4th Quarter, 2009 Newsletter

January 26, 2010

Dear Shareholder:

We are pleased to provide the unaudited financial results for The Bank of Princeton (“the Bank”) for the year ending December 31, 2009. For the year, we achieved and even surpassed virtually every financial goal. The Bank had total assets of $264,764,000, total deposits of $218,628,000, total gross loans outstanding of $174,975,000 and capital of $27,993,000. Our loan portfolio grew 91% ($83 million) while our deposits grew 31% ($52 million). This balance sheet realignment resulted in a favorable loan to deposit ratio of 80% at December 31, 2009. While asset growth was significant, credit quality remains sound.

For the fiscal year ending December 31, 2009 the Bank realized a profit of $516,296. These results reflect interest income of $11,423,000, interest expense of $3,807,000, a $1,204,000 addition to the loan loss reserve, and $6,475,000 of non-interest expenses. Contributing to this profit were the aforementioned loan growth and a lower cost of funds. We were able to reduce our cost of funds to 1.83% for the year (1.51% for the month of December). These results represent a significant improvement over the prior year twelve month operations which showed a loss of $2,315,000 on interest income of $3,348,000, $2,621,000 in interest expense, a $738,000 addition to the loan loss reserve and $5,026,000 of non-interest expenses.

As outlined in previous quarterly reports, we have implemented programs and strategies during the year that have contributed to both positive growth and profitability.

• In the second quarter we began offering a residential first mortgage product. This enabled us to diversify our loan portfolio and address another one of our customers’ financial needs. Through the first six months of this offering we have booked in excess of $15 million dollars in mortgages.

• In the third quarter we rolled out a new healthcare financing program. This was created to address the unique banking needs of medical practices and other healthcare providers.

• In July we placed our most experienced commercial lenders in each branch as Community Bank Executives (CBE’s). The CBE’s are veteran customer contact personnel that have both a retail and commercial background which allows for a full service presence in our branches at the management level.

• In December four new Business Development Managers (BDM’s) joined The Bank of Princeton team. Consistent with our business model, which is designed to foster maximum customer contact, each of these Business Development Managers is located within a branch. The Business Development Managers are working closely with the Community Banking Executives to develop strategies specific to each market in order to provide a superior customer experience while enhancing profitability for the bank.

•We are also pleased to report that we continue to successfully attract new and expand existing municipal deposit relationships. This has become a niche market that the Bank looks forward to expanding.

We previously announced our plan to purchase the Montgomery office of Provident Bank which includes approximately $11,000,000 in deposits. We are excited to inform you that we have received approval from the NJ Department of Banking and are awaiting final regulatory approval from the FDIC.

The Bank of Princeton continues to demonstrate its commitment to the community in the markets that we serve. Our team members actively participate in many non-profit and local business organizations throughout the year.

Overall, we are extremely pleased with our results for 2009. Achieving profitability is an exciting accomplishment made possible through the commitment and tireless dedication of everyone at TBOP. We are positioned well to build upon these positive results and look forward to meeting and even exceeding our goals for 2010.

The Directors, Management and Staff of The Bank of Princeton thank you for your continued support and ask that you help make your bank even more successful. We encourage you to spread the positive news and we welcome the opportunity to speak with someone you may know that can benefit from our high touch, community banking approach.

Sincerely,

Andrew M. Chon                                                                  Martin P. Melilli
Chairman of the Board                                                       President

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