Clinton, NJ, July 18, 2019 - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income of $5.8 million, or $0.53 per diluted share, an 8.2 percent increase, for the quarter ended June 30, 2019, compared to $5.4 million, or $0.49 per diluted share for the prior year’s second quarter. For the six months ended June 30, 2019, Unity reported net income of $11.6 million, or $1.05 per diluted share, a 7.1 percent increase compared to $10.6 million or $0.98 per diluted share for the prior year’s period.

Second Quarter Earnings Highlights:
• Net interest income, our primary driver of earnings, increased $1.1 million to $14.2 million for the quarter ended June 30, 2019, compared to the prior year’s quarter, due to loan growth and a stable net interest margin.
• Net interest margin totaled 3.96% for the quarter ended June 30, 2019, compared to 3.95% for the prior year’s quarter, but decreased 10 basis points from 4.06% in the prior sequential quarter ended March 31, 2019. The net interest margin is expected to remain stable for the remainder of 2019.
• The provision for loan losses was $350 thousand for the quarter ended June 30, 2019, a decline of $200 thousand from the prior year’s quarter due to a lower level of net charge-offs and slower loan growth.
• Noninterest income increased $99 thousand to $2.4 million compared to the prior year’s quarter and increased $391 thousand compared to the prior sequential quarter. Quarterly noninterest income included increased mortgage gains, higher loan payoff charges, and gains from the appreciation of equity securities offset by reduced premiums received on SBA loan sales.
• Noninterest expense increased $633 thousand to $8.8 million compared to the prior year’s quarter and increased $315 thousand compared to the prior sequential quarter. The increases were primarily due to higher compensation and benefits expense, mortgage commissions on a higher origination volume, and supplemental executive retirement (“SERP”) benefit expense. In addition, we continue to invest in software and equipment to remain efficient, secure and competitive.
• The effective tax rate was 22.0% compared to 20.0% in the prior year’s quarter due to recent New Jersey tax legislation changes. The effective tax rate is expected to increase in the future as a result of this legislation.

Balance Sheet Highlights
• Total loans increased $40.2 million, or 3.1%, from year-end 2018 to $1.3 billion at June 30, 2019. Loan originations for the quarter were on plan, however, overall growth was impacted by increased payoffs in both commercial and residential mortgage loans. Commercial, residential mortgage and consumer loan portfolios increased $19.8 million, $13.5 million and $10.6 million, respectively, partially offset by a decline of $3.8 million in SBA loans.
• Total deposits increased $56.7 million, or 4.7%, from year-end 2018 to $1.3 billion at June 30, 2019. Growth resulted primarily from time deposit promotions while interest-bearing demand deposits declined due to seasonal outflows of municipal deposits.
• Borrowed funds decreased $20.0 million to $190.0 million at June 30, 2019.
• Shareholders’ equity was $149.4 million at June 30, 2019, an increase of $10.9 million from year-end 2018, due to retained net income. Shareholders’ equity continues to grow organically at a rate that exceeds balance sheet growth.
• Book value per common share was $13.76 as of June 30, 2019.
• At June 30, 2019, the leverage, common equity Tier I, Tier I and Total Risk Based Capital ratios were 10.36%, 11.99%, 12.81% and 14.06% respectively, all in excess of the ratios required to be deemed “well-capitalized.”
• Credit quality improved. Nonperforming loans totaled $4.4 million and included $3.9 million of wellsecured residential mortgage loans. Nonperforming assets to total assets were 0.33% and the allowance to total loans ratio remained at 1.19% at June 30, 2019. Net charge-offs were $69 thousand for the quarter. 2

Other Highlights:
• American Banker magazine released its list of the top publicly traded community banks. There were 601 banks with total assets of less than $2 billion as of December 31, 2018, of which Unity Bank was ranked 13th nationally with a three-year return on average equity of 14.63 percent.
• Unity Bank announced that its Board of Directors has approved a new Share Repurchase Program. Under this new program, the Company may repurchase up to 525,000 shares of its outstanding common stock, or approximately 5 percent of its common stock.
• In the second quarter, the Board of Directors increased the quarterly cash dividend $0.01 or 14 percent, from $0.07 to $0.08 per share. Unity Bancorp, Inc. is a financial service organization headquartered in Clinton, New Jersey, with approximately $1.6 billion in assets and $1.3 billion in deposits. Unity Bank 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 , 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 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, and results of regulatory exams, among other factors. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

July 18 2019