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 25, 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 January 20, 2022, announcing results for the three and twelve months ended December 31, 2021, the full text of which is incorporated by reference to this Item.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

January 20, 2022
Exhibit 99.1	Press release issued by the Registrant on January 20, 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.

January 20, 2022
	UNITY BANCORP, INC.
	(Registrant)

Date: January 25, 2022
	By:	/s/ George Boyan
		George Boyan
		Executive Vice President and Chief Financial Officer

Exhibit 99.1

For Immediate Release	News Media & Financial Analyst Contact:
Unity Bancorp, Inc. (NSDQ: UNTY)	George Boyan, EVP and CFO
January 20, 2022	(908) 713-4565

Clinton, NJ, January 20, 2022 - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income of $9.7 million, or $0.92 per diluted share, for the quarter ended December 31, 2021, a 32.7 percent increase compared to net income of $7.3 million, or $0.69 per diluted share for the prior year’s fourth quarter. For the year ended December 31, 2021, Unity reported net income of $36.1 million, or $3.43 per diluted share, compared to net income of $23.6 million, or $2.19 per diluted share for the year ended December 31, 2020.

Quarterly and Year over Year Earnings Highlights

●	Net interest income, our primary driver of earnings, increased $3.5 million to $20.8 million for the quarter ended December 31, 2021, compared to $17.3 million for the prior year’s quarter, primarily due to commercial loan growth, receipt of SBA PPP loan fees on forgiveness, and residential construction loan growth.
●	Net interest margin (“NIM”) increased 27 basis points to 4.24% for the quarter ended December 31, 2021, compared to 3.97% for the prior year’s quarter. For the year ended December 31, 2021, the NIM increased 31 basis points to 4.16%, compared to 3.85% for the year ended December 31, 2020.
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●	The Company released $382 thousand of its provision for loan losses for the quarter ended December 31, 2021. The provision for loan losses decreased $6.8 million for the twelve months ended December 31, 2021 compared to the prior year’s period. The decreases were primarily due to a reduction of specific reserves on impaired loans.
---	---
●	Noninterest income decreased $1.6 million to $2.6 million compared to the prior year’s quarter and decreased $892 thousand in the current year compared to the year ended December 31, 2020. The decreases were primarily due to a decline in the gains on residential mortgage loan sales and a decision to not sell SBA available for sale loans in the fourth quarter, partially offset by an increase in servicing and loan fee income. For the quarter ended December 31, 2021, quarterly residential mortgage loan sales were $38.6 million with a gain of 2.03%, compared to $106.0 million with a gain of 1.91% for the quarter ended December 31, 2020.
---	---
●	Noninterest expense decreased $65 thousand to $10.7 million compared to the prior year’s quarter, primarily due to a reduction in BSA expenses. Noninterest expense increased $800 thousand compared to the prior sequential quarter, primarily due to increased compensation expenses as the result of a one-time deferred compensation adjustment.
---	---
●	The effective tax rate was 25.8% compared to 25.6% in the prior year’s quarter.
---	---

Balance Sheet Highlights

●	Total loans increased $21.6 million, or 1.3%, from year-end 2020. The increase was primarily due to increases in commercial loans, residential construction loans, SBA loans and consumer loans. SBA PPP loans decreased $71.8 million due to loans being forgiven and paid off. Residential mortgage loans decreased 12.5%. Excluding SBA PPP loans, total loans increased 1.3% compared to the prior sequential quarter and 6.2% from year-end 2020. For the year ended December 31, 2021, the yield on average loans increased 5 basis points to 5.01% compared to the year ended December 31, 2020.
●	Total deposits increased $200.9 million, or 12.9%, from year-end 2020 to $1.8 billion at December 31, 2021. The Company’s deposit composition at December 31, 2021 consisted of 39.5% in savings deposits, 30.1% in noninterest-bearing demand deposits, 16.6% in time deposits and 13.9% in interest-bearing demand deposits. For the year ended December 31, 2021, the yield on average interest-bearing deposits decreased 61 basis points to 0.57% compared to the year ended December 31, 2020.
---	---
●	Borrowed funds decreased $160.0 million to $50.3 million at December 31, 2021, due to decreased FHLB advances resulting from core deposit growth, SBA PPP forgiveness and residential mortgage paydowns.
---	---
●	Shareholders’ equity was $205.7 million at December 31, 2021 compared to $173.9 million at year-end 2020.
---	---
●	Book value per common share was $19.80 as of December 31, 2021. During the fourth quarter, the Company repurchased 3,483 shares of common stock at a total cost of $87 thousand.
---	---
●	At December 31, 2021, the Community Bank Leverage Ratio was 10.51%, compared to 10.09% at December 31, 2020.
---	---
●	Net nonperforming assets were $9.6 million at December 31, 2021, compared to $11.7 million at December 31, 2020. The allowance to total loans ratio excluding SBA PPP loans was 1.39% at December 31, 2021.
---	---

Paycheck Protection Program Loans

As of December 31, 2021, the Company funded 955 Small Business Administration Paycheck Protection Program Round 2 loans, totaling $101.0 million. This is in addition to the 1,224 SBA PPP loans, totaling $143.0 million funded during the year ended December 31, 2020. During the quarter ended December 31, 2021, the Company earned $1.8 million on SBA PPP fees.

The table below summarizes SBA PPP loans as of December 31, 2021:

	Round 1		Round 2		Total
(In thousands, except number of loans)	$	#	$	#	$	#
Funded Principal	143,001	1,224	101,048	955	244,049	2,179
Forgiven Principal	141,112	1,207	54,964	700	196,076	1,907
Outstanding Principal	1,889	17	46,084	255	47,973	272
Funded Fees	5,468		4,083		9,551
Net Earned Fees	5,445		2,583		8,028
Net Unearned Fees	23		1,500		1,523
Total Outstanding Net SBA PPP Loans	1,866		44,584		46,450

Loan Deferrals

Because of COVID-19, the Bank worked with its borrowers who were unable to meet their contractual obligations. Loans which have been granted deferrals have significantly declined. At December 31, 2021, $8.4 million in loans, or 0.51% of the total loan portfolio, were on deferral, compared to $32.5 million in loans, or 2.00% of the total loan portfolio at December 31, 2020.

The table below summarizes loan deferrals as of December 31, 2021:

(In thousands, except percentages)	Total Loan Portfolio Balance	Full Deferrals	Principal Only Deferrals	Total Loans in Deferral	% of Deferrals to Total Loans
SBA loans held for sale	$ 27,373	$ -	$ -	$ -	0.00%
SBA loans held for investment	36,075	-	-	-	0.00%
SBA PPP loans	46,450	-	-	-	0.00%
Commercial loans	931,726	1,857	6,506	8,363	0.90%
Residential mortgage loans	409,355	-	-	-	0.00%
Consumer loans	77,944	-	-	-	0.00%
Residential construction loans	120,525	-	-	-	0.00%
Total loans	$ 1,649,448	$ 1,857	$ 6,506	$ 8,363	0.51%

The table below summarizes loan deferrals as of December 31, 2020:

(In thousands, except percentages)	Total Loan Portfolio Balance	Full Deferrals	Principal Only Deferrals	Total Loans in Deferral	% of Deferrals to Total Loans
SBA loans held for sale	$ 9,335	$ -	$ -	$ -	0.00%
SBA loans held for investment	39,587	562	2,461	3,023	7.64%
SBA PPP loans	118,257	-	-	-	0.00%
Commercial loans	839,788	4,921	22,647	27,568	3.28%
Residential mortgage loans	467,586	1,952	-	1,952	0.42%
Consumer loans	66,100	-	-	-	0.00%
Residential construction loans	87,164	-	-	-	0.00%
Total loans	$ 1,627,817	$ 7,435	$ 25,108	$ 32,543	2.00%

Other Highlights

On November 16, 2021, The Adult Day Center (“ADC”) of Somerset County honored President & CEO, James Hughes, at the Generations Gala. The ADC is a nonprofit agency providing compassionate day care services for vulnerable seniors, adults living with a disability or dementia-related illness, as well as support and education for their caregiving families. Unity Bank has been an important corporate partner of the ADC for the past six years and has funded their caregiver support group, program expansion and special events. All proceeds from the Generations Gala support the programs and services of the Adult Day Center of Somerset County. The Generations Gala raised over $270 thousand to support the vital services the ADC provides; this could not have been done without the support of Unity Bank and its customers and vendors.

Unity opened a Loan Production office in Lakewood, NJ, which will be used as a hub for commercial and residential lending in Ocean County. This office will be Unity’s southernmost office location, expanding Unity’s presence to New Jersey’s fastest growing municipality. The new lending office is a free-standing building in a strip mall. The space is approximately 1,800-square-foot, was previously operated as a bank branch by another financial institution and provides room for expansion.

Unity Bancorp, Inc. is a financial services organization headquartered in Clinton, New Jersey, with approximately $2.0 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 19 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

December 31, 2021


										December 31, 2021 vs.
										Sept. 30, 2021		Dec. 31, 2020
(In thousands, except percentages and per share amounts)	Dec. 31, 2021			Sept. 30, 2021			Dec. 31, 2020			%		%
BALANCE SHEET DATA
Total assets	$	2,033,713		$	1,991,115		$	1,958,914		2.1	%	3.8	%
Total deposits		1,758,881			1,706,185			1,557,959		3.1		12.9
Total loans		1,649,448			1,664,891			1,627,817		(0.9)		1.3
Total securities		79,322			49,807			47,571		59.3		66.7
Total shareholders' equity		205,729			196,267			173,911		4.8		18.3
Allowance for loan losses		22,302			22,537			23,105		(1.0)		(3.5)

FINANCIAL DATA - QUARTER TO DATE
Income before provision for income taxes	$	13,132		$	12,671		$	9,868		3.6		33.1
Provision for income taxes		3,387			3,212			2,524		5.4		34.2
Net income	$	9,746		$	9,459		$	7,345		3.0		32.7

Net income per common share - Basic	$	0.94		$	0.91		$	0.70		3.3		34.3
Net income per common share - Diluted		0.92			0.90			0.69		2.2		33.3

PERFORMANCE RATIOS - QUARTER TO DATE
Return on average assets		1.90	%		1.96	%		1.61	%
Return on average equity		19.23			19.57			17.07
Efficiency ratio		45.55			44.15			50.31
Net interest margin		4.24			4.27			3.97
Noninterest expense to average assets		2.08			2.05			2.35

FINANCIAL DATA - YEAR TO DATE
Income before provision for income taxes	$	48,130					$	31,119				54.7
Provision for income taxes		12,011						7,475				60.7
Net income	$	36,119					$	23,644				52.8

Net income per common share - Basic	$	3.47					$	2.21				57.0
Net income per common share - Diluted		3.43						2.19				56.6

PERFORMANCE RATIOS - YEAR TO DATE
Return on average assets		1.87	%					1.35	%			38.5
Return on average equity		19.16						14.20				34.9
Efficiency ratio		46.09						50.80				(9.3)
Net interest margin		4.16						3.85				8.1
Noninterest expense to average assets		2.11						2.24				(5.8)

SHARE INFORMATION
Market price per share	$	26.25		$	23.40		$	17.55		12.2		49.6
Dividends paid		0.10			0.09			0.08		11.1		25.0
Book value per common share		19.80			18.94			16.63		4.5		19.1
Average diluted shares outstanding (QTD)		10,555			10,507			10,629		0.5		(0.7)

CAPITAL RATIOS
Total equity to total assets		10.12	%		9.86	%		8.88	%
Community bank leverage ratio		10.51			10.70			10.09

CREDIT QUALITY AND RATIOS
Nonperforming assets	$	9,686		$	8,802		$	12,060		10.0		(19.7)
QTD net chargeoffs (recoveries) to QTD average loans		(0.02)	%		0.06	%		0.03	%
Allowance for loan losses to total loans		1.35			1.35			1.42
Nonperforming loans to total loans		0.59			0.53			0.74
Nonperforming assets to total assets		0.48			0.44			0.62

UNITY BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

December 31, 2021


							December 31, 2021 vs.
							Sept. 30, 2021		Dec. 31, 2020
(In thousands, except percentages)	Dec. 31, 2021		Sept. 30, 2021		Dec. 31, 2020		%		%
ASSETS
Cash and due from banks	$	26,053	$	21,823	$	22,750	19.4	%	14.5	%
Interest-bearing deposits		218,765		194,549		196,561	12.4		11.3
Cash and cash equivalents		244,818		216,372		219,311	13.1		11.6
Securities:
Securities available for sale		56,480		39,763		45,617	42.0		23.8
Securities held to maturity		14,276		5,151		-	177.2		100.0
Equity securities		8,566		4,893		1,954	75.1		338.5
Total securities		79,322		49,807		47,571	59.3		66.7
Loans:
SBA loans held for sale		27,373		20,130		9,335	36.0		193.2
SBA loans held for investment		36,075		37,986		39,587	(5.0)		(8.9)
SBA PPP loans		46,450		81,907		118,257	(43.3)		(60.7)
Commercial loans		931,726		924,039		839,789	0.8		10.9
Residential mortgage loans		409,355		420,835		467,586	(2.7)		(12.5)
Consumer loans		77,944		71,071		66,100	9.7		17.9
Residential construction loans		120,525		108,925		87,164	10.6		38.3
Total loans		1,649,448		1,664,891		1,627,817	(0.9)		1.3
Allowance for loan losses		(22,302)		(22,537)		(23,105)	(1.0)		(3.5)
Net loans		1,627,146		1,642,354		1,604,712	(0.9)		1.4
Premises and equipment, net		19,914		20,106		20,226	(1.0)		(1.5)
Bank owned life insurance ("BOLI")		26,608		26,587		26,514	0.1		0.4
Deferred tax assets		10,040		10,987		9,183	(8.6)		9.3
Federal Home Loan Bank ("FHLB") stock		3,550		4,403		10,594	(19.4)		(66.5)
Accrued interest receivable		9,586		9,684		10,429	(1.0)		(8.1)
Other real estate owned ("OREO")		-		-		-	-		-
Goodwill		1,516		1,516		1,516	-		-
Prepaid expenses and other assets		11,213		9,297		8,858	20.6		26.6
Total assets	$	2,033,713	$	1,991,115	$	1,958,914	2.1	%	3.8	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	529,227	$	520,572	$	459,677	1.7	%	15.1	%
Interest-bearing demand		244,073		244,015		204,236	0.0		19.5
Savings		694,161		622,087		455,449	11.6		52.4
Time, under $100,000		194,960		217,302		264,671	(10.3)		(26.3)
Time, $100,000 to $250,000		62,668		65,570		95,595	(4.4)		(34.4)
Time, $250,000 and over		33,791		36,639		78,331	(7.8)		(56.9)
Total deposits		1,758,881		1,706,185		1,557,959	3.1		12.9
Borrowed funds		40,000		60,000		200,000	(33.3)		(80.0)
Subordinated debentures		10,310		10,310		10,310	-		-
Accrued interest payable		129		158		248	(18.1)		(47.9)
Accrued expenses and other liabilities		18,664		18,195		16,485	2.6		13.2
Total liabilities		1,827,984		1,794,847		1,785,003	1.8		2.4
Shareholders' equity:
Common stock		94,003		93,409		91,873	0.6		2.3
Retained earnings		123,037		114,337		90,669	7.6		35.7
Treasury stock, at cost		(11,634)		(11,547)		(7,443)	(0.8)		(56.3)
Accumulated other comprehensive income (loss)		322		68		(1,189)	NM*		NM*
Total shareholders' equity		205,729		196,267		173,911	4.8		18.3
Total liabilities and shareholders' equity	$	2,033,713	$	1,991,115	$	1,958,914	2.1	%	3.8	%
COMMON SHARES AT PERIOD END:
Shares issued		11,094		11,063		10,961
Shares outstanding		10,391		10,363		10,456
Treasury shares		703		700		505

*NM=Not meaningful

UNITY BANCORP, INC.

QTD CONSOLIDATED STATEMENTS OF INCOME

December 31, 2021


										December 31, 2021 vs.
	For the three months ended									Sept. 30, 2021				Dec. 31, 2020
(In thousands, except percentages and per share amounts)	Dec. 31, 2021			Sept. 30, 2021			Dec. 31, 2020				%				%
INTEREST INCOME															.
Fed funds and interest-bearing deposits	$	89		$	48		$	23				86.7	%			295.3	%
FHLB stock		41			41			64				0.1				(36.1)
Securities:
Taxable		460			292			364				57.7				26.6
Tax-exempt		5			8			11				(35.9)				(56.9)
Total securities		465			300			375				55.3				24.0
Loans:
SBA loans		828			864			819				(4.1)				1.1
SBA PPP loans		1,978			1,751			1,361				13.0				45.3
Commercial loans		11,679			11,280			10,155				3.5				15.0
Residential mortgage loans		4,587			4,606			5,441				(0.4)				(15.7)
Consumer loans		871			736			824				18.3				5.6
Residential construction loans		1,734			1,628			1,226				6.5				41.4
Total loans		21,676			20,865			19,826				3.9				9.3
Total interest income		22,271			21,253			20,287				4.8				9.8
INTEREST EXPENSE
Interest-bearing demand deposits		210			247			319				(14.8)				(34.1)
Savings deposits		444			390			463				13.7				(4.1)
Time deposits		541			659			1,726				(18.0)				(68.7)
Borrowed funds and subordinated debentures		227			234			441				(3.2)				(48.6)
Total interest expense		1,422			1,531			2,949				(7.1)				(51.8)
Net interest income		20,849			19,723			17,339				5.7				20.2
Provision for loan losses		(319)			-			1,000				(10,000.0)				(131.9)
Net interest income after provision for loan losses		21,168			19,723			16,339				7.3				29.6
NONINTEREST INCOME
Branch fee income		273			294			285				(7.2)				(4.3)
Service and loan fee income		820			804			557				1.9				47.1
Gain on sale of SBA loans held for sale, net		-			-			543				-				(100.0)
Gain on sale of mortgage loans, net		782			968			2,027				(19.2)				(61.4)
BOLI income		289			138			139				109.6				108.3
Net security gains		73			202			280				(64.0)				(74.0)
Other income		388			402			424				(3.5)				(8.5)
Total noninterest income		2,624			2,809			4,254				(6.6)				(38.3)
NONINTEREST EXPENSE
Compensation and benefits		6,655			5,720			6,371				16.4				4.5
Processing and communications		747			747			956				(0.0)				(21.9)
Occupancy		670			654			650				2.5				3.1
Furniture and equipment		655			627			673				4.3				(2.7)
Other loan expenses		163			452			149				(63.9)				9.6
Professional services		402			315			340				27.3				18.3
Advertising		304			261			218				16.6				39.4
BSA expenses		37			214			623				(82.9)				(94.1)
Deposit insurance		206			198			230				4.1				(10.5)
Director fees		210			189			202				11.4				4.2
Loan collection & OREO expenses (recoveries)		69			62			(5)				11.4				1,486.8
Other expenses		543			423			319				28.4				70.3
Total noninterest expense		10,660			9,860			10,725				8.1				(0.6)
Income before provision for income taxes		13,132			12,671			9,868				3.6				33.1
Provision for income taxes		3,387			3,212			2,524				5.4				34.2
Net income	$	9,746		$	9,459		$	7,345				3.0	%			32.7	%

Effective tax rate		25.8	%		25.4	%		25.6	%

Net income per common share - Basic	$	0.94		$	0.91		$	0.70
Net income per common share - Diluted		0.92			0.90			0.69

Weighted average common shares outstanding - Basic		10,376			10,372			10,532
Weighted average common shares outstanding - Diluted		10,555			10,507			10,629

*NM=Not meaningful

All values are in US Dollars.

UNITY BANCORP, INC.

YTD CONSOLIDATED STATEMENTS OF INCOME

December 31, 2021



	For the years ended December 31,						Current YTD vs. Prior YTD
(In thousands, except percentages and per share amounts)	2021			2019				%
INTEREST INCOME
Fed funds and interest-bearing deposits	$	194		$	258				(24.9)	%
FHLB stock		197			331				(40.4)
Securities:
Taxable		1,298			1,695				(23.4)
Tax-exempt		31			61				(48.9)
Total securities		1,329			1,756				(24.3)
Loans:
SBA loans		3,252			3,144				3.4
SBA PPP loans		7,206			3,120				130.9
Commercial loans		44,168			40,002				10.4
Residential mortgage loans		19,227			22,255				(13.6)
Consumer loans		3,145			3,502				(10.2)
Residential construction loans		6,063			4,547				33.3
Total loans		83,060			76,570				8.5
Total interest income		84,780			78,916				7.4
INTEREST EXPENSE
Interest-bearing demand deposits		1,073			1,344				(20.2)
Savings deposits		1,685			2,463				(31.6)
Time deposits		3,834			8,784				(56.4)
Borrowed funds and subordinated debentures		1,150			1,888				(39.1)
Total interest expense		7,741			14,480				(46.5)
Net interest income		77,039			64,436				19.6
Provision for loan losses		181			7,000				(97.4)
Net interest income after provision for loan losses		76,858			57,436				33.8
NONINTEREST INCOME
Branch fee income		1,130			1,046				8.0
Service and loan fee income		2,757			1,742				58.3
Gain on sale of SBA loans held for sale, net		741			1,642				(54.9)
Gain on sale of mortgage loans, net		4,567			6,344				(28.0)
BOLI income		689			613				12.3
Net security gains		609			93				553.8
Other income		1,561			1,466				6.5
Total noninterest income		12,054			12,946				(6.9)
NONINTEREST EXPENSE
Compensation and benefits		24,771			23,124				7.1
Processing and communications		3,050			3,155				(3.3)
Occupancy		2,661			2,543				4.7
Furniture and equipment		2,590			2,606				(0.6)
Professional services		1,437			1,144				25.6
Advertising		1,236			906				36.4
Other loan expenses		922			622				48.2
BSA expenses		701			1,800				(61.1)
Deposit insurance		844			674				25.2
Director fees		811			774				4.8
Loan collection & OREO expenses		135			215				(37.1)
Other expenses		1,625			1,698				(4.3)
Total noninterest expense		40,782			39,262				3.9
Income before provision for income taxes		48,130			31,119				54.7
Provision for income taxes		12,011			7,475				60.7
Net income	$	36,119		$	23,644				52.8	%

Effective tax rate		25.0	%		24.0	%

Net income per common share - Basic	$	3.47		$	2.21
Net income per common share - Diluted		3.43			2.19

Weighted average common shares outstanding - Basic		10,403			10,709
Weighted average common shares outstanding - Diluted		10,546			10,814

*NM=Not meaningful

All values are in US Dollars.

UNITY BANCORP, INC.

QUARTER TO DATE NET INTEREST MARGIN

December 31, 2021

(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis


	For the three months ended
	December 31, 2021							December 31, 2020
	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Fed funds and interest-bearing deposits	$	222,683	$	89		0.16	%	$	64,359	$	23		0.14	%
FHLB stock		3,526		41		4.58			5,732		64		4.44
Securities:
Taxable		60,087		460		3.04			46,873		364		3.09
Tax-exempt		1,033		6		2.39			2,491		13		2.08
Total securities (A)		61,120		466		3.03			49,364		377		3.04
Loans:
SBA loans		58,718		828		5.60			53,383		819		6.10
SBA PPP loans		61,854		1,978		12.68			134,946		1,361		4.01
Commercial loans		936,078		11,679		4.95			814,366		10,155		4.96
Residential mortgage loans		414,955		4,587		4.39			465,117		5,441		4.65
Consumer loans		74,207		871		4.65			66,963		824		4.90
Residential construction loans		116,305		1,734		5.91			84,113		1,226		5.80
Total loans (B)		1,662,117		21,676		5.17			1,618,888		19,826		4.87
Total interest-earning assets	$	1,949,446	$	22,272		4.53	%	$	1,738,343	$	20,289		4.64	%

Noninterest-earning assets:
Cash and due from banks		25,065							24,128
Allowance for loan losses		(22,572)							(22,907)
Other assets		80,810							75,489
Total noninterest-earning assets		83,303							76,710
Total assets	$	2,032,749						$	1,815,053

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	255,083	$	210		0.33	%	$	205,049	$	319		0.62	%
Total savings deposits		684,215		444		0.26			461,345		463		0.40
Total time deposits		302,088		541		0.71			427,208		1,726		1.61
Total interest-bearing deposits		1,241,386		1,195		0.38			1,093,602		2,507		0.91
Borrowed funds and subordinated debentures		50,799		227		1.77			102,256		441		1.72
Total interest-bearing liabilities	$	1,292,185	$	1,422		0.44	%	$	1,195,858	$	2,949		0.98	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		519,709							431,030
Other liabilities		19,824							17,025
Total noninterest-bearing liabilities		539,533							448,055
Total shareholders' equity		201,031							171,140
Total liabilities and shareholders' equity	$	2,032,749						$	1,815,053

Net interest spread			$	20,850		4.10	%			$	17,341		3.66	%
Tax-equivalent basis adjustment				(1)							(3)
Net interest income			$	20,849						$	17,338
Net interest margin						4.24	%						3.97	%

(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 nondeductable 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, 2021

(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)


	For the three months ended
	December 31, 2021							September 30, 2021
	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Fed funds and interest-bearing deposits	$	222,683	$	89		0.16	%	$	133,660	$	48		0.14	%
FHLB stock		3,526		41		4.58			3,706		41		4.36
Securities:
Taxable		60,087		460		3.04			41,738		292		2.78
Tax-exempt		1,033		6		2.39			1,176		10		3.26
Total securities (A)		61,120		466		3.03			42,914		302		2.79
Loans:
SBA loans		58,718		828		5.60			54,686		864		6.27
SBA PPP loans		61,854		1,978		12.68			110,239		1,751		6.30
Commercial loans		936,078		11,679		4.95			898,589		11,280		4.98
Residential mortgage loans		414,955		4,587		4.39			417,166		4,606		4.38
Consumer loans		74,207		871		4.65			66,782		736		4.37
Residential construction loans		116,305		1,734		5.91			105,908		1,628		6.10
Total loans (B)		1,662,117		21,676		5.17			1,653,370		20,865		5.01
Total interest-earning assets	$	1,949,446	$	22,272		4.53	%	$	1,833,650	$	21,255		4.60	%

Noninterest-earning assets:
Cash and due from banks		25,065							23,085
Allowance for loan losses		(22,572)							(22,733)
Other assets		80,810							75,961
Total noninterest-earning assets		83,303							76,313
Total assets	$	2,032,749						$	1,909,963

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	255,083	$	210		0.33	%	$	227,152	$	247		0.43	%
Total savings deposits		684,215		444		0.26			558,354		390		0.28
Total time deposits		302,088		541		0.71			345,811		659		0.76
Total interest-bearing deposits		1,241,386		1,195		0.38			1,131,317		1,296		0.45
Borrowed funds and subordinated debentures		50,799		227		1.77			56,322		234		1.65
Total interest-bearing liabilities	$	1,292,185	$	1,422		0.44	%	$	1,187,639	$	1,531		0.51	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		519,709							514,518
Other liabilities		19,824							16,077
Total noninterest-bearing liabilities		539,533							530,595
Total shareholders' equity		201,031							191,729
Total liabilities and shareholders' equity	$	2,032,749						$	1,909,963

Net interest spread			$	20,850		4.10	%			$	19,725		4.09	%
Tax-equivalent basis adjustment				(1)							(2)
Net interest income			$	20,849						$	19,723
Net interest margin						4.24	%						4.27	%

(C)	Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis. They are reduced by the nondeductable portion of interest expense, assuming a federal tax rate of 21 percent and applicable state rates.
(D)	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, 2021

(Dollar amounts in thousands, interest amounts and interest rates/yields on a fully tax-equivalent basis)


	For the years ended
	December 31, 2021							December 31, 2020
	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Fed funds and interest-bearing deposits	$	143,311	$	194		0.14	%	$	68,507	$	258		0.38	%
FHLB stock		4,275		197		4.62			6,145		331		5.39
Securities:
Taxable		43,847		1,298		2.96			52,714		1,695		3.22
Tax-exempt		1,587		39		2.45			3,118		76		2.44
Total securities (A)		45,434		1,337		2.94			55,832		1,771		3.17
Loans:
SBA loans		53,279		3,252		6.10			50,354		3,144		6.24
SBA PPP loans		119,440		7,206		6.03			93,733		3,120		3.33
Commercial loans		887,525		44,168		4.98			790,093		40,002		5.06
Residential mortgage loans		430,466		19,227		4.47			463,155		22,255		4.81
Consumer loans		66,477		3,145		4.73			70,009		3,502		5.00
Residential construction loans		101,486		6,063		5.97			76,729		4,547		5.93
Total loans (B)		1,658,673		83,060		5.01			1,544,073		76,570		4.96
Total interest-earning assets	$	1,851,693	$	84,788		4.58	%	$	1,674,557	$	78,931		4.71	%

Noninterest-earning assets:
Cash and due from banks		23,862							22,571
Allowance for loan losses		(22,911)							(19,812)
Other assets		77,105							73,948
Total noninterest-earning assets		78,056							76,707
Total assets	$	1,929,749						$	1,751,264

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	227,750	$	1,073		0.47	%	$	178,358	$	1,344		0.75	%
Total savings deposits		557,700		1,685		0.30			438,996		2,463		0.56
Total time deposits		376,696		3,834		1.02			448,688		8,784		1.96
Total interest-bearing deposits		1,162,146		6,591		0.57			1,066,042		12,592		1.18
Borrowed funds and subordinated debentures		68,812		1,150		1.67			112,264		1,888		1.68
Total interest-bearing liabilities	$	1,230,958	$	7,741		0.63	%	$	1,178,306	$	14,480		1.23	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		493,213							389,255
Other liabilities		17,018							17,163
Total noninterest-bearing liabilities		510,231							406,418
Total shareholders' equity		188,560							166,540
Total liabilities and shareholders' equity	$	1,929,749						$	1,751,264

Net interest spread			$	77,047		3.95	%			$	64,451		3.48	%
Tax-equivalent basis adjustment				(8)							(15)
Net interest income			$	77,039						$	64,436
Net interest margin						4.16	%						3.85	%

(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 nondeductable 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, 2021


Amounts in thousands, except percentages	Dec. 31, 2021		Sept. 30, 2021		Jun. 30, 2021		Mar. 31, 2021		Dec. 31, 2020
ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period	$	22,537	$	22,801	$	22,965	$	23,105	$	22,237
Provision for loan losses charged to expense		(319)		-		-		500		1,000
		22,218		22,801		22,965		23,605		23,237
Less: Chargeoffs
SBA loans		-		145		164		282		-
Commercial loans		1		158		21		374		150
Residential mortgage loans		-		-		-		-		-
Consumer loans		-		3		-		1		-
Residential construction loans		-		-		-		-		-
Total chargeoffs		1		306		185		657		150
Add: Recoveries
SBA loans		52		-		19		15		-
Commercial loans		32		-		1		1		18
Residential mortgage loans		-		42		-		-		-
Consumer loans		-		-		-		-		-
Residential construction loans		-		-		-		-		-
Total recoveries		84		42		20		16		18
Net (recoveries) chargeoffs		(83)		264		164		640		132
Balance, end of period	$	22,302	$	22,537	$	22,801	$	22,965	$	23,105

LOAN QUALITY INFORMATION:

Nonperforming loans:
SBA loans	$	510	$	660	$	1,713	$	1,560	$	2,473
Commercial loans		2,582		2,879		1,637		952		1,325
Residential mortgage loans		3,262		2,626		4,043		6,711		5,217
Consumer loans		210		-		3		-		3,045
Residential construction loans		3,122		2,637		2,289		2,565		-
Total nonperforming loans		9,686		8,802		9,685		11,788		12,060
OREO		-		-		-		-		-
Nonperforming assets		9,686		8,802		9,685		11,788		12,060
Less: Amount guaranteed by Small Business Administration		59		139		139		139		371
Net nonperforming assets	$	9,627	$	8,663	$	9,546	$	11,648	$	11,689

Loans 90 days past due & still accruing	$	-	$	2,265	$	574	$	2,540	$	449

Performing Troubled Debt Restructurings (TDRs)	$	1,046	$	1,057	$	1,068	$	1,079	$	663

Allowance for loan losses to:
Total nonperforming loans		230.24		256.03		235.42		194.82		191.59
Nonperforming assets		230.24		256.03		235.42		194.82		191.59
Net nonperforming assets		231.65		260.15		238.85		197.15		197.67

UNITY BANCORP, INC.

QUARTERLY FINANCIAL DATA

December 31, 2021


(In thousands, except percentages and per share amounts)	Dec. 31, 2021			Sept. 30, 2021			Jun. 30, 2021			Mar. 31, 2021			Dec. 31, 2020
SUMMARY OF INCOME:
Total interest income	$	22,271		$	21,254		$	20,680		$	20,576		$	20,288
Total interest expense		1,422			1,531			2,231			2,558			2,949
Net interest income		20,849			19,724			18,449			18,018			17,340
Provision for loan losses		(319)			-			-			500			1,000
Net interest income after provision for loan losses		21,168			19,724			18,449			17,518			16,340
Total noninterest income		2,624			2,809			2,895			3,726			4,254
Total noninterest expense		10,660			9,860			10,460			9,803			10,726
Income before provision for income taxes		13,132			12,672			10,884			11,442			9,868
Provision for income taxes		3,387			3,213			2,466			2,946			2,524
Net income	$	9,746		$	9,459		$	8,418		$	8,496		$	7,345

Net income per common share - Basic	$	0.94		$	0.91		$	0.81		$	0.81		$	0.70
Net income per common share - Diluted		0.92			0.90			0.80			0.80			0.69

COMMON SHARE DATA:
Market price per share	$	26.25		$	23.40		$	22.05		$	22.00		$	17.55
Dividends paid		0.10			0.09			0.09			0.08			0.08
Book value per common share		19.80			18.94			18.12			17.38			16.63

Weighted average common shares outstanding - Basic		10,376			10,372			10,427			10,437			10,532
Weighted average common shares outstanding - Diluted		10,555			10,507			10,569			10,565			10,629
Issued common shares		11,094			11,063			11,031			10,996			10,961
Outstanding common shares		10,391			10,363			10,416			10,422			10,456
Treasury shares		703			700			615			574			505

PERFORMANCE RATIOS (Annualized):
Return on average assets		1.90	%		1.96	%		1.77	%		1.85	%		1.61	%
Return on average equity		19.23			19.57			18.29			19.51			17.07
Efficiency ratio		45.55			44.15			49.06			45.74			50.31
Noninterest expense to average assets		2.08			2.05			2.19			2.13			2.35

BALANCE SHEET DATA:
Total assets	$	2,033,713		$	1,991,115		$	1,973,311		$	2,004,818		$	1,958,914
Total deposits		1,758,881			1,706,185			1,594,316			1,628,393			1,557,959
Total loans		1,649,448			1,664,891			1,653,988			1,668,448			1,627,817
Total securities		79,322			49,807			37,054			34,551			47,571
Total shareholders' equity		205,729			196,267			188,756			181,186			173,911
Allowance for loan losses		22,302			22,537			22,801			22,965			23,105

TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets		4.53	%		4.60	%		4.52	%		4.67	%		4.64	%
Interest-bearing liabilities		0.44			0.51			0.73			0.85			0.98
Net interest spread		4.10			4.09			3.79			3.82			3.66
Net interest margin		4.24			4.27			4.03			4.09			3.97

CREDIT QUALITY:
Nonperforming assets	$	9,686		$	8,802		$	9,685		$	11,788		$	12,060
QTD net chargeoffs (recoveries) (annualized) to QTD average loans		(0.02)	%		0.06	%		0.04	%		0.16	%		0.03	%
Allowance for loan losses to total loans		1.35			1.35			1.38			1.38			1.42
Nonperforming loans to total loans		0.59			0.53			0.59			0.71			0.74
Nonperforming assets to total assets		0.48			0.44			0.49			0.59			0.62

CAPITAL RATIOS AND OTHER:
Total equity to total assets		10.12	%		9.86	%		9.57	%		9.04	%		8.88	%
Community bank leverage ratio		10.51			10.70			10.31			10.19			10.09

Number of banking offices		19			19			19			19			19
Number of ATMs		20			20			20			20			20
Number of employees		211			208			208			209			206