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Unity Bancorp Reports Fourth Quarter And Year End Results

CLINTON, N.J., Feb. 3 /PRNewswire-FirstCall/ -- Unity Bancorp, Inc. (Nasdaq: UNTY), parent company of Unity Bank, reported a net loss attributable to common shareholders of $239 thousand or ($0.03) per diluted share for the quarter ended December 31, 2009, compared to net income available to common shareholders of $474 thousand or $0.07 per diluted share for the fourth quarter of 2008.  The Company recognized an impairment charge during the quarter of $862 thousand, or $0.08 per diluted share after tax, due to further deterioration of the underlying collateral for two pooled trust preferred securities.  Excluding impairment charges, net income available to common shareholders would have been $330 thousand or $0.05 per diluted share for the quarter ended December 31, 2009, compared to net income available to common shareholders of $698 thousand, or $0.10 per diluted share for the same period a year ago.

For the year ended December 31, 2009, the Company reported a net loss attributable to common shareholders of $2.6 million, or ($0.36) per diluted share, compared to net income available to common shareholders of $1.8 million, or $0.25 per diluted share, for the same period a year ago.  Earnings for 2009 were materially impacted by an impairment charge of $2.6 million, or $0.24 per diluted share after tax, on the two pooled trust preferred securities noted above and a one-time FDIC special assessment of $408 thousand, or $0.04 per diluted share after tax in June 2009. Excluding impairment charges and the FDIC special assessment, net loss attributable to common shareholders would have been $584 thousand or ($0.08) per diluted share for the year ended December 31, 2009, compared to net income available to common shareholders of $2.8 million or $0.39 per diluted share for 2008.

James A. Hughes, Unity Bancorp's President and CEO, said, "We are facing the most challenging economic environment in decades.  Our loss for 2009 was the result of the magnitude of the recession and its impact on our customers and our investment portfolio.  While New Jersey has fared much better than other states, our portfolio of Commercial and SBA loans continues to be a challenge.  Although there have been recent signs of stability, the recovery is expected to be slow and measured.  We continue to remain positive and have focused on growing our customer relationships and investing in our future.  This year we had record core deposit growth, and we are extremely optimistic that our redefined strategic plan will enhance our franchise.  Our capital levels continue to be strong and we expect 2010 to be a turnaround year for our performance."  

Net Interest Income

For the quarter ended December 31, 2009, net interest income was $7.3 million, an increase of $477 thousand or 7.0% from the quarter ended September 30, 2009, and an increase of $599 thousand or 8.9% from the quarter ended December 31, 2008.  Quarter over quarter, net interest margin expanded as higher cost certificates of deposit repriced in a lower rate environment.  Factors affecting fourth quarter net interest income include:

  • The yield on interest-earning assets decreased 73 basis points to 5.45% from 6.18% for the same period last year.
  • The cost of interest-bearing liabilities decreased 85 basis points to 2.44% from 3.29% for the same period last year.
  • Average earning assets, consisting primarily of loans, rose 6.3%.
  • Net interest margin was 3.30%, a 7 basis point increase from 3.23% in the fourth quarter of 2008.

Year-to-date, net interest income was $27.8 million, an increase of $537 thousand or 2.0% from 2008.  Factors affecting year-to-date net interest income include:  

  • The yield on interest-earning assets decreased from 6.52% for 2008, to 5.71% for 2009.
  • The cost of interest-bearing liabilities decreased from 3.39% for 2008, to 2.84% for 2009.
  • Average earning assets, consisting primarily of loans, rose 11.0%.
  • Net interest margin for the year ended December 31, 2009 was 3.22%, a decline of 29 basis points from 2008.

Noninterest Income

Historically, Unity had generated significant revenue from the sale of its SBA loans.  In the fourth quarter of 2008, Unity exited the National SBA program and closed all SBA loan production offices outside its primary trade area.  Consequently, revenue on the sale of SBA loans will no longer be material to total revenue.  

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