1ST Constitution Bancorp (NASDAQ: FCCY), the holding company (the
“Company”) for 1ST Constitution Bank (the “Bank”), today reported
net income of $6.1 million and diluted earnings per share of $0.59
for the three months ended December 31, 2020 compared to net income
of $3.2 million and diluted earnings per share of $0.34 for the
three months ended December 31, 2019. Net income increased 87.0%
and diluted earnings per share increased 73.5% for the fourth
quarter of 2020 compared to the fourth quarter of 2019. Net income
for the three months ended December 31, 2019 included $880,000 of
after tax merger expenses related to the merger of Shore Community
Bank (“Shore”) with and into the Bank in November 2019.
For the year ended December 31, 2020, net income
was $18.1 million and diluted earnings per share was $1.76 compared
to net income of $13.6 million and diluted earnings per share of
$1.53 for the year ended December 31, 2019. Net income for the
years ended December 31, 2020 and 2019 included $45,000 and $1.3
million, respectively, of after tax merger expenses related to the
merger of Shore.
The Board of Directors declared a quarterly cash
dividend of $0.09 per share of common stock that will be payable on
February 26, 2021 to shareholders of record on February 12,
2021.
Robert F. Mangano, President and Chief Executive
Officer, stated, “We reported record earnings for the fourth
quarter and the full year of 2020 despite the unprecedented
challenges presented by the pandemic. The Company’s diversified
lending platforms contributed significantly to the increase in
revenue and net income during the fourth quarter and throughout the
year as the Company’s residential mortgage banking and mortgage
warehouse lending operations benefited from the low interest rate
environment.”
Mr. Mangano added, “We addressed the economic
uncertainty by providing access to additional credit and
forbearance on loan interest and or principal payments to
customers, significantly enhancing the frequency and level of
critical review of the loan portfolio and recording an annual
provision for loan losses of $6.7 million, which increased the
allowance for loan losses by 68.7% to $15.6 million at December 31,
2020.”
Mr. Mangano continued, “I could not be prouder
of the dedication, hard work and resiliency of our employees during
this extremely difficult period. They worked tirelessly to serve
and assist our customers and maintain the operations of the
Company. Our financial success is a reflection of their commitment.
Recently, Newsweek Magazine named 1st Constitution Bank the “2021
Best Small Bank in New Jersey.”
FOURTH QUARTER 2020 HIGHLIGHTS
- Return on average total assets and
return on average shareholders' equity were 1.31% and 13.13%,
respectively.
- Net interest income was $16.4
million and the net interest margin was 3.81% on a tax equivalent
basis.
- A provision for loan losses of $1.4
million was recorded and net charge-offs were $168,000.
- Total loans were $1.4 billion at
December 31, 2020 and increased $217.7 million from December 31,
2019. Mortgage warehouse lines increased $151.7 million, commercial
real estate loans increased $51.3 million and commercial business
loans increased $49.5 million, which included $58.8 million in
Small Business Administration (“SBA”) Paycheck Protection Program
(“PPP”) loans.
- Mortgage warehouse lines totaled
$388.4 million at December 31, 2020 and $1.8 billion of residential
mortgage loans were financed during the fourth quarter of
2020.
- Residential mortgage banking
operations originated $117.4 million of residential mortgages, sold
$113.6 million in residential mortgages and recorded a $3.2 million
gain on sales of loans.
- Total deposits were $1.6 billion at
December 31, 2020 and increased $285.5 million, with non-interest
demand deposits increasing $137.7 million from December 31,
2019.
- Non-performing assets were $17.3
million, or 0.96% of total assets at December 31, 2020,
representing an increase of $12.3 million from December 31, 2019
and included $92,000 of other real estate owned (“OREO”).
COVID-19 Impact and Response
The Company in its previous earnings press
releases during 2020 reported the actions that it took in response
to the sudden emergence of the COVID-19 global pandemic.
As the Company conducts its daily operations,
the health and 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 first quarter of
2020. The Company re-opened interior access to all of our branch
offices to customers in June 2020 and the offices continue to be
open for customers. Where feasible, the Company is allowing its
staff to work remotely. The Company rewarded all its staff with a
bonus payment in the fourth quarter of 2020 for their dedication
during this pandemic. In addition, the Company is providing paid
time off to employees to obtain COVID-19 vaccinations.
During the fourth quarter of 2020, the Company
continued working with customers impacted by the economic
disruption. In addition, management significantly increased the
provision for loan losses in response to the higher estimated
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.
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. During 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 of December 31, 2020, all loans
that had previously received deferrals were no longer deferred,
except one commercial real estate loan with a balance of $6.0
million received an additional deferral of principal payments up to
90 days and two commercial real estate loans totaling $4.6 million
were placed on non-accrual status in the third quarter of
2020.
- As a long-standing SBA preferred
lender, we actively participated in the SBA’s PPP lending program
established under the CARES Act. As of December 31, 2020, we funded
467 SBA PPP loans totaling $75.6 million of which $15.8 million of
PPP loans were forgiven by the SBA in the fourth quarter of
2020.
- The Economic Aid to Hard Hit Small
Business, Not for Profits and Venues Act (“Economic Aid Act”) was
enacted in December 2020 in further response to the coronavirus
pandemic. Among other things, the Economic Aid Act provides relief
to borrowers to access additional credit through the SBA's PPP
program. We are actively participating in the new program and have
accepted 120 applications for PPP loans totaling $22.1 million. The
SBA has approved 62 applications for $8.6 million of PPP loans. Of
the total approved, we have funded $8.7 million of PPP loans as of
January 29, 2021.
- We are participating in the Federal
Reserve's PPP loan funding program and may pledge 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 December 31, 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
December 31, 2020, all commercial business, commercial real estate
and consumer loans that had previously received deferrals were no
longer deferred and had made the contractually due payments, except
for three loans. During the fourth quarter of 2020, one commercial
real estate loan with a balance of $6.0 million received an
additional deferral of principal payments up to 90 days. Two
commercial real estate loans for hotels 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.
Allowance for Loan Losses
Management reviewed the loan portfolio at
December 31, 2020 in connection with the evaluation of the adequacy
of the allowance for loan losses. Loans with balances of less than
$250,000 were generally excluded from management’s review. As a
result of management’s review of the loan portfolio at December 31,
2020, a provision for loan losses of $1.4 million was recorded for
the fourth quarter of 2020 and the allowance for loan losses was
increased to $15.6 million at December 31, 2020.
Management reviewed over 90% 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.
At December 31, 2020, the allowance for loan
losses included $618,000 for loans that were rated Pass-Watch and
had received a deferral. This reflects management’s previously
reported determination that “Pass-Watch” credit rated loans with
modifications or deferrals suggest a weaker financial strength of
the borrower than “Pass” credit rated loans, thereby warranting
additional reserves for loan losses than would ordinarily be
reserved for “Pass-Watch” credit rated loans.
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 December 31, 2020 loans to hotel and
restaurant-food service industries were $67.8 million and $64.0
million, respectively. Management reviewed over 99% of the hotel
loans and over 96% of the restaurant-food service loans.
All 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 reviewed loans to schools that
are private educational institutions that are generally sponsored
or affiliated with religious organizations. The loans totaled $26.4
million at December 31, 2020, and 97% of these loans were
reviewed.
The expanded review also included $6.0 million,
or over 31%, of commercial loans made under the SBA 7(a) loan
program, totaling $19.3 million at December 31, 2020.
As a result of this fourth quarter of 2020
review, loans totaling $3.9 million and $500,000 were down-graded
to “Special Mention” and “Substandard,” respectively.
Discussion of Financial Results
On November 8, 2019, the Company completed the
merger of Shore with and into the Bank (the "Shore Merger").
Net income was $6.1 million, or $0.59 per
diluted share, for the fourth quarter of 2020 compared to net
income of $3.2 million, or $0.34 per diluted share, for the fourth
quarter of 2019. For the three months ended December 31, 2020, net
interest income increased $3.2 million compared to the three months
ended December 31, 2019 driven primarily by the increase in the
average balance of loans since December 31, 2019. Gain on sales of
loans for the fourth quarter of 2020 increased $1.9 million
compared to the fourth quarter of 2019 due primarily to the higher
volume of residential mortgage loans sold. The provision for loan
losses was $1.4 million for the fourth quarter of 2020 compared to
$300,000 for the fourth 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 $11.2 million for the fourth quarter of
2020, representing an increase of $710,000, compared to $10.5
million for the fourth quarter of 2019, which included $1.2 million
of Shore merger-related expenses.
Net interest income was $16.4 million for the
fourth quarter of 2020 and increased $3.2 million compared to net
interest income of $13.2 million for the fourth quarter of 2019.
Total interest income was $18.3 million for the three months ended
December 31, 2020 compared to $16.7 million for the three months
ended December 31, 2019. The increase in total interest income was
primarily due to a net increase of $330.5 million in average loans,
reflecting growth in all segments of the loan portfolio except
construction loans and loans to individuals, and included $69.9
million in average SBA PPP loans. Average interest-earning assets
were $1.7 billion, with a tax-equivalent yield of 4.27%, for the
fourth quarter of 2020 compared to average interest-earning assets
of $1.4 billion, with a tax-equivalent yield of 4.92%, for the
fourth quarter of 2019. The tax-equivalent yield on average
interest-earning assets for the fourth quarter of 2020 declined 65
basis points to 4.27%, due primarily to the decline in market
interest rates beginning in the third quarter of 2019 and
continuing throughout 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 $570.5 million of loans with an
interest rate tied to the prime rate and approximately $47.5
million of loans with an interest rate tied to either 1- or 3-month
LIBOR at December 31, 2020.
Interest expense on average interest-bearing
liabilities was $2.0 million, with an interest cost of 0.65%, for
the fourth quarter of 2020, compared to $2.4 million, with an
interest cost of 0.79%, for the third quarter of 2020 and $3.6
million, with an interest cost of 1.39%, for the fourth quarter of
2019. Despite an increase of $175.3 million in average
interest-bearing liabilities for the fourth quarter of 2020
compared to the fourth quarter of 2019, interest expense declined
$1.6 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 0.64% for the fourth
quarter of 2020, 0.81% for the third quarter of 2020 and 1.32% for
the fourth quarter of 2019. The lower interest cost of
interest-bearing deposits for the fourth quarter of 2020 compared
to the fourth quarter of 2019 primarily reflected a steep decline
in market interest rates beginning in the third quarter of 2019 and
continuing through 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.
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 $48.2
million for the fourth quarter of 2020. At December 31, 2020, there
were $94.7 million of certificates of deposits with an average
interest cost of 1.46% that mature within the following six months.
Management will continue to monitor and 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 was 3.81% for the fourth quarter of 2020 compared to 3.87%
for the fourth quarter of 2019, representing a decline of 6 basis
points due primarily to the lower interest rate environment
beginning in the third quarter of 2019. Interest income for the
fourth quarter of 2020 included $339,000 of fee income related to
PPP loans that were forgiven and paid-off by the SBA and $224,000
of interest income collected on non-performing loans that were
fully paid-off.
The Company recorded a provision for loan losses
of $1.4 million for the fourth quarter of 2020 compared to a
provision for loan losses of $300,000 for the fourth quarter of
2019. The significant increase in the provision for loan losses in
the fourth quarter of 2020 included an additional provision of
approximately $500,000 to increase specific reserves on impaired
loans, $208,000 to increase the qualitative risk factors for local
economic conditions and $580,000 to increase the qualitative risk
factors for hotel and restaurant loans. This provision also
reflected changes in loan ratings and the growth and change in mix
of the loan portfolio in the fourth quarter of 2020. At December
31, 2020, total loans were $1.4 billion and the allowance for loan
losses was $15.6 million, or 1.09% of total loans, compared to
total loans of $1.2 billion and an allowance for loan losses of
$9.3 million, or 0.76% of total loans, at December 31, 2019. The
allowance for loan losses, excluding the allocated reserve for
mortgage warehouse lines, was $13.8 million, or 1.32% of total
loans excluding mortgage warehouse lines. Acquisition accounting
for the Shore merger in 2019 and the New Jersey Community Bank
(“NJCB”) merger 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 $1.6 million and $0.5 million at
December 31, 2020, respectively. In addition, at December 31, 2020,
there were $58.8 million of SBA PPP loans which are 100% guaranteed
by the SBA and, accordingly, no reserve was provided.
Non-interest income was $4.4 million for the
fourth quarter of 2020, representing an increase of $2.4 million,
or 118.1%, compared to $2.0 million for the fourth quarter of 2019.
The significant increase in non-interest income was driven
primarily by a $1.9 million increase in gain on sales of loans. In
the fourth quarter of 2020, residential mortgage banking operations
originated approximately $117.4 million of residential mortgages,
sold $113.6 million of residential mortgages and recorded $3.2
million of gain on sales of loans compared to $40.9 million of
residential mortgages originated, $45.5 million of residential
mortgage loans sold and $1.2 million of gain on sales of loans
recorded in the fourth quarter of 2019. The residential mortgage
loan pipeline was $42.5 million at December 31, 2020. Management
believes that the increase in residential mortgage loans originated
and sold was due primarily to increased residential mortgage
refinancing activity as a result of significantly lower mortgage
interest rates in the 2020 period compared to the 2019
period. In the fourth quarter of 2020, $705,000 of SBA
loans were sold and gains of $59,000 was recorded compared to $1.5
million of SBA loans sold and gains of $112,000 recorded in the
fourth quarter of 2019. For the fourth quarter of 2020 compared to
the fourth quarter of 2019, service charges on deposit accounts
decreased $43,000, due primarily to lower overdraft fees. Other
income increased $494,000 in the fourth quarter of 2020 compared to
the fourth quarter of 2019, which included a $238,000 loss on sale
of OREO. Excluding the loss on sale of OREO, other income increased
$256,000 primarily due to a $57,000 increase in debit card
interchange fees, an interest rate swap fee collected of $29,000,
$54,000 of fees and reimbursed expenses related to the resolution
of non-performing loans, a recovery of $44,000 of principal on a
previously impaired investment security and general increases in
other income components.
Non-interest expenses were $11.2 million for the
fourth quarter of 2020 and increased $710,000, or 6.8%, compared to
$10.5 million for the fourth quarter of 2019, which included $1.2
million of expenses related to the Shore merger. Salaries and
employee benefits expense increased $1.6 million, or 27.0%, for the
fourth quarter of 2020 compared to the fourth quarter of 2019 due
primarily to a $945,000 increase in mortgage commissions resulting
from significantly higher residential mortgage lending activity,
$150,000 in temporary staffing costs, $107,000 in special bonus
compensation paid to all employees, merit increases and increases
in employee benefit expenses, which amounts were partially offset
by higher deferred loan origination expenses of approximately
$95,000. FDIC insurance expense increased $291,000 due to the
growth of assets, a credit of $106,000 from the FDIC related to the
third quarter of 2019 assessment and an increase in the FDIC
assessment rate in 2020. Other operating expenses decreased
$73,000, or 4.0% for the fourth quarter of 2020 compared to the
fourth quarter of 2019, resulting primarily from net decreases in
various components of other operating expenses.
Income tax expense was $2.1 million for the
fourth quarter of 2020, resulting in an effective tax rate of
26.0%, compared to income tax expense of $1.1 million, which
resulted in an effective tax rate of 26.3% for the fourth quarter
of 2019. The $1.0 million increase in income tax expense was due to
an increase of $3.8 million in pre-tax income in the fourth quarter
of 2020 compared to the fourth quarter of 2019.
Total assets increased $220.6 million to $1.81
billion at December 31, 2020 from $1.59 billion at December 31,
2019, due primarily to a $217.7 million increase in total loans, a
$23.9 million increase in loans held for sale and a $7.2 million
increase in total cash and cash equivalents which were partially
offset by a $14.7 million decrease in total investment securities.
The increase in total assets was funded primarily by a $285.5
million increase in deposits. Total portfolio loans at December 31,
2020 were $1.43 billion, compared to $1.22 billion at December 31,
2019. The $217.7 million increase in loans was due primarily to an
increase of $151.7 million in mortgage warehouse lines, an increase
of $51.3 million in commercial real estate loans and an increase of
$49.5 million in commercial business loans which included $58.8
million of SBA PPP loans, and was partially offset by decreases in
other components of the loan portfolio. Total investment securities
were $217.7 million at December 31, 2020, representing a decrease
of $14.7 million from $232.4 million at December 31, 2019.
Investment securities available for sale decreased $30.6 million
and investment securities held to maturity increased $15.9 million
at December 31, 2020 from December 31, 2019.
Total deposits increased $285.5 million to $1.56
billion at December 31, 2020 from $1.28 billion at December 31,
2019. The increase in deposits was due primarily to a $137.7
million increase in non-interest-bearing demand deposits, a $48.4
million increase in interest-bearing demand deposits, a $75.2
million increase in savings deposits and $24.2 million increase in
certificates of deposit. Short-term borrowings decreased $82.2
million to $9.8 million at December 31, 2020, compared to $92.0
million at December 31, 2019 as a result of the increase in total
deposits.
Regulatory capital ratios for the Company and
the Bank continue to reflect a strong capital position. Under
applicable 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 9.92%,
12.16%, 11.12% and 9.41%, respectively, at December 31, 2020. The
Bank’s estimated CET1, total risk-based capital, Tier 1 capital and
leverage ratios were 11.11%, 12.15%, 11.11% and 9.40%,
respectively, at December 31, 2020. The Company and the Bank are
considered “well capitalized” under these capital standards.
Asset Quality
Non-accrual loans were $16.4 million at December
31, 2020 compared to $4.5 million at December 31, 2019. During the
year ended December 31, 2020, $14.5 million of loans were placed on
non-accrual status and consisted of a participation in a
construction loan with a balance of $7.5 million, $6.8 million of
commercial real estate loans, a $156,000 residential loan and a
$84,000 commercial business loan. During the year, $2.7 million of
non-performing loans and $1.8 million of purchased credit impaired
loans were repaid.
Non-performing loans represented 1.20% of total
loans and non-performing assets represented 0.96% of total assets
at December 31, 2020 compared to 0.37% and 0.32% at December 31,
2019, respectively.
OREO at December 31, 2020 was $92,000 and
consisted of one parcel of land that was acquired in the Shore
merger. During 2020, $479,000 of OREO was sold and a gain on sale
of OREO of $75,000 was recorded.
About 1ST Constitution Bancorp
1ST Constitution Bancorp, through its primary
subsidiary, 1ST Constitution Bank, operates 25 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 (2), 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 December 31, |
|
Year Ended December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Per share
data: |
|
|
|
|
|
|
|
Earnings per share - basic |
$ |
0.59 |
|
|
|
$ |
0.34 |
|
|
|
$ |
1.77 |
|
|
|
$ |
1.54 |
|
|
Earnings per share - diluted |
0.59 |
|
|
|
0.34 |
|
|
|
1.76 |
|
|
|
1.53 |
|
|
Book value per share at end of period |
|
|
|
|
18.32 |
|
|
|
16.74 |
|
|
Tangible book value per common share at end of period(1) |
|
|
|
|
14.80 |
|
|
|
13.13 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding – basic |
10,240,325 |
|
|
|
9,568,280 |
|
|
|
10,220,319 |
|
|
|
8,875,237 |
|
|
Weighted average shares outstanding - diluted |
10,282,336 |
|
|
|
9,628,738 |
|
|
|
10,260,965 |
|
|
|
8,933,471 |
|
|
Shares outstanding at end of period |
|
|
|
|
10,245,826 |
|
|
|
10,191,676 |
|
|
Performance
ratios/data: |
|
|
|
|
|
|
|
Return on average total assets |
1.31 |
|
% |
|
0.88 |
|
% |
|
1.05 |
|
% |
|
1.06 |
|
% |
Return on average shareholders' equity |
13.13 |
|
% |
|
8.25 |
|
% |
|
10.20 |
|
% |
|
9.87 |
|
% |
Net interest income (tax-equivalent basis)(2) |
$ |
16,501 |
|
|
|
$ |
13,268 |
|
|
|
$ |
59,020 |
|
|
|
$ |
47,779 |
|
|
Net interest margin (tax-equivalent basis)(3) |
3.81 |
|
% |
|
3.87 |
|
% |
|
3.71 |
|
% |
|
4.00 |
|
% |
Efficiency ratio (tax-equivalent basis)(4) |
53.53 |
|
% |
|
68.49 |
|
% |
|
56.68 |
|
% |
|
63.46 |
|
% |
|
|
|
|
|
|
|
|
Loan portfolio
composition: |
|
|
|
|
December 31, 2020 |
|
December 31, 2019 |
Commercial real estate |
|
|
|
|
$ |
618,978 |
|
|
|
$ |
567,655 |
|
|
Mortgage warehouse lines |
|
|
|
|
388,366 |
|
|
|
236,672 |
|
|
Construction loans |
|
|
|
|
129,245 |
|
|
|
148,939 |
|
|
Commercial business |
|
|
|
|
188,728 |
|
|
|
139,271 |
|
|
Residential real estate |
|
|
|
|
88,261 |
|
|
|
90,259 |
|
|
Loans to individuals |
|
|
|
|
21,269 |
|
|
|
32,604 |
|
|
Other loans |
|
|
|
|
113 |
|
|
|
137 |
|
|
Gross loans |
|
|
|
|
1,434,960 |
|
|
|
1,215,537 |
|
|
Deferred (fees) costs, net |
|
|
|
|
(1,254 |
) |
|
|
491 |
|
|
Total loans |
|
|
|
|
$ |
1,433,706 |
|
|
|
$ |
1,216,028 |
|
|
Asset quality
data: |
|
|
|
|
|
|
|
Loans past due over 90 days and still accruing |
|
|
|
|
$ |
871 |
|
|
|
$ |
— |
|
|
Non-accrual loans |
|
|
|
|
16,361 |
|
|
|
4,497 |
|
|
OREO property |
|
|
|
|
92 |
|
|
|
571 |
|
|
Total non-performing
assets |
|
|
|
|
$ |
17,324 |
|
|
|
$ |
5,068 |
|
|
|
|
|
|
|
|
|
|
Net charge-offs |
$ |
(168 |
) |
|
|
$ |
(7 |
) |
|
|
$ |
(328 |
) |
|
|
$ |
(481 |
) |
|
Allowance for loan losses to
total loans |
|
|
|
|
1.09 |
|
% |
|
0.76 |
|
% |
Allowance for loan losses to
total loans excluding mortgage warehouse lines and related
allowance |
|
|
|
|
1.32 |
|
% |
|
0.84 |
|
% |
Allowance for loan losses to
non-performing loans |
|
|
|
|
90.77 |
|
% |
|
206.16 |
|
% |
Non-performing loans to total
loans |
|
|
|
|
1.20 |
|
% |
|
0.37 |
|
% |
Non-performing assets to total
assets |
|
|
|
|
0.96 |
|
% |
|
0.32 |
|
% |
Capital
ratios: |
|
|
|
|
|
|
|
1ST Constitution
Bancorp |
|
|
|
|
|
|
|
Common equity tier 1 capital to risk-weighted assets |
|
|
|
|
9.92 |
|
% |
|
9.70 |
|
% |
Total capital to risk-weighted assets |
|
|
|
|
12.16 |
|
% |
|
11.69 |
|
% |
Tier 1 capital to risk-weighted assets |
|
|
|
|
11.12 |
|
% |
|
11.01 |
|
% |
Tier 1 leverage ratio |
|
|
|
|
9.41 |
|
% |
|
10.56 |
|
% |
1ST Constitution
Bank |
|
|
|
|
|
|
|
Common equity tier 1 capital to risk-weighted assets |
|
|
|
|
11.11 |
|
% |
|
10.99 |
|
% |
Total capital to risk-weighted assets |
|
|
|
|
12.15 |
|
% |
|
11.67 |
|
% |
Tier 1 capital to risk-weighted assets |
|
|
|
|
11.11 |
|
% |
|
10.99 |
|
% |
Tier 1 leverage ratio |
|
|
|
|
9.40 |
|
% |
|
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 $109 for the three
months ended December 31, 2020 and 2019, respectively, the
tax-equivalent adjustment was $517 and $443 for the year ended
December 31, 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)
|
December 31, 2020 |
|
December 31, 2019 |
ASSETS |
|
|
|
Cash and due from banks |
$ |
3,661 |
|
|
|
$ |
2,547 |
|
|
Interest-earning deposits |
18,334 |
|
|
|
12,295 |
|
|
Total cash and cash equivalents |
21,995 |
|
|
|
14,842 |
|
|
Investment securities: |
|
|
|
Available for sale, at fair
value |
125,197 |
|
|
|
155,782 |
|
|
Held to maturity (fair value of $95,640 and $78,223 at December 31,
2020 and 2019, respectively) |
92,552 |
|
|
|
76,620 |
|
|
Total investment securities |
217,749 |
|
|
|
232,402 |
|
|
Loans held for sale |
29,782 |
|
|
|
5,927 |
|
|
Loans |
1,433,706 |
|
|
|
1,216,028 |
|
|
Less: allowance for loan
losses |
(15,641 |
) |
|
|
(9,271 |
) |
|
Net loans |
1,418,065 |
|
|
|
1,206,757 |
|
|
Premises and equipment,
net |
14,345 |
|
|
|
15,262 |
|
|
Right-of-use assets |
16,548 |
|
|
|
17,957 |
|
|
Accrued interest
receivable |
5,273 |
|
|
|
4,945 |
|
|
Bank-owned life insurance |
37,316 |
|
|
|
36,678 |
|
|
Other real estate owned |
92 |
|
|
|
571 |
|
|
Goodwill and intangible
assets |
36,003 |
|
|
|
36,779 |
|
|
Other assets |
9,741 |
|
|
|
14,142 |
|
|
Total assets |
$ |
1,806,909 |
|
|
|
$ |
1,586,262 |
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
LIABILITIES |
|
|
|
Deposits |
|
|
|
Non-interest bearing |
$ |
425,210 |
|
|
|
$ |
287,555 |
|
|
Interest bearing |
1,137,629 |
|
|
|
989,807 |
|
|
Total deposits |
1,562,839 |
|
|
|
1,277,362 |
|
|
Short-term borrowings |
9,825 |
|
|
|
92,050 |
|
|
Redeemable subordinated
debentures |
18,557 |
|
|
|
18,557 |
|
|
Accrued interest payable |
851 |
|
|
|
1,592 |
|
|
Lease liability |
17,387 |
|
|
|
18,617 |
|
|
Accrued expense and other
liabilities |
9,793 |
|
|
|
7,506 |
|
|
Total liabilities |
1,619,252 |
|
|
|
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; 10,293,535 and 10,224,974 shares
issued and 10,245,826 and 10,191,676 shares outstanding as of
December 31, 2020 and 2019, respectively |
111,135 |
|
|
|
109,964 |
|
|
Retained earnings |
75,201 |
|
|
|
60,791 |
|
|
Treasury stock, 47,709 and
33,298 shares at December 31, 2020 and 2019, respectively |
(611 |
) |
|
|
(368 |
) |
|
Accumulated other
comprehensive income |
1,932 |
|
|
|
191 |
|
|
Total shareholders' equity |
187,657 |
|
|
|
170,578 |
|
|
Total liabilities and shareholders' equity |
$ |
1,806,909 |
|
|
|
$ |
1,586,262 |
|
|
|
|
|
|
|
|
|
|
|
|
1ST
Constitution Bancorp Consolidated
Statements of Income(Dollars in thousands, except
per share data)(Unaudited)
|
Three Months EndedDecember
31, |
|
Year EndedDecember 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
INTEREST
INCOME |
|
|
|
|
|
|
|
Loans, including fees |
$ |
17,152 |
|
|
$ |
15,195 |
|
|
$ |
63,808 |
|
|
$ |
53,537 |
|
Securities: |
|
|
|
|
|
|
|
Taxable |
656 |
|
|
1,095 |
|
|
3,289 |
|
|
4,710 |
|
Tax-exempt |
504 |
|
|
411 |
|
|
1,942 |
|
|
1,667 |
|
Federal funds sold and short-term investments |
12 |
|
|
47 |
|
|
107 |
|
|
176 |
|
Total interest income |
18,324 |
|
|
16,748 |
|
|
69,146 |
|
|
60,090 |
|
INTEREST
EXPENSE |
|
|
|
|
|
|
|
Deposits |
1,848 |
|
|
3,202 |
|
|
9,981 |
|
|
11,094 |
|
Borrowings |
23 |
|
|
215 |
|
|
228 |
|
|
912 |
|
Redeemable subordinated debentures |
86 |
|
|
172 |
|
|
434 |
|
|
748 |
|
Total interest expense |
1,957 |
|
|
3,589 |
|
|
10,643 |
|
|
12,754 |
|
Net interest income |
16,367 |
|
|
13,159 |
|
|
58,503 |
|
|
47,336 |
|
PROVISION FOR LOAN
LOSSES |
1,358 |
|
|
300 |
|
|
6,698 |
|
|
1,350 |
|
Net interest income after provision for loan losses |
15,009 |
|
|
12,859 |
|
|
51,805 |
|
|
45,986 |
|
NON-INTEREST
INCOME |
|
|
|
|
|
|
|
Service charges on deposit accounts |
130 |
|
|
173 |
|
|
601 |
|
|
663 |
|
Gain on sales of loans, net |
3,243 |
|
|
1,329 |
|
|
10,230 |
|
|
4,885 |
|
Income on bank-owned life insurance |
186 |
|
|
185 |
|
|
818 |
|
|
623 |
|
Gain on sales/calls of securities |
4 |
|
|
14 |
|
|
101 |
|
|
30 |
|
Other income |
788 |
|
|
294 |
|
|
2,893 |
|
|
2,036 |
|
Total non-interest income |
4,351 |
|
|
1,995 |
|
|
14,643 |
|
|
8,237 |
|
NON-INTEREST
EXPENSES |
|
|
|
|
|
|
|
Salaries and employee
benefits |
7,405 |
|
|
5,832 |
|
|
26,681 |
|
|
21,304 |
|
Occupancy expense |
1,179 |
|
|
1,116 |
|
|
4,776 |
|
|
4,100 |
|
Data processing expenses |
469 |
|
|
435 |
|
|
1,871 |
|
|
1,507 |
|
FDIC insurance expense |
332 |
|
|
41 |
|
|
816 |
|
|
154 |
|
Other real estate owned
expenses |
14 |
|
|
37 |
|
|
72 |
|
|
171 |
|
Merger-related expenses |
— |
|
|
1,155 |
|
|
64 |
|
|
1,730 |
|
Other operating expenses |
1,764 |
|
|
1,837 |
|
|
7,475 |
|
|
6,583 |
|
Total non-interest expenses |
11,163 |
|
|
10,453 |
|
|
41,755 |
|
|
35,549 |
|
Income before income taxes |
8,197 |
|
|
4,401 |
|
|
24,693 |
|
|
18,674 |
|
INCOME
TAXES |
2,132 |
|
|
1,157 |
|
|
6,607 |
|
|
5,040 |
|
Net income |
$ |
6,065 |
|
|
$ |
3,244 |
|
|
$ |
18,086 |
|
|
$ |
13,634 |
|
EARNINGS PER COMMON
SHARE |
|
|
|
|
|
|
|
Basic |
$ |
0.59 |
|
|
$ |
0.34 |
|
|
$ |
1.77 |
|
|
$ |
1.54 |
|
Diluted |
0.59 |
|
|
0.34 |
|
|
1.76 |
|
|
1.53 |
|
WEIGHTED AVERAGE
SHARES OUTSTANDING |
|
|
|
|
|
|
|
Basic |
10,240,325 |
|
|
9,568,280 |
|
|
10,220,319 |
|
|
8,875,237 |
|
Diluted |
10,282,336 |
|
|
9,628,738 |
|
|
10,260,965 |
|
|
8,933,471 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1ST
Constitution Bancorp Net Interest Margin
Analysis(Unaudited)
|
Three months endedDecember 31, 2020 |
|
Three months endedDecember 31, 2019 |
(In thousands except
yield/cost information) |
Average |
|
|
|
Average |
|
Average |
|
|
|
Average |
Assets |
Balance |
|
Interest |
|
Yield/Cost |
|
Balance |
|
Interest |
|
Yield/Cost |
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
Federal funds sold/short term investments |
$ |
44,460 |
|
|
|
$ |
12 |
|
|
0.10 |
% |
|
$ |
11,114 |
|
|
|
$ |
47 |
|
|
1.68 |
% |
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
Taxable |
134,080 |
|
|
|
656 |
|
|
1.96 |
% |
|
165,213 |
|
|
|
1,095 |
|
|
2.65 |
% |
Tax-exempt (1) |
86,838 |
|
|
|
638 |
|
|
2.94 |
% |
|
57,841 |
|
|
|
520 |
|
|
3.60 |
% |
Total investment securities |
220,918 |
|
|
|
1,294 |
|
|
2.34 |
% |
|
223,054 |
|
|
|
1,615 |
|
|
2.90 |
% |
Loans: (2) |
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
623,286 |
|
|
|
8,247 |
|
|
5.18 |
% |
|
506,554 |
|
|
|
6,637 |
|
|
5.13 |
% |
Mortgage warehouse lines |
359,108 |
|
|
|
3,567 |
|
|
3.97 |
% |
|
228,123 |
|
|
|
2,861 |
|
|
5.02 |
% |
Construction |
124,568 |
|
|
|
1,721 |
|
|
5.50 |
% |
|
154,159 |
|
|
|
2,441 |
|
|
6.28 |
% |
Commercial business |
133,665 |
|
|
|
1,351 |
|
|
4.02 |
% |
|
125,580 |
|
|
|
1,909 |
|
|
6.03 |
% |
SBA PPP loans |
69,902 |
|
|
|
724 |
|
|
4.12 |
% |
|
— |
|
|
|
— |
|
|
— |
% |
Residential real estate |
90,034 |
|
|
|
1,045 |
|
|
4.54 |
% |
|
75,092 |
|
|
|
908 |
|
|
4.73 |
% |
Loans to individuals |
25,652 |
|
|
|
288 |
|
|
4.39 |
% |
|
27,956 |
|
|
|
368 |
|
|
5.15 |
% |
Loans held for sale |
30,298 |
|
|
|
203 |
|
|
2.67 |
% |
|
6,427 |
|
|
|
63 |
|
|
3.92 |
% |
All other loans |
588 |
|
|
|
6 |
|
|
3.99 |
% |
|
731 |
|
|
|
8 |
|
|
2.83 |
% |
Deferred (fees) costs, net |
(1,585 |
) |
|
|
— |
|
|
— |
% |
|
377 |
|
|
|
— |
|
|
— |
% |
Total loans |
1,455,516 |
|
|
|
17,152 |
|
|
4.69 |
% |
|
1,124,999 |
|
|
|
15,195 |
|
|
5.36 |
% |
Total interest-earning assets |
1,720,894 |
|
|
|
$ |
18,458 |
|
|
4.27 |
% |
|
1,359,167 |
|
|
|
$ |
16,857 |
|
|
4.92 |
% |
Non-interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
(14,644 |
) |
|
|
|
|
|
|
(9,102 |
) |
|
|
|
|
|
Cash and due from bank |
12,086 |
|
|
|
|
|
|
|
13,090 |
|
|
|
|
|
|
Other assets |
119,989 |
|
|
|
|
|
|
|
105,299 |
|
|
|
|
|
|
Total non-interest-earning assets |
117,431 |
|
|
|
|
|
|
|
109,287 |
|
|
|
|
|
|
Total assets |
$ |
1,838,325 |
|
|
|
|
|
|
|
$ |
1,468,454 |
|
|
|
|
|
|
Liabilities and
shareholders' equity: |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Money market and NOW accounts |
$ |
448,941 |
|
|
|
$ |
507 |
|
|
0.45 |
% |
|
$ |
387,227 |
|
|
|
$ |
773 |
|
|
0.79 |
% |
Savings accounts |
317,328 |
|
|
|
437 |
|
|
0.55 |
% |
|
234,821 |
|
|
|
572 |
|
|
0.97 |
% |
Certificates of deposit |
386,705 |
|
|
|
904 |
|
|
0.93 |
% |
|
338,549 |
|
|
|
1,857 |
|
|
2.18 |
% |
Federal Reserve Bank PPPLF borrowings |
21,820 |
|
|
|
18 |
|
|
0.33 |
% |
|
— |
|
|
|
— |
|
|
— |
% |
Short-term borrowings |
4,429 |
|
|
|
5 |
|
|
0.45 |
% |
|
43,347 |
|
|
|
215 |
|
|
1.97 |
% |
Redeemable subordinated debentures |
18,557 |
|
|
|
86 |
|
|
1.83 |
% |
|
18,557 |
|
|
|
172 |
|
|
3.71 |
% |
Total interest-bearing liabilities |
1,197,780 |
|
|
|
$ |
1,957 |
|
|
0.65 |
% |
|
1,022,501 |
|
|
|
$ |
3,589 |
|
|
1.39 |
% |
Non-interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
427,003 |
|
|
|
|
|
|
|
262,559 |
|
|
|
|
|
|
Other liabilities |
29,740 |
|
|
|
|
|
|
|
27,425 |
|
|
|
|
|
|
Total non-interest-bearing liabilities |
456,743 |
|
|
|
|
|
|
|
289,984 |
|
|
|
|
|
|
Shareholders' equity |
183,802 |
|
|
|
|
|
|
|
155,969 |
|
|
|
|
|
|
Total liabilities and shareholders' equity |
$ |
1,838,325 |
|
|
|
|
|
|
|
$ |
1,468,454 |
|
|
|
|
|
|
Net interest spread (3) |
|
|
|
|
3.62 |
% |
|
|
|
|
|
3.53 |
% |
Net interest income and margin
(4) |
|
|
$ |
16,501 |
|
|
3.81 |
% |
|
|
|
$ |
13,268 |
|
|
3.87 |
% |
(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 BancorpNet Interest Margin
Analysis(Unaudited)
|
Year Ended December 31, 2020 |
|
Year Ended December 31, 2019 |
(In thousands except
yield/cost information) |
Average |
|
|
|
Average |
|
Average |
|
|
|
Average |
Assets: |
Balance |
|
Interest |
|
Yield/Cost |
|
Balance |
|
Interest |
|
Yield/Cost |
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
Federal funds sold/short term investments |
$ |
23,478 |
|
|
|
$ |
107 |
|
|
0.46 |
% |
|
$ |
8,142 |
|
|
|
$ |
176 |
|
|
2.16 |
% |
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
Taxable |
156,464 |
|
|
|
3,289 |
|
|
2.10 |
% |
|
163,415 |
|
|
|
4,710 |
|
|
2.88 |
% |
Tax-exempt (1) |
79,581 |
|
|
|
2,459 |
|
|
3.09 |
% |
|
57,005 |
|
|
|
2,110 |
|
|
3.70 |
% |
Total investment securities |
236,045 |
|
|
|
5,748 |
|
|
2.43 |
% |
|
220,420 |
|
|
|
6,820 |
|
|
3.09 |
% |
Loans: (2) |
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
596,978 |
|
|
|
31,184 |
|
|
5.14 |
% |
|
426,929 |
|
|
|
22,129 |
|
|
5.11 |
% |
Mortgage warehouse lines |
273,286 |
|
|
|
11,269 |
|
|
4.12 |
% |
|
174,151 |
|
|
|
9,543 |
|
|
5.48 |
% |
Construction |
137,190 |
|
|
|
7,686 |
|
|
5.60 |
% |
|
156,467 |
|
|
|
10,576 |
|
|
6.76 |
% |
Commercial business |
139,913 |
|
|
|
6,164 |
|
|
5.88 |
% |
|
121,985 |
|
|
|
7,295 |
|
|
5.98 |
% |
SBA PPP loans |
50,042 |
|
|
|
1,542 |
|
|
4.12 |
% |
|
— |
|
|
|
— |
|
|
— |
% |
Residential real estate |
89,509 |
|
|
|
4,130 |
|
|
4.54 |
% |
|
56,745 |
|
|
|
2,591 |
|
|
4.50 |
% |
Loans to individuals |
28,052 |
|
|
|
1,289 |
|
|
4.52 |
% |
|
23,312 |
|
|
|
1,195 |
|
|
5.06 |
% |
Loans held for sale |
18,216 |
|
|
|
507 |
|
|
2.78 |
% |
|
4,280 |
|
|
|
170 |
|
|
3.97 |
% |
All other loans |
801 |
|
|
|
37 |
|
|
4.54 |
% |
|
782 |
|
|
|
38 |
|
|
3.57 |
% |
Deferred (fees) costs, net |
(657 |
) |
|
|
— |
|
|
— |
% |
|
269 |
|
|
|
— |
|
|
— |
% |
Total loans |
1,333,330 |
|
|
|
63,808 |
|
|
4.79 |
% |
|
964,920 |
|
|
|
53,537 |
|
|
5.55 |
% |
Total interest-earning assets |
1,592,853 |
|
|
|
$ |
69,663 |
|
|
4.37 |
% |
|
1,193,482 |
|
|
|
$ |
60,533 |
|
|
5.07 |
% |
Non-interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
(11,680 |
) |
|
|
|
|
|
|
(8,796 |
) |
|
|
|
|
|
Cash and due from bank |
12,158 |
|
|
|
|
|
|
|
11,729 |
|
|
|
|
|
|
Other assets |
122,871 |
|
|
|
|
|
|
|
86,887 |
|
|
|
|
|
|
Total non-interest-earning assets |
123,349 |
|
|
|
|
|
|
|
89,820 |
|
|
|
|
|
|
Total assets |
$ |
1,716,202 |
|
|
|
|
|
|
|
$ |
1,283,302 |
|
|
|
|
|
|
Liabilities and
shareholders' equity: |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Money market and NOW accounts |
$ |
425,446 |
|
|
|
$ |
2,420 |
|
|
0.57 |
% |
|
$ |
349,663 |
|
|
|
$ |
2,750 |
|
|
0.79 |
% |
Savings accounts |
286,149 |
|
|
|
2,049 |
|
|
0.72 |
% |
|
201,738 |
|
|
|
1,952 |
|
|
0.97 |
% |
Certificates of deposit |
362,633 |
|
|
|
5,512 |
|
|
1.52 |
% |
|
286,419 |
|
|
|
6,392 |
|
|
2.23 |
% |
Federal Reserve Bank PPPLF borrowings |
15,344 |
|
|
|
54 |
|
|
0.35 |
% |
|
— |
|
|
|
— |
|
|
— |
% |
Short-term borrowings |
30,567 |
|
|
|
174 |
|
|
0.57 |
% |
|
38,594 |
|
|
|
912 |
|
|
2.36 |
% |
Redeemable subordinated debentures |
18,557 |
|
|
|
434 |
|
|
2.30 |
% |
|
18,557 |
|
|
|
748 |
|
|
4.03 |
% |
Total interest-bearing liabilities |
1,138,696 |
|
|
|
$ |
10,643 |
|
|
0.93 |
% |
|
894,971 |
|
|
|
$ |
12,754 |
|
|
1.43 |
% |
Non-interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
370,323 |
|
|
|
|
|
|
|
226,701 |
|
|
|
|
|
|
Other liabilities |
29,865 |
|
|
|
|
|
|
|
23,529 |
|
|
|
|
|
|
Total non-interest-bearing liabilities |
400,188 |
|
|
|
|
|
|
|
250,230 |
|
|
|
|
|
|
Shareholders' equity |
177,318 |
|
|
|
|
|
|
|
138,101 |
|
|
|
|
|
|
Total liabilities and shareholders' equity |
$ |
1,716,202 |
|
|
|
|
|
|
|
$ |
1,283,302 |
|
|
|
|
|
|
Net interest spread (3) |
|
|
|
|
3.44 |
% |
|
|
|
|
|
3.65 |
% |
Net interest income and margin
(4) |
|
|
$ |
59,020 |
|
|
3.71 |
% |
|
|
|
$ |
47,779 |
|
|
4.00 |
% |
(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 BancorpReconciliation of
Non-GAAP Measures (1)(Dollars in
thousands, except per share
data)(Unaudited)
|
|
Three Months Ended |
|
Year Ended |
|
|
December 31, |
|
December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Adjusted net
income |
|
|
|
|
|
|
|
|
Net income |
|
$ |
6,065 |
|
|
$ |
3,244 |
|
|
|
$ |
18,086 |
|
|
|
$ |
13,634 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Merger-related expenses |
|
— |
|
|
1,155 |
|
|
|
64 |
|
|
|
1,730 |
|
|
Income tax effect of adjustments |
|
— |
|
|
(275 |
) |
|
|
(19 |
) |
|
|
(394 |
) |
|
Adjusted net income |
|
$ |
6,065 |
|
|
$ |
4,124 |
|
|
|
$ |
18,131 |
|
|
|
$ |
14,970 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
per diluted share |
|
|
|
|
|
|
|
|
Adjusted net income |
|
$ |
6,065 |
|
|
$ |
4,124 |
|
|
|
$ |
18,131 |
|
|
|
$ |
14,970 |
|
|
Diluted shares outstanding |
|
10,282,336 |
|
|
9,628,738 |
|
|
|
10,260,965 |
|
|
|
8,933,471 |
|
|
Adjusted net income per diluted share |
|
$ |
0.59 |
|
|
$ |
0.43 |
|
|
|
$ |
1.77 |
|
|
|
$ |
1.68 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted return on
average total assets |
|
|
|
|
|
|
|
|
Adjusted net income |
|
$ |
6,065 |
|
|
$ |
4,124 |
|
|
|
$ |
18,131 |
|
|
|
$ |
14,970 |
|
|
Average assets |
|
1,838,325 |
|
|
1,468,454 |
|
|
|
1,716,202 |
|
|
|
1,283,302 |
|
|
Adjusted return on average total assets |
|
1.31 |
% |
|
1.11 |
|
% |
|
1.06 |
|
% |
|
1.17 |
|
% |
|
|
|
|
|
|
|
|
|
Adjusted return on
average shareholders' equity |
|
|
|
|
|
|
|
|
Adjusted net income |
|
$ |
6,065 |
|
|
$ |
4,124 |
|
|
|
$ |
18,131 |
|
|
|
$ |
14,970 |
|
|
Average equity |
|
183,802 |
|
|
155,969 |
|
|
|
177,318 |
|
|
|
138,101 |
|
|
Adjusted return on average shareholders' equity |
|
13.13 |
% |
|
10.49 |
|
% |
|
10.23 |
|
% |
|
10.84 |
|
% |
|
|
|
|
|
|
|
|
|
Book value and
tangible book value per common share |
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
|
$ |
187,657 |
|
|
|
$ |
170,578 |
|
|
Less: goodwill and intangible assets |
|
|
|
|
|
36,003 |
|
|
|
36,779 |
|
|
Tangible shareholders' equity |
|
|
|
|
|
151,654 |
|
|
|
133,799 |
|
|
Shares outstanding |
|
|
|
|
|
10,245,826 |
|
|
|
10,191,676 |
|
|
Book value per common share |
|
|
|
|
|
$ |
18.32 |
|
|
|
$ |
16.74 |
|
|
Tangible book value per common share |
|
|
|
|
|
$ |
14.80 |
|
|
|
$ |
13.13 |
|
|
|
|
|
|
|
|
|
|
|
(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. Mangano |
Stephen J. Gilhooly |
|
President & Chief
Executive Officer |
Sr. Vice President
& Chief Financial Officer |
|
(609)
655-4500 |
(609)
655-4500 |
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