Unity Bancorp Receives Approval from U.S. Treasury to Repurchase Remaining
Portion of its TARP Preferred Stock
CLINTON, N.J., July 1, 2013
CLINTON, N.J., July 1, 2013 /PRNewswire/ -- Unity Bancorp, Inc. (NASDAQ:
UNTY), parent company of Unity Bank, announced today that it has received
approval of its application from the U.S. Department of Treasury (the
"Treasury") to redeem the remaining 10,325 shares of preferred stock issued
in connection with the Company's participation in the Treasury's Capital
Purchase Program ("CPP"). On July 3, 2013, the Company will pay $10.4 million
to the Treasury to repurchase 10,325 shares of the preferred stock, including
accrued and unpaid dividends for the shares. The redemption of these shares
is not subject to additional conditions or stipulations from the U.S.
Treasury, including any requirement that the Company raise additional
"We are pleased to announce the repurchase of the remaining outstanding
preferred stock issued to the Treasury under the CPP program," said James A.
Hughes, President and CEO. "We entered into the program in December 2008 in
order to strengthen our financial position during challenging economic times.
The funds were used to support loan growth in the markets we serve. As our
asset quality and earnings have improved, we believe it is time to redeem
these shares. Since receiving the TARP investment, Unity has paid the U.S.
Treasury approximately $4.5 million in preferred stock dividends. We believe
the U.S. Treasury made a sound investment in Unity and it has earned a healthy
return on that investment," said Mr. Hughes.
The preferred stock that the Company will repurchase for $10.3 million has a
carrying value of $10.2 million (net of $116 thousand in non-accreted
discount) on the financial statements. As a result, the Company will
accelerate the accretion of $116 thousand and record a reduction in retained
earnings. If the redemption had occurred as of March 31, 2013, the resulting
pro forma capital ratios for the Company and the Bank would have been as
follows: for the Company, leverage ratio 8.75%, tier I risk based ratio
11.37%, and a total risk based ratio of 12.64%; and for the Bank, leverage
ratio 7.40%, tier I risk based ratio 9.59%, and a total risk based ratio of
12.22%. The Bank's capital ratios would remain in excess of the ratios
required to be deemed "well-capitalized" under FDIC regulations.
As part of the transaction, the Company issued warrants to the Treasury to
purchase 764,778 shares of common stock at $4.05 per share. The warrants are
still held by the Treasury and remain outstanding. Unity intends to attempt
to negotiate for the repurchase of the warrants; however, the repurchase price
is subject to these negotiations and there is no assurance that the warrants
will be repurchased.
Unity Bancorp, Inc. is a financial service organization headquartered in
Clinton, New Jersey, with approximately $827 million in assets and $652
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
SOURCE Unity Bancorp, Inc.
Contact: News Media & Financial Analyst Contact: Alan J. Bedner, EVP, Chief
Financial Officer, (908) 713-4308
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