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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(MARK ONE)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
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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
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UNITY BANCORP, INC.
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(Name of small business issuer as specified in its charter)
DELAWARE 22-3282551
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(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
64 OLD HIGHWAY 22, CLINTON, NJ 08809
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(Address of principal executive offices) (Zip Code)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE (908) 730-7630
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE EXCHANGE ACT: NONE.
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE EXCHANGE ACT:
Title of each class: Common Stock, No Par Value
Indicate by check mark whether the Issuer: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, 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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to the
best of Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. (X)
The aggregate market value of the voting stock held by non-affiliates of
the Issuer, as of March 1, 2001, was $9,502,699
The number of shares of the Issuer's Common Stock, no par value,
outstanding as of March 27, 2001, was 3,706,708.
For the fiscal year ended December 31, 2000, the Issuer had total revenues
of $35.7 million.
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1 of 14
UNITY BANCORP, INC.
DOCUMENTS INCORPORATED BY REFERENCE
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10-KSB ITEM DOCUMENT INCORPORATED
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Item 6. Management's Discussion and Analysis of Financial Financial Report to Shareholders for the fiscal year ended
Condition and Results of Operations December 31, 2000
Item 7. Financial Statements Financial Report to Shareholders for the fiscal year ended
December 31, 2000
Item 9. Directors and Executive Officers of the Company; Proxy Statement for 2001 Annual Meeting of Shareholders
Compliance with Section 16(a) of the Exchange Act to be filed no later than April 30, 2001
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Item 10. Executive Compensation Proxy Statement for 2001 Annual Meeting of Shareholders
to be filed no later than April 30, 2001
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Item 11. Security Ownership of Certain Beneficial Owners and Proxy Statement for 2001 Annual Meeting of Shareholders
Management to be filed no later than April 30, 2001
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Item 12. Certain Relationships and Related Transactions Proxy Statement for 2001 Annual Meeting of Shareholders
to be filed no later than April 30, 2001
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INDEX TO FORM 10-KSB
PART I
Page
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Item 1. Description of the Business
a) General 3
b) Statistical information 4
Item 2. Description of Properties 7
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote of Security Holders 8
PART II
Item 5. Market for Common Equity and Related Stockholder Matters 8
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 7. Financial Statements 9
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 9
PART III
Item 9. Directors and Executive Officers 10
Item 10. Executive Compensation 10
Item 11. Security Ownership of Certain Beneficial 10
Owners and Management
Item 12. Certain Relationships and Related Transactions 10
PART IV
Item 13. Exhibits and Reports on Form 8-K 11
Signatures 12
Page 2 of 14
PART I
ITEM 1. DESCRIPTION OF THE BUSINESS
a) GENERAL
Unity Bancorp, Inc. (the "Company" or "Registrant") is a one-bank holding
company incorporated under the laws of the State of Delaware to serve as a
holding company for Unity Bank (the "Bank"). The Company was organized at the
direction of the Board of Directors of the Bank for the purpose of acquiring all
of the capital stock of the Bank. Pursuant to the New Jersey Banking Act of 1948
(the "Banking Act"), and pursuant to approval of the shareholders of the Bank,
the Company acquired the Bank and became its holding company on December 1,
1994. The only significant activity of the Company is ownership and supervision
of the Bank.
The Bank opened for business on September 16, 1991. The Bank received its
charter from the New Jersey Department of Banking and Insurance on September 13,
1991. The Bank is a full-service commercial bank, providing a wide range of
business and consumer financial services through its main office and twelve (12)
branches located in Clinton, Colonia, Edison, Flemington, Highland Park, Linden,
North Plainfield, Scotch Plains, South Plainfield, Springfield, Union and
Whitehouse, New Jersey. The Bank's primary service area encompasses the Route
22/Route 78 corridor between the Bank's Clinton, New Jersey main office and its
Linden, New Jersey branch.
In the second half of 1999, the Company incurred certain losses, which
combined with the Company's asset growth, caused both the Bank's and the
Company's capital ratios to fall below levels required under federal regulation.
As a result of the capital deficiency, in the first quarter of 2000, the Company
and the Bank entered into Memoranda of Understanding with their primary
regulatory agencies. However, due to continued losses through the first two
quarters of 2000, among other reasons, the Bank and the Company entered into
stipulations and agreements with each of their respective regulators on July 18,
2000. Under these agreements, the Bank and the Company are each required to take
a number of affirmative steps including hiring an outside consulting firm to
review the management structures, adopt strategic and capital plans which will
increase the Bank's leverage ratio to 6% or above, review and adopt various
policies and procedures, adopt programs with regard to the resolution of certain
criticized assets, and provide ongoing reporting to the various regulatory
agencies with regard to the Bank's and Company's progress in meeting the
requirements of the agreements. The agreements require the Bank and Company to
establish a compliance committee to oversee the efforts in meeting all
requirements of the agreements, and prohibited the Bank from paying a dividend
to the Company and the Company from paying dividends on its common or preferred
stock, without regulatory approval. As of December 31, 2000, the Bank and the
Company believe they are in compliance with the requirements of the agreements.
As a result of the regulatory orders and the Company's losses in 1999 and
2000, the Company undertook a number of steps during 2000 to restructure its
balance sheet, enhance its capital ratios and restructure the Company's
management. In the first quarter of 2000, the Company completed an offering of
shares of a newly created class of preferred stock. The offering was undertaken
without registration with the Securities and Exchange Commission to a limited
number of sophisticated investors, and yielded $4.9 million in proceeds to the
Company, net of offering expenses. This additional capital was contributed to
the Bank. The preferred stock provides for a 10% annual cumulative dividend.
However, due to the regulatory agreements discussed above, the Company had been
unable to pay dividends on any of its outstanding securities, and therefore has
failed to pay the dividend on the preferred stock since the first dividend
payment in April 2000. At December 31, 2000, there were $388 thousand in
preferred stock dividends in arrears.
Also during 2000, the Company engaged in several sales of loan packages. In
the first quarter of 2000, the Company sold $36.4 million in adjustable rate 1-4
family mortgages, recognizing a loss of $.7 million. In the third quarter of
2000, the Company also sold $44.9 million in home equity loans, recognizing a
loss of $1.2 million. The loan sales helped improved the Company's liquidity as
well as its capital ratios by reducing the Company's outstanding assets. In
addition, the cash from the third quarter loan sale was used to fund the sale of
five (5) of the Company's branches in the fourth quarter of 2000. The branch
sales involved the assumption of $48.0 million in deposits by the acquirers,
which also assumed the Company's lease obligations under the leases for the
branch premises. The Company recognized a pretax gain of $3.5 million on these
sales.
Also in the fourth quarter of 2000, Certified Mortgage Associates, Inc.
("CMA"), a subsidiary of the Bank, ceased operations. CMA had been acquired in
February 1999. However, CMA had not operated profitably since the second quarter
of 1999. Certain members of management left the employment of CMA in the third
and fourth quarters of 2000 and the Company
Page 3 of 14
elected to have CMA cease operations during the fourth quarter. In connection
with the cessation of business, in the third and fourth quarters of 2000, the
Company wrote off $3.2 million in intangibles booked on the acquisition of CMA.
On August 14, 2000, Mr. Robert J. VanVolkenburgh resigned from his
positions of Chairman of the Board and Chief Executive Officer of the Company.
In February 2001, Mr. VanVolkenburgh filed a complaint in the Superior Court of
New Jersey alleging breach of two agreements. The Company intends to vigorously
defend itself from any claims for payment under the agreements. Counsel has
advised the Company it has strong defenses to any such claims by Mr.
VanVolkenburgh and he is not likely to succeed in this regard.
The Company is subject to the supervision and regulation of the Board of
Governors of the Federal Reserve System (the "FRB"). The Bank is a New Jersey
chartered commercial bank whose deposits are insured Federal Deposit Insurance
Corporation ("FDIC"). The operations of the Company and the Bank are subject to
the supervision and regulation of FRB, FDIC and the New Jersey Department of
Banking and Insurance (the "Department").
The principal executive offices of the Company are located at 64 Old
Highway 22, Clinton, New Jersey 08809, and the telephone number is (908)
730-7630.
BUSINESS OF THE COMPANY
The Company's primary business is ownership and supervision of the Bank.
The Company, through the Bank, conducts a traditional and community-oriented
commercial banking business, and offers services including personal and business
checking accounts and time deposits, money market accounts and regular savings
accounts. The Company structures its specific services and charges in a manner
designed to attract the business of the small and medium sized business and
professional community as well as that of individuals residing, working and
shopping in its service area. The Company engages in a wide range of lending
activities and offers commercial, SBA, consumer, mortgage, home equity and
personal loans.
SERVICE AREAS
The Company's primary service area is defined as the neighborhoods served
by the Bank's offices. The Bank's main office, located in Clinton, in
combination with its Flemington and Whitehouse offices serves the greater area
of Hunterdon County. The Bank's North Plainfield office serves those communities
located in the northern, eastern and central parts of Somerset County, and the
southernmost communities of Union County. The Bank's Springfield, Scotch Plains,
Linden, Union, and Springfield offices serve the majority of the communities in
Union County, and the southwestern communities of Essex County. The offices in
South Plainfield, Highland Park, Edison, and Colonia Township extend the
Company's service area into Middlesex County.
COMPETITION
The Company is located in an extremely competitive area. The Company's
service area is already serviced by major regional banks, large thrift
institutions and by a variety of credit unions. In addition, since passage of
the Gramm-Leach-Bliley Financial Modernization Act of 1999 (the "Modernization
Act"), securities firms and insurance companies have been allowed to acquire or
form financial institutions, thereby increasing competition in the financial
services market. Most of the Company's competitors have substantially more
capital and therefore greater lending limits than the Company. The Company's
competitors generally have established positions in the service area and have
greater resources than the Company with which to pay for advertising, physical
facilities, personnel and interest on deposited funds. The Company relies upon
the competitive pricing of its loans, deposits and other services as well as its
ability to provide local decision making and personal service in order to
compete with these larger institutions.
EMPLOYEES
At December 31, 2000, the Company employs 115 full-time and 24 part-time
employees. None of the Company's employees are represented by any collective
bargaining units. The Company believes that its relations with its employees are
good.
Page 4 of 14
SUPERVISION AND REGULATION
GENERAL - SUPERVISION AND REGULATION
Bank holding companies and banks are extensively regulated under both
federal and state law. These laws and regulations are intended to protect
depositors, not stockholders. To the extent that the following information
describes statutory and regulatory provisions, it is qualified in its entirety
by reference to the particular statutory and regulatory provisions. Any change
in the applicable law or regulation may have a material effect on the business
and prospects of the Company and the Bank. Over the past several years, a number
of legislative proposals have been debated in Congress concerning modernization
of the nation's financial system. Many of these proposals would substantially
alter the current regulatory framework, particularly as it relates to bank
holding companies and their powers. Management of the Company is unable to
predict, at this time, which, if any, of these legislative proposals may
ultimately be adopted and the impact of any such regulatory proposals on the
business of the Company.
GENERAL BANK HOLDING COMPANY REGULATION
General. As a bank holding company registered under the Bank Holding
Company Act of 1956, as amended, (the "BHCA"), the Company is subject to the
regulation and supervision of the FRB. The Company is required to file with the
FRB annual reports and other information regarding its business operations and
those of its subsidiaries. Under the BHCA, the Company's activities and those of
its subsidiaries are limited to banking, managing or controlling banks,
furnishing services to or performing services for its subsidiaries or engaging
in any other activity which the FRB determines to be so closely related to
banking or managing or controlling banks as to be properly incident thereto.
The BHCA requires, among other things, the prior approval of the FRB in any
case where a bank holding company proposes to (i) acquire all or substantially
all of the assets of any other bank, (ii) acquire direct or indirect ownership
or control of more than 5% of the outstanding voting stock of any bank (unless
it owns a majority of such bank's voting shares), or (iii) merge or consolidate
with any other bank holding company. The FRB will not approve any acquisition,
merger, or consolidation that would have a substantially anti-competitive
effect, unless the anti- competitive impact of the proposed transaction is
clearly outweighed by a greater public interest in meeting the convenience and
needs of the community to be served. The FRB also considers capital adequacy and
other financial and managerial resources and future prospects of the companies
and the banks concerned, together with the convenience and needs of the
community to be served, when reviewing acquisitions or mergers.
The BHCA also generally prohibits a bank holding company, with certain
limited exceptions, from (i) acquiring or retaining direct or indirect ownership
or control of more than 5% of the outstanding voting stock of any company which
is not a bank or bank holding company, or (ii) engaging directly or indirectly
in activities other than those of banking, managing or controlling banks, or
performing services for its subsidiaries; unless such non-banking business is
determined by the FRB to be so closely related to banking or managing or
controlling banks as to be properly incident thereto. In making such
determinations, the FRB is required to weigh the expected benefits to the
public, such as greater convenience, increased competition or gains in
efficiency, against the possible adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts of interest, or unsound
banking practices.
The BHCA was substantially amended through the Modernization Act. The
Modernization Act permits bank holding companies and banks, which meet certain
capital, management and Community Reinvestment Act standards to engage in a
broader range of nonbanking activities. In addition, bank holding companies,
which elect to become financial holding companies, may engage in certain banking
and nonbanking activities without prior FRB approval. Finally, the Modernization
Act imposes certain new privacy requirements on all financial institutions and
their treatment of consumer information. At this time, the Company has elected
not to become a financial holding company, as it does not engage in any
nonbanking activities.
There are a number of obligations and restrictions imposed on bank holding
companies and their depository institution subsidiaries by law and regulatory
policy that are designed to minimize potential loss to the depositors of such
depository institutions and the FDIC insurance funds in the event the depository
institution becomes in danger of default. Under a policy of the FRB with respect
to bank holding company operations, a bank holding company is required to serve
as a source of financial strength to its subsidiary depository institutions and
to commit resources to support such institutions in circumstances where it might
not do so absent such policy. The FRB also has the authority under the BHCA to
require a bank holding company to terminate any activity or to relinquish
control of a non-bank subsidiary upon the FRB's determination that such activity
or control constitutes a serious risk to the financial soundness and stability
of any bank subsidiary of the bank holding company.
Page 5 of 14
Capital Adequacy Guidelines for Bank Holding Companies. The FRB has adopted
risk-based capital guidelines for bank holding companies. The risk-based capital
guidelines are designed to make regulatory capital requirements more sensitive
to differences in risk profile among banks and bank holding companies, to
account for off-balance sheet exposure, and to minimize disincentives for
holding liquid assets. Under these guidelines, assets and off-balance sheet
items are assigned to broad risk categories each with appropriate weights. The
resulting capital ratios represent capital as a percentage of total
risk-weighted assets and off-balance sheet items.
The risk-based guidelines apply on a consolidated basis to bank holding
companies with consolidated assets of $150 million or more. The minimum ratio of
total capital to risk-weighted assets (including certain off-balance sheet
activities, such as standby letters of credit) is 8%. At least 4% of the total
capital is required to be "Tier I," consisting of common stockholders' equity
and certain preferred stock, less certain goodwill items and other intangible
assets. The remainder, "Tier II Capital," may consist of (a) the allowance for
loan losses of up to 1.25% of risk-weighted assets, (b) excess of qualifying
preferred stock, (c) hybrid capital instruments, (d) debt, (e) mandatory
convertible securities, and (f) qualifying subordinated debt. Total capital is
the sum of Tier I and Tier II capital less reciprocal holdings of other banking
organizations' capital instruments, investments in unconsolidated subsidiaries
and any other deductions as determined by the FRB (determined on a case-by-case
basis or as a matter of policy after formal rule-making).
Bank holding company assets are given risk-weights of 0%, 20%, 50% and
100%. In addition, certain off-balance sheet items are given similar credit
conversion factors to convert them to asset equivalent amounts to which an
appropriate risk-weight will apply. These computations result in the total
risk-weighted assets. Most loans are assigned to the 100% risk category, except
for performing first mortgage loans fully secured by residential property which
carry a 50% risk-weighting and performing, guaranteed portions of unsold SBA
loans, which carry a 20% risk-weighting. Most investment securities (including,
primarily, general obligation claims of states or other political subdivisions
of the United States) are assigned to the 20% category, except for municipal or
state revenue bonds, which have a 50% risk-weight, and direct obligations of the
U.S. Treasury or obligations backed by the full faith and credit of the U.S.
Government, which have a 0% risk-weight. In converting off-balance sheet items,
direct credit substitutes including general guarantees and standby letters of
credit backing financial obligations, are given a 100% risk-weighing.
Transaction related contingencies such as standby letters of credit backing
non-financial obligations and undrawn commitments (including commercial credit
lines with an initial maturity or more than one year) have a 50% risk-weighing.
Short-term commercial letters of credit have a 20% risk-weighing and certain
short-term unconditionally cancelable commitments have a 0% risk-weighing.
In addition to the risk-based capital guidelines, the FRB has adopted a
minimum Tier I capital (leverage) ratio, under which a bank holding company must
maintain a minimum level of Tier I capital to average total consolidated assets
of at least 3% in the case of a bank holding company that has the highest
regulatory examination rating and is not contemplating significant growth or
expansion. All other bank holding companies are expected to maintain a leverage
ratio of at least 100 to 200 basis points above the stated minimum.
The Company is currently in compliance with these minimum Federal capital
requirements.
GENERAL BANK REGULATION
As a New Jersey-chartered commercial bank, the Bank is subject to the
regulation, supervision, and control of the Department. As an FDIC-insured
institution, the Bank is subject to regulation, supervision and control of the
FDIC, an agency of the federal government. The regulations of the FDIC and the
Department impact virtually all activities of the Bank, including the minimum
level of capital the Bank must maintain, the ability of the Bank to pay
dividends, the ability of the Bank to expand through new branches or
acquisitions and various other matters.
Insurance of Deposits. The Bank's deposits are insured up to a maximum of
$100,000 per depositor under the SAIF of the FDIC. Pursuant to the Federal
Deposit Insurance Corporation Improvements Act of 1991 ("FDICIA") the FDIC has
established a risk-based assessment system. Premium assessments under this
system are based upon: (i) the probability that the insurance fund will incur a
loss with respect to the institution; (ii) the likely amount of the loss; and
(iii) the revenue needs of the insurance fund. To effectuate this system, the
FDIC has developed a matrix that sets the assessment premium for a particular
institution in accordance with its capital level and overall rating by the
primary regulator.
Page 6 of 14
Dividend Rights. Under the Banking Act, a bank may declare and pay
dividends only if, after payment of the dividend, the capital stock of the bank
will be unimpaired and either the bank will have a surplus of not less than 50%
of its capital stock or the payment of the dividend will not reduce the bank's
surplus. However, as described above, pursuant to its agreements with its
federal and state regulators, the Bank is currently prohibited from paying
dividends without the prior written approval of those regulatory agencies.
b) STATISTICAL INFORMATION
The table below provides a cross-reference to portions of Unity Bancorp.
Inc.'s 2000 Annual Report to Shareholders incorporated by reference herein.
Information that is not applicable is indicated by (N/A):
Annual Report
Description of Financial Data Pages
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I. Distribution of Assets, Liabilities, and
Stockholders' Equity; Interest
Rates and Interest Differential
A. Analysis of Net Interest Earnings 7
B. Average Balance Sheets 8
C. Rate/Volume Analysis 8
II. Investment Portfolio
A. Book value of investment securities 25
B. Investment securities by range of maturity with
corresponding average yields 25
C. Securities of issuers exceeding ten percent
of stockholders' equity NA
III. Loan Portfolio
A. Types of loans 11
B. Maturities and sensitivities of loans to
changes in interest rates 11
C. Risk elements
1) Nonaccrual, past due and restructured loans 11-12
2) Potential problem loans 12
3) Foreign outstandings NA
4) Loan concentrations NA
D. Other interest bearing assets NA
IV. Summary of Loan Loss Experience
A. Analysis of the allowance for loan losses 12
B. Allocation of the allowance for loan losses 13
V. Deposits
A. Average amount and average rate paid on major
categories of deposits 13
B. Other categories of deposits NA
C. Deposits by foreign depositors in domestic offices NA
D. Time deposits of $100,000 or more by remaining maturity 26
E. Time deposits of $100,000 or more by foreign offices NA
VI. Return on Equity and Assets 5
VII. Short-term Borrowings 27
Page 7 of 14
ITEM 2. DESCRIPTION OF PROPERTIES
The Company presently conducts its business through its main office located
at 64 Old Highway 22, Clinton, New Jersey, and its twelve branch offices.
The following table sets forth certain information regarding the Company's
properties for which it conducts business as of December 31, 2000.
Leased Date Leased Lease 2000 Annual
Location Or Owned or Acquired Expiration Rental Fee
-------- -------- ----------- ---------- -----------
Clinton, NJ Leased 1996 2006 $ 448,056
Colonia, NJ Leased 1995 2005 36,000
Flemington, NJ Leased 1995 2003 55,725
Linden, NJ Owned 1991 -- --
Highland Park, NJ Leased 1999 2024 66,950
North Plainfield, NJ Owned 1991 -- --
Scotch Plains, NJ Leased 1996 2006 70,812
Springfield, NJ-1 Leased 1995 2003 30,336
South Plainfield, NJ Leased 1999 2024 80,340
Union, NJ Leased 1996 2006 61,350
Edison, NJ Leased 1999 2024 92,700
Whitehouse, NJ Owned 1998 -- --
ITEM 3. LEGAL PROCEEDINGS
The Company and the Bank are periodically parties to or otherwise involved in
legal proceedings arising in the normal course of business, such as claims to
enforce liens, claims involving the making and servicing of real property loans,
and other issues incident to the Bank's business. With the exception of the
litigation described below, none of these proceedings individually or in the
aggregate is expected to have a material adverse effect upon the Company.
On August 14, 2000, Mr. Robert J. VanVolkenburgh resigned from his
positions of Chairman of the Board and Chief Executive Officer of the Company.
In February 2001, Mr. VanVolkenburgh filed a complaint in the Superior Court of
New Jersey alleging breach of two agreements. The Company intends to vigorously
defend itself from any claims for payment under the agreements. Counsel has
advised the Company it has strong defenses to any such claims by Mr.
VanVolkenburgh and he is not likely to succeed in this regard.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No matters were submitted for a vote of the Registrant's shareholders
during the fourth quarter of fiscal 2000.
Page 8 of 14
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Commencing on September 21, 1998, the Company's Common Stock began trading
on the NASDAQ National Market under the symbol "UNTY". Previously, the Company's
Common Stock had traded on the American Stock Exchange under the symbol "UBI".
As of December 31, 2000, there were 574 stockholders of record of the Common
Stock.
The following table sets forth the high and low bid prices of the Common
Stock along with the closing prices, as reported on the NASDAQ National Market
for 2000 and 1999. The NASDAQ high and low bid prices reflect inter-dealer
quotations, without retail mark-up, mark-down or commissions and do not
necessarily represent actual transactions. The table also sets forth cash
dividends paid on the Common Stock.
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UNITY BANCORP, INC., COMMON STOCK PRICES AND CASH DIVIDENDS
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CASH
HIGH LOW CLOSE DIVIDEND
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2000:
4th Quarter................ $ 4.38 $ 2.00 $ 2.00 $ 0.00
--------------------------------------------------------------------------------
3rd Quarter................ 4.94 3.44 3.44 0.00
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2nd Quarter................ 6.25 3.50 3.88 0.00
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1st Quarter................ 6.68 5.25 6.00 0.00
--------------------------------------------------------------------------------
1999:
4th Quarter................ $ 8.50 $ 4.75 $ 6.00 $ 0.06
--------------------------------------------------------------------------------
3rd Quarter................ 11.75 6.38 6.88 0.06
--------------------------------------------------------------------------------
2nd Quarter................ 12.00 9.63 11.75 0.06
--------------------------------------------------------------------------------
1st Quarter................ 11.00 9.31 10.00 0.06
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The Company began paying a cash dividend in the first quarter of 1995 and
declared a quarterly dividend each quarter until the fourth quarter of 1999.
However, as is discussed under Item 1 "Description of Business - General," the
Company is currently prohibited from paying dividends on its securities pursuant
to its consent with its state and federal regulators. On March 13, 2000, the
Company completed an offering of shares of a newly created class of preferred
stock. The offering was undertaken without registration with the Securities and
Exchange Commission to a limited number of sophisticated investors. The
preferred stock bears a cumulative dividend rate of 10%, and is convertible into
shares of the Company's common stock at an assumed value of $7.25 per common
share. The Company also has rights to force conversion of its preferred stock
into common stock starting in March 2002 at an assumed common stock price of
$7.25 per share. The Company obtained $5.2 million in proceeds from this
offering. The Company issued 103,500 shares of the preferred stock, which are
convertible into 713,793 shares of the Company's common stock at a conversion
rate of 6.8966 common. Due to the Company's regulatory agreements, the Company
has not paid dividends on the preferred stock since the first dividend in April
2000. At December 31, 2000, there were $388 thousand of preferred stock
dividends in arrears.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
See Management's Discussion and Analysis of Financial Condition and Results
of Operations on pages 5 to 17 of the 2000 Annual Report to Shareholders which
information is incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS
See Financial Statements and Notes to Financial Statements on pages 18 to
31 of the 2000 Annual Report to Shareholders which information is incorporated
by reference herein.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
Page 9 of 14
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS; COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT
Information concerning directors and executive officers is included in the
definitive Proxy Statement for the Company's 200 Annual Shareholders Meeting
under the captions "ELECTION OF DIRECTORS" and information concerning compliance
with Section 16(a) of the Exchange Act is included under the caption "COMPLIANCE
WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934," each of which is
incorporated herein by reference. It is expected that such Proxy Statement will
be filed with the Securities and Exchange Commission no later than April 30,
2001.
The following table sets forth certain information about each executive
officer of the Company who is not also a director.
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PRINCIPAL OCCUPATION DURING
NAME, AGE AND POSITION OFFICER SINCE PAST FIVE YEARS
--------------------------------------------------------------------------------------------------------------
Anthony J. Feraro, 53, President and Chief 1999 Previously, Mr. Feraro was an Executive Vice
Executive Officer of the Company and the President of Zion Bancorp.
Bank
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James A. Hughes *, 42, 2001 Previously, Mr. Hughes was SVP of Finance for
Chief Financial Officer and Executive Vice Summit Bancorp, Inc.
President of the Company and Bank
==============================================================================================================
James W. Loney **, 59, 2000 Managing Examiner for the State of New Jersey,
Chief Operating Officer and Executive Vice Department of Banking and Insurance
President of the Bank
==============================================================================================================
* James A. Hughes began employment with the Company in December 2000 and was
ratified by regulatory agencies as the Chief Financial Officer of the Company in
February 2001.
** James W. Loney began employment with the Bank in September 2000.
ITEM 10. EXECUTIVE COMPENSATION
Information concerning executive compensation is included in the definitive
Proxy Statement for the Company's 2001 Annual Meeting under the caption
"EXECUTIVE COMPENSATION," which is incorporated herein by reference. It is
expected that such Proxy Statement will be filed with the Securities and
Exchange Commission no later than April 30, 2001.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning security ownership of certain beneficial owners and
management is included in the definitive Proxy Statement for the Company's 2001
Annual Shareholders Meeting under the caption "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT," which is incorporated herein by reference. It
is expected that such Proxy Statement will be filed with the Securities and
Exchange Commission no later than April 30, 2001.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related transactions is
included in the definitive Proxy Statement for the Company's 2001 Annual
Shareholders Meeting under the caption "Certain Transactions with Management,"
which is incorporated herein by reference. It is expected that such Proxy
Statement will be filed with the Securities and Exchange Commission no later
than April 30, 2001.
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ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
a) (1) Financial statements
See Financial Statements and Notes to Financial Statements on pages 18 to
31 of the 2000 Annual Report to Shareholders which information is
incorporated by reference herein.
(a) (2) Other Exhibits.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
-------- -----------------------
3(i) Certificate of Incorporation of the Company, as amended (2)
3(ii) Bylaws of the Company (1)
4(i) Form of Stock Certificate (2)
10(i) 1994 Stock Option Plan for Non-Employee Directors (1)
10(ii) Stock Bonus Plan (2)
10(iii) 1997 Stock Option Plan (3)
10(iv) 1997 Stock Bonus Plan (3)
10(v) 1998 Stock Option Plan (4)
13 Unity Bancorp. Inc. 2000 Annual Report to Shareholders
21 Subsidiaries of the Registrant
23a Consent of KPMG LLP
27 Financial Data Schedule
(1) Incorporated by reference from Exhibits 2(a) to 99(b) from the Registrant's
Registration Statement on Form S-4, Registration No. 33-76392.
(2) Incorporated by reference from Exhibits 3(i) to 27 from the Registrant's
Registration Statement on Form SB-2, Registration No. 333-12565.
(3) Incorporated by reference from Exhibits B and C from the Company's
Definitive Proxy Statement for its 1997 Annual Meeting of Shareholders.
(4) Incorporated by reference from Exhibit A from the Company's definitive Proxy
Statement for its 1998 Annual Meeting of Shareholders.
(a) (3) Reports on Form 8-K
DATE ITEM REPORTED
---- -------------
October 10, 2000 5 - announcing loan and branch sale
December 11, 2000 5- announcing the sale of certain
branches of its subsidiary,
Unity Bank and announcing the
appointment of Anthony Feraro
president of the Registrant and
other certain management changes.
Page 11 of 14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, hereunto duly authorized.
UNITY BANCORP, INC.
Dated: March 29, 2001 By:/s/ ANTHONY J. FERARO
---------------------
Anthony J. Feraro
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
================================================================================
NAME TITLE DATE
--------------------------------------------------------------------------------
/s/ David D. Dallas Chairman of the Board March 29, 2001
-------------------------
David D. Dallas
--------------------------------------------------------------------------------
/s/ Anthony J. Ferraro President and Chief Executive March 29, 2001
------------------------- Officer
Anthony J. Ferraro
--------------------------------------------------------------------------------
/s/ James A. Hughes Chief Financial Officer (Principal March 29, 2001
------------------------- Financial and Accounting Officer)
James A. Hughes
--------------------------------------------------------------------------------
/s/ Charles S. Loring Director March 29, 2001
-------------------------
Charles S. Loring
--------------------------------------------------------------------------------
/s/ Peter P. DeTommaso Director March 29, 2001
-------------------------
Peter P. DeTommaso
--------------------------------------------------------------------------------
/s/ Allen Tucker Director March 29, 2001
-----------------------
Allen Tucker
================================================================================
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