Cranbury, N.J.-based 1st Constitution Bancorp reported a material weakness in its disclosure controls and procedures, as well as internal control over financial reporting as of June 30, according to its latest 10-Q. Specifically, the weakness was in the process for compiling the income and expense accounts for consolidated financial statements.
In a notification of nontimely filing, the company said there was an overstatement of loan interest and noninterest expenses in its consolidated statements of income for the year ended Dec. 31, 2016 — including quarterly periods ended March 31, 2016; June 30, 2016; and Sept. 30, 2016 — as well as in the quarterly period ended March 31, 2017. For the three months ended June 30, 2016, loan interest income was reduced by $384,000, and it was reduced by $755,000 in the six-month period ended June 30, 2016. For both of these periods, noninterest expense was reduced by the same amount.
The company noted that there was no effect on pretax income, after-tax income, earnings per share, statements of cash flows, balance sheets, book value, return on assets, return on equity or regulatory capital ratios, and that it did not result in a material misstatement to prior financial statements. It plans to remediate the weakness by the end of 2017, noting that the issue cannot be considered solved until there has been sufficient time to test its updated controls.