PR Newswire | Oct 22, 2020 04:01PM EDT

10/22 15:00 CDT

The Bank of Princeton Announces Third Quarter 2020 Results PRINCETON, N.J., Oct. 22, 2020

PRINCETON, N.J., Oct. 22, 2020 /PRNewswire/ -- The Bank of Princeton (the "Bank") (NASDAQ - BPRN) today reported its unaudited results of operations and financial condition for the quarter ended September 30, 2020. The Bank reported net income of $3.5 million, or $0.52 per diluted common share, for the third quarter of 2020, compared to net income of $3.1 million, or $0.45 per diluted common share, for the second quarter of 2020, and net income of $3.7 million, or $0.54 per diluted common share, for the third quarter of 2019. The increase in net income, when compared to the three months ended June 30, 2020, was primarily due to a $772 thousand increase in net-interest income, a $405 thousand increase in non-interest income and a $460 thousand reduction in non-interest expense, partially offset by a $925 thousand increase in the Bank's provision for loan losses, and a $291 thousand increase in income tax expense. The decrease in net income, when comparing it to the three months ended September 30, 2019, was primarily due to a $187 thousand increase in income tax expense. For the nine month period ended September 30, 2020, the Bank recorded net income of $9.7 million, or $1.41 per diluted common share, compared to $6.8 million, or $0.98 per diluted common share for the same period in 2019. This increase over 2019's results was primarily due to a $4.2 million increase in net-interest income, a $1.1 million decrease in the Bank's provision for loan losses and a $1.0 million increase in non-interest income, partially offset by $2.4 million increase in non-interest expenses attributed to the Bank's strategy of branch expansion and a $1.1 million increase in income tax expense.

Highlights for the quarter-ended September 30, 2020 are as follows:

* The Bank opened three new branches located in Lakewood and Piscataway, New Jersey and Philadelphia, Pennsylvania. * Net interest income for the three month period ended September 30, 2020 increased $2.0 million, or 18.7%, over the same period in 2019. * The Bank decreased its cost of funds by 79 basis points during the three month period ended September 30, 2020, when compared to the same period in 2019. * The Bank's efficiency ratio decreased to 52.91% for the three month period ended September 30, 2020. * The ratio of non-performing assets to total assets was 0.15% at September 30, 2020 and 0.17% at December 31, 2019.

President/CEO Edward Dietzler stated that, "We are pleased to report strong third quarter earnings, despite the continued economic challenges created by the ongoing COVID-19 pandemic. The Bank continues to show improvement in the cost of funds paid on deposits and significantly reduced its loan modifications to 5.4% of net loans outstanding at September 30, 2020, from a high of 19.7%."

Chairman Richard Gillespie added, "Bank management and employees have been especially nimble and attentive to the needs of our customers during the changing COVID-19 environment. We continue to be well positioned for the near term with both strong deposit growth and loan demand".

Balance Sheet Review

Total assets were $1.55 billion at September 30, 2020, an increase of $94.9 million or 6.5% when compared to $1.45 billion at the end of 2019. The primary reason for the increase in total assets was due to an increase of net loans of approximately $148.0 million, primarily consisting of Payroll Protection Program ("PPP") loans guaranteed by the U.S. government, which have a maturity of 24-60 months.

Total deposits at September 30, 2020 increased by $73.4 million, or 5.9%, when compared to December 31, 2019, primarily due to loan proceeds maintained in non-interest demand accounts from customers who received PPP loans as well as growth from new branches added since year end 2019. When comparing deposit products between the two periods, non-interest checking increased $79.0 million, savings increased $23.1 million and money markets increased $3.5 million. These increases were partially offset by a decrease of $25.8 million in certificates of deposit and $6.4 million in interest bearing checking accounts. In addition, at September 30, 2020 the Bank had borrowings totaling $8.0 million compared to no outstanding borrowings at December 31, 2019.

Total stockholders' equity at September 30, 2020 increased $9.2 million or 4.7% when compared to the end of 2019. This increase was primarily due to earnings recorded during the nine months of 2020, and an increase of $1.1 million in the fair-value of the available-for-sale investment portfolio. The ratio of equity to total assets at September 30, 2020 was 13.2% compared to 13.5% at December 31, 2019, as the current period ratio was impacted by the 6.5% growth in assets.

Asset Quality

At September 30, 2020, non-performing assets were $2.4 million, a decrease of $59 thousand, or 0.15%, when compared to the amount at December 31, 2019. This decrease at September 30, 2020 from December 31, 2019 was primarily due to principal payments on non-performing loans during the period. Total troubled debt restructurings ("TDR") totaled $8.9 million at September 30, 2020, compared to $9.3 million at December 31, 2019, a decrease of $405 thousand or 4.4%. All TDR's are performing to their agreed upon terms.

As part of the Bank's commitment to provide assistance during the COVID-19 pandemic, the Bank agreed to defer either the principal portion or both principal and interest payments for its customers who requested the deferral and were not delinquent prior to the government shut down. The Bank is seeing favorable trend as a majority of customers have returned to their regular payment schedule. As of September 30, 2020, the Bank had remaining 36 loans that were modified totaling $72.1 million, down from the 240 loans totaling $263.5 million originally approved, for such deferment reported as of June 30, 2020. Under current accounting guidance, these loans are not required to be classified as TDR's.

Review of Quarterly Financial Results

Net interest income was $12.8 million for the third quarter of 2020, compared to $12.0 million for the second quarter of 2020 and $10.8 million for the third quarter of 2019. The increase from the previous quarter was a result of an increase in interest income of $186 thousand and a $586 thousand, or 17.8%, decrease in interest paid on liabilities, partially resulting from a 28 basis points reduction in the yield on interest bearing deposits. The net interest margin for the third quarter of 2020 was 3.45%, increasing 2 basis points when compared to the second quarter of 2020. This increase was primarily associated with a reduction of 28 basis points in total cost of funds, partially offset by a 19 basis points reduction in the yield on earning assets. When comparing the three month periods ended September 30, 2020 and 2019, net interest income increased $2.0 million, which was primarily due to a reduction in interest expense of $1.8 million and by an increase in interest income of $235 thousand. The reduction in cost of funds was attributed to decline of 79 basis points in the rate paid on its interest-bearing liabilities resulting from the two FOMC rate reductions in March of 2020 totaling 150 basis points and the three 25 basis points reductions during 2019.

For the nine month period ended September 30, 2020, net interest income was $35.3 million, an increase of $4.2 million, or 13.7%, over the same period in 2019. This increase was due a $1.3 million increase in interest earned on earning assets and a $2.9 million decline in interest expense. For the nine month period ended September 30, 2020, the average outstanding balance of earning assets increased by $167.3 million and average outstanding balance of interest-bearing liabilities increased $79.4 million. The total rate on interest-bearing liabilities, which includes non-interest-bearing deposits, for the three month periods ended September 30, 2020 and 2019 was 0.80% and 1.55%, respectively. For the nine month periods ended September 30, 2020 and 2019 the total rate on interest-bearing liabilities, which includes non-interest bearing deposits, was 1.25% and 1.61%, respectively.

The provision for credit losses was $1.9 million for the three month period ended September 30, 2020. The comparable amounts were $1.0 million and $125 thousand for the three months ended June 30, 2020 and September 30, 2019, respectively. The primary reason for the provision in the third quarter was due to an increase in the Bank's general reserves. The general reserves increase was due to increases in qualitative factors due to uncertainties of the economic impact from the COVID-19 pandemic and an increase in the historical loss factor resulting from increased levels of prior period charge-offs. As of September 30, 2020, the Bank did not apply any qualitative factors to the loans originated from PPP, based on the U.S government's guarantee and the Coronavirus Aid, Relief and Economic Securities Act requirement to classify these loans at 0% in determining risk-based capital ratio. The rate of allowance for credit losses to period end loans was 1.14% (excluding PPP loans, the coverage ratio was 1.32%) at September 30, 2020, compared to 1.06% at December 31, 2019 and 1.09% at September 30, 2019, which reflects management's assessment of the credit quality in the loan portfolio.

At September 30, 2020,the Bank's concentration in the loan portfolio associated with the segments management believes could be effected by the pandemic: restaurants, hotels and retail, totaled $17.4 million, $50.0 million and $50.2 million, respectively.

Total non-interest income for the third quarter of 2020 increased $198 thousand to $1.3 million, or 18.4%, when compared to the same period in 2019. This increase was primarily due to an increase in service charges on deposits and loan fees collected. When compared to the three month periods ended June 30, 2020, total non-interest income for the third quarter of 2020 increased by $405 thousand, or 46.6%, primarily due an increase of $246 thousand in loan fees and $116 thousand in service charges collected. For the nine month period ended September 30, 2020, non-interest income increased $1.0 million, or 40.3%, primarily due to an increase of $550 thousand from the gains recorded from the sale of investment securities available-for-sale, $326 thousand in service charges collected and $127 thousand in loan fees.

Total non-interest expense for the third quarter of 2020 increased $394 thousand, or 5.5%, when compared to the same period in 2019. This increase was primarily due to an increase in additional operating cost associated with the Bank's branch expansion strategy. When comparing September 30, 2020 to the immediately prior quarter, non-interest expense decreased $460 thousand, or 5.7%, primarily due to decreases in salaries and employee benefits' expense and other operating expenses resulting from attrition within operations of the Bank related to the economic slowdown caused by the pandemic as well operational economies achieved during the quarter, partially offset by an increase in occupancy and equipment expenses, professional fees, data processing and communication expenses, advertising expenses and office expense. For the nine month period ended September 30, 2020, non-interest expense was $23.2 million, compared to $20.9 million for the same period in 2019. The increase was due to an increase in additional operating cost associated with the Bank's branch expansion strategy, partially offset by acquisition costs recorded relating to our Beneficial Bank branch acquisition in 2019.

For the three month period ended September 30, 2020, the Bank recorded an income tax expense of $988 thousand, resulting in an effective tax rate of 21.9%, compared to an income tax expense of $697 thousand resulting in an effective tax rate of 18.2% for the three month period ended June 30, 2020, and compared to an income tax expense of $801 thousand resulting in an effective tax rate of 17.7% for the three month period ended September 30, 2019. During the third quarter of 2020, the New Jersey Governor signed a law extending and retroactively increasing New Jersey's corporation business tax surtax, by 1.0% to 2.5%. The effective tax rate for all three periods were impacted by the level of tax-free income against the level of taxable earnings.

COVID-19

The full impact of the coronavirus continues to evolve as of the date of this press release. As such, it is uncertain as to the full magnitude that the pandemic will have on the Bank's financial condition, liquidity and future results of operations.

The Bank continues to work closely with its loan customers to educate and guide them on their options for financial assistance, including the PPP and payment relief through deferral and waived fees. The Bank continues to endeavor to provide a fast and flexible response to the quickly changing circumstances and is confident it will navigate successfully through these trying times.

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 20 branches in New Jersey, including four 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, 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; 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, 2019 under the heading "Risk Factors," as modified in the Bank's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 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 Rapp609.454.0718grapp@thebankofprinceton.com

The Bank of Princeton

Summary Statements of Financial Condition Data

(unaudited)

(dollars in thousands, except per share data)

Sep 30, 2020 Sep 30, 2020 Sep 30, 2020 Sep 30, 2020 vs vs vs vs Dec 31, 2019 Dec 31, 2019 Sep 30, 2019 Sep 30, 2019

Sep 30, Dec 31, Sep 30, $ % $ % 2020 2019 2019 Change Change Change Change

ASSETS

Cash and cash equivalents $ $ $ $ (37.57) % $ 6,804 17.67 % 45,320 72,598 38,516 (27,278)

Securities available for sale taxable 27,552 55,951 52,288 (28,399) (50.76) (24,736) (47.31)

Securities available for sale tax exempt 52,530 56,361 56,680 (3,831) (6.80) (4,150) (7.32)

Securities held to maturity 217 222 224 (5) (2.25) (7) (3.13)

Loans receivable, net of deferred 1,337,224 1,186,570 1,148,601 150,654 12.70 188,623 16.42

Allowance for loan losses (15,247) (12,557) (12,543) (2,690) 21.42 (2,704) 21.56

Other assets 102,154 95,749 95,832 6,405 6.69 6,322 6.60

TOTAL ASSETS $1,549,750 $1,454,894 $1,379,598 $ 6.52 % $ 170,152 12.33 % 94,856

LIABILITIES

Non interest checking $ $ $ $ 55.89 % $ 73,103 49.65 % 220,325 141,338 147,222 78,987

Interest checking 206,115 212,552 197,699 (6,437) (3.03) 8,416 4.26

Savings 177,895 154,756 155,944 23,139 14.95 21,951 14.08

Money market 298,466 294,940 242,320 3,526 1.20 56,146 23.17

Time deposits over $250,000 74,638 121,122 104,880 (46,484) (38.38) (30,242) (28.83)

Other time deposits 333,837 313,182 302,856 20,655 6.60 30,981 10.23

Total Deposits 1,311,276 1,237,890 1,150,921 73,386 5.93 160,355 13.93

Borrowings 8,000 - 13,400 8,000 - (5,400) -

Other liabilities 25,324 21,079 22,160 4,245 20.14 3,164 14.28

TOTAL LIABILITIES 1,344,600 1,258,969 1,186,481 85,631 6.80 % 158,119 13.33 %

STOCKHOLDERS' EQUITY

Common stock 33,895 33,807 33,754 88 0.26 141 0.42

Paid-in capital 79,547 79,215 79,022 332 0.42 525 0.66

Retained earnings 89,945 82,273 79,560 7,672 9.33 10,385 13.05

Accumulated other comprehensive income 1,763 630 781 1,133 179.84 982 125.74(loss)

TOTAL STOCKHOLDERS' EQUITY 205,150 195,925 193,117 9,225 4.71 % 12,033 6.23 %

TOTAL LIABILITIES

AND STOCKHOLDERS' EQUITY $1,549,750 $1,454,894 $1,379,598 $ 17.02 % $ 170,152 12.33 % 94,856

Book value per common share $ $ $ $ 4.43 % $ 5.77 % 30.26 28.98 28.61 1.28 1.65

Tangible book value per common share^1 $ $ $ $ 5.05 % $ 6.63 % 28.48 27.11 26.71 1.37 1.77

^1 Tangible book value is a non-gaap measurer.

The Bank of Princeton

Loan/Deposit Tables

Loan receivable, net at September 30, 2020 and December 31, 2019 were comprisedof the following:

September 30, December 31,

2020 2019

(Dollars in thousands)

Commercial real estate $ 818,721 $ 853,876

Commercial and industrial 36,612 43,504

Construction 221,626 189,789

Residential first-lien mortgages 71,388 89,067

Home equity / consumer 10,804 12,959

PPP (SBA loans) 183,322 -

Total loans 1,342,473 1,189,195

Deferred fees and costs (5,249) (3,419)

Allowance for loan losses (15,247) (12,557)

Loans, net $ 1,321,977 $ 1,173,219

The components of deposits at September 30, 2020 and December 31, 2019 were asfollows:

September 30, December 31,

2020 2019

(Dollars in thousands)

Demand, non-interest-bearing checking $ 220,325 $ 141,338

Demand, interest-bearing 206,115 212,552

Savings 177,895 154,756

Money Markets 298,466 294,940

Time deposits 408,475 434,304

Total Deposits $ 1,311,276 $ 1,237,890

The Bank of Princeton

Consolidated Statements of Operations

(unaudited)

Three Months Ended September 30,

2020 2019 $ Change % Change

(Dollars in thousands, except per share data)

Interest and Dividend Income

Loans and fees $ 14,977 $ 14,412 $ 565 3.9%

Available-for-Sale debt securities:

Taxable 135.00 276.00 -141 -51.1%

Tax-exempt 339.00 341.00 -2 -0.6%

Held-to-Maturity debt securities 3.00 3.00 0 0.0%

Other interest and dividend income 32.00 219.00 -187 -85.4%

Total Interest and Dividends 15,486.00 15,251.00 235 1.5%

Interest expense

Deposits 2,709.00 4,468.00 -1,759 -39.4%

Borrowings 0.00 18.00 -18 -100.0%

Total Interest Expense 2,709.00 4,486.00 -1,777 -39.6%

Net Interest Income 12,777.00 10,765.00 2,012 18.7%

Provision for Loan Losses 1,925.00 125.00 1,800 1440.0%

Net Interest Income after Provision for Loan Losses 10,852.00 10,640.00 212 2.0%

Non-Interest income

Gain on sale of securities available for sale,net 48.00 3.00 0 0.0%

Income from bank-owned life insurance 284.00 308.00 -24 -7.8%

Fees and service charges 424.00 339.00 85 25.1%

Loan fees, including prepayment penalities 463.00 417.00 46 11.0%

Other 56.00 10.00 46 460.0%

Total Non-Interest Income 1,275.00 1,077.00 198 18.4%

Non-Interest Expense

Salaries and employee benefits 3,998.00 4,060.00 -62 -1.5%

Occupancy and equipment 1,423.00 1,189.00 234 19.7%

Professional fees 512.00 518.00 -6 -1.2%

Data processing and communications 745.00 708.00 37 5.2%

Federal deposit insurance 112.00 -87.00 199 -228.7%

Advertising and promotion 82.00 123.00 -41 -33.3%

Office expense 81.00 106.00 -25 -23.6%

Other real estate owned expense 0.00 5.00 -5 -100.0%

Core deposit intangible 173.00 193.00 -20 -10.4%

Other 468.00 385.00 83 21.6%

Total Non-Interest Expense 7,594.00 7,200.00 394 5.5%

Income before income tax expense

4,533.00 4,517.00 16 0.4%

Income tax expense 988.00 801.00 187 23.3%

Net Income $ 3,545 $ -$171 -4.6% 3,716

Net income per common share - basic $ 0.52 $ -$0.03 -5.5% 0.55

Net income per common share - diluted $ 0.52 $ -$0.02 -3.7% 0.54

Weighted average shares outstanding - basic 6,775 6,721 54 0.8%

Weighted average shares outstanding - diluted 6,835 6,891 -56 -0.8%

The Bank of Princeton

Consolidated Statements of Operations (Current Quarter vs Prior Quarter)

(unaudited)

Quarter Ending

Sep 30, Jun 30,

2020 2020 $ Change % Change

(Dollars in thousands, except per share data)

Interest and Dividend Income

Loans and fees $ 14,977 $ 14,746 $ 231 1.6%

Available-for-Sale debt securities:

Taxable 135 171 -36 -21.1%

Tax-exempt 339 355 -16 -4.5%

Held-to-Maturity debt securities 3 3 0 0.0%

Other interest and dividend income 32 25 7 28.0%

Total Interest and Dividends 15,486 15,300 186 1.2%

Interest expense

Deposits 2,709 3,289 -580 -17.6%

Borrowings - 6 -6 -100.0%

Total Interest Expense 2,709 3,295 -586 -17.8%

Net Interest Income 12,777 12,005 772 6.4%

Provision for Loan Losses 1,925 1,000 925 92.5%

Net Interest Income after Provision for Loan Losses 10,852 11,005 -153 -1.4%

Non-Interest income

Gain on sale of securities available for sale,net 48 1 47 4700.0%

Income from bank-owned life insurance 284 291 -7 -2.4%

Fees and service charges 424 308 116 37.7%

Loan fees, including prepayment penalities 463 217 246 113.4%

Other 56 53 3 5.7%

Total Non-Interest Income 1,275 870 405 46.6%

Non-Interest Expense

Salaries and employee benefits 3,998 4,461 -463 -10.4%

Occupancy and equipment 1,423 1,288 135 10.5%

Professional fees 512 456 56 12.3%

Data processing and communications 745 749 -4 -0.5%

Federal deposit insurance 112 116 -4 -3.4%

Advertising and promotion 82 70 12 17.1%

Office expense 81 55 26 47.3%

Core deposit intangible 173 186 -13 -7.0%

Other 468 673 -205 -30.5%

Total Non-Interest Expense 7,594 8,054 -460 -5.7%

Income before income tax expense

4,533 3,821 712 18.6%

Income tax expense 988 697 291 41.8%

Net Income $ $ $ 421 13.5% 3,545 3,124

Net income per common share - basic $ $ $ 0.06 13.0% 0.52 0.46

Net income per common share - diluted $ $ $ 0.07 15.6% 0.52 0.45

Weighted average shares outstanding - basic 6,775 6,772 3 0.0%

Weighted average shares outstanding - diluted 6,835 6,848 (13) -0.2%

The Bank of Princeton

Consolidated Statements of Operations

(unaudited)

Nine Months Ended September 30,

2020 2019 $ Change % Change

(Dollars in thousands, except for per share data)

Interest and Dividend Income

Loans and fees $ 43,922 $ 41,988 $ 1,934 4.6%

Available-for-Sale debt securities:

Taxable 616 811 -195 -24.0%

Tax-exempt 1,057 979 78 8.0%

Held-to-Maturity debt securities 9 9 0 0.0%

Other interest and dividend income 219 737 -518 -70.3%

Total Interest and Dividends 45,823 44,524 1,299 2.9%

Interest expense

Deposits 10,530 13,022 -2,492 -19.1%

Borrowings 9 463 -454 -98.1%

Total Interest Expense 10,539 13,485 -2,946 -21.8%

Net Interest Income 35,284 31,039 4,245 13.7%

Provision for Loan Losses 3,575 4,675 -1,100 -23.5%

Net Interest Income after Provision for Loan Losses 31,709 26,364 5,345 20.3%

Non-Interest income

Gain on sale of securities available for sale,net 554 4 550 13750.0%

Income from bank-owned life insurance 871 930 -59 -6.3%

Fees and service charges 1,065 739 326 44.1%

Loan fees, including prepayment penalities 984 857 127 14.8%

Other 162 62 100 161.3%

Total Non-Interest Income 3,636 2,592 1,044 40.3%

Non-Interest Expense

Salaries and employee benefits 12,581 11,631 950 8.2%

Occupancy and equipment 3,913 3,041 872 28.7%

Professional fees 1,489 1,432 57 4.0%

Data processing and communications 2,297 1,749 548 31.3%

Federal deposit insurance 316 81 235 290.1%

Advertising and promotion 242 288 -46 -16.0%

Office expense 216 281 -65 -23.1%

Other real estate owned expense - 6 -6 -100.0%

Acquisition Expense - 627 -627 -100.0%

Core deposit intangible 553 289 264 91.3%

Other 1,624 1,432 192 13.4%

Total Non-Interest Expense 23,231 20,857 2,374 11.4%

Income before income tax expense 12,114 8,099 4,015 49.6%

Income tax expense 2,411 1,345 1,066 79.3%

Net Income $ $ $ 2,949 43.7% 9,703 6,754

Net income per common share - basic $ $ $ 43.0% 1.43 1.00 0.43

Net income per common share - diluted $ $ $ 43.9% 1.41 0.98 0.43

Weighted average shares outstanding - basic 6,771 6,721 50 0.7%

Weighted average shares outstanding - diluted 6,865 6,891 (26) -0.4%

The Bank of Princeton

Consolidated Average Balance Sheets

(unaudited)

For the Three Months Ended

Sep 30,

2020 2019

Average Yield/ Average Yield /

balance rate balance rate $ Change % Change

Earning assets

Loans $ 1,334,993 4.46% $ 1,132,154 5.05% $ 202,839 -0.59%

Securities

Taxable AFS 37,381 1.45% 46,329 2.38% -8,948 -0.93%

Tax exempt AFS 54,574 2.48% 51,484 2.65% 3,090 -0.17%

Held-to-maturity 218 5.26% 225 5.25% -7 0.01%

Securities 92,173 2.07% 98,038 2.53% -5,865 -0.46%

Other interest earning assets

Interest-bearing bank accounts 45,412 0.12% 34,744 2.27% 10,668 -2.15%

Equities 1,369 5.23% 1,384 6.00% -15 -0.77%

Other interest earning assets 46,781 0.27% 36,128 2.41% 10,653 -2.14%

Total interest-earning assets 1,473,947 4.18% 1,266,320 4.78% 207,627 -0.60%

Total non earning assets 99,680 92,446

Total Assets $ 1,573,627 $ 1,358,766

Interest-bearing liabilities

Checking $ 0.48% $ 1.05% $ -0.57% 220,146 205,155 14,991

Savings 178,271 0.37% 155,953 1.28% 22,318 -0.91%

Money Market 284,263 0.47% 237,697 1.63% 46,566 -1.16%

Certificate of Deposit 421,490 1.84% 404,982 2.40% 16,508 -0.56%

Total interest-bearing deposits 1,104,170 0.98% 1,003,787 1.77% 100,383 -0.79%

Non interest bearing deposits 238,935 140,640

Total deposits 1,343,105 0.80% 1,144,427 1.55% 198,678 -0.75%

Borrowings 87 0.35% 3,074 2.30% -2,987 -1.95%

Total interest-bearing liabilities

(excluding non interest deposits) 1,104,257 0.98% 1,006,861 1.77% 97,396 -0.79%

Noninterest-bearing deposits 238,935 140,640

Total Cost of Funds 1,343,192 0.80% 1,147,501 1.55% 195,691 -0.75%

Accrued expenses and other liabilities 25,990 19,923

Stockholders' equity 204,445 191,342

Total liabilities and stockholders' equity $ 1,573,627 $ 1,358,766

Net interest spread 3.20% 3.01%

Net interest margin 3.45% 3.37%

Net interest margin (FTE)* 3.53% 3.46%

*Includes federal and state tax effect of tax exempt

securities and loans

The Bank of Princeton

Consolidated Average Balance Sheets

(unaudited)

For the Quarter Ended

Sep 2020 Jun 2020

Average Yield/ Average Yield/

balance rate balance rate $ Change % Change

Earning assets

Loans $ 1,334,993 4.46% $1,280,865 4.63% $ 54,128 -0.17%

Securities

Taxable AFS 37,381 1.45% 34,769 1.97% 2,612 -0.52%

Tax exempt AFS 54,574 2.48% 56,031 2.54% -1,457 -0.06%

Held-to-maturity 218 5.26% 220 5.26% -2 0.00%

Securities 92,173 2.07% 91,020 2.33% 1,153 -0.26%

Other interest earning assets

Interest-bearing bank accounts 45,412 0.12% 36,219 0.07% 9,193 0.05%

Equities 1,369 5.23% 1,549 4.74% -180 0.49%

Other interest earning assets 46,781 0.27% 37,768 0.27% 9,013 0.00%

Total interest-earning assets 1,473,947 4.18% 1,409,653 4.37% 64,294 -0.19%

Total non earning assets 99,680 115,220

Total Assets $ 1,573,627 $1,524,873

Interest-bearing liabilities

Checking $ 0.48% $216,330 0.78% $ -0.30% 220,146 3,816

Savings 178,271 0.37% 170,969 0.58% 7,302 -0.21%

Money Market 284,263 0.47% 269,735 0.66% 14,528 -0.19%

Certificate of Deposit 421,490 1.84% 392,702 2.24% 28,788 -0.40%

Total interest-bearing deposits 1,104,170 0.98% 1,049,736 1.26% 54,434 -0.28%

Non interest bearing deposits 238,935 245,313

Total deposits 1,343,105 0.80% 1,295,049 1.02% 48,056 -0.22%

Borrowings 87 0.35% 4,255 0.57% -4,168 -0.22%

Total interest-bearing liabilities 1,104,257 0.98% 1,053,991 1.25% 50,266 -0.27%

(excluding non interest deposits)

Noninterest-bearing deposits 238,935 245,313

Total Cost of Funds 1,343,192 0.80% 1,299,304 1.02% 43,888 -0.22%

Accrued expenses and other liabilities 25,990 25,166

Stockholders' equity 204,445 200,403

Total liabilities and stockholders' equity $ 1,573,627 $1,524,873

Net interest spread 3.20% 3.11%

Net interest margin 3.45% 3.43%

Net interest margin (FTE)* 3.53% 3.52%

*Includes federal and state tax effect of tax exempt

securities and loans

The Bank of Princeton

Consolidated Average Balance Sheets

(unaudited)

For the Nine Months Ended

Sep 30,

2020 2019

Average Yield Average Yield/ /

balance rate balance rate $ Change % Change

Earning assets

Loans $ 1,271,433 4.61% $ 1,113,052 5.04% $ 158,381 -0.43%

Securities

Taxable AFS 42,910 1.91% 44,949 2.41% -2,039 -0.50%

Tax exempt AFS 55,822 2.53% 48,476 2.69% 7,346 -0.16%

Held-to-maturity 220 5.26% 226 5.26% -6 0.00%

Securities 98,952 2.27% 93,651 2.56% 5,301 -0.29%

Other interest earning assets

Interest-bearing bank accounts 39,997 0.55% 35,569 2.38% 4,428 -1.83%

Equities 1,400 5.17% 2,234 6.22% -834 -1.05%

Other interest earning assets 41,397 0.71% 37,803 2.61% 3,594 -1.90%

Total interest-earning assets 1,411,782 4.34% 1,244,506 4.78% 167,276 -0.44%

Total non earning assets 103,421 81,112

Total Assets $ 1,515,203 $ 1,325,618

Interest-bearing liabilities

Checking $ 0.75% $ 1.20% $ 16,601 -0.45% 218,836 202,235

Savings 168,869 0.68% 124,307 1.31% 44,562 -0.63%

Money Market 274,122 0.72% 250,490 1.67% 23,632 -0.95%

Certificate of Deposit 416,694 2.15% 400,600 2.29% 16,094 -0.14%

Total interest-bearing deposits 1,078,521 1.30% 977,632 1.78% 100,889 -0.48%

Non interest bearing deposits 209,439 116,840

Total deposits 1,287,960 1.10% 1,094,472 1.59% 193,488 -0.49%

Borrowings 1,709 0.68% 23,223 2.67% -21,514 -1.99%

Total interest-bearing liabilities

(excluding non interest deposits) 1,080,230 1.47% 1,000,855 1.80% 79,375 -0.33%

Noninterest-bearing deposits 209,439 116,840

Total Cost of Funds 1,289,669 1.25% 1,117,695 1.61% 171,974 -0.36%

Accrued expenses and other liabilities 24,654 19,239

Stockholders' equity 200,880 188,684

Total liabilities and stockholders' equity $ 1,515,203 $ 1,325,618

Net interest spread 3.03% 2.98%

Net interest margin 3.34% 3.33%

Net interest margin (FTE)* 3.42% 3.42%

*Includes federal and state tax effect of tax exempt

securities and loans

The Bank of Princeton

Quarterly Financial Highlights

(unaudited)

2020 2020 2020 2019 2019

Sep Jun Mar Dec Sep

Return on average assets 0.90% 0.82% 0.84% 0.94% 1.09%

Return on average equity 6.90% 6.27% 6.17% 6.92% 7.70%

Return on average tangible equity * 7.50% 6.68% 6.59% 7.40% 8.26%

Net interest margin 3.45% 3.43% 3.13% 3.10% 3.37%

Net interest margin (FTE)** 3.53% 3.49% 3.20% 3.21% 3.46%

Efficiency ratio - Non-GAAP *** 52.91% 61.10% 64.33% 59.63% 59.17%

Common Stock Data

Market value at period end 18.17 20.19 23.25 31.49 29.06

Market range:

High 20.45 23.91 32.25 32.12 30.20

Low 17.40 17.51 19.09 27.34 25.92

Book value per common share at period end 30.26 29.85 29.39 28.98 28.61

Tangible book value per common share at period end **** 28.48 28.04 27.56 27.11 26.71

CAPITAL RATIOS

Total Capital (to risk-weighted assets) 16.41% 16.01% 15.32% 15.11% 15.42%

Tier 1 Capital (to risk-weighted assets) 15.20% 14.95% 14.36% 14.13% 14.41%

Tier 1 Capital (to average assets) 12.27% 12.45% 12.91% 12.89% 13.31%

Period-end equity to assets 13.24% 12.69% 13.97% 13.47% 14.00%

Period-end tangible equity to tangible assets 12.56% 12.02% 13.21% 12.71% 13.19%

CREDIT QUALITY DATA AT PERIOD END

(Dollars in Thousands)

Net charge-offs and (recoveries) -$6 $6 $884 $112 $3

Annualized net charge-offs (recoveries) to average loans -0.001% 0.002% 0.297% 0.038% 0.001%

Nonaccrual loans 2,383 2,387 2,596 2,442 2,434

Total nonperforming assets 2,383 2,387 2,596 2,442 2,434

Accruing troubled debt restructurings (TDRs) 8,888 9,471 9,247 9,293 9,828

Total nonperforming assets and accruing TDRs $ 11,271 $ 11,858 $ 11,843 $ 11,735 $ 12,262

Allowance for credit losses as a percent of:

Period-end loans 1.14% 0.99% 1.03% 1.06% 1.09%

Nonaccrual loans 639.82% 557.90% 474.65% 514.21% 515.32%

Nonperforming assets 639.82% 557.90% 474.65% 514.21% 515.32%

As a percent of total loans:

Nonaccrual loans 0.18% 0.18% 0.22% 0.21% 0.21%

Accruing TDRs 0.66% 0.71% 0.78% 0.78% 0.86%

Nonaccrual loans and accruing TDRs 0.84% 0.88% 0.99% 0.99% 1.07%

* Return on average tangible equity is a non-GAAP measure that represents therate of return on tangible common equity.

**Includes the effect of tax exempt securities and loans

***The efficiency ratio in a non-GAAP measure that represents the ration ofnon-interest expense divided by the net-interest income

and non-interest income.

**** Tangible book value per common share is a non-GAAP measure that representsbook value per common share which

which excludes goodwill and core deposit intangible.

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SOURCE The Bank of Princeton