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1ST Constitution Bancorp Reports Fourth Quarter and Full Year 2016 Results

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CRANBURY N.J., Feb. 02, 2017 (GLOBE NEWSWIRE) -- 1ST Constitution Bancorp (NASDAQ: FCCY), the holding company (the "Company") for 1ST Constitution Bank (the "Bank"), today reported net income of $2.1 million and diluted earnings per share of $0.25 for the three months ended December 31, 2016 compared to net income of $1.6 million and diluted earnings per share of $0.20 for the three months ended December 31, 2015. For the year ended December 31, 2016, the Company reported net income of $9.3 million and diluted earnings per share of $1.14 compared to net income of $8.7 million and diluted earnings per share of $1.08 for the year ended December 31, 2015.

FOURTH QUARTER 2016 HIGHLIGHTS

  • Net income increased 26.2% and diluted earnings per share increased 25% compared to the fourth quarter of 2015.
  • Book value per share and tangible book value per share were $13.11 and $11.50, respectively, at December 31, 2016.
  • Net interest income was $9.1 million and the net interest margin was 3.83% on a tax equivalent basis. 
  • Non-performing assets were $5.4 million, or 0.52% of assets, and included $166,000 of OREO at December 31, 2016.
  • The Bank did not record a provision for loan losses in the fourth quarter of 2016 due to net recoveries on loans of $8,000, the low level of non-performing and criticized loans, lower historical loan loss factors that reflected the continued improvement in loan credit quality and the current economic and operating environment. 
  • On December 15, 2016, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.05 per common share that was paid on January 25, 2017 to shareholders of record as of the close of business on January 3, 2017. 

FULL YEAR 2016 HIGHLIGHTS

  • Net income increased 7.2% to $9.3 million for the year ended December 31, 2016.
  • Diluted earnings per share increased 6.5% to $1.14 for the year ended December 31, 2016.
  • Return on average assets and return on average equity were 0.93% and 9.21%, respectively for the year ended December 31, 2016.
  • A credit (negative) provision for loan losses of $300,000 and net recoveries of loans of $234,000 were recorded.
  • Loans held in portfolio increased $42.7 million, or 6.3%, to $724.8 million at December 31, 2016 due primarily to growth in commercial real estate loans.
  • Deposits increased $47.8 million, or 6.1%, to $834.5 million at December 31, 2016 due primarily to growth of non-interest bearing and interest bearing demand deposit accounts, money market accounts and savings accounts.

Robert F. Mangano, President and Chief Executive Officer, stated "The Company's financial results in 2016 reflected strong operating fundamentals generated by quality loan and core deposit growth.  We continued to invest in personnel and systems to support the future growth of the Company."  Mr. Mangano added, "We made further progress in reducing our non-performing assets to a historically low level, which also contributed to the Company's improved financial performance."

Discussion of Financial Results

Net income was $2.1 million, or $0.25 per diluted share, for the fourth quarter of 2016 compared to $1.6 million, or $0.20 per diluted share, for the fourth quarter of 2015. The increase in net income of $427,000, or 26.2%, resulted primarily from a $404,000 increase in net interest income, a $1.1 million increase in non-interest income and a decrease of $500,000 in the provision for loan losses, which were partially offset by a $1.3 million increase in non-interest expense in the fourth quarter of 2016 compared to the fourth quarter of 2015. All share and per share amounts have been adjusted to reflect the effect of the five percent common stock dividend paid on February 1, 2016.

Net interest income was $9.1 million for the quarter ended December 31, 2016 and increased $404,000 compared to net interest income of $8.7 million for the fourth quarter of 2015. Interest income was $10.5 million for the three months ended December 31, 2016 compared to $9.9 million for the three months ended December 31, 2015 and increased primarily due to the growth of the loan portfolio. Average interest-earning assets were $971.0 million with a yield of 4.39% for the fourth quarter of 2016 compared to $895.1 million with a yield of 4.49% for the fourth quarter of 2015. The lower yield on average interest-earning assets in the fourth quarter of 2016 reflected primarily the lower yield earned on loans and investments. The yield on loans and investments declined due to the continued low interest rate environment as new loans were originated and investment securities were purchased at yields lower than the average yield on loans and investments, respectively, in the prior year period.

Interest expense on average interest bearing liabilities was $1.4 million, with a cost of 0.73%, for the fourth quarter of 2016 compared to $1.2 million, with a cost of 0.67%, for the fourth quarter of 2015. The $190,000 increase in interest expense on interest bearing liabilities for the fourth quarter of 2016 reflected primarily higher short-term market interest rates in 2016 and increased competition for deposits compared to 2015.

The net interest margin declined to 3.83% in the fourth quarter of 2016 compared to 3.96% in the fourth quarter of 2015 due primarily to the lower yield on average interest-earning assets and the higher cost of average interest bearing liabilities.

The Company did not record a provision for loan losses in the fourth quarter of 2016 compared to a provision for loan losses of $500,000 in the fourth quarter of 2015. A provision for loan losses was not required for the fourth quarter of 2016 due to lower historical loan loss factors, which reflected the improvement in loan credit quality, the resolution of non-performing loans and the significant reduction of net charge-offs of commercial and commercial real estate loans in 2016 and 2015. Management believes that the current economic and operating conditions are generally positive, which also was considered in management's evaluation of the adequacy of the allowance for loan losses. For the twelve months ended December 31, 2016, net recoveries were $234,000 compared to net charge-offs of loans of $465,000 for the twelve months ended December 31, 2015.

Non-interest income was $2.0 million for the fourth quarter of 2016, an increase of $1.1 million, compared to $920,000 for the fourth quarter of 2015. Other income increased $626,000 in the fourth quarter of 2016 compared to the fourth quarter of 2015.  In 2015, other income included a $692,000 loss on the sale of OREO.  Excluding this loss, other income in 2016 decreased $66,000 compared to 2015. Other income in 2015 also included a recovery of $117,000 in excess of the carrying amount of an acquired non-performing loan. An increase of $499,000 in gains from the sales of loans also contributed to the increase in non-interest income for the fourth quarter of 2016. In the fourth quarter of 2016, $3.7 million of SBA loans were sold and gains of $335,000 were recorded compared to $3.4 million of loans sold and gains of $317,000 recorded in the fourth quarter of 2015. SBA guaranteed commercial lending activity and loan sales vary from period to period.  In the fourth quarter of 2016, $34.3 million of residential mortgages were sold and $925,000 of gains were recorded compared to $21.3 million of loans sold and $444,000 of gains recorded in the fourth quarter of 2015. The increase in residential mortgage loans closed and sold was due primarily to the hiring of a new residential mortgage lending team in August 2016. Service charge income decreased $47,000 to $156,000 in the fourth quarter of 2016 from $203,000 in the fourth quarter of 2015 due primarily to lower fees for insufficient funds.

Non-interest expenses were $8.0 million for the fourth quarter of 2016, an increase of $1.3 million or 19.2%, compared to $6.7 million for the fourth quarter of 2015. Salaries and employee benefits expense increased $964,000, or 23% in 2016, due primarily to an increase of $529,000 in commissions paid to residential loan officers, $272,000 of salaries for additional commercial loan, business development and residential mortgage personnel and increases in employee benefits expenses. Commission expense increased due to the higher volume of residential mortgages originated in the fourth quarter of 2016. Occupancy costs increased $77,000, or 7.9%, due primarily to the occupancy costs of four residential mortgage loan production offices added in the third quarter of 2016. Data processing expenses increased $78,000 primarily due to service credits received from the provider that reduced the expense for the fourth quarter of 2015. FDIC insurance expense declined $5,000, or 3.8%, due to a lower assessment rate that reflected the Bank's improvement in asset quality and financial performance. OREO expense declined due to the significant reduction in OREO assets. Other operating expenses increased $278,000 due primarily to increases of $67,000 in telephone expense, $65,000 in legal expense and $65,000 in internal and external professional audit fees related to management's required year-end 2016 attestation regarding internal controls (Section 404 of the Sarbanes-Oxley Act).

Income tax expense was $1.0 million for the fourth quarter of 2016, resulting in an effective tax rate of 32.9% compared to income tax expense of $747,000, which resulted in an effective tax rate of 31.5%, for the fourth quarter of 2015. Income tax expense increased primarily due to the increase in pre-tax income.  The effective tax rate increased due to the lower percentage of the total amount of tax-exempt interest income and income on Bank-owned life insurance as compared to pre-tax income.

At December 31, 2016, the allowance for loan losses was $7.5 million compared to $7.6 million at December 31, 2015. As a percentage of total loans, the allowance was 1.03% at December 31, 2016 compared to 1.11% at year end 2015. The decline in the allowance for loan losses as a percentage of loans reflected the lower level of non-performing loans and the lower historical loan loss factors at December 31, 2016 compared to December 31, 2015.

Total assets increased to $1.04 billion at December 31, 2016 from $968.0 million at December 31, 2015 due primarily to a $42.7 million increase in total loans, an increase of $15.9 million in investments, and an increase of $8.8 million in loans held for sale, which assets were funded primarily by increases of $47.8 million in deposits and $14.2 million in borrowings. Total portfolio loans at December 31, 2016 were $724.8 million compared to $682.1 million at December 31, 2015. The increase in loans was due primarily to a $35.1 million increase in commercial real estate loans, a $4.0 million increase in residential mortgage loans and a $2.3 million increase in construction loans.

Total deposits at December 31, 2016 were $834.5 million compared to $786.8 million at December 31, 2015, primarily reflecting the growth in core deposits. Interest bearing demand deposits increased $25.6 million, non interest-bearing demand deposits increased $10.9 million, savings deposits increased $9.0 million, and time deposits increased $2.2 million.

Regulatory capital ratios for the Company and the Bank continue to reflect a strong capital position. Under current regulatory capital standards, the Company's common equity Tier 1 to risk based assets ("CET1"), total risk-based capital, Tier I capital, and leverage ratios were 10.40%, 13.24%, 12.41% and 10.93%, respectively, at December 31, 2016. The Bank's CET1, total risk-based capital, Tier 1 capital and leverage ratios were 12.13%, 12.96%, 12.13% and 10.68%, respectively, at December 31, 2016. The Company and the Bank are considered "well capitalized" under these capital standards.

Asset Quality

Non-accrual loans were $5.2 million at December 31, 2016 compared to $6.0 million at December 31, 2015. During the fourth quarter of 2016, $139,000 of non-performing loans were resolved and $74,000 of loans were placed on non-accrual. Net recoveries of loans were $8,000 for the fourth quarter of 2016 and were $234,000 for the twelve months ended December 31, 2016. The allowance for loan losses was 144% of non-accrual loans at December 31, 2016 compared to 126% of non-accrual loans at December 31, 2015.

Overall, we observed stable trends in loan quality with non-performing loans to total loans of 0.72% and non-performing assets to total assets of 0.52% at December 31, 2016.

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

About 1ST Constitution Bancorp

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

1ST Constitution Bancorp is traded on the Nasdaq Global Market under the trading symbol "FCCY" and can be accessed through the Internet at www.1STCONSTITUTION.com

The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's expectations about new and existing programs and products, relationships, opportunities, taxation, technology and market conditions. These statements may be identified by such forward-looking terminology as "expect," "look," "believe," "anticipate," "may," "will," or similar statements or variations of such terms. Actual results may differ materially from such forward-looking statements. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, changes in the direction of the economy in New Jersey, the direction of interest rates, effective income tax rates, loan prepayment assumptions, continued levels of loan quality and origination volume, continued relationships with major customers including sources for loans, a higher level of net loan charge-offs and delinquencies than anticipated, bank regulatory rules, regulations or policies that restrict or direct certain actions, the adoption, interpretation and implementation of new or pre-existing accounting pronouncements, a change in legal and regulatory barriers including issues related to compliance with anti-money laundering and bank secrecy act laws, as well as the effects of general economic conditions and legal and regulatory barriers and structure. 1ST Constitution Bancorp assumes no obligation for updating any such forward-looking statements at any time, except as required by law.

         
1ST Constitution Bancorp
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
               
  Three Months Ended   Twelve Months Ended
  December 31,   December 31,
    2016       2015       2016       2015  
Per Common Share Data: (1)              
Earnings per common share - Basic $   0.26     $   0.21     $   1.17     $   1.10  
Earnings per common share - Diluted     0.25         0.20         1.14         1.07  
Tangible book value per common share at the period-end             11.50         10.43  
Book value per common share at the period end             13.11         12.11  
Average common shares outstanding:              
Basic   7,985,677       7,923,018       7,962,121       7,901,278  
Diluted   8,228,741       8,112,383       8,177,439       8,075,752  
Shares outstanding           7,993,789       7,922,968  
               
Performance Ratios / Data:              
Return on average assets   0.79 %     0.67 %     0.93 %     0.89 %
Return on average equity   7.86 %     6.75 %     9.21 %     9.49 %
Net interest income (tax-equivalent basis) (2) $   9,348     $   8,942     $   36,702     $   37,331  
Net interest margin (tax-equivalent basis) (3)   3.83 %     3.96 %     3.89 %     4.07 %
Efficiency ratio (4)   70.8 %     68.31 %     66.5 %     66.10 %
               
          December 31,   December 31,
            2016       2015  
               
Loan Portfolio Composition:              
Commercial Business         $   99,650     $   99,277  
Commercial Real Estate           242,393       207,250  
Construction Loans           96,035       93,745  
Mortgage Warehouse Lines           216,259       216,572  
Residential Real Estate           44,791       40,744  
Loans to Individuals           23,736       23,074  
Other Loans           207       233  
Gross Loans           723,071       680,895  
 Deferred Costs (net)             1,737         1,226  
Total Loans (net)         $   724,808     $   682,121  
               
Asset Quality Data:              
Loans past due over 90 days and still accruing         $   24     $   -  
Non-accrual loans             5,174         6,020  
OREO property             166         966  
Other repossessed assets             -         -  
Total non-performing assets         $   5,364     $   6,986  
               
Net recoveries/(charge-offs) $   8     $   (318 )   $   234     $   (465 )
Allowance for loan losses to total loans           1.03 %     1.11 %
Non-performing loans to total loans           0.72 %     0.88 %
Non-performing assets to total assets           0.52 %     0.72 %
               
Capital Ratios:              
1ST Constitution Bancorp              
Common equity to risk weighted assets ("CET 1")           10.40 %     10.03 %
Total capital to risk weighted assets           13.24 %     13.08 %
Tier 1 capital to risk weighted assets           12.41 %     12.18 %
Tier 1 capital to average assets (leverage ratio)           10.93 %     10.80 %
               
1ST Constitution Bank              
Common equity to risk weighted assets ("CET 1")           12.13 %     11.90 %
Total capital to risk weighted assets           12.96 %     12.80 %
Tier 1 capital to risk weighted assets           12.13 %     11.90 %
Tier 1 capital to average assets (leverage ratio)           10.68 %     10.55 %
               
               
1 All share and per share amounts have been adjusted to reflect the effect of the 5% stock dividend paid on February 1, 2016. 
2 The tax equivalent adjustment was $251 and $251 for the three months and $997 and $1,022 for the twelve months ended December 31, 2016 and December 31, 2015, respectively.
3 Represents net interest income on a taxable equivalent basis as a percent of average interest earning assets.
4 Represents non-interest expenses divided by the sum of net interest income on a taxable equivalent basis and non-interest income.
               


 
  1ST Constitution Bancorp 
  Consolidated Balance Sheets
(Dollars in thousands)
       
  December 31,   December 31,
ASSETS   2016       2015  
       
Cash and Due From Banks $   14,886     $   11,368  
Federal Funds Sold / Short Term Investments     -         -  
  Total cash and cash equivalents     14,886         11,368  
       
Investment Securities:      
  Available for sale, at fair value     103,794         91,422  
  Held to maturity (fair value of $128,559 and $127,157      
   at December 31, 2016 and December 31, 2015, respectively)     126,810         123,261  
Total securities     230,604         214,683  
       
Loans Held for Sale     14,829         5,997  
       
Loans     724,808         682,121  
  Less- Allowance for loan losses     (7,494 )       (7,560 )
Net loans     717,314         674,561  
       
Premises and Equipment (net)     10,673         11,109  
Accrued Interest Receivable     3,095         2,853  
Bank Owned Life Insurance     22,184         21,583  
Other Real Estate Owned     166         966  
Goodwill and Intangible Assets     12,880         13,284  
Other Assets     11,582         11,587  
       
Total Assets $   1,038,213     $   967,991  
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
       
LIABILITIES:      
Deposits      
  Non-interest bearing $   170,854     $   159,918  
  Interest bearing     663,662         626,839  
Total deposits     834,516         786,757  
       
Borrowings     73,050         58,896  
Redeemable Subordinated Debentures     18,557         18,557  
Accrued Interest Payable     866         846  
Accrued Expense and Other Liabilities     6,423         6,975  
Total liabilities     933,412         872,031  
       
SHAREHOLDERS EQUITY:      
  Preferred stock, no par value; 5,000,000 shares authorized; none issued     -         -  
  Common Stock, no par value; 30,000,000 shares authorized; 8,027,087 and      
  7,575,492 shares issued and 7,993,789 and 7,545,684 shares outstanding      
  as of December 31, 2016 and December 31, 2015, respectively     71,695         70,845  
  Retained earnings     34,074         25,589  
  Treasury Stock, 33,298 shares and 29,908 shares at December 31, 2016      
  and December 31, 2015, respectively      (368 )       (344 )
  Accumulated other comprehensive loss     (600 )       (130 )
Total shareholders' equity     104,801         95,960  
       
Total liabilities and shareholders' equity $   1,038,213     $   967,991  
       


1ST Constitution Bancorp
Consolidated Statements of Income
(Dollars in thousands, except per share data)
 
               
  Three Months Ended
December 31,
  Twelve Months Ended
December 31,
    2016     2015       2016       2015
               
INTEREST INCOME:              
  Loans, including fees $   9,115   $   8,543     $   35,429     $   35,597
  Securities:              
    Taxable     809       784         3,268         3,167
    Tax-exempt     523       523         2,078         2,131
  Federal funds sold/ interest earning deposits      9       12         88         50
Total interest income     10,456       9,862         40,863         40,945
               
INTEREST EXPENSE:              
  Deposits     1,055       940         4,044         3,704
  Borrowings     189       139         687         577
  Redeemable subordinated debentures     116       91         427         355
Total interest expense     1,360       1,170         5,158         4,636
               
Net interest income     9,096       8,692         35,705         36,309
               
PROVISION (CREDIT) FOR LOAN LOSSES     -       500         (300 )       1,100
  Net interest income after provision (credit)              
   for loan losses     9,096       8,192         36,005         35,209
               
NON-INTEREST INCOME:              
  Service charges on deposit accounts     156       203         715         818
  Gain on sales of loans      1,260       761         3,785         4,039
  Income on Bank-owned life insurance     136       137         549         558
  Other income     445       (181 )       1,837         1,049
Total non-interest income     1,997       920       6,886       6,464
               
NON-INTEREST EXPENSES:              
  Salaries and employee benefits     5,159       4,195         18,298         17,232
  Occupancy expense     1,054       977         4,001         4,098
  Data processing expenses     336       258         1,277         1,211
  FDIC insurance expense     125       130         453         660
  Other real estate owned expenses     5       103         81         734
  Other operating expenses     1,352       1,074         4,873         5,011
Total non-interest expenses     8,031       6,737         28,983         28,946
               
  Income before income taxes     3,062       2,375         13,908         12,727
INCOME TAXES     1,007       747         4,623         4,062
  Net Income $   2,055   $   1,628     $   9,285     $   8,665
               
NET INCOME PER COMMON SHARE              
  Basic $ 0.26   $ 0.21     $ 1.17     $ 1.10
  Diluted $ 0.25   $ 0.20     $ 1.14     $ 1.07
               
WEIGHTED AVERAGE SHARES              
  OUTSTANDING              
  Basic   7,985,677     7,923,018         7,962,121         7,901,278
  Diluted   8,228,741     8,112,383         8,177,439         8,075,752
               

 

1ST Constitution Bancorp
Net interest Margin Analysis
(Dollars in thousands)
 
               
  Three months ended December 31, 2016   Three months ended December 31, 2015
(yields on a tax-equivalent basis) Average   Average   Average   Average
  Balance Interest Yield   Balance Interest Yield
               
Assets              
Federal funds sold/interest earning deposits $   10,713   $   9 0.32 %   $   22,587   $   12 0.21 %
Investment Securities:              
  Taxable   140,266       809 2.31 %     124,302       784 2.52 %
  Tax-exempt 4   85,640       775 3.62 %     79,844       773 3.87 %
  Total   225,906     1,584 2.80 %     204,146     1,557 3.05 %
               
Loans: 1              
  Construction   95,513     1,382 5.76 %     94,710     1,410 5.91 %
  Residential Real Estate   43,645     476 4.36 %       40,826     423 4.14 %
  Home Equity   22,640     256 4.51 %       21,947     249 4.51 %
  Commercial Business and Commercial Real Estate   312,530     4,194 5.34 %       286,277     3,913 5.42 %
  SBA Loans   22,857     367 6.38 %       20,668     306 5.87 %
  Mortgage Warehouse Lines   218,781     2,333 4.24 %       195,126     2,180 4.43 %
  Loans Held for Sale   15,826     93 2.35 %     6,676     47 2.82 %
  All Other Loans   2,622     14 2.10 %     2,087     15 2.78 %
  Total   734,414     9,115 4.94 %     668,317     8,543 5.07 %
               
  Total Interest-Earning Assets     971,033   $    10,708 4.39 %       895,050   $    10,112 4.49 %
               
Allowance for Loan Losses   (7,550 )         (7,339 )    
Cash and Due From Bank   5,222           5,464      
Other Assets   59,759           63,135      
  Total Assets $    1,028,464         $    956,310      
               
Liabilities and Shareholders' Equity:              
Interest-Bearing Liabilities:              
  Money Market and NOW Accounts $   316,895   $   307 0.39 %   $   294,984   $   259 0.35 %
  Savings Accounts   205,217     320 0.62 %     198,550     264 0.53 %
  Certificates of Deposit   147,714     428 1.15 %     148,870     417 1.11 %
  Other Borrowed Funds   54,974     189 1.37 %     28,695     139 1.92 %
  Trust Preferred Securities   18,557     116 2.50 %     18,557     91 1.93 %
  Total Interest-Bearing Liabilities    743,357   $    1,360 0.73 %     689,656   $    1,170 0.67 %
               
  Net Interest Spread 2     3.66 %       3.82 %
               
Demand Deposits   171,152           163,089      
Other Liabilities   9,969           8,534      
Total Liabilities     924,478             861,279      
Shareholders' Equity   103,986           95,031      
Total Liabilities and Shareholders' Equity $    1,028,464         $    956,310      
               
  Net Interest Margin 3   $    9,348 3.83 %     $    8,942 3.96 %
               
(1) Loan Origination fees are considered an adjustment to interest income. for the purpose of calculating loan yields, average loan 
balances include non-accrual loans with no related interest income and the average balance of loans held for sale.
(2) The net interest spread is the difference between the average yield on interest-earning assets and the average rate paid on interest
bearing liabilities
(3) The net interest margin is equal to net interest income divided by average interest-earning assets.
(4) Tax equivalent basis.
               

 

     
1ST Constitution Bancorp    
Net Interest Margin Analysis    
(Dollars in thousands)    
     
                   
  Twelve months ended December 31, 2016   Twelve months ended December 31, 2015    
(yields on a tax-equivalent basis) Average   Average   Average   Average    
  Balance Interest Yield   Balance Interest Yield    
                   
                   
Assets                  
Federal funds sold/interest earning deposits $   21,041   $   88 0.42 %   $   23,131   $   50 0.22 %    
Investment Securities:                  
  U.S.Treasury Bonds     -        -  -         -        -  -      
  Taxable   143,461       3,268 2.28 %     127,859       3,167 2.48 %    
  Tax-exempt 4   81,570       3,075 3.77 %     81,612       3,153 3.86 %    
  Total   225,031     6,343 2.82 %     209,471     6,320 3.02 %    
                   
Loans: 1                  
  Construction   93,478     5,408 5.79 %     95,627     5,961 6.23 %    
  Residential Real Estate   42,694     1,858 4.28 %     43,048     1,804 4.13 %    
  Home Equity   23,250     1,025 4.41 %     22,217     1,028 4.63 %    
  Commercial Business and Commercial Real Estate   302,172     16,786 5.55 %     290,301     16,510 5.69 %    
  SBA Loans   21,508     1,352 6.28 %     19,409     1,100 5.67 %    
  Mortgage Warehouse Lines   205,711     8,769 4.26 %     203,074     8,894 4.38 %    
  Loans Held for Sale   7,256     176 2.38 %     8,954     246 2.71 %    
  All Other Loans   2,367     55 2.34 %     1,855     54 2.90 %    
  Total   698,436     35,429 5.07 %     684,485     35,597 5.20 %    
                   
  Total Interest-Earning Assets     944,508   $    41,860 4.43 %       917,087   $    41,967 4.58 %    
                   
Allowance for Loan Losses   (7,538 )         (7,484 )        
Cash and Due From Bank   5,120           6,272          
Other Assets   59,679           62,149          
  Total Assets $    1,001,769         $ 978,024          
                   
Liabilities and Shareholders' Equity:                  
Interest-Bearing Liabilities:                  
  Money Market and NOW Accounts $   301,086   $   1,128 0.37 %   $   300,814   $   1,013 0.34 %    
  Savings Accounts     206,069     1,208 0.59 %     196,844     950 0.48 %    
  Certificates of Deposit      152,078     1,708 1.12 %     158,754     1,741 1.10 %    
  Other Borrowed Funds     48,448     687 1.42 %     38,472     577 1.50 %    
  Trust Preferred Securities     18,557     427 2.30 %     18,557     355 1.91 %    
  Total Interest-Bearing Liabilities    726,238   $    5,158 0.71 %     713,441   $    4,636 0.65 %    
                   
  Net Interest Spread 2     3.72 %       3.93 %    
                   
Demand Deposits   166,519           164,419          
Other Liabilities   8,205           8,857          
Total Liabilities     900,962             886,717          
Shareholders' Equity   100,807           91,307          
Total Liabilities and Shareholders' Equity $    1,001,769         $   978,024          
                   
  Net Interest Margin 3   $    36,702 3.89 %     $    37,331 4.07 %    
                   
(1) Loan Origination fees are considered an adjustment to interest income. For the purpose of calculating loan yields, average loan     
 balances include non-accrual loans with no related interest income and the average balance of loans held for sale.    
(2) The net interest spread is the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities    
(3) The net interest margin is equal to net interest income divided by average interest-earning assets.    
(4) Tax equivalent basis.    
                   

CONTACT: Robert F. Mangano			
President & Chief Executive Officer	
(609) 655-4500

Stephen J. Gilhooly
Sr. Vice President & Chief Financial Officer
(609) 655-4500

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