Unity Bancorp, Inc.
64 Old Highway 22
Clinton, NJ 08809
800-618-BANK
www.unitybank.com
NewsNewsNewsNewsNews
For Immediate Release:
October 25, 2016
News Media & Financial Analyst Contact:
Alan J. Bedner, EVP
Chief Financial Officer
(908) 713-4308
Unity Bancorp Reports 18% Increase in Quarterly Net Income
Clinton, NJ - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported increased quarterly and year-to-date earnings. Major contributing factors included strong loan growth, expanded net interest margin, increased levels of noninterest income and expense control.
Net income was $3.0 million, or $0.32 per diluted share, for the three months ended September 30, 2016, an 18.4% increase compared to net income of $2.6 million, or $0.27 per diluted share, for the same period a year ago. Return on average assets and average common equity for the quarter were 1.05% and 13.90%, respectively, compared to 1.00% and 13.54% for the same period a year ago.
Year-to-date net income was $10.0 million, or $1.06 per diluted share, for the nine months ended September 30, 2016, a 45.3% increase compared to net income of $6.9 million, or $0.74 per diluted share, for the same period a year ago. Return on average assets and average common equity for the period were 1.20% and 16.09%, respectively, compared to 0.95% and 12.69% for the same period a year ago.
During the first quarter, the Company repurchased $5.0 million of its outstanding subordinated debentures at a price of $0.5475 per dollar, thus reducing its outstanding subordinated debt to $10.3 million. The repurchase resulted in a nonrecurring pre-tax gain of approximately $2.26 million. Net income, excluding the nonrecurring gain on the repurchased subordinated debentures, was $8.6 million, or $0.91 per diluted share, for the nine months ended September 30, 2016, compared to net income of $6.9 million, or $0.74 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, 2016, excluding the gain, would have been 1.03% and 13.73%, respectively, compared to 0.95% and 12.69% for the same period a year ago.
Management believes excluding the nonrecurring gain from year-to-date net income and reporting it in a format which is not in compliance with generally accepted accounting principles (“non-GAAP”) is beneficial to the reader and provides better comparability of the Company’s performance over both periods.
Third quarter highlights included:
| • | Opening our 16th branch location in Emerson, New Jersey. Our 17th branch in Somerville, New Jersey, is expected to open in November 2016. |
| • | Ringing NASDAQ’s closing bell to commemorate our 25th Anniversary. |
| • | Increasing the quarterly cash dividend 25% to $.05 per common share from $.04 as well as paying a 10% stock dividend to shareholders. |
| • | Total loans increased 11.0% compared to September 30, 2015. |
| • | Total deposits increased 7.7% and noninterest-bearing demand deposits grew 19.3% since September 30, 2015. |
| • | Net interest income increased 14.5% compared to the prior year’s quarter due to strong loan growth. |
| • | Net interest margin increased to 3.63% this quarter compared to 3.60% in the prior year’s quarter. |
| • | Credit quality has continued to improve. |
“We had record earnings and strong financial results for the third quarter,” stated James A. Hughes, President and CEO. “We are now focusing on growing our market presence. We opened our Emerson branch on October 17th and we anticipate opening our Somerville office in November. In addition, we have hired two seasoned lenders in the Lehigh Valley market, so we will now be looking for opportunities in Pennsylvania. We are extremely excited about our future and look forward to the challenges ahead.”
Net Interest Income
Net interest income increased $1.3 million to $9.9 million for the quarter ended September 30, 2016 compared to the prior year’s period, while year-to-date, net interest income increased $3.2 million to $28.2 million. The net interest margin was 3.63% for the quarter-ended September 30, 2016, an increase of 3 basis points from the quarter-ended September 30, 2015 and 3.58% for the nine months ended September 30, 2016 compared to 3.65% in the prior year’s period. The increase in the net interest margin for the quarter was due to growth in our loan portfolio and the restructuring of our FHLB borrowings.
Each period saw continued strong commercial, residential mortgage and consumer loan growth over the prior year period. Quarterly average commercial loans increased $57.5 million, average residential mortgage loans have increased $21.6 million and consumer loans increased $13.0 million compared to the third quarter in 2015.
The cost of interest-bearing liabilities has remained relatively stable at 1.04% for the quarter and 1.05% for the year-to-date periods. The quarterly cost of deposits increased 13 basis points to 0.84% due to the intentional growth of five year time deposits and a promotional savings product. The quarterly cost of borrowed funds and subordinated debentures decreased 121 basis points compared to the prior year due to the modification of borrowings with the Federal Home Loan Bank (“FHLB”) over the past year.
Provision for Loan Losses
The provision for loan losses was $420 thousand for the three months ended September 30, 2016 and $1.0 million for the nine months ended September 30, 2016. In the prior year’s periods, there was a $200 thousand loan loss provision during the quarter ended September 30, 2015 and a $400 thousand loan loss provision for the nine months ended September 30, 2015. The increase in the quarterly and year-to-date provision for 2016 versus 2015 was due to higher net charge-offs in each period. Net charge-offs were $493 thousand for the quarter and $1.1 million year-to-date at September 30, 2016, compared to net charge-offs of $183 thousand and $530 thousand for the quarter and year-to-date periods ended September 30, 2015.
Noninterest Income
Noninterest income decreased $102 thousand to $2.2 million for the three months ended September 30, 2016, compared to the same period last year. While gains on the sale of SBA and mortgage loans were consistent with the prior quarter, noninterest income decreased due to lower branch and loan fee income. Year-to-date, noninterest income increased $613 thousand to $6.4 million due to higher gains on the sale of SBA loans and securities, partially offset by lower branch and loan fee income.
Notable items included:
| • | Branch fee income declined in the quarterly and year-to-date periods due to lower levels of overdraft fees and service charges from commercial checking accounts. |
| • | Service and loan fee income declined in the quarterly and year-to-date periods due to the write-down of a mortgage servicing asset as a result of large principal pay-downs on a sold mortgage pool. On a year-to-date basis, service and loan fee income was also impacted by lower loan payoff charges and processing fees. |
| • | SBA loan sales during the third quarter of 2016 totaled $7.8 million with a net gain of $639 thousand. During the prior year’s quarter, SBA loan sales totaled $3.4 million with a net gain of $308 thousand. Year-to-date, SBA loan sales totaled $18.4 million in 2016 and $6.9 million in 2015 with net gains on sale of $1.6 million and $671 thousand, respectively. |
| • | During the quarter, $25.6 million in residential mortgage loans were sold at a gain of $609 thousand, compared to $35.7 million in loans sold at a gain of $926 thousand during the prior year’s quarter. Year-to-date, $76.7 million in residential mortgage loans were sold at a gain of $1.9 million compared to $77.9 million in loans sold at a gain of $2.0 million during the prior year’s period. Our mortgage pipeline remains strong. |
Noninterest Expense
Noninterest expenses increased $141 thousand or 2.1% to $7.0 million for the quarter and $324 thousand or 1.6% for the nine months ended September 30, 2016. The increases in each period, evidence investment in Unity’s retail network, corporate infrastructure and its staff.
In 2016, our compensation and benefits expense has risen as we expand our branch network, lending and support staff. This additional headcount has resulted in higher salary and benefit expense. This year, we also committed to our future by purchasing the Clinton, New Jersey corporate headquarters building, which resulted in lower occupancy expenses. However, investment in our retail network through the addition of branches in Emerson and Somerville, New Jersey will increase future occupancy expenses. Furniture and equipment expense has increased due to investment in our technology infrastructure through network and software upgrades that will improve our efficiency and keep our data secure. Advertising expenses have risen in support of our retail and lending sales as well as the branch expansions. Other expenses that increased were officer and employee training and director compensation fees. OREO costs remain elevated as legal and property tax expenses are incurred on these properties.
Financial Condition
At September 30, 2016, total assets were $1.2 billion, an increase of $68.0 million from year-end 2015:
| • | Total loans increased $60.9 million or 6.8%, from year-end 2015 to $949.8 million at September 30, 2016. Commercial, residential mortgage and consumer loan portfolios increased $30.5 million, $17.8 million and $11.0 million, respectively. |
| • | Other assets increased due to the purchase of the Company’s Clinton, New Jersey headquarters, as well as two new branch sites in Emerson, New Jersey and the Somerville, New Jersey, both of which were purchased facilities. |
| • | Total deposits increased $38.8 million or 4.3%, to $933.3 million at September 30, 2016. Savings deposits grew $43.3 million and noninterest-bearing demand deposits increased $23.9 million, while time deposits declined $25.6 million and noninterest-bearing demand deposits declined $2.8 million, respectively. The declines were due to reduced levels of municipal deposits from year-end and a roll-off of institutional certificates of deposit. |
| • | Borrowed funds increased $23.0 million to $115.0 million at September 30, 2016, due to the addition of $30.0 million Federal Home Loan Bank (FHLB) term borrowings partially offset by reduced overnight borrowings. Also, during the nine month period, $10.0 million in FHLB borrowings at an average cost of 4.27% were extended to 2020 at an average rate of 2.10%. |
| • | Subordinated debentures decreased from year-end due to the repurchase of $5.0 million at a discount of $0.5475 per dollar. |
| • | Shareholders’ equity was $88.2 million at September 30, 2016, an increase of $9.7 million from year-end 2015 due to year-to-date net income less the dividends paid to shareholders. During the quarter, a $.05 cash dividend and a 10 percent stock dividend were paid. |
| • | Book value per common share was $9.45 as of September 30, 2016. |
| • | At September 30, 2016, the leverage, common equity Tier I, Tier I and Total Risk Based Capital ratios were 8.49%, 9.63%, 10.74% and 11.48% respectively, all in excess of the ratios required to be deemed “well-capitalized”. |
Credit Quality
| • | Nonperforming assets totaled $8.2 million at September 30, 2016, or 0.86% of total loans and OREO, compared to $8.9 million or 0.99% of total loans and OREO at year-end 2015. |
| • | Nonperforming loans decreased 10.1% to $6.5 million at September 30, 2016 from year-end. |
| • | OREO increased $112 thousand to $1.7 million at September 30, 2016 from year-end. |
| • | The allowance for loan losses totaled $12.7 million at September 30, 2016, or 1.34% of total loans compared to $12.4 million and 1.45% at September 30, 2015. |
| • | Net charge-offs were $493 thousand for the three months ended September 30, 2016, compared to $183 thousand for the same period a year ago. Net charge-offs were $1.1 million for nine months ended September 30, 2016, compared to $530 thousand for the same period a year ago. |
Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $1.2 billion in assets and $933 million in deposits. Unity Bank provides financial services to retail, corporate and small business customers through its 16 retail service centers located in Bergen, Hunterdon, Middlesex, Somerset, Union and Warren Counties in New Jersey and Northampton County, Pennsylvania. For additional information about Unity, visit our website at www.unitybank.com , or call 800- 618-BANK.
This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance. These statements may be identified by use of the words “believe”, “expect”, “intend”, “anticipate”, “estimate”, “project” or similar expressions. These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond the company’s control and could impede its ability to achieve these goals. These factors include those items included in our Annual Report on Form 10-K under the heading “Item IA-Risk Factors” as well as general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, our ability to manage and reduce the level of our nonperforming assets, and results of regulatory exams, among other factors.
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
UNITY BANCORP, INC.
SUMMARY FINANCIAL HIGHLIGHTS
NON-GAAP
September 30, 2016
| Sep 30, 2016 vs. | ||||||||||||||||||||
| Jun 30, 2016 | Sep 30, 2015 | |||||||||||||||||||
| (In thousands, except percentages and per share amounts) | Sep 30, 2016 | Jun 30, 2016 | Sep 30, 2015 | % | % | |||||||||||||||
| BALANCE SHEET DATA: | ||||||||||||||||||||
| Total assets | $ | 1,152,896 | $ | 1,128,370 | $ | 1,052,711 | 2.2 | % | 9.5 | % | ||||||||||
| Total deposits | 933,320 | 912,198 | 866,247 | 2.3 | 7.7 | |||||||||||||||
| Total loans | 949,832 | 915,043 | 855,560 | 3.8 | 11.0 | |||||||||||||||
| Total securities | 72,360 | 73,994 | 71,492 | (2.2 | ) | 1.2 | ||||||||||||||
| Total shareholders' equity | 88,152 | 84,967 | 76,065 | 3.7 | 15.9 | |||||||||||||||
| Allowance for loan losses | (12,685 | ) | (12,758 | ) | (12,421 | ) | 0.6 | 2.1 | ||||||||||||
| FINANCIAL DATA - QUARTER TO DATE: | ||||||||||||||||||||
| Income before provision for income taxes | $ | 4,633 | $ | 4,448 | $ | 3,845 | 4.2 | 20.5 | ||||||||||||
| Provision for income taxes | 1,613 | 1,624 | 1,294 | (0.7 | ) | 24.7 | ||||||||||||||
| Net income | $ | 3,020 | $ | 2,824 | $ | 2,551 | 6.9 | 18.4 | ||||||||||||
| Net income per: | ||||||||||||||||||||
| Common share - basic | $ | 0.32 | $ | 0.30 | $ | 0.28 | 6.7 | 14.3 | ||||||||||||
| Common share - diluted | $ | 0.32 | $ | 0.30 | $ | 0.27 | 6.7 | 18.5 | ||||||||||||
| Performance ratios: | ||||||||||||||||||||
| Return on average assets | 1.05 | % | 1.03 | % | 1.00 | % | 1.9 | 5.0 | ||||||||||||
| Return on average equity | 13.90 | % | 13.59 | % | 13.54 | % | 2.3 | 2.7 | ||||||||||||
| Efficiency ratio | 58.11 | % | 58.53 | % | 62.88 | % | (0.7 | ) | (7.6 | ) | ||||||||||
| Net interest margin | 3.63 | % | 3.61 | % | 3.60 | % | 0.6 | 0.8 | ||||||||||||
| FINANCIAL DATA - YEAR TO DATE: | ||||||||||||||||||||
| Income before provision for income taxes and gain on subordinated debenture | $ | 13,276 | $ | 10,414 | 27.5 | |||||||||||||||
| Provision for income taxes | 4,700 | 3,496 | 34.4 | |||||||||||||||||
| Net income before gain on subordinated debenture | $ | 8,576 | $ | 6,918 | 24.0 | |||||||||||||||
| Gain on subordinated debenture, net of tax | 1,473 | — | NM | |||||||||||||||||
| Net income | $ | 10,049 | $ | 6,918 | 45.3 | |||||||||||||||
| Net income before gain on subordinated debenture per: | ||||||||||||||||||||
| Common share - basic | $ | 0.92 | $ | 0.75 | 22.7 | |||||||||||||||
| Common share - diluted | $ | 0.91 | $ | 0.74 | 23.0 | |||||||||||||||
| Net income per: | ||||||||||||||||||||
| Common share - basic | $ | 1.08 | $ | 0.75 | 44.0 | |||||||||||||||
| Common share - diluted | $ | 1.06 | $ | 0.74 | 43.2 | |||||||||||||||
| Net income before gain on subordinated debenture ratios: | ||||||||||||||||||||
| Return on average assets | 1.03 | % | 0.95 | % | 8.4 | |||||||||||||||
| Return on average equity | 13.73 | % | 12.69 | % | 8.2 | |||||||||||||||
| Efficiency ratio | 59.03 | % | 64.97 | % | (9.1 | ) | ||||||||||||||
| Performance ratios: | ||||||||||||||||||||
| Return on average assets | 1.20 | % | 0.95 | % | 26.3 | |||||||||||||||
| Return on average equity | 16.09 | % | 12.69 | % | 26.8 | |||||||||||||||
| Efficiency ratio | 55.39 | % | 64.97 | % | (14.7 | ) | ||||||||||||||
| Net interest margin | 3.58 | % | 3.65 | % | (1.9 | ) | ||||||||||||||
| SHARE INFORMATION: | ||||||||||||||||||||
| Market price per share | $ | 12.82 | $ | 11.56 | $ | 8.89 | 10.9 | 44.2 | ||||||||||||
| Dividends paid | $ | 0.05 | $ | 0.04 | $ | 0.04 | 0.3 | 0.3 | ||||||||||||
| Book value per common share | $ | 9.45 | $ | 9.10 | $ | 8.20 | 3.8 | 15.2 | ||||||||||||
| Average diluted shares outstanding (QTD) | 9,496 | 9,468 | 9,389 | 0.3 | 1.1 | |||||||||||||||
| CAPITAL RATIOS: | ||||||||||||||||||||
| Total equity to total assets | 7.65 | % | 7.53 | % | 7.23 | % | 1.6 | 5.8 | ||||||||||||
| Leverage ratio | 8.49 | % | 8.52 | % | 8.92 | % | (0.4 | ) | (4.8 | ) | ||||||||||
| Common equity tier 1 risk-based capital ratio | 9.63 | % | 9.70 | % | 9.37 | % | n/a | n/a | ||||||||||||
| Tier 1 risk-based capital ratio | 10.74 | % | 10.85 | % | 11.25 | % | (1.0 | ) | (4.5 | ) | ||||||||||
| Total risk-based capital ratio | 11.48 | % | 12.11 | % | 12.50 | % | (5.2 | ) | (8.2 | ) | ||||||||||
| CREDIT QUALITY AND RATIOS: | ||||||||||||||||||||
| Nonperforming assets | $ | 8,230 | $ | 8,243 | $ | 12,501 | (0.2 | ) | (34.2 | ) | ||||||||||
| QTD net chargeoffs (annualized) to QTD average loans | 0.21 | % | 0.12 | % | 0.09 | % | 75.0 | 133.3 | ||||||||||||
| Allowance for loan losses to total loans | 1.34 | % | 1.39 | % | 1.45 | % | (3.6 | ) | (7.6 | ) | ||||||||||
| Nonperforming assets to total loans and OREO | 0.86 | % | 0.90 | % | 1.46 | % | (4.4 | ) | (41.1 | ) | ||||||||||
| Nonperforming assets to total assets | 0.71 | % | 0.73 | % | 1.19 | % | (2.7 | ) % | (40.3 | ) % | ||||||||||
All share information has been adjusted for the 10% stock dividend paid September 30, 2016.
UNITY BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 2016
| Sep 30, 2016 vs. | ||||||||||||||||||||
| Dec 31, 2015 | Sep 30, 2015 | |||||||||||||||||||
| (In thousands, except percentages) | Sep 30, 2016 | Dec 31, 2015 | Sep 30, 2015 | % | % | |||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 23,811 | $ | 22,681 | $ | 21,863 | 5.0 | % | 8.9 | % | ||||||||||
| Federal funds sold and interest-bearing deposits | 60,859 | 65,476 | 66,994 | (7.1 | ) | (9.2 | ) | |||||||||||||
| Cash and cash equivalents | 84,670 | 88,157 | 88,857 | (4.0 | ) | (4.7 | ) | |||||||||||||
| Securities: | ||||||||||||||||||||
| Securities available for sale | 44,186 | 52,865 | 53,470 | (16.4 | ) | (17.4 | ) | |||||||||||||
| Securities held to maturity | 28,174 | 18,471 | 18,022 | 52.5 | 56.3 | |||||||||||||||
| Total securities | 72,360 | 71,336 | 71,492 | 1.4 | 1.2 | |||||||||||||||
| Loans: | ||||||||||||||||||||
| SBA loans held for sale | 15,611 | 13,114 | 13,937 | 19.0 | 12.0 | |||||||||||||||
| SBA loans held for investment | 41,795 | 39,393 | 39,728 | 6.1 | 5.2 | |||||||||||||||
| SBA 504 loans | 26,067 | 29,353 | 29,221 | (11.2 | ) | (10.8 | ) | |||||||||||||
| Commercial loans | 496,008 | 465,518 | 442,970 | 6.5 | 12.0 | |||||||||||||||
| Residential mortgage loans | 282,317 | 264,523 | 255,447 | 6.7 | 10.5 | |||||||||||||||
| Consumer loans | 88,034 | 77,057 | 74,257 | 14.2 | 18.6 | |||||||||||||||
| Total loans | 949,832 | 888,958 | 855,560 | 6.8 | 11.0 | |||||||||||||||
| Allowance for loan losses | (12,685 | ) | (12,759 | ) | (12,421 | ) | 0.6 | 2.1 | ||||||||||||
| Net loans | 937,147 | 876,199 | 843,139 | 7.0 | 11.1 | |||||||||||||||
| Premises and equipment, net | 22,302 | 15,171 | 15,297 | 47.0 | 45.8 | |||||||||||||||
| Bank owned life insurance ("BOLI") | 13,664 | 13,381 | 13,285 | 2.1 | 2.9 | |||||||||||||||
| Deferred tax assets | 6,008 | 5,968 | 6,107 | 0.7 | (1.6 | ) | ||||||||||||||
| Federal Home Loan Bank ("FHLB") stock | 5,767 | 4,600 | 4,510 | 25.4 | 27.9 | |||||||||||||||
| Accrued interest receivable | 4,165 | 3,884 | 3,704 | 7.2 | 12.4 | |||||||||||||||
| Other real estate owned ("OREO") | 1,703 | 1,591 | 1,759 | 7.0 | (3.2 | ) | ||||||||||||||
| Goodwill and other intangibles | 1,516 | 1,516 | 1,516 | — | — | |||||||||||||||
| Other assets | 3,594 | 3,063 | 3,045 | 17.3 | 18.0 | |||||||||||||||
| Total assets | $ | 1,152,896 | $ | 1,084,866 | $ | 1,052,711 | 6.3 | % | 9.5 | % | ||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Noninterest-bearing demand | $ | 209,122 | $ | 185,267 | $ | 175,298 | 12.9 | % | 19.3 | % | ||||||||||
| Interest-bearing demand | 127,845 | 130,605 | 123,984 | (2.1 | ) | 3.1 | ||||||||||||||
| Savings | 344,772 | 301,447 | 299,017 | 14.4 | 15.3 | |||||||||||||||
| Time, under $100,000 | 134,448 | 134,468 | 124,348 | — | 8.1 | |||||||||||||||
| Time, $100,000 and over, under $250,000 | 86,366 | 104,106 | 115,912 | (17.0 | ) | (25.5 | ) | |||||||||||||
| Time, $250,000 and over | 30,767 | 38,600 | 27,688 | (20.3 | ) | 11.1 | ||||||||||||||
| Total deposits | 933,320 | 894,493 | 866,247 | 4.3 | 7.7 | |||||||||||||||
| Borrowed funds | 115,000 | 92,000 | 90,000 | 25.0 | 27.8 | |||||||||||||||
| Subordinated debentures | 10,310 | 15,465 | 15,465 | (33.3 | ) | (33.3 | ) | |||||||||||||
| Accrued interest payable | 446 | 461 | 460 | (3.3 | ) | (3.0 | ) | |||||||||||||
| Accrued expenses and other liabilities | 5,668 | 3,977 | 4,474 | 42.5 | 26.7 | |||||||||||||||
| Total liabilities | 1,064,744 | 1,006,396 | 976,646 | 5.8 | 9.0 | |||||||||||||||
| Shareholders' equity: | ||||||||||||||||||||
| Common stock | 70,450 | 59,371 | 59,205 | 18.7 | 19.0 | |||||||||||||||
| Retained earnings | 18,117 | 19,566 | 17,270 | (7.4 | ) | 4.9 | ||||||||||||||
| Accumulated other comprehensive (loss) | (415 | ) | (467 | ) | (410 | ) | NM | NM | ||||||||||||
| Total shareholders' equity | 88,152 | 78,470 | 76,065 | 12.3 | 15.9 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,152,896 | $ | 1,084,866 | $ | 1,052,711 | 6.3 | % | 9.5 | % | ||||||||||
| Issued and outstanding common shares | 9,331 | 9,279 | 9,272 | |||||||||||||||||
UNITY BANCORP, INC.
QTD CONSOLIDATED STATEMENTS OF INCOME
NON-GAAP
September 30, 2016
| Sep 30, 2016 vs. | ||||||||||||||||||||||||||||
| For the three months ended | Jun 30, 2016 | Sep 30, 2015 | ||||||||||||||||||||||||||
| (In thousands, except percentages and per share amounts) | Sep 30, 2016 | Jun 30, 2016 | Sep 30, 2015 | $ | % | $ | % | |||||||||||||||||||||
| INTEREST INCOME | ||||||||||||||||||||||||||||
| Federal funds sold and interest-bearing deposits | $ | 50 | $ | 41 | $ | 11 | $ | 9 | 22.0 | % | $ | 39 | 354.5 | % | ||||||||||||||
| FHLB stock | 67 | 55 | 36 | 12 | 21.8 | 31 | 86.1 | |||||||||||||||||||||
| Securities: | ||||||||||||||||||||||||||||
| Taxable | 456 | 427 | 349 | 29 | 6.8 | 107 | 30.7 | |||||||||||||||||||||
| Tax-exempt | 43 | 55 | 71 | (12 | ) | (21.8 | ) | (28 | ) | (39.4 | ) | |||||||||||||||||
| Total securities | 499 | 482 | 420 | 17 | 3.5 | 79 | 18.8 | |||||||||||||||||||||
| Loans: | ||||||||||||||||||||||||||||
| SBA loans | 822 | 788 | 696 | 34 | 4.3 | 126 | 18.1 | |||||||||||||||||||||
| SBA 504 loans | 321 | 344 | 353 | (23 | ) | (6.7 | ) | (32 | ) | (9.1 | ) | |||||||||||||||||
| Commercial loans | 6,138 | 5,860 | 5,378 | 278 | 4.7 | 760 | 14.1 | |||||||||||||||||||||
| Residential mortgage loans | 3,138 | 2,937 | 2,811 | 201 | 6.8 | 327 | 11.6 | |||||||||||||||||||||
| Consumer loans | 1,046 | 980 | 849 | 66 | 6.7 | 197 | 23.2 | |||||||||||||||||||||
| Total loans | 11,465 | 10,909 | 10,087 | 556 | 5.1 | 1,378 | 13.7 | |||||||||||||||||||||
| Total interest income | 12,081 | 11,487 | 10,554 | 594 | 5.2 | 1,527 | 14.5 | |||||||||||||||||||||
| INTEREST EXPENSE | ||||||||||||||||||||||||||||
| Interest-bearing demand deposits | 129 | 124 | 108 | 5 | 4.0 | 21 | 19.4 | |||||||||||||||||||||
| Savings deposits | 458 | 381 | 255 | 77 | 20.2 | 203 | 79.6 | |||||||||||||||||||||
| Time deposits | 920 | 954 | 839 | (34 | ) | (3.6 | ) | 81 | 9.7 | |||||||||||||||||||
| Borrowed funds and subordinated debentures | 701 | 686 | 730 | 15 | 2.2 | (29 | ) | (4.0 | ) | |||||||||||||||||||
| Total interest expense | 2,208 | 2,145 | 1,932 | 63 | 2.9 | 276 | 14.3 | |||||||||||||||||||||
| Net interest income | 9,873 | 9,342 | 8,622 | 531 | 5.7 | 1,251 | 14.5 | |||||||||||||||||||||
| Provision for loan losses | 420 | 400 | 200 | 20 | 5.0 | 220 | 110.0 | |||||||||||||||||||||
| Net interest income after provision for loan losses | 9,453 | 8,942 | 8,422 | 511 | 5.7 | 1,031 | 12.2 | |||||||||||||||||||||
| NONINTEREST INCOME | ||||||||||||||||||||||||||||
| Branch fee income | 321 | 286 | 399 | 35 | 12.2 | (78 | ) | (19.5 | ) | |||||||||||||||||||
| Service and loan fee income | 274 | 267 | 306 | 7 | 2.6 | (32 | ) | (10.5 | ) | |||||||||||||||||||
| Gain on sale of SBA loans held for sale, net | 639 | 637 | 308 | 2 | 0.3 | 331 | 107.5 | |||||||||||||||||||||
| Gain on sale of mortgage loans, net | 609 | 593 | 926 | 16 | 2.7 | (317 | ) | (34.2 | ) | |||||||||||||||||||
| BOLI income | 97 | 93 | 95 | 4 | 4.3 | 2 | 2.1 | |||||||||||||||||||||
| Net security gains | 11 | 81 | — | (70 | ) | (86.4 | ) | 11 | 100.0 | |||||||||||||||||||
| Other income | 222 | 277 | 241 | (55 | ) | (19.9 | ) | (19 | ) | (7.9 | ) | |||||||||||||||||
| Total noninterest income | 2,173 | 2,234 | 2,275 | (61 | ) | (2.7 | ) | (102 | ) | (4.5 | ) | |||||||||||||||||
| NONINTEREST EXPENSE | ||||||||||||||||||||||||||||
| Compensation and benefits | 3,872 | 3,709 | 3,814 | 163 | 4.4 | 58 | 1.5 | |||||||||||||||||||||
| Occupancy | 611 | 513 | 598 | 98 | 19.1 | 13 | 2.2 | |||||||||||||||||||||
| Processing and communications | 647 | 600 | 631 | 47 | 7.8 | 16 | 2.5 | |||||||||||||||||||||
| Furniture and equipment | 432 | 395 | 393 | 37 | 9.4 | 39 | 9.9 | |||||||||||||||||||||
| Professional services | 216 | 239 | 251 | (23 | ) | (9.6 | ) | (35 | ) | (13.9 | ) | |||||||||||||||||
| Loan costs | 86 | 59 | 265 | 27 | 45.8 | (179 | ) | (67.5 | ) | |||||||||||||||||||
| OREO expenses | 74 | 82 | 15 | (8 | ) | (9.8 | ) | 59 | 393.3 | |||||||||||||||||||
| Deposit insurance | 168 | 165 | 163 | 3 | 1.8 | 5 | 3.1 | |||||||||||||||||||||
| Advertising | 304 | 303 | 203 | 1 | 0.3 | 101 | 49.8 | |||||||||||||||||||||
| Other expenses | 583 | 663 | 519 | (80 | ) | (12.1 | ) | 64 | 12.3 | |||||||||||||||||||
| Total noninterest expense | 6,993 | 6,728 | 6,852 | 265 | 3.9 | 141 | 2.1 | |||||||||||||||||||||
| Income before provision for income taxes and gain on subordinated debenture | 4,633 | 4,448 | 3,845 | 185 | 4.2 | 788 | 20.5 | |||||||||||||||||||||
| Provision for income taxes | 1,613 | 1,624 | 1,294 | (11 | ) | (0.7 | ) | 319 | 24.7 | |||||||||||||||||||
| Net income | $ | 3,020 | $ | 2,824 | $ | 2,551 | $ | 196 | 6.9 | % | $ | 469 | 18.4 | % | ||||||||||||||
| Effective tax rate | 34.8 | % | 36.5 | % | 33.7 | % | ||||||||||||||||||||||
| Net income per: | ||||||||||||||||||||||||||||
| Common share - basic | $ | 0.32 | $ | 0.30 | $ | 0.28 | ||||||||||||||||||||||
| Common share - diluted | $ | 0.32 | $ | 0.30 | $ | 0.27 | ||||||||||||||||||||||
| Weighted average common shares outstanding - Basic | 9,339 | 9,318 | 9,270 | |||||||||||||||||||||||||
| Weighted average common shares outstanding - Diluted | 9,496 | 9,468 | 9,389 | |||||||||||||||||||||||||
UNITY BANCORP, INC.
YTD CONSOLIDATED STATEMENTS OF INCOME
NON-GAAP
September 30, 2016
| For the nine months ended September 30, | Current YTD vs. Prior YTD | ||||||||||||||||
| (In thousands, except percentages and per share amounts) | 2016 | 2015 | $ | % | |||||||||||||
| INTEREST INCOME | |||||||||||||||||
| Federal funds sold and interest-bearing deposits | $ | 135 | $ | 26 | $ | 109 | 419.2 | % | |||||||||
| FHLB stock | 173 | 117 | 56 | 47.9 | |||||||||||||
| Securities: | |||||||||||||||||
| Taxable | 1,246 | 1,100 | 146 | 13.3 | |||||||||||||
| Tax-exempt | 160 | 213 | (53 | ) | (24.9 | ) | |||||||||||
| Total securities | 1,406 | 1,313 | 93 | 7.1 | |||||||||||||
| Loans: | |||||||||||||||||
| SBA loans | 2,331 | 1,980 | 351 | 17.7 | |||||||||||||
| SBA 504 loans | 1,050 | 1,068 | (18 | ) | (1.7 | ) | |||||||||||
| Commercial loans | 17,676 | 15,720 | 1,956 | 12.4 | |||||||||||||
| Residential mortgage loans | 9,017 | 8,108 | 909 | 11.2 | |||||||||||||
| Consumer loans | 2,956 | 2,322 | 634 | 27.3 | |||||||||||||
| Total loans | 33,030 | 29,198 | 3,832 | 13.1 | |||||||||||||
| Total interest income | 34,744 | 30,654 | 4,090 | 13.3 | |||||||||||||
| INTEREST EXPENSE | |||||||||||||||||
| Interest-bearing demand deposits | 390 | 317 | 73 | 23.0 | |||||||||||||
| Savings deposits | 1,206 | 789 | 417 | 52.9 | |||||||||||||
| Time deposits | 2,824 | 2,250 | 574 | 25.5 | |||||||||||||
| Borrowed funds and subordinated debentures | 2,122 | 2,289 | (167 | ) | (7.3 | ) | |||||||||||
| Total interest expense | 6,542 | 5,645 | 897 | 15.9 | |||||||||||||
| Net interest income | 28,202 | 25,009 | 3,193 | 12.8 | |||||||||||||
| Provision for loan losses | 1,020 | 400 | 620 | 155.0 | |||||||||||||
| Net interest income after provision for loan losses | 27,182 | 24,609 | 2,573 | 10.5 | |||||||||||||
| NONINTEREST INCOME | |||||||||||||||||
| Branch fee income | 940 | 1,118 | (178 | ) | (15.9 | ) | |||||||||||
| Service and loan fee income | 796 | 1,068 | (272 | ) | (25.5 | ) | |||||||||||
| Gain on sale of SBA loans held for sale, net | 1,584 | 671 | 913 | 136.1 | |||||||||||||
| Gain on sale of mortgage loans, net | 1,917 | 1,957 | (40 | ) | (2.0 | ) | |||||||||||
| BOLI income | 283 | 284 | (1 | ) | (0.4 | ) | |||||||||||
| Net security gains | 186 | 28 | 158 | 564.3 | |||||||||||||
| Other income | 716 | 683 | 33 | 4.8 | |||||||||||||
| Total noninterest income | 6,422 | 5,809 | 613 | 10.6 | |||||||||||||
| NONINTEREST EXPENSE | |||||||||||||||||
| Compensation and benefits | 11,130 | 10,767 | 363 | 3.4 | |||||||||||||
| Occupancy | 1,742 | 1,871 | (129 | ) | (6.9 | ) | |||||||||||
| Processing and communications | 1,845 | 1,841 | 4 | 0.2 | |||||||||||||
| Furniture and equipment | 1,247 | 1,189 | 58 | 4.9 | |||||||||||||
| Professional services | 710 | 729 | (19 | ) | (2.6 | ) | |||||||||||
| Loan costs | 343 | 647 | (304 | ) | (47.0 | ) | |||||||||||
| OREO expenses | 179 | 117 | 62 | 53.0 | |||||||||||||
| Deposit insurance | 494 | 496 | (2 | ) | (0.4 | ) | |||||||||||
| Advertising | 848 | 728 | 120 | 16.5 | |||||||||||||
| Other expenses | 1,790 | 1,619 | 171 | 10.6 | |||||||||||||
| Total noninterest expense | 20,328 | 20,004 | 324 | 1.6 | |||||||||||||
| Income before provision for income taxes and gain on subordinated debenture | 13,276 | 10,414 | 2,862 | 27.5 | |||||||||||||
| Provision for income taxes | 4,700 | 3,496 | 1,204 | 34.4 | |||||||||||||
| Net income before gain on subordinated debenture | 8,576 | 6,918 | 1,658 | 24.0 | |||||||||||||
| Gain on subordinated debenture, net of tax | 1,473 | — | 1,473 | 100.0 | |||||||||||||
| Net income | $ | 10,049 | $ | 6,918 | $ | 3,131 | 45.3 | % | |||||||||
| For the nine months ended September 30, | |||||||||||||||||
| (In thousands, except percentages and per share amounts) | 2016 | 2015 | |||||||||||||||
| Effective tax rate | 35.3 | % | 33.6 | % | |||||||||||||
| Net income before gain on subordinated debenture per: | |||||||||||||||||
| Common share - basic | 0.92 | 0.75 | |||||||||||||||
| Common share - diluted | 0.91 | 0.74 | |||||||||||||||
| Net income per: | |||||||||||||||||
| Common share - basic | 1.08 | 0.75 | |||||||||||||||
| Common share - diluted | 1.06 | 0.74 | |||||||||||||||
| Weighted average common shares outstanding - Basic | 9,320 | 9,265 | |||||||||||||||
| Weighted average common shares outstanding - Diluted | 9,468 | 9,377 | |||||||||||||||
UNITY BANCORP, INC.
QUARTER TO DATE NET INTEREST MARGIN
September 30, 2016
| (Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis) | ||||||||||||||||||||||
| For the three months ended | ||||||||||||||||||||||
| September 30, 2016 | June 30, 2016 | |||||||||||||||||||||
| Average Balance | Interest | Rate/Yield | Average Balance | Interest | Rate/Yield | |||||||||||||||||
| ASSETS | ||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||
| Federal funds sold and interest-bearing deposits | $ | 70,628 | $ | 50 | 0.28 | % | $ | 62,652 | $ | 41 | 0.26 | % | ||||||||||
| FHLB stock | 5,728 | 67 | 4.65 | 4,904 | 55 | 4.51 | ||||||||||||||||
| Securities: | ||||||||||||||||||||||
| Taxable | 63,871 | 456 | 2.84 | 62,561 | 427 | 2.75 | ||||||||||||||||
| Tax-exempt | 6,478 | 66 | 4.05 | 8,177 | 83 | 4.08 | ||||||||||||||||
| Total securities (A) | 70,349 | 522 | 2.95 | 70,738 | 510 | 2.90 | ||||||||||||||||
| Loans: | ||||||||||||||||||||||
| SBA loans | 57,122 | 822 | 5.72 | 56,719 | 788 | 5.59 | ||||||||||||||||
| SBA 504 loans | 26,562 | 321 | 4.81 | 27,273 | 344 | 5.07 | ||||||||||||||||
| Commercial loans | 490,776 | 6,138 | 4.98 | 474,573 | 5,860 | 4.97 | ||||||||||||||||
| Residential mortgage loans | 276,413 | 3,138 | 4.52 | 264,599 | 2,937 | 4.46 | ||||||||||||||||
| Consumer loans | 85,632 | 1,046 | 4.86 | 82,295 | 980 | 4.79 | ||||||||||||||||
| Total loans (B) | 936,505 | 11,465 | 4.87 | 905,459 | 10,909 | 4.85 | ||||||||||||||||
| Total interest-earning assets | $ | 1,083,210 | $ | 12,104 | 4.45 | % | $ | 1,043,753 | $ | 11,515 | 4.44 | % | ||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||
| Cash and due from banks | 19,831 | 25,993 | ||||||||||||||||||||
| Allowance for loan losses | (12,769 | ) | (12,850 | ) | ||||||||||||||||||
| Other assets | 52,000 | 49,250 | ||||||||||||||||||||
| Total noninterest-earning assets | 59,062 | 62,393 | ||||||||||||||||||||
| Total assets | $ | 1,142,272 | $ | 1,106,146 | ||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||
| Total interest-bearing demand deposits | $ | 129,310 | $ | 129 | 0.40 | % | $ | 129,263 | $ | 124 | 0.39 | % | ||||||||||
| Total savings deposits | 331,588 | 458 | 0.55 | 310,329 | 381 | 0.49 | ||||||||||||||||
| Total time deposits | 256,884 | 920 | 1.42 | 275,700 | 954 | 1.39 | ||||||||||||||||
| Total interest-bearing deposits | 717,782 | 1,507 | 0.84 | 715,292 | 1,459 | 0.82 | ||||||||||||||||
| Borrowed funds and subordinated debentures | 123,136 | 701 | 2.26 | 106,277 | 686 | 2.60 | ||||||||||||||||
| Total interest-bearing liabilities | $ | 840,918 | $ | 2,208 | 1.04 | % | $ | 821,569 | $ | 2,145 | 1.05 | % | ||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||
| Noninterest-bearing demand deposits | 197,937 | 194,649 | ||||||||||||||||||||
| Other liabilities | 16,990 | 6,370 | ||||||||||||||||||||
| Total noninterest-bearing liabilities | 214,927 | 201,019 | ||||||||||||||||||||
| Total shareholders' equity | 86,427 | 83,558 | ||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,142,272 | $ | 1,106,146 | ||||||||||||||||||
| Net interest spread | $ | 9,896 | 3.41 | % | $ | 9,370 | 3.39 | % | ||||||||||||||
| Tax-equivalent basis adjustment | (23 | ) | (28 | ) | ||||||||||||||||||
| Net interest income | $ | 9,873 | $ | 9,342 | ||||||||||||||||||
| Net interest margin | 3.63 | % | 3.61 | % | ||||||||||||||||||
| (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 nondeductable portion of interest expense, assuming a federal tax rate of 35 percent and applicable state rates. |
| (B) | The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued. |
UNITY BANCORP, INC.
QUARTER TO DATE NET INTEREST MARGIN
September 30, 2016
| (Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis) | ||||||||||||||||||||||
| For the three months ended | ||||||||||||||||||||||
| September 30, 2016 | September 30, 2015 | |||||||||||||||||||||
| Average Balance | Interest | Rate/Yield | Average Balance | Interest | Rate/Yield | |||||||||||||||||
| ASSETS | ||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||
| Federal funds sold and interest-bearing deposits | $ | 70,628 | $ | 50 | 0.28 | % | $ | 34,465 | $ | 11 | 0.13 | % | ||||||||||
| FHLB stock | 5,728 | 67 | 4.65 | 3,517 | 36 | 4.06 | ||||||||||||||||
| Securities: | ||||||||||||||||||||||
| Taxable | 63,871 | 456 | 2.84 | 61,542 | 349 | 2.25 | ||||||||||||||||
| Tax-exempt | 6,478 | 66 | 4.05 | 11,612 | 105 | 3.59 | ||||||||||||||||
| Total securities (A) | 70,349 | 522 | 2.95 | 73,154 | 454 | 2.46 | ||||||||||||||||
| Loans: | ||||||||||||||||||||||
| SBA loans | 57,122 | 822 | 5.72 | 53,325 | 696 | 5.18 | ||||||||||||||||
| SBA 504 loans | 26,562 | 321 | 4.81 | 29,268 | 353 | 4.79 | ||||||||||||||||
| Commercial loans | 490,776 | 6,138 | 4.98 | 433,285 | 5,378 | 4.92 | ||||||||||||||||
| Residential mortgage loans | 276,413 | 3,138 | 4.52 | 254,765 | 2,811 | 4.38 | ||||||||||||||||
| Consumer loans | 85,632 | 1,046 | 4.86 | 72,641 | 849 | 4.64 | ||||||||||||||||
| Total loans (B) | 936,505 | 11,465 | 4.87 | 843,284 | 10,087 | 4.75 | ||||||||||||||||
| Total interest-earning assets | $ | 1,083,210 | $ | 12,104 | 4.45 | % | $ | 954,420 | $ | 10,588 | 4.40 | % | ||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||
| Cash and due from banks | 19,831 | 24,990 | ||||||||||||||||||||
| Allowance for loan losses | (12,769 | ) | (12,619 | ) | ||||||||||||||||||
| Other assets | 52,000 | 44,098 | ||||||||||||||||||||
| Total noninterest-earning assets | 59,062 | 56,469 | ||||||||||||||||||||
| Total assets | $ | 1,142,272 | $ | 1,010,889 | ||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||
| Total interest-bearing demand deposits | $ | 129,310 | $ | 129 | 0.40 | % | $ | 125,405 | $ | 108 | 0.34 | % | ||||||||||
| Total savings deposits | 331,588 | 458 | 0.55 | 290,413 | 255 | 0.35 | ||||||||||||||||
| Total time deposits | 256,884 | 920 | 1.42 | 256,216 | 839 | 1.30 | ||||||||||||||||
| Total interest-bearing deposits | 717,782 | 1,507 | 0.84 | 672,034 | 1,202 | 0.71 | ||||||||||||||||
| Borrowed funds and subordinated debentures | 123,136 | 701 | 2.26 | 83,383 | 730 | 3.47 | ||||||||||||||||
| Total interest-bearing liabilities | $ | 840,918 | $ | 2,208 | 1.04 | % | $ | 755,417 | $ | 1,932 | 1.01 | % | ||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||
| Noninterest-bearing demand deposits | 197,937 | 176,085 | ||||||||||||||||||||
| Other liabilities | 16,990 | 4,663 | ||||||||||||||||||||
| Total noninterest-bearing liabilities | 214,927 | 180,748 | ||||||||||||||||||||
| Total shareholders' equity | 86,427 | 74,724 | ||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,142,272 | $ | 1,010,889 | ||||||||||||||||||
| Net interest spread | $ | 9,896 | 3.41 | % | $ | 8,656 | 3.39 | % | ||||||||||||||
| Tax-equivalent basis adjustment | (23 | ) | (34 | ) | ||||||||||||||||||
| Net interest income | $ | 9,873 | $ | 8,622 | ||||||||||||||||||
| Net interest margin | 3.63 | % | 3.60 | % | ||||||||||||||||||
| (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 nondeductable portion of interest expense, assuming a federal tax rate of 35 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.
YEAR TO DATE NET INTEREST MARGIN
September 30, 2016
| (Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis) | ||||||||||||||||||||||
| For the nine months ended | ||||||||||||||||||||||
| September 30, 2016 | September 30, 2015 | |||||||||||||||||||||
| Average Balance | Interest | Rate/Yield | Average Balance | Interest | Rate/Yield | |||||||||||||||||
| ASSETS | ||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||
| Federal funds sold and interest-bearing deposits | $ | 70,654 | $ | 135 | 0.26 | % | $ | 30,657 | $ | 26 | 0.11 | % | ||||||||||
| FHLB stock | 5,063 | 173 | 4.56 | 3,694 | 117 | 4.23 | ||||||||||||||||
| Securities: | ||||||||||||||||||||||
| Taxable | 61,869 | 1,246 | 2.69 | 64,121 | 1,100 | 2.29 | ||||||||||||||||
| Tax-exempt | 8,062 | 241 | 3.99 | 11,798 | 315 | 3.57 | ||||||||||||||||
| Total securities (A) | 69,931 | 1,487 | 2.84 | 75,919 | 1,415 | 2.49 | ||||||||||||||||
| Loans: | ||||||||||||||||||||||
| SBA loans | 55,932 | 2,331 | 5.57 | 49,678 | 1,980 | 5.33 | ||||||||||||||||
| SBA 504 loans | 27,685 | 1,050 | 5.07 | 30,720 | 1,068 | 4.65 | ||||||||||||||||
| Commercial loans | 476,477 | 17,676 | 4.96 | 420,682 | 15,720 | 5.00 | ||||||||||||||||
| Residential mortgage loans | 268,436 | 9,017 | 4.49 | 241,675 | 8,108 | 4.49 | ||||||||||||||||
| Consumer loans | 82,098 | 2,956 | 4.81 | 67,488 | 2,322 | 4.60 | ||||||||||||||||
| Total loans (B) | 910,628 | 33,030 | 4.85 | 810,243 | 29,198 | 4.82 | ||||||||||||||||
| Total interest-earning assets | $ | 1,056,276 | $ | 34,825 | 4.40 | % | $ | 920,513 | $ | 30,756 | 4.47 | % | ||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||
| Cash and due from banks | 24,261 | 26,537 | ||||||||||||||||||||
| Allowance for loan losses | (12,848 | ) | (12,583 | ) | ||||||||||||||||||
| Other assets | 48,922 | 43,637 | ||||||||||||||||||||
| Total noninterest-earning assets | 60,335 | 57,591 | ||||||||||||||||||||
| Total assets | $ | 1,116,611 | $ | 978,104 | ||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||
| Total interest-bearing demand deposits | $ | 129,968 | $ | 390 | 0.40 | % | $ | 125,216 | $ | 317 | 0.34 | % | ||||||||||
| Total savings deposits | 317,441 | 1,206 | 0.51 | 289,445 | 789 | 0.36 | ||||||||||||||||
| Total time deposits | 271,511 | 2,824 | 1.39 | 229,512 | 2,250 | 1.31 | ||||||||||||||||
| Total interest-bearing deposits | 718,920 | 4,420 | 0.82 | 644,173 | 3,356 | 0.69 | ||||||||||||||||
| Borrowed funds and subordinated debentures | 111,298 | 2,122 | 2.55 | 87,714 | 2,289 | 3.49 | ||||||||||||||||
| Total interest-bearing liabilities | $ | 830,218 | $ | 6,542 | 1.05 | % | $ | 731,887 | $ | 5,645 | 1.03 | % | ||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||
| Noninterest-bearing demand deposits | 193,288 | 168,852 | ||||||||||||||||||||
| Other liabilities | 9,656 | 4,463 | ||||||||||||||||||||
| Total noninterest-bearing liabilities | 202,944 | 173,315 | ||||||||||||||||||||
| Total shareholders' equity | 83,449 | 72,902 | ||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,116,611 | $ | 978,104 | ||||||||||||||||||
| Net interest spread | $ | 28,283 | 3.35 | % | $ | 25,111 | 3.44 | % | ||||||||||||||
| Tax-equivalent basis adjustment | (81 | ) | (102 | ) | ||||||||||||||||||
| Net interest income | $ | 28,202 | $ | 25,009 | ||||||||||||||||||
| Net interest margin | 3.58 | % | 3.65 | % | ||||||||||||||||||
| (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 nondeductable portion of interest expense, assuming a federal tax rate of 35 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, 2016
| Amounts in thousands, except percentages | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | |||||||||||||||
| ALLOWANCE FOR LOAN LOSSES: | ||||||||||||||||||||
| Balance, beginning of period | $ | 12,758 | $ | 12,634 | $ | 12,759 | $ | 12,421 | $ | 12,404 | ||||||||||
| Provision for loan losses charged to expense | 420 | 400 | 200 | 100 | 200 | |||||||||||||||
| 13,178 | 13,034 | 12,959 | 12,521 | 12,604 | ||||||||||||||||
| Less: Chargeoffs | ||||||||||||||||||||
| SBA loans | 140 | 142 | 86 | 151 | 86 | |||||||||||||||
| Commercial loans | 376 | 152 | 228 | 52 | 10 | |||||||||||||||
| Residential mortgage loans | — | — | — | — | 50 | |||||||||||||||
| Consumer loans | — | — | 28 | 41 | 52 | |||||||||||||||
| Total chargeoffs | 516 | 294 | 342 | 244 | 198 | |||||||||||||||
| Add: Recoveries | ||||||||||||||||||||
| SBA loans | 17 | 4 | 11 | 6 | 10 | |||||||||||||||
| Commercial loans | 6 | 13 | 6 | 476 | 5 | |||||||||||||||
| Consumer loans | — | 1 | — | — | — | |||||||||||||||
| Total recoveries | 23 | 18 | 17 | 482 | 15 | |||||||||||||||
| Net chargeoffs (recoveries) | 493 | 276 | 325 | (238 | ) | 183 | ||||||||||||||
| Balance, end of period | $ | 12,685 | $ | 12,758 | $ | 12,634 | $ | 12,759 | $ | 12,421 | ||||||||||
| LOAN QUALITY INFORMATION: | ||||||||||||||||||||
| Nonperforming loans (1) | $ | 6,527 | $ | 6,541 | $ | 6,887 | $ | 7,260 | $ | 10,742 | ||||||||||
| Other real estate owned ("OREO") | 1,703 | 1,702 | 1,417 | 1,591 | 1,759 | |||||||||||||||
| Nonperforming assets | 8,230 | 8,243 | 8,304 | 8,851 | 12,501 | |||||||||||||||
| Less: Amount guaranteed by SBA | 624 | 134 | 243 | 288 | 225 | |||||||||||||||
| Net nonperforming assets | $ | 7,606 | $ | 8,109 | $ | 8,061 | $ | 8,563 | $ | 12,276 | ||||||||||
| Loans 90 days past due & still accruing | $ | — | $ | 485 | $ | — | $ | — | $ | 272 | ||||||||||
| Performing Troubled Debt Restructurings (TDRs) | $ | 665 | $ | 772 | $ | 844 | $ | 3,015 | $ | 3,268 | ||||||||||
| (1) Nonperforming TDRs included in nonperforming loans | 154 | 161 | 293 | 293 | 2,808 | |||||||||||||||
| Total TDRs | $ | 819 | $ | 933 | $ | 1,137 | $ | 3,308 | $ | 6,076 | ||||||||||
| Allowance for loan losses to: | ||||||||||||||||||||
| Total loans at quarter end | 1.34 | % | 1.39 | % | 1.42 | % | 1.44 | % | 1.45 | % | ||||||||||
| Nonperforming loans (1) | 194.35 | 195.05 | 183.45 | 175.74 | 115.63 | |||||||||||||||
| Nonperforming assets | 154.13 | 154.77 | 152.14 | 144.15 | 99.36 | |||||||||||||||
| Net nonperforming assets | 166.78 | 157.33 | 156.73 | 149.00 | 101.18 | |||||||||||||||
| QTD net chargeoffs (annualized) to QTD average loans: | ||||||||||||||||||||
| SBA loans | 0.86 | % | 0.98 | % | 0.56 | % | 1.05 | % | 0.57 | % | ||||||||||
| Commercial loans | 0.30 | 0.12 | 0.19 | (0.37 | ) | — | ||||||||||||||
| Residential mortgage loans | — | — | — | — | 0.08 | |||||||||||||||
| Consumer loans | — | — | 0.14 | 0.21 | 0.28 | |||||||||||||||
| Total loans | 0.21 | % | 0.12 | % | 0.15 | % | (0.11 | )% | 0.09 | % | ||||||||||
| Nonperforming loans to total loans | 0.69 | % | 0.71 | % | 0.78 | % | 0.82 | % | 1.26 | % | ||||||||||
| Nonperforming loans and TDRs to total loans | 0.76 | 0.80 | 0.87 | 1.16 | 1.64 | |||||||||||||||
| Nonperforming assets to total loans and OREO | 0.86 | 0.90 | 0.93 | 0.99 | 1.46 | |||||||||||||||
| Nonperforming assets to total assets | 0.71 | 0.73 | 0.74 | 0.82 | 1.19 | |||||||||||||||
UNITY BANCORP, INC.
QUARTERLY FINANCIAL DATA
NON-GAAP
September 30, 2016
| (In thousands, except percentages and per share amounts) | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | |||||||||||||||
| SUMMARY OF INCOME: | ||||||||||||||||||||
| Total interest income | $ | 12,081 | $ | 11,487 | $ | 11,176 | $ | 10,995 | $ | 10,554 | ||||||||||
| Total interest expense | 2,208 | 2,145 | 2,189 | 2,015 | 1,932 | |||||||||||||||
| Net interest income | 9,873 | 9,342 | 8,987 | 8,980 | 8,622 | |||||||||||||||
| Provision for loan losses | 420 | 400 | 200 | 100 | 200 | |||||||||||||||
| Net interest income after provision for loan losses | 9,453 | 8,942 | 8,787 | 8,880 | 8,422 | |||||||||||||||
| Total noninterest income | 2,173 | 2,234 | 2,016 | 1,920 | 2,275 | |||||||||||||||
| Total noninterest expense | 6,993 | 6,728 | 6,607 | 6,846 | 6,852 | |||||||||||||||
| Income before provision for income taxes and gain on subordinated debenture | 4,633 | 4,448 | 4,196 | 3,954 | 3,845 | |||||||||||||||
| Provision for income taxes | 1,613 | 1,624 | 1,464 | 1,315 | 1,294 | |||||||||||||||
| Net income before gain on subordinated debenture | $ | 3,020 | $ | 2,824 | $ | 2,732 | $ | 2,639 | $ | 2,551 | ||||||||||
| Gain on subordinated debenture, net of tax | — | — | 1,473 | — | — | |||||||||||||||
| Net income | $ | 3,020 | $ | 2,824 | $ | 4,205 | $ | 2,639 | $ | 2,551 | ||||||||||
| Net income per common share - Basic | $ | 0.32 | $ | 0.30 | $ | 0.45 | $ | 0.28 | $ | 0.28 | ||||||||||
| Net income per common share - Diluted | $ | 0.32 | $ | 0.30 | $ | 0.44 | $ | 0.28 | $ | 0.27 | ||||||||||
| COMMON SHARE DATA: | ||||||||||||||||||||
| Market price per share | $ | 12.82 | $ | 11.56 | $ | 10.34 | $ | 11.34 | $ | 8.89 | ||||||||||
| Dividends paid | $ | 0.05 | $ | 0.04 | $ | 0.04 | $ | 0.04 | $ | 0.04 | ||||||||||
| Book value per common share | $ | 9.45 | $ | 9.10 | $ | 8.83 | $ | 8.46 | $ | 8.20 | ||||||||||
| Weighted average common shares outstanding - Basic | 9,339 | 9,318 | 9,304 | 9,273 | 9,270 | |||||||||||||||
| Weighted average common shares outstanding - Diluted | 9,496 | 9,468 | 9,550 | 9,402 | 9,389 | |||||||||||||||
| Issued and outstanding common shares | 9,331 | 9,336 | 9,315 | 9,279 | 9,272 | |||||||||||||||
| OPERATING RATIOS (Annualized): | ||||||||||||||||||||
| Return on average assets | 1.05 | % | 1.03 | % | 1.54 | % | 1.00 | % | 1.00 | % | ||||||||||
| Return on average equity | 13.90 | 13.59 | 21.05 | 13.59 | 13.54 | |||||||||||||||
| Efficiency ratio | 58.11 | 58.53 | 50.16 | 62.81 | 62.88 | |||||||||||||||
| BALANCE SHEET DATA: | ||||||||||||||||||||
| Total assets | 1,152,896 | 1,128,370 | 1,120,955 | 1,084,866 | 1,052,711 | |||||||||||||||
| Total deposits | 933,320 | 912,198 | 926,819 | 894,493 | 866,247 | |||||||||||||||
| Total loans | 949,832 | 915,043 | 886,990 | 888,958 | 855,560 | |||||||||||||||
| Total securities | 72,360 | 73,994 | 66,729 | 71,336 | 71,492 | |||||||||||||||
| Total shareholders' equity | 88,152 | 84,967 | 82,276 | 78,470 | 76,065 | |||||||||||||||
| Allowance for loan losses | (12,685 | ) | (12,758 | ) | (12,634 | ) | (12,759 | ) | (12,421 | ) | ||||||||||
| TAX EQUIVALENT YIELDS AND RATES: | ||||||||||||||||||||
| Interest-earning assets | 4.45 | % | 4.44 | % | 4.33 | % | 4.40 | % | 4.40 | % | ||||||||||
| Interest-bearing liabilities | 1.04 | 1.05 | 1.06 | 1.02 | 1.01 | |||||||||||||||
| Net interest spread | 3.41 | 3.39 | 3.27 | 3.38 | 3.39 | |||||||||||||||
| Net interest margin | 3.63 | 3.61 | 3.48 | 3.60 | 3.60 | |||||||||||||||
| CREDIT QUALITY: | ||||||||||||||||||||
| Nonperforming assets | 8,230 | 8,243 | 8,304 | 8,851 | 12,501 | |||||||||||||||
| QTD net chargeoffs (annualized) to QTD average loans | 0.21 | % | 0.12 | % | 0.15 | % | (0.11 | )% | 0.09 | % | ||||||||||
| Allowance for loan losses to total loans | 1.34 | 1.39 | 1.42 | 1.44 | 1.45 | |||||||||||||||
| Nonperforming assets to total loans and OREO | 0.86 | 0.90 | 0.93 | 0.99 | 1.46 | |||||||||||||||
| Nonperforming assets to total assets | 0.71 | 0.73 | 0.74 | 0.82 | 1.19 | |||||||||||||||
| (In thousands, except percentages and per share amounts) | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | |||||||||||||||
| CAPITAL RATIOS AND OTHER: | ||||||||||||||||||||
| Total equity to total assets | 7.65 | 7.53 | 7.34 | 7.23 | 7.23 | |||||||||||||||
| Leverage ratio | 8.49 | 8.52 | 8.31 | 8.82 | 8.92 | |||||||||||||||
| Common equity tier 1 risk-based capital ratio | 9.63 | 9.70 | 9.77 | 9.37 | 9.37 | |||||||||||||||
| Tier 1 risk-based capital ratio | 10.74 | 10.85 | 10.97 | 11.18 | 11.25 | |||||||||||||||
| Total risk-based capital ratio | 11.48 | 12.11 | 12.22 | 12.43 | 12.50 | |||||||||||||||
| Number of banking offices | 15 | 15 | 15 | 15 | 15 | |||||||||||||||
| Number of ATMs | 16 | 16 | 16 | 16 | 16 | |||||||||||||||
| Number of employees | 180 | 172 | 172 | 162 | 163 | |||||||||||||||