PRINCETON, N.J., July 26, 2018 /PRNewswire/ -- The Bank of Princeton (the "Bank") (NASDAQ – BPRN) today reported unaudited results of operations and financial condition for the quarter ended June 30, 2018.  The Bank reported net income of $3.6 million, or $0.53 per diluted common share, for the second quarter of 2018, compared to net income of $3.6 million, or $0.52 per diluted common share, for the first quarter of 2018, and net income of $3.0 million, or $0.69 per diluted common share, for the second quarter of 2017. The increase in net income, when comparing the three months ended March 31, 2018, was primarily due in an increase of $372 thousand in net interest income and a reduction in income tax expense of $211thousand and partially offset by an increase to the Bank's provision for loan losses of $155 thousand,  a decline in non-interest income of $159 thousand and an increase of $215 thousand in non-interest expenses. The increase of $596 thousand in total net income, when comparing the three months ended June 30, 2017 was primarily due to a $790 thousand increase of net-interest income, a $108 thousand increase in non-interest income, a $339 thousand reduction in income tax expense, partially offset with a $410 thousand in provision for loan losses and a $231 thousand increase in non-interest expenses.  For the six month period ended June 30, 2018, the Bank recorded net income of $7.2 million, or $1.05 per diluted common share, compared to $6.1 million, or $1.21 per diluted common share for the same period in 2017.  

Highlights for the quarter-ended June 30, 2018 are as follows:

• Net-interest income for the three month period ended June 30, 2018 increased $790 thousand, or 8.3%, over the same period in 2017.
• Non-interest income for the three month period ended June 30, 2018 increased $108 thousand, or 20.8%, over the same period in 2017.
• Total net-income for the second quarter of 2018 increased $596 thousand, or 19.6%, when compared to the same period in 2017.
• Total net-income for the six month period ended June 30, 2018 increased $1.1 million, or 17.7%, when compared to the same period in 2017.
• Net loans increased $95.8 million, from $958.4 million at December 31, 2017.  This reflects an annualized increase of 20.0%

"We are pleased to report another quarter of sound financial performance, continuing the momentum that began with our stock offering in August 2017," stated Edward Dietzler, President/CEO.

Chairman Richard Gillespie noted that, "The Bank's financial results in the second quarter, demonstrate the positive impact of our growth strategy, by focusing on prudent loan growth."

Balance Sheet Review

Total assets were $1.24 billion at June 30, 2018, an increase of $40.2 million, or 3.3% when compared to $1.20 billion at the end of 2017. The primary reason for the increase in total assets was due to an increase in net loans of approximately $95.8 million, primarily consisting of commercial and residential real estate loans, partially offset by a reduction of $57.0 million in cash and cash equivalents, which were related to a decline in deposit accounts connected with a cyclical reduction of municipal deposits.

Total deposits at June 30, 2018 decreased by $14.0 million, or 1.4% when compared to December 31, 2017. Since December 31, 2017, we experienced deposit increases of $54.9 million in time deposit, $35.2 million n money markets, which were more than offset by a $100.4 million decrease in demand accounts (approximately $50.0 million was related to the municipal deposits noted above).  At June 30, 2018, the Bank had borrowings of $46.0 million in short-term advances to fund the loan growth.   

Total stockholders' equity increased $7.7 million, or 4.6% when compared to the end of 2017. This increase was primarily due to earnings recorded during the first six months of 2018.  The ratio of equity to total assets was 14.2%, 0.2% higher than year-end 2017.

Asset Quality

At June 30, 2018, non-performing assets were $9.3 million, a decrease of $736 thousand, or 7.4%, when compared to $10.0 million at December 31, 2017.  This decrease was primarily the result of one large credit removed from non-accrual during the quarter. Total troubled debt restructuring ("TDRs") balance totaled $2.8 million at June 30, 2018, a decline of $3.5 million from year-end 2017. All TDRs are performing to their agreed upon terms.

Review of Quarterly Financial Results

Net interest income was $10.2 million for the second quarter of 2018, compared to $9.9 million for the first quarter of 2018 and $9.5 million for the second quarter of 2017.  The increase from the previous quarter was a result of an increase in interest income of $865 thousand, or 6.9%, offset by an increase in interest expense of $493 thousand.  The net interest margin for the second quarter 2018 was 3.57%, increasing 5 basis points, when compared to the first quarter of 2018. This increase was primarily associated with an increase of 20 basis points of yield on earning assets, partially offset by an increase of 18 basis points paid on cost of funds.  When comparing the same three month period ended June 30, 2018 and 2017, net interest income increased $790 thousand, which was primarily due to a higher volume of average earnings assets of approximately $147.9 million. For the six month period ended June 30, 2018, net interest income was $20.2 million, an increase of $1.3 million, or 7.0%, over the same period in 2017, which was primarily due to a higher volume of average earning assets of approximately $147.9 million.  Total rate on interest-bearing liabilities, which includes non-interest-bearing deposits for the three month period ended June 30, 2018 and 2017 was 1.24% and 0.93%, respectively. 

The provision for credit losses was $410 thousand and $665 thousand for the three and six months ended June 30, 2018, respectively, compared to $0 for the same periods in 2017.  When compared to the prior quarter, the increase was $255 thousand for the three months ended March 31, 2018. The primary reason for the provision in the second quarter of 2018 was due to an increase in the outstanding loans balance.  The ratio of allowance for credit losses to period end loans was 1.13% at June 30, 2018, compared to 1.20% at December 31, 2017 and 1.20% at June 30, 2017, which reflects management's assessment of the credit quality in the loan portfolio.

Total non-interest income for the second quarter of 2018 increased $108 thousand, to $627 thousand, or 20.8%, when compared to the same period in 2017. This increase was primarily due to an increase in income from bank-owned life insurance. Total non-interest income, comparing the three month periods ended June 30, 2018 and March 31, 2018, reflected a decrease of $159 thousand, primarily due to a lower level of fees generated on loans recorded between the two periods.  For the six month period ended June 30, 2018, non-interest income increased $530 thousand, or 60.0%, primarily due to increases in bank-owned life insurance and fees earned on loans.

Total non-interest expense for the second quarter of 2018 increased $231 thousand, or 3.8%, when compared to the same period in 2017.  This increase was primarily due to increases in salaries and employee benefit expense and advertising expense, partially offset by a reduction in professional fees and FDIC deposit insurance.  When comparing June 30, 2018 to the prior linked quarter, non-interest expense increased $215 thousand, or 3.6%, primarily due to an increase in professional fees and other operating expense. For the six month period ended June 30, 2018, non-operating expense was $12.3 million, compared to $12.0 million for the same period in 2017. The increase was attributed to an increase of salaries and benefits expense, partially offset by a reduction in professional fees and FDIC deposit insurance expense.

For the three month period ended June 30, 2018, the Bank recorded income tax expense of $579 thousand, resulting in an effective tax rate of 13.7%, compared to $790 thousand, resulting in an effective tax rate of 18.1%, for the three month period ended March 31, 2018, and compared to $918 thousand, resulting in an effective tax rate of 23.2%, for the three month period ended June 30, 2017. The current effective tax yield for the three and six months ended June 30, 2018, were reduced, in part, as a result of the new corporate tax rate of 21.0% from the prior rate of 34.0%.  In addition, both three and six months ended June 30, 2018 and three months ended March 31, 2018 were positively impacted by recording 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contact George Rapp

609.454.0718

grapp@thebankofprinceton.com 

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SOURCE The Bank of Princeton