 Cranbury, N.J., July 24, 2020 GLOBE NEWSWIRE -- 1ST Constitution Bancorp NASDAQ: FCCY, the holding company the Company for 1ST Constitution Bank the Bank, today reported net income of 3.7 million and diluted earnings per share of 0.36 for the three months ended June 30, 2020 compared to net income of 3.4 million, or 0.39 per diluted share for the three months ended June 30, 2019.The Board of Directors declared a quarterly cash dividend of 0.09 per share of common stock that will be payable on August 25, 2020 to shareholders of record on August 12, 2020.Robert F. Mangano, President and Chief Executive Officer, stated The Company generated solid fundamental operating performance during the second quarter of 2020 despite the challenging economic environment. The value of the Companys diversified lending platforms was reflected in the significant increase in residential mortgage banking activity which resulted in a 961,000 increase in gain on sale of loans and a 72.3 million increase in mortgage warehouse loans. Our continuous focus on deposit pricing and the mix and term structure of our funding resulted in the cost of interest-bearing liabilities declining to 1.04. Also, due to current economic uncertainty, the provision for loan losses was increased to 2.1 million and the allowance for loan losses increased 21.2 to 12.1 million at June 30, 2020.Mr. Mangano added, We are navigating through the COVID-19 pandemic impact and the economic and social disruption to our customers and communities we serve. While the severity and duration of the pandemic are not knowable today, we believe that the Company has the financial strength and flexibility to address these adverse economic and operating conditions.SECOND QUARTER 2020 HIGHLIGHTS Return on average total assets and return on average shareholders equity were 0.89 and 8.50, respectively. Net interest income was 13.8 million and net interest margin was 3.64 on a tax equivalent basis. A provision for loan losses of 2.1 million was recorded for the second quarter of 2020 and there were no charge-offs. Total loans were 1.4 billion at June 30, 2020 and increased 138.0 million from March 31, 2020. Mortgage warehouse loans increased 72.3 million and commercial real estate loans increased 15.4 million from March 31, 2020. As of June 30, 2020, the Bank had funded 75.1 million in Small Business Administration SBA Paycheck Protection Program PPP loans under the Coronavirus Aid, Relief and Economic Security Act CARES Act. Total deposits were 1.4 billion at June 30, 2020 and increased 111.4 million with non-interest demand deposits increasing 98.1 million from March 31, 2020. Non-performing assets were 14.0 million, or 0.80 of total assets at June 30, 3030, relatively unchanged from March 31, 2020 and included 470,000 of other real estate owned OREO.For the six months ended June 30, 2020, net income was 7.1 million and diluted earnings per share were 0.69 compared to net income of 6.8 million, or 0.78 per diluted share, for the six months ended June 30, 2019.COVID-19 Impact and ResponseIn the first quarter 2020 earnings report, the Company reported the initial steps that it took in response to the sudden emergence of the COVID-19 global pandemic.During the second quarter of 2020, the Company continued working with its customers who were severely impacted by the economic disruption. Management significantly increased the provision for loan losses in response to the current economic environment and higher potential incurred losses in the loan portfolio. Management may further increase the provision and allowance for loan losses in response to changes in economic conditions and the performance of the loan portfolio in future periods.To protect our employees and customers we have: Effective March 24, 2020, adjusted branch hours and temporarily closed our branch lobbies to customers, except on an appointment only basis and deployed 50 of our staff to work remotely. Continued to service our customers through drive-up facilities, ATMs and our robust technology capabilities that allow customers to execute transactions and apply for residential mortgage loans through our website utilizing their mobile devices and computers. Provided our employees with masks, gloves and hand sanitizer. Installed protective shields and partitions in branch offices and social distancing markings. On June 22, 2020, re-opened our lobby facilities and require customers entering our locations to have face coverings.To support our loan and deposit customers and the communities we serve: We are working tirelessly to provide access to additional credit and forbearance on loan interest and or principal payments for up to 90 days where management has determined that it is warranted. As of June 30, 2020, 147.5 million of loans 139.1 million of commercial loans and 8.4 million of consumer loans were modified to provide deferral of interest and or principal by borrowers for up to 90 days. As a long-standing SBA preferred lender, we are actively participating in the SBAs PPP lending program established under the CARES Act. As of June 30, 2020, we have funded 459 SBA PPP loans totaling 75.1 million. We registered to utilize the Main Street New Loan Facility Facility established by the Board of Governors of the Federal Reserve System the Federal Reserve under the CARES Act to provide financing to our customers and communities. This Facility is intended to facilitate lending by banks to small and medium-sized businesses, which we believe may be beneficial to certain of our customers. We are participating in the Federal Reserves PPP loan funding program and are pledging the PPP loans to collateralize a like amount of borrowings from the Federal Reserve at a favorable interest rate of 0.35 up to a 2 year term.Modification of Loans and Deferral of PaymentsThrough June 30, 2020, 139.1 million of commercial loans and 8.4 million of consumer loans had been modified to provide deferral of interest and or principal by borrowers for up to 90 days. As of July 1, 2020, deferrals for 49.2 million of these loans were expiring during July 2020 and a full monthly loan payment was due in July. As of July 22, 2020, customers had made the required monthly loan payments on 43.9 million of these loans, payments are due on 4.3 million of these loans and 1.0 million of these loans have a payment due date after July 22, 2020. One loan relationship totaling 1.0 million received a second modification to extend the deferral for another 90 days.As of July 22, 2020, loan deferrals totaled 99.4 million and were comprised of 94.3 million of commercial loans and 5.1 million of consumer loans.Allowance for Loan and Lease LossesAs part of the review of the adequacy of the allowance for loan losses at June 30, 2020, management reviewed over 81 of the 139.1 million of commercial business and commercial real estate loans that had been modified to defer interest and or principal for up to 90 days. Loans excluded from the review were either recently modified in June, had a balance less than 250,000 or payments were being made by the SBA for six months under the CARES Act.Management previously identified the hotel and restaurant-food service industries as most likely to be adversely impacted in the near-term by the economic disruption caused by the COVID-19 pandemic. At June 30, 2020 loans to hotel and restaurant-food service industries were 67.7 million and 47.7 million, respectively. Management reviewed over 97 of the hotel loans and over 87 of the restaurant-food service loans. Loans excluded from this review had a balance of less than 250,000 or payments were being made by the SBA for six months under the CARES Act.As a result of this review, management concluded that although loans with modifications and deferrals of loan payments were credit rated Pass-Watch, the deferral of payments indicated a somewhat weaker financial strength than Pass credit rated loans. Therefore, an additional reserve for potential incurred losses of 1.2 million was warranted. In connection with this review, loans with modifications and deferrals totaling 8.5 million and 5.0 million were down-graded to Special Mention and Substandard, respectively, resulting in an increase in the allowance for loan losses of approximately 800,000. During the second quarter of 2020, total loans down-graded to credit ratings of Special Mention, Substandard and Doubtful were 8.9 million, 5.2 million and 151,000, respectively.Discussion of Financial ResultsOn November 8, 2019, the Company completed the merger of Shore Community Bank Shore with and into the Bank the Shore Merger. The Shore Merger contributed approximately 200.0 million and 260.2 million in loans and deposits, respectively, at June 30, 2020.Net income was 3.7 million, or 0.36 per diluted share, for the second quarter of 2020 compared to net income of 3.4 million, or 0.39 per diluted share, for the second quarter of 2019. For the three months ended June 30, 2020, net interest income increased 2.4 million compared to the three months ended June 30, 2019, driven by the increase in the average balance of loans over the 12-month period ended June 30, 2020. Gain on sales of loans for the second quarter 2020 increased 961,000 compared to the second quarter of 2019 due primarily to the higher volume of residential mortgage loans sold. The provision for loan losses was 2.1 million for the second quarter of 2020 compared to 400,000 for the second quarter of 2019. This increase reflected managements current estimate of potential loan losses that were incurred due to the economic disruption caused by the COVID-19 pandemic. 