• Unity Bancorp Reports 24.4% Increase in Quarterly Net Income

    Source: Nasdaq GlobeNewswire / 19 Oct 2017 06:00:18   Eastern Standard Time

    CLINTON, N.J., Oct. 19, 2017 (GLOBE NEWSWIRE) -- Unity Bancorp, Inc. (NASDAQ:UNTY), parent company of Unity Bank, reported a 24.4% increase in quarterly earnings and a 21.2% increase in year-to-date earnings.  The year-to-date results exclude the effect of a nonrecurring gain during the prior year’s period.   Contributing factors included strong loan and deposit growth, increased net interest income and expanded net interest margins. 

    Net income for the three months ended September 30, 2017 was $3.8 million, or $0.35 per diluted share, a 24.4 percent increase compared to net income of $3.0 million, or $0.32 per diluted share, for the three months ended September 30, 2016.  Return on average assets and average common equity for the quarter were 1.17% and 13.00%, respectively, compared to 1.05% and 13.90% for the same period a year ago.    

    Year-to-date net income was $10.4 million, or $0.97 per diluted share, for the nine months ended September 30, 2017.  Year-to-date net income, excluding the nonrecurring gain on the repurchase of subordinated debentures, was $8.6 million, or $0.91 per diluted share, for the same period a year ago.  Current year-to-date net income represents a 21.2% increase over the prior year’s year-to-date net income excluding the nonrecurring gain.  Return on average assets and average common equity for the nine months ended September 30, 2017 were 1.12% and 12.51%, respectively, compared to 1.03% and 13.73% for the same period a year ago, excluding the nonrecurring gain described below. 

    In February 2016, the Company repurchased $5.0 million of its outstanding subordinated “capital qualifying” 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.  Management believes excluding the nonrecurring gain from 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. 

    Net income for the nine months ended September 30, 2017 increased 3.4% compared to the prior year period net income, which included the nonrecurring gain on the repurchase of subordinated debentures, of $10.0 million or $1.06 per diluted share.   Return on average assets and average common equity for the nine months ended September 30, 2017 was 1.12% and 12.51%, respectively compared to 1.20% and 16.09% for the prior year period, including the 2016 nonrecurring gain.    

    Third quarter highlights included:

    • Announcing two new branches – Bethlehem, PA and Ramsey, NJ which will open later this year.  Also, the Phillipsburg branch will be relocated.    
    • Loans grew 12.3% from year-end:  19.5% increase in consumer loans, 14.4% increase in residential mortgage loans and 11.7% increase in commercial loans. 
    • Deposits increased 10.4%:  19.7% increase in noninterest-bearing demand deposits, 14.3% increase in interest-bearing deposits and an 11.1% increase in savings deposits.
    • Net interest income increased 19.7% to $11.8 million compared to the prior year’s quarter due to earning asset growth and improved margins. 
    • Net interest margin increased to 3.88% this quarter compared to 3.63% in the prior year’s quarter due to strong loan growth and the benefit of a rising rate environment.
    • Credit quality continues to improve.  Nonperforming loans fell 48.3% from year-end to $3.7 million. 

    “We had another quarter of record earnings,” stated James A. Hughes, President and CEO.  “Loan and deposit growth remains extremely robust and I expect that to continue for the remainder of this year and into 2018.  We recently announced the opening of 2 branches in Bethlehem, PA and Ramsey, NJ which will add to our geographic presence in the Lehigh Valley and Bergen County markets.  We feel confident that we can continue to expand our franchise while we grow our profitability.  Our balance sheet is well positioned and has benefited from the increase in interest rates.  I look forward to reporting on our future successes.”

    Net Interest Income

    Net interest income, our core driver of earnings, increased $1.9 million to $11.8 million for the quarter ended September 30, 2017 compared to the prior year’s quarter.  In addition, the net interest margin expanded 25 basis points to 3.88%, compared to 3.63% for the prior year’s quarter.  For the nine months ended September 30, 2017, net interest income increased $5.2 million to $33.4 million, and the net interest margin expanded 19 basis points to 3.79%.  Each period benefited from strong loan growth and the rising interest rate environment. 

    The yield on earning assets increased 21 basis points to 4.66% for the quarter ended September 30, 2017 compared to 4.45% for the prior year’s quarter.  This increase was the result of strong commercial, residential mortgage and consumer loan growth over the prior year’s period and the benefit of a rising rate environment.  Quarterly average commercial loans increased $62.7 million, average residential mortgage loans have increased $45.8 million and consumer loans increased $21.3 million compared to the third quarter in 2016.  

    The cost of interest-bearing liabilities remained consistent at 1.04% for the quarter ended September 30, 2017.  While the cost of deposits increased 3 basis points to 0.87%, the cost of borrowed funds and subordinated debentures decreased 17 basis points compared to the prior year due to the modification of borrowings with the Federal Home Loan Bank (“FHLB”) and the addition of new borrowings at lower rates over the past year.   The increase in the cost of deposits was primarily driven by the growth in savings deposits.

    Provision for Loan Losses

    The provision for loan losses increased during the quarter and nine month periods ended September 30, 2017 despite reduced net charge-offs due to the growth in the loan portfolio.  The provision for loan losses was $500 thousand and $420 thousand for each of the quarters ended September 30, 2017 and September 30, 2016, respectively.  Year-to-date the provision for loan losses increased $130 thousand to $1.2 million for the nine months ended September 30, 2017 compared to the prior year period.  Quarterly net charge-offs declined $306 thousand to $187 thousand from $493 thousand in the prior year’s quarter.  Year-to-date charge-offs declined $478 thousand over the prior year period to $616 thousand for the nine months ended September 30, 2017.

    Noninterest Income

    Noninterest income decreased $165 thousand to $2.0 million for the three months ended September 30, 2017 and declined $189 thousand to $6.2 million for the nine month period ended September 30, 2017, compared to the same period last year due to a lower volume of sales of both mortgage and SBA loans. 

    Quarterly gains on the sale of mortgage loans declined $217 thousand and year-to-date gains declined $729 thousand compared to the prior year periods due to lower sales volumes in each period. During 2017, management elected to hold more of the residential loans it originates in portfolio for long term investment rather than sell the loans.  In the nine months ended September 30, 2017, $151.5 million in mortgage loans were originated with $66.2 million being sold for a net gain of $1.2 million.  By comparison, $135.1 million in mortgage loans were originated in the nine months ended September 30, 2016, of which $76.7 million were sold for a gain of $1.9 million.  Mortgage loan sale volume totaled $23.8 million for the three months ended September 30, 2017 compared to $25.6 million in sales in the prior year’s period. 

    Gains on the sale of SBA loans decreased due to a lower volume of loan sales this quarter compared with the prior year’s quarter.  SBA loan sales totaled $4.3 million with net gains on sale of $385 thousand for the quarter ended September 30, 2017, compared to $7.8 million in sales and a net gain of $639 thousand in the prior year’s quarter.   Year-to-date, gains on the sale of $15.7 million in SBA loans were $1.3 million compared to $1.6 million on $18.4 million in sales in the prior year-to-date period.  

    Other notable items included service and loan fee income which increased $174 thousand and $676 thousand in the quarterly and year-to-date periods, respectively due to loan application, servicing and payoff fees.

    Noninterest Expense

    Noninterest expense increased $561 thousand, or 8.0%, to $7.6 million for the quarter and increased $2.1 million, or 10.3%, to $22.4 million for the nine months ended September 30, 2017 over the prior year periods.  These increases are attributed to costs of expanding our retail branch and lending networks which resulted in higher compensation and occupancy expenses.    Notable items for the periods include:

    • Compensation and benefits expense increased $396 thousand to $4.3 million for the three months ended September 30, 2017 and increased $1.5 million to $12.7 million for the nine months ended September 30, 2017.  Compensation and benefit expenses have risen in each of these periods due to the addition of two new retail branches, additional lending and operational staff.
    • Furniture and equipment expense increased $81 thousand and $290 thousand for the quarter and year-to-date periods, respectively due to continued investment in technology in the form of equipment, network maintenance and software.
    • Year-to-date, loan collection and OREO expenses increased as the result of a $253 thousand loss on the sale of an OREO property in the first quarter of 2017 and $151 thousand in valuation adjustments on two OREO properties. 
    • Deposit insurance expense declined for the quarter and year-to-date period as our assessment rate dropped as a result of the capital raise in December 2016.

    Financial Condition

    At September 30, 2017, total assets were $1.3 billion, an increase of $139.9 million from year-end 2016:

    • Total securities increased $10.6 million due to purchases of $26.0 million during the period.
    • Total loans increased $119.5 million or 12.3%, from year-end 2016 to $1.0 billion at September 30, 2017. Commercial, residential mortgage, consumer and SBA loan portfolios increased $59.6 million, $41.7 million, $17.8 million and $4.5 million, respectively.  Our pipeline in all categories remains strong and loan growth is expected to continue in future quarters.
    • Total deposits increased $97.9 million or 10.4%, to $1.0 billion at September 30, 2017.  Noninterest-bearing demand deposits, savings deposits and interest-bearing demand deposits have increased $42.6 million, $40.4 million and $20.9 million, respectively. 
    • Borrowed funds increased $31.0 million to $152.0 million at September 30, 2017 due to increased overnight borrowings.    
    • Shareholders’ equity was $115.8 million at September 30, 2017, an increase of $9.5 million from year-end 2016, due to retained net income.
    • Book value per common share was $10.94 as of September 30, 2017 compared to $10.14 at December 31, 2016.
    • At September 30, 2017, the leverage, common equity Tier I, Tier I and Total Risk Based Capital ratios were 9.70%, 11.27%, 12.26% and 13.30% respectively, all in excess of the ratios required to be deemed “well-capitalized”. 

    Credit Quality

    • Nonperforming assets totaled $4.4 million at September 30, 2017, or 0.41% of total loans and OREO, compared to $8.3 million or 0.85% of total loans and OREO at year-end 2016.  
    • Nonperforming loans totaled $3.7 million at September 30, 2017.  Included in this balance is a $2.0 million consumer loan that is under contract at par value and is expected to settle in the fourth quarter.
    • The allowance for loan losses totaled $13.1 million at September 30, 2017, or 1.20% of total loans compared to $12.7 million and 1.34% at September 30, 2016.
    • Net charge-offs were $187 thousand for the three months ended September 30, 2017, compared to $493 thousand for the same period a year ago.  Year-to-date net charge-offs were $616 thousand compared to $1.1 million for the prior year’s period.

    Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $1.3 billion in assets and $1.0 billion in deposits.  Unity Bank provides financial services to retail, corporate and small business customers through its 17 retail service centers located in Bergen, Hunterdon, Middlesex, Somerset, Union and Warren Counties in New Jersey and Northampton County in 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, 2017 
                    
                    
             September 30, 2017 vs. 
             June 30, 2017 September 30, 2016 
    (In thousands, except percentages and per share amounts) September 30, 2017 June 30, 2017 September 30, 2016   %   %  
    BALANCE SHEET DATA:               
    Total assets $1,329,834  $1,275,517  $1,152,896   4.3 %15.3 %
    Total deposits  1,043,632   1,003,967   933,320   4.0  11.8  
    Total loans  1,092,873   1,046,804   949,832   4.4  15.1  
    Total securities  72,105   75,066   72,360   (3.9) (0.4) 
    Total shareholders' equity  115,814   112,447   88,152   3.0  31.4  
    Allowance for loan losses  (13,113)  (12,800)  (12,685)  (2.4) 3.4  
                    
    FINANCIAL DATA - QUARTER TO DATE:               
    Income before provision for income taxes $5,771  $5,350  $4,633   7.9  24.6  
    Provision for income taxes  2,014   1,906   1,613   5.7  24.9  
    Net income $3,757  $3,444  $3,020   9.1  24.4  
                    
    Net income per:               
    Common share - basic $0.36  $0.33  $0.32   9.1  12.5  
    Common share - diluted $0.35  $0.32  $0.32   9.4  9.4  
                    
    Performance ratios:               
    Return on average assets  1.17 % 1.11 % 1.05 % 5.4  11.4  
    Return on average equity  13.00 % 12.47 % 13.90 % 4.3  (6.5) 
    Efficiency ratio  54.86 % 56.41 % 58.11 % (2.7) (5.6) 
    Net interest margin  3.88 % 3.79 % 3.63 % 2.4  6.9  
    Noninterest expense to average assets  2.35 % 2.39 % 2.44 % (1.7) (3.7) 
                    
    FINANCIAL DATA - YEAR TO DATE:               
    Income before provision for income taxes and gain on subordinated debenture $16,025     $13,276     20.7  
    Provision for income taxes  5,632      4,700     19.8  
    Net income before gain on subordinated debenture $10,393     $8,576     21.2  
    Gain on subordinated debenture, net of tax  -      1,473     NM  
    Net income $10,393     $10,049     3.4  
                    
    Net income before gain on subordinated debenture per:               
    Common share - basic $0.99     $0.92     7.6  
    Common share - diluted $0.97     $0.91     6.6  
                    
    Net income per:               
    Common share - basic $0.99     $1.08     (8.3) 
    Common share - diluted $0.97     $1.06     (8.5) 
                    
    Net income before gain on subordinated debenture performance ratios:              
    Return on average assets  1.12 %    1.03 %   (6.7) 
    Return on average equity  12.51 %    13.73 %   (22.2) 
    Efficiency ratio  56.72 %    59.03 %   2.4  
                    
    Performance ratios:               
    Return on average assets  1.12 %    1.20 %   (6.7) 
    Return on average equity  12.51 %    16.09 %   (22.2) 
    Efficiency ratio  56.72 %    55.39 %   2.4  
    Net interest margin  3.79 %    3.58 %   5.9  
    Noninterest expense to average assets  2.35 %    2.38 %   (1.3) 
                    
    SHARE INFORMATION:               
    Market price per share $19.80  $17.20  $12.82   15.1  54.4  
    Dividends paid quarterly $0.06  $0.06  $0.05   -  0.2  
    Book value per common share $10.94  $10.64  $9.45   2.8  15.8  
    Average diluted shares outstanding (QTD)  10,761   10,735   9,496   0.2  13.3  
                    
    CAPITAL RATIOS:               
    Total equity to total assets  8.71 % 8.82 % 7.65 % (1.2) 13.9  
    Leverage ratio  9.70 % 9.66 % 8.49 % 0.3  14.1  
    Common equity tier 1 risk-based capital ratio  11.27 % 11.32 % 9.63 % (0.3) 17.2  
    Tier 1 risk-based capital ratio  12.26 % 12.34 % 10.74 % (0.6) 14.2  
    Total risk-based capital ratio  13.30 % 13.59 % 11.48 % (2.1) 15.9  
                    
    CREDIT QUALITY AND RATIOS:               
    Nonperforming assets $4,449  $6,262  $8,230   (29.0) (45.9) 
    QTD net chargeoffs (annualized) to QTD average loans  0.07 % 0.11 % 0.21 % (36.4) (66.7) 
    Allowance for loan losses to total loans  1.20 % 1.22 % 1.34 % (1.6) (10.4) 
    Nonperforming assets to total loans
    and OREO
      0.41 % 0.60 % 0.86 % (31.7) (52.3) 
    Nonperforming assets to total assets  0.33 % 0.49 % 0.71 % (32.7)%(53.5)%
                    
                    


                    
    UNITY BANCORP, INC.
    CONSOLIDATED BALANCE SHEETS
    September 30, 2017
                    
                    
                September 30, 2017 vs. 
                December 31, 2016 September 30, 2016 
    (In thousands, except percentages) September 30, 2017 December 31, 2016 September 30, 2016   %   %  
    ASSETS               
    Cash and due from banks $20,318  $22,105  $23,811   (8.1)%(14.7)%
    Fed funds, interest-bearing deposits and repos  84,512   83,790   60,859   0.9  38.9  
    Cash and cash equivalents  104,830   105,895   84,670   (1.0) 23.8  
    Securities:               
    Securities available for sale  52,750   40,568   44,186   30.0  19.4  
    Securities held to maturity  19,355   20,979   28,174   (7.7) (31.3) 
    Total securities  72,105   61,547   72,360   17.2  (0.4) 
    Loans:               
    SBA loans held for sale  17,724   14,773   15,611   20.0  13.5  
    SBA loans held for investment  44,001   42,492   41,795   3.6  5.3  
    SBA 504 loans  22,239   26,344   26,067   (15.6) (14.7) 
    Commercial loans  568,766   509,171   496,008   11.7  14.7  
    Residential mortgage loans  330,787   289,093   282,317   14.4  17.2  
    Consumer loans  109,356   91,541   88,034   19.5  24.2  
    Total loans  1,092,873   973,414   949,832   12.3  15.1  
    Allowance for loan losses  (13,113)  (12,579)  (12,685)  4.2  3.4  
    Net loans  1,079,760   960,835   937,147   12.4  15.2  
    Premises and equipment, net  23,080   23,398   22,302   (1.4) 3.5  
    Bank owned life insurance ("BOLI")  24,047   13,758   13,664   74.8  76.0  
    Deferred tax assets  5,842   5,512   6,008   6.0  (2.8) 
    Federal Home Loan Bank ("FHLB") stock  7,328   6,037   5,767   21.4  27.1  
    Accrued interest receivable  5,222   4,462   4,165   17.0  25.4  
    Other real estate owned ("OREO")  707   1,050   1,703   (32.7) (58.5) 
    Goodwill  1,516   1,516   1,516   -  -  
    Other assets  5,397   5,896   3,594   (8.5) 50.2  
    Total assets $1,329,834  $1,189,906  $1,152,896   11.8 %15.3 %
                    
    LIABILITIES AND SHAREHOLDERS' EQUITY            
    Liabilities:               
    Deposits:               
    Noninterest-bearing demand $258,519  $215,963  $209,122   19.7 %23.6 %
    Interest-bearing demand  166,529   145,654   127,845   14.3  30.3  
    Savings  403,871   363,462   344,772   11.1  17.1  
    Time, under $100,000  122,410   123,724   134,448   (1.1) (9.0) 
    Time, $100,000 and over, under $250,000  71,155   75,567   86,366   (5.8) (17.6) 
    Time, $250,000 and over  21,148   21,353   30,767   (1.0) (31.3) 
    Total deposits  1,043,632   945,723   933,320   10.4  11.8  
    Borrowed funds  152,000   121,000   115,000   25.6  32.2  
    Subordinated debentures  10,310   10,310   10,310   -  -  
    Accrued interest payable  400   430   446   (7.0) (10.3) 
    Accrued expenses and other liabilities  7,678   6,152   5,668   24.8  35.5  
    Total liabilities  1,214,020   1,083,615   1,064,744   12.0  14.0  
    Shareholders' equity:               
    Common stock  86,423   85,383   70,450   1.2  22.7  
    Retained earnings  29,260   20,748   18,117   41.0  61.5  
    Accumulated other comprehensive income (loss)  131   160   (415)  NM  NM  
    Total shareholders' equity  115,814   106,291   88,152   9.0  31.4  
    Total liabilities and shareholders' equity $1,329,834  $1,189,906  $1,152,896   11.8 %15.3 %
                    
    Issued and outstanding common shares  10,586   10,477   9,331       
                    
    NM=Not meaningful               


    UNITY BANCORP, INC.
     
    QTD CONSOLIDATED STATEMENTS OF INCOME
     
    NON-GAAP
     
    September 30, 2017
     
                            
           
                 September 30, 2017 vs.  
      For the three months ended   June 30, 2017 September 30, 2016 
    (In thousands, except percentages and per share amounts) September 30, 2017 June 30, 2017 September 30, 2016   $   %   $   %  
    INTEREST INCOME                       
    Fed funds, interest-bearing deposits and repos $262 $203 $50  $59   29.1 %$212   424.0 %
    FHLB stock  85  73  67   12   16.4   18   26.9  
    Securities:                       
    Taxable  512  538  456   (26)  (4.8)  56   12.3  
    Tax-exempt  40  44  43   (4)  (9.1)  (3)  (7.0) 
    Total securities  552  582  499   (30)  (5.2)  53   10.6  
    Loans:                       
    SBA loans  1,042  886  822   156   17.6   220   26.8  
    SBA 504 loans  287  309  321   (22)  (7.1)  (34)  (10.6) 
    Commercial loans  6,924  6,573  6,138   351   5.3   786   12.8  
    Residential mortgage loans  3,636  3,584  3,138   52   1.5   498   15.9  
    Consumer loans  1,407  1,267  1,046   140   11.0   361   34.5  
    Total loans  13,296  12,619  11,465   677   5.4   1,831   16.0  
    Total interest income  14,195  13,477  12,081   718   5.3   2,114   17.5  
    INTEREST EXPENSE                       
    Interest-bearing demand deposits  168  161  129   7   4.3   39   30.2  
    Savings deposits  733  678  458   55   8.1   275   60.0  
    Time deposits  823  814  920   9   1.1   (97)  (10.5) 
    Borrowed funds and subordinated debentures  654  674  701   (20)  (3.0)  (47)  (6.7) 
    Total interest expense  2,378  2,327  2,208   51   2.2   170   7.7  
    Net interest income  11,817  11,150  9,873   667   6.0   1,944   19.7  
    Provision for loan losses  500  400  420   100   25.0   80   19.0  
    Net interest income after provision for loan losses  11,317  10,750  9,453   567   5.3   1,864   19.7  
    NONINTEREST INCOME                       
    Branch fee income  355  344  321   11   3.2   34   10.6  
    Service and loan fee income  448  512  274   (64)  (12.5)  174   63.5  
    Gain on sale of SBA loans held for sale, net  385  479  639   (94)  (19.6)  (254)  (39.7) 
    Gain on sale of mortgage loans, net  392  264  609   128   48.5   (217)  (35.6) 
    BOLI income  111  89  97   22   24.7   14   14.4  
    Net security gains  53  16  11   37   231.3   42   381.8  
    Other income  264  317  222   (53)  (16.7)  42   18.9  
    Total noninterest income  2,008  2,021  2,173   (13)  (0.6)  (165)  (7.6) 
    NONINTEREST EXPENSE                       
    Compensation and benefits  4,268  4,299  3,872   (31)  (0.7)  396   10.2  
    Occupancy  600  590  611   10   1.7   (11)  (1.8) 
    Processing and communications  656  632  693
       24   3.8   (37
    )
      (5.3
     
    Furniture and equipment  513  513  432   -   -   81   18.8  
    Professional services  247  251  216   (4)  (1.6)  31   14.4  
    Loan collection & OREO expenses  114  38  95
       76   200.0   19
       20.0
      
    Other loan expenses  47  18  19   29   161.1   28   147.4  
    Deposit insurance  156  144  168   12   8.3   (12)  (7.1) 
    Advertising  299  323  304   (24)  (7.4)  (5)  (1.6) 
    Director fees  150  149  141   1   0.7   9   6.4  
    Other expenses  504  464  442   40   8.6   62   14.0  
    Total noninterest expense  7,554  7,421  6,993   133   1.8   561   8.0  
    Income before provision for income taxes  5,771  5,350  4,633   421   7.9   1,138   24.6  
    Provision for income taxes  2,014  1,906  1,613   108   5.7   401   24.9  
    Net income $3,757 $3,444 $3,020  $313   9.1 %$737   24.4 %
                            
    Effective tax rate  34.9% 35.6% 34.8%             
                            
    Net income per:                       
    Common share - basic $0.36 $0.33 $0.32              
    Common share - diluted $0.35 $0.32 $0.32              
                            
    Weighted average common shares outstanding - Basic  10,572  10,546  9,339              
    Weighted average common shares outstanding - Diluted  10,761  10,735  9,496              
                            


                   
    UNITY BANCORP, INC.
     
    YTD CONSOLIDATED STATEMENTS OF INCOME
     
    NON-GAAP 
    September 30, 2017 
                   
           
      For the nine months ended September 30,    Current YTD vs. Prior YTD 
    (In thousands, except percentages and per share amounts) 2017 2016   $   %  
    INTEREST INCOME              
    Fed funds, interest-bearing deposits and repos $595 $135  $460   340.7 %
    FHLB stock  252  173   79   45.7  
    Securities:              
    Taxable  1,543  1,246   297   23.8  
    Tax-exempt  127  160   (33)  (20.6) 
    Total securities  1,670  1,406   264   18.8  
    Loans:              
    SBA loans  2,781  2,331   450   19.3  
    SBA 504 loans  896  1,050   (154)  (14.7) 
    Commercial loans  19,666  17,676   1,990   11.3  
    Residential mortgage loans  10,603  9,017   1,586   17.6  
    Consumer loans  3,806  2,956   850   28.8  
    Total loans  37,752  33,030   4,722   14.3  
    Total interest income  40,269  34,744   5,525   15.9  
    INTEREST EXPENSE              
    Interest-bearing demand deposits  482  390   92   23.6  
    Savings deposits  1,994  1,206   788   65.3  
    Time deposits  2,441  2,824   (383)  (13.6) 
    Borrowed funds and subordinated debentures  1,992  2,122   (130)  (6.1) 
    Total interest expense  6,909  6,542   367   5.6  
    Net interest income  33,360  28,202   5,158   18.3  
    Provision for loan losses  1,150  1,020   130   12.7  
    Net interest income after provision for loan losses  32,210  27,182   5,028   18.5  
    NONINTEREST INCOME              
    Branch fee income  1,029  940   89   9.5  
    Service and loan fee income  1,472  796   676   84.9  
    Gain on sale of SBA loans held for sale, net  1,348  1,584   (236)  (14.9) 
    Gain on sale of mortgage loans, net  1,188  1,917   (729)  (38.0) 
    BOLI income  289  283   6   2.1  
    Net security gains  69  186   (117)  (62.9) 
    Other income  838  716   122   17.0  
    Total noninterest income  6,233  6,422   (189)  (2.9) 
    NONINTEREST EXPENSE              
    Compensation and benefits  12,662  11,130   1,532   13.8  
    Occupancy  1,791  1,742   49   2.8  
    Processing and communications  1,892  1,980   (88
      (4.4
     
    Furniture and equipment  1,537  1,247   290   23.3  
    Professional services  724  710   14   2.0  
    Loan collection & OREO expenses  493  268
       225
       84.0
      
    Other loan expenses  149  120   29   24.2  
    Deposit insurance  376  494   (118)  (23.9) 
    Advertising  859  848   11   1.3  
    Director fees  496  415   81   19.5  
    Other expenses  1,439  1,374   65   4.7  
    Total noninterest expense  22,418  20,328   2,090   10.3  
    Income before provision for income taxes and gain on subordinated debenture  16,025  13,276   2,749   20.7  
    Provision for income taxes  5,632  4,700   932   19.8  
    Net income before gain on subordinated debenture  10,393  8,576   1,817   21.2  
    Gain on subordinated debenture, net of tax  -  1,473   (1,473)  (100.0) 
    Net income $10,393 $10,049  $344   3.4 %
                   
    Effective tax rate  35.1% 35.3%       
                   
    Net income per:              
    Common share - basic $0.99 $1.08        
    Common share - diluted $0.97 $1.06        
                   
    Weighted average common shares outstanding - Basic  10,543  9,320        
    Weighted average common shares outstanding - Diluted  10,734  9,468        
                   


    UNITY BANCORP, INC.
     
    QUARTER TO DATE NET INTEREST MARGIN
     
    September 30, 2017
     
                        
                        
    (Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis) 
      For the three months ended 
      September 30, 2017 September 30, 2016 
      Average Balance Interest  Rate/Yield  Average Balance Interest  Rate/Yield  
    ASSETS                   
    Interest-earning assets:                   
    Fed funds, interest-bearing deposits and repos $64,579  $262   1.61%$70,628  $50   0.28%
    FHLB stock  5,697   85   5.92  5,728   67   4.65 
    Securities:                   
    Taxable  67,178   512   3.02  63,871   456   2.84 
    Tax-exempt  6,234   60   3.82  6,478   66   4.05 
    Total securities (A)  73,412   572   3.09  70,349   522   2.95 
    Loans:                   
    SBA loans  60,221   1,042   6.86  57,122   822   5.72 
    SBA 504 loans  22,596   287   5.04  26,562   321   4.81 
    Commercial loans  553,443   6,924   4.96  490,776   6,138   4.98 
    Residential mortgage loans  322,172   3,636   4.48  276,413   3,138   4.52 
    Consumer loans   106,976   1,407   5.22  85,632   1,046   4.86 
    Total loans (B)  1,065,408   13,296   4.95  936,505   11,465   4.87 
    Total interest-earning assets $1,209,096  $14,215   4.66%$1,083,210  $12,104   4.45%
                        
    Noninterest-earning assets:                   
    Cash and due from banks  23,407         19,831        
    Allowance for loan losses  (13,053)        (12,769)       
    Other assets  57,179         52,000        
    Total noninterest-earning assets  67,533         59,062        
    Total assets $1,276,629        $1,142,272        
                        
    LIABILITIES AND SHAREHOLDERS' EQUITY                   
    Interest-bearing liabilities:                   
    Total interest-bearing demand deposits $160,184  $168   0.42%$129,310  $129   0.40%
    Total savings deposits  406,064   733   0.72  331,588   458   0.55 
    Total time deposits  215,501   823   1.52  256,884   920   1.42 
    Total interest-bearing deposits  781,749   1,724   0.87  717,782   1,507   0.84 
    Borrowed funds and subordinated debentures  124,369   654   2.09  123,136   701   2.26 
    Total interest-bearing liabilities $906,118  $2,378   1.04%$840,918  $2,208   1.04%
                        
    Noninterest-bearing liabilities:                   
    Noninterest-bearing demand deposits  248,259         197,937        
    Other liabilities  7,598         16,990        
    Total noninterest-bearing liabilities  255,857         214,927        
    Total shareholders' equity  114,654         86,427        
    Total liabilities and shareholders' equity $1,276,629        $1,142,272        
                        
    Net interest spread    $11,837   3.62%   $9,896   3.41%
    Tax-equivalent basis adjustment     (20)        (23)    
    Net interest income    $11,817        $9,873     
    Net interest margin        3.88%       3.63%
                        
    (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 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, 2017
     
                        
                  
    (Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis) 
      For the three months ended 
      September 30, 2017 June 30, 2017 
      Average Balance Interest  Rate/Yield  Average Balance Interest  Rate/Yield  
    ASSETS                   
    Interest-earning assets:                   
    Fed funds, interest-bearing deposits and repos $64,579  $262   1.61%$76,656  $203   1.06%
    FHLB stock  5,697   85   5.92  5,912   73   4.95 
    Securities:                   
    Taxable  67,178   512   3.02  67,102   538   3.22 
    Tax-exempt  6,234   60   3.82  6,764   67   3.97 
    Total securities (A)  73,412   572   3.09  73,866   605   3.29 
    Loans:                   
    SBA loans  60,221   1,042   6.86  55,650   886   6.39 
    SBA 504 loans  22,596   287   5.04  23,986   309   5.17 
    Commercial loans  553,443   6,924   4.96  532,659   6,573   4.95 
    Residential mortgage loans  322,172   3,636   4.48  311,730   3,584   4.61 
    Consumer loans   106,976   1,407   5.22  100,889   1,267   5.04 
    Total loans (B)  1,065,408   13,296   4.95  1,024,914   12,619   4.94 
    Total interest-earning assets $1,209,096  $14,215   4.66%$1,181,348  $13,500   4.58%
                        
    Noninterest-earning assets:                   
    Cash and due from banks  23,407         23,055        
    Allowance for loan losses  (13,053)        (12,916)       
    Other assets  57,179         55,367        
    Total noninterest-earning assets  67,533         65,506        
    Total assets $1,276,629        $1,246,854        
                        
    LIABILITIES AND SHAREHOLDERS' EQUITY                   
    Interest-bearing liabilities:                   
    Total interest-bearing demand deposits $160,184  $168   0.42%$157,896  $161   0.41%
    Total savings deposits  406,064   733   0.72  397,813   678   0.68 
    Total time deposits  215,501   823   1.52  221,636   814   1.47 
    Total interest-bearing deposits  781,749   1,724   0.87  777,345   1,653   0.85 
    Borrowed funds and subordinated debentures  124,369   654   2.09  126,057   674   2.14 
    Total interest-bearing liabilities $906,118  $2,378   1.04%$903,402  $2,327   1.03%
                        
    Noninterest-bearing liabilities:                   
    Noninterest-bearing demand deposits  248,259         225,909        
    Other liabilities  7,598         6,752        
    Total noninterest-bearing liabilities  255,857         232,661        
    Total shareholders' equity  114,654         110,791        
    Total liabilities and shareholders' equity $1,276,629        $1,246,854        
                        
    Net interest spread    $11,837   3.62%   $11,173   3.55%
    Tax-equivalent basis adjustment     (20)        (23)    
    Net interest income    $11,817        $11,150     
    Net interest margin        3.88%       3.79%
                        
    (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 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, 2017
     
                        
                        
    (Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis) 
      For the nine months ended 
      September 30, 2017 September 30, 2016 
      Average Balance Interest  Rate/Yield  Average Balance Interest  Rate/Yield  
    ASSETS                   
    Interest-earning assets:                   
    Fed funds, interest-bearing deposits and repos $73,011  $595   1.09%$70,654  $135   0.26%
    FHLB stock  5,795   252   5.81  5,063   173   4.56 
    Securities:                   
    Taxable  66,155   1,543   3.12  61,869   1,246   2.69 
    Tax-exempt  6,479   192   3.96  8,062   241   3.99 
    Total securities (A)  72,634   1,735   3.19  69,931   1,487   2.84 
    Loans:                   
    SBA loans  57,951   2,781   6.42  55,932   2,331   5.57 
    SBA 504 loans  24,198   896   4.95  27,685   1,050   5.07 
    Commercial loans  533,033   19,666   4.93  476,477   17,676   4.96 
    Residential mortgage loans  310,460   10,603   4.57  268,436   9,017   4.49 
    Consumer loans   100,740   3,806   5.05  82,098   2,956   4.81 
    Total loans (B)  1,026,382   37,752   4.92  910,628   33,030   4.85 
    Total interest-earning assets $1,177,822  $40,334   4.58%$1,056,276  $34,825   4.40%
                        
    Noninterest-earning assets:                   
    Cash and due from banks  23,346         24,261        
    Allowance for loan losses  (12,919)        (12,848)       
    Other assets  56,018         48,922        
    Total noninterest-earning assets  66,445         60,335        
    Total assets $1,244,267        $1,116,611        
                        
    LIABILITIES AND SHAREHOLDERS' EQUITY                   
    Interest-bearing liabilities:                   
    Total interest-bearing demand deposits $156,853  $482   0.41%$129,968  $390   0.40%
    Total savings deposits  394,206   1,994   0.68  317,441   1,206   0.51 
    Total time deposits  219,790   2,441   1.48  271,511   2,824   1.39 
    Total interest-bearing deposits  770,849   4,917   0.85  718,920   4,420   0.82 
    Borrowed funds and subordinated debentures  125,304   1,992   2.13  111,298   2,122   2.55 
    Total interest-bearing liabilities $896,153  $6,909   1.03%$830,218  $6,542   1.05%
                        
    Noninterest-bearing liabilities:                   
    Noninterest-bearing demand deposits  229,978         193,288        
    Other liabilities  7,050         9,656        
    Total noninterest-bearing liabilities  237,028         202,944        
    Total shareholders' equity  111,086         83,449        
    Total liabilities and shareholders' equity $1,244,267        $1,116,611        
                        
    Net interest spread    $33,425   3.55%   $28,283   3.35%
    Tax-equivalent basis adjustment     (65)        (81)    
    Net interest income    $33,360        $28,202     
    Net interest margin        3.79%       3.58%
                        
    (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 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, 2017
     
                     
                     
    Amounts in thousands, except percentages  Sept. 30, 2017 Jun. 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sept. 30, 2016 
    ALLOWANCE FOR LOAN LOSSES:                
    Balance, beginning of period $12,800  $12,681 $12,579  $12,685 $12,758 
    Provision for loan losses charged to expense  500   400  250   200  420 
       13,300   13,081  12,829   12,885  13,178 
    Less: Chargeoffs                
    SBA loans  34   150  109   189  140 
    Commercial loans  31   120  76   19  376 
    Residential mortgage loans  5   -  -   101  - 
    Consumer loans  170   17  66   2  - 
    Total chargeoffs  240   287  251   311  516 
    Add: Recoveries                
    SBA loans  36   3  37   1  17 
    SBA 504 loans  2   -  -   -  - 
    Commercial loans  13   3  53   4  6 
    Residential mortgage loans  -   -  12   -  - 
    Consumer loans  2   -  1   -  - 
    Total recoveries  53   6  103   5  23 
    Net chargeoffs  187   281  148   306  493 
    Balance, end of period $13,113  $12,800 $12,681  $12,579 $12,685 
                     
    LOAN QUALITY INFORMATION:                
    Nonperforming loans (1) $3,742  $5,681 $7,758  $7,237 $6,527 
    Other real estate owned ("OREO")  707   581  1,172   1,050  1,703 
    Nonperforming assets  4,449   6,262  8,930   8,287  8,230 
    Less:  Amount guaranteed by SBA  27   41  60   60  624 
    Net nonperforming assets $4,422  $6,221 $8,870  $8,227 $7,606 
                     
    Loans 90 days past due & still accruing $2,216  $230 $-  $- $- 
                     
    Performing Troubled Debt Restructurings (TDRs) $-  $- $-  $- $665 
    (1) Nonperforming TDRs included in nonperforming loans   -   -  -   153  154 
    Total TDRs $-  $- $-  $153 $819 
                     
    Allowance for loan losses to:                
    Total loans at quarter end  1.20 % 1.22% 1.27 % 1.29% 1.34%
    Nonperforming loans (1)  350.43   225.31  163.46   173.82  194.35 
    Nonperforming assets  294.74   204.41  142.00   151.79  154.13 
    Net nonperforming assets  296.54   205.75  142.97   152.90  166.78 
                     
    QTD net chargeoffs (annualized) to QTD average loans:                
    SBA loans  (0.01)% 1.06% 0.50 % 1.26% 0.86%
    SBA 504 loans  (0.04)  -  -   -  - 
    Commercial loans  0.01   0.09  0.02   0.01  0.30 
    Residential mortgage loans  0.01   -  (0.02)  0.14  - 
    Consumer loans  0.62   0.07  0.28   0.01  - 
          Total loans  0.07 % 0.11% 0.06 % 0.13% 0.21%
                     
    Nonperforming loans to total loans  0.34 % 0.54% 0.78 % 0.74% 0.69%
    Nonperforming loans and TDRs to total loans  0.34   0.54  0.78   0.74  0.76 
    Nonperforming assets to total loans and OREO  0.41   0.60  0.89   0.85  0.86 
    Nonperforming assets to total assets  0.33 % 0.49% 0.73 % 0.70% 0.71%
                     


    UNITY BANCORP, INC.
     
    QUARTERLY FINANCIAL DATA
     
    NON-GAAP
     
    September 30, 2017
     
                     
                     
    (In thousands, except percentages and per share amounts) Sept. 30, 2017 Jun. 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sept. 30, 2016 
    SUMMARY OF INCOME:                
    Total interest income $14,195  $13,477  $12,594  $12,280  $12,081  
    Total interest expense  2,378   2,327   2,204   2,225   2,208  
    Net interest income  11,817   11,150   10,390   10,055   9,873  
    Provision for loan losses  500   400   250   200   420  
    Net interest income after provision for loan losses  11,317   10,750   10,140   9,855   9,453  
    Total noninterest income  2,008   2,021   2,204   2,373   2,173  
    Total noninterest expense  7,554   7,421   7,440   7,303   6,993  
    Income before provision for income taxes  5,771   5,350   4,904   4,925   4,633  
    Provision for income taxes  2,014   1,906   1,712   1,765   1,613  
    Net income $3,757  $3,444  $3,192  $3,160  $3,020  
                     
    Net income per common share - Basic $  0.36   $0.33  $0.30  $0.33  $0.32  
    Net income per common share - Diluted $  0.35   $0.32  $0.30  $0.32  $0.32  
                     
    COMMON SHARE DATA:                
    Market price per share $  19.80   $17.20  $16.95  $15.70  $12.82  
    Dividends paid $  0.06   $0.06  $0.05  $0.05  $0.05  
    Book value per common share $  10.94   $10.64  $10.38  $10.14  $9.45  
                     
    Weighted average common shares outstanding - Basic  10,572   10,546   10,509   9,700   9,339  
    Weighted average common shares outstanding - Diluted  10,761   10,735   10,705   9,878   9,496  
    Issued and outstanding common shares  10,586   10,567   10,535   10,477   9,331  
                     
    PERFORMANCE RATIOS (Annualized):                
    Return on average assets    1.17  % 1.11 % 1.07 % 1.07 % 1.05 %
    Return on average equity    13.00    12.47   12.02   13.47   13.90  
    Efficiency ratio    54.86    56.41   59.08   59.90   58.11  
    Noninterest expense to average assets    2.35    2.39   2.50   2.47   2.44  
                     
    BALANCE SHEET DATA:                
    Total assets $1,329,834  $1,275,517  $1,226,168  $1,189,906  $1,152,896  
    Total deposits  1,043,632   1,003,967   980,703   945,723   933,320  
    Total loans  1,092,873   1,046,804   1,000,677   973,414   949,832  
    Total securities  72,105   75,066   73,022   61,547   72,360  
    Total shareholders' equity  115,814   112,447   109,305   106,291   88,152  
    Allowance for loan losses    (13,113)  (12,800)  (12,681)  (12,579)  (12,685) 
                     
    TAX EQUIVALENT YIELDS AND RATES:                
    Interest-earning assets    4.66  %4.58 % 4.48 % 4.40 % 4.45 %
    Interest-bearing liabilities    1.04    1.03   1.02   1.03   1.04  
    Net interest spread    3.62    3.55   3.46   3.37   3.41  
    Net interest margin    3.88    3.79   3.70   3.60   3.63  
                     
    CREDIT QUALITY:                
    Nonperforming assets  4,449   6,262   8,930   8,287   8,230  
    QTD net chargeoffs (annualized) to QTD average loans    0.07  %0.11 % 0.06 % 0.13 % 0.21 %
    Allowance for loan losses to total loans    1.20    1.22   1.27   1.29   1.34  
    Nonperforming assets to total loans and OREO    0.41    0.60   0.89   0.85   0.86  
    Nonperforming assets to total assets    0.33    0.49   0.73   0.70   0.71  
                     
    CAPITAL RATIOS AND OTHER:                
    Total equity to total assets    8.71  %8.82 % 8.91 % 8.93 % 7.65 %
    Leverage ratio    9.70   9.66   9.72   9.73   8.49  
    Common equity tier 1 risk-based capital ratio    11.27   11.32   11.46   11.49   9.63  
    Tier 1 risk-based capital ratio    12.26   12.34   12.53   12.58   10.74  
    Total risk-based capital ratio    13.30   13.59   13.78   13.84   11.48  
    Number of banking offices    17    17   17   17   15  
    Number of ATMs    18    18   18   18   16  
    Number of employees    166    186   181   184   180  
                     
    News Media & Financial Analyst Contact:
    Alan J. Bedner, EVP
    Chief Financial Officer
    (908) 713-4308

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