PRINCETON, N.J. and MOUNT LAUREL, N.J., Jan. 18,
2024 /PRNewswire/ -- Princeton Bancorp, Inc. (NASDAQ
– BPRN), the parent company of The Bank of Princeton, Princeton, New Jersey, and Cornerstone
Financial Corporation (OTC "CFIC") ("Cornerstone"), the parent
company of Cornerstone Bank, Mount
Laurel, New Jersey, jointly announced today that they
have entered into a definitive agreement and plan of merger
pursuant to which Princeton Bancorp will acquire Cornerstone in a
transaction valued at approximately $17.9
million. Under the terms of the merger agreement, which has
been approved by the boards of directors of both companies,
Cornerstone will merge with, into and under the charter of
Princeton Bancorp. In the merger, each share of Cornerstone common
stock outstanding will be exchanged for 0.24 shares of Princeton
Bancorp, subject to adjustment, having a value of $8.16 per share based on the $34.00 closing price of Princeton Bancorp common
stock on January 17, 2024. Each share
of Cornerstone's preferred stock outstanding will be exchanged for
its stated value of $1,000 per share.
The transaction is subject to receipt of all required banking
regulatory approvals, Cornerstone stockholder approval and certain
financial and other contingencies. The transaction is expected to
close in the second or third quarter of 2024.
Background on Cornerstone
Cornerstone Financial
Corporation is a New Jersey based
bank holding company headquartered in Mount Laurel, New Jersey and is the holding
company for Cornerstone Bank, a New
Jersey state chartered commercial bank. Cornerstone had
approximately $321 million in assets,
$276 million in loans, $290 million of deposits, and $23.8 million in consolidated common
stockholders' equity as of September 30,
2023. Cornerstone Bank commenced operations in October of
1999 and conducts business from its main office in Moorestown and from five additional branch
offices located in Medford,
Burlington City, Cherry Hill, Voorhees and Woodbury, New Jersey.
Transaction Highlights
- The purchase price equates to approximately 75% of
Cornerstone's tangible book value as of September 30, 2023. Based on current estimated
purchase accounting adjustments, the transaction is expected to be
5.7% dilutive to Princeton Bancorp's tangible book value per
share, with a projected earn-back period of 2.5 years.
- The transaction is also expected to be 21% accretive to
Princeton Bancorp's 2025 earnings per share on a GAAP basis
and 16% accretive on a cash basis.
- Following the transaction, Princeton Bancorp will have
approximately $2.3 billion in total
assets, $1.8 billion in loans and
$2.0 billion in deposits, with 28
branches in New Jersey, five
branches in the Philadelphia,
Pennsylvania area and two in the New York City
metropolitan area.
- Under the terms of the Merger Agreement, if the sum of
Cornerstone's common stockholders' equity and allowance for loan
losses as of the month end immediately prior to the Closing Date,
as calculated in accordance with the merger agreement, is less than
the sum of Cornerstone's stockholders' equity and allowance for
loan losses at September 30, 2023, as
calculated in accordance with the merger agreement, ($26.8 million), the exchange ratio will be
reduced to reflect the amount of the deficiency.
- As of the effective time of the Merger, one member of the board
of directors of Cornerstone, to be selected by the
Nominating/Governance Committee of Princeton Bancorp, will be
appointed to the board of directors of Princeton Bancorp.
Support agreements to vote in favor of the merger were received
from the directors and executive officers of Cornerstone.
Management Commentary
Edward
J. Dietzler, President and CEO, stated, "We are thrilled to
announce the agreement with Cornerstone Financial. Cornerstone
represents the second acquisition we have announced in the last 15
months, and further supports our growth in the southern
New Jersey market, while doing so
in a manner that is minimally dilutive to tangible book value and
accretive to our earnings. It provides a great opportunity to
combine two community banks that share a deep commitment to their
local markets, fills in our South Jersey branch presence and
enhances our core banking franchise. We are excited to welcome
Cornerstone's employees, customers, and shareholders to Princeton
Bancorp, and we believe this transaction will enhance our long-term
profitability metrics and earnings growth rate. This acquisition
aligns with our continued vision of being the premier community
bank in all of our markets."
Gene D'Orazio, the President and CEO of Cornerstone Bank,
stated, "We are excited to join The Bank of Princeton, a strong, well-managed organization
that shares a common philosophy focused on supporting customers,
employees, and communities. As part of a larger organization, we
believe our customers will benefit from expanded financial products
and resources, as well as greater access to additional full-service
bank locations throughout the Philadelphia and South Jersey market. We also
believe that our employees will have greater opportunities for
growth and advancement as part of a larger community bank with such
an outstanding reputation. Finally, we believe our shareholders
will also benefit as part of a dividend paying larger bank with
greater liquidity and strong earnings power."
Advisors
Raymond James
& Associates, Inc. served as financial advisor to Princeton
Bancorp, and Stevens & Lee, P.C. is serving as its legal
counsel. Janney Montgomery Scott
served as financial advisor to Cornerstone and rendered a fairness
opinion. Windels Marx Lane & Mittendorf, LLP is serving
as legal counsel to Cornerstone.
About Princeton Bancorp, Inc.
Princeton Bancorp, Inc.
is the holding company for The Bank of Princeton, a community bank founded in 2007.
The Bank is a New Jersey
state-chartered commercial bank with 22 branches in New Jersey, including three in Princeton and others in Bordentown, Browns
Mills, Chesterfield,
Cream Ridge, Deptford, Fort
Lee, Hamilton, Kingston, Lakewood, Lambertville, Lawrenceville, Monroe, New Brunswick, Palisades Park, Pennington, Piscataway, Princeton Junction, Quakerbridge and
Sicklerville. There are also five
branches in the Philadelphia,
Pennsylvania area and two in the New York City
metropolitan area. The Bank of Princeton is a member of the Federal Deposit
Insurance Corporation ("FDIC").
About Cornerstone
Cornerstone Financial Corporation is
a New Jersey based bank holding
company headquartered in Mount Laurel,
New Jersey and is the holding company for Cornerstone Bank,
a New Jersey state chartered
commercial bank. Cornerstone Bank commenced operations in October,
1999 and conducts business from its main office in Moorestown and from five additional branch
offices located in Medford,
Burlington City, Cherry Hill, Voorhees and Woodbury, New Jersey More information is
available at https://www.cornerstonebank.net.
Statements made in this release, other than those concerning
historical financial information, may be considered forward-looking
statements, which speak only as of the date of this release and are
based on current expectations and involve a number of assumptions.
These include statements as to the anticipated benefits of the
merger, including future financial and operating results, cost
savings and enhanced revenues that may be realized from the merger
as well as other statements of expectations regarding the merger
and any other statements regarding future results or expectations.
Each of Princeton Bancorp and Cornerstone intends such
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 and is including this
statement for purposes of these safe harbor provisions. The
entities' respective abilities to predict results, or the actual
effect of future plans or strategies, is inherently uncertain.
Factors that could have a material effect on the operations and
future prospects of each of Princeton Bancorp and Cornerstone and
the resulting entity, include but are not limited to: (1) the
businesses of the Princeton Bancorp and Cornerstone may not be
integrated successfully or such integration may be more difficult,
time-consuming or costly than expected; (2) expected revenue
synergies and cost savings from the merger may not be fully
realized or realized within the expected timeframe; (3) revenues
following the merger may be lower than expected; (4) customer and
employee relationships and business operations may be disrupted by
the merger; (5) the ability to obtain required regulatory and
shareholder approvals, and the ability to complete the merger on
the expected timeframe may be more difficult, time-consuming or
costly than expected; (6) changes in interest rates, general
economic conditions, legislation and regulation, and monetary and
fiscal policies of the U.S. government, including policies of the
U.S. Treasury, the Federal Deposit Insurance Corporation and the
Board of Governors of the Federal Reserve System;
(7) the ongoing impact of higher inflation levels,
higher interest rates and general economic and recessionary
concerns, all of which could impact economic growth and could cause
a reduction in financial transactions and business activities,
including decreased deposits and reduced loan originations, (8) our
ability to manage liquidity in a rapidly changing and unpredictable
market, (9) the global impact of the military conflicts
in the Ukraine and the
Middle East, (10) the quality and
composition of the loan and securities portfolios, demand for loan
products, deposit flows, competition, and demand for financial
services in the companies' respective market areas; (11) the
implementation of new technologies, and the ability to develop and
maintain secure and reliable electronic systems; (12) accounting
principles, policies, and guidelines; and (13) other risk factors
detailed from time to time in filings made by Princeton Bancorp
with the SEC. Forward-looking statements reflect Princeton Bancorp
and Cornerstone management's analysis as of the date of this
release, even if subsequently made available by Princeton Bancorp
and Cornerstone on their respective websites or otherwise.
Princeton Bancorp and Cornerstone undertake no obligation to update
or clarify these forward-looking statements, whether as a result of
new information, future events or otherwise. For a list of other
factors which would affect the operations and future prospects of
each of Princeton Bancorp and the resulting entity in the merger,
see Princeton Bancorp's filings with the SEC under the Securities
Exchange Act of 1934, including those risk factors identified in
the "Risk Factor" section and elsewhere in Princeton Bancorp's
Annual Report on Form 10-K for the year ended
December 31, 2022, and in Part II, Item 1A of its quarterly
report on Form 10-Q for the quarter-ended March 31,
2023.
For The Bank of Princeton:
Edward J. Dietzler, President and
CEO
Phone: (609) 454-0717
or
For Cornerstone:
Gene D'Orazio, President and CEO
Phone: (856) 380-8050
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SOURCE The Bank of Princeton
