan (9)
|
10(xii)
| | 2006 Stock Option Plan (10) (6) |
10(xiii)
10(ix) | | Third Amendment to Lease by and between Clinton Unity Group, LLC and Unity Bank dated July 31, 2009 (11)
|
10(xiv)
| | 2011 Stock Option Plan and 2011 Stock Bonus Plan (12) (7) |
10(xv)
10(x) | | 2013 Stock Bonus Plan (13) (8) |
10(xvi)
10(xi) | | Fourth Amendment to Lease by and between Clinton Unity Group, LLC and Unity Bank dated January 30, 2014 (14)
2015 Stock Bonus Plan (10) |
13
10(xii) | | Supplemental Executive Retirement Plan dated June 4, 2015 with James A. Hughes (11) |
| 13 | | Portion of Unity Bancorp. Inc. 20132015 Annual Report to Shareholders |
21 | | Subsidiaries of the Registrant |
23.1 | | Consent of McGladreyRSM US LLP |
31.1 | | Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 | | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 | | Certification of President, Chief Executive Officer, and Chief Financial Officer pursuant to Section 906 |
99.1 | | Certification of President and Chief Executive Officer pursuant to Section 111(b)(4) of the Emergency Economic Stabilization Act of 2008 |
99.2 | | Certification of Chief Financial Officer pursuant to Section 111(b)(4) of the Emergency Economic Stabilization Act of 2008 |
101.INS | | XBRL Instance Document |
101.SCH | | XBRL Taxonomy Extension Schema Document |
101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document |
101.LAB | | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document |
101.DEF | | XBRL Taxonomy Extension Definitions Linkbase Document |
| | |
(1)
| | Previously filed with the Securities and Exchange Commission as an Exhibit to the Registration Statement on Form S-4 (File No. 33-76392) and incorporated by reference herein.
|
(2)
(1) | | Previously filed with the Securities and Exchange Commission as an Exhibit to the Current Report on Form 8-K filed on July 22, 2002 and incorporated by reference herein. |
(3)
(2) | | Previously filed with the Securities and Exchange Commission as an Exhibit to the Proxy Statement for the Annual Meeting of Shareholders filed on April 4, 1997.
|
(4)
| | Previously filed with the Securities and Exchange Commission as an Exhibit to the Proxy Statement for the Annual Meeting of Shareholders filed on March 30, 1998. |
(5)
(3) | | Previously filed with the Securities and Exchange Commission as an Exhibit to the Proxy Statement for the Annual Meeting of Shareholders filed on April 2, 1999. |
(6)
(4) | | Previously filed with the Securities and Exchange Commission as an Exhibit to the Proxy Statement for the Annual Meeting of Shareholders filed on April 10, 2002. |
(7)
(5) | | Previously filed with the Securities and Exchange Commission as an Exhibit to the Annual Report on Form 10-K filed March 26, 2003. |
(8)
(6) | | Previously filed with the Securities and Exchange Commission as an Exhibit to the Annual Report on Form 10-K filed March 26, 2004.
|
(9)
| | Previously filed with the Securities and Exchange Commission as an Exhibit to the Proxy Statement for the Annual Meeting of Shareholders filed on April 15, 2004.
|
(10)
| | Previously filed with the Securities and Exchange Commission as an Exhibit to the Proxy Statement for the Annual Meeting of Shareholders filed on May 4, 2006. |
(11)
(7) | | Previously filed with the Securities and Exchange Commission as an Exhibit to the Current Report on Form 8-K filed on August 4, 2009 and incorporated by reference herein.
|
(12)
| | Previously filed with the Securities and Exchange Commission as an Exhibit to Form S-8 filed on May 26, 2011 and incorporated by reference herein. |
|
(13)
| | |
| (8) | | Previously filed with the Securities and Exchange Commission as an Exhibit to Form S-8 filed on July 12, 2013 and incorporated by reference herein. |
(14)
(9) | | Previously filed with the Securities and Exchange Commission as an Exhibit to the Current Report on Form 8-K filed September 18, 2014. |
| (10) | | Previously filed with the Securities and Exchange Commission as an Exhibit to the Proxy Statement for the Annual Meeting of Shareholders filed on February 4, 2014March 17, 2015. |
| (11) | | Previously filed with the Securities and Exchange Commission as an Exhibit to Form S-8 filed on May 22, 2015 and incorporated by reference herein. |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| |
By:
| |
| By: | /s/ Alan J. Bedner , Jr. |
| Alan J. Bedner, Jr. |
| Executive Vice President |
| Chief Financial Officer |
| |
Date: | February 27, 2014
March 3, 2017 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | |
Name
| | Title
| | Date
|
| Name | | Title | | Date |
| | | | |
| /s/ David D. Dallas | | Chairman of the Board and Director | | February 27, 2014
March 3, 2017 |
David D. Dallas | | | | |
| | | | |
/s/ James A. Hughes | | President, Chief Executive Officer and Director | | February 27, 2014
March 3, 2017 |
James A. Hughes | | | | |
| | | | |
/s/ Alan J. Bedner, Jr. | | Chief Financial Officer | | February 27, 2014
March 3, 2017 |
Alan J. Bedner, Jr. | | (Principal Financial and Accounting Officer) | | |
| | | | |
/s/ Dr. Mark S. Brody | | Director | | February 27, 2014
March 3, 2017 |
Dr. Mark S. Brody | | | | |
| | | | |
/s/ Wayne Courtright | | Director | | February 27, 2014
March 3, 2017 |
Wayne Courtright | | | | |
| | | | |
/s/ Robert H. Dallas, II | | Director | | February 27, 2014
March 3, 2017 |
Robert H. Dallas, II | | | | |
| | | | |
/s/ Dr. Mary E. Gross | | Director | | February 27, 2014
March 3, 2017 |
Dr. Mary E. Gross | | | | |
| | | | |
/s/ Peter E. Maricondo | | Director | | February 27, 2014
March 3, 2017 |
Peter E. Maricondo | | | | |
| | | | |
|
| | | | |
| Signatures (continued) | | | | |
| Name | | Title | | Date |
| | | | |
| /s/ Raj Patel | | Director | | February 27, 2014
March 3, 2017 |
Raj Patel | | | | |
| | | | |
/s/ Donald E. Souders, Jr. | | Director | | March 3, 2017 |
| Donald E. Souders, Jr. | | | | |
| | | | |
| /s/ Aaron Tucker | | Director | | March 3, 2017 |
| Aaron Tucker | | | | |
| | | | |
| /s/ Allen Tucker | | Director | | February 27, 2014
March 3, 2017 |
Allen Tucker | | | | |
| | | | |
