Unity Bancorp Beats Q2 Earnings Expectations; Shares Rise 5.3%

Unity Bancorp, Inc. (UNTY) shares jumped 5.3% on Friday to close at $25.26 after the financial services company delivered stronger-than-expected third-quarter results driven by strong growth in loans and deposits.

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Markedly, shares of Unity Bancorp, with a current market capitalization of $260 million have gained 91% over the past year. (See Unity Bancorp stock charts on TipRanks)

In Q3, adjusted earnings of $0.90 per share grew 64.2% year-over-year and beat analysts’ expectations of $0.81 per share. The company reported earnings of $0.54 per share in the prior-year period.

Positively, net interest income came in at $19.7 million, up 21% year-over-year, attributable to commercial, residential construction, and SBA loan growth.

However, non-interest income declined 15% to $2.8 million, mainly due to lower gains on residential mortgage loan sales and the company’s decision not to sell SBA available for sale loans during the quarter.

Net interest margins improved to 4.27% in the quarter, up 24 bps sequentially and 49 bps from the year-ago period.

The company did not record a provision for loan losses during the quarter versus $2.0 million recorded on the prior-year quarter.

Non-interest expenses were down 1.7% year-over-year to $9.6 million, attributable to a reduction in BSA expenses.

The company reported total loans of $1.7 billion, up 2.3% from the 2020 year-end, while total deposits surged 9.5% to $1.7 billion.

Unity Bancorp CEO James A. Hughes stated, “Business segments are exhibiting strong performance and are making positive contributions to Unity’s overall results. Steady growth in loans and deposits continue to drive core banking earnings and our capital base is on solid footings. While some effects of the pandemic still linger, the resiliency of our employees and customers continue to be the driving force behind Unity’s success.”

The stock has picked up a rating from one analyst in the past three months. Following the Q3 results, Boenning & Scattergood analyst Erik Zwick increased the price target to $28 (10.9% upside potential) and reiterated a Buy rating on the stock.

UNTY scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.