The Bank of Princeton Announces Fourth Quarter and Full-Year 2017 Results

PRINCETON, N.J., Jan. 25, 2018 /PRNewswire/ -- The Bank of Princeton (the "Bank") BPRN today reported unaudited results of operations and financial condition for the quarter and twelve months ended December 31, 2017. The Bank reported net income of $1.7 million or $0.25 per diluted common share for the fourth quarter of 2017, compared to net income of $3.2 million or $0.51 per diluted common share for the third quarter of 2017, and net income of $3.0 million or $0.60 per diluted common share for the fourth quarter of 2016. The reduction in net income was primarily due to increases in the Bank's provision for loan losses of $2.1 million and $2.9 million as compared to the three months ended September 30, 2017 and December 31, 2016.

The Bank reported net income of $11.0 million or $1.90 per diluted common share for the twelve months ended December 31, 2017 compared to net income of $11.8 million or $2.36 per diluted common share for the same period in 2016.

Highlights for the quarter-ended December 31, 2017 are as follows:

Net interest income for the three month period ended December 31, 2017 increased $1.0 million or 10.6% over the same period in 2016.
Non-interest income for the three month period ended December 31, 2017 increased $146,000 or 22.3% over the same period in 2016.
Total non-interest expense decreased $349 thousand or 6.0% when compared to the third quarter of 2017 and decreased $231 thousand or 4.0% when compared to fourth quarter of 2016.
Net loans increased an additional $109.6 million from $860.3 million at December 31, 2016.
Total deposits exceeded the $1.00 billion level, a $166.1 million increase from the $862.5 million at December 31, 2016.

"We are pleased with our ability to increase revenue and reduce expenses along with significant loan and deposit growth," stated Edward Dietzler, President.

Chairman Richard Gillespie noted that, "The Bank continues growth beyond our peers in both loan and deposit growth, while controlling operating expenses. Our Board and executive team look forward to 2018 with enthusiasm for continued growth and success."

Balance Sheet Review

Total assets were $1.20 billion at December 31, 2017, a $174.6 million or 17.0% increase when compared to $1.03 billion at the end of 2016. The primary reason for the increase in total assets was the result of growth in net loans of $108.9 million or 12.8%, and an increase of $63.2 million in cash and cash equivalents.

Total liabilities increased by $109.8 million to $1.03 billion at December 31, 2017 from $922.5 million at December 31, 2016. Total deposits at December 31, 2017 increased by $166.1 million or 19.3% when compared to December 31, 2016. The increase in deposits consists of increases of $121.8 million in interest checking and $73.1 million in time deposit, partially offset by a $37.6 million decline in money markets. Borrowings as of December 31, 2017 were brought down to $0 from the December 31, 2016 level of $56.1 million.

Total stockholders' equity increased $64.8 million or 62.7% when compared to the end of 2016. This increase was primarily due to the completion of a common stock offering that raised $51.9 million, and $11.0 million of profits generated during the twelve month period ended December 31, 2017. The ratio of equity to total assets was 14.0%, 3.9% higher than year-end 2016.

Asset Quality

At December 31, 2017, non-performing assets were $10.0 million, an increase of $6.6 million or 194.1% when compared to $3.4 million at the same date in 2016. This increase was primarily the result of two large credits put on non-accrual during the year. Troubled debt restructurings totaled $4.8 million at December 31, 2017, a decline of $147 thousand from year-end 2016.

Review of Quarterly Financial Results

Net interest income was $10.3 million for the fourth quarter of 2017 compared to $9.9 million for the third quarter of 2017 and $9.4 million for the fourth quarter of 2016. The net interest margin for the fourth quarter 2017 was 3.79%, declining three basis points, compared to the third quarter of 2017. The increase in net interest income when comparing the fourth quarter of 2017 to the third quarter of 2017 and the fourth quarter of 2016, was primarily due to a higher volume of average earnings assets of approximately $50.9 million and $112.6 million, respectively.

The provision for credit losses was $2.9 million for the three months ended December 31, 2017. The comparable amounts were $850 thousand and a credit of $41 thousand for the three months ended September 30, 2017 and December 31, 2016, respectively. The primary reason for the provision in the fourth quarter of 2017 was to cover a $2.6 million charge-off consisting of four commercial real estate loans in the amount of loans of $2.1 million and two commercial and industrial loans in the amount of $509 thousand, along with continued loan growth. The rate of allowance for credit losses to period end loans was 1.20% at quarter end 2017, compared to 1.19% at September 30, 2017 and 1.26% at December 31, 2016, which reflects management's assessment of the credit quality in the loan portfolio.

Total non-interest income for the fourth quarter of 2017 increased $145 thousand, to $800 thousand, or 22.3%, when compared to the same period in 2016. This increase was primarily due to an increase in income from bank-owned life insurance, and to a lesser extent fees generated on loans and deposits. Total non-interest income comparing the three month periods ended December 31, 2017 and September 30, 2017 reflected a decrease of $347 thousand primarily due to a higher level of prepayment penalty fees paid by borrowers in the third quarter of 2017.

Total non-interest expense for the fourth quarter of 2017 decreased $350 thousand or 6.0% when compared to the third quarter of 2017 and decreased $231 thousand or 4.0% compared to the fourth quarter 2016. The decreases were attributed to a reduction in salary and benefit cost and in FDIC insurance premium expense.

For the three month period ended the December 31, 2017, the Bank recorded income tax expense of $1.0 million resulting in an effective tax rate of 37.6%, compared to $1.2 million resulting in an effective tax rate of 27.8% for the three month period ended September 30, 2017 and compared to $1.3 million resulting in an effective tax rate of 29.5% for the three month period ended December 31, 2016. During the fourth quarter 2017, the Bank recorded a $40 thousand tax benefit as a result of evaluating the impact of the Tax Cuts and Jobs Act signed into law effective December 22, 2017. In addition, the Bank recorded a tax expense of approximately $500 thousand for an excise tax related to the deferral of the distribution of REIT earnings until 2018. The net impact to the income statement is an additional expense of $460 thousand.

Review of Twelve Month Financial Results

Net interest income for the twelve months of 2017 was $39.1 million, an increase of $1.5 million when compared to the twelve months of 2016. The increase was due to significant growth of average earning assets of $53.8 million, while maintaining an average yield of 4.66% for both periods, generating an increase in interest income of $2.5 million. This increase was partially offset by an increase in interest expense of approximately $1.1 million resulting from an increase of the average outstanding balance of interest-bearing liabilities of $33.6 million, along with an 8 basis point increase in the rate.

The provision for credit losses for the twelve months ended December 31, 2017 was $3.8 million compared with a credit of $41 thousand for the 2016 period. The increase was attributed to growth in the loan portfolio and increased net charge-offs totaling $3.0 million.

Total non-interest income for the twelve months ended December 31, 2017 increased $476 thousand or 20.2% when compared to the same period in 2016. This increase was primarily due to an increase in income from bank-owned life insurance, as well as increased prepayment fees paid by borrowers.

Total non-interest expense for the twelve months ended December 31, 2017 decreased $427 thousand or 1.8% when compared to the same period of 2016. This decrease was primarily due to decrease in salary and benefit cost and FDIC insurance premium expense.

For the year ended the December 31, 2017, the Bank recorded income tax expense of $3.8 million resulting in an effective tax rate of 25.9%, compared to a $4.5 million expense resulting in an effective tax rate of 27.4% for the same period in 2016.

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.-

Contact George Rapp
609.454.0718
grapp@thebankofprinceton.com

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

			Dec 31, 2017 vs Dec 31, 2016	Dec 31, 2017 vs Dec 31, 2016
	December 31, 2017	December 31, 2016	$ Change	% Change

ASSETS
Cash and cash equivalents	$ 82,822	$ 19,605	$ 63,217	322.45	%
Securities available for sale taxable	53,770	59,863	(6,093)	(10.18)
Securities available for sale tax exempt	47,974	53,171	(5,197)	(9.77)
Securities held to maturity	264	340	(76)	(22.35)
Loans receivable, net of deferred	969,947	860,326	109,621	12.74
Allowance for loan losses	(11,591)	(10,822)	(769)	7.11
Other assets	57,405	43,513	13,892	31.93
TOTAL ASSETS	$ 1,200,591	$ 1,025,996	$ 174,595	17.02	%


LIABILITIES
Non interest checking	$ 100,633	$ 98,204	$ 2,429	2.47	%
Interest checking	282,076	160,247	121,829	76.03
Savings	105,475	99,035	6,440	6.50
Money market	246,897	284,546	(37,649)	(13.23)
Time deposits over $250,000	102,586	45,553	57,033	125.20
Other time deposits	191,001	174,936	16,065	9.18
Total Deposits	1,028,668	862,521	166,147	19.26
Borrowings	-	56,100	(56,100)	(100.00)
Other liabilities	3,628	3,913	(285)	(7.28)
TOTAL LIABILITIES	1,032,296	922,534	109,762	11.90	%

STOCKHOLDERS' EQUITY
Common stock	32,756	23,502	9,254	39.38
Paid-in capital	76,350	31,856	44,494	139.67
Retained earnings	59,122	48,108	11,014	22.89
Accumulated other comprehensive income(loss)	67	(4)	71	(1,775.00)
TOTAL STOCKHOLDERS' EQUITY	168,295	103,462	64,833	62.66	%

TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY	$ 1,200,591	$ 1,025,996	$ 174,595	17.02	%

Book value per common share	$ 25.69	$ 22.01	$ 3.68	16.72	%
Tangible book value per common share1	$ 25.69	$ 22.00	$ 3.69	16.77	%

1Reconciliation of non-GAAP tangible
book value per common share:
Total stockholders' equity	$ 168,295	$ 103,462
Intangible assets	-	(30)
Tangible stockholders' equity	$ 168,295	$ 103,432

Common shares outstanding	6,551,229	4,700,395

Tangible book value per common share	$ 25.69	$ 22.00

The Bank of Princeton
Consolidated Statements of Operations
(unaudited)
			Three Months Ended			Twelve Months Ended
			December 31,			December 31.
			2017	2016	% Change	2017	2016	% Change
			(Dollars in thousands)			(Dollars in thousands)
Interest and Dividend Income

	Loans and fees		$ 12,082	$ 10,664	13.3%	$ 45,119	$ 42,304	7%
	Available-for-Sale debt securities:
		Taxable	289	275	5.1%	1,155	1,154	0%
		Tax-exempt	295	379	-22.2%	1,241	1,663	-25%
	Held-to-Maturity debt securities		3	5	-40.0%	15	19	-21%
	Other interest and dividend income		121	53	128.3%	442	293	51%

		Total Interest and Dividends	12,790	11,376	12.4%	47,972	45,433	6%

	Interest expense

		Deposits	2,432	1,967	23.6%	8,297	7,360	-13%
		Borrowings	15	57	-73.7%	543	403	-35%

		Total Interest Expense	2,447	2,024	20.9%	8,840	7,763	-14%

		Net Interest Income	10,343	9,352	10.6%	39,132	37,670	4%

Provision for Loan Losses			2,915	-	-	3,765	(41)	9283%

Net Interest Income after Provision for Loan Losses			7,428	9,352	-20.6%	35,367	37,711	-6%

Non-Interest income

	Gain on sale of securities available for sale, net		-	1	0.0%	14	136	-90%
	Income from bank-owned life insurance		298	171	73.7%	896	653	37%
	Fees and service charges		487	457	6.6%	1,878	1,540	22%
	Gain (loss) on sale of fixed assets		-	-	-	3	(42)	-107%
	Other		15	25	-44.0%	39	67	-42%

		Total Non-Interest Income	800	654	22.2%	2,830	2,354	20%

Non-Interest Expense

	Salaries and employee benefits		3,073	3,170	3.1%	13,042	13,350	2%
	Occupancy and equipment		874	861	-1.5%	3,461	3,483	1%
	Professional fees		481	466	-3.2%	2,134	2,147	1%
	Data processing and communications		511	470	-8.7%	1,970	1,904	-3%
	Federal deposit insurance		(19)	183	110.4%	508	705	28%
	Advertising and promotion		58	28	-107.1%	260	225	-16%
	Office expense		70	75	6.7%	266	308	14%
	OREO Expense		2	6	66.7%	8	18	56%
	Other		390	233		1,242	1,155	0%
	Other		443	465	-4.7%	1,685	1,621	-4%
		Total Non-Interest Expense	5,493	5,724		23,334	23,761	2%
					-4.0%
Income before income tax expense/(benefit)			2,734	4,282		14,863	16,304	-9%
					-36.2%
Income tax expense/(benefit)			1,028	1,264		3,849	4,461	14%
					-18.8%
Net Income			1,707	3,018		11,014	11,843	-7.0%


Net income per common share - basic			0.26	0.64	-59.4%	2.00	2.52	-20.5%
Net income per common share - diluted			0.25	0.60	-58.2%	1.90	2.36	-19.3%

Weighted average shares outstanding - basic			6,550	4,700	39.4%	5,496	4,696	-17.0%
Weighted average shares outstanding - diluted			6,859	5,065	35.4%	5,787	5,019	-15.3%

The Bank of Princeton
Consolidated Average Balance Sheets
(unaudited)

	For the Three Months Ended				For the Twelve Months Ended
	December 31,				December 31,
	2017		2016		2017		2016
	Average	Yield/	Average	Yield/	Average	Yield/	Average	Yield/
	balance	rate	balance	rate	balance	rate	balance	rate
Earning assets
Loans	$ 948,724	5.05%	$ 837,807	5.06%	$ 899,822	5.01%	$ 829,295	5.10%

Securities

Taxable AFS	55,831	2.07%	59,640	1.85%	57,434	2.01%	63,668	1.81%
Tax exempt AFS	44,404	2.66%	54,810	2.77%	46,047	2.70%	60,643	2.74%
Held-to-maturity	265	5.21%	341	5.15%	302	5.08%	369	5.08%

Securities	100,500	2.34%	114,791	2.30%	103,783	2.32%	124,680	2.27%

Other interest earning assets
Interest-bearing bank accounts	33,379	1.18%	15,539	0.48%	21,976	1.12%	16,956	0.52%
Equities	1,179	7.35%	2,738	4.94%	3,395	5.69%	4,228	4.85%

Other interest earning assets	34,558	1.39%	18,277	1.15%	25,371	1.74%	21,184	1.38%

Total interest-earning assets	1,083,782	4.68%	970,875	4.66%	1,028,976	4.66%	975,159	4.66%

Total non earning assets	57,756		39,720		45,858		35,971

Total Assets	$ 1,141,538		$ 1,010,595		$ 1,074,834		$ 1,011,130


Interest-bearing liabilities
Checking	$ 209,337	0.75%	$ 156,423	0.67%	$ 173,761	0.71%	$ 160,270	0.63%
Savings	108,988	0.92%	95,992	0.85%	107,747	0.87%	83,123	0.76%
Money Market	253,908	1.06%	285,746	0.94%	265,055	0.99%	234,949	0.86%
Certificate of Deposit	287,497	1.53%	229,541	1.42%	238,388	1.48%	255,433	1.45%

Total interest-bearing deposits	859,730	1.12%	767,702	1.02%	784,951	1.06%	733,775	1.00%

Non interest bearing deposits	105,586		100,357		102,317		105,794
Total deposits	965,316	1.00%	868,059	0.90%	887,268	0.94%	839,569	0.88%

Borrowings	4,450	1.36%	35,912	0.63%	51,618	1.05%	69,222	0.58%

Total interest-bearing liabilities
(excluding non interest deposits)	864,180	1.12%	803,614	1.00%	836,569	1.06%	802,997	0.97%

Noninterest-bearing deposits	105,586		100,357		102,317		105,794
Accrued expenses and other liabilities	3,390		4,085		3,189		4,035
Stockholders' equity	168,382		102,539		132,759		98,304
Total liabilities and stockholders' equity	$ 1,141,538		$ 1,010,595		$ 1,074,834		$ 1,011,130

Net interest spread		3.56%		3.66%		3.60%		3.69%
Net interest margin		3.79%		3.83%		3.80%		3.86%

Net interest margin (FTE)*		3.97%		3.82%		3.99%		4.11%

*Includes the effect of tax exempt
securities and loans

The Bank of Princeton
Quarterly Financial Highlights
(unaudited)

	2017	2017	2017	2017	2016
	Dec	Sep	Jun	Mar	Dec


Return on average assets	0.59%	1.17%	1.17%	1.22%	1.18%
Return on average equity	4.02%	8.60%	11.10%	11.91%	11.68%
Return on average tangible equity	4.02%	8.60%	11.10%	11.91%	11.68%
Net interest margin	3.79%	3.82%	3.78%	3.83%	3.82%
Efficiency ratio - Non-GAAP	49.40%	52.67%	60.43%	61.28%	57.22%


Common Stock Data
Market value at period end	34.34	31.99	-	-	-
Market range:
High	34.95	33.49	-	-	-
Low	31.1	29.43	-	-	-
Book value per common share at period end	25.69	25.47	23.15	22.59	22.01
Tangible book value per common share at period end	25.69	25.46	23.14	22.58	22.00


CAPITAL RATIOS
Total Capital (to risk-weighted assets)	17.12%	17.15%	12.34%	12.25%	12.04%
Teir 1 Capital (to risk-weighted assets)	16.01%	16.06%	11.25%	11.14%	10.89%
Teir 1 Capital (to average assets)	14.64%	15.29%	10.55%	10.32%	10.14%
Period-end equity to assets	14.09%	14.90%	10.58%	10.28%	10.08%
Period-end tangible equity to tangible assets	14.09%	14.90%	10.58%	10.28%	10.08%

CREDIT QUALITY DATA AT PERIOD END
(Dollars in Thousands)
Net charge-offs and (recoveries)	$ 2,584	$ 235	$ 5	$ 172	$ -

Annualized net charge-offs to average loans	1.08%	0.10%	0.002%	0.08%	0.00%

Nonaccrual loans	9,199	11,240	7,258	3,282	3,371
Loans 90 days past due and still accruing
Other real estate owned	802	179	179	179	-
Total nonperforming assets	10,001	11,419	7,437	3,461	3,371

Accruing troubled debt restructurings (TDRs)	4,796	4,845	4,775	4,896	4,943

Total nonperforming assets and accruing TDRs	$ 14,797	$ 16,264	$ 12,212	$ 8,357	$ 8,314

Allowance for credit losses as a percent of:
Period-end loans	1.20%	1.19%	1.20%	1.21%	1.26%
Nonaccrual loans	79.36%	99.82%	68.18%	30.82%	31.15%
Nonperforming assets	86.28%	101.41%	69.86%	32.50%	31.15%

As a percent of total loans:
Nonaccrual loans	0.95%	1.19%	0.82%	0.37%	0.39%
Accruing TDRs	0.49%	0.51%	0.54%	0.56%	0.57%
Nonaccrual loans and accruing TDRs	1.53%	1.72%	1.37%	0.95%	0.97%