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

October 11, 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 October 11, 2024 announcing results for the nine months ended September 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 October 11, 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: October 11, 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 $10.9 million, or $1.07 per diluted share, for the quarter ended September 30, 2024, compared to net income of $9.5 million, or $0.93 per diluted share for the quarter ended June 30, 2024. This represents a 15.3% increase in net income and a 15.1% increase in net income per diluted share. For the nine months ended September 30, 2024, Unity Bancorp reported net income of $29.9 million, or $2.94 per diluted share, compared to net income of $29.9 million, or $2.88 per diluted share, for the nine months ended September 30, 2023. This represents no change in net income and a 2.1% increase in net income per diluted share, reflecting the Company’s repurchase of outstanding shares.

Third Quarter Earnings Highlights

●

Net interest income, the primary driver of earnings, was $24.9 million for the quarter ended September 30, 2024, an increase of $1.5 million, as compared to $23.4 million for the quarter ended June 30, 202 4. Net interest margin (“NIM”) increased 15 basis points to 4.16% for the quarter ended September 30, 2024, compared to the quarter ended June 30, 2024. The increase was primarily due to the yield on interest-earning assets increasing and the cost of interest-bearing liabilities decreasing slightly.

●

The provision for credit losses on loans was $1.0 million for the quarter ended September 30, 2024, compared to $0.3 million for the quarter ended June 30, 2024. The provision in the current quarter was primarily driven by loan growth.

●

Noninterest income was $2.8 million for the quarter ended September 30, 2024, compared to $2.0 million for the quarter ended June 30, 2024. The $0.8 million increase was primarily due to increased net securities gains, gain on sale of mortgage loans, service & loan fee income and branch fee income. The increase was partially offset by lower gain on sale of SBA loans and other income. The Bank sold $0.9 million of SBA loans during the quarter ended September 30, 2024, compared to $3.9 million during the quarter ended June 30, 2024.

●

Noninterest expense was $12.0 million for the quarter ended September 30, 2024, which was flat compared to the prior quarter. The increase in compensation & benefits and other expenses was offset by decreases in loan related expenses, deposit insurance and professional services.

●

The effective tax rate was 25.1% for the quarter ended September 30, 2024, compared to 24.7% for the quarter ended June 30, 2024.

Balance Sheet Highlights

●

Total gross loans increased $45.3 million, or 2.1%, from December 31, 2023, primarily due to increases in the commercial loan category. This was partially offset by decreases in the residential construction and residential mortgage categories.

●

As of September 30, 2024, the allowance for credit losses as a percentage of gross loans was 1.22%.

●

Total deposits increased $122.0 million, or 6.3%, from December 31, 2023. As of September 30, 2024, 19.1% of total deposits were uninsured or uncollateralized. The Company’s deposit composition as of September 30, 2024, consisted of 20.7% in noninterest bearing demand deposits, 15.9% in interest-bearing demand deposits, 27.4% in savings deposits and 36.0% in time deposits.

●

As of September 30, 2024, the loan to deposit ratio was 108.4%, representing a continued reduction from 112.9% as of December 31, 2023.

●

As of September 30, 2024, investments comprised 5.5% of total assets. Available for sale debt securities (“AFS”) were $97.7 million or 3.7% of total assets. Held to maturity (“HTM”) debt securities were $36.2 million or 1.4% of total assets. As of September 30, 2024, pre-tax net unrealized losses on AFS and HTM were $3.3 million and $5.7 million, respectively. These pre-tax unrealized losses represent approximately 3.1% of the Company’s Tier 1 capital. Equity securities were $9.8 million or 0.4% of total assets as of September 30, 2024.

●

Borrowed funds decreased $89.6 million from December 31, 2023. Borrowed funds were entirely comprised of borrowings from the FHLB.

●

Shareholders’ equity was $284.3 million as of September 30, 2024, compared to $261.4 million as of December 31, 2023. The $22.9 million increase was primarily driven by 2024 earnings, partially offset by share repurchases and dividend payments. For the nine months ended September 30, 2024, Unity Bancorp repurchased 229,102 shares for approximately $6.2 million, or a weighted average price of $27.05 per share. For the three months ended September 30, 2024, Unity Bancorp repurchased 10,334 shares for approximately $0.3 million, or a weighted average price of $27.27 per share.

●

Book value per common share was $28.48 as of September 30, 2024, compared to $25.98 as of December 31, 2023. This increase primarily reflects earnings partially offset by dividend payouts.

●

Below is a summary of Unity Bancorp’s regulatory capital ratios:

o

The Leverage Ratio increased 80 basis points to 11.94% at September 30, 2024, compared to 11.14% at December 31, 2023.

o

The Common Equity Tier 1 Capital Ratio increased 80 basis points to 13.50% at September 30, 2024, compared to 12.70% at December 31, 2023.

o

The Tier 1 Capital Ratio increased 80 basis points to 13.98% at September 30, 2024, compared to 13.18% at December 31, 2023.

o

The Total Capital Ratio increased 80 basis points, to 15.23% at September 30, 2024, compared to 14.43% at December 31, 2023.

●

At September 30, 2024, the Company held $194.5 million of cash and cash equivalents. The Company also maintained approximately $569.4 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 195.9% of uninsured or uncollateralized deposits.

●

As of September 30, 2024, nonperforming assets were $15.9 million, compared to $19.2 million as of December 31, 2023 and $15.2 million as of June 30, 2024. As of September 30, 2024, nonperforming assets included $2.9 million related to debt securities available for sale. The ratio of nonperforming loans to total loans was 0.59% as of September 30, 2024. The ratio of nonperforming assets to total assets was 0.60% as of September 30, 2024.

●

In the third quarter of 2024, to hedge floating rate liability exposure, the Company entered into a forward starting pay-fix, receive-float interest rate swap which will commence in the first quarter of 2025, maturing in the first quarter of 2028. The interest rate swap, which qualifies for hedge accounting, is tied to the Secured Overnight Financing Rate (SOFR) for a notional amount of $20.0 million. The effective fixed rate interest rate obligation to the Company is 2.89%.

Other Highlights

❖

In August 2024, Unity Bancorp announced the approval of a new Share Repurchase Program, authorizing the Company to repurchase up to 500 thousand shares, or approximately 5.0% of its outstanding stock. The 2024 Share repurchase plan will commence after the completion of the 2023 Share Repurchase Plan. As of September 30, 2024, the Company had approximately 685 thousand shares remaining for repurchase.

❖

In August 2024, Unity Bancorp was once again recognized in the Top 25 Banks with less than $5 billion in assets listing as published by Bank Director magazine. Unity Bank is listed as the 13th best publicly traded bank in the nation and is 5^th in Return on Assets.

❖

In the third quarter of 2024, Unity Bank awarded $50 thousand in grants to local small businesses through the FHLB Small Business Recovery Grant Program. These grants assist small businesses in overcoming challenges posed by inflation, supply chain constraints, rising energy costs and a volatile interest rate environment.

❖

In the third quarter of 2024, the Company’s CEO, James Hughes, was named as the 2024 Founders Award Recipient at the Center for Hope Charity Gala and will be honored on October 17^th. The Center for Hope provides hospice and palliative care, grief and bereavement counseling and community outreach services to the communities it serves.

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 any health crisis or national disasters on the Bank, its employees and customers, among other factors.

UNITY BANCORP, INC.

SUMMARY FINANCIAL HIGHLIGHTS


										September 30, 2024 vs.
										June 30, 2024		September 30, 2023
(In thousands, except percentages and per share amounts)	September 30, 2024			June 30, 2024			September 30, 2023			%		%
BALANCE SHEET DATA
Total assets	$	2,635,319		$	2,597,707		$	2,563,006		1.4	%	2.8	%
Total deposits		2,046,137			2,010,831			1,884,910		1.8		8.6
Total gross loans		2,217,393			2,170,535			2,173,190		2.2		2.0
Total securities		143,712			145,187			136,091		(1.0)		5.6
Total shareholders' equity		284,257			273,395			252,384		4.0		12.6
Allowance for credit losses		27,002			26,107			25,918		3.4		4.2

FINANCIAL DATA - QUARTER TO DATE
Income before provision for income taxes	$	14,567		$	12,552		$	13,047		16.1		11.7
Provision for income taxes		3,662			3,098			3,097		18.2		18.2
Net income	$	10,905		$	9,454		$	9,950		15.3		9.6

Net income per common share - Basic	$	1.09		$	0.94		$	0.98		16.0		11.2
Net income per common share - Diluted		1.07			0.93			0.97		15.1		10.3

PERFORMANCE RATIOS - QUARTER TO DATE (annualized)
Return on average assets		1.76	%		1.56	%		1.61	%
Return on average equity		15.55			14.07			15.84
Efficiency ratio**		44.23			47.10			46.59
Cost of funds		2.71			2.73			2.45
Net interest margin		4.16			4.01			3.96
Noninterest expense to average assets		1.94			1.98			1.93

FINANCIAL DATA - YEAR TO DATE
Income before provision for income taxes	$	39,901					$	39,946				(0.1)
Provision for income taxes		9,956						10,009				(0.5)
Net income	$	29,945					$	29,937				-

Net income per common share - Basic	$	2.98					$	2.92				2.1
Net income per common share - Diluted		2.94						2.88				2.1

PERFORMANCE RATIOS - YEAR TO DATE
Return on average assets		1.64	%					1.64	%
Return on average equity		14.72						16.38
Efficiency ratio**		46.25						45.67
Cost of funds		2.70						2.14
Net interest margin		4.09						4.06
Noninterest expense to average assets		1.97						1.93

SHARE INFORMATION
Market price per share	$	34.06		$	29.57		$	23.43		15.2		45.4
Dividends paid (QTD)		0.13			0.13			0.12		-		8.3
Book value per common share		28.48			27.41			24.95		3.9		14.1
Average diluted shares outstanding (QTD)		10,148			10,149			10,258		-		(1.1)

UNITY BANCORP CAPITAL RATIOS
Total equity to total assets		10.79	%		10.52	%		9.85	%	2.6		9.5
Leverage ratio		11.94			11.67			10.76		2.3		11.0
Common Equity Tier 1 Capital Ratio		13.50			13.31			12.16		1.4		11.0
Risk-based Tier 1 Capital Ratio		13.98			13.80			12.64		1.3		10.6
Risk-based Total Capital Ratio		15.23			15.05			13.88		1.2		9.7


CREDIT QUALITY AND RATIOS
Nonperforming assets	$	15,879		$	15,193		$	18,307		4.5	(13.3)
QTD annualized net (chargeoffs)/recoveries to QTD average loans		(0.02)	%		(0.04)	%		(0.11)	%
Allowance for credit losses to total loans		1.22			1.20			1.19
Nonperforming loans to total loans		0.59			0.56			0.84
Nonperforming assets to total assets		0.60			0.58			0.71
** 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.

UNITY BANCORP, INC.

CONSOLIDATED BALANCE SHEETS


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

ASSETS
Cash and due from banks	$	28,892	$	20,668	$	26,224	39.8	%	10.2	%
Interest-bearing deposits		165,609		174,108		135,223	(4.9)		22.5
Cash and cash equivalents		194,501		194,776		161,447	(0.1)		20.5
Securities:
Debt securities available for sale, at market value		97,651		91,765		92,122	6.4		6.0
Debt securities held to maturity, at book value		36,225		36,122		35,956	0.3		0.7
Equity securities, at market value		9,836		7,802		8,013	26.1		22.8
Total securities		143,712		135,689		136,091	5.9		5.6
Loans:
SBA loans held for sale		14,621		18,242		19,387	(19.8)		(24.6)
SBA loans held for investment		37,904		38,584		40,873	(1.8)		(7.3)
SBA PPP loans		1,593		2,318		2,507	(31.3)		(36.5)
Commercial loans		1,368,763		1,277,460		1,276,156	7.1		7.3
Residential mortgage loans		623,529		631,506		628,628	(1.3)		(0.8)
Consumer loans		72,291		72,676		72,189	(0.5)		0.1
Residential construction loans		98,692		131,277		133,450	(24.8)		(26.0)
Total loans		2,217,393		2,172,063		2,173,190	2.1		2.0
Allowance for credit losses		(27,002)		(25,854)		(25,918)	4.4		4.2
Net loans		2,190,391		2,146,209		2,147,272	2.1		2.0
Premises and equipment, net		18,857		19,567		19,783	(3.6)		(4.7)
Bank owned life insurance ("BOLI")		25,619		25,230		25,223	1.5		1.6
Deferred tax assets		14,517		12,552		13,249	15.7		9.6
Federal Home Loan Bank ("FHLB") stock		14,584		18,435		19,882	(20.9)		(26.6)
Accrued interest receivable		12,913		13,582		16,101	(4.9)		(19.8)
Goodwill		1,516		1,516		1,516	-		-
Prepaid expenses and other assets		18,709		10,951		22,442	70.8		(16.6)
Total assets	$	2,635,319	$	2,578,507	$	2,563,006	2.2	%	2.8	%

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	423,968	$	419,636	$	425,436	1.0	%	(0.3)	%
Interest-bearing demand		325,264		312,208		297,326	4.2		9.4
Savings		524,607		497,491		507,401	5.5		3.4
Brokered deposits		214,679		268,408		238,939	(20.0)		(10.2)
Time deposits		557,619		426,397		415,808	30.8		34.1
Total deposits		2,046,137		1,924,140		1,884,910	6.3		8.6
Borrowed funds		266,798		356,438		388,610	(25.1)		(31.3)
Subordinated debentures		10,310		10,310		10,310	-		-
Accrued interest payable		1,765		1,924		1,412	(8.3)		25.0
Accrued expenses and other liabilities		26,052		24,265		25,380	7.4		2.6
Total liabilities		2,351,062		2,317,077		2,310,622	1.5		1.8
Shareholders' equity:
Common stock		102,886		100,426		99,741	2.4		3.2
Retained earnings		217,141		191,108		182,557	13.6		18.9
Treasury stock, at cost		(33,566)		(27,367)		(25,954)	22.7		29.3
Accumulated other comprehensive loss		(2,204)		(2,737)		(3,960)	(19.5)		(44.3)
Total shareholders' equity		284,257		261,430		252,384	8.7		12.6
Total liabilities and shareholders' equity	$	2,635,319	$	2,578,507	$	2,563,006	2.2	%	2.8	%

Shares issued		11,570		11,424		11,411
Shares outstanding		9,980		10,063		10,115
Treasury shares		1,590		1,361		1,296

*NM=Not meaningful

UNITY BANCORP, INC.

QTD CONSOLIDATED STATEMENTS OF INCOME


										September 30, 2024 vs.
	For the three months ended									June 30, 2024					September 30, 2023
(In thousands, except percentages and per share amounts)	September 30, 2024			June 30, 2024			September 30, 2023			$		%			$		%
INTEREST INCOME
Interest-bearing deposits	$	695		$	435		$	483		$	260		59.8	%	$	212		43.9	%
FHLB stock		164			180			364			(16)		(8.9)			(200)		(54.9)
Securities:
Taxable		1,904			1,749			1,848			155		8.9			56		3.0
Tax-exempt		17			17			17			-		-			-		-
Total securities		1,921			1,766			1,865			155		8.8			56		3.0
Loans:
SBA loans		1,153			1,276			1,379			(123)		(9.6)			(226)		(16.4)
SBA PPP loans		6			11			25			(5)		(45.5)			(19)		(76.0)
Commercial loans		22,283			21,160			20,299			1,123		5.3			1,984		9.8
Residential mortgage loans		9,657			9,316			8,462			341		3.7			1,195		14.1
Consumer loans		1,436			1,390			1,525			46		3.3			(89)		(5.8)
Residential construction loans		2,235			2,453			2,588			(218)		(8.9)			(353)		(13.6)
Total loans		36,770			35,606			34,278			1,164		3.3			2,492		7.3
Total interest income		39,550			37,987			36,990			1,563		4.1			2,560		6.9
INTEREST EXPENSE
Interest-bearing demand deposits		1,802			2,010			1,409			(208)		(10.3)			393		27.9
Savings deposits		3,605			3,349			2,590			256		7.6			1,015		39.2
Brokered deposits		2,039			2,181			2,212			(142)		(6.5)			(173)		(7.8)
Time deposits		6,186			5,832			3,429			354		6.1			2,757		80.4
Borrowed funds and subordinated debentures		1,062			1,191			3,817			(129)		(10.8)			(2,755)		(72.2)
Total interest expense		14,694			14,563			13,457			131		0.9			1,237		9.2
Net interest income		24,856			23,424			23,533			1,432		6.1			1,323		5.6
Provision for credit losses, loans		1,029			266			534			763		286.8			495		92.7
Provision for credit losses, off-balance sheet		51			13			22			38		292.3			29		131.8
Provision for credit losses, AFS securities		-			646			-			(646)		*NM			-		*NM
Net interest income after provision for credit losses		23,776			22,499			22,977			1,277		5.7			799		3.5
NONINTEREST INCOME
Branch fee income		420			266			278			154		57.9			142		51.1
Service and loan fee income		753			467			385			286		61.2			368		95.6
Gain on sale of SBA loans held for sale, net		70			305			-			(235)		(77.0)			70		*NM
Gain on sale of mortgage loans, net		549			266			488			283		106.4			61		12.5
BOLI income		135			189			679			(54)		(28.6)			(544)		(80.1)
Net securities gains (losses)		499			20			(123)			479		2,395.0			622		505.7
Other income		377			520			336			(143)		(27.5)			41		12.2
Total noninterest income		2,803			2,033			2,043			770		37.9			760		37.2
NONINTEREST EXPENSE
Compensation and benefits		7,274			7,121			7,440			153		2.1			(166)		(2.2)
Processing and communications		868			840			705			28		3.3			163		23.1
Occupancy		781			815			763			(34)		(4.2)			18		2.4
Furniture and equipment		803			819			645			(16)		(2.0)			158		24.5
Professional services		326			405			348			(79)		(19.5)			(22)		(6.3)
Advertising		465			397			405			68		17.1			60		14.8
Loan related expenses		223			351			215			(128)		(36.5)			8		3.7
Deposit insurance		245			321			397			(76)		(23.7)			(152)		(38.3)
Director fees		232			231			209			1		0.4			23		11.0
Other expenses		795			680			846			115		16.9			(51)		(6.0)
Total noninterest expense		12,012			11,980			11,973			32		0.3			39		0.3
Income before provision for income taxes		14,567			12,552			13,047			2,015		16.1			1,520		11.7
Provision for income taxes		3,662			3,098			3,097			564		18.2			565		18.2
Net income	$	10,905		$	9,454		$	9,950		$	1,451		15.3	%	$	955		9.6	%

Effective tax rate		25.1	%		24.7	%		23.7	%

Net income per common share - Basic	$	1.09		$	0.94		$	0.98
Net income per common share - Diluted		1.07			0.93			0.97

Weighted average common shares outstanding - Basic		9,978			10,016			10,128
Weighted average common shares outstanding - Diluted		10,148			10,149			10,258
*NM=Not meaningful

UNITY BANCORP, INC.

YTD CONSOLIDATED STATEMENTS OF INCOME



	For the nine months ended September 30,						Current YTD vs. Prior YTD
(In thousands, except percentages and per share amounts)	2024			2023			$		%
INTEREST INCOME
Interest-bearing deposits	$	1,549		$	1,257		$	292		23.2	%
FHLB stock		624			1,037			(413)		(39.8)
Securities:
Taxable		5,503			5,385			118		2.2
Tax-exempt		53			55			(2)		(3.6)
Total securities		5,556			5,440			116		2.1
Loans:
SBA loans		3,762			4,186			(424)		(10.1)
SBA PPP loans		25			129			(104)		(80.6)
Commercial loans		64,273			56,320			7,953		14.1
Residential mortgage loans		28,192			25,103			3,089		12.3
Consumer loans		4,228			4,351			(123)		(2.8)
Residential construction loans		7,265			7,911			(646)		(8.2)
Total loans		107,745			98,000			9,745		9.9
Total interest income		115,474			105,734			9,740		9.2
INTEREST EXPENSE
Interest-bearing demand deposits		5,523			3,705			1,818		49.1
Savings deposits		10,097			6,138			3,959		64.5
Brokered deposits		6,516			5,631			885		15.7
Time deposits		16,718			7,556			9,162		121.3
Borrowed funds and subordinated debentures		4,499			11,740			(7,241)		(61.7)
Total interest expense		43,353			34,770			8,583		24.7
Net interest income		72,121			70,964			1,157		1.6
Provision for credit losses, loans		1,937			1,419			518		36.5
Provision (release) for credit losses, off-balance sheet		66			(62)			128		*NM
Provision for credit losses, AFS securities		646			-			646		*NM
Net interest income after provision for credit losses		69,472			69,607			(135)		(0.2)
NONINTEREST INCOME
Branch fee income		929			741			188		25.4
Service and loan fee income		1,677			1,379			298		21.6
Gain on sale of SBA loans held for sale, net		613			896			(283)		(31.6)
Gain on sale of mortgage loans, net		1,134			1,195			(61)		(5.1)
BOLI income		389			843			(454)		(53.9)
Net securities gains (losses)		573			(610)			1,183		193.9
Other income		1,238			1,131			107		9.5
Total noninterest income		6,553			5,575			978		17.5
NONINTEREST EXPENSE
Compensation and benefits		21,751			21,801			(50)		(0.2)
Processing and communications		2,615			2,172			443		20.4
Occupancy		2,394			2,312			82		3.5
Furniture and equipment		2,306			2,024			282		13.9
Professional services		1,167			1,071			96		9.0
Advertising		1,263			1,108			155		14.0
Loan related expenses		959			520			439		84.4
Deposit insurance		905			1,362			(457)		(33.6)
Director fees		709			629			80		12.7
Other expenses		2,055			2,237			(182)		(8.1)
Total noninterest expense		36,124			35,236			888		2.5
Income before provision for income taxes		39,901			39,946			(45)		(0.1)
Provision for income taxes		9,956			10,009			(53)		(0.5)
Net income	$	29,945		$	29,937		$	8		-	%

Effective tax rate		25.0	%		25.1	%

Net income per common share - Basic	$	2.98		$	2.92
Net income per common share - Diluted		2.94			2.88

Weighted average common shares outstanding - Basic		10,040			10,255
Weighted average common shares outstanding - Diluted		10,192			10,381
*NM=Not meaningful

UNITY BANCORP, INC.

QUARTER TO DATE NET INTEREST MARGIN


	For the three months ended
(Dollar amounts in thousands, interest amounts and	September 30, 2024							September 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	$	50,232	$	695		5.50	%	$	34,597	$	483		5.54	%
FHLB stock		7,530		164		8.67			15,485		364		9.32
Securities:
Taxable		141,682		1,904		5.38			135,132		1,848		5.47
Tax-exempt		1,579		18		4.48			1,692		18		4.27
Total securities (A)		143,261		1,922		5.37			136,824		1,866		5.45
Loans:
SBA loans		52,346		1,153		8.81			60,108		1,379		9.18
SBA PPP loans		1,641		6		1.51			2,523		25		3.94
Commercial loans		1,321,336		22,283		6.60			1,266,185		20,299		6.27
Residential mortgage loans		628,299		9,657		6.15			628,544		8,462		5.39
Consumer loans		70,740		1,436		7.94			75,246		1,525		7.93
Residential construction loans		99,865		2,235		8.76			139,045		2,588		7.28
Total loans (B)		2,174,227		36,770		6.62			2,171,651		34,278		6.18
Total interest-earning assets	$	2,375,250	$	39,551		6.62	%	$	2,358,557	$	36,991		6.22	%

Noninterest-earning assets:
Cash and due from banks		23,728							22,841
Allowance for credit losses		(26,406)							(26,478)
Other assets		93,000							100,428
Total noninterest-earning assets		90,322							96,791
Total assets	$	2,465,572						$	2,455,348

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	320,256	$	1,802		2.24	%	$	302,800	$	1,409		1.89	%
Savings deposits		530,954		3,605		2.70			503,676		2,590		2.09
Brokered deposits		217,851		2,039		3.72			245,557		2,212		3.65
Time deposits		560,297		6,186		4.39			396,918		3,429		3.50
Total interest-bearing deposits		1,629,358		13,632		3.33			1,448,951		9,640		2.64
Borrowed funds and subordinated debentures		120,067		1,062		3.46			300,608		3,817		4.97
Total interest-bearing liabilities	$	1,749,425	$	14,694		3.34	%	$	1,749,559	$	13,457		3.05	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		408,376							429,321
Other liabilities		28,761							27,192
Total noninterest-bearing liabilities		437,137							456,513
Total shareholders' equity		279,010							249,276
Total liabilities and shareholders' equity	$	2,465,572						$	2,455,348

Net interest spread			$	24,857		3.28	%			$	23,534		3.17	%
Tax-equivalent basis adjustment				(1)							(1)
Net interest income			$	24,856						$	23,533
Net interest margin						4.16	%						3.96	%

(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	September 30, 2024							June 30, 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	$	50,232	$	695		5.50	%	$	32,237	$	435		5.43	%
FHLB stock		7,530		164		8.67			7,951		180		9.12
Securities:
Taxable		141,682		1,904		5.38			140,501		1,749		4.98
Tax-exempt		1,579		18		4.48			1,571		18		4.55
Total securities (A)		143,261		1,922		5.37			142,072		1,767		4.97
Loans:
SBA loans		52,346		1,153		8.81			55,922		1,276		9.13
SBA PPP loans		1,641		6		1.51			1,782		11		2.49
Commercial loans		1,321,336		22,283		6.60			1,300,754		21,160		6.44
Residential mortgage loans		628,299		9,657		6.15			625,086		9,316		5.96
Consumer loans		70,740		1,436		7.94			69,943		1,390		7.86
Residential construction loans		99,865		2,235		8.76			112,272		2,453		8.64
Total loans (B)		2,174,227		36,770		6.62			2,165,759		35,606		6.50
Total interest-earning assets	$	2,375,250	$	39,551		6.62	%	$	2,348,019	$	37,988		6.51	%

Noninterest-earning assets:
Cash and due from banks		23,728							23,547
Allowance for credit losses		(26,406)							(26,202)
Other assets		93,000							90,971
Total noninterest-earning assets		90,322							88,316
Total assets	$	2,465,572						$	2,436,335

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	320,256	$	1,802		2.24	%	$	337,629	$	2,010		2.39	%
Savings deposits		530,954		3,605		2.70			504,685		3,349		2.67
Brokered deposits		217,851		2,039		3.72			228,276		2,181		3.84
Time deposits		560,297		6,186		4.39			535,444		5,832		4.38
Total interest-bearing deposits		1,629,358		13,632		3.33			1,606,034		13,372		3.35
Borrowed funds and subordinated debentures		120,067		1,062		3.46			129,763		1,191		3.63
Total interest-bearing liabilities	$	1,749,425	$	14,694		3.34	%	$	1,735,797	$	14,563		3.37	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		408,376							401,146
Other liabilities		28,761							29,139
Total noninterest-bearing liabilities		437,137							430,285
Total shareholders' equity		279,010							270,253
Total liabilities and shareholders' equity	$	2,465,572						$	2,436,335

Net interest spread			$	24,857		3.28	%			$	23,425		3.14	%
Tax-equivalent basis adjustment				(1)							(1)
Net interest income			$	24,856						$	23,424
Net interest margin						4.16	%						4.01	%

(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 nine months ended
(Dollar amounts in thousands, interest amounts and	September 30, 2024							September 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	$	37,764	$	1,549		5.48	%	$	34,068	$	1,257		4.93	%
FHLB stock		8,822		624		9.45			16,500		1,037		8.41
Securities:
Taxable		139,029		5,503		5.28			136,473		5,385		5.26
Tax-exempt		1,603		56		4.50			1,737		58		4.46
Total securities (A)		140,632		5,559		5.27			138,210		5,443		5.25
Loans:
SBA loans		55,451		3,762		9.05			62,802		4,186		8.89
SBA PPP loans		1,879		25		1.77			3,103		129		5.53
Commercial loans		1,301,303		64,273		6.49			1,230,752		56,320		6.03
Residential mortgage loans		626,286		28,192		6.00			621,971		25,103		5.38
Consumer loans		70,313		4,228		7.90			76,363		4,351		7.51
Residential construction loans		113,901		7,265		8.38			153,587		7,911		6.79
Total loans (B)		2,169,133		107,745		6.53			2,148,578		98,000		6.01
Total interest-earning assets	$	2,356,351	$	115,477		6.55	%	$	2,337,356	$	105,737		6.05	%

Noninterest-earning assets:
Cash and due from banks		23,499							22,516
Allowance for credit losses		(26,223)							(26,178)
Other assets		92,658							104,883
Total noninterest-earning assets		89,934							101,221
Total assets	$	2,446,285						$	2,438,577

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	327,544	$	5,523		2.25	%	$	299,957	$	3,705		1.65	%
Total savings deposits		512,969		10,097		2.63			514,468		6,138		1.59
		229,862		6,516		3.79			237,390		5,631		3.16
Total time deposits		520,448		16,718		4.29			343,123		7,556		2.93
Total interest-bearing deposits		1,590,823		38,854		3.26			1,394,938		23,030		2.21
Borrowed funds and subordinated debentures		150,278		4,499		3.93			327,382		11,740		4.73
Total interest-bearing liabilities	$	1,741,101	$	43,353		3.33	%	$	1,722,320	$	34,770		2.70	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		404,471							445,862
Other liabilities		28,883							26,016
Total noninterest-bearing liabilities		433,354							471,878
Total shareholders' equity		271,830							244,379
Total liabilities and shareholders' equity	$	2,446,285						$	2,438,577

Net interest spread			$	72,124		3.22	%			$	70,967		3.35	%
Tax-equivalent basis adjustment				(3)							(3)
Net interest income			$	72,121						$	70,964
Net interest margin						4.09	%						4.06	%

UNITY BANCORP, INC.

QUARTERLY ALLOWANCE FOR CREDIT LOSSES AND ASSET QUALITY SCHEDULES


Amounts in thousands, except percentages	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
ALLOWANCE FOR CREDIT LOSSES:
Balance, beginning of period	$	26,107		$	26,080		$	25,854		$	25,918		$	25,988
Provision for credit losses on loans charged to expense		1,029			266			641			413			534
		27,136			26,346			26,495			26,331			26,522
Less: Chargeoffs
SBA loans		70			-			-			-			100
Commercial loans		46			138			98			252			500
Residential mortgage loans		-			-			-			-			-
Consumer loans		68			130			70			274			52
Residential construction loans		-			-			277			100			-
Total chargeoffs		184			268			445			626			652
Add: Recoveries
SBA loans		7			6			8			-			1
Commercial loans		9			12			12			23			10
Residential mortgage loans		-			-			-			4			-
Consumer loans		34			11			10			11			37
Residential construction loans		-			-			-			111			-
Total recoveries		50			29			30			149			48
Net (chargeoffs)/recoveries		(134)			(239)			(415)			(477)			(604)
Balance, end of period	$	27,002		$	26,107		$	26,080		$	25,854		$	25,918

ASSET QUALITY INFORMATION:

Nonperforming loans:
SBA loans	$	3,646		$	3,813		$	3,542		$	3,444		$	3,445
Commercial loans		3,674			2,321			2,415			1,948			750
Residential mortgage loans		5,053			5,336			7,440			11,272			10,530
Consumer loans		100			105			366			381			130
Residential construction loans		547			547			3,127			2,141			3,201
Total nonperforming loans		13,020			12,122			16,890			19,186			18,056
Debt securities available for sale		2,859			3,071			-			-			-
OREO		-			-			-			-			251
Nonperforming assets		15,879			15,193			16,890			19,186			18,307

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

Nonperforming loans to total loans		0.59	%		0.56	%		0.78	%		0.88	%		0.84
Nonperforming assets to total assets		0.60			0.58			0.66			0.74			0.71

Allowance for credit losses to:
Total loans at quarter end		1.22	%		1.20	%		1.20	%		1.19	%		1.19
Total nonperforming loans		207.39			215.37			154.41			134.75			143.54

UNITY BANCORP, INC.

QUARTERLY FINANCIAL DATA


(In thousands, except %'s, employee, office and per share amounts)	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023				September 30, 2023
SUMMARY OF INCOME:
Total interest income	$	39,550		$	37,987		$	37,937			$	37,758			$	36,990
Total interest expense		14,694			14,563			14,096				13,727				13,457
Net interest income		24,856			23,424			23,841				24,031				23,533
Provision for credit losses		1,080			925			643				1,811				556
Net interest income after provision for credit losses		23,776			22,499			23,198				22,220				22,977
Total noninterest income		2,803			2,033			1,718				2,568				2,043
Total noninterest expense		12,012			11,980			12,132				11,740				11,973
Income before provision for income taxes		14,567			12,552			12,784				13,048				13,047
Provision for income taxes		3,662			3,098			3,198				3,278				3,097
Net income	$	10,905		$	9,454		$	9,586			$	9,770			$	9,950

Net income per common share - Basic	$	1.09		$	0.94		$	0.95			$	0.97			$	0.98
Net income per common share - Diluted		1.07			0.93			0.94				0.96				0.97

COMMON SHARE DATA:
Market price per share	$	34.06		$	29.57		$	27.60			$	29.59			$	23.43
Dividends paid		0.13			0.13			0.13				0.12				0.12
Book value per common share		28.48			27.41			26.56				25.98				24.95

Weighted average common shares outstanding - Basic		9,978			10,016			10,127				10,066				10,128
Weighted average common shares outstanding - Diluted		10,148			10,149			10,276				10,209				10,258
Issued common shares		11,570			11,555			11,555				11,424				11,411
Outstanding common shares		9,980			9,975			10,044				10,063				10,115
Treasury shares		1,590			1,580			1,511				1,361				1,296

PERFORMANCE RATIOS (Annualized):
Return on average assets		1.76	%		1.56	%		1.58	%			1.59	%			1.61	%
Return on average equity		15.55			14.07			14.49				15.12				15.84
Efficiency ratio**		44.23			47.10			47.57				43.06				46.59

BALANCE SHEET DATA:
Total assets	$	2,635,319		$	2,597,707		$	2,568,088			$	2,578,507			$	2,563,006
Total securities		143,712			145,187			138,702				135,689				136,091
Total loans		2,217,393			2,170,535			2,174,457				2,172,063				2,173,190
Allowance for credit losses		27,002			26,107			26,080				25,854				25,918
Total deposits		2,046,137			2,010,831			1,961,270				1,924,140				1,884,910
Total shareholders' equity		284,257			273,395			266,761				261,430				252,384

TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets		6.62	%		6.51	%		6.51	%			6.38	%			6.22	%
Interest-bearing liabilities		3.34			3.37			3.26				3.14				3.05
Net interest spread		3.28			3.14			3.25				3.24				3.17
Net interest margin		4.16			4.01			4.09				4.06				3.96

CREDIT QUALITY:
Nonperforming assets	$	15,879		$	15,193		$	16,890			$	19,186			$	18,307
QTD annualized net (chargeoffs)/recoveries to QTD average loans		(0.02)	%		(0.04)	%		(0.08)	%			(0.09)	%			(0.11)	%
Allowance for credit losses to total loans		1.22			1.20			1.20				1.19				1.19
Nonperforming loans to total loans		0.59			0.56			0.78				0.88				0.84
Nonperforming assets to total assets		0.60			0.58			0.66				0.74				0.71

UNITY BANCORP CAPITAL RATIOS
Total equity to total assets		10.79	%		10.52	%		10.39	%			10.14	%			9.85	%
Leverage ratio		11.94			11.67			11.39				11.14				10.76
Common Equity Tier 1 Capital Ratio		13.50			13.31			12.90				12.70				12.16
Risk-based Tier 1 Capital Ratio		13.98			13.80			13.38				13.18				12.64
Risk-based Total Capital Ratio		15.23			15.05			14.63				14.43				13.88

Number of banking offices	21	21	21	21	21
Employee Full-Time Equivalent	222	217	217	232	232

** 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.

Unity Bancorp, Inc

Loan Portfolio Composition


In thousands, except percentages	September 30, 2024		%	December 31, 2023		%
SBA Loans:
SBA loans held for sale	$	14,621	0.6%	$	18,242	0.8%
SBA loans held for investment		37,904	1.7%		38,584	1.8%
SBA PPP		1,593	0.1%		2,318	0.1%
Total SBA Loans		54,118	2.4%		59,144	2.7%
Commercial Loans
Commercial construction		132,363	6.0%		129,159	6.0%
SBA 504		45,307	2.0%		33,669	1.7%
Commercial & Industrial		139,635	6.3%		128,402	5.9%
Commercial Mortgage - Owner Occupied		559,275	25.2%		502,397	23.1%
Commercial Mortgage - Nonowner Occupied		412,722	18.6%		424,490	19.5%
Other		79,461	3.6%		59,343	2.7%
Total Commercial Loans		1,368,763	61.7%		1,277,460	58.9%

Residential Mortgage loans		623,529	28.1%		631,506	29.1%
Consumer Loans
Home equity		68,838	3.1%		67,037	3.0%
Consumer other		3,453	0.2%		5,639	0.3%
Total Consumer Loans		72,291	3.3%		72,676	3.3%

Residential Construction		98,692	4.5%		131,277	6.0%

Total Gross Loans	$	2,217,393	100.0%	$	2,172,063	100.0%

Document and Entity Information	Oct. 11, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	Oct. 11, 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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