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FIRST CONSTITUTION REPORTS SECOND QUARTER RESULTS

 FIRST CONSTITUTION REPORTS SECOND QUARTER RESULTS
 NEW HAVEN, Conn., July 29 /PRNewswire/ -- First Constitution Financial Corporation (NASDAQ: FCON), parent company of First Constitution Bank, reported a second quarter net loss of $20.6 million, compared with a loss of $8.5 million for the same period a year ago. On a per-share basis, the 1992 second-quarter loss was $1.88, compared with 78 cents last year.
 "Continuing deterioration in commercial real estate is the principal reason for the loss," according to John J. Crawford, president and chief executive officer. "This deterioration shows up both in additions to our non-performing loans and in reduced values of commercial properties we now own.
 "We are continuing work on our plan for the concurrent sale of about $220 million in non-accruing assets and a major recapitalization of the bank, as previously announced. These efforts are proceeding on schedule according to a capital plan previously filed with the Federal Deposit Insurance Corporation," Crawford said. "The bank is also in discussions with the FDIC about the possibility of its providing financial assistance in this transaction. Without such assistance, the plan is not likely to be successful."
 The company had a net loss of $32.0 million, or $2.92 a share, for the first six months this year, compared with a loss of $18.0 million, or $1.64 a share, for the first six months of 1991. "The 1992 loss includes a first-quarter tax benefit of $8.5 million, resulting from the adoption for public reporting purposes of Financial Accounting Standard No. 109, which deals with a recovery of certain tax amounts paid in prior years," Crawford said. "FDIC regulatory reporting does not yet permit including the tax benefit in the computation of the bank's capital ratios," he added.
 The consolidated equity-to-assets ratio was 2.25 percent at June 30. The ratio of total bank capital to risk-weighted assets was 3.08 percent, compared to a regulatory requirement of 7.25 percent. The bank's Tier 1 capital-to-assets or leverage, ratio was 1.07 percent, which does not meet the June 30 interim target of 3.4 percent contained in the FDIC regulatory order that became effective March 22, 1992. "If the $8.5 million tax benefit had been included in the computation, the Tier 1 ratio would have been 1.6 percent -- still below the interim target. These ratios are clearly too low, and are below regulatory requirements. Because our target was not achieved," Crawford said, "a revised capital plan will be filed with the FDIC, one that will continue to rely on the sale of assets and recapitalization as the solution to the bank's problems."
 The 1992 second-quarter provision for loan losses was $14.1 million, compared with $7.0 million a year ago. Expenses of real estate owned were $6.0 million, including write-downs of $4.5 million. The June 30 reserve for loan losses was $56.4 million, after taking $15.3 million in write-offs. The ratio of reserves for loan losses to non-accruing loans was 44 percent, compared with 46 percent last year.
 Non-accruing assets at June 30 were $250.0 million, down from $258.2 million at March 31 and down from $269.8 million a year ago. Troubled debt restructurings, on which interest is earned at less than market rates, were $10.9 million at June 30, 1992. Non-accruing loans were $127.9 million, in-substance foreclosures amounted to $64.4 million and real estate owned totaled $57.7 million.
 Consolidated shareholders' equity at June 30 was $35.8 million. On the same date, shareholders' equity at the bank subsidiary was $25.5 million. Book value per share was $3.27, based on 10,956,519 shares outstanding.
 Net interest income before provision for this year's second quarter was $5.7 million, compared with $8.8 million a year ago. Non-interest income was $2.3 million, compared with last year's $1.8 million.
 For the first half, net interest income before the provision was $12.2 million, compared with $15.9 million in the first six months of 1991. Non-interest income was $7.6 million, compared with $3.2 million last year. In this year's first quarter, the bank sold a portfolio of second-mortgage loans for a gain of $3.2 million.
 "Our balance sheet for March 31, 1992, showed $375 million in earning assets 'held for sale.' Of that amount, during the second quarter we sold about $100 million of mortgage-backed securities. In the course of ongoing discussions about our business with the FDIC, it was decided not to pursue the sale of the remainder of these assets," Crawford said. "Accordingly, the balance of roughly $275 million of performing residential loans has been reclassified on the second quarter balance sheet. In addition, due to changes in market conditions, we sold an additional $100 million in mortgage-backed securities during the second quarter."
 Total loans at June 30 were $1.2 billion, compared with $1.6 billion a year ago. Total assets were $1.6 billion, compared with $2.0 billion at June 30, 1991. Total deposits of $1.3 billion at June 30, 1992, compared with $1.6 billion a year ago.
 First Constitution Bank is a state-chartered savings bank with branches in New Haven and Fairfield counties. Deposits are insured by the FDIC.
 First Constitution Financial Corporation common shares are traded on the Nasdaq Stock Market. The trading symbol is FCON.
 FIRST CONSTITUTION FINANCIAL CORPORATION AND SUBSIDIARY
 Consolidated Statements of Operations
 (in thousands except for share data)
 Three Months Six Months
 Ended June 30, Ended June 30,
 1992 1991 1992 1991
 Interest income:
 Investments $486 $854 $1,742 $2,300
 Mortgage-backed securities 5,239 5,893 12,147 9,705
 Loans 24,862 38,337 51,855 77,918
 Total interest income 30,587 45,084 65,744 89,923
 Interest expense:
 Interest on deposits 20,269 29,131 43,560 59,432
 Interest on borrowings 4,571 7,111 9,992 14,558
 Total interest expense 24,840 36,242 53,552 73,990
 Net interest income 5,747 8,842 12,192 15,933
 Provision for loan losses 14,100 7,000 30,511 14,000
 Net interest income
 (loss) after provision (8,353) 1,842 (18,319) 1,933
 Non-interest income:
 Fees and service charges 808 922 1,947 1,821
 Net gain on securities 376 --- 608 ---
 Income (loss) from
 real estate investments (304) 255 (91) 602
 Gain from sale of loans 61 --- 3,301 ---
 Gain on sale of mortgage-
 backed securities 1,143 --- 1,143 ---
 Other income 183 666 682 761
 Total non-interest income 2,267 1,843 7,590 3,184
 Income (loss) before
 non-interest expense (6,086) 3,685 (10,729) 5,117
 Non-interest expense:
 Compensation, taxes
 and benefits 4,101 5,391 7,274 9,668
 Office occupancy 947 853 1,814 1,651
 Furniture and fixtures 386 432 849 881
 Professional fees 1,423 1,327 2,519 2,268
 Federal insurance premium 953 781 1,909 1,569
 Net cost of real estate
 owned 6,013 1,628 12,961 3,361
 Other 1,475 1,724 3,150 3,575
 Total non-interest
 expense 15,298 12,136 30,476 22,973
 Loss before income taxes
 and cumulative effect of
 change in accounting
 principle (21,384) (8,451) (41,205) (17,856)
 Income tax expense
 (benefit) (776) 90 (686) 132
 Loss before cumulative
 effect of change in
 accounting principle (20,608) (8,541) (40,519) (17,988)
 Cumulative effect of
 change in accounting
 principle --- --- 8,500 ---
 Net Loss $(20,608) $(8,541) $(32,019) $(17,988)
 Net Loss Per Share:
 Loss before cumulative
 effect of change in
 accounting principle $(1.88)(78 cents) $(3.70) $(1.64)
 Cumulative effect of
 change in accounting
 principle --- --- 78 cents ---
 Net Loss Per Share $(1.88)(78 cents) $(2.92) $(1.64)
 Weighted average shares
 outstanding (a) 10,956,519 10,950,646 10,956,519 10,950,437
 (a) -- Weighted average shares outstanding does not include stock options outstanding, which are antidilutive.
 FIRST CONSTITUTION FINANCIAL CORPORATION AND SUBSIDIARY
 Consolidated Balance Sheets
 (in thousands except for share data)
 June 30, December 31, June 30,
 1992 1991 1991
 Assets:
 Federal funds and other
 short-term investments $6,628 $12,711 $7,848
 Assets held for sale 3,280 142,392 12,533
 Investment securities 28,392 38,119 36,851
 Mortgage-backed securities 172,024 308,151 204,682
 Loans receivable, net
 Residential real estate loans 865,511 903,056 1,024,409
 Commercial real estate loans 245,578 315,392 347,165
 Consumer loans 62,489 68,320 185,745
 Commercial loans 63,331 74,650 90,090
 Total loans, net of loans
 in process and unearned
 income 1,236,909 1,361,418 1,647,409
 Less reserve for
 loan losses (56,368) (63,743) (76,423)
 Total loans receivable, net 1,180,541 1,297,675 1,570,986
 Real estate investments, net 15,859 22,813 23,870
 Property acquired through
 foreclosure and in-substance
 foreclosures 122,106 95,627 103,757
 Proceeds receivable from
 sale of securities --- 97,749 ---
 Cash and amounts due from
 depository institutions 13,910 18,215 14,097
 Other assets 49,908 46,068 53,779
 Total Assets $1,592,648 $2,079,520 $2,028,403
 Liabilities and Shareholders' Equity
 Liabilities
 Deposits:
 Demand deposit accounts $12,613 $15,483 $14,861
 Regular savings accounts 230,169 219,808 161,065
 N.O.W. accounts 71,899 77,462 71,125
 Money market deposit accounts 74,178 98,328 100,454
 Certificate accounts 953,630 1,124,493 1,216,851
 Total deposits 1,342,489 1,535,574 1,564,356
 Borrowings 194,799 453,728 336,121
 Advance payments by borrowers
 for taxes and insurance 9,680 9,214 10,671
 Total deposits and
 interest-bearing liabilities 1,546,968 1,998,516 1,911,148
 Other liabilities 9,870 13,177 10,801
 Total liabilities 1,556,838 2,011,693 1,921,949
 Shareholders' equity
 Preferred shares $1.00 par value
 Authorized-3,000,000 shares
 Issued -- none --- --- ---
 Common shares $1.00 par value
 Authorized-20,000,000 shares
 Issued -- 11,058,019, 11,058,019
 and 11,056,582 shares respectively
 Outstanding -- 10,956,519,
 10,956,519 and 10,955,082
 respectively 11,058 11,058 11,057
 Additional paid-in capital 150,313 150,313 150,313
 Retained deficit (123,961) (91,944) (53,316)
 Less treasury stock --
 101,500 shares at cost (1,600) (1,600) (1,600)
 Total shareholders' equity 35,810 67,827 106,454
 Total Liabilities and
 Shareholders' Equity $1,592,648 $2,079,520 $2,028,403
 FIRST CONSTITUTION FINANCIAL CORPORATION AND SUBSIDIARY
 Supplementary Financial Data
 Three Months Six Months
 Ended June 30, Ended June 30,
 1992 1991 1992 1991
 Profitability (annualized):
 Average yields
 Loans (a) 7.70 pct. 8.94 pct. 7.74 pct. 8.93 pct.
 Mortgage-backed
 securities 6.70 11.20 7.28 10.35
 Investments 5.87 7.57 5.62 8.24
 Combined 7.47 9.15 7.58 9.04
 Effective interest rates
 Deposits 5.85 7.40 6.06 7.59
 Borrowings 6.05 8.00 5.99 8.09
 Combined 5.88 7.51 6.05 7.69
 Average interest rate
 spread 1.59 1.64 1.53 1.35
 Net interest margin 1.37 1.77 1.37 1.54
 Non-interest expense to
 average assets 3.44 2.34 3.27 2.21
 Per share
 Book value
 (end of period) -- -- $3.27 $9.72
 Earnings $(1.88) (78 cents) $(2.92) $(1.64)
 Other
 Shareholders' equity
 to total assets
 (end of period) -- -- 2.25 pct. 5.25 pct.
 Total bank capital to
 risk-weighted assets
 (end of period) -- -- 3.08 8.04
 Bank Tier 1 capital to
 assets (end of period) -- -- 1.07 4.67
 Bank Tier 1 capital to
 quarterly average
 assets -- -- 0.95 4.61
 Loans past due 90 days
 or more to total loans
 (end of period) (a) -- -- 8.20 9.68
 Non-performing assets to
 total loans, real estate
 investments, in-substance
 foreclosures and other
 repossessed assets (end
 of period) (a) -- -- 18.93 15.57
 Reserve for loan losses to
 non-accruing loans -- -- 44.09 46.02
 Reserve for loan losses to
 non-performing assets -- -- 21.61 27.45
 Originations
 (in thousands) $46,142 $57,013 $79,309 $101,914
 Cumulative positive
 12-month gap to
 total assets (end of
 period) (b) -- -- 13.26 pct. 14.29 pct.
 (a) Ratios include certain loan portfolios held for sale.
 (b) Ratios have not been adjusted for non-accruing loans. After giving effect to non-accruing loans, the ratios are 5.57 percent and 6.55 percent at June 30, 1992 and 1991, respectively.
 -0- 7/29/92
 /CONTACT: John Rourke of First Constitution, 203-782-4570/ CO: First Constitution Financial Corporation ST: Connecticut IN: FIN SU: ERN


CH-CN -- NE006 -- 4629 07/29/92 12:54 EDT
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