Unity Bancorp, Inc.
64 Old Highway 22
Clinton, NJ 08809
800 618-BANK
www.unitybank.com
NewsNewsNewsNewsNews
For Immediate Release:
October 24, 2008
News Media & Financial Analyst Contact:
Alan J. Bedner, EVP
Chief Financial Officer
(908) 713-4308
Unity Bancorp Reports Third Quarter and Nine Month Results
Clinton, NJ - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported a net loss of $1.0 million, or $(0.14) per diluted share, for the quarter ended September 30, 2008, compared to net income of $1.1 million, or $0.14 per diluted share, for the quarter ended September 30, 2007.
For the nine months ended September 30, 2008, net income was $1.3 million, or $0.19 per diluted share, compared to $4.0 million, or $0.53 per diluted share for the same period a year ago. Return on average assets and average common equity for the nine months ended September 30, 2008, were 0.22% and 3.77%, respectively, as compared to 0.77% and 11.57%, respectively, for the prior year’s comparable period.
Earnings for the quarter and nine months ended were impacted by an other-than-temporary impairment (“OTTI”) charge and sale of Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie Mac”) perpetual callable preferred securities. Unity sold approximately $909 thousand in book value of these securities in August 2008 and recorded a pretax loss of approximately $518 thousand on this sale. In addition, the market value of the remaining securities was written down as of September 30, 2008, due to actions by the Treasury of the United States and the OFHEO (now FHFA) placing Freddie Mac under conservatorship. The aggregate amount of security losses and other-than-temporary impairment charges related to Freddie Mac perpetual preferred stock for the third quarter of 2008 was $1.4 million.
While the reported results for the three and nine month periods reflect the effects of the OTTI charge, they do not reflect the change in tax treatment enacted as part of the Emergency Economic Stabilization Act of 2008 (the “Act”), which was adopted on October 3, 2008. Under the Act, the Company is permitted to deduct the loss as an ordinary loss for tax purposes, thereby offsetting a portion of the Company’s ordinary income. However, since the Act was not enacted until the fourth quarter, the Company cannot recognize this tax benefit as part of its third quarter results. The tax benefit will be recognized in the fourth quarter, and it is expected to amount to approximately $239 thousand or $.03 per diluted share, based on the average shares outstanding for the quarter ended September 30, 2008.
James A. Hughes, Unity Bancorp’s President and CEO said, “The crisis in the financial markets has had a material impact on our operating results. In addition to the charges we have taken on our investment in Freddie Mac preferred stock, we have significantly increased our provision for loan losses this quarter due to the inherent increase in credit risk resulting from the downturn in the economy. Although Unity Bank was not a producer of subprime residential mortgage loans, the continued decline in real estate values has impacted the level of credit losses in our loan portfolios. We are taking proactive steps to mitigate credit risk by aggressively dealing with problem loans and tightening our credit standards. In addition, the shortage of credit in the marketplace has virtually eliminated the salability of SBA loans. As a result, Unity has closed all SBA offices outside of our New Jersey, Pennsylvania and New York primary market. We have taken aggressive steps to reduce expenses, and will continue to review all potential expense savings.”
Net Interest Income
Net interest income for the third quarter of 2008 was $7.1 million, compared to the $6.0 million earned in the third quarter of 2007, an increase of 19%. Net interest margin for the third quarter of 2008 was 3.55%, an 11 basis point improvement from the 3.44% reported in the third quarter of 2007. Average earning assets rose 15% from the third quarter of 2007. As a result of the lower rate environment, the yield on interest-earning assets decreased by 71 basis points to 6.45% in the third quarter of 2008, from 7.16% for the same period last year. The cost of interest-bearing liabilities decreased 99 basis points from 4.27% in the third quarter of 2007 to 3.28% in the third quarter of 2008. The decreased liability cost was primarily due to the lower interest rate environment.
Year-to-date, net interest income was $20.6 million, or 14% higher than the $18.1 million reported for the first nine months of 2007. Net interest margin for the nine months ended 2008 was 3.61%, relatively flat from the same period last year. The Company's yield on earning assets decreased from 7.26% for the first nine months of 2007, to 6.64% for the first nine months of 2008. The Company's cost of interest-bearing liabilities decreased from 4.20% for the first nine months of 2007, to 3.43% for the first nine months of 2008.
Noninterest Income
Noninterest income, excluding losses on investment securities, totaled $1.1 million for the third quarter of 2008, as compared to $1.4 million for the same period last year, a decrease of 23%. Gains on sales of SBA loans amounted to $215 thousand in the third quarter of 2008, compared to $316 thousand for the quarter ended September 30, 2007, reflecting both a lower volume of loans sold and lower premiums on loans sold, due to current market conditions. As a result of the significantly reduced premiums resulting from the recent credit crisis, Unity has decided to significantly reduce future SBA production. Consequently, gains on SBA loans will decline substantially for the foreseeable future. Service charges on deposit accounts amounted to $381 thousand for the third quarter of 2008, an increase of $43 thousand, or 13%, as compared to the same period last year, primarily due to higher levels of commercial analysis charges.
Noninterest income, excluding losses on investment securities, totaled $3.7 million for the first nine months of 2008, as compared to $4.9 million for the same period last year, a decrease of 23%. Gains on sales of SBA loans amounted to $1.2 million for the first nine months of 2008, compared to $1.8 million for the same period a year ago, reflecting a lower volume of loans sold and lower premiums on loans sold, due to current market conditions. Service charges on deposit accounts totaled $1.0 million and were flat from the same period a year ago. Service and loan fee income amounted to $936 thousand for the nine months ended 2008, a decrease of $238 thousand, or 20%, as compared to the same period last year, primarily due to lower levels of prepayment penalties and SBA servicing income. Other income amounted to $390 thousand for the nine months ended 2008, a decrease of $298 thousand, or 43%, as compared to the same period last year, primarily due to lower levels of loan referral fees.
Noninterest Expense
Noninterest expense for the third quarter of 2008 was $5.8 million, as compared to $5.5 million for the same period last year, an increase of 5%. Compensation and benefits expense amounted to $2.9 million for the third quarter of 2008, an increase of $132 thousand, or 5% compared to the same period a year ago, primarily due to annual merit increases. Processing and communications and occupancy expense for the third quarter of 2008, declined by 14% and 2%, respectively, from the same period a year ago due to reduced communications costs from renegotiated contracts and a decline in capital expenditures. Professional fees amounted to $285 thousand for the third quarter of 2008, an increase of $169 thousand from the same period a year ago, due to increased consulting costs. Loan servicing costs amounted to $206 thousand for the third quarter of 2008, an increase of $22 thousand from the same period a year ago, due to increased collection costs on delinquent loans.
For the first nine months of 2008, noninterest expense was $17.2 million, compared to $16.2 million in 2007, an increase of 6%. Compensation and benefits expense for the nine months ended 2008 amounted to $9.1 million, an increase of $654 thousand, or 8%, primarily related to an increase in average head count and annual merit increases. During September and October of 2008, Unity significantly reduced its head count. The full benefit of this reduction will not be realized until the first quarter of 2009. Processing and communications expense for the first nine months of 2008 declined 5% from the same period a year ago, due to renegotiated contracts and lower items processing costs. Professional services expense for the first nine months amounted to $626 thousand an increase of $212 thousand, due to increased consulting costs related to tax planning and compliance with the Sarbanes Oxley Act of 2002. Other expense for the nine months ended 2008 amounted to $1.7 million, an increase of $118 thousand or 8%, primarily related to the increase in FDIC deposit insurance premiums.
Financial Condition
At September 30, 2008, total assets were $864.1 million. Total loans were $685.0 million, up $117.4 million, or 21%, from $567.6 million at September 30, 2007. The increase was across all product lines. SBA, commercial, residential and consumer loans increased 23%, 10%, 78%, and 9% respectively. Total deposits were $684.7 million, an increase of $72.5 million from September 30, 2007. This increase was partially due to a $103.4 million increase in time deposits, an $8.8 million increase in demand deposits and $5.6 million in interest bearing checking accounts, offset by a $45.4 million decline in savings deposits.
Asset Quality
At September 30, 2008, nonperforming assets totaled $11.0 million, an increase of $6.6 million compared to $4.3 million at September 30, 2007. The increase in nonperforming assets was primarily related to three commercial mortgage loans totaling $5.2 million. The composition of nonperforming loans was as follows: commercial $6.1 million, SBA $3.3 million, residential $1.3 million and consumer $262 thousand. The allowance for loan losses totaled $9.9 million at September 30, 2008, and represented 1.45% of total loans, as compared to $8.2 million and 1.44% of total loans at September 30, 2007. The provision for loan losses for the three months ended September 30, 2008, amounted to $2.1 million, an increase of $1.7 million from the same period a year ago. Net charge-offs for the three months ended September 30, 2008, amounted to $1.1 million, compared to $264 thousand for the same period a year ago. The provision for loan losses for the first nine months of 2008 amounted to $3.2 million, an increase of $2.2 million from the same period a year ago. During the first nine months of 2008, the Company had net charge-offs of $1.7 million, compared to $441 thousand for the same period a year ago.
Capital
As of September 30, 2008, shareholders’ equity was $46.5 million, and book value per common share was $6.55. As of September 30, 2008, the Company's leverage ratio was 7.42%. Tier I and total risk based capital ratios were 9.07% and 10.33%, respectively. All regulatory capital ratios exceeded the well-capitalized, federal capital adequacy requirements as of September 30, 2008.
Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $864 million in assets and $685 million in deposits. Unity Bank provides financial services to retail, corporate and small business customers through its 16 retail service centers located in Hunterdon, Middlesex, Somerset, Union and Warren Counties in New Jersey and Northampton County, Pennsylvania. For additional information about Unity, visit our website at www.unitybank.com, or call 800- 618-BANK.
This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance. These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond the company’s control and could impede its ability to achieve these goals. These factors include general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, and results of regulatory exams, among other factors
| Unity Bancorp, Inc. | | | | | | | | | | | | | | |
| Consolidated Financial Highlights | | | | | | | | | | | | | | |
| (Dollars in thousands, except per share data) | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | Sep. 08 | | vs. | |
| BALANCE SHEET DATA: | | Sep. 30, 2008 | | | Jun. 30, 2008 | | | Sep. 30, 2007 | | | Jun. 08 | | Sep. 07 | |
| Assets | $ | 864,083 | | $ | 832,315 | | $ | 746,821 | | | 3.8 | % | 15.7 | % |
| Deposits | | 684,680 | | | 671,881 | | | 612,215 | | | 1.9 | | 11.8 | |
| Loans | | 685,023 | | | 643,039 | | | 567,597 | | | 6.5 | | 20.7 | |
| Securities | | 99,410 | | | 106,972 | | | 108,476 | | | (7.1) | | (8.4) | |
| Shareholders' equity | | 46,539 | | | 47,951 | | | 47,261 | | | (2.9) | | (1.5) | |
| Allowance for loan losses | | 9,913 | | | 8,945 | | | 8,183 | | | 10.8 | | 21.1 | |
| | | | | | | | | | | | | | | |
FINANCIAL DATA - QUARTER TO DATE: | | | | | | | | | | | | | | |
| Net income before taxes | $ | (1,141) | | $ | 1,599 | | $ | 1,482 | | | (171.4) | % | (177.0) | % |
| Federal and state income tax provision | | (139) | | | 495 | | | 430 | | | (128.1) | | (132.3) | |
| Net income | | (1,002) | | | 1,104 | | | 1,052 | | | (190.8) | | (195.2) | |
| | | | | | | | | | | | | | | |
| Per share-basic | | (0.14) | | | 0.16 | | | 0.15 | | | (187.5) | | (196.0) | |
| Per share-diluted | | (0.14) | | | 0.15 | | | 0.14 | | | (193.3) | | (199.3) | |
| | | | | | | | | | | | | | | |
| Return on average assets | | (0.47) | % | 0.56 | % | 0.57 | % | | (183.9) | | (182.5) | |
| Return on average common equity | | (8.45) | | | 9.29 | | | 8.89 | | | (190.9) | | (195.0) | |
| Efficiency ratio | | 70.51 | | | 69.59 | | | 74.23 | | | 1.3 | | (5.0) | |
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| | | | | | | | | | | | | | | |
| FINANCIAL DATA - YEAR TO DATE: | | | | | | | | | | | | | | |
| Net income before taxes | $ | 2,328 | | | - | | $ | 5,781 | | | - | | (59.7) | % |
| Federal and state income tax provision | | 982 | | | - | | | 1,736 | | | - | | (43.4) | |
| Net income | | 1,346 | | | - | | | 4,045 | | | - | | (66.7) | |
| | | | | | | | | | | | | | | |
| Per share-basic | | 0.19 | | | - | | | 0.55 | | | - | | (65.5) | |
| Per share-diluted | | 0.19 | | | - | | | 0.53 | | | - | | (64.2) | |
| | | | | | | | | | | | | | | |
| Return on average assets | | 0.22 | % | - | | | 0.77 | % | | - | | (71.4) | |
| Return on average common equity | | 3.77 | | | - | | | 11.57 | | | - | | (67.4) | |
| Efficiency ratio | | 70.68 | | | - | | | 70.57 | | | - | | 0.2 | |
| | | | | | | | | | | | | | | |
| SHARE INFORMATION: | | | | | | | | | | | | | | |
| Closing price per share | $ | 4.00 | | $ | 6.95 | | $ | 10.55 | | | (42.4) | % | (62.1) | % |
| Cash dividends declared | | 0.00 | | | 0.05 | | | 0.05 | | | - | | - | |
| Book value per share | | 6.55 | | | 6.76 | | | 6.61 | | | (3.1) | | (0.9) | |
| Average diluted shares outstanding (QTD) | 7,259 | | | 7,275 | | | 7,462 | | | (0.2) | | (2.7) | |
| | | | | | | | | | | | | | | |
| CAPITAL RATIOS: | | | | | | | | | | | | | | |
| Total equity to total assets | | 5.39 | % | 5.76 | % | 6.33 | % | | (6.4) | % | (14.8) | % |
| Tier I capital to average assets (leverage) | | 7.42 | | | 8.01 | | | 8.37 | | | (7.4) | | (11.4) | |
| Tier I capital to risk-adjusted assets | | 9.07 | | | 9.42 | | | 10.51 | | | (3.7) | | (13.7) | |
| Total risk-based capital | | 10.33 | | | 10.67 | | | 11.76 | | | (3.2) | | (12.2) | |
| | | | | | | | | | | | | | | |
| CREDIT QUALITY AND RATIOS: | | | | | | | | | | | | | | |
| Nonperforming assets | $ | 10,955 | | $ | 6,887 | | $ | 4,319 | | | 59.1 | % | 153.6 | % |
| Net charge offs to average loans (QTD) | | 0.67 | % | 0.23 | % | 0.19 | % | | 191.3 | | 252.6 | |
| Allowance for loan losses to total loans | | 1.45 | | | 1.39 | | | 1.44 | | | 4.3 | | 0.7 | |
| Nonperforming assets to total loans and OREO | 1.60 | | | 1.07 | | | 0.76 | | | 49.5 | | 110.5 | |
| Unity Bancorp, Inc. | | | | | | | | | | | | | | |
| Consolidated Balance Sheets | | | | | | | | | | | | | | |
| (In thousands) | | | | | | | | | | | Sep. 08 | | vs. | |
| | | Sep. 30, 2008 | | | Jun. 30, 2008 | | | Sep. 30, 2007 | | | Jun. 08 | | Sep. 07 | |
| ASSETS | | | | | | | | | | | | | | |
| Cash and due from banks | $ | 21,987 | | $ | 20,368 | | $ | 12,826 | | | 7.9 | % | 71.4 | % |
| Federal funds sold and interest bearing deposits | 29,356 | | | 33,678 | | | 32,495 | | | (12.8) | | (9.7) | |
| Securities: | | | | | | | | | | | | | | |
| Available for sale | | 70,144 | | | 77,110 | | | 72,980 | | | (9.0) | | (3.9) | |
| Held to maturity | | 29,266 | | | 29,862 | | | 35,496 | | | (2.0) | | (17.6) | |
| Total securities | | 99,410 | | | 106,972 | | | 108,476 | | | (7.1) | | (8.4) | |
| Loans: | | | | | | | | | | | | | | |
| SBA - Held for sale | | 19,863 | | | 25,605 | | | 17,014 | | | (22.4) | | 16.7 | |
| SBA - Held to Maturity | | 82,551 | | | 75,988 | | | 66,255 | | | 8.6 | | 24.6 | |
| Commercial | | 394,215 | | | 387,302 | | | 356,964 | | | 1.8 | | 10.4 | |
| Residential mortgage | | 128,216 | | | 95,100 | | | 72,177 | | | 34.8 | | 77.6 | |
| Consumer | | 60,178 | | | 59,044 | | | 55,187 | | | 1.9 | | 9.0 | |
| Total loans | | 685,023 | | | 643,039 | | | 567,597 | | | 6.5 | | 20.7 | |
| Less: Allowance for loan losses | | 9,913 | | | 8,945 | | | 8,183 | | | 10.8 | | 21.1 | |
| Net loans | | 675,110 | | | 634,094 | | | 559,414 | | | 6.5 | | 20.7 | |
| Goodwill and other intangibles | | 1,577 | | | 1,581 | | | 1,592 | | | (0.3) | | (0.9) | |
| Premises and equipment, net | | 12,475 | | | 12,372 | | | 11,729 | | | 0.8 | | 6.4 | |
| Accrued interest receivable | | 4,364 | | | 4,095 | | | 4,073 | | | 6.6 | | 7.1 | |
| Loan servicing asset | | 1,721 | | | 1,877 | | | 2,139 | | | (8.3) | | (19.5) | |
| Bank Owned Life Insurance | | 5,727 | | | 5,674 | | | 5,520 | | | 0.9 | | 3.8 | |
| FHLB/ACBB Stock | | 5,307 | | | 4,407 | | | 3,720 | | | 20.4 | | 42.7 | |
| Other assets | | 7,049 | | | 7,197 | | | 4,837 | | | (2.1) | | 45.7 | |
| Total Assets | $ | 864,083 | | $ | 832,315 | | $ | 746,821 | | | 3.8 | % | 15.7 | % |
| | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | |
| Noninterest-bearing demand deposits | $ | 82,167 | | $ | 81,273 | | $ | 73,355 | | | 1.1 | % | 12.0 | % |
| Interest-bearing deposits: | | | | | | | | | | | | | | |
| Interest bearing checking | | 87,587 | | | 88,551 | | | �� 81,985 | | | (1.1) | | 6.8 | |
| Savings | | 148,026 | | | 180,665 | | | 193,387 | | | (18.1) | | (23.5) | |
| Time, under $100,000 | | 274,845 | | | 236,241 | | | 181,776 | | | 16.3 | | 51.2 | |
| Time, $100,000 and over | | 92,055 | | | 85,151 | | | 81,712 | | | 8.1 | | 12.7 | |
| Total deposits | | 684,680 | | | 671,881 | | | 612,215 | | | 1.9 | | 11.8 | |
| Borrowed funds and subordinated debentures | 130,465 | | | 110,465 | | | 85,465 | | | 18.1 | | 52.7 | |
| Accrued interest payable | | 869 | | | 779 | | | 757 | | | 11.6 | | 14.8 | |
| Accrued expenses and other liabilities | | 1,530 | | | 1,239 | | | 1,123 | | | 23.5 | | 36.2 | |
| Total liabilities | | 817,544 | | | 784,364 | | | 699,560 | | | 4.2 | | 16.9 | |
| Commitments and Contingencies | | - | | | - | | | - | | | | | | |
| Shareholders' equity: | | | | | | | | | | | | | | |
| Common stock, no par value, 12,500 shares authorized | 52,453 | | | 52,281 | | | 49,282 | | | 0.3 | | 6.4 | |
| Retained earnings | | 591 | | | 1,593 | | | 2,128 | | | (62.9) | | (72.2) | |
| Treasury stock at cost | | (4,169) | | | (4,169) | | | (3,218) | | | - | | 29.6 | |
| Accumulated other comprehensive loss, net of tax | (2,336) | | | (1,754) | | | (931) | | | 33.2 | | 150.9 | |
| Total shareholders' equity | | 46,539 | | | 47,951 | | | 47,261 | | | (2.9) | | (1.5) | |
| Total Liabilities and Shareholders' Equity | $ | 864,083 | | $ | 832,315 | | $ | 746,821 | | | 3.8 | % | 15.7 | % |
| | | | | | | | | | | | | | | |
| COMMON SHARES AT PERIOD END: | | | | | | | | | | | | | | |
| Issued | | 7,535 | | | 7,520 | | | 7,478 | | | | | | |
| Outstanding | | 7,110 | | | 7,095 | | | 7,154 | | | | | | |
| Treasury | | 425 | | | 425 | | | 324 | | | | | | |
| N/M= Not meaningful | | | | | | | | | | | | | | |
| Unity Bancorp, Inc. | | | | | | | | | | | | | | |
| Consolidated Statements of Income | | | | | | | | | | | | | | |
| (In thousands, except per share data) | | | | | | | | | | | | | | |
| | | | | | | | | | | | Sep. 08 | | vs. | |
| FOR THE THREE MONTHS ENDED: | | Sep. 30, 2008 | | | Jun. 30, 2008 | | | Sep. 30, 2007 | | | Jun. 08 | | Sep. 07 | |
| INTEREST INCOME | | | | | | | | | | | | | | |
| Fed funds sold and interest on deposits | $ | 113 | | $ | 111 | | $ | 390 | | | 1.8 | % | (71.0) | % |
| FHLB/ACBB Stock | | 58 | | | 76 | | | 66 | | | (23.7) | | (12.1) | |
| Securities: | | | | | | | | | | | | | | |
| Available for sale | | 907 | | | 932 | | | 888 | | | (2.7) | | 2.1 | |
| Held to maturity | | 381 | | | 398 | | | 452 | | | (4.3) | | (15.7) | |
| Total securities | | 1,288 | | | 1,330 | | | 1,340 | | | (3.2) | | (3.9) | |
| Loans: | | | | | | | | | | | | | | |
| SBA | | 2,043 | | | 2,028 | | | 2,190 | | | 0.7 | | (6.7) | |
| Commercial | | 6,877 | | | 6,667 | | | 6,600 | | | 3.1 | | 4.2 | |
| Residential mortgage | | 1,720 | | | 1,209 | | | 1,047 | | | 42.3 | | 64.3 | |
| Consumer | | 866 | | | 846 | | | 933 | | | 2.4 | | (7.2) | |
| Total loan interest income | | 11,506 | | | 10,750 | | | 10,770 | | | 7.0 | | 6.8 | |
| Total interest income | | 12,965 | | | 12,267 | | | 12,566 | | | 5.7 | | 3.2 | |
| INTEREST EXPENSE | | | | | | | | | | | | | | |
| Interest bearing demand deposits | | 404 | | | 350 | | | 451 | | | 15.4 | | (10.4) | |
| Savings deposits | | 774 | | | 918 | | | 1,995 | | | (15.7) | | (61.2) | |
| Time deposits | | 3,553 | | | 3,006 | | | 2,994 | | | 18.2 | | 18.7 | |
| Borrowed funds and subordinated debentures | 1,152 | | | 1,155 | | | 1,153 | | | (0.3) | | (0.1) | |
| Total interest expense | | 5,883 | | | 5,429 | | | 6,593 | | | 8.4 | | (10.8) | |
| Net interest income | | 7,082 | | | 6,838 | | | 5,973 | | | 3.6 | | 18.6 | |
| Provision for loan losses | | 2,100 | | | 650 | | | 450 | | | 223.1 | | 366.7 | |
| Net interest income after provision for loan losses | 4,982 | | | 6,188 | | | 5,523 | | | (19.5) | | (9.8) | |
| NONINTEREST INCOME | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | 381 | | | 341 | | | 338 | | | 11.7 | | 12.7 | |
| Service and loan fee income | | 334 | | | 302 | | | 428 | | | 10.6 | | (22.0) | |
| Gain on SBA loan sales | | 215 | | | 417 | | | 316 | | | (48.4) | | (32.0) | |
| Bank owned life insurance | | 53 | | | 53 | | | 53 | | | - | | - | |
| Net securities (loss) gains | | (1,458) | | | (206) | | | 22 | | | 100.0 | | 100.0 | |
| Other income | | 131 | | | 121 | | | 303 | | | 8.3 | | (56.8) | |
| Total noninterest income | | (344) | | | 1,028 | | | 1,460 | | | (133.5) | | (123.6) | |
| NONINTEREST EXPENSES | | | | | | | | | | | | | | |
| Compensation and benefits | | 2,948 | | | 2,980 | | | 2,816 | | | (1.1) | | 4.7 | |
| Processing and communications | | 554 | | | 544 | | | 645 | | | 1.8 | | (14.1) | |
| Occupancy, net | | 688 | | | 713 | | | 699 | | | (3.5) | | (1.6) | |
| Furniture and equipment | | 423 | | | 413 | | | 419 | | | 2.4 | | 1.0 | |
| Professional fees | | 285 | | | 143 | | | 116 | | | 99.3 | | 145.7 | |
| Loan servicing costs | | 206 | | | 138 | | | 184 | | | 49.3 | | 12.0 | |
| Advertising | | 158 | | | 79 | | | 113 | | | 100.0 | | 39.8 | |
| Other | | 517 | | | 607 | | | 509 | | | (14.8) | | 1.6 | |
| Total noninterest expenses | | 5,779 | | | 5,617 | | | 5,501 | | | 2.9 | | 5.1 | |
| Income before taxes | | (1,141) | | | 1,599 | | | 1,482 | | | (171.4) | | (177.0) | |
| Federal and state income tax provision | | (139) | | | 495 | | | 430 | | | (128.1) | | (132.3) | |
| Net Income | $ | (1,002) | | $ | 1,104 | | $ | 1,052 | | | (190.8) | % | (195.2) | % |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Net Income Per Common Share-Basic | $ | (0.14) | | $ | 0.16 | | $ | 0.15 | | | (187.5) | % | (196.0) | % |
| Net Income Per Common Share-Diluted | $ | (0.14) | | $ | 0.15 | | $ | 0.14 | | | (193.3) | % | (199.3) | % |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| AVERAGE COMMON SHARES OUTSTANDING: | | | | | | | | | | | | | | |
| Basic | | 7,107 | | | 7,092 | | | 7,215 | | | | | | |
| Diluted | | 7,259 | | | 7,275 | | | 7,462 | | | | | | |
| Unity Bancorp, Inc. | | | | | | | | | | |
| Consolidated Statements of Income | | | | | | | | | | |
| (Dollars in thousands, except per share data) | | | | | | | | |
| | | | | | | | | Sep. 08 vs. | | |
| YEAR TO DATE | | Sep. 30, 2008 | | | Sep. 30, 2007 | | | Sep. 07 | | |
| INTEREST INCOME | | | | | | | | | | |
| Fed funds sold and interest on deposits | $ | 404 | | $ | 873 | | | (53.7) | % | |
| FHLB/ACBB Stock | | 234 | | | 180 | | | 30.0 | | |
| Securities: | | | | | | | | | | |
| Available for sale | | 2,714 | | | 2,332 | | | 16.4 | | |
| Held to maturity | | 1,216 | | | 1,470 | | | (17.3) | | |
| Total securities | | 3,930 | | | 3,802 | | | 3.4 | | |
| Loans: | | | | | | | | | | |
| SBA | | 6,399 | | | 6,732 | | | (4.9) | | |
| Commercial | | 20,279 | | | 18,966 | | | 6.9 | | |
| Residential mortgage | | 4,008 | | | 2,902 | | | 38.1 | | |
| Consumer | | 2,613 | | | 2,788 | | | (6.3) | | |
| Total loan interest income | | 33,299 | | | 31,388 | | | 6.1 | | |
| Total interest income | | 37,867 | | | 36,243 | | | 4.5 | | |
| INTEREST EXPENSE | | | | | | | | | | |
| Interest bearing demand deposits | | 1,120 | | | 1,480 | | | (24.3) | | |
| Savings deposits | | 3,041 | | | 6,288 | | | (51.6) | | |
| Time deposits | | 9,779 | | | 7,117 | | | 37.4 | | |
| Borrowed funds and subordinated debentures | 3,372 | | | 3,279 | | | 2.8 | | |
| Total interest expense | | 17,312 | | | 18,164 | | | (4.7) | | |
| Net interest income | | 20,555 | | | 18,079 | | | 13.7 | | |
| Provision for loan losses | | 3,200 | | | 1,000 | | | 220.0 | | |
| Net interest income after provision for loan losses | 17,355 | | | 17,079 | | | 1.6 | | |
| NONINTEREST INCOME | | | | | | | | | | |
| Service charges on deposit accounts | | 1,042 | | | 1,026 | | | 1.6 | | |
| Service and loan fee income | | 936 | | | 1,174 | | | (20.3) | | |
| Gain on SBA loan sales | | 1,208 | | | 1,819 | | | (33.6) | | |
| Bank owned life insurance | | 157 | | | 148 | | | 6.1 | | |
| Net securities (loss) gains | | (1,594) | | | 32 | | | 100.0 | | |
| Other income | | 390 | | | 688 | | | (43.3) | | |
| Total noninterest income | | 2,139 | | | 4,887 | | | (56.2) | | |
| NONINTEREST EXPENSES | | | | | | | | | | |
| Compensation and benefits | | 9,148 | | | 8,494 | | | 7.7 | | |
| Processing and communications | | 1,668 | | | 1,758 | | | (5.1) | | |
| Occupancy, net | | 2,102 | | | 2,016 | | | 4.3 | | |
| Furniture and equipment | | 1,224 | | | 1,213 | | | 0.9 | | |
| Professional fees | | 626 | | | 414 | | | 51.2 | | |
| Loan servicing costs | | 446 | | | 443 | | | 0.7 | | |
| Advertising | | 299 | | | 312 | | | (4.2) | | |
| Other | | 1,653 | | | 1,535 | | | 7.7 | | |
| Total noninterest expenses | | 17,166 | | | 16,185 | | | 6.1 | | |
| Income before taxes | | 2,328 | | | 5,781 | | | (59.7) | | |
| Federal and state income tax provision | | 982 | | | 1,736 | | | (43.4) | | |
| Net Income | $ | 1,346 | | $ | 4,045 | | | (66.7) | % | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Net Income Per Common Share-Basic | $ | 0.19 | | $ | 0.55 | | | (65.5) | % | |
| Net Income Per Common Share-Diluted | $ | 0.19 | | $ | 0.53 | | | (64.2) | % | |
| | | | | | | | | | | |
| Average common shares outstanding: | | | | | | | | | | |
| Basic | | 7,091 | | | 7,291 | | | | | |
| Diluted | | 7,268 | | | 7,596 | | | | | |
| Unity Bancorp, Inc. | | | | | | | | | | | | | | |
| Consolidated Average Balance Sheets | | | | | | | | | | | | | | |
| with Resultant Interest and Rates | | | | | | | | | | | | | | |
| (Tax-equivalent basis, dollars in thousands) | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | September 30, 2008 | | | June 30, 2008 | |
| | | Balance | | Interest | | Rate | | | Balance | | Interest | | Rate | |
| ASSETS | | | | | | | | | | | | | | |
| Interest-earning assets: | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Federal funds sold and interest-bearing deposits with banks | $ | 24,118 | $ | 113 | | 1.86 | % | $ | 22,351 | $ | 111 | | 2.00 | % |
| FHLB/ACBB Stock | | 4,415 | | 58 | | 5.23 | | | 4,400 | | 76 | | 6.95 | |
| Securities: | | | | | | | | | | | | | | |
| Available for sale | | 72,658 | | 920 | | 5.06 | | | 76,613 | | 961 | | 5.02 | |
| Held to maturity | | 31,209 | | 399 | | 5.11 | | | 31,547 | | 416 | | 5.27 | |
| Total securities | | 103,867 | | 1,319 | | 5.08 | | | 108,160 | | 1,377 | | 5.09 | |
| Loans, net of unearned discount: | | | | | | | | | | | | | | |
| SBA | | 102,383 | | 2,043 | | 7.98 | | | 101,006 | | 2,028 | | 8.03 | |
| Commercial | | 393,626 | | 6,877 | | 6.95 | | | 378,389 | | 6,667 | | 7.09 | |
| Residential mortgage | | 114,058 | | 1,720 | | 6.03 | | | 79,985 | | 1,209 | | 6.05 | |
| Consumer | | 59,933 | | 866 | | 5.75 | | | 58,608 | | 846 | | 5.81 | |
| Total loans | | 670,000 | | 11,506 | | 6.84 | | | 617,988 | | 10,750 | | 6.99 | |
| Total interest-earning assets | | 802,400 | | 12,996 | | 6.45 | | | 752,899 | | 12,314 | | 6.57 | |
| Noninterest-earning assets: | | | | | | | | | | | | | | |
| Cash and due from banks | | 19,166 | | | | | | | 14,377 | | | | | |
| Allowance for loan losses | | (9,092) | | | | | | | (8,814) | | | | | |
| Other assets | | 32,229 | | | | | | | 31,262 | | | | | |
| Total noninterest-earning assets | | 42,303 | | | | | | | 36,825 | | | | | |
| Total Assets | $ | 844,703 | | | | | | $ | 789,724 | | | | | |
| | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | $ | 87,903 | | 404 | | 1.83 | | $ | 82,195 | | 350 | | 1.71 | |
| Savings deposits | | 161,707 | | 774 | | 1.90 | | | 185,674 | | 918 | | 1.99 | |
| Time deposits | | 353,743 | | 3,553 | | 4.00 | | | 282,182 | | 3,006 | | 4.28 | |
| Total interest-bearing deposits | | 603,353 | | 4,731 | | 3.12 | | | 550,051 | | 4,274 | | 3.13 | |
| Borrowed funds and subordinated debentures | | 110,684 | | 1,152 | | 4.14 | | | 110,464 | | 1,155 | | 4.21 | |
| Total interest-bearing liabilities | | 714,037 | | 5,883 | | 3.28 | | | 660,515 | | 5,429 | | 3.31 | |
| Noninterest-bearing liabilities: | | | | | | | | | | | | | | |
| Demand deposits | | 81,157 | | | | | | | 78,879 | | | | | |
| Other liabilities | | 2,321 | | | | | | | 2,553 | | | | | |
| Total noninterest-bearing liabilities | | 83,478 | | | | | | | 81,432 | | | | | |
| Shareholders' equity | | 47,188 | | | | | | | 47,777 | | | | | |
| Total Liabilities and Shareholders' Equity | $ | 844,703 | | | | | | $ | 789,724 | | | | | |
| | | | | | | | | | | | | | | |
| Net interest spread | | | | 7,113 | | 3.17 | % | | | | 6,885 | | 3.26 | % |
| Tax-equivalent basis adjustment | | | | (31) | | | | | | | (47) | | | |
| Net interest income | | | $ | 7,082 | | | | | | $ | 6,838 | | | |
| | | | | | | | | | | | | | | |
| Net interest margin | | | | | | 3.55 | % | | | | | | 3.66 | % |
| Unity Bancorp, Inc. | | | | | | | | | | | | | | |
| Consolidated Average Balance Sheets | | | | | | | | | | | | | | |
| with Resultant Interest and Rates | | | | | | | | | | | | | | |
| (Tax-equivalent basis, dollars in thousands) | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | September 30, 2008 | | | September 30, 2007 | |
| | | Balance | | Interest | | Rate | | | Balance | | Interest | | Rate | |
| ASSETS | | | | | | | | | | | | | | |
| Interest-earning assets: | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Federal funds sold and interest-bearing deposits with banks | $ | 24,118 | $ | 113 | | 1.86 | % | $ | 31,449 | $ | 390 | | 4.92 | % |
| FHLB/ACBB Stock | | 4,415 | | 58 | | 5.23 | | | 3,509 | | 66 | | 7.46 | |
| Securities: | | | | | | | | | | | | | | |
| Available for sale | | 72,658 | | 920 | | 5.06 | | | 71,522 | | 910 | | 5.09 | |
| Held to maturity | | 31,209 | | 399 | | 5.11 | | | 36,047 | | 471 | | 5.23 | |
| Total securities | | 103,867 | | 1,319 | | 5.08 | | | 107,569 | | 1,381 | | 5.14 | |
| Loans, net of unearned discount: | | | | | | | | | | | | | | |
| SBA | | 102,383 | | 2,043 | | 7.98 | | | 81,693 | | 2,190 | | 10.72 | |
| Commercial | | 393,626 | | 6,877 | | 6.95 | | | 350,555 | | 6,600 | | 7.47 | |
| Residential mortgage | | 114,058 | | 1,720 | | 6.03 | | | 71,401 | | 1,047 | | 5.87 | |
| Consumer | | 59,933 | | 866 | | 5.75 | | | 54,064 | | 933 | | 6.85 | |
| Total loans | | 670,000 | | 11,506 | | 6.84 | | | 557,713 | | 10,770 | | 7.68 | |
| Total interest-earning assets | | 802,400 | | 12,996 | | 6.45 | | | 700,240 | | 12,607 | | 7.16 | |
| Noninterest-earning assets: | | | | | | | | | | | | | | |
| Cash and due from banks | | 19,166 | | | | | | | 14,911 | | | | | |
| Allowance for loan losses | | (9,092) | | | | | | | (8,330) | | | | | |
| Other assets | | 32,229 | | | | | | | 29,503 | | | | | |
| Total noninterest-earning assets | | 42,303 | | | | | | | 36,084 | | | | | |
| Total Assets | $ | 844,703 | | | | | | $ | 736,324 | | | | | |
| | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | $ | 87,903 | | 404 | | 1.83 | | $ | 79,188 | | 451 | | 2.26 | |
| Savings deposits | | 161,707 | | 774 | | 1.90 | | | 199,483 | | 1,995 | | 3.97 | |
| Time deposits | | 353,743 | | 3,553 | | 4.00 | | | 243,358 | | 2,994 | | 4.88 | |
| Total interest-bearing deposits | | 603,353 | | 4,731 | | 3.12 | | | 522,029 | | 5,440 | | 4.13 | |
| Borrowed funds and subordinated debentures | | 110,684 | | 1,152 | | 4.14 | | | 89,892 | | 1,153 | | 5.09 | |
| Total interest-bearing liabilities | | 714,037 | | 5,883 | | 3.28 | | | 611,921 | | 6,593 | | 4.27 | |
| Noninterest-bearing liabilities: | | | | | | | | | | | | | | |
| Demand deposits | | 81,157 | | | | | | | 75,218 | | | | | |
| Other liabilities | | 2,321 | | | | | | | 2,216 | | | | | |
| Total noninterest-bearing liabilities | | 83,478 | | | | | | | 77,434 | | | | | |
| Shareholders' equity | | 47,188 | | | | | | | 46,969 | | | | | |
| Total Liabilities and Shareholders' Equity | $ | 844,703 | | | | | | $ | 736,324 | | | | | |
| | | | | | | | | | | | | | | |
| Net interest spread | | | | 7,113 | | 3.17 | % | | | | 6,014 | | 2.89 | % |
| Tax-equivalent basis adjustment | | | | (31) | | | | | | | (41) | | | |
| Net interest income | | | $ | 7,082 | | | | | | $ | 5,973 | | | |
| Net interest margin | | | | | | 3.55 | % | | | | | | 3.44 | % |
| | | | | | | | | | | | | | | |
| Unity Bancorp, Inc. | | | | | | | | | | | | | | |
| Consolidated Average Balance Sheets | | | | | | | | | | | | | | |
| with Resultant Interest and Rates | | | | | | | | | | | | | | |
| (Tax-equivalent basis, dollars in thousands) | | | | | | | | | | | | | | |
| | | Year to Date | |
| | | September 30, 2008 | | | September 30, 2007 | |
| | | Balance | | Interest | | Rate | | | Balance | | Interest | | Rate | |
| ASSETS | | | | | | | | | | | | | | |
| Interest-earning assets: | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Federal funds sold and interest-bearing deposits with banks | $ | 23,135 | $ | 404 | | 2.33 | % | $ | 23,749 | $ | 873 | | 4.91 | % |
| FHLB/ACBB Stock | | 4,330 | | 234 | | 7.22 | | | 3,185 | | 180 | | 7.56 | |
| Securities: | | | | | | | | | | | | | | |
| Available for sale | | 73,337 | | 2,789 | | 5.07 | | | 65,208 | | 2,378 | | 4.86 | |
| Held to maturity | | 32,297 | | 1,270 | | 5.24 | | | 38,589 | | 1,525 | | 5.27 | |
| Total securities | | 105,634 | | 4,059 | | 5.12 | | | 103,797 | | 3,903 | | 5.01 | |
| Loans, net of unearned discount: | | | | | | | | | | | | | | |
| SBA | | 100,674 | | 6,399 | | 8.47 | | | 82,185 | | 6,732 | | 10.92 | |
| Commercial | | 381,497 | | 20,279 | | 7.10 | | | 334,875 | | 18,966 | | 7.57 | |
| Residential mortgage | | 89,551 | | 4,008 | | 5.97 | | | 66,551 | | 2,902 | | 5.81 | |
| Consumer | | 58,679 | | 2,613 | | 5.95 | | | 54,239 | | 2,788 | | 6.87 | |
| Total loans | | 630,401 | | 33,299 | | 7.05 | | | 537,850 | | 31,388 | | 7.79 | |
| Total interest-earning assets | | 763,500 | | 37,996 | | 6.64 | | | 668,581 | | 36,344 | | 7.26 | |
| Noninterest-earning assets: | | | | | | | | | | | | | | |
| Cash and due from banks | | 16,189 | | | | | | | 13,113 | | | | | |
| Allowance for loan losses | | (8,866) | | | | | | | (8,078) | | | | | |
| Other assets | | 31,268 | | | | | | | 29,363 | | | | | |
| Total noninterest-earning assets | | 38,591 | | | | | | | 34,398 | | | | | |
| Total Assets | $ | 802,091 | | | | | | $ | 702,979 | | | | | |
| | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | $ | 83,050 | | 1,120 | | 1.80 | | $ | 87,095 | | 1,480 | | 2.27 | |
| Savings deposits | | 179,254 | | 3,041 | | 2.27 | | | 207,238 | | 6,288 | | 4.06 | |
| Time deposits | | 304,298 | | 9,779 | | 4.29 | | | 199,798 | | 7,117 | | 4.76 | |
| Total interest-bearing deposits | | 566,602 | | 13,940 | | 3.29 | | | 494,131 | | 14,885 | | 4.03 | |
| Borrowed funds and subordinated debentures | | 107,345 | | 3,372 | | 4.20 | | | 84,334 | | 3,279 | | 5.20 | |
| Total interest-bearing liabilities | | 673,947 | | 17,312 | | 3.43 | | | 578,465 | | 18,164 | | 4.20 | |
| Noninterest-bearing liabilities: | | | | | | | | | | | | | | |
| Demand deposits | | 78,259 | | | | | | | 75,303 | | | | | |
| Other liabilities | | 2,354 | | | | | | | 2,466 | | | | | |
| Total noninterest-bearing liabilities | | 80,613 | | | | | | | 77,769 | | | | | |
| Shareholders' equity | | 47,531 | | | | | | | 46,745 | | | | | |
| Total Liabilities and Shareholders' Equity | $ | 802,091 | | | | | | $ | 702,979 | | | | | |
| | | | | | | | | | | | | | | |
| Net interest spread | | | | 20,684 | | 3.21 | % | | | | 18,180 | | 3.06 | % |
| Tax-equivalent basis adjustment | | | | (129) | | | | | | | (101) | | | |
| Net interest income | | | $ | 20,555 | | | | | | $ | 18,079 | | | |
| Net interest margin | | | | | | 3.61 | % | | | | | | 3.63 | % |
| | Unity Bancorp, Inc. | | | | | | | | | | | |
| | Allowance for Loan Losses and Loan Quality Schedules | | | | | | | | | |
| | (Dollars in thousands) | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | 9/30/2008 | | 6/30/2008 | | 3/31/2008 | | 12/31/2007 | | 9/30/2007 | |
| | ALLOWANCE FOR LOAN LOSSES: | | | | | | | | | | | |
| | Balance, beginning of quarter | $ | 8,945 | $ | 8,650 | $ | 8,383 | $ | 8,183 | $ | 7,997 | |
| | Provision charged to expense | | 2,100 | | 650 | | 450 | | 550 | | 450 | |
| | | | 11,045 | | 9,300 | | 8,833 | | 8,733 | | 8,447 | |
| | Less: Charge offs | | | | | | | | | | | |
| | SBA | | 423 | | 249 | | 264 | | 260 | | 270 | |
| | Commercial | | 700 | | 60 | | - | | 126 | | 24 | |
| | Residential mortgage | | - | | - | | 25 | | 0 | | - | |
| | Consumer | | 78 | | 56 | | 6 | | 20 | | 28 | |
| | Total Charge Offs | | 1,201 | | 365 | | 295 | | 406 | | 322 | |
| | Add: Recoveries | | | | | | | | | | | |
| | SBA | | 40 | | 5 | | 60 | | 53 | | 41 | |
| | Commercial | | 29 | | 4 | | 2 | | 3 | | 7 | |
| | Residential mortgage | | - | | - | | - | | 0 | | - | |
| | Consumer | | - | | 1 | | 50 | | 0 | | 10 | |
| | Total Recoveries | | 69 | | 10 | | 112 | | 56 | | 58 | |
| | Net Charge Offs | | 1,132 | | 355 | | 183 | | 350 | | 264 | |
| | Balance, end of quarter | $ | 9,913 | $ | 8,945 | $ | 8,650 | $ | 8,383 | $ | 8,183 | |
| | | | | | - | | | | | | | |
| | | | | | | | | | | | | |
| | LOAN QUALITY INFORMATION: | | | | | | | | | | | |
| | Nonperforming loans | $ | 10,637 | $ | 6,621 | $ | 4,142 | $ | 5,461 | $ | 4,185 | |
| | Other real estate owned, net | | 318 | | 266 | | 266 | | 106 | | 134 | |
| | Nonperforming assets | $ | 10,955 | $ | 6,887 | $ | 4,408 | $ | 5,567 | $ | 4,319 | |
| | | | | | | | | | | | | |
| | Loans 90 days past due and still accruing | $ | 3,532 | $ | 76 | $ | 546 | $ | 155 | $ | 340 | |
| | | | | | | | | | | | | |
| | Allowance for loan losses to: | | | | | | | | | | | |
| | Total loans at period end | | 1.45 | % | 1.39 | % | 1.43 | % | 1.42 | % | 1.44 | % |
| | Nonperforming loans | | 93.19 | | 135.10 | | 208.84 | | 153.51 | | 195.53 | |
| | Nonperforming assets | | 90.49 | | 129.88 | | 196.23 | | 150.58 | | 189.47 | |
| | Net charge offs to average loans (QTD) | | 0.67 | | 0.23 | | �� 0.12 | | 0.24 | | 0.19 | |
| | Net charge offs to average loans (YTD) | | 0.35 | | 0.18 | | 0.12 | | 0.14 | | 0.11 | |
| | Nonperforming loans to total loans | | 1.55 | | 1.03 | | 0.69 | | 0.93 | | 0.74 | |
| | Nonperforming assets to total loans and OREO | 1.60 | | 1.07 | | 0.73 | | 0.94 | | 0.76 | |
| Unity Bancorp, Inc. | | | | | | | | | | | |
| Quarterly Financial Data | | | | | | | | | | | |
| | | 09/30/08 | | 06/30/08 | | 03/31/08 | | 12/31/07 | | 09/30/07 | |
| SUMMARY OF INCOME (in thousands) : | | | | | | | | | |
| Interest income | $ | 12,965 | $ | 12,267 | $ | 12,635 | $ | 12,657 | $ | 12,566 | |
| Interest expense | | 5,883 | | 5,429 | | 6,000 | | 6,310 | | 6,593 | |
| Net interest income | | 7,082 | | 6,838 | | 6,635 | | 6,347 | | 5,973 | |
| Provision for loan losses | | 2,100 | | 650 | | 450 | | 550 | | 450 | |
| Net interest income after provision | | 4,982 | | 6,188 | | 6,185 | | 5,797 | | 5,523 | |
| Noninterest income | | (344) | | 1,028 | | 1,455 | | 1,053 | | 1,460 | |
| Noninterest expense | | 5,779 | | 5,617 | | 5,770 | | 5,928 | | 5,501 | |
| Income before income taxes | | (1,141) | | 1,599 | | 1,870 | | 922 | | 1,482 | |
| Federal and state income tax provision | | (139) | | 495 | | 626 | | 242 | | 430 | |
| Net Income | | (1,002) | | 1,104 | | 1,244 | | 680 | | 1,052 | |
| Net Income per Common Share: | | | | | | | | | | | |
| Basic | $ | (0.14) | $ | 0.16 | $ | 0.18 | $ | 0.10 | $ | 0.15 | |
| Diluted | | (0.14) | | 0.15 | | 0.17 | | 0.09 | | 0.14 | |
| COMMON SHARE DATA: | | | | | | | | | | |
| Cash dividends declared | $ | - | $ | 0.05 | $ | 0.05 | $ | 0.05 | $ | 0.05 | |
| Book value at quarter end | | 6.55 | | 6.76 | | 6.76 | | 6.70 | | 6.61 | |
| Market value at quarter end | | 4.00 | | 6.95 | | 7.48 | | 8.10 | | 10.55 | |
| Average common shares outstanding: (000's) | | | | | | | | | | | |
| Basic | | 7,107 | | 7,092 | | 7,075 | | 7,107 | | 7,215 | |
| Diluted | | 7,259 | | 7,275 | | 7,271 | | 7,328 | | 7,462 | |
| Common shares outstanding at period end (000's) | | 7,110 | | 7,095 | | 7,084 | | 7,063 | | 7,154 | |
| OPERATING RATIOS: | | | | | | | |
| Return on average assets | | (0.47) | % | 0.56 | % | 0.65 | % | 0.36 | % | 0.57 | % |
| Return on average common equity | | (8.45) | | 9.29 | | 10.50 | | 5.78 | | 8.89 | |
| Efficiency ratio | | 70.51 | | 69.59 | | 71.95 | | 74.07 | | 74.23 | |
| BALANCE SHEET DATA (in thousands): | | | | | | | |
| Assets | $ | 864,083 | $ | 832,315 | $ | 807,874 | $ | 752,196 | $ | 746,821 | |
| Deposits | | 684,680 | | 671,881 | | 642,282 | | 601,268 | | 612,215 | |
| Loans | | 685,023 | | 643,039 | | 602,943 | | 590,132 | | 567,597 | |
| Shareholders' equity | | 46,539 | | 47,951 | | 47,896 | | 47,260 | | 47,261 | |
| Allowance for loan losses | | 9,913 | | 8,945 | | 8,650 | | 8,383 | | 8,183 | |
| TAX-EQUIVALENT YIELDS AND RATES: | | | | | | | |
| Interest-earning assets | | 6.45 | % | 6.57 | % | 6.93 | % | 7.15 | % | 7.16 | % |
| Interest-bearing liabilities | | 3.28 | | 3.31 | | 3.73 | | 4.05 | | 4.27 | |
| Net interest spread | | 3.17 | | 3.26 | | 3.20 | | 3.10 | | 2.89 | |
| Net interest margin | | 3.55 | | 3.66 | | 3.64 | | 3.62 | | 3.44 | |
| CREDIT QUALITY: | | | | | | | | | | | |
| Nonperforming assets (in thousands) | $ | 10,955 | $ | 6,887 | $ | 4,408 | $ | 5,567 | $ | 4,319 | |
| Allowance for loan losses to period-end loans | | 1.45 | % | 1.39 | % | 1.43 | % | 1.42 | % | 1.44 | % |
| Net charge offs to average loans | | 0.67 | | 0.23 | | 0.12 | | 0.24 | | 0.19 | |
| Nonperforming assets to loans and OREO | | 1.60 | | 1.07 | | 0.73 | | 0.94 | | 0.76 | |
| CAPITAL AND OTHER: | | | | | | | |
| Total equity to assets | | 5.39 | % | 5.76 | % | 5.93 | % | 6.28 | % | 6.33 | % |
| Tier I capital to average assets (leverage) | | 7.42 | | 8.01 | | 8.06 | | 8.25 | | 8.37 | |
| Tier I capital to risk-adjusted assets | | 9.07 | | 9.42 | | 9.66 | | 9.81 | | 10.51 | |
| Total capital to risk-adjusted assets | | 10.33 | | 10.67 | | 10.91 | | 11.06 | | 11.76 | |
| Number of banking offices | | 16 | | 16 | | 17 | | 17 | | 16 | |
| Number of ATMs | | 19 | | 19 | | 20 | | 20 | | 19 | |
| Number of employees | | 176 | | 191 | | 188 | | 201 | | 197 | |
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