• 1ST Constitution Bancorp Reports Second Quarter 2019 Results and Declares a Quarterly Dividend of $0.075 Per Share

    Source: Nasdaq GlobeNewswire / 19 Jul 2019 09:15:03   America/New_York

    CRANBURY, N.J., July 19, 2019 (GLOBE NEWSWIRE) -- 1ST Constitution Bancorp (NASDAQ: FCCY), the holding company (the “Company”) for 1ST Constitution Bank (the “Bank”), today reported net income of $3.4 million and diluted earnings per share of $0.39 for the three months ended June 30, 2019. For the six months ended June 30, 2019, net income was $6.8 million and diluted earnings per share were $0.78.

    The Board of Directors declared a quarterly cash dividend of $0.075 per share of common stock that will be payable on August 23, 2019 to shareholders of record on August 12, 2019.

    Adjusted Net Income is a non-GAAP financial measure, which is net income excluding the after-tax effect of merger-related expenses and gain on bargain purchase. Adjusted net income increased 13.7% to $3.6 million for the second quarter of 2019 compared to Adjusted Net Income of $3.1 million for the second quarter of 2018.

    On June 24, 2019, the Company announced the execution of a definitive agreement and plan of merger to acquire Shore Community Bank (“Shore”). Expenses of $258,000 related to this pending transaction were incurred in the second quarter of 2019. On April 11, 2018, the Company completed the acquisition of New Jersey Community Bank (“NJCB”) by merging NJCB into the Bank. Merger-related expenses of $2.0 million were incurred and a gain on bargain purchase of $184,000 was recognized in the second quarter of 2018.

    Adjusted Net Income per diluted share increased 13.9% to $0.41 for the second quarter of 2019 compared to Adjusted Net Income per share of $0.36 for the second quarter of 2018. A reconciliations of non-GAAP financial measures to the reported net income and net income per diluted share is included in this release.

    SECOND QUARTER 2019 HIGHLIGHTS

    • Return on average total assets and return on average shareholders' equity were 1.10% and 10.22%, respectively.
    • Book value per share and tangible book value per share were $15.62 and $14.21, respectively, at June 30, 2019.
    • Net interest income was $11.4 million and the net interest margin was 4.06% on a tax equivalent basis.
    • A provision for loan losses of $400,000 and net charge-offs of $463,000 were recorded.
    • Total loans were $967.8 million at June 30, 2019 and increased $84.7 million from December 31, 2018. Commercial business, commercial real estate and construction loans totaled $683.4 million, representing an increase of $25.0 million, or 3.8%, compared to $658.4 million at December 31, 2018 and an increase of $59.9 million, or 9.6%, compared to $623.5 million at June 30, 2018. Mortgage warehouse loans increased $50.0 million during the first six months of 2019 to $204.2 million, reflecting the seasonal nature of residential lending in the Bank's markets.
    • Non-performing assets declined $3.6 million to $5.5 million, or 0.42% of total assets, and included $1.5 million of OREO at June 30, 2019.      

    For the six months ended June 30, 2019, Adjusted Net Income was $7.0 million, or $0.80 per diluted share, compared to Adjusted Net Income of $6.1 million, or $0.72 per diluted share for the six months ended June 30, 2018.

    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 share are non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, the Company’s GAAP financial results. A reconciliation of these non-GAAP financial measures to the GAAP financial results is attached to this press release. Management believes that the presentation of these non-GAAP financial measures of the Company in this press release may be helpful to readers in understanding the Company’s financial performance without including the financial impact of the pending acquisition of Shore and the 2018 acquisition of NJCB when comparing the Company’s financial statements for the three- and six-month periods ended June 30, 2019 and 2018.

    Robert F. Mangano, President and Chief Executive Officer, stated, “We achieved strong earnings for the second quarter of 2019, as our loan portfolio growth drove the increase in net interest income and we carefully managed recurring operating expenses. Asset quality and capital levels continue to be strong.”  Mr. Mangano added, “Our second quarter results, excluding the impact of the merger expenses, reflected a 13.7% increase in net income year over year and higher annualized return on average total assets and average shareholders’ equity.”

    Mr. Mangano continued, “The addition of the five offices of Shore Community Bank, its employees and customers will enhance our presence in Ocean County and provide additional growth opportunities for the Company and the Bank. We are proceeding with our integration planning with Shore and have submitted the requisite applications with our bank regulators. We anticipate consummating the merger in the fourth quarter of 2019.”

    Discussion of Financial Results

    Net income was $3.4 million, or $0.39 per diluted share, for the second quarter of 2019 compared to $1.9 million, or $0.22 per diluted share, for the second quarter of 2018. Adjusted Net Income and Adjusted Net Income per diluted share were $3.6 million and $0.41, respectively, for the second quarter of 2019 compared to Adjusted Net Income and Adjusted Net Income per diluted share of $3.1 million and $0.36, respectively, for the second quarter of 2018. For the three months ended June 30, 2019, net interest income increased $415,000 compared to the three months ended June 30, 2018. Gain on sales of loans increased $176,000 compared to the second quarter of 2018 due to higher gains on sales of residential mortgages. Non-interest expenses were $8.6 million for the second quarter of 2019, which included $258,000 of merger-related expenses compared to $10.3 million for the second quarter of 2018, which included $2.0 million of merger-related expenses.

    Net interest income was $11.4 million for the second quarter of 2019 and increased $415,000, or 3.8%, compared to net interest income of $11.0 million for the second quarter of 2018. Total interest income was $14.6 million for the three months ended June 30, 2019 compared to $12.9 million for the three months ended June 30, 2018. This increase was due primarily to the $65.0 million increase in average loans, reflecting growth primarily of commercial real estate, commercial business and construction loans. Average interest-earning assets were $1.14 billion with a yield of 5.15% for the second quarter of 2019 compared to $1.08 billion with a yield of 4.77% for the second quarter of 2018. The higher yield on average interest-earning assets for the second quarter of 2019 reflected primarily the higher yield earned on the loan portfolio. The 50 basis point increase in the Federal Reserve’s targeted federal funds rate and the corresponding increase in the Prime Rate since June 2018 had a positive effect on the yields of mortgage warehouse, construction, commercial business and home equity loans with variable interest rate terms in the second quarter of 2019.

    Interest expense on average interest-bearing liabilities was $3.1 million, with an interest cost of 1.46%, for the second quarter of 2019 compared to $1.9 million, with an interest cost of 0.91%, for the second quarter of 2018. The $1.3 million increase in interest expense on interest-bearing liabilities for the second quarter of 2019 reflected primarily higher deposit interest rates and higher borrowing interest rates in the second quarter of 2019 compared to the second quarter of 2018 and an increase of $35.3 million in average interest-bearing liabilities. The change in the mix of deposits with the average balance of money market, NOW and savings accounts lower and certificates of deposits higher than in the second quarter of 2018 also increased the cost of total deposits in the second quarter of 2019.

    The net interest margin decreased to 4.06% for the second quarter of 2019 compared to 4.13% for the second quarter of 2018 due primarily to the higher interest cost of average interest-bearing liabilities, which was partially offset by the higher yield on average earning assets.

    The Company recorded a higher provision for loan losses of $400,000 for the second quarter of 2019 compared to a provision for loan losses of $225,000 for the second quarter of 2018 due primarily to the higher amount of net charge-offs in the second quarter of 2019, the growth of the loan portfolio and the change in the mix of loans in the loan portfolio.

    At June 30, 2019, total loans were $967.8 million and the allowance for loan losses was $8.6 million, or 0.89% of total loans, compared to total loans of $899.9 million and an allowance for loan losses of $8.5 million, or 0.94% of total loans, at June 30, 2018. The decrease in the allowance as a percentage of loans was due primarily to the $660,000 decline in specific reserves for impaired loans from June 30, 2018 to June 30, 2019 as a result of the charge-off and resolution of these impaired loans during this period. Management believes that the current economic conditions in New Jersey and operating conditions for the Company are generally positive, which were also considered in management’s evaluation of the adequacy of the allowance for loan losses.

    Non-interest income was $2.2 million for the second quarter of 2019, an increase of $127,000, compared to $2.0 million for the second quarter of 2018. Gains on the sale of loans increased $176,000. In the second quarter of 2019, $28.3 million of residential mortgages were sold and $878,000 of gains were recorded compared to $21.2 million of residential mortgage loans sold and $672,000 of gains recorded in the second quarter of 2018. The increase in residential mortgage loans sold was due primarily to higher residential mortgage lending activity in the second quarter of 2019 compared to 2018. In the second quarter of 2019, $3.2 million of SBA loans were sold and gains of $282,000 were recorded compared to $3.9 million of SBA loans sold and gains of $312,000 recorded in the second quarter of 2018. SBA guaranteed commercial lending activity and loan sales vary from period to period. A gain from bargain purchase of $184,000 from the NJCB merger was recorded in the second quarter of 2018. Other income increased $145,000 due primarily to a gain on the sale of OREO of $137,000 during the second quarter of 2019.

    Non-interest expenses were $8.6 million for the second quarter of 2019, a decrease of $1.7 million, or 16.4%, compared to $10.3 million for the second quarter of 2018. The decrease was due primarily to $2.0 million of merger related expenses that were incurred in the second quarter of 2018 for termination of contracts, legal and financial advisory fees, severance and other expenses in connection with the NJCB merger. Salaries and employee benefits expense increased $202,000, or 4.0%, in the second quarter of 2019 due primarily to merit increases and increases in employee benefit expenses. Occupancy expense increased $106,000, or 12.0%, due primarily to leasing additional office space and increases in occupancy costs. Data processing expenses decreased to $345,000 in the second quarter of 2019 compared to $369,000 for the second quarter of 2018 due primarily to the separate NJCB data processing costs incurred from the date of the closing of the merger to the date of core operating system integration on June 15, 2018. FDIC insurance expense decreased $86,000, or 58.9%, due to the reduction in the FDIC assessment rate. Other operating expenses decreased $198,000 due primarily to decreases in legal fees, amortization of intangible assets, supplies and business development expenses.

    Income tax expense was $1.3 million for the second quarter of 2019, resulting in an effective tax rate of 27.3%, compared to income tax expense of $714,000, which resulted in an effective tax rate of 27.6%, for the second quarter of 2018.

    At June 30, 2019, the allowance for loan losses was $8.6 million compared to $8.4 million at December 31, 2018. As a percentage of total loans, the allowance was 0.89% at June 30, 2019 compared to 0.95% at December 31, 2018. The allowances for loan losses declined as a percentage of loans at June 30, 2019 compared to December 31, 2018 due primarily to the charge-off of impaired loans with specific reserves in the second quarter of 2019 and a change in the mix of loans.

    Total assets increased $126.5 million to $1.30 billion at June 30, 2019 from $1.18 billion at December 31, 2018 due primarily to a $84.7 million increase in total loans, an increase of $13.3 million in cash and cash equivalents, an increase of $ 12.2 million in investment securities and an increase of $15.4 million in right-of-use assets related to the adoption of the new lease accounting standard, ASC Topic 842. Other real estate owned decline by $1.1 million as a result of the sale of one property. Total loans at June 30, 2019 were $967.8 million compared to $883.2 million at December 31, 2018. The increase in loans was due primarily to an increase of $50.0 million in mortgage warehouse loans, a $22.3 million increase in commercial real estate loans, an $11.0 million increase in residential real estate loans and a $4.8 million increase in construction loans. The increase in mortgage warehouse loans reflects the seasonal nature of residential lending in the Bank’s markets, which generally experience higher home purchase activity during the spring and summer months compared to other periods during the year.

    Total deposits increased $71.2 million to $1.02 billion at June 30, 2019 from $950.7 million at December 31, 2018. Certificates of deposit increased $41.1 million, non-interest bearing demand deposits increased $19.3 million, interest-bearing demand deposits increased $9.5 million and savings deposits increased $1.2 million. Short-term borrowings increased $33.1 million to $104.9 million at June 30, 2019 compared to $71.8 million at December 31, 2018 due primarily to fund the asset growth in excess of the growth of deposits. Lease liability totaled $16.0 million at June 30, 2019 due to the adoption of the new lease accounting standard, ASC Topic 842 in 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 10.56%, 12.87%, 12.12% and 11.51%, respectively, at June 30, 2019. The Bank’s estimated CET1, total risk-based capital, Tier 1 capital and leverage ratios were 12.11%, 12.86%, 12.11% and 11.50%, respectively, at June 30, 2019. The Company and the Bank are considered “well capitalized” under these capital standards.

    Asset Quality

    Non-accrual loans were $4.0 million at June 30, 2019 compared to $6.5 million at December 31, 2018. During the second quarter of 2019, $887,000 of non-performing loans were resolved, $463,000 of loans were charged-off and $1.7 million of loans were placed on non-accrual. In the first quarter of 2019, the Bank was notified that a shared national credit syndicated loan in which it was a participant in a $4.3 million facility was upgraded to pass rating from substandard rating and was no longer classified as a non-accrual loan. As of the date of notification, the Bank upgraded the loan, which had a balance of $2.8 million at that time, and returned the loan to accrual status.

    The allowance for loan loss was 214% of non-performing loans at June 30, 2019 compared to 128% at December 31, 2018. Overall, management observed generally stable loan quality, with non-performing loans to total loans of 0.42% and non-performing assets to total assets of 0.42% at June 30, 2019 compared to nonperforming loans to total loans of 0.75% and non-performing assets to total assets of 0.77% at December 31, 2018.

    OREO at June 30, 2019 was $1.5 million compared to $2.5 million at December 31, 2018. One residential real estate property acquired in the NJCB merger with a carrying value of $1.1 million was sold in the second quarter of 2019 and a gain of $137,000 was recognized. OREO at June 30, 2019 included land with a carrying value of $93,000 that was foreclosed in the second quarter of 2018 and a commercial real estate property that was foreclosed in the third quarter of 2018 with a fair value of $1.4 million.

    About 1ST Constitution Bancorp

    1ST Constitution Bancorp, through its primary subsidiary, 1ST Constitution Bank, operates 21 branch banking offices in Cranbury (2), Asbury Park, Fort Lee, Freehold, Hamilton, Hightstown, Hillsborough, Hopewell, Jamesburg, Lawrenceville, Little Silver, Long Branch, Neptune City, Perth Amboy, Plainsboro, Princeton, Rocky Hill, Rumson, Fair Haven and Shrewsbury, 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

    Forward Looking Statements

    This press release 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 and New York City Metropolitan area, 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, failure to close the Shore merger for any reason, including the failure to obtain Shore shareholder approval, the risk that expected cost savings and synergies from the Shore merger may not be realized, the diversion of management’s time from ongoing business operations due to issues relating to the Shore merger and the inability to retain Shore’s customers and employees. 1ST Constitution Bancorp assumes no obligation for updating any such forward-looking statements at any time, except as required by law.

    No Offer or Solicitation

    On June 23, 2019, the Company and the Bank entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Shore, providing for the merger of Shore with and into the Bank, with the Bank as the surviving entity (the “Merger”). The material terms of the Merger Agreement and the Merger were disclosed on a Current Report on Form 8-K filed with the Commission on June 25, 2019.

    This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

    Additional Information and Where to Find It

    In connection with the proposed Merger, the Company intends to file a registration statement on Form S-4 with the Commission. The Company may file other documents with the Commission regarding the proposed Merger. A definitive proxy statement/prospectus will be mailed to the shareholders of Shore. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE COMMISSION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO SUCH DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the registration statement (when available), including the proxy statement/prospectus, and other documents containing information about the Company at the Commission’s website at www.sec.gov. Copies of these documents may also be obtained from the Company (when available) by directing a request to Robert F. Mangano, President and Chief Executive Officer, 1ST Constitution Bancorp, at 2650 Route 130 North, P.O. Box 634, Cranbury, New Jersey 08512, telephone (609) 655-4500.

    Certain Information Regarding Participants

    The Company, Shore, their respective directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies from Shore’s shareholders in respect of the proposed Merger. Information regarding the directors and executive officers of the Company may be found in its definitive proxy statement relating to its 2019 Annual Meeting of Shareholders, which was filed with the Commission on April 19, 2019 and can be obtained free of charge from the Commission’s website at www.sec.gov or from the Company by directing a request to Robert F. Mangano, President and Chief Executive Officer, 1ST Constitution Bancorp, at 2650 Route 130 North, P.O. Box 634, Cranbury, New Jersey 08512, telephone (609) 655-4500. Information regarding the directors and executive officers of Shore may be found in its proxy statement relating to its 2019 Annual Meeting of Shareholders, which can be obtained free of charge from Robert T. English, President and Chief Executive Officer, Shore Community Bank, 1012 Hooper Avenue, Toms River, New Jersey 08753, telephone (732) 240-5800. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the Commission when they become available.


    1ST Constitution Bancorp
    Selected Consolidated Financial Data
    (Dollars in thousands, except per share data)
     
     Three months ended Six months ended
     June 30, June 30,
      2019   2018   2019   2018 
    Per share data:       
      Earnings per share – basic$  0.39  $  0.22  $  0.78  $  0.57 
      Earnings per share – diluted   0.39     0.22     0.78     0.56 
      Book value per share at end of period       15.62     14.42 
      Tangible book value per common share at end of period 1       14.21     12.94 
            
      Weighted average shares outstanding - basic   8,634,251     8,341,459     8,629,197     8,227,109 
      Weighted average shares outstanding - diluted   8,696,943     8,628,105     8,692,063     8,506,961 
      Shares outstanding at end of period       8,648,993     8,379,342 
    Performance ratios/data:       
    Return on average total assets 1.10%  0.65%  1.14%  0.86%
    Return on average shareholders' equity 10.22%  6.36%  10.49%  8.25%
    Net interest income (tax-equivalent basis) 2$  11,544  $  11,153  $  22,889  $  20,968 
    Net interest margin (tax-equivalent basis) 3 4.06%  4.13%  4.13%  4.04%
    Efficiency ratio (tax-equivalent basis) 4 62.46%  77.68%  61.88%  71.88%
            
         June 30, 2019 December 31, 2018
    Loan portfolio composition:       
    Commercial real estate    $  410,721  $  388,431 
    Mortgage warehouse lines       204,204     154,183 
    Construction loans       154,162     149,387 
    Commercial business       118,481     120,590 
    Residential real estate       58,241     47,263 
    Loans to individuals       21,463     22,962 
    Other loans       158     181 
      Gross loans       967,430     882,997 
    Deferred costs, net       390     167 
    Total loans    $  967,820  $  883,164 
    Asset quality data:       
    Loans past due over 90 days and still accruing    $  -  $  55 
    Non-accrual loans       4,042     6,525 
    OREO property       1,460     2,515 
    Total non-performing assets    $  5,502  $  9,095 
            
    Net (charge-offs) recoveries$  (463) $  (24) $  (418) $  35 
    Allowance for loan losses to total loans     0.89%  0.95%
    Allowance for loan losses to non-performing loans     213.78%  127.69%
    Non-performing loans to total loans     0.42%  0.75%
    Non-performing assets to total assets     0.42%  0.77%
    Capital ratios:       
    1ST Constitution Bancorp       
    Common equity tier 1 capital to risk-weighted assets     10.56%  10.72%
    Total capital to risk-weighted assets     12.87%  13.17%
    Tier 1 capital to risk-weighted assets     12.12%  12.39%
    Tier 1 leverage ratio     11.51%  11.73%
    1ST Constitution Bank       
    Common equity tier 1 capital to risk-weighted assets     12.11%  12.40%
    Total capital to risk-weighted assets     12.86%  13.18%
    Tier 1 capital to risk-weighted assets     12.11%  12.40%
    Tier 1 leverage ratio     11.50%  11.74%
            
    1 Tangible book value per share is a non-GAAP financial measure and is calculated by subtracting goodwill and intangible assets
      from shareholders' equity and dividing it by common shares outstanding,
    2 The tax equivalent adjustment was $112 and $135 for the three months ended June 30, 2019 and 2018, respectively, the tax equivalent
      adjustment was $230 and $271 for the six months ended June 30, 2019 and 2018, 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 Bancorp
    Consolidated Statements of Condition
    (Dollars in thousands)
    Unaudited
     June 30, 2019 December 31, 2018
    ASSETS   
    Cash and due from banks$  9,211  $  4,983 
    Interest-earning deposits   20,903     11,861 
    Total cash and cash equivalents   30,114     16,844 
    Investment securities:   
    Available for sale, at fair value   146,179     132,222 
    Held to maturity (fair value of $79,502 and $80,204 at June 30, 2019 and
       December 31, 2018, respectively)
       77,829     79,572 
    Total investment securities   224,008     211,794 
    Loans held for sale   3,863     3,020 
    Loans   967,820     883,164 
      Less: allowance for loan losses   (8,641)    (8,402)
    Net loans   959,179     874,762 
    Premises and equipment, net   11,563     11,653 
    Right-of-use assets   15,441     - 
    Accrued interest receivable   4,095     3,860 
    Bank-owned life insurance   28,993     28,705 
    Other real estate owned   1,460     2,515 
    Goodwill and intangible assets   12,196     12,258 
    Other assets   13,382     12,422 
    Total assets$  1,304,294  $  1,177,833 
    LIABILITIES AND SHAREHOLDERS' EQUITY   
    LIABILITIES   
    Deposits   
    Non-interest bearing$  232,313  $  212,981 
    Interest bearing   789,521     737,691 
    Total deposits   1,021,834     950,672 
    Short-term borrowings   104,850     71,775 
    Redeemable subordinated debentures   18,557     18,557 
    Accrued interest payable   1,697     1,228 
    Lease liability   16,021     - 
    Accrued expense and other liabilities   6,260     8,516 
    Total liabilities   1,169,219     1,050,748 
    SHAREHOLDERS’ EQUITY   
    Preferred stock, no par value; 5,000,000 shares authorized; none issued   -     - 
    Common stock, no par value; 30,000,000 shares authorized; 8,682,291 and
      8,639,276 shares issued and 8,648,993 and 8,605,978 shares outstanding as of
      June 30, 2019 and December 31, 2018, respectively
       80,190     79,536 
    Retained earnings   55,224     49,750 
    Treasury stock, 33,298 shares at June 30, 2019 and December 31, 2018   (368)    (368)
    Accumulated other comprehensive income (loss)   29     (1,833)
    Total shareholders' equity   135,075     127,085 
    Total liabilities and shareholders' equity$  1,304,294  $  1,177,833 




    1ST Constitution Bancorp
    Consolidated Statements of Income
    (Dollars in thousands, except per share data)
    (Unaudited)
            
     Three Months Ended June 30, Six Months Ended June 30,
      2019  2018  2019  2018
    INTEREST INCOME       
    Loans, including fees$  12,869 $  11,349 $  25,026 $  20,885
    Securities:       
    Taxable   1,215    989    2,485    1,855
    Tax-exempt   422    509    863    1,024
    Federal funds sold and short-term investments   47    34    94    172
    Total interest income   14,553    12,881    28,468    23,936
    INTEREST EXPENSE       
    Deposits   2,671    1,469    4,988    2,688
    Borrowings   257    220    430    227
    Redeemable subordinated debentures   192    174    390    324
    Total interest expense   3,120    1,863    5,808    3,239
    Net interest income   11,433    11,018    22,660    20,697
    PROVISION FOR LOAN LOSSES   400    225    700    450
    Net interest income after provision for loan losses   11,033    10,793    21,960    20,247
    NON-INTEREST INCOME       
    Service charges on deposit accounts   159    153    325    303
    Gain on sales of loans   1,160    984    2,205    2,133
    Income on bank-owned life insurance   149    159    289    273
    Gain from bargain purchase   -    184    -    184
    Gain on sales of securities   -    6    -    12
    Other income   702    557    1,217    1,023
    Total non-interest income 2,170  2,043  4,036  3,928
    NON-INTEREST EXPENSES       
    Salaries and employee benefits   5,278    5,076    10,241    9,814
    Occupancy expense   991    885    2,012    1,697
    Data processing expenses   345    369    693    678
    FDIC insurance expense   60    146    160    276
    Other real estate owned expenses   34    -    82    2
    Merger-related expense   258    1,977    273    2,141
    Other operating expenses   1,600    1,798    3,199    3,288
    Total non-interest expenses   8,566    10,251    16,660    17,896
    Income before income taxes   4,637    2,585    9,336    6,279
    INCOME TAXES   1,267    714    2,569    1,555
    Net Income$  3,370 $  1,871 $  6,767 $  4,724
    EARNINGS PER COMMON SHARE       
    Basic$  0.39 $  0.22 $  0.78 $  0.57
    Diluted   0.39    0.22    0.78    0.56
    WEIGHTED AVERAGE SHARES OUTSTANDING       
    Basic   8,634,251    8,341,459    8,629,197    8,227,109
    Diluted   8,696,943    8,628,105    8,692,063    8,506,961




    1ST Constitution Bancorp
    Net Interest Margin Analysis
    (Unaudited)
            
     Three months ended June 30, 2019 Three months ended June 30, 2018
     Average Average Average Average
     BalanceInterestYield BalanceInterestYield
    (Dollars in thousands)       
    Assets:       
    Interest-earning assets:       
    Federal funds sold/short-term investments$  7,650 $  472.46% $  11,633 $  341.17%
    Investment securities:       
    Taxable 166,287    1,2152.92%  149,366    9892.65%
    Tax-exempt 1 57,425    5343.72%  76,567    6443.36%
    Total investment securities 223,712  1,7493.13%  225,933  1,6332.89%
    Loans: 2       
    Commercial real estate 403,980  5,1875.08%  368,850  4,7945.14%
    Mortgage warehouse lines 151,929  2,2145.76%  154,796  2,0575.26%
    Construction 158,097  2,7687.02%  133,679  2,1786.45%
    Commercial business 122,005  1,8336.03%  109,245  1,4605.31%
    Residential real estate 47,280  5234.42%  50,154  5484.37%
    Loans to individuals 21,964  2925.26%  24,990  2754.41%
    Loans held for sale 4,104  424.09%  2,428  264.28%
    All other loans 895  104.42%  1,123  113.88%
    Total loans 910,254  12,8695.67%  845,265  11,3495.32%
    Total interest-earning assets    1,141,616 $ 14,6655.15%    1,082,831 $   13,0164.77%
    Non-interest-earning assets:       
    Allowance for loan losses (8,755)    (8,390)  
    Cash and due from bank 10,968     6,232   
    Other assets 83,914     65,721   
    Total non-interest-earning assets 86,127     63,563   
    Total assets$  1,227,743    $  1,146,394   
    Liabilities and shareholders' equity:       
    Interest-bearing liabilities:       
    Money market and NOW accounts$  340,048 $  6830.81% $  375,846 $  5060.54%
    Savings accounts 191,586  4640.97%  208,755  3610.69%
    Certificates of deposit 266,662  1,5252.29%  174,107  6021.39%
    Short-term borrowings 39,187  2572.63%  43,464  2202.03%
    Redeemable subordinated debentures 18,557  1924.14%  18,557  1743.75%
    Total interest-bearing liabilities 856,040    3,1211.46%  820,729    1,8630.91%
    Non-interest-bearing liabilities:       
    Demand deposits 215,530     199,707   
    Other liabilities 23,951     7,978   
    Total non-interest bearing liabilities   239,481       207,685   
    Shareholders' equity 132,222     117,980   
    Total liabilities and shareholders' equity$  1,227,743    $  1,146,394   
    Net interest spread 3  3.69%   3.86%
    Net interest income and net interest margin 4 $  11,5444.06%  $  11,1534.13%


    1 Tax equivalent basis, using federal tax rate of 21% in 2019 and 2018.
    2 Loan origination fees 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)
            
     Six months ended June 30, 2019 Six months ended June 30, 2018
     Average Average Average Average
     BalanceInterestYield BalanceInterestYield
    (Dollars in thousands)       
    Assets:       
    Interest-earning assets:       
    Federal funds sold/short-term investments$  7,490 $  942.53% $  26,031 $  1721.33%
    Investment securities:       
      Taxable 163,454    2,4853.04%  143,405    1,8552.59%
      Tax-exempt 1 58,621    1,0933.73%  78,524    1,2953.30%
      Total investment securities 222,075  3,5783.22%  221,929  3,1502.84%
    Loans: 2       
      Commercial real estate 397,154  10,1995.11%  336,743  8,4905.01%
      Mortgage warehouse lines 137,741  4,0385.86%  145,728  3,8135.23%
      Construction 156,987  5,4306.98%  131,330  4,1416.36%
      Commercial business 122,456  3,6556.02%  110,118  2,8955.30%
      Residential real estate 47,277  1,0584.45%  45,537  9884.32%
      Loans to individuals 22,353  5675.05%  22,742  4754.15%
      Loans held for sale 2,741  584.23%  2,997  634.20%
      All other loans 936  214.46%  1,168  203.41%
      Total loans 887,645  25,0265.69%  796,363  20,8855.24%
    Total interest-earning assets   1,117,210 $    28,6985.18%    1,044,323 $    24,2074.63%
    Non-interest-earning assets:       
    Allowance for loan losses (8,645)    (8,249)  
    Cash and due from bank 11,060     5,789   
    Other assets 78,586     61,980   
    Total non-interest-earning assets 81,001     59,520   
    Total assets$  1,198,211    $  1,103,843   
    Liabilities and shareholders' equity:       
    Interest-bearing liabilities:       
      Money market and NOW accounts$  337,516 $  1,2570.75% $  373,873 $  9380.51%
      Savings accounts 190,387  8890.94%  216,180  7080.66%
      Certificates of deposit 257,251  2,8422.23%  154,814  1,0421.36%
      Other borrowed funds 32,729  4302.65%  22,673  2272.02%
      Redeemable subordinated debentures 18,557  3914.21%  18,557  3243.49%
    Total interest-bearing liabilities 836,440 $  5,8091.40%  786,097 $  3,2390.83%
    Non-interest-bearing liabilities:       
    Demand deposits 211,575     194,189   
    Other liabilities 20,097     8,121   
    Total non-interest bearing liabilities   231,672       202,310   
    Shareholders' equity 130,099     115,436   
    Total liabilities and shareholders' equity$  1,198,211    $  1,103,843   
    Net interest spread 3  3.78%   3.80%
    Net interest margin 4 $  22,8894.13%  $  20,9684.04%
            


    1 Tax equivalent basis, using federal tax rate of 21% in 2019 and 2018.
    2 Loan origination fees 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 Six months ended
     June 30, June 30,
      2019   2018   2019   2018 
    Adjusted Net Income       
    Net income$  3,370  $  1,871  $  6,767  $  4,724 
    Adjustments:       
      Merger-related expenses   258     1,977     273     2,141 
      Gain from bargain purchase   -     (184)    -     (184)
      Income tax effect of adjustments   (77)    (542)    (82)    (568)
    Adjusted Net Income$  3,551  $  3,122  $  6,958  $  6,113 
            
    Adjusted Net Income per diluted share        
    Adjusted Net Income$  3,551  $  3,122  $  6,958  $  6,113 
    Diluted shares outstanding 8,696,943   8,628,105     8,692,063     8,506,961 
    Adjusted Net Income per diluted share$0.41  $0.36  $  0.80  $  0.72 
            
    Adjusted return on average total assets       
    Adjusted Net Income$  3,551  $  3,122  $  6,958  $  6,113 
    Average assets 1,227,743     1,146,394     1,198,211     1,103,843 
    Adjusted return on average total assets 1.16%  1.09%  1.17%  1.12%
            
    Adjusted return on average shareholders' equity       
    Adjusted Net Income$  3,551  $  3,122  $  6,958  $  6,113 
    Average equity 132,222     117,980     130,099     115,436 
    Adjusted Return on average shareholders' equity 10.77%  10.61%  10.78%  10.68%
            
    Book value and tangible book value per share       
    Shareholders' equity    $  135,075  $  120,849 
    Less: goodwill and intangible assets       12,196     12,387 
    Tangible shareholders' equity       122,879     108,462 
    Shares outstanding       8,648,993     8,379,342 
    Book value per share    $  15.62  $  14.42 
    Tangible book value per share    $  14.21  $  12.94 
            
    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 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 expenses related to the pending acquisition of Shore and the merger-related expenses and the gain from the bargain purchase recorded in connection with the NJCB merger in 2018. 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
    President & Chief Executive Officer
    (609) 655-4500                                                           

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

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