Unity Bancorp (UNTY) in Clifton, N.J., is set to redeem half of the preferred shares it issued through the Troubled Asset Relief Program.

The $827 million-asset company said Thursday that the Treasury Department had given it permission to redeem $10.3 million of preferred stock, along with unpaid dividends, issued through the Tarp.

Unity will not have to raise additional capital. The company said it will have a Tier 1 leverage ratio of 9.98% and a risk-based capital ratio of 14.19% after redeeming the shares.

The company issued $20.6 million in preferred shares to the Treasury Department in December 2008, along with warrants to buy 744,778 shares at $4.05 each.

"We entered into the program … in order to strengthen our financial position during challenging economic times," James Hughes, Unity's president and chief executive, said in a press release. "As our asset quality and earnings have improved, we believe it is time to redeem these shares. We intend on addressing the repurchase of the remaining shares as soon as possible."

Unity Bank has 15 branches in New Jersey and Pennsylvania.

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