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Princeton Bancorp, Inc.

BPRN
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Business Summary

Princeton Bancorp, Inc. (the "Company") operates as a bank holding company for The Bank of Princeton (the "Bank"), a New Jersey state-chartered banking institution providing full-service personal and business lending and deposit services . The Bank's market area generally extends within an approximate 50-mile radius of Princeton, NJ, encompassing parts of Burlington, Camden, Gloucester, Hunterdon, Mercer, Middlesex, Ocean, and Somerset Counties in New Jersey, as well as portions of Philadelphia, Montgomery, and Bucks Counties in Pennsylvania. Additionally, the Bank maintains two retail branches and conducts loan origination activities in select areas of the New York City metropolitan area .

The Company faces substantial competition in originating commercial and consumer loans from other banks, savings institutions, mortgage banking companies, and other lenders, many of whom possess greater financial resources, higher lending limits, more aggressive marketing, better brand recognition, wider geographic presence, more accessible branch locations, and the ability to offer a broader array of services or more favorable pricing . In attracting deposits, the Company competes with other insured depository institutions and institutions offering uninsured investment alternatives, which may offer higher interest rates . The Company's competitive strategy centers on value and service, building customer relationships by addressing their full banking needs, demonstrating expertise, providing convenience through its branch and ATM network, and competitive pricing . The Company also monitors FinTechs and larger technology platform companies, seeking partnership and investment opportunities in technology-driven companies to augment its distribution and product capabilities .

The core business model involves generating revenue primarily through net interest income, derived from the spread between interest earned on loans and securities and interest paid on deposits and borrowings . The Company offers a traditional range of deposit products, including checking, savings, attorney trust, money market accounts, and certificates of deposit . Lending activities are concentrated in commercial real estate, multi-family, construction, commercial and industrial, residential first-lien mortgage, and home equity/consumer loans . The Company aims to establish and retain customer relationships by offering competitively priced financial services and products to small businesses, professionals, and individuals, delivered with personalized service .

The loan portfolio is significantly concentrated in commercial real estate and multi-family loans, which totaled $1.34 billion , representing 73.9% of total loans receivable at December 31, 2025. This segment decreased by $41.6 million , or 3.0% , from December 31, 2024. The average commercial and multi-family real estate loan size was approximately $1.8 million at December 31, 2025. Construction loans amounted to $209.5 million , or 11.5% of total loans receivable, decreasing by $47.7 million , or 18.5% , from December 31, 2024. Commercial and industrial loans aggregated $76.6 million , or 4.2% of the total loan portfolio, a decrease of $16.3 million , or 17.6% , from December 31, 2024. Residential first-lien mortgage loans increased by $95.8 million , or 140.8% , to $163.8 million , representing 9.0% of the total portfolio, primarily due to loan purchases during 2025. Home equity and consumer loans increased by $7.2 million .

For the year ended December 31, 2025, the Company reported net income of $18.6 million , or $2.71 per diluted common share, an increase from $10.2 million , or $1.55 per diluted common share, in 2024. Total assets decreased by $55.1 million , or 2.35% , to $2.29 billion at December 31, 2025, from $2.34 billion at December 31, 2024. Net interest income increased by $9.3 million , or 14.0% , to $75.8 million in 2025, from $66.5 million in 2024. The provision for credit losses was $6.7 million in 2025, up from $5.1 million in 2024. Non-interest income increased by $312 thousand , or 3.8% , to $8.467 million . Non-interest expense decreased by $2.8 million to $53.9 million , primarily due to acquisition-related expenses of $7.8 million recorded in 2024. Cash and cash equivalents increased by $18.3 million , or 15.6% , to $135.7 million . Total deposits decreased by $56.4 million , or 2.78% , to $1.98 billion . Total stockholders' equity increased by $8.7 million , or 3.31% , to $270.712 million . The ratio of equity to total assets was 11.9% at December 31, 2025, compared to 11.2% at December 31, 2024. The Company had no outstanding borrowings at December 31, 2025 .

The increase in net income for 2025 was primarily attributed to the reduction in net income in 2024 due to purchase accounting adjustments related to the Cornerstone Financial Corporation (CFC) acquisition, including merger-related expenses of $7.8 million . Total interest and dividend income increased by $7.6 million , or 6.2% , to $130.6 million in 2025, driven by a $166.0 million increase in the average balance of loans and a $73.9 million increase in the average balance of securities, partially offset by a decrease in the yield on earning assets of 8 basis points . Interest expense decreased by $1.7 million , or 3.0% , due to a 37 basis point decrease in the cost of interest-bearing deposits, partially offset by a $125.2 million increase in average interest-bearing deposits. Non-interest expense decreased due to the absence of the $7.8 million acquisition-related expenses incurred in 2024, despite increases in salaries and employee benefits of $1.7 million , data processing and communications of $1.1 million , professional fees of $763 thousand , occupancy and equipment of $527 thousand , and federal deposit insurance of $448 thousand in 2025.

During 2025, the Company completed no acquisitions. However, on August 23, 2024, the Company acquired Cornerstone Financial Corporation (CFC), which included Cornerstone Bank, a New Jersey chartered state bank primarily serving the southern New Jersey market . This acquisition involved the Company issuing its common stock at an exchange ratio of 0.24 shares of Company common stock per share of Cornerstone's common stock, based on a closing price of $38.09 per share on August 23, 2024. The acquisition resulted in $5.5 million of goodwill and merger-related expenses of $7.8 million . The Company also purchased approximately $108.2 million in residential loans and $8.7 million in consumer loans during the twelve months ended December 31, 2025.

Business Outlook

The Company's primary business objectives include providing banking services responsive to local needs, attracting deposits and loans through competitive pricing and service, and delivering a reasonable return to stockholders . The Company intends to continue pursuing a strategy that includes acquisitions, while acknowledging the significant risks involved such as finding suitable candidates, attracting funding, maintaining asset quality, retaining customers and key personnel, obtaining regulatory approvals, conducting due diligence, managing risks, and integrating acquired businesses . The market for acquisition targets is highly competitive, which may impact the Company's ability to find suitable candidates .

The Company expects to continue to realize income from the spread between the interest earned on loans, securities, and other interest-earning assets, and the interest paid on deposits and borrowings . A financial strategy that utilizes variable rates and matching assets and liabilities is expected to enable the Company to increase its net interest margin while managing interest rate risk . The Company also seeks to generate fee income from various sources, subject to maintaining competitive pricing and regulatory constraints .

The Company manages its liquidity in accordance with a board of directors-approved asset-liability policy, administered by its asset-liability committee (ALCO) . ALCO reports interest rate sensitivity, liquidity, capital, and investment-related matters quarterly to the board of directors . The Company reviews cash flow projections regularly and updates them to maintain liquid assets at levels believed to meet the requirements of normal operations, including loan commitments and potential deposit outflows . When needed, the Company can generate cash through borrowings from the Federal Home Loan Bank of New York (FHLB-NY), with remaining available capacity of $548.4 million at December 31, 2025, subject to certain collateral restrictions. Additionally, the Company had available borrowing capacity with Atlantic Community Bankers Bank of $10.0 million for short-term liquidity, generally for a period of not more than fourteen days .

The Company's business plan includes executing a variety of strategies to allocate and deploy any excess capital, such as continued organic balance sheet growth and diversification, stock repurchases, and payment of regular cash dividends . The Company will also consider acquisition opportunities to deploy capital when such opportunities are expected to significantly enhance long-term shareholder value . The Company declared a cash dividend of $0.35 per share of common stock on January 21, 2026, which was paid on February 27, 2026 .

The Company faces structural headwinds and execution risks, including the potential impact of a partial government shutdown, higher tariffs, higher inflation levels, and general economic concerns, which could lead to increased loan delinquencies, reduced financial transactions, difficulties in managing liquidity, and supply chain disruptions . Global conflicts, such as those involving Ukraine and the Russian Federation and in the Middle East, or other similar events, as well as government actions or trade restrictions, could adversely impact economic and market conditions for the Company and its clients . Interruption of customers' supply chains or changes in federal funding could negatively impact their business and ability to repay loans .

Risk Factors

The Company faces significant credit risk due to its substantial concentration in commercial real estate loans, which constituted 73.9% of its total loan portfolio at December 31, 2025, and commercial construction loans, representing 11.5% of the total loan portfolio at the same date. These loans carry a higher risk of nonpayment and loss, as repayment depends on the successful operation of a business or project, collateral may be difficult to sell, and loan terms often include balloon payments . Construction loans, in particular, involve additional risks related to estimating property value, project costs, and sales timelines, with potential for cost overruns and increased end-purchaser borrowing costs due to rising interest rates . A downturn in the local economy or commercial real estate market could increase loan delinquencies, defaults, and foreclosures, impairing collateral value and leading to material losses . The allowance for credit losses, which was $20.3 million at December 31, 2025, may not be adequate to cover actual losses, and regulatory agencies may require increases . Increases in market interest rates have decreased the fair value of available-for-sale securities, leading to unrealized losses, and forced sales to meet liquidity needs could result in realized losses, impacting capital and profitability . Operational risks include potential failures in internal control systems, data processing system failures, and customer or employee fraud, which, if uninsured or exceeding limits, could significantly affect the business . The Company relies on third parties for key business infrastructure, and their failure could disrupt operations, damage reputation, and lead to financial liability . The evolving nature of technology, including AI, presents risks of service interruptions, competitive harm, legal and regulatory actions, and reputational damage if AI models are flawed or misused . Cybersecurity threats, including denial of service attacks, hacking, and data corruption, pose a risk of disclosure of confidential information, business disruption, and significant legal and financial exposure . The Company is subject to extensive government regulation, which can change and impose substantial compliance costs, restrict activities, and affect profitability . Changes to tax laws, such as the New Jersey Corporate Transit Fee of 2.5% on taxable net income over $10 million , could adversely affect financial condition . The Company's lending limit to a single borrower, which was $40.6 million at December 31, 2025, may restrict growth and discourage potential borrowers with larger credit needs .

Management Priorities

Management emphasizes a continued focus 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, professionals, and individuals within its market area . The Company aims to provide superior customer service that is highly personalized, efficient, and responsive to local needs, supported by advanced delivery systems including ATMs, current operating software, timely reporting, and online bill pay . A key strategic priority is to continue pursuing an acquisition strategy, while acknowledging the inherent risks such as finding suitable candidates, attracting funding, maintaining asset quality, retaining customers and key personnel, obtaining regulatory approvals, conducting adequate due diligence, managing known and unknown risks, and integrating acquired businesses . Management also highlights its commitment to managing the balance sheet based on interrelated criteria such as interest rate changes, fluctuations in asset and liability categories, deposit account balance changes, prepayments, investment opportunities, lending originations, and capital provided by earnings, all while actively managing overall liquidity positions . The Board of Directors declared a cash dividend of $0.35 per share of common stock on January 21, 2026, which was paid on February 27, 2026 .

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Organization and Nature of Operations
  2. [2] Item 1, Business — General and Market Area
  3. [3] Item 1, Business — Competition
  4. [4] Item 1, Business — Competition
  5. [5] Item 1, Business — Competition
  6. [6] Item 1, Business — Competition
  7. [7] Item 7, MD&A — Overview and Strategy
  8. [8] Item 1, Business — Deposits
  9. [9] Item 1, Business — Lending Activities
  10. [10] Item 7, MD&A — Overview and Strategy
  11. [11] Item 1, Business — Commercial Real Estate and Multi-family
  12. [12] Item 1, Business — Commercial Real Estate and Multi-family
  13. [13] Item 1, Business — Commercial Real Estate and Multi-family
  14. [14] Item 1, Business — Commercial Real Estate and Multi-family
  15. [15] Item 1, Business — Commercial Real Estate and Multi-family
  16. [16] Item 1, Business — Construction Loans
  17. [17] Item 1, Business — Construction Loans
  18. [18] Item 1, Business — Construction Loans
  19. [19] Item 1, Business — Construction Loans
  20. [20] Item 1, Business — Commercial and Industrial Loans
  21. [21] Item 1, Business — Commercial and Industrial Loans
  22. [22] Item 1, Business — Commercial and Industrial Loans
  23. [23] Item 1, Business — Commercial and Industrial Loans
  24. [24] Item 1, Business — Residential First-Lien Mortgage Loans
  25. [25] Item 1, Business — Residential First-Lien Mortgage Loans
  26. [26] Item 1, Business — Residential First-Lien Mortgage Loans
  27. [27] Item 1, Business — Residential First-Lien Mortgage Loans
  28. [28] Item 7, MD&A — Loans
  29. [29] Item 7, MD&A — General
  30. [30] Item 7, MD&A — General
  31. [31] Item 7, MD&A — General
  32. [32] Item 7, MD&A — General
  33. [33] Item 7, MD&A — General
  34. [34] Item 7, MD&A — General
  35. [35] Item 7, MD&A — General
  36. [36] Item 7, MD&A — General
  37. [37] Item 7, MD&A — Net interest income
  38. [38] Item 7, MD&A — Net interest income
  39. [39] Item 7, MD&A — Net interest income
  40. [40] Item 7, MD&A — Net interest income
  41. [41] Item 7, MD&A — Provision for credit losses
  42. [42] Item 7, MD&A — Provision for credit losses
  43. [43] Item 7, MD&A — Non-interest income
  44. [44] Item 7, MD&A — Non-interest income
  45. [45] Item 7, MD&A — Non-interest income
  46. [46] Item 7, MD&A — Non-interest expense
  47. [47] Item 7, MD&A — Non-interest expense
  48. [48] Item 7, MD&A — Non-interest expense
  49. [49] Item 7, MD&A — Cash and cash equivalents
  50. [50] Item 7, MD&A — Cash and cash equivalents
  51. [51] Item 7, MD&A — Cash and cash equivalents
  52. [52] Item 7, MD&A — Deposits
  53. [53] Item 7, MD&A — Deposits
  54. [54] Item 7, MD&A — Deposits
  55. [55] Item 7, MD&A — Stockholders’ equity
  56. [56] Item 7, MD&A — Stockholders’ equity
  57. [57] Item 7, MD&A — Stockholders’ equity
  58. [58] Item 7, MD&A — Stockholders’ equity
  59. [59] Item 7, MD&A — Stockholders’ equity
  60. [60] Item 7, MD&A — Borrowings
  61. [61] Item 7, MD&A — General
  62. [62] Item 7, MD&A — Total interest and dividend income
  63. [63] Item 7, MD&A — Total interest and dividend income
  64. [64] Item 7, MD&A — Total interest and dividend income
  65. [65] Item 7, MD&A — Interest income and fees on loans
  66. [66] Item 7, MD&A — Interest income on securities
  67. [67] Item 7, MD&A — Total interest and dividend income
  68. [68] Item 7, MD&A — Interest expense
  69. [69] Item 7, MD&A — Interest expense
  70. [70] Item 7, MD&A — Interest expense
  71. [71] Item 7, MD&A — Interest expense
  72. [72] Item 7, MD&A — Non-interest expense
  73. [73] Item 7, MD&A — Non-interest expense
  74. [74] Item 7, MD&A — Non-interest expense
  75. [75] Item 7, MD&A — Non-interest expense
  76. [76] Item 7, MD&A — Non-interest expense
  77. [77] Item 7, MD&A — Non-interest expense
  78. [78] Item 1, Business — General and Market Area
  79. [79] Item 2, Note 2 — Business Combinations
  80. [80] Item 2, Note 2 — Business Combinations
  81. [81] Item 2, Note 2 — Business Combinations
  82. [82] Item 2, Note 2 — Business Combinations
  83. [83] Item 5, Note 5 — Loans Receivable
  84. [84] Item 5, Note 5 — Loans Receivable
  85. [85] Item 7, MD&A — Overview and Strategy
  86. [86] Item 7, MD&A — Overview and Strategy
  87. [87] Item 7, MD&A — Overview and Strategy
  88. [88] Item 1A, Risk Factors — CREDIT AND INTEREST RATE RISKS
  89. [89] Item 7, MD&A — Overview and Strategy
  90. [90] Item 7, MD&A — Overview and Strategy
  91. [91] Item 7, MD&A — Liquidity, Commitments and Capital Resources
  92. [92] Item 7, MD&A — Liquidity, Commitments and Capital Resources
  93. [93] Item 7, MD&A — Liquidity, Commitments and Capital Resources
  94. [94] Item 7, MD&A — Liquidity, Commitments and Capital Resources
  95. [95] Item 7, MD&A — Liquidity, Commitments and Capital Resources
  96. [96] Item 7, MD&A — Liquidity, Commitments and Capital Resources
  97. [97] Item 1A, Risk Factors — STRATEGIC RISKS
  98. [98] Item 1A, Risk Factors — STRATEGIC RISKS
  99. [99] Item 17, Note 17 — Subsequent Events
  100. [100] Item 17, Note 17 — Subsequent Events
  101. [101] Item 7, MD&A — Cautionary Note Regarding Forward-Looking Statements
  102. [102] Item 1A, Risk Factors — ECONOMIC RISKS
  103. [103] Item 1A, Risk Factors — ECONOMIC RISKS
  104. [104] Item 1A, Risk Factors — CREDIT AND INTEREST RATE RISKS
  105. [105] Item 1A, Risk Factors — CREDIT AND INTEREST RATE RISKS
  106. [106] Item 1A, Risk Factors — CREDIT AND INTEREST RATE RISKS
  107. [107] Item 1A, Risk Factors — CREDIT AND INTEREST RATE RISKS
  108. [108] Item 1A, Risk Factors — CREDIT AND INTEREST RATE RISKS
  109. [109] Item 1, Business — Analysis of Allowance for Credit Losses
  110. [110] Item 1A, Risk Factors — CREDIT AND INTEREST RATE RISKS
  111. [111] Item 1A, Risk Factors — CREDIT AND INTEREST RATE RISKS
  112. [112] Item 1A, Risk Factors — OPERATIONAL RISKS
  113. [113] Item 1A, Risk Factors — OPERATIONAL RISKS
  114. [114] Item 1A, Risk Factors — OPERATIONAL RISKS
  115. [115] Item 1A, Risk Factors — OPERATIONAL RISKS
  116. [116] Item 1A, Risk Factors — RISKS RELATED TO THE REGULATION OF OUR INDUSTRY
  117. [117] Item 1, Business — New Jersey Tax Laws
  118. [118] Item 1, Business — New Jersey Tax Laws
  119. [119] Item 1A, Risk Factors — RISKS RELATED TO THE REGULATION OF OUR INDUSTRY
  120. [120] Item 1, Business — Loans to One Borrower
  121. [121] Item 1A, Risk Factors — RISKS RELATED TO THE REGULATION OF OUR INDUSTRY
  122. [122] Item 7, MD&A — Overview and Strategy
  123. [123] Item 7, MD&A — Overview and Strategy
  124. [124] Item 7, MD&A — Overview and Strategy
  125. [125] Item 7, MD&A — Comparison of Financial Condition at December 31, 2025 and December 31, 2024
  126. [126] Item 17, Note 17 — Subsequent Events
  127. [127] Item 17, Note 17 — Subsequent Events

Analysis on 5/20/2026