Unity Bancorp Inc.

01/25/2022 | Press release | Distributed by Public on 01/25/2022 13:52

Press release issued by the Registrant on - Form 8-K

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.
● 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

$

41

86.7

%

$

67

295.3

%

FHLB stock

41

41

64

​

0.1

(23)

(36.1)

Securities:

Taxable

460

292

364

168

57.7

97

26.6

Tax-exempt

5

8

11

(3)

(35.9)

(6)

(56.9)

Total securities

465

300

375

166

55.3

90

24.0

Loans:

SBA loans

828

864

819

(36)

(4.1)

9

1.1

SBA PPP loans

1,978

1,751

1,361

227

13.0

617

45.3

Commercial loans

11,679

11,280

10,155

399

3.5

1,524

15.0

Residential mortgage loans

4,587

4,606

5,441

(20)

(0.4)

(854)

(15.7)

Consumer loans

871

736

824

135

18.3

46

5.6

Residential construction loans

1,734

1,628

1,226

105

6.5

508

41.4

Total loans

21,676

20,865

19,826

810

3.9

1,850

9.3

Total interest income

22,271

21,253

20,287

1,017

4.8

1,984

9.8

INTEREST EXPENSE

Interest-bearing demand deposits

210

247

319

(37)

(14.8)

(109)

(34.1)

Savings deposits

444

390

463

54

13.7

(19)

(4.1)

Time deposits

541

659

1,726

(118)

(18.0)

(1,185)

(68.7)

Borrowed funds and subordinated debentures

227

234

441

(7)

(3.2)

(214)

(48.6)

Total interest expense

1,422

1,531

2,949

(109)

(7.1)

(1,527)

(51.8)

Net interest income

20,849

19,723

17,339

1,126

5.7

3,510

20.2

Provision for loan losses

(319)

-

1,000

(319)

(10,000.0)

(1,319)

(131.9)

Net interest income after provision for loan losses

21,168

19,723

16,339

1,445

7.3

4,829

29.6

NONINTEREST INCOME

Branch fee income

273

294

285

(21)

(7.2)

(12)

(4.3)

Service and loan fee income

820

804

557

15

1.9

262

47.1

Gain on sale of SBA loans held for sale, net

-

-

543

-

-

(543)

(100.0)

Gain on sale of mortgage loans, net

782

968

2,027

(186)

(19.2)

(1,245)

(61.4)

BOLI income

289

138

139

151

109.6

150

108.3

Net security gains

73

202

280

(130)

(64.0)

(207)

(74.0)

Other income

388

402

424

(14)

(3.5)

(36)

(8.5)

Total noninterest income

2,624

2,809

4,254

(184)

(6.6)

(1,630)

(38.3)

NONINTEREST EXPENSE

Compensation and benefits

6,655

5,720

6,371

936

16.4

284

4.5

Processing and communications

747

747

956

()

(0.0)

(209)

(21.9)

Occupancy

670

654

650

16

2.5

20

3.1

Furniture and equipment

655

627

673

27

4.3

(18)

(2.7)

Other loan expenses

163

452

149

(289)

(63.9)

14

9.6

Professional services

402

315

340

86

27.3

62

18.3

Advertising

304

261

218

43

16.6

86

39.4

BSA expenses

37

214

623

(177)

(82.9)

(586)

(94.1)

Deposit insurance

206

198

230

8

4.1

(24)

(10.5)

Director fees

210

189

202

21

11.4

8

4.2

Loan collection & OREO expenses (recoveries)

69

62

(5)

7

11.4

74

1,486.8

Other expenses

543

423

319

120

28.4

224

70.3

Total noninterest expense

10,660

9,860

10,725

799

8.1

(65)

(0.6)

Income before provision for income taxes

13,132

12,671

9,868

461

3.6

3,264

33.1

Provision for income taxes

3,387

3,212

2,524

174

5.4

863

34.2

Net income

$

9,746

$

9,459

$

7,345

$

287

3.0

%

$

2,401

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

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

$

(64)

(24.9)

%

FHLB stock

197

331

(134)

(40.4)

Securities:

Taxable

1,298

1,695

(397)

(23.4)

Tax-exempt

31

61

(30)

(48.9)

Total securities

1,329

1,756

(427)

(24.3)

Loans:

SBA loans

3,252

3,144

108

3.4

SBA PPP loans

7,206

3,120

4,085

130.9

Commercial loans

44,168

40,002

4,167

10.4

Residential mortgage loans

19,227

22,255

(3,028)

(13.6)

Consumer loans

3,145

3,502

(357)

(10.2)

Residential construction loans

6,063

4,547

1,516

33.3

Total loans

83,060

76,570

6,490

8.5

Total interest income

84,780

78,916

5,865

7.4

INTEREST EXPENSE

Interest-bearing demand deposits

1,073

1,344

(272)

(20.2)

Savings deposits

1,685

2,463

(778)

(31.6)

Time deposits

3,834

8,784

(4,951)

(56.4)

Borrowed funds and subordinated debentures

1,150

1,888

(738)

(39.1)

Total interest expense

7,741

14,480

(6,739)

(46.5)

Net interest income

77,039

64,436

12,604

19.6

Provision for loan losses

181

7,000

(6,819)

(97.4)

Net interest income after provision for loan losses

76,858

57,436

19,422

33.8

NONINTEREST INCOME

Branch fee income

1,130

1,046

84

8.0

Service and loan fee income

2,757

1,742

1,015

58.3

Gain on sale of SBA loans held for sale, net

741

1,642

(900)

(54.9)

Gain on sale of mortgage loans, net

4,567

6,344

(1,777)

(28.0)

BOLI income

689

613

76

12.3

Net security gains

609

93

515

553.8

Other income

1,561

1,466

95

6.5

Total noninterest income

12,054

12,946

(892)

(6.9)

NONINTEREST EXPENSE

Compensation and benefits

24,771

23,124

1,647

7.1

Processing and communications

3,050

3,155

(105)

(3.3)

Occupancy

2,661

2,543

118

4.7

Furniture and equipment

2,590

2,606

(16)

(0.6)

Professional services

1,437

1,144

293

25.6

Advertising

1,236

906

330

36.4

Other loan expenses

922

622

300

48.2

BSA expenses

701

1,800

(1,099)

(61.1)

Deposit insurance

844

674

170

25.2

Director fees

811

774

37

4.8

Loan collection & OREO expenses

135

215

(80)

(37.1)

Other expenses

1,625

1,698

(73)

(4.3)

Total noninterest expense

40,782

39,262

1,520

3.9

Income before provision for income taxes

48,130

31,119

17,010

54.7

Provision for income taxes

12,011

7,475

4,535

60.7

Net income

$

36,119

$

23,644

$

12,475

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

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