UNITY BANCORP INC /NJ/
For the period ended Jun 30, 2026. Filed Aug 6, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 6, 2026
UNTY$57.22-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0000920427-26-000037
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0000920427-26-000045
ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 106 previous paragraphs and 129 current paragraphs.
41 unchanged; 42 reworded; 44 added; 18 removed; 5 previous and 2 current paragraphs rearranged.
Tables are not compared: 40 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (44)
Current report
Net interest income increased 11.5 percent compared to the prior year’s quarter, primarily due to the increased volume on loans and decreased cost of time deposits and decreased volume on borrowed funds and subordinated debentures, partially offset by increases in the volume of interest-bearing deposits.
Current report
Net interest margin equaled 4.56 percent this quarter compared to 4.49 percent in the prior year’s quarter. The increase was primarily due to the increased yield on FHLB stock complemented by decrease in cost of interest-bearing liabilities.
Current report
The provision for credit losses on loans and off-balance sheet items was $1.2 million for the three months ended June 30, 2026, compared to $1.9 million in provision for credit losses on loans and off-balance sheet items for the prior year’s quarter. The decrease was primarily due to qualitative adjustments.
Current report
Noninterest income decreased 67.0 percent compared to the prior year’s quarter, primarily because the quarter ended June 30, 2025 included $3.5 million in one-time realized gains from the sale of Patriot National Bancorp, Inc. common stock.
Current report
Noninterest expense increased 7.0 percent compared to the prior year’s quarter, primarily due to increases in compensation and benefits and processing and communications.
Current report
The effective tax rate was 22.4 percent compared to 23.4 percent in the prior year’s quarter.
Current report
Defined as net income divided by weighted average shares outstanding.
Current report
Defined as net income divided by the sum of the weighted average shares and the potential dilutive impact of the exercise of outstanding options.
Current report
Defined as annualized net income divided by average shareholders’ equity.
Current report
Defined as dividends declared per share divided by diluted net income per share.
Current report
Defined as average equity divided by average total assets.
Current report
During the three months ended June 30, 2026, tax-equivalent interest income was $46.6 million, an increase of $4.0 million or 9.5% when compared to the same period in 2025. The increase was mainly driven by increases in balance of loans, partially offset by a decrease in yield on loans.
Current report
Of the $4.0 million increase in interest income on a tax-equivalent basis, $4.5 million is due to an increase in volume of interest earning assets, partially offset by a decrease of $0.5 million due to decreases in yield on interest earning assets
Current report
The average volume of interest-earning assets increased $248.7 million to $2.8 billion for the second quarter of 2026 compared to $2.6 billion in 2025. This was due primarily to a $265.2 million increase in average loans and $5.4 million increase in interest-bearing deposits, partially offset by $21.3 million and $0.6 million in securities and FHLB stock, respectively.
Current report
The yield on total interest-earning assets decreased 2 basis points to 6.68 percent for the three months ended June 30, 2026, when compared to the same period in 2025.The yield on the loan portfolio decreased 2 basis points to 6.73 percent.
Current report
Total interest expense was $14.8 million for the three months ended June 30, 2026, an increase of $0.8 million or 5.4 percent when compared to the same period in 2025. The increase was driven by an increase in volume of interest-bearing deposits, partially offset by a decrease in yield on interest-bearing deposits and volume of borrowed funds.
Current report
The $0.8 increase in interest expense resulted from a $1.4 million increase in volume of average interest-bearing deposits, partially offset by a $0.4 million and $0.2 million decrease in rate paid on interest-bearing deposits and volume of borrowed funds, respectively.
Current report
The average cost of interest-bearing liabilities decreased 13 basis points to 2.92 percent for the three months ended June 30, 2026 compared to 2025. The cost of interest-bearing deposits decreased 12 basis points to 2.88 percent.
Current report
Interest-bearing liabilities averaged $2.0 billion during the three months ended June 30, 2026, an increase of $182.0 million compared to the same period in 2025. The increase in interest-bearing liabilities was primarily due to an increase in savings deposits, brokered deposits, interest-bearing demand deposits and time deposits, partially offset by a decrease in borrowed funds.
Current report
Of the $8.4 million increase in interest income on a tax-equivalent basis, $8.9 million was due to the increased average volume of interest-earning assets, offset by $0.5 million due to decreased rate on interest earning assets.
Current report
The average volume of interest-earning assets increased $261.9 million to $2.8 billion for the second quarter of 2026 compared to $2.5 billion in 2025. This was due primarily to a $267.0 million increase in average loans and $18.2 million increase in interest-bearing deposits. The increase was offset by a $22.9 and $0.4 million decrease in average investments and FHLB stock respectively.
Current report
The yield on total interest-earning assets decreased 2 basis points to 6.67 percent for the six months ended June 30, 2026, when compared to the same period in 2025. The yield on the loan portfolio decreased 1 basis point to 6.72 percent.
Current report
The $1.7 million increase in interest expense resulted from an increase of $2.9 million in the average volume of interest-bearing deposits, partially offset by a $0.9 million decrease in rate on average interest-bearing liabilities and a $0.3 million decrease in volume of borrowed funds.
Current report
The average cost of interest-bearing liabilities decreased 12 basis points to 2.92 percent for the six months ended June 30, 2026 compared to 2025. The average cost of interest-bearing deposits decreased 11 basis points to 2.88.
Current report
Interest-bearing liabilities averaged $2.0 billion during the six months ended June 30, 2026, an increase of $191.2 million, compared to the same period in 2025. The increase in interest-bearing liabilities was primarily due to an increase in savings deposits, brokered deposits, interest-bearing demand deposits and time deposits, partially offset by a decrease in borrowed funds.
Current report
(A)
Current report
(B)
Current report
The Company participates in federal and state income tax credit programs. Tax credits are accounted for within the scope of ASC 740 and are reflected as a reduction of income tax expense when the related tax benefit is realized or realizable. Tax credits are recognized in the period when the Company concludes that it has met the more-likely-than-not recognition threshold under ASC 740.
Current report
Total assets increased $227.7 million or 7.7 percent, to $3.2 billion at June 30, 2026, when compared to year end 2025. This increase was primarily due to increases of $137.8 million in gross loans, $58.2 million in prepaid expenses and other assets, $33.8 million in cash and cash equivalents and $3.1 million in FHLB stock, partially offset by a decrease of $4.7 million in securities. For the quarter ended June 30, 2026, the increase in prepaid expenses and other assets was primarily driven by $65 million of originated Brokered CDs pending settlements compared to $10 million of originated Brokered CDs pending settlements at year end 2025.
Current report
$9.5 million in principal payments, calls and maturities; and
Current report
$0.2 million in unrealized losses recognized through earnings;
Current report
Partially offset by $6.0 million in purchases
Current report
At June 30, 2026, the portfolio had a net unrealized loss of $1.6 million compared to a net unrealized loss of $1.6 million at December 31, 2025. These net unrealized losses are reflected net of tax in shareholder’s equity as accumulated other comprehensive loss.
Current report
$1.0 million in purchases; and
Current report
$0.1 million in net accretion
Current report
$2.2 million in sales;
Current report
$1.3 million in unrealized losses;
Current report
Partially offset by $0.8 million in realized gains; and
Current report
$0.5 million in purchases
Current report
The unrealized losses are largely due to the Company's investment in Patriot National Bancorp, Inc., of which the Company held approximately 2.2 million shares as of June 30, 2026.
Showing the first 40 of 44 passages. Open the source sections for the rest.
Removed paragraphs (18)
Previous report
Overview
Previous report
Earnings Summary
Previous report
Net Interest Income
Previous report
Provision for Credit Losses
Previous report
Income Tax Expense
Previous report
Financial Condition at March 31, 2026
Previous report
Total assets increased $60.7 million or 2.0 percent, to $3.0 billion at March 31, 2026, when compared to year end 2025. This increase was primarily due to increases of $56.9 million in gross loans, $12.6 million in cash and cash equivalents, and $0.4 million in accrued interest receivable, partially offset by a decrease of $8.7 million in securities.
Previous report
Securities Portfolio
Previous report
Loan Portfolio
Previous report
Asset Quality
Previous report
Deposits
Previous report
Borrowed Funds and Subordinated Debentures
Previous report
Market Risk
Previous report
Liquidity
Previous report
Regulatory Capital
Previous report
Shareholders’ Equity
Previous report
Repurchase Plan
Previous report
Impact of Inflation and Changing Prices
Reworded paragraphs (42)
Previous wording
Net income totaled $14.3 million, or $1.40 per diluted share for the three months ended March 31, 2026, compared to $11.6 million, or $1.13 per diluted share for the same period in 2025. Return on average assets and return on average common equity for the quarter were 2.04 percent and 16.38 percent, respectively, compared to 1.83 percent and 15.56 percent for the same period in 2025.
Current wording
Net income totaled $14.5 million, or $1.42 per diluted share for the three months ended June 30, 2026, compared to $16.5 million, or $1.61 per diluted share for the same period in 2025. Return on average assets and return on average common equity for the quarter were 2.01 percent and 15.86 percent, respectively, compared to 2.51 percent and 21.15 percent for the same period in 2025.
Previous wording
During the three months ended March 31, 2026, tax-equivalent net interest income amounted to $30.7 million, an increase of $3.5 million or 12.8 percent when compared to the same period in 2025. The net interest margin increased 7 basis points to 4.53 percent for the three months ended March 31, 2026, compared to 4.46 percent for the same period in 2025.
Current wording
During the three months ended June 30, 2026, tax-equivalent net interest income amounted to $31.8 million, an increase of $3.3 million or 11.5 percent when compared to the same period in 2025. The net interest margin increased 7 basis points to 4.56 percent for the three months ended June 30, 2026, compared to 4.49 percent for the same period in 2025.
Previous wording
During the three months ended March 31, 2026, tax-equivalent interest income was $45.2 million, an increase of $4.4 million or 10.7 percent when compared to the same period in 2025. This increase was mainly driven by increases in the average balance of loans, yield of loans and volume of interest-bearing deposits.
Current wording
During the six months ended June 30, 2026, tax-equivalent interest income was $91.8 million, an increase of $8.4 million or 10.1 percent when compared to the same period in 2025. This increase was mainly driven by increases in the average balance of loans offset by a decrease in average balance of securities and yield on loans and securities.
Previous wording
Total interest expense was $14.4 million for the three months ended March 31, 2026, an increase of $0.9 million or 6.6 percent compared to the same period in 2025. This increase was driven by the increased average volume of interest-bearing deposits, partially offset by decreased cost of time deposits.
Current wording
Total interest expense was $29.3 million for the six months ended June 30, 2026, an increase of $1.7 million or 6.0 percent compared to the same period in 2025. This increase was driven by the increased average volume of interest-bearing deposits, partially offset by decreased cost of time deposits and volume of borrowed funds.
Previous wording
The provision for credit losses for loans was $1.0 million during the three months ended March 31, 2026, compared to $1.4 million for the same period in 2025.
Current wording
The provision for credit losses for loans was $1.0 million and $2.1 million during the three and six months ended June 30, 2026, compared to $1.7 million and $3.1 million for the same periods in 2025.
Previous wording
The provision for credit losses for off-balance sheet exposures was $5 thousand for the three months ended March 31, 2026, compared to a release of $41 thousand for the same period in 2025.
Current wording
The provision for credit losses for off-balance sheet exposures was $0.1 million for the three and six months ended June 30, 2026 and 2025.
Previous wording
There was no provision for credit losses on securities for the three months ended March 31, 2026 and 2025.
Current wording
There was no provision for credit losses on securities for the three and six months ended June 30, 2026, compared to a release of $2.0 million for the same periods in 2025.
Previous wording
Each period’s credit loss provision is the result of Management’s analysis of the loan portfolio and reflects changes in the size and composition of the portfolio, the level of net charge-offs, delinquencies, current and expected economic conditions and other internal and external factors impacting the risk within the loan portfolio. Additional information may be found under the captions “Financial Condition - Asset Quality” and “Financial Condition - Allowance for Credit
Current wording
Each period’s credit loss provision is the result of Management’s analysis of the loan portfolio and reflects changes in the size and composition of the portfolio, the level of net charge-offs, delinquencies, current and expected economic conditions and other internal and external factors impacting the risk within the loan portfolio. Additional information may be found under the captions “Financial Condition - Asset Quality” and “Financial Condition - Allowance for Credit Losses and Reserve for Unfunded Loan Commitments.” The current provision is considered appropriate under Management’s assessment of the adequacy of the allowance for credit losses.
Previous wording
For the quarter ended March 31, 2026, the Company reported income tax expense of $4.2 million for an effective tax rate of 22.7 percent, compared to income tax expense of $3.8 million and an effective tax rate of 24.8 percent for the prior year’s quarter. During the first quarter of 2026, Unity purchased $5.1 million of tax credits, resulting in $0.4 million of tax savings.
Current wording
For the quarter ended June 30, 2026, the Company reported income tax expense of $4.2 million for an effective tax rate of 22.4 percent, compared to income tax expense of $5.0 million and an effective tax rate of 23.4 percent for the prior year’s quarter. For the six months ended June 30, 2026, the Company reported income tax expense of $8.4 million for an effective tax rate of 22.6 percent, compared to an income tax expense of $8.9 million and an effective tax rate of 24.0 percent for the six months ended June 30, 2025. During the first quarter of 2026, Unity purchased $5.1 million in federal tax credits, resulting in $0.4 million of tax savings. Furthermore, during the second quarter of 2026, Unity purchased an additional $2.6 million of state tax credits, resulting in $0.2 million of tax savings.
Previous wording
Total shareholders’ equity increased $12.5 million, when compared to year end 2025, primarily due to earnings and an increase in common stock, partially offset by dividends paid on common stock and the repurchase of shares during the three months ended March 31, 2026.
Current wording
Total shareholders’ equity increased $26.2 million, when compared to year end 2025, primarily due to earnings, partially offset by dividends paid on common stock and the repurchase of shares during the six months ended June 30, 2026.
Previous wording
AFS debt securities totaled $63.3 million at March 31, 2026, a decrease of $7.6 million or 10.7 percent, compared to $70.9 million at December 31, 2025. This net decrease was the result of:
Current wording
AFS debt securities totaled $67.2 million at June 30, 2026, a decrease of $3.7 million or 5.1 percent, compared to $70.9 million at December 31, 2025. This net decrease was the result of:
Previous wording
The weighted average life of AFS debt securities, adjusted for prepayments, amounted to 4.9 years and 5.1 years at March 31, 2026 and December 31, 2025, respectively. The effective duration of AFS debt securities amounted to 2.0 and 1.9 years at March 31, 2026 and December 31, 2025, respectively.
Current wording
The weighted average life of AFS debt securities, adjusted for prepayments, amounted to 4.9 years and 5.1 years at June 30, 2026 and December 31, 2025, respectively. The effective duration of AFS debt securities amounted to 1.8 and 1.9 years at June 30, 2026 and December 31, 2025, respectively.
Previous wording
HTM debt securities were $36.6 million at March 31, 2026 and December 31, 2025.
Current wording
HTM debt securities were $37.7 million at June 30, 2026, an increase of $1.1 or 3.1 percent, compared to $36.6 million at December 31, 2025. This net increase was the result of:
Previous wording
The weighted average life of HTM securities, adjusted for prepayments, amounted to 12.9 years and 14.8 years at March 31, 2026 and December 31, 2025, respectively. As of March 31, 2026 and December 31, 2025, the fair value of HTM securities was $30.4 million. The effective duration of HTM securities amounted to 10.3 years and 10.7 years at March 31, 2026 and December 31, 2025, respectively.
Current wording
The weighted average life of HTM securities, adjusted for prepayments, amounted to 14.1 years and 14.8 years at June 30, 2026 and December 31, 2025, respectively. As of June 30, 2026 and December 31, 2025, the fair value of HTM securities was $31.4 million and $30.4 million respectively. The effective duration of HTM securities amounted to 9.6 years and 10.7 years at June 30, 2026 and December 31, 2025, respectively.
Previous wording
Equity securities totaled $15.3 million at March 31, 2026, a decrease of $1.3 million or 7.5 percent, compared to $16.6 million at December 31, 2025. This net decrease was the result of:
Current wording
Equity securities totaled $14.4 million at June 30, 2026, a decrease of $2.2 million or 13.3 percent, compared to $16.6 million at December 31, 2025. This net decrease was the result of:
Previous wording
Securities with a carrying value of $69.0 million and $69.2 million at March 31, 2026 and December 31, 2025, respectively, were held at the FHLB or FRB and were pledged for borrowing purposes; however, there were no securities borrowed against at March 31, 2026 and December 31, 2025.
Current wording
Securities with a carrying value of $67.0 million and $69.2 million at June 30, 2026 and December 31, 2025, respectively, were held at the FHLB or FRB and were pledged for borrowing purposes; however, there were no securities borrowed against at June 30, 2026 and December 31, 2025.
Previous wording
Approximately 61 percent of the total debt security investment portfolio had a fixed rate of interest at March 31, 2026 compared to 65 percent at March 31, 2025.
Current wording
Approximately 59 percent of the total debt security investment portfolio had a fixed rate of interest at June 30, 2026 compared to 56 percent at June 30, 2025.
Previous wording
Total loans increased $56.9 million or 2.2 percent to $2.6 billion at March 31, 2026, compared to year end 2025. Commercial, commercial construction, residential construction, loans held for sale and consumer loans increased by $41.1 million, $12.0 million, $10.6 million, $3.1 million and $0.4 million, respectively. This was offset by decreases of $8.5 million and $1.8 million in residential mortgage and SBA loans, respectively.
Current wording
Total loans increased $137.8 million or 5.4 percent to $2.7 billion at June 30, 2026, compared to year end 2025. Commercial, residential construction, consumer loans and SBA loans increased by $131.2 million, $22.8 million, $9.5 million, and $1.6 million respectively. This was offset by decreases of $18.6 million and $8.7 million in commercial construction and residential mortgage, respectively.
Previous wording
Average loans increased $268.8 million or 11.7 percent to $2.6 billion for the three months ended March 31, 2026 from $2.3 billionfor the same period in 2025. The increase in average loans was due to increases in average commercial, residential mortgages, commercial construction and consumer loans, partially offset by decreases in average residential construction and SBA loans. The yield on the overall loan portfolio increased 2 basis points to 6.72 percent for the three months ended March 31, 2026 when compared to the same period in the prior year.
Current wording
Average loans increased $267.0 million or 11.5 percent to $2.6 billion for the six months ended June 30, 2026 from $2.3 billion for the same period in 2025. The increase in average loans was due to increases in average commercial, commercial construction, residential mortgage, consumer and residential construction loans, partially offset by decreases in average SBA loans and loans held for sale. The yield on the overall loan portfolio decreased 1 basis point to 6.72 percent for the six months ended June 30, 2026 when compared to the same period in the prior year.
Previous wording
SBA loans held for sale, carried at the lower of cost or market, amounted to $8.2 million at March 31, 2026, an increase of $0.2 million from $8.0 million at December 31, 2025. SBA 7(a) loans held for investment amounted to $32.5 million at March 31, 2026, a decrease of $1.8 million from $34.3 million at December 31, 2025. The yield on SBA loans, which are generally floating and adjust quarterly to the Prime rate, was 8.12 percent for the three months ended March 31, 2026 compared to 7.53 percent for the same period in the prior year. The Company sold $4.0 million of SBA loans during the three months ended March 31, 2026.
Current wording
SBA loans held for sale, carried at the lower of cost or market, amounted to $2.9 million at June 30, 2026, a decrease of $5.1 million from $8.0 million at December 31, 2025. SBA 7(a) loans held for investment amounted to $35.8 million at June 30, 2026, an increase of $1.5 million from $34.3 million at December 31, 2025. The yield on SBA loans, which are generally floating and adjust quarterly to the Prime rate, was 8.10 percent for the six months ended June 30, 2026 compared to 7.25 percent for the same period in the prior year. The Company sold $4.3 million of SBA loans during the six months ended June 30, 2026.
Previous wording
The guarantee rates on SBA 7(a) loans range from 50 percent to 90 percent, with the majority of the portfolio having a guarantee rate of 75 percent at origination. The guarantee rates are determined by the SBA and can vary from year to year depending on government funding and the goals of the SBA program. Approximately $49.4 million and $49.2 million in SBA loans were sold but serviced by the Bank at March 31, 2026 and December 31, 2025, respectively, and are not included on the Company’s Balance Sheet. There is no relationship or correlation between the guarantee percentages and the level of charge-offs and recoveries on the Company’s SBA 7(a) loans. Charge-offs taken on SBA 7(a) loans effect the unguaranteed portion of the loan. SBA loans are underwritten to the same credit standards irrespective of the guarantee percentage.
Current wording
The guarantee rates on SBA 7(a) loans range from 50 percent to 90 percent, with the majority of the portfolio having a guarantee rate of 75 percent at origination. The guarantee rates are determined by the SBA and can vary from year to year depending on government funding and the goals of the SBA program. Approximately $48.3 million and $49.2 million in SBA loans were sold but serviced by the Bank at June 30, 2026 and December 31, 2025, respectively, and are not included on the Company’s Balance Sheet. There is no relationship or correlation between the guarantee percentages and the level of charge-offs and recoveries on the Company’s SBA 7(a) loans. Charge-offs taken on SBA 7(a) loans effect the unguaranteed portion of the loan. SBA loans are underwritten to the same credit standards irrespective of the guarantee percentage.
Previous wording
Commercial loans are generally made in the Company’s marketplace for the purpose of providing working capital, financing the purchase of equipment, inventory or commercial real estate and for other business purposes. These loans amounted to $1.6 billion at March 31, 2026, an increase of $41.1 million from year end 2025. The yield on commercial loans was 6.55 percent for the three months ended March 31, 2026, compared to 6.53 percent for the same period in 2025. The SBA 504 program, which consists of real estate backed commercial mortgages where the Company has the first mortgage and the SBA has the second mortgage on the property, is included in the Commercial loan portfolio. The Commercial Real Estate sub-category includes both owner occupied and non-owner occupied commercial mortgages.
Current wording
Commercial loans are generally made in the Company’s marketplace for the purpose of providing working capital, financing the purchase of equipment, inventory or commercial real estate and for other business purposes. These loans amounted to $1.6 billion at June 30, 2026, an increase of $131.2 million from year end 2025. The yield on commercial loans was 6.62 percent for the six months ended June 30, 2026, compared to 6.61 percent for the same period in 2025. The SBA 504 program, which consists of real estate backed commercial mortgages where the Company has the first mortgage and the SBA has the second mortgage on the property, is included in the Commercial loan portfolio. The Commercial Real Estate sub-category includes both owner occupied and non-owner occupied commercial mortgages.
Previous wording
Commercial construction loans amounted to $159.2 million at March 31, 2026, an increase of $12.0 million from the $147.2 million at 2025. The yield on commercial construction loans was 7.96 percent for the three months ended March 31, 2026, compared to 8.36 percent for the same period in 2025.
Current wording
Commercial construction loans amounted to $128.6 million at June 30, 2026, a decrease of $18.6 million from the $147.2 million at 2025. The yield on commercial construction loans was 7.92 percent for the six months ended June 30, 2026, compared to 8.32 percent for the same period in 2025.
Previous wording
Residential mortgage loans consist of loans secured by 1 to 4 family residential properties. These loans amounted to $668.7 million at March 31, 2026, a decrease of $8.5 million from year end 2025. Sales of conforming mortgage loans totaled $19.3 million for the three months ended March 31, 2026, compared to sales of $7.5 million in the prior year period. The yield on residential mortgages was 6.44 percent for the three months ended March 31, 2026, compared to 6.22 percent for the same period in 2025. Residential mortgage loans maintained in portfolio are generally to individuals that do not qualify for conventional financing. In extending credit to this category of borrowers, the Bank considers other mitigating factors such as credit history, equity and liquid reserves of the borrower. As a result, the residential mortgage loan portfolio of the Bank includes adjustable rate mortgages with rates that exceed the rates on conventional fixed-rate mortgage loan products but which are not considered high priced mortgages.
Current wording
Residential mortgage loans consist of loans secured by 1 to 4 family residential properties. These loans amounted to $668.5 million at June 30, 2026, a decrease of $8.7 million from year end 2025. Sales of conforming mortgage loans totaled $32.4 million for the six months ended June 30, 2026, compared to sales of $48.7 million in the prior year period. The yield on residential mortgages was 6.33 percent for the six months ended June 30, 2026, compared to 6.27 percent for the same period in 2025. Residential mortgage loans maintained in portfolio are generally to individuals that do not qualify for conventional financing. In extending credit to this category of borrowers, the Bank considers other mitigating factors such as credit history, equity and liquid reserves of the borrower. As a result, the residential mortgage loan portfolio of the Bank includes adjustable rate mortgages with rates that exceed the rates on conventional fixed-rate mortgage loan products but which are not considered high priced mortgages.
Previous wording
Consumer loans consist of home equity loans and loans for the purpose of financing the purchase of consumer goods, home improvements and other personal needs, and are generally secured by 1 to 4 family residences. These loans amounted to $85.6 million at March 31, 2026, an increase of $0.4 million from year end 2025. The yield on consumer loans was 6.78 percent for the three months ended March 31, 2026, compared to 7.16 percent for the same period in 2025.
Current wording
Consumer loans consist of home equity loans and loans for the purpose of financing the purchase of consumer goods, home improvements and other personal needs, and are generally secured by 1 to 4 family residences. These loans amounted to $94.8 million at June 30, 2026, an increase of $9.5 million from year end 2025. The yield on consumer loans was 6.66 percent for the six months ended June 30, 2026, compared to 7.17 percent for the same period in 2025.
Previous wording
Residential construction loans consist of short-term loans for the purpose of funding the costs of building a home. These loans amounted to $83.9 million at March 31, 2026, an increase of $10.6 million from year end 2025. The yield on residential construction loans was 9.10 percent for the three months ended March 31, 2026, compared to 9.46 percent for the same period in 2025.
Current wording
Residential construction loans consist of short-term loans for the purpose of funding the costs of building a home. These loans amounted to $96.1 million at June 30, 2026, an increase of $22.8 million from year end 2025. The yield on residential construction loans was 9.02 percent for the six months ended June 30, 2026, compared to 9.52 percent for the same period in 2025.
Previous wording
Nonaccrual loans were $30.6 million at March 31, 2026, a $0.8 million increase from $29.8 million at December 31, 2025 and a $13.8 million increase from $16.8 million at March 31, 2025, respectively. Since year end 2025, nonaccrual loans in the residential mortgage and consumer segments increased, offset by a decrease in nonaccrual loans in the SBA, commercial and residential construction segments. In addition, there was $0.1 million in loans past due 90 days or more and still accruing interest at March 31, 2026, compared to none at December 31, 2025 and 1.1 million at March 31, 2025.
Current wording
Nonaccrual loans were $33.0 million at June 30, 2026, a $3.2 million increase from $29.8 million at December 31, 2025 and a $17.2 million increase from $15.8 million at June 30, 2025, respectively. Since year end 2025, nonaccrual loans in the residential mortgage, consumer and residential construction segments increased, offset by a decrease in nonaccrual loans in the commercial and SBA segments. In addition, there were no loans past due 90 days or more and still accruing interest at June 30, 2026 and December 31, 2025, compared to $2.9 million at June 30, 2025.
Previous wording
The Company also monitors potential problem loans. Potential problem loans are those loans where information about possible credit problems of borrowers causes Management to have doubts as to the ability of such borrowers to comply with loan repayment terms. These loans are categorized by their non-passing risk rating and performing loan status. Potential problem loans totaled $7.8 million at March 31, 2026, a decrease of $3.7 million from $11.5 million at December 31, 2025.
Current wording
The Company also monitors potential problem loans. Potential problem loans are those loans where information about possible credit problems of borrowers causes Management to have doubts as to the ability of such borrowers to comply with loan repayment terms. These loans are categorized by their non-passing risk rating and performing loan status. Potential problem loans totaled $22.6 million at June 30, 2026, an increase of $11.1 million from $11.5 million at December 31, 2025.
Previous wording
The allowance for credit losses on loans totaled $33.4 million at March 31, 2026, compared to $32.3 million at December 31, 2025 and $27.7 million at March 31, 2025, with a resulting allowance to total loan ratio of 1.28 percent at March 31,2026, compared to 1.27 percent at December 31,2025 and 1.18 percent at March 31, 2025. Net charge-offs amounted to $31 thousand for the three months ended March 31, 2026, compared to net charge-offs of $0.5 million for the same period in 2025. As of March 31, 2026, there was no allowance for credit losses on individually evaluated loans based upon the valuation of the collateral securing each loan.
Current wording
The allowance for credit losses on loans totaled $34.6 million at June 30, 2026, compared to $32.3 million at December 31, 2025 and $29.0 million at June 30, 2025, with a resulting allowance to total loan ratio of 1.29 percent at June 30, 2026, compared to 1.27 percent at December 31, 2025 and 1.22 percent at June 30, 2025. Net recoveries amounted to $0.1 million for the six months ended June 30, 2026, compared to net charge-offs of $0.9 million for the same period in 2025. As of June 30, 2026, there was no allowance for credit losses on individually evaluated loans based upon the valuation of the collateral securing each loan.
Previous wording
The Company maintains a reserve for unfunded loan commitments at a level that Management believes is adequate to absorb estimated expected losses. Adjustments to the reserve are made through provision for credit losses and applied to the reserve which is classified in Other liabilities. At March 31, 2026 and December 31, 2025, the commitment reserve totaled $0.7 million.
Current wording
The Company maintains a reserve for unfunded loan commitments at a level that Management believes is adequate to absorb estimated expected losses. Adjustments to the reserve are made through provision for credit losses and applied to the reserve which is classified in Other liabilities. At June 30, 2026, the commitment reserve totaled $0.8 million, compared to $0.7 million at December 31, 2025.
Previous wording
Deposits, which include noninterest-bearing demand deposits, interest-bearing demand deposits, savings deposits and time deposits, are the primary source of the Company’s funds. The Company offers a variety of products designed to attract and retain customers, with primary focus on building and expanding relationships. The Company continues to
Current wording
Deposits, which include noninterest-bearing demand deposits, interest-bearing demand deposits, savings deposits and time deposits, are the primary source of the Company’s funds. The Company offers a variety of products designed to attract and retain customers, with primary focus on building and expanding relationships. The Company continues to focus on establishing a comprehensive relationship with business borrowers, seeking deposits as well as lending relationships.
Previous wording
Total deposits increased $55.1 million to $2.4 billion at March 31, 2026 from year end 2025. This increase was due to increases of $47.7 million in savings deposits, $16.4 million in time deposits, $9.0 million in interest-bearing demand deposits, partially offset by decreases of $3.6 million in brokered deposits and $14.4 million in noninterest-bearing demand deposits. The change in the composition of the portfolio from December 31, 2025 reflects a 8.9 percent increase in savings deposits, a 2.4 percent increase in time deposits, a 2.4 percent increase in interest-bearing demand deposits, partially offset by a 1.3 percent decrease in brokered deposits and a 3.1 percent decrease in noninterest-bearing deposits.
Current wording
Total deposits increased $138.5 million to $2.5 billion at June 30, 2026 from year end 2025. This increase was due to increases of $46.7 million in time deposits, $31.6 million in savings deposits, $27.3 million in brokered deposits, $21.5 million in non-interest bearing demand deposits and $11.3 million in interest-bearing demand deposits. The change in the composition of the portfolio from December 31, 2025 reflects a 10.0 percent increase in brokered deposits, a 6.9 percent increase in time deposits, a 5.9 percent increase in savings deposits, a 4.6 percent increase in non-interest bearing demand deposits and a 3.1 percent increase in interest-bearing demand deposits.
Previous wording
As of March 31, 2026, 21.6 percent of total deposits were uninsured or uncollateralized. The Company’s deposit composition as of March 31, 2026, consisted of 19.0 percent in noninterest-bearing demand deposits, 17.2 percent in interest-bearing demand deposits, 24.9 percent in savings deposits and 38.9 percent in time deposits.
Current wording
As of June 30, 2026, 21.8 percent of total deposits were uninsured or uncollateralized. The Company’s deposit composition as of June 30, 2026, consisted of 19.8 percent in noninterest-bearing demand deposits, 16.8 percent in interest-bearing demand deposits, 23.2 percent in savings deposits and 40.2 percent in time deposits.
Previous wording
Borrowed funds and subordinated debentures totaled $258.6 million and $266.1 million at March 31, 2026 and December 31, 2025, respectively, and are broken down in the following table:
Current wording
Borrowed funds and subordinated debentures totaled $326.4 million and $266.1 million at June 30, 2026 and December 31, 2025, respectively, and are broken down in the following table:
Previous wording
In March 2026, the FHLB issued a $250.0 million municipal deposit letter of credit in the name of Unity Bank naming the New Jersey Department of Banking and Insurance as beneficiary, to secure municipal deposits as required under New Jersey law. The FHLB issued an additional $33.0 million municipal deposit letter of credit in the name of Unity Bank naming certain townships in Pennsylvania as beneficiary, to secure municipal deposits as required under Pennsylvania law.
Current wording
In June 2026, the FHLB issued municipal deposit letters of credit totaling $293.0 million in the name of Unity Bank, naming the New Jersey Department of Banking and Insurance and certain townships in Pennsylvania as beneficiaries, to secure municipal deposits as required under applicable state laws.
Previous wording
At March 31, 2026, the Company had $108.5 million of additional credit available at the FHLB, $282.2 million of additional credit available at the FRB and $20.0 million of additional credit available from other sources. Pledging additional collateral in the form of 1 to 4 family residential mortgages, commercial loans and investment securities can increase the lines with the FHLB and FRB.
Current wording
At June 30, 2026, the Company had $104.3 million of additional credit available at the FHLB, $297.5 million of additional credit available at the FRB and $20.0 million of additional credit available from other sources. Pledging additional collateral in the form of 1 to 4 family residential mortgages, commercial and construction loans, and investment securities can increase the lines with the FHLB and FRB.
Previous wording
For the three months ended March 31, 2026, average FHLB Borrowings were $97.9 million with a weighted average cost of 3.45%.
Current wording
For the six months ended June 30, 2026, average FHLB Borrowings were $91.7 million with a weighted average cost of 3.49%.
Previous wording
On July 24, 2006, Unity (NJ) Statutory Trust II, a statutory business trust and wholly-owned subsidiary of Unity Bancorp, Inc., issued $10.0 million of floating rate capital trust pass through securities to investors due on July 24, 2036. The subordinated debentures are redeemable in whole or part. The floating interest rate on the subordinated debentures is the daily compounded SOFR rate with a 0.262 percent spread. The floating interest rate was 5.539 percent at March 31, 2026 and 5.537 percent at December 31, 2025.
Current wording
On July 24, 2006, Unity (NJ) Statutory Trust II, a statutory business trust and wholly-owned subsidiary of Unity Bancorp, Inc., issued $10.0 million of floating rate capital trust pass through securities to investors due on July 24, 2036. The subordinated debentures are redeemable in whole or part. The floating interest rate on the subordinated debentures is the daily compounded SOFR rate with a 0.262 percent spread. The floating interest rate was 5.548 percent at June 30, 2026 and 5.537 percent at December 31, 2025.
Previous wording
The principal sources of funds at the Bank are deposits, scheduled amortization and prepayments of investment and loan principal, sales and maturities of investment securities, additional borrowings and funds provided by operations. While scheduled loan payments and maturing investments are relatively predictable sources of funds, deposit inflows and outflows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. The Consolidated Statement of Cash Flows provides detail on the Company’s sources and uses of cash, as well as an indication of the Company’s ability to maintain an adequate level of liquidity. At March 31, 2026, the balance of cash and cash equivalents was $229.2 million, an increase of $12.6 million from December 31, 2025. A discussion of on- and off-balance sheet liquidity follows.
Current wording
The principal sources of funds at the Bank are deposits, scheduled amortization and prepayments of investment and loan principal, sales and maturities of investment securities, additional borrowings and funds provided by operations. While scheduled loan payments and maturing investments are relatively predictable sources of funds, deposit inflows and outflows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. The Consolidated Statement of Cash Flows provides detail on the Company’s sources and uses of cash, as well as an indication of the Company’s ability to maintain an adequate level of liquidity. At June 30, 2026, the balance of cash and cash equivalents was $250.3 million, an increase of $33.8 million from December 31, 2025. A discussion of on- and off-balance sheet liquidity follows.
Previous wording
competition. The Company believes that the current level of these types of deposits is appropriate. Within this portfolio the average deposit size was $8.0 million as of March 31, 2026.
Current wording
Deposits. As of June 30, 2026, deposits included $443.6 million of government deposits, as compared to $444.9 million at year end 2025. These deposits are generally short in duration and are very sensitive to price competition. The Company believes that the current level of these types of deposits is appropriate. Within this portfolio the average deposit size was $7.6 million as of June 30, 2026.
Showing the first 40 of 42 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
(A) Yields related to securities exempt from federal and state income taxes are stated on a fully tax-equivalent basis, assuming a federal tax rate of 21 percent.
Current report — wording carried from elsewhere
(B) The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
ITEM 2Management’s Discussion and Analysis of Financial Condition and Results of Operations
Previous report — wording carried elsewhere
Losses and Reserve for Unfunded Loan Commitments.” The current provision is considered appropriate under Management’s assessment of the adequacy of the allowance for credit losses.
Previous report — wording carried elsewhere
Allowance for Credit Losses and Reserve for Unfunded Loan Commitments
Previous report — wording carried elsewhere
focus on establishing a comprehensive relationship with business borrowers, seeking deposits as well as lending relationships.
Previous report — wording carried elsewhere
The financial statements and notes thereto, presented elsewhere herein have been prepared in accordance with U.S.