Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20429 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-41589 PRINCETON BANCORP, INC. (Exact name of registrant as specified in its charter) Pennsylvania 88-4268702 (State or o ...

Loan Portfolio - As of December 31, 2024, the total loan portfolio amounted to $1.83 billion, with commercial real estate and multi-family loans constituting $1.39 billion, or 76.1% of total loans[26] - The commercial real estate portfolio increased by $242.2 million, or 21.1%, from December 31, 2023, when it was $1.14 billion, or 73.8% of total loans[26] - Commercial and industrial loans reached $93.0 million, representing 5.1% of the total loan portfolio, with an increase of $42.0 million, or 82.2%, since December 31, 2023[32] - Construction loans totaled $257.2 million, or 14.1% of total loans, reflecting a decrease of $53.0 million, or 17.1%, since December 31, 2023[35] - Residential first-lien mortgage loans amounted to $68.0 million, or 3.7% of the total portfolio, with a significant increase of $30.0 million, or 78.8%, since December 31, 2023[38] - Loans receivable, net increased from $1.55 billion at December 31, 2023, to $1.82 billion at December 31, 2024, an increase of $270.5 million, or 17.5%[40] - The acquisition of CFC in August 2024 resulted in an increase of $255.5 million to the loan portfolio[40] - As of December 31, 2024, the company's total loan portfolio includes approximately $1.39 billion in commercial real estate loans, representing 76.1% of the total[147] - The company has $257.2 million in construction loans, accounting for 14.1% of the total loan portfolio as of December 31, 2024[147] - The lending limit to one borrower under regulatory guidelines is $40.6 million, with an internal limit set at approximately $30.5 million[129] Non-Performing Assets and Credit Losses - Total non-performing assets increased to $27.1 million as of December 31, 2024, up $20.4 million from December 31, 2023[59] - The allowance for credit losses on loans was $23.7 million as of December 31, 2024, compared to $18.5 million as of December 31, 2023, reflecting a $5.2 million increase[58] - Nonaccrual loans totaled $26.8 million as of December 31, 2024, representing 1.47% of total loans outstanding[60] - The allowance for credit losses to total loans outstanding increased to 1.30% in 2024 from 1.19% in 2023[60] - The company recorded net charge-offs of $353 thousand during 2024, compared to $1.8 million in 2023[60] - Commercial real estate loans accounted for 76.1% of the allowance for credit losses in 2024, up from 73.7% in 2023[62] - The company is evaluating options regarding two delinquent commercial real estate loans totaling $25.4 million[59] - The allowance for credit losses may not be adequate to cover actual losses, and regulatory agencies may require an increase in this allowance, adversely affecting earnings[157] Deposits and Equity - 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%[85] - Non-interest-bearing deposits increased by $51.7 million, or 20.7%, to $301.0 million at December 31, 2024[85] - Interest-bearing deposits increased by $345.2 million, or 24.9%, including $215.2 million acquired from CFC[85] - Average total deposits for the year ended December 31, 2024, were $1.83 billion, an increase of $318.9 million from $1.51 billion for the year ended December 31, 2023[183] - Total stockholders' equity increased by $21.8 million, or 9.09%, to $261.5 million at December 31, 2024[89] - The ratio of equity to total assets decreased from 12.5% at December 31, 2023, to 11.2% at December 31, 2024[89] Acquisitions and Market Presence - The Company completed the acquisition of Noah Bank on May 19, 2023, and Cornerstone Financial Corporation on August 23, 2024, enhancing its market presence[16][17] - Goodwill increased by $5.5 million to $14.4 million at December 31, 2024, related to the acquisition of CFC[71] Regulatory Environment - The common equity Tier 1 capital requirement is at least 4.5% of risk-weighted assets, with the Bank meeting all capital adequacy requirements on a fully phased-in basis as of December 31, 2023[112][115] - The Federal Reserve has paused major rulemakings until a new vice chair for supervision is confirmed, affecting regulatory oversight[101][102] - The Community Reinvestment Act (CRA) rating is "satisfactory" as of December 31, 2024, with new regulations expected to take effect in 2024 and 2026[123] - The limit for federal deposit insurance is $250,000, with potential adverse effects on operating expenses if insurance assessments increase[106] - The Bank is classified as a "small bank holding company" with less than $3 billion in consolidated assets, exempting it from certain capital requirements[118] - The Dodd-Frank Act expands limitations on affiliate transactions, impacting the Company's operational flexibility[98] - The Bank's leverage capital requirement is at least 3.0% of adjusted total assets, with additional requirements for other banking associations[113] - The Federal Reserve may require the Company to provide adequate capital funds to the Bank during financial stress[99] - The Company is prohibited from paying dividends if it would result in being undercapitalized or in default of any assessment due to the FDIC[108] Competition and Market Conditions - The Company faces substantial competition in both loan origination and deposit attraction, impacting net interest income and overall profitability[20][21] - Increased competition from other financial institutions may adversely affect profitability, as competitors may offer higher interest rates on deposits and lower rates on loans[181] - The company faces substantial competition in originating loans, primarily from banks, credit unions, and mortgage companies within a 100-mile radius of Princeton[179] - Market conditions and economic cyclicality may adversely affect the company's industry, leading to increased delinquencies and default rates[174] Economic Risks - A recession in the local economy could impair commercial real estate borrowers' ability to repay loans, potentially increasing nonperforming loans and negatively impacting net income[152] - The company is exposed to risks from economic downturns, which could lead to increased credit losses and negatively affect financial condition[156] - Inflation poses a risk to the company's business and its customers, potentially leading to increased loan delinquencies and non-performing assets[172] - The financial services industry is experiencing volatility, with changes in interest rates impacting net interest income, a significant portion of the company's earnings[159] - Instability in global economic conditions and geopolitical matters could materially affect the company's results of operations and financial condition[175] Operational Risks - The company faces increased regulatory scrutiny and potential changes in legislation that could impact its operating environment[142] - The company must maintain high underwriting standards to ensure safe asset growth, as weakening these standards could lead to loan defaults and increased credit loss allowances[184] - The company relies on third parties for key business infrastructure, and failures in these systems could disrupt operations and damage reputation[189] - The company utilizes AI for operational efficiency and customer service, but does not use it for decision-making processes, mitigating potential risks associated with AI[193] - Cybersecurity risks remain a significant concern, with potential exposure to cyber-attacks that could compromise confidential information and disrupt operations[198] - The sophistication of cyber threat actors has escalated, leading to increased risks of cyber-attacks and information security breaches[201] - The potential material loss from cyber-attacks could result in significant business disruption, reputational damage, and regulatory fines[203] - The Bank's existing insurance coverage may not adequately compensate for losses from major cyber-attacks[204] - The perception of a successful cyber-attack could damage the Bank's reputation with customers and clients, regardless of the actual occurrence[203] Employee and Growth Management - Attracting and retaining skilled employees is critical for managing growth and ensuring long-term profitability[209] - The loss of executive officers or key personnel could adversely affect the implementation of the Bank's long-term business strategy[211] - The Bank's growth strategy has substantially increased expenses, impacting results of operations, particularly in compensation and leasehold expenses[208] Reputation and Customer Confidence - Maintaining a strong reputation is essential for the company’s success, as any damage could adversely affect client confidence and operational results[185] - The increasing use of social media platforms presents new risks, including improper disclosure of proprietary information and negative publicity[205] - The ability to monitor third-party cybersecurity practices is limited, increasing the risk of breaches impacting the Bank's confidential information[202]

Core Insights - Princeton Bancorp reported revenue of $20.03 million for Q4 2024, a year-over-year increase of 12.6% [1] - The earnings per share (EPS) for the same period was $0.75, down from $0.82 a year ago [1] - Revenue fell short of the Zacks Consensus Estimate by 5.59%, which was $21.22 million [1] - The EPS also missed the consensus estimate of $0.86 by 12.79% [1] Financial Metrics - Efficiency Ratio was reported at 62.6%, slightly higher than the estimated 61.8% [4] - Net Interest Margin was 3.3%, below the average estimate of 3.6% [4] - Total Noninterest Income was $2.03 million, compared to the estimated $2.20 million [4] - Net Interest Income was reported at $18.01 million, lower than the average estimate of $19.36 million [4] Stock Performance - Shares of Princeton Bancorp have returned -3.2% over the past month, while the Zacks S&P 500 composite increased by 0.8% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market [3]

Group 1: Earnings Performance - Princeton Bancorp reported quarterly earnings of $0.75 per share, missing the Zacks Consensus Estimate of $0.86 per share, and down from $0.82 per share a year ago, representing an earnings surprise of -12.79% [1] - The company posted revenues of $20.03 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 5.59%, compared to year-ago revenues of $17.79 million [2] Group 2: Stock Performance and Outlook - Princeton Bancorp shares have lost about 3.5% since the beginning of the year, while the S&P 500 has gained 2.2% [3] - The current consensus EPS estimate for the coming quarter is $0.81 on revenues of $21.11 million, and for the current fiscal year, it is $3.55 on revenues of $87.58 million [7] Group 3: Industry Context - The Zacks Industry Rank for Banks - Northeast is currently in the top 9% of over 250 Zacks industries, indicating strong performance potential [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that investors can track these revisions for insights [5]

Company Update - Brian Schoener has joined The Bank of Princeton as Vice President, Commercial Loan Officer for the Mercer County Region [1] - Brian Schoener brings over 25 years of experience in the banking industry, including roles at Northfield Bank, Santander Bank, and TD Bank [2] - Brian Schoener will be based out of The Bank of Princeton's Lambertville Office located at 10 Bridge Street, Lambertville, NJ [2] Industry Expertise - Brian Schoener has a wealth of experience in commercial lending and business banking, with longstanding ties within local and regional communities [2] - He has successfully worked with a wide range of clients across diverse industries, showcasing his ability to deliver tailored financial solutions [2] Strategic Growth - The Bank of Princeton is focused on growing its commercial and small business lending, cash management, and deposit portfolio [2] - Brian Schoener's expertise and dedication are expected to be an invaluable addition to the team as the bank continues its growth strategy [2]

Core Viewpoint - Princeton Bancorp (BPRN) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of earnings estimate revisions, which are strongly correlated with near-term stock price movements [4][6]. - Rising earnings estimates for Princeton Bancorp suggest an improvement in the company's underlying business, likely leading to an increase in stock price [5][11]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7][9]. - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, indicating superior earnings estimate revisions [10][11]. Earnings Estimate Details - For the fiscal year ending December 2024, Princeton Bancorp is expected to earn $2.98 per share, reflecting a year-over-year change of -26.1% [8]. - Over the past three months, the Zacks Consensus Estimate for Princeton Bancorp has increased by 0.3% [8].

Core Insights - Three stocks with strong income characteristics and buy rank are highlighted for investors to consider on December 12 Group 1: Alpine Income Property Trust, Inc. (PINE) - This real estate investment trust has seen a 3.6% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] Group 2: ZIM Integrated Shipping Services Ltd. (ZIM) - This container shipping provider has experienced a significant 35.7% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days - The company has a dividend yield of 6.4%, which is higher than the industry average of 4.2% [2] Group 3: Princeton Bancorp, Inc. (BPRN) - This bank holding company for The Bank of Princeton has seen a 1.4% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days - The company has a dividend yield of 5.7%, compared to the industry average of 3.6% [3] Group 4: Additional Insights - Another company mentioned has a dividend yield of 3.2%, which exceeds the industry average of 2.4% [4]

Core Viewpoint - Princeton Bancorp, Inc. (BPRN) is highlighted as a stock with a buy rank and strong income characteristics, making it a potential investment opportunity for investors as of December 4 [1]. Group 1: Earnings Estimates - The Zacks Consensus Estimate for Princeton Bancorp's current year earnings has increased by 1.4% over the last 60 days [1]. Group 2: Dividend Yield - Princeton Bancorp offers a dividend yield of 3.2%, which is higher than the industry average of 2.4% [2].

Financial Performance - The company reported a net loss of $4,456 thousand for the three months ended September 30, 2024, compared to a net income of $7,598 thousand in the same period of 2023[9]. - Earnings per common share for the three months ended September 30, 2024, was $(0.68), a decline from $1.21 in the same period of 2023[9]. - Net income for the nine months ended September 30, 2024, was $5,015,000, a decrease from $20,483,000 for the same period in 2023[13]. - Comprehensive income for the nine months ended September 30, 2024, was $6,623 thousand, down from $17,163 thousand in 2023, indicating a decrease of about 61.4%[10]. - The company reported a net cash used in investing activities of $101,205,000 in 2024, contrasting with a net cash provided of $49,617,000 in 2023[13]. Asset Growth - Total assets increased to $2,354,730 thousand as of September 30, 2024, up from $1,916,497 thousand at December 31, 2023, representing a growth of 22.7%[7]. - Total stockholders' equity as of September 30, 2024, increased to $261,502 thousand from $232,208 thousand as of September 30, 2023, reflecting an increase of approximately 12.6%[11]. - The company’s cash and cash equivalents totaled $181,058 thousand as of September 30, 2024, up from $150,557 thousand at December 31, 2023, marking a 20.3% increase[7]. Loans and Credit Losses - Loans receivable net of deferred fees and costs rose to $1,831,407 thousand, an increase of 18.3% from $1,548,335 thousand at the end of 2023[7]. - The allowance for credit losses increased to $23,200 thousand as of September 30, 2024, from $18,492 thousand at December 31, 2023, indicating a proactive approach to potential credit risks[7]. - Provision for credit losses increased to $4,669,000 in 2024 from $2,546,000 in 2023, indicating a rise of approximately 83.5%[13]. Deposits - Total deposits reached $2,046,001 thousand, up 25.2% from $1,635,741 thousand at December 31, 2023[7]. - The net increase in deposits for the nine months ended September 30, 2024, was $127,503,000, compared to $98,536,000 in 2023, reflecting an increase of approximately 29.4%[13]. Non-Interest Income and Expenses - Non-interest income decreased significantly to $2,056 thousand for the three months ended September 30, 2024, compared to $2,403 thousand in the same period of 2023[9]. - Total non-interest expense surged to $20,144 thousand for the three months ended September 30, 2024, compared to $10,159 thousand in the same period of 2023, reflecting a 98.1% increase[9]. - Non-interest expense increased to $44.0 million for the nine-month period ended September 30, 2024, from $37.7 million in the same period in 2023, primarily due to merger-related expenses and increased salaries[152]. Acquisitions - The company completed the acquisition of Cornerstone Financial Corporation on August 23, 2024, with a total goodwill recorded of $5.5 million[30]. - The acquisition of Cornerstone Financial Corporation involved 525,946 shares at a price of $38.09 per share, totaling $20,033 thousand[11]. - The total purchase price assigned to Cornerstone Financial Corporation was $20.03 million, with $5.5 million recorded as goodwill on the Consolidated Statement of Financial Condition[30][31]. Market and Economic Conditions - The unemployment rate in New Jersey was 4.6% as of September 30, 2024, reflecting a tight labor market[113]. - The Federal Reserve has increased short-term interest rates to combat inflation, which has implications for economic activity and financial transactions[105]. Interest Income and Expense - Interest income increased by $4.8 million, with loan interest rising by $4.6 million due to a $226.9 million increase in average loan balances and a 25 basis point yield increase[137]. - Interest expense on deposits rose by $19.3 million to $40.8 million for the nine-month period ended September 30, 2024, driven by a 126 basis point increase in the rate paid on interest-bearing deposits and a $284.6 million increase in average balances[149]. Credit Quality - The total past due loans amounted to $33,869 thousand as of September 30, 2024, with $2,334 thousand being more than 90 days past due[62]. - Non-performing assets decreased by $4.4 million to $2.3 million, representing 0.13% of total loans compared to 0.43% at December 31, 2023[122].

Company Performance - Princeton Bancorp reported quarterly earnings of $0.63 per share, matching the Zacks Consensus Estimate, but down from $1.02 per share a year ago [1] - The bank's revenues for the quarter ended September 2024 were $19.17 million, slightly missing the Zacks Consensus Estimate by 0.70%, and showing a marginal increase from $19.09 million year-over-year [2] - The company has surpassed consensus EPS estimates three times in the last four quarters [1] Market Comparison - Princeton Bancorp shares have increased by approximately 1.1% since the beginning of the year, in contrast to the S&P 500's gain of 22.1% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.83 on revenues of $21.1 million, and for the current fiscal year, it is $2.94 on revenues of $75.9 million [7] - The estimate revisions trend for Princeton Bancorp is currently unfavorable, resulting in a Zacks Rank 5 (Strong Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Banks - Northeast industry, to which Princeton Bancorp belongs, is currently ranked in the top 16% of over 250 Zacks industries, suggesting a favorable industry outlook [8]