8-K - UNTY - Equibles

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 14, 2023

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 14, 2023, announcing results for the three months ended and six months ended June 30, 2023, the full text of which is incorporated by reference to this Item.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit 99.1Press release issued by the Registrant on July 14, 2023.

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.

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

Date: July 14, 2023
	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 $9.7 million, or $0.95 per diluted share, for the quarter ended June 30, 2023, compared to net income of $10.3 million, or $0.96 per diluted share for the quarter ended March 31, 2023. This represents a 5.7% decrease in net income and a 1.0% decrease in net income per diluted share. For the six months ended June 30, 2023, Unity reported net income of $20.0 million or $1.91 per diluted share, compared to net income of $18.6 million or $1.74 per diluted share for the six months ended June 30, 2022. This represents a 7.7% increase in net income and a 9.8% increase in net income per diluted share.

Second Quarter Earnings Highlights

●	Net interest income, our primary driver of earnings, decreased $0.4 million to $23.5 million for the quarter ended June 30, 2023, compared to $23.9 million for the quarter ended March 31, 2023. Net interest margin (“NIM”) decreased 15 basis points to 4.04% for the quarter ended June 30, 2023, compared to the quarter ended March 31, 2023. 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 was $0.8 million for the quarter ended June 30, 2023, compared to $0.1 million for the quarter ended March 31, 2023. The increase was primarily driven by loan growth and increased losses related to certain Consumer and Small Business Administration (“SBA”) credits.
---	---
●	Non-interest income was $2.1 million for the quarter ended June 30, 2023, compared to $1.4 million for the quarter ended March 31, 2023. The $0.7 million increase was primarily driven by increased realized gains related to the sale of mortgage loans and SBA loans. This was complemented by reduced mark-to-market decreases in the Company’s equity portfolio, which is primarily comprised of bank common and preferred shares.
---	---
●	Non-interest expense was $11.8 million for the quarter ended June 30, 2023, compared to $11.4 million for the quarter ended March 31, 2023. The increase was primarily driven by increased FDIC deposit insurance expense.
---	---
●	The effective tax rate was 26.0% for the quarter ended June 30, 2023, compared to 25.4% for the quarter ending March 31, 2023.
---	---

Balance Sheet Highlights

●	Total gross loans modestly increased $60.8 million, or 2.9%, from December 31, 2022, primarily due to increases in commercial loans and residential mortgage loans. These increases were partially offset by decreases in the residential construction loan category. In the second quarter of 2023, the Company sold $6.3 million of portfolio residential mortgage loans and $6.0 million of SBA held for sale loans, realizing gains of $0.1 million and $0.6 million, respectively.
●	As of June 30, 2023, the allowance for credit losses as a percentage of gross loans was 1.20%.
---	---
●	Total deposits increased $62.0 million, or 3.5%, from December 31, 2022, to $1.85 billion as of June 30, 2023. As of June 30, 2023, 18.2% of total deposits were uninsured and the average deposit account size was approximately $37 thousand. Further, the Bank’s deposit base was 45.7% retail, 26.3% business, 17.6% municipal, and 10.4% Brokered CDs.
---	---
●	As of June 30, 2023, the loan to deposit ratio was approximately 117.2%, which is above the Company’s target threshold of 110%. Consistent with the prior quarter and to bring the ratio in line with the Company’s target, Unity is intentionally reducing commercial investment property CRE lending volumes and continues to execute upon its retail banking deposit gathering strategies.
---	---
●	As of June 30, 2023, investments comprised 5.4% of total assets. Available for sale debt securities (“AFS”) were $93.0 million or 3.7% of total assets. Held to maturity (“HTM”) debt securities were $35.9 million or 1.4% of total assets. As of June 30, 2023, pre-tax net unrealized losses on AFS and HTM were $6.1 million and $6.6 million, respectively. These pre-tax unrealized losses represent approximately 5.0% of the Bank’s capital. Equity securities were $8.2 million or 0.3% of total assets as of June 30, 2023.
---	---
●	Borrowed funds increased $40.0 million from December 31, 2022. Borrowed funds were entirely comprised of borrowings from the FHLB.
---	---
●	Shareholders’ equity was $244.1 million as of June 30, 2023, compared to $239.2 million as of December 31, 2022. The $4.9 million increase was primarily driven by 2023 earnings, partially offset by share repurchase and dividend payments. In the second quarter of 2023, Unity Bancorp repurchased 225,000 shares for approximately $5.1 million, or a weighted average price of $22.82 per share.
---	---
●	Book value per common share was $24.12 as of June 30, 2023, compared to $22.60 as of December 31, 2022.
---	---
●	Below is a summary of the Bancorp’s regulatory capital:
---	---
o	Community Bank Leverage Ratio: 10.49% at June 30, 2023, compared to 10.38% at March 31, 2023 and 10.88% at December 31, 2022.
---	---
o	Common Equity Tier 1 Capital Ratio: 11.74% at June 30, 2023.
---	---
o	Tier 1 Capital Ratio: 12.21% at June 30, 2023.
---	---
o	Total Capital Ratio: 13.45% at June 30, 2023.
---	---
●	At June 30, 2023, the Company held $151.2 million of cash and cash equivalents. Further, the Company maintained approximately $450.2 million of funding available from various funding sources, including the FHLB, FRB Discount Window, and other lines of credit. Total available funding plus cash on hand represented 179.0% of uninsured deposits.
---	---
●	As of June 30, 2023, nonperforming assets were $16.5 million. As of December 31, 2022, nonperforming assets were $9.1 million. As of June 30, 2023, criticized, classified and nonaccrual assets were $36.8 million. Over 70% of nonperforming loans consisted of residential mortgage loans and residential construction loans, which have historically resulted in lower net charge off levels. The Company diligently reviews nonperforming assets and potential problem credits, taking proactive measures to promptly address and resolve any issues.
---	---

Other Highlights

❖	In June 2023, Unity Bank hired industry veteran Daniel Sharabba as its new Senior Retail Officer. Mr. Sharabba previously served as Regional Manager/Vice President with Citizens Bank, overseeing 17 retail locations in northern and central New Jersey.

❖	Unity Bank is opening a new full-service branch in Parsippany, the first location in Morris County, New Jersey and third new retail banking site since December 2022. The branch opening is anticipated to occur over the upcoming months.

❖

In May 2023, Unity Bank was selected for the ICBA’s 2023 Best Performing Banks List, which annually ranks the top community banks in the country. Additionally, in July 2023, Unity Bank was awarded the Raymond James Community Bankers Cup for 2022. This award recognizes the top 10% of community banks based on various profitability, efficiency, and balance sheet metrics. Unity was the only New Jersey headquartered bank to be recognized for these awards.

❖

In April 2023, Unity Bancorp Inc. announced a new Share Repurchase Program. Under the new program, Unity Bancorp Inc. may repurchase up to 500,000 shares or approximately 5% of its outstanding common stock. The program is a testament to the Company’s commitment to returning value to its shareholders. Further, the Company will continue to conservatively manage its overall capital and liquidity positions when determining the timing of share repurchases.

Unity Bancorp, Inc. is a financial services organization headquartered in Clinton, New Jersey, with approximately $2.6 billion in assets and $1.8 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, 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, 2023


										June 30, 2023 vs.
										March 31, 2023		June 30, 2022
(In thousands, except percentages and per share amounts)	June 30, 2023			March 31, 2023			June 30, 2022			%		%
BALANCE SHEET DATA
Total assets	$	2,552,301		$	2,475,851		$	2,117,156		3.1	%	20.6	%
Total deposits		1,849,528			1,823,921			1,697,967		1.4		8.9
Total gross loans		2,167,367			2,130,919			1,801,593		1.7		20.3
Total securities		137,061			138,264			139,835		(0.9)		(2.0)
Total shareholders' equity		244,073			240,459			220,789		1.5		10.5
Allowance for credit losses		25,988			26,201			22,858		(0.8)		13.7

FINANCIAL DATA - QUARTER TO DATE
Income before provision for income taxes	$	13,109		$	13,791		$	12,608		(4.9)		4.0
Provision for income taxes		3,409			3,504			3,157		(2.7)		8.0
Net income	$	9,700		$	10,287		$	9,451		(5.7)		2.6

Net income per common share - Basic	$	0.96		$	0.98		$	0.90		(2.0)		6.7
Net income per common share - Diluted		0.95			0.96			0.88		(1.0)		8.0

PERFORMANCE RATIOS - QUARTER TO DATE
Return on average assets		1.60	%		1.72	%		1.83	%
Return on average equity		16.19			17.14			17.32
Efficiency ratio **		45.54			44.56			42.84
Net interest margin		4.04			4.19			4.39
Noninterest expense to average assets		1.93			1.91			2.08

FINANCIAL DATA - YEAR TO DATE
Income before provision for income taxes	$	26,901					$	24,519				9.7
Provision for income taxes		6,914						5,960				16.0
Net income	$	19,987					$	18,559				7.7

Net income per common share - Basic	$	1.94					$	1.77				9.6
Net income per common share - Diluted		1.91						1.74				9.8

PERFORMANCE RATIOS - YEAR TO DATE
Return on average assets		1.66	%					1.82	%
Return on average equity		16.66						17.48
Efficiency ratio **		45.05						44.27
Net interest margin		4.11						4.25
Noninterest expense to average assets		1.92						2.15

SHARE INFORMATION
Market price per share	$	23.59		$	22.81		$	26.48		3.4		(10.9)
Dividends paid		0.12			0.12			0.11		-		9.1
Book value per common share		24.12			23.34			21.01		3.3		14.8
Average diluted shares outstanding (QTD)		10,203			10,686			10,706		(4.5)		(4.7)

CAPITAL RATIOS
Total equity to total assets		9.56	%		9.71	%		10.43	%
Community bank leverage ratio		10.49			10.38			11.20

CREDIT QUALITY AND RATIOS
Nonperforming assets	$	16,466		$	14,683		$	7,680		12.1		114.4
QTD annualized net (chargeoffs)/recoveries to QTD average loans		(0.18)	%		0.01	%		(0.11)	%
Allowance for credit losses to total loans		1.20			1.23			1.27
Nonperforming loans (gross SBA guarantee) to total loans		0.76			0.68			0.43
Nonperforming assets (gross SBA guarantee) to total assets		0.65			0.59			0.36

******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

June 30, 2023


							June 30, 2023 vs.
							December 31, 2022		June 30, 2022
(In thousands, except percentages)	June 30, 2023		December 31, 2022		June 30, 2022		%		%

ASSETS
Cash and due from banks	$	22,552	$	19,699	$	23,997	14.5	%	(6.0)	%
Interest-bearing deposits		128,682		95,094		85,046	35.3		51.3
Cash and cash equivalents		151,234		114,793		109,043	31.7		38.7
Securities:
Debt securities available for sale, at market value		92,966		95,393		93,972	(2.5)		(1.1)
Debt securities held to maturity, at book value		35,890		35,760		36,813	0.4		(2.5)
Equity securities, at market value		8,205		9,793		9,050	(16.2)		(9.3)
Total securities		137,061		140,946		139,835	(2.8)		(2.0)
Loans:
SBA loans held for sale		20,074		27,928		32,183	(28.1)		(37.6)
SBA loans held for investment		39,878		38,468		33,089	3.7		20.5
SBA PPP loans		2,555		5,908		14,216	(56.8)		(82.0)
Commercial loans		1,256,032		1,187,543		1,026,313	5.8		22.4
Residential mortgage loans		633,414		605,091		481,687	4.7		31.5
Consumer loans		75,990		78,164		79,645	(2.8)		(4.6)
Residential construction loans		139,424		163,457		134,460	(14.7)		3.7
Total loans		2,167,367		2,106,559		1,801,593	2.9		20.3
Allowance for credit losses		(25,988)		(25,196)		(22,858)	3.1		13.7
Net loans		2,141,379		2,081,363		1,778,735	2.9		20.4
Premises and equipment, net		19,923		20,002		19,288	(0.4)		3.3
Bank owned life insurance ("BOLI")		26,940		26,776		26,464	0.6		1.8
Deferred tax assets		12,891		12,345		11,933	4.4		8.0
Federal Home Loan Bank ("FHLB") stock		21,430		19,064		9,223	12.4		132.4
Accrued interest receivable		14,858		13,403		9,961	10.9		49.2
Goodwill		1,516		1,516		1,516	-		-
Prepaid expenses and other assets		25,069		14,740		11,158	70.1		124.7
Total assets	$	2,552,301	$	2,444,948	$	2,117,156	4.4	%	20.6	%

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	439,220	$	494,184	$	511,062	(11.1)	%	(14.1)	%
Interest-bearing demand		300,710		276,218		249,997	8.9		20.3
Savings		546,116		591,826		670,129	(7.7)		(18.5)
Brokered time deposits		192,043		189,644		93,395	1.3		105.6
Time deposits		371,439		235,656		173,384	57.6		114.2
Total deposits		1,849,528		1,787,528		1,697,967	3.5		8.9
Borrowed funds		423,000		383,000		165,000	10.4		156.4
Subordinated debentures		10,310		10,310		10,310	-		-
Accrued interest payable		715		691		128	3.5		458.6
Accrued expenses and other liabilities		24,675		24,192		22,962	2.0		7.5
Total liabilities		2,308,228		2,205,721		1,896,367	4.6		21.7
Shareholders' equity:
Common stock		98,910		97,204		95,650	1.8		3.4
Retained earnings		173,823		156,958		139,394	10.7		24.7
Treasury stock, at cost		(25,037)		(11,675)		(11,633)	114.4		115.2
Accumulated other comprehensive (loss) income		(3,623)		(3,260)		(2,622)	11.1		38.2
Total shareholders' equity		244,073		239,227		220,789	2.0		10.5
Total liabilities and shareholders' equity	$	2,552,301	$	2,444,948	$	2,117,156	4.4	%	20.6	%

Shares issued		11,387		11,289		11,214
Shares outstanding		10,119		10,584		10,511
Treasury shares		1,268		705		703

*NM=Not meaningful

UNITY BANCORP, INC.

QTD CONSOLIDATED STATEMENTS OF INCOME

June 30, 2023


										June 30, 2023 vs.
	For the three months ended									March 31, 2023				June 30, 2022
(In thousands, except percentages and per share amounts)	June 30, 2023			March 31, 2023			June 30, 2022				%				%
INTEREST INCOME
Interest-bearing deposits	$	441		$	333		$	152				32.4	%			190.1	%
FHLB stock		343			331			50				3.6				586.0
Securities:
Taxable		1,798			1,739			1,115				3.4				61.3
Tax-exempt		19			19			10				-				90.0
Total securities		1,817			1,758			1,125				3.4				61.5
Loans:
SBA loans		1,403			1,404			926				(0.1)				51.5
SBA PPP loans		27			77			492				(64.9)				(94.5)
Commercial loans		18,621			17,401			12,414				7.0				50.0
Residential mortgage loans		8,532			8,109			4,982				5.2				71.3
Consumer loans		1,471			1,354			919				8.6				60.1
Residential construction loans		2,737			2,586			2,011				5.8				36.1
Total loans		32,791			30,931			21,744				6.0				50.8
Total interest income		35,392			33,353			23,071				6.1				53.4
INTEREST EXPENSE
Interest-bearing demand deposits		1,349			982			198				37.4				581.3
Savings deposits		2,501			1,953			412				28.1				507.0
Time deposits		3,895			2,709			419				43.8				829.6
Borrowed funds and subordinated debentures		4,125			3,799			285				8.6				1,347.4
Total interest expense		11,870			9,443			1,314				25.7				803.3
Net interest income		23,522			23,910			21,757				(1.6)				8.1
Provision for credit losses		777			108			1,188				619.4				(34.6)
Net interest income after provision for credit losses		22,745			23,802			20,569				(4.4)				10.6
NONINTEREST INCOME
Branch fee income		228			235			281				(3.0)				(18.9)
Service and loan fee income		491			503			688				(2.4)				(28.6)
Gain on sale of SBA loans held for sale, net		586			309			-				89.6				NM*
Gain on sale of mortgage loans, net		463			244			431				89.8				7.4
BOLI income		84			80			161				5.0				(47.8)
Net securities losses		(164)			(322)			(498)				49.1				67.1
Other income		427			368			1,686				16.0				(74.7)
Total noninterest income		2,115			1,417			2,749				49.3				(23.1)
NONINTEREST EXPENSE
Compensation and benefits		7,271			7,090			6,811				2.6				6.8
Processing and communications		663			804			706				(17.5)				(6.1)
Occupancy		779			770			727				1.2				7.2
Furniture and equipment		690			689			618				0.1				11.7
Professional services		296			427			392				(30.7)				(24.5)
Advertising		443			260			340				70.4				30.3
Other loan expenses		45			128			(5)				(64.8)				NM*
Deposit insurance		617			348			250				77.3				146.8
Director fees		203			217			225				(6.5)				(9.8)
Loan collection expenses		85			47			36				80.9				136.1
Other expenses		659			648			610				1.7				8.0
Total noninterest expense		11,751			11,428			10,710				2.8				9.7
Income before provision for income taxes		13,109			13,791			12,608				(4.9)				4.0
Provision for income taxes		3,409			3,504			3,157				(2.7)				8.0
Net income	$	9,700		$	10,287		$	9,451				(5.7)	%			2.6	%

Effective tax rate		26.0	%		25.4	%		25.0	%

Net income per common share - Basic	$	0.96		$	0.98		$	0.90
Net income per common share - Diluted		0.95			0.96			0.88

Weighted average common shares outstanding - Basic		10,103			10,538			10,504
Weighted average common shares outstanding - Diluted		10,203			10,686			10,706
*NM=Not meaningful

All values are in US Dollars.

UNITY BANCORP, INC.

YTD CONSOLIDATED STATEMENTS OF INCOME

June 30, 2023



	For the six months ended June 30,						Current YTD vs. Prior YTD
(In thousands, except percentages and per share amounts)	2023			2022				%
INTEREST INCOME
Interest-bearing deposits	$	775		$	248				212.5	%
FHLB stock		674			83				712.0
Securities:
Taxable		3,537			1,768				100.1
Tax-exempt		38			16				137.5
Total securities		3,575			1,784				100.4
Loans:
SBA loans		2,807			1,849				51.8
SBA PPP loans		104			1,269				(91.8)
Commercial loans		36,022			23,910				50.7
Residential mortgage loans		16,641			9,372				77.6
Consumer loans		2,825			1,840				53.5
Residential construction loans		5,323			3,835				38.8
Total loans		63,722			42,075				51.4
Total interest income		68,746			44,190				55.6
INTEREST EXPENSE
Interest-bearing demand deposits		2,331			362				543.9
Savings deposits		4,454			757				488.4
Time deposits		6,604			899				634.6
Borrowed funds and subordinated debentures		7,924			511				1,450.7
Total interest expense		21,313			2,529				742.7
Net interest income		47,433			41,661				13.9
Provision for credit losses		885			1,009				(12.3)
Net interest income after provision for credit losses		46,548			40,652				14.5
NONINTEREST INCOME
Branch fee income		463			556				(16.7)
Service and loan fee income		993			1,272				(21.9)
Gain on sale of SBA loans held for sale, net		896			852				5.2
Gain on sale of mortgage loans, net		707			952				(25.7)
BOLI income		164			324				(49.4)
Net securities losses		(487)			(1,055)				53.8
Other income		796			2,088				(61.9)
Total noninterest income		3,532			4,989				(29.2)
NONINTEREST EXPENSE
Compensation and benefits		14,361			13,319				7.8
Processing and communications		1,467			1,458				0.6
Occupancy		1,549			1,502				3.1
Furniture and equipment		1,379			1,194				15.5
Professional services		723			839				(13.8)
Advertising		703			565				24.4
Other loan expenses		173			130				33.1
Deposit insurance		965			519				85.9
Director fees		420			459				(8.5)
Loan collection expenses		132			93				41.9
Other expenses		1,307			1,044				25.2
Total noninterest expense		23,179			21,122				9.7
Income before provision for income taxes		26,901			24,519				9.7
Provision for income taxes		6,914			5,960				16.0
Net income	$	19,987		$	18,559				7.7	%

Effective tax rate		25.7	%		24.3	%

Net income per common share - Basic	$	1.94		$	1.77
Net income per common share - Diluted		1.91			1.74

Weighted average common shares outstanding - Basic		10,319			10,475
Weighted average common shares outstanding - Diluted		10,444			10,685
*NM=Not meaningful

All values are in US Dollars.

UNITY BANCORP, INC.

QUARTER TO DATE NET INTEREST MARGIN

June 30, 2023


	For the three months ended
(Dollar amounts in thousands, interest amounts and	June 30, 2023							June 30, 2022
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	$	34,808	$	441		5.09	%	$	101,430	$	152		0.60	%
FHLB stock		17,252		343		7.97			3,996		50		4.99
Securities:
Taxable		135,943		1,798		5.29			127,539		1,115		3.51
Tax-exempt		1,766		20		4.59			1,258		11		3.69
Total securities (A)		137,709		1,818		5.28			128,797		1,126		3.51
Loans:
SBA loans		61,744		1,403		9.09			63,804		926		5.82
SBA PPP loans		2,561		27		4.20			23,900		492		8.25
Commercial loans		1,225,761		18,621		6.01			1,006,183		12,414		4.95
Residential mortgage loans		622,283		8,532		5.48			449,963		4,982		4.44
Consumer loans		76,741		1,471		7.59			78,400		919		4.70
Residential construction loans		158,165		2,737		6.85			129,780		2,011		6.21
Total loans (B)		2,147,255		32,791		6.04			1,752,030		21,744		4.98
Total interest-earning assets	$	2,337,024	$	35,393		6.07	%	$	1,986,253	$	23,072		4.66	%

Noninterest-earning assets:
Cash and due from banks		21,967							24,041
Allowance for credit losses		(26,270)							(22,179)
Other assets		103,234							79,130
Total noninterest-earning assets		98,931							80,992
Total assets	$	2,435,955						$	2,067,245

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	312,149	$	1,349		1.73	%	$	270,380	$	198		0.29	%
Total savings deposits		543,690		2,501		1.85			686,058		412		0.24
Total time deposits		533,612		3,895		2.93			278,206		419		0.60
Total interest-bearing deposits		1,389,451		7,745		2.24			1,234,644		1,029		0.33
Borrowed funds and subordinated debentures		339,599		4,125		4.81			59,090		285		1.94
Total interest-bearing liabilities	$	1,729,050	$	11,870		2.75	%	$	1,293,734	$	1,314		0.41	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		440,289							532,496
Other liabilities		26,275							22,192
Total noninterest-bearing liabilities		466,564							554,688
Total shareholders' equity		240,341							218,823
Total liabilities and shareholders' equity	$	2,435,955						$	2,067,245

Net interest spread			$	23,523		3.32	%			$	21,758		4.25	%
Tax-equivalent basis adjustment				(1)							(1)
Net interest income			$	23,522						$	21,757
Net interest margin						4.04	%						4.39	%

(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

June 30, 2023


	For the three months ended
(Dollar amounts in thousands, interest amounts and	June 30, 2023							March 31, 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	$	34,808	$	441		5.09	%	$	32,778	$	333		4.12	%
FHLB stock		17,252		343		7.97			16,776		331		7.99
Securities:
Taxable		135,943		1,798		5.29			138,379		1,739		5.03
Tax-exempt		1,766		20		4.59			1,753		20		4.49
Total securities (A)		137,709		1,818		5.28			140,132		1,759		5.02
Loans:
SBA loans		61,744		1,403		9.09			66,625		1,404		8.43
SBA PPP loans		2,561		27		4.20			4,243		77		7.26
Commercial loans		1,225,761		18,621		6.01			1,199,577		17,401		5.80
Residential mortgage loans		622,283		8,532		5.48			614,936		8,109		5.27
Consumer loans		76,741		1,471		7.59			77,121		1,354		7.02
Residential construction loans		158,165		2,737		6.85			163,821		2,586		6.31
Total loans (B)		2,147,255		32,791		6.04			2,126,323		30,931		5.82
Total interest-earning assets	$	2,337,024	$	35,393		6.07	%	$	2,316,009	$	33,354		5.84	%

Noninterest-earning assets:
Cash and due from banks		21,967							22,738
Allowance for credit losses		(26,270)							(25,778)
Other assets		103,234							111,104
Total noninterest-earning assets		98,931							108,064
Total assets	$	2,435,955						$	2,424,073

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	312,149	$	1,349		1.73	%	$	287,749	$	982		1.38	%
Total savings deposits		543,690		2,501		1.85			571,843		1,953		1.39
Total time deposits		533,612		3,895		2.93			485,679		2,709		2.26
Total interest-bearing deposits		1,389,451		7,745		2.24			1,345,271		5,644		1.70
Borrowed funds and subordinated debentures		339,599		4,125		4.81			342,398		3,799		4.44
Total interest-bearing liabilities	$	1,729,050	$	11,870		2.75	%	$	1,687,669	$	9,443		2.27	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		440,289							468,407
Other liabilities		26,275							24,541
Total noninterest-bearing liabilities		466,564							492,948
Total shareholders' equity		240,341							243,456
Total liabilities and shareholders' equity	$	2,435,955						$	2,424,073

Net interest spread			$	23,523		3.32	%			$	23,911		3.57	%
Tax-equivalent basis adjustment				(1)							(1)
Net interest income			$	23,522						$	23,910
Net interest margin						4.04	%						4.19	%

(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.

YEAR TO DATE NET INTEREST MARGIN

June 30, 2023


	For the six months ended
(Dollar amounts in thousands, interest amounts and	June 30, 2023							June 30, 2022
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	$	33,798	$	775		4.62	%	$	155,714	$	248		0.32	%
FHLB stock		17,016		674		7.98			3,774		83		4.44
Securities:
Taxable		137,154		3,537		5.16			106,257		1,768		3.35
Tax-exempt		1,760		40		4.54			1,124		19		3.42
Total securities (A)		138,914		3,577		5.15			107,381		1,787		3.36
Loans:
SBA loans		64,171		2,807		8.75			63,674		1,849		5.86
SBA PPP loans		3,397		104		6.12			30,408		1,269		8.42
Commercial loans		1,212,741		36,022		5.91			978,221		23,910		4.93
Residential mortgage loans		618,630		16,641		5.38			431,737		9,372		4.38
Consumer loans		76,930		2,825		7.30			78,693		1,840		4.71
Residential construction loans		160,978		5,323		6.58			126,405		3,835		6.12
Total loans (B)		2,136,847		63,722		5.93			1,709,138		42,075		4.96
Total interest-earning assets	$	2,326,575	$	68,748		5.96	%	$	1,976,007	$	44,193		4.51	%

Noninterest-earning assets:
Cash and due from banks		22,350							23,861
Allowance for credit losses		(26,025)							(22,254)
Other assets		107,147							79,379
Total noninterest-earning assets		103,472							80,986
Total assets	$	2,430,047						$	2,056,993

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	300,016	$	2,331		1.57	%	$	259,913	$	362		0.28	%
Total savings deposits		557,689		4,454		1.61			693,627		757		0.22
Total time deposits		509,778		6,604		2.61			283,153		899		0.64
Total interest-bearing deposits		1,367,483		13,389		1.97			1,236,693		2,018		0.33
Borrowed funds and subordinated debentures		340,991		7,924		4.62			54,724		511		1.88
Total interest-bearing liabilities	$	1,708,474	$	21,313		2.52	%	$	1,291,417	$	2,529		0.40	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		454,270							529,729
Other liabilities		25,413							21,707
Total noninterest-bearing liabilities		479,683							551,436
Total shareholders' equity		241,890							214,141
Total liabilities and shareholders' equity	$	2,430,047						$	2,056,993

Net interest spread			$	47,435		3.44	%			$	41,664		4.12	%
Tax-equivalent basis adjustment				(2)							(3)
Net interest income			$	47,433						$	41,661
Net interest margin						4.11	%						4.25	%

(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.

QUARTERLY ALLOWANCE FOR CREDIT LOSSES AND LOAN QUALITY SCHEDULES

June 30, 2023


Amounts in thousands, except percentages	June 30, 2023			March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022
ALLOWANCE FOR CREDIT LOSSES:
Balance, beginning of period	$	26,201		$	25,196		$	23,861		$	22,858		$	22,168
Impact of the adoption of ASU 2016-13 ("CECL")		-			847			-			-			-
Provision for credit losses charged to expense		777			108			1,632			1,517			1,188
		26,978			26,151			25,493			24,375			23,356
Less: Chargeoffs
SBA loans		-			113			59			-			-
Commercial loans		-			-			-			501			501
Residential mortgage loans		-			-			-			-			-
Consumer loans		225			120			300			50			40
Residential construction loans		900			-			-			-			-
Total chargeoffs		1,125			233			359			551			541
Add: Recoveries
SBA loans		15			-			-			5			6
Commercial loans		96			271			26			23			32
Residential mortgage loans		-			-			2			-			1
Consumer loans		24			12			34			9			4
Residential construction loans		-			-			-			-			-
Total recoveries		135			283			62			37			43
Net (chargeoffs)/recoveries		(990)			50			(297)			(514)			(498)
Balance, end of period	$	25,988		$	26,201		$	25,196		$	23,861		$	22,858

LOAN QUALITY INFORMATION:

Nonperforming loans:
SBA loans	$	3,591		$	4,325		$	690		$	1,491		$	604
Commercial loans		835			1,144			1,582			1,147			1,717
Residential mortgage loans		8,607			5,565			3,361			3,404			2,668
Consumer loans		-			-			-			-			200
Residential construction loans		3,182			3,473			3,432			1,991			2,691
Total nonperforming loans		16,215			14,507			9,065			8,033			7,680
OREO		251			176			-			-			-
Nonperforming assets		16,466			14,683			9,065			8,033			7,680
Less: Amount guaranteed by Small Business Administration		3,201			3,625			-			-			15
Nonperforming assets, net of SBA guarantee		13,265			11,058			9,065			8,033			7,665

Loans 90 days past due & still accruing	$	-		$	-		$	-		$	75		$	43

Allowance for loan losses to:
Total loans at quarter end		1.20	%		1.23	%		1.20	%		1.23	%		1.27
Total nonperforming loans		157.83			178.44			277.95			297.04			297.63
Total nonperforming assets, net of SBA guarantee		195.91			236.94			277.95			297.04			298.21

UNITY BANCORP, INC.

QUARTERLY FINANCIAL DATA

June 30, 2023


(In thousands, except %'s, employee, office and per share amounts)	June 30, 2023			March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022
SUMMARY OF INCOME:
Total interest income	$	35,392		$	33,353		$	30,325		$	26,224		$	23,071
Total interest expense		11,870			9,443			5,616			2,486			1,314
Net interest income		23,522			23,910			24,709			23,738			21,757
Provision for credit losses		777			108			1,632			1,517			1,188
Net interest income after provision for credit losses		22,745			23,802			23,077			22,221			20,569
Total noninterest income		2,115			1,417			1,946			1,110			2,749
Total noninterest expense		11,751			11,428			11,389			10,064			10,710
Income before provision for income taxes		13,109			13,791			13,634			13,267			12,608
Provision for income taxes		3,409			3,504			3,678			3,325			3,157
Net income	$	9,700		$	10,287		$	9,956		$	9,942		$	9,451

Net income per common share - Basic	$	0.96		$	0.98		$	0.94		$	0.94		$	0.90
Net income per common share - Diluted		0.95			0.96			0.93			0.93			0.88

COMMON SHARE DATA:
Market price per share	$	23.59		$	22.81		$	27.33		$	25.11		$	26.48
Dividends paid		0.12			0.12			0.11			0.11			0.11
Book value per common share		24.12			23.34			22.60			21.86			21.01

Weighted average common shares outstanding - Basic		10,103			10,538			10,557			10,522			10,504
Weighted average common shares outstanding - Diluted		10,203			10,686			10,740			10,714			10,706
Issued common shares		11,387			11,335			11,289			11,236			11,214
Outstanding common shares		10,119			10,292			10,584			10,533			10,511
Treasury shares		1,268			1,043			705			703			703

PERFORMANCE RATIOS (Annualized):
Return on average assets		1.60	%		1.72	%		1.72	%		1.85	%		1.83	%
Return on average equity		16.19			17.14			16.82			17.39			17.32
Efficiency ratio**		45.54			44.56			43.24			39.59			42.84
Noninterest expense to average assets		1.93			1.91			1.96			1.87			2.08

BALANCE SHEET DATA:
Total assets	$	2,552,301		$	2,475,851		$	2,444,948		$	2,339,537		$	2,117,156
Total securities		137,061			138,264			140,946			136,871			139,835
Total loans		2,167,367			2,130,919			2,106,559			1,942,414			1,801,593
Allowance for credit losses		25,988			26,201			25,196			23,861			22,858
Total deposits		1,849,528			1,823,921			1,787,528			1,796,597			1,697,967
Total shareholders' equity		244,073			240,459			239,227			230,234			220,789

TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets		6.07	%		5.84	%		5.48	%		5.09	%		4.66	%
Interest-bearing liabilities		2.75			2.27			1.44			0.72			0.41
Net interest spread		3.32			3.57			4.04			4.37			4.25
Net interest margin		4.04			4.19			4.47			4.61			4.39

CREDIT QUALITY:
Nonperforming assets	$	16,466		$	14,683		$	9,065		$	8,033		$	7,680
QTD annualized net (chargeoffs)/recoveries to QTD average loans		(0.18)	%		0.01	%		(0.06)	%		(0.11)	%		(0.11)	%
Allowance for credit losses to total loans		1.20			1.23			1.20			1.23			1.27
Nonperforming loans to total loans		0.76			0.68			0.43			0.41			0.43
Nonperforming assets to total assets		0.65			0.59			0.37			0.34			0.36

CAPITAL RATIOS AND OTHER:
Total equity to total assets		9.56	%		9.71	%		9.78	%		9.84	%		10.43	%
Community bank leverage ratio, bancorp		10.49			10.38			10.88			10.85			11.20

Number of banking offices		20			20			19			18			19
Number of employees		230			228			231			222			213

** 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.