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.
  • 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.

Loan Deferrals

The Bank worked with its 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.

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, 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.

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.

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July 14 2021