UNITY BANCORP INC /NJ/ [UNTY] Filings

10-Q 1 unty-20240630x10q.htm 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____.

Commission File Number 1-12431

Unity Bancorp, Inc.

(Exact name of registrant as specified in its charter)


New Jersey	22-3282551
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

64 Old Highway 22, Clinton, NJ	08809
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (800) 618-2265

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


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

Securities registered pursuant to Section 12(g) of the Exchange Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934, as amended, during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ⌧ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:


Large accelerated filer ◻	Accelerated filer ⌧	Nonaccelerated filer ◻	Smaller reporting company ☒
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. ◻

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act: Yes ☐ No ⌧

The number of shares outstanding of each of the registrant’s classes of common equity stock, as of July 31, 2024 common stock, no par value: 9,979,668 shares outstanding.

Table of Contents

Table of Contents

the three months ended September 30, 2023 and 2022
		Page #
PART I	CONSOLIDATED FINANCIAL INFORMATION

ITEM 1	Consolidated Financial Statements (Unaudited)	3

	Consolidated Balance Sheets at June 30, 2024 and December 31, 2023	3

	Consolidated Statements of Income for the three and six months ended June 30, 2024 and 2023	4

	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2024 and 2023	5

	Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended June 30, 2024 and 2023	7

	Consolidated Statements of Cash Flows for the three and six months ended June 30, 2024 and 2023	8

	Notes to the Consolidated Financial Statements	9

ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38

ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	52

ITEM 4	Controls and Procedures	52

PART II	OTHER INFORMATION	53

ITEM 1	Legal Proceedings	53

ITEM 1A	Risk Factors	53

ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	53

ITEM 3	Defaults upon Senior Securities	53

ITEM 4	Mine Safety Disclosures	53

ITEM 5	Other Information	53

ITEM 6	Exhibits	54

	EXHIBIT INDEX	55

	Exhibit 31.1

	Exhibit 31.2

	Exhibit 32.1

	SIGNATURES	56

Table of Contents

PART I CONSOLIDATED FINANCIAL INFORMATION

ITEM 1 Consolidated Financial Statements (Unaudited)

Unity Bancorp, Inc.

Consolidated Balance Sheets

(Unaudited)


(In thousands)	June 30, 2024		December 31, 2023
ASSETS
Cash and due from banks	$	31,180	$	20,668
Interest-bearing deposits		166,238		174,108
Cash and cash equivalents		197,418		194,776
Securities:
Debt securities available for sale ("AFS"), at fair value		99,081		91,765
Debt securities held to maturity ("HTM"), at amortized cost		36,157		36,122
Equity securities, at fair value		9,949		7,802
Total securities		145,187		135,689
Loans:
SBA loans held for sale		15,159		18,242
SBA loans held for investment		38,017		38,584
SBA PPP loans		1,734		2,318
Commercial loans		1,318,208		1,277,460
Residential mortgage loans		624,949		631,506
Consumer loans		69,280		72,676
Residential construction loans		103,188		131,277
Total loans		2,170,535		2,172,063
Allowance for credit losses		(26,107)		(25,854)
Net loans		2,144,428		2,146,209
Premises and equipment, net		19,073		19,567
Bank owned life insurance ("BOLI")		25,483		25,230
Deferred tax assets, net		13,294		12,552
Federal Home Loan Bank ("FHLB") stock		14,957		18,435
Accrued interest receivable		13,257		13,582
Goodwill		1,516		1,516
Prepaid expenses and other assets		23,094		10,951
Total assets	$	2,597,707	$	2,578,507
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	422,001	$	419,636
Interest-bearing demand		301,480		312,208
Savings		505,586		497,491
Brokered deposits		221,990		268,408
Time deposits		559,774		426,397
Total deposits		2,010,831		1,924,140
Borrowed funds		274,798		356,438
Subordinated debentures		10,310		10,310
Accrued interest payable		1,657		1,924
Accrued expenses and other liabilities		26,716		24,265
Total liabilities		2,324,312		2,317,077
Shareholders’ equity:
Common stock		102,226		100,426
Retained earnings		207,534		191,108
Treasury stock		(33,285)		(27,367)
Accumulated other comprehensive loss		(3,080)		(2,737)
Total shareholders’ equity		273,395		261,430
Total liabilities and shareholders’ equity	$	2,597,707	$	2,578,507

Common shares at period end
Shares issued		11,555		11,424
Shares outstanding		9,975		10,063
Treasury shares		1,580		1,361

The accompanying notes to the Consolidated Financial Statements are an integral part of these statements.

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Unity Bancorp, Inc.

Consolidated Statements of Income

(Unaudited)


	For the three months ended June 30,				For the six months ended June 30,
(In thousands, except per share amounts)	2024		2023		2024		2023
INTEREST INCOME
Interest-bearing deposits	$	435	$	441	$	855	$	775
FHLB stock		180		343		460		674
Securities:
Taxable		1,749		1,798		3,598		3,537
Tax-exempt		17		19		35		38
Total securities		1,766		1,817		3,633		3,575
Loans:
SBA loans		1,276		1,403		2,609		2,807
SBA PPP loans		11		27		19		104
Commercial loans		21,160		18,621		41,990		36,022
Residential mortgage loans		9,316		8,532		18,535		16,641
Consumer loans		1,390		1,471		2,792		2,825
Residential construction loans		2,453		2,737		5,031		5,323
Total loans		35,606		32,791		70,976		63,722
Total interest income		37,987		35,392		75,924		68,746
INTEREST EXPENSE
Interest-bearing demand deposits		2,010		1,331		3,720		2,296
Savings deposits		3,349		1,993		6,493		3,548
Brokered deposits		2,181		1,857		4,476		3,419
Time deposits		5,832		2,564		10,531		4,126
Borrowed funds and subordinated debentures		1,191		4,125		3,439		7,924
Total interest expense		14,563		11,870		28,659		21,313
Net interest income		23,424		23,522		47,265		47,433
Provision for credit losses, loans		266		777		907		885
Provision for credit losses, off-balance sheet		13		(84)		15		(84)
Provision for credit losses, AFS debt securities		646		—		646		—
Net interest income after provision for credit losses		22,499		22,829		45,697		46,632
NONINTEREST INCOME
Branch fee income		266		228		509		463
Service and loan fee income		467		491		924		993
Gain on sale of SBA loans held for sale, net		305		586		543		896
Gain on sale of mortgage loans, net		266		463		586		707
BOLI income		189		84		254		164
Net security gains (losses)		20		(164)		74		(487)
Other income		520		427		861		796
Total noninterest income		2,033		2,115		3,751		3,532
NONINTEREST EXPENSE
Compensation and benefits		7,121		7,271		14,478		14,361
Processing and communications		840		663		1,746		1,467
Occupancy		815		779		1,613		1,549
Furniture and equipment		819		690		1,503		1,379
Professional services		405		296		841		723
Advertising		397		443		797		703
Loan related expenses		351		130		735		305
Deposit insurance		321		617		660		965
Director fees		231		203		478		420
Other expenses		680		743		1,261		1,391
Total noninterest expense		11,980		11,835		24,112		23,263
Income before provision for income taxes		12,552		13,109		25,336		26,901
Provision for income taxes		3,098		3,409		6,296		6,914
Net income	$	9,454	$	9,700	$	19,040	$	19,987
Net income per common share – Basic	$	0.94	$	0.96	$	1.89	$	1.94
Net income per common share – Diluted	$	0.93	$	0.95	$	1.86	$	1.91
Weighted average common shares outstanding – Basic		10,016		10,103		10,072		10,319
Weighted average common shares outstanding – Diluted		10,149		10,203		10,212		10,444

The accompanying notes to the Consolidated Financial Statements are an integral part of these statements.

Table of Contents

Unity Bancorp, Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)


	For the three months ended
	June 30, 2024						June 30, 2023

			Income tax						Income tax
		Before tax		expense		Net of tax		Before tax		expense		Net of tax
(In thousands)	amount		(benefit)		amount		amount		(benefit)		amount
Net income	$	12,552	$	3,098	$	9,454	$	13,109	$	3,409	$	9,700
Other comprehensive (loss) income before reclassifications
Debt securities available for sale:
Unrealized holding losses on securities arising during the period		(118)		(29)		(89)		(683)		(166)		(517)
Less: reclassification adjustment for losses on securities included in net income		—		—		—		—		—		—
Total unrealized losses on securities available for sale		(118)		(29)		(89)		(683)		(166)		(517)
Net unrealized (losses) gains from cash flow hedges:
Unrealized holding (losses) gains on cash flow hedges arising during the period		(429)		(122)		(307)		319		90		229
Less: reclassification adjustment for (gains) losses on cash flow hedges included in net income		(238)		(70)		(168)		219		63		156
Total unrealized (losses) gains on cash flow hedges		(191)		(52)		(139)		100		27		73
Total other comprehensive loss		(309)		(81)		(228)		(583)		(139)		(444)
Total comprehensive income	$	12,243	$	3,017	$	9,226	$	12,526	$	3,270	$	9,256

The accompanying notes to the Consolidated Financial Statements are an integral part of these statements.

Table of Contents


	For the six months ended
	June 30, 2024						June 30, 2023
			Income tax							Income tax
	Before tax		expense		Net of tax		Before tax		expense		Net of tax
(In thousands)	amount		(benefit)		amount		amount			(benefit)	amount
Net income	$	25,336	$	6,296	$	19,040	$	26,901	$	6,914	$	19,987
Other comprehensive (loss) income
Debt securities available for sale:
Unrealized holding losses on securities arising during the period		(162)		(39)		(123)		(324)		(74)		(250)
Less: reclassification adjustment for losses on securities included in net income		—		—		—		—		—		—
Total unrealized losses on securities available for sale		(162)		(39)		(123)		(324)		(74)		(250)
Net unrealized (losses) gains from cash flow hedges:
Unrealized holding losses on cash flow hedges arising during the period		(780)		(222)		(558)		(552)		(140)		(412)
Less: reclassification adjustment for (gains) losses on cash flow hedges included in net income		(476)		(138)		(338)		(418)		(119)		(299)
Total unrealized losses on cash flow hedges		(304)		(84)		(220)		(134)		(21)		(113)
Total other comprehensive loss		(466)		(123)		(343)		(458)		(95)		(363)
Total comprehensive income	$	24,870	$	6,173	$	18,697	$	26,443	$	6,819	$	19,624

The accompanying notes to the Consolidated Financial Statements are an integral part of these statements.

Table of Contents

Unity Bancorp, Inc.

Consolidated Statements of Changes in Shareholders’ Equity

For the three and six months ended June 30, 2024 and 2023

(Unaudited)

Accumulated

other

Total

Common Stock

Retained

Treasury

comprehensive

shareholders’

(In thousands)

Shares

Amount

earnings

stock

loss

equity

Balance, December 31, 2023

10,063

100,426

191,108

(27,367)

(2,737)

261,430

Net income

—

9,586

—

9,586

Other comprehensive loss, net of tax

—

(115)

Dividends on common stock ($0.13 per share)

(1,314)

—

(1,261)

Share-based compensation (1)

129

1,197

—

1,197

Treasury stock purchased, at cost

(150)

—

UNITY BANCORP INC /NJ/ [UNTY] Filings
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10-K	[2018-03-02]
10-Q	[2017-11-08]
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10-Q	[2017-05-11]
10-K	[2017-03-03]
10-Q	[2016-11-09]
S-1	[2016-09-16]
10-Q	[2016-08-08]
10-Q	[2016-05-10]
10-K	[2016-03-04]
10-Q	[2015-11-06]
10-Q	[2015-08-12]
10-Q	[2015-05-08]
10-K	[2015-03-16]
10-Q	[2014-11-07]
10-Q	[2014-08-08]
10-Q	[2014-05-09]
S-1	[2014-04-15]
10-K	[2014-03-06]
10-Q	[2013-11-08]
10-Q	[2013-08-09]
10-Q	[2013-05-10]
10-K	[2013-03-21]
10-Q	[2012-11-09]
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10-K	[2012-03-15]