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SEC filingUnity Bancorp, Inc. reported strong financial results for fiscal year 2025, with net income of $58.0 million, a significant increase from $41.5 million in 2024. This performance was driven by robust net interest income of $117.0 million, up from $98.6 million the prior year, and a substantial increase in total noninterest income to $14.8 million from $8.5 million. The company's loan portfolio grew to $2.54 billion, supported by a net increase in deposits of $223.7 million. Key profitability metrics improved, with return on average assets at 2.17% and return on average equity at 18.07%. The company maintained strong capital ratios, with a total risk-based capital ratio of 16.12% for the consolidated entity. Asset quality metrics showed an allowance for credit losses of $32.3 million, covering 108.40% of nonaccrual loans.
Unity Bancorp, Inc. delivered strong financial performance in fiscal year 2025, with net income increasing to $58.0 million from $41.5 million in 2024, representing 39.8% growth. Total interest income rose to $173.6 million from $155.7 million, while interest expense decreased slightly to $56.6 million from $57.1 million, resulting in net interest income of $117.0 million compared to $98.6 million the prior year. Noninterest income showed significant improvement, reaching $14.8 million versus $8.5 million in 2024, driven primarily by net security gains of $5.6 million. The company's efficiency ratio improved as noninterest expense grew modestly to $52.4 million from $48.7 million. Basic earnings per share increased to $5.78 from $4.13, while diluted EPS rose to $5.67 from $4.06.
Interest income growth was driven by expansion in the loan portfolio, with total loans reaching $2.54 billion, up from $2.26 billion in 2024. Loan interest income totaled $164.2 million, with commercial loans contributing $95.1 million, residential mortgage loans $41.9 million, and SBA loans $3.8 million. Securities income contributed $6.9 million, while interest-bearing deposits and FHLB stock added $2.6 million. Noninterest revenue showed strong performance across multiple categories: net security gains of $5.6 million, gain on sale of mortgage loans of $1.5 million, BOLI income of $774K, and gain on sale of SBA loans of $705K. Service and loan fee income contributed $2.7 million, while branch fee income added $1.8 million.
The company's net interest margin improved to 4.52% from 4.16% in 2024, reflecting better asset yield management and funding cost control. The net interest spread widened to 3.69% from 3.29%. Gross margin, calculated as net interest income divided by total interest income, improved to 67.4% from 63.3%. Operating margin, measured as income before provision for income taxes divided by total revenue (interest income plus noninterest income), was 43.5%. Provision for credit losses totaled $3.9 million, with $6.7 million for loans, $66K for off-balance sheet items, and a $2.8 million release for securities. The efficiency ratio, calculated as noninterest expense divided by total revenue, improved to 27.8% from 29.7%.
Operating activities generated $44.9 million in cash flow, primarily from net income of $58.0 million adjusted for various non-cash items. Investing activities used $256.8 million, mainly for net loan increases of $285.9 million, partially offset by securities maturities and sales. Financing activities provided $248.0 million, driven by deposit growth of $223.7 million and net borrowing increases. The balance sheet shows total assets of $2.97 billion, with loans net of allowance at $2.51 billion, securities of $124.0 million, and cash equivalents of $216.5 million. Total liabilities were $2.62 billion, primarily deposits of $2.32 billion. Shareholders' equity reached $345.6 million, with book value per common share of $34.63.
The company faces several risk factors including interest rate sensitivity, concentration in commercial real estate lending (56.6% of loan portfolio), and geographic concentration in New Jersey and Pennsylvania markets. Regulatory changes, particularly those affecting SBA lending and commercial real estate concentrations, could impact operations. The company maintains elevated wholesale funding balances and has $842.4 million in time deposits maturing within one year. Management continues to focus on loan portfolio growth while monitoring credit quality, with approximately 42.1% of the loan portfolio originated in the past three years. Technological advancements and cybersecurity remain ongoing priorities, as does competition from larger financial institutions and fintech companies.