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UNITY BANCORP INC

UNITY BANCORP INCUNTYEarnings & Financial Report

Nasdaq · Financials · State Commercial Banks

Unity Bancorp Inc is a New Jersey-headquartered financial holding company operating Unity Bank. It offers a full range of commercial and retail banking services including business loans, deposit products, mortgage services, and personal banking solutions, primarily serving small and medium-sized enterprises and individual consumers across local communities in New Jersey and eastern Pennsylvania.

What changed in UNITY BANCORP INC's 10-K — 2024 vs 2025

Top changes in UNITY BANCORP INC's 2025 10-K

328 paragraphs added · 460 removed · 187 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

1 edited+100 added−251 removed0 unchanged
The Bank is also required to maintain a “capital conservation buffer” of 2.5% above the regulatory minimum capital ratios which results in the following minimum ratios: (i) a common equity Tier 1 capital ratio of 7.0%; (ii) a Tier 1 capital ratio of 8.5%; and (iii) a total capital ratio of 10.5%.
The New Rules also require a “capital conservation buffer.” The Bank is required to maintain a 2.5% capital conservation buffer, which is composed entirely of CET1, on top of the minimum risk-weighted asset ratios described above, resulting in the following minimum capital ratios: ● CET1 of 7%; ● Tier 1 Capital Ratio of 8.5%; ● Total Capital Ratio of 10.5%.
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Item 1. Business . 62 Table of Contents Revenue Recognition FASB ASC 606, Revenue from Contracts with Customers ("ASC 606") , establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers.
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Item 1. Business: Forward Looking Statements This report, in Item 1, Item 7 and elsewhere, includes forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended, that involve inherent risks and uncertainties.
Removed
The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.
Added
These forward-looking statements concern the financial condition, results of operations, plans, objectives, future performance and business of Unity Bancorp, Inc. and its subsidiaries, including statements preceded by, followed by or that include words or phrases such as “believes,” “expects,” “anticipates,” “plans,” “trend,” “objective,” “continue,” “remain,” “pattern” or similar expressions or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions.
Removed
The majority of the Company’s revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as loans, letters of credit, derivatives and investment securities, as well as revenue related to mortgage servicing activities, as these activities are subject to other U.S. GAAP discussed elsewhere within the Company’s disclosures.
Added
There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements.
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Descriptions of the Company’s revenue-generating activities that are within the scope of ASC 606, which are presented in its income statements as components of non-interest income are as follows: ● Branch fee income - these represent general service fees for monthly account maintenance and activity or transaction based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue.
Added
Factors that might cause such a difference include, but are not limited to: (1) the potential impact of pandemics and other health emergencies and the government’s response thereto on our operations as well as those of our clients and on the economy generally and in our market area specifically; (2) competitive and technological pressures among financial institutions may increase significantly; (3) changes in the interest rate environment may reduce interest margins; (4) prepayment speeds, loan origination and sale volumes, charge-offs and credit loss provisions may vary substantially from period to period; (5) general economic conditions may be less favorable than expected; (6) political developments, wars or other hostilities may disrupt or increase volatility in securities markets or other economic conditions; (7) legislative or regulatory changes or actions may adversely affect the businesses in which Unity Bancorp, Inc. is engaged; (8) changes and trends in the securities markets may adversely impact Unity Bancorp, Inc.; (9) a delayed or incomplete resolution of regulatory issues could adversely impact us; (10) difficulties in integrating any businesses that we may acquire, which may increase our expenses and delay the achievement of any benefits that we may expect from such acquisitions; (11) the impact of reputation risk created by the developments discussed above on such matters as business generation and retention, funding and liquidity could be significant; and (12) the outcome of any future regulatory and legal investigations and proceedings may not be anticipated; and (13) risks associated with generative artificial intelligence technology.
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Revenue is recognized when the Company’s performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed (such as a wire transfer).
Added
Further information on other factors that could affect the financial results of Unity Bancorp, Inc. are included in Item 1A of this Annual Report on Form 10-K and in Unity Bancorp, Inc.’s other filings with the Securities and Exchange Commission. These documents are available free of charge at the Commission’s website at http://www.sec.gov and/or from Unity Bancorp, Inc.
Removed
Payments for such performance obligations are generally received at the time the performance obligations are satisfied. ● Other non-interest income primarily includes items such as loan-related fees, bank owned life insurance income, dividends on FHLB and FRB stock and other general operating income, none of which are subject to the requirements of ASC 606.
Added
Unity Bancorp, Inc. assumes no obligation to update forward-looking statements at any time. ​ a) General Unity Bancorp, Inc., ("we", "us", "our", the "Company" or "Registrant"), is a bank holding company incorporated under the laws of the State of New Jersey to serve as a holding company for Unity Bank (the “Bank”).
Removed
Recent Accounting Pronouncements ​ ​ ​ ​ ​ Accounting Standard Update (“ASU”) Required Adoption Date Brief Description Effect on the Company’s Financial Statements ASU 2023-09, Income Taxes (Topic 740) Fiscal years beginning after December 15, 2024 Improve transparency of certain income tax related disclosures, including the rate reconciliation and taxes paid disclosures.
Added
The Company has also elected to become a financial holding company pursuant to regulations of the Board of Governors of the Federal Reserve system (the "FRB"). The Company was organized at the direction of the Board of Directors of the Bank for the purpose of acquiring all the capital stock of the Bank.
Removed
No significant impact ASU 2024-03, Income Statement – Reporting comprehensive income – Expense Disaggregation Disclosures (Subtopic 220-40) Fiscal years beginning after December 15, 2026 Improve transparency of specific expense categories, which is generally not presented in the financial statements today. No significant impact ​ ​ 63 Table of Contents 2.
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Pursuant to the New Jersey Banking Act of 1948 (the "Banking Act"), and pursuant to approval of the shareholders of the Bank, the Company acquired the Bank and became its holding company on December 1, 1994. The primary activity of the Company is ownership and supervision of the Bank.
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Securities This table provides the major components of debt securities AFS, HTM and equity securities at amortized cost and estimated fair value at December 31, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ ​ ​ Gross Gross ​ ​ ​ ​ ​ ​ ​ Amortized ​ unrealized ​ unrealized ​ Valuation ​ Estimated (In thousands) ​ cost ​ gains ​ losses ​ allowance ​ fair value Available for sale: ​ ​ ​ ​ ​ ​ U.S.
Added
The Company also owns 100 percent of the common equity of Unity (NJ) Statutory Trust II. The trust has issued $10.3 million of preferred securities to investors. The principal executive offices of the Company are located at 64 Old Highway 22, Clinton, New Jersey 08809 and the telephone number is (800) 618-2265. The Company’s website address is www.unitybank.com.
Removed
Government sponsored entities ​ $ 15,000 ​ $ — ​ $ (241) ​ $ — ​ $ 14,759 State and political subdivisions ​ 357 ​ — ​ (24) ​ — ​ 333 Residential mortgage-backed securities ​ 13,814 ​ 27 ​ (1,555) ​ — ​ 12,286 Asset backed securities ​ ​ 39,300 ​ ​ 94 ​ ​ (2) ​ ​ — ​ ​ 39,392 Corporate and other securities ​ 31,741 ​ 165 ​ (1,968) ​ (2,824) ​ 27,114 Total debt securities available for sale ​ $ 100,212 ​ $ 286 ​ $ (3,790) ​ $ (2,824) ​ $ 93,884 Held to maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.
Added
Business of the Company The Company’s primary business is ownership and supervision of the Bank. The Company and the Bank derive a majority of their revenue from net interest income (i.e., the difference between the interest received on loans and securities and the interest paid on deposits and borrowings).
Removed
Government sponsored entities ​ $ 28,000 ​ $ — ​ $ (4,932) ​ $ — ​ $ 23,068 State and political subdivisions ​ 1,234 ​ 59 ​ — ​ — ​ 1,293 Residential mortgage-backed securities ​ 12,060 ​ — ​ (2,607) ​ — ​ 9,453 Total debt securities held to maturity ​ $ 41,294 ​ $ 59 ​ $ (7,539) ​ $ — ​ $ 33,814 Equity securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total equity securities ​ $ 10,606 ​ $ 64 ​ $ (820) ​ $ — ​ $ 9,850 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ Gross Gross ​ ​ ​ ​ ​ ​ ​ Amortized ​ unrealized ​ unrealized ​ ​ Valuation ​ Estimated (In thousands) ​ cost ​ gains ​ losses ​ ​ allowance ​ fair value Available for sale: ​ ​ ​ ​ ​ ​ ​ ​ U.S.
Added
The Company, through the Bank, conducts a traditional and community- 3 Table of Contents oriented commercial banking business and offers services, including personal and business checking accounts, time deposits, money market accounts, savings accounts, credit cards, debit cards, wire transfers, safe deposit boxes, access to automated teller services and internet and mobile banking, typical of a community banking business.
Removed
Government sponsored entities ​ $ 16,490 ​ $ — ​ $ (457) ​ $ — ​ $ 16,033 State and political subdivisions ​ 388 ​ — ​ (28) ​ — ​ 360 Residential mortgage-backed securities ​ 15,473 ​ 30 ​ (1,426) ​ — ​ 14,077 Asset backed securities ​ ​ 35,750 ​ ​ — ​ ​ (347) ​ ​ — ​ ​ 35,403 Corporate and other securities ​ 29,453 ​ 251 ​ (2,529) ​ (1,283) ​ 25,892 Total debt securities available for sale ​ $ 97,554 ​ $ 281 ​ $ (4,787) ​ $ (1,283) ​ $ 91,765 Held to maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.
Added
The Bank also offers retirement accounts, Automated Clearing House (“ACH”) origination and Remote Deposit Capture (“RDC”). CDARS/ICS reciprocal deposits are offered based on the Bank’s participation in the IntraFi Network LLC network which enable Federal Deposit Insurance Corporation (“FDIC”) insurance sensitive customers to have FDIC coverage for large dollar deposits.
Removed
Government sponsored entities ​ $ 28,000 ​ $ — ​ $ (4,419) ​ $ — ​ $ 23,581 State and political subdivisions ​ 1,272 ​ 90 ​ — ​ — ​ 1,362 Residential mortgage-backed securities ​ 6,850 ​ — ​ (2,137) ​ — ​ 4,713 Total debt securities held to maturity ​ $ 36,122 ​ $ 90 ​ $ (6,556) ​ $ — ​ $ 29,656 Equity securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total equity securities ​ $ 9,050 ​ $ 99 ​ $ (1,347) ​ $ — ​ $ 7,802 ​ ​ For the year ended December 31, 2024, the provision for credit losses on AFS debt securities was $1.5 million, compared to $1.3 million for the year ended December 31, 2023. ​ ​ 64 Table of Contents The following table summarizes the amortized cost of HTM debt securities by external credit rating at December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-investment ​ ​ ​ ​ ​ ​ (In thousands) ​ AAA/AA/A rated ​ BBB rated ​ grade rated ​ Non-rated ​ Total December 31, 2024 ​ ​ ​ ​ ​ U.S.
Added
The Company structures its specific services and charges in a manner designed to attract the business of the small and medium sized business, professional community and state and local municipalities, as well as that of individuals residing, working and shopping in its service area.
Removed
Government sponsored entities ​ $ 28,000 ​ $ — ​ $ — ​ $ — ​ $ 28,000 State and political subdivisions ​ 1,234 ​ — ​ — ​ — ​ 1,234 Residential mortgage-backed securities ​ 12,060 ​ — ​ — ​ — ​ 12,060 Total ​ $ 41,294 ​ $ — ​ $ — ​ $ — ​ $ 41,294 December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.
Added
Deposits serve as the primary source of funding for interest-earning assets, but also generate noninterest income through treasury solution fees, merchant fees, stop payment fees, wire transfer fees, insufficient fund fees, debit/credit card income, foreign ATM fees, interchange and other miscellaneous fees.
Removed
Government sponsored entities ​ $ 28,000 ​ $ — ​ $ — ​ $ — ​ $ 28,000 State and political subdivisions ​ 1,172 ​ — ​ — ​ 100 ​ 1,272 Residential mortgage-backed securities ​ 6,850 ​ — ​ — ​ — ​ 6,850 Total ​ $ 36,022 ​ $ — ​ $ — ​ $ 100 ​ $ 36,122 ​ This table provides the remaining contractual maturities within the investment portfolios.
Added
In addition, the Bank generates additional noninterest income through residential, commercial and Small Business Administration (“SBA”) loan originations, servicing and sales. The Company engages in a wide range of lending activities and offers commercial, SBA, consumer, mortgage, home equity and personal loans.
Removed
The carrying value of securities at December 31, 2024 is distributed by contractual maturity. Securities, which may have principal prepayment provisions, are distributed based on contractual maturity.
Added
Commercial lending is primarily comprised of owner-occupied and non-owner occupied commercial mortgages and is supplemented by commercial and industrial lending activities, secured by business assets including real estate, receivables, inventory and equipment. Additionally, the Company engages in commercial and residential construction lending activities. A significant majority of the Company’s loans are real-estate secured.
Removed
Expected maturities will differ materially from contractual maturities as a result of early prepayments and calls. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized ​ ​ Fair (In thousands) ​ cost ​ ​ value Available for sale, at fair value: ​ ​ ​ ​ ​ Due in one year $ 3,285 $ 3,243 Due after one year through five years ​ 30,283 ​ ​ 26,678 Due after five years through ten years ​ 27,639 ​ ​ 26,437 Due after ten years ​ 25,191 ​ ​ 25,240 Residential mortgage-backed securities ​ 13,814 ​ ​ 12,286 Total $ 100,212 ​ $ 93,884 Held to maturity, at amortized cost: ​ ​ ​ ​ ​ Due in one year $ — ​ $ — Due after one year through five years ​ 3,000 ​ ​ 2,927 Due after five years through ten years ​ — ​ ​ — Due after ten years ​ 26,234 ​ ​ 21,434 Residential mortgage-backed securities ​ 12,060 ​ ​ 9,453 Total $ 41,294 ​ $ 33,814 ​ The number of securities in an unrealized loss position as of December 31, 2024 totaled 75, compared to 98 at December 31, 2023.
Added
Service Areas The Company’s primary service area is defined as the neighborhoods served by the Bank’s offices.
Removed
This decrease is primarily due to market interest rate fluctuations. As of December 31, 2024, the company had accrued interest receivable of $1.2 million relating to debt securities, compared to $1.5 million at December 31, 2023.
Added
The Bank’s main office is located in Clinton, New Jersey and the Bank operates twenty-two branches primarily along the Route 22/Route 78 corridors with branches in Bergen, Hunterdon, Middlesex, Morris, Ocean, Somerset, Union and Warren counties in New Jersey and Northampton County in Pennsylvania.
Removed
During the year ended December 31, 2024, $125 thousand in interest income was reversed relating to nonaccrual debt securities compared to none during the year ended December 31, 2023.
Added
Through its banking locations and online services, the Bank is able to support clients throughout the New York City metropolitan area. The Company’s goal is to continue to expand as needed to support clients as their businesses grow. Competition The banking business is highly competitive. The Company is located in an extremely competitive area.
Removed
During the 65 Table of Contents year ended December 31, 2024, $213 thousand in interest payments were recorded as a reduction of principal relating to nonaccrual debt securities compared to none during the year ended December 31, 2023. At the year-end 2024 and 2023, there were no holdings of securities of any one issuer, other than the U.S.
Added
The Company’s service area is also serviced by national banks, major regional banks, large thrift institutions, financial technology companies and a variety of credit unions.
Removed
Government and its agencies, in an amount greater than 10% of shareholders’ equity.
Added
In addition, since passage of the Gramm-Leach-Bliley Financial Modernization Act of 1999 (the “Modernization Act”), securities firms and insurance companies have been allowed to acquire or form financial institutions, thereby increasing competition in the financial services market. Most of the Company’s competitors have substantially more capital, and therefore greater lending limits than the Company.
Removed
The fair value of securities with unrealized losses by length of time where the individual securities have been in a continuous unrealized loss position at December 31, 2024 and December 31, 2023 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ ​ ​ Less than 12 months ​ 12 months and greater ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated ​ Unrealized ​ Estimated ​ Unrealized ​ Estimated ​ Unrealized (In thousands) ​ ​ fair value ​ (loss) ​ fair value ​ (loss) ​ fair value ​ (loss) Available for sale: ​ ​ ​ ​ ​ ​ U.S.
Added
The Company’s competitors generally have established positions in the service area and have greater resources than the Company with which to pay for advertising, technologies, physical facilities, personnel and interest on deposited funds.
Removed
Government sponsored entities ​ $ — ​ $ — ​ $ 14,759 ​ $ (241) ​ $ 14,759 ​ $ (241) State and political subdivisions ​ ​ — ​ ​ — ​ ​ 333 ​ ​ (24) ​ ​ 333 ​ ​ (24) Residential mortgage-backed securities ​ ​ 8 ​ ​ (1) ​ ​ 12,145 ​ ​ (1,554) ​ ​ 12,153 ​ ​ (1,555) Asset backed securities ​ ​ ​ 3,998 ​ ​ (1) ​ ​ 3,000 ​ ​ (1) ​ ​ 6,998 ​ ​ (2) Corporate and other securities ​ — ​ — ​ 14,609 ​ (1,968) ​ 14,609 ​ (1,968) Total temporarily impaired AFS securities ​ $ 4,006 ​ $ (2) ​ $ 44,846 ​ $ (3,788) ​ $ 48,852 ​ $ (3,790) Held to maturity: ​ ​ ​ ​ ​ ​ ​ U.S.
Added
The Company relies on the competitive pricing of its loans, deposits and other services, as well as its ability to provide local decision-making and personal service in order to compete with these larger institutions. Employees and Human Capital As of December 31, 2025, the Company employed 239 full‑time and 6 part‑time employees.
Removed
Government sponsored entities ​ $ — ​ $ — ​ $ 23,068 ​ $ (4,932) ​ $ 23,068 ​ $ (4,932) Residential mortgage-backed securities ​ — ​ — ​ 4,453 ​ (2,607) ​ 4,453 ​ (2,607) Total temporarily impaired HTM securities ​ $ — ​ $ — ​ $ 27,521 ​ $ (7,539) ​ $ 27,521 ​ $ (7,539) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ Less than 12 months ​ 12 months and greater ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated ​ Unrealized ​ Estimated ​ Unrealized ​ Estimated ​ Unrealized (In thousands) ​ ​ fair value ​ (loss) ​ fair value ​ (loss) ​ fair value ​ (loss) Available for sale: ​ ​ ​ ​ ​ ​ U.S.
Added
None of the Company’s employees are represented by collective bargaining units. The Company believes its relations with employees are good and that its ability to attract and retain talent is critical to its success. To support this objective, the Company strives to offer competitive salaries and comprehensive employee benefits and regularly monitors compensation levels within its market areas.
Removed
Government sponsored entities ​ $ — ​ $ — ​ $ 16,033 ​ $ (457) ​ $ 16,033 ​ $ (457) State and political subdivisions ​ ​ — ​ ​ — ​ ​ 360 ​ ​ (28) ​ ​ 360 ​ ​ (28) Residential mortgage-backed securities ​ ​ — ​ ​ — ​ ​ 13,949 ​ ​ (1,426) ​ ​ 13,949 ​ ​ (1,426) Asset backed securities ​ ​ ​ — ​ ​ — ​ ​ 35,403 ​ ​ (347) ​ ​ 35,403 ​ ​ (347) Corporate and other securities ​ — ​ — ​ 19,424 ​ (2,529) ​ 19,424 ​ (2,529) Total temporarily impaired AFS securities ​ $ — ​ $ — ​ $ 85,169 ​ $ (4,787) ​ $ 85,169 ​ $ (4,787) Held to maturity: ​ ​ ​ ​ ​ ​ ​ U.S.
Added
The Company provides medical benefits through a self‑insured health plan.
Removed
Government sponsored entities ​ $ — ​ $ — ​ $ 23,581 ​ $ (4,419) ​ $ 23,581 ​ $ (4,419) Residential mortgage-backed securities ​ — ​ — ​ 4,713 ​ (2,137) ​ 4,713 ​ (2,137) Total temporarily impaired HTM securities ​ $ — ​ $ — ​ $ 28,294 ​ $ (6,556) ​ $ 28,294 ​ $ (6,556) ​ Unrealized losses in each of the categories presented in the tables above were primarily driven by market interest rate fluctuations.
Added
In addition, the principal purposes of the Company’s equity incentive plans are to attract, retain, and motivate selected employees, consultants, and directors through the granting of stock‑based compensation awards. 4 Table of Contents SUPERVISION AND REGULATION General Supervision and Regulation Bank holding companies and banks are extensively regulated under both federal and state law and these laws are subject to change.
Removed
Realized Gains and Losses There were no available for sale or held to maturity gross realized gains or losses relating to sales in 2024 or 2023.
Added
As an example, in the summer of 2010, Congress passed, and the President signed, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) (discussed below). These laws and regulations are intended to protect depositors, not stockholders.
Removed
Pledged Securities Securities with a carrying value of $11.5 million and $9.7 million at December 31, 2024 and December 31, 2023, respectively, were pledged to secure other borrowings and for other purposes required or permitted by law. 66 Table of Contents Equity Securities Included in this category are Community Reinvestment Act ("CRA") investments and the Company’s current other equity holdings of financial institutions.
Added
To the extent that the following information describes statutory and regulatory provisions, it is qualified in its entirety by reference to the particular statutory and regulatory provisions. Any change in the applicable law or regulation may have a material effect on the business and prospects of the Company and the Bank.
Removed
Equity securities are defined to include (a) preferred, common and other ownership interests in entities including partnerships, joint ventures and limited liability companies and (b) rights to acquire or dispose of ownership interests in entities at fixed or determinable prices.
Added
Management of the Company is unable to predict, at this time, the impact of future changes to laws and regulations. General Bank Holding Company Regulation General: As a bank holding company registered under the Bank Holding Company Act of 1956, as amended, (the "BHCA"), the Company is subject to the regulation and supervision of the FRB.
Removed
The following is a summary of the gains and losses recognized in net income on equity securities for the past two years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, (In thousands) 2024 2023 Net unrealized gains (losses) recognized during the period on equity securities ​ $ 492 ​ $ (338) Net gains recognized during the period on equity securities sold during the period ​ 94 ​ 345 Gains recognized during the reporting period on equity securities ​ $ 586 ​ $ 7 ​ ​ 3.
Added
The Company is required to file with the FRB annual reports and other information regarding its business operations and those of its subsidiaries.
Removed
Loans The following table sets forth the classification of loans by class, including unearned fees, deferred costs and excluding the allowance for credit losses for the past two years: ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) December 31, 2024 December 31, 2023 SBA loans held for investment ​ $ 36,859 ​ $ 38,584 SBA PPP loans ​ ​ 1,450 ​ ​ 2,318 Commercial loans ​ ​ SBA 504 loans ​ 48,479 ​ 33,669 Commercial & industrial ​ 147,186 ​ 128,402 Commercial real estate (1) ​ 1,085,771 ​ 986,230 Commercial real estate construction ​ 130,193 ​ 129,159 Residential mortgage loans ​ 630,927 ​ 631,506 Consumer loans ​ ​ ​ ​ Home equity ​ 73,223 ​ 67,037 Consumer other ​ 3,488 ​ 5,639 Residential construction loans ​ ​ 90,918 ​ ​ 131,277 Total loans held for investment ​ $ 2,248,494 ​ $ 2,153,821 SBA loans held for sale ​ 12,163 ​ 18,242 Total loans ​ $ 2,260,657 ​ $ 2,172,063 ​ (1) Commercial real estate includes Commercial Mortgage – Owner Occupied, Commercial Mortgage – Nonowner Occupied and Commercial Mortgage – Other.
Added
Under the BHCA, activities of a holding company and those of its subsidiaries are limited to banking, managing or controlling banks, furnishing services to or performing services for its subsidiaries or engaging in any other activity which the FRB determines to be so closely related to banking or managing or controlling banks as to be properly incident thereto.
Removed
Commercial Mortgage – Other primarily includes multifamily and land loans. Loans are made to individuals and commercial entities. Specific loan terms vary as to interest rate, repayment and collateral requirements based on the type of loan requested and the credit worthiness of the prospective borrower.
Added
However, as a financial holding company, the Company may engage in a broader scope of activities. See "Financial Holding Company Status".
Removed
Credit risk tends to be geographically concentrated in that a majority of the loan customers are located in the markets serviced by the Bank. Loan performance may be adversely affected by factors impacting the general economy or conditions specific to the real estate market such as geographic location and/or property type.
Added
The BHCA requires, among other things, the prior approval of the FRB in any case where a bank holding company proposes to; (i) acquire all or substantially all the assets of any other bank; (ii) acquire direct or indirect ownership or control of more than 5% of the outstanding voting stock of any bank (unless it owns a majority of such bank’s voting shares); or (iii) merge or consolidate with any other bank holding company.
Removed
A description of the Company’s different loan segments follows: SBA Loans: SBA 7(a) loans, on which the SBA has historically provided guarantees of up to 90 percent of the principal balance, are considered a higher risk loan product for the Company than its other loan products.
Added
The FRB will not approve any acquisition, merger or consolidation that would have a substantially anti-competitive effect, unless the anti-competitive impact of the proposed transaction is clearly outweighed by a greater public interest in meeting the convenience and needs of the community to be served.
Removed
The guaranteed portion of the Company’s SBA loans is generally sold in the secondary market with the nonguaranteed portion held in the portfolio as a loan held for investment. SBA loans are for the purpose of providing working capital, business acquisitions, financing the purchase of equipment, inventory or commercial real estate and for other business purposes.
Added
The FRB also considers capital adequacy, as well as other financial and management resources, and future prospects of the companies and banks concerned, along with the convenience and needs of the community to be served.
Removed
Loans are guaranteed by 67 Table of Contents the businesses’ major owners. SBA loans are made based primarily on the historical and projected cash flow of the business and secondarily on the underlying collateral provided. Loans held for sale represent the guaranteed portion of SBA loans and are reflected at the lower of aggregate cost or market value.
Added
The BHCA also generally prohibits a bank holding company, with certain limited exceptions, from; (i) acquiring or retaining direct or indirect ownership or control of more than 5% of the outstanding voting stock of any company which is not a bank or bank holding company; or (ii) engaging directly or indirectly in activities other than those of banking, managing or controlling banks, or performing services for its subsidiaries, unless such non-banking business is determined by the FRB to be so closely related to banking or managing or controlling banks as to be properly incident thereto.
Removed
When sales of SBA loans do occur, the premium received on the sale and the present value of future cash flows of the servicing assets are recognized in income. All criteria for sale accounting must be met in order for the loan sales to occur.
Added
In making such determinations, the FRB is required to weigh the expected benefits to the public such as greater convenience, increased competition or gains in efficiency, against the possible adverse effects such as undue concentration of resources, decreased or unfair competition, conflicts of interest or unsound banking practices. The BHCA was substantially amended through the Modernization Act.
Removed
Servicing assets represent the estimated fair value of retained servicing rights, net of servicing costs, at the time loans are sold. Servicing assets are amortized in proportion to, and over the period of, estimated net servicing revenues. Impairment is evaluated based on stratifying the underlying financial assets by date of origination and term.
Added
The Modernization Act permits bank holding companies and banks, which meet certain capital, management and Community Reinvestment Act standards, to engage in a broader range of non-banking activities. In addition, bank holding companies, which elect to become financial holding companies, may engage in certain banking and non-banking activities without prior FRB approval.
Removed
Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Serviced loans sold to others are not included in the accompanying Consolidated Balance Sheets.
Added
Finally, the Modernization Act imposes certain privacy requirements on all financial institutions and their treatment of consumer information. The Company has elected to become a financial holding company. See "Financial Holding Company Status" below.
Removed
Income and fees collected for loan servicing are credited to noninterest income when earned, net of amortization on the related servicing assets, in the accompanying Consolidated Statements of Income. Commercial Loans: Commercial credit is extended primarily to middle market and small business customers.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

58 edited+25 added−5 removed105 unchanged
Weakness in the real estate market in the Company’s primary market areas could result in an increase in the number of borrowers who default on their loans and a reduction in the value of the collateral securing their loans, which in turn could have an adverse effect on the Company’s profitability and asset quality.
Weakness in the real estate market in the Company’s primary market areas could result in an increase in the number of borrowers who default on their loans and a reduction in the value of the collateral securing their loans, which in turn could have an adverse effect on the Company’s profitability, capital and asset quality.
As a community banking organization, the Company is highly reliant on key employees, including its Chief Executive Officer, Chief Financial Officer, heads of key operational areas, area managers, business development officers and loan officers.
As a community banking organization, the Company is highly reliant on key employees, including its Chief Executive Officer, President, Chief Financial Officer, heads of key operational areas, area managers, business development officers and loan officers.
Risks within the loan portfolio are analyzed on a continuous basis by Management and, periodically, by an independent loan review function and by the Audit Committee. A risk system, consisting of multiple-grading categories, is utilized as an analytical tool to assess risk and the appropriate level of loss reserves.
Risks within the loan portfolio are analyzed on a continuous basis by Management and, periodically, by an independent loan review function as overseen by the Audit Committee. A risk system, consisting of multiple-grading categories, is utilized as an analytical tool to assess risk and the appropriate level of credit loss reserves.
Department of Treasury, the Federal Reserve, and the FDIC took steps to ensure the depositors of the failed banks in early 2023 would have access to their insured and uninsured deposits, there is no assurance that these or similar actions will restore customer confidence in the baking system, and the Company may be further impacted by concerns regarding the soundness, real or perceived, of 20 Table of Contents other financial institutions or other future bank failures or disruptions.
Department of Treasury, the Federal Reserve, and the FDIC took steps to ensure the depositors of the failed banks in early 2023 would have access to their insured and uninsured deposits, there is no assurance that these or similar actions will restore customer confidence in the baking system, and the Company may be further impacted by concerns regarding the soundness, real or perceived, of other financial institutions or other future bank failures or disruptions.
Additionally, the Company’s earnings could be impacted if interest rates increase and the Company needs to increase the rates offered on time deposits to retain these funds. The Company’s management monitors the deposit composition of its Consolidated Balance Sheet through various Board and Management reporting on a regular basis.
Additionally, the Company’s earnings could be impacted if interest rates increase and the Company needs to increase the rates offered on deposits to retain these funds. The Company’s management and Board of Directors monitors the deposit composition of its Consolidated Balance Sheet through various Board and Management reporting on a regular basis.
Any failure or circumvention of the controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on the Company and its results of operations and financial condition. Anti-takeover provisions in corporate documents and in New Jersey corporate law may make it difficult and expensive to remove current management.
Any failure or circumvention of the controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on the Company and its results of operations and financial condition. 23 Table of Contents Anti-takeover provisions in corporate documents and in New Jersey corporate law may make it difficult and expensive to remove current management.
There is a risk that the Company may not be repaid in a timely manner, or at all, for loans it makes or securities it purchases. The risk of nonpayment (or deferred or delayed payment) of loans is inherent in banking.
There is a risk that the Company may not be repaid in a timely manner, or at all, for loans it makes or securities it holds. The risk of nonpayment (or deferred or delayed payment) of loans is inherent in banking.
The Company cannot assure that any positive trends or developments discussed in this annual report will continue or that negative trends or developments will not arise. 11 Table of Contents A significant portion of the Company’s loan portfolio is secured by real estate and events that negatively impact the real estate market in the Company’s trade area could hurt its business.
The Company cannot assure that any positive trends or developments discussed in this annual report will continue or that negative trends or developments will not arise. A significant portion of the Company’s loan portfolio is secured by real estate and events that negatively impact the real estate market in the Company’s trade area could hurt its business.
The Company seeks to minimize its credit risk exposure on securities through ongoing monitoring and credit controls, which evaluate the financial condition of the issuer of the securities. However, there can be no assurance that such procedures will actually reduce credit losses. The Company’s allowance for credit losses may not be adequate to cover actual losses.
The Company seeks to minimize its credit risk exposure on securities through ongoing monitoring and credit controls, which evaluate the financial condition of the issuer of the securities. However, there can be no assurance that such procedures will actually reduce credit losses. 14 Table of Contents The Company’s allowance for credit losses may not be adequate to cover actual losses.
These loans may have delinquency or charge-off levels above our expectations, which could negatively affect our performance. Additionally, although the majority of residential mortgages historically originated by the Bank would be considered Qualified Mortgages, the Bank has and may continue to make residential mortgage loans that would not qualify.
These loans may have delinquency or charge-off levels above our expectations, which could negatively affect our performance. 18 Table of Contents Additionally, although the majority of residential mortgages historically originated by the Bank would be considered Qualified Mortgages, the Bank has and may continue to make residential mortgage loans that would not qualify.
In addition, if repurchase and indemnity demands increase on loans that we sell from our portfolio, our liquidity, results of operations and financial condition could be adversely affected. 13 Table of Contents Imposition of limits by bank regulators on commercial real estate lending activities could curtail our growth and adversely affect our earnings.
In addition, if repurchase and indemnity demands increase on loans that we sell from our portfolio, our liquidity, results of operations and financial condition could be adversely affected. Imposition of limits by bank regulators on commercial real estate lending activities could curtail our growth and adversely affect our earnings.
The loss of these employees could have an adverse impact on the Company’s operating capacities and the ability to implement growth strategies and adversely impact the financial performance. 19 Table of Contents Pandemic or other health related events may have a material adverse effect on operations and financial condition.
The loss of these employees could have an adverse impact on the Company’s operating capacities and the ability to implement growth strategies and adversely impact the financial performance. Pandemic or other health related events may have a material adverse effect on operations and financial condition.
Additionally, certain aspects of these primary trade areas may be adversely impacted by the economic wellbeing of the New York City metro region. The Company’s loans, the ability of borrowers to repay these loans and the value of collateral securing these loans are impacted by economic conditions.
Additionally, certain aspects of these primary trade areas may be adversely impacted by the economic wellbeing of the New York City metro region. 11 Table of Contents The Company’s loans, the ability of borrowers to repay these loans and the value of collateral securing these loans are impacted by economic conditions.
Any changes to the SBA program, including but not limited to changes to the level of guarantee provided by the federal government on SBA loans, changes to program specific rules impacting volume eligibility under the guaranty program, as well as changes to the program amounts authorized by Congress or funding for the SBA program may also have a material adverse effect on our business.
Any changes to the SBA program, including but not limited to changes to the level of guarantee provided by the federal government on SBA loans, changes to ongoing SBA servicing related expenses, changes to program specific rules impacting volume eligibility under the guaranty program, as well as changes to the program amounts authorized by Congress or funding for the SBA program may also have a material adverse effect on our business.
Changes in monetary policy, including changes in interest rates, could influence not only the interest the Company receives on loans and investment securities and the amount of interest it pays on deposits and borrowings, but such changes could also affect (i) the ability to originate loans and obtain deposits, (ii) the fair value of financial assets and liabilities, including the held to maturity and available for sale securities portfolios and (iii) the average duration of interest-earning assets.
Changes in monetary policy, including changes in interest rates and/or quantitative easing or tightening protocols, could influence not only the interest the Company receives on loans and investment securities and the amount of interest it pays on deposits and borrowings, but such changes could also affect (i) the ability to originate loans and obtain deposits, (ii) the fair value of financial assets and liabilities, including the held to maturity and available for sale securities portfolios and (iii) the average duration of interest-earning assets.
We generally retain the non-guaranteed portions of the SBA loans that we originate and sell, and to the extent the borrowers of such loans experience financial difficulties, our financial condition and results of operations would be adversely impacted.
We generally retain the 13 Table of Contents non-guaranteed portions of the SBA loans that we originate and sell, and to the extent the borrowers of such loans experience financial difficulties, our financial condition and results of operations would be adversely impacted.
A significant portion of the Company’s loan portfolio is secured by real estate. As of December 31, 2024, approximately 96 percent of its loans had real estate as a primary or secondary component of collateral.
A significant portion of the Company’s loan portfolio is secured by real estate. As of December 31, 2025, approximately 96 percent of its loans had real estate as a primary and/or secondary component of collateral.
This may adversely impact the operating results. The Company may not be able to detect money laundering and other illegal or improper activities fully, or on a timely basis, which could expose the company to additional liability and could have a material adverse effect.
This may adversely impact the operating results. 22 Table of Contents The Company may not be able to detect money laundering and other illegal or improper activities fully, or on a timely basis, which could expose the company to additional liability and could have a material adverse effect.
In addition, subsequent legislation and regulatory action has, and future legislation and regulatory action may, amend or revise various provisions of the Dodd-Frank Act.
In addition, subsequent 15 Table of Contents legislation and regulatory action has, and future legislation and regulatory action may, amend or revise various provisions of the Dodd-Frank Act.
To the extent that the Company fails to fully comply 21 Table of Contents with the applicable laws and regulations, banking agencies may have the authority to impose fines, other penalties and sanctions on the Company.
To the extent that the Company fails to fully comply with the applicable laws and regulations, banking agencies may have the authority to impose fines, other penalties and sanctions on the Company.
The financial services market, including banking services, is increasingly affected by advances in technology, including developments in: ● telecommunications; ● data processing; ● artificial intelligence, (“AI”); ● automation; 18 Table of Contents ● Internet-based banking; ● Tele-banking; ● debit cards/smart cards The Company’s ability to compete successfully in the future will depend on whether it can anticipate and respond to technological changes.
The financial services market, including banking services, is increasingly affected by advances in technology, including developments in: ● telecommunications; ● data processing; ● artificial intelligence, (“AI”); ● automation; ● Internet-based banking; ● Stablecoins and other crypto currencies; ● Tele-banking; ● debit cards/smart cards The Company’s ability to compete successfully in the future will depend on whether it can anticipate and respond to technological changes.
As a result, the Bank might experience increased compliance costs, loan losses, litigation related expenses and delays in taking title to real estate collateral, if these loans do not perform and borrowers challenge whether the Bank satisfied the ability-to-repay rule upon originating the loan. Future offerings of common stock may adversely affect the market price of the Company’s stock.
As a result, the Bank might experience increased compliance costs, loan losses, litigation related expenses and delays in taking title to real estate collateral, if these loans do not perform and borrowers challenge whether the Bank satisfied the ability-to-repay rule upon originating the loan.
The Company has also been active in competing for New Jersey governmental and municipal deposits. At December 31, 2024, the Company held approximately $400.5 million in governmental and municipal deposits.
The Company has also been active in competing for New Jersey governmental and municipal deposits. At December 31, 2025, the Company held approximately $444.9 million in governmental and municipal deposits.
Our SBA lending program is dependent upon the U.S. federal government. The SBA periodically reviews the lending operations of participating lenders to assess, among other things, whether the lender exhibits prudent risk management. When weaknesses are identified, the SBA may request corrective actions or impose enforcement actions.
The SBA periodically reviews the lending operations of participating lenders to assess, among other things, whether the lender exhibits prudent risk management. When weaknesses are identified, the SBA may request corrective actions or impose enforcement actions.
In addition, our reputation and client relationships may be damaged as a result of our practices related to climate change, including our involvement, or our clients’ involvement, in certain industries or projects, in the absence of mitigation and/or transition measures, associated with causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change.
Additionally, transitioning to a low-carbon economy may entail extensive policy, legal, technology and market initiatives. 20 Table of Contents In addition, our reputation and client relationships may be damaged as a result of our practices related to climate change, including our involvement, or our clients’ involvement, in certain industries or projects, in the absence of mitigation and/or transition measures, associated with causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change.
We generally retain the non-guaranteed portions of the SBA loans that we originate. Consequently, as of December 31, 2024, we held $36.9 million of SBA loans on our balance sheet, $36.1 million of which primarily consisted of the non-guaranteed portion of SBA loans.
We generally retain the non-guaranteed portions of the SBA loans that we originate. Consequently, as of December 31, 2025, we held $34.3 million of SBA loans on our balance sheet, $5.4 million of which primarily consisted of the non-guaranteed portion of SBA loans.
The Company’s financial results and condition may be adversely impacted by banking failures or future similar events. Certain events impacting the banking industry, including the bank failures in March and April 2023, resulted in significant disruption and volatility in the capital markets, reduced valuation of bank securities, and decreased confidence in banks among certain depositors and counterparties. While the U.S.
Certain events impacting the banking industry, including the bank failures in March and April 2023, resulted in significant disruption and volatility in the capital markets, reduced valuation of bank securities, and decreased confidence in banks among certain depositors and counterparties. While the U.S.
The Company’s success depends a great deal upon its judgment that large and mid-size financial institutions do not adequately serve small businesses in its principal market area and upon the Company’s ability to compete favorably for such customers.
Additionally, many of these competitors have less regulation than the Company as they are not financial institutions. The Company’s success depends a great deal upon its judgment that large and mid-size financial institutions do not adequately serve small businesses in its principal market area and upon the Company’s ability to compete favorably for such customers.
Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit and reputational risks and costs. Climate change could also present incremental risks to the execution of the Company’s long-term strategy. Additionally, transitioning to a low-carbon economy may entail extensive policy, legal, technology and market initiatives.
Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit and reputational risks and costs. Climate change could also present incremental risks to the execution of the Company’s long-term strategy.
GAAP”), the Company maintains an allowance for credit losses created through charges against earnings. As of December 31, 2024, the Company’s allowance for credit losses was $26.8 million, or 1.18 percent of its total loan portfolio and 204.77 percent of its nonaccrual loans.
GAAP”), the Company maintains an allowance for credit losses created through charges against earnings. As of December 31, 2025, the Company’s allowance for credit losses was $32.3 million, or 1.27 percent of its total loan portfolio and 108.40 percent of its nonaccrual loans.
Management will have to apply resources to ensure compliance with all applicable provisions of regulatory reforms, including the Dodd-Frank Act and any implementing rules, which may increase the Company’s costs of operations and adversely impact its earnings. 15 Table of Contents The provisions of the Dodd-Frank Act, as well as any other aspects of current or proposed regulatory or legislative changes to laws or regulations applicable to the financial industry, may impact the profitability of business activities and may change certain business practices, including the ability to offer new products, obtain financing, attract deposits, make loans and achieve satisfactory interest spreads, and could expose the Company to additional costs, including increased compliance costs.
The provisions of the Dodd-Frank Act, as well as any other aspects of current or proposed regulatory or legislative changes to laws or regulations applicable to the financial industry, may impact the profitability of business activities and may change certain business practices, including the ability to offer new products, obtain financing, attract deposits, make loans and achieve satisfactory interest spreads, and could expose the Company to additional costs, including increased compliance costs.
While the Company has policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of its information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur; or, if they do occur, that they will be adequately addressed.
In addition, the Company maintains cyber liability insurance to mitigate against certain losses it may incur. 19 Table of Contents While the Company has policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of its information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur; or, if they do occur, that they will be adequately addressed.
The Company’s business may be adversely affected by changes in tax laws if there are any increases in its federal income tax rates. Further, the Company’s business may be adversely affected by changes in tax laws if there are any increases in its state and local tax rates in markets where it has locations.
The Company’s business may be adversely affected by changes in tax laws if there are any increases in its federal income tax rates.
However, should this proposal be adopted and a state owned bank formed, it could impede the Company’s ability to attract and retain governmental and municipal deposits, thereby impairing the Company’s liquidity. The nature and growth rate of our loan portfolio may expose us to increased lending risks.
However, should this proposal be adopted and a state owned bank formed, it could impede the Company’s ability to attract and retain governmental and municipal deposits, thereby impairing the Company’s liquidity.
The Company seeks to minimize its credit risk exposure through credit controls, which include evaluation of potential borrowers’ available collateral, liquidity and cash flow. However, there can be no assurance that such procedures will actually reduce credit losses. The risk of nonpayment (or deferred or delayed payment) on securities is also inherent in banking.
The Company seeks to minimize its credit risk exposure through credit controls, which include evaluation of potential borrowers’ available collateral, liquidity, cash flow and debt service coverage (both individually and globally). However, there can be no assurance that such procedures will actually reduce credit losses.
The occurrence of any such event in the future could have material adverse effect on the business, which in turn, could have a materially adverse impact on the financial condition and results of operations of the Company. The Company may be adversely affected by changes in U.S. federal tax laws and state and local tax laws.
The occurrence of any such event in the future could have material adverse effect on the business, which in turn, could have a materially adverse impact on the financial condition and results of operations of the Company.
We also may incur losses on commercial real estate loans due to declines in occupancy rates and rental rates, which may decrease property values and may decrease the likelihood that a borrower may find permanent financing alternatives.
We also may incur losses on commercial real estate loans due to declines in occupancy rates and rental rates, which may decrease property values and may decrease the likelihood that a borrower may find permanent financing alternatives. Any of these events could increase our costs, require Management's time and attention, and materially and adversely affect us.
The Company’s ability to maintain its reputation is critical to the success of the business and the failure to do so may adversely impact its performance. The Company’s reputation is one of the most valuable components of its business. As such, the Company strives to conduct its business in a manner that maintains its reputation.
The Company’s reputation is one of the most valuable components of its business. As such, the Company strives to conduct its business in a manner that maintains its reputation.
Using regulatory guidance definitions, the Bank’s commercial real estate loan balance decreased 1.55% for the year ended December 31, 2024 and commercial real estate loans represented 235.05% of the Bank’s risk-based capital at December 31, 2024, a decrease from 269.98% at December 31, 2023.
Using regulatory guidance definitions, the Bank’s commercial real estate loan balance was $868.9 million at December 31, 2025 and commercial real estate loans represented 231.92% of the Bank’s risk-based capital at December 31, 2025, a decrease from 235.05% at December 31, 2024.
Any of these events could increase our costs, require Management's time and attention, and materially and adversely affect us. 12 Table of Contents Small Business Administration lending is an important part of our business. Our SBA lending program is dependent upon the U.S. federal government, and we face specific risks associated with originating SBA loans.
Small Business Administration lending is an important part of our business. Our SBA lending program is dependent upon the U.S. federal government, and we face specific risks associated with originating SBA loans. Our SBA lending program is dependent upon the U.S. federal government.
The amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates that may be beyond the Company’s control, and these losses may exceed current estimates.
This risk assessment process is performed at least quarterly and, as adjustments become necessary, they are realized in the periods in which they become known. The amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates that may be beyond the Company’s control, and these losses may exceed current estimates.
In the future, if the Company’s or the Bank’s capital ratios fall below the prevailing regulatory required minimums, or should the Company seek to expand through acquisitions, the Company or the Bank could be forced to raise additional capital by making additional offerings of common stock or preferred stock.
In the future, if the Company’s or the Bank’s capital ratios fall below the prevailing regulatory minimums, or if the Company seeks to pursue growth opportunities such as acquisitions, the Company or the Bank may be required to raise additional capital through offerings of common stock, preferred stock, subordinated debt, senior debt, or other capital instruments.
Additional equity offerings may dilute the holdings of existing shareholders or reduce the market price of common stock, or both. The Company cannot predict how changes in technology will impact its business.
Future offerings of common stock may adversely affect the market price of the Company’s stock. The Company cannot predict how changes in technology will impact its business.
Given the significant growth in our loan portfolio, many of our loans are unseasoned, meaning that they were originated relatively recently. Approximately 53.0% of our loan portfolio has been originated in the past three years. As a result, it may be difficult to predict the future performance of our loan portfolio.
Approximately 42.1% of our loan portfolio has been originated in the past three years. As a result, it may be difficult to predict the future performance of our loan portfolio.
We anticipate data-based modeling will penetrate further into bank decision-making, particularly risk management efforts, as the capacities developed to meet rigorous stress testing requirements are able to be employed more widely and in differing applications.
While we are not currently subject to annual Dodd-Frank stress testing and the Comprehensive Capital Analysis and Review submissions, we anticipate that model-derived testing may become more extensively implemented by regulators in the future. 16 Table of Contents We anticipate data-based modeling will penetrate further into bank decision-making, particularly risk management efforts, as the capacities developed to meet rigorous stress testing requirements are able to be employed more widely and in differing applications.
If we are required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earnings and shareholders’ equity could be adversely affected. Any weakening of the commercial real estate market may increase the likelihood of default on these loans, which could negatively impact our loan portfolio’s performance and asset quality.
If we are required to liquidate the collateral securing a loan to satisfy 12 Table of Contents the debt during a period of reduced real estate values, our earnings and shareholders’ equity could be adversely affected.
Such nonpayment, or delayed or deferred payment on securities held by the Company, if they occur may have a material adverse effect on the Company’s earnings and overall financial condition. As of December 31, 2024, the Company maintained a valuation reserve on a single available for sale security of $2.8 million.
The risk of nonpayment (or deferred or delayed payment) on securities is also inherent in banking. Such nonpayment, or delayed or deferred payment on securities held by the Company, if they occur may have a material adverse effect on the Company’s earnings and overall financial condition.
Any significant failure to pay on time by our clients or a significant default by our clients would materially and adversely affect us. Concentrations in commercial real estate are closely monitored by regulatory agencies and subject to especially heightened scrutiny both on a public and confidential basis.
Concentrations in commercial real estate are closely monitored by regulatory agencies and subject to especially heightened scrutiny both on a public and confidential basis. Any formal or informal action by our supervisors may require us to increase our reserves on these loans and adversely impact our earnings and capital.
A number of the Company’s competitors have substantially greater resources than it does to expend upon advertising and marketing, and their substantially greater capitalization enables them to make much larger loans. Additionally, many of these competitors have less regulation than the Company as they are not financial institutions.
Similarly, larger legacy non-financial companies, such as Apple, Alphabet and Amazon, are further increasing competition to compete for loans, deposits and payments. A number of the Company’s competitors have substantially greater resources than it does to expend upon advertising and marketing, and their substantially greater capitalization enables them to make much larger loans.
Additionally, mixed-use loans, in their hybrid nature, may include these industries, as well as others not denoted above. These types of loans generally expose a lender to a higher degree of credit risk of non-payment and loss than residential mortgage loans do for several factors, including dependence on the successful operation of a business or a project for repayment.
These types of loans generally expose a lender to a higher degree of credit risk of non-payment and loss than residential mortgage loans due to several factors, including dependence on the successful operation of a business or a project for repayment. Further, the Company facilitates construction-to-permanent financing, which may come with heightened credit risks.
If these proposals change or progress, this could impact the Company’s ability to borrow from the FHLB and require it to find other sources of credit, including borrowing directly from the FRB. The Company is in competition with many other banks, including larger commercial banks which have greater resources, as well as “fintech” companies for loan and deposit customers.
If these proposals change 17 Table of Contents or progress, this could impact the Company’s ability to borrow from the FHLB and require it to find other sources of credit, including borrowing directly from the FRB.
As of December 31, 2024, $815.1 million, or 38.8%, of the Company’s deposits were time deposits with $768.6 million, or 94.3% of those time deposits, maturing within one year. The Company’s liquidity position could be impacted by these deposits if its customers decide to withdraw funds at maturity and invest in non-deposit products, including but not limited to U.S. Treasuries.
The Company’s liquidity position could be impacted by these deposits if its customers decide to withdraw funds at maturity and invest in non-deposit products, including but not limited to U.S. Treasuries, money market funds and other alternative sources.
Secondarily, because of the complexity inherent in these approaches, misunderstanding or misuse of their outputs could similarly result in suboptimal decision-making. 16 Table of Contents Liquidity risk.
Secondarily, because of the complexity inherent in these approaches, misunderstanding or misuse of their outputs could similarly result in suboptimal decision-making. There is the risk that the Company will be insufficiently liquid to meet its obligations as they come due.
In addition, financial technology companies, either directly or in partnership with other insured depository institutions, compete for loan and deposit customers. Similarly, larger legacy non-financial companies, such as 17 Table of Contents Apple, Alphabet and Amazon, are further increasing competition to compete for loans, deposits and payments.
In addition, the Modernization Act permits other financial entities, such as insurance companies and securities firms, to acquire or form financial institutions, thereby further increasing competition. In addition, financial technology companies, either directly or in partnership with other insured depository institutions, compete for loan and deposit customers.
The banking industry within the State of New Jersey is highly competitive. The Company’s principal market area is also served by branch offices of large commercial banks and thrift institutions. In addition, the Modernization Act permits other financial entities, such as insurance companies and securities firms, to acquire or form financial institutions, thereby further increasing competition.
The Company is in competition with many other banks, including larger commercial banks which have greater resources, as well as “fintech” companies for loan and deposit customers. The banking industry within the State of New Jersey is highly competitive. The Company’s principal market area is also served by branch offices of large commercial banks and thrift institutions.
The value of the real estate collateral that provides an alternate source of repayment in the event of default by the borrower could deteriorate during the time the credit is extended. Underwriting and portfolio management activities cannot completely eliminate all risks related to these loans.
In addition, commercial real estate loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to one-to-four family residential mortgage loans. The value of the real estate collateral that provides an alternate source of repayment in the event of default by the borrower could deteriorate during the time the credit is extended.
Stress in the real estate market, combined with any weakness in economic conditions could drive losses beyond that which is provided for in the Company’s allowance for credit losses. In that event, the Company’s earnings could be adversely affected.
Further, such declines in real estate values could impact values in the Company’s debt securities investment portfolio, ultimately resulting in an adverse effect on the Company’s profitability, capital and asset quality. Stress in the real estate market, combined with any weakness in economic conditions could drive losses beyond that which is provided for in the Company’s allowance for credit losses.
A significant portion of the Company’s loan portfolio is secured by commercial real estate. As of December 31, 2024, total commercial real estate loans, including construction loans, represented 53.8 percent of our loan portfolio. Included in this portfolio are loans to industries including hotel/motel, retail, educational facilities, office space, warehouses, food/beverage services and religious facilities.
A significant portion of the Company’s loan portfolio is secured by commercial real estate. As of December 31, 2025, total commercial real estate loans, including construction loans, represented 56.6 percent of our loan portfolio.
Removed
Further, the Company facilitates construction-to-permanent financing, which may come with heightened credit risks. In addition, commercial real estate loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to one-to-four family residential mortgage loans.
Added
In that event, the Company’s earnings and capital could be adversely affected. Furthermore, stress in the real estate market could severely impact the Company’s ability to sell residential mortgage loans and SBA 7a loans on the secondary market. The inability to sell such loans would adversely impact the Company’s noninterest revenue and hence negatively impact earnings and capital.
Removed
Any formal or informal action by our supervisors may require us to increase our reserves on these loans and adversely impact our earnings.
Added
Included in this portfolio are loans to industries including hotel/motel, food/beverage services, educational facilities, retail, warehouse, office, religious facilities, automotive, healthcare facilities, gas station and educational facilities. Additionally, mixed-use loans, in their hybrid nature, may include these industries, as well as others not denoted above.
Removed
This risk assessment process is performed at least quarterly and, as adjustments become necessary, they 14 Table of Contents are realized in the periods in which they become known.
Added
Underwriting, portfolio management activities and other credit administration functions, cannot completely eliminate all risks related to these loans. Any significant failure to pay on time by our clients or a significant default by our clients would materially and adversely affect us.
Removed
While we are not currently subject to annual Dodd-Frank stress testing and the Comprehensive Capital Analysis and Review submissions, we anticipate that model-derived testing may become more extensively implemented by regulators in the future.
Added
Any weakening of the commercial real estate market may increase the likelihood of default on these loans, which could negatively impact our loan portfolio’s performance and asset quality.
Removed
In addition, the Company maintains cyber liability insurance to mitigate against certain losses it may incur.
Added
Management will have to apply resources to ensure compliance with all applicable provisions of regulatory reforms, including the Dodd-Frank Act and any implementing rules, which may increase the Company’s costs of operations and adversely impact its earnings.
Added
As of December 31, 2025, the Company had $882.9 million in time deposits, comprising 38.0% of total deposits. Time deposits maturing within one year were $842.4 million, or 95.4% of time deposits and 36.2% of total deposits. Additionally, as of December 31, 2025, uninsured or uncollateralized deposits represented 21.7% of total deposits.
Added
The emergence of U.S. dollar–denominated stablecoins and the evolving legislative and regulatory landscape governing them—including recently proposed and enacted federal frameworks such as the GENIUS Act and other stablecoin specific bills—may adversely affect our deposit base, liquidity profile, and competitive position.
Added
As stablecoins become more widely adopted for payments and value storage, customers may shift funds from traditional bank deposits into digital assets, potentially reducing our low cost funding sources and increasing our reliance on more expensive or volatile funding alternatives.
Added
New legislation could also impose operational, compliance, cybersecurity, or reporting requirements on financial institutions that interact with stablecoin issuers, custodians, or users. The pace and direction of regulatory change remain uncertain, and future rules could materially impact our ability to compete, our cost structure, or the behavior of our customers.
Added
Any of these developments could adversely affect our business, financial condition, and results of operations. The nature and growth rate of our loan portfolio may expose us to increased lending risks. Given the significant growth in our loan portfolio, many of our loans are unseasoned, meaning that they were originated relatively recently.
Added
Future offerings of common stock or debt securities may adversely affect the market price of the Company’s stock.
Added
Any such equity offerings may dilute the holdings of existing shareholders or reduce the market price of the Company’s common stock, or both. Debt offerings could increase the Company’s interest expense, impose restrictive covenants, or otherwise adversely affect the Company’s financial condition. There can be no assurance that any such capital could be raised on acceptable terms, or at all.
Added
The Company maintains an incident response and business continuity framework, which is periodically tested through tabletop exercises involving executive management, senior leadership and other critical business functions. These exercises are intended to support effective decision making, communication and coordination during cybersecurity or operational incidents; however, there can be no assurance that such measures will be effective in all circumstances.
Added
Our use of artificial intelligence, including generative artificial intelligence, may expose us to operational, regulatory, legal, and reputational risks that could adversely affect our business, financial condition, and results of operations. We use, and expect to continue to expand our use of, artificial intelligence and machine learning technologies, including generative artificial intelligence models, in our operations and through third-party vendors.
Added
These technologies are complex, rapidly evolving, and may not perform as intended. AI systems may produce inaccurate, biased, or unpredictable results, which could lead to flawed business decisions, customer harm, control failures, or violations of law or regulation, including consumer protection and fair lending requirements.
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The regulatory and supervisory framework governing the use of artificial intelligence in the banking industry is developing and remains uncertain. Banking regulators have increased scrutiny of AI-related practices, including governance, model risk management, explainability, data usage, and third-party oversight.
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New laws, regulations, or supervisory expectations could limit our ability to deploy AI technologies, require significant changes to our systems or processes, increase compliance costs, or result in supervisory actions, fines, or penalties if our use of AI is deemed noncompliant or unsafe. The use of AI, including generative AI, may also increase cybersecurity, data privacy, and information security risks.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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During his tenure at Unity Bank, he is a member of various Risk and Cybersecurity Committees of the New Jersey Bankers Association, is a member of FS-ISAC, The Independent Community Bankers of America and our primary banking vendors advisory and risk management committees. ​ The Company’s Chief Compliance Officer was appointed as the Company’s Information Security Officer in 2016. ​ The Virtual Information Security Officer (vISO), an outsourced consultant, has an over 19-year career in Information Technology, Cybersecurity and both Internal/External Audit experience.
During his tenure at Unity Bank, he is a member of various Risk and Cybersecurity Committees of the New Jersey Bankers Association, is a member of FS-ISAC, The Independent Community Bankers of America and our primary banking vendors advisory and risk management committees. ​ The Company’s Chief Compliance Officer was appointed as the Company’s Information Security Officer in 2016. ​ The Virtual Information Security Officer (vISO), an outsourced consultant, has an over 20-year career in Information Technology, Cybersecurity and both Internal/External Audit experience.
Finally, the Company’s cybersecurity compliance program is audited by the Bank’s outsourced internal auditor. ​ The Company also maintains insurance which may provide coverage for expenses and certain losses incurred in connection with a cybersecurity incident. ​ Cybersecurity Incident Response Planning The Company has established a comprehensive cybersecurity incident response plan to ensure the swift and effective handling of any potential security breaches.
Finally, the Company’s cybersecurity compliance program is audited by the Bank’s outsourced internal auditor. ​ The Company also maintains cyber liability insurance which may provide coverage for expenses and certain losses incurred in connection with a cybersecurity incident. ​ Cybersecurity Incident Response Planning The Company has established a comprehensive cybersecurity incident response plan to ensure the swift and effective handling of any potential security breaches.
This plan includes detailed procedures for identifying, assessing, and mitigating cybersecurity threats, as well as protocols for communication and coordination with relevant stakeholders. Regular training and simulations are conducted to keep the Company’s response team prepared for various scenarios, ensuring minimal disruption to its operations and safeguarding the Company’s customers’ data. ​ ​ ​ ​ 23 Table of Contents
This plan includes detailed procedures for identifying, assessing, and mitigating cybersecurity threats, as well as protocols for communication and coordination with relevant stakeholders. Regular training and simulations are conducted to keep the Company’s response team prepared for various scenarios, ensuring minimal disruption to its operations and safeguarding the Company’s customers’ data. ​ ​ ​ ​ 25 Table of Contents
The ITSC also includes a non-voting member that is an outsourced cybersecurity expert. ​ Over his 17-year career, the Company’s Chief Information Officer has served in multiple Information Technology and Cybersecurity roles, such as Senior Engineer, responsible for implementing hardened infrastructure for both physical and 22 Table of Contents cloud applications; Solutions Architect, designing infrastructures for highly regulated industries including Financial Services, Local/State Government and Healthcare; Director of Service Delivery, overseeing engineering, solutions architecture and maintaining the System and Organization Controls (SOC) program prior to joining Unity Bank.
The ITSC also includes a non-voting member that is an independent, outsourced cybersecurity expert. ​ Over his 18-year career, the Company’s Chief Information Officer has served in multiple Information Technology and Cybersecurity roles, such as Senior Engineer, responsible for implementing hardened infrastructure for both physical and cloud applications; Solutions Architect, designing infrastructures for highly regulated industries including Financial Services, Local/State Government and Healthcare; Director of Service Delivery, overseeing engineering, solutions architecture and maintaining the System and Organization Controls (SOC) program prior to joining Unity Bank.
The Company’s internal IT team performs monthly vulnerability scanning and performs an annual risk assessment based on the National Institute of Standards and Technology Cybersecurity Framework. The results are reported to the ITSC.
The Company’s internal IT team performs monthly vulnerability scanning and performs an annual risk assessment based on the National Institute of Standards and Technology Cybersecurity Framework. The results are reported to the ITSC, which is then reported to the Board of Directors.
He presently holds a position of Partner of Herbein, COA Advisor & Audit, where he’s held multiple positions within Information Technology and Cybersecurity. ​ The Company’s Information Technology Manager has an over 26-year career in Information Technology, the prior 13-years of which have been in Information Technology, Security and Cybersecurity, working primarily in regulated industries. ​ In order to ensure that cybersecurity risk management is integrated into the Company’s overall risk management plans, systems and processes, the ITSC and Chief Information Officer provide reports and updates to the Board of Directors, or a Committee thereof on a quarterly basis. ​ The Company’s cybersecurity risk mitigation program involves a combination of internal resources and the use of third parties.
He presently holds a position of Partner of Cherry Bekaert, formerly Herbein & Company, Inc., COA Advisor & Audit, where he’s held multiple positions within Information Technology and Cybersecurity. ​ The Company’s Information Technology Manager has an over 27-year career in Information Technology, the prior 14-years of which have been in Information Technology, Security and Cybersecurity, working primarily in regulated industries. ​ In order to ensure that cybersecurity risk management is integrated into the Company’s overall risk management plans, systems and processes, the ITSC and Chief Information Officer provide reports and updates to the Board of Directors, or a Committee thereof on a quarterly basis.
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To ensure employees are properly trained, annually all employees are required to take a Gramm-Leach-Bliley Act training. ​ 24 Table of Contents The Company’s cybersecurity risk mitigation program involves a combination of internal resources and the use of third parties.

Item 2. Properties

Properties — owned and leased real estate

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Item 2. Properties: The Company presently conducts its business through its main office located at 64 Old Highway 22, Clinton, New Jersey and its twenty-one branch offices. The Company is currently leasing additional back office space in Clinton, New Jersey, in a building adjacent to its main office. The Company’s facilities are adequate to meet its needs.
Item 2. Properties: The Company presently conducts its business through its main office located at 64 Old Highway 22, Clinton, New Jersey and its twenty-two branch offices. The Company is currently leasing additional back office space in Clinton, New Jersey, in a building adjacent to its main office. The Company’s facilities are adequate to meet its needs.
The following table sets forth certain information regarding the Company’s properties from which it conducts business as of December 31, 2024. ​ ​ ​ ​ ​ ​ ​ Location Leased or Owned Date Leased or Acquired Lease Expiration North Plainfield, NJ Owned 1991 — Linden, NJ Owned 1997 — Whitehouse, NJ Owned 1998 — Union, NJ Leased 2021 2036 Scotch Plains, NJ Owned 2004 — Flemington, NJ Owned 2005 — Forks Township, PA Leased 2006 2036 Middlesex, NJ Owned 2007 — Somerset, NJ Leased 2012 2027 Washington, NJ Owned 2012 — Highland Park, NJ Owned 2013 — South Plainfield, NJ Owned 2013 — Edison, NJ Owned 2013 — Clinton, NJ* Owned 2016 — Somerville, NJ Owned 2016 — Emerson, NJ Owned 2016 — Phillipsburg, NJ Leased 2017 2027 Clinton, NJ** Leased 2018 2036 Bethlehem, PA Leased 2018 2028 Parsippany, NJ ​ Owned ​ 2023 ​ — Lakewood, NJ Leased 2022 2037 Fort Lee, NJ Leased 2022 2037 *Headquarters Space **Back Office Space ​ ​ ​
The following table sets forth certain information regarding the Company’s properties from which it conducts business as of December 31, 2025. ​ ​ ​ ​ ​ ​ ​ Location ​ ​ ​ Leased or Owned ​ ​ ​ Date Leased or Acquired ​ ​ ​ Lease Expiration North Plainfield, NJ Owned 1991 — Linden, NJ Owned 1997 — Whitehouse, NJ Owned 1998 — Union, NJ Leased 2021 2036 Scotch Plains, NJ Owned 2004 — Flemington, NJ Owned 2005 — Forks Township, PA Leased 2006 2036 Middlesex, NJ Owned 2007 — Somerset, NJ Leased 2012 2027 Washington, NJ Owned 2012 — Highland Park, NJ Owned 2013 — South Plainfield, NJ Owned 2013 — Edison, NJ Owned 2013 — Clinton, NJ* Owned 2016 — Somerville, NJ Owned 2016 — Emerson, NJ Owned 2016 — Phillipsburg, NJ Leased 2017 2027 Clinton, NJ** Leased 2018 2036 Bethlehem, PA Leased 2018 2028 Parsippany, NJ ​ Owned ​ 2023 ​ — Lakewood, NJ Leased 2022 2037 Fort Lee, NJ ​ Leased ​ 2022 ​ 2037 Madison, NJ Leased 2025 2035 *Headquarters Space **Back Office Space ​ ​ ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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A total of 229 thousand shares were repurchased at an average price of $27.05 during 2024, all of which were repurchased under the prior repurchase plan, leaving 685 thousand shares available for repurchase as of December 31, 2024.
A total of 229 thousand shares were repurchased at an average price of $27.05 during 2024, leaving 685 thousand shares available for repurchase as of December 31, 2024.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities: (a) Market Information The Company’s Common Stock is quoted on the NASDAQ Global Market under the symbol “UNTY.” The Company declared cash dividends of $0.13 per share in each of the first, second, third and fourth quarters of 2024.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities: (a) Market Information The Company’s Common Stock is quoted on the NASDAQ Global Market under the symbol “UNTY.” The Company declared cash dividends of $0.14 per share for the first and second quarters of 2025, and subsequently increased the 26 Table of Contents dividend to $0.15 per share for the third and fourth quarters of the year.
The timing and amount of additional purchases, if any, will depend upon several factors including the Company’s capital needs, the Company’s liquidity position, the performance of its loan portfolio, the need for additional provisions for credit losses and the market price of the Company’s stock. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Number of ​ ​ Total ​ ​ ​ ​ Shares Purchased ​ Shares that May ​ ​ Number of ​ ​ Weighted ​ as Part of Publicly ​ Yet be Purchased ​ ​ Shares ​ Average Price ​ Announced Plans ​ Under the Plans Period ​ Purchased ​ Paid per Share ​ or Programs ​ or Programs January 1, 2024 through January 31, 2024 ​ - ​ $ - ​ - ​ 413,747 February 1, 2024 through February 29, 2024 ​ 28,709 ​ ​ 26.91 ​ 28,709 ​ 385,038 March 1, 2024 through March 31, 2024 ​ 121,288 ​ ​ 27.23 ​ 121,288 ​ 263,750 April 1, 2024 through April 30, 2024 ​ 4,190 ​ ​ 26.73 ​ 4,190 ​ 259,560 May 1, 2024 through May 31, 2024 ​ 35,100 ​ ​ 26.99 ​ 35,100 ​ 224,460 June 1, 2024 through June 30, 2024 ​ 29,481 ​ ​ 26.51 ​ 29,481 ​ 194,979 July 1, 2024 through July 31, 2024 ​ 10,334 ​ ​ 27.27 ​ 10,334 ​ 184,645 August 1, 2024 through August 31, 2024 ​ - ​ ​ - ​ - ​ 684,645 September 1, 2024 through September 30, 2024 ​ - ​ ​ - ​ - ​ 684,645 October 1, 2024 through October 31, 2024 ​ - ​ ​ - ​ - ​ 684,645 November 1, 2024 through November 30, 2024 ​ - ​ ​ - ​ - ​ 684,645 December 1, 2024 through December 31, 2024 ​ - ​ ​ - ​ - ​ 684,645 ​ ​ ​ ​ ​ ​ The above table excludes stock repurchase excise taxes accrued or paid. ​ Item 6.
The timing and amount of additional purchases, if any, will depend upon several factors including the Company’s capital needs, the Company’s liquidity position, the performance of its loan portfolio, the need for additional provisions for credit losses and the market price of the Company’s stock. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Number of ​ ​ Total ​ ​ ​ ​ Shares Purchased ​ Shares that May ​ ​ Number of ​ ​ Weighted ​ as Part of Publicly ​ Yet be Purchased ​ ​ Shares ​ Average Price ​ Announced Plans ​ Under the Plans Period ​ Purchased ​ Paid per Share ​ or Programs ​ or Programs January 1, 2025 through January 31, 2025 ​ - ​ $ - ​ - ​ 684,645 February 1, 2025 through February 29, 2025 ​ - ​ ​ - ​ - ​ 684,645 March 1, 2025 through March 31, 2025 ​ - ​ ​ - ​ - ​ 684,645 April 1, 2025 through April 30, 2025 ​ 50,000 ​ ​ 38.78 ​ 50,000 ​ 634,645 May 1, 2025 through May 31, 2025 ​ - ​ ​ - ​ - ​ 634,645 June 1, 2025 through June 30, 2025 ​ - ​ ​ - ​ - ​ 634,645 July 1, 2025 through July 31, 2025 ​ - ​ ​ - ​ - ​ 634,645 August 1, 2025 through August 31, 2025 ​ - ​ ​ - ​ - ​ 634,645 September 1, 2025 through September 30, 2025 ​ - ​ ​ - ​ - ​ 634,645 October 1, 2025 through October 31, 2025 ​ 5,402 ​ ​ 45.32 ​ 5,402 ​ 629,243 November 1, 2025 through November 30, 2025 ​ 60,894 ​ ​ 46.66 ​ 60,894 ​ 568,349 December 1, 2025 through December 31, 2025 ​ - ​ ​ - ​ - ​ 568,349 ​ ​ ​ ​ ​ ​ The above table excludes stock repurchase excise taxes accrued or paid. ​ Item 6.
The declaration and payment of future dividends to holders of the Company’s common stock is at the discretion of our Board and 24 Table of Contents depends upon many factors, including our financial condition, earnings, capital requirements, legal requirements, regulatory constraints and other factors that our Board deems relevant. ​ (b) Repurchase Plan On August 1, 2024 the Board authorized a repurchase plan permitting the repurchase of up to 500 thousand shares, or approximately 5.0% of the Company’s outstanding common stock, in addition to the previously approved repurchase plan authorizing the repurchase of up to 500 thousand shares of common stock.
The declaration and payment of future dividends to holders of the Company’s common stock is at the discretion of our Board and depends upon many factors, including our financial condition, earnings, capital requirements, legal requirements, regulatory constraints and other factors that our Board deems relevant.
A total of 656 thousand shares were repurchased at an average price of $23.69 during 2023, leaving 414 thousand shares available for repurchase as of December 31, 2023.
A total of 116 thousand shares were repurchased at an average price of $43.21 during 2025, all of which were repurchased under the prior repurchase plan, leaving 568 thousand shares available for repurchase as of December 31, 2025.
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As of December 31, 2025, approximately 281 holders of record held shares of our common stock. ​ (b) Repurchase Plan On August 1, 2024 the Board authorized a repurchase plan permitting the repurchase of up to 500 thousand shares, or approximately 5.0% of the Company’s outstanding common stock, in addition to the previously approved repurchase plan authorizing the repurchase of up to 500 thousand shares of common stock.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Item 6. Selected Financial Data ​ 25 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 25 Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 49 Item 8. Financial Statements, Report of Independent Auditor (PCAOB ID: 392) and Supplementary Data ​ 50
Item 6. Selected Financial Data ​ 27 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 27 Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 52 Item 8. Financial Statements, Report of Independent Auditor (PCAOB ID: 392) and Supplementary Data ​ 53

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Loans The loan portfolio, which represents the Company’s largest asset group, is a significant source of both interest and fee income. The portfolio consists of SBA, commercial, residential mortgage, consumer and residential construction loans.
Loans The loan portfolio, which represents the Company’s largest asset group, is a significant source of both interest and fee income. The portfolio consists of SBA, commercial, commercial construction, residential mortgage, consumer and residential construction loans.
The principal objectives of the ALCO are to establish prudent risk management guidelines, evaluate and control the level of interest rate risk in balance sheet accounts, determine the level of appropriate risk given the business focus, operating environment, capital and liquidity requirements and actively manage risk within Board-approved guidelines.
The principal objectives of ALCO are to establish prudent risk management guidelines, evaluate and control the level of interest rate risk in balance sheet accounts, determine the level of appropriate risk given the business focus, operating environment, capital and liquidity requirements and actively manage risk within Board-approved guidelines.
These increases were partially offset by $6.2 million in treasury stock purchased at cost and $5.0 million in dividends paid on common stock. For additional information on shareholders’ equity, see Note 10 to the Consolidated Financial Statements.
These increases were partially offset by $5.0 million in treasury stock purchased at cost and $5.6 million in dividends paid on common stock. For additional information on shareholders’ equity, see Note 10 to the Consolidated Financial Statements.
Declines in the market values of real estate in the Company’s trade area impact the value of the collateral securing its loans. This could lead to greater losses in the event of defaults on loans secured by real estate. At December 31, 2024 and 2023, approximately 96 percent of the Company’s loan portfolio was secured by real estate.
Declines in the market values of real estate in the Company’s trade area impact the value of the collateral securing its loans. This could lead to greater losses in the event of defaults on loans secured by real estate. At December 31, 2025 and 2024, approximately 96 percent of the Company’s loan portfolio was secured by real estate.
Consistent with our goal to operate as a sound and profitable financial organization, Unity Bancorp and Unity Bank actively seek to maintain our well capitalized status in accordance with regulatory standards. As of December 31, 2024, Unity Bank exceeded all capital requirements of the federal banking regulators and was considered well capitalized.
Consistent with our goal to operate as a sound and profitable financial organization, Unity Bancorp and Unity Bank actively seek to maintain our well capitalized status in accordance with regulatory standards. As of December 31, 2025, Unity Bank exceeded all capital requirements of the federal banking regulators and was considered well capitalized.
Factors that may cause actual results to differ from those results expressed or implied, include, but are not limited to those listed under “Item 1A - Risk Factors” in this Annual Report; the overall economy and the interest rate environment; the ability of customers to repay their obligations; the adequacy of the allowance for credit losses; competition; significant 47 Table of Contents changes in tax, accounting or regulatory practices and requirements; and technological changes.
Factors that may cause actual results to differ from those results expressed or implied, include, but are not limited to those listed under “Item 1A - Risk Factors” in this Annual Report; the overall economy and the interest rate environment; the ability of customers to repay their obligations; the adequacy of the allowance for credit losses; competition; significant changes in tax, accounting or regulatory practices and requirements; and technological changes.
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 real estate related loans.
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.
The following table provides the major components of AFS debt securities, HTM debt securities and equity investments at their carrying value as of December 31, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ (In thousands) ​ ​ December 31, 2024 ​ ​ December 31, 2023 Available for sale, at fair value: ​ ​ ​ ​ ​ ​ U.S.
The following table provides the major components of AFS debt securities, HTM debt securities and equity investments at their carrying value as of December 31, 2025 and December 31, 2024: ​ ​ ​ ​ ​ ​ ​ (In thousands) ​ ​ December 31, 2025 ​ ​ December 31, 2024 Available for sale, at fair value: ​ ​ ​ ​ ​ ​ U.S.
(B) The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued. 30 Table of Contents The rate volume table below presents an analysis of the impact on interest income and expense resulting from changes in average volume and rates over the periods presented.
(B) The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued. (C) The rate volume table below presents an analysis of the impact on interest income and expense resulting from changes in average volume and rates over the periods presented.
Although Management has taken certain steps to mitigate the negative effect of the aforementioned items, significant unfavorable changes could severely impact the assumptions used and have an adverse effect on future profitability.
Although Management 51 Table of Contents has taken certain steps to mitigate the negative effect of the aforementioned items, significant unfavorable changes could severely impact the assumptions used and have an adverse effect on future profitability.
Approximately $72.6 million and $75.6 million in SBA loans were sold but serviced by the Company at December 31, 2024 and December 31, 2023, respectively, and are not included on the Company’s Balance Sheet. There is no direct relationship or correlation between the guarantee percentages and the level of charge-offs and recoveries on the Company’s SBA 7(a) loans.
Approximately $49.2 million and $72.6 million in SBA loans were sold but serviced by the Company at December 31, 2025 and December 31, 2024, respectively, and are not included on the Company’s Balance Sheet. There is no direct relationship or correlation between the guarantee percentages and the level of charge-offs and recoveries on the Company’s SBA 7(a) loans.
There were no securities encumbered at December 31, 2024 and December 31, 2023. Approximately 63 percent and 66 percent of the total investment portfolio had a fixed rate of interest at December 31, 2024 and December 31, 2023, respectively. For additional information on securities, see Note 2 to the Consolidated Financial Statements.
There were no securities encumbered at December 31, 2025 and December 31, 2024. Approximately 57 and 63 percent of the total investment portfolio had a fixed rate of interest at December 31, 2025 and December 31, 2024, respectively. For additional information on securities, see Note 2 to the Consolidated Financial Statements.
In December 2024, FHLB issued an additional $28.0 million municipal deposits 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, compared to a letter of credit with a balance of $25.0 million as of December 31, 2023.
In December 2025, FHLB issued an additional $33.0 million municipal deposits 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, compared to a letter of credit with a balance of $28.0 million as of December 31, 2024.
In addition, the Company can pledge additional collateral in the form of 1 to 4 family residential mortgages, consumer loans, commercial loans or investment securities to increase these lines with the FHLB and FRB. As of December 31, 2024, total available funding plus cash on hand represented 182.5% of uninsured or uncollateralized deposits.
In addition, the Company can pledge additional collateral in the form of 1 to 4 family residential mortgages, consumer loans, commercial loans or investment securities to increase these lines with the FHLB and FRB. As of December 31, 2025, total available funding plus cash on hand represented 142.1% of uninsured or uncollateralized deposits.
The allocated allowance is the total of 41 Table of Contents identified specific and general reserves by loan category. The allocation is not necessarily indicative of the categories in which future losses may occur.
The allocated allowance is the total of identified specific and general reserves by loan category. The allocation is not necessarily indicative of the categories in which future losses may occur.
At December 31, 2024 and December 31, 2023, a $0.6 million commitment reserve was reported. ​ See Note 4 to the accompanying Consolidated Financial Statements for more information regarding the Allowance for Credit Losses and Reserve for Unfunded Loan Commitments.
At December 31, 2025, a $0.7 million commitment reserve was reported, compared to a $0.6 million reserve at December 31, 2024. ​ See Note 4 to the accompanying Consolidated Financial Statements for more information regarding the Allowance for Credit Losses and Reserve for Unfunded Loan Commitments.
The Bank provides a full range of commercial and retail banking services through online banking platforms and its twenty-one branch offices located in Bergen, Hunterdon, 25 Table of Contents Middlesex, Morris, Ocean, Somerset, Union and Warren counties in New Jersey and Northampton County in Pennsylvania.
The Bank provides a full range of commercial and retail banking services through online banking platforms and its twenty-two branch offices located in Bergen, Hunterdon, Middlesex, Morris, Ocean, Somerset, Union and Warren counties in New Jersey and Northampton County in Pennsylvania.
The weighted average life of AFS debt securities, adjusted for prepayments, amounted to 4.9 years and 5.6 years at December 31, 2024 and 2023, respectively. The effective duration of AFS debt securities amounted to 1.4 and 1.7 years at December 31, 2024 and 2023, respectively.
The weighted average life of AFS debt securities, adjusted for prepayments, amounted to 5.1 years and 4.9 years at December 31, 2025 and 2024, respectively. The effective duration of AFS debt securities amounted to 1.9 and 1.4 years at December 31, 2025 and 2024, respectively.
Government sponsored entities ​ $ 28,000 ​ $ 28,000 State and political subdivisions ​ ​ 1,234 ​ ​ 1,272 Residential mortgage-backed securities ​ ​ 12,060 ​ ​ 6,850 Total securities held to maturity ​ $ 41,294 ​ $ 36,122 Equity Securities, at fair value: ​ ​ ​ ​ ​ ​ Total Equity Securities ​ $ 9,850 ​ $ 7,802 ​ AFS debt securities are investments carried at fair value that may be sold in response to changing market and interest rate conditions, liquidity management purposes, or for other business purposes.
Government sponsored entities ​ $ 28,000 ​ $ 28,000 State and political subdivisions ​ ​ 1,299 ​ ​ 1,234 Residential mortgage-backed securities ​ ​ 7,277 ​ ​ 12,060 Total securities held to maturity ​ $ 36,576 ​ $ 41,294 Equity Securities, at fair value: ​ ​ ​ ​ ​ ​ Total Equity Securities ​ $ 16,569 ​ $ 9,850 ​ AFS debt securities are investments carried at fair value that may be sold in response to changing market and interest rate conditions, liquidity management purposes, or for other business purposes.
As of December 31, 2024, deposits included $400.6 million of Government deposits, as compared to $346.3 million at year end 2023. 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.
As of December 31, 2025, deposits included $444.9 million of Government deposits, as compared to $400.6 million at year end 2024. 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.
As a member of the Federal Home Loan Bank of New York, the Company can borrow additional funds based on the market value of collateral pledged. At December 31, 2024, pledging provided an additional $292.2 million in borrowing potential from the FHLB, $245.9 million from the FRB and $20.0 million from other sources.
As a member of the Federal Home Loan Bank of New York, the Company can borrow additional funds based on the market value of collateral pledged. At December 31, 2025, pledging provided an additional $247.0 million in borrowing potential from the FHLB, $232.2 million from the FRB and $20.0 million from other sources.
As of December 31, 2024, the fair value of HTM debt securities was $33.8 million, compared to $29.7 million at December 31, 2023. The effective duration of HTM debt securities amounted to 9.0 and 10.9 years at December 31, 2024 and 2023, respectively.
As of December 31, 2025, the fair value of HTM debt securities was $30.4 million, compared to $33.8 million at December 31, 2024. The effective duration of HTM debt securities amounted to 10.7 and 9.0 years at December 31, 2025 and 2024, respectively.
The increase was complemented by a $4.3 million and $3.9 million increase in average interest-bearing deposits and average investment securities, respectively, partially offset by a $7.1 million decrease in average FHLB stock. ● The yield on total interest-earning assets increased 44 basis points to 6.57 percent for the year ended December 31, 2024 when compared to 2023.
The increase was complemented by a $7.4 million increase in average interest-bearing deposits, partially offset by a $3.8 million and $1.1 million decrease in average investment securities and FHLB stock, respectively. ● The yield on total interest-earning assets increased 14 basis points to 6.71 percent for the year ended December 31, 2025 when compared to 2024.
The carrying value of securities at December 31, 2024 is distributed by contractual maturity. Residential mortgage-backed securities and other securities, which may have principal prepayment provisions, are distributed based on contractual maturity.
The carrying value of securities at December 31, 2025 is distributed by contractual 37 Table of Contents maturity. Residential mortgage-backed securities and other securities, which may have principal prepayment provisions, are distributed based on contractual maturity.
The yield on SBA 7(a) loans, which is generally floating and adjusts quarterly to the Prime Rate, was 8.91 percent for the year ended December 31, 2024, compared to 8.88 percent in the prior year.
The yield on SBA 7(a) loans, which is generally floating and adjusts quarterly to the Prime Rate, was 7.87 percent for the year ended December 31, 2025, compared to 8.56 percent in the prior year.
The below table reflects a 5-year trend of the Company’s net income and return on average equity, (“ROE”): ​ Results of Operations Net income totaled $41.5 million, or $4.06 per diluted share for the year ended December 31, 2024, compared to $39.7 million, or $3.84 per diluted share for the year ended December 31, 2023.
The below table reflects a 5-year trend of the Company’s net income and return on average equity, (“ROE”): Results of Operations Net income totaled $58.0 million, or $5.67 per diluted share for the year ended December 31, 2025, compared to $41.5 million, or $4.06 per diluted share for the year ended December 31, 2024.
Approximately $75.4 million and $79.0 million in residential loans were sold but serviced by the Company at December 31, 2024 and December 31, 2023, respectively, and are not included on the Company’s Balance Sheet. The yield on residential mortgages was 6.04 percent for 2024, compared to 5.48 percent for 2023.
Approximately $66.3 million and $75.5 million in residential loans were sold but serviced by the Company at December 31, 2025 and December 31, 2024, respectively, and are not included on the Company’s Balance Sheet. The yield on residential mortgages was 6.32 percent for 2025, compared to 6.04 percent for 2024.
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 residential properties. These loans amounted to $76.7 million at December 31, 2024, an increase of $4.0 million from December 31, 2023.
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 residential properties. These loans amounted to $85.2 million at December 31, 2025, an increase of $8.5 million from December 31, 2024.
Additionally, equity securities consist of Community Reinvestment Act ("CRA") investments and the equity holdings of financial institutions. Equity securities totaled $9.8 million at December 31, 2024, an increase of $2.0 million, or 26.2 percent, compared to $7.8 million at December 31, 2023.
Additionally, equity securities consist of Community Reinvestment Act ("CRA") investments and the equity holdings of financial institutions. Equity securities totaled $16.6 million at December 31, 2025, an increase of $6.7 million, or 68.2 percent, compared to $9.9 million at December 31, 2024.
Each of these segments is subject to differing levels of credit and interest rate risk. ​ 35 Table of Contents Total loans were $2.3 billion at December 31, 2024, an increase of $88.6 million or 4.1 percent when compared to year end 2023.
Each of these segments is subject to differing levels of credit and interest rate risk. ​ 38 Table of Contents Total loans were $2.5 billion at December 31, 2025, an increase of $284.1 million or 12.6 percent when compared to year end 2024.
Income Tax Expense For 2024, the Company reported income tax expense of $12.9 million for an effective tax rate of 23.8%, compared to an income tax expense of $13.3 million and an effective tax rate of 25.1% in 2023.
Income Tax Expense For 2025, the Company reported income tax expense of $17.6 million for an effective tax rate of 23.3%, compared to an income tax expense of $12.9 million and an effective tax rate of 23.8% in 2024.
Within this portfolio the average deposit size was $7.7 million as of December 31, 2024. ● Borrowed Funds . Total FHLB borrowings amounted to $220.5 million and $356.4 million as of December 31, 2024 and 2023, respectively.
Within this portfolio the average deposit size was $8.2 million as of December 31, 2025. ● Borrowed Funds . Total FHLB borrowings amounted to $255.8 million and $220.5 million as of December 31, 2025 and 2024, respectively.
This increase was mainly driven by increases in the yield on loans and the balance of average loans. ● Of the $12.2 million increase in interest income on a tax-equivalent basis, $1.0 million was due to the increased average volume of interest-earning assets and $11.2 million was due to increased yields on average interest-earning assets. ● The average volume of interest-earning assets increased $30.2 million to $2.4 billion for 2024 compared to $2.3 billion for 2023.
This increase was mainly driven by the increase in the average balance of loans and in the yield on loans. ● Of the $17.9 million increase in interest income on a tax-equivalent basis, $12.9 million was due to the increased average volume of interest-earning assets and $5.0 million was due to increased yields on average interest-earning assets. ● The average volume of interest-earning assets increased $216.5 million to $2.6 billion for 2025 compared to $2.4 billion for 2024.
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.” 31 Table of Contents Noninterest Income The following table shows the components of noninterest income for the past two years: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, (In thousands) 2024 2023 Branch fee income ​ $ 1,391 ​ $ 997 Service and loan fee income ​ 2,165 ​ 1,928 Gain on sale of SBA loans held for sale, net ​ 660 ​ 1,299 Gain on sale of mortgage loans, net ​ 1,488 ​ 1,546 BOLI income ​ 544 ​ 852 Net securities gains ​ 586 ​ 7 Other income ​ 1,635 ​ 1,513 Total noninterest income ​ $ 8,469 ​ $ 8,142 ​ Noninterest income was $8.5 million for 2024, a $0.4 million increase compared to $8.1 million for 2023.
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.” 34 Table of Contents Noninterest Income The following table shows the components of noninterest income for the past two years: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, (In thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Branch fee income ​ $ 1,836 ​ $ 1,391 Service and loan fee income ​ 2,712 ​ 2,165 Gain on sale of SBA loans held for sale, net ​ 705 ​ 660 Gain on sale of mortgage loans, net ​ 1,527 ​ 1,488 BOLI income ​ 774 ​ 544 Net securities gains ​ 5,596 ​ 586 Other income ​ 1,629 ​ 1,635 Total noninterest income ​ $ 14,779 ​ $ 8,469 ​ Noninterest income was $14.8 million for 2025, a $6.3 million increase compared to $8.5 million for 2024.
The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on management’s credit evaluation of the borrower. As of December 31, 2024, the Bank had 46 Table of Contents $239.3 million in unused lines of credit and $77.5 million in outstanding commitments to borrowers.
The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on Management’s credit evaluation of the borrower. As of December 31, 2025, the Bank had $363.5 million in unused lines of credit and $139.1 million in outstanding commitments to borrowers.
The Company’s performance ratios for the past two years are listed in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ ​ 2024 2023 Net income per common share - Basic (1) ​ $ 4.13 ​ $ 3.89 ​ Net income per common share - Diluted (2) ​ $ 4.06 ​ $ 3.84 ​ Return on average assets ​ 1.68 % 1.63 % Return on average equity (3) ​ 14.99 % 16.05 % Efficiency ratio (4) ​ 45.77 % 45.55 % Dividend payout ratio (5) ​ ​ 12.81 % ​ 12.50 % Average equity to average assets (6) ​ ​ 11.24 % ​ 10.14 % ​ (1) Defined as net income divided by weighted average shares outstanding.
The Company’s performance ratios for the past two years are listed in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ Net income per common share - Basic (1) ​ $ 5.78 ​ $ 4.13 ​ Net income per common share - Diluted (2) ​ $ 5.67 ​ $ 4.06 ​ Return on average assets ​ 2.17 % 1.68 % Return on average equity (3) ​ 18.07 % 14.99 % Dividend payout ratio (4) ​ ​ 10.23 % ​ 12.81 % Average equity to average assets (5) ​ ​ 11.99 % ​ 11.24 % ​ (1) Defined as net income divided by weighted average shares outstanding.
Borrowed Funds and Subordinated Debentures As part of the Company’s overall funding and liquidity management program, from time to time the Company borrows from the Federal Home Loan Bank of New York. Residential mortgages and commercial real estate loans collateralize these borrowings.
Borrowed Funds and Subordinated Debentures As part of the Company’s overall funding and liquidity management program, from time to time the Company borrows from the Federal Home Loan Bank of New York.
Government sponsored entities ​ $ — ​ - % ​ $ 3,000 ​ 4.00 % ​ $ — ​ - % ​ $ 25,000 ​ 3.48 % ​ $ 28,000 ​ 3.54 % State and political subdivisions ​ ​ — ​ - ​ ​ ​ — ​ - ​ ​ ​ — ​ - ​ ​ ​ 1,234 ​ 5.19 ​ ​ ​ 1,234 ​ 5.19 ​ Residential mortgage-backed securities ​ ​ — ​ - ​ ​ ​ — ​ - ​ ​ ​ — ​ - ​ ​ ​ 12,060 ​ 4.50 ​ ​ ​ 12,060 ​ 4.50 ​ Total debt securities held for maturity ​ $ — ​ - % ​ $ 3,000 ​ 4.00 % ​ $ — ​ - % ​ $ 38,294 ​ 3.86 % ​ $ 41,294 ​ 3.87 % ​ Securities with a carrying value of $11.5 million and $9.7 million at December 31, 2024 and December 31, 2023, respectively, were pledged to secure other borrowings and for other purposes required or permitted by law.
Government sponsored entities ​ $ — ​ - % ​ $ 3,000 ​ 4.00 % ​ $ — ​ - % ​ $ 25,000 ​ 3.48 % ​ $ 28,000 ​ 3.54 % State and political subdivisions ​ ​ — ​ - ​ ​ ​ — ​ - ​ ​ ​ — ​ - ​ ​ ​ 1,299 ​ 5.19 ​ ​ ​ 1,299 ​ 5.19 ​ Residential mortgage-backed securities ​ ​ — ​ - ​ ​ ​ — ​ - ​ ​ ​ — ​ - ​ ​ ​ 7,277 ​ 3.03 ​ ​ ​ 7,277 ​ 3.03 ​ Total debt securities held for maturity ​ $ — ​ - % ​ $ 3,000 ​ 4.00 % ​ $ — ​ - % ​ $ 33,576 ​ 3.45 % ​ $ 36,576 ​ 3.50 % ​ Securities with a carrying value of $69.2 million and $11.5 million at December 31, 2025 and December 31, 2024, respectively, were pledged to secure other borrowings and for other purposes required or permitted by law.
These loans amounted to $1.4 billion at December 31, 2024, an increase of $134.2 million from year end 2023. The yield on commercial loans was 6.54 percent for 2024, compared to 6.12 percent for the same period in 2023.
These loans amounted to $1.5 billion at December 31, 2025, an increase of $236.6 million from year end 2024. The yield on commercial loans was 6.68 percent for 2025, compared to 6.28 percent for the same period in 2024.
SBA 7(a) loans held for sale, carried at the lower of cost or market, amounted to $12.2 million at December 31, 2024, a decrease of $6.0 million from $18.2 million at December 31, 2023. SBA 7(a) loans held for investment amounted to $36.9 million at December 31, 2024, a decrease of $1.7 million from $38.6 million at December 31, 2023.
SBA 7(a) loans held for sale, carried at the lower of cost or market, amounted to $8.0 million at December 31, 2025, a decrease of $4.2 million from $12.2 million at December 31, 2024. SBA 7(a) loans held for investment amounted to $34.3 million at December 31, 2025, a decrease of $4.0 million from $38.3 million at December 31, 2024.
Borrowed funds decreased $135.9 million to $220.5 million at December 31, 2024. ​ Total shareholders’ equity increased $34.2 million when compared to December 31, 2023, due to earnings and an increase in common stock, offset by dividends paid and share repurchases. ​ These fluctuations are discussed in further detail in the sections that follow.
Borrowed funds increased $35.3 million to $255.8 million at December 31, 2025. ​ Total shareholders’ equity increased $50.0 million when compared to December 31, 2024, due to earnings and an increase in common stock, offset by dividends paid and share repurchases. ​ These fluctuations are discussed in further detail in the sections that follow.
For 2023 and 2024, the floating interest rate on the subordinated debentures is the three-month CME term Secured Overnight Financing Rate (“SOFR”) plus 262 basis points and reprices quarterly.
For 2024 and 2025, the floating interest rate on the subordinated debentures is the three-month CME term Secured Overnight Financing Rate (“SOFR”) plus 262 basis points and reprices quarterly. The floating interest rate was 5.537% at December 31, 2025 and 6.189% at December 31, 2024.
In addition, many SBA 7(a) loans are for startup businesses where there is no historical financial information. Finally, many SBA borrowers do not have an ongoing and continuous banking relationship with the Bank and work with the Bank on a single transaction. The guaranteed portion of the Company’s SBA loans may be sold in the secondary market.
Finally, many SBA borrowers do not have an ongoing and continuous banking relationship with the Bank and work with the Bank on a single transaction. The guaranteed portion of the Company’s SBA loans may be sold in the secondary market.
The net interest margin increased 10 basis points to 4.16 percent for the year ended December 31, 2024, compared to 4.06 percent for the same period in 2023. The net interest spread was 3.29 percent for 2024, a 3 basis point decrease compared to 3.32 for the same period in 2023.
The net interest margin increased 36 basis points to 4.52 percent for the year ended December 31, 2025, compared to 4.16 percent for the same period in 2024. The net interest spread was 3.69 percent for 2025, a 40 basis point increase compared to 3.29 for the same period in 2024.
Interest-bearing liabilities include interest-bearing demand, savings, brokered and time deposits, borrowed funds and subordinated debentures. 2024 compared to 2023 During 2024, tax-equivalent net interest income amounted to $98.6 million, an increase of $3.6 million, or 3.8 percent, when compared to the same period in 2023.
Interest-bearing liabilities include interest-bearing demand, savings, brokered and time deposits, borrowed funds and subordinated debentures. 30 Table of Contents 2025 compared to 2024 During 2025, tax-equivalent net interest income amounted to $117.0 million, an increase of $18.4 million, or 18.7 percent, when compared to the same period in 2024.
Shareholders’ equity increased $34.2 million to $295.6 million at December 31, 2024, compared to $261.4 million at December 31, 2023, primarily due to net income of $41.5 million. Other increases were due to $0.6 million in other comprehensive income and $3.3 million from the issuance of common stock under employee benefit plans, net of tax.
Shareholders’ equity increased $50.0 million to $345.6 million at December 31, 2025, compared to $295.6 million at December 31, 2024, primarily due to net income of $58.0 million. Other increases were due to $1.0 million in other comprehensive income and $1.7 million from the issuance of common stock under employee benefit plans, net of tax.
Total assets also included an increase of $9.3 million in securities, offset by a decrease of $14.3 million in total cash and cash equivalents. ​ Total deposits increased $176.2 million, or 9.2 percent, to $2.1 billion at December 31, 2024.
Total assets also included an increase of $36.1 million in total cash and cash equivalents, partially offset by a decrease of $21.0 million in securities. ​ Total deposits increased $223.7 million, or 10.7 percent, to $2.3 billion at December 31, 2025.
The following table presents the Company’s EVE and NII sensitivity exposure related to an instantaneous and sustained parallel shift in market interest rate of 100, 200 and 300 bps, which were all in compliance with Board approved tolerances at December 31, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated (Decrease)/Increase in EVE ​ Estimated 12 mo.
ALCO reviews the maturities and repricing of loans, investments, deposits and borrowings, cash flow needs, current market conditions and interest rate levels. ​ 48 Table of Contents The following table presents the Company’s EVE and NII sensitivity exposure related to an instantaneous and sustained parallel shift in market interest rate of 100, 200 and 300 bps, which were all in compliance with Board approved tolerances at December 31, 2025 and December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated (Decrease)/Increase in EVE ​ ​ Estimated 12 mo.
For additional information on income taxes, see Note 11 to the Consolidated Financial Statements. ​ ​ 32 Table of Contents Financial Condition Total assets increased $75.5 million, or 2.9 percent, to $2.7 billion at December 31, 2024, when compared to year end 2023.
For additional information on income taxes, see Note 11 to the Consolidated Financial Statements. ​ 35 Table of Contents Financial Condition Total assets increased $312.6 million, or 11.8 percent, to $3.0 billion at December 31, 2025, when compared to year end 2024.
The following table provides a 5 year look back at yield on interest-earning assets, cost of interest-bearing liabilities and net interest margin. ​ Consolidated Average Balance Sheets The following table reflects the components of net interest income, setting forth for the periods presented herein: (1) average assets, liabilities and shareholders’ equity, (2) interest income earned on interest-earning assets and interest expense paid on interest-bearing liabilities, (3) average yields earned on interest-earning assets and average rates paid on 29 Table of Contents interest-bearing liabilities, (4) net interest spread and (5) net interest income/margin on average interest-earning assets.
The increase in interest-bearing liabilities was primarily due to increases in time deposits and interest-bearing demand deposits, partially offset by increases in borrowed funds and subordinated debentures and brokered deposits. ​ 31 Table of Contents The following table provides a 5 year look back at yield on interest-earning assets, cost of interest-bearing liabilities and net interest margin. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 32 Table of Contents ​ ​ Consolidated Average Balance Sheets The following table reflects the components of net interest income, setting forth for the periods presented herein: (1) average assets, liabilities and shareholders’ equity, (2) interest income earned on interest-earning assets and interest expense paid on interest-bearing liabilities, (3) average yields earned on interest-earning assets and average rates paid on interest-bearing liabilities, (4) net interest spread and (5) net interest income/margin on average interest-earning assets.
The following table shows average deposits and the concentration of each category of deposits for the past two years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ ​ 2024 ​ 2023 ​ (In thousands, except percentages) Amount % of total Amount % of total Average balance: ​ ​ Noninterest-bearing demand deposits ​ $ 411,148 20.4 % $ 439,653 23.7 % Interest-bearing demand deposits ​ 326,943 16.2 ​ 306,820 16.5 ​ Savings deposits ​ 512,405 25.5 ​ 552,864 29.7 ​ Brokered deposits ​ ​ 227,070 ​ 11.3 ​ ​ 197,708 ​ 10.6 ​ Time deposits ​ 535,297 26.6 ​ 363,367 19.5 ​ Total deposits ​ $ 2,012,863 100.0 % $ 1,860,412 100.0 % ​ As of December 31, 2024, the Company's municipal deposits consisted of $374.8 million from New Jersey and $25.8 million from Pennsylvania which are collateralized by Municipal Letter of Credits (“MULOCs”) issued by the FHLB.
The Company’s deposit composition as of December 31, 2025, consisted of 20.0% in noninterest bearing demand deposits, 17.5% in interest-bearing demand deposits, 24.4% in savings deposits and 38.1% in time deposits. ​ The following table shows average deposits and the concentration of each category of deposits for the past two years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ ​ 2025 ​ 2024 ​ (In thousands, except percentages) ​ ​ ​ Amount ​ ​ ​ % of total ​ ​ ​ Amount ​ ​ ​ % of total ​ ​ ​ Average balance: ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest-bearing demand deposits ​ $ 446,081 20.2 % $ 411,148 20.4 % Interest-bearing demand deposits ​ 362,811 16.4 ​ 326,943 16.2 ​ Savings deposits ​ 509,892 23.1 ​ 512,405 25.5 ​ Brokered deposits ​ ​ 220,910 ​ 10.0 ​ ​ 227,070 ​ 11.3 ​ Time deposits ​ 668,405 30.3 ​ 535,297 26.6 ​ Total deposits ​ $ 2,208,099 100.0 % $ 2,012,863 100.0 % ​ As of December 31, 2025, the Company's municipal deposits consisted of $415.2 million from New Jersey and $29.7 million from Pennsylvania which are collateralized by Municipal Letter of Credits (“MULOCs”) issued by the FHLB.
Borrowed funds and subordinated debentures totaled $230.8 million and $366.7 million at December 31, 2024 and December 31, 2023, respectively, and are broken down in the following table: ​ ​ ​ ​ ​ ​ ​ (In thousands) December 31, 2024 December 31, 2023 FHLB borrowings: ​ ​ ​ ​ ​ ​ Non-overnight, fixed rate advances ​ $ 20,504 ​ $ 109,438 Overnight advances ​ 140,000 ​ 217,000 Puttable advances ​ 60,000 ​ 30,000 Subordinated debentures ​ 10,310 ​ 10,310 Total borrowed funds and subordinated debentures ​ $ 230,814 ​ $ 366,748 ​ In December 2024, the FHLB issued a $180.0 million municipal deposits 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, compared to a letter of credit with a balance of $142.0 million as of December 31, 2023.
Residential mortgages, commercial real estate loans and debt securities collateralize these borrowings. 47 Table of Contents Borrowed funds and subordinated debentures totaled $266.1 million and $230.8 million at December 31, 2025 and December 31, 2024, respectively, and are broken down in the following table: ​ ​ ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ December 31, 2025 ​ ​ ​ December 31, 2024 FHLB borrowings: ​ ​ ​ ​ ​ ​ Non-overnight, fixed rate advances ​ $ 15,774 ​ $ 20,504 Overnight advances ​ 170,000 ​ 140,000 Puttable advances ​ 70,000 ​ 60,000 Subordinated debentures ​ 10,310 ​ 10,310 Total borrowed funds and subordinated debentures ​ $ 266,084 ​ $ 230,814 ​ In December 2025, the FHLB issued a $240.0 million municipal deposits 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, compared to a letter of credit with a balance of $180.0 million as of December 31, 2024.
The majority of this increase is attributable to increased compensation and benefits, processing and communications and furniture and equipment expenses, partially offset by decreased deposit insurance expense.
The majority of this increase is attributable to increased compensation and benefits, processing and communications, director fee and occupancy expenses, partially offset by decreased loan related expense.
The yield on consumer loans was 7.77 percent for 2024, compared to 7.55 percent for 2023. Residential construction loans consist of short-term loans for the purpose of funding the costs of building a home. These loans amounted to $90.9 million at December 31, 2024, a decrease of $40.4 million from December 31, 2023.
The yield on consumer loans was 7.08 percent for 2025, compared to 7.77 percent for 2024. 41 Table of Contents Residential construction loans consist of short-term loans for the purpose of funding the costs of building a home. These loans amounted to $73.3 million at December 31, 2025, a decrease of $17.6 million from December 31, 2024.
This net increase was the result of: ● Purchases of $2.2 million, ● $0.5 million of net unrealized gains; and ● $0.8 million in proceeds from sales, including $0.1 million of realized gains ​ ​ ​ 34 Table of Contents The following table provides the remaining contractual maturities and average yields, calculated on a yield-to-maturity basis, within the investment portfolios.
This net increase was the result of: ● $3.5 million of realized gains, ● $2.1 million of unrealized gains, ● Conversion of senior debt to common equity $5.0 million, ● Purchases of $2.7 million ; and ● Partially offset by $6.6 million in sales The following table provides the remaining contractual maturities and average yields, calculated on a yield-to-maturity basis, within the investment portfolios.
There are no concentrations of loans to any borrowers or group of borrowers exceeding 10 percent of the total loan portfolio. 38 Table of Contents In the normal course of business, the Company may originate loan products whose terms could give rise to additional credit risk.
The yield on residential construction loans was 9.45 percent for 2025, compared to 8.61 percent for 2024. There are no concentrations of loans to any borrowers or group of borrowers exceeding 10 percent of the total loan portfolio. In the normal course of business, the Company may originate loan products whose terms could give rise to additional credit risk.
Noninterest Expense The following table shows the components of noninterest expense for the past two years: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, (In thousands) 2024 2023 Compensation and benefits ​ $ 29,749 ​ $ 29,051 Processing and communications ​ 3,473 ​ 2,994 Occupancy ​ 3,184 ​ 3,087 Furniture and equipment ​ 3,140 ​ 2,780 Professional services ​ 1,683 ​ 1,563 Advertising ​ 1,611 ​ 1,436 Loan related expenses ​ ​ 1,138 ​ ​ 918 Deposit insurance ​ 1,100 ​ 1,715 Director fees ​ ​ 956 ​ ​ 847 Other expenses ​ ​ 2,707 ​ ​ 2,585 Total noninterest expense ​ $ 48,741 ​ $ 46,976 ​ Noninterest expense totaled $48.7 million for the year ended December 31, 2024, an increase of $1.7 million when compared to $47.0 million in 2023.
Noninterest Expense The following table shows the components of noninterest expense for the past two years: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, (In thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Compensation and benefits ​ $ 32,186 ​ $ 29,749 Processing and communications ​ 4,193 ​ 3,473 Occupancy ​ 3,407 ​ 3,184 Furniture and equipment ​ 3,224 ​ 3,140 Professional services ​ 1,758 ​ 1,683 Advertising ​ 1,682 ​ 1,611 Loan related expenses ​ ​ 888 ​ ​ 1,138 Deposit insurance ​ 1,174 ​ 1,100 Director fees ​ ​ 1,293 ​ ​ 956 Other expenses ​ ​ 2,554 ​ ​ 2,707 Total noninterest expense ​ $ 52,359 ​ $ 48,741 ​ Noninterest expense totaled $52.4 million for the year ended December 31, 2025, an increase of $3.7 million when compared to $48.7 million in 2024.
The cost of interest-bearing deposits increased 84 basis points in 2024. The cost of borrowed funds and subordinated debentures decreased 90 basis points in 2024. ● Interest-bearing liabilities averaged $1.7 billion in 2024, an increase of $18.0 million, compared to 2023.
The cost of interest-bearing deposits decreased 25 basis points in 2025. The cost of borrowed funds and subordinated debentures decreased 24 basis points in 2025. ● Interest-bearing liabilities averaged $1.9 billion in 2025, an increase of $132.9 million, compared to 2024.
The increase was primarily driven by a 10.5 percent increase in commercial loans, partially offset by a 30.7 percent decrease in residential construction loans. ● Total deposits increased $176.2 million, or 9.2 percent from the prior year.
The increase was primarily driven by a 18.5 percent increase in commercial loans, 13.1 percent increase in commercial construction and 7.3 percent increase in residential mortgage loans, partially offset by a 19.4 percent decrease in residential construction loans. ● Total deposits increased $223.7 million, or 10.7 percent from the prior year.
This increase was primarily driven by the increases in the rate on time deposits, interest-bearing demand deposits and savings deposits and the increased balance of average time deposits, which were partially offset by a decrease in the rate paid on and the average balance of borrowed funds and subordinated debentures. ● Of the $8.6 million increase in interest expense, $11.1 million was due to increased rates on average interest-bearing deposits, while $6.5 million was due to the increased volume of average interest-bearing deposits, which was offset by a decrease of $6.7 million related to volume and $2.3 million related to rate for borrowed funds and subordinated debentures. ● The average cost of interest-bearing liabilities increased 47 basis points to 3.28 percent in 2024 when compared to 2023.
This decrease was primarily driven by the decrease in the cost of deposits and the decreased average balance of borrowed funds and subordinated debentures, which was partially offset by an increase in the volume of time deposits and interest-bearing demand deposits. ● Of the $0.5 million decrease in interest expense, $4.9 million was due to decreased rates on average interest-bearing deposits, while $1.0 million and $0.3 million was due to the decreased volume and rate of borrowed funds and subordinated debentures, respectively, which was partially offset by an increase of $5.7 million related to volume of average interest-bearing deposits. ● The average cost of interest-bearing liabilities decreased 26 basis points to 3.02 percent in 2025 when compared to 2024.
This was primarily due to a $29.1 million increase in average loans, with growth in commercial.
This was primarily due to a $214.0 million increase in average loans, with growth in commercial and residential mortgage loans.
The increase was due to: ● Purchases of $5.0 million; and ● $0.2 million in net accretion ​ The weighted average life of HTM debt securities, adjusted for prepayments, amounted to 14.3 years and 17.1 years at December 31, 2024 and 2023, respectively.
The decrease was due to: ● $4.8 million in principal paydowns; and ● Partially offset by $0.1 million in net accretion ​ The weighted average life of HTM debt securities, adjusted for prepayments, amounted to 14.8 years and 14.3 years at December 31, 2025 and 2024, respectively.
The total allowance is available to absorb losses from any segment of the portfolio. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ ​ ​ ​ % of % of ​ ​ % of % of ​ ​ ​ ​ ​ reserve to ​ ​ loans ​ ​ ​ ​ reserve to ​ ​ loans ​ ​ ​ Reserve ​ nonaccrual ​ ​ to total ​ Reserve ​ nonaccrual ​ ​ to total ​ (In thousands, except percentages) ​ amount ​ loans ​ ​ loans ​ amount ​ loans ​ ​ loans ​ Balance applicable to: ​ ​ SBA loans ​ $ 1,535 39.9 % 2.2 % $ 1,221 35.5 % 2.7 % Commercial loans ​ 17,361 583.8 ​ 62.5 ​ 15,876 815.0 ​ 58.8 ​ Residential mortgage loans ​ 6,254 109.5 ​ 27.9 ​ 6,529 63.2 ​ 29.1 ​ Consumer loans ​ 775 NM ​ 3.4 ​ 1,022 268.2 ​ 3.4 ​ Residential construction loans ​ 863 157.8 ​ 4.0 ​ 1,206 56.3 ​ 6.0 ​ Total loans ​ $ 26,788 204.8 % 100.0 % $ 25,854 141.7 % 100.0 % ​ ​ The Company maintains a reserve for unfunded loan commitments at a level that Management believes is adequate to absorb estimated expected losses.
The total allowance is available to absorb losses from any segment of the portfolio. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ ​ ​ reserve to ​ ​ loans ​ ​ ​ ​ reserve to ​ ​ loans ​ ​ ​ Reserve ​ nonaccrual ​ ​ to total ​ Reserve ​ nonaccrual ​ ​ to total ​ (In thousands, except percentages) ​ amount ​ loans ​ ​ loans ​ amount ​ loans ​ ​ loans ​ Balance applicable to: ​ ​ ​ ​ ​ ​ ​ ​ SBA loans ​ $ 785 44.8 % 1.7 % $ 1,535 39.9 % 2.2 % Commercial loans ​ 22,148 119.9 ​ 65.5 ​ 17,361 583.8 ​ 62.5 ​ Residential mortgage loans ​ 7,695 94.2 ​ 26.6 ​ 6,254 109.5 ​ 27.9 ​ Consumer loans ​ 995 78.5 ​ 3.3 ​ 775 NM ​ 3.4 ​ Residential construction loans ​ 719 420.5 ​ 2.9 ​ 863 157.8 ​ 4.0 ​ Total loans ​ $ 32,342 108.4 % 100.0 % $ 26,788 204.8 % 100.0 % ​ ​ 45 Table of Contents The Company maintains a reserve for unfunded loan commitments at a level that Management believes is adequate to absorb estimated expected losses.
(the “Parent Company”) is a financial holding company incorporated in New Jersey and registered under the Bank Holding Company Act of 1956, as amended. Its wholly-owned subsidiary, Unity Bank (the “Bank” or, when consolidated with the Parent Company, the “Company”) is chartered by the New Jersey Department of Banking and Insurance and commenced operations on September 13, 1991.
Its wholly-owned subsidiary, Unity Bank (the “Bank” or, 27 Table of Contents when consolidated with the Parent Company, the “Company”) is chartered by the New Jersey Department of Banking and Insurance and commenced operations on September 13, 1991.
Allowance for Credit Losses and Reserve for Unfunded Loan Commitments The allowance for credit losses totaled $26.8 million at December 31, 2024, compared to $25.9 million at December 31, 2023, with resulting allowance to total loan ratios of 1.18 percent and 1.19 percent, respectively. Net charge-offs amounted to $1.5 million for 2024, compared to $2.0 million for 2023.
Allowance for Credit Losses and Reserve for Unfunded Loan Commitments The allowance for credit losses totaled $32.3 million at December 31, 2025, compared to $26.8 million at December 31, 2024, with resulting allowance to total loan ratios of 1.27 percent and 1.18 percent, respectively.
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.
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.
The increase was primarily due to increased compensation and benefits expenses and processing and communications expenses, partially offset by a decrease in deposit insurance expenses. ● Net income before provision for income taxes increased 2.6 percent to $54.4 million from $53.0 million in the prior year. ● The effective tax rate decreased to 23.8 percent compared to 25.1 percent in the prior year. ● Total gross loans increased $88.6 million, or 4.1 percent from the prior year.
The increase was primarily due to increased compensation and benefits, processing and communications, director fees and occupancy expenses, partially offset by a decrease in loan related expenses. ● Net income before provision for income taxes increased 38.8 percent to $75.5 million from $54.4 million in the prior year. ● The effective tax rate decreased to 23.3 percent compared to 23.8 percent in the prior year. ● Total securities decreased $21.0 million, or 14.5 percent from the prior year.
During 2024, tax-equivalent interest income was $155.7 million, an increase of $12.2 million, or 8.5 percent, when compared to the same period in the prior year.
During 2025, tax-equivalent interest income was $173.6 million, an increase of $17.9 million, or 11.5 percent, when compared to the same period in the prior year.
A discussion of the cash provided by and used in operating, investing and financing activities follows. 45 Table of Contents Operating activities provided $47.9 million and $46.9 million in net cash for the years ended December 31, 2024 and 2023, respectively The primary sources of funds were net income from operations and adjustments to net income, such as the provision for credit losses and depreciation and amortization.
The primary sources of funds were net income from operations and adjustments to net income, such as the provision for credit losses and depreciation and amortization. Investing activities used $256.8 million and $92.8 million in net cash for the years ended December 31, 2025 and 2024, respectively.
The floating interest rate was 6.189% at December 31, 2024 and 7.212% at December 31, 2023. 44 Table of Contents Market Risk Market risk for the Company is primarily limited to interest rate risk, which is the impact that changes in interest rates would have on future earnings. The Company’s Asset Liability Committee (“ALCO”) manages this risk.
Market Risk Market risk for the Company is primarily limited to interest rate risk, which is the impact that changes in interest rates would have on future earnings. The Company’s Asset Liability Committee (“ALCO”) manages this risk.
Government sponsored entities ​ $ 14,759 ​ $ 16,033 State and political subdivisions ​ ​ 333 ​ ​ 360 Residential mortgage-backed securities ​ ​ 12,286 ​ ​ 14,077 Asset backed securities ​ ​ 39,393 ​ ​ 35,403 Corporate and other securities ​ ​ 27,113 ​ ​ 25,892 Total securities available for sale ​ $ 93,884 ​ $ 91,765 Held to maturity, at amortized cost: ​ ​ ​ ​ ​ ​ U.S.
Government sponsored entities ​ $ 4,969 ​ $ 14,759 State and political subdivisions ​ ​ 159 ​ ​ 333 Residential mortgage-backed securities ​ ​ 11,752 ​ ​ 12,286 Asset backed securities ​ ​ 22,000 ​ ​ 39,393 Corporate and other securities ​ ​ 31,990 ​ ​ 27,113 Total securities available for sale ​ $ 70,870 ​ $ 93,884 Held to maturity, at amortized cost: ​ ​ ​ ​ ​ ​ U.S.
The change in the composition of the portfolio from December 31, 2023 reflects a 47.4 percent increase in time deposits, 9.1 percent increase in brokered time deposits, 5.0 percent increase in noninterest-bearing demand deposits and a 2.7 percent increase in interest-bearing demand deposits, partially offset by a 13.1 percent decrease in savings deposits.
The change in the composition of the portfolio from December 31, 2024 reflects a 25.8 percent increase in brokered deposits, 14.7 percent increase in interest-bearing demand deposits, 8.9 percent increase in savings deposits, 8.2 percent increase in time deposits and 5.6 percent increase in noninterest-bearing demand deposits.
Government sponsored entities, state and political subdivisions, residential mortgage-backed securities, asset backed securities and corporate and other securities. ​ 33 Table of Contents AFS debt securities totaled $93.9 million at December 31, 2024, an increase of $2.1 million or 2.3 percent, compared to $91.8 million at December 31, 2023.
Government sponsored entities, state and political subdivisions, residential mortgage-backed securities, asset backed securities and corporate and other securities. ​ 36 Table of Contents AFS debt securities totaled $70.9 million at December 31, 2025, a decrease of $23.0 million or 24.5 percent, compared to $93.9 million at December 31, 2024.
(2) Defined as net income divided by the sum of weighted average shares and the potential dilutive impact of the exercise of outstanding options. (3) Defined as net income divided by average shareholders’ equity. (4) The efficiency ratio is a non-GAAP measure of operational performance.
(2) Defined as net income divided by the sum of weighted average shares and the potential dilutive impact of the exercise of outstanding options. (3) Defined as net income divided by average shareholders’ equity. (4) Defined as dividends declared per share divided by diluted net income per share.
The provision for credit losses for loans increased $0.6 million for the year ended 2024 primarily due to loan growth. The provision for credit losses for off-balance sheet exposures totaled to $1 thousand for the year ended December 31, 2024, compared to $53 thousand at December 31, 2023.
The provision for credit losses for loans increased $4.3 million for the year ended 2025 primarily due to loan growth, with additional increases in qualitative adjustments due to increased nonaccrual assets. The provision for credit losses for off-balance sheet exposures totaled to $66 thousand for the year ended December 31, 2025, compared to $1 thousand at December 31, 2024.
This increase was primarily due to increases of $202.2 million in time deposits, $21.2 million in noninterest-bearing demand deposits, $18.3 million in brokered deposits and $8.4 million in interest-bearing demand deposits, offset by a decrease of $73.9 million in savings deposits.
This increase was primarily due to increases of $56.3 million in brokered deposits, $51.4 million in time deposits, $47.3 million in interest-bearing demand deposits, $43.9 million in savings deposits and $24.8 million in noninterest-bearing demand deposits.
These increases in reserves were recorded through retained earnings and were $0.6 million, net of tax. ​ For available for sale securities in an unrealized loss position, the Company first assesses whether it intends to sell, or is more likely than not that it will be required to sell the security before the recovery of its amortized cost basis.
CECL also applies to certain off-balance sheet exposures. ​ For available for sale securities in an unrealized loss position, the Company first assesses whether it intends to sell, or is more likely than not that it will be required to sell the security before the recovery of its amortized cost basis.
The following table is a summary of the changes to the allowance for credit losses for December 31, 2024 and 2023, including net charge-offs to average loan ratios for each major loan category: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands, except percentages) 2024 2023 Balance, beginning of period ​ $ 25,854 ​ $ 25,196 ​ Impact of the adoption of ASU 2016-13 ("CECL") ​ ​ — ​ ​ 847 ​ Provision for credit losses for loans charged to expense ​ 2,407 ​ 1,832 ​ Less: Charge-offs ​ ​ ​ SBA loans held for investment ​ (370) ​ (213) ​ Commercial loans ​ (633) ​ (752) ​ Residential mortgage loans ​ ​ (150) ​ ​ (93) ​ Consumer loans ​ (361) ​ (578) ​ Residential construction loans ​ ​ (277) ​ ​ (1,000) ​ Total charge-offs ​ (1,791) ​ (2,636) ​ Add: Recoveries ​ ​ ​ SBA loans held for investment ​ 47 ​ 20 ​ Commercial loans ​ 204 ​ 400 ​ Residential mortgage loans ​ — ​ — ​ Consumer loans ​ 67 ​ 84 ​ Residential construction loans ​ ​ — ​ ​ 111 ​ Total recoveries ​ 318 ​ 615 ​ Net charge-offs ​ (1,473) ​ (2,021) ​ Balance, end of period ​ $ 26,788 ​ $ 25,854 ​ Selected loan quality ratios: ​ ​ ​ Net charge-offs to average loan segment: ​ ​ ​ SBA loans held for investment ​ 0.85 % 0.46 % Commercial loans ​ 0.03 ​ 0.03 ​ Residential mortgage loans ​ 0.02 ​ 0.01 ​ Consumer loans ​ 0.41 ​ 0.66 ​ Residential construction loans ​ ​ 0.26 ​ ​ 0.60 ​ Total loans ​ ​ 0.07 ​ ​ 0.09 ​ Allowance to total loans ​ 1.18 ​ 1.19 ​ Allowance to nonaccrual loans ​ 204.77 % 141.74 % ​ The following table sets forth, for each of the major lending categories, the amount of reserve allocated to nonaccrual loans of each category and the amount of the allowance for credit losses allocated to each category and the percentage of total loans represented by such category as of December 31, 2024 and 2023.
Net charge-offs amounted to $1.1 million for 2025, compared to $1.5 million for 2024. ​ 44 Table of Contents The following table is a summary of the changes to the allowance for credit losses for December 31, 2025 and 2024, including net charge-offs to average loan ratios for each major loan category: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands, except percentages) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ Balance, beginning of period ​ $ 26,788 ​ $ 25,854 ​ Provision for credit losses for loans charged to expense ​ 6,699 ​ 2,407 ​ Less: Charge-offs ​ ​ ​ ​ ​ SBA loans held for investment ​ (930) ​ (370) ​ Commercial loans ​ (102) ​ (633) ​ Residential mortgage loans ​ ​ (543) ​ ​ (150) ​ Consumer loans ​ (112) ​ (361) ​ Residential construction loans ​ ​ — ​ ​ (277) ​ Total charge-offs ​ (1,687) ​ (1,791) ​ Add: Recoveries ​ ​ ​ ​ ​ SBA loans held for investment ​ 61 ​ 47 ​ Commercial loans ​ 395 ​ 204 ​ Residential mortgage loans ​ — ​ — ​ Consumer loans ​ 86 ​ 67 ​ Residential construction loans ​ ​ — ​ ​ — ​ Total recoveries ​ 542 ​ 318 ​ Net charge-offs ​ (1,145) ​ (1,473) ​ Balance, end of period ​ $ 32,342 ​ $ 26,788 ​ Selected loan quality ratios: ​ ​ ​ ​ ​ Net charge-offs (recoveries) to average loan segment: ​ ​ ​ ​ ​ SBA loans held for investment ​ 1.83 % 0.85 % Commercial loans ​ (0.02) ​ 0.03 ​ Residential mortgage loans ​ 0.08 ​ 0.02 ​ Consumer loans ​ 0.03 ​ 0.41 ​ Residential construction loans ​ ​ — ​ ​ 0.26 ​ Total loans ​ ​ 0.05 ​ ​ 0.07 ​ Allowance to total loans ​ 1.27 ​ 1.18 ​ Allowance to nonaccrual loans ​ 108.40 % 204.77 % ​ The following table sets forth, for each of the major lending categories, the amount of reserve allocated to nonaccrual loans of each category and the amount of the allowance for credit losses allocated to each category and the percentage of total loans represented by such category as of December 31, 2025 and 2024.
Highlights for the year include: ● Net income increased 4.4 percent to $41.5 million from $39.7 million in the prior year. ● Net income per diluted share increased 5.7 percent to $4.06 per share from $3.84 per share in the prior year. ● Net interest income increased $3.6 million, or 3.8 percent, to $98.6 million from $95.0 million in the prior year, primarily due to additional interest income primarily resulting from increases in the yield of interest-earning assets, partially offset by an increased cost of interest-bearing liabilities. ● Net interest margin for the year ending December 31, 2024 increased 10 basis points to 4.16 percent compared to 4.06 percent in the prior year. ● Noninterest income was $8.5 million, a 4.0 percent increase compared to $8.1 million in the prior year, primarily due to net securities gains, branch fee income and service and loan fees increasing, partially offset by a decrease in gain on sale of SBA loans held for sale and BOLI income. 26 Table of Contents ● Noninterest expense totaled $48.7 million, an increase of $1.7 million when compared to $47.0 million in the prior year.
Highlights for the year include: ● Net income increased 39.8 percent to $58.0 million from $41.5 million in the prior year. ● Net income per diluted share increased 39.7 percent to $5.67 per share from $4.06 per share in the prior year. ● Net interest income increased $18.4 million, or 18.7 percent, to $117.0 million from $98.6 million in the prior year, primarily due to increased volume and rate of interest-earning assets and decrease in rate of interest-bearing liabilities, partially offset by increases in the volume of interest-bearing liabilities. ● Net interest margin for the year ending December 31, 2025 increased 36 basis points to 4.52 percent compared to 4.16 percent in the prior year. ● Noninterest income was $14.8 million, a 74.5 percent increase compared to $8.5 million in the prior year, primarily due to increased net securities gains, service and loan fee and branch fee income.
At December 31, 2024 the portfolio had $2.8 million in valuation allowance compared to $1.3 million at December 31, 2023 The provision for credit losses on AFS debt securities was $1.5 million at December 31, 2024.
For the year ended December 31, 2025, there was a release in credit losses on AFS debt securities of $2.8 million compared to a provision of $1.5 million for year ended December 31, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk: For information regarding Quantitative and Qualitative Disclosures about Market Risk, see Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Risk." ​ 49 Table of Contents
Item 7A. Quantitative and Qualitative Disclosures About Market Risk: For information regarding Quantitative and Qualitative Disclosures about Market Risk, see Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Risk." ​ 52 Table of Contents

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