James A. Hughes, President and CEO, commented on the financial results: “We are extremely pleased to announce another record-breaking quarter for Unity Bancorp, where we generated $9.9 million of net income, or $0.93 per diluted share. Steady growth in our loan and deposit franchises continue to drive robust core banking earnings, resulting in an impressive 1.85% ROA and 17.39% ROE. We attribute this success to our valued customer base and our employees’ ability to deliver top-notch financial services to the communities that we serve. While the prospective macro-economic trends are deteriorating given the significant increase in interest rates, we are actively moving to a defensive position to manage our credit exposure.”
Clinton, NJ, October 14, 2022 - Unity Bancorp, Inc. (NASDAQ: UNTY), parent company of Unity Bank, reported net income of $9.9 million, or $0.93 per diluted share, for the quarter ended September 30, 2022, compared to net income of $9.5 million, or $0.90 per diluted share for the prior year’s third quarter. This represents a 5.1% increase in net income and a 3.3% increase in net income per diluted share. For the nine months ended September 30, 2022, Unity reported net income of $28.5 million, or $2.67 per diluted share, compared to $26.4 million or $2.50 per diluted share for the prior year’s period. This represents a 8.1% increase in net income and a 6.8% increase in net income per diluted share.
Third Quarter Earnings Highlights:
· Net interest income, our primary driver of earnings, increased $4.0 million to $23.7 million for the quarter ended September 30, 2022, compared to $19.7 million for the prior year’s quarter. The increase was primarily due to higher interest income on loans, resulting from loan growth.
· Net interest margin (“NIM”) increased 34 basis points to 4.61% for the quarter ended September 30, 2022, compared to the prior year’s quarter, and increased 22 basis points from 4.39% in the prior sequential quarter.
· The provision for loan losses was $1.5 million for the quarter ended September 30, 2022, compared to $1.2 million in provision for loan losses for the prior sequential quarter. The increase was primarily driven by the sizable increase in total loans quarter over quarter.
· Non-interest income was $1.1 million for the quarter ended September 30, 2022. This represented a decrease of $1.6 million compared to the prior sequential quarter. The prior sequential quarter was higher primarily due to a non-recurring gain of $1.2 million recognized from the termination of a swap derivative instrument.
· Non-interest expense was $10.1 million for the quarter ended September 30, 2022, a decrease of $0.6 million compared to the prior sequential quarter and an increase of $0.2 million compared to the prior year’s quarter.
· The effective tax rate was 25.1% compared to 25.4% in the prior year’s quarter. Balance Sheet Highlights
· Total gross loans increased $293.0 million, or 17.8%, from year-end 2021 primarily due to increases in commercial loans, residential mortgage loans and residential construction loans. SBA PPP loans decreased $39.7 million due to loans being forgiven and paid off.
· Total deposits increased $37.7 million from year-end 2021 to $1.8 billion at September 30, 2022. The Company’s deposit composition at September 30, 2022 consisted of 38.0% in savings deposits, 27.7% in noninterest-bearing demand deposits, 19.4% in time deposits and 14.9% in interest-bearing demand deposits.
· Borrowed funds increased $125.0 million the prior quarter to $280.0 million at September 30, 2022, due to the funding requirements associated with increased customer demands for loans.
· Shareholders’ equity was $230.2 million at September 30, 2022 compared to $205.7 million at year-end 2021.
· Book value per common share was $21.86 as of September 30, 2022, compared to $19.80 as of December 31, 2021.
· At September 30, 2022, the Community Bank Leverage Ratio was 10.85%, compared to 10.51% at December 31, 2021.
· Nonperforming assets were $8.0 million at September 30, 2022, compared to $9.7 million at December 31, 2021. The allowance to total loans ratio was 1.23% at September 30, 2022, compared to 1.35% at December 31, 2021. The decrease in the allowance to total loans ratio was primarily driven by the resolution of certain nonperforming loans and partially offset by an increase in the general allowance for loan losses.
Other Highlights:
For the first time, Unity Bancorp was selected for the national Top 25 Banks ranking as published by Bank Director magazine. Unity was ranked number 21 on the listing of the largest 300 publicly traded banks and number 9 nationally for banks in the $1 billion to $5 billion category.
Ryan Peene has joined Unity Bank as Chief Depository Officer, bringing years of financial services industry experience to Unity Bank. Previously, Peene served as a Senior Vice President with Spencer Savings Bank and Senior Vice President with SB One Bank. Peene earned a master’s from the University of Notre Dame and a bachelor’s from Rutgers University.
Unity Bank has applied to the FDIC and DOBI to expand our strategic geographic footprint by converting the existing Loan Production Office in Lakewood, NJ to a full-service branch. In addition, to better service the Bergen County region, Unity Bank closed the Ramsey, NJ branch and applied to the FIDC and DOBI to open a branch in Fort Lee, NJ. Both applications are subject to the review and approval of the regulatory authorities. Unity Bancorp, Inc. is a financial services organization headquartered in Clinton, New Jersey, with approximately $2.3 billion in assets and $1.8 billion in deposits.
Unity Bank, the Company’s wholly owned subsidiary, provides financial services to retail, corporate and small business customers through its 18 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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