Unity Bancorp Inc. in Clinton, N.J., said Thursday that its fourth-quarter loss widened by 25% from the period a year earlier, to $299,000.

The $818.4 million-asset company swung to a profit for the year but said its results were hurt by a $1.1 million increase in expenses on bank-owned real estate, including the writedown and disposal of several foreclosed properties in the fourth quarter.

Unity booked a $2.75 million provision in the fourth quarter, a 37.5% increase from the previous quarter, and charged off $2.5 million in problem loans. Nonperforming assets declined 27% from the third quarter, to $24 million, or 3.88% of total loans as of Dec. 31.

For the year Unity turned a profit of $719,000, after reporting a $2.6 million loss for 2009. Net interest income for the year rose 7.8%, to $30 million, helped by a higher yield on earning assets and a lower cost of deposits. The net interest margin rose 45 basis points, to 3.67%.

"Unity continues to work diligently to address problem loans," James A. Hughes, its president and CEO, said in a press release.

"The decrease in nonperforming assets was related to the sale of many problem assets," Hughes said. "For the near term, the size of our loan-loss provision will remain the most important single factor in our earnings. However, we are hopeful we will see further improvement in credit quality in 2011."

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