Princeton Bancorp Announces YTD & Fourth Quarter 2024 Results

PRINCETON, N.J., Jan. 28, 2025 /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 twelve-months ended December 31, 2024.

President/CEO Edward Dietzler commented, "We are proud to have completed our 17^th year of operations with a successful performance. We completed the acquisition of Cornerstone Bank, continuing our long-term strategic plan of becoming the community bank of choice up and down the I-95 corridor. At December 31, 2024, the Bank entered a new milestone by exceeding $2.0 billion in assets, supported by growth in core loans and deposits while maintaining a strong capital position. The Bank remains well positioned to continue our conservative growth path with our experienced management team."

The Company reported a net income of $5.2 million, or $0.75 per diluted common share, for the fourth quarter of 2024, compared to net loss of ($4.5) million, or ($0.68) per diluted common share, for the third quarter of 2024, and net income of $5.3 million, or $0.82 per diluted common share, for the fourth quarter of 2023. The increase in net income for the fourth quarter of 2024 when compared to the third quarter of 2024 was primarily due to a decrease of $7.4 million in non-interest expense, a decrease in the provision for credit losses of $4.2 million and an increase in net-interest income of $900 thousand, partially offset by an increase in income tax expense of $2.7 million. The variance in non-operating expenses was impacted by a one-time recorded charge in the third quarter of 2024 of $7.8 million in merger related expenses along with a $3.2 million provision for credit loss associated with the acquired non-purchase credit deteriorated loans related to the acquisition of Cornerstone Financial Corporation ("Cornerstone"). The decrease in net income for the fourth quarter of 2024 when compared to the fourth quarter of 2023 was primarily due to increases of $1.8 million and $598 thousand in non-interest expense and income tax expense, respectively, mostly offset by increases of $2.1 million and $248 thousand in net interest income after provision for loan losses and non-interest income, respectively.

Review of Statements of Financial Condition

Total assets were $2.34 billion at December 31, 2024, an increase of $423.7 million, or 22.11% when compared to $1.92 billion at the end of 2023. The primary reasons for the increase in total assets were the acquisition of Cornerstone on August 23, 2024, which had approximately $303.5 million in assets at closing, and increases from existing core operations. When looking at specific components of the balance sheet, including acquired assets, the Company recorded an increase in net loans of $270.5 million, an increase in investments of $155.8 million, an increase in other assets of $24.9 million and a decrease in cash and cash equivalents of approximately $33.2 million that was partially used to purchase investment securities. The increase in the Company's net loans consisted of increases of $242.2 million in commercial real estate loans, $41.9 million in commercial and industrial loans, $30.0 million in residential mortgages, and $10.1 in home equity and consumer loans, all partially offset by a decrease of $53.0 million in construction loans.

Total deposits on December 31, 2024, increased $396.9 million, or 24.26%, 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 and an increase of $114.1 million from existing branch operations. The increase in the Company's deposits consisted of increases in money market deposits of $136.5 million, certificates of deposit of $131.6 million, interest-bearing demand deposits of $52.6 million, non-interest-bearing deposits of $51.7 million, and savings deposits of $24.4 million.

Total stockholders' equity at December 31, 2024, increased $21.8 million or 9.09% when compared to December 31, 2023. The increase was primarily due to the $21.6 million increase in paid-in capital which is primarily associated with the issuance of $20.0 million of common stock related to the acquisition of Cornerstone, an increase in retained earnings of $2.5 million, which consisted of $10.2 million in net income, partially offset by $7.7 million of cash dividends recorded during the period and partially offset by an increase in accumulated other comprehensive loss of $1.4 million. The ratio of equity to total assets at December 31, 2024 and at December 31, 2023 was 11.2% and 12.5%, respectively. The current period ratio decrease was primarily due to the Cornerstone acquisition.

Asset Quality

At December 31, 2024, non-performing assets totaled $27.1million, an increase of $20.4 million when compared to the amount at December 31, 2023. The increase was due to the delinquency of two commercial real estate loans totaling $25.4 million with collateral supporting each loan. The Company is a participant in these loans and is currently evaluating its options with the lead bank, including but not limited to placing the loans on the market for sale.

Review of Quarterly and Year-to-Date Financial Results

Net interest income was $18.0 million for the fourth quarter of 2024, compared to $17.1 million for the third quarter of 2024 and $16.0 million for the fourth quarter of 2023. The increase from the previous quarter was the result of an increase in interest income of $1.9 million, or 5.8%, partially offset by an increase in interest expense of $1.0 million, or 6.5%. The net interest margin for the fourth quarter of 2024 was 3.28%, a decrease by 13 basis points when compared to the third quarter of 2024, and a decrease by 27 basis points when compared to the fourth quarter of 2023. When comparing the two 2024 periods, the increase in interest expense and the decrease in net interest margin were primarily associated with an increase in total interest-bearing deposits of $164.6 million and partially offset by a 13-basis point decrease in the rate on such deposits. This resulted in a decrease in the Company's cost of funds of 12 basis points.  The increase in interest income for the fourth quarter was due to a $187.6 million increase in average interest-earning assets, partially offset by a 21-basis point decrease in the yield on interest-earning assets when compared to the third quarter of 2024.

When comparing the three-month periods ended December 31, 2024 and 2023, net-interest income increased by $2.0 million, which was primarily due to an increase in average interest-earning assets of $396.2 million and an increase of 2 basis points in the yield earned on interest-earning assets, partially offset by the increase in average interest-bearing deposits of $357.1 million and an increase of 26 basis points in the cost of funds.

For the year ended December 31, 2024, the Company recorded net income of $10.2 million, or $1.55 per diluted common share, compared to $25.8 million, or $4.03 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 which included a tax benefit of $2.0 million in 2023 from the Company's acquisition of Noah Bank in May of that year, and the purchase accounting adjustments recorded in 2024 related to the Cornerstone acquisition, which included an increase of $2.0 million in the provision for credit losses when comparing both periods. For the year ended December 31, 2024, net interest income of $66.5 million increased $1.5 million, or 2.3%, compared to net interest income of $65.0 million for the year ended December 31, 2023.  The increase from the previous year was the result of an increase in interest income of $24.8 million, or 25.2%, partially offset by an increase in interest expense of $23.3 million, or 70.1%.

The Company recorded a provision for credit losses of $440 thousand during the fourth quarter of 2024, which consisted of an increase in the required reserve for credit losses on loans in the amount of $543 thousand and a decrease in the reserve for unfunded liabilities of $103 thousand. The current quarters' provision recorded on the Company's statements of income was $4.2 million lower when compared to the provision for credit losses for the quarter ended September 30, 2024, most of which was primarily attributed to the acquisition of Cornerstone Bank. When comparing the three-month periods of December 31, 2024, and 2023, the provision for credit losses decreased $122 thousand.  For the quarter ended December 31, 2024, the Company recorded charge-offs of $107 thousand and recoveries of $21 thousand. The coverage ratio of the allowance for credit losses to period end loans was 1.30% at December 31, 2024 and 1.19% at December 31, 2023.

Total non-interest income of $2.0 million for the fourth quarter of 2024 decreased $29 thousand or 1.4% when compared to the third quarter of 2024 and increased $248 thousand or 13.9% when compared to the quarter ended December 31, 2023. The increase over the prior year quarter was primarily due to an increase in other non-interest income of $143 thousand and an increase in income from bank owned life insurance of $104 thousand. For the year ended December 31, 2024, non-interest income decreased $9.0 million, or by 52.4%, primarily due to the $9.7 million bargain purchase gain from the Noah Bank acquisition, partially offset by an increase in other non-interest income of $646 thousand and an increase in income from bank owned life insurance of $380 thousand over the same period in 2023.

Total non-interest expense of $12.8 million for the fourth quarter of 2024 decreased $7.4 million, or 36.6%, when compared to the third quarter of 2024. This increase over the prior quarter was primarily due to the $7.8 million in merger costs associated with the Cornerstone acquisition recorded in the third quarter of 2024. Total non-interest expense for the fourth quarter of 2024 increased $1.8 million or 16.7% when compared to the fourth quarter of 2023.This increase was primarily related to the Cornerstone acquisition, as salaries and benefits expense increased by $484 thousand, occupancy and equipment expense increased by $392 thousand, data processing and communications expense increased by $192 thousand, professional fees increased by $370 thousand and core deposit intangible expense increased by $104 thousand. For the year ended December 31, 2024, non-interest expense was $56.8 million, compared to $48.7 million for 2023. The increase of $8.0 million was primarily attributed increases in salaries and employee benefits of $2.7 million, occupancy and equipment of $1.2 million, professional fees of $515 thousand, data processing and communications of $352 thousand, federal deposit insurance of $254 thousand and merger-related expenses of $2.2 million during 2024 over the same period in 2023. The Cornerstone acquisition caused a significant portion of such increases.

For the three-month period ended December 31, 2024, the Company recorded an income tax expense of $1.6 million, resulting in an effective tax rate of 23.4%, compared to an income tax benefit of $1.1 million resulting in an effective tax rate of (20.1)% for the three-month period ended September 30, 2024 and compared to an income tax expense of $1.0 million resulting in an effective tax rate of 15.9% for the three-month period ended December 31, 2023. For the year ending December 31, 2024, income tax expense was $2.6 million resulting in an effective tax rate of 20.1% compared to income tax expense of $4.6 million and an effective tax rate of 15.1% for the year ended December 31, 2023. This decrease was due to the income taxes on the $9.7 million non-taxable bargain purchase gain from the Noah Bank acquisition, recorded in the year end December 31, 2023, and an increase in 2024 merger related expenses of $2.2 million when comparing December 31, 2024, and 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. 

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, and supply chain disruptions. 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.