Attached files
| file | filename |
|---|---|
| 8-K - 8-K - 1ST CONSTITUTION BANCORP | a1stconstitution_form8-kin.htm |
DRAFT
Investor Presentation
November 22, 2016
Bancorp
1
2
DRAFT
Bancorp
2
Section 1
About 1st Constitution Bancorp
Bancorp 3
Forward-Looking Statement
This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for
forward-looking statements. When used in this and in future filings by 1st Constitution Bancorp (the “Company”) with the Securities and Exchange
Commission (the “SEC”), in the Company’s press releases and in oral statements made with the approval of an authorized executive officer of the
Company, the words or phrases “will,” “will likely result,” “could,” “anticipates,” “believes,” “continues,” “expects,” “plans,” “will continue,” “is anticipated,”
“estimated,” “project” or “outlook” or similar expressions (including confirmations by an authorized executive officer of the Company of any such
expressions made by a third party with respect to the Company) are intended to identify forward-looking statements. The Company cautions readers
not to place undue reliance on any such forward-looking statements, each of which speaks only as of the date made. Such statements are subject to
certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected.
Factors that may cause actual results to differ from those results expressed or implied, include, but are not limited to, those listed under “Business”, “Risk
Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2015 filed with the SEC on March 22, 2016, such as the overall economy and the interest rate environment; the ability
of customers to repay their obligations; the adequacy of the allowance for loan losses; competition; significant changes in accounting, tax or regulatory
practices and requirements; certain interest rate risks; risks associated with investments in mortgage-backed securities; risks associated with speculative
construction lending; and risks associated with safeguarding information technology systems. Although management has taken certain steps to mitigate
any negative effect of the aforementioned items, significant unfavorable changes could severely impact the assumptions used and could have an
adverse effect on profitability. The Company undertakes no obligation to publicly revise any forward-looking statements to reflect anticipated or
unanticipated events or circumstances occurring after the date of such statements, except as required by law.
Bancorp 4
1st Constitution Highlights
Company Profile
• New Jersey-chartered bank holding company
organized in 1999
• One banking subsidiary, 1st Constitution Bank,
founded in 1989
• Growth-oriented community bank
headquartered in Cranbury, New Jersey
• Operates 19 branches throughout Middlesex,
Monmouth, Mercer and Somerset Counties and
the Fort Lee area of Bergen County, New Jersey
• Seeks to provide customers a high level of
personalized banking services, emphasizing
quick and flexible responses to customer
demands
• Completed acquisition of 3 branches from
Amboy Bank in March 2011 ($112mm total
deposits)
• Completed acquisition of Rumson-Fair Haven
Bank & Trust Co. on February 7, 2014 ($214mm
total assets)
Mission
Statement
1st Constitution Bancorp provides financial services to consumers, businesses, and institutions in Central New Jersey in the communities we serve. Our
basis of services emphasizes credit products for creditworthy consumers and businesses, and deposit products and services designed to enhance the
value or our clients' assets. Our employees are a key element in our success. We will train them appropriately and provide them with the means to
deliver a superior level or service to our customers, and reward them accordingly for their overall performance. Our mission is to enhance
shareholder value by making each of our operating units a driving force towards providing shareholders with an appropriate rate of return on their
investment.
5 Bancorp 5
2.21%
Projected Population Growth Franchise Weighted
3.77%
1.82%
3.03%
1.27%
2.50%
0.51%
2.98%
NationNJBergenMercerSomersetMonmouthMiddlesex
Markets of Operation and Demographics
Franchise Highlights
Source: SNL Financial; (1) deposit market share rank includes banks only
• 11th most populous state in the US, ~$580 billion economy
with a population of approx. 9 million
• New Jersey is the most densely populated state in the U.S.
(1,210 people per sq. mile)
• Markets represent 35% of the total New Jersey population
• Well situated in some of the top counties in the Mid-
Atlantic
– Highly populated counties with close proximity to New
York City, Philadelphia and the New Jersey shore
Median 2017 HHI Projected Change
57,462
75,854
84,008
92,229
106,919
76,922
88,821
8.4%
7.6%
8.6%
5.6% 5.5%
8.1%
7.3%
0%
5%
10%
15%
20%
25%
NationNJBergenMercerSomersetMonmouthMiddlesex
Market Overview2017 - 2022 Projected Population Growth
2017 - 2022 Projected Median HH Income Growth
2016 Percent of
Number Deposit State
of in Market Franchise
County Branches ($000) (%)
New Jersey
Middlesex 6 361,509 45.67
M nmout 5 149,871 18.93
Somerset 2 144,435 18.25
Mercer 5 102,421 12.94
Bergen 1 33,333 4.21
Weighted Average Total 19 791,569 100.00
State of New Jersey 791,569
6 Bancorp 6
1st Constitution Management Team
Experienced management team with extensive local market knowledge
Source: SNL Financial
Robert F. Mangano
President & Chief Executive Officer
Stephen J. Gilhooly
Senior VP, Treasurer & Chief Financial Officer
Walter Hrycyna
Senior Vice President
Steve Seong
Senior Vice President
40+ years of banking experience
Joined Bank in 1996
Prior experience: Urban National Bank, Midlantic Corp.
FCCY ownership: 6.78% shares outstanding
30+ years of banking experience
Joined Bank in 2014
Prior experience: Florida Community Bank, TIB Financial Corp,
and Advest, Inc.
35+ years of banking experience
Joined Bank in 2007
Head of Mortgage Warehousing
25+ years of banking experience
Joined Bank in 2003
Head of Small Business Lending (SBA)
John Andreacio
Executive Vice President & Chief Lending Officer
30+ years of banking experience
Joined Bank in 2011
Prior experience: President & CEO Northern State Bank, EVP
and Regional President KNPT
Christina Barbaro
Senior Vice President - Operations
30+ years of banking experience
Joined Bank in 2010
Prior Experience: Bank operations consulting, First Morris Bank
7 Bancorp 7
1st Constitution Management Team (Cont.)
Experienced management team with extensive local market knowledge
Source: SNL Financial
John E. Tylutki, Jr.
Vice President Residential Lending - Operations
25+ years of residential lending experience
Joined Bank in 2016
Prior Experience: First Hallmark Mortgage Corp.
Bruno Viscariello
Vice President Residential Lending - Sales
25+ years of residential lending experience
Joined Bank in 2016
Prior Experience: First Hallmark Mortgage Corp.
Dorine Nicol
Senior Vice President – Human Resources
35+ years of banking human resource experience
Joined Bank in 2003
Prior Experience: Consulting, Midlantic
Andrea Pagiazitis
Senior Vice President – Retail Banking
25+ years of banking experience
Joined Bank in 1998
Prior Experience: Hudson United
8 Bancorp 8
Officers and Directors
Board of Directors & Executive Leadership ~ 14.0% Insider Ownership
Source: SNL Financial; (1) Previously a director of the Bank
Charles S. Crow III
Chairman of the Board
James G. Aaron(1)
Board Member
J. Lynne Cannon(1)
Board Member
Antonio L. Cruz(1)
Board Member
Edwin J. Pisani(1)
Board Member
William M. Rue
Board Member
Director since 1999
Partner, law firm of Crow & Associates
FCCY ownership: 1.11% shares outstanding
Director since 2016
Partner, law firm of Ansell Grimm & Aaron, P.C.
FCCY ownership: 0.15% shares outstanding
Director since 2016
CEO of the Princeton Management Development Institute
FCCY ownership: 0.03% shares outstanding
Director since 2016
Retired attorney of the Law Offices of Antonio L. Cruz
FCCY ownership: 1.64% shares outstanding
Director since 2016
Advisory Services Managing Partner for Ernst & Young
FCCY ownership: 0.18% shares outstanding
Director since 1999
Chairman of Chas. E. Rue & Son, Inc. an insurance agency
FCCY ownership: 3.05% shares outstanding
Roy D. Tartaglia(1)
Board Member
Director since 2016
Retired Chairman & CEO of the RTK Group, Inc.
FCCY ownership: 1.05% shares outstanding
Robert F. Mangano
President & Chief Executive Officer
Director since 1996
FCCY ownership: 6.78% shares outstanding
9
DRAFT
Bancorp
9
Section 2
1st Constitution Financial Summary
10 Bancorp 10
($ in thousands), except per share data)
9/30/2015 6/30/2016 9/30/2016 Linked Q ∆ YOY ∆
Selected Balance Sheet Data:(1)
Total Assets 980,450$ 1,068,736$ 1,055,308$ -1.3% 7.6%
Total Net Loans, Net of Deferred Loan Fees and Costs 708,177 759,806 747,664 -1.6% 5.6%
Total Investment Securities 195,582 233,962 224,350 -4.1% 14.7%
Total Deposits 793,842 791,486 827,062 4.5% 4.2%
Tangible Equity 81,041 88,546 90,966 2.7% 12.2%
Selected Profitability Data:(1)
Net Interest Income 9,663$ 8,614$ 9,488$ 874$ (175)$
Provision for Loan Losses 100 (100) - 100 (100)
Non-Interest Income 1,427 1,536 1,760 224 333
Non-Interest Expense 7,380 6,823 7,097 274 (283)
Net Income 2,462 2,314 2,695 381 233
Key Performance Measures:(1)
GAAP Diluted Earnings per Share 0.30$ 0.28$ 0.33$ 0.05$ 0.03$
Net Interest Margin (%) 4.20 3.86 3.92 6 bps -28 bps
Non-interest Income to Operating Revenue (%) 12.87 15.13 15.65 52 bps 278 bps
Efficiency Ratio (%) 62.97 64.34 60.76 -358 bps -221 bps
ROAA (%) 0.98 0.95 1.03 8 bps 5 bps
ROAE (%) 10.56 9.36 10.45 109 bps -11 bps
Quarter Ended
Financial Highlights
Source: SNL Financial
Note: (1) See earnings release dated October 21, 2016
Summary of Quarterly Financial Performance
11 Bancorp 11
11/18/2011 11/18/2015 11/18/2016
Price: 5.68$ 11.72$ 13.70$
Market Cap ($M): 33.2$ 93.1$ 109.4$
52-week Avg. Daily Volume: 3,505 8,240 9,055
Price/LTM EPS: 10.2x 10.4x 12.7x
Price/Forward EPS: NA NA 13.0x
Price/Book Value: 61.1% 98.4% 105.2%
Price/Tangible Book Value: 68.0% 114.6% 120.2%
-20.0
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
11/18/11 11/18/12 11/18/13 11/18/14 11/18/15 11/18/16
-30.0
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
11/18/15 1/18/16 3/18/16 5/18/16 7/18/16 9/18/16 11/18/16
Shareholder Returns
Summary Stockholder Information
Source: SNL Financial; market data as of 11/18/2016
(1) Except 2013 & 2014; Declared a 6% stock dividend in 2006 & 2007
• Publicly traded on the NASDAQ (“FCCY”)
• Ownership:
– Fully Diluted Insider Ownership: 14.0%
– Institutional Ownership: 18.2%
– Mutual Fund Ownership: 11.8%
• Has declared a 5% stock dividend annually since
1999(1)
• Declared its first cash dividend of $0.05 in the 3rd
quarter 2016
LTM Total Shareholder Return
5 - Year Total Shareholder ReturnValuation Impact
FCCY 16.9%0 0
SNL U.S. Bank 10.0%
FCCY 141.3%0 0
SNL U.S. Bank 136.5%
12 Bancorp 12
Total Assets ($000) Total Net Loans ($000) Loan Portfolio Growth ($000)
Total Deposits ($000) Total Equity ($000)
9/30/2016
2015
2014
2013
2012
$1,055,308
$967,991 $956,779
$742,325
$840,968
9/30/20162015201420132012
2016 Q3 LTMYear Ended
$752,366
$680,558 $655,744
$377,221
$550,623
9/30/20162015201420132012
2016 Q3 LTMYear Ended
$827,062 $786,757 $817,761
$638,552
$707,689
9/30/20162015201420132012
2016 Q3 LTMYear Ended
$103,947
$95,960
$87,110
$68,357 $65,054
9/30/20162015201420132012
2016 Q3 LTMYear Ended
(1) Includes the acquisition of Rumson – Fair Haven Bank & Trust, (“Rumson”) which contributed $115 million of loans and $177 million of deposits at
December 31, 2014.
Balance Sheet Trends(1)
Financial Highlights
13 Bancorp 13
CRE + C&I Construction Mortgage Warehouse Lines
$160.3 $180.7
$309.0 $306.5 $331.0
$55.7 $51.0
$95.6 $93.7
$93.8$284.1
$117.0
$179.2 $216.6
$254.2
2012 2013 2014 2015 9/30/2016
Year Ended 2016 Q3 LTM
($ in 000s) % of
Loan Composition Balance Total
Mortgage Warehouse Lines 254,168$ 34.0%
Comm. RE 232,8 3 31.1%
Comm. Business 98,147 13.1%
Cons. Loans 93,839 12.6%
Res. RE 44,974 6.0%
Loans to Ind. 23,503 3.1%
Other Loans 220 0.0%
Total Gross Loans 747,664$
Mortgage
Warehouse
Lines
34.0%
Comm. RE
31.1%
Comm.
Business
13.1%
Cons. Loans
12.6%
Res. RE
6.0%
Loans to Ind.
3.1%
Other Loans
0.0%
Source: SNL Financial; (1) Includes $70 million of CRE and C&I loans acquired in the Rumson transaction.
Conservative Loan Portfolio with Commercial Focus
Balanced Loan Portfolio
Commerical Portfolio Growth ($M)Loan Composition (%)
Yield on Loans (%) Demand Deposits / Deposits (%)
5.06%5.20%
5.48%5.65%5.75%
9/30/20162015201420132012
2016 Q3 LTMYear Ended
(1)
14 Bancorp 14
Source: SNL Financial
• Mortgage Warehouse
– Provides a revolving line of credit that is available to licensed mortgage banking
companies
– Originates one-to-four family residential mortgage loans that are pre-sold to the
secondary mortgage market
– On average, loans remain outstanding for a period of less than 30 days, with repayment
coming directly from the sale of the loan into the secondary mortgage market
• Commercial business and SBA
– SBA – preferred lender designation
• Construction
– Principally residential single family and multi family
• Residential mortgage banking
– Originate and sell into secondary market
• Commercial real estate
– Primarily owner occupied and income properties
Summary of Lending Focus
Loan Portfolio Overview
15 Bancorp 15
Book Unrealized Fair
($000) Value Gain / (Loss) Value
Securities Held to Maturity
Municipal 60,554$ 2,305$ 62,859$
GSE MBS 42,941 1,587 44,528
GSE Residential CMOs 13,003 384 13,387
Treasuries & GSEs 4,081 29 4,110
Other 501 (3) 498
Bank Trust Preferred 156 303 459
Subtotal 121,236$ 4,605$ 125,841$
Book Unrealized Fair
($000) Value Gain / (Loss) Value
Securities Available for Sale
GSE MBS 33,030$ 744$ 33,774$
Corporate Debt 24,988 123 25,111
Municipals 21,639 565 22,204
GSE Residential CMOs 15,308 86 15,394
Treasuries & GSEs 3,517 26 3,543
Bank Trust Preferred 2,477 (283) 2,194
Other 906 (12 894
ubtotal 101,865$ 1,249$ 103,114$
Overview of Investment Portfolio
Source: SNL Financial; data as of 09/30/2016; (1) Effective duration of 3.2 at September 30, 2016.
Investment Portfolio Overview(1)
GSE MBS,
32.8%
Corporate
Debt, 24.2%
Municipal,
21.0%
GSE
Residential
CMOs,
14.8%
Treasuries &
GSEs, 3.4%
Bank Trust
Preferred,
2.4%
Other, 0.9%
Municipal
48.1% GSE MBS
34.1%
GSE
Residential
CMOs
10.3%
Treasuries
& GSEs
3.2%
Other
0.4%
Bank Trust
Preferred
0.1%
Fair Value: Available for Sale (%)
Fair Value: Held to Maturity (%)
16 Bancorp 16
Nonaccruel Oreo TDRs NCOs / Average Loans (%) NPAs Excl Restructured / Assets (%)
0.11%
0.30%
1.04%
0.07%
-0.02%
1.69%
1.14%
1.08%
0.72%
0.51%
2012 2013 2014 2015 9/30/2016
Year Ended 2016 Q3 LTM
$5.9 $6.3
$4.5
$6.0 $5.2
$8.3
$2.1 $5.7
$1.0
$0.2
$2.0
$3.9
$3.9
$1.5
$1.2
2012 2013 2014 2015 9/30/2016
Year Ended 2016 Q3 LTM
Asset Quality
Asset Quality
Source: SNL Financial
Overview of Asset Quality and Credit Culture
• Non-performing assets have declined from $16.2 million to $6.6 million from 2012 –
September 30, 2016
• NPAs excluding TDRs have declined from $14.2M to $5.4M from 2012 – September 30, 2016
• The company has realized net recoveries through September 30, 2016
$16.2 $12.3 $14.2 $8.5 $6.6
Conservative Credit Culture
NPAs by Type ($M)
17 Bancorp 17
Cost of Funds (%)(1)
($ in 000s) % of
Deposit Composition Balance Total
Interest bearing 295,563$ 35.7%
Savings Deposits 211,431 25.6%
Non-Interest bearing 173,946 21.0%
Time Deposits 146,122 17.7%
Total 827,062$
Interest
bearing
35.7%
Savings
Deposits
25.6%
Non-Interest
bearing
21.0%
Time
Deposits
17.7%
Noninterest-bearing Deposits / Deposits (%) Cost of Funds (%)
21.03%20.33%19.84%19.09%
21.53%
9/30/20162015201420132012
2016 Q3 LTMYear Ended
Source: SNL Financial; (1) Cost of funds is interest incurred on liabilities as a percent of average noninterest-bearing deposits and interest-bearing deposits
Core Deposit Focus
Attractive Deposit Composition
Deposit Composition (%)
0.58%
0.53%0.54%
0.58%
0.73%
9/30/20162015201420132012
2016 Q3 LTMYear Ended
18 Bancorp 18
Tangible Common Equity / Tangible Assets (%) Leverage Ratio (%)
Tier 1 Ratio (%) Total Risk-Based Capital Ratio (%)
8.73%8.66%
7.78%
8.61%
7.17%
9/30/20162015201420132012
2016 Q3 LTMYear Ended
10.56%10.80%
9.53%
10.89%
9.29%
9/30/20162015201420132012
2016 Q3 LTMYear Ended
11.86%12.18%11.41%
18.04%
11.84%
9/30/20162015201420132012
2016 Q3 LTMYear Ended
12.67%13.08%12.28%
19.29%
12.98%
9/30/20162015201420132012
2016 Q3 LTMYear Ended
Financial Highlights
Source: SNL Financial; Note: CET1 ratio was 9.90% at September 30, 2016.
Capital Trends
19 Bancorp 19
Net Interest Income ($000) Noninterest Expense ($000)
Noninterest Income ($000) Net Income ($000)
28,390 29,755
26,806
21,422
23,771
9/30/20162015201420132012
2016 Q3 LTMYear Ended
6,510
7,272
6,815
5,827
5,207
9/30/20162015201420132012
2016 Q3 LTMYear Ended
8,858 8,664
4,356
5,780
5,061
9/30/20162015201420132012
2016 Q3 LTMYear Ended
35,302 36,309
32,703
24,737
27,685
9/30/20162015201420132012
2016 Q3 LTMYear Ended
Source: SNL Financial
Income Statement Trends
Financial Highlights
20 Bancorp 20
Return on Average Assets (%) Return on Average Equity (%)
Net Interest Margin (%) Efficiency Ratio (%)
0.90%0.89%
0.46%
0.72%
0.65%
9/30/20162015201420132012
2016 Q3 LTMYear Ended
8.99%9.49%
5.34%
8.73%8.63%
9/30/20162015201420132012
2016 Q3 LTMYear Ended
3.92%4.07%3.84%
3.44%
3.98%
9/30/20162015201420132012
2016 Q3 LTMYear Ended
63.37%
62.29%
64.28%
64.74%
59.65%
9/30/20162015201420132012
2016 Q3 LTMYear Ended
Source: SNL Financial
Performance Trends
Financial Highlights
Bancorp 21
Focus on Technology
Online Banking Services
Full Suite of Online Banking and Mobile Delivery Systems
Popmoney
Mobile Banking
Business Banking-Tailored Products
• Bill payments
• Account alerts
• E-statements
• Account transfers
• Review account activity
• Deposit
• Offers full online banking
functionality to customers from their
mobile devices
• Can be accessed through text,
phone web browser, or the 1st
Constitution mobile app (available
for iPhone and android)
• A personal payment service that
lets customers send money from
their bank accounts to any
recipient via an e-mail address or
mobile number
• Online cash management platform
– Originate ACH, initiate wire transfer,
retrieve and manage account
information, and place stop payments
• EZ Deposit
– Deposits made via scanner (remote
deposit capture)
22 Bancorp 22
Summary
• Experienced management team with extensive in-market experience
• Significant insider ownership by management and directors
• Each line of business managed by experienced and trained professionals who
have been at the Company for an average of 10 years
• Internal audit, compliance, BSA, and loan review functions overseen in-house by
trained and experienced, full-time employees
• Focus on credit quality
• Attractive market demographics and growth opportunities
• Low cost, core deposit franchise
• Diversified loan portfolio
• Strong historical record of profitability
• Shareholder and customer focus