The Bank of Princeton Announces First Quarter 2018 Results

PRINCETON, N.J., April 26, 2018 /PRNewswire/ -- The Bank of Princeton (the "Bank") (NASDAQ: BPRN) today reported unaudited results of operations and financial condition for the quarter ended March 31, 2018.  The Bank reported net income of $3.6 million or $0.52 per diluted common share for the first quarter of 2018, compared to net income of $1.7 million or $0.25 per diluted common share for the fourth quarter of 2017, and net income of $3.1 million or $0.61 per diluted common share for the first quarter of 2017. The increase in net income, when comparing the three months ended December 31, 2017, was primarily due a decline in the Bank's provision for loan losses of $2.7 million. The increase of $531 thousand when comparing the three months ended March 31, 2017 was primarily due to an increase of the net-interest income, and a $277 thousand increase in non-interest income, partially offset with a $255 thousand in provision for loan losses and a modest increase in non-interest expenses for the three month period ended March 31, 2018.

Highlights for the quarter-ended March 31, 2018 are as follows:

• Net interest income for the three month period ended March 31, 2018 increased $531 thousand or 5.7% over the same period in 2017.
• Non-interest income for the three month period ended March 31, 2018 increased $422 thousand, or 115.9% over the same period in 2017.
• Total net-income before income taxes for the first quarter of 2018 increased $603 thousand or 16.0% when compared to the same period in 2017.
• Net loans increased an additional $28.7 million from $958.4 million at December 31, 2017.

"We are pleased to report loan growth and positive earnings," stated Edward Dietzler, President/CEO.

Chairman Richard Gillespie noted that, "The Bank began the fiscal 2018 by increasing net loans and recording an earnings level that exceeded the prior year. The Bank is progressing with its growth expectations, along with continuing its efforts to enhance shareholder value."

Balance Sheet Review

Total assets were $1.18 billion at March 31, 2018, a decline of $16.7 million or 1.4% when compared to $1.20 billion at the end of 2017. The primary reason for the decrease in total assets was a reduction of $50.0 million in cash and cash equivalents, related to a decline in deposit accounts connected with a cyclical reduction of municipal deposits. Loans increased $28.7 million, primarily in commercial real estate credits.

Total deposits at March 31, 2018 decreased by $50.9 million, or 5.0% when compared to December 31, 2017. The decrease in deposits consists of decreases of $76.3 million in interest checking, partially offset by a $16.8 million increase in money markets, increases of $9.3 million in time deposits and $2.9 million in savings accounts. In addition, during the quarter the Bank borrowed $30.3 million in short-term advances to fund the loan growth.   

Total stockholders' equity increased $3.3 million or 2.0% when compared to the end of 2017. This increase was primarily due to earnings recorded during the first three months of 2018.  The ratio of equity to total assets was 14.5%, 0.5% higher than year-end 2017.

Asset Quality

At March 31, 2018, non-performing assets were $11.6 million, an increase of $1.6 million, or 16.4% when compared to $10.0 million at December 31, 2017.  This increase was primarily the result of one large credit placed on non-accrual during the quarter. Total troubled debt restructuring ("TDR's) balance totaled $6.3 million at March 31, 2018, a decline of $88 thousand from year-end 2017. All TDR's are performing to their agreed upon terms.

Review of Quarterly Financial Results

Net interest income was $9.9 million for the first quarter of 2018 compared to $10.3 million for the fourth quarter of 2017 and $9.4 million for the first quarter of 2017.  The decrease from the previous quarter was a result of a decline in interest income of $198 thousand, or 1.5%, along with an increase in interest expense of $250 thousand.  The net interest margin for the first quarter 2018 was 3.52%, declining 27 basis points, when compared to the fourth quarter of 2017. This decrease was primarily associated with the high level of average short-term assets maintained during the quarter. When comparing the same three month period ended March 31, 2018 and 2017, net interest income increased $532 thousand, which was primarily due to a higher volume of average earnings assets of approximately $147.9 million.

The provision for credit losses was $255 thousand for the three months ended March 31, 2018.  The comparable amounts were $2.9 million and $0 for the three months ended December 31, 2017 and March 31, 2017, respectively. The primary reason for the provision in the first quarter of 2018 was due to an increase in the outstanding loans.  The rate of allowance for credit losses to period end loans was 1.19% at March 31, 2018, compared to 1.20% at December 31, 2017 and 1.20% at March 31, 2017, which reflects management's assessment of the credit quality in the loan portfolio.

Total non-interest income for the first quarter of 2018 increased $422 thousand, to $786 thousand, or 115.9%, when compared to the same period in 2017. This increase was primarily due to an increase in income from bank-owned life insurance, and loan prepayment penalties. Total non-interest income, compared to the three month periods ended March 31, 2018 and December 31, 2017, reflected a small decrease of $14 thousand, primarily due to a lower level of fees generated on loans recorded between the two periods.

Total non-interest expense for the first quarter of 2018 increased $95 thousand, or 1.6% when compared to the same period in 2017.  This increase was primarily due to increases in salaries and employees benefit expense and data processing expense, partially offset by a reduction in professional fees and FDIC deposit insurance.  When comparing March 31, 2018 to the prior quarter, non-interest expense increased $562 thousand, or 10.2%, primarily due to an increase in salaries and employees benefits' expense and FDIC deposit insurance expense, partially offset by a reduction in professional fees expense and other operating expenses. The increase attributed to salaries and benefits expense was due to the hiring of new employees at the end of 2017 and early 2018 connected with the strategic initiatives, higher benefit cost and salary merit increases.

For the three month period ended March 31, 2018, the Bank recorded income tax expense of $790 thousand, resulting in an effective tax rate of 18.1%, compared to $1.0 million resulting in an effective tax rate of 37.6% for the three month period ended December 31, 2017 and compared to $678 thousand resulting in an effective tax rate of 18.0% for the three month period ended March 31, 2017. The current effective tax yield for the quarter ended March 31, 2018, was reduced as a result of the new corporate tax rate of 21.0% from the prior rate of 34.0%.  With respect to the effective tax rate of 37.6% in the fourth quarter of 2017, tax expense included a one-time excise tax related to the Bank's REIT subsidiary and the first quarter of 2017 effective tax rate was impacted by a tax benefit related to the exercise of warrants and stock options.  

About The Bank of Princeton

The Bank of Princeton is a community bank founded in 2007.  The Bank is a New Jersey state-chartered commercial bank with ten branches in New Jersey, including three in Princeton and others in Hamilton, Pennington, Montgomery, Monroe, Lambertville, Lawrenceville, and New Brunswick.  There are also three branches in the Philadelphia, Pennsylvania area, operating as MoreBank, a division of The Bank of Princeton. The Bank of Princeton is a member of the Federal Deposit Insurance Corporation ("FDIC").

Forward-Looking Statements

The Bank of Princeton may from time to time make written or oral "forward-looking statements," including statements contained in the Bank's filings with the FDIC, in its reports to stockholders and in other communications by the Bank (including this press release), which are made in good faith by the Bank 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 Bank's plans, objectives, expectations, estimates and intentions that are subject to change based on various important factors (some of which are beyond the Bank's control). The following factors, among others, could cause the Bank's financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which the Bank conducts 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; inflation, interest rate, 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 Bank; technological changes; acquisitions; changes in consumer spending and saving habits; and the success of the Bank at managing the risks involved in the foregoing.

The Bank cautions that the foregoing list of important factors is not exclusive. The Bank 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 Bank, except as required by applicable law or regulation.