Unity Bancorp Reports Increased Earnings

                   Unity Bancorp Reports Increased Earnings

PR Newswire

CLINTON, N.J., Jan. 31, 2013

CLINTON, N.J., Jan. 31, 2013 /PRNewswire/ --Unity Bancorp, Inc. (NASDAQ:
UNTY), parent company of Unity Bank, reported net income available to common
shareholders of $759 thousand, or $0.10 per diluted share, for the three
months ended December 31, 2012, compared to $203 thousand, or $0.03 per
diluted share, for the same period a year ago. Return on average assets and
average common equity for the quarter were 0.57% and 5.34%, respectively,
compared to 0.29% and 1.51% for the same period a year ago.

For the year ended December 31, 2012, net income available to common
shareholders totaled $2.6 million, or $0.34 per diluted share, compared to
$988 thousand, or $0.13 per diluted share, for the same period a year ago.
Return on average assets and average common equity for the year were 0.53% and
4.80%, respectively, compared to 0.31% and 1.90% for the same period a year
ago.

Quarterly highlights include:

  oImproved credit quality since December 31, 2011 resulted in lower loan
    loss provisions as well as reduced loan collection expenses and costs to
    maintain other real estate owned ("OREO").
  oSignificant increases in residential mortgage originations resulted in
    increased gains on sale of mortgage loans.
  oContinued deposit product mix improvement due to growth in core demand
    deposits and savings deposits, while higher costing time deposits
    declined.
  oFurther improvement in our capital ratios as we remain "well-capitalized".
  oOpened a branch in Somerset, New Jersey on November 16, 2012.
  oLaunched our mobile banking product.

James A. Hughes, President and CEO, stated, "This was a year of increased
earnings as our core fundamentals continued to improve and asset quality
strengthened. We had a record year of mortgage production, opened two new
branches and continued to grow our noninterest-bearing deposits thereby
reducing our cost of funds. The trends are very positive and I remain
extremely optimistic about the long-term opportunities ahead."

Net Interest Income

Net interest income increased $64 thousand to $6.7 million for the three
months ended December 31, 2012, compared to the prior year's quarter and
decreased $1.5 million to $27.4 million for the year ended December 31, 2012
compared to the prior year. In addition, the net interest margin expanded 12
basis points to 3.51% for the quarter ended December 31, 2012, and contracted
14 basis points to 3.62% for the year ended December 31, 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") of
the Federal Reserve Board 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 20 basis
points to 4.44% and 49 basis points to 4.63% for the quarter and year ending
December 31, 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 35 basis points to 1.14% for the three
month period and decreased 38 basis points to 1.24% for the twelve month
period.

Noninterest Income

Noninterest income increased $703 thousand to $2.0 million and $1.7 million to
$7.3 million for the three and twelve months ended December 31, 2012,
respectively, compared to the same periods last year. These increases were
driven by record levels of residential mortgage loan originations and sales.
Additional factors affecting noninterest income were:

  oBranch fee income, which consists of deposit service charges and overdraft
    fees, increased $7 thousand and $83 thousand for the quarterly and annual
    periods, respectively. For the year ended December 31, 2012, increased
    overdraft fees and commercial analysis fees offset other reduced deposit
    account service charges.
  oService and loan fee income increased $103 thousand and $218 thousand for
    the quarterly and annual periods, respectively, due to late charges,
    servicing income, mortgage application fees and other processing fees. 
  oGains on sales of SBA loans increased $148 thousand for the quarter due to
    higher premiums on the sale of $2.1 million in loans during the period.
    For the twelve month period ended December 31, 2012, SBA gains on sale
    decreased $274 thousand, due primarily to a lower volume of loans sold in
    2012. For the year ended December 31, 2012, $6.8 million was sold
    compared to $13.3 million in the prior year.
  oGains on sales of residential mortgage loans increased on a significantly
    higher volume of loan sales. For the three month period, $32.4 million
    in residential mortgage loans were sold compared to $26.8 million in the
    fourth quarter of 2011. Year-to-date, $104.0 million in residential
    mortgage loans were sold compared to $55.8 million in the prior year.
  oSecurity gains of $59 thousand and $573 thousand were realized during the
    quarter and full year periods, respectively.

Noninterest Expense

Noninterest expense totaled $6.1 million and $6.0 million for the three months
ended December 31, 2012, and 2011, respectively. Noninterest expense decreased
$221 thousand to $24.3 million for the year ended December 31, 2012, compared
to $24.5 million in 2011.

Noninterest expense in the current and prior year periods included the impact
of our branch network restructuring, as well as the benefit of lower loan and
OREO related expenses as credit quality improved. In 2012, we opened two new
branches and closed an underperforming branch. In 2011, we closed two
underperforming branches. Other noteworthy expenses include:

  oCompensation and benefits expense increased $154 thousand and $779
    thousand for the quarter and annual periods, respectively, due primarily
    to annual merit-based and replacement cost increases in compensation,
    increased mortgage commissions, bonuses and equity compensation.
  oLoan collection costs decreased $90 thousand and $297 thousand for the
    quarter and annual periods, respectively, due to lower loan legal, credit
    reports, and insurance and other collection related expenses.
  oOREO costs, such as losses on sales, property taxes, maintenance and legal
    expenses, decreased $207 thousand and $746 thousand during the quarter and
    annual periods, respectively as our foreclosed inventory levels declined
    and properties were sold at favorable prices.
  oDeposit insurance expense for the year ended December 31, 2012, decreased
    due to the assets-based assessment method put into place by the FDIC on
    April 1, 2011.
  oAdvertising 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 $112 thousand for the year ended December 31, 2012.
  oOther expenses increased $101 thousand and $100 thousand for the quarter
    and annual periods, respectively, due to higher retail losses and office
    supply expenses.

Financial Condition

At December 31, 2012, total assets were $819.7 million, an increase of $8.9
million from the prior year end.

  oTotal securities increased $3.5 million since December 31, 2011, due to
    $47.0 million in security purchases, partially offset by sales and
    prepayments.
  oTotal loans decreased $5.6 million or 0.9%, to $587.0 million at December
    31, 2012. The Company plans to continue shrinking it's out of market SBA
    portfolio. Future loan growth is expected in both the commercial and
    residential portfolios. The net decrease was the result of the following:

       oCommercial loans increased $18.5 million or 6.5%,
       oSBA 504 loans decreased $13.7 million or 24.8%,
       oSBA 7(a) loans decreased $6.3 million or 8.8%,
       oResidential mortgage loans decreased $2.0 million or 1.5%, and
       oConsumer loans decreased $2.0 million or 4.2%. 

  oCore deposits, which exclude time deposits, increased $39.3 million during
    the year to $523.8 million, due primarily to a $19.3 million increase in
    municipal deposits. The net changes by product type include:

       oA $15.9 million increase in savings deposits,
       oA $13.2 million increase in noninterest-bearing demand deposits, and
         a
       o$10.1 million increase in interest-bearing demand deposits.

  oTime deposits decreased $34.5 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.
  oShareholders' equity was $77.5 million at December 31, 2012, an increase
    of $4.0 million from year-end 2011, primarily due to the increase in net
    income.
  oBook value per common share was $7.62 as of December 31, 2012.
  oAt December 31, 2012 the leverage, Tier I and Total Risk Based Capital
    ratios were 11.14%, 14.85% and 16.12%, respectively, all in excess of the
    ratios required to be deemed "well-capitalized".

Credit Quality

"Nonperforming assets have declined $6.5 million or 25.2% to $19.3 million
since year-end 2011. Although the economy is still under stress, we expect to
have continued success in resolving problem credits in 2013," said James A.
Hughes. "Many of our problem commercial and SBA relationships have been
resolved and the majority of our larger problem relationships are behind us."

  oNonperforming assets totaled $19.3 million at December 31, 2012 or 3.28%
    of total loans and OREO, compared to $25.8 million or 4.33% of total loans
    and OREO at year-end 2011.
  oThe allowance for loan losses totaled $14.8 million at December 31, 2012
    or 2.51% of total loans. The provision for loan losses for the quarter
    ended December 31, 2012 was $800 thousand compared to $1.2 million for the
    prior year's quarter. The provision for loan losses for the twelve months
    ended December 31, 2012 was $4.0 million compared to $6.8 million for the
    prior year.
  oNet charge-offs were $1.3 million for the three months ended December 31,
    2012, compared to $1.2 million for the same period a year ago. For the
    twelve months ended December 31, 2012, net charge-offs were $5.6 million,
    compared to $4.8 million for the prior year.
  oTroubled debt restructurings ("TDRs") decreased $6.4 million from year-end
    to $14.7 million due to loan payoffs. At December 31, 2012, 92.6% of our
    TDRs were performing. 

Unity Bancorp, Inc. is a financial service organization headquartered in
Clinton, New Jersey, with approximately $820 million in assets and $649
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
December 31, 2012
                                                        December 31, 2012
                                                        vs.
                                                        September   December
                                                        30, 2012    31, 2011
(In thousands,
except          December     September    December
percentages     31, 2012     30, 2012     31, 2011      %           %
and per share
amounts)
BALANCE SHEET
DATA:
Total assets    $ 819,730    $ 802,675    $ 810,846     2.1       % 1.1      %
Total deposits    648,760      633,126      643,971     2.5         0.7
Total loans       587,036      596,910      592,592     (1.7)       (0.9)
Total             111,053      106,437      107,536     4.3         3.3
securities
Total
shareholders'     77,510       76,387       73,558      1.5         5.4
equity
Allowance for     (14,758)     (15,294)     (16,348)    3.5         9.7
loan losses
FINANCIAL DATA
- QUARTER TO
DATE:
Income before
provision for   $ 1,810      $ 1,802      $ 816         0.4         121.8
income taxes
Provision for     643          606          220         6.1         192.3
income taxes
Net income       1,167        1,196        596         (2.4)       95.8
Preferred
stock
dividends and     408          397          393         2.8         3.8
discount
accretion
Income
available to    $ 759        $ 799        $ 203         (5.0)       273.9
common
shareholders
Net income per
common share -  $ 0.10       $ 0.11       $ 0.03        (9.1)       233.3
Basic (1)
Net income per
common share -  $ 0.10       $ 0.10       $ 0.03        -           233.3
Diluted (1)
Return on         0.57     %   0.60     %   0.29     %  (5.0)       96.6
average assets
Return on
average equity    5.34     %   5.74     %   1.51     %  (7.0)       253.6
(2)
Efficiency        70.66    %   68.22    %   74.90    %  3.6         (5.7)
ratio
FINANCIAL DATA
- YEAR TO
DATE:
Income before
provision for   $ 6,470                   $ 3,315                   95.2
income taxes
Provision for     2,226                     769                     189.5
income taxes
Net income       4,244                     2,546                   66.7
Preferred
stock
dividends and     1,602                     1,558                   2.8
discount
accretion
Income
available to    $ 2,642                   $ 988                     167.4
common
shareholders
Net income per
common share -  $ 0.35                    $ 0.13                    169.2
Basic (1)
Net income per
common share -  $ 0.34                    $ 0.13                    161.5
Diluted (1)
Return on         0.53     %                0.31     %              71.0
average assets
Return on
average equity    4.80     %                1.90     %              152.6
(2)
Efficiency        71.06    %                71.42    %              (0.5)
ratio
SHARE
INFORMATION:
Market price    $ 6.24       $ 6.13       $ 6.40        1.8         (2.5)
per share
Dividends paid  $ -          $ -          $ -           -           -
Book value per  $ 7.62       $ 7.52       $ 7.24        1.3         5.2
common share
Average
diluted shares    7,818        7,782        7,782       0.5         0.5
outstanding
(QTD)
CAPITAL
RATIOS:
Total equity
to total          9.46     %   9.52     %   9.07     %  (0.6)       4.3
assets
Leverage ratio    11.14    %   11.20    %   10.44    %  (0.5)       6.7
Tier 1
risk-based        14.85    %   14.52    %   14.33    %  2.3         3.6
capital ratio
Total
risk-based        16.12    %   15.78    %   15.60    %  2.2         3.3
capital ratio
CREDIT QUALITY
AND RATIOS:
Nonperforming   $ 19,294     $ 18,790     $ 25,801      2.7         (25.2)
assets
QTD net
chargeoffs
(annualized)      0.90     %   1.32     %   0.83     %  (31.8)      8.4
to QTD average
loans
Allowance for
loan losses to    2.51     %   2.56     %   2.76     %  (2.0)       (9.1)
total loans
Nonperforming
assets to         3.28     %   3.14     %   4.33     %  4.5         (24.2)
total loans
and OREO
Nonperforming
assets to         2.35     %   2.34     %   3.18     %  0.4       % (26.1)   %
total 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
December 31, 2012
                                                          December 31, 2012
                                                          vs.
                                                          September   December
                                                          30, 2012    31, 2011
(In thousands,       December    September   December     %           %
except percentages)  31, 2012    30, 2012    31, 2011
ASSETS
Cash and due from    $ 23,705    $ 17,027    $ 17,688     39.2      % 34.0     %
banks
Federal funds sold
and                    70,487      55,536      64,886     26.9        8.6
interest-bearing
deposits
Cash and cash          94,192      72,563      82,574     29.8        14.1
equivalents
Securities:
Securities             89,538      90,852      88,765     (1.4)       0.9
available for sale
Securities held to     21,515      15,585      18,771     38.0        14.6
maturity
Total securities       111,053     106,437     107,536    4.3         3.3
Loans:
SBA loans held for     6,937       7,708       7,668      (10.0)      (9.5)
sale
SBA loans held to      58,593      59,299      64,175     (1.2)       (8.7)
maturity
SBA 504 loans          41,438      41,771      55,108     (0.8)       (24.8)
Commercial loans       301,564     306,569     283,104    (1.6)       6.5
Residential            132,094     137,192     134,090    (3.7)       (1.5)
mortgage loans
Consumer loans         46,410      44,371      48,447     4.6         (4.2)
Total loans            587,036     596,910     592,592    (1.7)       (0.9)
Allowance for loan     (14,758)    (15,294)    (16,348)   3.5         9.7
losses
Net loans              572,278     581,616     576,244    (1.6)       (0.7)
Premises and           12,062      12,016      11,350     0.4         6.3
equipment, net
Bank owned life        9,402       9,327       9,107      0.8         3.2
insurance ("BOLI")
Deferred tax assets    5,954       6,221       6,878      (4.3)       (13.4)
Federal Home Loan      3,989       3,989       4,088      -           (2.4)
Bank stock
Accrued interest       3,298       3,478       3,703      (5.2)       (10.9)
receivable
Other real estate      1,826       1,456       3,032      25.4        (39.8)
owned ("OREO")
Prepaid FDIC           1,929       2,079       2,545      (7.2)       (24.2)
insurance
Goodwill and other     1,516       1,518       1,530      (0.1)       (0.9)
intangibles
Other assets           2,231       1,975       2,259      13.0        (1.2)
Total assets         $ 819,730   $ 802,675   $ 810,846    2.1       % 1.1      %
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Liabilities:
Deposits:
Noninterest-bearing  $ 114,424   $ 105,529   $ 101,193    8.4       % 13.1     %
demand deposits
Interest-bearing       114,838     104,469     104,749    9.9         9.6
demand deposits
Savings deposits       294,533     295,567     278,603    (0.3)       5.7
Time deposits,         76,994      78,104      102,809    (1.4)       (25.1)
under $100,000
Time deposits,         47,971      49,457      56,617     (3.0)       (15.3)
$100,000 and over
Total deposits         648,760     633,126     643,971    2.5         0.7
Borrowed funds         75,000      75,000      75,000     -           -
Subordinated           15,465      15,465      15,465     -           -
debentures
Accrued interest       434         464         523        (6.5)       (17.0)
payable
Accrued expenses
and other              2,561       2,233       2,329      14.7        10.0
liabilities
Total liabilities      742,220     726,288     737,288    2.2         0.7
Shareholders'
equity:
Cumulative
perpetual preferred    20,115      19,968      19,545     0.7         2.9
stock
Common stock           54,274      54,176      53,746     0.2         1.0
Retained earnings      1,788       1,028       (854)      73.9        309.4
(deficit)
Accumulated other
comprehensive          1,333       1,215       1,121      9.7         18.9
income
Total shareholders'    77,510      76,387      73,558     1.5         5.4
equity
Total liabilities
and shareholders'    $ 819,730   $ 802,675   $ 810,846    2.1       % 1.1      %
equity
Preferred shares       21          21          21
Issued and
outstanding common     7,534       7,503       7,459
shares



                     UNITY BANCORP, INC.
                     QTD CONSOLIDATED STATEMENTS OF INCOME
                     December 31, 2012
                                                    December 31, 2012 vs.
                  For the three months ended      September 30,      December 31,
                                                    2012               2011
(In thousands,
except            December  September   December
percentages and   31, 2012  30, 2012    31, 2011    $        %         $        %
per share
amounts)
INTEREST INCOME
Federal funds
sold and          $  16     $  13       $  35       $ 3       23.1   % $ (19)    (54.3) %
interest-bearing
deposits
Federal Home         44        50          36         (6)     (12.0)     8       22.2
Loan Bank stock
Securities:
Securities
available for        604       656         645        (52)    (7.9)      (41)    (6.4)
sale
Securities held      143       146         163        (3)     (2.1)      (20)    (12.3)
to maturity
Total securities     747       802         808        (55)    (6.9)      (61)    (7.5)
Loans:
SBA loans            779       881         995        (102)   (11.6)     (216)   (21.7)
SBA 504 loans        548       647         855        (99)    (15.3)     (307)   (35.9)
Commercial loans     4,270     4,313       4,188      (43)    (1.0)      82      2.0
Residential          1,577     1,631       1,605      (54)    (3.3)      (28)    (1.7)
mortgage loans
Consumer loans       521       534         611        (13)    (2.4)      (90)    (14.7)
Total loans          7,695     8,006       8,254      (311)   (3.9)      (559)   (6.8)
Total interest       8,502     8,871       9,133      (369)   (4.2)      (631)   (6.9)
income
INTEREST EXPENSE
Interest-bearing     119       108         152        11      10.2       (33)    (21.7)
demand deposits
Savings deposits     251       293         501        (42)    (14.3)     (250)   (49.9)
Time deposits        575       619         946        (44)    (7.1)      (371)   (39.2)
Borrowed funds
and subordinated     820       824         861        (4)     (0.5)      (41)    (4.8)
debentures
Total interest       1,765     1,844       2,460      (79)    (4.3)      (695)   (28.3)
expense
Net interest         6,737     7,027       6,673      (290)   (4.1)      64      1.0
income
Provision for        800       1,000       1,150      (200)   (20.0)     (350)   (30.4)
loan losses
Net interest
income after         5,937     6,027       5,523      (90)    (1.5)      414     7.5
provision for
loan losses
NONINTEREST
INCOME
Branch fee           397       383         390        14      3.7        7       1.8
income
Service and loan     297       366         194        (69)    (18.9)     103     53.1
fee income
Gain on sale of
SBA loans held       262       46          114        216     469.6      148     129.8
for sale, net
Gain on sale of
mortgage loans,      748       662         445        86      13.0       303     68.1
net
BOLI income          76        74          74         2       2.7        2       2.7
Net security         59        7           (49)       52      742.9      108     220.4
gains (losses)
Other income         169       236         137        (67)    (28.4)     32      23.4
Total
noninterest          2,008     1,774       1,305      234     13.2       703     53.9
income
NONINTEREST
EXPENSE
Compensation and     3,054     3,191       2,900      (137)   (4.3)      154     5.3
benefits
Occupancy            683       690         619        (7)     (1.0)      64      10.3
Processing and       549       544         511        5       0.9        38      7.4
communications
Furniture and        395       368         349        27      7.3        46      13.2
equipment
Professional         192       196         217        (4)     (2.0)      (25)    (11.5)
services
Loan collection      229       182         319        47      25.8       (90)    (28.2)
costs
OREO expenses        86        36          293        50      138.9      (207)   (70.6)
Deposit              163       162         114        1       0.6        49      43.0
insurance
Advertising          210       181         217        29      16.0       (7)     (3.2)
Other expenses       574       449         473        125     27.8       101     21.4
Total
noninterest          6,135     5,999       6,012      136     2.3        123     2.0
expense
Income before
provision for        1,810     1,802       816        8       0.4        994     121.8
income taxes
Provision for        643       606         220        37      6.1        423     192.3
income taxes
Net income          1,167     1,196       596        (29)    (2.4)      571     95.8
Preferred stock
dividends and        408       397         393        11      2.8        15      3.8
discount
accretion
Income available
to common         $  759    $  799      $  203      $ (40)    (5.0)  % $ 556     273.9  %
shareholders
Effective tax        35.5  %   33.6   %    27.0  %
rate
Net income per
common share -    $  0.10   $  0.11     $  0.03
Basic (1)
Net income per
common share -    $  0.10   $  0.10     $  0.03
Diluted (1)
Weighted average
common shares        7,514     7,473       7,427
outstanding -
Basic
Weighted average
common shares        7,818     7,782       7,782
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
December 31, 2012
                        For the twelve months   Current YTD vs.
                        ended December 31,     Prior YTD
(In thousands, except
percentages and per     2012         2011        $          %
share amounts)
INTEREST INCOME
Federal funds sold and
interest-bearing        $  72        $  61       $ 11        18.0   %
deposits
Federal Home Loan Bank     189          183        6         3.3
stock
Securities:
Securities available       2,671        3,204      (533)     (16.6)
for sale
Securities held to         625          787        (162)     (20.6)
maturity
Total securities           3,296        3,991      (695)     (17.4)
Loans:
SBA loans                  3,430        4,665      (1,235)   (26.5)
SBA 504 loans              2,645        3,482      (837)     (24.0)
Commercial loans           16,982       17,492     (510)     (2.9)
Residential mortgage       6,445        7,107      (662)     (9.3)
loans
Consumer loans             2,144        2,542      (398)     (15.7)
Total loans                31,646       35,288     (3,642)   (10.3)
Total interest income      35,203       39,523     (4,320)   (10.9)
INTEREST EXPENSE
Interest-bearing           486          571        (85)      (14.9)
demand deposits
Savings deposits           1,185        2,202      (1,017)   (46.2)
Time deposits              2,796        4,067      (1,271)   (31.3)
Borrowed funds and
subordinated               3,307        3,711      (404)     (10.9)
debentures
Total interest expense     7,774        10,551     (2,777)   (26.3)
Net interest income        27,429       28,972     (1,543)   (5.3)
Provision for loan         4,000        6,800      (2,800)   (41.2)
losses
Net interest income
after provision for        23,429       22,172     1,257     5.7
loan losses
NONINTEREST INCOME
Branch fee income          1,528        1,445      83        5.7
Service and loan fee       1,252        1,034      218       21.1
income
Gain on sale of SBA
loans held for sale,       688          962        (274)     (28.5)
net
Gain on sale of            2,274        951        1,323     139.1
mortgage loans, net
BOLI income                296          295        1         0.3
Net security gains        573          303        270       89.1
Other income               727          671        56        8.3
Total noninterest          7,338        5,661      1,677     29.6
income
NONINTEREST EXPENSE
Compensation and           12,560       11,781     779       6.6
benefits
Occupancy                  2,722        2,781      (59)      (2.1)
Processing and             2,180        2,104      76        3.6
communications
Furniture and              1,480        1,527      (47)      (3.1)
equipment
Professional services      789          817        (28)      (3.4)
Loan collection costs      682          979        (297)     (30.3)
OREO expenses              483          1,229      (746)     (60.7)
Deposit insurance          664          775        (111)     (14.3)
Advertising                839          727        112       15.4
Other expenses             1,898        1,798      100       5.6
Total noninterest          24,297       24,518     (221)     (0.9)
expense
Income before
provision for income       6,470        3,315      3,155     95.2
taxes
Provision for income       2,226        769        1,457     189.5
taxes
Net income                4,244        2,546      1,698     66.7
Preferred stock
dividends and discount     1,602        1,558      44        2.8
accretion
Income available to     $  2,642     $  988      $ 1,654     167.4  %
common shareholders
Effective tax rate         34.4         23.2
Net income per common   $  0.35      $  0.13
share - Basic (1)
Net income per common   $  0.34      $  0.13
share - Diluted (1)
Weighted average
common shares              7,477        7,333
outstanding - Basic
Weighted average
common shares              7,794        7,735
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.
                       QUARTER TO DATE NET INTEREST MARGIN
                       December 31, 2012
(Dollar amounts in thousands, interest amounts and interest
rates/yields on a fully tax-equivalent basis)
                     For the three months ended
                     December 31, 2012                    September 30, 2012
                     Average     Interest  Rate/Yield   Average     Interest  Rate/Yield
                     Balance                              Balance
ASSETS
Interest-earning
assets:
Federal funds sold
and                  $ 61,710    $  16          0.10    % $ 40,183    $  13          0.13    %
interest-bearing
deposits
Federal Home Loan      3,990        44          4.39        3,989        50          4.99
Bank stock
Securities:
Securities             90,566       651         2.88        95,193       703         2.95
available for sale
Securities held to     19,232       146         3.04        16,467       152         3.69
maturity
Total securities       109,798      797         2.91        111,660      855         3.06
(A)
Loans:
SBA loans              66,669       779         4.67        66,484       881         5.30
SBA 504 loans          41,584       548         5.24        44,583       647         5.77
Commercial loans       304,413      4,270       5.58        307,090      4,313       5.59
Residential            133,799      1,577       4.71        136,568      1,631       4.78
mortgage loans
Consumer loans         46,571       521         4.45        46,116       534         4.61
Total loans (B)        593,036      7,695       5.17        600,841      8,006       5.31
Total
interest-earning     $ 768,534   $  8,552       4.44    % $ 756,673   $  8,924       4.70    %
assets
Noninterest-earning
assets:
Cash and due from      18,386                               16,211
banks
Allowance for loan     (15,566)                             (16,508)
losses
Other assets           38,312                               40,138
Total
noninterest-earning    41,132                               39,841
assets
Total assets         $ 809,666                            $ 796,514
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Interest-bearing
liabilities:
Interest-bearing     $ 112,958   $  119         0.42    % $ 103,029   $  108         0.42    %
demand deposits
Savings deposits       287,047      251         0.35        287,054      293         0.41
Time deposits          126,233      575         1.81        131,356      619         1.87
Total
interest-bearing       526,238      945         0.72        521,439      1,020       0.78
deposits
Borrowed funds and
subordinated           90,498       820         3.55        90,465       824         3.56
debentures
Total
interest-bearing     $ 616,736   $  1,765       1.14    % $ 611,904   $  1,844       1.19    %
liabilities
Noninterest-bearing
liabilities:
Noninterest-bearing    113,164                              105,876
demand deposits
Other liabilities      3,181                                3,469
Total
noninterest-bearing    116,345                              109,345
liabilities
Total shareholders'    76,585                               75,265
equity
Total liabilities
and shareholders'    $ 809,666                            $ 796,514
equity
Net interest spread              $  6,787       3.30    %             $  7,080       3.51    %
Tax-equivalent                      (50)                                 (53)
basis adjustment
Net interest income              $  6,737                             $  7,027
Net interest margin                             3.51    %                            3.72    %
(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
                       December 31, 2012
(Dollar amounts in thousands, interest amounts and interest
rates/yields on a fully tax-equivalent basis)
                     For the three months ended
                     December 31, 2012                    December 31, 2011
                     Average     Interest  Rate/Yield   Average     Interest  Rate/Yield
                     Balance                              Balance
ASSETS
Interest-earning
assets:
Federal funds sold
and                  $ 61,710    $  16          0.10    % $ 86,323    $  35          0.16    %
interest-bearing
deposits
Federal Home Loan      3,990        44          4.39        4,088        36          3.49
Bank stock
Securities:
Securities             90,566       651         2.88        87,096       700         3.21
available for sale
Securities held to     19,232       146         3.04        13,747       168         4.89
maturity
Total securities       109,798      797         2.91        100,843      868         3.44
(A)
Loans:
SBA loans              66,669       779         4.67        74,523       995         5.34
SBA 504 loans          41,584       548         5.24        55,326       855         6.13
Commercial loans       304,413      4,270       5.58        282,963      4,188       5.87
Residential            133,799      1,577       4.71        135,186      1,605       4.75
mortgage loans
Consumer loans         46,571       521         4.45        49,386       611         4.91
Total loans (B)        593,036      7,695       5.17        597,384      8,254       5.50
Total
interest-earning     $ 768,534   $  8,552       4.44    % $ 788,638   $  9,193       4.64    %
assets
Noninterest-earning
assets:
Cash and due from      18,386                               15,000
banks
Allowance for loan     (15,566)                             (16,851)
losses
Other assets           38,312                               40,686
Total
noninterest-earning    41,132                               38,835
assets
Total assets         $ 809,666                            $ 827,473
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Interest-bearing
liabilities:
Interest-bearing     $ 112,958   $  119         0.42    % $ 107,662   $  152         0.56    %
demand deposits
Savings deposits       287,047      251         0.35        292,976      501         0.68
Time deposits          126,233      575         1.81        160,784      946         2.33
Total
interest-bearing       526,238      945         0.72        561,422      1,599       1.13
deposits
Borrowed funds and
subordinated           90,498       820         3.55        90,465       861         3.72
debentures
Total
interest-bearing     $ 616,736   $  1,765       1.14    % $ 651,887   $  2,460       1.49    %
liabilities
Noninterest-bearing
liabilities:
Noninterest-bearing    113,164                              99,672
demand deposits
Other liabilities      3,181                                3,228
Total
noninterest-bearing    116,345                              102,900
liabilities
Total shareholders'    76,585                               72,686
equity
Total liabilities
and shareholders'    $ 809,666                            $ 827,473
equity
Net interest spread              $  6,787       3.30    %             $  6,733       3.15    %
Tax-equivalent                      (50)                                 (60)
basis adjustment
Net interest income              $  6,737                             $  6,673
Net interest margin                             3.51    %                            3.39    %
(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
                     December 31, 2012
(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully
tax-equivalent basis)
                     For the twelve months ended
                     December 31, 2012                    December 31, 2011
                     Average     Interest  Rate/Yield   Average     Interest  Rate/Yield
                     Balance                              Balance
ASSETS
Interest-earning
assets:
Federal funds sold
and                  $ 49,355    $ 72           0.15    % $ 50,574    $ 61           0.12    %
interest-bearing
deposits
Federal Home Loan      4,015       189          4.71        4,120       183          4.44
Bank stock
Securities:
Securities             97,927      2,877        2.94        97,310      3,403        3.50
available for sale
Securities held to     17,893      647          3.62        15,265      806          5.28
maturity
Total securities       115,820     3,524        3.05        112,575     4,209        3.74
(A)
Loans:
SBA loans              68,536      3,430        5.00        82,177      4,665        5.68
SBA 504 loans          46,153      2,645        5.73        58,010      3,482        6.00
Commercial loans       299,820     16,982       5.66        284,183     17,492       6.16
Residential            134,214     6,445        4.80        133,477     7,107        5.32
mortgage loans
Consumer loans         46,487      2,144        4.61        51,830      2,542        4.90
Total loans (B)        595,210     31,646       5.31        609,677     35,288       5.79
Total
interest-earning     $ 764,400   $ 35,431       4.63    % $ 776,946   $ 39,741       5.12    %
assets
Noninterest-earning
assets:
Cash and due from      16,665                               16,105
banks
Allowance for loan     (16,458)                             (16,198)
losses
Other assets           39,625                               40,528
Total
noninterest-earning    39,832                               40,435
assets
Total assets         $ 804,232                            $ 817,381
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Interest-bearing
liabilities:
Interest-bearing     $ 108,825   $ 486          0.45    % $ 103,574   $ 571          0.55    %
demand deposits
Savings deposits       282,115     1,185        0.42        287,769     2,202        0.77
Time deposits          138,233     2,796        2.02        166,836     4,067        2.44
Total
interest-bearing       529,173     4,467        0.84        558,179     6,840        1.23
deposits
Borrowed funds and
subordinated           90,473      3,307        3.60        90,465      3,711        4.05
debentures
Total
interest-bearing     $ 619,646   $ 7,774        1.24    % $ 648,644   $ 10,551       1.62    %
liabilities
Noninterest-bearing
liabilities:
Noninterest-bearing    106,412                              93,875
demand deposits
Other liabilities      3,335                                3,607
Total
noninterest-bearing    109,747                              97,482
liabilities
Total shareholders'    74,839                               71,255
equity
Total liabilities
and shareholders'    $ 804,232                            $ 817,381
equity
Net interest spread              $ 27,657       3.39    %             $ 29,190       3.50    %
Tax-equivalent                     (228)                                (218)
basis adjustment
Net interest income              $ 27,429                             $ 28,972
Net interest margin                             3.62    %                            3.76    %
(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
                        December 31, 2012
Amounts in            December    September   June 30,   March      December
thousands, except     31, 2012    30, 2012    2012       31, 2012   31, 2011
percentages
ALLOWANCE FOR LOAN
LOSSES:
Balance, beginning    $ 15,294    $  16,284   $ 16,339   $ 16,348   $ 16,447
of period
Provision for loan
losses charged to       800          1,000      1,000      1,200      1,150
expense
                        16,094       17,284     17,339     17,548     17,597
Less: Chargeoffs
SBA loans               251          254        213        615        735
SBA 504 loans           -            481        100        227        200
Commercial loans        1,190        1,428      540        346        290
Residential mortgage    152          65         494        113        73
loans
Consumer loans          -            31         25         -          46
Total chargeoffs        1,593        2,259      1,372      1,301      1,344
Add: Recoveries
SBA loans               22           195        249        53         26
SBA 504 loans           50           15         15         28         -
Commercial loans        184          58         53         11         15
Residential mortgage    -            -          -          -          50
loans
Consumer loans          1            1          -          -          4
Total recoveries        257          269        317        92         95
Net chargeoffs          1,336        1,990      1,055      1,209      1,249
Balance, end of       $ 14,758    $  15,294   $ 16,284   $ 16,339   $ 16,348
period
LOAN QUALITY
INFORMATION:
Nonperforming loans   $ 17,468    $  17,334   $ 19,831   $ 22,206   $ 22,769
(1)
Other real estate       1,826        1,456      2,355      1,625      3,032
owned ("OREO")
Nonperforming assets    19,294       18,790     22,186     23,831     25,801
Less: Amount           1,849        566        526        555        939
guaranteed by SBA
Net nonperforming     $ 17,445    $  18,224   $ 21,660   $ 23,276   $ 24,862
assets
Loans 90 days past    $ 109       $  1,630    $ 2,443    $ 3,165    $ 2,411
due & still accruing
Performing Troubled
Debt Restructurings   $ 13,576    $  17,250   $ 20,541   $ 20,985   $ 17,436
(TDRs)
(1) Nonperforming       1,087        1,628      871        2,287      3,645
TDRs included above
Total TDRs            $ 14,663    $  18,878   $ 21,412   $ 23,272   $ 21,081
Allowance for loan
losses to:
Total loans at          2.51    %    2.56   %   2.69   %   2.80   %   2.76   %
quarter end
Nonperforming loans     84.49        88.23      82.11      73.58      71.80
(1)
Nonperforming assets    76.49        81.39      73.40      68.56      63.36
Net nonperforming       84.60        83.92      75.18      70.20      65.75
assets
QTD net chargeoffs
(annualized) to QTD
average loans:
SBA loans               1.37    %    0.35   %   (0.21) %   3.15   %   3.77   %
SBA 504 loans           (0.48)       4.16       0.73       1.55       1.43
Commercial loans        1.31         1.77       0.65       0.47       0.39
Residential mortgage    0.45         0.19       1.49       0.34       0.07
loans
Consumer loans          (0.01)       0.26       0.22       -          0.34
Total loans             0.90    %    1.32   %   0.71   %   0.83   %   0.83   %
Nonperforming loans     2.98    %    2.90   %   3.28   %   3.81   %   3.84   %
to total loans
Nonperforming loans
and TDRs to total       5.29         5.79       6.67       7.41       6.78
loans
Nonperforming assets
to total loans and      3.28         3.14       3.65       4.08       4.33
OREO
Nonperforming assets    2.35         2.34       2.83       2.94       3.18
to total assets

                    UNITY BANCORP, INC.
                    QUARTERLY FINANCIAL DATA
                    December 31, 2012
(In thousands,
except            December    September    June 30,     March 31,    December
percentages and   31, 2012    30, 2012     2012         2012         31, 2011
per share
amounts)
SUMMARY OF
INCOME:
Total interest    $ 8,502     $ 8,871      $ 8,772      $ 9,058      $ 9,133
income
Total interest      1,765       1,844        1,915        2,250        2,460
expense
Net interest        6,737       7,027        6,857        6,808        6,673
income
Provision for       800         1,000        1,000        1,200        1,150
loan losses
Net interest
income after        5,937       6,027        5,857        5,608        5,523
provision for
loan losses
Total
noninterest         2,008       1,774        1,841        1,715        1,305
income
Total
noninterest         6,135       5,999        6,204        5,959        6,012
expense
Income before
provision for       1,810       1,802        1,494        1,364        816
income taxes
Provision for       643         606          518          459          220
income taxes
Net income         1,167       1,196        976          905          596
Preferred stock
dividends and       408         397          401          396          393
discount
accretion
Income available
to common         $ 759       $ 799        $ 575        $ 509        $ 203
shareholders
Net income per
common share -    $ 0.10      $ 0.11       $ 0.08       $ 0.07       $ 0.03
Basic (1)
Net income per
common share -    $ 0.10      $ 0.10       $ 0.07       $ 0.07       $ 0.03
Diluted (1)
COMMON SHARE
DATA:
Market price per  $ 6.24      $ 6.13       $ 6.00       $ 6.24       $ 6.40
share
Dividends paid    $ -         $ -          $ -          $ -          $ -
Book value per    $ 7.62      $ 7.52       $ 7.38       $ 7.28       $ 7.24
common share
Weighted average
common shares       7,514       7,473        7,462        7,460        7,427
outstanding -
Basic
Weighted average
common shares       7,818       7,782        7,784        7,792        7,782
outstanding -
Diluted
Issued and
outstanding         7,534       7,503        7,461        7,463        7,459
common shares
OPERATING RATIOS
(Annualized):
Return on           0.57     %  0.60     %   0.49     %   0.45     %   0.29     %
average assets
Return on
average equity      5.34        5.74         4.25         3.81         1.51
(2)
Efficiency ratio    70.66       68.22        73.72        71.80        74.90
BALANCE SHEET
DATA:
Total assets      $ 819,730   $ 802,675    $ 785,111    $ 810,198    $ 810,846
Total deposits      648,760     633,126      616,443      643,101      643,971
Total loans         587,036     596,910      604,901      582,752      592,592
Total securities    111,053     106,437      114,846      128,061      107,536
Total
shareholders'       77,510      76,387       74,901       74,002       73,558
equity
Allowance for       (14,758)    (15,294)     (16,284)     (16,339)     (16,348)
loan losses
TAX EQUIVALENT
YIELDS AND
RATES:
Interest-earning    4.44     %  4.70     %   4.70     %   4.71     %   4.64     %
assets
Interest-bearing    1.14        1.19         1.25         1.41         1.49
liabilities
Net interest        3.30        3.51         3.45         3.30         3.15
spread
Net interest        3.51        3.72         3.68         3.56         3.39
margin
CREDIT QUALITY:
Nonperforming       19,294      18,790       22,186       23,831       25,801
assets
QTD net
chargeoffs
(annualized) to     0.90     %  1.32     %   0.71     %   0.83     %   0.83     %
QTD average
loans
Allowance for
loan losses to      2.51        2.56         2.69         2.80         2.76
total loans
Nonperforming
assets to total     3.28        3.14         3.65         4.08         4.33
loans and OREO
Nonperforming
assets to total     2.35        2.34         2.83         2.94         3.18
assets
CAPITAL RATIOS
AND OTHER:
Total equity to     9.46     %  9.52     %   9.54     %   9.13     %   9.07     %
total assets
Leverage ratio      11.14       11.20        11.08        10.67        10.44
Tier 1
risk-based          14.85       14.52        14.22        14.44        14.33
capital ratio
Total risk-based    16.12       15.78        15.49        15.71        15.60
capital ratio
Number of           15          15           15           15           14
banking offices
Number of ATMs      16          16           16           16           15
Number of           165         161          169          171          171
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

Website: http://www.unitybank.com
Contact: News Media & Financial Analyst, Alan J. Bedner, EVP, Chief Financial
Officer, +1-908-713-4308