Form 8-K - Current report

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

July 12, 2024

Date of Report (Date of earliest event reported)

UNITY BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

New Jersey

(State or Other Jurisdiction of Incorporation)


1-12431	22-3282551
(Commission File Number)	(IRS Employer Identification No.)

64 Old Highway 22

Clinton, NJ 08809

(Address of Principal Executive Office)

(908) 730-7630

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	UNTY	NASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operation and Financial Condition

The Registrant issued a press release on July 12, 2024 announcing results for the six months ended June 30, 2024, the full text of which is incorporated by reference to this Item.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit 99.1

Press release issued by the Registrant on July 12, 2024.

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 hereunto duly authorized.

October 13, 2023
	UNITY BANCORP, INC.
	(Registrant)

Date: July 12, 2024
	By:	/s/ George Boyan
		George Boyan
		Executive Vice President and Chief Financial Officer

Exhibit 99.1

Clinton, NJ -- Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income of $9.5 million, or $0.93 per diluted share, for the quarter ended June 30, 2024, compared to net income of $9.6 million, or $0.93 per diluted share for the quarter ended March 31, 2024. This represents a 1.4% decrease in net income and no change in net income per diluted share. For the six months ended June 30, 2024, Unity Bancorp reported net income of $19.0 million, or $1.86 per diluted share, compared to net income of $20.0 million, or $1.91 per diluted share, for the six months ended June 30, 2023. This represents a 4.7% decrease in net income and a 2.6% decrease in net income per diluted share.

Second Quarter Earnings Highlights

●

Net interest income, the primary driver of earnings, was $23.4 million for the quarter ended June 30, 2024, a decrease of $0.4 million, as compared to $23.8 million for the quarter ended March 31, 202 4. Net interest margin (“NIM”) decreased 8 basis points to 4.01% for the quarter ended June 30, 2024, compared to the quarter ended March 31, 2024. The decrease was primarily due to the cost of interest-bearing liabilities increasing faster than the yield of interest-earning assets.

●

The provision for credit losses on loans was $0.3 million for the quarter ended June 30, 2024, compared to $0.6 million for the quarter ended March 31, 2024. The provision in the current quarter was primarily driven by increases in the specific reserve.

●

Provision for credit losses on Available For Sale (“AFS”) debt securities was $0.6 million for the quarter ended June 30, 2024, as compared to no provision for the prior quarter. The impairment was entirely attributable to the same corporate debt security for which a partial provision was taken in the fourth quarter of 2023. The Company owns $5 million in par of this position and moved the position into non-accrual status during the three months ending June 30, 2024. The net carrying value of the position was $3.1 million as of June 30, 2024.

●

Noninterest income was $2.0 million for the quarter ended June 30, 2024, compared to $1.7 million for the quarter ended March 31, 2024. The $0.3 million increase was primarily due to increased BOLI income, other income and gain on sale of SBA loans. Other income is primarily comprised of interchange & wire fee revenues. The Bank sold $3.9 million of SBA loans during the quarter ended June 30, 2024, compared to $2.4 million during the quarter ended March 31, 2024.

●

Noninterest expense was $12.0 million for the quarter ended June 30, 2024, compared to $12.1 million for the quarter ended March 31, 2024. The decrease was primarily driven by lower compensation and benefit expenses, partially offset by increased furniture & equipment expense.

●

The effective tax rate was 24.7% for the quarter ended June 30, 2024, compared to 25.0% for the quarter ending March 31, 2024.

Balance Sheet Highlights

●

Total gross loans decreased $1.5 million, or 0.1%, from December 31, 2023, primarily due to decreases in the residential construction and residential mortgage categories. These decreases were partially offset by increases in the commercial loan category.

●

As of June 30, 2024, the allowance for credit losses as a percentage of gross loans was 1.20%.

●

Total deposits increased $86.7 million, or 4.5%, from December 31, 2023. As of June 30, 2024, 18.3% of total deposits were uninsured or uncollateralized. The Company’s deposit composition as of June 30, 2024, consisted of 21.0% in noninterest bearing demand deposits, 15.0% in interest-bearing demand deposits, 27.5% in savings deposits, and 36.5% in time deposits.

●

As of June 30, 2024, the loan to deposit ratio was 107.9%, representing a continued reduction from 112.9% as of December 31, 2023. Because the Company is in compliance with its 110% threshold, management plans to expand lending initiatives to non-owner occupied borrowers.

●

As of June 30, 2024, investments comprised 5.6% of total assets. Available for sale debt securities (“AFS”) were $99.1 million or 3.8% of total assets. Held to maturity (“HTM”) debt securities were $36.2 million or 1.4% of total assets. As of June 30, 2024, pre-tax net unrealized losses on AFS and HTM were $4.7 million and $7.2 million, respectively. These pre-tax unrealized losses represent approximately 4.2% of the Company’s Tier 1 capital. Equity securities were $9.9 million or 0.4% of total assets as of June 30, 2024.

●

Borrowed funds decreased $81.6 million from December 31, 2023. Borrowed funds were entirely comprised of borrowings from the FHLB.

●

Shareholders’ equity was $273.4 million as of June 30, 2024, compared to $261.4 million as of December 31, 2023. The $12.0 million increase was primarily driven by 2024 earnings, partially offset by share repurchases and dividend payments. In the first half of 2024, Unity Bancorp repurchased 218,768 shares for approximately $5.9 million, or a weighted average price of $27.04 per share. For the three months ended June 30, 2024, Unity Bancorp repurchased 68,771 shares for approximately $1.8 million, or a weighted average price of $26.77 per share.

●

Book value per common share was $27.41 as of June 30, 2024, compared to $25.98 as of December 31, 2023. This increase primarily reflects earnings offset by dividend payouts and share repurchases.

●

Below is a summary of the Company’s regulatory capital ratios:

o

The Leverage Ratio increased 53 basis points to 11.67% at June 30, 2024, compared to 11.14% at December 31, 2023.

o

The Common Equity Tier 1 Capital Ratio increased 61 basis points to 13.31% at June 30, 2024, compared to 12.70% at December 31, 2023.

o

The Tier 1 Capital Ratio increased 62 basis points to 13.80% at June 30, 2024, compared to 13.18% at December 31, 2023.

o

The Total Capital Ratio increased 62 basis points, to 15.05% at June 30, 2024, compared to 14.43% at December 31, 2023.

●

At June 30, 2024, the Company held $197.4 million of cash and cash equivalents. Further, the Company maintained approximately $610.5 million of funding available from various funding sources, including the FHLB, FRB Discount Window and other lines of credit. Additionally, the Company has the ability to pledge additional securities to further increase borrowing capacity. Total available funding plus cash on hand represented 219.3% of uninsured or uncollateralized deposits.

●

As of June 30, 2024, nonperforming assets were $15.2 million, compared to $19.2 million as of December 31, 2023 and $16.9 million as of March 31, 2024. The Company diligently reviews nonperforming assets and potential problem credits, taking proactive measures to promptly address and resolve any issues. As of June 30, 2024, nonperforming assets included $3.1 million related to debt securities available for sale. There were no nonperforming debt securities available for sale as of December 31, 2023 or March 31, 2024. The ratio of nonperforming loans to total loans was 0.56% as of June 30, 2024. The ratio of nonperforming assets to total assets was 0.58% as of June 30, 2024.

Other Highlights

❖

In Q2 2024, Unity Bank actively assisted certain customers with their application to participate in the FHLBNY’s 2024 Affordable Housing Program (“AHP”). The FHLBNY AHP program awards grants to members and project sponsors who are planning to purchase, rehabilitate, or construct affordable homes or apartments.

❖

In Q2 2024, Unity Bank introduced deposit account promotions specifically tailored to business checking and savings accounts.

❖

In Q2 2024, Unity Bank’s Marketing Director, Crystal Stoneback Rose, was selected as a Lehigh Valley Business Woman of Influence. This recognition highlights Crystal’s professional experience, community involvement and commitment to mentoring others.

Unity Bancorp, Inc. is a financial services organization headquartered in Clinton, New Jersey, with approximately $2.6 billion in assets and $2.0 billion in deposits. Unity Bank, the Company’s wholly owned subsidiary, provides financial services to retail, corporate and small business customers through its robust branch network located in Bergen, Hunterdon, Middlesex, Morris, Ocean, Somerset, Union and Warren Counties in New Jersey and Northampton County in Pennsylvania. For additional information about Unity, visit our website at www.unitybank.com , or call 800-618-BANK.

This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance. These statements may be identified by use of the words “believe”, “expect”, “intend”, “anticipate”, “estimate”, “project” or similar expressions. These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond the Company’s control and could impede its ability to achieve these goals. These factors include those items included in our Annual Report on Form 10-K under the heading “Item IA-Risk Factors” as amended or supplemented by our subsequent filings with the SEC, as well as general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, our ability to manage and reduce the level of our nonperforming assets, results of regulatory exams, and the impact of COVID-19 on the Bank, its employees and customers, among other factors.

UNITY BANCORP, INC.

SUMMARY FINANCIAL HIGHLIGHTS


										June 30, 2024 vs.
										March 31, 2024		June 30, 2023
(In thousands, except percentages and per share amounts)	June 30, 2024			March 31, 2024			June 30, 2023			%		%
BALANCE SHEET DATA
Total assets	$	2,597,707		$	2,568,088		$	2,552,301		1.2	%	1.8	%
Total deposits		2,010,831			1,961,270			1,849,528		2.5		8.7
Total gross loans		2,170,535			2,174,457			2,167,367		(0.2)		0.1
Total securities		145,187			138,702			137,061		4.7		5.9
Total shareholders' equity		273,395			266,761			244,073		2.5		12.0
Allowance for credit losses		26,107			26,080			25,988		0.1		0.5

FINANCIAL DATA - QUARTER TO DATE
Income before provision for income taxes	$	12,552		$	12,784		$	13,109		(1.8)		(4.2)
Provision for income taxes		3,098			3,198			3,409		(3.1)		(9.1)
Net income	$	9,454		$	9,586		$	9,700		(1.4)		(2.5)

Net income per common share - Basic	$	0.94		$	0.95		$	0.96		(1.1)		(2.1)
Net income per common share - Diluted		0.93			0.93			0.95		-		(2.1)

PERFORMANCE RATIOS - QUARTER TO DATE (annualized)
Return on average assets		1.56	%		1.58	%		1.60	%
Return on average equity		14.07			14.49			16.19
Efficiency ratio**		47.10			47.57			45.87
Cost of funds		2.73			2.64			2.19
Net interest margin		4.01			4.09			4.04
Noninterest expense to average assets		1.98			2.00			1.95

FINANCIAL DATA - YEAR TO DATE
Income before provision for income taxes	$	25,336					$	26,901				(5.8)
Provision for income taxes		6,296						6,914				(8.9)
Net income	$	19,040					$	19,987				(4.7)

Net income per common share - Basic	$	1.89					$	1.94				(2.6)
Net income per common share - Diluted		1.86						1.91				(2.6)

PERFORMANCE RATIOS - YEAR TO DATE
Return on average assets		1.57	%					1.66	%
Return on average equity		14.28						16.66
Efficiency ratio**		47.33						45.21
Cost of funds		2.70						2.00
Net interest margin		4.05						4.11
Noninterest expense to average assets		1.99						1.93

SHARE INFORMATION
Market price per share	$	29.57		$	27.60		$	23.59		7.1		25.3
Dividends paid (QTD)		0.13			0.13			0.12		-		8.3
Book value per common share		27.41			26.56			24.12		3.2		13.6
Average diluted shares outstanding (QTD)		10,149			10,276			10,203		(1.2)		(0.5)

CAPITAL RATIOS***
Total equity to total assets		10.52	%		10.39	%		9.56	%	1.3		10.0
Leverage ratio		11.67			11.39			10.49		2.5		11.2
Common Equity Tier 1 Capital Ratio		13.31			12.90			11.74		3.2		13.4
Risk-based Tier 1 Capital Ratio		13.80			13.38			12.21		3.1		13.0
Risk-based Total Capital Ratio		15.05			14.63			13.45		2.9		11.9

CREDIT QUALITY AND RATIOS
Nonperforming assets	$	15,193		$	16,890		$	16,466		(10.0)		(7.7)
QTD annualized net (chargeoffs)/recoveries to QTD average loans		(0.04)	%		(0.08)	%		(0.18)	%
Allowance for credit losses to total loans		1.20			1.20			1.20
Nonperforming loans to total loans		0.56			0.78			0.76
Nonperforming assets to total assets		0.58			0.66			0.65
** The efficiency ratio is a non-GAAP measure, calculated based on the noninterest expense divided by the sum of net interest income plus non interest income, excluding net gains and losses on securities.

*** Represents Bancorp consolidated capital ratios.

UNITY BANCORP, INC.

CONSOLIDATED BALANCE SHEETS


							June 30, 2024 vs.
							December 31, 2023		June 30, 2023
(In thousands, except percentages)	June 30, 2024		December 31, 2023		June 30, 2023		%		%

ASSETS
Cash and due from banks	$	31,180	$	20,668	$	22,552	50.9	%	38.3	%
Interest-bearing deposits		166,238		174,108		128,682	(4.5)		29.2
Cash and cash equivalents		197,418		194,776		151,234	1.4		30.5
Securities:
Debt securities available for sale, at market value		99,081		91,765		92,966	8.0		6.6
Debt securities held to maturity, at book value		36,157		36,122		35,890	0.1		0.7
Equity securities, at market value		9,949		7,802		8,205	27.5		21.3
Total securities		145,187		135,689		137,061	7.0		5.9
Loans:
SBA loans held for sale		15,159		18,242		20,074	(16.9)		(24.5)
SBA loans held for investment		38,017		38,584		39,878	(1.5)		(4.7)
SBA PPP loans		1,734		2,318		2,555	(25.2)		(32.1)
Commercial loans		1,318,208		1,277,460		1,256,032	3.2		5.0
Residential mortgage loans		624,949		631,506		633,414	(1.0)		(1.3)
Consumer loans		69,280		72,676		75,990	(4.7)		(8.8)
Residential construction loans		103,188		131,277		139,424	(21.4)		(26.0)
Total loans		2,170,535		2,172,063		2,167,367	(0.1)		0.1
Allowance for credit losses		(26,107)		(25,854)		(25,988)	1.0		0.5
Net loans		2,144,428		2,146,209		2,141,379	(0.1)		0.1
Premises and equipment, net		19,073		19,567		19,923	(2.5)		(4.3)
Bank owned life insurance ("BOLI")		25,483		25,230		26,940	1.0		(5.4)
Deferred tax assets		13,294		12,552		12,891	5.9		3.1
Federal Home Loan Bank ("FHLB") stock		14,957		18,435		21,430	(18.9)		(30.2)
Accrued interest receivable		13,257		13,582		14,858	(2.4)		(10.8)
Goodwill		1,516		1,516		1,516	-		-
Prepaid expenses and other assets		23,094		10,951		25,069	110.9		(7.9)
Total assets	$	2,597,707	$	2,578,507	$	2,552,301	0.7	%	1.8	%

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	422,001	$	419,636	$	439,220	0.6	%	(3.9)	%
Interest-bearing demand		301,480		312,208		299,290	(3.4)		0.7
Savings		505,586		497,491		503,122	1.6		0.5
Brokered deposits		221,990		268,408		236,457	(17.3)		(6.1)
Time deposits		559,774		426,397		371,439	31.3		50.7
Total deposits		2,010,831		1,924,140		1,849,528	4.5		8.7
Borrowed funds		274,798		356,438		423,000	(22.9)		(35.0)
Subordinated debentures		10,310		10,310		10,310	-		-
Accrued interest payable		1,657		1,924		715	(13.9)		131.7
Accrued expenses and other liabilities		26,716		24,265		24,675	10.1		8.3
Total liabilities		2,324,312		2,317,077		2,308,228	0.3		0.7
Shareholders' equity:
Common stock		102,226		100,426		98,910	1.8		3.4
Retained earnings		207,534		191,108		173,823	8.6		19.4
Treasury stock, at cost		(33,285)		(27,367)		(25,037)	21.6		32.9
Accumulated other comprehensive loss		(3,080)		(2,737)		(3,623)	12.5		(15.0)
Total shareholders' equity		273,395		261,430		244,073	4.6		12.0
Total liabilities and shareholders' equity	$	2,597,707	$	2,578,507	$	2,552,301	0.7	%	1.8	%

Shares issued		11,555		11,424		11,387
Shares outstanding		9,975		10,063		10,119
Treasury shares		1,580		1,361		1,268

*NM=Not meaningful

UNITY BANCORP, INC.

QTD CONSOLIDATED STATEMENTS OF INCOME


										June 30, 2024 vs.
	For the three months ended									March 31, 2024					June 30, 2023
(In thousands, except percentages and per share amounts)	June 30, 2024			March 31, 2024			June 30, 2023			$		%			$		%
INTEREST INCOME
Interest-bearing deposits	$	435		$	420		$	441		$	15		3.6	%	$	(6)		(1.4)	%
FHLB stock		180			280			343			(100)		(35.7)			(163)		(47.5)
Securities:
Taxable		1,749			1,849			1,798			(100)		(5.4)			(49)		(2.7)
Tax-exempt		17			18			19			(1)		(5.6)			(2)		(10.5)
Total securities		1,766			1,867			1,817			(101)		(5.4)			(51)		(2.8)
Loans:
SBA loans		1,276			1,333			1,403			(57)		(4.3)			(127)		(9.1)
SBA PPP loans		11			8			27			3		37.5			(16)		(59.3)
Commercial loans		21,160			20,830			18,621			330		1.6			2,539		13.6
Residential mortgage loans		9,316			9,219			8,532			97		1.1			784		9.2
Consumer loans		1,390			1,402			1,471			(12)		(0.9)			(81)		(5.5)
Residential construction loans		2,453			2,578			2,737			(125)		(4.8)			(284)		(10.4)
Total loans		35,606			35,370			32,791			236		0.7			2,815		8.6
Total interest income		37,987			37,937			35,392			50		0.1			2,595		7.3
INTEREST EXPENSE
Interest-bearing demand deposits		2,010			1,710			1,331			300		17.5			679		51.0
Savings deposits		3,349			3,144			1,993			205		6.5			1,356		68.0
Brokered deposits		2,181			2,295			1,857			(114)		(5.0)			324		17.4
Time deposits		5,832			4,699			2,564			1,133		24.1			3,268		127.5
Borrowed funds and subordinated debentures		1,191			2,248			4,125			(1,057)		(47.0)			(2,934)		(71.1)
Total interest expense		14,563			14,096			11,870			467		3.3			2,693		22.7
Net interest income		23,424			23,841			23,522			(417)		(1.7)			(98)		(0.4)
Provision for credit losses, loans		266			641			777			(375)		(58.5)			(511)		(65.8)
Provision for credit losses, off-balance sheet		13			2			(84)			11		550.0			97		115.5
Provision for credit losses, AFS securities		646			-			-			646		*NM			646		*NM
Net interest income after provision for credit losses		22,499			23,198			22,829			(699)		(3.0)			(330)		(1.4)
NONINTEREST INCOME
Branch fee income		266			243			228			23		9.5			38		16.7
Service and loan fee income		467			457			491			10		2.2			(24)		(4.9)
Gain on sale of SBA loans held for sale, net		305			238			586			67		28.2			(281)		(48.0)
Gain on sale of mortgage loans, net		266			320			463			(54)		(16.9)			(197)		(42.5)
BOLI income		189			65			84			124		190.8			105		125.0
Net securities gains (losses)		20			54			(164)			(34)		(63.0)			184		112.2
Other income		520			341			427			179		52.5			93		21.8
Total noninterest income		2,033			1,718			2,115			315		18.3			(82)		(3.9)
NONINTEREST EXPENSE
Compensation and benefits		7,121			7,357			7,271			(236)		(3.2)			(150)		(2.1)
Processing and communications		840			906			663			(66)		(7.3)			177		26.7
Occupancy		815			798			779			17		2.1			36		4.6
Furniture and equipment		819			684			690			135		19.7			129		18.7
Professional services		405			436			296			(31)		(7.1)			109		36.8
Advertising		397			400			443			(3)		(0.8)			(46)		(10.4)
Loan related expenses		351			384			130			(33)		(8.6)			221		170.0
Deposit insurance		321			339			617			(18)		(5.3)			(296)		(48.0)
Director fees		231			247			203			(16)		(6.5)			28		13.8
Other expenses		680			581			743			99		17.0			(63)		(8.5)
Total noninterest expense		11,980			12,132			11,835			(152)		(1.3)			145		1.2
Income before provision for income taxes		12,552			12,784			13,109			(232)		(1.8)			(557)		(4.2)
Provision for income taxes		3,098			3,198			3,409			(100)		(3.1)			(311)		(9.1)
Net income	$	9,454		$	9,586		$	9,700		$	(132)		(1.4)	%	$	(246)		(2.5)	%

Effective tax rate		24.7	%		25.0	%		26.0	%

Net income per common share - Basic	$	0.94		$	0.95		$	0.96
Net income per common share - Diluted		0.93			0.93			0.95

Weighted average common shares outstanding - Basic		10,016			10,127			10,103
Weighted average common shares outstanding - Diluted		10,149			10,276			10,203
*NM=Not meaningful

UNITY BANCORP, INC.

YTD CONSOLIDATED STATEMENTS OF INCOME



	For the six months ended June 30,						Current YTD vs. Prior YTD
(In thousands, except percentages and per share amounts)	2024			2023			$		%
INTEREST INCOME
Interest-bearing deposits	$	855		$	775		$	80		10.3	%
FHLB stock		460			674			(214)		(31.8)
Securities:
Taxable		3,598			3,537			61		1.7
Tax-exempt		35			38			(3)		(7.9)
Total securities		3,633			3,575			58		1.6
Loans:
SBA loans		2,609			2,807			(198)		(7.1)
SBA PPP loans		19			104			(85)		(81.7)
Commercial loans		41,990			36,022			5,968		16.6
Residential mortgage loans		18,535			16,641			1,894		11.4
Consumer loans		2,792			2,825			(33)		(1.2)
Residential construction loans		5,031			5,323			(292)		(5.5)
Total loans		70,976			63,722			7,254		11.4
Total interest income		75,924			68,746			7,178		10.4
INTEREST EXPENSE
Interest-bearing demand deposits		3,720			2,296			1,424		62.0
Savings deposits		6,493			3,548			2,945		83.0
Brokered deposits		4,476			3,419			1,057		30.9
Time deposits		10,531			4,126			6,405		155.2
Borrowed funds and subordinated debentures		3,439			7,924			(4,485)		(56.6)
Total interest expense		28,659			21,313			7,346		34.5
Net interest income		47,265			47,433			(168)		(0.4)
Provision for credit losses, loans		907			885			22		2.5
Provision for credit losses, off-balance sheet		15			(84)			99		*NM
Provision for credit losses, AFS securities		646			-			646		*NM
Net interest income after provision for credit losses		45,697			46,632			(935)		(2.0)
NONINTEREST INCOME
Branch fee income		509			463			46		9.9
Service and loan fee income		924			993			(69)		(6.9)
Gain on sale of SBA loans held for sale, net		543			896			(353)		(39.4)
Gain on sale of mortgage loans, net		586			707			(121)		(17.1)
BOLI income		254			164			90		54.9
Other income		861			796			65		8.2
Total noninterest income		3,751			3,532			219		6.2
NONINTEREST EXPENSE
Compensation and benefits		14,478			14,361			117		0.8
Processing and communications		1,746			1,467			279		19.0
Occupancy		1,613			1,549			64		4.1
Furniture and equipment		1,503			1,379			124		9.0
Professional services		841			723			118		16.3
Advertising		797			703			94		13.4
Loan related expenses		735			305			430		141.0
Deposit insurance		660			965			(305)		(31.6)
Director fees		478			420			58		13.8
Other expenses		1,261			1,391			(130)		(9.3)
Total noninterest expense		24,112			23,263			849		3.6
Income before provision for income taxes		25,336			26,901			(1,565)		(5.8)
Provision for income taxes		6,296			6,914			(618)		(8.9)
Net income	$	19,040		$	19,987		$	(947)		(4.7)	%

Effective tax rate		24.9	%		25.7	%

Net income per common share - Basic	$	1.89		$	1.94
Net income per common share - Diluted		1.86			1.91

Weighted average common shares outstanding - Basic		10,072			10,319
Weighted average common shares outstanding - Diluted		10,212			10,444
*NM=Not meaningful

UNITY BANCORP, INC.

QUARTER TO DATE NET INTEREST MARGIN


	For the three months ended
(Dollar amounts in thousands, interest amounts and	June 30, 2024							June 30, 2023
interest rates/yields on a fully tax-equivalent basis)	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Interest-bearing deposits	$	32,237	$	435		5.43	%	$	34,808	$	441		5.09	%
FHLB stock		7,951		180		9.12			17,252		343		7.97
Securities:
Taxable		140,501		1,749		4.98			135,943		1,798		5.29
Tax-exempt		1,571		18		4.55			1,766		20		4.59
Total securities (A)		142,072		1,767		4.97			137,709		1,818		5.28
Loans:
SBA loans		55,922		1,276		9.13			61,744		1,403		9.09
SBA PPP loans		1,782		11		2.49			2,561		27		4.20
Commercial loans		1,300,754		21,160		6.44			1,225,761		18,621		6.01
Residential mortgage loans		625,086		9,316		5.96			622,283		8,532		5.48
Consumer loans		69,943		1,390		7.86			76,741		1,471		7.59
Residential construction loans		112,272		2,453		8.64			158,165		2,737		6.85
Total loans (B)		2,165,759		35,606		6.50			2,147,255		32,791		6.04
Total interest-earning assets	$	2,348,019	$	37,988		6.51	%	$	2,337,024	$	35,393		6.07	%

Noninterest-earning assets:
Cash and due from banks		23,547							21,967
Allowance for credit losses		(26,202)							(26,270)
Other assets		90,971							103,234
Total noninterest-earning assets		88,316							98,931
Total assets	$	2,436,335						$	2,435,955

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	337,629	$	2,010		2.39	%	$	310,717	$	1,331		1.74	%
Savings deposits		504,685		3,349		2.67			503,979		1,993		1.60
Brokered deposits		228,276		2,181		3.84			229,872		1,857		3.28
Time deposits		535,444		5,832		4.38			344,883		2,564		3.02
Total interest-bearing deposits		1,606,034		13,372		3.35			1,389,451		7,745		2.24
Borrowed funds and subordinated debentures		129,763		1,191		3.63			339,599		4,125		4.81
Total interest-bearing liabilities	$	1,735,797	$	14,563		3.37	%	$	1,729,050	$	11,870		2.75	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		401,146							440,289
Other liabilities		29,139							26,275
Total noninterest-bearing liabilities		430,285							466,564
Total shareholders' equity		270,253							240,341
Total liabilities and shareholders' equity	$	2,436,335						$	2,435,955

Net interest spread			$	23,425		3.13	%			$	23,523		3.32	%
Tax-equivalent basis adjustment				(1)							(1)
Net interest income			$	23,424						$	23,522
Net interest margin						4.01	%						4.04	%

(A)	Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 21 percent and applicable state rates.

(B)	The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued.

UNITY BANCORP, INC.

QUARTER TO DATE NET INTEREST MARGIN


	For the three months ended
(Dollar amounts in thousands, interest amounts and	June 30, 2024							March 31, 2024
interest rates/yields on a fully tax-equivalent basis)	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Interest-bearing deposits	$	32,237	$	435		5.43	%	$	30,685	$	420		5.50	%
FHLB stock		7,951		180		9.12			11,000		280		10.23
Securities:
Taxable		140,501		1,749		4.98			134,874		1,849		5.48
Tax-exempt		1,571		18		4.55			1,658		18		4.47
Total securities (A)		142,072		1,767		4.97			136,532		1,867		5.47
Loans:
SBA loans		55,922		1,276		9.13			58,120		1,333		9.17
SBA PPP loans		1,782		11		2.49			2,215		8		1.38
Commercial loans		1,300,754		21,160		6.44			1,281,600		20,830		6.43
Residential mortgage loans		625,086		9,316		5.96			625,451		9,219		5.90
Consumer loans		69,943		1,390		7.86			70,250		1,402		7.90
Residential construction loans		112,272		2,453		8.64			129,720		2,578		7.86
Total loans (B)		2,165,759		35,606		6.50			2,167,356		35,370		6.46
Total interest-earning assets	$	2,348,019	$	37,988		6.51	%	$	2,345,573	$	37,937		6.51	%

Noninterest-earning assets:
Cash and due from banks		23,547							23,220
Allowance for credit losses		(26,202)							(26,059)
Other assets		90,971							94,001
Total noninterest-earning assets		88,316							91,162
Total assets	$	2,436,335						$	2,436,735

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	337,629	$	2,010		2.39	%	$	324,829	$	1,710		2.12	%
Savings deposits		504,685		3,349		2.67			503,071		3,144		2.51
Brokered deposits		228,276		2,181		3.84			243,592		2,295		3.79
Time deposits		535,444		5,832		4.38			465,166		4,699		4.06
Total interest-bearing deposits		1,606,034		13,372		3.35			1,536,658		11,848		3.10
Borrowed funds and subordinated debentures		129,763		1,191		3.63			201,335		2,248		4.41
Total interest-bearing liabilities	$	1,735,797	$	14,563		3.37	%	$	1,737,993	$	14,096		3.26	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		401,146							403,847
Other liabilities		29,139							28,747
Total noninterest-bearing liabilities		430,285							432,594
Total shareholders' equity		270,253							266,148
Total liabilities and shareholders' equity	$	2,436,335						$	2,436,735

Net interest spread			$	23,425		3.13	%			$	23,841		3.25	%
Tax-equivalent basis adjustment				(1)							-
Net interest income			$	23,424						$	23,841
Net interest margin						4.01	%						4.09	%

(A)	Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductible portion of interest expense, assuming a federal tax rate of 21 percent and applicable state rates.

(B)	The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued.

UNITY BANCORP, INC.

YTD NET INTEREST MARGIN


	For the six months ended
(Dollar amounts in thousands, interest amounts and	June 30, 2024							June 30, 2023
interest rates/yields on a fully tax-equivalent basis)	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Interest-bearing deposits	$	31,461	$	855		5.46	%	$	33,798	$	775		4.62	%
FHLB stock		9,476		460		9.76			17,016		674		7.98
Securities:
Taxable		137,688		3,598		5.23			137,154		3,537		5.16
Tax-exempt		1,615		36		4.51			1,760		40		4.54
Total securities (A)		139,303		3,634		5.22			138,914		3,577		5.15
Loans:
SBA loans		57,021		2,609		9.15			64,171		2,807		8.75
SBA PPP loans		1,999		19		1.87			3,397		104		6.12
Commercial loans		1,291,176		41,990		6.43			1,212,741		36,022		5.91
Residential mortgage loans		625,269		18,535		5.93			618,630		16,641		5.38
Consumer loans		70,096		2,792		7.88			76,930		2,825		7.30
Residential construction loans		120,996		5,031		8.22			160,978		5,323		6.58
Total loans (B)		2,166,557		70,976		6.48			2,136,847		63,722		5.93
Total interest-earning assets	$	2,346,797	$	75,925		6.51	%	$	2,326,575	$	68,748		5.96	%

Noninterest-earning assets:
Cash and due from banks		23,383							22,350
Allowance for credit losses		(26,130)							(26,025)
Other assets		92,486							107,147
Total noninterest-earning assets		89,739							103,472
Total assets	$	2,436,536						$	2,430,047

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	331,229	$	3,720		2.26	%	$	298,511	$	2,296		3.09	%
Total savings deposits		503,878		6,493		2.59			519,922		3,548		2.74
		235,934		4,476		3.82			233,270		3,419		5.88
Total time deposits		500,305		10,531		4.23			315,780		4,126		5.24
Total interest-bearing deposits		1,571,346		25,220		3.23			1,367,483		13,389		1.97
Borrowed funds and subordinated debentures		165,550		3,439		4.11			340,991		7,924		4.62
Total interest-bearing liabilities	$	1,736,896	$	28,659		3.32	%	$	1,708,474	$	21,313		2.52	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		402,497							454,270
Other liabilities		28,943							25,413
Total noninterest-bearing liabilities		431,440							479,683
Total shareholders' equity		268,200							241,890
Total liabilities and shareholders' equity	$	2,436,536						$	2,430,047

Net interest spread			$	47,266		3.19	%			$	47,435		3.44	%
Tax-equivalent basis adjustment				(1)							(2)
Net interest income			$	47,265						$	47,433
Net interest margin						4.05	%						4.11	%

UNITY BANCORP, INC.

QUARTERLY ALLOWANCE FOR CREDIT LOSSES AND ASSET QUALITY SCHEDULES


Amounts in thousands, except percentages	June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023			March 31, 2023
ALLOWANCE FOR CREDIT LOSSES:
Balance, beginning of period	$	26,080		$	25,854		$	25,918		$	25,988		$	26,201
Impact of the adoption of ASU 2016-13 ("CECL")		-			-			-			-			-
Provision for credit losses on loans charged to expense		266			641			413			534			777
		26,346			26,495			26,331			26,522			26,978
Less: Chargeoffs
SBA loans		-			-			-			100			-
Commercial loans		138			98			252			500			-
Residential mortgage loans		-			-			-			-			-
Consumer loans		130			70			274			52			225
Residential construction loans		-			277			100			-			900
Total chargeoffs		268			445			626			652			1,125
Add: Recoveries
SBA loans		6			8			-			1			15
Commercial loans		12			12			23			10			96
Residential mortgage loans		-			-			4			-			-
Consumer loans		11			10			11			37			24
Residential construction loans		-			-			111			-			-
Total recoveries		29			30			149			48			135
Net (chargeoffs)/recoveries		(239)			(415)			(477)			(604)			(990)
Balance, end of period	$	26,107		$	26,080		$	25,854		$	25,918		$	25,988

ASSET QUALITY INFORMATION:

Nonperforming loans:
SBA loans	$	3,813		$	3,542		$	3,444		$	3,445		$	3,591
Commercial loans		2,321			2,415			1,948			750			835
Residential mortgage loans		5,336			7,440			11,272			10,530			8,607
Consumer loans		105			366			381			130			-
Residential construction loans		547			3,127			2,141			3,201			3,182
Total nonperforming loans		12,122			16,890			19,186			18,056			16,215
Debt securities available for sale		3,071			-			-			-			-
OREO		-			-			-			251			251
Nonperforming assets		15,193			16,890			19,186			18,307			16,466

Loans 90 days past due & still accruing	$	373		$	138		$	946		$	265		$	-

Nonperforming loans to total loans		0.56	%		0.78	%		0.88	%		0.84			0.76
Nonperforming assets to total assets		0.58			0.66			0.74			0.71			0.65

Allowance for credit losses to:
Total loans at quarter end		1.20	%		1.20	%		1.19	%		1.19	%		1.20
Total nonperforming loans		215.37			154.41			134.75			143.54			160.27

UNITY BANCORP, INC.

QUARTERLY FINANCIAL DATA


(In thousands, except %'s, employee, office and per share amounts)	June 30, 2024			December 31, 2023			December 31, 2023			September 30, 2023			June 30, 2023
SUMMARY OF INCOME:
Total interest income	$	37,987		$	37,937		$	37,758		$	36,990		$	35,392
Total interest expense		14,563			14,096			13,727			13,457			11,870
Net interest income		23,424			23,841			24,031			23,533			23,522
Provision for credit losses		925			643			1,811			556			693
Net interest income after provision for credit losses		22,499			23,198			22,220			22,977			22,829
Total noninterest income		2,033			1,718			2,568			2,043			2,115
Total noninterest expense		11,980			12,132			11,740			11,973			11,835
Income before provision for income taxes		12,552			12,784			13,048			13,047			13,109
Provision for income taxes		3,098			3,198			3,278			3,097			3,409
Net income	$	9,454		$	9,586		$	9,770		$	9,950		$	9,700

Net income per common share - Basic	$	0.94		$	0.95		$	0.97		$	0.98		$	0.96
Net income per common share - Diluted		0.93			0.93			0.96			0.97			0.95

COMMON SHARE DATA:
Market price per share	$	29.57		$	27.60		$	29.59		$	23.43		$	23.59
Dividends paid		0.13			0.13			0.12			0.12			0.12
Book value per common share		27.41			26.56			25.98			24.95			24.12

Weighted average common shares outstanding - Basic		10,016			10,127			10,066			10,128			10,103
Weighted average common shares outstanding - Diluted		10,149			10,276			10,209			10,258			10,203
Issued common shares		11,555			11,555			11,424			11,411			11,387
Outstanding common shares		9,975			10,044			10,063			10,115			10,119
Treasury shares		1,580			1,511			1,361			1,296			1,268

PERFORMANCE RATIOS (Annualized):
Return on average assets		1.56	%		1.58	%		1.59	%		1.61	%		1.60	%
Return on average equity		14.07			14.49			15.12			15.84			16.19
Efficiency ratio**		47.10			47.57			43.06			46.59			45.54

BALANCE SHEET DATA:
Total assets	$	2,597,707		$	2,568,088		$	2,578,507		$	2,563,006		$	2,552,301
Total securities		145,187			138,702			135,689			136,091			137,061
Total loans		2,170,535			2,174,457			2,172,063			2,173,190			2,167,367
Allowance for credit losses		26,107			26,080			25,854			25,918			25,988
Total deposits		2,010,831			1,961,270			1,924,140			1,884,910			1,849,528
Total shareholders' equity		273,395			266,761			261,430			252,384			244,073

TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets		6.51	%		6.51	%		6.38	%		6.22	%		6.07	%
Interest-bearing liabilities		3.37			3.26			3.14			3.05			2.75
Net interest spread		3.13			3.25			3.24			3.17			3.32
Net interest margin		4.01			4.09			4.06			3.96			4.04

CREDIT QUALITY:
Nonperforming assets	$	15,193		$	16,890		$	19,186		$	18,307		$	16,466
QTD annualized net (chargeoffs)/recoveries to QTD average loans		(0.04)	%		(0.08)	%		(0.09)	%		(0.11)	%		(0.18)	%
Allowance for credit losses to total loans		1.20			1.20			1.19			1.19			1.20
Nonperforming loans to total loans		0.56			0.78			0.88			0.84			0.76
Nonperforming assets to total assets		0.58			0.66			0.74			0.71			0.65

CAPITAL RATIOS* AND OTHER:**
Total equity to total assets		10.52	%		10.39	%		10.14	%		9.85	%		9.56	%
Leverage ratio		11.67			11.39			11.14			10.76			10.49
Common Equity Tier 1 Capital Ratio		13.31			12.90			12.70			12.16			11.74
Risk-based Tier 1 Capital Ratio		13.80			13.38			13.18			12.64			12.21
Risk-based Total Capital Ratio		15.05			14.63			14.43			13.88			13.45

Number of banking offices		21			21			21			21			20
Employee Full-Time Equivalent		217			217			232			232			230
** The efficiency ratio is a non-GAAP measure, calculated based on the noninterest expense divided by the sum of net interest income plus non interest income, excluding net gains and losses on securities.

'*** Represents Bancorp consolidated capital ratios.

Unity Bancorp, Inc

Loan Portfolio Composition


In thousands, except percentages	June 30, 2024		%	December 31, 2023		%
SBA Loans:
SBA loans held for sale	$	15,159	0.6%	$	18,242	0.8%
SBA loans held for investment		38,017	1.8%		38,584	1.8%
SBA PPP		1,734	0.1%		2,318	0.1%
Total SBA Loans		54,910	2.5%		59,144	2.7%
Commercial Loans
Commercial construction		125,749	5.8%		129,159	6.0%
SBA 504		39,195	1.8%		33,669	1.7%
Commercial & Industrial		147,172	6.8%		128,402	5.9%
Commercial Mortgage - Owner Occupied		527,498	24.3%		502,397	23.1%
Commercial Mortgage - Nonowner Occupied		411,455	19.0%		424,490	19.5%
Other		67,139	3.0%		59,343	2.7%
Total Commercial Loans		1,318,208	60.7%		1,277,460	58.9%

Residential Mortgage loans		624,949	28.8%		631,506	29.1%
Consumer Loans
Home equity		65,065	3.0%		67,037	3.0%
Consumer other		4,215	0.2%		5,639	0.3%
Total Consumer Loans		69,280	3.2%		72,676	3.3%

Residential Construction		103,188	4.8%		131,277	6.0%

Total Gross Loans	$	2,170,535	100.0%	$	2,172,063	100.0%

Document and Entity Information	Jul. 12, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	Jul. 12, 2024
Securities Act File Number	1-12431
Entity Registrant Name	UNITY BANCORP, INC.
Entity Incorporation, State or Country Code	NJ
Entity Tax Identification Number	22-3282551
Entity Address, Address Line One	64 Old Highway 22
Entity Address, City or Town	Clinton
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	08809
City Area Code	908
Local Phone Number	730-7630
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock
Trading Symbol	UNTY
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0000920427
Amendment Flag	false

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Unity Bancorp (NASDAQ:UNTY)
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