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

October 14, 2022

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 14, 2022, announcing results for the three and nine months ended September 30, 2022, 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 October 14, 2022.

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.

July 14, 2022
	UNITY BANCORP, INC.
	(Registrant)

Date: October 14, 2022
	By:	/s/ George Boyan
		George Boyan
		Executive Vice President and Chief Financial Officer

Exhibit 99.1

Diagram
Description automatically generated with medium confidence

Clinton, NJ, October 14, 2022 - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income of $9.9 million, or $0.93 per diluted share, for the quarter ended September 30, 2022, compared to net income of $9.5 million, or $0.90 per diluted share for the prior year’s third quarter. This represents a 5.1% increase in net income and a 3.3% increase in net income per diluted share. For the nine months ended September 30, 2022, Unity reported net income of $28.5 million, or $2.67 per diluted share, compared to $26.4 million or $2.50 per diluted share for the prior year’s period. This represents a 8.1% increase in net income and a 6.8% increase in net income per diluted share.

Third Quarter Earnings Highlights

●	Net interest income, our primary driver of earnings, increased $4.0 million to $23.7 million for the quarter ended September 30, 2022, compared to $19.7 million for the prior year’s quarter. The increase was primarily due to higher interest income on loans, resulting from loan growth.
●	Net interest margin (“NIM”) increased 34 basis points to 4.61% for the quarter ended September 30, 2022, compared to the prior year’s quarter, and increased 22 basis points from 4.39% in the prior sequential quarter.
---	---
●	The provision for loan losses was $1.5 million for the quarter ended September 30, 2022, compared to $1.2 million in provision for loan losses for the prior sequential quarter. The increase was primarily driven by the sizable increase in total loans quarter over quarter.
---	---
●	Non-interest income was $1.1 million for the quarter ended September 30, 2022. This represented a decrease of $1.6 million compared to the prior sequential quarter. The prior sequential quarter was higher primarily due to a non-recurring gain of $1.2 million recognized from the termination of a swap derivative instrument.
---	---
●	Non-interest expense was $10.1 million for the quarter ended September 30, 2022, a decrease of $0.6 million compared to the prior sequential quarter and an increase of $0.2 million compared to the prior year’s quarter.
---	---
●	The effective tax rate was 25.1% compared to 25.4% in the prior year’s quarter.
---	---

Balance Sheet Highlights

●	Total gross loans increased $293.0 million, or 17.8%, from year-end 2021 primarily due to increases in commercial loans, residential mortgage loans and residential construction loans. SBA PPP loans decreased $39.7 million due to loans being forgiven and paid off.
●	Total deposits increased $37.7 million from year-end 2021 to $1.8 billion at September 30, 2022. The Company’s deposit composition at September 30, 2022 consisted of 38.0% in savings deposits, 27.7% in noninterest-bearing demand deposits, 19.4% in time deposits and 14.9% in interest-bearing demand deposits.
---	---
●	Borrowed funds increased $125.0 million the prior quarter to $280.0 million at September 30, 2022, due to the funding requirements associated with increased customer demands for loans.
---	---
●	Shareholders’ equity was $230.2 million at September 30, 2022 compared to $205.7 million at year-end 2021.
---	---
●	Book value per common share was $21.86 as of September 30, 2022, compared to $19.80 as of December 31, 2021.
---	---
●	At September 30, 2022, the Community Bank Leverage Ratio was 10.85%, compared to 10.51% at December 31, 2021.
---	---
●	Nonperforming assets were $8.0 million at September 30, 2022, compared to $9.7 million at December 31, 2021. The allowance to total loans ratio was 1.23% at September 30, 2022, compared to 1.35% at December 31, 2021. The decrease in the allowance to total loans ratio was primarily driven by the resolution of certain nonperforming loans and partially offset by an increase in the general allowance for loan losses.
---	---

Other Highlights

❖	For the first time, Unity Bancorp was selected for the national Top 25 Banks ranking as published by Bank Director magazine. Unity was ranked number 21 on the listing of the largest 300 publicly traded banks and number 9 nationally for banks in the $1 billion to $5 billion category.

❖	Ryan Peene has joined Unity Bank as Chief Depository Officer, bringing years of financial services industry experience to Unity Bank. Previously, Peene served as a Senior Vice President with Spencer Savings Bank and Senior Vice President with SB One Bank. Peene earned a master’s from the University of Notre Dame and a bachelor’s from Rutgers University.

❖

Unity Bank has applied to the FDIC and DOBI to expand our strategic geographic footprint by converting the existing Loan Production Office in Lakewood, NJ to a full-service branch. In addition, to better service the Bergen County region, Unity Bank closed the Ramsey, NJ branch and applied to the FDIC and DOBI to open a branch in Fort Lee, NJ. Both applications are subject to the review and approval of the regulatory authorities.

Unity Bancorp, Inc. is a financial services organization headquartered in Clinton, New Jersey, with approximately $2.3 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 18 retail service centers located in Bergen, Hunterdon, Middlesex, 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

September 30, 2022


										September 30, 2022 vs.
										June 30, 2022		September 30, 2021
(In thousands, except percentages and per share amounts)	September 30, 2022			June 30, 2022			September 30, 2021			%		%
BALANCE SHEET DATA
Total assets	$	2,339,537		$	2,117,156		$	1,991,115		10.5	%	17.5	%
Total deposits		1,796,597			1,697,967			1,706,185		5.8		5.3
Total loans		1,942,414			1,801,593			1,664,891		7.8		16.7
Total securities		136,871			139,835			49,807		(2.1)		174.8
Total shareholders' equity		230,234			220,789			196,267		4.3		17.3
Allowance for loan losses		23,861			22,858			22,537		4.4		5.9

FINANCIAL DATA - QUARTER TO DATE
Income before provision for income taxes	$	13,267		$	12,608		$	12,672		5.2		4.7
Provision for income taxes		3,325			3,157			3,213		5.3		3.5
Net income	$	9,942		$	9,451		$	9,459		5.2		5.1

Net income per common share - Basic	$	0.94		$	0.90		$	0.91		4.4		3.3
Net income per common share - Diluted		0.93			0.88			0.90		5.7		3.3

PERFORMANCE RATIOS - QUARTER TO DATE
Return on average assets		1.85	%		1.83	%		1.96	%
Return on average equity		17.39			17.32			19.57
Efficiency ratio		39.59			42.84			44.15
Net interest margin		4.61			4.39			4.27
Noninterest expense to average assets		1.87			2.08			2.05

FINANCIAL DATA - YEAR TO DATE
Income before provision for income taxes	$	37,786					$	34,997				8.0
Provision for income taxes		9,285						8,624				7.7
Net income	$	28,501					$	26,373				8.1

Net income per common share - Basic	$	2.72					$	2.53				7.5
Net income per common share - Diluted		2.67						2.50				6.8

PERFORMANCE RATIOS - YEAR TO DATE
Return on average assets		1.83	%					1.86	%
Return on average equity		17.45						19.13
Efficiency ratio		42.64						46.28
Net interest margin		4.37						4.13
Noninterest expense to average assets		2.00						2.13

SHARE INFORMATION
Market price per share	$	25.11		$	26.48		$	23.40		(5.2)		7.3
Dividends paid		0.11			0.11			0.09		-		22.2
Book value per common share		21.86			21.01			18.94		4.0		15.4
Average diluted shares outstanding (QTD)		10,714			10,706			10,507		0.1		2.0

CAPITAL RATIOS
Total equity to total assets		9.84	%		10.43	%		9.86	%
Community bank leverage ratio		10.85			11.20			10.70

CREDIT QUALITY AND RATIOS
Nonperforming assets	$	8,033		$	7,680		$	8,801		4.6		(8.7)
QTD net chargeoffs/(recoveries) to QTD average loans		0.11	%		0.11	%		0.06	%
Allowance for loan losses to total loans		1.23			1.27			1.35
Nonperforming loans to total loans		0.41			0.43			0.53
Nonperforming assets to total assets		0.34			0.36			0.44

UNITY BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

September 30, 2022


							September 30, 2022 vs.
							Dec. 31, 2021		September 30, 2021
(In thousands, except percentages)	September 30, 2022		Dec. 31, 2021		September 30, 2021		%		%
ASSETS
Cash and due from banks	$	24,959	$	26,053	$	21,823	(4.2)	%	14.4	%
Interest-bearing deposits		138,421		218,765		194,549	(36.7)		(28.9)
Cash and cash equivalents		163,380		244,818		216,372	(33.3)		(24.5)
Securities:
Debt securities available for sale		92,500		56,480		39,763	63.8		132.6
Securities held to maturity		35,897		14,276		5,151	151.4		596.9
Equity securities with readily determinable fair values		8,474		8,566		4,893	(1.1)		73.2
Total securities		136,871		79,322		49,807	72.6		174.8
Loans:
SBA loans held for sale		36,338		27,373		20,130	32.8		80.5
SBA loans held for investment		30,747		36,075		37,986	(14.8)		(19.1)
SBA PPP loans		6,706		46,450		81,907	(85.6)		(91.8)
Commercial loans		1,106,059		931,726		924,037	18.7		19.7
Residential mortgage loans		533,737		409,355		420,835	30.4		26.8
Consumer loans		79,662		77,944		71,071	2.2		12.1
Residential construction loans		149,165		120,525		108,925	23.8		36.9
Total loans		1,942,414		1,649,448		1,664,891	17.8		16.7
Allowance for loan losses		(23,861)		(22,302)		(22,537)	7.0		5.9
Net loans		1,918,553		1,627,146		1,642,354	17.9		16.8
Premises and equipment, net		19,094		19,914		20,106	(4.1)		(5.0)
Bank owned life insurance ("BOLI")		26,634		26,608		26,587	0.1		0.2
Deferred tax assets		12,910		10,040		10,987	28.6		17.5
Federal Home Loan Bank ("FHLB") stock		14,398		3,550		4,403	305.6		227.0
Accrued interest receivable		11,385		9,586		9,684	18.8		17.6
Goodwill		1,516		1,516		1,516	-		-
Prepaid expenses and other assets		34,796		11,213		9,299	210.3		274.2
Total assets	$	2,339,537	$	2,033,713	$	1,991,115	15.0	%	17.5	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	497,752	$	529,227	$	520,572	(5.9)	%	(4.4)	%
Interest-bearing demand		267,558		244,073		244,015	9.6		9.6
Savings		682,756		694,161		622,087	(1.6)		9.8
Time, under $100,000		233,447		194,961		217,302	19.7		7.4
Time, $100,000 to $250,000		70,649		62,668		65,570	12.7		7.7
Time, $250,000 and over		44,435		33,791		36,639	31.5		21.3
Total deposits		1,796,597		1,758,881		1,706,185	2.1		5.3
Borrowed funds		280,000		40,000		60,000	600.0		366.7
Subordinated debentures		10,310		10,310		10,310	-		-
Accrued interest payable		294		129		158	127.9		86.1
Accrued expenses and other liabilities		22,102		18,664		18,195	18.4		21.5
Total liabilities		2,109,303		1,827,984		1,794,848	15.4		17.5
Shareholders' equity:
Common stock		96,493		94,003		93,409	2.6		3.3
Retained earnings		148,174		123,037		114,337	20.4		29.6
Treasury stock, at cost		(11,633)		(11,633)		(11,547)	-		(0.7)
Accumulated other comprehensive (loss) income		(2,800)		322		68	NM*		NM*
Total shareholders' equity		230,234		205,729		196,267	11.9		17.3
Total liabilities and shareholders' equity	$	2,339,537	$	2,033,713	$	1,991,115	15.0	%	17.5	%
COMMON SHARES AT PERIOD END:
Shares issued		11,236		11,094		11,063
Shares outstanding		10,533		10,391		10,363
Treasury shares		703		703		700

*NM=Not meaningful

UNITY BANCORP, INC.

QTD CONSOLIDATED STATEMENTS OF INCOME

September 30, 2022


										September 30, 2022 vs.
	For the three months ended									June 30, 2022				September 30, 2021
(In thousands, except percentages and per share amounts)	September 30, 2022			June 30, 2022			September 30, 2021				%				%
INTEREST INCOME
Interest-bearing deposits	$	168		$	152		$	48				10.5	%			250.0	%
FHLB stock		93			50			41				86.0				126.8
Securities:
Taxable		1,397			1,115			292				25.3				378.4
Tax-exempt		18			10			8				80.0				125.0
Total securities		1,415			1,125			300				25.8				371.7
Loans:
SBA loans		1,083			926			864				17.0				25.3
SBA PPP loans		277			492			1,751				(43.7)				(84.2)
Commercial loans		14,017			12,414			11,280				12.9				24.3
Residential mortgage loans		5,912			4,982			4,606				18.7				28.4
Consumer loans		1,075			919			736				17.0				46.1
Residential construction loans		2,184			2,011			1,628				8.6				34.2
Total loans		24,548			21,744			20,865				12.9				17.7
Total interest income		26,224			23,071			21,254				13.7				23.4
INTEREST EXPENSE
Interest-bearing demand deposits		320			198			247				61.6				29.6
Savings deposits		878			412			390				113.1				125.1
Time deposits		600			419			659				43.2				(9.0)
Borrowed funds and subordinated debentures		688			285			235				141.4				192.8
Total interest expense		2,486			1,314			1,531				89.2				62.4
Net interest income		23,738			21,757			19,723				9.1				20.4
Provision for loan losses		1,517			1,188			-				27.7				NM*
Net interest income after provision for loan losses		22,221			20,569			19,723				8.0				12.7
NONINTEREST INCOME
Branch fee income		336			281			294				19.6				14.3
Service and loan fee income		543			688			804				(21.1)				(32.5)
Gain on sale of SBA loans held for sale, net		-			-			-				-				-
Gain on sale of mortgage loans, net		280			431			968				(35.0)				(71.1)
BOLI income		170			161			138				5.6				23.2
Net security (losses) gains		(576)			(498)			202				(15.7)				(385.1)
Other income		357			1,686			403				(78.8)				(11.4)
Total noninterest income		1,110			2,749			2,809				(59.6)				(60.5)
NONINTEREST EXPENSE
Compensation and benefits		6,471			6,811			5,720				(5.0)				13.1
Processing and communications		708			706			747				0.3				(5.2)
Occupancy		702			727			654				(3.4)				7.3
Furniture and equipment		617			618			627				(0.2)				(1.6)
Professional services		221			392			315				(43.6)				(29.8)
Advertising		307			340			261				(9.7)				17.6
Other loan expenses (income)		109			(5)			452				2,280.0				(75.9)
Deposit insurance		233			250			198				(6.8)				17.7
Director fees		240			225			189				6.7				27.0
Loan collection expenses		45			36			62				25.0				(27.4)
Other expenses		411			610			635				(32.6)				(35.3)
Total noninterest expense		10,064			10,710			9,860				(6.0)				2.1
Income before provision for income taxes		13,267			12,608			12,672				5.2				4.7
Provision for income taxes		3,325			3,157			3,213				5.3				3.5
Net income	$	9,942		$	9,451		$	9,459				5.2	%			5.1	%

Effective tax rate		25.1	%		25.0	%		25.4	%
Net income per common share - Basic	$	0.94		$	0.90		$	0.91
Net income per common share - Diluted		0.93			0.88			0.90

Weighted average common shares outstanding - Basic		10,522			10,504			10,372
Weighted average common shares outstanding - Diluted		10,714			10,706			10,507
*NM=Not meaningful

All values are in US Dollars.

UNITY BANCORP, INC.

YTD CONSOLIDATED STATEMENTS OF INCOME

September 30, 2022



	For the nine months ended September 30,						Current YTD vs. Prior YTD
(In thousands, except percentages and per share amounts)	2022			2021				%
INTEREST INCOME
Interest-bearing deposits	$	416		$	105				296.2	%
FHLB stock		176			157				12.1
Securities:
Taxable		3,164			837				278.0
Tax-exempt		34			26				30.8
Total securities		3,198			863				270.6
Loans:
SBA loans		2,933			2,423				21.0
SBA PPP loans		1,546			5,228				(70.4)
Commercial loans		37,928			32,490				16.7
Residential mortgage loans		15,284			14,640				4.4
Consumer loans		2,914			2,274				28.1
Residential construction loans		6,018			4,330				39.0
Total loans		66,623			61,385				8.5
Total interest income		70,413			62,510				12.6
INTEREST EXPENSE
Interest-bearing demand deposits		682			863				(21.0)
Savings deposits		1,635			1,241				31.7
Time deposits		1,499			3,293				(54.5)
Borrowed funds and subordinated debentures		1,199			922				30.0
Total interest expense		5,015			6,319				(20.6)
Net interest income		65,398			56,191				16.4
Provision for loan losses		2,526			500				405.2
Net interest income after provision for loan losses		62,872			55,691				12.9
NONINTEREST INCOME
Branch fee income		892			858				4.0
Service and loan fee income		1,815			1,937				(6.3)
Gain on sale of SBA loans held for sale, net		852			741				15.0
Gain on sale of mortgage loans, net		1,231			3,785				(67.5)
BOLI income		494			399				23.8
Net security (losses) gains		(1,631)			535				(404.9)
Other income		2,446			1,175				108.2
Total noninterest income		6,099			9,430				(35.3)
NONINTEREST EXPENSE
Compensation and benefits		19,790			18,116				9.2
Processing and communications		2,166			2,303				(5.9)
Occupancy		2,205			1,991				10.7
Furniture and equipment		1,811			1,935				(6.4)
Professional services		1,060			1,035				2.4
Advertising		873			932				(6.3)
Other loan expenses		238			759				(68.6)
Deposit insurance		752			637				18.1
Director fees		698			600				16.3
Loan collection		138			67				106.0
Other expenses		1,454			1,748				(16.8)
Total noninterest expense		31,185			30,123				3.5
Income before provision for income taxes		37,786			34,998				8.0
Provision for income taxes		9,285			8,625				7.7
Net income	$	28,501		$	26,373				8.1	%

Effective tax rate		24.6	%		24.6	%

Net income per common share - Basic	$	2.72		$	2.53
Net income per common share - Diluted		2.67			2.50

Weighted average common shares outstanding - Basic		10,491			10,412
Weighted average common shares outstanding - Diluted		10,694			10,546
*NM=Not meaningful

All values are in US Dollars.

UNITY BANCORP, INC.

QUARTER TO DATE NET INTEREST MARGIN

September 30, 2022


	For the three months ended
(Dollar amounts in thousands, interest amounts and	September 30, 2022							September 30, 2021
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	$	34,605	$	168		1.92	%	$	133,660	$	48		0.14	%
FHLB stock		6,200		93		5.96			3,706		41		4.36
Securities:
Taxable		137,590		1,397		4.03			41,738		292		2.78
Tax-exempt		1,841		20		4.27			1,176		10		3.26
Total securities (A)		139,431		1,417		4.03			42,914		302		2.79
Loans:
SBA loans		65,941		1,083		6.52			54,686		864		6.27
SBA PPP loans		9,576		277		11.47			110,239		1,751		6.30
Commercial loans		1,069,917		14,017		5.20			898,589		11,280		4.98
Residential mortgage loans		504,787		5,912		4.65			417,166		4,606		4.38
Consumer loans		76,957		1,075		5.54			66,782		736		4.37
Residential construction loans		137,681		2,184		6.29			105,908		1,628		6.10
Total loans (B)		1,864,859		24,548		5.22			1,653,370		20,865		5.01
Total interest-earning assets	$	2,045,095	$	26,226		5.09	%	$	1,833,650	$	21,256		4.60	%

Noninterest-earning assets:
Cash and due from banks		24,350							23,085
Allowance for loan losses		(22,848)							(22,733)
Other assets		83,168							75,961
Total noninterest-earning assets		84,670							76,313
Total assets	$	2,129,765						$	1,909,963

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	269,486	$	320		0.47	%	$	227,152	$	247		0.43	%
Total savings deposits		674,486		878		0.52			558,354		390		0.28
Total time deposits		310,842		600		0.77			345,811		659		0.76
Total interest-bearing deposits		1,254,814		1,798		0.57			1,131,317		1,296		0.45
Borrowed funds and subordinated debentures		108,135		688		2.53			56,322		235		1.65
Total interest-bearing liabilities	$	1,362,949	$	2,486		0.72	%	$	1,187,639	$	1,531		0.51	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		516,898							514,518
Other liabilities		23,130							16,077
Total noninterest-bearing liabilities		540,028							530,595
Total shareholders' equity		226,788							191,729
Total liabilities and shareholders' equity	$	2,129,765						$	1,909,963

Net interest spread			$	23,740		4.37	%			$	19,725		4.09	%
Tax-equivalent basis adjustment				(2)							(2)
Net interest income			$	23,738						$	19,723
Net interest margin						4.61	%						4.27	%

(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

September 30, 2022


	For the three months ended
(Dollar amounts in thousands, interest amounts and	September 30, 2022							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	$	34,605	$	168		1.92	%	$	101,430	$	152		0.60	%
FHLB stock		6,200		93		5.96			3,996		50		4.99
Securities:
Taxable		137,590		1,397		4.03			127,539		1,115		3.51
Tax-exempt		1,841		20		4.27			1,258		11		3.69
Total securities (A)		139,431		1,417		4.03			128,797		1,126		3.51
Loans:
SBA loans		65,941		1,083		6.52			63,804		926		5.82
SBA PPP loans		9,576		277		11.47			23,900		492		8.25
Commercial loans		1,069,917		14,017		5.20			1,006,183		12,414		4.95
Residential mortgage loans		504,787		5,912		4.65			449,963		4,982		4.44
Consumer loans		76,957		1,075		5.54			78,400		919		4.70
Residential construction loans		137,681		2,184		6.29			129,780		2,011		6.21
Total loans (B)		1,864,859		24,548		5.22			1,752,030		21,744		4.98
Total interest-earning assets	$	2,045,095	$	26,226		5.09	%	$	1,986,253	$	23,072		4.66	%

Noninterest-earning assets:
Cash and due from banks		24,350							24,041
Allowance for loan losses		(22,848)							(22,179)
Other assets		83,168							79,130
Total noninterest-earning assets		84,670							80,992
Total assets	$	2,129,765						$	2,067,245

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	269,486	$	320		0.47	%	$	270,380	$	198		0.29	%
Total savings deposits		674,486		878		0.52			686,058		412		0.24
Total time deposits		310,842		600		0.77			278,206		419		0.60
Total interest-bearing deposits		1,254,814		1,798		0.57			1,234,644		1,029		0.33
Borrowed funds and subordinated debentures		108,135		688		2.53			59,090		285		1.94
Total interest-bearing liabilities	$	1,362,949	$	2,486		0.72	%	$	1,293,734	$	1,314		0.41	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		516,898							532,496
Other liabilities		23,130							22,192
Total noninterest-bearing liabilities		540,028							554,688
Total shareholders' equity		226,788							218,823
Total liabilities and shareholders' equity	$	2,129,765						$	2,067,245

Net interest spread			$	23,740		4.37	%			$	21,758		4.25	%
Tax-equivalent basis adjustment				(2)							(1)
Net interest income			$	23,738						$	21,757
Net interest margin						4.61	%						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.

YEAR TO DATE NET INTEREST MARGIN

September 30, 2022


	For the nine months ended
(Dollar amounts in thousands, interest amounts and	September 30, 2022							September 30, 2021
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	$	114,901	$	416		0.48	%	$	116,563	$	105		0.12	%
FHLB stock		4,592		176		5.13			4,527		157		4.63
Securities:
Taxable		116,816		3,164		3.62			38,374		837		2.92
Tax-exempt		1,366		39		3.80			1,774		33		2.46
Total securities (A)		118,182		3,203		3.62			40,148		870		2.90
Loans:
SBA loans		64,438		2,933		6.08			51,446		2,423		6.30
SBA PPP loans		23,388		1,546		8.84			138,846		5,228		5.03
Commercial loans		1,009,122		37,928		5.03			871,163		32,490		4.99
Residential mortgage loans		456,354		15,284		4.48			435,694		14,640		4.49
Consumer loans		78,108		2,914		4.99			63,872		2,274		4.76
Residential construction loans		130,205		6,018		6.18			96,491		4,330		6.00
Total loans (B)		1,761,615		66,623		5.06			1,657,512		61,385		4.95
Total interest-earning assets	$	1,999,290	$	70,418		4.71	%	$	1,818,750	$	62,517		4.60	%

Noninterest-earning assets:
Cash and due from banks		24,026							23,456
Allowance for loan losses		(22,454)							(23,026)
Other assets		80,656							75,856
Total noninterest-earning assets		82,228							76,286
Total assets	$	2,081,518						$	1,895,036

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	263,139	$	682		0.35	%	$	218,539	$	863		0.53	%
Total savings deposits		687,177		1,635		0.32			515,065		1,241		0.32
Total time deposits		292,484		1,499		0.69			401,839		3,293		1.10
Total interest-bearing deposits		1,242,800		3,816		0.41			1,135,443		5,397		0.64
Borrowed funds and subordinated debentures		72,724		1,199		2.21			74,882		922		1.65
Total interest-bearing liabilities	$	1,315,524	$	5,015		0.51	%	$	1,210,325	$	6,319		0.70	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		525,405							484,284
Other liabilities		22,186							16,069
Total noninterest-bearing liabilities		547,591							500,353
Total shareholders' equity		218,403							184,358
Total liabilities and shareholders' equity	$	2,081,518						$	1,895,036

Net interest spread			$	65,403		4.20	%			$	56,198		3.90	%
Tax-equivalent basis adjustment				(5)							(7)
Net interest income			$	65,398						$	56,191
Net interest margin						4.37	%						4.13	%

(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 LOAN LOSSES AND LOAN QUALITY SCHEDULES

September 30, 2022


Amounts in thousands, except percentages	September 30, 2022			June 30, 2022			March 31, 2022			Dec. 31 2021			September 30, 2021
ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period	$	22,858		$	22,168		$	22,302		$	22,537		$	22,801
Provision (benefit) for loan losses charged to expense		1,517			1,188			(178)			(319)			-
		24,375			23,356			22,124			22,218			22,801
Less: Chargeoffs
SBA loans		-			-			-			-			145
Commercial loans		501			501			-			-			158
Residential mortgage loans		-			-			-			-			-
Consumer loans		50			40			6			-			3
Residential construction loans		-			-			-			-			-
Total chargeoffs		551			541			6			-			306
Add: Recoveries
SBA loans		5			6			22			52			-
Commercial loans		23			32			28			32			-
Residential mortgage loans		-			1			-			-			42
Consumer loans		9			4			-			-			-
Residential construction loans		-			-			-			-			-
Total recoveries		37			43			50			84			42
Net (chargeoffs)/recoveries		(514)			(498)			44			84			(264)
Balance, end of period	$	23,861		$	22,858		$	22,168		$	22,302		$	22,537

LOAN QUALITY INFORMATION:

Nonperforming loans:
SBA loans	$	1,491		$	604		$	537		$	510		$	660
Commercial loans		1,147			1,717			2,292			2,581			2,878
Residential mortgage loans		3,404			2,668			2,999			3,262			2,626
Consumer loans		-			-			200			210			-
Residential construction loans		1,991			2,691			3,273			3,122			2,637
Total nonperforming loans		8,033			7,680			9,301			9,686			8,801
OREO		-			-			-			-			-
Nonperforming assets		8,033			7,680			9,301			9,686			8,801

Loans 90 days past due & still accruing	$	-		$	43		$	488		$	-		$	2,265

Performing Troubled Debt Restructurings (TDRs)	$	1,860		$	1,885		$	1,917		$	1,046		$	1,057

Allowance for loan losses to:
Total loans at quarter end		1.23	%		1.27	%		1.30	%		1.35	%		1.35
Total nonperforming loans		297.04			297.63			238.34			230.25			256.07

UNITY BANCORP, INC.

QUARTERLY FINANCIAL DATA

September 30, 2022


(In thousands, except percentages and per share amounts)	September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021
SUMMARY OF INCOME:
Total interest income	$	26,224		$	23,071		$	21,119		$	22,271		$	21,254
Total interest expense		2,486			1,314			1,215			1,422			1,531
Net interest income		23,738			21,757			19,904			20,849			19,723
Provision (benefit) for loan losses		1,517			1,188			(178)			(319)			-
Net interest income after provision for loan losses		22,221			20,569			20,082			21,168			19,723
Total noninterest income		1,110			2,749			2,239			2,624			2,809
Total noninterest expense		10,064			10,711			10,410			10,660			9,860
Income before provision for income taxes		13,267			12,607			11,911			13,132			12,672
Provision for income taxes		3,325			3,156			2,803			3,386			3,213
Net income	$	9,942		$	9,451		$	9,108		$	9,746		$	9,459

Net income per common share - Basic	$	0.94		$	0.90		$	0.87		$	0.94		$	0.91
Net income per common share - Diluted		0.93			0.88			0.85			0.92			0.90

COMMON SHARE DATA:
Market price per share	$	25.11		$	26.48		$	27.98		$	26.25		$	23.40
Dividends paid		0.11			0.11			0.10			0.10			0.09
Book value per common share		21.86			21.01			20.48			19.80			18.94

Weighted average common shares outstanding - Basic		10,522			10,504			10,446			10,376			10,372
Weighted average common shares outstanding - Diluted		10,714			10,706			10,664			10,555			10,507
Issued common shares		11,236			11,214			11,196			11,094			11,063
Outstanding common shares		10,533			10,511			10,493			10,391			10,363
Treasury shares		703			703			703			703			700

PERFORMANCE RATIOS (Annualized):
Return on average assets		1.85	%		1.83	%		1.80	%		1.90	%		1.96	%
Return on average equity		17.39			17.32			17.64			19.23			19.57
Efficiency ratio		39.59			42.84			45.86			45.55			44.15
Noninterest expense to average assets		1.87			2.08			2.06			2.08			2.05

BALANCE SHEET DATA:
Total assets	$	2,339,537		$	2,117,156		$	2,067,692		$	2,033,713		$	1,991,115
Total deposits		1,796,597			1,697,967			1,771,168			1,758,881			1,706,185
Total loans		1,942,414			1,801,593			1,701,384			1,649,448			1,664,891
Total securities		136,871			139,835			116,254			79,322			49,807
Total shareholders' equity		230,234			220,789			214,928			205,729			196,267
Allowance for loan losses		23,861			22,858			22,168			22,302			22,537

TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets		5.09	%		4.66	%		4.36	%		4.53	%		4.60	%
Interest-bearing liabilities		0.72			0.41			0.38			0.44			0.51
Net interest spread		4.37			4.25			3.98			4.10			4.09
Net interest margin		4.61			4.39			4.11			4.24			4.27

CREDIT QUALITY:
Nonperforming assets	$	8,033		$	7,680		$	9,301		$	9,686		$	8,802
QTD net (chargeoffs)/recoveries to QTD average loans		(0.11)	%		(0.11)	%		0.01	%		0.02	%		(0.06)	%
Allowance for loan losses to total loans		1.23			1.27			1.30			1.35			1.35
Nonperforming loans to total loans		0.41			0.43			0.55			0.59			0.53
Nonperforming assets to total assets		0.34			0.36			0.45			0.48			0.44

CAPITAL RATIOS AND OTHER:
Total equity to total assets		9.84	%		10.43	%		10.39	%		10.12	%		9.86	%
Community bank leverage ratio		10.85			11.20			10.87			10.51			10.70

Number of banking offices		18			19			19			19			19
Number of ATMs		19			20			20			20			20
Number of employees		222			213			209			211			208