UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
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 or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No)
2650 Route 130, P.O. Box 634, Cranbury, NJ 08512 .
(Address of principal executive officers) (Zip Code)
(609) 655-4500
(Registrant'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 subjected to
such filing requirements for the past 90 days.
[X] Yes [ ] No
As of July 29, 2002 there were 1,402,307 shares of common stock, no par value
outstanding.
1
1st Constitution Bancorp
FORM 10-QSB
INDEX
Page
----
PART I -FINANCIAL INFORMATION
ITEM 1-Financial Statements and Notes to 3
Consolidated Financial Statements
ITEM 2-Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
PART II -OTHER INFORMATION
ITEM 2-Changes in Securities 21
ITEM 4-Submission of Matters to a Vote of Security Holders 21
ITEM 6-Exhibits and Reports on Form 8-K 22
SIGNATURES 23
2
1ST CONSTITUTION BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(UNAUDITED)
June 30, 2002 December 31, 2001
----------------- -----------------
ASSETS
CASH AND DUE FROM BANKS $ 9,154,376 $ 8,173,550
FEDERAL FUNDS SOLD / SHORT-TERM INVESTMENTS 12,015,250 13,754,664
----------------- -----------------
Total cash and cash equivalents 21,169,626 21,928,214
----------------- -----------------
SECURITIES:
Available for sale, at market value 75,396,577 61,605,057
Held to maturity (market value of $5,458,234 and $6,103,760 in 2002
and 2001, respectively) 5,278,349 6,034,927
----------------- -----------------
Total securities 80,674,926 67,639,984
----------------- -----------------
LOANS HELD FOR SALE 1,715,308 7,158,950
----------------- -----------------
LOANS 130,252,939 124,937,483
Less- Allowance for loan losses (1,548,104) (1,414,495)
----------------- -----------------
Net loans 128,704,835 123,522,988
----------------- -----------------
PREMISES AND EQUIPMENT, net 1,048,297 998,744
ACCRUED INTEREST RECEIVABLE 1,113,447 1,047,670
OTHER ASSETS 1,027,102 886,913
----------------- -----------------
Total assets $ 235,453,540 $ 223,183,463
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits
Non-interest bearing $ 40,841,116 $ 32,633,895
Interest bearing 148,031,595 151,630,901
----------------- -----------------
Total deposits 188,872,711 184,264,796
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE 4,198,060 3,808,183
OTHER BORROWINGS 15,500,000 15,500,000
TRUST PREFERRED SECURITIES 5,000,000 0
ACCRUED INTEREST PAYABLE 1,136,193 1,557,392
ACCRUED EXPENSES AND OTHER LIABILITIES 1,437,188 620,148
----------------- -----------------
Total liabilities 216,144,152 205,750,519
----------------- -----------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, no par value; 15,000,000 shares authorized;
1,404,895 shares issued and 1,402,832 and 1,398,395
outstanding as of June 30, 2002 and
December 31, 2001, respectively 15,237,148 15,198,339
Retained earnings 3,582,390 2,360,437
Treasury Stock, shares at cost (7,700 shares and 6,500 shares at June 30,
2002 and December 31, 2001, respectively) (109,212) (83,190)
Accumulated other comprehensive income (loss) 599,062 (42,642)
----------------- -----------------
Total shareholders' equity 19,309,388 17,432,944
----------------- -----------------
Total liabilities and shareholders' equity $ 235,453,540 $ 223,183,463
================= =================
3
See accompanying notes to consolidated financial statements.
1ST CONSTITUTION BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three months ended June 30, Six months ended June 30,
--------------------------- --------------------------
INTEREST INCOME 2002 2001 2002 2001
---------- ---------- ---------- ----------
Interest on loans $2,470,913 $2,666,122 $4,935,960 $5,286,625
Interest on securities
Taxable 965,390 995,055 1,786,388 1,918,923
Tax-exempt 37,581 47,296 75,162 78,849
Interest on Federal funds sold and
short-term investments 58,104 75,309 117,641 134,448
---------- ---------- ---------- ----------
Total interest income 3,531,988 3,783,782 6,915,151 7,418,845
---------- ---------- ---------- ----------
INTEREST EXPENSE
Interest on deposits 965,863 1,445,252 2,003,886 2,750,937
Interest on securities sold under agreement
to repurchase and other borrowed funds 231,772 365,254 456,501 736,753
Interest on trust preferred securities 68,256 0 68,256 0
---------- ---------- ---------- ----------
Total interest expense 1,265,891 1,810,506 2,528,643 3,487,690
---------- ---------- ---------- ----------
Net interest income 2,266,097 1,973,276 4,386,508 3,931,155
Provision for loan losses 60,000 60,000 120,000 120,000
---------- ---------- ---------- ----------
Net interest income after provision for
loan losses 2,206,097 1,913,276 4,266,508 3,811,155
---------- ---------- ---------- ----------
NON-INTEREST INCOME
Service charges on deposit accounts 122,547 100,085 243,481 186,560
Gain on sale of loans held for sale 254,555 163,912 567,683 278,928
Other income 62,408 64,855 119,394 142,300
---------- ---------- ---------- ----------
Total non-interest income 439,510 328,852 930,558 607,788
---------- ---------- ---------- ----------
NON-INTEREST EXPENSE
Salaries and employee benefits 833,213 765,392 1,702,169 1,515,584
Occupancy expense 187,701 176,364 369,024 358,277
Other operating expenses 648,702 473,109 1,206,277 959,740
---------- ---------- ---------- ----------
Total non-interest expense 1,669,616 1,414,865 3,277,470 2,833,601
---------- ---------- ---------- ----------
Income before income taxes 975,991 827,263 1,919,596 1,585,342
Income taxes 352,601 296,158 697,314 573,983
---------- ---------- ---------- ----------
Net income $ 623,390 $ 531,105 $1,222,282 $1,011,359
---------- ---------- ---------- ----------
NET INCOME PER SHARE
Basic $ 0.44 $ 0.38 $ 0.87 $ 0.72
Diluted $ 0.42 $ 0.37 $ 0.83 $ 0.70
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 1,401,945 1,399,359 1,400,075 1,400,644
Diluted 1,466,804 1,429,442 1,464,934 1,430,727
4
See accompanying notes to consolidated financial statements
1ST CONSTITUTION BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six months ended June 30,
-------------------------------
2002 2001
------------ ------------
OPERATING ACTIVITIES:
Net income $ 1,222,282 $ 1,011,359
Adjustments to reconcile net income
to net cash provided by (used in) operating activities-
Provision for loan losses 120,000 120,000
Depreciation and amortization 156,435 108,785
Net amortization on securities 115,466 8,673
Gain on sale of loans held for sale (567,683) (278,927)
Originations of loans held for sale (29,091,610) (31,056,555)
Proceeds from sales of loans held for sale 35,102,935 26,521,717
Increase in accrued interest receivable (65,777) (38,660)
Increase in other assets (458,306) (2,310)
(Decrease) increase in accrued interest payable (421,199) 21,331
Increase (decrease) in accrued expenses and other liabilities 817,040 (102,365)
------------ ------------
Net cash provided by (used in) operating activities 6,929,583 (3,686,953)
------------ ------------
INVESTING ACTIVITIES:
Purchases of securities -
Available for sale (24,484,602) (19,543,101)
Held to maturity -- (2,829,268)
Proceeds from maturities and prepayments of securities -
Available for sale 11,555,413 8,195,247
Held to maturity 751,061 1,712,937
Proceeds from sales of securities available for sale -- --
Net increase in loans (5,301,847) (10,881,141)
Capital expenditures (205,988) (106,134)
------------ ------------
Net cash used in investing activities (17,685,963) (23,451,460)
------------ ------------
FINANCING ACTIVITIES:
Net increase in demand, savings and time deposits 4,607,915 39,329,991
Net increase in securities sold under agreements to repurchase 389,877 3,179,570
Proceeds from issuance of trust preferred securities 5,000,000 0
------------ ------------
Net cash provided by financing activities 9,997,792 42,509,561
------------ ------------
(Decrease) increase in cash and cash equivalents (758,588) 15,371,148
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 21,928,214 7,539,966
------------ ------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 21,169,626 $ 22,911,114
============ ============
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW INFORMATION:
Cash paid during the period for -
Interest $ 2,949,842 $ 3,466,359,
Income taxes $ 783,480 $ 889,600
============ ============
5
See accompanying notes to consolidated financial statements.
1ST CONSTITUTION BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002 (UNAUDITED)
(1) BASIS OF PRESENTATION
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. 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.
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 2002.
(2) 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. Potential shares of common stock resulting from
stock option agreements totaled 64,859 for the three-month and
six-month periods ended June 30, 2002 and 30,083 for the same periods
at June 30, 2001, respectively. All share amounts have been restated
for the effect of a 5% stock dividend declared in 2001.
(3) RECENT ACCOUNTING PRONOUNCEMENT
In July, 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. The standard requires
companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a
commitment to an exit or disposal plan. The Statement is to be applied
prospectively to exit or disposal activities initiated after December
31, 2002. Management does not anticipate that the initial adoption of
SFAS 146 will have a significant impact on the Company's consolidated
financial statements.
In April, 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections. The Statement was issued to eliminate an
inconsistency in the required accounting for sale-leaseback
transactions and certain lease modifications that were similar to
sale-leaseback transactions and to rescind FASB Statement No. 44,
Accounting for Intangible Assets of Motor Carrier as well as amending
other existing authoritative pronouncements to make various technical
corrections.
6
SFAS No. 145 also rescinds SFAS No. 4, Reporting Gains and Losses from
Extinguishments of Debt and SFAS No. 64 Extinguishments of Debt Made to
Satisfy Sinking-Fund Requirements. Under SFAS No. 4, as amended by SFAS
No. 64, gains and losses from the extinguishment of debt were required
to be classified as an extraordinary item, if material. Under SFAS No.
145, gains or losses from the extinguishment of debt are to be
classified as a component of operating income, rather than an
extraordinary item. SFAS No. 145 is effective for fiscal years
beginning after May 15, 2002, with early adoption of the provisions
related to the rescission of SFAS No. 4 encouraged. Upon adoption,
companies must reclassify prior period amounts previously classified as
an extraordinary item. Management does not anticipate that the initial
adoption of SFAS 145 will have a significant impact on the Company's
consolidated financial statements.
7
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
The following discussion of the operating results and financial condition at
June 30, 2002 is intended to help readers analyze the accompanying financial
statements, notes and other supplemental information contained in this document.
Results of operations for the three and six-month periods ended June 30, 2002
are not necessarily indicative of results to be attained for any other period.
General
1st Constitution Bancorp (the "Company"), a bank holding company, was
incorporated in February 1999 for the purpose of becoming the parent holding
company of 1st Constitution Bank (the "Bank"), a full service commercial bank
which began operations in August 1989. 1st Constitution Capital Trust I, a
subsidiary of the Company, was created to issue trust preferred securities to
assist the Company to raise additional regulatory capital. The Bank operates 6
branches and has 2 subsidiaries, 1st Constitution Investment Company, which
manages an investment portfolio and FCB Assets Holdings, Inc., which is used by
the Bank to manage and dispose of repossessed property/real estate.
Forward-Looking Statements
This report 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 our confidence and strategies and
our expectations about new and existing programs and products, relationships,
opportunities, technology and market conditions. These statements may be
identified by such forward-looking terminology as "expect", "believe",
"anticipate", or by expressions of confidence such as "continuing" or "strong"
or similar statements or variations of such terms. Such forward-looking
statements involve certain risks and uncertainties. These include, but are not
limited to, expected cost savings not being realized or not being realized
within the expected time frame; income or revenues being lower than expected or
operating costs higher; competitive pressures in the banking or financial
services industries increasing significantly; business disruption related to
program implementation or methodologies; weakening of general economic
conditions nationally or in New Jersey; changes in legal and regulatory barriers
and structures; and unanticipated occurrences delaying planned programs or
initiatives or increasing their costs or decreasing their benefits, as well as
other risks and uncertainties detailed from time to time in filings of the
Company with the U.S. Securities and Exchange Commission. Actual results may
differ materially from such forward-looking statements. The Company assumes no
obligation for updating any such forward-looking statements at any time.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001
Summary
The Company realized net income of $623,390 for the three months ended June 30,
2002 as compared to $531,105 reported for the same period in 2001. Net income
per diluted share was $0.42 for the three months ended June 30, 2002 compared to
$0.37 per diluted share for the prior year.
8
EARNINGS ANALYSIS
Interest Income
Interest income for the quarter ended June 30, 2002 was $3,531,988, a decrease
of $251,794 from the $3,783,782 reported in the same period of 2001. This
decrease is primarily attributable to the declining interest rate environment
that existed throughout 2001 and continued into the second quarter of 2002. For
the three months ended June 30, 2002, average interest earning assets increased
$21,079,025 or 10.6%, compared with the same period in 2001. The increase in
interest income resulting from increases in earning asset volume was offset by a
decrease in the average yield earned on these assets. For the three months ended
June 30, 2002, the average yield on earning assets decreased 121 basis points to
6.50% from 7.71% for the same period last year.
Interest Expense
Interest expense for the quarter ended June 30, 2002 was $1,265,891, a decrease
of $544,615 from $1,810,506 reported in the same period last year. The average
cost of interest bearing liabilities decreased 157 basis points to 2.99% for the
current quarter of 2002 from 4.56% for the same period last year, primarily as a
result of a decrease in rates paid on deposits and short-term borrowed funds.
Total average interest bearing liabilities increased by $10,735,184 for the
current quarter of 2002 compared to the same period in 2001.
Net Interest Income
The net effect of the changes in interest income and interest expense for the
three months ended June 30, 2002 compared to the prior year period was an
increase of $292,821 in net interest income. For the three months ended June 30,
2002, the net interest margin, on a fully taxable equivalent basis, increased 14
basis points from the same period last year. The increase in the net interest
margin was primarily the result of interest bearing liabilities repricing faster
than interest earning assets in the decreasing rate environment that has
continued through the first six months of 2002.
Provision for Loan Losses
For the three months ended June 30, 2002 and June 30, 2001, the provision for
loan losses was $60,000. The comparable provisions were the result of stable
loan portfolio growth combined with lower levels of non-performing loans. The
amount of the loan loss provisions and the level of the allowance for loan
losses are critical accounting policies of the Company and are based upon a
number of factors including Management's evaluation of potential losses in the
portfolio after consideration of appraised collateral values, financial
conditions and past credit history of the borrowers as well as prevailing
economic conditions.
Non-Interest Income
For the three months ended June 30, 2002, compared to the same period of 2001,
total non-interest income increased $110,658 or 33.6%, to $439,510 compared to
$328,852. The increase was due primarily to increases of $90,643 in gains on
sale of loans held for sale and $22,462 in service charges on deposit accounts.
These increases were partially offset by a modest decline in other income of
$2,447. The declining interest rate environment that existed in 2001 and
continues in 2002 greatly fueled the volume of mortgage loan originations and
subsequent secondary market mortgage loan sales.
9
Non-Interest Expense
For the three months ended June 30, 2002, non-interest expense increased
$254,751, or 18.0%, from the same period last year. Salaries and employee
benefits increased $67,821 compared to the prior year period primarily due to
increased staffing levels to manage the continuing growth of the Company plus
normal salary increases. Occupancy expense increased $11,337 and other expenses
increased $175,593 as a result of a full quarter of operating expenses for the
new Windrows branch office opened in February 2002 plus additional professional
fee expenses associated with the Company's issuance of trust preferred
securities during April 2002.
An important industry productivity measure is the efficiency ratio. The
efficiency ratio is calculated by dividing total operating expenses by net
interest income and other income. An increase in the efficiency ratio indicates
that more resources are being utilized to generate the same or greater volume of
income, while a decrease would indicate a more efficient allocation of
resources. The Company's efficiency ratio remained relatively consistent for the
quarter ended June 30, 2002 at 61.7% compared to 61.5% for the quarter ended
June 30, 2001.
SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001
Summary
The Company realized net income of $1,222,282 for the six months ended June 30,
2002, an increase of 20.9% over the $1,011,359 for the same period in 2001. Net
income per diluted share was $0.83 for the six months ended June 30, 2002
compared to $0.70 per diluted share for the prior year.
EARNINGS ANALYSIS
Interest Income
For the first six months of 2002, total interest income was $6,915,151, a
decrease of 6.8% compared to total interest income of $7,418,845 for the same
period in 2001. The following table sets forth the Company's consolidated
average balances of assets, liabilities and shareholders' equity as well as
interest income and expense on related items, and the Company's average rate for
the six month periods ended June 30, 2002 and 2001.
10
AVERAGE BALANCE SHEETS WITH RESULTANT INTEREST AND RATES
(yields on a tax-equivalent basis) Six months ended June 30, 2002 Six months ended June 30, 2001
------------------------------ --------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
-------------------------------------------------------------------------------------
ASSETS:
Federal Funds Sold/Short-Term $ 12,958,635 $ 117,641 1.83% $ 5,370,316 $134,448 5.05%
Investments
Securities:
U.S. Treasury Bonds - - 0.00% 328,475 8,407 5.16%
Collateralized Mortgage
Obligations/
Mortgage Backed Securities 68,602,042 1,786,387 5.21% 59,393,727 1,910,518 6.43%
States and Political
Subdivisions 3,186,629 111,240 6.98% 3,259473 116,697 7.16%
--------------------------------------------------------------------------------------
Total 71,788,671 1,897,627 5.29% 62,981,675 2,035,622 6.46%
Loan Portfolio:
Commercial 23,929,046 974,642 8.21% 25,554,610 1,381,932 11.35%
Installment 14,381,138 567,877 7.96% 15,214,858 602,268 7.98%
Commercial Mortgages and
Construction Wholesale 65,311,675 2,252,536 6.95% 52,873,080 2,145,790 8.18%
Residential Mortgages and
Construction Retail 19,215,418 720,207 7.56% 19,755,621 765,461 7.81%
All Other Loans 7,969,539 420,699 10.90 7,361,057 391,174 10.07%
--------------------------------------------------------------------------------------
Total 130,806,816 4,935,961 7.61% 119,759,226 5,286,625 8.90%
TOTAL INTEREST-EARNING ASSETS 215,554,122 6,951,229 6.50% 188,111,217 7,456,695 8.00%
======== ======
Allowance for Loan Losses (1,494,085) (1,199,380)
Cash and Due From Bank 7,512,915 6,282,637
Other Assets 3,253,432 3,015,863
------------ ------------
TOTAL ASSETS $224,826,384 $196,210,337
============ ============
Interest-Bearing Liabilities:
Money Market and NOW Accounts $ 62,734,530 $465,289 1.50% $ 33,706,829 $464,227 2.78%
Savings Accounts 12,593,561 93,016 1.49% 10,568,610 134,922 2.57%
Certificates of Deposit 54,315,996 1,110,256 4.12% 50,784,226 1,517,805 6.03%
Certificates of Deposit of
$100,000 and Over 17,487,849 335,325 3.87% 23,087,150 633,983 5.54%
Federal Funds Purchased/Other
Borrowed Funds 19,425,539 456,501 4.74% 30,620,840 736,753 4.85%
Trust Preferred Securities 2,237,569 68,256 6.02% - - 0.00%
--------------------------------------------------------------------------------------
TOTAL INTEREST-BEARING LIABILITIES 168,795,044 2,528,643 3.02% 148,767,655 3,487,690 4.73%
========================= =======================
NET INTEREST SPREAD 3.48% 3.27%
======== ======
Demand Deposits 34,795,928 29,211,370
Other Liabilities 3,183,819 2,627,963
------------ ------------
Total Liabilities 206,774,791 180,606,988
Shareholders' Equity 18,051,593 15,603,349
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 224,826,384 196,210,337
============ ============
NET INTEREST MARGIN $4,422,586 4.14% $3,969,005 4.25%
========================= =======================
The current year decrease in interest income occurred despite higher average
balances in the securities and loan portfolios as these were offset by lower
yields earned on these portfolios. Average loans increased $11,047,590, or 9.2%
while the yield on the portfolio decreased 129 basis points to 7.61% from 8.90%.
The lower loan yield reflected the lower interest rate environment that existed
throughout 2001 and continued into the second quarter of 2002.
Average securities increased $8,806,996, or 14.0%, while the yield on the
securities portfolio decreased 117 basis points to 5.29% from 6.46%.
Overall, the yield on the Company's total interest-earning assets decreased 150
basis points to 6.50% for the six months ended June 30, 2002 from the 8.00% for
the same period in 2001.
11
Interest Expense
Total interest expense for the six months ended June 30, 2002 was $2,528,643, a
decrease of 27.5% compared to $3,487,690 for the same period in 2001. The
decrease in interest expense for the current period resulted primarily from the
impact of higher levels of interest-bearing liabilities priced at a
significantly lower market interest rate level. The average rate paid on
interest bearing liabilities for the six months ended June 30, 2002 decreased
171 basis points to 3.02% from 4.73% for the same period of 2001.
Net Interest Income
The Company's net interest income for the six month period ended June 30, 2002
was $4,386,508, an increase of 11.6% compared to $3,931,155 for the same period
in 2001. For the first six months of 2002, interest income decreased by $503,694
compared to the same period in 2001 while interest expense decreased by $959,047
compared to the same period in 2001. Although the loan and securities portfolios
average balances increased during the first six months of 2002, those assets
earned lower rates of return in 2002 than during 2001.
The net interest margin (on a tax-equivalent basis), which is net interest
income divided by average interest-earning assets, was 4.14% for the first six
months of 2002 compared to 4.25% for the same period in 2001. The principal
factor causing the decline in the net interest margin was the lower interest
rate environment that existed throughout 2001 and continued into the second
quarter of 2002.
Provision for Loan Losses
The provision for loan losses for the six months ended June 30, 2002 and 2001
was $120,000. The comparable provisions were the result of stable loan portfolio
growth combined with lower levels of non-performing loans.
Non-Interest Income
Total non-interest income for the six months ended June 30, 2002 was $930,558,
an increase of 53.1% over non-interest income of $607,788 for the same period in
2001. The increase was due primarily to increases in service charges on deposit
accounts and gains on loans held for sale, partially offset by a decrease in
other non-interest income.
Gain on sale of loans held for sale represents the largest single source on
non-interest income. Gain on sale of loans held for sale for the six months
ended June 30, 2002 was $567,683 compared to $278,928 for the same period in
2001. The declining interest rate environment that existed in 2001 and continues
in 2002 greatly fueled the volume of mortgage loan originations and subsequent
secondary market mortgage loan sales.
Service charges on deposit accounts amounted to $243,481 for the six months
ended June 30, 2002 compared to $186,560 for the same period in 2001. Service
charge income increased in 2002 principally due to increases in income from
overdraft fees and wire transfer service fees.
The Company also generates non-interest income from a variety of other fee-based
services. These fees are monitored closely by Management to reflect current
charges amid the Company's competitive market.
12
Non-Interest Expense
Total non-interest expense for the six months ended June 30, 2002 was
$3,277,470, an increase of 15.7% compared to non-interest expense of $2,833,601
for the same period in 2001.
The following table presents the major components of non-interest expense for
the six months ended June 30, 2002 and 2001.
NON-INTEREST EXPENSES
Six months ended June 30
2002 2001
Salaries and employee benefits $1,702,169 $1,515,584
Occupancy expenses 369,024 358,277
Equipment expense 209,132 143,916
Marketing 125,506 88,009
Computer services 271,196 237,207
Regulatory, professional and other fees 232,211 151,225
Office expense 145,722 163,756
All other expenses 222,510 175,627
---------- ----------
$3,277,470 $2,833,601
========== ==========
Salaries and employee benefits increased 12.3% to $1,702,169 for the six months
ended June 30, 2002 compared to $1,515,584 for the six months ended June 30,
2001. This increase reflects the increase in staffing for the new Windrows
branch that opened in February 2002.
The Company's ratio of non-interest expense to average assets remained
reasonably consistent at 2.94% for the six months ended June 30, 2002 compared
to 2.91% for the same period in 2001. The Company's efficiency ratio decreased
to 61.6% for the first six months of 2002 compared to a ratio of 62.4% for the
first six months of 2001.
FINANCIAL CONDITION
June 30, 2002 Compared with December 31, 2001
Total consolidated assets at June 30, 2002 totaled $235,453,540 compared to
$223,183,463 at December 31, 2001. The increase in the Company's asset base
during the first six months of 2002 was primarily funded by an increase in
non-interest bearing deposits and the $5,000,000 in proceeds from the issuance
of trust preferred securities. Total deposits increased by $4,607,915 or 2.5% to
$188,872,711 at June 30, 2002 compared to $184,264,796 at December 31, 2001.
Cash and Cash Equivalents
Cash and Cash Equivalents at June 30, 2002 totaled $21,169,626 compared to
$21,928,214 at December 31, 2001. Cash and cash equivalents at June 30, 2002
consisted of cash and due from banks of $9,154,376 and Federal funds sold/short
term investments of $12,015,250. The corresponding balances at December 31, 2001
were $8,173,550 and $13,754,664, respectively. The balance of cash and cash
equivalents at June 30, 2002 decreased primarily due to decreased interest
bearing deposit balances.
13
Securities
Securities represented 34.3% of total assets at June 30, 2002 and 30.3% at
December 31, 2001. Total securities increased $13,034,942 or 19.3% at June 30,
2002 to $80,674,926 compared to $67,639,984 at year-end 2001.
Information relative to the Company's securities portfolio at June 30, 2002, is
as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ----------- ----------- -----------
JUNE 30, 2002
Available for sale --
U.S. Treasury securities and obligations of
U.S. Government corporations and agencies $36,587,489 $ 422,587 $ 73,769 $36,936,307
Mortgage backed securities 31,039,788 610,410 12,508 31,637,689
FHLB stock and other securities 6,861,630 69,944 108,993 6,822,581
----------- ----------- ----------- -----------
$74,488,907 $ 1,102,940 $ 195,270 $75,396,577
=========== =========== =========== ===========
Held to maturity --
Obligations of State and Political $ 3,181,162 $ 88,696 $ 0 $ 3,269,858
Subdivisions 2,097,187 91,189 0 2,188,376
----------- ----------- ----------- -----------
Mortgage backed securities $ 5,278,349 $ 179,885 $ 0 $ 5,458,234
=========== =========== =========== ===========
Securities available for sale totaled $75,396,577 at June 30, 2002, an increase
of $13,791,520 or 22.4% from year-end 2001. During the first six months of 2002,
$24,484,602 of securities available for sale were purchased (predominantly
mortgage backed securities) and funded by calls and maturities of securities
held to maturity, securities available for sale and short-term investments.
Securities held to maturity totaled $5,278,349 at June 30,2002, a decrease of
$756,578 or 12.5% from year-end 2001.
Loans
The loan portfolio, which represents the Company's largest asset, is a
significant source of both interest and fee income. Elements of the loan
portfolio are subject to differing levels of credit and interest rate risk. The
Company's primary lending focus continues to be commercial loans, owner-occupied
commercial mortgage loans and tenanted commercial real estate loans.
The following table sets forth the classification of loans by major category at
June 30, 2002 and December 31, 2001.
LOAN PORTFOLIO COMPOSITION June 30, 2002 December 31, 2001
% %
Component Amount of total Amount of total
----------------------------- ----------- -------- ------------ --------
Construction loans $ 28,795,286 22.1% $ 29,385,096 23.5%
Residential real estate loans 9,141,347 7.0% 11,634,097 9.3%
Commercial and industrial loans 70,541,321 54.2% 62,043,318 49.7%
Loans to individuals 15,916,407 12.2% 15,587,772 12.5%
Lease financing 5,420,597 4.2% 6,117,261 4.9%
All other loans 437,981 0.3% 169,939 0.1%
------------ ----- ------------ -----
$130,252,939 100.0% $124,937,483 100.0%
============ ===== ============ =====
14
The loan portfolio increased at June 30, 2002 to $130,252,939 from $124,937,483
at December 31, 2001. The ability of the Company to enter into larger loan
relationships and management's philosophy of relationship banking are key
factors in continued loan growth. Strong competition from both bank and non-bank
competitors could result in comparatively lower yields on new and established
lending relationships. The ultimate collectability of the loan portfolio and the
recovery of the carrying amount of real estate are subject to changes in the
Company's market region's economic environment and real estate market.
Non-Performing Assets
Non-performing assets consist of non-performing loans and other real estate
owned. Non-performing loans are composed of (1) loans on a non-accrual basis,
(2) loans which are contractually past due 90 days or more as to interest and
principal payments but have not been classified as non-accrual and (3) loans
whose terms have been restructured to provide a reduction or deferral of
interest on principal because of a deterioration in the financial position of
the borrower.
The Company's policy with regard to non-accrual loans varies by the type of loan
involved. Generally, commercial loans are placed on a non-accrual status when
they are 90 days past due unless these loans are well secured and in the process
of collection or, regardless of the past due status of the loan, when management
determines that the complete recovery of principal or interest is in doubt.
Consumer loans are generally charged off after they become 90 days past due.
Residential mortgage loans are not generally placed on a non-accrual status
unless the value of the real estate has deteriorated to the point that a
potential loss of principal or interest exists. Subsequent payments are credited
to income only if collection of principal is not in doubt.
Nonaccrual loans amounted to $16,539 at June 30, 2002, a decrease of $601,563
from $618,102 at year-end 2001. As the table demonstrates, loan quality and
ratios remain strong. This was accomplished through quality loan underwriting, a
proactive approach to loan monitoring and aggressive workout strategies.
NON-PERFORMING ASSETS AND LOANS June 30, December 31,
2002 2001
------------ ------------
Non-Performing loans:
Loans 90 days or more past due and still accruing $ 15,413 $ 0
Non-accrual loans 16,539 618,102
------------ ------------
Total non-performing loans 31,952 618,102
Other real estate owned 37,855 0
------------ ------------
Total non-performing assets $ 69,807 $618,102
============ ============
Non-performing loans to total loans 0.02% 0.49%
Non-performing assets to total assets 0.03% 0.28%
The Company had no restructured loans or impaired loans at June 30, 2002.
Impaired loans totaled $609,237 at December 31, 2001.
Allowance for Loan Losses
The determination of the adequacy of the allowance for loan losses is a critical
accounting policy of the Company and is maintained at a level believed by
management sufficient to absorb probable credit losses inherent in the loan
portfolio as of the date of the financial statements. The allowance
15
for loan losses is a valuation reserve available for losses incurred in the loan
portfolio and other extensions of credit.
Management utilizes a systematic and documented allowance adequacy methodology
for loan losses that requires specific allowance assessment for all loans,
including real estate mortgages and consumer loans. This methodology assigns
reserves based upon credit risk ratings for all loans. The reserves are based
upon various factors, including historical performance, general economic
conditions as well as the current economic conditions of borrowers and
underlying collateral values. Management periodically reviews the process used
to determine the adequacy of the allowance for loan losses. Allocations to the
allowance for loan losses, both specific and general, are determined after this
review. Loans are classified based on internal reviews and evaluations performed
by the lending staff. These evaluations are, in turn, examined by the Company's
internal loan review specialist. A formal loan review function, independent of
loan origination, is used to identify and monitor risk classifications. The
determination of the adequacy of the allowance for loan losses is inherently
subjective in nature and subject to significant near term change based upon the
underlying factors discussed above.
The allowance for loan losses amounted to $1,548,104 at June 30, 2002, an
increase of $133,609 from December 31, 2001. The ratio of the allowance for loan
losses to total loans was 1.19% at June 30, 2002 and 1.13% at December 31, 2001,
respectively. The quality of the loan portfolio remains strong and it is
management's belief that the allowance for loan losses is adequate in relation
to credit risk exposure levels.
The following table presents, for the periods indicated, an analysis of the
allowance for loan losses and other related data.
ALLOWANCE FOR LOAN LOSSES June 30, June 30,
2002 2001
------------- -------------
Balance, beginning of period $ 1,414,495 $ 1,132,555
Provision charged to operating expenses 120,000 120,000
Loans charged off (7,337) (392)
Recoveries 20,946 1,483
------------- -------------
Net recoveries 13,609 1,091
------------- -------------
Balance, end of period $ 1,548,104 $ 1,253,646
============= =============
Loans:
At period end $ 130,252,939 $ 121,513,703
Average during the period 130,806,816 119,759,226
Net recoveries to average loans outstanding 0.01% 0.00%
Allowance for loan losses to:
Total loans at period end 1.19% 1.03%
Non-performing loans 0.00% 0.00%
Deposits
Deposits, which include demand deposits (interest bearing and non-interest
bearing), savings and time deposits, are a fundamental and cost-effective source
of funding the Company's operations. The Company offers a variety of products
designed to attract and retain customers, with management's primary focus being
on building and expanding long-term relationships.
16
AVERAGE DEPOSIT BALANCE
Six months ended June 30, 2002
------------------------------
Percentage
Balance Of Total
------------ ------------
Non-interest bearing demand deposits $ 34,795,928 19.1%
Interest bearing demand deposits 62,734,530 34.5%
Savings deposits 12,593,561 6.9%
Certificates of deposit of $100,000 or more 17,487,849 9.6%
Other time deposits 54,315,996 29.9%
------------ ------------
Total $181,927,864 100.0%
============ ============
Total deposits increased $4,607,915 or 2.5% to $188,872,711 at June 30, 2002
from $184,264,796 at December 31, 2001. This increase in total deposits was
primarily the result of a $3,599,306 decrease in interest bearing deposits to
$148,031,595 as customers with maturing time deposits migrated from the Company
in searching for higher competitive rates during this period of lower market
interest rates. This was offset by a $8,207,221 in increase in non-interest
bearing deposits to $40,841,116.
Other Borrowings
Other Borrowings are comprised of fixed rate convertible advances from the
Federal Home Loan Bank ("FHLB"). These borrowings are primarily used to fund
asset growth not supported by deposit generation. These advances are fully
secured by marketable securities and qualifying one-to-four family mortgage
loans.
The balances of other borrowed funds was $15,500,000 at June 30, 2002 and
December 31, 2001.
Trust Preferred Securities
On April 10, 2002, the Company, through a wholly owned subsidiary, issued $5.0
million of floating rate Trust Preferred Securities in a pooled institutional
placement transaction. The Trust Preferred Securities mature April 22, 2032 and
have an initial rate of 6.02%. The Trust Preferred Securities are redeemable in
whole or in part prior to maturity after April 22, 2007.
Shareholders' Equity And Dividends
Shareholders' equity at June 30, 2002 totaled $19,309,388, an increase of
$1,876,444, or 10.8%, compared to December 31, 2001. Book value per common share
rose to $13.76 at June 30, 2002 compared to $12.47 at December 31, 2001.
In 2000, the Board of Directors authorized a stock buyback program that allows
for the repurchase of a limited number of the Company's shares at management's
discretion on the open market. The Company undertook this repurchase program in
order to increase shareholder value. During the six months ended June 30, 2002,
1,200 shares of common stock were purchased and, during 2001, 4,610 shares were
purchased under this program. Treasury stock totaled $109,212 at June 30, 2002
compared to $83,190 at December 31, 2001.
17
During December 2001, the Company's stock became listed for trading on the
NASDAQ National Market System, under the symbol, "FCCY".
The table below presents the actual capital amounts and ratios of the Company
for the periods indicated:
CAPITAL RATIOS
Amount Ratio
---------- ----------
As of June 30, 2002 -
Total capital to risk weighted assets $25,258,522 16.11%
Tier 1 capital to risk weighted assets 23,710,418 15.12%
Tier 1 capital to average assets 23,710,418 10.36%
As of December 31, 2001-
Total capital to risk weighted assets $18,890,081 12.82%
Tier 1 capital to risk weighted assets 17,475,586 11.86%
Tier 1 capital to average assets 17,475,586 7.57%
The minimum regulatory capital requirements for financial institutions require
institutions to have a Tier 1 capital to average assets ratio of 4.0%, a Tier 1
capital to risk weighted assets ratio of 4.0% and a total capital to risk
weighted assets ratio of 8.0%. To be considered "well capitalized," an
institution must have a minimum Tier 1 leverage ratio of 5.0%. At June 30, 2002,
the ratios of the Company exceeded the ratios required to be considered well
capitalized. It is management's goal to monitor and maintain adequate capital
levels to continue to support asset growth and continue its status as a
well-capitalized institution.
Liquidity
At June 30, 2002, the amount of liquid assets remained at a level management
deemed adequate to ensure that contractual liabilities, depositors withdrawal
requirements, and other operational and customer credit needs could be
satisfied.
Liquidity measures the ability to satisfy current and future cash flow needs as
they become due. Liquidity management refers to the Company's ability to support
asset growth while satisfying the borrowing needs and deposit withdrawal
requirements of customers. In addition to maintaining liquid assets, factors
such as capital position, profitability, asset quality and availability of
funding affect a banks' ability to meet its liquidity needs. On the asset side,
liquid funds are maintained in the form of cash and cash equivalents, Federal
funds sold, investment securities held to maturity maturing within one year,
securities available for sale and loans held for sale. Additional asset-based
liquidity is derived from scheduled loan repayments as well as investment
repayments of principal and interest from mortgage-backed securities. On the
liability side, the primary source of liquidity is the ability to generate core
deposits. Short-term borrowings are used as supplemental funding sources when
growth in the core deposit base does not keep pace with that of earnings assets.
The Company has established borrowing relationship with the FHLB and its
correspondent banks which further support and enhance liquidity.
The Consolidated Statements of Cash Flows present the changes in cash from
operating, investing and financing activities.
18
Net cash provided by operating activities totaled $6,929,583 in 2002 compared to
$3,686,953 used in operating activities in 2001. The primary sources of funds
are net income from operations adjusted for provision for loan losses,
depreciation expenses, and amortization of intangibles and net proceeds from
sales of loans held for sale.
Net cash used in investing activities totaled $17,685,963 in 2002 compared to
$23,451,460 in 2001. The decrease in usage was the result of a lower volume of
loan originations for the six months ended June 30, 2002.
Net cash provided by financing activities amounted to $9,997,792 in 2002
compared to $42,509,561 provided by financing activities in 2001. The decrease
in 2002 resulted primarily from a lesser total volume increase in deposits
during the six month period ended June 30, 2002 compared to the same prior year
period.
The securities portfolio is also a source of liquidity, providing cash flows
from maturities and periodic repayments of principal. During 2002, maturities of
investment securities totaled $12,306,474. Another source of liquidity is the
loan portfolio, which provides a steady flow of payments and maturities.
Interest Rate Sensitivity Analysis
The largest component of the Company's total income is net interest income, and
the majority of the Company's financial instruments are composed of interest
rate-sensitive assets and liabilities with various terms and maturities. The
primary objective of management is to maximize net interest income while
minimizing interest rate risk. Interest rate risk is derived from timing
differences in the repricing of assets and liabilities, loan prepayments,
deposit withdrawals, and differences in lending and funding rates. Management
actively seeks to monitor and control the mix of interest rate-sensitive assets
and interest rate-sensitive liabilities.
The Company continually evaluates interest rate risk management opportunities,
including the use of derivative financial instruments. Management believes that
hedging instruments currently available are not cost-effective, and therefore,
has focused its efforts on increasing the Company's spread by attracting
lower-costing retail deposits.
MARKET RISK ANALYSIS
To measure the impacts of longer-term asset and liability mismatches beyond two
years, the Company utilizes Modified Duration of Equity and Economic Value of
Portfolio Equity ("EVPE") models. The modified duration of equity measures the
potential price risk of equity to changes in interest rates. A longer modified
duration of equity indicates a greater degree of risk to rising interest rates.
Because of balance sheet optionality, an EVPE analysis is also used to
dynamically model the present value of asset and liability cash flows, with
rates ranging up or down 200 basis points. The economic value of equity is
likely to be different as interest rates change. Results falling outside
prescribed ranges require action by management. At June 30, 2002 and December
31, 2001, the Company's variance in the economic value equity as a percentage of
assets with an instantaneous and sustained parallel shift of 200 basis points is
within the negative 3% guideline, as shown in the tables below.
The market capitalization of the Company should not be equated to the EVPE,
which only deals with the valuation of balance sheet cash flows using
conservative assumptions. Calculated core deposit premiums may be less than what
is available in an outright sale. The model does not
19
consider potential premiums on floating rate loan sales, the impact of overhead
expense, non-interest income, taxes, industry market price multiples and other
factors reflected in the market capitalization of a company.
The following tables set forth certain information relating to the Company's
financial instruments that are sensitive to changes in interest rates,
categorized by expected maturity or repricing and the instruments fair value at
June 30, 2002 and December 31, 2001.
MARKET RISK ANALYSIS
June 30, 2002 December 31, 2001
-------------------------------------- --------------------------------------
Change in Rates Flat -200bp +200bp Flat -200bp +200bp
-------------------------------------- --------------------------------------
Economic Value
of Portfolio
Equity $25,508,000 $23,864,000 $22,334,000 $22,128,000 $21,465,000 $19,109,000
Change (1,644,000) (3,174,000) (663,000) (3,019,000)
Change as a %
of assets (0.70%) (1.35%) (0.30%) (1.35%)
20
Part II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.
(a). At the Annual Meeting of Shareholders held on May 16, 2002, an
amendment to the Company's Certificate of Incorporation was approved
establishing a classified Board of Directors, consisting of three classes, with
each class containing, as nearly as practicable, an equal number of directors.
At each annual meeting of shareholders, the holders of shares of common stock
are entitled to elect one of the classes of the Company's Board of Directors.
(b) At the Annual Meeting of Shareholders held on May 16, 2002, an
amendment to the Company's Certificate of Incorporation was approved amending
the authorized capital stock of the Company. The aggregate number of shares of
stock which the Company has the authority to issue is 20,000,000 of which
5,000,000 are preferred stock without par value and 15,000,000 are common stock
without par value. The preferred stock may have such rights and preferences as
the Board may determine. The Company has no plans to issue preferred stock at
this time.
(c) The Company issued 5,000 shares of common stock on April 1, 2002 to
Mr. Mangano for a price of $7.34 per share pursuant to his exercise of options
granted to him on September 10, 1996 under the 1996 Employee Stock Option Plan.
The common stock was issued in reliance on Rule 701 of the Securities Act of
1933, as amended, which provides an exemption for securities issued pursuant to
a written compensatory plan for participation of employees if the offer was made
prior to the issuer becoming subject to the reporting requirements of the
Exchange Act.
Item 4 - Submission of Matters to a Vote of Security Holders Proxies were mailed
to shareholders of the Company on March 21, 2002 for the Annual Meeting
of Shareholders on May 16, 2002. The purpose was to vote on:
Note: Shares Outstanding: 1,397,895
Shares Voted: 1,183,577
(1) The election of five Directors to the Company's Board of
Directors. Since the Proposal to establish a classified Board
of Directors (Proposal 2) was approved, the five Directors
were elected to serve for a period of one to three years and
until their successors shall have been elected and qualified;
(2) An amendment to the Certificate of Incorporation to establish
a classified Board of Directors, comprised of three classes,
each class to serve for three years;
(3) An amendment to the Certificate of Incorporation to (a)
increase the total number of authorized shares of Common Stock
from 10,000,000 to 15,000,000 and (b) authorize the issuance
of up to 5,000,000 shares of "blank check" Preferred Stock
with such rights and preferences as the Board of Directors may
determine;
(4) The ratification of the selection of KPMG LLP as independent
auditor of the Company for the 2002 fiscal year.
21
Following are the results of the voting:
(1) Election of Directors:
Class Votes For Votes Withheld Percentage
Charles S. Crow I 1,180,359 3,218 99.7%
Edward D. Knapp III 1,176,789 6,788 99.4%
Robert F. Mangano III 1,176,789 6,788 99.4%
William M. Rue II 1,179,488 4,089 99.7%
Frank E. Walsh III II 1,180,359 3,218 99.7%
(2) Amendment to Certificate of Incorporation for classified Board of
Directors:
Votes Percentage
For: 720,793 85.4%
Against: 123,078
Abstain: 1,550
Broker Non Vote: 338,156
(3) Amendment to Certificate of Incorporation to increase number of
authorized shares:
Votes Percentage
For: 667,149 79.3%
Against: 174,113
Abstain: 4,159
Broker Non Vote: 338,156
(4) Ratification of Auditors:
Votes Percentage
For: 1,178,142 99.7%
Against: 2,698
Abstain: 2,737
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
10.1 Amended and Restated Stock Option Plan for Key
Employees, as amended by Amendment effective July 1,
1999 and as further amended by Second Amendment
effective April 25, 2002 (filed herewith)
10.2 1996 Employee Stock Option Plan, as amended by
Amendment and by a further Amendment effective July
1, 1999 and as further amended by Third Amendment
effective April 25, 2002 (filed herewith)
99.1 Certification of Chief Executive Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith)
99.2 Certification of Principal Accounting Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (filed herewith)
22
(b) Form 8-K
There has been no Form 8-K filed during the second quarter of 2002.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
1st Constitution Bancorp
--------------------------
(Registrant)
Dated: August 9, 2002 By: /s/ Robert F. Mangano
--------------------------
Robert F. Mangano
President and
Chief Executive Officer
/s/ Joseph M. Reardon
--------------------------
Joseph M. Reardon
Vice President and Treasurer
(Principal Accounting Officer)
23
Exhibit Index
Exhibit No. Description
----------- -----------
10.1 Amended and Restated Stock Option Plan for Key
Employees, as amended by Amendment effective July 1,
1999 and as further amended by Second Amendment
effective April 25, 2002 (filed herewith)
10.2 1996 Employee Stock Option Plan, as amended by
Amendment and by a further Amendment effective July
1, 1999 and as further amended by Third Amendment
effective April 25, 2002 (filed herewith)
99.1 Certification of Chief Executive Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith)
99.2 Certification of Principal Accounting Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (filed herewith)
24