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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO _________
Commission file number: 1-12431
UNITY BANCORP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-3282551
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification)
64 OLD HIGHWAY 22, CLINTON, NEW JERSEY 08809
- ---------------------------------------- ----------
(Address of principal executive offices) (zip code)
(908) 730-7630
----------------------------------------------------
(Registrant's telephone number, including area code)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
The number of shares outstanding of each of the registrant's classes of common
stock, as of August 12, 1997: Common Stock, No Par Value: 1,977,525 shares
outstanding: Warrants, No Par Value: 399,650.
Transitional Small Business Disclosure Format (check one):
YES NO X
--- ---
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<PAGE>
<TABLE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
June 30, December 31,
1997 1996
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks ........................................................... $ 20,366,708 $ 15,848,021
Federal funds sold ................................................................ 6,550,000 17,600,000
------------ ------------
Total cash and cash equivalents ........................................... 26,916,708 33,448,021
------------ ------------
Securities
Available for sale (at market value) .......................................... 18,513,660 11,152,967
Held to maturity (aggregate market value of $27,919,220 and $25,246,902) ...... 28,618,778 25,999,907
------------ ------------
47,132,438 37,152,874
------------ ------------
Loans (including loans held for sale of $2,387,122 and $2,041,650) ................ 116,000,008 97,847,453
Less: Unearned income ........................................................ 13,859 19,544
Allowance for possible loan losses ..................................... 1,055,329 886,465
------------ ------------
Net loans .............................................................. 114,930,820 96,941,444
------------ ------------
Premises and equipment, net ....................................................... 3,585,603 3,103,931
Accrued interest receivable ....................................................... 1,262,648 1,052,809
Other assets ...................................................................... 1,171,187 988,597
------------ ------------
Total assets .............................................................. $194,999,404 $172,687,676
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Demand
Noninterest Bearing ........................................................... $ 36,226,052 $ 31,385,323
Interest bearing .............................................................. 24,736,327 21,282,010
Savings ......................................................................... 28,888,182 24,976,839
Time (includes deposits $100,000 and over of $16,604,551 and $13,801,000) ....... 85,157,105 75,910,888
------------ ------------
Total deposits ............................................................ 175,007,666 153,555,060
------------ ------------
Obligation under capital lease .................................................... 349,197 380,275
Accrued interest payable .......................................................... 572,543 533,695
Accrued expenses and other liabilities ............................................ 445,204 228,645
------------ ------------
Total liabilities ......................................................... 176,374,610 154,697,675
------------ ------------
Commitments and contingencies Shareholders' Equity
Common stock, no par value, 7,500,000 shares authorized;
1,977,525 and 1,964,113 issued and outstanding ................................ 17,032,501 16,867,120
Retained earnings ............................................................... 1,644,492 1,183,357
Net unrealized loss on available for sale securities ............................ (52,199) (60,476)
------------ ------------
Total Shareholders' Equity ................................................ 18,624,794 17,990,001
------------ ------------
Total liabilities and Shareholders' Equity ................................ $194,999,404 $172,687,676
============ ============
The accompanying notes to consolidated financial statements are an integral part of these statements.
</TABLE>
2
<PAGE>
<TABLE>
UNITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest Income
Interest on loans ........................... $2,704,250 $1,869,586 $5,052,960 $3,486,678
Interest on Securities ...................... 807,768 605,040 1,504,410 1,288,877
Interest on Federal Funds Sold .............. 181,148 68,149 408,293 173,844
---------- ---------- ---------- ----------
Total interest income ..................... 3,693,166 2,542,775 6,965,663 4,949,399
---------- ---------- ---------- ----------
Interest expense .............................. 1,541,772 1,085,780 2,968,230 2,136,140
---------- ---------- ---------- ----------
Net interest income ........................... 2,151,394 1,456,995 3,997,433 2,813,259
---------- ---------- ---------- ----------
Provision for possible loan losses ............ 176,871 117,805 235,187 257,288
---------- ---------- ---------- ----------
Net interest income after provision ........... 1,974,523 1,339,190 3,762,246 2,555,971
---------- ---------- ---------- ----------
Other income
Service charges on deposits ................. 172,039 138,497 335,009 223,721
Gain on sale of loans ....................... 506,418 365,233 776,479 617,611
Gain on sale of securities .................. -- -- -- 31,850
Other income ................................ 133,414 108,962 264,811 177,022
---------- ---------- ---------- ----------
Total other income ........................ 811,871 612,692 1,376,299 1,050,204
---------- ---------- ---------- ----------
Other expenses
Salaries and employee benefits .............. 976,371 668,423 2,024,302 1,294,497
Occupancy expense ........................... 268,369 205,167 525,939 328,168
Other operating expenses .................... 783,494 612,813 1,509,139 1,168,597
---------- ---------- ---------- ----------
Total other expenses ...................... 2,028,234 1,486,403 4,059,380 2,791,262
---------- ---------- ---------- ----------
Income before taxes ........................... 758,160 465,479 1,079,165 814,913
Provision for income taxes .................... 295,932 176,533 420,485 312,295
---------- ---------- ---------- ----------
Net income .................................... $ 462,228 $ 288,946 $ 658,680 $ 502,618
========== ========== ========== ==========
Net income per share .......................... $ 0.23 $ 0.21 $ 0.33 $ 0.38
Weighted average shares outstanding ........... 1,974,630 1,361,740 1,973,647 1,322,853
The accompanying notes to consolidated financial statements are an integral part of these statements.
</TABLE>
3
<PAGE>
<TABLE>
UNITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
<CAPTION>
For the six months ended
June 30,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Operating activities:
Net income .............................................................. $ 658,680 $ 502,618
Adjustments to reconcile net income to net cash provided
by (used in) operating activities
Provision for possible loan losses .................................. 235,187 257,288
Depreciation and amortization ....................................... 274,333 129,073
Net gain on sale of securities ...................................... -- (31,850)
Gain on sale of loans ............................................... (776,479) (617,611)
Amortization of securities premiums, net ............................ 1,412 32,128
Deferred tax benefit ................................................ (5,516) --
Increase in accrued interest receivable ............................. (209,839) (165,556)
Increase in other assets ............................................ (189,399) (493,091)
Increase in accrued interest payable ................................ 38,848 30,737
Increase (decrease) in accrued expenses and other liabilities ....... 185,481 (212,170)
------------ ------------
Net cash provided by operating activities ......................... 212,708 (568,434)
------------ ------------
Investing activities:
Proceeds from sales of securities available for sale .................... -- 1,234,436
Purchases of securities held to maturity ................................ (4,997,188) (1,006,172)
Purchases of securities available for sale .............................. (9,246,092) (3,999,921)
Maturities and principal payments on securities held to maturity ........ 2,369,587 508,674
Maturities and principal payments on securities available for sale ...... 1,906,512 5,014,918
Proceeds from sale of loans ............................................. 6,297,726 6,814,863
Net increase in loans ................................................... (23,745,810) (31,232,533)
Capital expenditures .................................................... (749,196) (1,443,305)
------------ ------------
Net cash used in investing activities ............................. (28,164,461) (24,109,040)
------------ ------------
Financing activities:
Increase in deposits .................................................... 21,452,606 14,625,626
Proceeds from issuance of common stock, net ............................. 165,381 7,917
Subordinated Debt Issuance .............................................. -- 2,010,000
Cash Dividends .......................................................... (197,547) (120,430)
------------ ------------
Net cash provided by financing activities ......................... 21,420,440 16,523,113
------------ ------------
Decrease in cash and cash equivalents ..................................... (6,531,313) (8,154,361)
Cash and cash equivalents at beginning of year ............................ 33,448,021 24,689,858
------------ ------------
Cash and cash equivalents at end of period ................................ $ 26,916,708 $ 16,535,497
------------ ------------
Supplemental disclosures:
Interest paid ........................................................... $ 2,929,382 $ 2,105,403
Income taxes paid ....................................................... 257,675 878,500
============ ============
The accompanying notes to consolidated financial statements are an integral part of these statements.
</TABLE>
4
<PAGE>
UNITY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements of Unity Bancorp, Inc.
(the "Company") and its subsidiary, First Community Bank (the "Bank"),
reflect all adjustments and disclosures which are, in the opinion of
management, necessary for a fair presentation of interim results. The
financial information has been prepared in accordance with the Company's
customary accounting practices and has not been audited.
Certain information and footnote disclosures required under generally
accepted accounting principles have been condensed or omitted pursuant to
the SEC rules and regulations. These interim financial statements should be
read in conjunction with the Company's consolidated financial statements and
notes thereto for the year ended December 31, 1996.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the year.
2. Securities:
Information with regard to the Company's securities portfolio at June 30,
1997 is as follows:
<TABLE>
<CAPTION>
June 1997
-------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
HELD TO MATURITY
Obligations of U.S. Government
agencies ........................... $ 6,894,812 $ 8,545 $ (52,898) $ 6,850,459
U.S. Government sponsored agencies.... 13,001,419 7,170 (573,592) 12,434,997
Mortgage-backed securities ........... 8,226,250 74,048 (167,719) 8,132,579
Corporate debt securities ............ 496,297 4,888 -- 501,185
----------- ------- --------- -----------
Total held to maturity ........... $28,618,778 $94,651 $(794,209) $27,919,220
=========== ======= ========= ===========
AVAILABLE FOR SALE
U.S. Treasury securities ............. $ 3,319,913 $13,651 $ (3) $ 3,333,561
U.S. Government sponsored agencies.... 11,040,599 12,282 (38,234) 11,014,647
Obligations of states and political
subdivisions ....................... 1,544,708 174 (2,508) 1,542,374
Mortgage-backed securities ........... 92,383 5 -- 92,388
Corporate debt securities ............ 2,010,465 2,525 -- 2,012,990
FHLB stock ........................... 517,700 0 -- 517,700
----------- ------- --------- -----------
Total available for sale ......... $18,525,768 $28,637 $ (40,745) $18,513,660
=========== ======= ========= ===========
</TABLE>
5
<PAGE>
The amortized cost and estimated market value of securities at June 30,
1997, by contractual maturity, are shown below:
Estimated
Amortized Market
Cost Value
----------- -----------
Held to maturity
Due after 1 year - 5 years $ 6,740,936 $ 6,748,523
Due after 5 years - 10 Years 5,506,780 5,331,410
Due after 10 years 8,144,812 7,706,708
Mortgage-backed securities 8,226,250 8,132,579
$28,618,778 $27,919,220
Available for sale
Due under 1 year $10,998,143 $11,013,512
Due after 1 year - 5 years 6,917,542 6,890,060
FHLB Stock 517,700 517,700
Mortgage-backed securities 92,383 92,388
$18,525,768 $18,513,660
Expected maturities may differ from contractual maturities because borrowers
may have the right to call or prepay obligations without call or prepayment
penalties.
Securities with carrying values aggregating $350,000 were pledged to secure
public deposits at June 30, 1997.
3. Loans:
Loans outstanding by classification as of June 30, 1997 are as follows:
June 30,
1997
------------
Loans secured by real estate-
Residential properties $ 27,865,552
Nonresidential properties 49,283,053
Construction loans 15,825,011
Commercial and industrial loan 18,442,381
Loans to individuals 4,584,111
$116,000,108
As of June 30, 1997, loans accounted for on a nonaccrual basis amounted to
approximately $1,008,574. The interest income that would have been recorded
had these loans performed under the original contract terms was $54,487 for
the six months ended June 30, 1997. At June 30, 1997, $429,098 in loans were
past due greater than 90 days but still accruing interest.
As of June 30, 1997, the Bank's recorded investment in impaired loans,
defined as nonaccrual loans, was $1,008,574 and the related valuation
allowance was $58,878. This valuation allowance is included in the
allowance for possible loan losses in the accompanying statement of
condition.
6
<PAGE>
As of June 30, 1997, approximately 80% of the Company's loans were secured
by real estate. As such, a substantial portion of the Company's borrowers'
ability to repay their loans is dependent on the economic environment of the
real estate industry in the Company's market area.
In the ordinary course of business, the Company may extend credit to
officers, directors or their associates. These loans are subject to the
Company's normal lending policy. An analysis of such loans, all of which are
current as to principal and interest payments, is as follows:
Balance at December 31, 1996 $ 5,906,120
New Loans 2,767,327
Repayments (1,943,934)
Balance at June 30, 1997 $ 6,729,513
4. Allowance for Possible Loan Losses:
The allowance for possible loan losses is based on estimates and ultimate
losses may vary from current estimates. These estimates are reviewed
periodically and, as adjustments become known, they are reflected in
operations in the periods in which they become known.
An analysis of the change in the allowance for possible loan losses during
1997, is as follows:
June 30,
1997
-----------
Balance at beginning of year $ 886,465
Provision charged to expense 235,187
Loans charged-off (66,323)
Recoveries on loans previously charged off 0
Balance at end of period $ 1,055,329
5. Shareholders' Equity:
In December 1996, the Company completed a stock offering resulting in the
issuance of 401,500 shares of common stock and, attached to each share, a
nontransferable warrant to purchase one share of common stock at an exercise
price of $15.75 at any time within two years after the offering. As of June
30, 1997, outstanding warrants totaled 399,650.
On April 29, 1994, the Company's shareholders approved the 1994 Employee Non
qualified Stock Option Plan (the Employee Plan) and the 1994 Non employee
Director Stock Option Plan (the Director Plan). Transaction under the plan
are summarized as follows:
Exercise
Number Price
of Shares Per Share
--------- -------------
Outstanding, December 31, 1996 49,999 $ 9.72-$10.80
Options granted 37,000 11.47-$13.38
Options exercised (1,562) 9.72
Options exercised (1,000) 11.47
Options expired
Outstanding June 30, 1997 84,437 $ 9.72-$13.38
7
<PAGE>
The following table summarizes information about stock options outstanding
at June 30, 1997:
Number Remaining Number
Outstanding at Contractual Exercisable at
Exercise Price June 30, 1997 Life June 30, 1997
$ 10.80 38,125 3.50 years 38,125
9.72 10,312 3.50 years 10,312
13.38 24,000 4.50 years 24,000
11.47 12,000 4.50 years 12,000
$ 11.50 84,437 3.93 years 84,437
In addition, select key employees and board members are eligible to
participate in the company's Stock Award Plan. The Company granted 9,000
shares to its directors in January 1997, resulting in a charge to
operations of approximately $140,000. As of June 30, 1997, the Company has
12,929 shares reserved for issuance under the Stock Award Plan.
The Board of Directors declared a cash dividend on March 25, 1997 and June
26, 1997. Stockholders of record on April 15, 1997 and July 7,1997,
received a $.05 per share cash dividend, paid on May 5, 1997 and August 1,
1997.
6. Premises and Equipment:
The detail of premises and equipment as of June 30, 1997 is as follows:
June 30,
1997
Land and building $1,344,705
Furniture, fixtures and equipment 1,737,098
Leasehold improvements 1,450,039
4,531,842
Less--Accumulated depreciation and amortization (946,239)
$3,585,603
8
<PAGE>
Item 2. Management's Discussion and Analysis
Unity Bancorp, Inc. and Subsidiary
Management's Discussion and Analysis of Financial Condition and Results of
Operations
This financial review presents management's discussion and analysis of the
Company's financial condition and results of operations. It should be read
in conjunction with the consolidated condensed financial statements and the
accompanying notes.
Financial Condition
The Company's total assets increased to $195.0 million at June 30, 1997,
$22.3 million, or 12.9%, above year end 1996 total assets of $172.7. Total
loans increased by 18.6%, to $114.9 million from $96.9 million at December
31, 1996. The Company's securities portfolio, including securities held to
maturity and available for sale, grew to $47.1 million at June 30, 1997,
compared to $37.2 million at December 31, 1996. Shareholders' equity
increased to $18.6 million at June 30, 1997 from $18.0 million at December
31, 1996, an increase of 3.5%, or $635 thousand. The growth in the
Company's total assets, loans receivable, securities and deposits was a
result of the Company's branch expansion, continued penetration of its
existing markets, emphasis on customer service, competitive rate
structures, selective marketing and growing product line. The increase in
the Company's shareholders' equity was primarily attributable to the
Company's increase in retained earnings, issuance of stock awards and
exercise of stock options as of June 30, 1997.
These increases in total assets were funded primarily by the Company's
total deposits which increased to $175.0 million at June 30, 1997, an
increase of $21.5 million, or 14.0%, over total deposits of $153.6 million
at December 31, 1996. Time deposits increased by $9.2 million, or 12.2% and
noninterest bearing demand deposits increased by $4.8 million, or 15.4%.
The increase in time deposits was primarily caused by the Company's
promotional activities at its new locations, as well as the Company's
continued penetration of its existing markets. Deposits are obtained
primarily from the market areas which the Company serves. As of June 30,
1997 the Company did not have any brokered deposits and neither solicited
nor offered premiums for such deposits.
Results of Operations
Net Income
For the six months ended June 30, 1997, the Company earned net income of
$659 thousand, or $.33 per share, compared to net income of $503 thousand,
or $.38 per share, earned for the comparable period of 1996. Earnings per
share were calculated on 1,973,647 weighted average shares outstanding at
June 30, 1997, compared to 1,322,853 shares outstanding a year earlier, a
49.2% increase totaling 650,794 shares. The changes in the components of
net income included a $1.2 million, or 47.2%, increase in net interest
income after provision for loan losses, and a $326 thousand, or 31.0%
increase in noninterest income. These items were partially offset by an
increase in noninterest expenses of $1.3 million, or 45.4%, as the Company
continued its branch expansion and increased staff required to support and
deliver its new products.
For the three months ended June 30, 1997, net income grew 31%, totaling
$659 thousand, or $.33 per share, compared to $289 thousand, or $.21 per
share for the same period in 1996. Earnings per share were calculated
9
<PAGE>
on 1,974,630 weighted average shares outstanding for the quarter ended June
30, 1997, compared to 1,361,740 shares outstanding a year earlier, a 45%
increase totaling 612,890 shares.
Net Interest Income
The Company's interest income increased by $2.0 million, or 40.7%, to $7.0
million for the six months ended June 30, 1997 from $4.9 million for the
comparable period of 1996. The increase resulted from a $51.2 million
increase in the Company's average earning assets. Interest expense
increased by $832 thousand, or 39.0%, to $3.0 million for the six months
ended June 30, 1997 from $2.1 million for the comparable period of 1996.
This increase in interest expense was primarily attributable to the $49.0
million, or 39.3%, increase in the Company's total deposits from $125.6
million as of June 30, 1996 to $175.0 million as of June 30, 1997 and the
change in the composition of the Company's deposits, as a greater
percentage of the Company's deposits were in time deposits, which generally
pay higher rates of interest. Since interest income increased more than
interest expense, the Company experienced growth in its net interest margin
from 4.55% for the six months ended June 30, 1996 to 4.57% for the six
months ended June 30, 1997.
Provision for Loan Losses
The Company's provision for loan losses decreased by $22 thousand to $235
thousand for the six months ended June 30, 1997 from $257 thousand for the
comparable period of 1996. This decrease in the provision for loan losses
reflects the $18.2 million growth in the loan portfolio for the six month
period ended June 30, 1997, compared to a $25.0 million growth for the same
period ended June 30, 1996.
For the second quarter of 1997, the provision for loan losses increased by
$59 thousand, or 50.1%, over the comparable period of 1996. Management
determines provisions as necessary to maintain the allowance for loan
losses at targeted levels as measured against total loans and/or past due
accounts.
Noninterest Income
Service charges on deposits increased $111 thousand to $335 thousand for
the six months ended June 30, 1997, a 49.7% increase over $224 thousand
reported June 30, 1996. The majority of the increase is due to growth in
the demand accounts which includes higher volumes of transactions processed
along with repricing transaction fees in March 1996.
Other income increased 49.6%, to $265 thousand for the six month period
ending June 30, 1997 due to a larger portfolio of loan serviced and two new
loan products which accounted for an increase in loan application and
appraisal fee income. In January 1997, the Company introduced two new
products to augment its lending efforts, a full-service residential
mortgage department and "Cash Flow Manager". The mortgage department offers
a variety of traditional fixed and variable rate products. "Cash Flow
Manager" involves the purchase of accounts receivable on a recourse basis
as a means of generating both fees and interest income to the Company and
providing small businesses with a means of increasing their cash
availability for operating needs or expansion plans.
The Company's gain on sale of loans increased by $159 thousand to $776
thousand for the six months ended June 30, 1997 from $618 thousand for the
comparable period of 1996. This increase in the gain on sale of loans
reflects the Company's increased participation in the Small Business
Administration's ("SBA") guaranteed loan program as the Company has been
designated a "preferred lender" for the states of New Jersey, Delaware, New
York and Pennsylvania. Under the SBA program, the SBA guarantees up to 90%
of the principal of a qualifying loan. The Company then sells the
guaranteed portion of the loan
10
<PAGE>
into the secondary market.
For the quarter ended June 30, 1997 service charges on deposits increased
$33 thousand to $172 thousand, a 24.2% increase over $138 thousand reported
June 30, 1996. As stated above, growth in demand accounts and repricing
transactions fees contributed to the increase in charges.
Other income increased $24 thousand or 22.4% for the three month period
ending June 30, 1997 due to a larger portfolio of loan serviced and two new
loan products as described earlier.
Gain on sale of loans increased 38.7% or $141 thousand from $365 thousand
in 1996 to $506 thousand for the three month period ended June 30, 1997.
The increase was attributable to the same factors as discussed in the six
month comparisons.
Noninterest Expense
The Company's total other expenses increased by $1.3 million, or 45.4%, to
$4.1 million for the six months ended June 30, 1997 from $3.0 million for
the comparable period of 1996. Increases are comprised of $730 thousand in
salaries and employee benefits, $198 thousand in occupancy expenses and
$341 thousand in other operating expenses. The increases in employee
benefits, occupancy and other operating expenses were primarily
attributable to the company's continued expansion, as the Company opened
three new branches in July 1996, December 1996 and April 1997 and added two
new loan products in January 1997. In addition, the Company completed the
move into its new headquarters building in April 1996.
For the second quarter of 1997 total other expenses increased by $541
thousand, or 36.4%, to $2.0 million for the three month period ended June
30, 1997 from $1.5 million for the comparable period of 1996. Increases are
comprised of $308 thousand in salaries and employee benefits, $63 thousand
in occupancy expenses and $170 thousand in other operating expenses. The
increases were primarily attributable to expansion as discussed previously.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are various claims and lawsuits in which the Company is periodically
involved incidental to the Bank's business. In the opinion of management,
no material loss is expected from any such pending claims or lawsuits.
Item 2. Change in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
On or about April 4, 1997, the Registrant mailed to its shareholders a
proxy statement ("Proxy Statement") for the purpose of soliciting proxies
for use at its Annual Meeting of Shareholders. The proxies were solicited
pursuant to regulation 14A under the Securities Exchange Act of 1934 and
there were no solicitations in opposition thereto.
At the Annual Meeting, held on April 25, 1997, the shareholders approved
the following proposals set forth in the Proxy statement by the votes
indicated:
1. The election of the nominees named in the Proxy Statement to serve as
directors of the Company for the terms of office specified and until
their successors are duly elected and qualified. The following
tabulation with respect to each nominee for director is as follows:
Term of Affirmative Withheld
Director Expiration Votes Votes
Peter P DeTommaso 1999 1,513,620 7,325
Walter Hazard 2000 1,516,320 4,625
Robert J VanVolkenburgh 2000 1,514,351 6,594
The following directors terms of office continued after the meeting:
David Dallas
James Hyman
2. Approval of an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of the
Company's common stock from 2,500,000 to 7,500,000. For -
12
<PAGE>
1,404,654; Against - 23,330; Abstain - 2,034.
3. Approval of the Unity Bancorp, Inc. 1997 Stock Option Plan. For -
1,384,639; Against - 41,495; Abstain - 6,320.
4. Approval of the Unity Bancorp, Inc. 1997 Stock Bonus Plan. For -
1,349,836; Against - 75,248; Abstain - 7,370.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit
Number (27) - Financial Data Schedule
(b) Reports on Form 8-K
May 5, 1997 press release of March 26, 1997 Declares $.05 quarterly
cash dividend
May 5, 1997 Press release of April 24, 1997 First Quarter Earnings
June 16, 1997 press release of June 16, 1997 Amex Listing of common
stock purchase warrants
June 26, 1997 press release of June 26, 1997 Declares $.05 quarterly
cash dividend
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
UNITY BANCORP, INC.
Date: June 14, 1997 By: JAMES HYMAN
James Hyman,
President and Chief
Operating Officer
13
<PAGE>
EXHIBIT INDEX
EXHIBIT NO.
- -----------
27 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
registrants Unaudited June 30, 1997 interim financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,244,364
<INT-BEARING-DEPOSITS> 17,122,344
<FED-FUNDS-SOLD> 6,550,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 18,513,491
<INVESTMENTS-CARRYING> 28,618,778
<INVESTMENTS-MARKET> 27,919,220
<LOANS> 115,986,149
<ALLOWANCE> 1,055,329
<TOTAL-ASSETS> 194,999,404
<DEPOSITS> 175,007,666
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,017,747
<LONG-TERM> 349,197
0
0
<COMMON> 17,032,501
<OTHER-SE> 1,592,293
<TOTAL-LIABILITIES-AND-EQUITY> 194,999,404
<INTEREST-LOAN> 5,052,960
<INTEREST-INVEST> 1,504,410
<INTEREST-OTHER> 408,293
<INTEREST-TOTAL> 6,965,663
<INTEREST-DEPOSIT> 2,938,362
<INTEREST-EXPENSE> 2,968,230
<INTEREST-INCOME-NET> 3,997,433
<LOAN-LOSSES> 235,187
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,059,380
<INCOME-PRETAX> 1,079,165
<INCOME-PRE-EXTRAORDINARY> 1,079,165
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 658,680
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.33
<YIELD-ACTUAL> 4.57
<LOANS-NON> 951,364
<LOANS-PAST> 429,098
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 886,465
<CHARGE-OFFS> 66,323
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,055,329
<ALLOWANCE-DOMESTIC> 1,055,329
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
