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Unity Bancorp, Inc.
64 Old Highway 22
Clinton, NJ 08809
800 618-BANK
www.unitybank.com
President's Message
I am happy to report that Unity has continued to announce record earnings. For the quarter ended March 31, 2003, Unity reported net income of $1.2 million, or $0.20 per diluted share, a 40.1% increase compared to $0.8 million from the prior year's comparable quarter. Return on average assets and average common equity for the first quarter of 2003, were 1.09% and 17.23%, respectively.
Despite the sluggish economy, Unity loan demand has continued to be strong, which has significantly enhanced our profitability. Total commercial loans for the first quarter of 2003 are up 31.7% from the prior year's comparable quarter and SBA loans held for investment are up 32.3% from a year ago. Our current loan pipeline suggests that we should continue to see favorable loan growth in these categories during the remainder of the year.
In addition to our robust loan growth, we are also enjoying continued growth in both our commercial and retail deposits. Total deposits are up 11.4% from a year ago, with non-interest deposits at the end of the first quarter of 2003, up 29.8% from a year ago. As previously reported, in 2003 we will be looking to expand our retail branch network and are currently awaiting approval on our new Bridgewater, New Jersey location. We expect to have the Bridgewater facility opened by mid year.
We are also very pleased with our investment in Hallmark Title, LLC, which commenced operations in July of 2002. They have already successfully built up a core business and have enjoyed their first quarter of profitable operations.
We are on track with our financial projections for 2003, and I am very optimistic about the remainder of the year. As we continue to distance ourselves from our troubled past, I am very hopeful that we will see further improvement in our franchise value.
As a Unity shareholder, I would like to thank you for your continued support. I hope that you make use of all that Unity has to offer for your financial service needs.
Anthony J. Feraro
President and Chief Executive Officer
April 21, 2003
Quarterly Financial Data
Unity Bancorp
| | 03/31/03 | 12/31/02 | 09/30/02 | 06/30/02 | 03/31/02 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SUMMARY OF INCOME | |||||||||||||
| (in thousands): | |||||||||||||
| Interest income | 6,190 | 6,193 | 6,227 | 6,127 | 5,748 | ||||||||
| Interest expense | 1,939 | 2,125 | 2,145 | 2,184 | 2,118 | ||||||||
| Net interest income | 4,251 | 4,068 | 4,082 | 3,943 | 3,630 | ||||||||
| Provision for loan losses | 450 | 400 | 375 | 975 | 600 | ||||||||
| Net interest income after provision | 3,801 | 3,668 | 3,707 | 2,968 | 3,030 | ||||||||
| Noninterest income | 2,107 | 2,116 | 1,622 | 2,362 | 1,891 | ||||||||
| Noninterest expense | 4,055 | 4,162 | 3,830 | 3,900 | 3,652 | ||||||||
| Income before income taxes | 1,853 | 1,622 | 1,499 | 1,430 | 1,269 | ||||||||
| Federal and state income tax provision | 701 | 613 | 537 | 514 | 447 | ||||||||
| Net Income | 1,152 | 1,009 | 962 | 916 | 822 | ||||||||
| Preferred dividends | — | — | 8 | 7 | 8 | ||||||||
| Net Income | 1,152 | 1,009 | 954 | 909 | 814 | ||||||||
| Net Income per Common Share: | |||||||||||||
| Basic | 0.21 | 0.19 | 0.17 | 0.17 | 0.15 | ||||||||
| Diluted | 0.20 | 0.18 | 0.16 | 0.16 | 0.14 | ||||||||
COMMON SHARE DATA: | |||||||||||||
| Cash dividends declared | |||||||||||||
| Book value at quarter end | 5.16 | 5.03 | 4.93 | 4.93 | 4.70 | ||||||||
| Market value at quarter end | 7.99 | 7.85 | 6.19 | 6.25 | 6.18 | ||||||||
| Average common shares outstanding: (000's) | |||||||||||||
| Basic | 5,393 | 5,411 | 5,652 | 5,477 | 5,389 | ||||||||
| Diluted | 5,671 | 5,662 | 5,946 | 5,834 | 5,825 | ||||||||
| Common shares outstanding at period end (000's) | 5,393 | 5,393 | 5,349 | 5,646 | 5,440 | ||||||||
OPERATING RATIOS: | |||||||||||||
| Return on average assets | 1.09 | 0.94 | 0.92 | 0.91 | 0.87 | ||||||||
| Return on average common equity | 17.23 | 15.12 | 13.53 | 13.90 | 13.19 | ||||||||
| Efficiency ratio | 64.62 | 67.30 | 67.15 | 64.18 | 66.15 | ||||||||
BALANCE SHEET DATA | |||||||||||||
| (in thousands): | |||||||||||||
| Assets | 445,270 | 432,874 | 423,990 | 410,336 | 394,230 | ||||||||
| Deposits | 394,025 | 382,585 | 374,094 | 367,312 | 353,777 | ||||||||
| Loans | 318,612 | 311,794 | 303,578 | 296,266 | 279,586 | ||||||||
| Shareholders' equity | 27,824 | 27,106 | 26,670 | 28,111 | 25,860 | ||||||||
| Allowance for loan losses | 4,382 | 4,094 | 3,786 | 3,563 | 3,180 | ||||||||
TAX-EQUIVALENT YIELDS AND RATES: | |||||||||||||
| Interest-earning assets | 6.15 | 6.15 | 6.30 | 6.43 | 6.41 | ||||||||
| Interest-bearing liabilities | 2.39 | 2.56 | 2.67 | 2.83 | 2.89 | ||||||||
| Net interest spread | 3.76 | 3.59 | 3.63 | 3.60 | 3.52 | ||||||||
| Net interest margin | 4.19 | 4.06 | 4.15 | 4.14 | 4.02 | ||||||||
CREDIT QUALITY: | |||||||||||||
| Nonperforming assets (in thousands) | 3,803 | 3,753 | 3,205 | 4,102 | 2,806 | ||||||||
| Allowance for loan losses to period-end loans | 1.38 | 1.31 | 1.25 | 1.20 | 1.14 | ||||||||
| Net charge offs to average loans | 0.21 | 0.12 | 0.20 | 0.80 | 0.86 | ||||||||
| Nonperforming assets to loans and OREO | 1.19 | 1.20 | 1.06 | 1.38 | 1.00 | ||||||||
CAPITAL AND OTHER: | |||||||||||||
| Total equity to assets | 6.25 | 6.26 | 6.29 | 6.85 | 6.56 | ||||||||
| Tier I capital to average assets (leverage) | 8.59 | 8.38 | 8.45 | 6.91 | 6.76 | ||||||||
| Tier I capital to risk-adjusted assets | 11.03 | 11.05 | 11.47 | 9.53 | 9.49 | ||||||||
| Total capital to risk-adjusted assets | 12.28 | 12.32 | 12.79 | 10.70 | 10.65 | ||||||||
| Number of banking offices | 12 | 12 | 12 | 12 | 12 | ||||||||
| Number of ATMs | 13 | 13 | 13 | 13 | 13 | ||||||||
| Number of employees | 160 | 159 | 149 | 151 | 144 | ||||||||
Quarterly Financial Data Unity Bancorp