The Bank of Princeton Announces Second Quarter 2022 Results

PRINCETON, N.J., July 21, 2022 /PRNewswire/ -- The Bank of Princeton (the "Bank") (NASDAQ: BPRN) today reported its unaudited results of operations and financial condition for and at the quarter ended June 30, 2022.  The Bank reported net income of $6.3 million, or $0.98 per diluted common share, for the second quarter of 2022, compared to net income of $6.0 million, or $0.91 per diluted common share, for the first quarter of 2022, and net income of $5.5 million, or $0.80 per diluted common share, for the second quarter of 2021. The increase in net income, when compared to the three months ended March 31, 2022, was primarily due to an increase of $433 thousand in net interest income and a $66 thousand increase in non-interest income, partially offset by a $160 thousand increase in non-interest expenses and a $33 thousand increase income taxes payable. The increase in net income, when comparing it to the three months ended June 30, 2021, was primarily due to an increase in net interest income of $552 thousand, a $1.0 million decrease in the provision for loan losses and a $94 thousand increase in non-interest income, partially offset by a $746 thousand increase in non-interest expenses and a $97 thousand increase in income tax expense.   For the six-month period ended June 30, 2022, the Bank recorded net income of $12.3 million, or $1.89 per diluted common share, compared to $10.4 million, or $1.50 per diluted common share for the same period in 2021, primarily due to a $2.1 million decrease in the Bank's provision for loan losses, a $1.7 million increase in net interest income and a $277 thousand increase in non-interest income, partially offset by a $1.8 million increase in non-interest expenses and an increase in income taxes of $326 thousand.

Highlights for the quarter-ended June 30, 2022 are as follows:

• During the six months ended June 30, 2022, the Bank purchased 265,341 shares of common stock of the authorized 324,017 shares of common stock from a second 5% stock buyback program which commenced in 2022 at a weighted average price of $29.17.
• Net income for the second quarter of 2022 increased $803 thousand or 14.5% over the same period in 2021.
• The Bank decreased its cost of funds on deposits by 15 basis points in the second quarter of 2022 from the same period in 2021.
• The ratio of nonperforming loans to total loans continues to be low at 0.07% as of June 30, 2022, compared to 0.09% at December 31, 2021 and 0.23% at June 30, 2021.

President/CEO Edward Dietzler noted that, "The Bank continues to improve its performance with continued credit quality and a strong net interest margin of 4.19% for the quarter and a well-controlled expense base."

Balance Sheet Review

Total assets were $1.63 billion at June 30, 2022, a decrease of $62.5 million, or 3.7% when compared to $1.69 billion at the end of 2021. The primary reason for the decrease in total assets was a decrease in cash and cash equivalents of approximately $111.9 million and a $12.9 million decrease in available-for-sale securities, partially offset by an increase of $61.0 million in net loans.  The increase in net loans primarily consisted of a $104.4 million increase in commercial real estate loans and an $11.3 million increase in construction and development loans, partially offset by a decrease of $54.4 million in Payroll Protection Program ("PPP") loans which are no longer being offered by the SBA.

Total deposits at June 30, 2022 decreased $55.1 million, or 3.8%, when compared to December 31, 2021.  When comparing deposit products between the two periods, certificates of deposit decreased $18.6 million, money market deposits decreased $12.6 million, interest-bearing demand deposits decreased $12.2 million, non-interest-bearing demand deposits decreased $8.4 million and savings decreased $3.2 million. In addition, the Bank had no outstanding borrowings at June 30, 2022 and December 31, 2021.  

Total stockholders' equity at June 30, 2022 decreased $5.2 million or 2.4% when compared to the end of 2021. This decrease was primarily due to the $7.8 million of common stock repurchased in the 2022 buyback program, and a $7.4 million change in the accumulated other comprehensive income (loss) on the available-for-sale investment portfolio associated with an increase in unrealized losses due to the increase in interest rates.  These decreases were partially offset by a $9.0 million increase in retained earnings consisting of $12.3 million of net income less $3.3 million of cash dividends recorded during the period. The ratio of equity to total assets at June 30, 2022 and at December 31, 2021, was $13.0% and 12.8%, respectively.  

Asset Quality

At June 30, 2022, non-performing assets were $965 thousand, a decrease of $449 thousand, or 31.8%, when compared to the amount at December 31, 2021.  This decrease was primarily due to the sale of an other real estate owned property in the amount of $226 thousand and a $203 thousand write-down of a non-performing loan.  Troubled debt restructurings ("TDRs") totaled $6.6 million at June 30, 2022 and $6.9 million at December 31, 2021. Three TDR loans totaling $6.0 million are performing in accordance with the agreed-upon terms and there is one TDR loan in non-accrual status as of June 30, 2022.  

Review of Quarterly Financial Results

Net interest income was $16.3 million for the second quarter of 2022, compared to $15.9 million for the first quarter of 2022 and $15.7 million for the second quarter of 2021.  The increase from the previous quarter was the result of an increase in interest income of $378 thousand, or 2.2% and a decrease in interest expense of $55 thousand.  The net interest margin for the second quarter 2022 was 4.19%, increasing 10 basis points when compared to the first quarter of 2022. This increase was primarily associated with an increase of eight basis points in the yield on earning assets.   When comparing the same three-month period ended June 30, 2022 and 2021, net interest income increased $552 thousand, which was primarily due to a reduction of 19 basis points on the yield paid on interest-bearing liabilities, partially offset by a $25.7 million increase in the average outstanding balance of interest-bearing deposits. For the six-month period ended June 30, 2022, net interest income was $32.1 million compared to $30.5 million for the six-month period ended June 30, 2021.  The increase from the previous six-month period was the result of an increase in interest income of $326 thousand, or 1.0% and a decrease in interest expense of $1.3 million, or 35.6%.  The average outstanding balance of earning assets increased by $36.6 million and average outstanding interest-bearing liabilities increased $26.2 million.  The rate on total deposits, for the three-month periods ended June 30, 2022 and 2021 was 0.33% and 0.48%, respectively.  For the six-month periods ended June 30, 2022 and 2021 the rate on total deposits was 0.34% and 0.54%, respectively.

The Bank did not record a provision for credit losses for both the three-month and six-month periods ended June 30, 2022.  The comparable amounts were $1.0 million and $2.1 million for the three months and six months ended June 30, 2021, respectively. The primary reasons for the provision for credit losses for the first and second quarters of 2021 were charge-offs in the amounts of $1.1 million and $1.0 million, respectively.  Net recoveries for the three-month and six-month periods ended June 30, 2022 and the prior three-month period ended March 31, 2022, were $12 thousand, $46 thousand and $34 thousand, respectively.  The Bank did not make any material changes to the qualitative factors used in determining the level of general reserve needed for management's assessment of the credit quality in the loan portfolio.  The coverage ratio of allowance for credit losses to period end loans was 1.19% (excluding PPP loans it was 1.21%) at June 30, 2022, compared to 1.24% (excluding PPP loans it was 1.32%) at December 31, 2021.

Total non-interest income for the second quarter of 2022 increased $94 thousand to $1.1 million, or by 9.2%, when compared to the same period in 2021. This increase was primarily due to a $65 thousand increase in loan fees collected and a $61 thousand increase in service fees, partially offset by a $40 thousand reduction relating to an equity investment that incurred startup costs.  For the six-month period ended June 30, 2022, non-interest income increased $277 thousand, or 14.7%, from the same six-month period in 2021, primarily due to a $134 thousand increase in service fees, a $99 thousand increase in other non-interest income and a $34 thousand increase in loan fees collected.

Total non-interest expense for the second quarter of 2022 increased $746 thousand, or 8.6%, when compared to the same period in 2021.  This increase was primarily due to $544 thousand increase in salaries and benefits expenses, $167 thousand increase in data processing and communication expenses and a $101 thousand expense related to an OREO property, partially offset by a $96 thousand reduction in professional fees and a $93 thousand reduction in occupancy and equipment expenses.  When comparing the quarter ended June 30, 2022 to the immediately prior quarter, non-interest expense increased $160 thousand, or 1.7%, primarily due to increases in OREO expense and other operating expenses. For the six-month period ended June 30, 2022, non-interest expense was $18.7 million, compared to $16.9 million for the same period in 2021. This increase was primarily due to an increase in additional operating costs associated with the Bank's expansion strategy.

For the three-month period ended June 30, 2022, the Bank recorded an income tax expense of $1.6 million, resulting in an effective tax rate of 20.6%, compared to an income tax expense of $1.6 million resulting in an effective tax rate of 21.1% for the three-month period ended March 31, 2022, and compared to an income tax expense of $1.5 million resulting in an effective tax rate of 21.9% for the three-month period ended June 30, 2021.  For the six-month periods ended June 30, 2022 and 2021, the income tax expense were $3.3 million (effective tax rate of 20.9%) and $2.9 million (effective tax rate of 22.0%), respectively.

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 19 branches in New Jersey, including three in Princeton and others in Bordentown, Browns Mills, Chesterfield, Cream Ridge, Deptford, Hamilton, Lakewood, Lambertville, Lawrenceville, Monroe, New Brunswick, Pennington, Piscataway, Princeton Junction, Quakerbridge and Sicklerville.  There are also four branches in the Philadelphia, Pennsylvania area. 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 extent of the adverse impact of the current global coronavirus outbreak on our customers, prospects and business, including related supply chain shortage of goods, as well as 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 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; and the timing and nature of the regulatory response to any applications filed by the Bank; technological changes; acquisitions; changes in consumer spending and saving habits; those risks set forth in the Bank's Annual Report on Form 10-K for the year ended December 31, 2021 under the heading "Risk Factors," 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.

Contact George Rapp
609.454.0718
[email protected]

SOURCE The Bank of Princeton