Unity Bancorp (UNTY) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $9.5 million ($0.93 per diluted share), down from $9.7 million in Q2 2023 and 1.4% sequentially; return on average assets was 1.56% and return on average equity was 14.07%.

• Net interest margin was 4.01%, down 8 bps sequentially and from 4.04% last year, reflecting higher funding costs.

• Total deposits rose $86.7 million (4.5%) to $2.0 billion, with noninterest-bearing deposits up 6.7% sequentially; loan growth was flat.

• Management expects mid- to high-single-digit loan growth in the second half of 2024, supported by robust pipelines.

• Noninterest income fell 3.9% year-over-year, mainly from lower gains on SBA and mortgage loan sales, while noninterest expense rose 1.2% due to higher loan-related and processing costs.

Financial highlights

• Total assets increased $19.2 million (0.7%) to $2.6 billion since year-end 2023, driven by higher cash, securities, and prepaid expenses.

• Net interest income was $23.4 million, down $0.4 million sequentially; noninterest income increased $0.3 million to $2.0 million.

• Deposits rose $86.7 million to $2.0 billion, led by a 31.3% increase in time deposits; 18.3% of deposits were uninsured or uncollateralized.

• Borrowed funds and subordinated debentures dropped to $285.1 million from $366.7 million at year-end; FHLB borrowings reduced by $81.6 million.

• Book value per share increased to $27.41, up from $25.98 at year-end.

Outlook and guidance

• Management continues to monitor inflation, interest rate environment, and deposit competition, noting sufficient liquidity and capital to meet current needs.

• Lending initiatives will expand to non-owner-occupied borrowers, given compliance with the 110% loan-to-deposit threshold.

• A new stock repurchase plan was announced on July 31, 2024, authorizing up to 500,000 shares upon completion of the prior plan.