The Bank of Princeton Announces Third Quarter 2017 Results

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Oct 24, 2017, 16:58 ET

PRINCETON, N.J., Oct. 24, 2017 /PRNewswire/ -- The Bank of Princeton (the "Bank") (NASDAQ: BPRN) today reported unaudited results of operations and financial condition for the quarter and nine months ended September 30, 2017.

The Bank reported net income of $3.2 million or $.0.51 per diluted common share for the third quarter of 2017, compared to net income of $3.0 million or $0.60 per diluted common share for the second quarter of 2017, and net income of $3.0 million or $0.60 per diluted common share for the third quarter of 2016. The Bank reported net income of $9.3 million or $1.71 per diluted common share for the nine months ended September 2017 compared to net income of $8.8 million or $1.76 per diluted common share for the same period in 2016.

"We are pleased to report another strong quarter of earnings along with significant loan and deposit growth employing the proceeds from our recent stock offering," stated Edward Dietzler, President.

Director Robert Ridolfi noted that, "The Bank's continued ability to maintain growth in loans and earnings demonstrates that the Bank is positioned to continue to return significant value to our shareholders."

Balance Sheet Review

Total assets were $1.119 billion at September 30, 2017, a $93 million or 10.9% increase when compared to $1.026 billion at the end of 2016. The primary reason for the increase in total assets was the result of growth in gross loans of $85.2 million or 9.9% and a BOLI increase of $14.8 million or 58.4% funded by growth in deposits as well as the net proceeds from a stock issuance totaling $51.9 million.

Total deposits at September 30, 2017 increased by $85.6 million or 9.9% when compared to December 31, 2016. The increase was primarily in noninterest and interest bearing checking of $13.7 million and $34.8 million, respectively, and time deposits of $50.6 million, partially offset by a decline of $25.5 million in money market deposits. Borrowings as of September 30, 2017 were brought down to $0 from the December 31, 2016 level of $56.1 million, as the result of the proceeds from the stock issuance as well as deposit growth. Total shareholder equity increased $63.3 million or 61.2% when compared to the end of 2016. At September 30, 2017 the ratio of equity to total assets was 14.9 %, higher than 10.08% at December 31, 2016.

Total assets at September 30, 2017 increase $110.3 million or 10.9% when compared to September 30, 2016. The increase in total assets was primarily due to an increase in gross loans of $114.1 million. The increase was partially offset by a decline in investment securities of $14.9 million which was used to fund loan growth. Total deposits increased $82.5 million or 9.53% when compared to the same period a year ago. The increase occurred in noninterest bearing deposits of $11.6 million, interest bearing deposits and savings deposits of $43.6 million and $17.8 million respectively. This was partially offset by a decline in money market deposits of $21.7 million. Borrowings declined by $37 million. Total shareholders' equity increased $65.1 million or 64.1% compared to September 30, 2016.

Review of Quarterly Financial Results

Net interest income was $9.95 million for the third quarter of 2017 compared to $9.48 million for the second quarter of 2017 and $9.25 million for the third quarter of 2016. The increase in net interest income when compared to the second quarter of 2017 and the third quarter of 2016 were primarily due to a higher volume of average loans partially offset with an increase in deposit cost with the rates increasing 6 basis points and 3 basis points respectively resulting in a net interest margin of 3.82% compared to 3.78% in the second quarter of 2017. The net interest margin was unchanged for the third quarter of 2017 compared to the third quarter of 2016.

The provision for credit losses was $850 thousand for the 3 months ended September 30, 2017. The comparable amounts were $0 and a credit of $142 thousand for the three months ended June 30, 2017 and September 30, 2016, respectively. The primary reason for the increase over those prior periods was the result of an increase in gross loans of $85.2 million and $114.1 million, respectively. Net charge offs were $234 thousand for the third quarter of 2017, $5 thousand for the second quarter of 2017 and $2 thousand net recovery for the third quarter of 2016. The rate of allowance for credit losses to period end loans was 1.19% at September 30, 2017, lower than 1.20% at June 30, 2017 and 1.24% at September 30, 2016 which reflects management's assessment of the credit quality in the loan portfolio.

At September 30, 2017, non-performing assets excluding TDR's were $11.4 million, an increase of $4.0 million or 54% when compared to June 30, 2017. When comparing September 30, 2017 to September 30, 2016, non-performing assets increased $2.5 million. The ratio of non-performing loans to total loans was 1.19% at September 30, 2017, and 0.82% and 1.05 % at June 30, 2017 and September 30, 2016, respectively.

Total non-interest income for the third quarter of 2017 increased $628 thousand when compared to the second quarter 2017, and $679 thousand when compared to the third quarter of 2016. The increase in the third quarter of 2017 compared to the second quarter 2017 was the result of significant prepayment penalty fees paid by borrowers. The increase from the third quarter 2016 was also due to these fees.

Total non-interest expense for the third quarter of 2017 decreased $196 thousand or 3.2% when compared to the second quarter of 2017 and increased $119 thousand or 2.1% compared to the third quarter 2016. The decrease from the second quarter of 2017 was primarily due to lower salary and benefit cost, and the increase from the third quarter of 2016 was due to other non-interest expense.

Review of Nine Month Financial Results

Net interest income for the nine months of 2017 was $28.8 million, an increase of $472 thousand when compared to the first nine months of 2016. The increase was due to significant growth of average loans of $56.9 million and the shift of average deposits from time deposits to transaction based accounts offering lower rates. The decrease in the average yield on loans of 11 basis points was virtually offset by the transition of lower yielding securities to fund new loan growth allowing the yield of total interest earning assets to decline only 1 basis point. The net interest margin for the nine months ended September declined 6 basis points to 3.81%, mostly the result of a 3 basis points increase in deposit rates and a 48 basis points increase in short term borrowings.

The provision for credit losses for the nine months ended September 30, 2017 and 2016 were $850 thousand and a credit of $41 thousand, respectively, with net charge offs of $412 thousand and a recovery of $8 thousand respectively. The increase in provision was the result of growth in loans outstanding as well as the net charge offs in 2017.

Total non-interest income for the nine months ended September 30, 2017 increased $330 thousand or 19.4% when compared to the same period in 2016. The increase was primarily prepayment penalty fees and the income from Bank Owned Life Insurance due to an increase in the Bank's average BOLI investment of $17.5 million year over year.

Total non-interest expense for the nine months ended September 30, 2017 decreased $195 thousand when compared to the same period in 2016. The decrease was primarily due to a reduction of salary expense related to attrition.

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.

The Bank of Princeton
Summary Statements of Financial Condition Data
(unaudited)
(dollars in thousands, except per share data)

				Sept 30, 2017 vs Dec 31, 2016	Sept 30, 2017 vs Dec 31, 2016		Sept 30, 2017 vs Sept 30, 2016	Sept 30, 2017 vs Sept 30, 2016
	September 30, 2017	December 31, 2016	September 30, 2016	$ Change	% Change		$ Change	% Change

ASSETS
Cash and cash equivalents	$ 27,182	$ 19,605	$ 32,929	$ 7,577	38.65	%	$ (5,747)	(17.45)	%
Securities available for sale taxable	57,473	59,863	58,168	(2,390)	(3.99)		(695)	(1.19)
Securities available for sale tax exempt	43,464	53,171	57,578	(9,707)	(18.26)		(14,114)	(24.51)
Securities held to maturity	265	340	341	(75)	(22.06)		(76)	(22.29)
Loans receivable, net of deferred	945,549	860,314	831,493	85,235	9.91		114,056	13.72
Allowance for loan losses	(11,260)	(10,810)	(10,818)	(450)	4.16		(442)	4.09
Other assets	56,278	43,513	39,010	12,765	29.34		17,268	44.27
TOTAL ASSETS	$ 1,118,951	$ 1,025,996	$ 1,008,701	$ 92,955	9.06	%	$ 110,250	10.93	%


LIABILITIES
Non interest checking	$ 111,885	$ 98,204	$ 100,303	$ 13,681	13.93	%	$ 11,582	11.55	%
Interest checking	195,070	160,247	151,489	34,823	21.73		43,581	28.77
Savings	110,932	99,035	93,100	11,897	12.01		17,832	19.15
Money Market	259,078	284,546	280,800	(25,468)	(8.95)		(21,722)	(7.74)
Time deposits $250,000 or more	56,694	45,553	53,827	11,141	24.46		2,867	5.33
Other time deposits	214,416	174,936	186,041	39,480	22.57		28,375	15.25
Total Deposits	948,075	862,521	865,560	85,554	9.92		82,515	9.53
Borrowings	-	56,100	37,000	(56,100)	(100)		(37,000)	(100)
Other liabilities	4,112	3,913	4,522	199	5.09		(410)	(9.07)
TOTAL LIABILITIES	952,187	922,534	907,082	29,653	3.21	%	45,105	4.97	%

STOCKHOLDERS' EQUITY
Common stock	32,740	23,502	23,502	9,238	39.31		9,238	39.31
Paid-in capital	76,301	31,856	31,744	44,445	139.52		44,557	140.36
Retained Earnings	57,415	48,108	45,090	9,307	19.35		12,325	27.33
Accumulated other comprehensive income(Loss)	308	(4)	1,283	312	(7,800)		(975)	(75.99)
TOTAL STOCKHOLDERS' EQUITY	166,764	103,462	101,619	63,302	61.18	%	65,145	64.11	%

TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY	$ 1,118,951	$ 1,025,996	$ 1,008,701	$ 92,955	9.06	%	$ 110,250	10.93	%

Book value per common share	$ 25.47	$ 22.01	$ 21.63	$ 3.46	15.72	%	$ 4.48	21.33	%
Tangible book value per common share1	$ 25.46	$ 22.00	$ 21.62	$ 3.46	15.73	%	$ 3.84	17.76	%

1Reconciliation of non-GAAP tangible
book value per common share:
Total stockholders' equity	$ 166,764	$ 103,462	$ 101,619
Intangible assets	(23)	(30)	(35)
Tangible stockholders' equity	$ 166,741	$ 103,432	$ 101,584

Common shares outstanding	6,548,045	4,700,395	4,697,895

The Bank of Princeton
Consolidated Statements of Operations
(unaudited)
			Three Months Ended			Nine Months Ended
			September			September
			2017	2016	% Change	2017	2016	% Change
			(Dollars in thousands)			(Dollars in thousands)
Interest and Dividend Income

	Loans and fees		$ 11,517	$ 10,510	9.6%	$ 33,037	$ 31,640	4.4%
	Available-for-Sale debt Securities:
		Taxable	291	276	5.4%	866	878	-1.4%
		Tax-exempt	292	404	-27.7%	946	1,284	-26.3%
	Held-to-Maturity debt securities		4	4	0.0%	12	14	-14.3%
	Other interest and dividend income		125	61	104.9%	321	240	33.8%

		Total Interest and Dividends	12,229	11,255	8.7%	35,182	34,056	3.3%

	Interest expense

		Deposits	2,210	1,951	13.3%	5,865	5,394	-8.7%
		Borrowings	71	58	22.4%	528	345	-53.0%

		Total Interest Expense	2,281	2,009	13.5%	6,393	5,739	-11.4%

		Net Interest Income	9,948	9,246	7.6%	28,789	28,317	1.7%

Provision for Loan Losses			850	(142)	-698.6%	850	(41)	2173.2%

Net Interest Income after Provision for Loan Losses			9,098	9,388	-3.1%	27,939	28,358	-1.5%

Non-Interest income

	Gain on sale of securities available for sale		-	-	0.0%	14	135	-89.6%
	Income from bank-owned life insurance		245	161	52.2%	598	482	24.1%
	Fees and service charges		895	344	160.2%	1,391	1,083	28.4%
	Gain on sale of fixed assets		-	(42)	-100.0%	3	(42)	-107.1%
	Other		7	5	40.0%	24	42	-42.9%

		Total Non-Interest Income	1,147	468	145.1%	2,030	1,700	19.4%

Non-Interest Expense

	Salaries and employee benefits		3,178	3,357	-5.3%	9,969	10,180	2.1%
	Occupancy and equipment		874	850	2.8%	2,587	2,622	1.3%
	Professional fees		548	514	6.6%	1,653	1,681	1.7%
	Data processing and communications		501	478	4.8%	1,459	1,434	-1.7%
	Federal deposit insurance		191	173	10.4%	527	522	-1.0%
	Advertising and promotion		87	50	74.0%	202	197	-2.5%
	Office expense		72	66	9.1%	196	233	15.9%
	OREO Expense		2	3	-33.3%	6	12	50.0%
	Other		390	233	1.5%	1,242	1,115	0.5%
		Total Non-Interest Expense	5,843	5,724	2.1%	$ 17,841	$ 18,036	1.1%

Income before income tax expense/(benefit)			4,403	4,132	6.6%	$ 12,128	$ 12,022	0.9%

Income tax expense/(benefit)			1,225	1,099	11.5%	$ 2,821	$ 3,197	11.8%

Net Income			3,178	3,033	95.4%	$ 9,307	$ 8,825	5.5%


Net income per common share - basic			0.54	0.65	16.7%	1.81	1.23	47.0%

Net income per common share - diluted			0.51	0.60	14.4%	1.71	1.76	46.5%

Weighted average shares outstanding - basic			5,909	4,700		5,146	4,690

Weighted average shares outstanding - diluted			6,204	5,071		5,431	4,957

The Bank of Princeton
Consolidated Average Balance Sheets
(unaudited)

	September 30,				September 30,
	2017		2016		2017			2016
	Average	Yield/	Average	Yield/	Average		Yield/	Average	Yield/
	balance	rate	balance	rate	balance		rate	balance	rate
Earning assets
Loans	$ 903,622	5.06%	$ 825,930	5.06%	$ 883,342		5.00%	$ 826,437	5.11%

Securities

Taxable AFS	57,871	2.02%	60,674	1.81%	57,974		2.99%	65,021	2.70%
Tax Exempt AFS	43,990	2.65%	58,655	2.75%	46,601		4.06%	62,602	4.10%
Held-to-maturity	292	5.02%	376	4.94%	315		3.47%	378	3.39%

Securities	102,153	2.30%	119,705	2.28%	104,890		3.48%	128,001	3.40%

Other Interest Earning Assests
Interest-bearing bank accounts	25,143	1.31%	14,399	0.53%	18,134		1.10%	17,432	0.53%
Equities	1,991	8.32%	2,869	5.85%	4,141		5.53%	4,728	4.83%

Other Interest Earning Assests	27,134	1.82%	17,268	1.42%	22,275		1.92%	22,160	1.45%

TOTAL INTEREST-EARNING ASSETS	1,032,909	4.70%	962,903	4.65%	1,010,507		4.65%	976,598	4.66%

TOTAL NON EARNING ASSETS	48,769		34,190		41,849			34,392

Total assets	$ 1,081,678		$ 997,093		$ 1,052,356			$ 1,010,990


Interest-bearing liabilities
Checking	$ 179,382	0.74%	$ 150,089	0.66%	$ 161,772		0.69%	$ 161,561	0.62%
Savings	111,490	0.90%	87,157	0.81%	107,329	#	0.85%	78,802	0.73%
Money Market	261,240	1.04%	261,677	0.89%	268,811		0.96%	217,893	0.82%
Certificate of Deposit	250,499	1.48%	257,451	1.45%	221,839		1.45%	264,127	1.45%

Total interest-bearing deposits	802,611	1.09%	756,374	1.03%	759,751		1.03%	722,383	1.00%

Non interest bearing deposits	108,839		97,605		101,216			107,619
Total deposits	911,450	0.96%	853,979	0.91%	860,967		0.91%	830,002

Borrowings	21,217	1.34%	38,788	0.59%	67,513		1.05%	80,407	0.57%

Total interest-bearing liabilities (excluding non interest deposits)	823,828	1.10%	795,162	1.01%	827,264		1.03%	802,790	0.95%


Noninterest-bearing deposits	108,839		97,605		101,216			107,619
Accrued expenses and other liabilities	2,333		4,135		3,122			3,698
Stockholders' equity	146,678		100,191		120,754			96,883
Total liabilities and stockholders' equity	$ 1,081,678		$ 997,093		$ 1,052,356			$ 1,010,990

Net interest spread		3.60%		3.64%			3.62%		3.71%
Net interest margin		3.82%		3.82%			3.81%		3.87%

Net interest margin (FTE)*		3.99%		4.03%			3.99%		4.09%

*Includes the effect of tax exempt
securities and loans

The Bank of Princeton
Financial Highlights
(Dollars in thousands, except per share data)	For the Three Months Ended						For the Nine Months Ended
(unaudited)
	September 30,						September 30,

	2017		2016		Change		2017		2016		Change



Return on average assets	1.17	%	1.21	%	(0.04)	%	1.18	%	1.17	%	0.01	%
Return on average equity	8.60	%	12.04	%	(3.44)	%	10.30	%	12.17	%	(1.87)	%
Return on average tangible equity (1)	8.60	%	12.05	%	(3.45)	%	10.30	%	12.17	%	(1.87)	%
Net interest margin	3.82	%	3.82	%	-	%	3.81	%	3.87	%	(0.06)	%
Efficiency ratio - Non-GAAP	52.67	%	58.94	%	(6.27)	%	57.90	%	60.10	%	(2.20)	%


PER SHARE DATA
Basic net income per common share	$ 0.54		$ 0.65		$ (0.11)		$ 1.81		$ 1.23		$ 0.58
Diluted net income per common share	0.51		0.60		(0.09)		1.71		1.17		0.54
Book value per common share at period end	25.47		21.62		3.85		25.47		21.62		3.85
Tangible book value per common share at period end	25.46		21.61		3.85		25.46		21.61		3.85
Market value at period end	31.99		30.00		1.99		31.99		30.00		1.99
Market range:
High	33.49		29.10		4.39		33.49		29.10		4.39
Low	29.43		25.00		4.43		29.43		25.00		4.43


CAPITAL RATIOS
Total Capital (to risk-weighted assets)	17.15	%	11.84	%	5.31	%	17.15	%	11.84	%	5.31	%
Tier 1 Capital (to risk-weighted assets)	16.06	%	10.68	%	5.38	%	16.06	%	10.68	%	5.38	%
Tier 1 Capital (to average assets)	15.20	%	9.98	%	5.22	%	15.20	%	9.98	%	5.22	%
Period-end equity to assets	14.90	%	10.07	%	4.83	%	14.90	%	10.07	%	4.83	%
Period-end tangible equity to tangible assets	14.90	%	10.07	%	4.83	%	14.90	%	10.07	%	4.83	%



CREDIT QUALITY DATA AT PERIOD END
Net charge-offs and (recoveries)	$ 260		$ -		260		$ 412		$ (12)		424

Annualized net charge-offs to average loans	0.11	%	-		0.11	%	0.06	%	(0.002)	%	0.06	%

Nonaccrual loans	11,240		8,729		2,511		11,240		8,729		2,511
Loans 90 days past due and still accruing	-		-				-		-
Other real estate owned	179		-		179		179		-		179
Total nonperforming assets	11,419		8,729		2,690		11,419		8,729		2,690

Accruing troubled debt restructurings (TDRs)	4,846		1,082		3,764		4,846		1,082		3,764

Total nonperforming assets and accruing TDRs	$ 16,265		$ 9,811		$ 6,454		$ 16,265		$ 9,811		$ 6,454

Allowance for credit losses as a percent of:
Period-end loans	1.19	%	1.30	%	-0.11	%	1.19	%	1.30	%	-0.11	%
Nonaccrual loans	99.82	%	80.69	%	19.13	%	99.82	%	80.69	%	19.13	%
Nonperforming assets	101.41	%	80.69	%	20.72	%	101.41	%	80.69	%	20.72	%

As a percent of total loans:
Nonaccrual loans	1.19	%	1.05	%	0.14	%	1.19	%	1.05	%	0.14	%
Accruing TDRs	0.51	%	0.13	%	0.38	%	0.51	%	0.13	%	0.38	%
Nonaccrual loans and accruing TDRs	1.70	%	1.05	%	0.65	%	1.70	%	1.05	%	0.65	%