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What changed in Princeton Bancorp, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Princeton Bancorp, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+283 added−233 removedSource: 10-K (2025-03-14) vs 10-K (2024-03-25)

Top changes in Princeton Bancorp, Inc.'s 2024 10-K

283 paragraphs added · 233 removed · 186 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

91 edited+26 added−9 removed113 unchanged
Biggest changeThe $2.0 million increase in the allowance for credit losses was attributed to a $1.8 million provision related to the Bank’s loan portfolio, $1.7 million for CECL day 1 provision and $601 thousand associated with purchased credit deteriorated loans, partially offset by $1.8 million of net-charge offs recorded during 2023 and $301 thousand related to the adoption of CECL effective January 1, 2023. 9 Table of Contents The following table presents a summary of our allowance for credit losses on loans and nonaccrual loans by total loans and a summary of net charge-offs by loan segments: As of and for Year Ended December 31, 2023 2022 (Dollars in thousands) Allowance for credit losses to total loans outstanding: 1.19 % 1.20 % Allowance for credit losses on loans $ 18,492 $ 16,461 Total loans outstanding $ 1,550,133 $ 1,372,824 Nonaccrual loans $ 6,708 $ 266 Allowance for credit losses to nonaccrual loans 275.7 % 6188.3 % Nonaccrual loans to total loans outstanding 0.43 % 0.02 % Net charge-offs (recoveries) during the period to average loans outstanding Commercial real estate 0.17 % 0.05 % Net charge-offs $ 1,659 $ 459 Average amount outstanding $ 986,974 $ 850,192 Commercial and industrial 0.00 % 0.00 % Net recoveries $ (2 ) $ — Average amount outstanding $ 42,850 $ 54,847 Construction 0.04 % 0.02 % Net charge-offs $ 148 $ 100 Average amount outstanding $ 371,037 $ 416,508 Residential first-lien 0.00 % 0.00 % Net charge-offs $ 2 $ — Average amount outstanding $ 40,831 $ 46,379 Home equity/consumer 0.00 % 0.00 % Net charge-offs $ — $ — Average amount outstanding $ 7,812 $ 7,575 Total loans 0.12 % 0.04 % Net charge-offs $ 1,807 $ 559 Average amount outstanding $ 1,449,504 $ 1,375,501 10 Table of Contents The following table presents the allocation of the allowance for credit losses by portfolio segment for the years presented.
Biggest changeThe following table presents a summary of our allowance for credit losses on loans and nonaccrual loans by total loans and a summary of net charge-offs by loan segments: As of and for Year Ended December 31, 2024 2023 (Dollars in thousands) Allowance for credit losses to total loans outstanding: 1.30 % 1.19 % Allowance for credit losses on loans $ 23,657 $ 18,492 Total loans outstanding $ 1,821,274 $ 1,550,133 Nonaccrual loans $ 26,841 $ 6,708 Allowance for credit losses to nonaccrual loans 88.1 % 275.7 % Nonaccrual loans to total loans outstanding 1.47 % 0.43 % Net charge-offs (recoveries) during the period to average loans outstanding Commercial real estate 0.01 % 0.17 % Net charge-offs $ 151 $ 1,659 Average amount outstanding $ 1,252,464 $ 986,974 Commercial and industrial 0.39 % 0.00 % Net charge-offs (recoveries) $ 237 $ (2 ) Average amount outstanding $ 60,665 $ 42,850 Construction -0.01 % 0.04 % Net charge-offs (recoveries) $ (35 ) $ 148 Average amount outstanding $ 289,851 $ 371,037 Residential first-lien 0.00 % 0.00 % Net charge-offs $ — $ 2 Average amount outstanding $ 48,392 $ 40,831 Home equity/consumer 0.00 % 0.00 % Net charge-offs $ — $ — Average amount outstanding $ 11,641 $ 7,812 Total loans 0.02 % 0.12 % Net charge-offs $ 353 $ 1,807 Average amount outstanding $ 1,663,013 $ 1,449,504 12 Table of Contents The following table presents the allocation of the allowance for credit losses by portfolio segment for the years presented.
Appraisal reports prepared by independent appraisers are reviewed by an outside third party prior to closing. Set forth below is a brief description of our three largest commercial real estate or multi-family loans: - The largest commercial real estate loan is a $31 million loan (split between two loans, $29 million and $2 million).
Appraisal reports prepared by independent appraisers are reviewed by an outside third party prior to closing. Set forth below is a brief description of our three largest commercial real estate or multi-family loans: - The largest commercial real estate loan is a $31 million loan (split between 2 loans $29 million and $2 million).
Our business, financial condition and results of operations are and will be affected by domestic economic conditions and the monetary and fiscal policies of the United States government and its agencies. The monetary policies of the Federal Reserve have a significant effect upon the operating results of commercial banks such as ours.
Monetary Policy. Our business, financial condition and results of operations are and will be affected by domestic economic conditions and the monetary and fiscal policies of the United States government and its agencies. The monetary policies of the Federal Reserve have a significant effect upon the operating results of commercial banks such as ours.
On September 29, 2020, New Jersey Governor Phil Murphy signed into law A.4721, extending through December 31, 2023, the 2.5% surtax currently imposed on Corporation Business Tax (CBT) filers with allocated taxable net income over $1 million.
On September 29, 2020, New Jersey Governor Phil Murphy signed into law A.4721, extending through December 31, 2023, the 2.5% surtax imposed on Corporation Business Tax (CBT) filers with allocated taxable net income over $1 million.
As of December 31, 2023, we maintained a “satisfactory” CRA rating. On October 24, 2023, the FDIC, the Federal Reserve, and the Office of the Comptroller of the Currency issued a final rule to strengthen and modernize the CRA regulations.
As of December 31, 2024, we maintained a “satisfactory” CRA rating. On October 24, 2023, the FDIC, the Federal Reserve, and the Office of the Comptroller of the Currency issued a final rule to strengthen and modernize the CRA regulations.
Consumer /HELOC loans – Loans in this segment are secured and repayment is dependent on the credit quality of the individual borrower and include junior-lien mortgages. Credits with Similar Risk Characteristics.
Consumer/HELOC loans – Loans in this segment are substantially secured and repayment is dependent on the credit quality of the individual borrower and include junior-lien mortgages. Credits with Similar Risk Characteristics.
The guidance defines a concentration as any of the following: (i) asset concentrations of 25% or more of Total Capital (loan related) or Tier 1 Capital (non-loan related) by individual borrower, small interrelated group of individuals, single repayment source or individual project; (ii) asset concentrations of 100% or more of Total Capital (loan related) or Tier 1 Capital (non-loan related) by industry, product line, type of collateral, or short-term obligations of one financial institution or affiliated group; (iii) funding concentrations from a single source representing 10% or more of Total Assets; or (iv) potentially volatile funding sources that when combined represent 25% or more of Total Assets (these sources may include brokered, large, high-rate, uninsured, internet-listing-service deposits, Federal funds purchased or other potentially volatile deposits or borrowings).
The guidance defines a concentration as any of the following: (i) asset concentrations of 25% or more of Total Capital (loan related) or Tier 1 Capital (non-loan related) by individual borrower, small interrelated group of individuals, single repayment source or individual project; (ii) asset concentrations of 100% or more of Total Capital (loan related) 22 Table of Contents or Tier 1 Capital (non-loan related) by industry, product line, type of collateral, or short-term obligations of one financial institution or affiliated group; (iii) funding concentrations from a single source representing 10% or more of Total Assets; or (iv) potentially volatile funding sources that when combined represent 25% or more of Total Assets (these sources may include brokered, large, high-rate, uninsured, internet-listing-service deposits, Federal funds purchased or other potentially volatile deposits or borrowings).
The area served by the Bank, through its 29 branches, is generally an area within an approximate 50-mile radius of Princeton, NJ, including parts of Burlington, Camden, Gloucester, Hunterdon, Mercer, Middlesex, Ocean, and Somerset Counties in New Jersey, and additional areas in portions of Philadelphia, Montgomery and Bucks Counties in Pennsylvania.
The area served by the Bank, through its 33 branches, is generally an area within an approximate 50-mile radius of Princeton, NJ, including parts of Burlington, Camden, Gloucester, Hunterdon, Mercer, Middlesex, Ocean, and Somerset Counties in New Jersey, and additional areas in portions of Philadelphia, Montgomery and Bucks Counties in Pennsylvania.
In addition, undercapitalized organizations are subject to various regulatory restrictions, and the appropriate federal banking agency also may take any number of discretionary supervisory actions. At December 31, 2023, the Bank was not subject to any of the above mentioned restrictions. Community Reinvestment Act.
In addition, undercapitalized organizations are subject to various regulatory restrictions, and the appropriate federal banking agency also may take any number of discretionary supervisory actions. At December 31, 2024, the Bank was not subject to any of the above mentioned restrictions. Community Reinvestment Act.
It is also the policy of the Federal Reserve that a bank holding company generally may only pay dividends on common stock out of net income available to common shareholders over the past twelve months and only if the prospective rate of earnings retention appears consistent with a bank holding company’s capital needs, asset quality, and overall financial condition.
It is also the policy of the Federal Reserve that a bank holding company generally may only pay dividends on common stock out of net income available to common shareholders over the past twelve months and only if 19 Table of Contents the prospective rate of earnings retention appears consistent with a bank holding company’s capital needs, asset quality, and overall financial condition.
Regulations set forth detailed procedures and criteria for implementing prompt corrective action in the case of any institution which is not adequately capitalized. The following table shows the amount of capital associated with the different capital categories set forth in the prompt corrective action regulations.
Regulations set forth detailed procedures and criteria for implementing prompt corrective action in the case of 20 Table of Contents any institution which is not adequately capitalized. The following table shows the amount of capital associated with the different capital categories set forth in the prompt corrective action regulations.
This process includes estimates which involve modeling loss projections attributed to existing loan balances, and considering historical experience, current conditions, and future expectations for segments of loans over a reasonable and supportable forecast period. The historical information used is that experienced by the Company or by a selection of peer banks, when appropriate.
This process includes estimates which involve modeling loss projections attributed to existing loan balances, and 10 Table of Contents considering historical experience, current conditions, and future expectations for segments of loans over a reasonable and supportable forecast period. The historical information used is that experienced by the Company or by a selection of peer banks, when appropriate.
Risks and exposures related to cyber-security attacks are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of third-party service providers, internet banking, mobile banking, and other technology-based products and services by us and our clients. Other Laws and Regulations.
Risks and exposures related to cyber-security attacks are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of third-party service providers, internet banking, mobile banking, and other technology-based products and services by us and our clients. Compensation.
In these cases, expected credit loss is measured as the difference between amortized cost basis and the loan and the fair value of the collateral less disposal costs (such as sales costs, transfer taxes and unpaid real estate taxes). Allowance for Credit Losses on Off-Balance Sheet Credit Exposures, Including Unfunded Loan Commitments.
In these cases, expected credit loss is measured as the difference between amortized cost basis and the loan and the fair value of the collateral less disposal costs (such as sales costs, transfer taxes and unpaid real estate taxes). 11 Table of Contents Allowance for Credit Losses on Off-Balance Sheet Credit Exposures, Including Unfunded Loan Commitments.
The assessment base for insured depository institutions is the average consolidated total assets during an assessment period less average tangible equity capital during that assessment period. 16 Table of Contents The limit for federal deposit insurance is $250,000 and the cash limit of Securities Investor Protection Corporation protection is also $250,000. The FDIC has authority to increase insurance assessments.
The assessment base for insured depository institutions is the average consolidated total assets during an assessment period less average tangible equity capital during that assessment period. The limit for federal deposit insurance is $250,000 and the cash limit of Securities Investor Protection Corporation protection is also $250,000. The FDIC has authority to increase insurance assessments.
The credit loss estimation process involves procedures to appropriately consider the unique characteristics of loan portfolio segments, which consist of commercial real estate loans, construction loans, commercial and industrial loans, residential loans and home equity line of credit (HELOC)/consumer loans. These segments are further disaggregated into loan classes, the level at which credit risk is monitored.
The credit loss estimation process involves procedures to appropriately consider the unique characteristics of loan portfolio segments, which consist of commercial real estate loans, construction loans, commercial and industrial loans, residential loans and HELOC/consumer loans. These segments are further disaggregated into loan classes, the level at which credit risk is monitored.
The proceeds are being used to construct a 9-story residential building consisting of 89 residential units in Brooklyn, NY. The project is approximately 14% complete.
The proceeds are being used to construct a 9-story residential building consisting of 89 residential units in Brooklyn, NY. The project is approximately 88% complete.
The DIF has a designated reserve (target) ratio (“DRR”) of 2.00% of the estimated insured deposits. The FDIC has adopted a restoration plan to ensure that the DIF reserve ratio reaches 1.35 percent within 8 years of establishment, because the reserve ratio was 1.30 percent as of June 30, 2020.
The DIF has a designated reserve (target) ratio (“DRR”) of 2.00% of the estimated insured deposits. When the reserve ratio was 1.30 percent as of June 30, 2020, the FDIC adopted a restoration plan to ensure that the DIF reserve ratio reaches 1.35 percent within 8 years.
Prudent fee income opportunities are sought to supplement net interest income but may be limited by our efforts to remain competitive and by regulatory constraints. Staffing As of December 31, 2023, we had approximately 206 full-time equivalent employees. Supervision and Regulation General. We are extensively regulated under both federal and state law.
Prudent fee income opportunities are sought to supplement net interest income but may be limited by our efforts to remain competitive and by regulatory constraints. Staffing As of December 31, 2024, we had approximately 247 full-time equivalent employees. Supervision and Regulation General. We are extensively regulated under both federal and state law.
The other statement indicates that a financial institution’s management is expected to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption, and maintenance of the institution’s operations after a cyber-attack involving destructive malware.
The other statement indicates that a financial institution’s management is expected to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption, and maintenance of the 23 Table of Contents institution’s operations after a cyber-attack involving destructive malware.
The borrower is paying in accordance with the loan terms as of December 31, 2023. Residential First-Lien Mortgage Loans. We offer a narrow range of prime residential first-lien mortgage loans at competitive rates. Our customers, stockholders and local real estate brokers are a significant source of these loans.
The borrower is paying in accordance with the loan terms as of December 31, 2024. 8 Table of Contents Residential First-Lien Mortgage Loans. We offer a narrow range of prime residential first-lien mortgage loans at competitive rates. Our customers, stockholders and local real estate brokers are a significant source of these loans.
The property is an eight-story mixed use property located in Queens, NY with 49 residential units and two commercial units with a loan-to-value of 56%. The borrower is paying in accordance with the loan terms as of December 31, 2023. Commercial and Industrial Loans.
The property is an eight-story mixed use property located in Queens, NY with 49 residential units and two commercial units with a LTV of 56%. The borrower is paying in accordance with the loan terms as of December 31, 2024. Commercial and Industrial Loans.
Analysis of Allowance for Credit Losses. On January 1, 2023, the Company adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL” or “ASC 326”) , which requires the recognition of the allowance for credit losses be estimated using the CECL methodology.
Analysis of Allowance for Credit Losses. On January 1, 2023, the Company adopted Accounting Standard Update (“ASU”) 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL” or “ASC 326”) , which requires the recognition of the allowance for credit losses be estimated using the CECL methodology.
Competition We have substantial competition in originating commercial and consumer loans in our market area. This competition comes principally from other banks, savings institutions, mortgage banking companies and other lenders.
Competition We have substantial competition in originating commercial and consumer loans in our market area. This competition comes principally from other banks, savings institutions, mortgage banking companies and other 5 Table of Contents lenders.
The allowance for credit losses on off-balance sheet credit exposures is adjusted as credit loss expense. As of December 31, 2023, the allowance for credit losses on loans was $18.5 million as compared to $16.5 million as of December 31, 2022.
The allowance for credit losses on off-balance sheet credit exposures is adjusted as credit loss expense. As of December 31, 2024, the allowance for credit losses on loans was $23.7 million as compared to $18.5 million as of December 31, 2023.
At December 31, 2023, the Bank exceeded all its regulatory capital requirements. 17 Table of Contents Any banking organization that fails any of the capital requirements is subject to possible enforcement action by the FDIC.
At December 31, 2024, the Bank exceeded all its regulatory capital requirements. Any banking organization that fails any of the capital requirements is subject to possible enforcement action by the FDIC.
As originally enacted, the surtax rate was scheduled to decrease from 2.5% to 1.5% for privilege periods beginning on or after January 1, 2020 through December 31, 2021 and expire for privilege periods beginning on or after January 1, 2022.
As originally enacted, the surtax rate was scheduled to decrease from 2.5% to 1.5% for privilege periods beginning on or after January 1, 2020 through December 31, 2021 and expire for privilege periods beginning on or after January 1, 2022. On June 28, 2024, New Jersey Gov.
As a public company with our securities listed for trading on the NASDAQ stock market, the Company is subject to the disclosure and regulatory requirements of the SEC, including under the Securities Act of 1933, as amended, and the Exchange Act, and the rules and listing standards of the NASDAQ stock market. Monetary Policy.
As a public company with our securities listed for trading on the NASDAQ stock market, the Company is subject to the disclosure and regulatory requirements of the SEC, including under the Securities Act of 1933, as amended, and the Exchange Act, and the rules and listing standards of the NASDAQ stock market. Pause on Major Federal Reserve Rulemakings.
One statement indicates that financial institutions should design multiple layers of security controls to establish lines of defense and ensure their risk management processes also address the risk posed by compromised client credentials, including security measures to reliably authenticate clients accessing internet-based services of the financial institution.
Federal regulators have issued two related statements regarding cyber-security. One statement indicates that financial institutions should design multiple layers of security controls to establish lines of defense and ensure their risk management processes also address the risk posed by compromised client credentials, including security measures to reliably authenticate clients accessing internet-based services of the financial institution.
The borrower is paying in accordance with the loan terms as of December 31, 2023. - The second largest commercial and industrial loan is a $5.0 million loan. The proceeds were used as a fully drawn business line of credit for general purposes. The loan is secured by real estate and cash collateral.
The proceeds were used as a fully drawn business line of credit for general purposes. The loan is secured by real estate and cash collateral. The borrower is paying in accordance with the loan terms as of December 31, 2024. - The third largest commercial and industrial loan is a $7.6 million loan.
The Company is using Discounted Cash Flow Method (“DCF”) in estimating the component of the allowance for credit losses for loans that share similar risk characteristics with other loans, such loans are segregated into loan segments.
The Company is using DCF in estimating the component of the allowance for credit losses for loans that share similar risk characteristics with other loans, such loans are segregated into loan segments.
At December 31, 2023, the Bank’s lending limit to one borrower under regulatory guidelines was $38.1 million, but our Board of Directors has set an internal lending limit of approximately 75.0% of the legal lending limit or $28.6 million. Concentration and Risk Guidance .
At December 31, 2024, the Bank’s lending limit to one borrower under regulatory guidelines was $40.6 million, but our Board of Directors has set an internal lending limit of approximately 75.0% of the legal lending limit or $30.5 million. Concentration and Risk Guidance .
Premises and Equipment Premises and equipment, net increased $2.7 million from December 31, 2022 to December 31, 2023 resulting from $2.5 million acquired in connection with the Noah acquisition, $1.7 million in a combination of purchases of new equipment and improvements, partially offset by $1.5 million in depreciation and disposals.
Premises and Equipment Premises and equipment, net increased $3.4 million from December 31, 2023 to December 31, 2024 resulting from $3.5 million in premises and equipment acquired in connection with the CFC acquisition, and $1.6 million in a combination of purchases of new equipment and improvements, partially offset by $1.7 million in depreciation and disposals.
Securities that are classified as AFS are carried at fair value with unrealized gains and losses, net of income taxes, reported as a component of equity within accumulated other comprehensive income (loss). Securities available-for-sale, which are carried at fair value, increased $8.0 million, or 9.5%, to $91.4 million at December 31, 2023 from $83.4 million at December 31, 2022.
Securities that are classified as AFS are carried at fair value with unrealized gains and losses, net of income taxes, reported as a component of equity within accumulated other comprehensive income (loss). Securities available-for-sale, which are carried at fair value, increased $155.8 million, or 170.6%, to $247.2 million at December 31, 2024 from $91.4 million at December 31, 2023.
As a result, the Bank became the sole direct subsidiary of the Company, the Company became the holding company for the Bank and the stockholders of the Bank became stockholders of the Company. As of December 31, 2023, the Company had 209 total employees and 206 full-time equivalent employees.
As a result, the Bank became the sole direct subsidiary of the Company, the Company became the holding company for the Bank and the stockholders of the Bank became stockholders of the Company. As of December 31, 2024, the Company had 249 total employees and 247 full-time equivalent employees.
Accrued Interest Receivable and Other Assets Accrued interest receivable increased $1.3 million from December 31, 2022 to December 31, 2023, primarily due to an increase in the outstanding principal balance of loans at December 31, 2023. Deferred taxes increased $3.9 million from December 31, 2022 to December 31, 2023, primarily due to the Noah acquisition.
Accrued Interest Receivable and Other Assets Accrued interest receivable increased $1.9 million from December 31, 2023 to December 31, 2024, primarily due to an increase in the outstanding principal balance of loans and investment securities at December 31, 2024. Deferred taxes increased $8.8 million from December 31, 2023 to December 31, 2024, primarily due to the CFC acquisition.
Individually Evaluated Financial Assets. For a loan that does not share risk characteristics with other loans, expected credit loss is measured based on net realizable value.
Individually Evaluated Financial Assets. For a loan that does not share risk characteristics with other loans, expected credit loss is measured based on net realizable value. We generally consider these to be nonperforming loans.
The project’s phase 1 is approximately 99% complete. The borrower is paying in accordance with the loan terms as of December 31, 2023. 7 Table of Contents - The third largest construction loan is a $25.0 million loan to purchase land for future construction of a mixed-use property consisting of residential units and commercial/retail office space in Jersey City, NJ.
The borrower is paying in accordance with the loan terms as of December 31, 2024. - The third largest construction loan is a $25.0 million loan to purchase land for future construction of a mixed-use property consisting of residential units and commercial/retail office space in Jersey City, NJ.
December 31, 2023 2022 (Dollars in thousands) Commercial real estate $ 4,485 $ — Commercial and industrial 2,116 — Construction — 148 Residential first-lien mortgage 107 118 Home equity/consumer — — Total nonaccrual loans 6,708 266 Troubled debt restructurings (TDRs) - performing — 5,882 Accruing loans 90 days or more past due — 184 Total nonperforming loans and performing TDRs 6,708 6,332 Other real estate owned — — Total nonperforming assets and performing TDRs $ 6,708 $ 6,332 See Note 5 - “Loans Receivable” in the Notes to Consolidated Financial Statements within this Form 10-K for additional information regarding our loans not classified as nonperforming assets as of December 31, 2023 and for other information on our loan ratings of special mention, substandard and doubtful, all of which contain varying degrees of potential credit problems that could result in the loans being classified as nonaccrual, past-due 90 or more days or troubled debt restructurings in a future period.
December 31, 2024 2023 (Dollars in thousands) Commercial real estate $ 26,101 $ 4,485 Commercial and industrial 627 2,116 Construction — — Residential first-lien mortgage 113 107 Home equity/consumer — — Total nonaccrual loans 26,841 6,708 Accruing loans 90 days or more past due — — Total nonperforming loans 26,841 6,708 Other real estate owned 295 — Total nonperforming assets $ 27,136 $ 6,708 See Note 5 - “Loans Receivable” in the Notes to Consolidated Financial Statements within this Form 10-K for additional information regarding our loans not classified as nonperforming assets as of December 31, 2024 and for other information on our loan ratings of special mention, substandard and doubtful, all of which contain varying degrees of potential credit problems that could result in the loans being classified as nonaccrual, past-due 90 or more days or modifications to borrowers with financial difficulty in a future period.
At December 31, 2023, commercial and industrial loans amounted in the aggregate to $51.0 million, or 3.3%, of the total loan portfolio . Our commercial and industrial portfolio has increased $22.1 million, or 76.6%, since December 31, 2022, when commercial and industrial loans amounted to $31.3 million, or 2.3%, of our total loan portfolio.
At December 31, 2024, commercial and industrial loans amounted in the aggregate to $93.0 million, or 5.1%, of the total loan portfolio . Our commercial and industrial portfolio has increased $42.0 million, or 82.2%, since December 31, 2023, when commercial and industrial loans amounted to $51.0 million, or 3.3%, of our total loan portfolio.
The increase was primarily due to $8.4 million in purchases of available-for-sale securities during 2023, the addition of $6.5 million from the Noah acquisition, and $1.1 million attributed to a reduction in the unrealized losses associated with the available-for-sale portfolio, partially offset by principal repayments of $4.9 million and $1.6 million of maturities or calls. 11 Table of Contents The following table summarizes the weighted-average yields based on maturity distribution schedule of the amortized cost of AFS debt securities at December 31, 2023.
The increase was primarily due to $179.5 million in purchases of available-for-sale securities during 2024, the addition of $13.9 million from the CFC acquisition, partially offset by an increase of $2.5 million attributed to the unrealized losses associated with the available-for-sale portfolio, principal repayments of $34.5 million and $300 thousand of maturities or calls. 13 Table of Contents The following table summarizes the weighted-average yields based on maturity distribution schedule of the amortized cost of AFS debt securities at December 31, 2024.
The commercial real estate and multi-family loan portfolio consists primarily of loans secured by small office buildings, strip shopping centers, small apartment buildings and other properties used for commercial and multi-family purposes located in the Company’s market area. At December 31, 2023, the average commercial and multi-family real estate loan size was approximately $1.9 million.
The commercial real estate and multi-family loan portfolio consists primarily of loans secured by small office buildings, strip shopping centers, small apartment buildings and other properties used for commercial and multi-family purposes located in the Company’s market area.
(Dollars in thousands) 2023 2022 Amount Loan Balance as % of Total Loans Amount Loan Balance as % of Total Loans Commercial real estate $ 16,047 73.7 % $ 8,554 63.6 % Commercial and industrial 488 3.3 % 271 2.3 % Construction 1,145 20.0 % 6,389 30.4 % Residential first-lien mortgage 725 2.5 % 236 3.1 % Home equity/consumer 87 0.5 % 45 0.6 % Unallocated — 0.0 % 966 0.0 % Total loans $ 18,492 100.0 % $ 16,461 100.0 % See Note 5 – “Loans Receivable” in the Notes to Consolidated Financial Statements within this Form 10-K for additional information regarding our allowance for credit losses.
(Dollars in thousands) 2024 2023 Amount Loan Balance as % of Total Loans Amount Loan Balance as % of Total Loans Commercial real estate $ 20,821 76.1 % $ 16,047 73.7 % Commercial and industrial 1,173 5.1 % 488 3.3 % Construction 609 14.1 % 1,145 20.0 % Residential first-lien mortgage 893 3.7 % 725 2.5 % Home equity/consumer 161 1.0 % 87 0.5 % Total loans $ 23,657 100.0 % $ 18,492 100.0 % See Note 5 – “Loans Receivable” in the Notes to Consolidated Financial Statements within this Form 10-K for additional information regarding our allowance for credit losses.
Although from time to time we advertise in local newspapers, our primary source of deposit relationships is satisfied customers. We offer a range of direct deposit products ranging from social security and disability payments to direct deposit of payroll checks. During normal business practices the Bank will utilize deposits originated by brokers to support the Bank’s funding needs.
We offer a range of direct deposit products ranging from social security and disability payments to direct deposit of payroll checks. During normal business practices the Bank will utilize deposits originated by brokers to support the Bank’s funding needs.
Increased loss provisions associated with the failures of Silicon Valley Bank, Signature Bank and First Republic Bank that reduced the DIF balance coupled with strong growth in uninsured deposits, resulted in the reserve ratio declining to 1.10 percent as of June 30, 2023. The Restoration Plan maintains the current schedule of assessment rates for all insured depository institutions.
However, increased loss provisions associated with the failures of Silicon Valley Bank, Signature Bank and First Republic Bank in 2023 that reduced the DIF balance coupled with strong growth in uninsured deposits, resulted in the reserve ratio declining to 1.10 percent as of June 30, 2023. The reserve ratio increased to 1.21 percent as of June 30, 2024.
Interest rates are either fixed or adjustable, based upon designated market indices such as the Wall Street Journal prime rate plus a margin. Commercial real estate and multi-family real estate lending involves different risks from single-family residential lending.
Most of the loans are structured with balloon payments of 5 years or less and amortization periods of up to 25 years. Interest rates are either fixed or adjustable, based upon designated market indices such as the Wall Street Journal prime rate plus a margin. Commercial real estate and multi-family real estate lending involves different risks from single-family residential lending.
This supervisory framework could materially impact the conduct and profitability of our activities. 15 Table of Contents To the extent that the following information describes statutory and regulatory provisions, it is qualified in its entirety by reference to the particular statutory and regulatory provisions.
These regulators have broad discretion to impose restrictions and limitations on our operations. This supervisory framework could materially impact the conduct and profitability of our activities. To the extent that the following information describes statutory and regulatory provisions, it is qualified in its entirety by reference to the particular statutory and regulatory provisions.
At December 31, 2023, commercial real estate and multi-family loans amounted in the aggregate to $1.14 billion, or 73.8% of the total loans receivable. Our commercial real estate portfolio has increased $269.3 million or 30.8% since December 31, 2022, when commercial real estate and multi-family loans amounted to $873.6 million, or 63.7%, of our total portfolio.
At December 31, 2024, commercial real estate and multi-family loans amounted in the aggregate to $1.39 billion, or 76.1% of the total loans receivable. Our commercial real estate portfolio has increased $242.2 million or 21.1% since December 31, 2023, when commercial real estate and multi-family loans amounted to $1.14 billion, or 73.8%, of our total portfolio.
Dividends are required to be paid to the industry should the DRR exceed 1.50%, but grants the FDIC sole discretion in determining whether to suspend or limit the declaration or payment of dividends.
The Restoration Plan maintains the current schedule of assessment rates for all insured depository institutions. Dividends are required to be paid to the industry should the DRR exceed 1.50%, but grants the FDIC sole discretion in determining whether to suspend or limit the declaration or payment of dividends.
Item 1. Business General The Bank of Princeton (the “Bank”) was incorporated on March 5, 2007 under the laws of the State of New Jersey and is a New Jersey state-chartered banking institution.
Item 1. Business General Princeton Bancorp, Inc. is a Pennsylvania corporation formed in 2022 to be the holding company for The Bank of Princeton (the “Bank”). The Bank was incorporated on March 5, 2007 under the laws of the State of New Jersey and is a New Jersey state-chartered banking institution.
Bank owned life insurance increased $6.2 million from December 31, 2022 to December 31, 2023, primarily due to $5.0 million in purchases and a $1.3 million increase in cash surrender value resulting from the increase in interest rates.
Bank owned life insurance increased $13.3 million from December 31, 2023 to December 31, 2024, primarily due to $8.7 million acquired from CFC, $2.9 million in purchases and a $1.7 million increase in cash surrender value resulting from the increase in interest rates. Other assets increased $1.3 million from December 31, 2023 to December 31, 2024.
As of December 31, 2023 2022 Uninsured time deposits maturity (Dollars in thousands) Three months or less $ 10,796 $ 1,822 Over three through six months 22,609 6,060 Over six through twelve months 28,715 14,586 Over twelve months 6,678 19,942 Total uninsured time deposits $ 68,798 $ 42,410 The uninsured portion of deposits is any balance that exceeds the FDIC insurance limit of $250,000.
As of December 31, 2024 2023 Uninsured time deposits maturity (Dollars in thousands) Three months or less $ 18,756 $ 10,796 Over three through six months 28,202 22,609 Over six through twelve months 40,150 28,715 Over twelve months 2,553 6,678 Total uninsured time deposits $ 89,661 $ 68,798 The uninsured portion of deposits is any balance that exceeds the FDIC insurance limit of $250,000.
At December 31, 2023 the balance of brokered deposits was $87.2 million, a decrease of $20.2 million from the $107.4 million outstanding at December 31, 2022.
At December 31, 2024 the balance of brokered deposits was $44.6 million, a decrease of $42.6 million from the $87.2 million outstanding at December 31, 2023.
The borrower is paying in accordance with the loan terms as of December 31, 2023. 6 Table of Contents - The third largest commercial real estate loan is a $20.7 million loan. The proceeds were used to refinance an existing loan.
The property is an industrial warehouse located in East Windsor, NJ with a LTV of 55%. The borrower is paying in accordance with the loan terms as of December 31, 2024. - The third largest commercial real estate loan is a $20.7 million loan. The proceeds were used to refinance an existing loan.
The Bank is also subject to the supervision and examination by the FDIC, as their primary federal regulator and as the insurer of the Banks’ deposits. The Bank is also regulated and examined by the New Jersey Department of Banking and Insurance (the “Department”). These regulators have broad discretion to impose restrictions and limitations on our operations.
The Bank is also subject to the supervision and examination by the FDIC, as their primary 17 Table of Contents federal regulator and as the insurer of the Banks’ deposits. The Bank is also regulated and examined by the New Jersey Department of Banking and Insurance (the “Department”).
At December 31, 2023, there were no customers whose deposit balances individually exceeded 5% of total deposits. 13 Table of Contents The following table presents the average balance of our deposit accounts and the average cost of funds for each category of our deposits, total uninsured deposits, and amount of uninsured portion of time deposits by maturity. 2023 2022 Average Amount Average Rate Paid Average Amount Average Rate Paid (Dollars in thousands) Non-interest-bearing checking $ 248,233 0.00 % $ 280,729 0.00 % Demand interest-bearing 250,312 1.46 % 261,951 0.31 % Money market 311,478 3.07 % 353,224 0.44 % Savings deposits 159,175 1.72 % 220,222 0.32 % Time deposits 538,343 3.17 % 293,627 0.99 % $ 1,507,541 2.19 % $ 1,409,753 0.43 % Amount Amount Uninsured deposits $ 427,384 $ 456,729 The following table represents the uninsured time deposits by maturity.
At December 31, 2024, there were no customers whose deposit balances individually exceeded 5% of total deposits. 15 Table of Contents The following table presents the average balance of our deposit accounts and the average cost of funds for each category of our deposits, total uninsured deposits, and amount of uninsured portion of time deposits by maturity. 2024 2023 Average Amount Average Rate Paid Average Amount Average Rate Paid (Dollars in thousands) Non-interest-bearing checking $ 264,418 0.00 % $ 248,233 0.00 % Demand interest-bearing 258,462 1.91 % 250,312 1.46 % Money market 421,934 3.79 % 311,478 3.07 % Savings deposits 157,538 2.52 % 159,175 1.72 % Time deposits 724,060 4.35 % 538,343 3.17 % $ 1,826,412 3.09 % $ 1,507,541 2.19 % Amount Amount Uninsured deposits $ 573,727 $ 427,384 The following table represents the uninsured time deposits by maturity.
Our construction loans portfolio has decreased $107.4 million or 25.7% since December 31, 2022, when construction loans amounted to $417.5 million, or 30.5% of our total loans receivable. Construction lending represents a segment of our loan portfolio and is driven primarily by market conditions.
Our construction loans portfolio has decreased $53.0 million or 17.1% since December 31, 2023, when construction loans amounted to $310.2 million, or 20.0% of our total loans receivable. Construction lending represents a segment of our loan portfolio and is driven primarily by market conditions.
At December 31, 2023, our residential first-lien loans amounted to $38.0 million, or 2.5%, of our total portfolio. Our residential first-lien loan portfolio has decreased $5.1 million, or 11.8%, since December 31, 2022, when residential first-lien loans amounted to $43.1 million, or 3.2%, of our total loan portfolio. Home Equity Loans and Consumer Loans.
At December 31, 2024, our residential first-lien loans amounted to $68.0 million, or 3.7%, of our total portfolio. Our residential first-lien loan portfolio has increased $30.0 million, or 78.8%, since December 31, 2023, when residential first-lien loans amounted to $38.0 million, or 2.5%, of our total loan portfolio.
The increase was primarily the result of the increase in interest rates offered on deposit accounts during 2023 as well as the increase in deposit balances due partially to the Noah acquisition. Lease liabilities increased $7.5 million due primarily to the Noah acquisition. Other liabilities increased $454,000.
The increase was primarily the result of the increase in interest rates offered on deposit accounts during 2024 as well as the increase in deposit balances due partially to the CFC acquisition.
Government Sponsored Enterprises (GSEs) 2.96 % 3.06 % 2.50 % 3.26 % 3.24 % U.S. government agencies — 2.84 % 2.00 % 2.33 % 2.32 % Obligations of state and political subdivisions — 3.21 % 2.59 % 2.36 % 2.62 % Small business association (SBA) securities — 7.16 % 6.74 % 5.38 % 6.33 % Total 2.96 % 3.31 % 2.75 % 3.11 % 3.00 % At December 31, 2023, there were no security holdings of any one issuer in an amount greater than 10.0% of our total stockholders’ equity.
Government Sponsored Enterprises (GSEs) 3.56 % 4.56 % 2.52 % 5.09 % 5.07 % U.S. government agencies — 2.84 % 4.24 % 2.33 % 3.64 % Obligations of state and political subdivisions 3.54 % 2.96 % 2.55 % 2.34 % 2.63 % Small business association (SBA) securities — 7.33 % 4.57 % 5.92 % 5.87 % U.S. treasury securities 4.88 % 3.93 % — — 4.32 % Total 4.32 % 3.64 % 2.89 % 5.00 % 4.61 % At December 31, 2024, there were no security holdings of any one issuer in an amount greater than 10.0% of our total stockholders’ equity.
Results for reporting periods beginning January 1, 2023 are presented under ASC 326 while prior periods continue to be reported in accordance with previous applicable GAAP. The Company recorded a net decrease of $284 thousand to retained earnings as of January 1, 2023 for the cumulative effect of adopting ASC 326, which included a net deferred asset of $110 thousand.
The Company recorded a net decrease of $284 thousand to retained earnings as of January 1, 2023 for the cumulative effect of adopting ASC 326, which included a net deferred asset of $110 thousand.
Deposit competition could adversely affect our net interest income and net income, and our ability to generate the funds we require for our lending or other operations.
Deposit competition could adversely affect our net interest income and net income, and our ability to generate the funds we require for our lending or other operations. As a result, we may need to seek other sources of funds that may be more expensive to obtain and could increase our cost of funds.
Without loaning money, however, a bank cannot generate enough net interest income to be profitable. The risk involved in each loan must be carefully evaluated before the loan is made.
Loan growth is driven by customer demand, which in turn is influenced by individual and business indebtedness and consumer demand for goods. Loaning money will always entail some risk. Without loaning money, however, a bank cannot generate enough net interest income to be profitable. The risk involved in each loan must be carefully evaluated before the loan is made.
Our commercial business loans have historically been underwritten based on the creditworthiness of the borrower and generally require a debt service coverage ratio of at least 1.20 X. In addition, we generally obtain personal guarantees from the principals of the borrower with respect to commercial business loans and frequently obtain real estate as additional collateral.
Our commercial business loans have historically been underwritten based on the creditworthiness of the borrower and generally require a debt service coverage ratio of at least 1.25 X.
We generate these loans and lines of credit primarily through direct marketing at our branch locations, referrals from local real estate brokers and, to a lesser extent, by targeted direct marketing programs such as mail and electronic mail. Consumer loans are solicited on a direct basis and upon referrals from our directors, stockholders and existing customers. Loan s Receivable, Net.
This substantial increase was due to our acquisition of CFC in August 2024. Home Equity Loans and Consumer Loans. We generate these loans and lines of credit primarily through direct marketing at our branch locations, referrals from local real estate brokers and, to a lesser extent, by targeted direct marketing programs such as mail and electronic mail.
At December 31, 2023, the SBIC had a book value of $2.4 million. The unfunded commitment to the partnership was $2.4 million at December 31, 2023. The Company invested in a CRA eligible investment that acquires SBA loans within qualifying census tracts in which the Bank operates. The Company decides which loans are included in its investment.
The Company invested in a CRA eligible investment that acquires SBA loans within qualifying census tracts in which the Bank operates. The Company decides which loans are included in its investment. The Company had an outstanding commitment to fund up to $6.9 million and currently has $6.9 million funded. There is currently no unfunded commitment at December 31, 2024.
The increase was attributable to an increase in commercial real estate loans of $269.3 million and an increase in commercial and industrial loans of $22.1 million, partially offset by a decrease of $107.4 million in construction loans.
The increase was attributable to an increase in commercial real estate loans of $242.2 million, an increase in commercial and industrial loans of $42.0 million and an increase in residential first-lien mortgage loans of $30.0, partially offset by a decrease of $53.0 million in construction loans.
The Federal Reserve’s Regulation W and relevant federal statutes and regulations, among other authorities, impose significant limitations on transactions in which the Bank may engage with us or with other affiliates, including per-affiliate and aggregate limits on affiliate transactions. 19 Table of Contents Federal Reserve Regulation O restricts loans to the Bank and its parent holding company’s insiders, which includes directors, certain officers, and principal shareholders and their respective related interests.
The Federal Reserve’s Regulation W and relevant federal statutes and regulations, among other authorities, impose significant limitations on transactions in which the Bank may engage with us or with other affiliates, including per-affiliate and aggregate limits on affiliate transactions.
Set forth below is a brief description of our three largest commercial and industrial loans: - The largest commercial and industrial loan is a $9.9 million loan. The proceeds were used for business purposes and completion of capital improvements. The collateral is a lien on all business assets.
The proceeds were used for business purposes and completion of capital improvements. The collateral is a lien on all business assets. The borrower is paying in accordance with the loan terms as of December 31, 2024. - The second largest commercial and industrial loan is a $9.4 million loan.
Federal Funds Sold Federal funds sold increased from $28.1 million at December 31, 2022 to $116.0 million at December 31, 2023, an increase of $88.0 million, or 313.6%. The increase in federal funds sold was primarily due to an increase in deposits partially offset by an increase in loans.
Federal Funds Sold Federal funds sold decreased from $116.0 million at December 31, 2023 to $83.7 million at December 31, 2024, a decrease of $32.3 million, or 27.9%. The decrease in federal funds sold was primarily due to increases in investment securities and in loans and partially offset by an increase in deposits.
Although terms for commercial real estate and multi-family loans vary, our underwriting standards generally allow for terms up to 7 years with loan-to-value ratios of not more than 75%. Most of the loans are structured with balloon payments of 5 years or less and amortization periods of up to 25 years.
At December 31, 2024, the average commercial and multi-family real estate loan size was approximately $1.8 million. 6 Table of Contents Although terms for commercial real estate and multi-family loans vary, our underwriting standards generally allow for terms up to 7 years with loan-to-value ratios of not more than 75%.
The borrower is paying in accordance with the loan terms as of December 31, 2023. - The third largest commercial and industrial loan is a $3.5 million loan. The proceeds were used for working capital for future business opportunities. The loan is unsecured. The borrower is paying in accordance with the loan terms as of December 31, 2023. Construction Loans.
The proceeds were used for working capital for future business opportunities. The loan is unsecured. The borrower is paying in accordance with the loan terms as of December 31, 2024. Construction Loans. We originate various types of commercial loans, including construction loans, secured by collateral such as real estate, business assets and personal guarantees.
We offer our customers access to automated teller machines (“ATMs”) and other services which increase customer convenience and encourage continued and additional banking relationships. We endeavor to maintain competitive rates on deposit accounts, and actual rates are established at the time that they are offered, and subsequently, based on contractual terms, taking into consideration competitor offerings.
We endeavor to maintain competitive rates on deposit accounts, and actual rates are established at the time that they are offered, and subsequently, based on contractual terms, taking into consideration competitor offerings. Although from time to time we advertise in local newspapers, our primary source of deposit relationships is satisfied customers.
See the liquidity discussion within Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations within this Form 10-K for more information regarding our available funds.
See the liquidity discussion within Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations within this Form 10-K for more information regarding our available funds. Total deposits increased from $1.64 billion at December 31, 2023 to $2.03 billion at December 31, 2024, an increase of $396.9 million, or 24.26%.
On that date the Company acquired 100% of the outstanding common stock, for cash, of Noah Bank and Noah Bank was merged with and into the Bank.
On that date the Company acquired 100% of the outstanding common stock, for cash, of Noah Bank and Noah Bank was merged with and into the Bank. On August 23, 2024, the Company completed the acquisition of Cornerstone Financial Corporation (“CFC”), the holding company for Cornerstone Bank, a New Jersey chartered state bank headquartered in Mt.
At December 31, 2022, the Company had $10.0 million in overnight borrowings from the FHLB-NY. 14 Table of Contents Accrued Interest Payable, Lease Liabilities and Other Liabilities Accrued interest payable increased $8.1 million from $1.0 million at December 31, 2022 to $9.2 million at December 31, 2023.
Borrowings The Company had no outstanding borrowings at December 31, 2024 or December 31, 2023. Accrued Interest Payable, Lease Liabilities and Other Liabilities Accrued interest payable increased $6.2 million from $9.2 million at December 31, 2023 to $15.4 million at December 31, 2024.
Goodwill and Core Deposit Intangible At December 31, 2023, the Company had $8.9 million of goodwill and $1.4 million in core deposit intangible assets of which $1.3 million is remaining from the branch acquisition that occurred in May 2019 and $89,000 from the Noah acquisition.
At December 31, 2024 the Company had 14 Table of Contents $3.6 million in core deposit intangible assets, an increase of $2.2 million when compared to December 31, 2023. The remaining balance is comprised of $2.6 million from the CFC acquisition, $900 thousand from the WSFS branch acquisition that occurred in May 2019, and $73 thousand from the Noah acquisition.
The proceeds were used to refinance an existing loan with cash out for future real estate investments. The property is an industrial warehouse located in East Windsor, NJ with a loan-to-value of 59%.
The borrower is paying in accordance with the loan terms as of December 31, 2024. - The second largest commercial real estate loan is a $22.7 million loan. The proceeds were used to refinance an existing loan with cash out for future real estate investments.
Total deposits increased from $1.35 billion at December 31, 2022 to $1.64 billion at December 31, 2023, an increase of $288.0 million, or 21.4%, included in this increase was $192.7 million acquired from Noah Bank. Non-interest-bearing deposits decreased $15.8 million, or 6.0%, to $249.3 million at December 31, 2023. The Company acquired $55.2 million of non-interest-bearing deposits during 2023.
Included in this increase was $282.8 million in deposits acquired from CFC. Non-interest-bearing deposits increased $51.7 million, or 20.7%, to $301.0 million at December 31, 2024. The Company acquired $67.6 million of non-interest-bearing deposits from CFC. Interest-bearing deposits increased $345.2 million, or 24.9%. Included in this increase was $215.2 million of interest-bearing deposits acquired from CFC.
Cash and Due from Banks and Interest-earning Bank Balances Cash and due from banks and interest-earning bank balances increased from $25.3 million at December 31, 2022 to $34.5 million at December 31, 2023, an increase of $9.2 million, or 36.5%. The increase in cash and due from banks and interest-earning banks’ balances was primarily due to the Bank’s liquidity management.
Cash and Due from Banks and Interest-earning Bank Balances Cash and due from banks and interest-earning bank balances decreased from $34.5 million at December 31, 2023 to $33.6 million at December 31, 2024, a decrease of $888 thousand, or 2.6%.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe offer electronic banking services for our consumer and business customers including Internet banking, mobile banking and electronic bill payment, as well as banking by phone. We also offer ATM and debit cards, wire transfers, and ACH transfers. The successful operation and further development of these and other new technologies will likely require additional capital investment in the future.
Biggest changeWe also offer ATM and debit cards, wire transfers, and ACH transfers. The successful operation and further development of these and other new technologies will likely require additional capital investment in the future. In addition, increased use of electronic banking creates opportunities for interruptions in service which could expose us to claims by customers or other third parties.
Maintenance of our reputation depends not only on our success in maintaining our service-focused culture and controlling and mitigating the various risks described herein, but also on our success in identifying and appropriately addressing issues that may arise in areas such as potential conflicts of interest, anti-money laundering, client personal information and privacy issues, record-keeping, regulatory investigations and any litigation that may arise from the failure or perceived failure of us to comply with legal and regulatory requirements.
Maintenance of our reputation depends not only on our success in maintaining our service-focused culture and controlling and mitigating the various risks described herein, but also on our success in identifying and appropriately addressing issues that may arise in areas such as potential conflicts of interest, anti-money laundering, client personal information and privacy issues, record-keeping, regulatory investigations and any 31 Table of Contents litigation that may arise from the failure or perceived failure of us to comply with legal and regulatory requirements.
Although we believe that our allowance for credit losses at December 31, 2023 is adequate to cover known and probable incurred losses included in the portfolio, we cannot provide assurances that we will not further increase the allowance for credit losses or that our regulators will not require us to increase this allowance.
Although we believe that our allowance for credit losses at December 31, 2024 is adequate to cover known and probable incurred losses included in the portfolio, we cannot provide assurances that we will not further increase the allowance for credit losses or that our regulators will not require us to increase this allowance.
As discussed above under CREDIT AND INTEREST RATE RISKS— Changes in interest rates may adversely affect our earnings and financial condition , as inflation increases and market interest rates rise, the value of the Company’s investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments.
As discussed above under “CREDIT AND INTEREST RATE RISKS— Changes in interest rates may adversely affect our earnings and financial condition.”, as inflation increases and market interest rates rise, the value of the Company’s investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments.
Consequently, an adverse development with respect to one loan or one credit relationship can expose us to a significantly greater risk of loss. In addition, no payment from the borrower is required during the term of most of our construction loans since the accumulated interest is added to the principal of the loan through an interest reserve.
Consequently, an adverse development with respect to one loan or one credit relationship can expose us to a significantly greater risk of loss. 25 Table of Contents In addition, no payment from the borrower is required during the term of most of our construction loans since the accumulated interest is added to the principal of the loan through an interest reserve.
Our limited time with these loans does not provide us with a significant payment history pattern with which to judge future collectability. As a result, it may be difficult to predict the future performance of our loan portfolio. These loans may have delinquency or charge off levels above our expectations, which could negatively affect our performance.
Our limited time with these loans does not provide us with a significant payment history pattern with which to judge future collectability. As a result, it may be difficult to predict the future performance of our loan portfolio. 26 Table of Contents These loans may have delinquency or charge off levels above our expectations, which could negatively affect our performance.
There is no assurance that the Bank will be able to pay dividends in the future, and if able, that the dividends will be at the same rate as 2023, or that the Company will generate adequate cash flow from the Bank to pay dividends in the future.
There is no assurance that the Bank will be able to pay dividends in the future, and if able, that the dividends will be at the same rate as 2024, or that the Company will generate adequate cash flow from the Bank to pay dividends in the future.
While the Company has taken actions to maximize its funding sources, there is no guarantee that such actions will be successful or sufficient in the event of sudden liquidity needs. 23 Table of Contents The financial services industry is undergoing a period of great volatility and disruption.
While the Company has taken actions to maximize its funding sources, there is no guarantee that such actions will be successful or sufficient in the event of sudden liquidity needs. The financial services industry is undergoing a period of great volatility and disruption.
While we have developed policies and procedures designed to assist in compliance with these laws and regulations, these policies and procedures may not be effective in preventing violations of these laws and regulations. We can give no assurance that future changes in laws and regulations or changes in their interpretation will not adversely affect our business.
While we have developed policies and procedures designed to assist in compliance with these laws and regulations, these policies and procedures may not be effective in preventing violations of these laws and regulations. 37 Table of Contents We can give no assurance that future changes in laws and regulations or changes in their interpretation will not adversely affect our business.
Any of these events could increase our costs, require management time and attention, and materially and adversely affect us. 22 Table of Contents Federal banking agencies have issued guidance regarding high concentrations of commercial real estate loans within bank loan portfolios.
Any of these events could increase our costs, require management time and attention, and materially and adversely affect us. Federal banking agencies have issued guidance regarding high concentrations of commercial real estate loans within bank loan portfolios.
We can provide no assurance that capital would be available at that time. The nature of our construction loan portfolio may expose us to increased lending risks. Given the recent growth in our loan portfolio, a portion of our construction loans are unseasoned, meaning that they were originated relatively recently.
We can provide no assurance that capital would be available at that time. The nature of our construction loan portfolio may expose us to increased lending risks. A portion of our construction loans are unseasoned, meaning that they were originated relatively recently.
Both increases and decreases in the interest rate environment may reduce our profits. We expect that we will continue to realize income from the spread between the interest we earn on loans, securities and other interest earning assets, and the interest we pay on deposits, and borrowings (when applicable).
Both increases and decreases in the interest rate environment may reduce our profits. We expect that we will continue to 27 Table of Contents realize income from the spread between the interest we earn on loans, securities and other interest earning assets, and the interest we pay on deposits, and borrowings (when applicable).
The ability of the Bank to pay dividends is also subject to its profitability, financial condition, capital expenditures, other cash flow requirements, and other factors deemed relevant by its Board of Directors.
The ability of the Bank to pay dividends is also 28 Table of Contents subject to its profitability, financial condition, capital expenditures, other cash flow requirements, and other factors deemed relevant by its Board of Directors.
The Company’s failure to pay dividends on its common stock could have a material adverse effect on the market price of its common stock. 24 Table of Contents Our stock price may reflect securities market conditions.
The Company’s failure to pay dividends on its common stock could have a material adverse effect on the market price of its common stock. Our stock price may reflect securities market conditions.
We may accommodate larger loans by selling participations in those loans to other financial institutions, but this ability may not always be available. 29 Table of Contents The Federal Reserve may require the Company to commit capital resources to support the Bank.
We may accommodate larger loans by selling participations in those loans to other financial institutions, but this ability may not always be available. The Federal Reserve may require the Company to commit capital resources to support the Bank.
However, should such an event occur that is not prevented or detected by our internal controls, is uninsured or in excess of applicable insurance limits, it could have a significant adverse effect on our business, results of operations, financial condition or prospects.
We also maintain insurance coverage for such risks. However, should such an event occur that is not prevented or detected by our internal controls, is uninsured or in excess of applicable insurance limits, it could have a significant adverse effect on our business, results of operations, financial condition or prospects.
As a result of inflationary pressures and the resulting rapid increases in interest rates over the last two years, the fair value of our securities classified as available for sale has declined. These securities make up a majority of the securities portfolio of the Company, resulting in unrealized losses embedded in other comprehensive income as a part of shareholders’ equity.
As a result of inflationary pressures and the resulting rapid increases in interest rates from early 2022 into 2023, the fair value of our securities classified as available for sale has declined. These securities make up a majority of the securities portfolio of the Company, resulting in unrealized losses embedded in other comprehensive income as a part of shareholders’ equity.
Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our business, financial condition and results of operations.
Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our business, financial condition and results of operations. Impairment of goodwill could require charges to earnings, which could result in a negative impact on our results of operations.
If we are unable to efficiently replace ineffective service providers, or if we experience a significant, sustained or repeated, system failure or service denial, it could compromise our ability to operate effectively, damage our reputation, result in a loss of customer business, and subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on our business, financial condition, results of operations and future prospects.
If we are unable to efficiently replace ineffective service providers, or if we experience a significant, sustained or repeated, system failure or service denial, it could compromise our ability to operate effectively, damage our reputation, result in a loss of customer business, and subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on our business, financial condition, results of operations and future prospects. 32 Table of Contents We cannot predict how changes in technology will impact our business; increased use of technology may expose us to service interruptions.
At December 31, 2023, we had approximately $1.14 billion of commercial real estate loans, which represented 73.8% of our total loan portfolio. Our commercial real estate loans include loans secured by owner-occupied and non-owner-occupied tenanted properties for commercial uses and multi-family loans.
Our loan portfolio is made up largely of commercial real estate loans and commercial construction loans. At December 31, 2024, we had approximately $1.39 billion of commercial real estate loans, which represented 76.1% of our total loan portfolio. Our commercial real estate loans include loans secured by owner-occupied and non-owner-occupied tenanted properties for commercial uses and multi-family loans.
The portfolio also consists of construction loans of approximately $310.2 million, or 20.0%, of our total loan portfolio as of December 31, 2023. In addition, we make both secured and unsecured commercial and industrial loans. At December 31, 2023, we had $51.0 million of commercial and industrial loans, which represented 3.3% of our total loan portfolio.
The portfolio also consists of construction loans of approximately $257.2 million, or 14.1%, of our total loan portfolio as of December 31, 2024. In addition, we make both secured and unsecured commercial and industrial loans. At December 31, 2024, we had $92.9 million of commercial and industrial loans, which represented 5.1% of our total loan portfolio.
Our average total deposits for the year ended December 31, 2023 of $1.51 billion were $100.1 million higher than the $1.41 billion for the year ended December 31, 2022. We will continue to focus on deposit growth, which we use to fund loan originations.
Our average total deposits for the year ended December 31, 2024 of $1.83 billion were $318.9 million higher than the $1.51 billion for the year ended December 31, 2023, but a substantial portion of that deposit growth was due to the CFC acquisition. We will continue to focus on deposit growth, which we use to fund loan originations.
We can provide no assurance that we will be successful in this strategy. 28 Table of Contents Our growth-oriented business strategy could be adversely affected if we are not able to attract and retain skilled employees.
We can provide no assurance that we will be successful in this strategy. Our growth-oriented business strategy could be adversely affected if we are not able to attract and retain skilled employees. We may not be able to successfully manage our business as a result of the strain on our management and operations that may result from growth.
Additional risks and uncertainties that management is not aware of or that management currently deems immaterial may also impair the Bank’s business operations. This report is qualified in its entirety by these risk factors.
Additional risks and uncertainties that management is not aware of or that management 24 Table of Contents currently deems immaterial may also impair the Bank’s business operations. This report is qualified in its entirety by these risk factors. If any of the following risks actually occur, our business, financial condition, and results of operations could be materially and adversely affected.
While we have taken actions to improve our funding, there is no guarantee that such actions will be successful or sufficient in the event of sudden liquidity needs. 25 Table of Contents There has also been increased regulatory scrutiny – in the course of routine examinations and otherwise – and new regulations directed towards banks of similar size to the Company, designed to address the negative developments in the banking industry in 2023, all of which may increase our costs of doing business and reduce our profitability.
There has also been increased regulatory scrutiny – in the course of routine examinations and otherwise – and new regulations directed towards banks of similar size to the Company, designed to address the negative developments in the banking industry in 2023, all of which may increase our costs of doing business and reduce our profitability.
These competitors may offer higher interest rates on deposits than we do, which could decrease the deposits that we attract or require us to increase our interest rates on deposit accounts to retain existing deposits or attract new deposits.
This competition could reduce our net income by decreasing the number and size of loans that we originate and the interest rates we may charge on these loans. 30 Table of Contents These competitors may offer higher interest rates on deposits than we do, which could decrease the deposits that we attract or require us to increase our interest rates on deposit accounts to retain existing deposits or attract new deposits.
We may not be able to successfully manage our business as a result of the strain on our management and operations that may result from growth. Our ability to manage growth will depend upon our ability to continue to attract, hire and retain skilled employees, and we may need to adopt additional equity plans in order to do so.
Our ability to manage growth will depend upon our ability to continue to attract, hire and retain skilled employees, and we may need to adopt additional equity plans in order to do so.
Market developments, including unemployment, price levels, stock and bond market volatility, and changes, including those resulting from world events, affect consumer confidence levels, economic activity and inflation. Changes in payment behaviors and payment rates may increase delinquencies and default rates, which could affect our earnings and credit quality.
Market developments, including unemployment, price levels, stock and bond market volatility, and changes, including those resulting from world events, affect consumer confidence levels, economic activity and inflation.
We maintain a system of internal controls to mitigate such occurrences which system recently had to be modified to cover the additional risks caused by the increase in the amount of time our employees are working remotely. We also maintain insurance coverage for such risks.
We are subject to certain operational risks, including but not limited to data processing system failures and errors and customer or employee fraud. We maintain a system of internal controls to mitigate such occurrences which system recently had to be modified to cover the additional risks caused by the increase in the amount of time our employees are working remotely.
Our success will also depend on the ability of our officers and key employees to continue to implement and improve our operational and other systems, to manage multiple, concurrent customer relationships and to hire, train and manage our employees.
Our success will also depend on the ability of our officers and key employees to continue to implement and improve our operational and other systems, to manage multiple, concurrent customer relationships and to hire, train and manage our employees. 36 Table of Contents We depend on our executive officers and key personnel to continue the implementation of our long-term business strategy and could be harmed by the loss of their services.
The financial services market, including banking services, is increasingly affected by advances in technology, including developments in: • telecommunications; • data processing; • automation; • Internet banking, including mobile banking; • social media; • debit cards and so-called “smart cards”; and • remote deposit capture. 27 Table of Contents Our ability to compete successfully in the future will depend, to a certain extent, on whether we can anticipate and respond to technological changes.
The financial services market, including banking services, is increasingly affected by advances in technology, including developments in: • telecommunications; • data processing; • automation; • Internet banking, including mobile banking; • social media; • debit cards and so-called “smart cards”; and • remote deposit capture.
OPERATIONAL RISKS Further negative developments in the banking industry could adversely affect our business operations and our financial condition and results of operations.
In addition, global supply chain disruptions may cause prolonged inflation, adversely impact consumer and business confidence, and adversely affect the economy as well as our financial condition and results. OPERATIONAL RISKS Further negative developments in the banking industry could adversely affect our business operations and our financial condition and results of operations.
If we were required to raise additional capital in the current environment, any such capital raise may be on unfavorable terms, thereby negatively impacting book value and profitability.
If we were required to raise additional capital in the current environment, any such capital raise may be on unfavorable terms, thereby negatively impacting book value and profitability. While we have taken actions to improve our funding, there is no guarantee that such actions will be successful or sufficient in the event of sudden liquidity needs.
Maintaining our reputation also depends on our ability to successfully prevent third parties from infringing on the “The Bank of Princeton” brand and associated trademarks.
Maintaining our reputation also depends on our ability to successfully prevent third parties from infringing on the “The Bank of Princeton” brand and associated trademarks. Defense of our reputation, including through litigation, could result in costs adversely affecting our business, results of operations, financial condition or prospects. Our internal control systems could fail to detect certain events.
In addition, increased use of electronic banking creates opportunities for interruptions in service which could expose us to claims by customers or other third parties. We can provide no assurance that we will have sufficient resources or access to the necessary technology to remain competitive in the future.
We can provide no assurance that we will have sufficient resources or access to the necessary technology to remain competitive in the future. We use AI in connection with our business and operations, which exposes us to inherent risks that may expose us to material harm.
If the acquisition is not completed, the Company would have to recognize these expenses without realizing the expected benefits of the acquisition. CREDIT AND INTEREST RATE RISKS Our loan portfolio has a significant concentration in commercial real estate and commercial construction loans. Our loan portfolio is made up largely of commercial real estate loans and commercial construction loans.
Our risk factors can be broadly summarized by the following categories: • Credit and Interest Rate Risks • Risks Related to the Bank’s Common Stock • Economic Risks • Operational Risks • Strategic Risks • Risks Related to the Regulation of our Industry CREDIT AND INTEREST RATE RISKS Our loan portfolio has a significant concentration in commercial real estate and commercial construction loans.
Removed
If any of the following risks actually occur, our business, financial condition, and results of operations could be materially and adversely affected. 20 Table of Contents Our risk factors can be broadly summarized by the following categories: • Risks Related to the Pending Acquisition of Cornerstone • Credit and Interest Rate Risks • Risks Related to the Bank’s Common Stock • Economic Risks • Operational Risks • Strategic Risks • Risks Related to the Regulation of our Industry RISKS RELATED TO THE COMPANY’S PENDING ACQUISITION OF CORNERSTONE Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the Company following the transaction.
Added
Changes in payment behaviors and payment rates may increase delinquencies and default rates, which could affect our earnings and credit quality. 29 Table of Contents Instability in global economic conditions and geopolitical matters could have a material adverse effect on our results of operations and financial condition.
Removed
In connection with the Company’s pending acquisition of Cornerstone (See Item 1. Business – General), before the acquisition can be completed, the Company and the Bank must obtain approval of the acquisition from the FDIC, the New Jersey Department of Banking and Insurance and the Federal Reserve.
Added
Instability in global economic conditions and geopolitical matters could have a material adverse effect on our results of operations and financial condition. The macroeconomic environment in the U.S. is susceptible to global events and volatility in financial markets.
Removed
In determining whether to grant these approvals, the regulators consider a variety of factors, including the regulatory standing of the Company, the Bank and Cornerstone, and other factors. An adverse development in either party’s regulatory standing or these factors could result in an inability to obtain approval or a delay in their receipt.
Added
For example, global conflicts (including the continuing conflicts involving Ukraine and the Russian Federation and those in the Middle East) or other similar events, as well as government actions of other restrictions in connection with such events, and trade negotiations between the U.S. and other nations could adversely impact economic and market conditions for the Company and its clients and counterparties.
Removed
These regulators may impose conditions on the completion of the acquisition or require changes to the terms of the Merger Agreement.
Added
Our ability to compete successfully in the future will depend, to a certain extent, on whether we can anticipate and respond to technological changes. We offer electronic banking services for our consumer and business customers including Internet banking, mobile banking and electronic bill payment, as well as banking by phone.
Removed
Such conditions or changes could have the effect of delaying or preventing completion of the acquisition or imposing additional costs on or limiting the revenues of the Company following the completion of the acquisition, any of which might have an adverse effect on the Company following the acquisition.
Added
AI in the banking industry refers to the use of advanced algorithms, machine learning, and automation to enhance operational efficiency, improve customer experiences, strengthen security, and optimize financial decision-making. Banks leverage AI for fraud detection, risk assessment, predictive analytics, chatbots for customer service, personalized financial recommendations, and automated regulatory compliance.
Removed
The acquisition may be more difficult, costly or time-consuming than expected and the anticipated benefits of the transaction may not be realized.
Added
By analyzing vast amounts of data in real time, AI helps institutions reduce costs, mitigate risks, detect anomalies, and deliver more efficient and secure banking services. The Bank does not utilize AI for decision-making processes or internal bot usage as any automation within the Bank is driven by macros and predefined rule-based workflows rather than AI-driven models.
Removed
The success of the acquisition, including anticipated benefits, will depend, in part, on the Company’s ability to successfully combine and integrate Cornerstone into the Company in a manner that permits growth opportunities and does not materially disrupt the existing customer relations nor result in decreased revenues due to loss of customers.
Added
AI technology, however, is employed within select third-party solutions integrated into our operations. These include SentinelOne for advanced cybersecurity threat detection and response, Verafin for fraud detection and AML compliance, the Glia Chatbot for enhancing customer service interactions, and CATO Networks for AI-driven network security and optimization.
Removed
It is possible that the integration process could result in the loss of key employees, the disruption of the Bank’s ongoing business or inconsistencies in standards, controls, procedures and policies that adversely affect the Bank’s ability to maintain relationships with clients, customers, depositors, employees and other constituents or to achieve the anticipated benefits of the transaction.
Added
These third-party tools that utilize a limited AI model support security, risk management, and operational efficiency but do not influence credit, lending, or other decision-making functions within the Bank. We do not believe that these products pose a material risk on the company’s business or financial results.
Removed
The loss of key employees could adversely affect the Bank’s ability to successfully conduct its business, which could have an adverse effect on the Company’s financial results and the value of its common stock.
Added
AI is complex and rapidly evolving, and the introduction of AI, a relatively new and emerging technology in the early stages of commercial use, into our business and operations may subject us to new or heightened legal, regulatory, ethical, operational, reputational, or other risks.
Removed
If the Bank experiences difficulties with the integration process, the anticipated benefits of the acquisition may not be realized fully or at all or may take longer to realize than expected.
Added
The models underlying AI may be incorrectly or inadequately designed or implemented and trained on, or otherwise use, data or algorithms that are, and output that may be, incomplete, inadequate, misleading, biased, poor-quality or otherwise flawed, any of which may not be easily detectable.
Removed
As with any acquisition, there also may be business disruptions that cause the Bank to lose customers or cause customers to remove their accounts from the Bank and move their business to competing financial institutions. Integration efforts by the Bank will also divert management’s attention and resources.
Added
Further, inappropriate or controversial data practices by developers and end-users or other factors adversely affecting public opinion of AI could impair the acceptance of AI, including those incorporated 33 Table of Contents in our business and operations.
Removed
These integration matters could have an adverse effect on the Bank during the transition period and for an undetermined period after completion of the acquisition. The Merger Agreement may be terminated in accordance with its terms, and the acquisition may not be completed.
Added
If the AI that we use is deficient, inaccurate or controversial, we could incur operational inefficiencies, competitive harm, legal and regulatory action, brand or reputational harm, or other adverse impacts on our business and financial results.
Removed
The Merger Agreement is subject to a number of customary closing conditions that must be satisfied or waived in order to complete the acquisition, including the receipt of the requisite regulatory approvals.
Added
Further, there can be no assurance that our use of AI will be successful in enhancing our business or operations or otherwise result in our intended outcomes, and our competitors may incorporate AI into their businesses or operations more quickly or more successfully than us.
Removed
These conditions to the closing of the acquisition may not be satisfied or waived in a timely manner or at all, and, accordingly, the acquisition may be delayed or may not be completed. In addition, Cornerstone or the Company may elect to terminate the Merger Agreement in certain other circumstances. Termination of the Merger Agreement could negatively impact the Company.
Added
AI and the use thereof is also subject to a variety of existing laws and regulations, including fair lending, consumer protection, intellectual property, cybersecurity, data privacy, and equal opportunity, and is expected to be subject to new laws and regulations or new applications of existing laws and regulations.
Removed
If the Merger Agreement is terminated, there may be various consequences. For example, the Bank’s business may have been impacted adversely by the failure to pursue other opportunities due to management’s focus on the acquisition, without realizing any of the anticipated benefits of completing the acquisition.
Added
AI is the subject of evolving review by various governmental and regulatory agencies, and changes in laws and regulations governing AI may adversely affect our ability to use AI. Additionally, various federal, state and foreign governments and regulators have implemented, or are considering implementing, general legal and regulatory frameworks for the appropriate use of AI.
Removed
Additionally, if the Merger Agreement is terminated, the market price of the Company’s common stock could decline to the extent that the current market prices reflect a market assumption that the Cornerstone acquisition will be completed. 21 Table of Contents Furthermore, the Company has incurred and will incur substantial expenses in connection with the completion of the transactions contemplated by the Merger Agreement.
Added
It is possible that we will not be able to anticipate how to respond to these rapidly developing laws and regulations.
Removed
This competition could reduce our net income by decreasing the number and size of loans that we originate and the interest rates we may charge on these loans.
Added
Further, if we do not have sufficient rights to use the data or algorithms on which our AI solutions rely or the output generated thereby, we also may incur liability through the violation of applicable laws and regulations, such as fair lending laws and regulations, third-party intellectual property, privacy or other rights, or contracts to which we are a party.
Removed
Defense of our reputation, including through litigation, could result in costs adversely affecting our business, results of operations, financial condition or prospects. 26 Table of Contents Our internal control systems could fail to detect certain events. We are subject to certain operational risks, including but not limited to data processing system failures and errors and customer or employee fraud.
Added
We may not be able to sufficiently mitigate or detect any of the foregoing risks or concerns given our and other market participants’ lack of experience with using AI, the pace of technological change, and rapid adoption of AI by our business partners and competitors.
Removed
We cannot predict how changes in technology will impact our business; increased use of technology may expose us to service interruptions.
Added
Any actual or perceived failure to address risks or concerns relating to the use of AI, whether unfounded or not, could adversely affect our business and operations.
Removed
We may be vulnerable to cyberattacks or other security breaches affecting our electronic data and product delivery systems. The financial services industry has experienced an increase in both the number and severity of reported cyberattacks aimed at gaining unauthorized systems access as a way to misappropriate assets and sensitive information, corrupt and destroy data, or cause operational disruptions.
Added
We face risks from cyber-attacks and other information or security breaches, including denial of service attacks, hacking, social engineering attacks targeting our colleagues, contractors, and customers, malware intrusion or data corruption attempts, and identity theft that could result in the disclosure of confidential, proprietary, personal and other information, any of which could adversely affect our business or reputation, and create significant legal and financial exposure.
Removed
Cybercrime risks have increased as electronic and mobile banking activities have increased. We are increasingly dependent on technology systems to run our core operations and to be a delivery channel to provide products and services to our customers.
Added
Our computer and data management systems and network infrastructure, and those of third parties on which we are highly dependent, are subject to cybersecurity risks and could be susceptible to cyber-attacks or other information or security breaches.
Removed
We also rely on the integrity and security of a variety of third-party processors, payment, clearing and settlement systems, as well as the various participants involved in these systems, many of which have no direct relationship with us.
Added
Our business relies on the secure processing, transmission, storage, and retrieval of confidential, proprietary, personal, and other information in our computer and data management systems and network infrastructure, and in the computer and data management systems and network infrastructure of third parties.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis information security program is a key part of our overall risk management system, which is administered by our Information Security Officer. The program includes administrative, technical and physical safeguards to help ensure the security and confidentiality of customer records and information. These security and privacy policies and procedures are in effect across all of our businesses and geographic locations.
Biggest changeThis information security program is a key part of our overall risk management system, which is administered by our Information Security Officer . The program includes administrative, technical and physical safeguards to help ensure the security and confidentiality of customer records and information.
While none of these identified threats or incidents have materially affected us, it is possible that threats and incidents we identify in the future could have a material adverse effect on our business strategy, results of operations, and financial condition. Our management team is responsible for the day-to-day management of risks we face, including our Chief Information Officer (“CIO”).
While none of these identified threats or incidents have materially affected us, it is possible that threats and incidents we identify in the future could have a material adverse effect on our business strategy, results of operations, and financial condition. Our management team is responsible for the day-to-day management of risks we face, including our CIO.
To carry out those duties, our board of directors receives quarterly reports from our management team regarding cybersecurity risks, and our efforts to prevent, detect, mitigate, and remediate any cybersecurity incidents.
To carry out those duties, our board of directors receives quarterly reports from our management team regarding cybersecurity risks, and our efforts to prevent, detect, mitigate, and remediate any cybersecurity incidents. 39 Table of Contents
Our CIO has been in the role since May 2021, and has 30 years of experience in technology risk management and cybersecurity, primarily within the financial services sector. 30 Table of Contents In addition, our board of directors is responsible for the oversight of risk management.
Our CIO has been in the role since May 2021, and has 30 years of experience in technology risk management and cybersecurity, primarily within the financial services sector. In additi on , our board of directors is responsible for the oversight of risk management.
We face a number of cybersecurity risks in connection with our business. From time-to-time, we have identified cybersecurity threats and cybersecurity incidents that require us to make changes to our processes and to implement additional safeguards.
These security and privacy policies and procedures are in effect across all of our bu sine sses and geographic locations. We face a number of cybersecurity risks in connection with our business. From time-to-time, we have identified cybersecurity threats and cybersecurity incidents that require us to make changes to our processes and to implement additional safeguards.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−0 removed0 unchanged
Biggest changeThe following table sets forth certain information regarding the Bank’s properties as of December 31, 2023: Location Leased or Owned Date of Lease Expiration 1 Corporate Headquarters and Branch 183 Bayard Lane Princeton, NJ Leased October 31, 2028 Operations Center 403 Wall Street Princeton, NJ Leased February 28, 2026 Hamilton Branch 339 Route 33 Hamilton, NJ Leased October 30, 2025 Pennington Branch 2 Route 31 Pennington, NJ Leased April 30, 2027 Montgomery Branch 1185 Route 206 North Princeton, NJ Leased April 30, 2025 Monroe Branch 1 Rossmoor Drive Monroe Township, NJ Leased July 31, 2030 Lambertville Branch 10-12 Bridge Street Lambertville, NJ Owned N/A Lawrenceville Branch 2999 Princeton Pike Lawrenceville, NJ Leased October 30, 2025 Nassau Street Branch 194 Nassau Street Princeton, NJ Leased November 30, 2026 New Brunswick Branch 1 Spring Street, Suite 102 New Brunswick, NJ Leased March 31, 2027 Cream Ridge Branch 403 Rt 539 Cream Ridge, NJ Leased November 30, 2028 31 Table of Contents Chesterfield Branch 305 Bordentown-Chesterfield Road Chesterfield, NJ Owned N/A Bordentown Branch 335 Farnsworth Avenue Bordentown, NJ Owned N/A Browns Mills Branch 101 Pemberton Browns Mills Road Browns Mills, NJ Owned N/A Deptford Branch 1893 Hurffville Road Deptford, NJ Owned N/A Sicklerville Branch 483 Cross Key Road Sicklerville, NJ Leased February 1, 2026 Princeton Junction Branch 11 Cranbury Road Princeton Junction, NJ Leased October 10, 2024 Quakerbridge Branch 3745 Quakerbridge Road Hamilton, NJ Leased April 1, 2024 Lakewood Branch 12 American Avenue, 7B Lakewood, NJ Leased August 20, 2025 Piscataway Branch 1642 Stelton Road, Suite 410 Piscataway, NJ Leased March 31, 2027 North Wales Branch 1222 Welsh Road North Wales, PA Leased September 30, 2026 Cheltenham Branch 470 West Cheltenham Avenue Philadelphia, PA Leased January 25, 2026 Chinatown Branch 921 Arch Street Philadelphia, PA Leased September 30, 2027 Chestnut Street Branch 1839 Chestnut Street Philadelphia, PA Leased February 28, 2027 Kingston Branch 4442 Route 27 Kingston, NJ Leased March 31, 2028 Fort Lee Branch 2337 Lemoine Ave Fort Lee, NJ Leased November 30, 2027 32 Table of Contents Palisades Park Branch 449 Broad Ave Palisades Park, NJ Leased December 31, 2025 Flushing Branch 15404 Northern Blvd Flushing, NY Leased January 31, 2029 Jericho Branch 350 N Broadway #352 Jericho, NY Leased November 30, 2028 Elkins Park Branch 7301 Old York Rd Elkins Park, PA Leased May 31, 2041 1 The expiration date is based on the next upcoming maturity date and does not take into consideration any renewal/extensions dates.
Biggest changeThe following table sets forth certain information regarding the Bank’s properties as of December 31, 2024: Location Leased or Owned Date of Lease Expiration 1 Corporate Headquarters and Branch 183 Bayard Lane Princeton, NJ Leased October 31, 2028 Operations Center 403 Wall Street Princeton, NJ Leased February 28, 2026 Hamilton Branch 339 Route 33 Hamilton, NJ Leased October 30, 2025 Pennington Branch 2 Route 31 Pennington, NJ Leased April 30, 2027 Montgomery Branch 1185 Route 206 North Princeton, NJ Leased April 30, 2025 Monroe Branch 1 Rossmoor Drive Monroe Township, NJ Leased July 31, 2030 Lambertville Branch 10-12 Bridge Street Lambertville, NJ Owned N/A Lawrenceville Branch 2999 Princeton Pike Lawrenceville, NJ Leased October 30, 2025 Nassau Street Branch 194 Nassau Street Princeton, NJ Leased November 30, 2026 New Brunswick Branch 1 Spring Street, Suite 102 New Brunswick, NJ Leased March 31, 2027 Cream Ridge Branch 403 Rt 539 Cream Ridge, NJ Leased November 30, 2028 Chesterfield Branch 305 Bordentown-Chesterfield Road Chesterfield, NJ Owned N/A Bordentown Branch 335 Farnsworth Avenue Bordentown, NJ Owned N/A 40 Table of Contents Browns Mills Branch 101 Pemberton Browns Mills Road Browns Mills, NJ Owned N/A Deptford Branch 1893 Hurffville Road Deptford, NJ Owned N/A Sicklerville Branch 483 Cross Key Road Sicklerville, NJ Leased January 31, 2026 Princeton Junction Branch 11 Cranbury Road Princeton Junction, NJ Leased October 10, 2029 Quakerbridge Branch 3745 Quakerbridge Road Hamilton, NJ Leased March 14, 2026 Lakewood Branch 12 American Avenue, 7B Lakewood, NJ Leased August 20, 2025 Piscataway Branch 1642 Stelton Road, Suite 410 Piscataway, NJ Leased August 14, 2026 North Wales Branch 1222 Welsh Road North Wales, PA Leased September 30, 2026 Cheltenham Branch 470 West Cheltenham Avenue Philadelphia, PA Leased January 26, 2026 Chinatown Branch 921 Arch Street Philadelphia, PA Leased September 30, 2027 Chestnut Street Branch 1839 Chestnut Street Philadelphia, PA Leased February 28, 2027 Kingston Branch 4442 Route 27 Kingston, NJ Leased March 1, 2028 Fort Lee Branch 2337 Lemoine Ave Fort Lee, NJ Leased November 30, 2027 Palisades Park Branch 449 Broad Ave Palisades Park, NJ Leased December 31, 2025 Flushing Branch 15404 Northern Blvd Flushing, NY Leased January 31, 2029 41 Table of Contents Jericho Branch 350 N Broadway #352 Jericho, NY Leased November 30, 2028 Elkins Park Branch 7301 Old York Rd Elkins Park, PA Leased May 31, 2041 Cherry Hill Branch 1405 Route 70 East Cherry Hill, NJ 08034 Owned N/A Medford Branch 170 Himmelein Rd.
Item 2. Properties We conduct our operations from our headquarters and branch located at 183 Bayard Lane, Princeton, New Jersey, an operations center at 403 Wall Street, Princeton, New Jersey, and from 28 other branch locations in New Jersey, Pennsylvania and New York.
Item 2. Properties We conduct our operations from our headquarters and branch located at 183 Bayard Lane, Princeton, New Jersey, an operations center at 403 Wall Street, Princeton, New Jersey, and from 34 other branch locations in New Jersey, Pennsylvania and New York.
Added
Medford, NJ 08055 Leased October 31, 2026 Moorestown Branch 253 West Main Street Moorestown, NJ 08057 Owned N/A Burlington Branch 353 High Street Burlington City, NJ 08016 Leased February 28, 2026 Voorhees Branch 133 Route 73 Voorhees, NJ 08043 Owned N/A Woodbury Branch 1201 North Broad Street Woodbury, NJ 08096 Leased April 1, 2032 1 The expiration date is based on the next upcoming maturity date and does not take into consideration any renewal/extensions dates.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed4 unchanged
Biggest changeDividends The Company declared and paid cash dividends of $0.30 per share in each quarter for the year ended December 31, 2023. The payment of dividends to shareholders of the Company is dependent on the Bank paying dividends to the Company.
Biggest changeRecent Sales of Unregistered Sales of Equity Securities and Use of Proceeds The Company did not repurchase any shares of its common stock during the three-month period ended December 31, 2024. Dividends The Company declared and paid cash dividends of $0.30 per share in each quarter for the year ended December 31, 2024.
A bank holding company also should not maintain a dividend level that places undue pressure on the capital of such institution’s subsidiaries, or that may undermine the bank holding company’s ability to serve as a source of strength for such subsidiaries. 34 Table of Contents Performance Graph The following graph demonstrates comparison of the cumulative total returns for the common stock of the Company, NASDAQ Composite Index, SNL Mid-Atlantic Bank Index, and Peer Group made up of banks and thrifts with total assets between $1.00 billion and $3.00 billion for the periods indicated.
A bank holding company also should not maintain a dividend level that places undue pressure on the capital of such institution’s subsidiaries, or that may undermine the bank holding company’s ability to serve as a source of strength for such subsidiaries. 43 Table of Contents Performance Graph The following graph demonstrates comparison of the cumulative total returns for the common stock of the Company, NASDAQ Composite Index, SNL Mid-Atlantic Bank Index, and Peer Group made up of banks and thrifts with total assets between $1.00 billion and $3.00 billion for the periods indicated.
See Note 15 “Stock-Based Compensation” in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for a description of the material features of each plan.
See Note 16 “Stock-Based Compensation” in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for a description of the material features of each plan.
Plan Category Number of shares of common stock to be issued upon exercise of outstanding options Weighted- average exercise price of outstanding options Number of shares of common stock remaining available for future issuance under compensation plans Equity Compensation Plans approved by security holders 328,637 $ 19.44 246,883 Equity Compensation Plans not approved by security holders — — — Total 328,637 $ 19.44 246,883
Plan Category Number of shares of common stock to be issued upon exercise of outstanding options Weighted- average exercise price of outstanding options Number of shares of common stock remaining available for future issuance under compensation plans Equity Compensation Plans approved by security holders 281,809 $ 19.86 215,025 Equity Compensation Plans not approved by security holders — — — Total 281,809 $ 19.86 215,025
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The Company’s common stock trades on the “NASDAQ Global Select Market” under the ticker symbol “BPRN.” As of March 4, 2024, there were approximately 2,415 holders of our common stock. Recent Sales of Unregistered Securities None.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The Company’s common stock trades on the “NASDAQ Global Select Market” under the ticker symbol “BPRN.” As of March 7, 2025, there were approximately 1,268 holders of our common stock.
The Bank may pay dividends as declared from time to time by the Board of Directors out of funds legally available, subject to certain restrictions.
The payment of dividends to shareholders of the Company is dependent on the Bank paying dividends to the Company. The Bank may pay dividends as declared from time to time by the Board of Directors out of funds legally available, subject to certain restrictions.
BMI Banks - Mid-Atlantic Region Index 100.00 142.19 128.53 162.33 137.10 166.23 Peer Group 100.00 114.61 97.79 125.48 124.42 123.09 Peer group includes Banks and Thrifts with total assets between $1B – $3B Source: S&P Global Market Intelligence © 2024 35 Table of Contents Securities Authorized for Issuance under Equity Compensation Plans The following table summarizes our equity compensation plan information as of December 31, 2023.
BMI Banks - Mid-Atlantic Region Index 100.00 90.39 114.16 96.42 116.90 162.46 Peer Group 100.00 86.22 111.22 108.54 105.35 121.91 Peer group includes Banks and Thrifts with total assets between $1B – $3B Source: S&P Global Market Intelligence © 2025 44 Table of Contents Securities Authorized for Issuance under Equity Compensation Plans The following table summarizes our equity compensation plan information as of December 31, 2024.
The graph below represents $100 invested in our Bank’s common stock at its closing price on December 31, 2018. Period Ending Index 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Princeton Bancorp, Inc. 100.00 113.60 85.98 110.18 123.16 144.98 NASDAQ Composite Index 100.00 136.69 198.10 242.03 163.28 236.17 S&P U.S.
The graph below represents $100 invested in our Bank’s common stock at its closing price on December 31, 2019. Period Ending Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Princeton Bancorp, Inc. 100.00 75.69 96.99 108.41 127.63 126.92 NASDAQ Composite Index 100.00 144.92 177.06 119.45 172.77 223.87 S&P U.S.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

44 edited+17 added−8 removed47 unchanged
Biggest changeNo tax-equivalent adjustments have been made. 2023 2022 Change 2023 vs 2022 Average Income/ Yield Average Income/ Yield Average Yield Balances Expense Rates Balances Expense Rates Balances Rates (Dollars in thousands) Interest-earning assets: Loans receivable $ 1,449,504 $ 89,278 6.16 % $ 1,375,501 $ 70,996 5.16 % $ 74,003 1.00 % Securities Taxable available-for-sale 43,476 1,339 3.08 % 47,358 986 2.08 % (3,882 ) 1.00 % Tax exempt available-for-sale 40,264 1,138 2.83 % 43,549 1,167 2.68 % (3,285 ) 0.15 % Held-to-maturity 197 10 5.28 % 204 11 5.39 % (7 ) -0.11 % Federal funds sold 109,441 5,858 5.35 % 66,292 797 1.20 % 43,149 4.15 % Other interest earning-assets 10,064 557 5.53 % 10,612 126 1.19 % (548 ) 4.35 % Total interest-earning assets 1,652,946 $ 98,180 5.94 % 1,543,516 $ 74,083 4.80 % 109,430 1.14 % Other non-earnings assets 122,321 101,940 20,381 Total assets $ 1,775,267 $ 1,645,456 $ 129,811 Interest-bearing liabilities Demand $ 250,312 $ 3,654 1.46 % $ 261,951 $ 823 0.31 % $ (11,639) 1.15 % Savings 159,175 2,742 1.72 % 220,222 714 0.32 % (61,047 ) 1.40 % Money markets 311,478 9,565 3.07 % 353,224 1,565 0.44 % (41,746 ) 2.63 % Certificates of deposit 538,343 17,085 3.17 % 293,627 2,893 0.99 % 244,716 2.19 % Total deposit 1,259,308 33,046 2.62 % 1,129,024 5,995 0.42 % 130,284 2.20 % Borrowings 2,343 118 5.01 % 153 5 3.37 % 2,190 1.65 % Total interest-bearing liabilities 1,261,651 $ 33,164 2.63 % 1,129,177 $ 6,000 0.53 % 132,474 2.10 % Non-interest-bearing deposits 248,233 280,729 (32,496 ) Other liabilities 36,856 20,755 16,101 Total liabilities 1,546,740 1,430,661 116,079 Stockholders’ equity 228,527 214,795 13,732 Total liabilities and stockholder’s equity $ 1,775,267 $ 1,645,456 $ 129,811 Net interest-earnings assets $ 391,295 $ 414,339 $ (23,044) Net interest income; interest rate spread 3.31 % 4.27 % -0.96 % Net interest margin $ 65,016 3.93 % $ 68,083 4.41 % $ (3,067) -0.48 % Net interest margin FTE 1 3.99 % 4.47 % -0.48 % 1 Includes federal and state tax effect of tax exempt securities and loans. 40 Table of Contents Rate/Volume Analysis The following table reflects the sensitivity of our interest income and interest expense to changes in volume and in yields on interest-earning assets and costs of interest-bearing liabilities during the periods indicated.
Biggest changeTwelve Months Ended December 31, 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 $ 1,663,013 $ 108,586 6.53 % $ 1,449,504 $ 89,278 6.16 % $ 213,509 0.37 % Securities Taxable available-for-sale 109,145 4,928 4.51 % 43,476 1,339 3.08 % 65,669 1.43 % Tax exempt available-for-sale 40,239 1,142 2.84 % 40,264 1,138 2.83 % (25 ) 0.01 % Held-to-maturity 169 9 5.27 % 197 10 5.28 % (28 ) -0.01 % Federal funds sold 136,281 7,188 5.27 % 109,441 5,858 5.35 % 26,840 -0.08 % Other interest earning-assets 19,337 1,093 5.65 % 10,064 557 5.53 % 9,273 0.12 % Total interest-earning assets 1,968,184 $ 122,946 6.25 % 1,652,946 $ 98,180 5.94 % 315,239 0.31 % Other non-earnings assets 151,600 122,321 29,369 Total assets $ 2,119,784 $ 1,775,267 $ 344,608 Interest-bearing liabilities Demand $ 258,462 $ 4,941 1.91 % $ 250,312 $ 3,654 1.46 % $ 8,150 0.45 % Savings 157,538 3,974 2.52 % 159,175 2,742 1.72 % (1,637 ) 0.80 % Money markets 421,934 15,971 3.79 % 311,478 9,565 3.07 % 110,456 0.72 % Certificates of deposit 724,060 31,528 4.35 % 538,343 17,085 3.17 % 185,717 1.18 % Total deposit 1,561,994 56,414 3.61 % 1,259,308 33,046 2.62 % 302,686 0.99 % Borrowings — — 0.00 % 2,343 118 5.01 % (2,343 ) -5.01 % Total interest-bearing liabilities 1,561,994 $ 56,414 3.61 % 1,261,651 $ 33,164 2.63 % 300,343 0.98 % Non-interest-bearing deposits 264,418 248,233 16,185 Other liabilities 43,955 36,856 7,099 Total liabilities 1,870,367 1,546,740 323,627 Stockholders’ equity 249,417 228,527 20,890 Total liabilities and stockholder’s equity $ 2,119,784 $ 1,775,267 $ 344,517 Net interest-earnings assets $ 406,189 $ 391,295 $ 14,894 Net interest income; interest rate spread 2.64 % 3.31 % -0.67 % Net interest margin $ 66,532 3.38 % $ 65,016 3.93 % $ 1,516 -0.55 % 51 Table of Contents Rate/Volume Analysis The following table reflects the sensitivity of our interest income and interest expense to changes in volume and in yields on interest-earning assets and costs of interest-bearing liabilities during the periods indicated.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is presented in sections as follows: • Overview and Strategy • Comparison of Financial Condition at December 31, 2023 and December 31, 2022 • Comparison of Operating Results for the Years Ended December 31, 2023 and 2022 • Rate/Volume Analysis • Liquidity, Commitments and Capital Resources • Off-Balance Sheet Arrangements • Impact of Inflation • Exposure to Changes in Interest Rates • Critical Accounting Policies and Estimates • Recently Issued Accounting Standards Overview and Strategy We remain focused on establishing and retaining customer relationships by offering a broad range of traditional financial services and products, competitively priced and delivered in a responsive manner to small businesses, to professionals and individuals in our market area.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is presented in sections as follows: • Overview and Strategy • Comparison of Financial Condition at December 31, 2024 and December 31, 2023 • Comparison of Operating Results for the Years Ended December 31, 2024 and 2023 • Rate/Volume Analysis • Liquidity, Commitments and Capital Resources • Off-Balance Sheet Arrangements • Impact of Inflation • Exposure to Changes in Interest Rates • Critical Accounting Policies and Estimates • Recently Issued Accounting Standards Overview and Strategy We remain focused on establishing and retaining customer relationships by offering a broad range of traditional financial services and products, competitively priced and delivered in a responsive manner to small businesses, to professionals and individuals in our market area.
We review cash flow projections regularly and update them in order to maintain liquid assets at levels believed to meet the requirements of normal operations, including loan commitments and potential deposit outflows from maturing certificates of deposit and savings withdrawals. 41 Table of Contents While deposits are our primary source of funds, when needed we are also able to generate cash through borrowings from the FHLB-NY.
We review cash flow projections regularly and update them in order to maintain liquid assets at levels believed to meet the requirements of normal operations, including loan commitments and potential deposit outflows from maturing certificates of deposit and savings withdrawals. 52 Table of Contents While deposits are our primary source of funds, when needed we are also able to generate cash through borrowings from the FHLB-NY.
Additionally, we are a shareholder of Atlantic Community Bancshares, Inc., and as such, as of December 31, 2023, we had available capacity with its subsidiary, Atlantic Community Bankers Bank of $10.0 million to provide short-term liquidity generally for a period of not more than fourteen days. Contractual Obligations. We have non-cancelable operating leases for branch offices and our operations center.
Additionally, we are a shareholder of Atlantic Community Bancshares, Inc., and as such, as of December 31, 2024, we had available capacity with its subsidiary, Atlantic Community Bankers Bank of $10.0 million to provide short-term liquidity generally for a period of not more than fourteen days. Contractual Obligations. We have non-cancelable operating leases for branch offices and our operations center.
As of December 31, 2023, we met the capital requirements to be considered “well capitalized.” See Note 17 – “Regulatory Matters” in the Notes to Consolidated Financial Statements included within this Form 10-K for more information regarding our capital resources.
As of December 31, 2024, we met the capital requirements to be considered “well capitalized.” See Note 17 – “Regulatory Matters” in the Notes to Consolidated Financial Statements included within this Form 10-K for more information regarding our capital resources.
(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. Certain shortcomings are inherent in the method of analysis presented in the foregoing table.
(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. 55 Table of Contents Certain shortcomings are inherent in the method of analysis presented in the foregoing table.
The Company performed its annual review at May 31, 2023 and determined that it was more than 50% probable the fair value of the Reporting Unit exceeds the then Carrying Value, therefore a quantitative test was not required as of May 31, 2023.
The Company performed its annual review at May 31, 2024 and determined that it was more than 50% probable the fair value of the Reporting Unit exceeds the then Carrying Value, therefore a quantitative test was not required as of May 31, 2024.
The table sets forth an approximation of the projected repricing of assets and liabilities at December 31, 2023, on the basis of contractual maturities, anticipated prepayments, and scheduled rate adjustments period and subsequent selected time intervals.
The table sets forth an approximation of the projected repricing of assets and liabilities at December 31, 2024, on the basis of contractual maturities, anticipated prepayments, and scheduled rate adjustments period and subsequent selected time intervals.
The management of these dynamic and interrelated elements of our balance sheet results in fluctuations in balance sheet items throughout the year. Comparison of Operating Results for the Years Ended December 31, 2023 and 2022 General.
The management of these dynamic and interrelated elements of our balance sheet results in fluctuations in balance sheet items throughout the year. Comparison of Operating Results for the Years Ended December 31, 2024, and 2023 General.
Our exposure to credit loss in the event of non-performance by the counterparty to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance-sheet instruments.
Our exposure to credit loss in the event of non-performance by the counterparty to the financial instrument for commitments to extend credit is 53 Table of Contents represented by the contractual notional amount of those instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance-sheet instruments.
All, or part, of the principal balance of loans receivable are charged off to the allowance for credit losses when it is determined that the repayment of all, or part, of the principal balance is highly unlikely. 45 Table of Contents Goodwill and Core Deposit Intangible.
All, or part, of the principal balance of loans receivable are charged off to the allowance for credit losses when it is determined that the repayment of all, or part, of the principal balance is highly unlikely. Goodwill and Core Deposit Intangible.
We consider these accounting estimates to be critical accounting policies. The judgments and assumptions we use are based on historical experience and other factors, which we believe to be reasonable under the circumstances.
We consider these accounting estimates to be critical accounting policies. The judgments and assumptions we use are based on historical experience and other factors, which we believe to be reasonable under 56 Table of Contents the circumstances.
For the year ended December 31, 2023, the Company recorded net income of $25.8 million, or $4.03 per diluted common share, compared to $26.5 million, or $4.11 per diluted common share, for the same period in 2022.
For the year ended December 31, 2024, the Company recorded net income of $10.2 million, or $1.55 per diluted common share, compared to $25.8 million, or $4.03 per diluted common share, for the same period in 2023.
At December 31, 2023, we had remaining available capacity with FHLB-NY, subject to certain collateral restrictions, of $139.4 million.
At December 31, 2024, we had remaining available capacity with FHLB-NY, subject to certain collateral restrictions, of $554.8 million.
The ratio of equity to total assets at December 31, 2023 and at December 31, 2022, was 12.5% and 13.7%, respectively. The current period ratio decrease was primarily due to the Noah Bank acquisition.
The ratio of equity to total assets at December 31, 2024 and at December 31, 2023 was 11.2% and 12.5%, respectively. The current period ratio decrease was primarily due to the CFC acquisition.
The increase was attributable to both a $74.0 million increase in the average balance and a 100 basis point increase in the year-over-year average yield on loans to 6.16%, due to rising interest rates over the period. Interest income on securities increased approximately $323,000, or 14.9%, for the year ended December 31, 2023 compared to the prior year.
The increase was attributable to both a $213.5 million increase in the average balance and a 37 basis point increase in the year-over-year average yield on loans to 6.53%, due to rising interest rates over the period. Interest income on securities increased approximately $3.6 million, or 144.43%, for the year ended December 31, 2024, compared to the prior year.
Total interest and dividend income. Total interest and dividend income increased $24.1 million, or 32.5%, to $98.2 million for the year ended December 31, 2023, compared to $74.1 million for the prior year.
Total interest and dividend income. Total interest and dividend income increased $24.8 million, or 25.2%, to $122.9 million for the year ended December 31, 2024, compared to $98.2 million for the prior year.
For the year ended December 31, 2023, income tax expense was $4.6 million resulting in an effective tax rate of 15.1% compared to income tax expense of $7.6 million and an effective tax rate of 22.2% for the year ended December 31, 2022.
The CFC acquisition caused a significant portion of such increases. Income tax expense. For the year ended December 31, 2024, income tax expense was $2.6 million resulting in an effective tax rate of 20.1% compared to income tax expense of $4.6 million and an effective tax rate of 15.1% for the year ended December 31, 2023.
For the year ended December 31, 2023, non-interest expense was $48.7 million, compared to $38.5 million for the same period in 2022.
Non-interest expense. For the year ended December 31, 2024, non-interest expense was $56.8 million, compared to $48.7 million for 2023.
Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. 42 Table of Contents We had the following off-balance sheet financial instruments whose contract amounts represent credit risk at December 31: 2023 2022 (In thousands) Performance and standby letters of credit $ 1,010 $ 1,420 Undisbursed construction loans-in-process 89,258 140,538 Commitments to fund loans 38,863 41,753 Unfunded commitments under lines of credit 4,697 5,800 Total $ 133,828 $ 189,511 For additional information regarding our outstanding lending commitments at December 31, 2023, see Note 9 – “Commitments and Contingencies” in the Notes to Consolidated Financial Statements contained in this Form 10-K.
We had the following off-balance sheet financial instruments whose contract amounts represent credit risk at December 31: 2024 2023 (In thousands) Performance and standby letters of credit $ 700 $ 1,010 Undisbursed construction loans-in-process 62,007 89,258 Commitments to fund loans 51,075 38,863 Unfunded commitments under lines of credit 19,659 4,697 Total $ 133,441 $ 133,828 For additional information regarding our outstanding lending commitments at December 31, 2024, see Note 9 – “Commitments and Contingencies” in the Notes to Consolidated Financial Statements contained in this Form 10-K.
We expect that a financial strategy that utilizes variable rates and matching assets and liabilities will enable us to increase our net interest margin, while managing interest rate risk. We also seek to generate fee income from various sources, subject to our desire to maintain competitive pricing within our market area.
We expect that a financial strategy that utilizes variable rates and matching assets and liabilities will enable us to increase our net interest margin, while managing interest rate risk.
The table on the next page sets forth the amounts of our interest-earning assets and interest-bearing liabilities outstanding at December 31, 2023, which we expect, based upon certain assumptions, to reprice or mature in each of the future time periods shown (the “GAP Table”).
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. 54 Table of Contents The table on the next page sets forth the amounts of our interest-earning assets and interest-bearing liabilities outstanding at December 31, 2024, which we expect, based upon certain assumptions, to reprice or mature in each of the future time periods shown.
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 December 31, 2023 and reflects the changes to NPV as a result of immediate and sustained changes in interest rates as indicated.
The following table sets forth our NPV as of December 31, 2024 and reflects the changes to NPV as a result of immediate and sustained changes in interest rates as indicated.
The following table is a schedule of future payments under operating leases with initial terms longer than 12 months at December 31, 2023: Amount Years ended December 31, (In thousands) 2024 $ 3,162 2025 3,101 2026 2,914 2027 2,627 2028 2,487 Thereafter 16,312 Total $ 30,603 The following table summarizes our contractual cash obligations relating to certificates of deposits: Amount Years ended December 31, (In thousands) 2024 $ 519,151 2025 92,413 2026 22,410 2027 2,583 Thereafter 1,474 Total $ 638,031 Capital Resources.
The following table is a schedule of future payments under operating leases with initial terms longer than 12 months at December 31, 2024: Amount Years Ended December 31 (in thousands) 2025 $ 3,722 2026 3,498 2027 3,208 2028 3,093 2029 2,467 Thereafter 14,541 Total $ 30,529 The following table summarizes our contractual cash obligations relating to certificates of deposits: Amount Years Ended December 31 (in thousands) 2025 $ 727,528 2026 33,942 2027 4,581 2028 1,112 2029 and thereafter 2,508 Total $ 769,671 Capital Resources.
The improvement in interest income resulted from an increase in the yield on earning assets of 114 basis points to 5.94% for the twelve-month period ended December 31, 2023. Interest income and fees on loans increased $18.3 million, or 25.8%, to $89.3 million for the year ended December 31, 2023, compared to $71.0 million for the prior year.
The improvement in interest income resulted from an increase in the yield on earning assets of 31 basis points to 6.25% and an increase in average interest-earning assets of $315.2 million for the twelve-month period ended December 31, 2024.
The increase was primarily due to merger-related expenses of $5.6 million during 2023 as well as increases in salaries and employee benefits of $2.9 million, occupancy and equipment of $1.2 million and data processing and communications of $538 thousand over the same period in 2022. Income tax expense.
The increase of $8.0 million was primarily attributed to increases in salaries and employee benefits of $2.7 million, occupancy and equipment of $1.2 million, professional fees of $515 thousand, data processing and communications of $352 thousand, federal deposit insurance of $254 thousand and merger-related expenses of $2.2 million during 2024 over the same period in 2023.
The Bank had no outstanding borrowings at December 31, 2023 and $10 million in borrowings at December 31, 2022. Total stockholders’ equity at December 31, 2023 increased $20.6 million or 9.4% when compared to the end of 2022.
Borrowings The Company had no outstanding borrowings at December 31, 2024 or December 31, 2023. 48 Table of Contents Stockholders’ equity Total stockholders’ equity at December 31, 2024, increased $21.8 million or 9.09% when compared to December 31, 2023.
The provision for credit losses for the twelve months ended December 31, 2023 was $3.1 million compared with a provision of $400,000 for the 2022 period. The $3.1 million provision for 2023 consists of a $3.4 million provision associated with the company’s loan portfolio, offset by a credit to the provision of $430,000 associated with unfunded commitments.
Provision for credit losses. The provision for credit losses for the twelve months ended December 31, 2024, was $5.1 million compared with a provision of $3.1 million for the 2023 period.
Finally, the ability of many borrowers to service their adjustable-rate loans may decrease in the event of an interest rate increase. 44 Table of Contents Net Portfolio Value Analysis.
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 also is 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.
This increase was the result of a 210 basis point increase in the cost of interest-bearing liabilities and an increase of $132.5 million in average interest-bearing liabilities. Interest expense on borrowings was not significant for either period presented. Provision for credit losses.
Total interest expense increased $23.3 million, or 70.1%, for the year ended December 31, 2024 compared to the prior year. This increase was the result of a 99 basis point increase in the cost of interest-bearing deposits and an increase of $302.7 million in average interest-bearing deposits. Interest expense on borrowings was not significant for either period presented.
Total non-interest income for the year ended December 31, 2023 increased $12.3 million, or 252.1%, primarily due to the $9.7 million bargain purchase gain and an increase in loan fees of $1.7 million over the same period in 2022. Non-interest expense.
Total non-interest income for the year ended December 31, 2024, decreased $9.0 million, or by 52.4%, primarily due to the $9.7 million bargain purchase gain from the Noah Bank acquisition recorded in 2023, partially offset by a 2024 increase in other non-interest income of $646 thousand and an increase in income from bank owned life insurance of $380 thousand over the same period in 2023.
Twelve Months Ended December 31, 2023 vs . 2022 Increase (Decrease) Due to Rate Volume Net (In thousands) Interest and dividend income: Loans receivable, including fees $ 14,307 $ 3,975 $ 18,282 Securities available-for-sale Taxable 440 (87 ) 353 Tax-exempt 62 (91 ) (29 ) Securities held-to-maturity — (1 ) (1 ) Federal funds sold 4,260 801 5,061 Other interest and dividend income 438 (7 ) 431 Total interest and dividend income $ 19,507 $ 4,590 $ 24,097 Interest expense: Demand $ 2,869 $ (38 ) $ 2,831 Savings 2,274 (246 ) 2,028 Money market 8,206 (206 ) 8,000 Certificates of deposit 10,300 3,892 14,192 Borrowings 4 109 113 Total interest expense $ 23,653 $ 3,511 $ 27,164 Change in net interest income $ (4,147 ) $ 1,080 $ (3,067 ) Liquidity, Commitments and Capital Resources Liquidity.
Twelve Months Ended December 31, 2024 vs . 2023 Increase (Decrease) Due to Rate Volume Net (In thousands) Interest and dividend income: Loans receivable, including fees $ 5,588 $ 13,720 $ 19,308 Securities available-for-sale — Taxable 842 2,747 3,589 Tax-exempt 6 (2 ) 4 Securities held-to-maturity — (1 ) (1 ) Federal funds sold (82 ) 1,412 1,330 Other interest and dividend income 12 524 536 Total interest and dividend income $ 6,366 $ 18,400 $ 24,766 Interest expense: Demand $ 1,164 $ 123 $ 1,287 Savings 1,260 (28 ) 1,232 Money market 2,540 3,866 6,406 Certificates of deposit 7,509 6,934 14,443 Borrowings (78 ) (40 ) (118 ) Total interest expense $ 12,395 $ 10,855 $ 23,250 Change in net interest income $ (6,029 ) $ 7,545 $ 1,516 Liquidity, Commitments and Capital Resources Liquidity.
This increase was due to a 415 basis point increase in the yield and a $43.1 million increase in average balances of federal funds sold. 38 Table of Contents Interest expense. Total interest expense increased $27.2 million, or 452.7%, for the year ended December 31, 2023 compared to the prior year.
The increase was attributable to both a $65.6 million increase in the average balance and a 110 basis point increase in the year-over-year average yield on investments to 4.06% Other interest and dividends increased $1.9 million, or 29.1%, to $8.3 million for the year ended December 31, 2024, compared to $6.4 million for the prior year due to an increase of $26.9 million in the average balances of federal funds sold, partially offset by an 8 basis point decrease in the yield on fed funds sold. 49 Table of Contents Interest expense.
The average yields and costs of funds shown are derived by dividing income or expense by the daily average balance of assets or liabilities, respectively, for the periods presented. Net loan fees of $2.8 million and $5.0 million were recorded for the twelve months ended December 31, 2023 and 2022, respectively.
The following table sets forth average balance sheets, yields and costs, and certain other information for the years indicated. The average yields and costs of funds shown are derived by dividing income or expense by the daily average balance of assets or liabilities, respectively, for the periods presented.
Our recognition of, and commitment to, the needs of the local community, combined with highly personalized and responsive customer service, differentiates us from our competition. We continue to capitalize upon the personal contacts and relationships of our organizers, directors, stockholders and officers to establish and grow our customer base.
We continue to capitalize upon the personal contacts and relationships of our organizers, directors, stockholders and officers to establish and grow our customer base. Comparison of Financial Condition at December 31, 2024 and December 31, 2023 General.
The provision for credit losses on loans includes $1.7 million related to non-purchased-credit-deteriorated loans acquired in the Noah acquisition and was also a result of loan net charge offs of $1.8 million.
The $5.1 million provision for 2024 consists of a $5.5 million provision associated with the company’s loan portfolio, offset by a credit to the provision of $360 thousand associated with unfunded commitments. The provision for credit losses on loans includes $3.2 million related to non-purchased-credit-deteriorated loans acquired in the CFC acquisition.
The decrease was due to an increase of $10.2 million in non-interest expenses, a decrease in net interest income of $3.1 million, and an increase in provision for credit losses of $2.7 million, partially offset by an increase of $12.3 million in non-interest income and a decrease in income tax expense of $3.0 million attributable in part to the $9.7 million bargain purchase gain from its Noah Bank acquisition in May of 2023 that is not taxable.
This year-to-date decrease was primarily the result of a $9.7 bargain purchase gain which included a tax benefit of $2.0 million in 2023 from the Company’s acquisition of Noah Bank in May of 2023, and the purchase accounting adjustments recorded in 2024 related to the CFC acquisition, which included an increase of $1.5 million in the provision for credit losses when comparing both periods.
Our interest rate sensitivity also is 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.
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.
This decrease was due to the $9.7 million non-taxable bargain purchase gain from the Noah Bank acquisition, partially offset by $274 thousand of merger-related expenses that were not tax-deductible. 39 Table of Contents Average Balance Sheets. The following table sets forth average balance sheets, yields and costs, and certain other information for the years indicated.
This decrease was due to the income taxes on the $9.7 million bargain purchase gain from the Noah Bank acquisition, recorded in the year ended December 31, 2023, and an increase in 2024 merger related expenses of $2.2 million when comparing the years ended December 31, 2024 and 2023. 50 Table of Contents Average Balance Sheets.
The increase was primarily due to the $17.9 million increase in retained earnings, consisting of $25.8 million in net income, the issuance of 50,900 shares resulting from the exercise of stock options and $807,000 of compensation expense related to restricted stock units, partially offset by $7.4 million of cash dividends recorded during the period.
The increase was primarily due to the $21.6 million increase in paid-in capital which is primarily associated with the issuance of $20.0 million of common stock related to the acquisition of CFC, and an increase in retained earnings of $2.5 million, which consisted of $10.2 million in net income partially offset by $7.7 million of cash dividends recorded during the period, which increase was partially offset by an increase in accumulated other comprehensive loss of $1.4 million.
Change in Interest Rates Net Portfolio Value NPV as % of Portfolio Value of Assets In Basis Points (Rate Shock) Amounts $Change % Change NPV Ratio Change (Dollars in thousands) 300 $ 188,005 $ 1,581 0.85 % -10.79% -4.74 % 200 $ 194,762 $ 8,338 4.47 % -9.01% -2.97 % 100 $ 193,426 $ 7,002 3.76 % -7.48% -1.43 % Static $ 186,424 $ — -6.05% (100) $ 198,504 $ 12,080 6.48 % -4.11% 1.94 % (200) $ 215,642 $ 29,218 15.67 % -2.17% 3.88 % (300) $ 216,134 $ 29,710 15.94 % -0.34% 5.71 % As is the case with the GAP Table, certain shortcomings are inherent in the methodology used in the above interest rate risk measurements.
Change in Interest Rates Net Portfolio Value NPV as % of Portfolio Value of Assets In Basis Points (Rate Shock) Amounts $ Change % Change EVE/EVA 1 Change (Dollars in thousands) 300 $ 307,333 $ (37,478 ) -10.87 % 14.05% (0.81 ) 200 $ 322,552 $ (22,259 ) -6.46 % 14.46% (0.40 ) 100 $ 334,236 $ (10,575 ) -3.07 % 14.69% (0.17 ) Static $ 344,811 $ — 14.86% (100) $ 357,192 $ 12,381 3.59 % 15.12% 0.26 (200) $ 361,831 $ 17,020 4.94 % 15.11% 0.25 (300) $ 352,480 $ 7,669 2.22 % 14.55% (0.31 ) 1 Economic Value of Equity (EVE) divided 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.
Comparison of Financial Condition at December 31, 2023 and December 31, 2022 General. Total assets were $1.92 billion at December 31, 2023, an increase of $314.7 million, or 19.7% when compared to $1.60 billion at the end of 2022 due primarily to the Noah acquisition.
Total assets were $2.34 billion at December 31, 2024, an increase of $423.7 million, or 22.11% when compared to $1.92 billion at the end of 2023. The primary reasons for the increase in total assets were the acquisition of CFC on August 23, 2024, which had approximately $303.5 million in assets at closing, and increases from existing core operations.
The results for 2023 were significantly impacted by purchase accounting adjustments resulting from the Noah Bank acquisition. Net interest income. Net interest income for the twelve-month period ended December 31, 2023 was $65.0 million, a decrease of $3.1 million, or 4.5%, from 2022.
Net interest income. Net interest income for the twelve-month period ended December 31, 2024, was $66.5 million, an increase of $1.5 million, or 2.3%, from 2023. The increase from the previous year was the result of an increase in interest income of $24.8 million, or 25.2%, partially offset by an increase in interest expense of $23.3 million, or 70.1%.
Other interest and dividends increased $5.5 million, or 595.0%, to $6.4 million for the year ended December 31, 2023, compared to $923,000 for the prior year due to an increase in federal funds sold.
Interest income and fees on loans increased $19.3 million, or 21.6%, to $108.6 million for the year ended December 31, 2024, compared to $89.3 million for the prior year.
Removed
The primary components of the increase in total assets were an increase in loans of approximately $178.0 million and an increase in cash and cash equivalents of approximately $97.2 million.
Added
We also seek to generate fee income from various sources, subject to our desire to maintain competitive pricing within our market area. 46 Table of Contents Our recognition of, and commitment to, the needs of the local community, combined with highly personalized and responsive customer service, differentiates us from our competition.
Removed
The increase in loans receivable primarily consisted of a $269.3 million increase in commercial real estate loans and a $19.6 million increase in commercial and industrial loans, partially offset by a $107.4 million decrease in construction loans during the twelve-month period covered. 37 Table of Contents Total liabilities increased by $294.1 million to $1.68 billion at December 31, 2023 from $1.38 billion at December 31, 2022.
Added
Cash and cash equivalents Cash and cash equivalents decreased $33.2 million, or 22.06%, to $117.3 million at December 31, 2024 compared to December 31, 2023. Investment securities Total available-for-sale investment securities increased million $155.8, or 170.57%, to $247.2 million at December 31, 2024 compared to December 31, 2023.
Removed
Total deposits at December 31, 2023 increased by $288.0 million, or 21.4%, when compared to December 31, 2022, primarily due to increases of $299.5 million in time deposits and $70.4 million in money market deposits partially offset by decreases in savings of $44.2 million, $21.8 million in interest checking, and $15.8 million in non-interest checking.
Added
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 CFC acquisition during the year ended December 31, 2024.
Removed
The decrease from the previous year was the result of an increase in interest expense of $27.2 million, or 452.7%, partially offset by an increase in interest income of $24.1 million, or 32.5%, both as a result of the 525 basis-point increase in federal funds interest rates since March 2022 and management’s strategic initiative to maintain high levels of primary liquidity in this uncertain rate environment.
Added
Loans Loans, net of deferred loan fees and costs, increased $270.5 million, or 17.47%, to $1.82 billion at December 31, 2024 compared to December 31, 2023. The primary reasons for the increase in net loans were the $255.5 million in loans acquired from CFC and a $15.0 million increase from existing operations.
Removed
This increase was attributable to a 59 basis point increase in the yield earned on the securities portfolio, partially offset by a $7.2 million decrease in average balances.
Added
The increase in the Company’s net loans consisted of increases of $242.2 million in commercial real estate loans, $41.9 million in commercial and industrial loans, $30.0 million in residential mortgages, and $10.1 in home equity and consumer loans, all partially offset by a decrease of $53.0 million in construction loans.
Removed
Nonaccrual loans are included in the average balance of loans receivable, net for all periods presented.
Added
The Company’s CRE loan portfolio, which includes multi-family, land, owner-occupied and non-owner-occupied CRE loans, was $1.39 billion or 76.1% of total loans of $1.82 billion at December 31, 2024. There were 774 loans in the Company’s CRE portfolio with an average and median loan size of $1.8 million and $0.6 million, respectively.
Removed
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.
Added
LTV estimates are less than 70% for $1.27 billion or 92.1% of the CRE portfolio and less than 80% for $1.37 billion or 99.3% of the CRE portfolio. 47 Table of Contents 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): December 31, 2024 December 31, 2023 Commercial Real Estate Balance % of portfolio Weighted Average LTV Balance % of portfolio Weighted Average LTV Multi Family 533,287 38.6 % 53.6 % 403,779 35.3 % 55.7 % Owner Occupied 407,798 29.4 % 36.3 % 347,734 30.4 % 33.0 % Land 25,241 1.8 % 73.9 % 30,280 2.6 % 79.6 % Non Owner Occupied Office Building 104,388 7.5 % 43.5 % 91,968 8.0 % 42.9 % Retail 100,771 7.3 % 42.5 % 67,862 5.9 % 40.7 % Industrial/Warehousing 73,417 5.3 % 44.9 % 69,917 6.1 % 46.0 % Mixed Use 48,076 3.5 % 43.7 % 48,684 4.3 % 42.9 % Restaurants 22,650 1.6 % 39.3 % 15,361 1.3 % 33.3 % Healthcare 10,268 0.7 % 53.3 % 11,448 1.0 % 48.7 % Other 59,189 4.3 % 45.6 % 55,830 4.9 % 38.7 % Total non owner occupied 418,759 30.2 % 361,070 31.6 % Total Commercial Real Estate 1,385,085 100.0 % 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): December 31, 2024 December 31, 2023 Balance % of portfolio Balance % of portfolio Geographical Market New York 639,994 46.1 % 533,991 46.7 % New Jersey 540,896 39.1 % 408,368 35.7 % Pennsylvania 184,084 13.3 % 172,848 15.1 % Other 20,111 1.5 % 27,657 2.5 % 1,385,085 100.00 % 1,142,864 100.00 % At December 31, 2024, non-performing assets totaled $27.1 million, an increase of $20.4 million when compared to the amount at December 31, 2023.
Removed
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. 43 Table of Contents 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 $ 12,953 $ 7,633 $ 11,048 $ 11,502 $ 58,822 $ (10,413 ) $ 91,545 Loans receivable 458,104 239,716 376,200 405,918 61,229 (11,324 ) 1,529,843 Other interest-earnings assets (2) 133,401 — — — — 17,156 150,557 Non-interest-earning assets — — — — — 144,552 144,552 Total assets $ 604,458 $ 247,349 $ 387,248 $ 417,420 $ 120,051 $ (4,581 ) $ 1,916,497 Interest-bearing liabilities: Checking and savings accounts $ 394,423 $ — $ — $ — $ — $ — $ 394,423 Money market accounts 354,005 — — — — — 354,005 Certificate accounts 94,627 429,863 112,106 1,435 — — 638,031 Borrowings — — — — — — — Total interest-bearing liabilities $ 843,055 $ 429,863 $ 112,106 $ 1,435 $ — $ — $ 1,386,459 Interest-earning assets less interest-bearing liabilities $ (238,597 ) $ (182,514 ) $ 275,142 $ 415,985 $ 120,051 $ (4,581 ) $ 530,038 Cumulative interest-rate sensitivity gap (3) $ (238,597 ) $ (421,111 ) $ (145,969 ) $ 270,016 $ 390,067 Cumulative interest-rate gap as a percentage of total assets at December 31, 2023 -12.45 % -21.97 % -7.62 % 14.09 % 20.35 % Cumulative interest-earning assets as a percentage of cumulative interest-bearing liabilities at December 31, 2023 71.70 % 66.92 % 89.46 % 119.48 % 128.13 % (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.
Added
The increase was due to the delinquency of two commercial real estate loans totaling $25.4 million with collateral supporting each loan. The Company is a participant in these loans and is currently evaluating its options with the lead bank, including but not limited to placing the loans on the market for sale.
Added
Deposits Total deposits on December 31, 2024, increased $396.9 million, or 24.26%, when compared to December 31, 2023. The primary reasons for the increase in total deposits were the $282.8 million in deposits acquired from CFC and an increase of $114.1 million from existing branch operations.
Added
The increase in the Company’s deposits consisted of increases in money market deposits of $136.5 million, certificates of deposit of $131.6 million, interest-bearing demand deposits of $52.6 million, non-interest-bearing deposits of $51.7 million, and savings deposits of $24.4 million.
Added
Net loan fees of $4.1 million and $2.8 million were recorded for the twelve months ended December 31, 2024 and 2023, respectively. Nonaccrual loans are included in the average balance of loans receivable, net for all periods presented. No tax-equivalent adjustments have been made as they were deemed insignificant.
Added
Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
Added
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 $ 15,364 $ 36,842 $ 59,335 $ 35,919 $ 113,336 $ (13,464 ) $ 247,332 Loans receivable 443,443 219,100 541,988 502,376 103,380 (15,069 ) 1,795,218 Other interest-earnings assets (2) 102,508 — — — — — 102,508 Total interest-earning assets $ 561,315 $ 255,942 $ 601,323 $ 538,295 $ 216,716 $ (28,533 ) $ 2,145,058 Interest-bearing liabilities: Checking and savings accounts $ 471,439 $ — $ — $ — $ — $ 471,439 Money market accounts 490,543 — — — — — 490,543 Certificate accounts 145,858 582,477 38,162 3,174 — — 769,671 Borrowings — — — — — — — Total interest-bearing liabilities $ 1,107,840 $ 582,477 $ 38,162 $ 3,174 $ — $ — $ 1,731,653 Interest-earning assets less interest-bearing liabilities $ (546,525 ) $ (326,535 ) $ 563,161 $ 535,121 $ 216,716 $ (28,533 ) $ 413,405 Cumulative interest-rate sensitivity gap (3) $ (546,525 ) $ (873,060 ) $ (309,899 ) $ 225,222 $ 441,938 Cumulative interest-rate gap as a percentage of total assets at December 31, 2024 -23.35 % -37.31 % -13.24 % 9.62 % 18.88 % Cumulative interest-earning assets as a percentage of cumulative interest-bearing liabilities at December 31, 2024 50.67 % 48.35 % 82.07 % 113.01 % 125.52 % (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.
Added
Cautionary Note 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 SEC, in its reports to stockholders and in other communications by the Company (including this report), 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 Exchange Act. 57 Table of Contents 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).
Added
The following factors, among others, could cause the Company’s financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the extent of the adverse impact of any current or future pandemics or other natural disasters on our customers, prospects and business, including related supply chain shortage of goods; 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 the Bank conduct operations; the imposition of tariffs or other domestic or international governmental policies impacting the value of the products of our borrowers; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; market volatility; the value of the Bank’s products and services as perceived by actual and prospective customers, including the features, pricing and quality compared to competitors’ products and services; the willingness of customers to substitute competitors’ products and services for the Bank’s products and services; credit risk associated with the Bank’s lending activities; risks relating to the real estate market and the Bank’s real estate collateral; the impact of changes in applicable laws and regulations and requirements arising out of our supervision by banking regulators; other regulatory requirements applicable to the Company and the Bank; the timing and nature of the regulatory response to any applications filed by the Company and the Bank; technological changes; acquisitions and difficulties and delays in integrating the businesses of the acquired company, including CFC, and the Company fully realizing cost savings and other benefits of such acquisitions; changes in consumer spending and saving habits; those risks described in Item 1.
Added
“Business,” Item 1A. “Risk Factors” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report; 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.
Added
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.

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