PR Newswire | Oct 21, 2021 04:02PM EDT

10/21 15:01 CDT

The Bank of Princeton Announces Third Quarter 2021 Results PRINCETON, N.J., Oct. 21, 2021

PRINCETON, N.J., Oct. 21, 2021 /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, 2021. The Bank reported net income of $5.9 million, or $0.88 per diluted common share, for the third quarter of 2021, compared to net income of $5.5 million, or $0.80 per diluted common share, for the second quarter of 2021, and net income of $3.5 million, or $0.52 per diluted common share, for the third quarter of 2020. The increase in net income, when compared to the three months ended June 30, 2021, was primarily due to a $376 thousand increase in net-interest income, a $300 thousand increase in non-interest income, and a $133 thousand reduction in non-interest expense, partially offset by a $200 thousand increase in the provision for loan losses and a $206 thousand increase in income tax expense. The increase in net income, when comparing it to the three months ended September 30, 2020, was primarily due to an increase in net-interest income of $3.3 million and a $42 thousand increase in non-interest income, partially offset by a $955 thousand increase in non-interest expense and a $765 thousand increase in income tax expenses.

For the nine month period ended September 30, 2021, the Bank recorded net income of $16.3 million, or $2.38 per diluted common share, compared to $9.7 million, or $1.41 per diluted common share, for the same period in 2020, primarily due to an $11.3 million increase in net-interest income and a $250 thousand reduction in the Bank's provision for loan losses, partially offset by an increase in income taxes of $2.3 million, a $2.3 million increase in non-interest expense, and a $437 thousand decrease in non-interest income.

Highlights for the quarter-ended September 30, 2021 are as follows:

* The Bank continued its stock buyback program during the third quarter by purchasing an additional 73,259 shares of common stock at a weighted average price of $29.63. * Net interest income for the third quarter of 2021 increased $3.3 million or 26.1% over the same period in 2020. * The Bank decreased its cost of funds on deposits by 37 basis points in the third quarter of 2021 from the same period in 2020. * The Bank's efficiency ratio decreased to 48.2% for the third quarter of 2021 compared to 52.9-% for the third quarter of 2020. * The ratio of nonperforming loans to total loans continues to be low at 0.16% as of September 30, 2021 compared to 0.12% at December 31, 2020 and compared to 0.18% at September 30, 2020.

President/CEO Edward Dietzler stated that, "The Bank this year has produced continuous increases in earnings with a 7.3% improvement over the second quarter 2021 and 67.1% when compared to the third quarter in 2020."

Balance Sheet Review

Total assets were $1.67 billion at September 30, 2021, an increase of $66.4 million, or 4.1% when compared to $1.60 billion at the end of 2020. The primary reason for the increase in total assets was an increase in cash and cash equivalents of approximately $66.8 million, and a $17.2 million increase in available-for-sale securities, partially offset by a decrease of $21.2 million in net loans, primarily consisting of a decrease of $29.6 million in commercial real estate loans and a $19.3 million decrease in residential loans and home equity/consumer loans and, partially offset by an increase of $90.2 million in construction loans during the nine month period covered. In addition, Payroll Protection Program ("PPP") loans declined $49.2 million at September 30, 2021 due to loan payoffs and the federal government's termination of the program.

Total deposits at September 30, 2021 increased by $63.6 million, or 4.7%, when compared to December 31, 2020, primarily due to loan proceeds maintained in non-interest demand accounts from customers who received PPP loans, and stimulus payments to individuals under the American Rescue Plan Act, as well as growth from new branches added during the third quarter of 2020. When comparing deposit products between the two periods, non-interest checking increased $59.4 million, savings increased $44.3 million and money markets increased $55.8 million. These increases were partially offset by a decrease in interest-bearing demand accounts of $39.2 million, primarily consisting of municipal deposits, and a decrease of $56.6 million in certificates of deposit. In addition, the Bank had no outstanding borrowings at September 30, 2021 and December 31, 2020.

Total stockholders' equity at September 30, 2021 increased $6.4 million or 3.1% when compared to the end of 2020. This increase was primarily due to earnings recorded during the nine months of 2021 minus the $6.6 million of common stock repurchased and the cash dividend paid during the period, and minus the $638 thousand decrease in the fair-value of the available-for-sale investment portfolio related to an increase in the treasury interest rate curve. In addition, the Bank commenced its stock buyback program during the third quarter and repurchased 227,191 shares of common stock at a total cost of $6.6 million and a weighted average cost of $29.13 per share. The ratio of equity to total assets at September 30, 2021 and at December 31, 2020, was $12.9% and 13.0%, respectively.

Asset Quality

At September 30, 2021, non-performing assets were $2.5 million, an increase of $835 thousand, or 49.8%, when compared to the amount at December 31, 2020. This increase at September 30, 2021 from December 31, 2020 was primarily due to the addition of three loans totaling $1.5 million being classified as non-performing, partially offset by $815 thousand in principal charge-offs, and the remaining $251 thousand from principal payments. Troubled debt restructurings ("TDR") totaled $7.3 million at September 30, 2021 and $8.6 million at December 31, 2020. Three TDR loans totaling $6.2 million are performing to their agreed upon terms and the remaining two loans have remained in non-accrual status as of September 30, 2021.

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 has seen a favorable trend as a vast majority of customers have returned to their regular payment schedule. As of September 30, 2021, the Bank had remaining 1 loan that was modified totaling $9.0 million, and at December 31, 2020, the Bank had remaining 14 loans (consisting of nine borrowers) that were modified totaling $45.0 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 TDRs.

Review of Quarterly Financial Results

Net-interest income was $16.1 million for the third quarter of 2021, compared to $15.7 million for the second quarter of 2021 and to $12.8 million for the third quarter of 2020. The increase from the previous quarter was a result of an increase in interest income of $234 thousand and a $142 thousand, or 8.4%, decrease in interest paid on liabilities, partially resulting from an 7 basis points reduction in the rate on interest bearing deposits. Interest income for the third quarter of 2021 included an increase of approximately $1.4 million in accelerated accretion attributable to deferred fees received from the first phase of PPP loans, due to the U.S. government forgiving the debt and paying off the loans. The net interest margin for the third quarter of 2021 was 4.08%, increasing 2 basis points when compared to the second quarter of 2021. This increase was primarily associated with a reduction of 5 basis points in total interest cost of funds, reduced by an increase in the average outstanding balance of earning assets of $13.4 million, and a 3 basis points reduction in the yield on the earning assets. When comparing the three month periods ended September 30, 2021 and 2020, net interest income increased $3.3 million, which was primarily due an increase in interest income of $2.2 million caused by a $93.0 million increase in interest earning assets aided by a reduction in interest expense of $1.2 million. The reduction in interest expense was attributable to a decline of 45 basis points in the rate paid on its interest-bearing liabilities. For the nine month period ended September 30, 2021, net interest income was $46.6 million, an increase of $11.3 million, or 32.1%, over the same period in 2020. This increase was due a $6.0 million increase in interest earned on earning assets and a $5.3 million decline in interest expense. For the nine month period ended September 30, 2021, the average outstanding balance of earning assets increased by $129.7 million and average outstanding interest-bearing liabilities increased $55.0 million. The total rate on interest-bearing liabilities, which includes non-interest-bearing deposits, for the three month periods ended September 30, 2021 and 2020 was 0.43% and 0.80%, respectively. For the nine month periods ended September 30, 2021 and 2020 the total rate on interest-bearing liabilities was 0.50% and 1.09%, respectively.

The provision for credit losses was $1.2 million for the three month period ended September 30, 2021. The comparable amounts were $1.0 million and $1.9 million for the three months ended June 30, 2021 and September 30, 2020, respectively. The primary reasons for the provision for credit losses for the third and second quarters of 2021 were charge-offs in the amounts of $821 thousand and $1.0 million, respectively. The primary reason for the provision in the third quarter of 2020 was due to an increase in the Bank's general reserves. The general reserve increase was attributable to the economic impact from the COVID-19 pandemic and an increase in the historical loss factors resulting from increased levels of prior period charge-offs. As of September 30, 2021, 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 coverage rate of allowance for credit losses to period end loans was 1.22% (excluding PPP loans, the coverage ratio was 1.34%) at September 30, 2021, compared to 1.18% (excluding PPP loans, the coverage ratio was 1.35%) at December 31, 2020, which reflects managements assessment of the credit quality in the loan portfolio.

At September 30, 2021, the Bank's concentration in the loan portfolio associated with the segments management believes could be affected by the pandemic: restaurants and hotels totaled $31.3 million and $46.9 million, respectively.

Total non-interest income for the third quarter of 2021 increased $42 thousand, or 3.3%, to $1.3 million when compared to the same period in 2020. This increase was primarily due to a $29 thousand increase on service fees collected and a $173 thousand increase in loan fees earned. Total non-interest income when comparing third quarter of 2021 to second quarter of 2021 increased $300 thousand, primarily due to $398 thousand increase in loans fees and $17 thousand increase in deposit fees earned. For the nine month period ended September 30, 2021, non-interest income decreased $437 thousand, or 12.0%, from the same nine month period in 2020, primarily due to a $554 thousand gain on the sale of investment securities available-for sale recorded in the 2020 period.

Total non-interest expense for the third quarter of 2021 increased $955 thousand, or 12.6%, when compared to the same period in 2020. This increase was primarily due to an increase in additional operating cost associated with the Bank's branch expansion strategy. When comparing the quarter ended September 30, 2021 to the immediately prior quarter, non-interest expense decreased $133 thousand, or 1.5%, primarily due to decreases in salaries and benefits expense, professional fees, occupancy and equipment expenses, federal deposit insurance expense, and other operating expenses, partially offset by an increase in OREO expenses. For the nine month period ended September 30, 2021, non-interest expense was $25.5 million, compared to $23.2 million for the same period in 2020. This increase was primarily due to an increase in additional operating costs associated with the Bank's branch expansion strategy.

For the three month period ended September 30, 2021, the Bank recorded an income tax expense of $1.8 million, resulting in an effective tax rate of 22.8%, 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, and compared to an income tax expense of $988 thousand resulting in an effective tax rate of 21.8% for the three month period ended September 30, 2020. 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 the third and second quarters 2021 were impacted by the level of tax-free income against the level of taxable earnings. For the nine month periods ended September 30, 2021 and 2020, the income tax expense was $4.7 million (effective tax rate of 22.3%) and $2.4 million (effective tax rate of 19.9%), respectively.

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 possible payment relief through deferral and waived fees. The Bank continues to endeavor to provide a fast and flexible response to the quickly changing circumstances.

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, 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, 2020 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 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, 2021 Sep 30, 2021 Sep 30, 2021 Sep 30, 2021 vs vs vs vs Dec 31, 2020 Dec 31, 2020 Sep 30, 2020 Sep 30, 2020

Sep 30, Dec 31, Sep 30, $ % $ % 2021 2020 Change Change Change Change 2020

ASSETS

Cash and cash equivalents $ 144,184 $ 77,429 $ 45,320 $ 66,755 86.21 % $ 98,864 218.15 %

Securities available for sale taxable 46,522 25,112 27,552 21,410 85.26 18,970 68.85

Securities available for sale tax exempt 46,345 50,516 52,530 (4,171) (8.26) (6,185) (11.77)

Securities held to maturity 210 215 217 (5) (2.33) (7) (3.23)

Loans receivable, net of deferred fees and costs 1,342,670 1,363,486 1,337,224 (20,816) (1.53) 5,446 0.41

Allowance for loan losses (16,421) (16,027) (15,247) (394) 2.46 (1,174) 7.70

Goodwill 8,853 8,853 8,853 - - - -

Core deposit intangible 2,547 3,036 3,209 (489) (16.11) (662) (20.63)

Other assets 94,284 90,218 90,092 4,066 4.51 4,192 4.65

TOTAL ASSETS $ 1,669,194 $ 1,602,838 $ 1,549,750 $ 66,356 4.14 % $ 119,444 7.71 %

LIABILITIES

Non interest checking $ 274,766 $ 215,381 $ 220,324 $ 59,385 27.57 % $ 54,442 24.71 %

Interest checking 249,563 288,769 206,115 (39,206) (13.58) 43,448 21.08

Savings 223,188 178,932 177,895 44,256 24.73 45,293 25.46

Money market 361,052 305,290 298,466 55,762 18.27 62,586 20.97

Time deposits over $250,000 39,270 67,924 74,638 (28,654) (42.19) (35,368) (47.39)

Other time deposits 283,055 310,970 333,838 (27,915) (8.98) (50,783) (15.21)

Total Deposits 1,430,894 1,367,266 1,311,276 63,628 4.65 119,618 9.12

Borrowings - - 8,000 - (8,000) (8,000) N/A

Other liabilities 23,116 26,754 25,324 (3,638) (13.60) (2,208) (8.72)

TOTAL LIABILITIES 1,454,010 1,394,020 1,344,600 59,990 4.30 109,410 8.14

STOCKHOLDERS' EQUITY

Common stock 34,082 33,949 33,895 133 0.39 187 0.55

Paid-in capital 80,112 79,708 79,547 404 0.51 565 0.71

Treasury Stock (6,618) - - (6,618) N/A (6,618) N/A

Retained earnings 106,455 93,370 89,945 13,085 14.01 16,510 18.36

Accumulated other comprehensive income (loss) 1,153 1,791 1,763 (638) (35.62) (610) (34.60)

TOTAL STOCKHOLDERS' EQUITY 215,184 208,818 205,150 6,366 3.05 10,034 4.89

TOTAL LIABILITIES

AND STOCKHOLDERS' EQUITY $ 1,669,194 $ 1,602,838 $ 1,549,750 $ 66,356 4.14 % $ 119,444 7.71 %

Book value per common share $ 32.66 $ 30.75 $ 30.26 $ 1.91 6.21 % $ 2.40 7.94 %

Tangible book value per common share^1 $ 30.93 $ 29.00 $ 28.48 $ 1.93 6.65 % $ 2.45 8.61 %

^1Tangible book value per common share in a non-GAAP measure that representsbook value per common share which excludes goodwill and core depositintangible.

The Bank of Princeton

Loan/Deposit Tables

(unaudited)

Loan receivable, net at September 30, 2021 and December 31, 2020 were comprisedof the following:

September 30, December 31,

2021 2020

(Dollars in thousands)

Commercial real estate $ 782,432 $ 812,043

Commercial and industrial 28,944 40,597

Construction 353,187 263,032

Residential first-lien mortgages 49,989 66,857

Home equity / consumer 7,523 9,929

PPP (SBA loans) Phase I 24,152 175,878

PPP (SBA loans) Phase II 102,504 -

Total loans 1,348,731 1,368,336

Deferred fees and costs, net (6,061) (4,850)

Allowance for loan losses (16,421) (16,027)

Loans, net $ 1,326,249 $ 1,347,459

The components of deposits at September 30, 2021 and December 31, 2020 were asfollows:

September 30, December 31,

2021 2020

(Dollars in thousands)

Demand, non-interest-bearing checking $ 274,766 $ 215,381

Demand, interest-bearing 249,563 288,769

Savings 223,188 178,932

Money Markets 361,052 305,290

Time deposits 322,325 378,894

Total Deposits $ 1,430,894 $ 1,367,266

The Bank of Princeton

Consolidated Statements of Operations

(unaudited)

Three Months Ended September 30,

2021 2020 $ Change % Change

(Dollars and shares in thousands, except per share data)

Interest and Dividend Income

Loans and fees $ 17,181 $ 14,977 $ 2,204 14.7%

Available-for-Sale debt securities:

Taxable 133 135 (2) -1.5%

Tax-exempt 287 339 (52) -15.3%

Held-to-Maturity debt securities 2 3 (1) -33.3%

Other interest and dividend income 53 32 21 65.6%

Total Interest and Dividends 17,656 15,486 2,170 14.0%

Interest expense

Deposits 1,545 2,709 (1,164) -43.0%

Borrowings - - - N/A

Total Interest Expense 1,545 2,709 (1,164) -43.0%

Net Interest Income 16,111 12,777 3,334 26.1%

Provision for Loan Losses 1,200 1,925 (725) -37.7%

Net Interest Income after Provision for Loan Losses 14,911 10,852 4,059 37.4%

Non-Interest income

Gain on sale of securities available for sale,net - 48 (48) -100.0%

Income from bank-owned life insurance 276 283 (7) -2.5%

Fees and service charges 453 424 29 6.8%

Loan fees, including prepayment penalities 636 463 173 37.4%

Other (47) 58 (105) -181.0%

Total Non-Interest Income 1,318 1,276 42 3.3%

Non-Interest Expense

Salaries and employee benefits 4,342 3,998 344 8.6%

Occupancy and equipment 1,492 1,423 69 4.8%

Professional fees 580 512 68 13.3%

Data processing and communications 904 745 159 21.3%

Federal deposit insurance 220 112 108 96.4%

Advertising and promotion 59 82 (23) -28.0%

Office expense 56 81 (25) -30.9%

Other real estate owned expense 80 - 80 N/A

Core deposit intangible 155 173 (18) -10.4%

Other 661 468 193 41.2%

Total Non-Interest Expense 8,549 7,594 955 12.6%

Income before income tax expense 7,680 4,534 3,146 69.4%

Income tax expense 1,753 988 765 77.4%

Net Income $ 5,927 $ 3,546 $ 2,381 67.1%

Net income per common share - basic $ 0.89 $ 0.52 $ 0.37 71.2%

Net income per common share - diluted $ 0.88 $ 0.52 $ 0.36 69.2%

Weighted average shares outstanding - basic 6,613 6,836 (223) -3.3%

Weighted average shares outstanding - diluted 6,767 6,896 (129) -1.9%

The Bank of Princeton

Consolidated Statements of Operations (Current Quarter vs Prior Quarter)

(unaudited)

Three Months Ended

Sep 30, Jun 30,

2021 2021 $ Change % Change

(Dollars and shares in thousands, except per share data)

Interest and Dividend Income

Loans and fees $ 17,181 $ 16,978 $ 203 1.2%

Available-for-Sale debt securities:

Taxable 133 112 21 18.8%

Tax-exempt 287 289 (2) -0.7%

Held-to-Maturity debt securities 2 2 0 0.0%

Other interest and dividend income 53 41 12 29.3%

Total Interest and Dividends 17,656 17,422 234 1.3%

Interest expense

Deposits 1,545 1,686 (141) -8.4%

Borrowings - 1 (1) 0.0%

Total Interest Expense 1,545 1,687 (142) -8.4%

Net Interest Income 16,111 15,735 376 2.4%

Provision for Loan Losses 1,200 1,000 200 20.0%

Net Interest Income after Provision for Loan Losses 14,911 14,735 176 1.2%

Non-Interest income

Gain on sale of securities available for sale,net - - - 0.0%

Income from bank-owned life insurance 276 277 (1) -0.4%

Fees and service charges 453 436 17 3.9%

Loan fees, including prepayment penalities 636 238 398 167.2%

Other (47) 67 (114) -170.1%

Total Non-Interest Income 1,318 1,018 300 29.5%

Non-Interest Expense

Salaries and employee benefits 4,342 4,364 (22) -0.5%

Occupancy and equipment 1,492 1,522 (30) -2.0%

Professional fees 580 678 (98) -14.5%

Data processing and communications 904 889 15 1.7%

Federal deposit insurance 220 238 (18) -7.6%

Advertising and promotion 59 63 (4) -6.3%

Office expense 56 44 12 27.3%

Other real estate owned expense 80 1 79 7900.0%

Core deposit intangible 155 160 (5) -3.1%

Other 661 723 (62) -8.6%

Total Non-Interest Expense 8,549 8,682 (133) -1.5%

Income before income tax expense 7,680 7,071 609 8.6%

Income tax expense 1,753 1,547 206 13.3%

Net Income $ 5,927 $ 5,524 $ 403 7.3%

Net income per common share - basic $ 0.89 $ 0.82 $ 0.07 8.5%

Net income per common share - diluted $ 0.88 $ 0.80 $ 0.08 10.0%

Weighted average shares outstanding - basic 6,613 6,725 (112) -1.7%

Weighted average shares outstanding - diluted 6,767 6,872 (105) -1.5%

The Bank of Princeton

Consolidated Statements of Operations

(unaudited)

Nine Months Ended Sep 30,

2021 2020 $ Change % Change

(Dollars and shares in thousands, except for per share data)

Interest and Dividend Income

Loans and fees $ 50,487 $ 43,922 $ 6,565 14.9%

Available-for-Sale debt securities:

Taxable 353 616 (263) -42.7%

Tax-exempt 877 1,057 (180) -17.0%

Held-to-Maturity debt securities 8 9 (1) -11.1%

Other interest and dividend income 139 219 (80) -36.5%

Total Interest and Dividends 51,864 45,823 6,041 13.2%

Interest expense

Deposits 5,261 10,530 (5,269) -50.0%

Borrowings 2 9 (7) -77.8%

Total Interest Expense 5,263 10,539 (5,276) -50.1%

Net Interest Income 46,601 35,284 11,317 32.1%

Provision for Loan Losses 3,325 3,575 (250) -7.0%

Net Interest Income after Provision for Loan Losses 43,276 31,709 11,567 36.5%

Non-Interest income

Gain on sale of securities available for sale,net 7 554 (547) -98.7%

Income from bank-owned life insurance 826 871 (45) -5.2%

Fees and service charges 1,291 1,065 226 21.2%

Loan fees, including prepayment penalities 1,000 984 16 1.6%

Other 75 162 (87) -53.7%

Total Non-Interest Income 3,199 3,636 (437) -12.0%

Non-Interest Expense

Salaries and employee benefits 12,816 12,581 235 1.9%

Occupancy and equipment 4,534 3,913 621 15.9%

Professional fees 1,920 1,489 431 28.9%

Data processing and communications 2,664 2,297 367 16.0%

Federal deposit insurance 586 316 270 85.4%

Advertising and promotion 172 242 (70) -28.9%

Office expense 153 216 (63) -29.2%

Other real estate owned expense 90 - 90 N/A

Core deposit intangible 489 553 (64) -11.6%

Other 2,066 1,624 442 27.2%

Total Non-Interest Expense 25,490 23,231 2,259 9.7%

Income before income tax expense 20,985 12,114 8,871 73.2%

Income tax expense 4,682 2,411 2,271 94.2%

Net Income $ 16,303 $ 9,703 $ 6,600 68.0%

Net income per common share - basic $ 2.43 $ 1.43 $ 1.00 69.9%

Net income per common share - diluted $ 2.38 $ 1.41 $ 0.97 68.8%

Weighted average shares outstanding - basic 6,710 6,771 (61) -0.9%

Weighted average shares outstanding - diluted 6,854 6,865 (11) -0.2%

The Bank of Princeton

Consolidated Average Statement of Financial Condition

(unaudited)

For the Three Months Ended

September 30,

2021 2020

Average Yield/ Average Yield/

balance rate balance rate $ Change % Change

(Dollars in thousands)

Earning assets

Loans $ 1,367,980 4.98% $ 1,334,993 4.46% $ 32,987 0.52%

Securities

Taxable AFS 33,953 1.51% 37,381 1.45% (3,428) 0.06%

Tax exempt AFS 46,510 2.47% 54,574 2.48% (8,064) -0.01%

Held-to-maturity 211 5.27% 218 5.50% (7) -0.23%

Securities 80,674 2.09% 92,173 2.07% (11,499) 0.02%

Other interest earning assets

Interest-bearing bank accounts 116,910 0.13% 45,412 0.12% 71,498 0.01%

Equities 1,338 3.93% 1,369 5.23% (31) -1.30%

Other interest earning assets 118,248 0.18% 46,781 0.27% 71,467 -0.09%

Total interest-earning assets 1,566,902 4.47% 1,473,947 4.18% 92,955 0.29%

Total non earning assets 95,130 99,680

Total Assets $ 1,662,032 $ 1,573,627

Interest-bearing liabilities

Checking $ 260,813 0.26% $ 220,146 0.48% $ 40,667 -0.22%

Savings 214,406 0.24% 178,271 0.37% 36,135 -0.13%

Money Market 346,330 0.28% 284,263 0.47% 62,067 -0.19%

Certificate of Deposit 329,117 1.21% 421,490 1.84% (92,373) -0.63%

Total interest-bearing deposits 1,150,666 0.53% 1,104,170 0.98% 46,496 -0.45%

Non interest bearing deposits 272,097 238,935

Total deposits 1,422,763 0.48% 1,343,105 0.80% 79,658 -0.32%

Borrowings - 0.00% 87 0.00% (87) 0.00%

Total interest-bearing liabilities

(excluding non interest deposits) 1,150,666 0.53% 1,104,257 0.98% 46,409 -0.45%

Noninterest-bearing deposits 272,097 238,935

Total Cost of Funds 1,422,763 0.43% 1,343,192 0.80% 79,571 -0.37%

Accrued expenses and other liabilities 24,480 25,990

Stockholders' equity 214,789 204,445

Total liabilities and stockholders' equity $ 1,662,032 $ 1,573,627

Net interest spread 3.94% 3.20%

Net interest margin 4.08% 3.45%

Net interest margin (FTE)^1 4.14% 3.53%

^1Includes federal and state tax effect of tax exempt securities and loans.

The Bank of Princeton

Consolidated Average Statement of Financial Condition

(unaudited)

For the Quarter Ended

Sept 2021 Jun 2021

Average Yield/ Average Yield/

balance rate balance rate $ Change % Change

(Dollars in thousands)

Earning assets

Loans $ 1,367,980 4.98% $ 1,434,187 4.75% $ (66,207) 0.23%

Securities

Taxable AFS 33,953 1.51% 24,890 1.80% 9,063 -0.29%

Tax exempt AFS 46,510 2.47% 46,586 2.48% (76) -0.01%

Held-to-maturity 211 5.27% 213 5.27% (2) 0.00%

Securities 80,674 2.07% 71,689 2.25% 8,985 -0.18%

Other interest earning assets

Interest-bearing bank accounts 116,910 0.13% 46,234 0.22% 70,676 -0.09%

Equities 1,338 3.93% 1,402 4.37% (64) -0.44%

Other interest earning assets 118,248 0.18% 47,636 0.35% 70,612 -0.17%

Total interest-earning assets 1,566,902 4.47% 1,553,512 4.50% 13,390 -0.03%

Total non earning assets 95,130 94,629

Total Assets $ 1,662,032 $ 1,648,141

Interest-bearing liabilities

Checking $ 260,813 0.26% $ 255,644 0.26% $ 5,169 0.00%

Savings 214,406 0.24% 199,920 0.25% 14,486 -0.01%

Money Market 346,330 0.28% 332,467 0.31% 13,863 -0.03%

Certificate of Deposit 329,117 1.21% 336,205 1.36% (7,088) -0.15%

Total interest-bearing deposits 1,150,666 0.53% 1,124,236 0.60% 26,430 -0.07%

Non interest bearing deposits 272,097 283,567

Total deposits 1,422,763 0.48% 1,407,803 0.48% 14,960 0.00%

Borrowings - 0.00% 610 0.32% (610) -0.32%

Total interest-bearing liabilities 1,150,666 0.53% 1,124,846 0.60% 25,820 -0.07%

(excluding non interest deposits)

Noninterest-bearing deposits 272,097 283,567

Total Cost of Funds 1,422,763 0.43% 1,408,413 0.48% 14,350 -0.05%

Accrued expenses and other liabilities 24,480 26,472

Stockholders' equity 214,789 213,256

Total liabilities and stockholders' equity $ 1,662,032 $ 1,648,141

Net interest spread 3.94% 3.90%

Net interest margin 4.08% 4.06%

Net interest margin (FTE)^1 4.14% 4.12%

^1Includes federal and state tax effect of tax exempt securities and loans.

The Bank of Princeton

Consolidated Average Statement of Financial Condition

(unaudited)

For the Nine Months Ended

September 30,

2021 2020

(Dollars in thousands)

Average Yield/ Average Yield/

balance rate balance rate $ Change % Change

Earning assets

Loans $ 1,393,122 4.85% $ 1,271,433 4.61% $ 121,689 0.24%

Securities

Taxable AFS 28,306 1.66% 42,910 1.91% (14,604) -0.25%

Tax exempt AFS 47,204 2.48% 55,822 2.53% (8,618) -0.05%

Held-to-maturity 213 5.27% 220 5.26% (7) 0.01%

Securities 75,723 2.18% 98,952 2.27% (23,229) -0.09%

Other interest earning assets

Interest-bearing bank accounts 71,289 0.19% 39,997 0.55% 31,292 -0.36%

Equities 1,376 4.29% 1,400 5.17% (24) -0.88%

Other interest earning assets 72,665 0.26% 41,397 0.69% 31,268 -0.43%

Total interest-earning assets 1,541,510 4.50% 1,411,782 4.31% 129,728 0.19%

Total non earning assets 100,970 103,421

Total Assets $ 1,642,480 $ 1,515,203

Interest-bearing liabilities

Checking $ 259,932 0.28% $ 218,836 0.75% $ 41,096 -0.47%

Savings 199,789 0.26% 168,869 0.68% 30,920 -0.42%

Money Market 330,605 0.31% 274,122 0.84% 56,483 -0.53%

Certificate of Deposit 344,526 1.39% 416,694 2.15% (72,168) -0.76%

Total interest-bearing deposits 1,134,852 0.62% 1,078,521 1.31% 56,331 -0.69%

Non interest bearing deposits 268,194 209,439

Total deposits 1,403,046 0.50% 1,287,960 1.09% 115,086 -0.59%

Borrowings 361 0.32% 1,709 0.68% (1,348) -0.36%

Total interest-bearing liabilities

(excluding non interest deposits) 1,135,213 0.62% 1,080,230 1.30% 54,983 -0.68%

Noninterest-bearing deposits 268,194 209,439

Total Cost of Funds 1,403,407 0.50% 1,289,669 1.09% 113,738 -0.59%

Accrued expenses and other liabilities 25,947 24,654

Stockholders' equity 213,126 200,880

Total liabilities and stockholders' equity $ 1,642,480 $ 1,515,203

Net interest spread 3.88% 3.01%

Net interest margin 4.04% 3.34%

Net interest margin (FTE)^1 4.10% 3.42%

^1Includes federal and state tax effect of tax exempt securities and loans.

The Bank of Princeton

Quarterly Financial Highlights

(unaudited)

2021 2021 2021 2020 2020

(Dollars in thousands, except common stock data) Sep Jun Mar Dec Sep

Return on average assets 1.41% 1.34% 1.21% 1.03% 0.90%

Return on average equity 10.95% 10.36% 9.31% 7.86% 6.90%

Return on average tangible equity^1 11.56% 10.95% 9.86% 8.35% 7.50%

Net interest margin 4.08% 4.06% 3.98% 3.63% 3.45%

Net interest margin (FTE)^2 4.14% 4.12% 4.09% 3.69% 3.53%

Efficiency ratio - Non-GAAP^3 48.16% 50.87% 51.79% 52.55% 52.91%

Common Stock Data

Market value at period end $ 29.87 $ 28.67 $ 28.62 $ 23.41 $ 18.17

Market range:

High $ 30.67 $ 31.31 $ 29.67 $ 26.44 $ 20.45

Low $ 28.18 $ 25.58 $ 21.43 $ 18.12 $ 17.40

Book value per common share at period end $ 32.66 $ 31.96 $ 31.24 $ 30.75 $ 30.26

Tangible book value per common share at period end^4 $ 30.93 $ 30.22 $ 29.52 $ 29.00 $ 28.48

Shares of common stock outstanding (in thousands) 6,588 6,659 6,804 6,761 6,779

CAPITAL RATIOS

Total Capital (to risk-weighted assets) 15.60% 15.33% 15.73% 16.03% 16.41%

Tier 1 Capital (to risk-weighted assets) 14.43% 14.19% 14.56% 14.81% 15.20%

Tier 1 Capital (to average assets) 12.29% 12.22% 12.45% 12.48% 12.27%

Period-end equity to assets 12.89% 13.01% 12.62% 13.03% 13.24%

Period-end tangible equity to tangible assets 12.23% 12.40% 11.92% 12.38% 12.56%

CREDIT QUALITY DATA AT PERIOD END

(Dollars in Thousands)

Net charge-offs and (recoveries) $ 821 $ 1,000 $ 1,100 $ 870 $ (6)

Annualized net charge-offs (recoveries) to average loans 0.240% 0.279% 0.319% 0.256% -0.001%

Total nonperforming Loans (TDRs not included) $ 1,043 $ 2,381 $ 2,498 $ 1,676 $ 2,383

Other real estate owned 376 446 446 - -

Troubled debt restructurings (TDRs)

-Performing 6,187 6,241 8,533 8,573 8,888

-Non-performing 1,092 1,332 - - -

Total nonperforming assets and accruing TDRs $ 8,698 $ 10,400 $ 11,477 $ 10,249 $ 11,271

Allowance for credit losses as a percent of:

Period-end loans 1.22% 1.14% 1.12% 1.18% 1.14%

Nonaccrual loans 769.13% 491.03% 781.77% 956.26% 639.82%

Nonperforming assets 653.96% 432.05% 642.19% 956.26% 639.82%

As a percent of total loans:

Nonaccrual loans 0.16% 0.23% 0.14% 0.12% 0.18%

Accruing TDRs 0.46% 0.45% 0.59% 0.63% 0.66%

Nonaccrual loans and accruing TDRs 0.62% 0.71% 0.77% 0.75% 0.84%

^1Return on average tangible equity is a non-GAAP measure that represents therate of return on tangible common equity.

^2Includes the effect of tax exempt securities and loans

^3The efficiency ratio in a non-GAAP measure that represents the ratio ofnon-interest expense (less CDI expense) divided by the net-interest income

and non-interest income.

^4Tangible book value per common share is a non-GAAP measure that representsbook value per common share which

excludes goodwill and core deposit intangible.

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SOURCE The Bank of Princeton