1ST Constitution Bancorp (NASDAQ: FCCY), the holding company (the
“Company”) for 1ST Constitution Bank (the “Bank”), today reported
net income of $4.9 million and diluted earnings per share of $0.48
for the three months ended September 30, 2020 compared to net
income of $3.6 million and diluted earnings per share of $0.42 for
the three months ended September 30, 2019. Net income increased
35.5% and diluted earnings per share increased 14.3% for the third
quarter of 2020 compared to the third quarter of 2019. Net income
for the three months ended September 30, 2019 included $265,000 of
after tax merger expenses related to the merger of Shore Community
Bank (“Shore”).
The Board of Directors declared a quarterly cash
dividend of $0.09 per share of common stock that will be payable on
November 25, 2020 to shareholders of record on November 10,
2020.
Robert F. Mangano, President and Chief Executive
Officer, stated “The Company continued to generate solid
fundamental operating performance during the third quarter of 2020
despite the challenging economic environment. The Company’s
residential mortgage banking and mortgage warehouse lending
operations continued to benefit from the low interest rate
environment, which drove a $2.0 million increase in gain on sale of
loans and a $76.9 million increase in mortgage warehouse loans for
the third quarter of 2020. Our sharp focus on deposit pricing and
the mix and term structure of our funding resulted in the cost of
interest-bearing liabilities declining to 0.79%. Due to continued
economic uncertainty, the provision for loan losses was increased
to $2.3 million and the allowance for loan losses increased 19.1%
to $14.5 million at September 30, 2020.”
Mr. Mangano added, “As we are navigating through
the COVID-19 pandemic impact and the economic and social disruption
to our customers and communities we serve, we continue to closely
monitor our loan portfolio to identify potential weaknesses. The
unknown severity and duration of the pandemic present a continuing
challenge. However, we believe that the Company has the financial
strength and flexibility to address these adverse economic and
operating conditions.”
THIRD QUARTER 2020 HIGHLIGHTS
- Return on average total assets and
return on average shareholders' equity were 1.08% and 10.92%,
respectively.
- Net interest income was $15.4
million and net interest margin was 3.67% on a tax equivalent
basis.
- A provision for loan losses of $2.3
million was recorded for the third quarter of 2020, net recoveries
were $5,000.
- Total loans were $1.5 billion at
September 30, 2020 and increased $100.2 million from June 30, 2020.
Mortgage warehouse loans increased $76.9 million and commercial
real estate loans increased $23.7 million from June 30, 2020.
- As of September 30, 2020, the Bank
had funded $75.6 million in Small Business Administration ("SBA")
Paycheck Protection Program ("PPP") loans under the Coronavirus
Aid, Relief and Economic Security Act ("CARES Act").
- Total deposits were $1.5 billion at
September 30, 2020 and increased $101.6 million, with non-interest
demand deposits increasing $29.3 million, from June 30, 2020.
- Non-performing assets were $17.5
million, or 0.95% of total assets at September 30, 2020, increased
$3.5 million from June 30, 2020 and included $267,000 of other real
estate owned ("OREO").
For the nine months ended September 30, 2020,
net income was $12.0 million and diluted earnings per share were
$1.17 compared to net income of $10.4 million and diluted earnings
per share of $1.19 for the nine months ended September 30, 2019,
respectively. Net income for the nine-months ended September 30,
2020 and 2019 included $45,000 and $456,000, respectively, of
after-tax merger expenses related to the merger of Shore.
COVID-19 Impact and Response
In the earnings press releases issued for the
first and second quarters of 2020, the Company reported the initial
steps that it took in response to the sudden emergence of the
COVID-19 global pandemic.
During the third quarter of 2020, the Company
continued working with customers severely impacted by the economic
disruption. Management significantly increased the provision for
loan losses in response to the higher incurred losses in the loan
portfolio. Management may further adjust the provision and
allowance for loan losses in response to changes in economic
conditions and the performance of the loan portfolio in future
periods.
As we conduct our daily operations, the safety
of our employees and customers remains our primary concern and we
continue to maintain the same measures and protective procedures
that we implemented in the second quarter of 2020.
To support our loan and deposit customers and
the communities we serve:
- We continue to provide access to
additional credit and forbearance on loan interest and or principal
payments for up to 90 days where management has determined that it
is warranted. Through September 30, 2020, $149.3 million of loans
($140.9 million of commercial loans and $8.4 million of consumer
loans) were modified to provide deferral of interest and or
principal by borrowers for up to 90 days.
- As a long-standing SBA preferred
lender, we actively participated in the SBA’s PPP lending program
established under the CARES Act. As of September 30, 2020, we
funded 467 SBA PPP loans totaling $75.6 million.
- We are registered to utilize the
Main Street New Loan Facility (“Facility”) established by the Board
of Governors of the Federal Reserve System (the “Federal Reserve”)
under the CARES Act to provide financing to our customers and
communities. This Facility is intended to facilitate lending
by banks to small and medium-sized businesses, which we believe may
be beneficial to certain of our customers.
- We are participating in the Federal
Reserve's PPP loan funding program and are pledging the PPP loans
to collateralize a like amount of borrowings from the Federal
Reserve at a favorable interest rate of 0.35% up to a two-year
term.
Modification of Loans and Deferral of Payments
Through September 30, 2020, $140.9 million of
commercial business and commercial real estate loans and $8.4
million of consumer loans had been modified to provide deferral of
interest and or principal by borrowers for up to 90 days. As of
September 30, 2020, $123.6 million of commercial business and
commercial real estate loans that had previously received deferrals
were no longer deferred and had made the contractually due payments
in the third quarter of 2020. During the third quarter of 2020,
commercial business and commercial real estate loans to three
borrowers totaling $10.3 million received a second modification and
commercial real estate loans to three borrowers totaling $1.8
million received a first modification to defer principal and or
interest up to 90 days. Two commercial real estate loans totaling
$4.6 million that had received a modification in the second quarter
of 2020 were placed on non-accrual during the third quarter of
2020. One commercial real estate loan with a balance of $595,000
had not made the first payment after the end of the deferral
period. Commercial business and commercial real loans with a
modification to defer principal and or interest up to 90 days
totaled $12.1 million at September 30, 2020.
All but two loans totaling $974,000 of the $8.4
million of consumer loans that had received a deferral made the
contractually due payments during the third quarter of 2020.
Allowance for Loan and Lease Losses
As part of the review of the adequacy of the
allowance for loan losses at September 30, 2020, management
reviewed over 95% of the $140.9 million of commercial business and
commercial real estate loans that had been modified to defer
interest and or principal for up to 90 days. Loans excluded from
the review had a balance less than $250,000.
At June 30, 2020 management had concluded that
although loans with modifications and deferrals of loan payments
were credit rated “Pass-Watch,” the deferral of payments indicated
a somewhat weaker financial strength than “Pass” credit rated
loans. Therefore, an additional reserve for incurred losses of $1.0
million was maintained at September 30, 2020 for loans that were
rated Pass-Watch and had received a deferral.
Management previously identified the hotel and
restaurant-food service industries as most likely to be adversely
impacted in the near-term by the economic disruption caused by the
COVID-19 pandemic. At September 30, 2020 loans to hotel and
restaurant-food service industries were $67.9 million and $48.4
million, respectively. Management reviewed over 99% of the hotel
loans and over 95% of the restaurant-food service loans. Loans
excluded from this review had a balance of less than $250,000.
Construction loans are closely monitored on a
quarterly basis and are reviewed to assess the progress of
construction relative to the plan and budget and lease-up or sales
of units.
Management also expanded its loan level review
for the third quarter of 2020 to include a review of loans to
schools that are private educational institutions that are
generally sponsored or affiliated with religious organizations. The
loans totaled $28.8 million at September 30, 2020, and 99% of these
loans were reviewed.
The expanded review also included commercial
loans made under the SBA 7(a) loan program with loan balances
greater than $250,000. These loans were not reviewed in the second
quarter of 2020 because the SBA was making the loan payments
through September 30, 2020 as part of the CARES Act financial
assistance. $6.7 million, or 45% of the total loans of $14.8,
million were reviewed.
In connection with this review for the third
quarter of 2020, loans totaling $1.2 million and $7.5 million were
down-graded to “Special Mention” and “Substandard,” respectively.
Two hotel loans totaling $4.6 million were placed on non-accrual
during the third quarter of 2020.
On the basis of the results of the loan review
process, management recorded a provision for loan losses of $2.3
million for the third quarter of 2020 and the allowance for loan
losses was increased to $14.5 million at September 30, 2020.
Discussion of Financial ResultsOn November 8,
2019, the Company completed the merger with Shore with and into the
Bank (the “Shore Merger”). The former operations of Shore
contributed approximately $192.3 million and $271.5 million in
loans and deposits, respectively, at September 30, 2020.
Net income was $4.9 million, or $0.48 per
diluted share, for the third quarter of 2020 compared to net income
of $3.6 million, or $0.42 per diluted share, for the third quarter
of 2019. For the three months ended September 30, 2020, net
interest income increased $3.8 million compared to the three months
ended September 30, 2019 driven by the increase in the average
balance of loans over the 12-month period ended September 30, 2020.
Gain on sales of loans for the third quarter of 2020 increased $2.0
million compared to the third quarter of 2019 due primarily to the
higher volume of residential mortgage loans sold. The provision for
loan losses was $2.3 million for the third quarter of 2020 compared
to $350,000 for the third quarter of 2019. This increase reflected
management’s current estimate of loan losses that were incurred due
to the economic disruption caused by the COVID-19 pandemic.
Non-interest expenses were $11.0 million for the third quarter of
2020, representing an increase of $2.5 million, compared to $8.4
million for the third quarter of 2019, which included $302,000 of
merger-related expenses.
Net interest income was $15.4 million for the
third quarter of 2020 and increased $3.8 million compared to net
interest income of $11.5 million for the third quarter of 2019.
Total interest income was $17.7 million for the three months ended
September 30, 2020 compared to $14.9 million for the three months
ended September 30, 2019. The increase in total interest income was
primarily due to a net increase of $476.2 million in average loans,
reflecting growth in all segments of the loan portfolio except
construction loans and included $75.5 million in average SBA PPP
loans. The growth in average loans included approximately $193.4
million of loans from the Shore Merger. Average interest-earning
assets were $1.7 billion with a tax-equivalent yield of 4.23% for
the third quarter of 2020 compared to average interest-earning
assets of $1.2 billion, with a tax-equivalent yield of 5.05%, for
the third quarter of 2019. The yield on average interest-earning
assets for the third quarter of 2020 declined 82 basis points to
4.23%, primarily due to the steep decline in market interest rates
beginning in the third quarter of 2019 and continuing through the
first nine months of 2020. The Federal Reserve reduced the targeted
federal funds rate 50 basis points in the third quarter of 2019, 25
basis points in the fourth quarter of 2019 and, in response to the
COVID-19 pandemic, further reduced the targeted federal funds rate
by 150 basis points in March 2020. The prime rate was 5.00% at
September 30, 2019. As a result of the reductions in the targeted
federal funds rate in 2019, the prime rate declined to 4.75% in
October 2019 and declined further to 3.25% in March 2020. The Bank
had approximately $571.8 million of loans with an interest rate
tied to the prime rate and approximately $49.2 million of loans
with an interest rate tied to either 1 or 3-month LIBOR at
September 30, 2020.
Interest expense on average interest-bearing
liabilities was $2.4 million, with an interest cost of 0.79%, for
the third quarter of 2020, compared to $2.9 million, with an
interest cost of 1.04%, for the second quarter of 2020 and $3.4
million, with an interest cost of 1.51%, for the third quarter of
2019. Despite an increase of $300.5 million in average
interest-bearing liabilities for the third quarter of 2020 compared
to the third quarter of 2019, interest expense declined $1.0
million largely due to the decline in interest rates paid on
deposits, borrowings and the redeemable subordinated debentures as
a direct result of the falling interest rate environment. The
average cost of interest-bearing deposits was 0.81% for the third
quarter of 2020, 1.04% for the second quarter of 2020 and 1.41% for
the third quarter of 2019. The lower interest cost of
interest-bearing deposits for the third quarter of 2020 compared to
the third quarter of 2019 primarily reflects a steep decline in
market interest rates beginning in the fourth quarter of 2019 and
continuing through the first nine months of 2020. The interest
rates paid on deposits generally do not adjust quickly to rapid
changes in market interest rates and decline over time in a falling
interest rate environment. The growth in average interest-bearing
liabilities included average interest-bearing deposits of $174.0
million acquired in the Shore Merger. Of the total increase in
average interest-bearing liabilities, certificates of deposit which
generally have a higher interest cost than other types of
interest-bearing deposits, increased $59.0 million. At September
30, 2020, there were $260.0 million of certificates of deposit with
an average interest cost of 1.33% that mature within the following
nine months. Management will continue to adjust the interest rates
paid on deposits to reflect the then current interest rate
environment and competitive factors.
The net interest margin on a tax-equivalent
basis decreased 24 basis points to 3.67% for the third quarter of
2020 compared to 3.91% for the third quarter of 2019 due primarily
to the 82 basis point decline in the yield of average
interest-earning assets, partially offset by the 72 basis points
decline in the interest cost of average interest-bearing
liabilities. Due to the decline in the prime rate in the third and
fourth quarters of 2019 followed by the further decline in the
prime rate in March 2020, the yield of loans declined 95 basis
points to 4.57% and the interest cost of interest-bearing
liabilities was not reduced to the same extent as the decline in
the yield of loans.
The Company recorded a provision for loan losses
of $2.3 million for the third quarter of 2020 compared to a
provision for loan losses of $350,000 for the third quarter of
2019. The significant increase in the provision for loan losses in
the third quarter of 2020 included an additional provision of
approximately $1.5 million to increase specific reserves on
impaired loans. The higher provision also reflected changes in loan
ratings and the growth and change in mix of the loan portfolio. At
September 30, 2020, total loans were $1.5 billion and the allowance
for loan losses was $14.5 million, or 0.99% of total loans,
compared to total loans of $1.0 billion and an allowance for loan
losses of $9.0 million, or 0.88% of total loans, at September 30,
2019. Included in total loans at September 30, 2020 were $186.6
million of loans that were acquired in the Shore Merger.
Acquisition accounting for the Shore Merger in 2019 and the merger
with New Jersey Community Bank (“NJCB”) in 2018 resulted in the
Shore and NJCB loans being recorded at their fair value and no
allowance for loan losses as of the effective time of the
respective mergers. The unaccreted general credit fair value
discounts related to the former Shore and NJCB loans were
approximately $1.8 million and $0.5 million at September 30, 2020,
respectively. In addition, at September 30, 2020, there were $75.6
million of SBA PPP loans which are 100% guaranteed by the SBA and,
accordingly, no reserve was provided.
Non-interest income was $4.7 million for the
third quarter of 2020, representing an increase of $2.5 million, or
114.7%, compared to $2.2 million for the third quarter of 2019. The
significant increase in non-interest income was driven primarily by
a $2.0 million increase in gain on sale of loans. In the third
quarter of 2020, residential mortgage banking operations originated
approximately $118.0 million of residential mortgages, sold $97.5
million of residential mortgages and recorded $2.9 million of gain
on sale of loans compared to $53.3 million of residential mortgages
originated, $38.8 million of residential mortgage loans sold and
$1.1 million of gain on sale of loans recorded in the third quarter
of 2019. The residential mortgage loan pipeline was $71.7 million
at September 30, 2020 and was comprised 64% and 36% of refinance
and purchase loan applications and commitments for mortgages,
respectively. Management believes that the increase in residential
mortgage loans originated and sold was due primarily to increased
residential mortgage lending activity as a result of significantly
lower mortgage interest rates in the 2020 period compared to the
2019 period. In the third quarter of 2020, $5.1 million of
SBA loans were sold and gain of $463,000 was recorded compared to
$2.4 million of SBA loans sold and gains of $205,000 recorded in
the third quarter of 2019. For the third quarter of 2020 compared
to the third quarter of 2019, service charges on deposit accounts
decreased $39,000, due primarily to lower overdraft fees and income
on bank-owned life insurance (“BOLI”) increased $39,000 due
primarily to the increase in BOLI acquired in the Shore Merger.
Gain on sales and calls of securities increased $63,000 for the
third quarter of 2020 as a result of sales and calls of
approximately $14.4 million of investment securities. Other income
increased $422,000 in the third quarter of 2020 compared to the
third quarter of 2019 primarily due to an interest rate swap fee
collected of $172,000, an expired loan commitment fee of $59,000,
gain from the sale of OREO of $71,000 and general increases in
other income components.
Non-interest expenses were $11.0 million for the
third quarter of 2020 and increased $2.5 million, or 30.0%,
compared to $8.4 million for the third quarter of 2019, which
included $302,000 of expenses related to the Shore Merger. The
primary reasons for the increase were higher commissions related to
the origination of residential mortgages for sale of $1.2 million
and expenses from inclusion of the former Shore operations of
$941,000 in the third quarter of 2020. Salaries and employee
benefits expense increased $1.9 million, or 35.8%, for the third
quarter of 2020 compared to the third quarter of 2019 due primarily
to a $1.2 million increase in mortgage commissions resulting from
significantly higher residential mortgage lending activity,
salaries and benefits for former Shore employees ($478,000) who
joined the Company, merit increases and increases in employee
benefit expenses, which amounts were partially offset by higher
deferred loan origination expenses of approximately $142,000
related to the origination of loans. Occupancy expense increased
$250,000, or 25.7%, due primarily to the addition of the five
former Shore branch offices. Data processing expenses increased
$107,000, or 28.2%, due primarily to the addition of the
Shore operations and increases in loans, deposits and other
customer services. FDIC insurance expense increased $272,000 due
primarily to the growth of assets, the acquisition of Shore, a
credit of $87,000 from the FDIC applied to the second quarter of
2019 assessment and an increase in the FDIC assessment rate in
2020. Other operating expenses increased $350,000, or 22.6%,
primarily resulting from the inclusion of the former Shore
operations of $157,000, higher professional fees of $149,000 and
general increases in other operating expenses.
Income tax expense was $1.9 million for the
third quarter of 2020, resulting in an effective tax rate of 27.9%,
compared to income tax expense of $1.3 million, which resulted in
an effective tax rate of 26.6% for the third quarter of 2019. The
increase in the effective tax rate for the third quarter of 2020
was due primarily to the lower percentage of the total of income on
BOLI and tax-exempt interest to pre-tax income in the third quarter
of 2020 compared to the third quarter of 2019.
Total assets increased $257.8 million to $1.84
billion at September 30, 2020 from $1.59 billion at December 31,
2019, due primarily to a $239.7 million increase in total loans, a
$22.3 million increase in loans held for sale and a $5.2 million
increase in total cash and cash equivalents partially offset by a
$9.5 million decrease in total investment securities. The increase
in assets was funded primarily by a $233.7 million increase in
deposits and a $13.8 million increase in short-term borrowings.
Total portfolio loans at September 30, 2020 were $1.46 billion,
compared to $1.22 billion at December 31, 2019. The $239.7 million
increase in loans was due primarily to an increase of $137.3
million in mortgage warehouse loans, the origination and funding of
$75.6 million of SBA PPP loans through September 30, 2020 and an
increase of $48.3 million in commercial real estate loans, which
were partially offset by decreases in other components of the loan
portfolio. Total investment securities were $222.9 million at
September 30, 2020, representing a decrease of $9.5 million
compared to $232.4 million at December 31, 2019. Investment
securities available for sale decreased $20.7 million and
investment securities held to maturity increased $11.2 million at
September 30, 2020 from December 31, 2019.
Total deposits increased $233.7 million to $1.51
billion at September 30, 2020 from $1.28 billion at December 31,
2019. The increase in deposits was due primarily to a $139.0
million increase in non-interest-bearing demand deposits, a $35.6
million increase in interest-bearing demand deposits, a $40.6
million increase in savings deposits and an $18.5 million increase
in certificates of deposit. Short-term borrowings increased $13.8
million to $105.9 million at September 30, 2020, compared to $92.0
million at December 31, 2019.
Regulatory capital ratios for the Company and
the Bank continue to reflect a strong capital position. Under
current regulatory capital standards, the Company’s estimated
common equity Tier 1 to risk-based assets (“CET1”), total
risk-based capital, Tier I capital, and leverage ratios were 9.44%,
11.58%, 10.63% and 9.11%, respectively, at September 30, 2020. The
Bank’s estimated CET1, total risk-based capital, Tier 1 capital and
leverage ratios were 10.62%, 11.57%, 10.62% and 9.10%,
respectively, at September 30, 2020. The Company and the Bank are
considered “well capitalized” under these capital standards.
Asset Quality
Non-accrual loans were $17.2 million at
September 30, 2020 compared to $4.5 million at December 31, 2019.
During the first nine months of 2020, $14.9 million of loans were
placed on non-accrual and included a participation in a
construction loan with a balance of $7.5 million, $6.9 million of
commercial real estate loans, an $84,000 commercial business loan,
a $160,000 residential loan and $248,000 of loans to individuals.
During the first nine months of 2020, $2.2 million of
non-performing loans were resolved.
Non-performing loans to total loans were 1.18%
and non-performing assets to total assets were 0.95% at September
30, 2020 compared to non-performing loans to total loans of 0.37%
and non-performing assets to total assets of 0.32% at December 31,
2019.
OREO at September 30, 2020 was $267,000 and
consisted of three residential lots acquired in the Shore merger
with a carrying value of $174,000 and land with a carrying value of
$93,000 that was foreclosed in the second quarter of 2018.
About 1ST Constitution Bancorp
1ST Constitution Bancorp, through its primary
subsidiary, 1ST Constitution Bank, operates 26 branch
banking offices in Asbury Park, Cranbury (2), Fair Haven, Fort
Lee, Freehold, Hamilton, Hightstown, Hillsborough, Hopewell,
Jackson, Jamesburg, Lawrenceville, Little Silver, Long Branch,
Manahawkin, Neptune City, Perth Amboy, Plainsboro, Princeton, Rocky
Hill, Rumson, Shrewsbury and Toms River (3), New Jersey.
1ST Constitution Bancorp is traded on the Nasdaq
Global Market under the trading symbol “FCCY” and information about
the Company can be accessed through the Internet at
www.1STCONSTITUTION.com
Cautionary Language Concerning Forward-Looking
Statements
The foregoing contains "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995 relating to, without limitation, our future
economic performance, plans and objectives for future operations,
and projections of revenues and other financial items that are
based on our beliefs, as well as assumptions made by and
information currently available to us. The words "may," "will,"
"anticipate," "should," "would," "believe," "contemplate," "could,"
"project," "predict," "expect," "estimate," "continue," and
"intend," as well as other similar words and expressions of the
future, are intended to identify forward-looking statements.
These forward-looking statements are based upon
our opinions and estimates as of the date they are made and are not
guarantees of future performance. Although we believe that the
expectations reflected in these forward-looking statements are
reasonable, such forward-looking statements are subject to known
and unknown risks and uncertainties that may be beyond our control,
which could cause actual results, performance and achievements to
differ materially from results, performance and achievements
projected, expected, expressed or implied by the forward-looking
statements.
Examples of factors or events that could cause
actual results to differ materially from historical results or
those anticipated, expressed or implied include, without
limitation, changes in the overall economy and interest rate
changes; inflation, market and monetary fluctuations; the ability
of our customers to repay their obligations; the accuracy of our
financial statement estimates and assumptions, including the
adequacy of the estimate made in connection with determining the
adequacy of the allowance for loan losses; increased competition
and its effect on the availability and pricing of deposits and
loans; significant changes in accounting, tax or regulatory
practices and requirements; changes in deposit flows, loan demand
or real estate values; the enactment of legislation or regulatory
changes; changes in monetary and fiscal policies of the U.S.
government; changes to the method that LIBOR rates are determined
and to the phasing out of LIBOR after 2021; changes in loan
delinquency rates or in our levels of non-performing assets; our
ability to declare and pay dividends; changes in the economic
climate in the market areas in which we operate; the frequency and
magnitude of foreclosure of our loans; changes in consumer spending
and saving habits; the effects of the health and soundness of other
financial institutions, including the need of the FDIC to increase
the Deposit Insurance Fund assessments; technological changes; the
effects of climate change and harsh weather conditions, including
hurricanes and man-made disasters; the economic impact of any
future terrorist threats and attacks, acts of war or threats
thereof and the response of the United States to any such threats
and attacks; our ability to integrate acquisitions and achieve cost
savings; other risks described from time to time in our filings
with the Securities and Exchange Commission; and our ability to
manage the risks involved in the foregoing. Further, the foregoing
factors may be exacerbated by the ultimate impact of the COVID-19
pandemic, which is unknown at this time.
In addition, statements about the COVID-19
pandemic and the potential effects and impacts of the COVID-19
pandemic on the Company’s business, financial condition, liquidity
and results of operations may constitute forward-looking statements
and are subject to the risk that actual results may differ,
possibly materially, from what is reflected in such forward-looking
statements due to factors and future developments that are
uncertain, unpredictable and, in many cases, beyond our control,
including the scope, duration and extent of the pandemic, actions
taken by governmental authorities in response to the pandemic and
the direct and indirect impact of the pandemic on our employees,
customers, business and third-parties with which we conduct
business.
Although management has taken certain steps to
mitigate any negative effect of the aforementioned factors,
significant unfavorable changes could severely impact the
assumptions used and have an adverse effect on profitability. Any
forward-looking statements made by us or on our behalf speak only
as of the date they are made, and we do not undertake any
obligation to update any forward-looking statement to reflect the
impact of subsequent events or circumstances, except as required by
law.
1ST Constitution
BancorpSelected Consolidated Financial
Data(Dollars in thousands, except per share
data)(Unaudited)
|
Three months ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Per share
data: |
|
|
|
|
|
|
|
Earnings per share - basic |
$ |
0.48 |
|
|
$ |
0.42 |
|
|
$ |
1.18 |
|
|
$ |
1.20 |
|
Earnings per share - diluted |
0.48 |
|
|
0.42 |
|
|
1.17 |
|
|
1.19 |
|
Book value per share at end of period |
|
|
|
|
17.78 |
|
|
15.95 |
|
Tangible book value per common share at end of period(1) |
|
|
|
|
14.22 |
|
|
14.55 |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic |
10,230,488 |
|
|
8,666,251 |
|
|
10,213,601 |
|
|
8,641,684 |
|
Weighted average shares outstanding - diluted |
10,268,951 |
|
|
8,722,349 |
|
|
10,260,477 |
|
|
8,698,959 |
|
Shares outstanding at end of period |
|
|
|
|
10,237,520 |
|
|
8,682,401 |
|
Performance
ratios/data: |
|
|
|
|
|
|
|
Return on average total assets |
1.08 |
% |
|
1.14 |
% |
|
0.96 |
% |
|
1.14 |
% |
Return on average shareholders' equity |
10.92 |
% |
|
10.57 |
% |
|
9.17 |
% |
|
10.52 |
% |
Net interest income (tax-equivalent basis)(2) |
$ |
15,487 |
|
|
$ |
11,622 |
|
|
$ |
42,520 |
|
|
$ |
34,511 |
|
Net interest margin (tax-equivalent basis)(3) |
3.67 |
% |
|
3.91 |
% |
|
3.66 |
% |
|
4.06 |
% |
Efficiency ratio (tax-equivalent basis)(4) |
54.21 |
% |
|
61.00 |
% |
|
57.93 |
% |
|
61.58 |
% |
|
|
|
|
|
|
|
|
Loan portfolio
composition: |
|
|
|
|
September 30, 2020 |
|
December 31, 2019 |
Commercial real estate |
|
|
|
|
$ |
615,957 |
|
|
$ |
567,655 |
|
Mortgage warehouse lines |
|
|
|
|
374,007 |
|
|
236,672 |
|
Construction loans |
|
|
|
|
141,583 |
|
|
148,939 |
|
Commercial business |
|
|
|
|
210,004 |
|
|
139,271 |
|
Residential real estate |
|
|
|
|
88,206 |
|
|
90,259 |
|
Loans to individuals |
|
|
|
|
27,432 |
|
|
32,604 |
|
Other loans |
|
|
|
|
122 |
|
|
137 |
|
Gross loans |
|
|
|
|
1,457,311 |
|
|
1,215,537 |
|
Deferred (fees) costs, net |
|
|
|
|
(1,627 |
) |
|
491 |
|
Total loans |
|
|
|
|
$ |
1,455,684 |
|
|
$ |
1,216,028 |
|
Asset quality
data: |
|
|
|
|
|
|
|
Loans past due over 90 days and still accruing |
|
|
|
|
$ |
92 |
|
|
$ |
— |
|
Non-accrual loans |
|
|
|
|
17,153 |
|
|
4,497 |
|
OREO property |
|
|
|
|
267 |
|
|
571 |
|
Total non-performing
assets |
|
|
|
|
$ |
17,512 |
|
|
$ |
5,068 |
|
|
|
|
|
|
|
|
|
Net (charge-offs)
recoveries |
$ |
5 |
|
|
$ |
(14 |
) |
|
$ |
(160 |
) |
|
$ |
(481 |
) |
Allowance for loan losses to
total loans |
|
|
|
|
0.99 |
% |
|
0.76 |
% |
Allowance for loan losses to
non-performing loans |
|
|
|
|
83.69 |
% |
|
206.16 |
% |
Non-performing loans to total
loans |
|
|
|
|
1.18 |
% |
|
0.37 |
% |
Non-performing assets to total
assets |
|
|
|
|
0.95 |
% |
|
0.32 |
% |
Capital
ratios: |
|
|
|
|
|
|
|
1ST Constitution Bancorp |
|
|
|
|
|
|
|
Common equity tier 1 capital to risk-weighted assets |
|
|
|
|
9.44 |
% |
|
9.70 |
% |
Total capital to risk-weighted assets |
|
|
|
|
11.58 |
% |
|
11.69 |
% |
Tier 1 capital to risk-weighted assets |
|
|
|
|
10.63 |
% |
|
11.01 |
% |
Tier 1 leverage ratio |
|
|
|
|
9.11 |
% |
|
10.56 |
% |
1ST Constitution Bank |
|
|
|
|
|
|
|
Common equity tier 1 capital to risk-weighted assets |
|
|
|
|
10.62 |
% |
|
10.99 |
% |
Total capital to risk-weighted assets |
|
|
|
|
11.57 |
% |
|
11.67 |
% |
Tier 1 capital to risk-weighted assets |
|
|
|
|
10.62 |
% |
|
10.99 |
% |
Tier 1 leverage ratio |
|
|
|
|
9.10 |
% |
|
10.54 |
% |
|
|
|
|
|
|
|
|
|
|
(1) Tangible book value per common share is a
non-GAAP financial measure and is calculated by subtracting
goodwill and other intangible assets from shareholders' equity and
dividing it by common shares outstanding.(2) The tax-equivalent
adjustment was $134 and $105 for the three months ended September
30, 2020 and 2019, respectively, the tax-equivalent adjustment was
$383 and $334 for the nine months ended September 30, 2020 and
2019, respectively.(3) Represents net interest income on a
tax-equivalent basis as a percent of average interest-earning
assets.(4) Represents non-interest expenses divided by the sum of
net interest income on a tax-equivalent basis and non-interest
income.
1ST Constitution
BancorpConsolidated Balance
Sheets(Dollars in
thousands)(Unaudited)
|
September 30, 2020 |
|
December 31, 2019 |
ASSETS |
|
|
|
Cash and due from banks |
$ |
8,811 |
|
|
$ |
2,547 |
|
Interest-earning deposits |
11,244 |
|
|
12,295 |
|
Total cash and cash equivalents |
20,055 |
|
|
14,842 |
|
Investment securities: |
|
|
|
Available for sale, at fair value |
135,123 |
|
|
155,782 |
|
Held to maturity (fair value of $90,735 and $78,223 at September
30, 2020 and December 31, 2019, respectively) |
87,811 |
|
|
76,620 |
|
Total investment securities |
222,934 |
|
|
232,402 |
|
Loans held for sale |
28,196 |
|
|
5,927 |
|
Loans |
1,455,684 |
|
|
1,216,028 |
|
Less: allowance for loan losses |
(14,450 |
) |
|
(9,271 |
) |
Net loans |
1,441,234 |
|
|
1,206,757 |
|
Premises and equipment,
net |
14,503 |
|
|
15,262 |
|
Right-of-use assets |
16,910 |
|
|
17,957 |
|
Accrued interest
receivable |
5,689 |
|
|
4,945 |
|
Bank-owned life insurance |
37,131 |
|
|
36,678 |
|
Other real estate owned |
267 |
|
|
571 |
|
Goodwill and intangible
assets |
36,471 |
|
|
36,779 |
|
Other assets |
20,640 |
|
|
14,142 |
|
Total assets |
$ |
1,844,030 |
|
|
$ |
1,586,262 |
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
LIABILITIES |
|
|
|
Deposits |
|
|
|
Non-interest bearing |
$ |
426,528 |
|
|
$ |
287,555 |
|
Interest bearing |
1,084,505 |
|
|
989,807 |
|
Total deposits |
1,511,033 |
|
|
1,277,362 |
|
Short-term borrowings |
105,867 |
|
|
92,050 |
|
Redeemable subordinated
debentures |
18,557 |
|
|
18,557 |
|
Accrued interest payable |
1,069 |
|
|
1,592 |
|
Lease liability |
17,714 |
|
|
18,617 |
|
Accrued expense and other
liabilities |
7,783 |
|
|
7,506 |
|
Total liabilities |
1,662,023 |
|
|
1,415,684 |
|
SHAREHOLDERS
EQUITY |
|
|
|
Preferred stock, no par value;
5,000,000 shares authorized; none issued |
— |
|
|
— |
|
Common stock, no par value;
30,000,000 shares authorized; 10,285,229 and 10,224,974 shares
issued and 10,237,520 and 10,191,676 shares outstanding as of
September 30, 2020 and December 31, 2019, respectively |
110,825 |
|
|
109,964 |
|
Retained earnings |
70,058 |
|
|
60,791 |
|
Treasury stock, 47,709 and
33,298 shares at September 30, 2020 and December 31, 2019 |
(611 |
) |
|
(368 |
) |
Accumulated other
comprehensive income |
1,735 |
|
|
191 |
|
Total shareholders' equity |
182,007 |
|
|
170,578 |
|
Total liabilities and shareholders' equity |
$ |
1,844,030 |
|
|
$ |
1,586,262 |
|
|
|
|
|
|
|
|
|
1ST Constitution Bancorp
Consolidated Statements of Income(Dollars
in thousands, except per share
data)(Unaudited)
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
INTEREST
INCOME |
|
|
|
|
|
|
|
Loans, including fees |
$ |
16,477 |
|
|
$ |
13,316 |
|
|
$ |
46,656 |
|
|
$ |
38,342 |
|
Securities: |
|
|
|
|
|
|
|
Taxable |
725 |
|
|
1,130 |
|
|
2,633 |
|
|
3,615 |
|
Tax-exempt |
504 |
|
|
393 |
|
|
1,438 |
|
|
1,256 |
|
Federal funds sold and short-term investments |
2 |
|
|
35 |
|
|
95 |
|
|
129 |
|
Total interest income |
17,708 |
|
|
14,874 |
|
|
50,822 |
|
|
43,342 |
|
INTEREST
EXPENSE |
|
|
|
|
|
|
|
Deposits |
2,171 |
|
|
2,904 |
|
|
8,133 |
|
|
7,892 |
|
Borrowings |
95 |
|
|
268 |
|
|
205 |
|
|
698 |
|
Redeemable subordinated debentures |
90 |
|
|
185 |
|
|
348 |
|
|
575 |
|
Total interest expense |
2,356 |
|
|
3,357 |
|
|
8,686 |
|
|
9,165 |
|
Net interest income |
15,352 |
|
|
11,517 |
|
|
42,136 |
|
|
34,177 |
|
PROVISION FOR LOAN
LOSSES |
2,320 |
|
|
350 |
|
|
5,340 |
|
|
1,050 |
|
Net interest income after provision for loan losses |
13,032 |
|
|
11,167 |
|
|
36,796 |
|
|
33,127 |
|
NON-INTEREST
INCOME |
|
|
|
|
|
|
|
Service charges on deposit accounts |
126 |
|
|
165 |
|
|
471 |
|
|
490 |
|
Gain on sales of loans, net |
3,396 |
|
|
1,351 |
|
|
6,987 |
|
|
3,556 |
|
Income on bank-owned life insurance |
188 |
|
|
149 |
|
|
632 |
|
|
437 |
|
Gain on sales/calls of securities |
79 |
|
|
16 |
|
|
97 |
|
|
16 |
|
Other income |
947 |
|
|
525 |
|
|
2,105 |
|
|
1,743 |
|
Total non-interest income |
4,736 |
|
|
2,206 |
|
|
10,292 |
|
|
6,242 |
|
NON-INTEREST
EXPENSES |
|
|
|
|
|
|
|
Salaries and employee benefits |
7,106 |
|
|
5,231 |
|
|
19,276 |
|
|
15,472 |
|
Occupancy expense |
1,222 |
|
|
972 |
|
|
3,597 |
|
|
2,984 |
|
Data processing expenses |
486 |
|
|
379 |
|
|
1,402 |
|
|
1,072 |
|
FDIC insurance expense |
225 |
|
|
(47 |
) |
|
484 |
|
|
113 |
|
Other real estate owned expenses |
27 |
|
|
52 |
|
|
58 |
|
|
134 |
|
Merger-related expenses |
— |
|
|
302 |
|
|
64 |
|
|
575 |
|
Other operating expenses |
1,896 |
|
|
1,546 |
|
|
5,711 |
|
|
4,746 |
|
Total non-interest expenses |
10,962 |
|
|
8,435 |
|
|
30,592 |
|
|
25,096 |
|
Income before income taxes |
6,806 |
|
|
4,938 |
|
|
16,496 |
|
|
14,273 |
|
INCOME
TAXES |
1,896 |
|
|
1,315 |
|
|
4,475 |
|
|
3,883 |
|
Net income |
$ |
4,910 |
|
|
$ |
3,623 |
|
|
$ |
12,021 |
|
|
$ |
10,390 |
|
EARNINGS PER COMMON
SHARE |
|
|
|
|
|
|
|
Basic |
$ |
0.48 |
|
|
$ |
0.42 |
|
|
$ |
1.18 |
|
|
$ |
1.20 |
|
Diluted |
0.48 |
|
|
0.42 |
|
|
1.17 |
|
|
1.19 |
|
WEIGHTED AVERAGE
SHARES OUTSTANDING |
|
|
|
|
|
|
|
Basic |
10,230,488 |
|
|
8,666,251 |
|
|
10,213,601 |
|
|
8,641,684 |
|
Diluted |
10,268,951 |
|
|
8,722,349 |
|
|
10,260,477 |
|
|
8,698,959 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1ST Constitution Bancorp
Net Interest Margin
Analysis(Unaudited)
|
Three months ended September 30, 2020 |
|
Three months ended September 30, 2019 |
(In thousands except
yield/cost information) |
Average |
|
|
|
Average |
|
Average |
|
|
|
Average |
Assets |
Balance |
|
Interest |
|
Yield |
|
Balance |
|
Interest |
|
Yield |
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
Federal funds sold/short term investments |
$ |
8,027 |
|
|
$ |
2 |
|
|
0.10 |
% |
|
$ |
6,452 |
|
|
$ |
35 |
|
|
2.15 |
% |
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
Taxable |
155,242 |
|
|
725 |
|
|
1.87 |
% |
|
161,538 |
|
|
1,130 |
|
|
2.80 |
% |
Tax-exempt (1) |
83,461 |
|
|
638 |
|
|
3.06 |
% |
|
52,990 |
|
|
498 |
|
|
3.76 |
% |
Total investment securities |
238,703 |
|
|
1,363 |
|
|
2.28 |
% |
|
214,528 |
|
|
1,628 |
|
|
3.04 |
% |
Loans: (2) |
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
609,917 |
|
|
7,789 |
|
|
5.00 |
% |
|
405,885 |
|
|
5,295 |
|
|
5.10 |
% |
Mortgage warehouse lines |
333,461 |
|
|
3,383 |
|
|
4.06 |
% |
|
191,812 |
|
|
2,644 |
|
|
5.39 |
% |
Construction |
136,252 |
|
|
1,794 |
|
|
5.24 |
% |
|
157,752 |
|
|
2,705 |
|
|
6.80 |
% |
Commercial business |
138,073 |
|
|
1,445 |
|
|
4.16 |
% |
|
117,465 |
|
|
1,731 |
|
|
5.85 |
% |
SBA PPP loans |
75,484 |
|
|
470 |
|
|
2.48 |
% |
|
— |
|
|
— |
|
|
— |
% |
Residential real estate |
89,755 |
|
|
1,137 |
|
|
4.96 |
% |
|
57,026 |
|
|
624 |
|
|
4.38 |
% |
Loans to individuals |
27,284 |
|
|
293 |
|
|
4.20 |
% |
|
20,555 |
|
|
260 |
|
|
4.95 |
% |
Loans held for sale |
23,914 |
|
|
155 |
|
|
2.59 |
% |
|
5,160 |
|
|
49 |
|
|
3.80 |
% |
All other loans |
643 |
|
|
11 |
|
|
6.69 |
% |
|
772 |
|
|
8 |
|
|
4.05 |
% |
Deferred (fees) costs, net |
(1,736 |
) |
|
— |
|
|
— |
% |
|
450 |
|
|
— |
|
|
— |
% |
Total loans |
1,433,047 |
|
|
16,477 |
|
|
4.57 |
% |
|
956,877 |
|
|
13,316 |
|
|
5.52 |
% |
Total interest-earning assets |
1,679,777 |
|
|
$ |
17,842 |
|
|
4.23 |
% |
|
1,177,857 |
|
|
$ |
14,979 |
|
|
5.05 |
% |
Non-interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
(12,348 |
) |
|
|
|
|
|
(8,786 |
) |
|
|
|
|
Cash and due from bank |
11,460 |
|
|
|
|
|
|
11,684 |
|
|
|
|
|
Other assets |
125,309 |
|
|
|
|
|
|
83,543 |
|
|
|
|
|
Total non-interest-earning assets |
124,421 |
|
|
|
|
|
|
86,441 |
|
|
|
|
|
Total assets |
$ |
1,804,198 |
|
|
|
|
|
|
$ |
1,264,298 |
|
|
|
|
|
Liabilities and
shareholders' equity: |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Money market and NOW accounts |
$ |
425,401 |
|
|
$ |
542 |
|
|
0.51 |
% |
|
$ |
335,997 |
|
|
$ |
720 |
|
|
0.85 |
% |
Savings accounts |
290,055 |
|
|
461 |
|
|
0.63 |
% |
|
190,985 |
|
|
491 |
|
|
1.02 |
% |
Certificates of deposit |
350,654 |
|
|
1,168 |
|
|
1.33 |
% |
|
291,674 |
|
|
1,693 |
|
|
2.30 |
% |
Federal Reserve Bank PPPLF borrowings |
35,296 |
|
|
33 |
|
|
0.37 |
% |
|
— |
|
|
— |
|
|
— |
% |
Short-term borrowings |
63,175 |
|
|
62 |
|
|
0.39 |
% |
|
45,378 |
|
|
268 |
|
|
2.34 |
% |
Redeemable subordinated debentures |
18,557 |
|
|
90 |
|
|
1.90 |
% |
|
18,557 |
|
|
185 |
|
|
3.99 |
% |
Total interest-bearing liabilities |
1,183,138 |
|
|
$ |
2,356 |
|
|
0.79 |
% |
|
882,591 |
|
|
$ |
3,357 |
|
|
1.51 |
% |
Non-interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
413,350 |
|
|
|
|
|
|
221,166 |
|
|
|
|
|
Other liabilities |
28,764 |
|
|
|
|
|
|
24,566 |
|
|
|
|
|
Total non-interest-bearing liabilities |
442,114 |
|
|
|
|
|
|
245,732 |
|
|
|
|
|
Shareholders' equity |
178,946 |
|
|
|
|
|
|
135,975 |
|
|
|
|
|
Total liabilities and shareholders' equity |
$ |
1,804,198 |
|
|
|
|
|
|
$ |
1,264,298 |
|
|
|
|
|
Net interest spread (3) |
|
|
|
|
3.44 |
% |
|
|
|
|
|
3.54 |
% |
Net interest income and margin
(4) |
|
|
$ |
15,486 |
|
|
3.67 |
% |
|
|
|
$ |
11,622 |
|
|
3.91 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Tax-equivalent basis, using 21% federal tax rate in 2020 and
2019.(2) Loan origination fees and costs are considered an
adjustment to interest income. For the purpose of calculating loan
yields, average loan balances include non-accrual loans with no
related interest income and the average balance of loans held for
sale.(3) The net interest spread is the difference between the
average yield on interest-earning assets and the average rate paid
on interest-bearing liabilities.(4) The net interest margin is
equal to net interest income divided by average interest-earning
assets.
1ST Constitution Bancorp
Net Interest Margin
Analysis(Unaudited)
|
Nine months ended September 30, 2020 |
|
Nine months ended September 30, 2019 |
(Dollars in thousands) |
Average |
|
|
|
Average |
|
Average |
|
|
|
Average |
Assets: |
Balance |
|
Interest |
|
Yield |
|
Balance |
|
Interest |
|
Yield |
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
Federal funds sold/short term investments |
$ |
16,433 |
|
|
$ |
95 |
|
|
0.77 |
% |
|
$ |
7,140 |
|
|
$ |
129 |
|
|
2.42 |
% |
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
Taxable |
163,979 |
|
|
2,633 |
|
|
2.14 |
% |
|
162,809 |
|
|
3,615 |
|
|
2.96 |
% |
Tax-exempt (1) |
77,145 |
|
|
1,821 |
|
|
3.15 |
% |
|
56,723 |
|
|
1,590 |
|
|
3.74 |
% |
Total investment securities |
241,124 |
|
|
4,454 |
|
|
2.46 |
% |
|
219,532 |
|
|
5,205 |
|
|
3.16 |
% |
Loans: (2) |
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
588,145 |
|
|
22,935 |
|
|
5.12 |
% |
|
400,096 |
|
|
15,494 |
|
|
5.11 |
% |
Mortgage warehouse lines |
244,470 |
|
|
7,702 |
|
|
4.20 |
% |
|
155,962 |
|
|
6,682 |
|
|
5.71 |
% |
Construction |
141,428 |
|
|
5,965 |
|
|
5.63 |
% |
|
157,245 |
|
|
8,135 |
|
|
6.92 |
% |
Commercial business |
142,010 |
|
|
4,815 |
|
|
4.53 |
% |
|
120,774 |
|
|
5,386 |
|
|
5.96 |
% |
SBA PPP loans |
43,374 |
|
|
818 |
|
|
2.52 |
% |
|
— |
|
|
— |
|
|
— |
% |
Residential real estate |
89,333 |
|
|
3,085 |
|
|
4.54 |
% |
|
50,562 |
|
|
1,682 |
|
|
4.39 |
% |
Loans to individuals |
28,857 |
|
|
1,001 |
|
|
4.56 |
% |
|
21,748 |
|
|
827 |
|
|
5.01 |
% |
Loans held for sale |
14,160 |
|
|
304 |
|
|
2.86 |
% |
|
3,556 |
|
|
107 |
|
|
4.01 |
% |
All other loans |
872 |
|
|
31 |
|
|
4.67 |
% |
|
799 |
|
|
29 |
|
|
4.79 |
% |
Deferred (fees) costs, net |
(345 |
) |
|
— |
|
|
— |
% |
|
233 |
|
|
— |
|
|
— |
% |
Total loans |
1,292,304 |
|
|
46,656 |
|
|
4.82 |
% |
|
910,975 |
|
|
38,342 |
|
|
5.63 |
% |
Total interest-earning assets |
1,549,861 |
|
|
$ |
51,205 |
|
|
4.41 |
% |
|
1,137,647 |
|
|
$ |
43,676 |
|
|
5.13 |
% |
Non-interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
(10,684 |
) |
|
|
|
|
|
(8,693 |
) |
|
|
|
|
Cash and due from bank |
12,182 |
|
|
|
|
|
|
11,270 |
|
|
|
|
|
Other assets |
123,841 |
|
|
|
|
|
|
81,186 |
|
|
|
|
|
Total non-interest-earning assets |
125,339 |
|
|
|
|
|
|
83,763 |
|
|
|
|
|
Total assets |
$ |
1,675,200 |
|
|
|
|
|
|
$ |
1,221,410 |
|
|
|
|
|
Liabilities and
shareholders' equity: |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Money market and NOW accounts |
$ |
417,557 |
|
|
$ |
1,913 |
|
|
0.61 |
% |
|
$ |
337,004 |
|
|
$ |
1,977 |
|
|
0.78 |
% |
Savings accounts |
275,679 |
|
|
1,612 |
|
|
0.78 |
% |
|
190,589 |
|
|
1,380 |
|
|
0.97 |
% |
Certificates of deposit |
354,551 |
|
|
4,608 |
|
|
1.74 |
% |
|
268,851 |
|
|
4,535 |
|
|
2.26 |
% |
Federal Reserve Bank PPPLF borrowings |
13,169 |
|
|
36 |
|
|
0.37 |
% |
|
— |
|
|
— |
|
|
— |
% |
Short-term borrowings |
39,344 |
|
|
169 |
|
|
0.58 |
% |
|
36,992 |
|
|
698 |
|
|
2.52 |
% |
Redeemable subordinated debentures |
18,557 |
|
|
348 |
|
|
2.46 |
% |
|
18,557 |
|
|
575 |
|
|
4.13 |
% |
Total interest-bearing liabilities |
1,118,857 |
|
|
$ |
8,686 |
|
|
1.04 |
% |
|
851,993 |
|
|
$ |
9,165 |
|
|
1.44 |
% |
Non-interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
351,291 |
|
|
|
|
|
|
214,618 |
|
|
|
|
|
Other liabilities |
29,911 |
|
|
|
|
|
|
22,720 |
|
|
|
|
|
Total non-interest-bearing liabilities |
381,202 |
|
|
|
|
|
|
237,338 |
|
|
|
|
|
Shareholders' equity |
175,141 |
|
|
|
|
|
|
132,079 |
|
|
|
|
|
Total liabilities and shareholders' equity |
$ |
1,675,200 |
|
|
|
|
|
|
$ |
1,221,410 |
|
|
|
|
|
Net interest spread (3) |
|
|
|
|
3.37 |
% |
|
|
|
|
|
3.69 |
% |
Net interest income and margin
(4) |
|
|
$ |
42,519 |
|
|
3.66 |
% |
|
|
|
$ |
34,511 |
|
|
4.06 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Tax-equivalent basis, using 21% federal tax rate in 2020 and
2019.(2) Loan origination fees and costs are considered an
adjustment to interest income. For the purpose of calculating loan
yields, average loan balances include non-accrual loans with no
related interest income and the average balance of loans held for
sale.(3) The net interest spread is the difference between the
average yield on interest-earning assets and the average rate paid
on interest-bearing liabilities.(4) The net interest margin is
equal to net interest income divided by average interest-earning
assets.
1ST Constitution Bancorp
Reconciliation of Non-GAAP Measures
(1)(Dollars in thousands, except per share
data)(Unaudited)
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Adjusted net
income |
|
|
|
|
|
|
|
Net income |
$ |
4,910 |
|
|
$ |
3,623 |
|
|
$ |
12,021 |
|
|
$ |
10,390 |
|
Adjustments: |
|
|
|
|
|
|
|
Merger-related expenses |
— |
|
|
302 |
|
|
64 |
|
|
575 |
|
Income tax effect of adjustments |
— |
|
|
(37 |
) |
|
(19 |
) |
|
(119 |
) |
Adjusted net income |
$ |
4,910 |
|
|
$ |
3,888 |
|
|
$ |
12,066 |
|
|
$ |
10,846 |
|
|
|
|
|
|
|
|
|
Adjusted net income
per diluted share |
|
|
|
|
|
|
|
Adjusted net income |
$ |
4,910 |
|
|
$ |
3,888 |
|
|
$ |
12,066 |
|
|
$ |
10,846 |
|
Diluted shares outstanding |
10,268,951 |
|
|
8,722,349 |
|
|
10,260,477 |
|
|
8,698,959 |
|
Adjusted net income per diluted share |
$ |
0.48 |
|
|
$ |
0.45 |
|
|
$ |
1.18 |
|
|
$ |
1.25 |
|
|
|
|
|
|
|
|
|
Adjusted return on
average total assets |
|
|
|
|
|
|
|
Adjusted net income |
$ |
4,910 |
|
|
$ |
3,888 |
|
|
$ |
12,066 |
|
|
$ |
10,846 |
|
Average assets |
1,804,198 |
|
|
1,264,298 |
|
|
1,675,200 |
|
|
1,221,410 |
|
Adjusted return on average total assets |
1.08 |
% |
|
1.22 |
% |
|
0.96 |
% |
|
1.19 |
% |
|
|
|
|
|
|
|
|
Adjusted return on
average shareholders' equity |
|
|
|
|
|
|
|
Adjusted net income |
$ |
4,910 |
|
|
$ |
3,888 |
|
|
$ |
12,066 |
|
|
$ |
10,846 |
|
Average equity |
178,946 |
|
|
135,975 |
|
|
175,141 |
|
|
132,079 |
|
Adjusted return on average shareholders' equity |
10.92 |
% |
|
11.34 |
% |
|
9.2 |
% |
|
10.98 |
% |
|
|
|
|
|
|
|
|
Book value and
tangible book value per common share |
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
$ |
182,007 |
|
|
$ |
138,527 |
|
Less: goodwill and intangible assets |
|
|
|
|
36,471 |
|
|
12,165 |
|
Tangible shareholders' equity |
|
|
|
|
145,536 |
|
|
126,362 |
|
Shares outstanding |
|
|
|
|
10,237,520 |
|
|
8,682,401 |
|
Book value per common share |
|
|
|
|
$ |
17.78 |
|
|
$ |
15.95 |
|
Tangible book value per common share |
|
|
|
|
$ |
14.22 |
|
|
$ |
14.55 |
|
|
|
|
|
|
|
|
|
(1) The Company used the non-GAAP financial measures,
Adjusted net income, Adjusted net income per diluted share,
Adjusted return on average total assets, Adjusted return on average
shareholders' equity and tangible book value per common share,
because the Company believes that it is helpful to readers in
understanding the Company's financial performance and the effect on
its financial statements of the merger-related expenses related to
the Shore Merger in 2019. These non-GAAP measures improve the
comparability of the current period results with the results of the
prior periods. The Company cautions that the non-GAAP financial
measures should be considered in addition to, but not as a
substitute for, the Company's GAAP financial results.
CONTACT: |
|
Robert F. ManganoPresident & Chief
Executive Officer(609) 655-4500 |
|
Stephen J. GilhoolySr. Vice President
& Chief Financial Officer(609)
655-4500 |
|
|
|
|
|
1st Constitution Bancorp (NASDAQ:FCCY)
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