UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2004
or
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file Number: 000-32891
1ST CONSTITUTION BANCORP
(Exact Name of Registrant as Specified in Its Charter)
| New Jersey | 22-3665653 | |
| (State of Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
| 2650 Route 130, P.O. Box 634, Cranbury, NJ | 08512 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
(609) 655-4500
(Issuer’s Telephone Number, Including Area Code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ¨ No x
As of May 11, 2004, there were 1,562,328 shares of the registrant’s common stock, no par value, outstanding.
1ST CONSTITUTION BANCORP
FORM 10-Q
PART I. FINANCIAL INFORMATION
| Item 1. | Financial Statements |
1st Constitution Bancorp and Subsidiaries
Consolidated Balance Sheets
(unaudited)
| March 31, 2004 |
December 31, 2003 |
|||||||
| ASSETS |
||||||||
| CASH AND DUE FROM BANKS |
$ | 7,560,178 | $ | 6,987,850 | ||||
| FEDERAL FUNDS SOLD / SHORT-TERM INVESTMENTS |
3,221,247 | 7,715,036 | ||||||
| Total cash and cash equivalents |
10,781,425 | 14,702,886 | ||||||
| INVESTMENT SECURITIES: |
||||||||
| Available for sale, at fair value |
92,051,823 | 84,999,973 | ||||||
| Held to maturity (fair value of $6,391,619 and $6,516,652 in 2004 and 2003, respectively) |
6,060,342 | 6,191,197 | ||||||
| Total investment securities |
98,112,165 | 91,191,170 | ||||||
| LOANS HELD FOR SALE |
8,494,554 | 15,405,982 | ||||||
| LOANS |
169,552,730 | 163,950,306 | ||||||
| Less- Allowance for loan losses |
(1,846,632 | ) | (1,786,632 | ) | ||||
| Net loans |
167,706,098 | 162,163,674 | ||||||
| PREMISES AND EQUIPMENT, net |
1,455,018 | 1,316,517 | ||||||
| ACCRUED INTEREST RECEIVABLE |
1,360,453 | 1,169,015 | ||||||
| BANK OWNED LIFE INSURANCE |
6,390,256 | 6,331,006 | ||||||
| OTHER ASSETS |
549,312 | 1,157,924 | ||||||
| Total assets |
$ | 294,849,281 | $ | 293,483,174 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| LIABILITIES: |
||||||||
| Deposits |
||||||||
| Non-interest bearing |
$ | 46,662,946 | $ | 42,661,432 | ||||
| Interest bearing |
197,237,380 | 202,692,292 | ||||||
| Total deposits |
243,900,326 | 245,353,724 | ||||||
| SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE |
1,926,102 | 1,921,015 | ||||||
| OTHER BORROWINGS |
15,500,000 | 15,500,000 | ||||||
| REDEEMABLE SUBORDINATED DEBENTURES |
5,155,000 | 5,155,000 | ||||||
| ACCRUED INTEREST PAYABLE |
948,607 | 906,576 | ||||||
| ACCRUED EXPENSES AND OTHER LIABILITIES |
2,634,446 | 1,061,603 | ||||||
| Total liabilities |
270,064,481 | 269,897,918 | ||||||
| COMMITMENTS AND CONTINGENCIES |
||||||||
| SHAREHOLDERS’ EQUITY: |
||||||||
| Common stock, no par value; 15,000,000 shares authorized; 1,565,367 shares issued and 1,562,463 and 1,565,163 outstanding as of March 31, 2004 and December 31, 2003, respectively |
19,687,439 | 19,694,828 | ||||||
| Retained earnings |
4,621,590 | 3,745,784 | ||||||
| Treasury Stock, shares at cost (2,904 shares at March 31, 2004 and 204 shares at December 31, 2003, respectively) |
(92,382 | ) | (5,517 | ) | ||||
| Accumulated other comprehensive income |
568,152 | 150,161 | ||||||
| Total shareholders’ equity |
24,784,799 | 23,585,256 | ||||||
| Total liabilities and shareholders’ equity |
$ | 294,849,281 | $ | 293,483,174 | ||||
See accompanying notes to consolidated financial statements.
1
1st Constitution Bancorp and Subsidiaries
Consolidated Statements of Income
(unaudited)
| Three Months Ended March 31, | ||||||
| 2004 |
2003 | |||||
| INTEREST INCOME: |
||||||
| Interest and fees on loans |
$ | 3,084,598 | $ | 2,752,687 | ||
| Interest on securities: |
||||||
| Taxable |
813,514 | 710,405 | ||||
| Tax-exempt |
83,999 | 60,194 | ||||
| Interest on Federal funds sold and short-term investments |
6,211 | 3,642 | ||||
| Total interest income |
3,988,322 | 3,526,928 | ||||
| INTEREST EXPENSE: |
||||||
| Interest on deposits |
747,327 | 845,090 | ||||
| Interest on securities sold under agreements to repurchase and other borrowed funds |
223,724 | 229,022 | ||||
| Interest on redeemable subordinated debentures |
62,183 | 66,485 | ||||
| Total interest expense |
1,033,234 | 1,140,597 | ||||
| Net interest income |
2,955,088 | 2,386,331 | ||||
| PROVISION FOR LOAN LOSSES |
60,000 | 60,000 | ||||
| Net interest income after provision for loan losses |
2,895,088 | 2,326,331 | ||||
| NON-INTEREST INCOME: |
||||||
| Service charges on deposit accounts |
126,632 | 145,642 | ||||
| Gain on sale of loans held for sale |
262,436 | 265,707 | ||||
| Income on Bank-owned life insurance |
59,250 | 69,705 | ||||
| Other income |
63,641 | 54,314 | ||||
| Total other income |
511,959 | 535,368 | ||||
| NON-INTEREST EXPENSE: |
||||||
| Salaries and employee benefits |
1,193,865 | 958,825 | ||||
| Occupancy expense |
245,856 | 200,295 | ||||
| Other operating expenses |
680,191 | 584,014 | ||||
| Total other expense |
2,119,912 | 1,743,134 | ||||
| Income before income taxes |
1,287,135 | 1,118,565 | ||||
| INCOME TAXES |
411,328 | 393,696 | ||||
| Net income |
$ | 875,807 | $ | 724,869 | ||
| NET INCOME PER SHARE: |
||||||
| Basic |
$ | 0.56 | $ | 0.47 | ||
| Diluted |
$ | 0.53 | $ | 0.45 | ||
See accompanying notes to consolidated financial statements.
2
1st Constitution Bancorp and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
| Three months ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| OPERATING ACTIVITIES: |
||||||||
| Net income |
$ | 875,807 | $ | 724,869 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities- |
||||||||
| Provision for loan losses |
60,000 | 60,000 | ||||||
| Depreciation and amortization |
79,678 | 82,689 | ||||||
| Net amortization on securities |
118,919 | 336,689 | ||||||
| Gain on sale of loans held for sale |
(262,436 | ) | (390,442 | ) | ||||
| Originations of loans held for sale |
(12,306,322 | ) | (14,310,371 | ) | ||||
| Proceeds from sales of loans held for sale |
19,480,186 | 21,032,342 | ||||||
| (Increase) Decrease in accrued interest receivable |
(191,438 | ) | 3,384 | |||||
| Income on Bank – owned life insurance |
(59,250 | ) | (69,705 | ) | ||||
| Decrease (Increase) decrease in other assets |
314,748 | (369,793 | ) | |||||
| Increase (Decrease) in accrued interest payable |
42,031 | (18,285 | ) | |||||
| Increase in accrued expenses and other liabilities |
1,572,844 | 46,694 | ||||||
| Net cash provided by operating activities |
9,724,767 | 7,128,071 | ||||||
| INVESTING ACTIVITIES: |
||||||||
| Purchases of securities - |
||||||||
| Available for sale |
(14,236,640 | ) | (5,215,351 | ) | ||||
| Held to maturity |
0 | (198,102 | ) | |||||
| Proceeds from maturities and prepayments of securities - |
||||||||
| Available for sale |
7,773,173 | 12,791,325 | ||||||
| Held to maturity |
128,019 | 247,749 | ||||||
| Net (increase) decrease in loans |
(5,602,424 | ) | 443,582 | |||||
| Capital expenditures |
(173,179 | ) | (42,344 | ) | ||||
| Net cash (used in) provided by investing activities |
(12,111,051 | ) | 8,026,859 | |||||
| FINANCING ACTIVITIES: |
||||||||
| Purchase of treasury stock |
(86,866 | ) | 0 | |||||
| Net decrease in demand, savings and time deposits |
(1,453,398 | ) | (4,051,863 | ) | ||||
| Net increase in securities sold under agreements to repurchase |
5,087 | 7,734 | ||||||
| Net decrease in other borrowings |
0 | (2,500,000 | ) | |||||
| Net cash used in financing activities |
(1,535,177 | ) | (6,544,129 | ) | ||||
| (Decrease) increase in cash and cash equivalents |
(3,921,461 | ) | 8,610,801 | |||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
14,702,886 | 9,594,374 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 10,781,425 | $ | 18,205,175 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
||||||||
| Cash paid during the period for - |
||||||||
| Interest |
$ | 991,203 | $ | 1,158,882 | ||||
| Income taxes |
— | — | ||||||
See accompanying notes to consolidated financial statements.
3
1st Constitution Bancorp and Subsidiaries
Notes To Consolidated Financial Statements
March 31, 2004 (Unaudited)
| (1) | Summary of Significant Accounting Policies |
The accompanying unaudited Consolidated Financial Statements herein have been prepared by 1st Constitution Bancorp (the “Company”), in accordance with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations. These consolidated Financial Statements should be read in conjunction with the audited financial statements and the notes thereto included in the Company’s Form 10-K for the year ended December 31, 2003, filed with the SEC on March 25, 2004.
In the opinion of the Company, all adjustments (consisting only of normal recurring accruals) which are necessary for a fair presentation of the operating results for the interim periods have been included. The results of operations for periods of less than a year are not necessarily indicative of results for the full year.
Certain reclassifications have been made to the prior years’ financial statements to conform with the classifications used in 2004.
Net Income Per Common Share
Basic net income per common share is computed by dividing net income by the weighted average number of shares outstanding during each period.
Diluted net income per common share is computed by dividing net income by the weighted average number of shares outstanding, as adjusted for the assumed exercise of potential common stock options, using the treasury stock method. All share and per share amounts have been restated for the effect of a 5% stock dividend declared on December 18, 2003 and paid on January 31, 2004 to shareholders of record on January 15, 2004.
The following tables illustrate the required disclosure of the reconciliation of the numerators and denominators of the basic and diluted earnings per share (EPS) computations,
| Three Months Ended March 31, 2004 |
|||||||||
| Income |
Weighted- average shares |
Per share amount |
|||||||
| Basic EPS |
|||||||||
| Net income available to common stockholders |
$ | 875,807 | 1,564,877 | ||||||