Princeton Bancorp Announces Third Quarter 2024 Results Form 8 K

Princeton Bancorp Announces

Third Quarter 2024 Results

Princeton, NJ, October 29, 2024 / PRNewswire / - Princeton Bancorp, Inc. (the "Company") (NASDAQ - BPRN), the bank holding company for The Bank of Princeton (the "Bank"), today reported its unaudited financial condition and results of operations at and for the quarter and nine-months ended September 30, 2024.

The Bank's third quarter was highlighted by the closing of the Cornerstone Bank acquisition. This acquisition will be immediately accretive to earnings with an expected 2.5 year earn back of tangible book value dilution. While the costs related to this acquisition naturally impacted our reported numbers, the core earnings of the Bank remain consistently strong. Please refer to the reconciliation table below that compares Non-GAAP net income to GAAP net income.

President/CEO Edward Dietzler commented, "We are thrilled with the Cornerstone acquisition. This acquisition, along with our recent one of Noah Bank, continues our long-term strategy of becoming the community bank of choice up and down the I95 corridor. Core loans and deposits are both up while asset quality and our capital position remain strong. The Bank is well positioned to continue our strong growth path with our experienced management team. Special thanks to our operations and technology teams who handled this acquisition."

The Company reported a net loss of ($3.6) million, or ($0.55) per diluted common share, for the third quarter of 2024, compared to net income of $5.1 million, or $0.80 per diluted common share, for the second quarter of 2024, and net income of $7.6 million, or $1.19 per diluted common share, for the third quarter of 2023. The decrease in net income for the third quarter of 2024 when compared to the second quarter of 2024 was due to an increase of $7.0 million in non-interest expense, and an increase in the provision for credit losses of $4.7 million. These increases were primarily the result of the Cornerstone acquisition which resulted in $6.7 million in merger related expenses and a $3.2 million provision for credit loss associated with the acquired non-purchase credit deteriorated loans. These expenses were partially offset by an increase in net interest income of $1.1 million. The $11.2 million decrease in net income for the third quarter of 2024 compared to the same period in 2023 was primarily due to the same acquisition-related items.

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Review of Statements of Financial Condition

Total assets were $2.35 billion at September 30, 2024, an increase of $438.2 million, or 22.87% when compared to $1.92 billion at the end of 2023. The primary reason for the increase in total assets was the acquisition of Cornerstone Bank on August 23, 2024, which had approximately $314.5 million in assets at closing. When looking at specific components of the balance sheet, including acquired assets, the Company recorded an increase in net loans of $283.1 million related to the Cornerstone acquisition, an increase in investments of $97.5 million, an increase in cash and cash equivalents of approximately $30.5 million, and an increase in other assets of $22.2 million. The increase in the Company's net loans consisted of increases of $248.4 million in commercial real estate loans, $42.8 million in commercial and industrial loans, $32.3 million in residential mortgages, and $11.3 in home equity and consumer loans, all partially offset by a decrease of $51.9 million in construction loans.

Total deposits on September 30, 2024, increased $410.3 million, or 25.08%, when compared to December 31, 2023. The primary reasons for the increase in total deposits were the $282.8 million in deposits acquired from Cornerstone Bank and the $127.5 million increase from existing operations. The increase in the Company's deposits consisted of increases in certificates of deposit of $149.0 million, money market deposits of $139.3 million, non-interest-bearing deposits of $53.6 million, interest-bearing demand deposits of $36.6 million and savings deposits of $31.8 million.

Total stockholders' equity at September 30, 2024, increased $22.1 million or 9.22% when compared to December 31, 2023. The increase was primarily due to the $21.2 million increase in paid-in capital associated with the issuance of common stock of $20.0 million related to the acquisition of Cornerstone and a decrease in accumulated other comprehensive income (loss) of $1.6 million. The ratio of equity to total assets at September 30, 2024 and at December 31, 2023 was 11.1% and 12.5%, respectively. The current period ratio decrease was primarily due to the Cornerstone Bank acquisition.

Asset Quality

At September 30, 2024, non-performing assets totaled $2.3 million, a decrease of $4.4 million when compared to the amount at December 31, 2023.

Review of Quarterly and Year-to-Date Financial Results

Net interest income was $17.1 million for the third quarter of 2024, compared to $16.0 million for the second quarter of 2024 and $16.7 million for the third quarter of 2023. The increase from the previous quarter was the result of an increase in interest income of $2.4 million, or 8.2%, partially offset by an increase in interest expense of $1.3 million, or 9.4%. The net interest margin for the third quarter of 2024 was 3.41%, a decrease by 3 basis points when compared to the second quarter of 2024. The increase in interest expense and the decrease in net interest margin were primarily associated with an increase in total interest-bearing deposits of $98.9 million and a six basis point increase in the rate on such deposits. This resulted in an increase in the Company's cost of funds of 3 basis points. The increase in interest income for the third quarter was due to an increase in average interest-earning assets of $130.2 million, while the yield on interest-earning assets remained consistent with the second quarter of 2024.

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For the nine-month period ended September 30, 2024, the Company recorded net income of $5.9 million, or $0.90 per diluted common share, compared to $20.5 million, or $3.21 per diluted common share, for the same period in 2023. This year-to-date decrease was primarily the result of a $9.7 bargain purchase gain in 2023 which included a tax benefit of $2.0 million from the Company's acquisition of Noah Bank in May of that year, and the purchase accounting recorded in 2024 related to the Cornerstone acquisition, which includes an increase of $2.2 million in the provision for credit losses when comparing both periods.

The Company recorded a provision for credit losses of $4.6 million during the third quarter of 2024, which consisted of $3.2 million related to the CECL impact for non-purchase credit deteriorated loans associated with loans acquired in the Cornerstone acquisition, and $1.5 million recorded to the allowance of credit losses resulting from changes in the Company's loan portfolio assumptions. The current quarters' provision recorded on the Company's statements of income was $4.7 million higher when compared to the provision for credit losses for the quarter ended June 30, 2024, and was $4.8 million higher than the provision for the same period in 2023, most of which can primarily be attributed to the acquisition of Cornerstone Bank. For the quarter ended September 30, 2024, the Company recorded charge-offs of $279 thousand and recoveries of $171 thousand. The coverage ratio of the allowance for credit losses to period end loans was 1.27% at September 30, 2024 and 1.19% at December 31, 2023.

Total non-interest income of $2.1 million for the third quarter of 2024 decreased $31 thousand or 1.5% when compared to the second quarter of 2024 and decreased $347 thousand or 14.4% when compared to the quarter ended September 30, 2023.

Total non-interest expense of $19.0 million for the third quarter of 2024 increased $7.0 million, or 58.5%, when compared to the second quarter of 2024. Total non-interest expense for the third quarter of 2024 increased $8.9 million or 87.4% when compared to the third quarter of 2023. This increase over both the prior quarter and the third quarter of 2023 was primarily due to the $6.7 million in merger costs associated with the Cornerstone acquisition. The remaining increase compared to the second quarter of 2024 was primarily related to occupancy and equipment expense increasing $237 thousand, salaries and benefits expense increasing $113 thousand, data processing and communications expense increasing $52 thousand, and professional fees increasing $52 thousand all partially offset by a decrease in other expenses of $251 thousand. For the nine-month period ended September 30, 2024, non-interest expense was $42.9 million, compared to $37.7 million for the same period in 2023. The increase was primarily due to an increase in merger-related expenses of $1.1 million during 2024 as well as increases in salaries and employee benefits of $2.2 million over the same period in 2023 associated with merit increases as well as additional staff costs related to the Cornerstone and Noah acquisitions.

For the quarter ended September 30, 2024, the Company recorded an income tax benefit of ($865) thousand, resulting in an effective tax rate of (19.3%), compared to an income tax expense of $1.0 million resulting in an effective tax rate of 16.8% for the second quarter ended June 30, 2024, and compared to an income tax expense of $1.5 million resulting in an effective tax rate of 16.6% for the quarter ended September 30, 2023.

About Princeton Bancorp, Inc. and The Bank of Princeton

Princeton Bancorp, Inc. is the holding company for The Bank of Princeton, a community bank founded in 2007. The Bank is a New Jersey state-chartered commercial bank with 28 branches in New Jersey, including three in Princeton and others in Bordentown, Browns Mills, Burlington, Chesterfield, Cherry Hill, Cream Ridge, Deptford, Fort Lee, Hamilton, Kingston, Lakewood, Lambertville, Lawrenceville, Medford, Monroe, Moorestown, New Brunswick, Palisades Park, Pennington, Piscataway, Princeton Junction, Quakerbridge, Sicklerville, Voorhees, and Woodbury. There are also five branches in the Philadelphia, Pennsylvania area and two in the New York City metropolitan area. The Bank of Princeton is a member of the Federal Deposit Insurance Corporation.

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Forward-Looking Statements

The Company may from time to time make written or oral "forward-looking statements," including statements contained in the Company's filings with the Securities and Exchange Commission, in its reports to stockholders and in other communications by the Company (including this press release), which are made in good faith by the Company pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended.

These forward-looking statements involve risks and uncertainties, such as statements of the Company's plans, objectives, expectations, estimates and intentions that are subject to change based on various important factors (some of which are beyond the Company's control). The most significant factors that could cause future results to differ materially from those anticipated by our forward-looking statements include the ongoing impact of higher inflation levels, higher interest rates and general economic and recessionary concerns, all of which could impact economic growth and could cause a reduction in financial transactions and business activities, including decreased deposits and reduced loan originations, our ability to manage liquidity in a rapidly changing and unpredictable market, supply chain disruptions, labor shortages and additional interest rate increases by the Federal Reserve. Other factors that could cause actual results to differ materially from those indicated by forward-looking statements include, but are not limited to, the following factors: the integration of the businesses of the Company and Cornerstone Bank following the completion of the Transaction may be more difficult; the global impact of the military conflicts in the Ukraine and the Middle East; the impact of any future pandemics or other natural disasters; civil unrest, rioting, acts or threats of terrorism, or actions taken by the local, state and Federal governments in response to such events, which could impact business and economic conditions in our market area; the strength of the United States economy in general and the strength of the local economies in which the Company and Bank conduct operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; market and monetary fluctuations; market volatility; the value of the Bank's products and services as perceived by actual and prospective customers, including the features, pricing and quality compared to competitors' products and services; the willingness of customers to substitute competitors' products and services for the Bank's products and services; credit risk associated with the Bank's lending activities; risks relating to the real estate market and the Bank's real estate collateral; the impact of changes in applicable laws and regulations and requirements arising out of our supervision by banking regulators; other regulatory requirements applicable to the Company and the Bank; and the timing and nature of the regulatory response to any applications filed by the Company and the Bank; technological changes; other acquisitions; changes in consumer spending and saving habits; those risks under the heading "Risk Factors" set forth in the Bank's Annual Report on Form 10-K for the year ended December 31, 2023, and the success of the Company at managing the risks involved in the foregoing.

The Company cautions that the foregoing list of important factors is not exclusive. The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company, except as required by applicable law or regulation.

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Princeton Bancorp, Inc.

Consolidated Statements of Financial Condition

(Unaudited)

(Dollars in thousands, except per share data)

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Princeton Bancorp, Inc.

Loan and Deposit Tables

(Unaudited)

The components of loans receivable, net at September 30, 2024 and December 31, 2023 were as follows:

The components of deposits at September 30, 2024 and December 31, 2023 were as follows:

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Princeton Bancorp, Inc.

Consolidated Statements of Income

(Unaudited)

(Amounts in thousands except per share data)

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Princeton Bancorp, Inc.

Consolidated Statements of Income (Current Quarter vs Prior Quarter)

(Unaudited)

(Amounts in thousands, except per share data)

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Princeton Bancorp, Inc.

Consolidated Statements of Income

(Unaudited)

(Amounts in thousands, except per share data)

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Princeton Bancorp, Inc.

Consolidated Average Statement of Financial Condition

(Unaudited)

(Dollars in thousands)

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Princeton Bancorp, Inc.

Consolidated Average Statement of Financial Condition

(Unaudited)

(Dollars in thousands)

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Princeton Bancorp, Inc.

Consolidated Average Statement of Financial Condition

(Unaudited)

(Dollars in thousands)

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Princeton Bancorp, Inc.

Quarterly Financial Highlights

(Unaudited)