920427--3/21/2008--UNITY_BANCORP_INC

related topics

{condition, economic, financial}

{personnel, key, retain}

{loan, real, estate}

{loss, insurance, financial}

{competitive, industry, competition}

{regulation, change, law}

{investment, property, distribution}

{debt, indebtedness, cash}

{system, service, information}

{acquisition, growth, future}

{product, market, service}

{cost, regulation, environmental}

We are subject to interest rate risk and variations in interest rates may negatively affect our financial performance, in addition dislocation and volatility in the credit markets may negatively affect the value of our assets. A significant amount of our loans, including our SBA loan portfolio, have variable rates of interest. As rates have risen, this has caused some borrowers difficulty meeting their loan obligations. Due to the current state of the yield curve, our net-interest margin and net-interest spread have declined. Continued declines in our net-interest margin and net-interest spread will negatively impact our results of operations. We have expanded our SBA lending program outside of our historic trade area. Our success in this program will depend on our ability to attract and retain qualified employees or correspondents in these new geographic areas, our ability to manage and supervise these remote employees and correspondents and our ability to recognize and manage risks in these areas that are different from those in our trade area. Our earnings may not continue to grow if we are unable to successfully attract core deposits and lending opportunities and exploit opportunities to generate fee-based income. Our growth-oriented business strategy could be adversely affected if we are not able to attract and retain skilled employees and manage our expenses. Curtailment of the Small Business Administration loan program could negatively affect the Company. There is a risk that the SBA will not honor their guarantee. Risks Related to the Banking Industry: Changes in local economic conditions could adversely affect our loan portfolio. There is a risk that we may not be repaid in a timely manner, or at all, for loans we make. Our allowance for loan losses may not be adequate to cover actual losses. We are in competition with many other banks, including larger commercial banks which have greater resources than us. The laws that regulate our operations are designed for the protection of depositors and the public, but not our stockholders. We may be subject to higher operating costs as a result of government regulation. We cannot predict how changes in technology will impact our business. The Company s information systems may experience an interruption or breach in security.

Full 10-K form ▸

920427--3/21/2008--UNITY_BANCORP_INC_/NJ/