EX-99 2 pressrelease2016-3q.htm EXHIBIT 99 Exhibit
    
        

CONTACT:
Robert F. Mangano
Stephen J. Gilhooly
 
President & Chief Executive Officer
Sr. Vice President & Chief Financial Officer
 
(609) 655-4500
(609) 655-4500
        
PRESS RELEASE - FOR IMMEDIATE RELEASE

1ST CONSTITUTION BANCORP
REPORTS THIRD QUARTER 2016 RESULTS

Cranbury NJ - October 21, 2016 -- 1ST Constitution Bancorp (NASDAQ: FCCY), the holding company (the “Company”) for 1ST Constitution Bank (the “Bank”), today reported net income of $2.7 million and diluted earnings per share of $0.33 for the three months ended September 30, 2016. For the nine months ended September 30, 2016, the Company reported net income of $7.2 million and diluted earnings per share of $0.89.
THIRD QUARTER 2016 HIGHLIGHTS

•
Net income increased 9.5% and diluted earnings per share increased 10.0% compared to the third quarter of 2015.
•
Return on Average Assets and Return on Average Equity were 1.03% and 10.45%, respectively.
•
Book value per share and tangible book value per share were $13.02 and $11.39, respectively.
•
Net interest income was $9.5 million and the net interest margin was 3.92% on a tax equivalent basis.
•
Non-performing assets were $5.4 million, or 0.51% of assets, at September 30, 2016.
•
The Bank did not record a provision for loan losses in the third quarter due to lower historical loan loss factors that reflected the continued improvement in loan credit quality and the current economic and operating environment. Through the first nine months of 2016 net recoveries of loans of $226,000 were recorded.
•
On September 16, 2016, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.05 per common share to be paid on October 21, 2016 to shareholders of record as of the close of business on September 28, 2016. This action represents the first cash dividend declared by 1ST Constitution Bancorp on its common shares.
           
Robert F. Mangano, President and Chief Executive Officer, stated “We are pleased with our financial performance for the third quarter. Net income increased $233,000 and 9.5% compared to the third quarter of last year and return on average assets was 1.03%.” Mr. Mangano added, “I am encouraged by the progress generated by our new residential lending team that joined us in August and the building of our residential mortgage pipeline to $30.0 million by the end of September.”
Discussion of Financial Results
Net income was $2.7 million, or $0.33 per diluted share, for the third quarter of 2016 compared to $2.5 million, or $0.30 per diluted share, for the third quarter of 2015. The increase in net income of $233,000, or 9.5%, was generated primarily by a $333,000 increase in non-interest income and a $283,000 reduction of non-interest expenses in the third quarter of 2016 compared to the third quarter of 2015. All share and per share amounts have been adjusted to reflect the effect of the five percent common stock dividend paid on February 1, 2016.

Net interest income was $9.5 million for the quarter ended September 30, 2016 and declined $175,000 compared to net interest income of $9.7 million for the third quarter of 2015 principally due to an increase in interest expense of $186,000. Interest income was $10.8 million for each of the three months ended

        

September 30, 2016 and 2015. Average earning assets were $987.8 million with a yield of 4.47% for the third quarter of 2016 compared to $938.3 million with a yield of 4.68% for the third quarter of 2015. The lower yield on average earning assets in the third quarter of 2016 reflected primarily the lower yield earned on commercial and commercial real estate loans and investments and the lower percentage of average loans to average earning assets compared to the third quarter of 2015. The yield on loans and investments declined due to the continued low interest rate environment as new loans were originated and investment securities were purchased at yields lower than the average yield on loans and investments, respectively, in the prior year period.
Interest expense on average interest bearing liabilities was $1.4 million, or 0.71%, for the third quarter of 2016 compared to $1.2 million, or 0.63%, for the third quarter of 2015. The $186,000 increase in the interest expense on interest bearing liabilities for the third quarter of 2016 reflected primarily higher short-term market interest rates in 2016 and increased competition for deposits compared to 2015.
The net interest margin declined to 3.92% in the third quarter of 2016 compared to 4.19% in the third quarter of 2015 due primarily to the lower yield on average earning assets and the higher cost of average interest bearing liabilities.
The Company did not record a provision for loan losses in the third quarter of 2016 compared to a provision for loan losses of $100,000 in the third quarter of 2015. A provision for loan losses was not required for the third quarter of 2016 due to lower historical loan loss factors, which reflected the improvement in loan credit quality, the resolution of non-performing loans and the significant reduction of net charge-offs of commercial and commercial real estate loans in 2016 and 2015. Management believes that the current economic and operating conditions are generally positive, which also was considered in management's evaluation of the adequacy of the allowance for loan losses.Through the first three quarters of 2016, net recoveries of loans were $226,000 compared to net charge-offs of loans of $393,000 for the first three quarters of 2015. Net charge-offs of loans for all of 2015 were $465,000, or 0.07% of average loans.
Non-interest income was $1.8 million for the third quarter of 2016, an increase of $333,000, or 23.3%, compared to $1.4 million for the third quarter of 2015. Other income increased $272,000 in the third quarter of 2016 and included an insurance recovery of $125,000 and a recovery of $75,000 in excess of the fair value of an acquired non-performing loan. An increase of $93,000 in gains from the sales of loans also contributed to the increase in non-interest income for the third quarter of 2016. In the third quarter of 2016, $3.5 million of SBA loans were sold and gains of $347,000 were recorded compared to $2.2 million of loans sold and gains of $193,000 recorded in the third quarter of 2015. SBA guaranteed commercial lending activity and loan sales vary from period to period. In the third quarter of 2016, $12.2 million of residential mortgages were sold and $529,000 of gains were recorded compared to $38.0 million of loans sold and $590,000 of gains recorded in the third quarter of 2015. Service charge income was relatively unchanged from the 2015 quarter.
Non-interest expenses were $7.1 million for the third quarter of 2016, a decrease of $283,000, or 3.8%, compared to $7.4 million for the third quarter of 2015. Salaries and employee benefits expense increased $159,000, or 3.6%, due primarily to an increase in full-time equivalent employees. Commissions paid to residential loan officers, which were included in salaries and benefits expense, declined $142,000 due to the lower volume of mortgages originated in the third quarter of 2016. Occupancy costs increased $43,000, or 4.5%, due primarily to the occupancy costs of four residential mortgage loan production offices added in the third quarter of 2016. FDIC insurance expense declined $55,000, or 34.4%, due to a lower assessment rate that reflected the Bank’s improvement in asset quality and financial performance. OREO expense declined due to the significant reduction in OREO assets. Other operating expenses decreased $311,000 due primarily to an $88,000 decrease in expense incurred for the collection and recovery of non-performing loans, lower telephone and communication expense of $63,000 due to the termination of certain services

        

and decreases in various other operating expenses, which were partially offset by a $60,000 increase in internal and external professional audit fees related to management’s required year-end 2016 attestation regarding internal controls (SOX 404).
Income tax expense was $1.5 million in the third quarter of 2016, resulting in an effective tax rate of 35.1% compared to income tax expense of $1.1 million, which resulted in an effective tax rate of 31.8% in the third quarter of 2015. The effective tax rate increased primarily due to the higher pretax income in the third quarter of 2016.
At September 30, 2016, the allowance for loan losses was $7.5 million compared to $7.6 million at December 31, 2015. As a percentage of total loans, the allowance was 1.00% at September 30, 2016 compared to 1.11% at year end 2015. The decline in the allowance for loan losses as a percentage of loans reflected the lower level of non-performing loans and the lower historical loan loss factors at September 30, 2016 compared to December 31, 2015.
Total assets increased to $1.06 billion at September 30, 2016 from $968.0 million at December 31, 2015 due primarily to a $67.3 million increase in total loans, an increase of $9.7 million in investments, and an increase of $4.4 million in loans held for sale, which were funded primarily by increases of $40.3 million in deposits and $38.1 million in short-term borrowings. Total portfolio loans at September 30, 2016 were $749.4 million compared to $682.1 million at December 31, 2015. The increase in loans was due primarily to a $37.6 million increase in mortgage warehouse loans, reflecting the seasonality of residential home buying in our markets, a $25.6 million increase in commercial real estate loans, and a $4.2 million increase in residential mortgage loans. Total investment securities at September 30, 2016 were $224.4 million, an increase of $9.7 million from $214.7 million at December 31, 2015.

Total deposits at September 30, 2016 were $827.1 million compared to $786.8 million at December 31, 2015. Total deposits grew $40.3 million, with savings deposits increasing $15.1 million, non-interest bearing demand deposits increasing $14.0 million and interest-bearing demand deposits increasing $11.0 million.

Regulatory capital ratios continue to reflect a strong capital position. Under the regulatory capital standards (Basel III) that became effective on January 1, 2015, the Company’s common equity Tier 1 to risk based assets (“CET1”), total risk-based capital, Tier I capital, and leverage ratios were 9.91%, 12.68%, 11.87% and 10.57%, respectively, at September 30, 2016. The Bank’s CET1, total risk-based capital, Tier 1 capital and leverage ratios were 11.60%, 12.41%, 11.60% and 10.33%, respectively, at September 30, 2016. The Company and the Bank are considered “well capitalized” under these capital standards.
Asset Quality
Net recoveries of loans were $4,000 during the third quarter of 2016 and were $226,000 for the nine months ended September 30, 2016. Non-accrual loans were $5.2 million at September 30, 2016 compared to $6.0 million at December 31, 2015. During the third quarter of 2016, $748,000 of non-performing loans were resolved and $829,000 of loans were placed on non-accrual. The allowance for loan losses was 143% of non-accrual loans at September 30, 2016 compared to 126% of non-accrual loans at December 31, 2015.

Overall, we observed stable trends in loan quality with net recoveries of $4,000 during the third quarter of 2016, non-performing loans to total loans of 0.70% and non-performing assets to total assets of 0.51% at September 30, 2016.

OREO at September 30, 2016 decreased to $166,000 from $1.0 million at December 31, 2015 due to the sale in the second quarter of 2016 of one residential property previously held in OREO.



        




About 1ST Constitution Bancorp
1ST Constitution Bancorp, through its primary subsidiary, 1ST Constitution Bank, operates 19 branch banking offices in Cranbury (2), Fort Lee, Hamilton, Hightstown, Hillsborough, Hopewell, Jamesburg, Lawrenceville, Perth Amboy, Plainsboro, Rocky Hill, West Windsor, Princeton, Rumson, Fair Haven, Shrewsbury, Little Silver and Asbury Park, New Jersey. 1ST Constitution Bank also operates four residential mortgage loan production offices in Forked River, Flemington, Jersey City and Somerset, New Jersey.

1ST Constitution Bancorp is traded on the Nasdaq Global Market under the trading symbol “FCCY” and 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,
 
2016
 
2015
2016
 
2015
Per Common Share Data: 1
 
 
 
 
 
 
Earnings per common share - Basic
$
0.34

 
$
0.31

$
0.91

 
$
0.89

Earnings per common share - Diluted
0.33

 
0.30

0.89

 
0.87

Tangible book value per common share at the period-end
 
 
 
11.39

 
10.43

Book value per common share at the period-end
 
 
 
13.02

 
12.11

Average common shares outstanding:
 
 
 
 
 
 
Basic
7,974,323

 
7,920,192

7,954,212

 
7,893,719

Diluted
8,185,758

 
8,079,836

8,159,419

 
8,058,693

Performance Ratios / Data:
 
 
 
 
 
 
Return on average assets
1.03
%
 
0.98
%
0.97
%
 
0.96
%
Return on average equity
10.45
%
 
10.56
%
9.68
%
 
10.46
%
Net interest income (tax-equivalent basis) 2
$
9,734

 
$
9,914

$
27,354

 
$
28,389

Net interest margin (tax-equivalent basis) 3
3.92
%
 
4.19
%
3.89
%
 
4.11
%
Efficiency ratio 4
61.70
%
 
64.00
%
65.00
%
 
64.50
%
 
 
 
 
 
 
 
 
 
 
 
September 30,
 
December 31,
 
 
 
 
2016
 
2015
Loan Portfolio Composition:
 
 
 
 
 
 
Commercial Business
 
 
 
$
98,147

 
$
99,277

Commercial Real Estate
 
 
 
232,812

 
207,250

Construction Loans
 
 
 
93,839

 
93,745

Mortgage Warehouse Lines
 
 
 
254,168

 
216,572

Residential Real Estate
 
 
 
44,975

 
40,744

Loans to Individuals
 
 
 
23,503

 
23,074

Other Loans
 
 
 
220

 
233

Gross Loans
 
 
 
747,664

 
680,895

Deferred Costs (net)
 
 
 
1,772

 
1,226

Total Loans (net)
 
 
 
$
749,436

 
$
682,121

 
 
 
 
 
 
 
Asset Quality Data:
 
 
 
 
 
 
Loans past due over 90 days and still accruing
 
 
 
—

 
—

Non-accrual loans
 
 
 
5,238

 
6,020

OREO property
 
 
 
166

 
966

Other repossessed assets
 
 
 
—

 
—

Total non-performing assets
 
 
 
$
5,404

 
$
6,986

 
 
 
 
 
 
 
Net recoveries (charge-offs)
$
4

 
$
(318
)
$
226

 
$
(465
)
Allowance for loan losses to total loans
 
 
 
1.00
%
 
1.11
%
Non-performing loans to total loans
 
 
 
0.70
%
 
0.88
%
Non-performing assets to total assets
 
 
 
0.51
%
 
0.72
%
 
 
 
 
 
 
 
Capital Ratios:
 
 
 
 
 
 
1ST Constitution Bancorp
 
 
 
 
 
 
Common equity to risk weighted assets ("CET 1")


 


9.91
%
 
10.03
%
Total capital to risk weighted assets


 


12.68
%
 
13.08
%
Tier 1 capital to risk weighted assets


 


11.87
%
 
12.18
%
Tier 1 capital to average assets (leverage ratio)


 


10.57
%
 
10.80
%
1ST Constitution Bank
 
 
 
 
 
 
Common equity to risk weighted assets ("CET 1")


 


11.60
%
 
11.90
%
Total capital to risk weighted assets


 


12.41
%
 
12.80
%
Tier 1 capital to risk weighted assets


 


11.60
%
 
11.90
%
Tier 1 capital to average assets (leverage ratio)


 


10.33
%
 
10.55
%

        

1All share and per share amounts have been adjusted to reflect the effect of the 5% stock dividend paid on February 1, 2016.
2The tax equivalent adjustment was $246 and $251 for the three months ended September 30, 2016 and September 30, 2015, respectively.
3Represents net interest income on a taxable equivalent basis as a percent of average interest earning assets.
4Represents 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, 2016
 
December 31, 2015
ASSETS
 
 
 
 
Cash and Due From Banks
 
$
16,947

 
$
11,368

Federal Funds Sold/Short Term Investments
 
—

 
—

    Total cash and cash equivalents
 
16,947

 
11,368

Investment Securities:
 
 

 
 

Available for sale, at fair value
 
103,114

 
91,422

Held to maturity (fair value of $125,841 and $127,157
at September 30, 2016 and December 31, 2015, respectively)
 
121,236

 
123,261

            Total investment securities
 
224,350

 
214,683

 
 
 
 
 
Loans Held for Sale
 
10,416

 
5,997

Loans
 
749,436

 
682,121

Less- Allowance for loan losses
 
(7,486
)
 
(7,560
)
            Net loans
 
741,950

 
674,561

 
 
 
 
 
Premises and Equipment, net
 
10,760

 
11,109

Accrued Interest Receivable
 
2,855

 
2,853

Bank-Owned Life Insurance
 
22,048

 
21,583

Other Real Estate Owned
 
166

 
966

Goodwill and Intangible Assets
 
12,981

 
13,284

Other Assets
 
12,835

 
11,587

Total assets
 
$
1,055,308

 
$
967,991

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 

 
 

LIABILITIES:
 
 

 
 

Deposits
 
 

 
 

Non-interest bearing
 
$
173,946

 
$
159,918

Interest bearing
 
653,116

 
626,839

Total deposits
 
827,062

 
786,757

 
 
 
 
 
Borrowings
 
97,099

 
58,896

Redeemable Subordinated Debentures
 
18,557

 
18,557

Accrued Interest Payable
 
794

 
846

Accrued Expenses and Other Liabilities
 
7,849

 
6,975

Total liabilities
 
951,361

 
872,031

 
 
 
 
 
SHAREHOLDERS’ EQUITY:
 
 

 
 

Preferred stock, no par value; 5,000,000 shares authorized, none issued
 
—

 
—

Common Stock, no par value; 30,000,000 shares authorized; 8,016,592 and 7,575,492 shares issued and 7,983,294 and 7,545,684 shares outstanding as of September 30, 2016 and December 31, 2015, respectively
 
71,394

 
70,845

Retained earnings
 
32,420

 
25,589

Treasury Stock, 33,298 shares and 29,808 shares at September 30, 2016 and December 31, 2015, respectively
 
(368
)
 
(344
)
Accumulated other comprehensive income (loss)
 
501

 
(130
)
Total shareholders’ equity
 
103,947

 
95,960

Total liabilities and shareholders’ equity
 
$
1,055,308

 
$
967,991

    

        

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,
 
2016
 
2015
 
2016
 
2015
INTEREST INCOME:
 
 
 
 
 
 
 
     Loans, including fees
$
9,489

 
$
9,527

 
$
26,314

 
$
27,054

     Securities:
 
 
 
 
 
 
 
           Taxable
827

 
776

 
2,459

 
2,383

           Tax-exempt
514

 
522

 
1,554

 
1,608

     Federal funds sold and short-term investments
13

 
7

 
79

 
38

               Total interest income
10,843

 
10,832

 
30,406

 
31,083

INTEREST EXPENSE:
 
 
 
 
 
 
 
     Deposits
1,051

 
921

 
2,989

 
2,765

     Borrowings
197

 
159

 
498

 
438

     Redeemable subordinated debentures
107

 
89

 
311

 
263

Total interest expense
1,355

 
1,169

 
3,798

 
3,466

               Net interest income
9,488

 
9,663

 
26,608

 
27,617

(CREDIT) PROVISION FOR LOAN LOSSES
—

 
100

 
(300
)
 
600

      Net interest income after (credit) provision for loan losses
9,488

 
9,563

 
26,908

 
27,017

NON-INTEREST INCOME:
 
 
 
 
 
 
 
     Service charges on deposit accounts
185

 
186

 
558

 
615

     Gain on sales of loans
876

 
783

 
2,525

 
3,278

     Income on Bank-owned life insurance
113

 
144

 
414

 
420

     Other income
586

 
314

 
1,392

 
1,231

Total non-interest income
1,760

 
1,427

 
4,889

 
5,544

NON-INTEREST EXPENSES:
 
 
 
 
 
 
 
     Salaries and employee benefits
4,532

 
4,373

 
13,138

 
13,037

     Occupancy expense
1,006

 
963

 
2,946

 
3,121

     Data processing expenses
314

 
326

 
941

 
951

     FDIC insurance expense
105

 
160

 
328

 
530

     Other real estate owned expenses
12

 
119

 
76

 
631

     Other operating expenses
1,128

 
1,439

 
3,522

 
3,939

 Total non-interest expenses
7,097

 
7,380

 
20,951

 
22,209

 
 
 
 
 
 
 
 
                  Income before income taxes
4,151

 
3,610

 
10,846

 
10,352

INCOME TAXES
1,456

 
1,148

 
3,616

 
3,315

                  Net Income
$
2,695

 
$
2,462

 
$
7,230

 
$
7,037

 
 
 
 
 
 
 
 
NET INCOME PER COMMON SHARE
 
 
 
 
 
 
 
          Basic
$
0.34

 
$
0.31

 
$
0.91

 
$
0.89

          Diluted
$
0.33

 
$
0.30

 
$
0.89

 
$
0.87

WEIGHTED AVERAGE SHARES OUTSTANDING
 
 
 
 
 
 
 
           Basic
7,974,323

 
7,920,192

 
7,954,212

 
7,893,719

           Diluted
8,185,758

 
8,079,836

 
8,159,419

 
8,058,693



        

1ST Constitution Bancorp
Net Interest Margin Analysis
(Dollars in thousands)
(Unaudited)
 
Three months ended September 30, 2016
 
Three months ended September 30, 2015
 
Average
Balance
 
Interest

 
Average
Yield
 
Average
Balance
 
Interest

 
Average
Yield
Assets:
 
 
 
 
 
 
 
 
 
 
 
Federal Funds Sold/Short-Term Investments
$
12,434

 
$
13

 
0.40
%
 
$
15,381

 
$
7

 
0.19
%
Investment Securities:
 
 
 
 
 
 
 
 
 
 
 
Taxable
148,715

 
827

 
2.22
%
 
119,047

 
776

 
2.61
%
Tax-exempt (4)
79,917

 
760

 
3.81
%
 
76,975

 
773

 
4.02
%
Total
228,632

 
1,587

 
2.78
%
 
196,022

 
1,549

 
3.16
%
Loan Portfolio: (1)
 
 
 

 
 

 
 

 
 

 
 

Construction
89,509

 
1,364

 
6.06
%
 
93,953

 
1,470

 
6.20
%
Residential real estate
45,919

 
493

 
4.30
%
 
41,828

 
445

 
4.25
%
Home Equity
23,286

 
279

 
4.76
%
 
22,314

 
272

 
4.84
%
Commercial and commercial real estate
335,887

 
4,722

 
5.59
%
 
311,411

 
4,611

 
5.94
%
Mortgage warehouse lines
245,654

 
2,600

 
4.21
%
 
243,273

 
2,634

 
4.30
%
Installment
616

 
7

 
4.48
%
 
516

 
5

 
4.11
%
All Other Loans
5,869

 
24

 
1.63
%
 
13,590

 
90

 
2.64
%
Total
746,740

 
9,489

 
5.06
%
 
726,885

 
9,527

 
5.20
%
Total Interest-Bearing Assets
987,806

 
$
11,089

 
4.47
%
 
938,288

 
$
11,083

 
4.68
%
Allowance for Loan Losses
(7,552
)
 
 
 
 
 
(7,661
)
 
 
 
 
Cash and Due From Bank
5,019

 
 
 
 
 
5,253

 
 
 
 
Other Assets
59,886

 
 
 
 
 
65,138

 
 
 
 
Total Assets
$
1,045,159

 
 
 
 
 
$
1,001,018

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity:
 
 
 
 
 
 
 
 
 
 
 
   Money Market and NOW Accounts 
$
296,554

 
$
281

 
0.38
%
 
$
295,478

 
$
248

 
0.33
%
Savings Accounts
209,703

 
316

 
0.60
%
 
195,051

 
231

 
0.47
%
Certificates of Deposit
173,652

 
454

 
1.04
%
 
170,500

 
442

 
1.03
%
Other Borrowed Funds
64,463

 
197

 
1.22
%
 
52,082

 
159

 
1.21
%
Trust Preferred Securities
18,557

 
107

 
2.32
%
 
18,557

 
89

 
1.89
%
Total Interest-Bearing Liabilities
762,929

 
$
1,355

 
0.71
%
 
731,668

 
$
1,169

 
0.63
%
Net Interest Spread (2)
 
 
 
 
3.76
%
 
 
 
 
 
4.05
%
Demand Deposits
171,631

 
 
 
 
 
167,526

 
 
 
 
Other Liabilities
7,962

 
 
 
 
 
9,536

 
 
 
 
Total Liabilities
942,522

 
 
 
 
 
908,730

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shareholders’ Equity
102,637

 
 
 
 
 
92,288

 
 
 
 
Total Liabilities and Shareholders’ Equity
$
1,045,159

 
 
 
 
 
$
1,001,018

 
 
 
 
Net Interest Margin (3)
 
 
$
9,734

 
3.92
%
 
 
 
$
9,914

 
4.19
%
(1)
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.
(2)
The net interest rate 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, 2016
 
Nine months ended September 30, 2015
 
Average
Balance
 
Interest
 
Average
Yield
 
Average
Balance
 
Interest
 
Average
Yield
Assets:
 
 
 
 
 
 
 
 
 
 
 
Federal Funds Sold/Short-Term Investments
$
24,508

 
$
79

 
0.43
%
 
$
22,042

 
$
38

 
0.23
%
Investment Securities:
 
 
 
 
 
 
 
 
 
 
 
Taxable
144,534

 
2,459

 
2.27
%
 
128,404

 
2,383

 
2.47
%
Tax-exempt (4)
80,203

 
2,299

 
3.82
%
 
82,207

 
2,380

 
3.86
%
Total
224,737

 
4,758

 
2.82
%
 
210,611

 
4,763

 
3.02
%
Loan Portfolio: (1)
 
 
 

 
 

 
 

 
 

 
 

Construction
92,795

 
4,026

 
5.80
%
 
95,936

 
4,551

 
6.34
%
Residential real estate
42,375

 
1,352

 
4.19
%
 
43,796

 
1,381

 
4.16
%
Home Equity
23,454

 
769

 
4.38
%
 
22,308

 
777

 
4.66
%
Commercial and commercial real estate
319,748

 
13,606

 
5.68
%
 
308,697

 
13,391

 
5.80
%
Mortgage warehouse lines
201,322

 
6,436

 
4.27
%
 
205,753

 
6,714

 
4.36
%
Installment
582

 
19

 
4.35
%
 
468

 
16

 
4.54
%
All Other Loans
6,078

 
106

 
2.34
%
 
12,715

 
224

 
2.36
%
Total
686,354

 
26,314

 
5.12
%
 
689,673

 
27,054

 
5.24
%
Total Interest-Bearing Assets
935,599

 
$
31,151

 
4.45
%
 
922,326

 
$
31,855

 
4.62
%
Allowance for Loan Losses
(7,534
)
 
 
 
 
 
(7,532
)
 
 
 
 
Cash and Due From Bank
5,086

 
 
 
 
 
7,816

 
 
 
 
Other Assets
59,652

 
 
 
 
 
62,475

 
 
 
 
Total Assets
$
992,803

 
 
 
 
 
$
985,085

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity:
 
 
 
 
 
 
 
 
 
 
 
   Money Market and NOW Accounts 
$
295,776

 
$
821

 
0.37
%
 
$
302,777

 
$
754

 
0.33
%
Savings Accounts
206,355

 
888

 
0.58
%
 
196,266

 
686

 
0.47
%
Certificates of Deposit
153,544

 
1,280

 
1.11
%
 
162,085

 
1,325

 
1.09
%
Other Borrowed Funds
46,257

 
498

 
1.44
%
 
41,767

 
438

 
1.40
%
Trust Preferred Securities
18,557

 
311

 
2.23
%
 
18,557

 
263

 
1.87
%
Total Interest-Bearing Liabilities
720,489

 
$
3,798

 
0.70
%
 
721,452

 
$
3,466

 
0.64
%
Net Interest Spread (2)
 
 
 
 
3.75
%
 
 
 
 
 
3.98
%
Demand Deposits
164,963

 
 
 
 
 
164,867

 
 
 
 
Other Liabilities
7,612

 
 
 
 
 
8,782

 
 
 
 
Total Liabilities
893,064

 
 
 
 
 
895,101

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shareholders’ Equity
99,739

 
 
 
 
 
89,984

 
 
 
 
Total Liabilities and Shareholders’ Equity
$
992,803

 
 
 
 
 
$
985,085

 
 
 
 
Net Interest Margin (3)
 
 
$
27,353

 
3.89
%
 
 
 
$
28,389

 
4.11
%
(1)
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.
(2)
The net interest rate 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.