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