8-K - UNTY - Equibles

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

July 14, 2021

Date of Report (Date of earliest event reported)

UNITY BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

New Jersey

(State or Other Jurisdiction of Incorporation)


1-12431	22-3282551
(Commission File Number)	(IRS Employer Identification No.)

64 Old Highway 22

Clinton , NJ **** 08809

(Address of Principal Executive Office)

( 908 ) 730-7630

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	UNTY	NASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operation and Financial Condition

The Registrant issued a press release on July 14, 2021 announcing results for the three and six months ended June 30, 2021, the full text of which is incorporated by reference to this Item.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits


Exhibit 99.1	Press release issued by the Registrant on July 14, 2021.

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.


	UNITY BANCORP, INC.
	(Registrant)

Date: July 14, 2021
	By:	/s/ George Boyan
		George Boyan
		Executive Vice President and Chief Financial Officer

EXHIBIT INDEX


EXHIBIT #		DESCRIPTION

99.1		Press release issued by the Registrant on July 14, 2021.

Exhibit 99.1

For Immediate Release	News Media & Financial Analyst Contact:
Unity Bancorp, Inc. (NSDQ: UNTY)	George Boyan, EVP and CFO
July 14, 2021	(908) 713-4565

Unity Bancorp Reports

Quarterly Earnings of $8.4 Million

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Clinton, NJ, July 14, 2021 - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income of $8.4 million, or $0.80 per diluted share, for the quarter ended June 30, 2021, a 62.8% increase compared to net income of $5.2 million, or $0.47 per diluted share for the prior year’s second quarter. For the six months ended June 30, 2021, Unity reported net income of $16.9 million, or $1.60 per diluted share, a 60.5% increase compared to $10.5 million or $0.96 per diluted share for the prior year’s period.

Second Quarter Earnings Highlights

●	Net interest income, our primary driver of earnings, increased $2.9 million to $18.4 million for the quarter ended June 30, 2021, compared to $15.5 million for the prior year’s quarter, due to SBA PPP loans, commercial loan growth and a reduction in the cost of funds.
●	Net interest margin (“NIM”) increased to 4.03% for the quarter ended June 30, 2021, compared to 3.73% for the prior year’s quarter and decreased six basis points from 4.09% in the prior sequential quarter ended March 31, 2021.
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●	The Company reported no provision for loan losses for the quarter ended June 30, 2021 compared to the prior year’s quarter. The provision for loan losses decreased $3.5 million for the six months ended June 30, 2021 compared to the prior year’s period. The decreases were due to an improved economic environment.
---	---
●	Noninterest income increased $84 thousand to $2.9 million compared to the prior year’s quarter, primarily due to increased gains on SBA loan sales. Noninterest income decreased $831 thousand compared to the prior sequential quarter, primarily due a decrease in sales of residential mortgage loans. For the quarter ended June 30, 2021 SBA loan sales totaled $3.6 million with net gains of $496 thousand.
---	---
●	Noninterest expense increased $1.3 million to $10.5 million compared to the prior year’s quarter and increased $658 thousand compared to the prior sequential quarter. The increases were primarily due to increased expenses related to a deferred compensation adjustment and increased advertising expenses.
---	---
●	The effective tax rate was 22.7% compared to 22.3% in the prior year’s quarter.
---	---

Balance Sheet Highlights

●	Total loans increased $26.2 million, or 1.6%, from year-end 2020 to $1.7 billion at June 30, 2021. The increase was primarily due to increases in commercial, SBA PPP and residential construction loans. Residential mortgage loans decreased 9.7% due to prepayments.
●	Total deposits increased $36.4 million, or 2.3%, from year-end 2020 to $1.6 billion at June 30, 2021. The Company’s deposit composition at June 30, 2021 consisted of 32.5% in savings deposits, 30.7% in noninterest-bearing demand deposits, 23.7% in time deposits and 13.1% in interest-bearing demand deposits.
---	---
●	Borrowed funds decreased $35.0 million to $165.0 million at June 30, 2021, due to decreased FHLB advances.
---	---
●	Shareholders’ equity was $188.8 million at June 30, 2021 compared to $173.9 million at year-end 2020.
---	---
●	Book value per common share was $18.12 as of June 30, 2021. During the second quarter, the Company repurchased 40,434 shares of common stock for a total cost of $874 thousand.
---	---
●	At June 30, 2021, the Community Bank Leverage Ratio was 10.11%.
---	---
●	Net nonperforming assets were $9.5 million at June 30, 2021, compared to $11.7 million at December 31, 2020. Most of the nonperforming assets are residential loans, the resolution of which has been impacted by foreclosure restrictions due to COVID-19. The allowance to total loans ratio excluding SBA PPP loans was 1.50% at June 30, 2021.
---	---

Paycheck Protection Program Loans

As of June 30, 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.

The table below summarizes SBA PPP loans as of June 30, 2021:


	Round 1		Round 2		Total
	$	#	$	#	$	#
Funded	143,001	1,224	101,048	955	244,049	2,179
Forgiven	105,106	901	6,568	17	111,674	918
Outstanding	37,895	323	94,480	938	132,375	1,261

Loan Deferrals

The Bank worked with borrowers who were unable to meet their contractual obligations because of the effects of COVID-19. By June 30, 2021, $5.7 million in loans were on deferral. Some loan deferrals are expected for the duration of 2021.

The table below summarizes loan deferrals as of June 30, 2021:


(In thousands)	Total Loan Portfolio balance		Full Deferrals		Principal Only Deferrals		Total Loans in Deferral		% Deferrals to Total Loans
SBA loans held for sale	$	11,314	$	—	$	—	$	—	0.00%
SBA loans held for investment		38,114		—		—		—	0.00%
SBA PPP loans		132,375		—		—		—	0.00%
Commercial loans		885,566		—		5,508		5,508	0.62%
Residential mortgage loans		422,188		231		—		231	0.05%
Consumer loans		64,557		—		—		—	0.00%
Residential construction loans		99,874		—		—		—	0.00%
Total loans	$	1,653,988	$	231	$	5,508	$	5,739	0.35%

Other Highlights

Unity Bank has been named one of the 2021 Best Places to Work in New Jersey – the only bank in New Jersey to make the prestigious list. It is the fifth year in a row that Unity has been honored by the survey and awards program, which identifies, recognizes and honors the top places of employment in New Jersey that benefit the state's economy, workforce and businesses.

Unity Bank donated $50,000 to St. Jude Children’s Research Hospital® as part of the Inspiration4 campaign, a $200 million fundraising initiative inspired by the world’s first all-civilian mission to space. Jared Isaacman, Founder and Chief Executive Officer of Shift4 Payments (NYSE: FOUR), headquartered in Allentown, Pa., is funding the historic three-day journey in space to support the lifesaving mission of St. Jude: Finding cures. Saving children.®

Unity Bank was the top ranked New Jersey community bank on the recently published American Banker magazine list of the Top 200 Publicly Traded Community Banks with less than $2 billion in assets. Unity was ranked 20th nationally on the respected industry list, which reviewed 511 institutions throughout the U.S.

On May 21, 2021, the Company announced a cash dividend of $0.09 per common share, an increase of 12.5%, payable on June 25, 2021, to shareholders of record as of June 11, 2021.

Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $2.0 billion in assets and $1.6 billion in deposits. Unity Bank 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

June 30,2021


												Jun. 30, 2021 vs.
												Dec. 31, 2020		Jun. 30, 2020
(In thousands, except percentages and per share amounts)	****	Jun. 30, 2021		****	Dec. 31, 2020		****	Jun. 30, 2020		****	****	%		%
BALANCE SHEET DATA:
Total assets		$	1,973,311		$	2,004,818		$	1,900,774			(1.6)	%	3.8	%
Total deposits	****		1,594,316			1,628,393			1,483,457			(2.1)		7.5
Total loans	****		1,653,988			1,668,448			1,592,507			(0.9)		3.9
Total securities	****		37,054			34,551			54,888			7.2		(32.5)
Total shareholders' equity	****		188,756			181,186			166,607			4.2		13.3
Allowance for loan losses	****		22,801			22,965			20,234			(0.7)		12.7

FINANCIAL DATA - QUARTER TO DATE:
Income before provision for income taxes		$	10,884		$	11,442		$	6,659			(4.9)		63.4
Provision for income taxes		****	2,466			2,946			1,488			(16.3)		65.7
Net income		$	8,418		$	8,496		$	5,171			(0.9)		62.8

Net income per common share - Basic		$	0.81		$	0.81		$	0.48			—		68.8
Net income per common share - Diluted		$	0.80		$	0.80		$	0.47			—		70.2

Performance ratios:
Return on average assets		****	1.77	%	****	1.85	%		1.19	%
Return on average equity		****	18.29	%	****	19.51	%		12.59	%
Efficiency ratio		****	49.06	%	****	45.74	%		50.27	%
Net interest margin		****	4.03	%	****	4.09	%		3.73	%
Noninterest expense to average assets		****	2.19	%	****	2.13	%		2.10	%

FINANCIAL DATA - YEAR TO DATE:
Income before provision for income taxes		$	22,325					$	13,625					63.9
Provision for income taxes		****	5,411						3,086					75.3
Net income		$	16,914					$	10,539					60.5

Net income per common share - Basic		$	1.62					$	0.97					67.0
Net income per common share - Diluted		$	1.60					$	0.96					66.7

Performance ratios:
Return on average assets		****	1.81	%					1.25	%				44.8
Return on average equity		****	18.88	%					12.91	%				46.2
Efficiency ratio		****	47.39	%					51.34	%				(7.7)
Net interest margin		****	4.06	%					3.82	%				6.3
Noninterest expense to average assets		****	2.16	%					2.19	%				(1.4)

SHARE INFORMATION:
Market price per share		$	22.05		$	22.00		$	14.30			0.2		54.2
Dividends paid		$	0.09		$	0.08		$	0.08			13		12.5
Book value per common share		$	18.12		$	17.38		$	15.53			4.3		16.7
Average diluted shares outstanding (QTD)		****	10,569			10,565			10,888			0.0		(2.9)

CAPITAL RATIOS:
Total equity to total assets		****	9.57	%	****	9.04	%		8.77	%
Community bank leverage ratio		****	10.11	%	****	10.19	%		10.01	%

CREDIT QUALITY AND RATIOS:
Nonperforming assets		$	9,685		$	11,788		$	10,184			(17.8)		(4.9)
QTD net chargeoffs to QTD average loans		****	0.04	%	****	0.16	%		(0.09)	%
Allowance for loan losses to total loans		1.38	%	1.38	%	1.27	%
---	---	---	---	---	---	---	---	---	---	---	---
Nonperforming assets to total loans		0.59	%	0.71	%	0.59	%
Nonperforming assets to total assets		0.49	%	0.59	%	0.54	%

UNITY BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

June 30,2021


	****										June 30, 2021 vs.
											December 31,		June 30,
		June 30,			December 31,			June 30,			2020		2020
(In thousands, except percentages)	****	2021		****	2020		****	2020		****	%		%
ASSETS
Cash and due from banks		$	24,527		$	22,750		$	24,066		7.8	%	1.9	%
Federal funds sold and interest-bearing deposits	****		197,325			196,561			162,617		0.4		21.3
Cash and cash equivalents	****		221,852			219,311			186,683		1.2		18.8
Securities:
Securities available for sale	****		32,810			45,617			53,102		(28.1)		(38.2)
Securities held to maturity	****		2,000			—			—		100.0		100.0
Equity securities	****		2,244			1,954			1,786		14.8		25.6
Total securities	****		37,054			47,571			54,888		(22.1)		(32.5)
Loans:
SBA loans held for sale	****		11,314			9,335			10,602		21.2		6.7
SBA loans held for investment	****		38,114			39,587			36,966		(3.7)		3.1
SBA PPP loans			132,375			118,257			136,039		11.9		(2.7)
Commercial loans	****		885,566			839,788			792,752		5.5		11.7
Residential mortgage loans	****		422,188			467,586			469,987		(9.7)		(10.2)
Consumer loans	****		64,557			66,100			68,719		(2.3)		(6.1)
Residential construction loans	****		99,874			87,164			77,442		14.6		29.0
Total loans	****		1,653,988			1,627,817			1,592,507		1.6		3.9
Allowance for loan losses	****		(22,801)			(23,105)			(20,234)		(1.3)		12.7
Net loans	****		1,631,187			1,604,712			1,572,273		1.6		3.7
Premises and equipment, net	****		19,799			20,226			20,751		(2.1)		(4.6)
Bank owned life insurance ("BOLI")	****		26,560			26,514			26,435		0.2		0.5
Deferred tax assets	****		9,377			9,183			7,274		2.1		28.9
Federal Home Loan Bank ("FHLB") stock	****		9,060			10,594			11,629		(14.5)		(22.1)
Accrued interest receivable	****		9,486			10,429			11,039		(9.0)		(14.1)
Other real estate owned ("OREO")	****		—			—			711		—		(100.0)
Goodwill	****		1,516			1,516			1,516		—		—
Other assets	****		7,420			8,858			7,575		(16.2)		(2.0)
Total assets		$	1,973,311		$	1,958,914		$	1,900,774		0.7	%	3.8	%

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand		$	489,700		$	459,677		$	429,899		6.5	%	13.9	%
Interest-bearing demand		****	208,802			204,236			154,803		2.2		34.9
Savings		****	518,405			455,449			426,563		13.8		21.5
Time, under $100,000			245,423			264,671			271,860		(7.3)		(9.7)
Time, $100,000 to $250,000			74,282			95,595			113,351		(22.3)		(34.5)
Time, $250,000 and over		****	57,704			78,331			86,981		(26.3)		(33.7)
Total deposits		****	1,594,316			1,557,959			1,483,457		2.3		7.5
Borrowed funds		****	165,000			200,000			223,000		(17.5)		(26.0)
Subordinated debentures		****	10,310			10,310			10,310		—		—
Accrued interest payable		****	231			248			228		(6.9)		1.3
Accrued expenses and other liabilities		****	14,698			16,486			17,172		(10.8)		(14.4)
Total liabilities		****	1,784,555			1,785,003			1,734,167		(0.0)		2.9
Shareholders' equity:
Common stock		****	92,810			91,873			91,103		1.0		1.9
Retained earnings		****	105,811			90,669			79,253		16.7		33.5
Treasury stock, at cost		****	(9,668)			(7,442)			(2,991)		29.9		223.2
Accumulated other comprehensive loss		****	(197)			(1,189)			(758)		NM*		NM*
Total shareholders' equity		****	188,756			173,911			166,607		8.5		13.3
Total liabilities and shareholders' equity		$	1,973,311		$	1,958,914		$	1,900,774		0.7	%	3.8	%


COMMON SHARES AT PERIOD END:
Shares issued		****	11,031			10,961			10,939
Shares outstanding		****	10,415			10,456			10,728
Treasury shares		****	615			505			211

NM=Not meaningful

UNITY BANCORP, INC.

QTD CONSOLIDATED STATEMENTS OF INCOME

June 30,2021


												Jun. 30, 2021 vs.
		For the three months ended										Mar. 31, 2021		****	Jun. 30, 2020
(In thousands, except percentages and per share amounts)	****	Jun. 30, 2021		****	Mar. 31, 2021		****	Jun. 30, 2020		****	****		%	****		%
INTEREST INCOME
Federal funds sold and interest-bearing deposits		$	33		$	24		$	23				37.5	%		43.5	%
FHLB stock		****	53			63			79				(15.9)			(32.9)
Securities:
Taxable		****	253			292			437				(13.4)			(42.1)
Tax-exempt		****	9			10			17				(10)			(47.1)
Total securities		****	262			302			454				(13.2)			(42.3)
Loans:
SBA loans		****	776			783			709				(0.9)			9.4
SBA PPP loans			1,748			1,730			723				1.0			141.8
Commercial loans		****	10,734			10,474			9,815				2.5			9.4
Residential mortgage loans		****	4,906			5,128			5,554				(4.3)			(11.7)
Consumer loans		****	682			857			875				(20.4)			(22.1)
Residential construction loans		****	1,486			1,215			1,046				22.3			42.1
Total loans		****	20,332			20,187			18,722				0.7			8.6
Total interest income		****	20,680			20,576			19,278				0.5			7.3
INTEREST EXPENSE
Interest-bearing demand deposits		****	307			309			329				(0.6)			(6.7)
Savings deposits		****	419			431			547				(2.8)			(23.4)
Time deposits		****	1,171			1,463			2,454				(20.0)			(52.3)
Borrowed funds and subordinated debentures		****	334			355			423				(5.9)			(21.0)
Total interest expense		****	2,231			2,558			3,753				(12.8)			(40.6)
Net interest income		****	18,449			18,018			15,525				2.4			18.8
Provision for loan losses		****	—			500			2,500				(100.0)			(100.0)
Net interest income after provision for loan losses		****	18,449			17,518			13,025				5.3			41.6
NONINTEREST INCOME
Branch fee income		****	269			295			207				(8.8)			30.0
Service and loan fee income		****	509			625			390				(18.6)			30.5
Gain on sale of SBA loans held for sale, net		****	496			245			92				102.4			439.1
Gain on sale of mortgage loans, net		****	1,066			1,750			1553				(39.1)			(31.4)
BOLI income		****	133			129			154				3.1			(13.6)
Net security gains		****	23			310			79				(92.6)			(70.9)
Other income		****	399			372			336				7.3			18.8
Total noninterest income		****	2,895			3,726			2,811				(22.3)			3.0
NONINTEREST EXPENSE
Compensation and benefits		****	6,333			6,063			5,553				4.5			14.0
Processing and communications		****	750			807			769				(7.1)			(2.5)
Furniture and equipment		****	659			649			641				1.5			2.8
Occupancy		****	631			706			630				(10.6)			0.2
Professional services		****	339			380			261				(10.8)			29.9
BSA expenses			282			168			488				67.9			(42.2)
Other loan expenses		****	165			143			168				15.4			(1.8)
Loan collection & OREO expenses (recoveries)		****	54			(49)			1				(210.2)			5,300.0
Deposit insurance		****	225			214			159				5			41.5
Advertising		****	403			268			207				50.4			94.7
Director fees		****	204			208			181				(1.9)			12.7
Other expenses		****	415			245			119				69.4			248.7
Total noninterest expense		****	10,460			9,802			9,177				6.7			14.0
Income before provision for income taxes		****	10,884			11,442			6,659				(4.9)			63.4
Provision for income taxes		****	2,466			2,946			1,488				(16.3)			65.7
Net income		$	8,418		$	8,496		$	5,171				(0.9)	%		62.8	%

Effective tax rate			22.7	%		25.7	%		22.3	%
Net income per common share - Basic		$	0.81		$	0.81		$	0.48
Net income per common share - Diluted		$	0.80		$	0.80		$	0.47

All values are in US Dollars.

Weighted average common shares outstanding - Basic			10,427			10,437			10,792
Weighted average common shares outstanding - Diluted			10,569			10,565			10,888

UNITY BANCORP, INC.

YTD CONSOLIDATED STATEMENTS OF INCOME

June 30,2021


		For the six months ended June 30,							Current YTD vs. Prior YTD
(In thousands, except percentages and per share amounts)	****	2021		****	2020		****	****		%
INTEREST INCOME
Federal funds sold and interest-bearing deposits		$	57		$	212				(73.1)	%
FHLB stock		****	116			188				(38.3)
Securities:
Taxable		****	546			948				(42.4)
Tax-exempt		****	18			39				(53.8)
Total securities		****	564			987				(42.9)
Loans:
SBA loans		****	1,559			1,694				(8.0)
SBA PPP loans			3,477			723				380.9
Commercial loans		****	21,210			19,748				7.4
Residential mortgage loans		****	10,034			11,324				(11.4)
Consumer loans			1,538			1,835				(16.2)
Residential construction loans		****	2,701			2,153				25.5
Total loans		****	40,519			37,477				8.1
Total interest income		****	41,256			38,864				6.2
INTEREST EXPENSE
Interest-bearing demand deposits		****	616			706				(12.7)
Savings deposits		****	851			1,499				(43.2)
Time deposits		****	2,634			4,900				(46.2)
Borrowed funds and subordinated debentures		****	688			989				(30.4)
Total interest expense		****	4,789			8,094				(40.8)
Net interest income		****	36,467			30,770				18.5
Provision for loan losses		****	500			4,000				(87.5)
Net interest income after provision for loan losses		****	35,967			26,770				34.4
NONINTEREST INCOME
Branch fee income		****	564			523				7.8
Service and loan fee income		****	1,133			766				47.9
Gain on sale of SBA loans held for sale, net		****	741			565				31.2
Gain on sale of mortgage loans, net		****	2,817			2,604				8.2
BOLI income		****	261			327				(20.2)
Net security gains (loss)		****	333			(91)				(465.9)
Other income		****	772			662				16.6
Total noninterest income		****	6,621			5,356				23.6
NONINTEREST EXPENSE
Compensation and benefits		****	12,396			10,992				12.8
Processing and communications		****	1,557			1,477				5.4
Furniture and equipment		****	1,308			1,296				0.9
Occupancy		****	1,337			1,253				6.7
Professional services		****	720			531				35.6
BSA expenses			450			550				(18.2)
Other loan expenses		****	308			257				19.8
Loan collection & OREO expenses		****	5			187				(97.3)
Deposit insurance		****	439			247				77.7
Advertising		****	671			497				35.0
Director fees		****	412			381				8.1
Other expenses		****	660			833				(20.8)
Total noninterest expense		****	20,263			18,501				9.5
Income before provision for income taxes		****	22,325			13,625				63.9
Provision for income taxes		****	5,411			3,086				75.3
Net income		$	16,914		$	10,539				60.5	%

Effective tax rate			24.2	%		22.6	%
Net income per common share - Basic		$	1.62		$	0.97
Net income per common share - Diluted		$	1.60		$	0.96
Weighted average common shares outstanding - Basic			10,432			10,838
Weighted average common shares outstanding - Diluted			10,567			10,962

All values are in US Dollars.

UNITY BANCORP, INC.

QUARTER TO DATE NET INTEREST MARGIN

June 30,2021

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


	For the three months ended
	June 30, 2021						June 30, 2020
	Average						Average
	Balance		Interest		Rate/Yield		Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits	$	124,728	$	33	0.11	%	$	73,899	$	23	0.13	%
FHLB stock	****	4,725		53	4.46			5,976		79	5.32
Securities:
Taxable	****	34,609		253	2.94			53,592		437	3.28
Tax-exempt	****	1,754		11	2.49			3,534		21	2.39
Total securities (A)	****	36,363		264	2.92			57,126		458	3.22
Loans:
SBA loans	****	50,742		776	6.14			47,964		709	5.95
SBA PPP loans		164,073		1,748	4.27			100,586		723	2.89
Commercial loans	****	865,292		10,734	4.98			783,962		9,815	5.04
Residential mortgage loans	****	434,558		4,906	4.53			461,156		5,554	4.84
Consumer loans	****	61,357		682	4.46			72,495		875	4.85
Residential construction loans	****	94,388		1,486	6.31			73,475		1,046	5.73
Total loans (B)	****	1,670,410		20,332	4.88			1,539,638		18,722	4.89
Total interest-earning assets	$	1,836,226	$	20,682	4.52	%	$	1,676,639	$	19,282	4.63	%

Noninterest-earning assets:
Cash and due from banks	****	23,511						20,698
Allowance for loan losses	****	(23,043)						(17,909)
Other assets	****	75,300						74,076
Total noninterest-earning assets	****	75,768						76,865
Total assets	$	1,911,994					$	1,753,504

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	219,244	$	307	0.56	%	$	163,685	$	329	0.81	%
Total savings deposits	****	509,476		419	0.33			421,647		547	0.52
Total time deposits	****	422,472		1,171	1.11			482,734		2,454	2.04
Total interest-bearing deposits	****	1,151,192		1,897	0.66			1,068,066		3,330	1.25
Borrowed funds and subordinated debentures	****	78,991		334	1.69			107,761		423	1.58
Total interest-bearing liabilities	$	1,230,183	$	2,231	0.73	%	$	1,175,827	$	3,753	1.28	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits	****	482,536						394,723
Other liabilities	****	14,713						17,682
Total noninterest-bearing liabilities	****	497,249						412,405
Total shareholders' equity	****	184,562						165,272
Total liabilities and shareholders' equity	$	1,911,994					$	1,753,504

Net interest spread			$	18,451	3.79	%			$	15,529	3.35	%
Tax-equivalent basis adjustment				(2)						(4)
Net interest income			$	18,449					$	15,525
Net interest margin					4.03	%					3.73	%

(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

June 30,2021

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


	For the three months ended
	June 30, 2021						March 31, 2021
	Average						Average
	Balance		Interest		Rate/Yield		Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits	$	124,728	$	33	0.11	%	$	90,830	$	24	0.11	%
FHLB stock	****	4,725		53	4.46			5,167		63	4.98
Securities:
Taxable	****	34,609		253	2.94			38,741		292	3.06
Tax-exempt	****	1,754		11	2.49			2,405		12	2.03
Total securities (A)	****	36,363		264	2.92			41,146		304	3.00
Loans:
SBA loans	****	50,742		776	6.14			48,845		783	6.50
SBA PPP loans		164,073		1,748	4.27			142,581		1,730	4.92
Commercial loans	****	865,292		10,734	4.98			849,065		10,474	5.00
Residential mortgage loans	****	434,558		4,906	4.53			455,782		5,128	4.56
Consumer loans	****	61,357		682	4.46			63,440		857	5.48
Residential construction loans	****	94,388		1,486	6.31			88,992		1,215	5.54
Total loans (B)	****	1,670,410		20,332	4.88			1,648,705		20,187	4.97
Total interest-earning assets	$	1,836,226	$	20,682	4.52	%	$	1,785,848	$	20,578	4.67	%

Noninterest-earning assets:
Cash and due from banks	****	23,511						23,781
Allowance for loan losses	****	(23,043)						(23,308)
Other assets	****	75,300						76,309
Total noninterest-earning assets	****	75,768						76,782
Total assets	$	1,911,994					$	1,862,630

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	219,244	$	307	0.56	%	$	209,020	$	309	0.60	%
Total savings deposits	****	509,476		419	0.33			476,463		431	0.37
Total time deposits	****	422,472		1,171	1.11			438,250		1,463	1.35
Total interest-bearing deposits	****	1,151,192		1,897	0.66			1,123,733		2,203	0.80
Borrowed funds and subordinated debentures	****	78,991		334	1.69			89,699		355	1.61
Total interest-bearing liabilities	$	1,230,183	$	2,231	0.73	%	$	1,213,432	$	2,558	0.85	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits	****	482,536						455,146
Other liabilities	****	14,713						17,418
Total noninterest-bearing liabilities	****	497,249						472,564
Total shareholders' equity	****	184,562						176,634
Total liabilities and shareholders' equity	$	1,911,994					$	1,862,630

Net interest spread			$	18,451	3.79	%			$	18,020	3.82	%
Tax-equivalent basis adjustment				(2)						(2)
Net interest income			$	18,449					$	18,018
Net interest margin					4.03	%					4.09	%

(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.

YEAR TO DATE NET INTEREST MARGIN

June 30,2021

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


	For the year ended
	June 30, 2021							June 30, 2020
	Average							Average					****
	Balance		Interest		Rate/Yield			Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Federal funds sold and interest-bearing deposits	$	107,873	$	57		0.11	%	$	71,548	$	212	0.60	%
FHLB stock	****	4,945		116		4.73			6,429		188	5.88
Securities:
Taxable	****	36,664		546		3.00			56,917		948	3.35
Tax-exempt	****	2,077		23		2.23			3,659		49	2.69
Total securities (A)	****	38,741		569		2.96			60,576		997	3.31
Loans:
SBA loans	****	49,799		1,559		6.31			49,127		1,694	6.93
SBA PPP loans		153,387		3,477		4.57			50,412		723	2.88
Commercial loans	****	857,223		21,210		4.99			776,729		19,748	5.11
Residential mortgage loans	****	445,111		10,034		4.55			461,952		11,324	4.93
Consumer loans		62,393		1,538		4.97			72,445		1,835	5.09
Residential construction loans	****	91,705		2,701		5.94			71,682		2,153	6.04
Total loans (B)	****	1,659,618		40,519		4.92			1,482,347		37,477	5.08
Total interest-earning assets	$	1,811,177	$	41,261		4.59	%	$	1,620,900	$	38,874	4.82	%

Noninterest-earning assets:
Cash and due from banks	****	23,645							21,320
Allowance for loan losses	****	(23,175)							(17,303)
Other assets	****	75,803							72,228
Total noninterest-earning assets	****	76,273							76,245
Total assets	$	1,887,450						$	1,697,145

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Total interest-bearing demand deposits	$	214,160	$	616		0.58	%	$	162,939	$	706	0.87	%
Total savings deposits	****	493,061		851		0.35			423,277		1,499	0.71
Total time deposits	****	430,317		2,634		1.23			459,218		4,900	2.15
Total interest-bearing deposits	****	1,137,538		4,101		0.73			1,045,434		7,105	1.37
Borrowed funds and subordinated debentures	****	84,316		688		1.65			119,409		989	1.67
Total interest-bearing liabilities	$	1,221,854	$	4,789		0.79	%	$	1,164,843	$	8,094	1.40	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits	****	468,916							351,203
Other liabilities	****	16,069							16,891
Total noninterest-bearing liabilities	****	484,985							368,094
Total shareholders' equity	****	180,611							164,208
Total liabilities and shareholders' equity	$	1,887,450						$	1,697,145

Net interest spread			$	36,472		3.80	%			$	30,780	3.42	%
Tax-equivalent basis adjustment				(5)							(10)
Net interest income			$	36,467						$	30,770
Net interest margin						4.06	%					3.82	%

(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

June 30,2021


Amounts in thousands, except percentages	****	Jun. 30, 2021		****	Mar. 31, 2021		****	Dec. 31, 2020		****	Sept. 30, 2020		****	Jun. 30, 2020		****
ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period		$	22,965		$	23,105		$	22,237		$	20,234		$	17,376
Provision for loan losses charged to expense		****	—			500			1,000			2,000			2,500
		****	22,965			23,605			23,237			22,234			19,876
Less: Chargeoffs
SBA loans		****	164			282			—			1			—
Commercial loans		****	20			373			150			—			219
Consumer loans		****	—			1			—			—			—
Total chargeoffs		****	184			656			150			1			219
Add: Recoveries
SBA loans		****	19			15			—			3			75
Commercial loans		****	1			1			18			1			502
Total recoveries		****	20			16			18			4			577
Net chargeoffs (recoveries)		****	164			640			132			(3)			(358)
Balance, end of period		$	22,801		$	22,965		$	23,105		$	22,237		$	20,234

LOAN QUALITY INFORMATION:
Nonperforming loans:
SBA loans		$	1,713		$	1,560		$	2,473		$	3,446		$	2,363
Commercial loans		****	1,637			952			1,325			527			413
Residential mortgage loans		****	4,043			6,711			5,217			3,722			6,192
Consumer loans			3			—			1,295			1,293			505
Residential construction loans		****	2,289			2,565			1,750			—			—
Total nonperforming loans		****	9,685			11,788			12,060			8,988			9,473
Other real estate owned ("OREO")		****	—			—			—			711			711
Nonperforming assets		****	9,685			11,788			12,060			9,699			10,184
Less: Amount guaranteed by SBA		****	139			139			371			812			307
Net nonperforming assets		$	9,546		$	11,649		$	11,689		$	8,887		$	9,877

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

Performing Troubled Debt Restructurings (TDRs)		$	1,068		$	1,079		$	663		$	673		$	684

Allowance for loan losses to:
Total nonperforming loans		****	235.43			194.82			191.58			247.41			213.60
Nonperforming assets		****	235.43			194.82			191.58			229.27			198.68
Net nonperforming assets		****	238.85			197.14			197.66			250.22			204.86

UNITY BANCORP, INC.

QUARTERLY FINANCIAL DATA

June 30,2021


(In thousands, except percentages and per share amounts)	****	Jun. 30, 2021		****	Mar. 31, 2021		****	Dec. 31, 2020		****	Sept. 30, 2020		****	Jun. 30, 2020		****
SUMMARY OF INCOME:
Total interest income		$	20,680		$	20,576		$	20,288		$	19,764		$	19,278
Total interest expense		****	2,231			2,558			2,949			3,437			3,753
Net interest income		****	18,449			18,018			17,339			16,327			15,525
Provision for loan losses		****	—			500			1,000			2,000			2,500
Net interest income after provision for loan losses		****	18,449			17,518			16,339			14,327			13,025
Total noninterest income		****	2,895			3,726			4,254			3,336			2,811
Total noninterest expense		****	10,460			9,802			10,725			10,037			9,177
Income before provision for income taxes		****	10,884			11,442			9,868			7,626			6,659
Provision for income taxes		****	2,466			2,946			2,523			1,866			1,488
Net income		$	8,418		$	8,496		$	7,345		$	5,760		$	5,171

Net income per common share - Basic		$	0.81		$	0.81		$	0.70		$	0.54		$	0.48
Net income per common share - Diluted		$	0.80		$	0.80		$	0.69		$	0.54		$	0.47

COMMON SHARE DATA:
Market price per share		$	22.05		$	22.00		$	17.55		$	11.58		$	14.30
Dividends paid		$	0.09		$	0.08		$	0.08		$	0.08		$	0.08
Book value per common share		$	18.12		$	17.38		$	16.63		$	16.01		$	15.53

Weighted average common shares outstanding - Basic		****	10,427			10,437			10,532			10,630			10,792
Weighted average common shares outstanding - Diluted		****	10,569			10,565			10,629			10,706			10,888
Issued common shares		****	11,031			10,996			10,961			10,943			10,939
Outstanding common shares		****	10,416			10,422			10,456			10,570			10,728
Treasury shares		****	615			574			505			373			211

PERFORMANCE RATIOS (Annualized):
Return on average assets		****	1.77	%		1.85	%		1.61	%		1.28	%		1.19	%
Return on average equity		****	18.29			19.51			17.07			13.76			12.59
Efficiency ratio		****	49.06			45.74			50.31			50.80			50.27
Noninterest expense to average assets		****	2.19			2.13			2.35			2.23			2.10

BALANCE SHEET DATA:
Total assets		$	1,973,311		$	2,004,818		$	1,958,914		$	1,930,836		$	1,900,774
Total deposits		****	1,594,316			1,628,393			1,557,959			1,493,440			1,483,457
Total loans		****	1,653,988			1,668,448			1,627,817			1,613,291			1,592,507
Total securities		****	37,054			34,551			47,571			50,387			54,888
Total shareholders' equity		****	188,756			181,186			173,911			169,234			166,607
Allowance for loan losses		****	22,801			22,965			23,105			22,237			20,234

TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets		****	4.52	%		4.67	%		4.64	%		4.58	%		4.63	%
Interest-bearing liabilities		****	0.73			0.85			0.98			1.15			1.28
Net interest spread		****	3.79			3.82			3.66			3.43			3.35
Net interest margin		****	4.03			4.09			3.97			3.78			3.73

CREDIT QUALITY:
Nonperforming assets		$	9,685		$	11,788		$	12,060		$	9,699		$	10,184
QTD net chargeoffs (recoveries) (annualized) to QTD average loans		****	0.04	%		0.16	%		0.03	%		—	%		(0.09)	%
Allowance for loan losses to total loans		****	1.38			1.38			1.42			1.38			1.27
Nonperforming assets to total loans		****	0.59			0.71			0.74			0.56			0.59
Nonperforming assets to total assets		****	0.49			0.59			0.62			0.50			0.54

CAPITAL RATIOS AND OTHER:
Total equity to total assets		****	9.57	%		9.04	%		8.88	%		8.76	%		8.77	%
Community bank leverage ratio		****	10.11			10.19			10.09			9.95			10.01

Number of banking offices		****	19			19			19			19			19
Number of ATMs		****	20			20			20			20			20
Number of employees		****	208			209			206			196			191