The President’s Message

The year 2014 marked the 25th anniversary of 1ST Constitution Bank.  Since 1989, our Company expanded through organic growth and a number of acquisitions.  We have managed the organization through times of prosperity and times of hardship.  We have focused our efforts externally on growth and development, and when necessary, we have focused internally to right the course. 

1ST Constitution remains true to its core strengths – serving our customers, supporting our communities, engaging our employees and helping our State wherever possible.  We reward our shareholders by insuring the Company remains strong, prudently managed, and profitable.

As we begin the new year, our total assets are just under $1 billion.  The Company is represented by 19 branch banking offices, and serves clients primarily located in Mercer, Middlesex, Monmouth, Somerset and Bergen Counties in New Jersey.  1ST Constitution Bancorp, the parent company of 1ST Constitution Bank, is publicly traded on the NASDAQ Global Market under the ticker symbol “FCCY”. 

Over our 25 year history, our product line has diversified in order to better serve the needs of the consumer and small business.  Among the Company’s primary services are consumer and business banking, highlighted by residential mortgage origination, a strong retail banking network, mortgage warehouse banking, construction lending, commercial real estate, commercial lending, and small business lending through the Small Business Loan Administration. 

The completion of the merger of Rumson Fair Haven Bank & Trust on February 7, 2014, and the effective integration of its operations, combined with the broad internal growth of our loan portfolio, drove a significant increase in net interest income and contributed to improving profitability that was evident in the third and fourth quarters of the year. 

For the year 2014, excluding the effect of the Rumson acquisition in the first quarter of 2014, loans increased $163 million.  Mortgage warehouse loans increased $62 million, construction loans increased $38 million, commercial and commercial real estate loans increased a combined $58 million, and residential mortgages increased $5 million. The loan to asset ratio increased to 68.4% at December 31, 2014 compared to 50.3% at December 31, 2013.

At December 31, 2014, the allowance for loan losses was $6.9 million, a slight decline of $0.1 million from $7.0 million at December 31, 2013. As a percent of total loans, the allowance was 1.06% at the end of 2014, compared to 1.89% at year-end 2013. The decrease in the allowance as a percentage of total loans was primarily due to the Rumson acquisition accounting, which required the acquired loans to be recorded at their fair value and the elimination of Rumson’s allowance for loan losses of $1.7 million at the date of merger. 

Total assets at December 31, 2014 increased to $957 million from $742 million at December 31, 2013 principally due to the acquisition of Rumson.  Total portfolio loans at December 31, 2014 were $654 million, an increase of $281 million from $373 million at December 31, 2013, which included $118 million of Rumson loans. Total investment securities at December 31, 2014 were $224 million, a decline of $18 million from December 31, 2013. Total deposits at December 31, 2014 were $818 million, compared to $639 million at December 31, 2013, with the increase principally due to the retained Rumson deposits of $177 million.

Regulatory capital ratios continue to reflect a strong capital position. The Company’s total risk-based capital, Tier I capital, and Leverage ratios were 12.28%, 11.41% and 9.53%, respectively, at December 31, 2014. The Bank’s total risk-based capital, Tier 1 capital and Leverage ratios were 12.00%, 11.13% and 9.30%, respectively. Under the new regulatory capital standards (Basel III) that became effective on January 1, 2015, the Bank’s common equity Tier 1 to assets (“CET1”), total risk-based capital and Leverage ratios are estimated to be 11.23%, 12.09% and 9.40%, respectively. The Bank would be considered “well capitalized” under these new capital standards.

1ST Constitution is in an enviable position.  We are in the businesses we want to be in, and based on our size, we do not face the need to divest of any businesses due to regulatory or profitability constraints.  We continue to enjoy the benefits of the “flight to quality” as customers recognize our exceptional products and services, and our strong historical financial performance, which are all signs of a solid banking franchise.  Our prudent management culture, a disciplined attention to measuring every aspect of our business and a commitment to aligning expenses with revenue have resulted in a balance sheet that is strong and growing.  Our mix of business is well diversified, and is coupled with financial performance that is consistent, predictable and repeatable. 

The year 2015 is beginning much like 2014 with corporations and consumers taking a conservative view of the future as it relates to spending and investment.  Although consumers are beginning to spend more, we are not yet at a point of sustainable economic growth.  Small business investment is improving but not at a level where we see a willingness to commit to substantial amounts of new capital investment.  This year, we expect to see spending and credit utilization increase.  We are not at the inflection point yet, but dialogue with our customers leads us to believe that the economy will accelerate during the second half of this year.  As I have said before, we are well positioned to capitalize on continued improvement in economic conditions.  Until then, we will continue to prudently manage our Company, controlling our expenses while keeping them aligned with revenue, maintaining and growing our market share, and investing for the future.

Periodically, we are asked about our interest in acquisitions, and our answer is always the same.  We are interested in expanding our market share where we believe it makes sense, and complements our existing franchise.  Our recent acquisition of a commercial bank in Monmouth County, which established our presence in a very desirable market, is a perfect example.  We expect to be a net branch grower in the coming years through whatever format we believe is necessary to serve the markets.  I have referred to our acquisition focus as “one-offs.”  By that I mean discreet, strategic acquisitions which are complimentary, rather than transformational, that are priced correctly and enhance our franchise, capabilities and product set and, ultimately, make sense for our shareholders.

I am very proud of our performance record.  Our Company’s results are directly tied to the hard work and dedication of all our employees, and I want to take this opportunity to thank them for their contribution to our success.

As we look forward to the coming year, we are mindful of the strength of our company and how we, as a bank, remain an integral part of the growth and vibrancy of our economy, our communities, and the customers we serve.  We are focused on the future and confident in our ability to deliver outstanding products, service, and results for the benefit of our customers, employees and, ultimately, for you, our shareholders.

Press Releases

1st Constitution Bancorp Announces Stock Repurchase Program

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1st Constitution Bancorp Announces Full Year and Fourth Quarter 2015

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