• 1ST Constitution Bancorp Reports Third Quarter 2017 Results and Increases Quarterly Dividend to $0.06 Per Share

    Source: Nasdaq GlobeNewswire / 26 Oct 2017 09:15:20   America/New_York

    CRANBURY, N.J., Oct. 26, 2017 (GLOBE NEWSWIRE) -- 1ST Constitution Bancorp (NASDAQ:FCCY), the holding company (the “Company”) for 1ST Constitution Bank (the “Bank”), today reported net income of $2.5 million and diluted earnings per share of $0.30 for the three months ended September 30, 2017. For the nine months ended September 30, 2017, net income was $6.4 million and diluted earnings per share were $0.76.

    The Board of Directors declared a quarterly cash dividend of $0.06 per share that will be paid on November 24, 2017 to shareholders of record as of November 16, 2017.

    THIRD QUARTER 2017 HIGHLIGHTS

    • Return on average assets was 0.94% and return on average equity was 8.94%.
    • Commercial business, commercial real estate and construction loans totaled $513.0 million at September 30, 2017, and increased $88.2 million, or 20.8%, compared to $424.8 million at September 30, 2016 and increased $74.9 million, or 17.1%, compared to $438.1 million at December 31, 2016. Total loans were $772.0 million at September 30, 2017.
    • Net interest income was $9.4 million and the net interest margin was 3.85% on a tax equivalent basis.
    • Non-interest income increased $356,000 to $2.1 million, driven primarily by a higher volume of sales of residential mortgages and SBA guaranteed loans.
    • The Bank recorded a provision for loan losses of $150,000 and net charge-offs were $55,000.
    • Non-performing assets were $6.9 million, or 0.64% of assets, and included $356,000 of OREO at September 30, 2017.
    • Book value per share and tangible book value per share were $13.83 and $12.27, respectively, at September 30, 2017.

    Robert F. Mangano, President and Chief Executive Officer, stated, “We continued to generate significant growth of over $16 million in our commercial real estate and construction loans during the third quarter and these loan segments grew, on a combined basis, over $92 million in the last twelve months. Similar to last quarter, offsetting this growth was a $61 million decrease in warehouse loans compared to last year due to lower residential mortgage refinancing activity in 2017.”

    Mr. Mangano added, “The higher short-term interest rate environment and our asset sensitive interest rate position had a positive effect on net interest income and our net interest margin in the third quarter of 2017 as our net interest margin increased to 3.85% compared to 3.75% for the third quarter of 2016.”

    Mr. Mangano continued, “We are pleased to announce a $0.01 increase in our quarterly dividend to $0.06 per share, which reflects our continued focus on enhancing the return on investment to our shareholders.”

    Discussion of Financial Results

    Net income was $2.5 million, or $0.30 per diluted share, for the third quarter of 2017 compared to $2.7 million, or $0.33 per diluted share, for the third quarter of 2016. The increase in the yield on loans was the primary driver of a $310,000 increase in net interest income. Non-interest income increased $356,000 due to an increase in gains of $453,000 from the sale of residential mortgages and SBA guaranteed commercial loans, which was partially offset by a decline in other income and service charges on deposits. The combined increase in revenue was more than offset by a $150,000 provision for loan losses in the third quarter of 2017 compared to no (zero) provision for loan losses in the third quarter of 2016 and a $955,000 increase in non-interest expenses for the third quarter of 2017 compared to the third quarter of 2016. As a result, net income for the third quarter of 2017 declined $210,000, or 7.8%, from $2.7 million for the third quarter of 2016.

    Net interest income was $9.4 million for the quarter ended September 30, 2017 and increased $310,000, or 3.4%, compared to net interest income of $9.1 million for the third quarter of 2016. Total interest income was $10.8 million for the three months ended September 30, 2017 compared to $10.4 million for the three months ended September 30, 2016. This increase was primarily due to the increase in the yield on loans, which was 4.99% for the quarter ended September 30, 2017 compared to 4.83% for the quarter ended September 30, 2016. Average interest-earning assets were $992.0 million with a tax-equivalent yield of 4.43% for the third quarter of 2017 compared to $987.8 million with a tax-equivalent yield of 4.30% for the third quarter of 2016. The 75 basis point increase in the Federal Reserve’s targeted federal funds rate and the corresponding increase in the Prime Rate since December of 2016 had a positive effect on the yields of construction, commercial business, SBA and warehouse loans with variable interest rate terms in the third quarter of 2017.

    Interest expense on average interest-bearing liabilities was $1.5 million, with an interest cost of 0.78%, for the third quarter of 2017 compared to $1.4 million, with an interest cost of 0.71%, for the third quarter of 2016. The $96,000 increase in interest expense on interest-bearing liabilities for the third quarter of 2017 reflected primarily higher deposit interest costs due to higher market interest rates in the third quarter of 2017 compared to the third quarter of 2016.

    The net interest margin increased to 3.85% for the third quarter of 2017 compared to 3.75% for the third quarter of 2016 due primarily to the higher yield on average interest-earning assets.

    The Company recorded a provision for loan losses of $150,000 for the third quarter of 2017 compared to no (zero) provision for loan losses for the third quarter of 2016 due primarily to the growth and change in the mix of loans in the loan portfolio.

    At September 30, 2017, total loans were $772.0 million and the allowance for loan losses was $7.8 million, or 1.01% of total loans, compared to total loans of $749.4 million and an allowance for loan losses of $7.5 million, or 1.00% of total loans, at September 30, 2016. Management believes that the current economic and operating conditions are generally positive, which also were considered in management's evaluation of the adequacy of the allowance for loan losses.

    Non-interest income was $2.1 million for the third quarter of 2017, an increase of $356,000, compared to $1.8 million for the third quarter of 2016. This increase was due primarily to an increase of $453,000 in gains on sales of loans in the third quarter of 2017 compared to the third quarter of 2016. In the third quarter of 2017, higher residential lending activity produced $34.3 million of closed loans and $28.9 million of loan sales, which generated gains on sales of loans of $809,000 compared to $12.2 million of residential mortgage loans sold and $529,000 of gains recorded in the third quarter of 2016. The increase in residential mortgage loans closed and sold was due primarily to higher residential mortgage lending activity as a result of the residential mortgage lending team that joined the Bank in August 2016. In the third quarter of 2017, $5.8 million of SBA loans were sold and gains of $520,000 were recorded compared to $3.5 million of SBA loans sold and gains of $347,000 recorded in the third quarter of 2016. SBA guaranteed commercial lending activity and loan sales vary from period to period and the level of activity is due primarily to the timing of loan originations. The pipeline of approved and committed SBA loans was $5.7 million with another $10.2 million of loans in process at September 30, 2017. Other income declined $96,000 to $490,000 for the third quarter of 2017 primarily due to a recovery of $77,000 on an acquired loan in the third quarter of 2016.

    Non-interest expenses were $7.6 million for the third quarter of 2017, an increase of $955,000, or 14.3%, compared to $6.7 million for the third quarter of 2016. Salaries and employee benefits expense increased $515,000, or 12.6%, in the third quarter of 2017 due primarily to increases of $198,000 in commissions paid to residential loan officers and $87,000 in share-based compensation expense. Deferred loan origination costs were $138,000 lower in the third quarter of 2017 compared to the third quarter of 2016. Merit increases, increases in employer payroll taxes and employee benefits expenses comprised the balance of the increase. Commission expense increased due to the higher volume of residential mortgages originated and sold in the third quarter of 2017 compared to the third quarter of 2016. Occupancy costs decreased $46,000, or 5.1%, due primarily to the closing of a branch office at the end of the first quarter of 2017. Data processing expenses increased to $338,000 in the third quarter of 2017 compared to $314,000 for the third quarter of 2016 due to higher transaction activity. FDIC insurance expense declined $10,000 due to a lower assessment rate that reflected the Bank’s improvement in asset quality and financial performance and lower assessment rates for community banks. OREO expense was insignificant due to the low amount of OREO assets. Other operating expenses increased $473,000 for the third quarter of 2017 compared to the third quarter of 2016 due primarily to increases of $115,000 in legal expense, primarily for loan collection and related litigation costs, $84,000 in consulting expense, primarily for marketing and loan collection costs, and other smaller increases in various expense categories.

    Income tax expense was $1.2 million for the third quarter of 2017, resulting in an effective tax rate of 33.1%, compared to income tax expense of $1.5 million for the third quarter of 2016, which resulted in an effective tax rate of 35.1%. Income tax expense decreased primarily due to the decrease in pre-tax income.  The effective tax rate decreased due to the higher percentage of the total of tax-exempt interest income and income on bank-owned life insurance to pre-tax income in the third quarter of 2017 compared to the third quarter of 2016.

    At September 30, 2017, the allowance for loan losses was $7.8 million compared to $7.5 million at December 31, 2016. As a percentage of total loans, the allowance was 1.01% at September 30, 2017 compared to 1.03% at December 31, 2016. The increase in the allowance for loan losses reflects the increase in loans and the change in the mix of loans since the end of 2016.

    Total assets increased $31.2 million to $1.07 billion at September 30, 2017 from $1.04 billion at December 31, 2016 due primarily to a $47.2 million increase in total loans, which was partially offset by a decrease of $8.8 million in investment securities and a decrease of $8.8 million in loans held for sale. The increase in assets was funded primarily by a $35.3 million increase in deposits and a $6.8 million increase in shareholders’ equity. Borrowings declined by a $10.0 million. Total portfolio loans at September 30, 2017 were $772.0 million compared to $724.8 million at December 31, 2016. The increase in loans was due primarily to an increase of $49.0 million in commercial real estate loans and a $31.6 million increase in construction loans, which were partially offset by a $22.7 million decrease in mortgage warehouse loans, a $5.6 million decrease in commercial business loans and a $2.8 million decrease in residential mortgage loans. The decline in mortgage warehouse loans reflects primarily the higher mortgage interest rates in the first three quarters of 2017 compared to the same period in 2016, which reduced the volume of residential mortgage loan refinancing activity compared to the same period of 2016. The decline in residential mortgage loan refinancing activity more than offset the increase in home purchase financing activity during the period that was financed by the Bank’s warehouse loans to mortgage banking customers.

    Total deposits at September 30, 2017 were $869.8 million compared to $834.5 million at December 31, 2016, primarily reflecting the growth in core deposits. Non-interest-bearing demand deposits increased $21.3 million, interest-bearing demand deposits increased $17.5 million and savings deposits increased $4.2 million, which were partially offset by a decrease of $7.7 million in time deposits.

    Regulatory capital ratios for the Company and the Bank continue to reflect a strong capital position. Under current regulatory capital standards, the Company’s common equity Tier 1 to risk based assets (“CET1”), total risk-based capital, Tier I capital, and leverage ratios were 10.41%, 13.11%, 12.30% and 11.33%, respectively, at September 30, 2017. The Bank’s CET1, total risk-based capital, Tier 1 capital and leverage ratios were 12.02%, 12.83%, 12.02% and 11.07%, respectively, at September 30, 2017. The Company and the Bank are considered “well capitalized” under these capital standards.

    Asset Quality

    Non-performing loans were $6.5 million at September 30, 2017 compared $5.2 million at December 31, 2016. During the third quarter of 2017, $365,000 of non-performing loans were resolved and a commercial loan with a balance of $775,000 and two residential second mortgage loans with a total balance of $78,000 were classified as non-accrual.

    During the first quarter of 2017, the Bank was notified that a shared national credit syndicated loan in which it was a participant in a $4.3 million facility had further deteriorated. The Bank downgraded the loan, which had a balance of $4.0 million, and placed it on non-accrual. In the second quarter, the borrower was recapitalized through an equity contribution by new investors and the loan was paid down by $906,000 and all interest was paid current. Management continues to monitor the borrower’s financial position.

    Charge-offs of loans were $61,000 and recoveries of loans previously charged off were $6,000 for the third quarter of 2017. The allowance for loan losses was 120% of non-performing loans at September 30, 2017 compared to 144% of non-performing loans at December 31, 2016.

    Overall, management observed generally stable trends in loan quality, with non-performing loans to total loans of 0.84% and non-performing assets to total assets of 0.64% at September 30, 2017 compared to non-performing loans to total loans of 0.72% and non-performing assets to total assets of 0.52% at December 31, 2016.

    OREO at September 30, 2017 was $356,000 and unchanged from June 30, 2017. OREO consists of two commercial properties.

    About 1ST Constitution Bancorp

    1ST Constitution Bancorp, through its primary subsidiary, 1ST Constitution Bank, operates 18 branch banking offices in Cranbury (2), Fort Lee, Hamilton, Hightstown, Hillsborough, Hopewell, Jamesburg, Lawrenceville, Perth Amboy, Plainsboro, Rocky Hill, Princeton, Rumson, Fair Haven, Shrewsbury, Little Silver and Asbury Park, 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

    The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about new and existing programs and products, relationships, opportunities, taxation, technology and market conditions. These statements may be identified by such forward-looking terminology as “expect,” “look,” “believe,” “anticipate,” “may,” “will,” or similar statements or variations of such terms. Actual results may differ materially from such forward-looking statements. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, changes in the direction of the economy in New Jersey, the direction of interest rates, effective income tax rates, loan prepayment assumptions, continued levels of loan quality and origination volume, continued relationships with major customers including sources for loans, a higher level of net loan charge-offs and delinquencies than anticipated, bank regulatory rules, regulations or policies that restrict or direct certain actions, the adoption, interpretation and implementation of new or pre-existing accounting pronouncements, a change in legal and regulatory barriers including issues related to compliance with anti-money laundering and bank secrecy act laws, as well as the effects of general economic conditions and legal and regulatory barriers and structure. 1ST Constitution Bancorp assumes no obligation for updating any such forward-looking statements at any time, except as required by law.

    1ST Constitution Bancorp 
    Selected Consolidated Financial Data 
    (Dollars in thousands, except per share data) 
    (Unaudited) 
             
     Three Months Ended Nine Months Ended 
     September 30, September 30, 
      2017   2016   2017   2016  
    Per Common Share Data:         
    Earnings per common share - Basic$  0.31  $  0.34  $  0.79  $  0.91  
    Earnings per common share - Diluted   0.30     0.33     0.76     0.89  
    Tangible book value per common share at the period-end       12.27     11.39  
    Book value per common share at the period end       13.83     13.02  
    Average common shares outstanding:        
    Basic 8,063,119   7,974,323   8,040,955   7,954,212  
      Diluted 8,328,252   8,185,840   8,309,363   8,159,419  
             
    Performance Ratios / Data:        
    Return on average assets 0.94%  1.03%  0.83%  0.97% 
    Return on average equity 8.94%  10.45%  7.87%  9.68% 
    Net interest income (tax-equivalent basis) (1)$  9,617  $  9,299  $  27,173  $  26,127  
    Net interest margin (tax-equivalent basis) (2) 3.85%  3.75%  3.76%  3.73% 
    Efficiency ratio (3) 64.92%  60.24%  68.61%  63.60% 
             
         September 30, December 31, 
          2017   2016  
             
    Loan Portfolio Composition:        
    Commercial Business    $  94,031  $  99,650  
    Commercial Real Estate     291,381   242,393  
    Construction Loans     127,604   96,035  
    Mortgage Warehouse Lines     193,535   216,259  
    Residential Real Estate     41,958   44,791  
    Loans to Individuals     22,611   23,736  
    Other Loans     186   207  
    Gross Loans     771,307   723,071  
     Deferred Costs (net)       675     1,737  
    Total Loans (net)    $  771,982  $  724,808  
             
    Asset Quality Data:        
    Loans past due over 90 days and still accruing    $  -  $  24  
    Non-accrual loans       6,511     5,174  
    OREO property       356     166  
    Total non-performing assets    $  6,867  $  5,364  
             
    Net (charge offs) recoveries    $  (142) $  234  
    Allowance for loan losses to total loans     1.01%  1.03% 
    Non-performing loans to total loans     0.84%  0.72% 
    Non-performing assets to total assets     0.64%  0.52% 
             
    Capital Ratios:        
    1st Constitution Bancorp        
    Common equity to risk weighted assets ("CET 1")     10.41%  10.40% 
    Total capital to risk weighted assets     13.11%  13.24% 
    Tier 1 capital to risk weighted assets     12.30%  12.41% 
    Tier 1 capital to average assets (leverage ratio)     11.33%  10.93% 
             
    1st Constitution Bank        
    Common equity to risk weighted assets ("CET 1")     12.02%  12.13% 
    Total capital to risk weighted assets     12.83%  12.96% 
    Tier 1 capital to risk weighted assets     12.02%  12.13% 
    Tier 1 capital to average assets (leverage ratio)     11.07%  10.68% 
             
             
    (1) The tax equivalent adjustment was $254 and $246 for the three months ended September 30, 2017 and September 30, 2016 respectively. 
    (2) Represents net interest income on a taxable equivalent basis as a percent of average interest earning assets.   
    (3) Represents non-interest expenses divided by the sum of net interest income on a taxable equivalent basis and non-interest income. 

     

    1st Constitution Bancorp  
    Consolidated Balance Sheets 
    (Dollars in thousands) 
    (Unaudited) 
      
     September 30,  December 31,  
    ASSETS 2017    2016   
           
    Cash and Due From Banks$15,657   $  14,886   
    Federal Funds Sold / Short Term Investments   -      -   
      Total cash and cash equivalents   15,657      14,886   
           
    Investment Securities:      
      Available for sale, at fair value   110,276      103,794   
      Held to maturity (fair value of $113,757 and $128,559      
        at September 30, 2017 and December 31, 2016, respectively)   111,554      126,810   
    Total securities   221,830      230,604   
           
    Loans Held for Sale   6,019      14,829   
           
    Loans   771,982      724,808   
      Less: Allowance for loan losses   (7,802)     (7,494)  
    Net loans   764,180      717,314   
           
    Premises and Equipment, net   10,627      10,673   
    Accrued Interest Receivable   3,141      3,095   
    Bank Owned Life Insurance   24,125      22,184   
    Other Real Estate Owned   356      166   
    Goodwill and Intangible Assets   12,591      12,880   
    Other Assets   10,868      11,582   
           
    Total Assets$  1,069,394   $  1,038,213   
           
           
    LIABILITIES AND SHAREHOLDERS' EQUITY      
           
    LIABILITIES      
    Deposits      
        Non-interest bearing$192,191   $  170,854   
        Interest bearing   677,622      663,662   
    Total deposits   869,813      834,516   
           
    Borrowings   63,025      73,050   
    Redeemable Subordinated Debentures   18,557      18,557   
    Accrued Interest Payable   715      866   
    Accrued Expense and Other Liabilities   5,674      6,423   
    Total liabilities   957,784      933,412   
           
           
    SHAREHOLDERS EQUITY      
      Preferred stock, no par value; 5,000,000 shares authorized; none issued   -      -   
      Common Stock, no par value; 30,000,000 shares authorized; 8,102,858 and      
      8,027,087 shares issued and 8,069,560 and 7,993,789 shares outstanding      
      as of September 30, 2017 and December 31, 2016, respectively   72,584      71,695   
      Retained earnings   39,624      34,074   
      Treasury Stock, 33,298 shares at September 30, 2017 and December 31, 2016,     
      respectively    (368)     (368)  
      Accumulated other comprehensive loss   (230)     (600)  
    Total shareholders' equity   111,610      104,801   
           
           
    Total liabilities and shareholders' equity$  1,069,394   $  1,038,213   
           

     

    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,
     
       
      2017  2016  2017  2016  
             
    INTEREST INCOME        
      Loans, including fees$  9,416 $  9,054 $  26,161 $  25,088  
      Securities:        
        Taxable   846    827    2,500    2,459  
        Tax-exempt   527    514    1,628    1,554  
      Federal funds sold and        
        short-term investments   25    13    183    79  
    Total interest income   10,814    10,408    30,472    29,180  
             
    INTEREST EXPENSE        
      Deposits   1,204    1,051    3,351    2,989  
      Borrowings   113    197    349    498  
      Redeemable subordinated debentures   134    107    380    311  
    Total interest expense   1,451    1,355    4,080    3,798  
             
    Net interest income   9,363    9,053    26,392    25,382  
             
    PROVISION (CREDIT) FOR LOAN LOSSES   150    -    450    (300) 
      Net interest income after provision (credit) for loan losses   9,213    9,053    25,942    25,682  
             
    NON-INTEREST INCOME        
      Service charges on deposit accounts   142    185    445    558  
      Gain on sales of loans    1,329    876    3,936    2,525  
      Income on Bank-owned life insurance   131    113    391    414  
      Gain on sale of securities   24    -    128    -  
      Other income   490    586    1,385    1,392  
    Total non-interest income   2,116    1,760    6,285    4,889  
             
    NON-INTEREST EXPENSES        
      Salaries and employee benefits   4,617    4,102    13,882    11,887  
      Occupancy expense   865    911    2,604    2,618  
      Data processing expenses   338    314    983    941  
      FDIC insurance expense   95    105    255    328  
      Other real estate owned expenses   11    12    26    76  
      Other operating expenses   1,691    1,218    5,204    3,875  
    Total non-interest expenses   7,617    6,662    22,954    19,725  
             
        Income before income taxes   3,712    4,151    9,273    10,846  
    INCOME TAXES   1,227    1,456    2,920    3,616  
        Net Income$  2,485 $  2,695 $  6,353 $  7,230  
             
    NET INCOME PER COMMON SHARE        
      Basic$0.31 $0.34 $0.79 $0.91  
      Diluted$0.30 $0.33 $0.76 $0.89  
             
    WEIGHTED AVERAGE SHARES OUTSTANDING        
      Basic 8,063,119  7,974,323  8,040,955  7,954,212  
      Diluted 8,328,252  8,185,840  8,309,363  8,159,419  
             

     

    1st Constitution Bancorp 
    Net interest Margin Analysis 
    (Dollars in thousands) 
    (Unaudited) 
             
     Three months ended September 30, 2017 Three months ended September 30, 2016 
    (yields on a tax-equivalent basis)Average Average Average Average 
     BalanceInterestYield BalanceInterestYield 
             
    Assets        
    Federal Funds Sold/Short Term Investments$  12,383 $  250.80% $  12,434 $  130.40% 
    Investment Securities:        
      Taxable 142,353    8462.38%  148,715    8272.22% 
      Tax-exempt (4) 89,034    7813.51%  79,917    7603.81% 
      Total 231,387  1,6272.81%  228,632  1,5872.78% 
             
    Loan Portfolio: (1)        
      Construction 123,822    1,8956.07%  89,682    1,2485.54% 
      Residential Real Estate 42,436    4454.19%  45,919    5144.48% 
      Loans To Individuals 22,379    2284.04%  23,286    2574.39% 
      Commercial Real Estate 286,130    3,5734.95%  234,218    3,2715.56% 
      Commercial Business 71,338    9565.32%  79,834    9094.53% 
      SBA Loans 22,238    3706.60%  21,662    3195.86% 
      Mortgage Warehouse Lines 174,610    1,9014.32%  245,654    2,5054.06% 
      Loans Held For Sale 3,715    373.95%  3,802    161.67% 
      All Other Loans 1,526    112.86%  2,683    152.22% 
      Total 748,194  9,4164.99%  746,740  9,0544.83% 
             
      Total Interest-Earning Assets   991,964  $   11,068 4.43%    987,806  $   10,654 4.30% 
             
    Allowance for Loan Losses (7,770)    (7,552)   
    Cash and Due From Bank 5,371     5,019    
    Other Assets 59,328     59,886    
      Total Assets$   1,048,893     $   1,045,159     
             
    Liabilities and Shareholders' Equity:        
    Interest-Bearing Liabilities:        
      Money Market and NOW Accounts$  324,940 $  3580.44% $  296,554 $  2810.38% 
      Savings Accounts 208,548    3380.64%  209,703    3160.60% 
      Certificates of Deposit 158,737    5081.27%  173,652    4541.04% 
      Other Borrowed Funds 27,533    1131.63%  64,463    1971.22% 
      Trust Preferred Securities 18,557    1342.89%  18,557    1072.31% 
      Total Interest-Bearing Liabilities  738,315  $   1,451 0.78%  762,929  $   1,355 0.71% 
             
      Net Interest Spread (2)  3.65%   3.59% 
             
    Demand Deposits 193,937     171,631    
    Other Liabilities 6,395     7,962    
    Total Liabilities   938,647       942,522    
             
    Shareholders' Equity 110,246     102,637    
    Total Liabilities and Shareholders' Equity$   1,048,893     $   1,045,159     
             
      Net Interest Margin (3) $   9,617 3.85%  $   9,299 3.75% 
             
    (1) Amortization of deferred 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. 
    (2) The net interest spread is the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities.  
    (3) The net interest margin is equal to net interest income divided by average interest-earning assets.  
    (4) Tax equivalent basis.  
             

     

    1st Constitution Bancorp 
    Net Interest Margin Analysis 
    (Dollars in thousands) 
    (Unaudited) 
             
     Nine months ended September 30, 2017 Nine months ended September 30, 2016 
    (yields on a tax-equivalent basis)Average Average Average Average 
     BalanceInterestYield BalanceInterestYield 
             
    Assets        
    Federal Funds Sold/Short Term Investments$  30,199 $  1830.81% $  24,508 $  790.43% 
    Investment Securities:        
      Taxable 141,662    2,5002.35%  144,534    2,4592.27% 
      Tax-exempt (4) 92,341    2,4093.48%  80,203    2,2993.82% 
      Total 234,003  4,9092.80%  224,737  4,7582.82% 
             
    Loan Portfolio: (1)        
      Construction 111,436    4,8175.78%  92,795    3,6735.29% 
      Residential Real Estate 42,136    1,3354.22%  42,375    1,3384.21% 
      Loans To Individuals 22,428    7014.18%  23,454    7154.07% 
      Commercial Real Estate 267,247    10,0885.05%  227,481    9,3045.46% 
      Commercial Business 73,461    2,9195.31%  70,760    2,8275.34% 
      SBA Loans 22,420    1,0876.48%  21,507    9195.71% 
      Mortgage Warehouse Lines 155,755    5,0144.30%  201,322    6,1874.11% 
      Loans Held For Sale 4,408    1655.00%  4,378    832.53% 
      All Other Loans 1,828    352.56%  2,282    422.43% 
      Total 701,119  26,1614.99%  686,354  25,0884.88% 
             
      Total Interest-Earning Assets   965,321  $   31,253 4.33%    935,599  $   29,925 4.27% 
             
    Allowance for Loan Losses (7,646)    (7,534)   
    Cash and Due From Bank 5,234     5,086    
    Other Assets 58,736     59,652    
      Total Assets$   1,021,645     $   992,803     
             
    Liabilities and Shareholders' Equity:        
    Interest-Bearing Liabilities:        
      Money Market and NOW Accounts$  329,089 $  1,0320.42% $  295,776 $  8210.37% 
      Savings Accounts 210,056    9920.63%  206,355    8880.57% 
      Certificates of Deposit 147,109    1,3271.21%  153,544    1,2801.11% 
      Other Borrowed Funds 20,494    3492.28%  46,257    4981.44% 
      Trust Preferred Securities 18,557    3802.73%  18,557    3112.23% 
      Total Interest-Bearing Liabilities  725,305  $   4,080 0.75%  720,489  $   3,798 0.70% 
             
      Net Interest Spread (2)  3.58%   3.57% 
             
    Demand Deposits 181,892     164,963    
    Other Liabilities 6,577     7,612    
    Total Liabilities   913,774       893,064    
             
    Shareholders' Equity 107,871     99,739    
    Total Liabilities and Shareholders' Equity$   1,021,645     $   992,803     
             
      Net Interest Margin (3) $   27,173 3.76%  $   26,127 3.73% 
             
    (1) Amortization of deferred 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. 
    (2) The net interest spread is the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities.  
    (3) The net interest margin is equal to net interest income divided by average interest-earning assets.  
    (4) Tax equivalent basis.  
             

    CONTACT:

    Robert F. Mangano                             
    President & Chief Executive Officer
    (609) 655-4500

    Stephen J. Gilhooly
    Sr. Vice President & Chief Financial Officer
    (609) 655-4500

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