Unity Bancorp (UNTY) 8-K Results of Operations and Financial Condition

Exhibit 99.1

Clinton, NJ -- Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income of $11.5 million, or $1.13 per diluted share, for the quarter ended December 31, 2024, compared to net income of $10.9 million, or $1.07 per diluted share for the quarter ended September 30, 2024. This represents a 5.5% increase in net income and a 5.6% increase in net income per diluted share.  For the twelve months ended December 31, 2024, Unity Bancorp reported net income of $41.5 million, or $4.06 per diluted share, compared to net income of $39.7 million, or $3.84 per diluted share, for the twelve months ended December 31, 2023. This represents a 4.4% increase net income and a 5.7% increase in net income per diluted share.

Fourth Quarter Earnings Highlights

● Net interest income, the primary driver of earnings, was $26.5 million for the quarter ended December 31, 2024, an increase of $1.6 million, as compared to $24.9 million for the quarter ended September 30, 2024. Net interest margin (“NIM”) increased 21 basis points to 4.37% for the quarter ended December 31, 2024, compared to the quarter ended September 30, 2024. The increase was primarily due to the cost of interest-bearing liabilities decreasing, complemented by an increase in the yield on interest-earning assets.

● The provision for credit losses on loans was $0.5 million for the quarter ended December 31, 2024, compared to $1.0 million for the quarter ended September 30, 2024.  The provision in the current quarter was driven by loan growth.

● The provision for credit losses on Available For Sale (“AFS”) debt securities was $0.9 million for the quarter ended December 31, 2024, as compared to no provision for the prior quarter. The impairment was entirely attributable to the same corporate debt security for which a partial provision was taken in the second quarter of 2024 and the fourth quarter of 2023. The Company owns $5 million in par of this position and maintains it in non-accrual status. The net carrying value of the position was $2.0 million as of December 31, 2024.

● Noninterest income was $1.9 million for the quarter ended December 31, 2024, compared to $2.8 million for the quarter ended September 30, 2024. The $0.9 million decrease was primarily due to lower net securities gains, service & loan fee income, and gain on sale of mortgage loans. The decrease was partially offset by increased branch fee income and other income. The Bank sold $0.4 million of SBA loans during the quarter ended December 31, 2024, compared to $0.9 million during the quarter ended September 30, 2024.

● Noninterest expense was $12.6 million for the quarter ended December 31, 2024, compared to $12.0 million for the quarter ended September 30, 2024. The $0.6 million increase was primarily due to a one-time valuation adjustment of $0.9 million related to the Company’s Supplemental Executive Retirement Plan (“SERP”). The increase was partially offset by lower advertising, deposit insurance and other expenses.

● The effective tax rate was 20.6% for the quarter ended December 31, 2024, compared to 25.1% for the quarter ended September 30, 2024.  The effective tax rate was 23.8% for the year ended December 31, 2024, compared to 25.1% for the year ended December 31, 2023. The quarter over quarter and year over year fluctuation was primarily due to an income tax strategy the Company deployed during the fourth quarter of 2024. Barring any federal, state, or local income tax legislation changes, prospectively the Company anticipates the effective tax rate to be between the 2024 and 2023 full year levels.

Balance Sheet Highlights

● Total gross loans increased $88.6 million, or 4.1%, from December 31, 2023, primarily due to increases in the commercial loans. This was partially offset by decreases in the residential construction and SBA loans.  

● As of December 31, 2024, the allowance for credit losses as a percentage of gross loans was 1.18%.

● Total deposits increased $176.2 million, or 9.2%, from December 31, 2023.  As of December 31, 2024, 19.3% of total deposits were uninsured or uncollateralized. The Company’s deposit composition as of December 31, 2024, consisted of 21.0% in noninterest bearing demand deposits, 16.8% in interest-bearing demand deposits, 23.4% in savings deposits and 38.8% in time deposits.

● As of December 31, 2024, the loan to deposit ratio was 107.6%, representing a continued reduction from 112.9% as of December 31, 2023.

● As of December 31, 2024, investments comprised 5.5% of total assets. Available for sale debt securities (“AFS”) were $93.9 million or 3.5% of total assets. Held to maturity (“HTM”) debt securities were $41.3 million or 1.6% of total assets. As of December 31, 2024, pre-tax net unrealized losses on AFS and HTM were $3.5 million and $7.5 million, respectively. These pre-tax unrealized losses represent approximately 3.6% of the Company’s Tier 1 capital. Equity securities were $9.9 million or 0.4% of total assets as of December 31, 2024.

● Borrowed funds decreased $135.9 million from December 31, 2023. Borrowed funds were entirely comprised of borrowings from the FHLB.

● Shareholders’ equity was $295.6 million as of December 31, 2024, compared to $261.4 million as of December 31, 2023. The $34.2 million increase was primarily driven by 2024 earnings, partially offset by share repurchases and dividend payments. For the twelve months ended December 31, 2024, Unity Bancorp repurchased 229,102 shares for approximately $6.2 million, or a weighted average price of $27.05 per share. Unity Bancorp did not repurchase any shares during the three months ended December 31, 2024.

● Book value per common share was $29.48 as of December 31, 2024, compared to $25.98 as of December 31, 2023. This increase primarily reflects earnings partially offset by dividend payouts and share repurchases.

● Below is a summary of Unity Bancorp’s regulatory capital ratios:

o The Leverage Ratio increased 108 basis points to 12.22% at December 31, 2024, compared to 11.14% at December 31, 2023.

o The Common Equity Tier 1 Capital Ratio increased 120 basis points to 13.90% at December 31, 2024, compared to 12.70% at December 31, 2023.

o The Tier 1 Capital Ratio increased 119 basis points to 14.37% at December 31, 2024, compared to 13.18% at December 31, 2023.

o The Total Capital Ratio increased 119 basis points, to 15.62% at December 31, 2024, compared to 14.43% at December 31, 2023.

● At December 31, 2024, the Company held $180.4 million of cash and cash equivalents. The Company also maintained approximately $558.0 million of funding available from various funding sources, including the FHLB, FRB Discount Window and other lines of credit. Additionally, the Company has the ability to pledge additional securities to further increase borrowing capacity. Total available funding plus cash on hand represented 182.5% of uninsured or uncollateralized deposits.

● As of December 31, 2024, non-accrual assets were $15.0 million, compared to $19.2 million as of December 31, 2023 and $15.9 million as of September 30, 2024. As of December 31, 2024, non-accrual assets included $2.0 million related to AFS debt securities. The ratio of non-accrual loans to total loans was 0.58% as of December 31, 2024. The ratio of non-accrual assets to total assets was 0.57% as of December 31, 2024.  

Other Highlights

❖ In 2024, Unity Bank and its employees fundraised over $25 thousand for local food pantries across New Jersey and the Lehigh Valley. This contribution is part of Unity’s annual holiday community service project, a tradition the Company has upheld for over a decade.

❖ In the fourth quarter, Unity Bank installed electric vehicle charging stations at its corporate headquarters. These chargers provide fast charging capabilities and represent an investment for Unity’s employees, customers, community members, and a commitment to a more sustainable future.

❖ In November 2024, Unity Bank proudly announced that Amanda Roche, Vice President & Finance Department Supervisor, was recognized as a 2024 New Leader in Banking by the New Jersey Bankers Association. This esteemed award honors outstanding young professionals who are making a significant contribution to the New Jersey banking sector.

Unity Bancorp, Inc. is a financial services organization headquartered in Clinton, New Jersey, with approximately $2.7 billion in assets and $2.1 billion in deposits.  Unity Bank, the Company’s wholly owned subsidiary, provides financial services to retail, corporate and small business customers through its robust branch network located in Bergen, Hunterdon, Middlesex, Morris, Ocean, Somerset, Union, and Warren Counties in New Jersey and Northampton County in Pennsylvania.  For additional information about Unity, visit our website at www.unitybank.com , or call 800-618-BANK.

This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance.  These statements may be identified by use of the words “believe”, “expect”, “intend”, “anticipate”, “estimate”, “project” or similar expressions.  These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond the Company’s control that 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 any health crisis or national disasters on the Bank, its employees and customers, among other factors.

UNITY BANCORP, INC.

SUMMARY FINANCIAL HIGHLIGHTS

										December 31, 2024 vs.
										September 30, 2024		December 31, 2023
(In thousands, except percentages and per share amounts)	December 31, 2024			September 30, 2024			December 31, 2023			%		%
BALANCE SHEET DATA
Total assets	$	2,654,017		$	2,635,319		$	2,578,507		0.7	%	2.9	%
Total deposits		2,100,313			2,046,137			1,924,140		2.6		9.2
Total gross loans		2,260,657			2,217,393			2,172,063		2.0		4.1
Total securities		145,028			143,712			135,689		0.9		6.9
Total shareholders' equity		295,583			284,257			261,430		4.0		13.1
Allowance for credit losses		26,788			27,002			25,854		(0.8)		3.6
FINANCIAL DATA - QUARTER TO DATE
Income before provision for income taxes	$	14,489		$	14,567		$	13,048		(0.5)		11.0
Provision for income taxes		2,984			3,662			3,278		(18.5)		(9.0)
Net income	$	11,505		$	10,905		$	9,770		5.5		17.8
Net income per common share - Basic	$	1.15		$	1.09		$	0.97		5.5		18.6
Net income per common share - Diluted		1.13			1.07			0.96		5.6		17.7
PERFORMANCE RATIOS - QUARTER TO DATE (annualized)
Return on average assets		1.83	%		1.76	%		1.59	%
Return on average equity		15.77			15.55			15.12
Efficiency ratio**		44.44			44.23			45.18
Cost of funds		2.51			2.71			2.53
Net interest margin		4.37			4.16			4.06
Noninterest expense to average assets		2.01			1.94			1.91
FINANCIAL DATA - YEAR TO DATE
Income before provision for income taxes	$	54,390					$	52,995				2.6
Provision for income taxes		12,940						13,288				(2.6)
Net income	$	41,450					$	39,707				4.4
Net income per common share - Basic	$	4.13					$	3.89				6.2
Net income per common share - Diluted		4.06						3.84				5.7
PERFORMANCE RATIOS - YEAR TO DATE
Return on average assets		1.68	%					1.63	%
Return on average equity		14.99						16.05
Efficiency ratio**		45.77						45.55
Cost of funds		2.65						2.24
Net interest margin		4.16						4.06
Noninterest expense to average assets		1.98						1.93
SHARE INFORMATION
Market price per share	$	43.61		$	34.06		$	29.59		28.0		47.4
Dividends paid (QTD)		0.13			0.13			0.12		-		8.3
Book value per common share		29.48			28.48			25.98		3.5		13.5
Average diluted shares outstanding (QTD)		10,204			10,148			10,209		0.6		-
UNITY BANCORP CAPITAL RATIOS
Total equity to total assets		11.14	%		10.79	%		10.14	%	3.2		9.9
Leverage ratio		12.22			11.94			11.14		2.3		9.7
Common Equity Tier 1 Capital Ratio		13.90			13.50			12.70		3.0		9.4
Risk-based Tier 1 Capital Ratio		14.37			13.98			13.18		2.8		9.0
Risk-based Total Capital Ratio		15.62			15.23			14.43		2.6		8.2
CREDIT QUALITY AND RATIOS
Nonperforming assets	$	15,046		$	15,879		$	19,186		(5.2)		(21.6)
QTD annualized net (chargeoffs)/recoveries to QTD average loans		(0.12)	%		(0.02)	%		(0.09)	%
Allowance for credit losses to total loans		1.18			1.22			1.19

Nonperforming loans to total loans	0.58	0.59	0.88
Nonperforming assets to total assets	0.57	0.60	0.74
** The efficiency ratio is a non-GAAP measure, calculated based on the noninterest expense divided by the sum of net interest income plus non interest income, excluding net gains and losses on securities.

UNITY BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

							December 31, 2024 vs.
							September 30, 2024		December 31, 2023
(In thousands, except percentages)	December 31, 2024		September 30, 2024		December 31, 2023		%		%
ASSETS
Cash and due from banks	$	20,206	$	28,892	$	20,668	(30.1)	%	(2.2)	%
Interest-bearing deposits		160,232		165,609		174,108	(3.2)		(8.0)
Cash and cash equivalents		180,438		194,501		194,776	(7.2)		(7.4)
Securities:
Debt securities available for sale, at market value		93,884		97,651		91,765	(3.9)		2.3
Debt securities held to maturity, at book value		41,294		36,225		36,122	14.0		14.3
Equity securities, at market value		9,850		9,836		7,802	0.1		26.2
Total securities		145,028		143,712		135,689	0.9		6.9
Loans:
SBA loans held for sale		12,163		14,621		18,242	(16.8)		(33.3)
SBA loans held for investment		36,859		37,904		38,584	(2.8)		(4.5)
SBA PPP loans		1,450		1,593		2,318	(9.0)		(37.4)
Commercial loans		1,411,629		1,368,763		1,277,460	3.1		10.5
Residential mortgage loans		630,927		623,529		631,506	1.2		(0.1)
Consumer loans		76,711		72,291		72,676	6.1		5.6
Residential construction loans		90,918		98,692		131,277	(7.9)		(30.7)
Total loans		2,260,657		2,217,393		2,172,063	2.0		4.1
Allowance for credit losses		(26,788)		(27,002)		(25,854)	(0.8)		3.6
Net loans		2,233,869		2,190,391		2,146,209	2.0		4.1
Premises and equipment, net		18,778		18,857		19,567	(0.4)		(4.0)
Bank owned life insurance ("BOLI")		25,773		25,619		25,230	0.6		2.2
Deferred tax assets		14,106		14,517		12,552	(2.8)		12.4
Federal Home Loan Bank ("FHLB") stock		12,507		14,584		18,435	(14.2)		(32.2)
Accrued interest receivable		12,691		12,913		13,582	(1.7)		(6.6)
Goodwill		1,516		1,516		1,516	-		-
Prepaid expenses and other assets		9,311		18,709		10,951	(50.2)		(15.0)
Total assets	$	2,654,017	$	2,635,319	$	2,578,507	0.7	%	2.9	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	440,803	$	423,968	$	419,636	4.0	%	5.0	%
Interest-bearing demand		321,780		325,264		313,352	(1.1)		2.7
Savings		491,175		524,607		565,088	(6.4)		(13.1)
Brokered deposits		217,931		214,679		199,667	1.5		9.1
Time deposits		628,624		557,619		426,397	12.7		47.4
Total deposits		2,100,313		2,046,137		1,924,140	2.6		9.2
Borrowed funds		220,504		266,798		356,438	(17.4)		(38.1)
Subordinated debentures		10,310		10,310		10,310	-		-
Accrued interest payable		1,702		1,765		1,924	(3.6)		(11.5)
Accrued expenses and other liabilities		25,605		26,052		24,265	(1.7)		5.5
Total liabilities		2,358,434		2,351,062		2,317,077	0.3		1.8
Shareholders' equity:
Common stock		103,936		102,886		100,426	1.0		3.5
Retained earnings		227,331		217,141		191,108	4.7		19.0
Treasury stock, at cost		(33,577)		(33,566)		(27,367)	-		22.7
Accumulated other comprehensive loss		(2,107)		(2,204)		(2,737)	(4.4)		(23.0)
Total shareholders' equity		295,583		284,257		261,430	4.0		13.1
Total liabilities and shareholders' equity	$	2,654,017	$	2,635,319	$	2,578,507	0.7	%	2.9	%
Shares issued		11,616		11,570		11,424
Shares outstanding		10,026		9,980		10,063
Treasury shares		1,590		1,590		1,361
*NM=Not meaningful

UNITY BANCORP, INC.

QTD CONSOLIDATED STATEMENTS OF INCOME

							December 31, 2024 vs.
	For the three months ended						September 30, 2024					December 31, 2023
(In thousands, except percentages and per share amounts)	December 31, 2024		September 30, 2024		December 31, 2023		$		%			$		%
INTEREST INCOME
Interest-bearing deposits	$	484	$	695	$	466	$	(211)		(30.4)	%	$	18		3.9	%
FHLB stock		164		164		331		-		-			(167)		(50.5)
Securities:
Taxable		1,809		1,904		1,886		(95)		(5.0)			(77)		(4.1)
Tax-exempt		17		17		17		-		-			-		-
Total securities		1,826		1,921		1,903		(95)		(4.9)			(77)		(4.0)
Loans:
SBA loans		1,096		1,153		1,303		(57)		(4.9)			(207)		(15.9)
SBA PPP loans		5		6		8		(1)		(16.7)			(3)		(37.5)
Commercial loans		23,500		22,283		20,646		1,217		5.5			2,854		13.8
Residential mortgage loans		9,578		9,657		9,091		(79)		(0.8)			487		5.4
Consumer loans		1,379		1,436		1,391		(57)		(4.0)			(12)		(0.9)
Residential construction loans		2,232		2,235		2,619		(3)		(0.1)			(387)		(14.8)
Total loans		37,790		36,770		35,058		1,020		2.8			2,732		7.8
Total interest income		40,264		39,550		37,758		714		1.8			2,506		6.6
INTEREST EXPENSE
Interest-bearing demand deposits		1,653		1,802		1,523		(149)		(8.3)			130		8.5
Savings deposits		2,909		3,605		3,037		(696)		(19.3)			(128)		(4.2)
Brokered deposits		1,896		2,039		2,285		(143)		(7.0)			(389)		(17.0)
Time deposits		6,200		6,186		4,011		14		0.2			2,189		54.6
Borrowed funds and subordinated debentures		1,116		1,062		2,871		54		5.1			(1,755)		(61.1)
Total interest expense		13,774		14,694		13,727		(920)		(6.3)			47		0.3
Net interest income		26,490		24,856		24,031		1,634		6.6			2,459		10.2
Provision for credit losses, loans		470		1,029		413		(559)		(54.3)			57		13.8
(Release) Provision for credit losses, off-balance sheet		(65)		51		115		(116)		*NM			(180)		*NM
Provision for credit losses, AFS securities		895		-		1,283		895		*NM			(388)		(30.2)
Net interest income after provision for credit losses		25,190		23,776		22,220		1,414		5.9			2,970		13.4
NONINTEREST INCOME
Branch fee income		463		420		256		43		10.2			207		80.9
Service and loan fee income		488		753		550		(265)		(35.2)			(62)		(11.3)
Gain on sale of SBA loans held for sale, net		47		70		403		(23)		(32.9)			(356)		(88.3)
Gain on sale of mortgage loans, net		353		549		351		(196)		(35.7)			2		0.6
BOLI income		155		135		9		20		14.8			146		*NM
Net securities gains		14		499		617		(485)		(97.2)			(603)		(97.7)
Other income		396		377		382		19		5.0			14		3.7
Total noninterest income		1,916		2,803		2,568		(887)		(31.6)			(652)		(25.4)
NONINTEREST EXPENSE
Compensation and benefits		7,997		7,274		7,250		723		9.9			747		10.3
Processing and communications		859		868		822		(9)		(1.0)			37		4.5
Occupancy		790		781		775		9		1.2			15		1.9
Furniture and equipment		834		803		756		31		3.9			78		10.3
Professional services		517		326		492		191		58.6			25		5.1
Advertising		348		465		328		(117)		(25.2)			20		6.1
Loan related expenses		179		223		398		(44)		(19.7)			(219)		(55.0)
Deposit insurance		195		245		353		(50)		(20.4)			(158)		(44.8)

Director fees		246			232			218			14	6.0			28	12.8
Other expenses		652			795			348			(143)	(18.0)			304	87.4
Total noninterest expense		12,617			12,012			11,740			605	5.0			877	7.5
Income before provision for income taxes		14,489			14,567			13,048			(78)	(0.5)			1,441	11.0
Provision for income taxes		2,984			3,662			3,278			(678)	(18.5)			(294)	(9.0)
Net income	$	11,505		$	10,905		$	9,770		$	600	5.5	%	$	1,735	17.8	%
Effective tax rate		20.6	%		25.1	%		25.1	%
Net income per common share - Basic	$	1.15		$	1.09		$	0.97
Net income per common share - Diluted		1.13			1.07			0.96
Weighted average common shares outstanding - Basic		10,002			9,978			10,066
Weighted average common shares outstanding - Diluted		10,204			10,148			10,209
*NM=Not meaningful

UNITY BANCORP, INC.

YTD CONSOLIDATED STATEMENTS OF INCOME

	For the years ended December 31,						Current YTD vs. Prior YTD
(In thousands, except percentages and per share amounts)	2024			2023			$		%
INTEREST INCOME
Interest-bearing deposits	$	2,033		$	1,724		$	309		17.9	%
FHLB stock		789			1,369			(580)		(42.4)
Securities:
Taxable		7,312			7,271			41		0.6
Tax-exempt		70			72			(2)		(2.8)
Total securities		7,382			7,343			39		0.5
Loans:
SBA loans		4,857			5,489			(632)		(11.5)
SBA PPP loans		30			137			(107)		(78.1)
Commercial loans		87,773			76,966			10,807		14.0
Residential mortgage loans		37,770			34,194			3,576		10.5
Consumer loans		5,607			5,742			(135)		(2.4)
Residential construction loans		9,497			10,530			(1,033)		(9.8)
Total loans		145,534			133,058			12,476		9.4
Total interest income		155,738			143,494			12,244		8.5
INTEREST EXPENSE
Interest-bearing demand deposits		7,176			5,227			1,949		37.3
Savings deposits		13,006			9,175			3,831		41.8
Brokered deposits		8,412			7,916			496		6.3
Time deposits		22,918			11,567			11,351		98.1
Borrowed funds and subordinated debentures		5,615			14,612			(8,997)		(61.6)
Total interest expense		57,127			48,497			8,630		17.8
Net interest income		98,611			94,997			3,614		3.8
Provision for credit losses, loans		2,407			1,832			575		31.4
Provision for credit losses, off-balance sheet		1			53			(52)		(98.1)
Provision for credit losses, AFS securities		1,541			1,283			258		20.1
Net interest income after provision for credit losses		94,662			91,829			2,833		3.1
NONINTEREST INCOME
Branch fee income		1,391			997			394		39.5
Service and loan fee income		2,165			1,928			237		12.3
Gain on sale of SBA loans held for sale, net		660			1,299			(639)		(49.2)
Gain on sale of mortgage loans, net		1,488			1,546			(58)		(3.8)
BOLI income		544			852			(308)		(36.2)
Net securities gains		586			7			579		*NM
Other income		1,635			1,513			122		8.1
Total noninterest income		8,469			8,142			327		4.0
NONINTEREST EXPENSE
Compensation and benefits		29,749			29,051			698		2.4
Processing and communications		3,473			2,994			479		16.0
Occupancy		3,184			3,087			97		3.1
Furniture and equipment		3,140			2,780			360		12.9
Professional services		1,683			1,563			120		7.7
Advertising		1,611			1,436			175		12.2
Loan related expenses		1,138			918			220		24.0
Deposit insurance		1,100			1,715			(615)		(35.9)
Director fees		956			847			109		12.9
Other expenses		2,707			2,585			122		4.7
Total noninterest expense		48,741			46,976			1,765		3.8
Income before provision for income taxes		54,390			52,995			1,395		2.6
Provision for income taxes		12,940			13,288			(348)		(2.6)
Net income	$	41,450		$	39,707		$	1,743		4.4	%
Effective tax rate		23.8	%		25.1	%
Net income per common share - Basic	$	4.13		$	3.89
Net income per common share - Diluted		4.06			3.84
Weighted average common shares outstanding - Basic		10,031			10,207
Weighted average common shares outstanding - Diluted		10,202			10,338
*NM=Not meaningful

UNITY BANCORP, INC.

QUARTER TO DATE NET INTEREST MARGIN

	For the three months ended
(Dollar amounts in thousands, interest amounts and	December 31, 2024							December 31, 2023
interest rates/yields on a fully tax-equivalent basis)	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Interest-bearing deposits	$	40,656	$	484		4.73	%	$	34,725	$	466		5.33	%
FHLB stock		7,303		164		8.96			12,563		331		10.46
Securities:
Taxable		142,096		1,809		5.09			133,827		1,886		5.64
Tax-exempt		1,588		17		4.47			1,583		18		4.13
Total securities (A)		143,684		1,826		5.09			135,410		1,904		5.62
Loans:
SBA loans		51,761		1,096		8.47			58,962		1,303		8.84
SBA PPP loans		1,497		5		1.33			2,376		8		1.36
Commercial loans		1,379,993		23,500		6.66			1,270,550		20,646		6.36
Residential mortgage loans		622,623		9,578		6.15			630,598		9,091		5.77
Consumer loans		73,087		1,379		7.39			71,026		1,391		7.66
Residential construction loans		92,648		2,232		9.43			133,485		2,619		7.68
Total loans (B)		2,221,609		37,790		6.66			2,166,997		35,058		6.33
Total interest-earning assets	$	2,413,252	$	40,264		6.64	%	$	2,349,695	$	37,759		6.38	%
Noninterest-earning assets:
Cash and due from banks		23,089							22,367
Allowance for credit losses		(27,292)							(26,064)
Other assets		92,772							94,253
Total noninterest-earning assets		88,569							90,556
Total assets	$	2,501,821						$	2,440,251
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	325,151	$	1,653		2.02	%	$	321,015	$	1,523		1.88	%
Savings deposits		510,725		2,909		2.27			506,741		3,037		2.38
Brokered deposits		218,755		1,896		3.45			246,190		2,285		3.68
Time deposits		579,519		6,200		4.26			423,439		4,011		3.76
Total interest-bearing deposits		1,634,150		12,658		3.08			1,497,385		10,856		2.88
Borrowed funds and subordinated debentures		115,314		1,116		3.79			236,278		2,871		4.75
Total interest-bearing liabilities	$	1,749,464	$	13,774		3.13	%	$	1,733,663	$	13,727		3.14	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		431,034							421,229
Other liabilities		31,032							29,047
Total noninterest-bearing liabilities		462,066							450,276
Total shareholders' equity		290,291							256,312
Total liabilities and shareholders' equity	$	2,501,821						$	2,440,251
Net interest spread			$	26,490		3.51	%			$	24,032		3.24	%
Tax-equivalent basis adjustment				-							(1)
Net interest income			$	26,490						$	24,031
Net interest margin						4.37	%						4.06	%

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

(B) The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued.

UNITY BANCORP, INC.

QUARTER TO DATE NET INTEREST MARGIN

	For the three months ended
(Dollar amounts in thousands, interest amounts and	December 31, 2024							September 30, 2024
interest rates/yields on a fully tax-equivalent basis)	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Interest-bearing deposits	$	40,656	$	484		4.73	%	$	50,232	$	695		5.50	%
FHLB stock		7,303		164		8.96			7,530		164		8.67
Securities:
Taxable		142,096		1,809		5.09			141,682		1,904		5.38
Tax-exempt		1,588		17		4.47			1,579		18		4.48
Total securities (A)		143,684		1,826		5.09			143,261		1,922		5.37
Loans:
SBA loans		51,761		1,096		8.47			52,346		1,153		8.81
SBA PPP loans		1,497		5		1.33			1,641		6		1.51
Commercial loans		1,379,993		23,500		6.66			1,321,336		22,283		6.60
Residential mortgage loans		622,623		9,578		6.15			628,299		9,657		6.15
Consumer loans		73,087		1,379		7.39			70,740		1,436		7.94
Residential construction loans		92,648		2,232		9.43			99,865		2,235		8.76
Total loans (B)		2,221,609		37,790		6.66			2,174,227		36,770		6.62
Total interest-earning assets	$	2,413,252	$	40,264		6.64	%	$	2,375,250	$	39,551		6.62	%
Noninterest-earning assets:
Cash and due from banks		23,089							23,728
Allowance for credit losses		(27,292)							(26,406)
Other assets		92,772							93,000
Total noninterest-earning assets		88,569							90,322
Total assets	$	2,501,821						$	2,465,572
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	325,151	$	1,653		2.02	%	$	320,256	$	1,802		2.24	%
Savings deposits		510,725		2,909		2.27			530,954		3,605		2.70
Brokered deposits		218,755		1,896		3.45			217,851		2,039		3.72
Time deposits		579,519		6,200		4.26			560,297		6,186		4.39
Total interest-bearing deposits		1,634,150		12,658		3.08			1,629,358		13,632		3.33
Borrowed funds and subordinated debentures		115,314		1,116		3.79			120,067		1,062		3.46
Total interest-bearing liabilities	$	1,749,464	$	13,774		3.13	%	$	1,749,425	$	14,694		3.34	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		431,034							408,376
Other liabilities		31,032							28,761
Total noninterest-bearing liabilities		462,066							437,137
Total shareholders' equity		290,291							279,010
Total liabilities and shareholders' equity	$	2,501,821						$	2,465,572
Net interest spread			$	26,490		3.51	%			$	24,857		3.28	%
Tax-equivalent basis adjustment				-							(1)
Net interest income			$	26,490						$	24,856
Net interest margin						4.37	%						4.16	%

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

(B) The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued.

UNITY BANCORP, INC.

YTD NET INTEREST MARGIN

	For the years ended
(Dollar amounts in thousands, interest amounts and	December 31, 2024							December 31, 2023
interest rates/yields on a fully tax-equivalent basis)	Average Balance		Interest		Rate/Yield			Average Balance		Interest		Rate/Yield
ASSETS
Interest-earning assets:
Interest-bearing deposits	$	38,491	$	2,033		5.28	%	$	34,233	$	1,724		5.03	%
FHLB stock		8,440		789		9.34			15,508		1,369		8.83
Securities:
Taxable		139,800		7,312		5.23			135,806		7,271		5.35
Tax-exempt		1,599		72		4.49			1,698		76		4.38
Total securities (A)		141,399		7,384		5.22			137,504		7,347		5.34
Loans:
SBA loans		54,524		4,857		8.91			61,834		5,489		8.88
SBA PPP loans		1,783		30		1.68			2,919		137		4.69
Commercial loans		1,321,083		87,773		6.54			1,240,783		76,966		6.12
Residential mortgage loans		625,365		37,770		6.04			624,146		34,194		5.48
Consumer loans		71,010		5,607		7.77			75,018		5,742		7.55
Residential construction loans		108,558		9,497		8.61			148,520		10,530		6.99
Total loans (B)		2,182,323		145,534		6.56			2,153,220		133,058		6.09
Total interest-earning assets	$	2,370,653	$	155,740		6.57	%	$	2,340,465	$	143,498		6.13	%
Noninterest-earning assets:
Cash and due from banks		23,396							22,478
Allowance for credit losses		(26,492)							(26,149)
Other assets		92,687							102,204
Total noninterest-earning assets		89,591							98,533
Total assets	$	2,460,244						$	2,438,998
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	326,943	$	7,176		2.19	%	$	305,265	$	5,227		1.71	%
Savings deposits		512,405		13,006		2.54			512,526		9,175		1.79
Brokered deposits		227,070		8,412		3.70			239,601		7,916		3.29
Time deposits		535,297		22,918		4.28			363,367		11,567		3.17
Total interest-bearing deposits		1,601,715		51,512		3.22			1,420,759		33,885		2.38
Borrowed funds and subordinated debentures		141,489		5,615		3.90			304,419		14,612		4.80
Total interest-bearing liabilities	$	1,743,204	$	57,127		3.28	%	$	1,725,178	$	48,497		2.81	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		411,148							439,653
Other liabilities		29,421							26,780
Total noninterest-bearing liabilities		440,569							466,433
Total shareholders' equity		276,471							247,387
Total liabilities and shareholders' equity	$	2,460,244						$	2,438,998
Net interest spread			$	98,613		3.29	%			$	95,001		3.32	%
Tax-equivalent basis adjustment				(2)							(4)
Net interest income			$	98,611						$	94,997
Net interest margin						4.16	%						4.06	%

UNITY BANCORP, INC.

QUARTERLY ALLOWANCE FOR CREDIT LOSSES AND ASSET QUALITY SCHEDULES

Amounts in thousands, except percentages	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023
ALLOWANCE FOR CREDIT LOSSES:
Balance, beginning of period	$	27,002		$	26,107		$	26,080		$	25,854		$	25,918
Provision for credit losses on loans charged to expense		470			1,029			266			641			413
		27,472			27,136			26,346			26,495			26,331
Less: Chargeoffs
SBA loans		300			70			-			-			-
Commercial loans		350			46			138			98			252
Residential mortgage loans		150			-			-			-			-
Consumer loans		93			68			130			70			274
Residential construction loans		-			-			-			277			100
Total chargeoffs		893			184			268			445			626
Add: Recoveries
SBA loans		26			7			6			8			-
Commercial loans		171			9			12			12			23
Residential mortgage loans		-			-			-			-			4
Consumer loans		12			34			11			10			11
Residential construction loans		-			-			-			-			111
Total recoveries		209			50			29			30			149
Net (chargeoffs)/recoveries		(684)			(134)			(239)			(415)			(477)
Balance, end of period	$	26,788		$	27,002		$	26,107		$	26,080		$	25,854
ASSET QUALITY INFORMATION:
Non-accrual loans:
SBA loans	$	3,850		$	3,646		$	3,813		$	3,542		$	3,444
Commercial loans		2,974			3,674			2,321			2,415			1,948
Residential mortgage loans		5,711			5,053			5,336			7,440			11,272
Consumer loans		-			100			105			366			381
Residential construction loans		547			547			547			3,127			2,141
Total non-accrual loans		13,082			13,020			12,122			16,890			19,186
Debt securities available for sale, net of valuation allowance		1,964			2,859			3,071			-			-
Non-accrual assets		15,046			15,879			15,193			16,890			19,186
Loans 90 days past due & still accruing	$	760		$	-		$	373		$	138		$	946
Non-accrual loans to total loans		0.58	%		0.59	%		0.56	%		0.78	%		0.88
Non-accrual assets to total assets		0.57			0.60			0.58			0.66			0.74
Allowance for credit losses to:
Total loans at quarter end		1.18	%		1.22	%		1.20	%		1.20	%		1.19
Total nonperforming loans		204.77			207.39			215.37			154.41			134.75

UNITY BANCORP, INC.

QUARTERLY FINANCIAL DATA

(In thousands, except %'s, employee, office and per share amounts)	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023
SUMMARY OF INCOME:
Total interest income	$	40,264		$	39,550		$	37,987		$	37,937		$	37,758
Total interest expense		13,774			14,694			14,563			14,096			13,727
Net interest income		26,490			24,856			23,424			23,841			24,031
Provision for credit losses		1,300			1,080			926			643			1,811
Net interest income after provision for credit losses		25,190			23,776			22,498			23,198			22,220
Total noninterest income		1,916			2,803			2,032			1,718			2,568
Total noninterest expense		12,617			12,012			11,980			12,132			11,740
Income before provision for income taxes		14,489			14,567			12,550			12,784			13,048
Provision for income taxes		2,984			3,662			3,096			3,198			3,278
Net income	$	11,505		$	10,905		$	9,454		$	9,586		$	9,770
Net income per common share - Basic	$	1.15		$	1.09		$	0.94		$	0.95		$	0.97
Net income per common share - Diluted		1.13			1.07			0.92			0.94			0.96
COMMON SHARE DATA:
Market price per share	$	43.61		$	34.06		$	29.57		$	27.60		$	29.59
Dividends paid		0.13			0.13			0.13			0.13			0.12
Book value per common share		29.48			28.48			27.41			26.56			25.98
Weighted average common shares outstanding - Basic		10,002			9,978			10,016			10,127			10,066
Weighted average common shares outstanding - Diluted		10,204			10,148			10,149			10,276			10,209
Issued common shares		11,616			11,570			11,555			11,555			11,424
Outstanding common shares		10,026			9,980			9,975			10,044			10,063
Treasury shares		1,590			1,590			1,580			1,511			1,361
PERFORMANCE RATIOS (Annualized):
Return on average assets		1.83	%		1.76	%		1.56	%		1.58	%		1.59	%
Return on average equity		15.77			15.55			14.07			14.49			15.12
Efficiency ratio**		44.44			44.23			47.10			47.57			45.18
BALANCE SHEET DATA:
Total assets	$	2,654,017		$	2,635,319		$	2,597,707		$	2,568,088		$	2,578,507
Total securities		145,028			143,712			145,187			138,702			135,689
Total loans		2,260,657			2,217,393			2,170,535			2,174,457			2,172,063
Allowance for credit losses		26,788			27,002			26,107			26,080			25,854
Total deposits		2,100,313			2,046,137			2,010,831			1,961,270			1,924,140
Total shareholders' equity		295,583			284,257			273,395			266,761			261,430
TAX EQUIVALENT YIELDS AND RATES:
Interest-earning assets		6.64	%		6.62	%		6.51	%		6.51	%		6.38	%
Interest-bearing liabilities		3.13			3.34			3.37			3.26			3.14
Net interest spread		3.51			3.28			3.14			3.25			3.24
Net interest margin		4.37			4.16			4.01			4.09			4.06
CREDIT QUALITY:
Nonperforming assets	$	15,046		$	15,879		$	15,193		$	16,890		$	19,186
QTD annualized net (chargeoffs)/recoveries to QTD average loans		(0.12)	%		(0.02)	%		(0.04)	%		(0.08)	%		(0.09)	%
Allowance for credit losses to total loans		1.18			1.22			1.20			1.20			1.19
Nonperforming loans to total loans		0.58			0.59			0.56			0.78			0.88
Nonperforming assets to total assets		0.57			0.60			0.58			0.66			0.74
UNITY BANCORP CAPITAL RATIOS
Total equity to total assets		11.14	%		10.79	%		10.52	%		10.39	%		10.14	%
Leverage ratio		12.22			11.94			11.67			11.39			11.14
Common Equity Tier 1 Capital Ratio		13.90			13.50			13.31			12.90			12.70
Risk-based Tier 1 Capital Ratio		14.37			13.98			13.80			13.38			13.18
Risk-based Total Capital Ratio		15.62			15.23			15.05			14.63			14.43
Number of banking offices		21			21			21			21			21
Employee Full-Time Equivalent		224			222			217			217			232
** The efficiency ratio is a non-GAAP measure, calculated based on the noninterest expense divided by the sum of net interest income plus non interest income, excluding net gains and losses on securities.

Unity Bancorp, Inc

Loan Portfolio Composition

In thousands, except percentages	December 31, 2024		%	December 31, 2023		%
SBA Loans:
SBA loans held for sale	$	12,163	0.5%	$	18,242	0.8%
SBA loans held for investment		36,859	1.6%		38,584	1.8%
SBA PPP		1,450	0.1%		2,318	0.1%
Total SBA Loans		50,472	2.2%		59,144	2.7%
Commercial Loans
Commercial construction		130,193	5.8%		129,159	6.0%
SBA 504		48,479	2.1%		33,669	1.7%
Commercial & Industrial		147,186	6.5%		128,402	5.9%
Commercial Mortgage - Owner Occupied		577,541	25.6%		502,397	23.1%
Commercial Mortgage - Nonowner Occupied		428,600	19.0%		424,490	19.5%
Other		79,630	3.5%		59,343	2.7%
Total Commercial Loans		1,411,629	62.5%		1,277,460	58.9%
Residential Mortgage loans		630,927	27.9%		631,506	29.1%
Consumer Loans
Home equity		73,223	3.2%		67,037	3.0%
Consumer other		3,488	0.2%		5,639	0.3%
Total Consumer Loans		76,711	3.4%		72,676	3.3%
Residential Construction		90,918	4.0%		131,277	6.0%
Total Gross Loans	$	2,260,657	100.0%	$	2,172,063	100.0%