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") (NASDAQ: 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

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SOURCE The Bank of Princeton