UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company     o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     o

1st Constitution Bancorp (the “Company”) is providing as exhibits to this Current Report on Form 8-K updated historical financial statements of Shore Community Bank (“Shore”) for the nine months ended September 30, 2019 and 2018, and pro forma financial information as of and for the nine months ended September 30, 2019. The Company acquired Shore effective November 8, 2019 upon the merger of Shore with and into 1st Constitution Bank, a wholly-owned subsidiary of the Company (the “Merger”).

For additional information regarding the Merger, refer to the Current Report on Form 8-K filed by the Company on November 8, 2019, and the Amendment thereto, filed by the Company on January 17, 2020.

SIGNATURE

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 hereunto duly authorized.

Exhibit 99.1

Balance Sheet

The accompanying notes are an integral part of these unaudited financial statements.

Statement of Income

The accompanying notes are an integral part of these unaudited financial statements.

Statement of Comprehensive Income

The accompanying notes are an integral part of these unaudited financial statements.

Statement of Shareholders’ Equity

The accompanying notes are an integral part of these unaudited financial statements.

Statement of Cash Flows

The accompanying notes are an integral part of these unaudited financial statements.

Basis of Financial Statement Presentation

The accompanying unaudited financial statements include the accounts of Shore Community Bank ("SCB") and have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements.

In the opinion of management, all adjustments considered necessary for fair presentation have been included. Operating results for the nine month period ended September 30, 2019 are not necessarily indicative of the results for the year ending December 31, 2019. For further information, refer to the consolidated financial statements and notes thereto included in the accompanying SCB’s financial statements for the year ended December 31, 2018.

SCB was incorporated March 20, 1996 under the laws of the State of New Jersey and is a New Jersey state chartered bank. SCB commenced operations on February 24, 1997 and provides full banking services. As a state bank, SCB is subject to regulation by the New Jersey Department of Banking and the Federal Deposit Insurance Corporation. The area served by SCB is principally Ocean County, New Jersey.

Subsequent Events

SCB has evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2019 for items that should potentially be recognized or disclosed in these financial statements. The evaluation was conducted through October 31, 2019, the date these financial statements were available to be issued, and SCB determined that the following item should be disclosed.

On June 24, 2019, 1^st Constitution Bancorp (“1^st Constitution”), the holding company for 1^st Constitution Bank, and Shore Community Bank (“SCB”) jointly announced that they have entered into a definitive agreement and plan of merger pursuant to which 1^st Constitution will acquire SCB in a stock and cash transaction valued at $16.54 per share, or approximately $53.1 million in total consideration. Upon the closing of the transaction, SCB will merge with and into 1^st Constitution Bank. The merger has been unanimously approved by the boards of directors of both institutions, and is anticipated to be completed on November 8 2019. The transaction is subject to approval by the shareholders of SCB, as well as regulatory approvals, and other customary closing conditions. Under the terms of the merger agreement, SCB’s shareholders will receive 0.8786 of a share of 1^st Constitution common stock, $16.50 in cash, or a combination of 1^st Constitution common stock and cash, subject to adjustment as set forth in the merger agreement, for each share of SCB’s common stock that they own.

Included in SCB’s 2019 year-to-date non-interest expense was $395,576 in non-recurring expenses related to the merger, largely legal and other professional fees. SCB expects to incur additional non-recurring costs through the closing of the merger.

Newly Issued Accounting Standard

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement and presentation of expenses and cash flows arising from a lease by the lessee will primarily depend on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, the new ASU will require both types of leases to be recognized on the balance sheet. ASU 2016-02 will also require disclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. The new disclosures will include both qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. ASU 2016-02 is effective for SCB in 2019. SCB adopted this ASU in 2019. At September 30, 2019, SCB’s operating lease right of use assets and operating lease liabilities were $1,034,440.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), to replace the incurred loss model, which is referred to as the current expected credit loss ("CECL") model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loans receivable and held-to maturity debt securities. It also applies to off-balance sheet credit exposures including loan commitments, standby letters of credit, financial guarantees, and other similar instruments. For the assets within the scope of CECL, a cumulative-effect adjustment will be recognized in retained earnings as of the beginning of the first report period in which the guidance is effective. This new standard will be effective for SCB in 2021. SCB is currently evaluating the impact this new standard will have on the financial statements.

In August 2018, the FASB issued ASU 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. ASU No. 2018-13 modifies the disclosure requirements for fair value measurements in Topic 820, Fair Value Measurement. The amendments are based on the concepts in the FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements, which the FASB finalized on August 28, 2018. ASU No. 2018-13 is effective for SCB in 2020. Early adoption is permitted. SCB is in the process of evaluating the potential impact this new standard will have on the financial statements.

The amortized cost and fair value of securities as of September 30, 2019 and December 31, 2018 are summarized as follows:

The amortized cost and fair value of securities as of September 30, 2019, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the borrowers may have the right to prepay obligations with or without any penalties.

The following tables present gross unrealized losses and fair value of Shore Community Bank’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2019 and December 31, 2018:

SCB had 29 and 47 securities at September 30, 2019 and December 31, 2018, respectively, in an unrealized loss position. The decline in fair value was due only to interest rate fluctuations. SCB does not intend to sell these securities prior to their recovery and it is more likely than not that SCB will not have to sell the securities prior to recovery. No securities are deemed to be other-than-temporarily impaired. None of the individual unrealized losses are significant.

There were no sales of available-for-sale securities in the nine months ended September 30, 2019 and 2018.

Securities with a carrying value of $18,898,749 and $20,507,000 at September 30, 2019 and December 31, 2018, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

The composition of net loans receivable at September 30, 2019 and December 31, 2018 was as follows:

The following tables summarize the activity in the allowance for loan losses by loan class for the nine months ended September 30, 2019 and the year ended December 31, 2018, and information in regard to the allowance for loan losses and the recorded investment in loans receivable by loan class as of September 30, 2019 and December 31, 2018:

The following table presents the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the SCB's internal risk rating system as of September 30, 2019 and December 31, 2018:

The following tables summarize information in regards to impaired loans by loan portfolio class as of September 30, 2019 and December 31, 2018:

The following table presents nonaccrual loans by classes of the loan portfolio as of September 30, 2019 and December 31, 2018:

The performance and credit quality of the loan portfolio is also monitored by the analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past due status as of September 30, 2019 and December 31, 2018:

SCB may grant a concession or modification for economic or legal reasons related to a borrower's financial condition that it would not otherwise consider resulting in a modified loan which is then identified as a troubled debt restructuring ("TDR"). SCB may modify loans through rate reductions, extensions of maturity, interest only payments, or payment modifications to better match the timing of cash flows due under the modified terms with the cash flows from the borrowers' operations. Loan modifications are intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. TDRs are considered impaired loans for purposes of calculating SCB's allowance for loan losses. As of September 30, 2019, and December 31, 2018, SCB has a recorded investment in troubled debt restructurings of $428,351 and $445,104, respectively. SCB has allocated $88,805 and $120 of specific allowance for these loans at September 30, 2019 and December 31, 2018, respectively, and there are no commitments to lend additional amounts.

SCB identifies loans for potential restructure primarily through direct communication with the borrower and evaluation of the borrower's financial statements, revenue projections, tax returns, and credit reports. Even if the borrower is not presently in default, management will consider the likelihood that cash flow shortages, adverse economic conditions, and negative trends may result in a payment default in the near future.

There were no troubled debt restructurings which occurred during the nine months ended September 30, 2019 and the year ended December 31, 2018, respectively.

There were no troubled debt restructured loans made in prior years that subsequently defaulted in the nine months ended September 30, 2019 and the year ended December 31, 2018.

Foreclosed asset activity was as follows for the nine months ended September 30, 2019 and 2018:

At September 30, 2019 and December 31, 2018, the balance of foreclosed assets includes $69,560 and $69,560, respectively of foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property or deed in lieu of foreclosure. At September 30, 2019 and December 31, 2018, the recorded investment of residential mortgage and consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceeds are in process was $-0-.

The components of deposits at September 30, 2019 and December 31, 2018 are as follows:

At September 30, 2019, the scheduled maturities of time deposits are as follows:

At September 30, 2019 and December 31, 2018, the total of individual time deposits with balances in excess of $250,000 (FDIC insurance limit) was approximately $13,117,413 and $8,956,000, respectively.

Effective January 1, 2019, SCB adopted ASU 2016-02, Leases (Topic 842), and all subsequent ASUs that modified Topic 842. For SCB, Topic 842 affected the accounting treatment for operation lease agreements in which SCB is the lessee by recognizing lease assets and liabilities on the balance sheet.

SCB leases the premises for two branch locations including a loan office under operating lease agreements expiring in various years through 2020. SCB is responsible to pay all real estate taxes, insurance, utilities, maintenance, and repairs on the buildings. SCB also has two land leases for two branch locations under operating lease agreements expiring through 2026. The branch buildings for these locations are owned by SCB.

All of the leases in which SCB is lessee are comprised of real estate property primarily for branches and office space. These leases are classified as operating leases. At September 30, 2019, SCB’s operating lease right of use assets and operating lease liabilities were $1,034,440.

In adopting the new accounting guidance, SCB used the following practical expedients for transitional relief as provided for in a subsequent ASU:

SCB also elected not to included short-term leases (i.e., leases with initial terms of twelve months or less) or equipment leases (deemed immaterial) on the balance sheet as provided for in the accounting guidance.

The following provides additional information about SCB’s operation leases:

At September 30, 2019:

At September 30, 2019, the future minimum payments are as follows:

Rent expense was $247,847 and $247,192 for the nine months ended September 30, 2019 and 2018, respectively.

SCB adopted a Savings Incentive Match Plan for Employees ("SIMPLE") individual retirement plan as of January 1, 2004. Employees may contribute up to the maximum allowable each year and SCB will match the elective deferral percentage of the employee's salary up to 3%. During the nine months ended September 30, 2019 and 2018, employer SIMPLE IRA matching contributions to the Plan charged to operations were $50,657 and $48,656, respectively.

SCB has employment agreements with certain employees which include minimum annual salary commitments and change of control provisions. Upon resignation after a change in the control of SCB, as defined in the agreement, the individuals will receive monetary compensation in the amount set forth in the agreement. SCB also has a supplemental employee retirement plan with its Chief Executive Officer. There are $37,000 and $86,500 of accruals under this plan as of September 30, 2019 and December 31, 2018, respectively, and which are included in other liabilities in the accompanying balance sheet.

Stock option share information as of September 30, 2019 and December 31, 2018 and activity for the nine months ended September 30, 2019 and the year ended December 31, 2018 has been adjusted for the 10% stock dividend issued in 2016.

Effective May 1, 2004, SCB adopted the 2004 Non-Qualified Stock Option Plan for certain employees, officers and directors of SCB and the 2004 Incentive Stock Option Plan for certain employees and officers of SCB. Under the Plans, stock options are granted at the discretion of the Board of Directors. The 2004 Non-Qualified Stock Option Plan was allotted 62,723 shares and the 2004 Incentive Stock Option Plan was allotted 126,737 shares, respectively, of SCB's common stock. Under the 2004 Non-Qualified Stock Option Plan, the exercise price of options granted to employees and officers cannot be less than 85% of the fair market value of the common shares at the date of grant and options granted to directors cannot be less than the fair market value of the common shares. Under the 2004 Incentive Stock Option Plan, the exercise price of options granted to employees and officers cannot be less than the fair market value of the common shares at the date of grant. Stock options granted under the Plans expire in ten years. As of September 30, 2019, and December 31, 2018, there were no shares available under the 2004 Non-Qualified Stock Option Plan and the 2004 Incentive Stock Option Plan and both plans have expired.

Effective May 1, 2014, SCB adopted the 2014 Incentive Stock Option Plan for certain employees and officers of SCB. Under the Plan, stock options are granted at the discretion of the Board of Directors. The 2014 Incentive Stock Option Plan was allotted 133,100 shares of SCB's common stock. Under the 2014 Incentive Stock Option Plan, the exercise price of options granted to employees and officers cannot be less than the fair market value of the common shares at the date of grant. Stock options granted under the Plan expire in ten years. As of December 31, 2018, there were no shares available under the 2014 Incentive Stock Option Plan for issuance.

Effective May 1, 2018, SCB adopted the 2018 Incentive Stock Option Plan for certain employees and officers of SCB. Under the Plan, stock options are granted at the discretion of the Board of Directors. The 2018 Incentive Stock Option Plan was allotted 150,000 shares of SCB's common stock. Under the 2018 Incentive Stock Option Plan, the exercise price of options granted to employees and officers cannot be less than the fair market value of the common shares at the date of grant. Stock options granted under the Plan expire in ten years. As of September 31, 2019, there were 55,000 shares available under the 2018 Incentive Stock Option Plan for issuance.

The following summarizes changes in stock options outstanding under the plans discussed above for the nine months ended September 30, 2019 and the year ended December 31, 2018.

The weighted-average remaining contractual life of the above options is approximately 7.9 years. Stock options outstanding at September 30, 2019 are exercisable at prices ranging from $4.94 to $12.06 per share. The intrinsic value of options outstanding and exercisable at September 30, 2019 was $1,314,863 and $892,726, respectively.

The fair value of each option grant is estimated on the date of grant using the Black Scholes option-pricing model with the following weighted average assumption for grants in 2019 and 2018: dividend yield of 0.00%, risk-free interest rate of 2.52% and 2.92%, expected life of 7 years, and expected volatility of 16.97% and 28.30%, respectively. The weighted average fair value of options granted in 2019 and 2018 was $8.95 and $3.66 per share, respectively.

Total stock-based compensation cost for the nine months ended September 30, 2019 and 2018 related to stock options granted was $120,516 and $79,546, respectively.

As of September 30, 2019, there was $227,819 of unrecognized compensation cost related to nonvested stock options granted. That cost is expected to be recognized over a weighted average period of 3.45 years through 2025.

The following table sets forth the computations of basic and diluted earnings per share for the nine months ended September 30, 2019 and 2018 (as adjusted for the 10% stock dividend issued in 2017):

A reconciliation of the statutory income tax at a rate of 21% to the income tax expense included in the statements of income is as follows for the nine months ended September 30, 2019 and 2018, respectively:

SCB has had, and may be expected to have in the future, banking transactions in the ordinary course of business with its executive officers, directors, principal stockholders, their immediate families and affiliated companies (commonly referred to as related parties), on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with others.

Loans to related parties at September 30, 2019 and December 31, 2018 were $7,926,248 and $4,524,673, respectively. New related party loans during the nine months ended September 30, 2019 and 2018 were $3,127,500 and $-0-, respectively. SCB had lines of credit to related parties with an outstanding balance of $279,780 and $798,870 at September 30, 2019 and December 31, 2018, respectively. Deposits to related parties at September 30, 2019 and December 31, 2018 were not significant.

SCB is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet.

SCB's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. SCB uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

A summary of SCB's financial instrument commitments at September 30, 2019 and December 31, 2018 is as follows:

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. SCB evaluates each customer's credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by SCB upon extension of credit, is based on management's credit evaluation. Collateral held varies but may include personal or commercial real estate, accounts receivable, inventory and equipment.

Outstanding letters of credit written are conditional commitments issued by SCB to guarantee the performance of a customer to a third party. The majority of these standby letters of credit expire within the next twelve months. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending other loan commitments. SCB requires collateral supporting these letters of credit as deemed necessary. The maximum undiscounted exposure related to these commitments at September 30, 2019 and December 31, 2018 was $280,000 and $352,000, respectively. The current amount of the liability as of September 30, 2019 and December 31, 2018 for guarantees under standby letters of credit issued is not material.

There are no material legal proceedings to which SCB is party to except proceedings which arise in the normal course of business and, in the opinion of management, will not have any material effect on the consolidated financial position of SCB.

Determination of Fair Value

SCB uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the SCB's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

Fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is determined at a reasonable point within the range that is most representative of fair value under current market conditions.

Fair Value Hierarchy

In accordance with this guidance, SCB groups its assets and liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 - Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 - Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3 - Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.

For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2019 and December 31, 2018 are as follows:

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2019 and December 31, 2018 are as follows:

For non-financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2019 and December 31, 2018 are as follows: