Unity Bancorp, Inc.
64 Old Highway 22
Clinton, NJ 08809
800-618-BANK
www.unitybank.com
NewsNewsNewsNewsNews
For Immediate Release:
October 25, 2012
News Media & Financial Analyst Contact:
Alan J. Bedner, EVP
Chief Financial Officer
(908) 713-4308
Unity Bancorp Reports Continued Improvement in Earnings
Clinton, NJ - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income available to common shareholders of $799 thousand, or $0.10 per diluted share, for the three months ended September 30, 2012, compared to $700 thousand, or $0.09 per diluted share, for the same period a year ago. Return on average assets and average common equity for the quarter were 0.60% and 5.74%, respectively, compared to 0.54% and 5.27% for the same period a year ago.
For the nine months ended September 30, 2012, net income available to common shareholders totaled $1.9 million, or $0.24 per diluted share, compared to $786 thousand, or $0.10 per diluted share, for the same period a year ago. Return on average assets and average common equity for the nine months were 0.51% and 4.61%, respectively, compared to 0.32% and 2.04% for the same period a year ago.
Highlights for the quarter include:
| × | Nonperforming assets improved for the third consecutive quarter with a decline of $3.4 million to $18.8 million from $22.2 million at June 30, 2012. |
| × | Improved credit quality resulted in lower loan loss provisions as well as reduced loan collection expenses and costs to maintain other real estate owned (“OREO”). |
| × | Significant increases in residential mortgage originations resulted in increased gains on sale of mortgage loans. |
| × | Net interest margin expanded to 3.72% this quarter from 3.68% for the quarter ended June 30, 2012. |
| × | Continued deposit product mix improvement. Growth in core demand deposits and savings deposits, while higher costing time deposits declined. |
| × | Further improvement in our capital ratios as we remain “well-capitalized”. |
| × | Closed our William Penn Highway, Pennsylvania branch and received regulatory approval for the new Somerset, New Jersey branch which is expected to open in November 2012. |
James A. Hughes, President and CEO, stated, “This was another quarter of increased earnings as our core fundamentals continued to improve and asset quality strengthened. We enhanced our net interest margin over the second quarter of 2012 through strategic deposit pricing, coupled with increasing levels of noninterest-bearing deposits. The trends are very positive and I remain extremely optimistic about the long-term opportunities ahead.”
Net Interest Income
Net interest income decreased $326 thousand to $7.0 million for the three months ended September 30, 2012 compared to the prior year’s quarter and decreased $1.6 million to $20.7 million for the nine months ended September 30, 2012 compared to the prior year’s period. In addition, the net interest margin contracted 13 basis points to 3.72% for the quarter ended September 30, 2012 and contracted 23 basis points to 3.65% for the nine months ended September 30, 2012 when compared to the prior year periods.
Our net interest income continues to be influenced by the sustained low interest rate environment, which the Federal Open Market Committee (“FOMC”) forecasts will remain through mid-2015. This rate environment has resulted in a tighter net interest margin as our earning assets re-price at lower rates. The yield on earning assets fell 51 basis points to 4.70% and 58 basis points to 4.70% for the quarter and year-to-date periods ending September 30, 2012, respectively, when compared to the same periods in 2011. Partially offsetting these declines are lower funding costs. The cost of interest-bearing liabilities decreased 43 basis points to 1.19% for the three month period and decreased 37 basis points to 1.29% for the nine month period.
Noninterest Income
Noninterest income increased $120 thousand to $1.8 million and $974 thousand to $5.3 million for the three and nine months ended September 30, 2012, respectively, compared to the prior year’s period. These increases were driven by record levels of residential mortgage loan originations and sales. Additional factors affecting noninterest income were:
| × | Branch fee income, which consists of deposit service charges and overdraft fees, increased due to higher levels of overdraft fees year-to-date partially offset by reduced deposit account service charges. |
| × | Service and loan fee income increased due to late charges, servicing income and other processing fees. |
| × | Gains on sales of SBA loans decreased due to a lower volume of loans being sold in each period. For the three month period, $442 thousand in SBA loans were sold compared to $5.1 million in sales in the third quarter of 2011. Year-to-date, $4.7 million in SBA loans were sold compared to $11.1 million in the prior year period. |
| × | Gains on sales of residential mortgage loans increased on a significantly higher volume of loan sales. For the three month period, $30.1 million in residential mortgage loans were sold compared to $13.3 million in the third quarter of 2011. Year-to-date, $71.6 million in residential mortgage loans were sold compared to $29.0 million in the prior year’s period. |
| × | Security gains of $7 thousand and $514 thousand were realized during the quarter and year to date periods, respectively. |
Noninterest Expense
Noninterest expense totaled $6.0 million and $6.1 million for the three months ended September 30, 2012 and 2011, respectively, and $18.2 million and $18.5 million for the nine months ended September 30, 2012 and 2011, respectively.
Noninterest expense in the current and prior year periods included the impact of our branch network restructuring. In March 2012, we opened our Washington Township, New Jersey branch. In the third quarter of 2012, we announced we would be closing our William Penn Highway, Pennsylvania branch and recognized approximately $32 thousand in residual lease and fixed asset disposal expenses. Also, during the third quarter we announced we would be opening a new branch in Somerset, New Jersey and have subsequently begun to incur lease and other operating expenses. For the nine months ended September 30, 2011, we incurred $215 thousand in residual lease obligation and fixed asset disposals related to closing two underperforming branches. Other factors which affected noninterest expense include:
| × | Compensation and benefits expense increased due to higher payroll costs, mortgage origination commissions, equity compensation and medical benefits expenses. |
| × | Occupancy expense increased over the third quarter of 2011 due to rental expense from our new Somerset branch, residual lease expenses from closing our William Penn branch and increased depreciation expenses due to the new Washington branch. For the year-to-date period, occupancy expense declined as the above noted increases were offset by higher snow removal expenses in 2011 and the branch closure related expenses in 2011 noted above. |
| × | Furniture and equipment expense decreased due primarily to the branch closure cost savings noted above, partially offset by expenses related to our new Washington branch. |
| × | Loan collection costs decreased due to lower loan legal, appraisal, insurance and other collection related expenses. |
| × | OREO costs, such as property valuation adjustments, property taxes and maintenance expenses, decreased significantly as credit quality improved. |
| × | Deposit insurance expense decreased year-to-date due to the new assets-based assessment method put into place by the FDIC on April 1, 2011. |
| × | Advertising expenses, such as promotional activities related to our new branches and in response to increased competition within our market place, combined with participation in community events and higher direct mail costs, increased year-to-date. |
Financial Condition
At September 30, 2012, total assets were $802.7 million, a decrease of $8.2 million from the prior year-end.
| × | Total securities decreased $1.1 million since December 31, 2011, due to $32.8 million in security purchases, offset by sales and an increased level of prepayments. |
| × | Total loans increased $4.3 million or 0.7% to $596.9 million at September 30, 2012. The Company plans to continue shrinking its SBA portfolio. Future loan growth is expected in both the commercial and residential portfolios as reflected in our year-to-date performance. The net increase was the result of the following: |
| - | Commercial loans increased $23.5 million or 8.3%, |
| - | Residential mortgage loans increased $3.1 million or 2.3%, |
| - | SBA 504 loans decreased $13.3 million or 24.2%, |
| - | SBA 7(a) loans decreased $4.8 million or 6.7%, and |
| - | Consumer loans decreased $4.1 million or 8.4%. |
| × | Core deposits, which exclude time deposits, increased $21.0 million during the year to $505.6 million, due primarily to a $10.3 million increase in municipal deposits. The net changes by product type include: |
| - | A $17.0 million increase in savings deposits, and a |
| - | $4.3 million increase in noninterest-bearing demand deposits, partially offset by a |
| - | $280 thousand decrease in interest-bearing demand deposits. |
| - | Time deposits decreased $31.9 million from year-end due to the maturity and planned run off of brokered deposits, as well as a high rate retail promotion that was completed late in 2008 to bolster liquidity. |
| × | Shareholders’ equity was $76.4 million at September 30, 2012, an increase of $2.9 million from year-end 2011, primarily due to the increase in net income. |
| × | Book value per common share was $7.52 as of September 30, 2012. |
| × | At September 30, 2012 the leverage, Tier I and Total Risk Based Capital ratios were 11.20%, 14.52% and 15.78%, respectively, all in excess of the ratios required to be deemed “well-capitalized”. |
Credit Quality
“Nonperforming assets have declined $7.0 million or 27.2% to $18.8 million since year-end 2011. This is the lowest level since 2008 and I expect this trend to continue”, said James A. Hughes. “Many of our problem commercial and SBA relationships have been resolved and the majority of our problem relationships are behind us.”
| × | Nonperforming assets totaled $18.8 million at September 30, 2012 or 3.14% of total loans and OREO, compared to $25.8 million or 4.33% of total loans and OREO at year-end 2011. |
| × | The allowance for loan losses totaled $15.3 million at September 30, 2012 or 2.56% of total loans. The provision for loan losses for the quarter ended September 30, 2012 was $1.0 million compared to $1.4 million for the prior year’s quarter. The provision for loan losses for the nine months ended September 30, 2012 was $3.2 million compared to $5.7 million for the prior year’s period. |
| × | Net charge-offs were $2.0 million for the three months ended September 30, 2012, compared to $971 thousand for the same period a year ago. For the nine months ended September 30, 2012, net charge-offs were $4.3 million, compared to $3.6 million for the prior year’s period. |
| × | Troubled debt restructurings (“TDRs”) decreased $2.2 million from year-end to $18.9 million due to loan payoffs. At September 30, 2012, 91.4% of our TDRs were performing. |
Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $803 million in assets and $633 million in deposits. Unity Bank provides financial services to retail, corporate and small business customers through its 15 retail service centers located in Hunterdon, Middlesex, Somerset, Union and Warren Counties in New Jersey and Northampton County, Pennsylvania. For additional information about Unity, visit our website at www.unitybank.com, or call 800- 618-BANK.
This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance. These statements may be identified by use of the words “believe”, “expect”, “intend”, “anticipate”, “estimate”, “project” or similar expressions. These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond the company’s control and could impede its ability to achieve these goals. These factors include those items included in our Annual Report on Form 10-K under the heading “Item IA-Risk Factors” as well as general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, our ability to manage and reduce the level of our nonperforming assets, and results of regulatory exams, among other factors.
UNITY BANCORP, INC.
SUMMARY FINANCIAL HIGHLIGHTS
September 30, 2012
| | | | | | | | | June 30, 2012 | | September 30, 2011 | |
(In thousands, except percentages and per share amounts) | | September 30, 2012 | | June 30, 2012 | | September 30, 2011 | | | % | | % | |
Total assets | | $ | 802,675 | | $ | 785,111 | | $ | 820,652 | | | 2.2 | % | (2.2) | % |
Total deposits | | | 633,126 | | | 616,443 | | | 654,171 | | | 2.7 | | (3.2) | |
Total loans | | | 596,910 | | | 604,901 | | | 603,633 | | | (1.3) | | (1.1) | |
Total securities | | | 106,437 | | | 114,846 | | | 100,752 | | | (7.3) | | 5.6 | |
Total shareholders' equity | | | 76,387 | | | 74,901 | | | 73,136 | | | 2.0 | | 4.4 | |
Allowance for loan losses | | | (15,294) | | | (16,284) | | | (16,447) | | | 6.1 | | 7.0 | |
FINANCIAL DATA - QUARTER TO DATE: | | | | | | | | | | | | | | | |
Income before provision for income taxes | | $ | 1,802 | | $ | 1,494 | | $ | 1,506 | | | 20.6 | | 19.7 | |
Provision for income taxes | | | 606 | | | 518 | | | 420 | | | 17.0 | | 44.3 | |
Net income | | | 1,196 | | | 976 | | | 1,086 | | | 22.5 | | 10.1 | |
Preferred stock dividends and discount accretion | | | 397 | | | 401 | | | 386 | | | (1.0) | | 2.8 | |
Income available to common shareholders | | $ | 799 | | $ | 575 | | $ | 700 | | | 39.0 | | 14.1 | |
Net income per common share - Basic (1) | | $ | 0.11 | | $ | 0.08 | | $ | 0.09 | | | 37.5 | | 22.2 | |
Net income per common share - Diluted (1) | | $ | 0.10 | | $ | 0.07 | | $ | 0.09 | | | 42.9 | | 11.1 | |
Return on average assets | | | 0.60 | % | | 0.49 | % | | 0.54 | % | | 22.4 | | 11.1 | |
Return on average equity (2) | | | 5.74 | % | | 4.25 | % | | 5.27 | % | | 35.1 | | 8.9 | |
Efficiency ratio | | | 68.22 | % | | 73.72 | % | | 69.80 | % | | (7.5) | | (2.3) | |
FINANCIAL DATA - YEAR TO DATE: | | | | | | | | | | | | | | | |
Income before provision for income taxes | | $ | 4,660 | | | | | $ | 2,498 | | | | | 86.5 | |
Provision for income taxes | | | 1,583 | | | | | | 548 | | | | | 188.9 | |
Net income | | | 3,077 | | | | | | 1,950 | | | | | 57.8 | |
Preferred stock dividends and discount accretion | | | 1,195 | | | | | | 1,164 | | | | | 2.7 | |
Income available to common shareholders | | $ | 1,882 | | | | | $ | 786 | | | | | 139.4 | |
Net income per common share - Basic (1) | | $ | 0.25 | | | | | $ | 0.11 | | | | | 127.3 | |
Net income per common share - Diluted (1) | | $ | 0.24 | | | | | $ | 0.10 | | | | | 140.0 | |
Return on average assets | | | 0.51 | % | | | | | 0.32 | % | | | | 59.4 | |
Return on average equity (2) | | | 4.61 | % | | | | | 2.04 | % | | | | 126.0 | |
Efficiency ratio | | | 71.20 | % | | | | | 70.36 | % | | | | 1.2 | |
Market price per share | | $ | 6.13 | | $ | 6.00 | | $ | 6.65 | | | 2.2 | | (7.8) | |
Dividends paid | | $ | - | | $ | - | | $ | - | | | - | | - | |
Book value per common share | | $ | 7.52 | | $ | 7.38 | | $ | 7.25 | | | 1.9 | | 3.7 | |
Average diluted shares outstanding (QTD) | | | 7,782 | | | 7,784 | | | 7,781 | | | - | | - | |
Total equity to total assets | | | 9.52 | % | | 9.54 | % | | 8.91 | % | | (0.2) | | 6.8 | |
Leverage ratio | | | 11.20 | % | | 11.08 | % | | 10.69 | % | | 1.1 | | 4.8 | |
Tier 1 risk-based capital ratio | | | 14.52 | % | | 14.22 | % | | 13.88 | % | | 2.1 | | 4.6 | |
Total risk-based capital ratio | | | 15.78 | % | | 15.49 | % | | 15.14 | % | | 1.9 | | 4.2 | |
CREDIT QUALITY AND RATIOS: | | | | | | | | | | | | | | | |
Nonperforming assets | | $ | 18,790 | | $ | 22,186 | | $ | 24,153 | | | (15.3) | | (22.2) | |
QTD net chargeoffs (annualized) to QTD average loans | | | 1.32 | % | | 0.71 | % | | 0.63 | % | | 85.9 | | 109.5 | |
Allowance for loan losses to total loans | | | 2.56 | % | | 2.69 | % | | 2.72 | % | | (4.8) | | (5.9) | |
Nonperforming assets to total loans and OREO | | | 3.14 | % | | 3.65 | % | | 3.98 | % | | (14.0) | | (21.1) | |
Nonperforming assets to total assets | | | 2.34 | % | | 2.83 | % | | 2.94 | % | | (17.3) | % | (20.4) | % |
| (1) | Defined as net income adjusted for dividends accrued and accretion of discount on perpetual preferred stock divided by weighted average shares outstanding. |
| (2) | Defined as net income adjusted for dividends accrued and accretion of discount on perpetual preferred stock divided by average shareholders' equity (excluding preferred stock). |
UNITY BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 2012
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | September 30, 2012 vs. | |
| | | | | | | | | | | | December 31, 2011 | | September 30, 2011 | |
(In thousands, except percentages) | | September 30, 2012 | | December 31, 2011 | | September 30, 2011 | | | % | | % | |
ASSETS | | | | | | | | | | | | | | | |
Cash and due from banks | | $ | 17,027 | | $ | 17,688 | | $ | 15,965 | | | (3.7) | % | 6.7 | % |
Federal funds sold and interest-bearing deposits | | | 55,536 | | | 64,886 | | | 74,125 | | | (14.4) | | (25.1) | |
Cash and cash equivalents | | | 72,563 | | | 82,574 | | | 90,090 | | | (12.1) | | (19.5) | |
Securities: | | | | | | | | | | | | | | | |
Securities available for sale | | | 90,852 | | | 88,765 | | | 88,083 | | | 2.4 | | 3.1 | |
Securities held to maturity | | | 15,585 | | | 18,771 | | | 12,669 | | | (17.0) | | 23.0 | |
Total securities | | | 106,437 | | | 107,536 | | | 100,752 | | | (1.0) | | 5.6 | |
Loans: | | | | | | | | | | | | | | | |
SBA loans held for sale | | | 7,708 | | | 7,668 | | | 9,284 | | | 0.5 | | (17.0) | |
SBA loans held to maturity | | | 59,299 | | | 64,175 | | | 66,363 | | | (7.6) | | (10.6) | |
SBA 504 loans | | | 41,771 | | | 55,108 | | | 55,520 | | | (24.2) | | (24.8) | |
Commercial loans | | | 306,569 | | | 283,104 | | | 284,046 | | | 8.3 | | 7.9 | |
Residential mortgage loans | | | 137,192 | | | 134,090 | | | 136,942 | | | 2.3 | | 0.2 | |
Consumer loans | | | 44,371 | | | 48,447 | | | 51,478 | | | (8.4) | | (13.8) | |
Total loans | | | 596,910 | | | 592,592 | | | 603,633 | | | 0.7 | | (1.1) | |
Allowance for loan losses | | | (15,294) | | | (16,348) | | | (16,447) | | | 6.4 | | 7.0 | |
Net loans | | | 581,616 | | | 576,244 | | | 587,186 | | | 0.9 | | (0.9) | |
| | | | | | | | | | | | | | | |
Premises and equipment, net | | | 12,016 | | | 11,350 | | | 10,648 | | | 5.9 | | 12.8 | |
Bank owned life insurance ("BOLI") | | | 9,327 | | | 9,107 | | | 9,033 | | | 2.4 | | 3.3 | |
Deferred tax assets | | | 6,221 | | | 6,878 | | | 6,889 | | | (9.6) | | (9.7) | |
Federal Home Loan Bank stock | | | 3,989 | | | 4,088 | | | 4,088 | | | (2.4) | | (2.4) | |
Accrued interest receivable | | | 3,478 | | | 3,703 | | | 3,519 | | | (6.1) | | (1.2) | |
Other real estate owned ("OREO") | | | 1,456 | | | 3,032 | | | 3,555 | | | (52.0) | | (59.0) | |
Prepaid FDIC insurance | | | 2,079 | | | 2,545 | | | 2,653 | | | (18.3) | | (21.6) | |
Goodwill and other intangibles | | | 1,518 | | | 1,530 | | | 1,533 | | | (0.8) | | (1.0) | |
Other assets | | | 1,975 | | | 2,259 | | | 706 | | | (12.6) | | 179.7 | |
| | | | | | | | | | | | | | | |
Total assets | | $ | 802,675 | | $ | 810,846 | | $ | 820,652 | | | (1.0) | % | (2.2) | % |
| | | | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | |
Noninterest-bearing demand deposits | | $ | 105,529 | | $ | 101,193 | | $ | 93,706 | | | 4.3 | % | 12.6 | % |
Interest-bearing demand deposits | | | 104,469 | | | 104,749 | | | 100,807 | | | (0.3) | | 3.6 | |
Savings deposits | | | 295,567 | | | 278,603 | | | 296,571 | | | 6.1 | | (0.3) | |
Time deposits, under $100,000 | | | 78,104 | | | 102,809 | | | 105,840 | | | (24.0) | | (26.2) | |
Time deposits, $100,000 and over | | | 49,457 | | | 56,617 | | | 57,247 | | | (12.6) | | (13.6) | |
Total deposits | | | 633,126 | | | 643,971 | | | 654,171 | | | (1.7) | | (3.2) | |
| | | | | | | | | | | | | | | |
Borrowed funds | | | 75,000 | | | 75,000 | | | 75,000 | | | - | | - | |
Subordinated debentures | | | 15,465 | | | 15,465 | | | 15,465 | | | - | | - | |
Accrued interest payable | | | 464 | | | 523 | | | 533 | | | (11.3) | | (12.9) | |
Accrued expenses and other liabilities | | | 2,233 | | | 2,329 | | | 2,347 | | | (4.1) | | (4.9) | |
Total liabilities | | | 726,288 | | | 737,288 | | | 747,516 | | | (1.5) | | (2.8) | |
| | | | | | | | | | | | | | | |
Shareholders' equity: | | | | | | | | | | | | | | | |
Cumulative perpetual preferred stock | | | 19,968 | | | 19,545 | | | 19,409 | | | 2.2 | | 2.9 | |
Common stock | | | 54,176 | | | 53,746 | | | 53,663 | | | 0.8 | | 1.0 | |
Retained earnings (deficit) | | | 1,028 | | | (854) | | | (1,056) | | | 220.4 | | 197.3 | |
Accumulated other comprehensive income | | | 1,215 | | | 1,121 | | | 1,120 | | | 8.4 | | 8.5 | |
Total shareholders' equity | | | 76,387 | | | 73,558 | | | 73,136 | | | 3.8 | | 4.4 | |
| | | | | | | | | | | | | | | |
Total liabilities and shareholders' equity | | $ | 802,675 | | $ | 810,846 | | $ | 820,652 | | | (1.0) | % | (2.2) | % |
| | | | | | | | | | | | | | | |
Preferred shares | | | 21 | | | 21 | | | 21 | | | | | | |
Issued and outstanding common shares | | | 7,503 | | | 7,459 | | | 7,413 | | | | | | |
UNITY BANCORP, INC.
QTD CONSOLIDATED STATEMENTS OF INCOME
September 30, 2012
| | For the three months ended | | | June 30, 2012 | | September 30, 2011 | |
(In thousands, except percentages and per share amounts) | | September 30, 2012 | | June 30, 2012 | | September 30, 2011 | | | $ | | % | | $ | | % | |
Federal funds sold and interest-bearing deposits | | $ | 13 | | $ | 11 | | $ | 6 | | | $ | 2 | | | 18.2 | % | $ | 7 | | | 116.7 | % |
Federal Home Loan Bank stock | | | 50 | | | 44 | | | 46 | | | | 6 | | | 13.6 | | | 4 | | | 8.7 | |
Securities available for sale | | | 656 | | | 690 | | | 804 | | | | (34) | | | (4.9) | | | (148) | | | (18.4) | |
Securities held to maturity | | | 146 | | | 163 | | | 157 | | | | (17) | | | (10.4) | | | (11) | | | (7.0) | |
Total securities | | | 802 | | | 853 | | | 961 | | | | (51) | | | (6.0) | | | (159) | | | (16.5) | |
SBA loans | | | 881 | | | 846 | | | 1,243 | | | | 35 | | | 4.1 | | | (362) | | | (29.1) | |
SBA 504 loans | | | 647 | | | 691 | | | 838 | | | | (44) | | | (6.4) | | | (191) | | | (22.8) | |
Commercial loans | | | 4,313 | | | 4,216 | | | 4,417 | | | | 97 | | | 2.3 | | | (104) | | | (2.4) | |
Residential mortgage loans | | | 1,631 | | | 1,582 | | | 1,825 | | | | 49 | | | 3.1 | | | (194) | | | (10.6) | |
Consumer loans | | | 534 | | | 529 | | | 616 | | | | 5 | | | 0.9 | | | (82) | | | (13.3) | |
Total loans | | | 8,006 | | | 7,864 | | | 8,939 | | | | 142 | | | 1.8 | | | (933) | | | (10.4) | |
Total interest income | | | 8,871 | | | 8,772 | | | 9,952 | | | | 99 | | | 1.1 | | | (1,081) | | | (10.9) | |
Interest-bearing demand deposits | | | 108 | | | 123 | | | 137 | | | | (15) | | | (12.2) | | | (29) | | | (21.2) | |
Savings deposits | | | 293 | | | 287 | | | 536 | | | | 6 | | | 2.1 | | | (243) | | | (45.3) | |
Time deposits | | | 619 | | | 689 | | | 979 | | | | (70) | | | (10.2) | | | (360) | | | (36.8) | |
Borrowed funds and subordinated debentures | | | 824 | | | 816 | | | 947 | | | | 8 | | | 1.0 | | | (123) | | | (13.0) | |
Total interest expense | | | 1,844 | | | 1,915 | | | 2,599 | | | | (71) | | | (3.7) | | | (755) | | | (29.0) | |
Net interest income | | | 7,027 | | | 6,857 | | | 7,353 | | | | 170 | | | 2.5 | | | (326) | | | (4.4) | |
Provision for loan losses | | | 1,000 | | | 1,000 | | | 1,400 | | | | - | | | - | | | (400) | | | (28.6) | |
Net interest income after provision for loan losses | | | 6,027 | | | 5,857 | | | 5,953 | | | | 170 | | | 2.9 | | | 74 | | | 1.2 | |
Branch fee income | | | 383 | | | 362 | | | 374 | | | | 21 | | | 5.8 | | | 9 | | | 2.4 | |
Service and loan fee income | | | 366 | | | 287 | | | 213 | | | | 79 | | | 27.5 | | | 153 | | | 71.8 | |
Gain on sale of SBA loans held for sale, net | | | 46 | | | 223 | | | 338 | | | | (177) | | | (79.4) | | | (292) | | | (86.4) | |
Gain on sale of mortgage loans, net | | | 662 | | | 453 | | | 250 | | | | 209 | | | 46.1 | | | 412 | | | 164.8 | |
BOLI income | | | 74 | | | 73 | | | 74 | | | | 1 | | | 1.4 | | | - | | | - | |
Net security gains | | | 7 | | | 283 | | | 266 | | | | (276) | | | (97.5) | | | (259) | | | (97.4) | |
Other income | | | 236 | | | 160 | | | 139 | | | | 76 | | | 47.5 | | | 97 | | | 69.8 | |
Total noninterest income | | | 1,774 | | | 1,841 | | | 1,654 | | | | (67) | | | (3.6) | | | 120 | | | 7.3 | |
Compensation and benefits | | | 3,191 | | | 3,133 | | | 2,944 | | | | 58 | | | 1.9 | | | 247 | | | 8.4 | |
Occupancy | | | 690 | | | 740 | | | 615 | | | | (50) | | | (6.8) | | | 75 | | | 12.2 | |
Processing and communications | | | 544 | | | 553 | | | 549 | | | | (9) | | | (1.6) | | | (5) | | | (0.9) | |
Furniture and equipment | | | 368 | | | 355 | | | 384 | | | | 13 | | | 3.7 | | | (16) | | | (4.2) | |
Professional services | | | 196 | | | 211 | | | 206 | | | | (15) | | | (7.1) | | | (10) | | | (4.9) | |
Loan collection costs | | | 182 | | | 91 | | | 235 | | | | 91 | | | 100.0 | | | (53) | | | (22.6) | |
OREO expenses | | | 36 | | | 237 | | | 491 | | | | (201) | | | (84.8) | | | (455) | | | (92.7) | |
Deposit insurance | | | 162 | | | 168 | | | 60 | | | | (6) | | | (3.6) | | | 102 | | | 170.0 | |
Advertising | | | 181 | | | 302 | | | 187 | | | | (121) | | | (40.1) | | | (6) | | | (3.2) | |
Other expenses | | | 449 | | | 414 | | | 430 | | | | 35 | | | 8.5 | | | 19 | | | 4.4 | |
Total noninterest expense | | | 5,999 | | | 6,204 | | | 6,101 | | | | (205) | | | (3.3) | | | (102) | | | (1.7) | |
Income before provision for income taxes | | | 1,802 | | | 1,494 | | | 1,506 | | | | 308 | | | 20.6 | | | 296 | | | 19.7 | |
Provision for income taxes | | | 606 | | | 518 | | | 420 | | | | 88 | | | 17.0 | | | 186 | | | 44.3 | |
Net income | | | 1,196 | | | 976 | | | 1,086 | | | | 220 | | | 22.5 | | | 110 | | | 10.1 | |
Preferred stock dividends and discount accretion | | | 397 | | | 401 | | | 386 | | | | (4) | | | (1.0) | | | 11 | | | 2.8 | |
Income available to common shareholders | | $ | 799 | | $ | 575 | | $ | 700 | | | $ | 224 | | | 39.0 | % | $ | 99 | | | 14.1 | % |
Effective tax rate | | | 33.6 | % | | 34.7 | % | | 27.9 | % | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Net income per common share - Basic (1) | | $ | 0.11 | | $ | 0.08 | | $ | 0.09 | | | | | | | | | | | | | | |
Net income per common share - Diluted (1) | | $ | 0.10 | | $ | 0.07 | | $ | 0.09 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Weighted average common shares outstanding - Basic | | | 7,473 | | | 7,462 | | | 7,413 | | | | | | | | | | | | | | |
Weighted average common shares outstanding - Diluted | | | 7,782 | | | 7,784 | | | 7,781 | | | | | | | | | | | | | | |
| (1) | Defined as net income adjusted for dividends accrued and accretion of discount on perpetual preferred stock divided by weighted average shares outstanding. |
UNITY BANCORP, INC.
YTD CONSOLIDATED STATEMENTS OF INCOME
September 30, 2012
| | For the nine months ended September 30, | | | Current YTD vs. Prior YTD | |
(In thousands, except percentages and per share amounts) | | 2012 | | 2011 | | | $ | | % | |
Federal funds sold and interest-bearing deposits | | $ | 56 | | $ | 26 | | | $ | 30 | | | 115.4 | % |
Federal Home Loan Bank stock | | | 144 | | | 147 | | | | (3) | | | (2.0) | |
Securities available for sale | | | 2,066 | | | 2,558 | | | | (492) | | | (19.2) | |
Securities held to maturity | | | 482 | | | 625 | | | | (143) | | | (22.9) | |
Total securities | | | 2,548 | | | 3,183 | | | | (635) | | | (19.9) | |
SBA loans | | | 2,652 | | | 3,671 | | | | (1,019) | | | (27.8) | |
SBA 504 loans | | | 2,098 | | | 2,626 | | | | (528) | | | (20.1) | |
Commercial loans | | | 12,707 | | | 13,304 | | | | (597) | | | (4.5) | |
Residential mortgage loans | | | 4,869 | | | 5,502 | | | | (633) | | | (11.5) | |
Consumer loans | | | 1,624 | | | 1,931 | | | | (307) | | | (15.9) | |
Total loans | | | 23,950 | | | 27,034 | | | | (3,084) | | | (11.4) | |
Total interest income | | | 26,698 | | | 30,390 | | | | (3,692) | | | (12.1) | |
Interest-bearing demand deposits | | | 368 | | | 420 | | | | (52) | | | (12.4) | |
Savings deposits | | | 933 | | | 1,701 | | | | (768) | | | (45.1) | |
Time deposits | | | 2,222 | | | 3,119 | | | | (897) | | | (28.8) | |
Borrowed funds and subordinated debentures | | | 2,486 | | | 2,851 | | | | (365) | | | (12.8) | |
Total interest expense | | | 6,009 | | | 8,091 | | | | (2,082) | | | (25.7) | |
Net interest income | | | 20,689 | | | 22,299 | | | | (1,610) | | | (7.2) | |
Provision for loan losses | | | 3,200 | | | 5,650 | | | | (2,450) | | | (43.4) | |
Net interest income after provision for loan losses | | | 17,489 | | | 16,649 | | | | 840 | | | 5.0 | |
Branch fee income | | | 1,131 | | | 1,054 | | | | 77 | | | 7.3 | |
Service and loan fee income | | | 954 | | | 840 | | | | 114 | | | 13.6 | |
Gain on sale of SBA loans held for sale, net | | | 427 | | | 848 | | | | (421) | | | (49.6) | |
Gain on sale of mortgage loans, net | | | 1,526 | | | 506 | | | | 1,020 | | | 201.6 | |
BOLI income | | | 220 | | | 221 | | | | (1) | | | (0.5) | |
Net security gains | | | 514 | | | 353 | | | | 161 | | | 45.6 | |
Other income | | | 558 | | | 534 | | | | 24 | | | 4.5 | |
Total noninterest income | | | 5,330 | | | 4,356 | | | | 974 | | | 22.4 | |
Compensation and benefits | | | 9,505 | | | 8,881 | | | | 624 | | | 7.0 | |
Occupancy | | | 2,038 | | | 2,161 | | | | (123) | | | (5.7) | |
Processing and communications | | | 1,631 | | | 1,593 | | | | 38 | | | 2.4 | |
Furniture and equipment | | | 1,085 | | | 1,178 | | | | (93) | | | (7.9) | |
Professional services | | | 598 | | | 599 | | | | (1) | | | (0.2) | |
Loan collection costs | | | 453 | | | 660 | | | | (207) | | | (31.4) | |
OREO expenses | | | 398 | | | 936 | | | | (538) | | | (57.5) | |
Deposit insurance | | | 502 | | | 661 | | | | (159) | | | (24.1) | |
Advertising | | | 630 | | | 510 | | | | 120 | | | 23.5 | |
Other expenses | | | 1,319 | | | 1,328 | | | | (9) | | | (0.7) | |
Total noninterest expense | | | 18,159 | | | 18,507 | | | | (348) | | | (1.9) | |
Income before provision for income taxes | | | 4,660 | | | 2,498 | | | | 2,162 | | | 86.5 | |
Provision for income taxes | | | 1,583 | | | 548 | | | | 1,035 | | | 188.9 | |
Net income | | | 3,077 | | | 1,950 | | | | 1,127 | | | 57.8 | |
Preferred stock dividends and discount accretion | | | 1,195 | | | 1,164 | | | | 31 | | | 2.7 | |
Income available to common shareholders | | $ | 1,882 | | $ | 786 | | | $ | 1,096 | | | 139.4 | % |
Effective tax rate | | | 34.0 | | | 21.9 | | | | | | | | |
| | | | | | | | | | | | | | |
Net income per common share - Basic (1) | | $ | 0.25 | | | 0.11 | | | | | | | | |
Net income per common share - Diluted (1) | | $ | 0.24 | | | 0.10 | | | | | | | | |
| | | | | | | | | | | | | | |
Weighted average common shares outstanding - Basic | | | 7,465 | | | 7,301 | | | | | | | | |
Weighted average common shares outstanding - Diluted | | | 7,786 | | | 7,719 | | | | | | | | |
| (1) | Defined as net income adjusted for dividends accrued and accretion of discount on perpetual preferred stock divided by weighted average shares outstanding. |
UNITY BANCORP, INC.
QTD NET INTEREST MARGIN
September 30, 2012
| | For the three months ended | |
| | September 30, 2012 | | June 30, 2012 | |
| | Average Balance | | Interest | | Rate/Yield | | Average Balance | | Interest | | Rate/Yield | |
ASSETS | | | | | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | | |
Federal funds sold and interest-bearing deposits | | $ | 40,183 | | $ | 13 | | | 0.13 | % | $ | 30,832 | | $ | 11 | | | 0.14 | % |
Federal Home Loan Bank stock | | | 3,989 | | | 50 | | | 4.99 | | | 3,993 | | | 44 | | | 4.43 | |
Securities: | | | | | | | | | | | | | | | | | | | |
Securities available for sale | | | 95,193 | | | 703 | | | 2.95 | | | 103,958 | | | 741 | | | 2.85 | |
Securities held to maturity | | | 16,467 | | | 152 | | | 3.69 | | | 17,499 | | | 170 | | | 3.89 | |
Total securities (A) | | | 111,660 | | | 855 | | | 3.06 | | | 121,457 | | | 911 | | | 3.00 | |
SBA loans | | | 66,484 | | | 881 | | | 5.30 | | | 69,273 | | | 846 | | | 4.89 | |
SBA 504 loans | | | 44,583 | | | 647 | | | 5.77 | | | 46,804 | | | 691 | | | 5.94 | |
Commercial loans | | | 307,090 | | | 4,313 | | | 5.59 | | | 303,409 | | | 4,216 | | | 5.59 | |
Residential mortgage loans | | | 136,568 | | | 1,631 | | | 4.78 | | | 133,643 | | | 1,582 | | | 4.74 | |
Consumer loans | | | 46,116 | | | 534 | | | 4.61 | | | 45,658 | | | 529 | | | 4.66 | |
Total loans (B) | | | 600,841 | | | 8,006 | | | 5.31 | | | 598,787 | | | 7,864 | | | 5.28 | |
Total interest-earning assets | | $ | 756,673 | | $ | 8,924 | | | 4.70 | % | $ | 755,069 | | $ | 8,830 | | | 4.70 | % |
| | | | | | | | | | | | | | | | | | | |
Noninterest-earning assets: | | | | | | | | | | | | | | | | | | | |
Cash and due from banks | | | 16,211 | | | | | | | | | 16,101 | | | | | | | |
Allowance for loan losses | | | (16,508) | | | | | | | | | (16,980) | | | | | | | |
Other assets | | | 40,138 | | | | | | | | | 39,774 | | | | | | | |
Total noninterest-earning assets | | | 39,841 | | | | | | | | | 38,895 | | | | | | | |
Total assets | | $ | 796,514 | | | | | | | | $ | 793,964 | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | |
Interest-bearing demand deposits | | $ | 103,029 | | $ | 108 | | | 0.42 | % | $ | 110,343 | | $ | 123 | | | 0.45 | % |
Savings deposits | | | 287,054 | | | 293 | | | 0.41 | | | 270,990 | | | 287 | | | 0.43 | |
Time deposits | | | 131,356 | | | 619 | | | 1.87 | | | 138,554 | | | 689 | | | 2.00 | |
Total interest-bearing deposits | | | 521,439 | | | 1,020 | | | 0.78 | | | 519,887 | | | 1,099 | | | 0.85 | |
Borrowed funds and subordinated debentures | | | 90,465 | | | 824 | | | 3.56 | | | 90,465 | | | 816 | | | 3.57 | |
Total interest-bearing liabilities | | $ | 611,904 | | $ | 1,844 | | | 1.19 | % | $ | 610,352 | | $ | 1,915 | | | 1.25 | % |
Noninterest-bearing liabilities: | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing demand deposits | | | 105,876 | | | | | | | | | 106,043 | | | | | | | |
Other liabilities | | | 3,469 | | | | | | | | | 3,438 | | | | | | | |
Total noninterest-bearing liabilities | | | 109,345 | | | | | | | | | 109,481 | | | | | | | |
Total shareholders' equity | | | 75,265 | | | | | | | | | 74,131 | | | | | | | |
Total liabilities and shareholders' equity | | $ | 796,514 | | | | | | | | $ | 793,964 | | | | | | | |
Net interest spread | | | | | $ | 7,080 | | | 3.51 | % | | | | $ | 6,915 | | | 3.45 | % |
Tax-equivalent basis adjustment | | | | | | (53) | | | | | | | | | (58) | | | | |
Net interest income | | | | | $ | 7,027 | | | | | | | | $ | 6,857 | | | | |
Net interest margin | | | | | | | | | 3.72 | % | | | | | | | | 3.68 | % |
| (A) | Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 34 percent and applicable state rates. |
| (B) | The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued. |
UNITY BANCORP, INC.
QTD NET INTEREST MARGIN
September 30, 2012
| | For the three months ended September 30, | |
| | Average Balance | | Interest | | Rate/Yield | | Average Balance | | Interest | | Rate/Yield | |
ASSETS | | | | | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | | |
Federal funds sold and interest-bearing deposits | | $ | 40,183 | | $ | 13 | | | 0.13 | % | $ | 41,735 | | $ | 6 | | | 0.06 | % |
Federal Home Loan Bank stock | | | 3,989 | | | 50 | | | 4.99 | | | 4,088 | | | 46 | | | 4.46 | |
Securities: | | | | | | | | | | | | | | | | | | | |
Securities available for sale | | | 95,193 | | | 703 | | | 2.95 | | | 93,603 | | | 852 | | | 3.64 | |
Securities held to maturity | | | 16,467 | | | 152 | | | 3.69 | | | 13,043 | | | 162 | | | 4.97 | |
Total securities (A) | | | 111,660 | | | 855 | | | 3.06 | | | 106,646 | | | 1,014 | | | 3.80 | |
SBA loans | | | 66,484 | | | 881 | | | 5.30 | | | 82,764 | | | 1,243 | | | 6.01 | |
SBA 504 loans | | | 44,583 | | | 647 | | | 5.77 | | | 55,814 | | | 838 | | | 5.96 | |
Commercial loans | | | 307,090 | | | 4,313 | | | 5.59 | | | 286,634 | | | 4,417 | | | 6.11 | |
Residential mortgage loans | | | 136,568 | | | 1,631 | | | 4.78 | | | 135,519 | | | 1,825 | | | 5.39 | |
Consumer loans | | | 46,116 | | | 534 | | | 4.61 | | | 50,838 | | | 616 | | | 4.81 | |
Total loans (B) | | | 600,841 | | | 8,006 | | | 5.31 | | | 611,569 | | | 8,939 | | | 5.82 | |
Total interest-earning assets | | $ | 756,673 | | $ | 8,924 | | | 4.70 | % | $ | 764,038 | | $ | 10,005 | | | 5.21 | % |
| | | | | | | | | | | | | | | | | | | |
Noninterest-earning assets: | | | | | | | | | | | | | | | | | | | |
Cash and due from banks | | | 16,211 | | | | | | | | | 15,453 | | | | | | | |
Allowance for loan losses | | | (16,508) | | | | | | | | | (16,812) | | | | | | | |
Other assets | | | 40,138 | | | | | | | | | 41,739 | | | | | | | |
Total noninterest-earning assets | | | 39,841 | | | | | | | | | 40,380 | | | | | | | |
Total assets | | $ | 796,514 | | | | | | | | $ | 804,418 | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | |
Interest-bearing demand deposits | | $ | 103,029 | | $ | 108 | | | 0.42 | % | $ | 98,942 | | $ | 137 | | | 0.55 | % |
Savings deposits | | | 287,054 | | | 293 | | | 0.41 | | | 281,591 | | | 536 | | | 0.76 | |
Time deposits | | | 131,356 | | | 619 | | | 1.87 | | | 163,676 | | | 979 | | | 2.37 | |
Total interest-bearing deposits | | | 521,439 | | | 1,020 | | | 0.78 | | | 544,209 | | | 1,652 | | | 1.20 | |
Borrowed funds and subordinated debentures | | | 90,465 | | | 824 | | | 3.56 | | | 90,465 | | | 947 | | | 4.10 | |
Total interest-bearing liabilities | | $ | 611,904 | | $ | 1,844 | | | 1.19 | % | $ | 634,674 | | $ | 2,599 | | | 1.62 | % |
Noninterest-bearing liabilities: | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing demand deposits | | | 105,876 | | | | | | | | | 94,811 | | | | | | | |
Other liabilities | | | 3,469 | | | | | | | | | 2,922 | | | | | | | |
Total noninterest-bearing liabilities | | | 109,345 | | | | | | | | | 97,733 | | | | | | | |
Total shareholders' equity | | | 75,265 | | | | | | | | | 72,011 | | | | | | | |
Total liabilities and shareholders' equity | | $ | 796,514 | | | | | | | | $ | 804,418 | | | | | | | |
Net interest spread | | | | | $ | 7,080 | | | 3.51 | % | | | | $ | 7,406 | | | 3.59 | % |
Tax-equivalent basis adjustment | | | | | | (53) | | | | | | | | | (53) | | | | |
Net interest income | | | | | $ | 7,027 | | | | | | | | $ | 7,353 | | | | |
Net interest margin | | | | | | | | | 3.72 | % | | | | | | | | 3.85 | % |
| (A) | Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 34 percent and applicable state rates. |
| (B) | The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued. |
UNITY BANCORP, INC.
YTD NET INTEREST MARGIN
September 30, 2012
| | For the nine months ended September 30, | |
| | Average Balance | | Interest | | Rate/Yield | | Average Balance | | Interest | | Rate/Yield | |
ASSETS | | | | | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | | |
Federal funds sold and interest-bearing deposits | | $ | 45,206 | | $ | 56 | | | 0.17 | % | $ | 38,526 | | $ | 26 | | | 0.09 | % |
Federal Home Loan Bank stock | | | 4,023 | | | 144 | | | 4.78 | | | 4,130 | | | 147 | | | 4.76 | |
Securities: | | | | | | | | | | | | | | | | | | | |
Securities available for sale | | | 100,398 | | | 2,225 | | | 2.95 | | | 100,752 | | | 2,701 | | | 3.57 | |
Securities held to maturity | | | 17,443 | | | 502 | | | 3.84 | | | 15,776 | | | 640 | | | 5.41 | |
Total securities (A) | | | 117,841 | | | 2,727 | | | 3.08 | | | 116,528 | | | 3,341 | | | 3.82 | |
SBA loans | | | 69,162 | | | 2,652 | | | 5.11 | | | 84,757 | | | 3,671 | | | 5.77 | |
SBA 504 loans | | | 47,687 | | | 2,098 | | | 5.88 | | | 58,914 | | | 2,626 | | | 5.96 | |
Commercial loans | | | 298,279 | | | 12,707 | | | 5.69 | | | 284,595 | | | 13,304 | | | 6.25 | |
Residential mortgage loans | | | 134,353 | | | 4,869 | | | 4.83 | | | 132,901 | | | 5,502 | | | 5.52 | |
Consumer loans | | | 46,459 | | | 1,624 | | | 4.67 | | | 52,653 | | | 1,931 | | | 4.90 | |
Total loans (B) | | | 595,940 | | | 23,950 | | | 5.36 | | | 613,820 | | | 27,034 | | | 5.88 | |
Total interest-earning assets | | $ | 763,010 | | $ | 26,877 | | | 4.70 | % | $ | 773,004 | | $ | 30,548 | | | 5.28 | % |
| | | | | | | | | | | | | | | | | | | |
Noninterest-earning assets: | | | | | | | | | | | | | | | | | | | |
Cash and due from banks | | | 16,088 | | | | | | | | | 16,478 | | | | | | | |
Allowance for loan losses | | | (16,758) | | | | | | | | | (15,978) | | | | | | | |
Other assets | | | 40,068 | | | | | | | | | 40,477 | | | | | | | |
Total noninterest-earning assets | | | 39,398 | | | | | | | | | 40,977 | | | | | | | |
Total assets | | $ | 802,408 | | | | | | | | $ | 813,981 | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | |
Interest-bearing demand deposits | | $ | 107,437 | | $ | 368 | | | 0.46 | % | $ | 102,197 | | $ | 420 | | | 0.55 | % |
Savings deposits | | | 280,459 | | | 933 | | | 0.44 | | | 286,014 | | | 1,701 | | | 0.80 | |
Time deposits | | | 142,263 | | | 2,222 | | | 2.09 | | | 168,874 | | | 3,119 | | | 2.47 | |
Total interest-bearing deposits | | | 530,159 | | | 3,523 | | | 0.89 | | | 557,085 | | | 5,240 | | | 1.26 | |
Borrowed funds and subordinated debentures | | | 90,465 | | | 2,486 | | | 3.61 | | | 90,465 | | | 2,851 | | | 4.16 | |
Total interest-bearing liabilities | | $ | 620,624 | | $ | 6,009 | | | 1.29 | % | $ | 647,550 | | $ | 8,091 | | | 1.66 | % |
Noninterest-bearing liabilities: | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing demand deposits | | | 104,145 | | | | | | | | | 91,922 | | | | | | | |
Other liabilities | | | 3,386 | | | | | | | | | 3,736 | | | | | | | |
Total noninterest-bearing liabilities | | | 107,531 | | | | | | | | | 95,658 | | | | | | | |
Total shareholders' equity | | | 74,253 | | | | | | | | | 70,773 | | | | | | | |
Total liabilities and shareholders' equity | | $ | 802,408 | | | | | | | | $ | 813,981 | | | | | | | |
Net interest spread | | | | | $ | 20,868 | | | 3.41 | % | | | | $ | 22,457 | | | 3.62 | % |
Tax-equivalent basis adjustment | | | | | | (179) | | | | | | | | | (158) | | | | |
Net interest income | | | | | $ | 20,689 | | | | | | | | $ | 22,299 | | | | |
Net interest margin | | | | | | | | | 3.65 | % | | | | | | | | 3.88 | % |
| (A) | Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 34 percent and applicable state rates. |
| (B) | The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued. |
UNITY BANCORP, INC.
QUARTERLY ALLOWANCE FOR LOAN LOSSES AND LOAN QUALITY SCHEDULES
September 30, 2012
| | | | | | | | | | | | | | | | |
Amounts in thousands, except percentages | | September 30, 2012 | | June 30, 2012 | | March 31, 2012 | | December 31, 2011 | | September 30, 2011 | |
ALLOWANCE FOR LOAN LOSSES: | | | | | | | | | | | | | | | | |
Balance, beginning of period | | $ | 16,284 | | $ | 16,339 | | $ | 16,348 | | $ | 16,447 | | $ | 16,018 | |
Provision for loan losses charged to expense | | | 1,000 | | | 1,000 | | | 1,200 | | | 1,150 | | | 1,400 | |
| | | 17,284 | | | 17,339 | | | 17,548 | | | 17,597 | | | 17,418 | |
Less: Chargeoffs | | | | | | | | | | | | | | | | |
SBA loans | | | 254 | | | 213 | | | 615 | | | 735 | | | 310 | |
SBA 504 loans | | | 481 | | | 100 | | | 227 | | | 200 | | | 325 | |
Commercial loans | | | 1,428 | | | 540 | | | 346 | | | 290 | | | 450 | |
Residential mortgage loans | | | 65 | | | 494 | | | 113 | | | 73 | | | - | |
Consumer loans | | | 31 | | | 25 | | | - | | | 46 | | | - | |
Total chargeoffs | | | 2,259 | | | 1,372 | | | 1,301 | | | 1,344 | | | 1,085 | |
SBA loans | | | 195 | | | 249 | | | 53 | | | 26 | | | 111 | |
SBA 504 loans | | | 15 | | | 15 | | | 28 | | | - | | | - | |
Commercial loans | | | 58 | | | 53 | | | 11 | | | 15 | | | 3 | |
Residential mortgage loans | | | - | | | - | | | - | | | 50 | | | - | |
Total recoveries | | | 269 | | | 317 | | | 92 | | | 95 | | | 114 | |
Net chargeoffs | | | 1,990 | | | 1,055 | | | 1,209 | | | 1,249 | | | 971 | |
Balance, end of period | | $ | 15,294 | | $ | 16,284 | | $ | 16,339 | | $ | 16,348 | | $ | 16,447 | |
LOAN QUALITY INFORMATION: | | | | | | | | | | | | | | | | |
Nonperforming loans (1) | | $ | 17,334 | | $ | 19,831 | | $ | 22,206 | | $ | 22,769 | | $ | 20,598 | |
Other real estate owned ("OREO") | | | 1,456 | | | 2,355 | | | 1,625 | | | 3,032 | | | 3,555 | |
Nonperforming assets | | | 18,790 | | | 22,186 | | | 23,831 | | | 25,801 | | | 24,153 | |
Less: Amount guaranteed by SBA | | | 566 | | | 526 | | | 555 | | | 939 | | | 1,339 | |
Net nonperforming assets | | $ | 18,224 | | $ | 21,660 | | $ | 23,276 | | $ | 24,862 | | $ | 22,814 | |
Loans 90 days past due & still accruing | | $ | 1,630 | | $ | 2,443 | | $ | 3,165 | | $ | 2,411 | | $ | 2,191 | |
| | | | | | | | | | | | | | | | |
Performing Troubled Debt Restructurings (TDRs) | | $ | 17,250 | | $ | 20,541 | | $ | 20,985 | | $ | 17,436 | | $ | 17,488 | |
(1) Nonperforming TDRs included above | | | 1,628 | | | 871 | | | 2,287 | | | 3,645 | | | 3,817 | |
Total TDRs | | $ | 18,878 | | $ | 21,412 | | $ | 23,272 | | $ | 21,081 | | $ | 21,305 | |
| | | | | | | | | | | | | | | | |
Allowance for loan losses to: | | | | | | | | | | | | | | | | |
Total loans at quarter end | | | 2.56 | % | | 2.69 | % | | 2.80 | % | | 2.76 | % | | 2.72 | % |
Nonperforming loans (1) | | | 88.23 | | | 82.11 | | | 73.58 | | | 71.80 | | | 79.85 | |
Nonperforming assets | | | 81.39 | | | 73.40 | | | 68.56 | | | 63.36 | | | 68.10 | |
Net nonperforming assets | | | 83.92 | | | 75.18 | | | 70.20 | | | 65.75 | | | 72.09 | |
| | | | | | | | | | | | | | | | |
QTD net chargeoffs (annualized) to QTD average loans: | | | | | | | | | | | | | | | | |
SBA loans | | | 0.35 | % | | (0.21) | % | | 3.15 | % | | 3.77 | % | | 0.95 | % |
SBA 504 loans | | | 4.16 | | | 0.73 | | | 1.55 | | | 1.43 | | | 2.31 | |
Commercial loans | | | 1.77 | | | 0.65 | | | 0.47 | | | 0.39 | | | 0.62 | |
Residential mortgage loans | | | 0.19 | | | 1.49 | | | 0.34 | | | 0.07 | | | - | |
Consumer loans | | | 0.26 | | | 0.22 | | | - | | | 0.34 | | | - | |
Total loans | | | 1.32 | % | | 0.71 | % | | 0.83 | % | | 0.83 | % | | 0.63 | % |
| | | | | | | | | | | | | | | | |
Nonperforming loans to total loans | | | 2.90 | % | | 3.28 | % | | 3.81 | % | | 3.84 | % | | 3.41 | % |
Nonperforming loans and TDRs to total loans | | | 5.79 | | | 6.67 | | | 7.41 | | | 6.78 | | | 6.31 | |
Nonperforming assets to total loans and OREO | | | 3.14 | | | 3.65 | | | 4.08 | | | 4.33 | | | 3.98 | |
Nonperforming assets to total assets | | | 2.34 | | | 2.83 | | | 2.94 | | | 3.18 | | | 2.94 | |
UNITY BANCORP, INC.
QUARTERLY FINANCIAL DATA
September 30, 2012
| | | | | | | | | | | | | | | | |
(In thousands, except percentages and per share amounts) | | September 30, 2012 | | June 30, 2012 | | March 31, 2012 | | December 31, 2011 | | September 30, 2011 | |
Total interest income | | $ | 8,871 | | $ | 8,772 | | $ | 9,058 | | $ | 9,133 | | $ | 9,952 | |
Total interest expense | | | 1,844 | | | 1,915 | | | 2,250 | | | 2,460 | | | 2,599 | |
Net interest income | | | 7,027 | | | 6,857 | | | 6,808 | | | 6,673 | | | 7,353 | |
Provision for loan losses | | | 1,000 | | | 1,000 | | | 1,200 | | | 1,150 | | | 1,400 | |
Net interest income after provision for loan lossees | | | 6,027 | | | 5,857 | | | 5,608 | | | 5,523 | | | 5,953 | |
Total noninterest income | | | 1,774 | | | 1,841 | | | 1,715 | | | 1,305 | | | 1,654 | |
Total noninterest expense | | | 5,999 | | | 6,204 | | | 5,959 | | | 6,012 | | | 6,101 | |
Income before provision for income taxes | | | 1,802 | | | 1,494 | | | 1,364 | | | 816 | | | 1,506 | |
Provision for income taxes | | | 606 | | | 518 | | | 459 | | | 220 | | | 420 | |
Net income | | | 1,196 | | | 976 | | | 905 | | | 596 | | | 1,086 | |
Preferred stock dividends and discount accretion | | | 397 | | | 401 | | | 396 | | | 393 | | | 386 | |
Income available to common shareholders | | $ | 799 | | $ | 575 | | $ | 509 | | $ | 203 | | $ | 700 | |
Net income per common share - Basic (1) | | $ | 0.11 | | $ | 0.08 | | $ | 0.07 | | $ | 0.03 | | $ | 0.09 | |
Net income per common share - Diluted (1) | | $ | 0.10 | | $ | 0.07 | | $ | 0.07 | | $ | 0.03 | | $ | 0.09 | |
| | | | | | | | | | | | | | | | |
COMMON SHARE DATA: | | | | | | | | | | | | | | | | |
Market price per share | | $ | 6.13 | | $ | 6.00 | | $ | 6.24 | | $ | 6.40 | | $ | 6.65 | |
Dividends paid | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - | |
Book value per common share | | $ | 7.52 | | $ | 7.38 | | $ | 7.28 | | $ | 7.24 | | $ | 7.25 | |
Weighted average common shares outstanding - Basic | | | 7,473 | | | 7,462 | | | 7,460 | | | 7,427 | | | 7,413 | |
Weighted average common shares outstanding - Diluted | | | 7,782 | | | 7,784 | | | 7,792 | | | 7,782 | | | 7,781 | |
Issued and outstanding common shares | | | 7,503 | | | 7,461 | | | 7,463 | | | 7,459 | | | 7,413 | |
| | | | | | | | | | | | | | | | |
OPERATING RATIOS (Annualized): | | | | | | | | | | | | | | | | |
Return on average assets | | | 0.60 | % | | 0.49 | % | | 0.45 | % | | 0.29 | % | | 0.54 | % |
Return on average equity (2) | | | 5.74 | | | 4.25 | | | 3.81 | | | 1.51 | | | 5.27 | |
Efficiency ratio | | | 68.22 | | | 73.72 | | | 71.80 | | | 74.90 | | | 69.80 | |
| | | | | | | | | | | | | | | | |
BALANCE SHEET DATA: | | | | | | | | | | | | | | | | |
Total assets | | $ | 802,675 | | $ | 785,111 | | $ | 810,198 | | $ | 810,846 | | $ | 820,652 | |
Total deposits | | | 633,126 | | | 616,443 | | | 643,101 | | | 643,971 | | | 654,171 | |
Total loans | | | 596,910 | | | 604,901 | | | 582,752 | | | 592,592 | | | 603,633 | |
Total securities | | | 106,437 | | | 114,846 | | | 128,061 | | | 107,536 | | | 100,752 | |
Total shareholders' equity | | | 76,387 | | | 74,901 | | | 74,002 | | | 73,558 | | | 73,136 | |
Allowance for loan losses | | | (15,294) | | | (16,284) | | | (16,339) | | | (16,348) | | | (16,447) | |
| | | | | | | | | | | | | | | | |
TAX EQUIVALENT YIELDS AND RATES: | | | | | | | | | | | | | | | | |
Interest-earning assets | | | 4.70 | % | | 4.70 | % | | 4.71 | % | | 4.64 | % | | 5.21 | % |
Interest-bearing liabilities | | | 1.19 | | | 1.25 | | | 1.41 | | | 1.49 | | | 1.62 | |
Net interest spread | | | 3.51 | | | 3.45 | | | 3.30 | | | 3.15 | | | 3.59 | |
Net interest margin | | | 3.72 | | | 3.68 | | | 3.56 | | | 3.39 | | | 3.85 | |
| | | | | | | | | | | | | | | | |
CREDIT QUALITY: | | | | | | | | | | | | | | | | |
Nonperforming assets | | | 18,790 | | | 22,186 | | | 23,831 | | | 25,801 | | | 24,153 | |
QTD net chargeoffs (annualized) to QTD average loans | | | 1.32 | % | | 0.71 | % | | 0.83 | % | | 0.83 | % | | 0.63 | % |
Allowance for loan losses to total loans | | | 2.56 | | | 2.69 | | | 2.80 | | | 2.76 | | | 2.72 | |
Nonperforming assets to total loans and OREO | | | 3.14 | | | 3.65 | | | 4.08 | | | 4.33 | | | 3.98 | |
Nonperforming assets to total assets | | | 2.34 | | | 2.83 | | | 2.94 | | | 3.18 | | | 2.94 | |
| | | | | | | | | | | | | | | | |
CAPITAL RATIOS AND OTHER: | | | | | | | | | | | | | | | | |
Total equity to total assets | | | 9.52 | % | | 9.54 | % | | 9.13 | % | | 9.07 | % | | 8.91 | % |
Leverage ratio | | | 11.20 | | | 11.08 | | | 10.67 | | | 10.44 | | | 10.69 | |
Tier 1 risk-based capital ratio | | | 14.52 | | | 14.22 | | | 14.44 | | | 14.33 | | | 13.88 | |
Total risk-based capital ratio | | | 15.78 | | | 15.49 | | | 15.71 | | | 15.60 | | | 15.14 | |
Number of banking offices | | | 15 | | | 15 | | | 15 | | | 14 | | | 14 | |
Number of ATMs | | | 16 | | | 16 | | | 16 | | | 15 | | | 15 | |
Number of employees | | | 161 | | | 169 | | | 171 | | | 171 | | | 168 | |
| (1) | Defined as net income adjusted for dividends accrued and accretion of discount on perpetual preferred stock divided by weighted average shares outstanding. |
| (2) | Defined as net income adjusted for dividends accrued and accretion of discount on perpetual preferred stock divided by average shareholders' equity (excluding preferred stock). |
