Unity Bancorp(UNTY) - 2024 Q4 - Annual Report

Financial Performance - Net income for the year ended December 31, 2024, totaled $41.5 million, a 4.4% increase from $39.7 million in 2023[166] - Noninterest income was $8.5 million, a 4.0% increase compared to $8.1 million in the prior year[167] - The effective tax rate decreased to 23.8% from 25.1% in the prior year[170] - Noninterest expense totaled $48.7 million, an increase of $1.7 million compared to the prior year[170] - Total comprehensive income for 2024 was $55,220, compared to $53,665 in 2023, reflecting a 2.9% increase[291] - The company declared dividends of $0.52 per share in 2024, up from $0.48 per share in 2023[292] Interest Income and Margin - Net interest income increased by $3.6 million, or 3.8%, to $98.6 million, primarily due to higher yields on interest-earning assets[167] - The net interest margin increased by 10 basis points to 4.16% for the year ended December 31, 2024[167] - Net interest income on a fully tax-equivalent basis was $98.6 million for 2024, compared to $95.0 million in 2023, reflecting an increase in net interest margin to 4.16%[185] - Total interest income for 2024 increased to $155,738, up 8.5% from $143,494 in 2023[290] Loans and Credit Quality - Total gross loans rose by $88.6 million, or 4.1%, driven by a 10.5% increase in commercial loans[170] - The provision for credit losses for loans increased to $2.4 million in 2024 from $1.8 million in 2023, attributed to loan growth[186] - Nonaccrual loans decreased to $13.1 million at December 31, 2024, down from $18.2 million at year-end 2023, representing a reduction of $5.1 million[235] - The allowance for credit losses increased to $26.8 million at December 31, 2024, compared to $25.9 million at December 31, 2023, with an allowance to total loans ratio of 1.18%[240] - The net charge-offs for 2024 were $1.5 million, a decrease from $2.0 million in 2023, indicating improved asset quality[240] Deposits and Funding - Total deposits increased by $176.2 million, or 9.2%, primarily due to growth in time deposits[170] - Total deposits rose by $176.2 million, or 9.2%, to $2.1 billion at December 31, 2024, driven by increases in time deposits and noninterest-bearing demand deposits[194] - Noninterest-bearing demand deposits accounted for 21.0% of total deposits, while time deposits represented 29.9% as of December 31, 2024[246] - The company reported a 47.4% increase in time deposits from December 31, 2023, reflecting a strategic shift in deposit composition[249] - Total borrowed funds decreased by $135.9 million, or 38.1%, primarily due to customer deposit growth[170] Assets and Equity - Total assets increased by $75.5 million, or 2.9%, to $2.7 billion at December 31, 2024, primarily due to an increase of $88.6 million in gross loans[193] - Total shareholders' equity increased by $34.2 million compared to December 31, 2023, due to earnings and an increase in common stock[195] - Shareholders' equity increased by $34.2 million to $295.6 million as of December 31, 2024, compared to $261.4 million at December 31, 2023, primarily due to net income of $41.5 million[273] Investment Securities - 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[199] - HTM debt securities amounted to $41.3 million at December 31, 2024, an increase of $5.2 million or 14.3 percent from $36.1 million at December 31, 2023[201] - The fair value of HTM debt securities was $33.8 million at December 31, 2024, compared to $29.7 million at December 31, 2023[201] - The company recorded a valuation allowance of $2.8 million for available-for-sale debt securities as of December 31, 2024, compared to $1.3 million as of December 31, 2023[289] Accounting and Regulatory Compliance - The company adopted the CECL accounting guidance on January 1, 2023, resulting in an increase of $0.8 million in the allowance for credit losses related to loans[282] - The Company maintains a well-capitalized status, exceeding all capital requirements of federal banking regulators as of December 31, 2024[274] - The Company adopted the provisions of ASC 326 effective January 1, 2023, modifying its accounting policy for the allowance for credit losses on loans[330] Cash Flow and Activities - Operating activities generated $47.9 million in net cash for the year ended December 31, 2024, compared to $46.9 million in 2023[264] - Investing activities used $92.8 million in net cash in 2024, an increase from $57.8 million in 2023[265] - Financing activities provided $30.5 million in net cash for 2024, a decrease from $90.9 million in 2023[266]