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

January 13, 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 January 13, 2023 announcing results for the three and twelve months ended December 31, 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 January 13, 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: January 13, 2023
	By:	/s/ George Boyan
		George Boyan
		Executive Vice President and Chief Financial Officer

Exhibit 99.1

Diagram
Description automatically generated with low confidence

Clinton, NJ -- Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income of $10.0 million, or $0.93 per diluted share, for the quarter ended December 31, 2022, compared to net income of $9.7 million, or $0.93 per diluted share for the prior year’s fourth quarter. This represents a 2.2% increase in net income and net income per diluted share remains flat. For the twelve months ended December 31, 2022, Unity reported net income of $38.5 million, or $3.59 per diluted share, compared to $36.1 million or $3.43 per diluted share for the prior year. This represents a 6.5% increase in net income and a 4.7% increase in net income per diluted share.

Fourth Quarter Earnings Highlights

●	Net interest income, our primary driver of earnings, increased $3.9 million to $24.7 million for the quarter ended December 31, 2022, compared to $20.8 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 23 basis points to 4.47% for the quarter ended December 31, 2022, compared to the prior year’s quarter, and decreased 14 basis points from 4.61% for the quarter ended September 30, 2022 because the cost of interest-bearing liabilities increased faster than the repricing of interest-earning assets.
---	---
●	The provision for loan losses was $1.6 million for the quarter ended December 31, 2022, compared to $1.5 million in provision for loan losses for the quarter ended September 30, 2022. The increase was primarily driven by the sizable increase in total loans period over period.
---	---
●	Non-interest income was $1.9 million for the quarter ended December 31, 2022. This represented an increase of $0.8 million compared to the quarter ended September 30, 2022. The increase was primarily driven by net unrealized securities gains for the quarter ended December 31, 2022.
---	---
●	Non-interest expense was $11.4 million for the quarter ended December 31, 2022, an increase of $1.3 million compared to the prior sequential quarter and an increase of $0.7 million compared to the prior year’s quarter.
---	---
●	The effective tax rate was 27.0% compared to 25.8% in the prior year’s quarter as a result of one-time activities in the real estate investment trust subsidiary.
---	---

Balance Sheet Highlights

●	Total gross loans increased $457.1 million, or 27.7%, from year-end 2021 primarily due to increases in commercial loans, residential mortgage loans and residential construction loans. SBA PPP loans decreased $40.5 million due to loans being forgiven.
●	Total deposits increased $28.6 million, or 1.6%, from year-end 2021. The Company’s deposit composition at December 31, 2022 consisted of 33.1% in savings deposits, 27.6% in noninterest-bearing demand deposits, 23.8% in time deposits and 15.5% in interest-bearing demand deposits.
---	---
●	Borrowed funds increased $343.0 million from year-end 2021. The increase was due to loan demand.
---	---
●	Shareholders’ equity was $239.2 million at December 31, 2022 compared to $205.7 million at year-end 2021.
---	---
●	Book value per common share was $22.60 as of December 31, 2022, compared to $19.80 as of December 31, 2021.
---	---
●	At December 31, 2022, the Community Bank Leverage Ratio was 10.45%, compared to 10.51% at December 31, 2021.
---	---
●	Nonperforming assets were $9.1 million at December 31, 2022, compared to $9.7 million at December 31, 2021. The allowance to total loans ratio was 1.20% at December 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, as well as a shift in loan product mix toward residential mortgage loans.
---	---

Other Highlights

❖	In November 2022, the FDIC and NJDOBI terminated the BSA Consent Order previously issued in July 2020.

❖	In December 2022, Unity Bank opened a new full service branch in Lakewood, New Jersey’s fastest growing municipality, to service customers in Ocean County. Additionally, in Q1 2023, Unity plans to open a Fort Lee branch to expand the bank’s footprint in Bergen County. Further, Unity plans to open its first Morris County location mid-2023.

❖	In Q4 2022, Unity Bank commenced an online account opening process to facilitate customer servicing and streamline deposit gathering.

❖

As of December 31, 2022, the loan to deposit ratio was approximately 118%, which is above the Company’s target threshold of 110%. In addition to the new branches discussed above, which are expected to assist in deposit aggregation, for 2023 the Company plans to reduce transactional-based lending and focus on lending to entities that will result in full-banking relationships, such as owner-occupied businesses.

Unity Bancorp, Inc. is a financial services organization headquartered in Clinton, New Jersey, with approximately $2.4 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

December 31, 2022


										December 31, 2022 vs.
										September 30, 2022		December 31, 2021
(In thousands, except percentages and per share amounts)	December 31, 2022			September 30, 2022			December 31, 2021			%		%
BALANCE SHEET DATA
Total assets	$	2,444,948		$	2,339,537		$	2,033,713		4.5	%	20.2	%
Total deposits		1,787,528			1,796,597			1,758,881		(0.5)		1.6
Total gross loans		2,106,559			1,942,414			1,649,448		8.5		27.7
Total securities		140,946			136,871			79,322		3.0		77.7
Total shareholders' equity		239,231			230,234			205,729		3.9		16.3
Allowance for loan losses		25,196			23,861			22,302		5.6		13.0

FINANCIAL DATA - QUARTER TO DATE
Income before provision for income taxes	$	13,634		$	13,267		$	13,132		2.8		3.8
Provision for income taxes		3,678			3,325			3,386		10.6		8.6
Net income	$	9,956		$	9,942		$	9,746		0.1		2.2

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

PERFORMANCE RATIOS - QUARTER TO DATE
Return on average assets		1.72	%		1.85	%		1.90	%
Return on average equity		16.82			17.39			19.23
Efficiency ratio		43.24			39.59			45.55
Net interest margin		4.47			4.61			4.24
Noninterest expense to average assets		1.96			1.87			2.08

FINANCIAL DATA - YEAR TO DATE
Income before provision for income taxes	$	51,421					$	48,130				6.8
Provision for income taxes		12,964						12,011				7.9
Net income	$	38,457					$	36,119				6.5

Net income per common share - Basic	$	3.66					$	3.47				5.5
Net income per common share - Diluted		3.59						3.43				4.7

PERFORMANCE RATIOS - YEAR TO DATE
Return on average assets		1.80	%					1.87	%
Return on average equity		17.28						19.16
Efficiency ratio		42.80						46.09
Net interest margin		4.40						4.16
Noninterest expense to average assets		1.99						2.11

SHARE INFORMATION
Market price per share	$	27.33		$	25.11		$	26.25		8.8		4.1
Dividends paid		0.11			0.11			0.10		-		10.0
Book value per common share		22.60			21.86			19.80		3.4		14.1
Average diluted shares outstanding (QTD)		10,740			10,714			10,555		0.2		1.8

CAPITAL RATIOS
Total equity to total assets		9.78	%		9.84	%		10.12	%
Community bank leverage ratio		10.45			10.85			10.51

CREDIT QUALITY AND RATIOS
Nonperforming assets	$	9,065		$	8,033		$	9,686		12.8		(6.4)
QTD net chargeoffs/(recoveries) to QTD average loans		0.06	%		0.11	%		(0.02)	%
Allowance for loan losses to total loans		1.20			1.23			1.35
Nonperforming loans to total loans		0.43			0.41			0.59
Nonperforming assets to total assets		0.37			0.34			0.48

UNITY BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

December 31, 2022


							December 31, 2022 vs.
							September 30, 2022		December 31, 2021
(In thousands, except percentages)	December 31, 2022		September 30, 2022		December 31, 2021		%		%
ASSETS
Cash and due from banks	$	19,699	$	24,959	$	26,053	(21.1)	%	(24.4)	%
Interest-bearing deposits		95,094		138,421		218,765	(31.3)		(56.5)
Cash and cash equivalents		114,793		163,380		244,818	(29.7)		(53.1)
Securities:
Debt securities available for sale		95,393		92,500		56,480	3.1		68.9
Debt securities held to maturity		35,760		35,897		14,276	(0.4)		150.5
Equity securities with readily determinable fair values		9,793		8,474		8,566	15.6		14.3
Total securities		140,946		136,871		79,322	3.0		77.7
Loans:
SBA loans held for sale		27,928		36,338		27,373	(23.1)		2.0
SBA loans held for investment		38,468		30,747		36,075	25.1		6.6
SBA PPP loans		5,908		6,706		46,450	(11.9)		(87.3)
Commercial loans		1,187,543		1,106,059		931,726	7.4		27.5
Residential mortgage loans		605,091		533,737		409,355	13.4		47.8
Consumer loans		78,164		79,662		77,944	(1.9)		0.3
Residential construction loans		163,457		149,165		120,525	9.6		35.6
Total loans		2,106,559		1,942,414		1,649,448	8.5		27.7
Allowance for loan losses		(25,196)		(23,861)		(22,302)	(5.6)		(13.0)
Net loans		2,081,363		1,918,553		1,627,146	8.5		27.9
Premises and equipment, net		20,002		19,094		19,914	4.8		0.4
Bank owned life insurance ("BOLI")		26,776		26,634		26,608	0.5		0.6
Deferred tax assets		12,345		12,910		10,040	(4.4)		23.0
Federal Home Loan Bank ("FHLB") stock		19,064		14,398		3,550	32.4		437.0
Accrued interest receivable		13,403		11,385		9,586	17.7		39.8
Goodwill		1,516		1,516		1,516	-		-
Prepaid expenses and other assets		14,740		34,796		11,213	(57.6)		31.5
Total assets	$	2,444,948	$	2,339,537	$	2,033,713	4.5	%	20.2	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	494,184	$	497,752	$	529,227	(0.7)	%	(6.6)	%
Interest-bearing demand		276,218		267,558		244,073	3.2		13.2
Savings		591,826		682,756		694,161	(13.3)		(14.7)
Time, under $100,000		273,954		233,447		194,961	17.4		40.5
Time, $100,000 to $250,000		84,002		70,649		62,668	18.9		34.0
Time, $250,000 and over		67,344		44,435		33,791	51.6		99.3
Total deposits		1,787,528		1,796,597		1,758,881	(0.5)		1.6
Borrowed funds		383,000		280,000		40,000	36.8		857.5
Subordinated debentures		10,310		10,310		10,310	-		-
Accrued interest payable		691		294		129	135.0		435.7
Accrued expenses and other liabilities		24,188		22,102		18,664	9.4		29.6
Total liabilities		2,205,717		2,109,303		1,827,984	4.6		20.7
Shareholders' equity:
Common stock		97,204		96,493		94,003	0.7		3.4
Retained earnings		156,958		148,174		123,037	5.9		27.6
Treasury stock		(11,671)		(11,633)		(11,633)	(0.3)		(0.3)
Accumulated other comprehensive (loss) income		(3,260)		(2,800)		322	(16.4)		NM*
Total shareholders' equity		239,231		230,234		205,729	3.9		16.3
Total liabilities and shareholders' equity	$	2,444,948	$	2,339,537	$	2,033,713	4.5	%	20.2	%
COMMON SHARES AT PERIOD END:
Shares issued		11,289		11,236		11,094
Shares outstanding		10,584		10,533		10,391
Treasury shares		705		703		703

*NM=Not meaningful

UNITY BANCORP, INC.

QTD CONSOLIDATED STATEMENTS OF INCOME

December 31, 2022


										December 31, 2022 vs.
	For the three months ended									September 30, 2022				December 31, 2021
(In thousands, except percentages and per share amounts)	December 31, 2022			September 30, 2022			December 31, 2021				%				%
INTEREST INCOME
Interest-bearing deposits	$	319		$	168		$	89				89.9	%			258.4	%
FHLB stock		220			93			41				136.6				436.6
Securities:
Taxable		1,589			1,397			460				13.7				245.4
Tax-exempt		19			18			5				5.6				280.0
Total securities		1,608			1,415			465				13.6				245.8
Loans:
SBA loans		1,370			1,083			828				26.5				65.5
SBA PPP loans		50			277			1,978				(81.9)				(97.5)
Commercial loans		15,894			14,017			11,678				13.4				36.1
Residential mortgage loans		7,111			5,912			4,587				20.3				55.0
Consumer loans		1,217			1,075			871				13.2				39.7
Residential construction loans		2,536			2,184			1,734				16.1				46.3
Total loans		28,178			24,548			21,676				14.8				30.0
Total interest income		30,325			26,224			22,271				15.6				36.2
INTEREST EXPENSE
Interest-bearing demand deposits		703			320			210				119.7				234.8
Savings deposits		1,475			878			444				68.0				232.2
Time deposits		1,258			600			541				109.7				132.5
Borrowed funds and subordinated debentures		2,180			688			227				216.9				860.4
Total interest expense		5,616			2,486			1,422				125.9				294.9
Net interest income		24,709			23,738			20,849				4.1				18.5
Provision for loan losses		1,632			1,517			(319)				7.6				NM*
Net interest income after provision for loan losses		23,077			22,221			21,168				3.9				9.0
NONINTEREST INCOME
Branch fee income		224			336			273				(33.3)				(17.9)
Service and loan fee income		618			543			820				13.8				(24.6)
Gain on sale of SBA loans held for sale, net		103			-			-				NM*				NM*
Gain on sale of mortgage loans, net		167			280			782				(40.4)				(78.6)
BOLI income		142			170			289				(16.5)				(50.9)
Net security gains (losses)		319			(576)			73				NM*				NM*
Other income		373			357			387				4.5				(3.6)
Total noninterest income		1,946			1,110			2,624				75.3				(25.8)
NONINTEREST EXPENSE
Compensation and benefits		7,160			6,471			6,655				10.6				7.6
Processing and communications		682			708			747				(3.7)				(8.7)
Occupancy		758			702			670				8.0				13.1
Furniture and equipment		683			617			655				10.7				4.3
Professional services		341			221			402				54.3				(15.2)
Advertising		339			307			304				10.4				11.5
Other loan expenses		1			109			163				(99.1)				(99.4)
Deposit insurance		270			233			206				15.9				31.1
Director fees		218			240			210				(9.2)				3.8
Loan collection expenses		140			45			69				211.1				102.9
Other expenses		797			411			579				93.9				37.7
Total noninterest expense		11,389			10,064			10,660				13.2				6.8
Income before provision for income taxes		13,634			13,267			13,132				2.8				3.8
Provision for income taxes		3,678			3,325			3,386				10.6				8.6
Net income	$	9,956		$	9,942		$	9,746				0.1	%			2.2	%

Effective tax rate		27.0	%		25.1	%		25.8	%

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

Weighted average common shares outstanding - Basic		10,557			10,522			10,376
Weighted average common shares outstanding - Diluted		10,740			10,714			10,555
*NM=Not meaningful

All values are in US Dollars.

UNITY BANCORP, INC.

YTD CONSOLIDATED STATEMENTS OF INCOME

December 31, 2022



	For the years ended December 31,						Current YTD vs. Prior YTD
(In thousands, except percentages and per share amounts)	2022			2021				%
INTEREST INCOME
Interest-bearing deposits	$	735		$	194				278.9	%
FHLB stock		396			197				101.0
Securities:
Taxable		4,754			1,298				266.3
Tax-exempt		53			31				71.0
Total securities		4,807			1,329				261.7
Loans:
SBA loans		4,303			3,252				32.3
SBA PPP loans		1,596			7,206				(77.9)
Commercial loans		53,820			44,167				21.9
Residential mortgage loans		22,395			19,227				16.5
Consumer loans		4,132			3,145				31.4
Residential construction loans		8,555			6,063				41.1
Total loans		94,801			83,060				14.1
Total interest income		100,739			84,780				18.8
INTEREST EXPENSE
Interest-bearing demand deposits		1,384			1,073				29.0
Savings deposits		3,110			1,685				84.6
Time deposits		2,757			3,834				(28.1)
Borrowed funds and subordinated debentures		3,380			1,149				194.2
Total interest expense		10,631			7,741				37.3
Net interest income		90,108			77,039				17.0
Provision for loan losses		4,159			181				2,197.8
Net interest income after provision for loan losses		85,949			76,858				11.8
NONINTEREST INCOME
Branch fee income		1,117			1,130				(1.2)
Service and loan fee income		2,433			2,757				(11.8)
Gain on sale of SBA loans held for sale, net		954			741				28.7
Gain on sale of mortgage loans, net		1,399			4,567				(69.4)
BOLI income		636			689				(7.7)
Net security (losses) gains		(1,313)			609				NM*
Other income		2,819			1,561				80.6
Total noninterest income		8,045			12,054				(33.3)
NONINTEREST EXPENSE
Compensation and benefits		26,949			24,771				8.8
Processing and communications		2,848			3,050				(6.6)
Occupancy		2,963			2,661				11.3
Furniture and equipment		2,493			2,590				(3.7)
Professional services		1,401			1,437				(2.5)
Advertising		1,212			1,236				(1.9)
Other loan expenses		240			922				(74.0)
Deposit insurance		1,022			844				21.1
Director fees		916			811				12.9
Loan collection		278			135				105.9
Other expenses		2,251			2,325				(3.2)
Total noninterest expense		42,573			40,782				4.4
Income before provision for income taxes		51,421			48,130				6.8
Provision for income taxes		12,964			12,011				7.9
Net income	$	38,457		$	36,119				6.5	%

Effective tax rate		25.2	%		25.0	%

Net income per common share - Basic	$	3.66		$	3.47
Net income per common share - Diluted		3.59			3.43

Weighted average common shares outstanding - Basic		10,508			10,403
Weighted average common shares outstanding - Diluted		10,705			10,546
*NM=Not meaningful

All values are in US Dollars.

UNITY BANCORP, INC.

QUARTER TO DATE NET INTEREST MARGIN

December 31, 2022


	For the three months ended
(Dollar amounts in thousands, interest amounts and	December 31, 2022							December 31, 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	$	37,640	$	319		3.37	%	$	222,683	$	89		0.16	%
FHLB stock		11,785		220		7.39			3,526		41		4.58
Securities:
Taxable		134,661		1,589		4.72			60,087		460		3.04
Tax-exempt		1,741		20		4.47			1,033		6		2.39
Total securities (A)		136,402		1,609		4.72			61,120		466		3.03
Loans:
SBA loans		67,448		1,370		8.13			58,718		828		5.60
SBA PPP loans		6,355		50		3.17			61,854		1,978		12.68
Commercial loans		1,134,102		15,894		5.48			936,078		11,678		4.95
Residential mortgage loans		569,698		7,111		4.99			414,955		4,587		4.39
Consumer loans		75,229		1,217		6.33			74,207		871		4.65
Residential construction loans		156,282		2,536		6.35			116,305		1,734		5.91
Total loans (B)		2,009,114		28,178		5.49			1,662,117		21,676		5.17
Total interest-earning assets	$	2,194,941	$	30,326		5.48	%	$	1,949,446	$	22,272		4.53	%

Noninterest-earning assets:
Cash and due from banks		20,352							25,065
Allowance for loan losses		(24,301)							(22,572)
Other assets		109,515							80,810
Total noninterest-earning assets		105,566							83,303
Total assets	$	2,300,507						$	2,032,749

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	289,524	$	703		0.96	%	$	255,083	$	210		0.33	%
Total savings deposits		636,230		1,475		0.92			684,215		444		0.26
Total time deposits		385,423		1,258		1.29			302,088		541		0.71
Total interest-bearing deposits		1,311,177		3,436		1.04			1,241,386		1,195		0.38
Borrowed funds and subordinated debentures		231,720		2,180		3.68			50,799		227		1.77
Total interest-bearing liabilities	$	1,542,897	$	5,616		1.44	%	$	1,292,185	$	1,422		0.44	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		496,993							519,709
Other liabilities		25,820							19,824
Total noninterest-bearing liabilities		522,813							539,533
Total shareholders' equity		234,797							201,031
Total liabilities and shareholders' equity	$	2,300,507						$	2,032,749

Net interest spread			$	24,710		4.04	%			$	20,850		4.10	%
Tax-equivalent basis adjustment				(1)							(1)
Net interest income			$	24,709						$	20,849
Net interest margin						4.47	%						4.24	%

(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

December 31, 2022


	For the three months ended
(Dollar amounts in thousands, interest amounts and	December 31, 2022							September 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	$	37,640	$	319		3.37	%	$	34,605	$	168		1.92	%
FHLB stock		11,785		220		7.39			6,200		93		5.96
Securities:
Taxable		134,661		1,589		4.72			137,590		1,397		4.03
Tax-exempt		1,741		20		4.47			1,841		20		4.27
Total securities (A)		136,402		1,609		4.72			139,431		1,417		4.03
Loans:
SBA loans		67,448		1,370		8.13			65,941		1,083		6.52
SBA PPP loans		6,355		50		3.17			9,576		277		11.47
Commercial loans		1,134,102		15,894		5.48			1,069,917		14,017		5.20
Residential mortgage loans		569,698		7,111		4.99			504,787		5,912		4.65
Consumer loans		75,229		1,217		6.33			76,957		1,075		5.54
Residential construction loans		156,282		2,536		6.35			137,681		2,184		6.29
Total loans (B)		2,009,114		28,178		5.49			1,864,859		24,548		5.22
Total interest-earning assets	$	2,194,941	$	30,326		5.48	%	$	2,045,095	$	26,226		5.09	%

Noninterest-earning assets:
Cash and due from banks		20,352							24,350
Allowance for loan losses		(24,301)							(22,848)
Other assets		109,515							83,168
Total noninterest-earning assets		105,566							84,670
Total assets	$	2,300,507						$	2,129,765

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	289,524	$	703		0.96	%	$	269,486	$	320		0.47	%
Total savings deposits		636,230		1,475		0.92			674,486		878		0.52
Total time deposits		385,423		1,258		1.29			310,842		600		0.77
Total interest-bearing deposits		1,311,177		3,436		1.04			1,254,814		1,798		0.57
Borrowed funds and subordinated debentures		231,720		2,180		3.68			108,135		688		2.53
Total interest-bearing liabilities	$	1,542,897	$	5,616		1.44	%	$	1,362,949	$	2,486		0.72	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		496,993							516,898
Other liabilities		25,820							23,130
Total noninterest-bearing liabilities		522,813							540,028
Total shareholders' equity		234,797							226,788
Total liabilities and shareholders' equity	$	2,300,507						$	2,129,765

Net interest spread			$	24,710		4.04	%			$	23,740		4.37	%
Tax-equivalent basis adjustment				(1)							(2)
Net interest income			$	24,709						$	23,738
Net interest margin						4.47	%						4.61	%

(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

December 31, 2022


	For the years ended
(Dollar amounts in thousands, interest amounts and	December 31, 2022							December 31, 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	$	95,427	$	735		0.77	%	$	143,311	$	194		0.14	%
FHLB stock		6,405		396		6.18			4,275		197		4.62
Securities:
Taxable		121,314		4,754		3.92			43,847		1,298		2.96
Tax-exempt		1,461		58		3.99			1,587		39		2.45
Total securities (A)		122,775		4,812		3.92			45,434		1,337		2.94
Loans:
SBA loans		65,197		4,303		6.60			53,279		3,252		6.10
SBA PPP loans		19,095		1,596		8.36			119,440		7,206		6.03
Commercial loans		1,040,624		53,820		5.10			887,525		44,167		4.98
Residential mortgage loans		484,923		22,395		4.62			430,466		19,227		4.47
Consumer loans		77,382		4,132		5.27			66,477		3,145		4.73
Residential construction loans		136,778		8,555		6.17			101,486		6,063		5.97
Total loans (B)		1,823,999		94,801		5.13			1,658,673		83,060		5.01
Total interest-earning assets	$	2,048,606	$	100,744		4.92	%	$	1,851,693	$	84,788		4.58	%

Noninterest-earning assets:
Cash and due from banks		23,100							23,862
Allowance for loan losses		(22,920)							(22,911)
Other assets		87,930							77,105
Total noninterest-earning assets		88,110							78,056
Total assets	$	2,136,716						$	1,929,749

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	269,789	$	1,384		0.51	%	$	227,750	$	1,073		0.47	%
Total savings deposits		674,335		3,110		0.46			557,700		1,685		0.30
Total time deposits		315,910		2,757		0.87			376,696		3,834		1.02
Total interest-bearing deposits		1,260,034		7,251		0.58			1,162,146		6,592		0.57
Borrowed funds and subordinated debentures		112,799		3,380		2.96			68,812		1,149		1.67
Total interest-bearing liabilities	$	1,372,833	$	10,631		0.77	%	$	1,230,958	$	7,741		0.63	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		518,244							493,213
Other liabilities		23,104							17,018
Total noninterest-bearing liabilities		541,348							510,231
Total shareholders' equity		222,535							188,560
Total liabilities and shareholders' equity	$	2,136,716						$	1,929,749

Net interest spread			$	90,113		4.15	%			$	77,047		3.95	%
Tax-equivalent basis adjustment				(5)							(8)
Net interest income			$	90,108						$	77,039
Net interest margin						4.40	%						4.16	%

(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

December 31, 2022


Amounts in thousands, except percentages	December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021
ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period	$	23,861		$	22,858		$	22,168		$	22,302		$	22,537
Provision (benefit) for loan losses charged to expense		1,632			1,517			1,188			(178)			(319)
		25,493			24,375			23,356			22,124			22,218
Less: Chargeoffs
SBA loans		59			-			-			-			-
Commercial loans		-			501			501			-			-
Residential mortgage loans		-			-			-			-			-
Consumer loans		300			50			40			6			-
Residential construction loans		-			-			-			-			-
Total chargeoffs		359			551			541			6			-
Add: Recoveries
SBA loans		-			5			6			22			52
Commercial loans		26			23			32			28			32
Residential mortgage loans		2			-			1			-			-
Consumer loans		34			9			4			-			-
Residential construction loans		-			-			-			-			-
Total recoveries		62			37			43			50			84
Net (chargeoffs)/recoveries		(297)			(514)			(498)			44			84
Balance, end of period	$	25,196		$	23,861		$	22,858		$	22,168		$	22,302

LOAN QUALITY INFORMATION:

Nonperforming loans:
SBA loans	$	690		$	1,491		$	604		$	537		$	510
Commercial loans		1,582			1,147			1,717			2,292			2,582
Residential mortgage loans		3,361			3,404			2,668			2,999			3,262
Consumer loans		-			-			-			200			210
Residential construction loans		3,432			1,991			2,691			3,273			3,122
Total nonperforming loans		9,065			8,033			7,680			9,301			9,686
OREO		-			-			-			-			-
Nonperforming assets		9,065			8,033			7,680			9,301			9,686

Loans 90 days past due & still accruing	$	-		$	75		$	43		$	488		$	-

Performing Troubled Debt Restructurings (TDRs)	$	1,423		$	1,860		$	1,885		$	1,917		$	1,046

Allowance for loan losses to:
Total loans at quarter end		1.20	%		1.23	%		1.27	%		1.30	%		1.35
Total nonperforming loans		277.95			297.04			297.63			238.34			230.25

UNITY BANCORP, INC.

QUARTERLY FINANCIAL DATA

December 31, 2022


(In thousands, except percentages and per share amounts)	December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021
SUMMARY OF INCOME:
Total interest income	$	30,325		$	26,224		$	23,071		$	21,119		$	22,271
Total interest expense		5,616			2,486			1,314			1,215			1,422
Net interest income		24,709			23,738			21,757			19,904			20,849
Provision (benefit) for loan losses		1,632			1,517			1,188			(178)			(319)
Net interest income after provision for loan losses		23,077			22,221			20,569			20,082			21,168
Total noninterest income		1,946			1,110			2,750			2,239			2,624
Total noninterest expense		11,389			10,064			10,710			10,410			10,660
Income before provision for income taxes		13,634			13,267			12,609			11,911			13,132
Provision for income taxes		3,678			3,325			3,158			2,803			3,386
Net income	$	9,956		$	9,942		$	9,451		$	9,108		$	9,746

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

COMMON SHARE DATA:
Market price per share	$	27.33		$	25.11		$	26.48		$	27.98		$	26.25
Dividends paid		0.11			0.11			0.11			0.10			0.10
Book value per common share		22.60			21.86			21.01			20.48			19.80

Weighted average common shares outstanding - Basic		10,557			10,522			10,504			10,446			10,376
Weighted average common shares outstanding - Diluted		10,740			10,714			10,706			10,664			10,555
Issued common shares		11,289			11,236			11,214			11,196			11,094
Outstanding common shares		10,584			10,533			10,511			10,493			10,391
Treasury shares		705			703			703			703			703

PERFORMANCE RATIOS (Annualized):
Return on average assets		1.72	%		1.85	%		1.83	%		1.80	%		1.90	%
Return on average equity		16.82			17.39			17.32			17.64			19.23
Efficiency ratio		43.24			39.59			42.84			45.86			45.55
Noninterest expense to average assets		1.96			1.87			2.08			2.06			2.08

BALANCE SHEET DATA:
Total assets	$	2,444,948		$	2,339,537		$	2,117,156		$	2,067,692		$	2,033,713
Total securities		140,946			136,871			139,835			116,254			79,322
Total loans		2,106,559			1,942,414			1,801,593			1,701,384			1,649,448
Allowance for loan losses		25,196			23,861			22,858			22,168			22,302
Total deposits		1,787,528			1,796,597			1,697,967			1,771,168			1,758,881
Total shareholders' equity		239,231			230,234			220,789			214,928			205,729

TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets		5.48	%		5.09	%		4.66	%		4.36	%		4.53	%
Interest-bearing liabilities		1.44			0.72			0.41			0.38			0.44
Net interest spread		4.04			4.37			4.25			3.98			4.10
Net interest margin		4.47			4.61			4.39			4.11			4.24

CREDIT QUALITY:
Nonperforming assets	$	9,065		$	8,033		$	7,680		$	9,301		$	9,686
QTD net (chargeoffs)/recoveries to QTD average loans		(0.06)	%		(0.11)	%		(0.11)	%		0.01	%		0.02	%
Allowance for loan losses to total loans		1.20			1.23			1.27			1.30			1.35
Nonperforming loans to total loans		0.43			0.41			0.43			0.55			0.59
Nonperforming assets to total assets		0.37			0.34			0.36			0.45			0.48

CAPITAL RATIOS AND OTHER:
Total equity to total assets		9.78	%		9.84	%		10.43	%		10.39	%		10.12	%
Community bank leverage ratio		10.45			10.85			11.20			10.87			10.51

Number of banking offices		19			18			19			19			19
Number of ATMs		20			19			20			20			20
Number of employees		231			222			213			209			211