Item 2.02 Results of Operations and Financial Condition.

On May 1, 2020, 1ST Constitution Bancorp (the "Company") issued a press release reporting earnings and other financial results for the three months ended March 31, 2020 (the "Press Release"). A copy of the Press Release is furnished herewith as Exhibit 99.1.




Item 8.01  Other Events

In the Press Release, the Company also announced that its Board of Directors declared a cash dividend of $0.09 per share on the Company's common stock, no par value per share. The cash dividend will be paid on May 22, 2020 to all shareholders of record of the Company's common stock as of the close of business on May 12, 2020.



The following risk factor supplements the Risk Factors previously disclosed
under Part I, Item 1A of the Company's Annual Report on Form 10-K for the year
ended December 31, 2019.
The ongoing COVID-19 pandemic and the measures implemented in response intended
to prevent its spread have adversely affected, and are likely to continue to
adversely affect, our business, results of operations and financial condition,
the ultimate impact of which will depend on future developments that are highly
uncertain and are difficult to predict at this time.
The outbreak of a strain of the Novel Coronavirus (COVID-19) originating from
Wuhan, China has caused global disruption in the financial markets and our
primary market is increasingly threatened by the potential spread of this virus.
On March 11, 2020, the World Health Organization declared the rapidly spreading
COVID-19 outbreak to be a global pandemic. The ultimate impact of COVID-19 is
uncertain at this time, but the known effects of, and risks posed by, the
pandemic are discussed below.
In response to public health concerns resulting from the pandemic, governments
around the world have implemented a variety of precautionary measures to reduce
the spread of COVID-19, including travel restrictions and bans, instructions to
residents to practice social distancing, quarantine advisories, shelter-in-place
orders and required closures of non-essential businesses. These government
mandates have forced many of our customers and vendors, which are primarily
located in northern and central New Jersey, communities along the New Jersey
shore and the New York City metropolitan area, to seek government support in
order to continue operating, to curtail drastically their service offerings or
to cease operations entirely.
In addition, these measures have negatively affected, and may further affect,
consumer sentiment and discretionary spending patterns, economies and financial
markets, and our workforce, operations and customers. Among other measures, we
have implemented work-from-home for our employees whose jobs can be performed
remotely, provided employees who are not working remotely with appropriate
protective equipment and supplies, adjusted branch hours and temporarily closed
all of our branch lobbies, except on an appointment only basis. These changes in
our operations in response to COVID-19 have impacted the way that we operate and
conduct business, and may result in additional inefficiencies or delays,
including additional costs related to business continuity initiatives, which
cannot be avoided or alleviated through succession planning, employees working
remotely or teleconferencing technologies. In recent weeks, the pandemic has
also caused significant volatility in financial markets, including the market
price of our common stock.
The immediate consequences of and responses to the pandemic, including the
public health problems resulting from COVID-19 and precautionary measures
instituted by governments and businesses to mitigate its spread, have raised the
prospect of an extended global recession, which would adversely impact the
businesses of our customers, clients, counterparties and service providers, as
well as other market participants, and would further disrupt our operations.
Other known impacts and anticipated risks of the COVID-19 pandemic include, but
are not limited to, the following:
•       We primarily operate in northern and central New Jersey, communities
        along the New Jersey shore and the New York City metropolitan area, which
        are among some of the most affected areas in the U.S. and,



                                       2

--------------------------------------------------------------------------------



accordingly, are the most likely geographies to remain subject to governmental
restrictions aimed at curtailing household and non-essential business activity
to contain COVID-19 for a prolonged period. The longer that our clients,
customers, communities and business partners remain subject to such
restrictions, the greater the likelihood that economic and demand uncertainty
will increase, which would negatively impact, among other things, demand for and
profitability of the Bank's products and services and our liquidity, regulatory
capital and growth strategy.
•       Concern about the spread of COVID-19 and the measures enacted to mitigate
        its spread have already caused and are likely to continue to cause
        business shutdowns and interruptions, increased unemployment, labor
        shortages and commercial property vacancies, and supply chain
        disruptions, all of which contribute to economic and financial market
        instability and which, in turn, could impact the ability of our customers
        to make scheduled loan payments. If the pandemic results in widespread
        and sustained repayment shortfalls on loans in our portfolio, we could
        incur significant delinquencies, foreclosures and credit losses,
        particularly if the available collateral is insufficient to cover our
        exposure.


•       Our financial performance, the ability of borrowers to pay interest on
        and repay principal of outstanding loans, and the value of the collateral
        securing such loans is highly dependent upon the business environment in
        the U.S. generally and in northern and central New Jersey, communities
        along the New Jersey shore and the New York City metropolitan area in
        particular. Further economic downturn resulting from the pandemic,
        particularly in our primary market areas, could negatively impact the
        collateral values associated with our existing loans, the ability to
        liquidate the real estate collateral securing our residential and
        commercial real estate loans, our ability to maintain loan origination
        volume and to obtain additional financing, and the financial condition
        and credit risk of our customers, among other credit risks.


•       Legislative responses and regulatory policy changes to protect borrowers,
        such as forbearance, waiver of late payment and other fees, and the
        suspension of foreclosures, may have a negative impact on our business,
        financial condition, liquidity and results of operations. We may need to
        further increase the allowance for loan losses if borrowers experience
        financial difficulties beyond forbearance periods, which would adversely
        affect our net income.


•       To support our customers, businesses and communities, we are
        participating in the Small Business Administration (the "SBA") Paycheck
        Protection Program ("PPP") established under the Coronavirus Aid, Relief
        and Economic Security Act (the "CARES Act"), notwithstanding that our
        participation in this federal relief program exposes the Company and the
        Bank to additional litigation risk. Several national banking associations
        have already been subject to litigation regarding their respective
        procedures for processing PPP applications. The Company and the Bank may
        be exposed to the risk of litigation, from both clients and non-clients
        that approached the Bank regarding PPP loans, regarding the manner in
        which we processed PPP applications. Any such litigation regardless of
        the outcome, may result in significant financial liability or adversely
        affect the Company's reputation.


•       Our participation in the PPP and any other relief programs established
        under the CARES Act further exposes us to certain credit risks. Among
        other regulatory requirements, PPP loans are subject to forbearance of
        loan payments for a six-month period to the extent that loans are not
        eligible for forgiveness. If PPP borrowers fail to qualify for loan
        forgiveness, we have a greater risk of holding these loans at unfavorable
        interest rates as compared to the loans to customers that we would have
        otherwise extended credit. Additionally, there is risk that the SBA could
        conclude there is a deficiency in the manner in which the Bank
        originated, funded, or serviced PPP loans, which may or may not be
        related to the ambiguity in the CARES Act or the rules and guidance
        promulgated by the SBA and the U.S. Department of the Treasury thereunder
        regarding the operation of the PPP.


•       Our ability to meet customer servicing expectations may be limited due to
        certain operational risks as a result of our reduced hours, branch lobby
        closures and work-from-home policy, as described above, including reduced
        productivity in our workforce, less reliable and more limited access to
        the networks, information systems, applications and other tools available
        to employees, as well as increased cybersecurity and information security
        risk.


•       In addition, our reliance on third-party service providers and vendors
        exposes us to certain operational risks to the extent that such service
        providers and vendors continue to have limited capacities for a prolonged
        period or if additional limitations or potential disruptions in these
        services materialize. By way of example, our business depends on vendors
        that supply essential services such as loan servicers, providers of
        financial information, systems and analytical tools and providers of
        electronic payment and settlement systems, amo



                                       3

--------------------------------------------------------------------------------



ng others. Without these services, we may experience delays in originating and
closing loans.
•       During this challenging economic environment, our communities are
        increasingly relying on us to access necessary capital and our customers
        are more dependent on our credit commitments. Increased borrowings under
        these commitments could adversely impact our liquidity. Moreover, our
        management has been focused on meeting clients' needs and mitigating the
        impact of the pandemic on our business, which has required and will
        continue to require a substantial investment of time and resources across
        our enterprise. This has resulted and can be expected to continue to
        result in a diversion of management attention.


•       Further volatility in interest rates caused by uncertainties stemming
        from COVID-19 could negatively impact our net interest income, lending
        activities, deposits and profitability.

To date the coronavirus pandemic has disrupted the way that we conduct business, but has not had a material adverse impact on our operations. However, the future impact of the pandemic is highly uncertain and cannot be predicted and there is no assurance that it will not have a material adverse impact on our future results. The extent of the impact will depend on future developments, including further actions taken to mitigate the spread of COVID-19, the extent and severity of the outbreak and the duration of the government mandates and business closures. At this time, we have not experienced a significant increase in loan delinquencies or downgrades in credit ratings of loans directed related to the pandemic, but we expect the economic disruption will more severely impact the businesses, clients and communities we serve, and therefore our business, in the second quarter of 2020. While the full extent and impact of the pandemic cannot be reasonably estimated at this time, it could have a material adverse impact on our consolidated business, results of operations and financial condition. To the extent the pandemic adversely affects our business, financial condition, liquidity or results of operations, it may also enhance certain material risks relating to our business that are addressed at Item 1A Risk Factors in our Annual Report on Form 10-K filed for the year ended December 31, 2019 and in any subsequent Quarterly Reports on Form 10-Q.

Item 9.01. Financial Statements and Exhibits.



(d)      Exhibits.

  99.1          Press Release of 1ST Constitution Bancorp, dated May 1, 2020






                                       4

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses