Princeton Bancorp, Inc 10-Q for FY2024 Q3
Princeton Bancorp, Inc. (BPRN)
About this 10-Q
Princeton Bancorp, Inc filed this 10-Q on November 14, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).
Headline figures
Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $4.46M
- compared with net income of $7.6M a year earlier
- Diluted EPS
- -$0.68
- compared with $1.19 a year earlier
Table of Contents
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
| Emerging growth company | ||||||
Table of Contents
TABLE OF CONTENTS
2
Table of Contents
September 30, |
December 31, |
|||||||
2024 |
2023 |
|||||||
ASSETS |
||||||||
Cash and due from banks |
$ | $ | ||||||
Interest-earning bank balances |
||||||||
Federal funds sold |
||||||||
Total cash and cash equivalents |
||||||||
Securities available-for-sale, |
||||||||
Securities held-to-maturity |
||||||||
Loans receivable, net of deferred fees and costs |
||||||||
Less: allowance for credit losses |
( |
) | ( |
) | ||||
Loan receivable, net |
||||||||
Bank-owned life insurance |
||||||||
Premises and equipment, net |
||||||||
Accrued interest receivable |
||||||||
Restricted investment in bank stock |
||||||||
Deferred taxes, net |
||||||||
Goodwill |
||||||||
Core deposit intangible |
||||||||
Operating lease right-of-use |
||||||||
Equity method investments |
||||||||
Other assets |
||||||||
TOTAL ASSETS |
$ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
LIABILITIES |
||||||||
Deposits: |
||||||||
Non-interest-bearing |
$ | $ | ||||||
Interest-bearing |
||||||||
Total deposits |
||||||||
Accrued interest payable |
||||||||
Operating lease liability |
||||||||
Other liabilities |
||||||||
TOTAL LIABILITIES |
||||||||
STOCKHOLDERS’ EQUITY: |
||||||||
Preferred stock, |
||||||||
Common stock, |
||||||||
Paid-in capital |
||||||||
Treasury stock, at cost of |
( |
) | ||||||
Retained earnings |
||||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
TOTAL STOCKHOLDERS’ EQUITY |
||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | $ | ||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, |
September 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
INTEREST AND DIVIDEND INCOME |
||||||||||||||||
Loans receivable, including fees |
$ | $ | $ | $ | ||||||||||||
Securities available-for-sale: |
||||||||||||||||
Taxable |
||||||||||||||||
Tax-exempt |
||||||||||||||||
Securities held-to-maturity |
||||||||||||||||
Other interest and dividend income |
||||||||||||||||
TOTAL INTEREST AND DIVIDEND INCOME |
||||||||||||||||
INTEREST EXPENSE |
||||||||||||||||
Deposits |
||||||||||||||||
Borrowings |
||||||||||||||||
TOTAL INTEREST EXPENSE |
||||||||||||||||
NET INTEREST INCOME |
||||||||||||||||
Provision for (reversal of) credit losses |
( |
) | ||||||||||||||
NET INTEREST INCOME AFTER PROVISION FOR (REVERSAL OF) CREDIT LOSSES |
||||||||||||||||
NON-INTEREST INCOME |
||||||||||||||||
(Loss) on call/sale of securities available-for-sale |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Income from bank-owned life insurance |
||||||||||||||||
Fees and service charges |
||||||||||||||||
Loan fees, including preypayment penalties |
||||||||||||||||
Gain on bargain purchase |
||||||||||||||||
Gain on sale of other real estate owned |
||||||||||||||||
Other |
||||||||||||||||
TOTAL NON-INTEREST INCOME |
||||||||||||||||
NON-INTEREST EXPENSE |
||||||||||||||||
Salaries and employee benefits |
||||||||||||||||
Occupancy and equipment |
||||||||||||||||
Professional fees |
||||||||||||||||
Data processing and communications |
||||||||||||||||
Federal deposit insurance |
||||||||||||||||
Advertising and promotion |
||||||||||||||||
Office expense |
||||||||||||||||
Other real estate expenses |
||||||||||||||||
Core deposit intangible |
||||||||||||||||
Acquisition-related expenses (reversal) |
( |
) | ||||||||||||||
Other |
||||||||||||||||
TOTAL NON-INTEREST EXPENSE |
||||||||||||||||
(LOSS) INCOME BEFORE INCOME TAX EXPENSE |
( |
) | ||||||||||||||
INCOME TAX (BENEFIT) EXPENSE |
( |
) | ||||||||||||||
NET (LOSS) INCOME |
$ | ( |
) | $ | $ | $ | ||||||||||
Earnings (loss) per common share-basic |
$ | ( |
) | $ | $ | $ | ||||||||||
Earnings (loss) per common share-diluted |
$ | ( |
) | $ | $ | $ | ||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, |
September 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
NET INCOME (LOSS) |
$ | ( |
) | $ | $ | $ | ||||||||||
Other comprehensive income (loss) |
||||||||||||||||
Unrealized losses arising during period on securities available-for-sale |
( |
) | ( |
) | ||||||||||||
Reclassification adjustment for losses (gains) realized in income 1 |
||||||||||||||||
Net unrealized income (loss) |
( |
) | ( |
) | ||||||||||||
Tax effect |
( |
) | ( |
) | ||||||||||||
Total other comprehensive income (loss) |
( |
) | ( |
) | ||||||||||||
COMPREHENSIVE INCOME (LOSS) |
$ | ( |
) | $ | $ | $ | ||||||||||
1 |
Amounts are included in gain on call/sale of securities available-for-sale non-interest income. There was |
Accumulated |
||||||||||||||||||||||||
Other |
||||||||||||||||||||||||
Common |
Paid-in |
Treasury |
Retained |
Comprehensive |
||||||||||||||||||||
Stock |
Capital |
Stock |
Earnings |
Loss |
Total |
|||||||||||||||||||
| Three Months Ended September 30, 2024 and 2023 |
||||||||||||||||||||||||
| Balance, July 1, 2023 |
$ | $ | |
$ | $ | $ | ( |
) | $ | |||||||||||||||
| Net income |
— | — | — | — | ||||||||||||||||||||
| Other comprehensive loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
| Stock options exercised ( |
— | — | — | |||||||||||||||||||||
| Dividends declared $ |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
| Dividend reinvestment plan ( |
— | ( |
) | — | — | |||||||||||||||||||
| Stock-based compensation expense |
— | — | — | — | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance, September 30, 2023 |
$ | $ | $ |
— |
$ | $ | ( |
) | $ | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance, July 1, 2024 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
| Net income (loss) |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
| Other comprehensive income |
— | — | — | — | ||||||||||||||||||||
| Dividends declared $ |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
| Dividend reinvestment plan ( |
— | ( |
) | — | — | |||||||||||||||||||
| Stock-based compensation expense |
— | — | — | — | ||||||||||||||||||||
| Acquisition of Cornerstone Financial Corporation ( |
— | — | — | — | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance, September 30, 2024 |
$ | |
$ | $ | ( |
) | $ | $ | ( |
) | $ | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated |
||||||||||||||||||||||||
Other |
||||||||||||||||||||||||
Common |
Paid-in |
Treasury |
Retained |
Comprehensive |
||||||||||||||||||||
stock |
Capital |
Stock |
Earnings |
Loss |
Total |
|||||||||||||||||||
| Nine Months Ended September 30, 2024 and 2023 |
||||||||||||||||||||||||
| Balance, January 1, 2023 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
| Net income |
— | — | — | — | ||||||||||||||||||||
| Other comprehensive loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
| Change in accounting principle |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
| Formation of Princeton Bancorp, Inc. |
( |
) | — | — | — | |||||||||||||||||||
| Stock options exercised ( |
— | — | — | |||||||||||||||||||||
| Dividends declared $ |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
| Dividend reinvestment plan ( |
— | ( |
) | — | — | |||||||||||||||||||
| Stock-based compensation expense |
— | — | — | — | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance, September 30, 2023 |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance, January 1, 2024 |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||
| Net income |
— | — | — | — | ||||||||||||||||||||
| Other comprehensive income |
— | — | — | — | ||||||||||||||||||||
| Treasury stock repurchases ( |
— | — | ( |
) | — | ( |
) | |||||||||||||||||
| Stock options exercised ( |
— | — | — | |||||||||||||||||||||
| Share redemption for tax withholding on restricted stock vesting |
— | ( |
) | — | — | — | ( |
) | ||||||||||||||||
| Dividends declared $ |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
| Dividend reinvestment plan ( |
— | ( |
) | — | — | |||||||||||||||||||
| Stock-based compensation expense |
— | — | — | — | ||||||||||||||||||||
| Acquisition of Cornerstone Financial Corporation ( |
— | — | — | — | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance, September 30, 2024 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Nine Months Ended September 30, |
||||||||
2024 |
2023 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Net income |
$ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Provision for credit losses |
||||||||
| Depreciation and amortization |
||||||||
| Stock-based compensation expense |
||||||||
| Amortization of premiums and accretion of discount on securities |
||||||||
| Accretion of net deferred loan fees and costs |
( |
) | ( |
) | ||||
| Loss on call/sale of securities available-for-sale |
||||||||
| Increase in cash surrender value of bank-owned life insurance |
( |
) | ( |
) | ||||
| Deferred income tax |
( |
) | ( |
) | ||||
| Amortization of core deposit intangible |
||||||||
| Bargain purchase gain |
( |
) | ||||||
| (Gain) loss on sale of other real estate owned |
( |
) | ||||||
| (Increase) decrease in accrued interest receivable and other assets |
||||||||
| Increase (decrease) in accrued interest payable and other liabilities |
||||||||
| |
|
|
|
|||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES |
||||||||
| |
|
|
|
|||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
| Purchases of available-for-sale |
( |
) | ( |
) | ||||
| Maturities, calls and principal repayments of securities available-for-sale |
||||||||
| Maturities, calls and principal repayments of securities held-to-maturity |
||||||||
| Net (increase) decrease in loans |
( |
) | ||||||
| Cash paid for acquisition |
( |
) | ||||||
| Cash received from acquisition |
||||||||
| Purchases of premises and equipment |
( |
) | ( |
) | ||||
| Purchases of bank-owned life insurance |
( |
) | ||||||
| Redemption (purchases) of restricted bank stock |
( |
) | ||||||
| Proceeds from other real estate owned |
||||||||
| |
|
|
|
|||||
| NET CASH (USED IN) PROVIDED BY INVESTMENT ACTIVITIES |
( |
) | ||||||
| |
|
|
|
|||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
| Net increase in deposits |
||||||||
| Proceeds from overnight borrowings |
( |
) | ||||||
| Cash dividends |
( |
) | ( |
) | ||||
| Share redemption for tax witholding on restricted stock vesting |
( |
) | ||||||
| Purchase of treasury stock |
( |
) | ||||||
| Proceeds from exercise of stock options |
||||||||
| |
|
|
|
|||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES |
||||||||
| |
|
|
|
|||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS |
||||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
||||||||
| |
|
|
|
|||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | $ | ||||||
| |
|
|
|
|||||
| SUPPLEMENTARY CASH FLOWS INFORMATION: |
||||||||
| Interest paid |
$ | $ | ||||||
| Income taxes paid |
$ | $ | ||||||
| Net assets acquired from Cornerstone Bank 1 |
$ | $ | ||||||
| Net liabilities assumed from Cornerstone Bank 1 |
$ | $ | ||||||
| Net assets acquired from Noah Bank |
$ | $ | ||||||
| Net liabilities assumed from Noah Bank |
$ | $ | ||||||
1 |
For details of assets acquired and liabilities assumed - See Note 2. |
| (Dollars in thousands except per share data) | Fair Value |
|||
Purchase Price Consideration in Cash for Cornerstone Financial Corporation’s |
||||
Outstanding Shares |
||||
Cornerstone Financial Corporation number of common shares outstanding |
||||
Exchange ratio |
||||
Princeton Bancorp, Inc shares issued |
||||
Value assigned to Cornerstone Financial Corporation common shares |
$ | |||
Purchase price assigned to Cornerstone Financial Corporation common shares exchanged for Princeton Bancorp, Inc common stock |
$ | |||
Assets Acquired: |
||||
Cash and cash equivalents |
$ | |||
Securities available-for-sale |
||||
Loans receivable, net of allowance |
||||
Core deposit intangible |
||||
Premises and equipment |
||||
Operating leases right-of-use |
||||
Deferred tax assets |
||||
Other assets |
||||
Fair value of assets acquired |
||||
Liabilities Assumed: |
||||
Deposits |
||||
Operating lease liability |
||||
Other liabilities assumed |
||||
Fair value of liabilities assumed |
||||
Total identifiable net assets |
||||
Goodwill |
$ | |||
Three months ended |
||||||||
September 30, |
||||||||
2024 |
2023 |
|||||||
| Net income (loss) applicable to common stock |
$ | ( |
) | $ | ||||
| Weighted average number of common shares outstanding |
||||||||
| |
|
|
|
|||||
| Basic earnings (loss) per share |
$ | ( |
) | $ | ||||
| |
|
|
|
|||||
| Net (loss) income applicable to common stock |
$ | ( |
) | $ | ||||
| Weighted average number of common shares outstanding |
||||||||
| Dilutive effect on common shares outstanding 1 |
||||||||
| |
|
|
|
|||||
| Weighted average number of diluted common shares outstanding |
||||||||
| |
|
|
|
|||||
| Diluted earnings (loss) per share |
$ | ( |
) | $ | ||||
| |
|
|
|
|||||
1 |
Dilutive effect on common shares outstanding not taken into consideration during the three months ended September 30, 2024 due to net (loss) recognized. |
Nine months ended |
||||||||
September 30, |
||||||||
2024 |
2023 |
|||||||
| Net income applicable to common stock |
$ | $ | ||||||
| Weighted average number of common shares outstanding |
||||||||
| |
|
|
|
|||||
| Basic earnings per share |
$ | $ | ||||||
| |
|
|
|
|||||
| Net income applicable to common stock |
$ | $ | ||||||
| Weighted average number of common shares outstanding |
||||||||
| Dilutive effect on common shares outstanding |
||||||||
| |
|
|
|
|||||
| Weighted average number of diluted common shares outstanding |
||||||||
| |
|
|
|
|||||
| Diluted earnings per share |
$ | $ | ||||||
| |
|
|
|
|||||
Three months ended September 30, |
||||||||||||||||
2024 |
2023 |
|||||||||||||||
| Weighted Ave | Weighted Ave | |||||||||||||||
| Options | Exercise Price | Options | Exercise Price | |||||||||||||
| Options to purchase |
$ | $ | ||||||||||||||
| Anti-dilutive |
$ | $ | ||||||||||||||
Nine months ended September 30, |
||||||||||||||||
2024 |
2023 |
|||||||||||||||
| Weighted Ave | Weighted Ave | |||||||||||||||
| Options | Exercise Price | Options | Exercise Price | |||||||||||||
| Options to purchase |
$ | $ | ||||||||||||||
| Anti-dilutive |
$ | |||||||||||||||
September 30, 2024 |
||||||||||||||||
Gross |
Gross |
|||||||||||||||
Amortized |
Unrealized |
Unrealized |
||||||||||||||
Cost |
Gains |
Losses |
Fair Value |
|||||||||||||
| (In thousands) | ||||||||||||||||
| Available-for-sale |
||||||||||||||||
| Mortgage-backed securities - U.S. government sponsored enterprises (GSEs) |
$ | $ | $ | ( |
) | $ | ||||||||||
| U.S. government agency securities |
( |
) | ||||||||||||||
| Obligations of state and political subdivisions |
( |
) | ||||||||||||||
| Small business association (SBA) securities |
( |
) | ||||||||||||||
| U.S. treasury securities |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total |
$ | $ | $ | ( |
) | $ | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
December 31, 2023 |
||||||||||||||||
Gross |
Gross |
|||||||||||||||
Amortized |
Unrealized |
Unrealized |
||||||||||||||
Cost |
Gains |
Losses |
Fair Value |
|||||||||||||
| (In thousands) | ||||||||||||||||
| Available-for-sale |
||||||||||||||||
| Mortgage-backed securities - U.S. government sponsored enterprises (GSEs) |
$ | $ | $ | ( |
) | $ | ||||||||||
| U.S. government agency securities |
( |
) | ||||||||||||||
| Obligations of state and political subdivisions |
( |
) | ||||||||||||||
| Small business association (SBA) securities |
( |
) | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total |
$ | $ | $ | ( |
) | $ | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
Less than 12 Months |
More than 12 Months |
Total |
||||||||||||||||||||||
Fair |
Unrealized |
Fair |
Unrealized |
Fair |
Unrealized |
|||||||||||||||||||
Value |
Losses |
Value |
Losses |
Value |
Losses |
|||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| September 30, 2024 |
||||||||||||||||||||||||
| Mortgage-backed securities - U.S. government sponsored enterprises (GSEs) |
$ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||
| U.S. government agency securities |
( |
) | ( |
) | ||||||||||||||||||||
| Obligations of state and political subdivisions |
( |
) | ( |
) | ||||||||||||||||||||
| Small business association (SBA) securities |
( |
) | ( |
) | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
$ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Less than 12 Months |
More than 12 Months |
|
Total |
|||||||||||||||||||||
Fair |
Unrealized |
Fair |
Unrealized |
Fair |
Unrealized |
|||||||||||||||||||
Value |
Losses |
Value |
Losses |
Value |
Losses |
|||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| December 31, 2023 |
||||||||||||||||||||||||
| Mortgage-backed securities - U.S. government sponsored enterprises (GSEs) |
$ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||
| U.S. government agency securities |
( |
) | ( |
) | ||||||||||||||||||||
| Obligations of state and political subdivisions |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Small business association (SBA) securities |
( |
) | ( |
) | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| $ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Amortized |
||||||||
Cost |
Fair Value |
|||||||
| (In thousands) | ||||||||
| Due in one year or less |
$ | $ | ||||||
| Due after one year through five years |
||||||||
| Due after five years through ten years |
||||||||
| Due after ten years |
||||||||
| Mortgage-backed securities (GSEs) |
||||||||
| Small business association (SBA) securities |
||||||||
| |
|
|
|
|||||
| $ | $ | |||||||
| |
|
|
|
|||||
September 30, |
December 31, |
|||||||
2024 |
2023 |
|||||||
| (In thousands) | ||||||||
Commercial real estate |
$ | $ | ||||||
Commercial and industrial |
||||||||
Construction |
||||||||
Residential first-lien mortgage |
||||||||
Home equity/consumer |
||||||||
Total loans |
||||||||
Deferred fees and costs |
( |
) | ( |
) | ||||
Loans, net |
$ | $ | ||||||
September 30, 2024 |
December 31, 2023 |
|||||||
| (In thousands) | ||||||||
Allowance for credit losses - loans |
$ | ( |
) | $ | ( |
) | ||
Allowance for credit losses - off balance sheet |
( |
) | ( |
) | ||||
| $ | ( |
) | $ | ( |
) | |||
September 30, 2024 |
December 31, 2023 |
|||||||||||||||
With a |
Without a |
With a |
Without a |
|||||||||||||
Related |
Related |
Related |
Related |
|||||||||||||
Allowance |
Allowance |
Allowance |
Allowance |
|||||||||||||
| (In thousands) | ||||||||||||||||
Commercial real estate |
$ | $ | $ | $ | ||||||||||||
Commercial and industrial |
||||||||||||||||
Construction |
||||||||||||||||
Residential first-lien mortgage |
||||||||||||||||
Home equity/consumer |
||||||||||||||||
Total nonaccrual loans |
$ | $ | $ | $ | ||||||||||||
Loans |
||||||||||||||||||||||||||||
30-59 |
60-89 |
>90 |
Receivable |
|||||||||||||||||||||||||
Days |
Days |
Days |
Total |
Total |
>90 Days |
|||||||||||||||||||||||
Past |
Past |
Past |
Past |
Loans |
and |
|||||||||||||||||||||||
Due |
Due |
Due |
Due |
Current |
Receivable |
Accruing |
||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||
Commercial real estate |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Commercial and industrial |
||||||||||||||||||||||||||||
Construction |
||||||||||||||||||||||||||||
Residential first-lien mortgage |
||||||||||||||||||||||||||||
Home equity/consumer |
||||||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Loans |
||||||||||||||||||||||||||||
30-59 |
60-89 |
>90 |
Receivable |
|||||||||||||||||||||||||
Days |
Days |
Days |
Total |
Total |
>90 Days |
|||||||||||||||||||||||
Past |
Past |
Past |
Past |
Loans |
and |
|||||||||||||||||||||||
Due |
Due |
Due |
Due |
Current |
Receivable |
Accruing |
||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||
Commercial real estate |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Commercial and industrial |
||||||||||||||||||||||||||||
Construction |
||||||||||||||||||||||||||||
Residential first-lien mortgage |
||||||||||||||||||||||||||||
Home equity/consumer |
||||||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Revolving Loans |
Total | |||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||||||||||||||
Pass |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Special mention |
||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||
Total commercial real estate |
||||||||||||||||||||||||||||||||
Current period gross charge-offs |
||||||||||||||||||||||||||||||||
Commercial and industrial |
||||||||||||||||||||||||||||||||
Pass |
||||||||||||||||||||||||||||||||
Special mention |
||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||
Total commercial and industrial |
||||||||||||||||||||||||||||||||
Current period gross charge-offs |
||||||||||||||||||||||||||||||||
Construction |
||||||||||||||||||||||||||||||||
Pass |
||||||||||||||||||||||||||||||||
Special mention |
||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||
Total construction |
||||||||||||||||||||||||||||||||
Residential first-lien mortgage |
||||||||||||||||||||||||||||||||
Performing |
||||||||||||||||||||||||||||||||
Nonperforming |
||||||||||||||||||||||||||||||||
Total residential first-lien mortgage |
||||||||||||||||||||||||||||||||
Home equity/consumer |
||||||||||||||||||||||||||||||||
Performing |
||||||||||||||||||||||||||||||||
Nonperforming |
||||||||||||||||||||||||||||||||
Total home equity/consumer |
||||||||||||||||||||||||||||||||
Total |
||||||||||||||||||||||||||||||||
Pass |
||||||||||||||||||||||||||||||||
Special mention |
||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||
Total loans |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| 2023 | 2022 | 2021 | 2020 | 2019 | Prior | Revolving Loans |
Total | |||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||||||||||||||
Pass |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Special mention |
||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||
Total commercial real estate |
||||||||||||||||||||||||||||||||
Current period gross charge-offs |
||||||||||||||||||||||||||||||||
Commercial and industrial |
||||||||||||||||||||||||||||||||
Pass |
||||||||||||||||||||||||||||||||
Special mention |
||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||
Total commercial and industrial |
||||||||||||||||||||||||||||||||
Current period gross charge-offs |
||||||||||||||||||||||||||||||||
Construction |
||||||||||||||||||||||||||||||||
Pass |
||||||||||||||||||||||||||||||||
Special mention |
||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||
Total construction |
||||||||||||||||||||||||||||||||
Current period gross charge-offs |
||||||||||||||||||||||||||||||||
Residential first-lien mortgage |
||||||||||||||||||||||||||||||||
Performing |
||||||||||||||||||||||||||||||||
Nonperforming |
||||||||||||||||||||||||||||||||
Total residential first-lien mortgage |
||||||||||||||||||||||||||||||||
Current period gross charge-offs |
||||||||||||||||||||||||||||||||
Home equity/consumer |
||||||||||||||||||||||||||||||||
Performing |
||||||||||||||||||||||||||||||||
Nonperforming |
||||||||||||||||||||||||||||||||
Total home equity/consumer |
||||||||||||||||||||||||||||||||
Total |
||||||||||||||||||||||||||||||||
Pass/performing |
||||||||||||||||||||||||||||||||
Special mention |
||||||||||||||||||||||||||||||||
Substandard /nonperforming |
||||||||||||||||||||||||||||||||
Total loans |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Commercial |
Residential |
|||||||||||||||||||||||
Commercial |
and |
first-lien |
Home equity/ |
|||||||||||||||||||||
real estate |
industrial |
Construction |
mortgage |
consumer |
Total |
|||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||
Beginning balance |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Purchased non-credit deteriorated loans1 |
||||||||||||||||||||||||
Purchased credit deteriorated loans |
||||||||||||||||||||||||
Provision (reversal) 1 |
( |
) | ( |
) | ||||||||||||||||||||
Charge-offs |
( |
) | ( |
) | ||||||||||||||||||||
Recoveries |
||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
1 |
The provision for credit losses on the Consolidated Statement of Income is $ million related to purchased non-credit deteriorated loans acquired, $ |
Commercial |
Residential |
|||||||||||||||||||||||
Commercial |
and |
first-lien |
Home equity/ |
|||||||||||||||||||||
real estate |
industrial |
Construction |
mortgage |
consumer |
Total |
|||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||
Beginning balance |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Purchased non-credit deteriorated loans1 |
||||||||||||||||||||||||
Purchased credit deteriorated loans |
||||||||||||||||||||||||
Provision (reversal) 1 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Charge-offs |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Recoveries |
||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | |
|||||||||||||||||
1 |
The provision for credit losses on the Consolidated Statement of Income is $ million related to purchased non-credit deteriorated loans acquired, $ |
Commercial |
Residential |
|||||||||||||||||||||||
Commercial |
and |
first-lien |
Home equity/ |
|||||||||||||||||||||
real estate |
industrial |
Construction |
mortgage |
consumer |
Total |
|||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
Allowance for loan losses: |
||||||||||||||||||||||||
Beginning balance |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Provision (reversal) 1 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Charge-offs |
||||||||||||||||||||||||
Recoveries |
||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
1 |
The reversal of credit losses on the Consolidated Statement of Income is $ |
Commercial |
Residential |
|||||||||||||||||||||||||||
Commercial |
and |
first-lien |
Home equity/ |
|||||||||||||||||||||||||
real estate |
industrial |
Construction |
mortgage |
consumer |
Unallocated |
Total |
||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||
Allowance for loan losses: |
||||||||||||||||||||||||||||
Beginning balance |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
CECL adoption |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
CECL day 1 provision |
||||||||||||||||||||||||||||
Purchased credit deteriorated loans |
||||||||||||||||||||||||||||
Provision (reversal) 1 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Charge-offs |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
Recoveries |
||||||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
1 |
The provision for credit losses on the Consolidated Statement of Income is $ non-PCD loans acquired, a $ |
September 30, 2024 |
December 31, 2023 |
|||||||||||||||
| (Dollars in thousands) | ||||||||||||||||
Demand, non-interest-bearing checking |
$ | % | $ | % | ||||||||||||
Demand, interest-bearing checking |
% | % | ||||||||||||||
Savings |
% | % | ||||||||||||||
Money market |
% | % | ||||||||||||||
Time deposits, $250,000 and over |
% | % | ||||||||||||||
Time deposits, other |
% | % | ||||||||||||||
| $ | % | $ | % | |||||||||||||
(Level 1) |
||||||||||||||||
Quoted Price |
(Level 2) |
|||||||||||||||
in Active |
Significant |
(Level 3) |
Total Fair |
|||||||||||||
Markets for |
Other |
Significant |
Value |
|||||||||||||
Identical |
Observable |
Unobservable |
September 30, |
|||||||||||||
Description |
Assets |
Inputs |
Inputs |
2024 |
||||||||||||
| (In thousands) | ||||||||||||||||
Mortgage-backed securities - U.S. government sponsored enterprise (GSEs) |
$ | $ | $ | $ | ||||||||||||
U.S. government agency securities |
||||||||||||||||
Obligations of state and political subdivisions |
||||||||||||||||
Small Business Association (SBA) securities |
||||||||||||||||
U.S. treasury securities |
||||||||||||||||
Securities available-for-sale |
$ | |
$ | $ | $ | |||||||||||
(Level 1) |
||||||||||||||||
Quoted Price |
(Level 2) |
|||||||||||||||
in Active |
Significant |
(Level 3) |
Total Fair |
|||||||||||||
Markets for |
Other |
Significant |
Value |
|||||||||||||
Identical |
Observable |
Unobservable |
December 31, |
|||||||||||||
Description |
Assets |
Inputs |
Inputs |
2023 |
||||||||||||
| (In thousands) | ||||||||||||||||
Mortgage-backed securities - U.S. government sponsored enterprise (GSEs) |
$ | $ | $ | $ | ||||||||||||
U.S. government agency securities |
||||||||||||||||
Obligations of state and political subdivisions |
||||||||||||||||
Small Business Association (SBA) securities |
||||||||||||||||
Securities available-for-sale |
$ | $ | $ | $ | |
|||||||||||
(Level 1) |
||||||||||||||||
Quoted Price |
(Level 2) |
|||||||||||||||
in Active |
Significant |
(Level 3) |
Total Fair |
|||||||||||||
Markets for |
Other |
Significant |
Value |
|||||||||||||
Identical |
Observable |
Unobservable |
December 31 |
|||||||||||||
| Description |
Assets |
Inputs |
Inputs |
2023 |
||||||||||||
| (In thousands) | ||||||||||||||||
| Collateral dependent loan |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | $ | $ | $ | |||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
Range |
||||||||||||||||
December 31, |
Valuation |
Unobservable |
(Weighted |
|||||||||||||
| Description |
2023 |
Technique |
Input |
Average) |
||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Collateral dependent loan |
$ | Collateral | 1 |
Discount adjustment | % ( | |||||||||||
1 |
Value based on third party offer to purchase note from the Bank. |
September 30, 2024 |
||||||||||||||||||||
Carrying |
Estimated |
|||||||||||||||||||
Amount |
Fair Value |
Level 1 |
Level 2 |
Level 3 |
||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Financial Assets: |
||||||||||||||||||||
| Cash and cash equivalents |
$ | $ | $ | $ | — | $ | — | |||||||||||||
| Securities available-for-sale |
— | — | ||||||||||||||||||
| Securities held-to-maturity |
— | — | ||||||||||||||||||
| Loans receivable, net |
— | — | ||||||||||||||||||
| Restricted investments in bank stock |
— | — | ||||||||||||||||||
| Accrued interest receivable |
— | — | ||||||||||||||||||
| Equity method investments |
— | |||||||||||||||||||
| Mortgage servicing rights |
— | — | ||||||||||||||||||
| Financial Liabilities: |
||||||||||||||||||||
| Deposits |
$ | $ | — | $ | $ | — | ||||||||||||||
| Accrued interest payable |
— | — | ||||||||||||||||||
December 31, 2023 |
||||||||||||||||||||
Carrying |
Estimated |
|||||||||||||||||||
Amount |
Fair Value |
Level 1 |
Level 2 |
Level 3 |
||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Financial assets: |
||||||||||||||||||||
| Cash and cash equivalents |
$ | $ | $ | $ | — | $ | — | |||||||||||||
| Securities available-for-sale |
— | — | ||||||||||||||||||
| Securities held-to-maturity |
— | — | ||||||||||||||||||
| Loans receivable, net |
— | — | ||||||||||||||||||
| Restricted investments in bank stock |
— | — | ||||||||||||||||||
| Accrued interest receivable |
— | — | ||||||||||||||||||
| Equity method investments |
— | |||||||||||||||||||
| Mortgage servicing rights |
— | — | ||||||||||||||||||
| Financial Liabilities: |
||||||||||||||||||||
| Deposits |
$ | $ | $ | — | $ | $ | — | |||||||||||||
| Accrued interest payable |
— | — | ||||||||||||||||||
Statement of Financial |
Nine Months Ended |
Twelve Months Ended |
||||||||||
Condition Location |
September 30, 2024 |
December 31, 2023 |
||||||||||
| (In thousands) | ||||||||||||
Operating Lease Right of Use Asset: |
||||||||||||
Gross carrying amount |
$ | $ | ||||||||||
Increased asset from new leases |
||||||||||||
Accumulated amortization |
( |
) | ( |
) | ||||||||
Net book value |
Operating lease right-of-use asset |
$ | $ | |||||||||
Operating Lease Liability: |
||||||||||||
Lease liability |
Operating lease liability | $ | $ | |||||||||
Twelve months ended September 30, 2024 |
$ | |||
2025 |
||||
2026 |
||||
2027 |
||||
2028 |
||||
Thereafter |
||||
Total future operating lease payment |
||||
Amounts representing interest |
( |
) | ||
Present value of net future lease payments |
$ | |||
Three Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, |
September 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
| (In thousands) | (In thousands) | |||||||||||||||
Lease cost: |
||||||||||||||||
Operating lease |
$ | $ | $ | $ | ||||||||||||
Short-term lease cost |
||||||||||||||||
Total lease cost |
$ | $ | $ | $ | ||||||||||||
Other information: |
||||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities |
$ | $ | $ | $ | ||||||||||||
Core Deposit |
||||||||
Goodwill |
Intangible |
|||||||
| (In thousands) | ||||||||
Balance at December 31, 2023 |
$ | $ | ||||||
Acquisition of Cornerstone Bank |
$ | $ | ||||||
Amortization expense |
— | ( |
) | |||||
Balance at September 30, 2024 |
$ | $ | ||||||
2024 |
||||
2025 |
||||
2026 |
||||
2027 |
||||
2028 |
||||
Thereafter |
||||
Total |
$ | |||
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis in conjunction with the unaudited consolidated interim financial statements contained in Part I, Item 1 of this report, and with our audited consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” presented in our Form 10-K as of and for the year ended December 31, 2023.
Cautionary Statement Regarding Forward-Looking Statements
The Company may from time to time make written or oral “forward-looking statements,” including statements contained in the Company’s filings with the Securities and Exchange Commission, in its reports to stockholders and in other communications by the Company (including this press release), which are made in good faith by the Company 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 Company’s plans, objectives, expectations, estimates and intentions that are subject to change based on various important factors (some of which are beyond the Company’s control). The most significant factors that could cause future results to differ materially from those anticipated by our forward-looking statements include the ongoing impact of higher inflation levels, higher interest rates and general economic and recessionary concerns, all of which could impact economic growth and could cause a reduction in financial transactions and business activities, including decreased deposits and reduced loan originations, our ability to manage liquidity in a rapidly changing and unpredictable market, supply chain disruptions, labor shortages and additional interest rate increases by the Federal Reserve. Other factors that could cause actual results to differ materially from those indicated by forward-looking statements include, but are not limited to, the following factors: difficulties and delays in integrating the businesses of Cornerstone Bank and the Company, retaining Cornerstone’s customers or fully realizing cost savings and other benefits; the global impact of the military conflicts in the Ukraine and the Middle East; 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 Company and Bank conduct 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; 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 Company and the Bank; and the timing and nature of the regulatory response to any applications filed by the Company and the Bank; technological changes; other acquisitions; changes in consumer spending and saving habits; those risks under the heading “Risk Factors” set forth in the Bank’s Annual Report on Form 10-K for the year ended December 31, 2023, and the success of the Company at managing the risks involved in the foregoing.
The Company cautions that the foregoing list of important factors is not exclusive. The Company 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 Company, except as required by applicable law or regulation.
Throughout this document, references to “we,” “us,” or “our” refer to the Company and the Bank.
29
Table of Contents
Executive Overview
The Company is the holding company for The Bank of Princeton (the “Bank”), a community bank founded in 2007. The Bank is a New Jersey state-chartered commercial bank with 28 branches in New Jersey, including three in Princeton and others in Bordentown, Browns Mills, Burlington, Chesterfield, Cherry Hill, Cream Ridge, Deptford, Fort Lee, Hamilton, Kingston, Lakewood, Lambertville, Lawrenceville, Medford, Monroe, Moorestown, New Brunswick, Palisades Park, Pennington, Piscataway, Princeton Junction, Quakerbridge, Sicklerville, Voorhees, and Woodbury. There are also five branches in the Philadelphia, Pennsylvania area and two in the New York City metropolitan area. The Bank of Princeton is a member of the Federal Deposit Insurance Corporation (“FDIC”).
The Company’s common stock trades on the “Nasdaq Global Select Market” under ticker symbol, “BPRN.”
Critical Accounting Policies and Estimates
Princeton Bancorp has chosen accounting policies that it believes are appropriate to accurately and fairly report its operating results and financial position, and the Company applies those accounting policies in a consistent manner. The Significant Accounting Policies are summarized in Note 1 to the consolidated financial statements included in the 2023 Annual Report on Form 10-K. There have been no changes to the Critical Accounting Estimates since the Company filed its Annual Report on Form 10-K for the year ended December 31, 2023.
New Accounting Pronouncements
Refer to Note 1 to the consolidated financial statements included in the 2023 Annual Report on Form 10-K and Note 1- Summary of Significant Accounting Policies in this document.
Economy
The US economy expanded at an annual rate of 2.8% over the three months ended September 30, 2024, lifted by consumer spending. Inflation has slowed after hitting a 40-year high, but households still grapple with a 20% increase in prices since 2021, an increase in energy prices, higher interest rates (impacting the real estate market) and uncertainties resulting from regional conflicts in around the world, including in Ukraine and the Middle East. U.S. unemployment, at 4.7%, is low but rising. The unemployment rate in New Jersey is 4.6% at September 30, 2024.
Comparison of Financial Condition at September 30, 2024 and December 31, 2023
General
Total assets were $2.35 billion at September 30, 2024, an increase of $438.2 million, or 22.87% when compared to $1.92 billion at the end of 2023. The primary reason for the increase in total assets was the acquisition of Cornerstone Bank on August 23, 2024, which had approximately $303.5 million in assets (at fair value) at closing. When looking at specific components of the balance sheet, including acquired assets, the Company recorded an increase in net loans of $283.1 million primarily related to the Cornerstone acquisition, an increase in investments of $97.5 million, an increase in cash and cash equivalents of approximately $30.5 million.
Cash and cash equivalents
Cash and cash equivalents increased $30.5 million, or 20.26%, to $181.1 million at September 30, 2024 compared to December 31, 2023.
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Investment securities
Total available-for-sale investment securities increased million $97.5, or 106.74%, to $188.9 million at September 30, 2024 compared to December 31, 2023. This increase was related to the purchase of mortgage-backed securities of U.S. government sponsored enterprises, and U.S government agency securities along with $14.0 million in securities acquired in the Cornerstone Bank acquisition during the nine-months ended September 30, 2024.
Loans
Loans, net of deferred loan fees and costs, increased $283.1 million, or 18.28%, to $1.83 billion at September 30, 2024 compared to December 31, 2023. The primary reasons for the increase in net loans were the $255.5 million in loans acquired from Cornerstone Bank and the $26.1 million increase from existing operations. The increase in the Company’s net loans consisted of increases of $248.5 million in commercial real estate loans, $42.9 million in commercial and industrial loans, $32.3 million in residential mortgages, and $11.3 in home equity and consumer loans, all partially offset by a decrease of $51.9 million in construction loans.
The Company’s CRE loan portfolio, which includes multi-family, land, owner-occupied and non-owner-occupied CRE loans, was $1.39 billion or 75.8% of total loans of $1.83 billion at September 30, 2024. There were 789 loans in the Company’s CRE portfolio with an average and median loan size of $1.8 million and $0.6 million, respectively. Loan to Value (“LTV”) estimates are less than 70% for $1.27 billion or 91.7% of the CRE portfolio and less than 80% for $1.37 billion or 99.2% of the CRE portfolio.
The following table presents the commercial real estate portfolio by property type along with the weighted average loan to value for the periods presented (dollars in thousands):
| September 30, 2024 | December 31, 2023 | |||||||||||||||||||||||
| Balance | % of portfolio | Weighted Average LTV |
Balance | % of portfolio | Weighted Average LTV |
|||||||||||||||||||
| Commercial Real Estate | ||||||||||||||||||||||||
| Multi Family |
525,202 | 37.8 | % | 53.3 | % | 403,779 | 35.3 | % | 55.7 | % | ||||||||||||||
| Owner Occupied |
419,994 | 30.2 | % | 36.4 | % | 347,734 | 30.4 | % | 33.0 | % | ||||||||||||||
| Land |
30,250 | 2.2 | % | 76.9 | % | 30,280 | 2.6 | % | 79.6 | % | ||||||||||||||
| Non Owner Occupied |
||||||||||||||||||||||||
| Office Building |
100,577 | 7.2 | % | 43.1 | % | 91,968 | 8.0 | % | 42.9 | % | ||||||||||||||
| Retail |
96,754 | 7.0 | % | 42.2 | % | 67,862 | 5.9 | % | 40.7 | % | ||||||||||||||
| Industrial/Warehousing |
78,374 | 5.6 | % | 45.9 | % | 69,917 | 6.1 | % | 46.0 | % | ||||||||||||||
| Mixed Use |
48,449 | 3.5 | % | 44.2 | % | 48,684 | 4.3 | % | 42.9 | % | ||||||||||||||
| Restaurants |
22,842 | 1.6 | % | 39.8 | % | 15,361 | 1.3 | % | 33.3 | % | ||||||||||||||
| Healthcare |
8,259 | 0.6 | % | 50.6 | % | 11,448 | 1.0 | % | 48.7 | % | ||||||||||||||
| Other |
60,544 | 4.4 | % | 45.8 | % | 55,830 | 4.9 | % | 38.7 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total non owner occupied |
415,799 | 29.8 | % | 361,070 | 31.6 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Commercial Real Estate |
1,391,245 | 100.0 | % | 1,142,863 | 100.0 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
The following table presents the geographic markets of the commercial real estate portfolio for the periods presented (dollars in thousands):
| September 30, 2024 | December 31, 2023 | |||||||||||||||
| Balance | % of portfolio | Balance | % of portfolio | |||||||||||||
| Geographical Market |
||||||||||||||||
| New York |
639,005 | 46.0 | % | 533,991 | 46.7 | % | ||||||||||
| New Jersey |
546,759 | 39.3 | % | 408,368 | 35.7 | % | ||||||||||
| Pennslyvania |
185,529 | 13.3 | % | 172,848 | 15.1 | % | ||||||||||
| Other |
19,952 | 1.4 | % | 27,657 | 2.5 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 1,391,245 | 100.00 | % | 1,142,864 | 100.00 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
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For the three-month and nine-month periods ended September 30, 2024, charge-offs were $278 thousand and $645 thousand, and recoveries were $172 thousand and $378 thousand. For the three-month and nine-month periods ended September 30, 2023, charge-offs were zero and $1.9 million, and recoveries were $22 thousand and $52 thousand, respectively. The coverage ratio of the allowance for credit losses to period end loans was 1.27% at September 30, 2024 and 1.19% at December 31, 2023.
At September 30, 2024, non-performing assets totaled $2.3 million, a decrease of $4.4 million when compared to the amount at December 31, 2023. Non-performing assets as a percentage of total loans, net of deferred fees and costs, was 0.13% at September 30, 2024 and 0.43% at December 31, 2023.
Deposits
Total deposits on September 30, 2024, increased $410.3 million, or 25.08%, when compared to December 31, 2023. The primary reasons for the increase in total deposits were the $282.8 million in deposits acquired from Cornerstone Bank and the $127.5 million increase from existing operations. The increase in the Company’s deposits consisted of increases in certificates of deposit of $149.0 million, money market deposits of $139.3 million, non-interest-bearing deposits of $53.6 million, interest-bearing demand deposits of $36.6 million and savings deposits of $31.8 million.
At September 30, 2024, the Company had approximately $616.7 million in uninsured deposits, consisting of $89.0 million in non-interest-bearing demand deposits, $184.9 million in interest-bearing demand deposits, $172.2 million in money market accounts, $27.7 million in savings deposits and $142.9 million in certificates of deposits.
Borrowings
The Company had no outstanding borrowings at September 30, 2024 and at December 31, 2023.
Stockholders’ equity
Total stockholders’ equity at September 30, 2024, increased $21.3 million or 8.86% when compared to December 31, 2023. The increase was primarily due to the $21.2 million increase in paid-in capital associated with the issuance of common stock of $20.0 million related to the acquisition of Cornerstone and a decrease in accumulated other comprehensive income (loss) of $1.6 million. The ratio of equity to total assets at September 30, 2024 and at December 31, 2023 was 11.1% and 12.5%, respectively. The current period ratio decrease was primarily due to the Cornerstone Bank acquisition.
Liquidity
Our liquidity, represented by cash and cash equivalents, is a product of our operating, investing and financing activities. Our primary sources of funds are deposits, principal repayments of securities and outstanding loans, and funds provided from operations. In addition, we invest excess funds in short-term interest-earnings assets such as overnight deposits or U.S. agency securities, which provide liquidity to meet lending requirements. While scheduled payments from the amortization of loans and securities and short-term investments are relatively predictable sources of funds, general interest rates, economic conditions and competition greatly influence deposit flows and repayments on loans and mortgage-backed securities.
As a member of the FHLB we are eligible to borrow funds in an aggregate amount of up to 50% of the Company’s total assets, subject to its collateral requirements. Based on available eligible securities and qualified real estate loan collateral, the Company had the ability to borrow an additional $471.8 million as of September 30, 2024. The company maintained a $60.0 million letter of credit with the FHLB supporting municipal deposits as of September 30, 2024.
As of September 30, 2024, the Bank was eligible to use the Federal Reserve discount window for borrowings. Based on assets pledged as collateral as of the applicable date, the Bank’s borrowing availability was approximately $10.0 million at September 30, 2024. As of September 30, 2024, the Company had no outstanding advances from the discount window.
The Company is also a shareholder of Atlantic Community Bancshares, Inc., the parent company of Atlantic Community Bankers Bank (“ACBB”). As of September 30, 2024, the Company had available borrowing capacity with ACBB of $10.0 million to provide short-term liquidity generally for a period of not more than fourteen days. No amounts were outstanding under our line of credit with ACBB at September 30, 2024.
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We believe that our current sources of funds provide adequate liquidity for our current cash flow needs.
Capital Resources
Regulatory Capital Requirements. Federally insured, state-chartered non-member banks are required to maintain minimum levels of regulatory capital. Current FDIC capital standards require these institutions to satisfy a common equity Tier 1 capital requirement and a Tier 1 capital requirement, a leverage capital requirement and a risk-based capital requirement.
In addition, in order to make capital distributions and pay discretionary bonuses to executive officers without restriction, an institution must also maintain additional common equity in excess of the minimum requirements. This excess is referred to as a capital conservation buffer. At September 30, 2024, the required capital conservation buffer is 2.50%.
Under the risk-based capital requirements, “total” capital (a combination of core and “supplementary” capital) must equal at least 8.0% of “risk-weighted” assets. The FDIC also is authorized to impose capital requirements in excess of these standards on individual institutions on a case-by-case basis. Management believes, as of September 30, 2024, that the Bank meets all capital adequacy requirements to which it is subject and is “well capitalized” under applicable regulations.
The Bank’s actual capital amounts and ratios and the regulatory requirements at September 30, 2024 and December 31, 2023 are presented below:
| Actual | For capital conservation buffer requirement |
To be well capitalized under prompt corrective action provision |
||||||||||||||||||||||
| Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||
| (Dollars in the thousands) | ||||||||||||||||||||||||
| September 30, 2024: |
||||||||||||||||||||||||
| Total capital (to risk-weighted assets) |
$ | 266,469 | 13.168 | % | $ | 212,480 | 10.500 | % | $ | 202,362 | 10.000 | % | ||||||||||||
| Tier 1 capital (to risk-weighted assets) |
$ | 243,269 | 12.021 | % | $ | 172,008 | 8.500 | % | $ | 161,890 | 8.000 | % | ||||||||||||
| Common equity tier 1 capital (to-risk weighted assets |
$ | 243,269 | 12.021 | % | $ | 141,653 | 7.000 | % | $ | 131,535 | 6.500 | % | ||||||||||||
| Tier 1 leverage capital (to average assets) |
$ | 243,269 | 11.440 | % | $ | 138,222 | 6.500 | % | $ | 106,325 | 5.000 | % | ||||||||||||
| December 31, 2023: |
||||||||||||||||||||||||
| Total capital (to risk-weighted assets) |
$ | 254,030 | 14.677 | % | $ | 181,740 | 10.500 | % | $ | 173,086 | 10.000 | % | ||||||||||||
| Tier 1 capital (to risk-weighted assets) |
$ | 235,538 | 13.608 | % | $ | 147,123 | 8.500 | % | $ | 138,469 | 8.000 | % | ||||||||||||
| Common equity tier 1 capital (to-risk weighted assets |
$ | 235,538 | 13.608 | % | $ | 121,160 | 7.000 | % | $ | 112,506 | 6.500 | % | ||||||||||||
| Tier 1 leverage capital (to average assets) |
$ | 235,538 | 12.289 | % | $ | 124,583 | 6.500 | % | $ | 95,833 | 5.000 | % | ||||||||||||
Comparison of Operating Results for the Three Months Ended September 30, 2024 and 2023
General
The Company reported net loss of $(4.5) million, or ($0.68) per diluted common share, for the third quarter of 2024, compared to net income of $7.6 million, or $1.19 per diluted common share, for the third quarter of 2023. The $12.1 million decrease in net income for the third quarter of 2024 compared to the same period in 2023 was primarily due to acquisition-related items recorded in the third quarter of 2024 due to the Company’s acquisition of Cornerstone Bank. Specifically, the decrease was a result of an increase of $10.0 million in non-interest expense, and an increase in the provision for credit losses of $4.8 million. These increases were primarily the result of the Cornerstone acquisition which resulted in $7.8 million in merger-related expenses and a $3.2 million provision for credit loss associated with the acquired purchased non-credit deteriorated loans.
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Table of Contents
Interest income
Interest income increased $4.8 million for the three months ended September 30, 2024, compared to the same period in 2023. Interest income on loans increased $4.6 million due to increases in both the average balance of loans of $226.9 million and the yield of 25 basis points. Interest on taxable available-for-sale securities increased $916 thousand due to a 150 basis point increase in yield and a $65.0 million increase in the average balance of taxable available-for-sale securities. Other interest and dividend income decreased $737 thousand due to a decrease in average balance of $55.1 million offset by an increase in the yield of 5 basis points.
Interest expense
Interest expense on deposits increased $4.4 million to $14.7 million for the three-month period ended September 30, 2024, due to increases in both the rate paid on interest-bearing deposits of 68 basis points and in the average balance of interest-bearing deposits of $223.5 million over the same prior year period.
Provision for credit losses
The Company recorded a provision of credit losses of $4.6 million during the three-months ended September 30, 2024, $3.2 million related to the CECL impact for purchased non-credit deteriorated loans associated with loans acquired in the Cornerstone acquisition, and $1.5 million recorded to the allowance of credit losses resulting from quantitative factors changes in the Company’s loan portfolio assumptions, offset by an decrease to the provision for credit losses of $88 thousand related to unfunded commitments, which are recorded in other liabilities on the Company’s statements of financial condition. Charge-offs were $278 thousand, and recoveries were $172 thousand, for the quarter ended September 30, 2024.
Non-interest income
Total non-interest income was $2.1 million for the three-months ended September 30, 2024, a decrease of $347 thousand or 14.4% when compared to the same prior year period.
Non-interest expense
Total non-interest expense was $20.1 million for the three-months ended September 30, 2024, an increase of $10.0 million or 98.3% when compared to the same prior year period. The increase was due primarily to $7.8 million in merger-related expenses recorded, $379 thousand more in salaries and benefits expense and $214 thousand more in data processing and communications expenses during the three-months ended September 30, 2024, of which were all primarily associated with the Cornerstone Bank acquisition.
Provision for income taxes
For the three months ended September 30, 2024, the Company recorded an income tax benefit of $1.1 million, resulting in an effective tax rate of (20.1%), compared to an income tax expense of $1.5 million resulting in an effective tax rate of 16.6% for the quarter ended September 30, 2023.
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Table of Contents
Average Balances, Net Interest Income, and Yields Earned and Rates Paid
The following table shows for the three-month period indicated the total dollar amount of interest earned from average interest earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities and the resulting costs, expressed both in dollars and rates. Average loan receivables balances include non-accrual loans. Average yields have been annualized. Tax-exempt incomes and yields have not been adjusted to a tax-equivalent basis.
| Three Months Ended September 30, | ||||||||||||||||||||||||||||||||
| 2024 | 2023 | Change 2024 vs 2023 | ||||||||||||||||||||||||||||||
| Average Balances |
Income/ Expense |
Yield Rates |
Average Balances |
Income/ Expense |
Yield Rates |
Average Balances |
Yield Rates |
|||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
| Interest-earning assets: |
||||||||||||||||||||||||||||||||
| Loans receivable |
$ | 1,691,688 | $ | 28,135 | 6.62 | % | $ | 1,464,798 | $ | 23,503 | 6.37 | % | $ | 226,890 | 0.25 | % | ||||||||||||||||
| Securities |
||||||||||||||||||||||||||||||||
| Taxable available-for-sale |
111,633 | 1,273 | 4.56 | % | 46,599 | 357 | 3.06 | % | 65,034 | 1.50 | % | |||||||||||||||||||||
| Tax exempt available-for-sale |
40,028 | 285 | 2.85 | % | 40,118 | 285 | 2.84 | % | (90 | ) | 0.01 | % | ||||||||||||||||||||
| Held-to-maturity |
164 | 2 | 5.33 | % | 196 | 3 | 5.28 | % | (32 | ) | 0.05 | % | ||||||||||||||||||||
| Federal funds sold |
135,164 | 1,828 | 5.38 | % | 199,350 | 2,702 | 5.38 | % | (64,186 | ) | 0.00 | % | ||||||||||||||||||||
| Other interest earning-assets |
19,549 | 287 | 5.85 | % | 10,506 | 150 | 5.67 | % | 9,043 | 0.18 | % | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Total interest-earning assets |
1,998,226 | $ | 31,810 | 6.33 | % | 1,761,567 | $ | 27,000 | 6.08 | % | 236,659 | 0.25 | % | |||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||
| Other non-earnings assets |
151,776 | 127,682 | 24,094 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Total assets |
$ | 2,150,002 | $ | 1,889,249 | $ | 260,753 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Interest-bearing liabilities |
||||||||||||||||||||||||||||||||
| Demand |
$ | 258,728 | $ | 1,213 | 1.86 | % | $ | 243,359 | $ | 1,031 | 1.68 | % | $ | 15,369 | 0.18 | % | ||||||||||||||||
| Savings |
159,521 | 1,031 | 2.57 | % | 149,215 | 788 | 2.10 | % | 10,306 | 0.48 | % | |||||||||||||||||||||
| Money markets |
443,109 | 4,294 | 3.85 | % | 337,491 | 2,979 | 3.50 | % | 105,618 | 0.35 | % | |||||||||||||||||||||
| Certificates of deposit |
721,240 | 8,163 | 4.50 | % | 629,082 | 5,518 | 3.48 | % | 92,158 | 1.02 | % | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Total deposit |
1,582,598 | 14,701 | 3.70 | % | 1,359,147 | 10,316 | 3.01 | % | 223,451 | 0.68 | % | |||||||||||||||||||||
| Borrowings |
— | — | N/A | — | — | N/A | — | N/A | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Total interest-bearing liabilities |
1,582,598 | $ | 14,701 | 3.70 | % | 1,359,147 | $ | 10,316 | 3.01 | % | 223,451 | 0.68 | % | |||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||
| Non-interest-bearing deposits |
269,030 | 255,775 | 13,255 | |||||||||||||||||||||||||||||
| Other liabilities |
43,729 | 45,923 | (2,194 | ) | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Total liabilities |
1,895,357 | 1,660,845 | 234,512 | |||||||||||||||||||||||||||||
| Stockholders’ equity |
254,645 | 228,404 | 26,241 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Total liabilities and stockholder’s equity |
$ | 2,150,002 | $ | 1,889,249 | $ | 260,753 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Net interest-earnings assets |
$ | 415,628 | $ | 402,420 | $ | 13,208 | ||||||||||||||||||||||||||
| Net interest income; interest rate spread |
2.64 | % | 3.07 | % | -0.43 | % | ||||||||||||||||||||||||||
| Net interest margin |
$ | 17,109 | 3.41 | % | $ | 16,684 | 3.76 | % | $ | 425 | -0.35 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
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Table of Contents
Rate/Volume Analysis
The following table reflects the changes in our interest income and interest expense segregated into amounts attributable to changes in volume and in yields on interest-earning assets and interest-bearing liabilities during the periods indicated.
| Three Months Ended September 30, 2024 vs. 2023 Increase (Decrease) Due to |
||||||||||||
| Rate | Volume | Net | ||||||||||
| (Dollars in thousands) | ||||||||||||
| Interest and dividend income: |
||||||||||||
| Loans receivable, including fees |
$ | 73 | $ | 4,558 | $ | 4,631 | ||||||
| Investment securities |
||||||||||||
| Taxable available-for-sale |
338 | 578 | 916 | |||||||||
| Tax exempt available-for-sale |
2 | (1 | ) | 1 | ||||||||
| Held-to-maturity |
0 | (1 | ) | (1 | ) | |||||||
| Federal funds sold |
4 | (878 | ) | (874 | ) | |||||||
| Other interest-earning assets |
0 | 137 | 137 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total interest-earning assets |
$ | 417 | $ | 4,393 | $ | 4,810 | ||||||
|
|
|
|
|
|
|
|||||||
| Interest expense: |
||||||||||||
| Demand |
230 | (48 | ) | $ | 182 | |||||||
| Savings |
386 | (143 | ) | 243 | ||||||||
| Money market |
584 | 731 | 1,315 | |||||||||
| Certificates of deposit |
298 | 2,347 | 2,645 | |||||||||
| Borrowings |
— | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total interest expense |
$ | 1,498 | $ | 2,887 | $ | 4,385 | ||||||
|
|
|
|
|
|
|
|||||||
| Change in net interest income |
$ | (1,081 | ) | $ | 1,506 | $ | 425 | |||||
|
|
|
|
|
|
|
|||||||
Comparison of Operating Results for the Nine Months Ended September 30, 2024, and 2023
General
The Company reported net income of $5.0 million, or $0.77 per diluted common share, for the nine-month period ended September 30, 2024, compared to net income of $20.5 million, or $3.21 per diluted common share, for the same period in 2023. The decrease in net income for the nine-month period ended September 30, 2024, compared to the same period in 2023, was primarily the result of a $9.7 bargain purchase gain in 2023 from the Company’s acquisition of Noah Bank in May of that year, a reduction of $2.6 million of income tax expense and the additional operating expenses recorded in 2024 related to the Cornerstone acquisition.
36
Table of Contents
Interest income
Interest income increased $18.7 million for the nine-months ended September 30, 2024, compared to the same period in 2023. Interest income on loans increased $14.2 million due to increases in both the average balance of loans of $185.1 million and the yield of 47 basis points. Interest on taxable available-for-sale securities increased $1.9 million due to a 158 basis point increase in yield and a $42.2 million increase in the average balance of taxable available-for-sale securities. Other interest and dividend income increased $2.6 million due to an increase in average balance of $59.3 million and an increase in the yield of 16 basis points.
Interest expense
Interest expense on deposits increased $19.3 million to $40.8 million for the nine-month period ended September 30, 2024, due to increases in both the rate paid on interest-bearing deposits of 126 basis points and in the average balance of interest-bearing deposits of $284.6 million over the same prior year period.
Provision for credit losses
The Company recorded a $4.7 million provision for credit losses for the nine-month period ended September 30, 2024, and recorded $2.5 million provision for credit losses for the nine-month period ended September 30, 2023. The increase for the nine-month period ended September 30, 2024, compared with the same prior year period, is primarily due to $3.2 million of the provision related to purchased non-credit deteriorated loans acquired in the Cornerstone Bank acquisition and $1.5 million recorded to the allowance of credit losses resulting from changes in the quantitative factors used in the Company’s loan portfolio assumptions. For the nine-month periods ended September 30, 2024, charge-offs were $646 thousand, and recoveries were $378 thousand.
Non-interest income
For the nine-month period ended September 30, 2024, non-interest income decreased $9.2 million or (60.1%), from the same nine-month period in 2023, primarily due to the $9.7 million bargain purchase gain from the Noah acquisition recorded in the nine-month period ended September 30, 2023.
Non-interest expense
For the nine-month period ended September 30, 2024, non-interest expense was $44.0 million, compared to $37.7 million for the same period in 2023. The increase was primarily due to an increase in merger-related expenses of $2.2 million during 2024 as well as increases in salaries and employee benefits of $2.2 million over the same period in 2023 associated with merit increases as well as additional staff costs related to the Cornerstone and Noah acquisitions.
Provision for income taxes
For the nine-month period ended September 30, 2024, the Bank recorded an income tax expense of $1.0 million, resulting in an effective tax rate of 16.35%, compared to an income tax expense of $3.6 million resulting in an effective tax rate of 14.86% for the nine-month period ended September 30, 2023.
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Table of Contents
Average Balances, Net Interest Income, and Yields Earned and Rates Paid
The following table shows for the three-month period indicated the total dollar amount of interest earned from average interest earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities and the resulting costs, expressed both in dollars and rates. Average loan receivables balances include non-accrual loans. Average yields have been annualized. Tax-exempt incomes and yields have not been adjusted to a tax-equivalent basis.
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||
| 2024 | 2023 | Change 2024 vs 2023 | ||||||||||||||||||||||||||||||
| Average Balances |
Income/ Expense |
Yield Rates |
Average Balances |
Income/ Expense |
Yield Rates |
Average Balances |
Yield Rates |
|||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
| Interest-earning assets: |
||||||||||||||||||||||||||||||||
| Loans receivable |
$ | 1,609,890 | $ | 79,109 | 6.56 | % | $ | 1,424,768 | $ | 64,914 | 6.09 | % | $ | 185,122 | 0.47 | % | ||||||||||||||||
| Securities |
||||||||||||||||||||||||||||||||
| Taxable available-for-sale |
86,732 | 2,838 | 4.36 | % | 44,517 | 927 | 2.78 | % | 42,215 | 1.59 | % | |||||||||||||||||||||
| Tax exempt available-for-sale |
40,180 | 857 | 2.84 | % | 40,974 | 853 | 2.78 | % | (794 | ) | 0.07 | % | ||||||||||||||||||||
| Held-to-maturity |
171 | 7 | 5.25 | % | 198 | 8 | 5.28 | % | (27 | ) | -0.03 | % | ||||||||||||||||||||
| Federal funds sold |
138,843 | 5,644 | 5.43 | % | 91,761 | 3,639 | 5.30 | % | 47,082 | 0.13 | % | |||||||||||||||||||||
| Other interest earning-assets |
19,281 | 831 | 5.76 | % | 7,086 | 285 | 5.36 | % | 12,195 | 0.40 | % | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Total interest-earning assets |
1,895,097 | $ | 89,286 | 6.29 | % | 1,609,304 | $ | 70,626 | 5.87 | % | 285,793 | 0.42 | % | |||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||
| Other non-earnings assets |
144,630 | 114,544 | 30,086 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Total assets |
$ | 2,039,727 | $ | 1,723,848 | $ | 315,879 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Interest-bearing liabilities |
||||||||||||||||||||||||||||||||
| Demand |
$ | 244,271 | $ | 3,525 | 1.93 | % | $ | 250,100 | $ | 2,417 | 1.29 | % | $ | (5,829 | ) | 0.64 | % | |||||||||||||||
| Savings |
151,884 | 2,925 | 2.57 | % | 163,516 | 1,888 | 1.54 | % | (11,632 | ) | 1.03 | % | ||||||||||||||||||||
| Money markets |
399,253 | 11,724 | 3.92 | % | 297,360 | 6,251 | 2.81 | % | 101,893 | 1.11 | % | |||||||||||||||||||||
| Certificates of deposit |
704,388 | 22,587 | 4.28 | % | 504,237 | 10,946 | 2.90 | % | 200,151 | 1.38 | % | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Total deposit |
1,499,796 | 40,761 | 3.63 | % | 1,215,213 | 21,502 | 2.37 | % | 284,583 | 1.26 | % | |||||||||||||||||||||
| Borrowings |
— | — | 0.00 | % | 3,133 | 118 | 5.01 | % | (3,133 | ) | -5.01 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Total interest-bearing liabilities |
1,499,796 | $ | 40,761 | 3.63 | % | 1,218,346 | $ | 21,620 | 2.37 | % | 281,450 | 1.26 | % | |||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||
| Non-interest-bearing deposits |
252,184 | 244,718 | 7,466 | |||||||||||||||||||||||||||||
| Other liabilities |
42,239 | 34,313 | 7,926 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Total liabilities |
1,794,219 | 1,497,377 | 296,842 | |||||||||||||||||||||||||||||
| Stockholders’ equity |
245,508 | 226,471 | 19,037 | |||||||||||||||||||||||||||||
| Total liabilities and stockholder’s equity |
$ | 2,039,727 | $ | 1,723,848 | $ | 315,879 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Net interest-earnings assets |
$ | 395,301 | $ | 390,958 | $ | 4,343 | ||||||||||||||||||||||||||
| Net interest income; interest rate spread |
2.66 | % | 3.50 | % | -0.84 | % | ||||||||||||||||||||||||||
| Net interest margin |
$ | 48,525 | 3.42 | % | $ | 49,006 | 4.07 | % | $ | (481 | ) | -0.65 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
38
Table of Contents
Rate/Volume Analysis
The following table reflects the changes in our interest income and interest expense segregated into amounts attributable to changes in volume and in yields on interest-earning assets and interest-bearing liabilities during the periods indicated.
| Nine Months Ended September 30, 2024 vs. 2023 Increase (Decrease) Due to |
||||||||||||
| Rate | Volume | Net | ||||||||||
| (In thousands) | ||||||||||||
| Interest and dividend income: |
||||||||||||
| Loans receivable, including fees |
$ | 516 | $ | 13,679 | $ | 14,195 | ||||||
| Securities available-for-sale |
||||||||||||
| Taxable |
294 | 1,618 | 1,912 | |||||||||
| Tax-exempt |
13 | (9 | ) | 4 | ||||||||
| Securities held-to-maturity |
(11 | ) | 10 | (1 | ) | |||||||
| Federal funds sold |
53 | 1,952 | 2,005 | |||||||||
| Other interest and dividend income |
2 | 545 | 547 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total interest and dividend income |
$ | 867 | $ | 17,795 | $ | 18,662 | ||||||
|
|
|
|
|
|
|
|||||||
| Interest expense: |
||||||||||||
| Demand |
975 | 133 | $ | 1,108 | ||||||||
| Savings |
917 | 120 | 1,037 | |||||||||
| Money market |
1,362 | 4,111 | 5,473 | |||||||||
| Certificates of deposit |
820 | 10,823 | 11,643 | |||||||||
| Borrowings |
— | (118 | ) | (118 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total interest expense |
$ | 4,074 | $ | 15,069 | $ | 19,143 | ||||||
|
|
|
|
|
|
|
|||||||
| Change in net interest income |
$ | (3,207 | ) | $ | 2,726 | $ | (481 | ) | ||||
|
|
|
|
|
|
|
|||||||
How We Manage Market Risk
Market risk is the risk of loss from adverse changes in market prices and rates. Our market risk arises primarily from interest rate risk which is inherent in our lending, investment and deposit gathering activities. To that end, management actively monitors and manages interest rate risk exposure. In addition to market risk, our primary risk is credit risk on our loan portfolio. We attempt to manage credit risk through our loan underwriting and oversight policies.
The principal objective of our interest rate risk management function is to evaluate the interest rate risk embedded in certain balance sheet accounts, determine the level of risk appropriate given our business strategy, operating environment, capital and liquidity requirements and performance objectives, and manage the risk consistent with approved guidelines. We seek to manage our exposure to risks from changes in interest rates while at the same time trying to improve our net interest spread. We monitor interest rate risk as such risk relates to our operating strategies. We have established an Asset/Liability Committee which is comprised of both Management and members of the Board of Directors. The Asset/Liability Committee meets on a regular basis and is responsible for reviewing our asset/liability policies and interest rate risk position. Both the extent and direction of shifts in interest rates are uncertainties that could have a negative impact on future earnings.
39
Table of Contents
Gap Analysis. The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest rate sensitive” and by monitoring the Company’s interest rate sensitivity “gap.” An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period. The interest rate sensitivity gap is defined as the difference between the amount of interest-earning assets maturing or repricing within a specific time period and the amount of interest-bearing liabilities maturing or repricing within that same time period. A gap is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate-sensitive liabilities. A gap is considered negative when the amount of interest rate sensitive liabilities exceeds the amount of interest rate sensitive assets. During a period of rising interest rates, a negative gap would tend to affect adversely net interest income while a positive gap would tend to result in an increase in net interest income. Conversely, during a period of falling interest rates, a negative gap would tend to result in an increase in net interest income while a positive gap would tend to affect adversely net interest income.
The table on the next page sets forth the amounts of our interest-earning assets and interest-bearing liabilities outstanding at September 30, 2024, which we expect, based upon certain assumptions, to reprice or mature in each of the future time periods shown (the “GAP Table”). Except as stated below, the amounts of assets and liabilities shown which reprice or mature during a particular period were determined in accordance with the earlier of term to repricing or the contractual maturity of the asset or liability. The table sets forth an approximation of the projected repricing of assets and liabilities at September 30, 2024, based on contractual maturities, anticipated prepayments, and scheduled rate adjustments within a three-month period and subsequent selected time intervals. The loan amounts in the table reflect principal balances expected to be redeployed and/or repriced as a result of contractual amortization and anticipated prepayments of adjustable-rate loans and fixed-rate loans, and as a result of contractual rate adjustments on adjustable-rate loans.
| 3 Months or Less |
More than 3 Months to 1 Year |
More than 1 Year to 3 Years |
More than 3 Years to 5 Years |
More than 5 Years |
Non-Rate Sensitive |
Total Amount | ||||||||||||||||||||||
| (Dollars in thousands) |
||||||||||||||||||||||||||||
| Interest-earning assets: (1) |
||||||||||||||||||||||||||||
| Investment securities |
$ | 21,608 | $ | 41,919 | $ | 44,907 | $ | 19,098 | $ | 70,664 | $ | (9,011 | ) | $ | 189,185 | |||||||||||||
| Loans receivable |
505,503 | 208,999 | 531,160 | 494,963 | 112,026 | (44,444 | ) | 1,808,207 | ||||||||||||||||||||
| Other interest-earnings assets (2) |
163,749 | — | — | — | — | — | 163,749 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total interest-earning assets |
$ | 690,860 | $ | 250,918 | $ | 576,067 | $ | 514,061 | $ | 182,690 | $ | (53,455 | ) | $ | 2,161,141 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||||||||||
| Checking and savings accounts |
$ | 462,803 | $ | — | $ | — | $ | — | $ | — | $ | 462,803 | ||||||||||||||||
| Money market accounts |
493,353 | — | — | — | — | — | 493,353 | |||||||||||||||||||||
| Certificate accounts |
124,152 | 620,773 | 39,554 | 2,520 | — | — | 786,999 | |||||||||||||||||||||
| Borrowings |
— | — | — | — | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total interest-bearing liabilities |
$ | 1,080,308 | $ | 620,773 | $ | 39,554 | $ | 2,520 | $ | — | $ | — | $ | 1,743,155 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Interest-earning assets less interest-bearing liabilities |
$ | (389,448 | ) | $ | (369,855 | ) | $ | 536,513 | $ | 511,541 | $ | 182,690 | $ | (53,455 | ) | $ | 417,986 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Cumulative interest-rate sensitivity gap (3) |
$ | (389,448 | ) | $ | (759,303 | ) | $ | (222,790 | ) | $ | 288,751 | $ | 471,441 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Cumulative interest-rate gap as a percentage of total assets at September 30, 2024 |
-16.54 | % | -32.25 | % | -9.46 | % | 12.26 | % | 20.02 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Cumulative interest-earning assets as a percentage of cumulative interest-bearing liabilities at September 30, 2024 |
63.95 | % | 55.36 | % | 87.20 | % | 116.56 | % | 127.05 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| (1) | Interest-earnings assets are included in the period in which the balances are expected to be redeployed and/or repriced as a result of anticipated prepayments, scheduled rate adjustments and contractual maturities. |
| (2) | Includes interest-bearing bank balances, FHLB Stock and Federal Funds Sold |
| (3) | Interest-rate sensitivity gap represents the difference between total interest-earning assets and total interest-bearing liabilities. |
40
Table of Contents
Certain shortcomings are inherent in the method of analysis presented in the foregoing table. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Additionally, certain assets, such as adjustable-rate loans, have features which restrict changes in interest rates both on a short-term basis and over the life of the asset. Further, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the table. Finally, the ability of many borrowers to service their adjustable-rate loans may decrease in the event of an interest rate increase.
Net Portfolio Value Analysis. Our interest rate sensitivity is also monitored by management through the use of a model which generates estimates of the changes in our net portfolio value (“NPV”) over a range of interest rate scenarios. NPV is the present value of expected cash flows from assets, liabilities, and off-balance sheet contracts. The NPV ratio, under any interest rate scenario, is defined as the NPV in that scenario divided by the market value of assets in the same scenario. The following table sets forth our NPV as of September 30, 2024, and reflects the changes to NPV as a result of immediate and sustained changes in interest rates as indicated.
| Change in Interest Rates | Net Portfolio Value | |||||||||||||||||||
| In Basis Points (Rate Shock) |
Amounts | $ Change | % Change | EVE/EVA1 | Change | |||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| 300 |
$ | 295,229 | $ | (17,731 | ) | -5.67 | % | 13.33 | % | (0.03 | ) | |||||||||
| 200 |
$ | 302,457 | $ | (10,503 | ) | -3.36 | % | 13.41 | % | 0.05 | ||||||||||
| 100 |
$ | 306,791 | $ | (6,169 | ) | -1.97 | % | 13.35 | % | (0.01 | ) | |||||||||
| Static |
$ | 312,960 | $ | — | 13.36 | % | ||||||||||||||
| (100) |
$ | 317,461 | $ | 4,501 | 1.44 | % | 13.33 | % | (0.03 | ) | ||||||||||
| (200) |
$ | 315,716 | $ | 2,756 | 0.88 | % | 13.08 | % | (0.28 | ) | ||||||||||
| (300) |
$ | 303,601 | $ | (9,359 | ) | -2.99 | % | 12.42 | % | (0.94 | ) | |||||||||
| 1 | Economic Value of Equity (EVE) divded by Economic Value of Assets (EVA) |
As is the case with the GAP Table, certain shortcomings are inherent in the methodology used in the above interest rate risk measurements. Modeling changes in NPV require the making of certain assumptions which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the models presented assume that the composition of our interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. Accordingly, although the NPV model provides an indication of interest rate risk exposure at a particular point in time, such model is not intended to and does not provide a precise forecast of the effect of changes in market interest rates on net interest income and will differ from actual results.
41
Table of Contents
Item 3. Quantitative and Qualitative Disclosures About Market Risk
A smaller reporting company, such as the Company, is not required to provide the information by this Item. Certain market risk disclosure is set forth in Item 2 above under “How We Manage Market Risk.”
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Management, with the participation of the Company’s Chief Executive Officer and its Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule l3a-l5 (e) promulgated under the Exchange Act) as of September 30, 2024. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective as of September 30, 2024 to ensure that the information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in FDIC rules and forms.
Changes in Internal Control Over Financial Reporting
There was no change in the Company’s internal control over financial reporting identified during the quarter ended September 30, 2024, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
42
Table of Contents
Table of Contents
Item 6. Exhibits
| Exhibit Number |
Description | |
| 31.1 | Rule 13a-14(a) Certification on the Principal Executive Officer | |
| 31.2 | Rule 13a-14(a) Certification on the Principal Financial Officer | |
| 32 | Section 1350 Certifications | |
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document | |
44
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Princeton Bancorp, Inc. | ||||||
| Date: November 14, 2024 | By: | /s/ Edward Dietzler | ||||
| Edward Dietzler | ||||||
| Chief Executive Officer and President | ||||||
| (Principal Executive Officer) | ||||||
| By: | /s/ George Rapp | |||||
| George Rapp | ||||||
| Executive Vice President and Chief Financial Officer | ||||||
| (Principal Financial and Accounting Officer) | ||||||
45
Exhibit 31.1
RULE 13A-14(a) CERTIFICATION
OF THE PRINCIPAL EXECUTIVE OFFICER
I, Edward Dietzler, Chief Executive Officer and President of Princeton Bancorp, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Princeton Bancorp, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, considering the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: November 14, 2024 | /s/ Edward Dietzler | |||||
| Edward Dietzler | ||||||
| Chief Executive Officer and President | ||||||
| (Principal Executive Officer) |
Exhibit 31.2
RULE 13A-14(a) CERTIFICATION
OF THE PRINCIPAL FINANCIAL OFFICER
I, George Rapp, Executive Vice President and Chief Financial Officer of Princeton Bancorp, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Princeton Bancorp, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: November 14, 2024 | /s/ George Rapp | |||||
| George Rapp | ||||||
| Executive Vice President and Chief Financial Officer | ||||||
| (Principal Financial and Accounting Officer) |
Exhibit 32
SECTION 1350 CERTIFICATIONS
In connection with the Quarterly Report of Princeton Bancorp, Inc. on Form 10-Q for the period ended September 30, 2024 as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Princeton Bancorp, Inc.
| /s/ Edward Dietzler | ||||||
| Edward Dietzler | ||||||
| Chief Executive Officer and President | ||||||
| (Principal Executive Officer) | ||||||
| /s/ George Rapp | ||||||
| George Rapp | ||||||
| Executive Vice President and Chief Financial Officer | ||||||
| (Principal Financial and Accounting Officer) | ||||||
| Date: November 14, 2024 | ||||||