Item 8.01 Other Events

In the second quarter of 2008, Unity Bancorp Inc. ("Unity") disclosed that it holds Freddie Mac perpetual preferred stock with a cost basis of approximately $1.9 million. Such securities are held in Unity's available for sale securities portfolio. Unity sold approximately $909 thousand in book value of these securities in August 2008 and will record a pretax loss of approximately $518 thousand on this sale. In addition, the market value of the remaining $954 thousand of securities has declined approximately $870 thousand as of September 8, 2008, due to recent actions by the Treasury of the United States and the OFHEO (now FHFA) placing Freddie Mac under conservatorship. The aggregate amount of security losses and other-than-temporary impairment charges related to Freddie Mac perpetual preferred stock for the third quarter of 2008 are estimated to be approximately $1.4 million, pre-tax, or $923 thousand, 0.13 per diluted share after tax, based upon current market valuations. The actual amount of any other-than-temporary impairment charge is difficult to determine at this time based, in part, upon the volatility in the market for Freddie Mac securities.

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