Unity Bancorp (UNTY) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was $10.9 million ($1.07 per diluted share), up 9.6% year-over-year and 15.3% sequentially, marking a record high; return on average assets was 1.76% and return on average equity was 15.55%.

• Net interest margin expanded to 4.16%, with net interest income up 5.6% year-over-year, driven by higher loan yields.

• Gross loans grew 2.2% sequentially and 2.1% year-to-date, led by commercial loan growth; deposits increased 2.4% sequentially.

• Maintained strong asset quality and capital ratios, with a focus on supporting local businesses and communities.

• Noninterest income grew 37.2% year-over-year, mainly from higher securities gains and fee income; noninterest expense was flat.

Financial highlights

• Total assets reached $2.6 billion, up 2.2% from year-end 2023, mainly due to $45.3 million growth in gross loans and $8.0 million in securities.

• Deposits grew by $122.0 million to $2.0 billion, with time deposits up 30.8% and brokered deposits down 20.0%.

• Book value per share rose to $28.48, up from $25.98 at year-end.

• Allowance for credit losses was $27.0 million (1.22% of loans), up from $25.9 million at year-end 2023; net charge-offs were $0.8 million for the nine months.

• For the nine months ended September 30, 2024, net income was $29.9 million, flat year-over-year, with diluted EPS up 2.1% due to share repurchases.

Outlook and guidance

• Management expects continued competition for deposits and liquidity due to the current interest rate environment.

• The company believes its liquidity sources are sufficient but notes that unexpected deposit withdrawals could require greater reliance on secondary funding.

• Management expects to maintain strong profitability metrics across interest rate scenarios, with a focus on conservative capital and liquidity management.

• Continued emphasis on loan and deposit growth to support local communities.