Clinton, NJ, July 14, 2022 - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income of $9.5 million, or $0.88 per diluted share, for the quarter ended June 30, 2022, a 12.3% increase compared to net income of $8.4 million, or $0.80 per diluted share for the prior year’s second quarter. For the six months ended June 30, 2022, Unity reported net income of $18.6 million, or $1.74 per diluted share, a 9.7% increase compared to $16.9 million or $1.60 per diluted share for the prior year’s period.
Second Quarter Earnings Highlights
- Net interest income, our primary driver of earnings, increased $3.3 million to $21.8 million for the quarter ended June 30, 2022, compared to $18.4 million for the prior year’s quarter, primarily due to loan growth. During the quarter ended June 30, 2022, the Company earned $438 thousand on SBA PPP fees.
- Net interest margin (“NIM”) increased 36 basis points to 4.39% for the quarter ended June 30, 2022, compared to the prior year’s quarter, and increased 28 basis points from 4.11% in the prior sequential quarter.
- The provision for loan losses was $1.2 million for the quarter ended June 30, 2022, compared to the release of $178 thousand in provision for loan losses for the prior sequential quarter, due to the sizable increase in total loans.
- Noninterest income increased $510 thousand compared to the prior sequential quarter, primarily due to a nonrecurring gain of $1.2 million recognized from the termination of a swap derivative instrument, partially offset by the decrease in gains on the sale of SBA loans resulting from the strategic decision to not sell SBA loans during the quarter.
- Noninterest expense was $10.7 million for the quarter ended June 30, 2022, an increase of $301 thousand compared to the prior sequential quarter and $251 thousand compared to the prior year’s quarter, primarily due to increased compensation expenses.
- The effective tax rate was 25.0% compared to 22.7% in the prior year’s quarter.
Balance Sheet Highlights
- Total loans increased $152.2 million, or 9.2%, from year-end 2021 due to increases in commercial loans, residential mortgage loans and residential construction loans. SBA PPP loans decreased $32.2 million due to loans being forgiven and paid off.
- Total deposits decreased $60.9 million from year-end 2021 to $1.7 billion at June 30, 2022. The decrease was primarily due to a decrease in savings deposits and noninterest-bearing demand deposits, as well as the maturity of a $20.0 million Brokered Certificate of Deposit. The Company’s deposit composition at June 30, 2022 consisted of 39.5% in savings deposits, 30.1% in noninterest-bearing demand deposits, 15.7% in time deposits and 14.7% in interest-bearing demand deposits.
- Borrowed funds increased $125.0 million to $165.0 million at June 30, 2022, due to increased customer demands for loans.
- Shareholders’ equity was $220.8 million at June 30, 2022 compared to $205.7 million at year end 2021.
- Book value per common share was $21.01 as of June 30, 2022, compared to $19.80 as of December 31, 2021.
- At June 30, 2022, the Community Bank Leverage Ratio was 11.06%, compared to 10.51% at December 31, 2021.
- Nonperforming assets were $7.7 million at June 30, 2022, compared to $9.6 million at December 31, 2021. The allowance to total loans ratio was 1.27% at June 30, 2022, compared to 1.35% at December 31, 2021.
Other Highlights
- Unity Bancorp, Inc., parent company of Unity Bank, was added as a member of the U.S. small-cap Russell 2000® Index, widely regarded as a bellwether of the U.S. economy due to its focus on American small businesses. Inclusion in the Russell 2000® index became effective on June 27th, as part of the 2022 Russell indexes reconstitution. Membership in the Russell 2000® Index, which remains in place for one year, is based on membership in the broad-market Russell 3000® Index. Unity’s stock also was automatically added to the appropriate growth and value indexes.
- Unity Bank Chief Operating Officer/Executive Vice President John Kauchak and retired Vice Chairman Allen Tucker were selected as recipients of the NJBIZ 2022 ICON Award. The honor recognizes leaders over the age of 60 from New Jersey financial services and other industries for work throughout their careers.
- Banking industry veteran Jim Donovan has joined Unity Bank as Chief Lending Officer (CLO), bringing more than 35 years of financial services industry leadership experience to Unity Bank. Donovan previously served as a Senior Vice President with Bryn Mawr Trust and a Group Vice President with M&T Bank. He started his banking career as a Credit Analyst with Corestates Bank and also served as Vice President and Commercial Relationship Manager with Meridian Bank. Donovan earned a Master of Business Administration from St. Joseph's University and a Bachelor’s in Accounting from Shippensburg University of Pennsylvania.
Unity Bancorp, Inc. is a financial services organization headquartered in Clinton, New Jersey, with approximately $2.1 billion in assets and $1.7 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.
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