U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-QSX
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended March 31, 1998
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the transition period from to
-------------------------
COMMISSION FILE NUMBER: 000-18546
-------------------------
BRIDGE BANCORP, INC.
(Exact name of small business issuer as specified in its charter)
NEW YORK
(State or other jurisdiction of
incorporation or organization)
2200 MONTAUK HIGHWAY
BRIDGEHAMPTON, NEW YORK
(Address of principal executive offices)
11932
(Zip Code)
11-2934195
(IRS Employer Identification Number)
(516) 537-1000
(Issuer's telephone number)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report.)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X]* No [ ]
* As a small business issuer
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 1,408,249 shares of common
stock as of May 13, 1998.
BRIDGE BANCORP, INC.
INDEX
Part 1. FINANCIAL INFORMATION
- -----------------------------
Item 1. Financial Statements
Unaudited Consolidated Statements of Condition as of March 31, 1998
and December 31, 1997
Unaudited Consolidated Statements of Income for the three months
ended March 31, 1998 and 1997
Unaudited Consolidated Statements of Stockholder's Equity for the three
months ended March 31, 1998
Unaudited Consolidated Statements of Cash Flows for the three months ended
March 31, 1998 and 1997
Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION
- --------------------------
Item 6. Exhibits and Reports on Form 8K
No reports on Form 8K have been filed during the quarter ended March 31, 1998.
The exhibits filed as part of this report are listed below.
Exhibit Index
- -------------
11.0 Statement re: Computation of Per Share Earnings
27.0 Financial Data Schedule
SIGNATURES
Part 1. Financial Information
Item 1. Financial Statements
BRIDGE BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except share and per share amounts)
March 31 December 31,
1998 1997
- --------------------------------------------------------------------------------
ASSETS
Cash and due from banks ............................... $ 13,260 $ 12,740
Interest earning deposits with banks .................. 66 89
Federal funds sold .................................... -- --
--------- --------
Total cash and cash equivalents ................... 13,326 12,829
Investment in debt and equity securities, net:
Securities available for sale, at fair value ....... 58,914 60,190
Securities held to maturity (fair value of $11,013
and $11,823 respectively) .......................... 11,003 11,812
--------- ---------
Total investment in debt and equity securities, net 69,917 72,002
Loans ................................................. 149,637 138,636
Less:
Allowance for possible loan losses .................. 1,452 1,393
--------- ---------
Loans, net ........................................ 148,185 137,243
Banking premises and equipment, net ................... 8,756 8,728
Accrued interest receivable ........................... 1,840 1,460
Deferred income taxes ................................. -- --
Other assets .......................................... 1,474 850
--------- ---------
TOTAL ASSETS .......................................... $ 243,498 $ 233,112
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits ....................................... $ 61,295 $ 63,629
Savings, NOW, and money market deposits ............... 82,937 76,740
Certificates of deposit of $100,000 or more ........... 32,311 20,872
Other time deposits ................................... 42,609 42,456
--------- ---------
Total deposits .................................... 219,152 203,697
Overnight borrowings .................................. 2,000 6,500
Accrued interest on depositors' accounts .............. 1,277 1,244
Deferred income taxes ................................. 142 94
Other liabilities and accrued expenses ................ 583 2,126
--------- ---------
Total Liabilities ................................. 223,154 213,661
--------- ---------
Stockholders' equity:
Common stock, par value $5.00 per share:
Authorized: 6,500,000 shares; issued and outstanding
1,407,999 shares at 3/31/98 and 12/31/97 ............ 7,202 7,202
Surplus ............................................. 607 607
Undivided profits ................................... 12,329 11,509
Less: Treasury Stock at cost, 32,400 shares ......... (621) (621)
--------- ---------
19,517 18,697
Accumulated other comprehensive income, net of taxes 827 754
--------- ---------
Total Stockholders' Equity ........................ 20,344 19,451
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............ $ 243,498 $ 233,112
========= =========
See accompanying notes to the unaudited consolidated financial statements.
BRIDGE BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
Three Months Ended March 31,
1998 1997
- --------------------------------------------------------------------------------
Interest income:
Loans (including fee income) ........................... $3,364 $2,921
Mortgage-backed securities ............................. 449 451
State and municipal obligations ........................ 330 252
U.S. Treasury and government agency securities ......... 228 294
Other securities ....................................... 19 16
Federal funds sold ..................................... 7 77
Deposits with banks .................................... 2 1
------ ------
Total interest income ................................ 4,399 4,012
Interest expense:
Savings, N.O.W. and money market deposits .............. 432 395
Certificates of deposit of $100,000 or more ............ 394 379
Other time deposits .................................... 544 551
Other borrowed money ................................... 44 13
------ ------
Total interest expense ............................... 1,414 1,338
------ ------
Net interest income ...................................... 2,985 2,674
Provision for possible loan losses ....................... 90 60
------ ------
Net interest income after provision for
possible loan losses ................................... 2,895 2,614
------ ------
Other income:
Mortgage banking activities ............................ 326 242
Service charges on deposit accounts .................... 198 176
Other operating income ................................. 188 120
------ ------
Total other income ................................... 712 538
------ ------
Other expenses:
Salaries and employee benefits ......................... 1,233 1,100
Net occupancy expense .................................. 197 138
Furniture and fixture expense .......................... 163 133
Other operating expenses ............................... 799 650
------ ------
Total other expenses ................................. 2,392 2,021
------ ------
Income before provision for income taxes ................. 1,215 1,131
Provision for income taxes ............................... 395 374
------ ------
Net income ............................................... $ 820 $ 757
====== ======
Basic earnings per share ................................. $ 0.58 $ 0.54
====== ======
Diluted earnings per share ............................... $ 0.57 --
====== ======
See accompanying notes to the unaudited consolidated financial statements. All
per share amounts have been adjusted to reflect the effects of the stock split.
Bridge Bancorp, Inc. and Subsidiary
Unaudited Consolidated Statements of Stockholders' Equity
(In thousands, except per share amounts)
Accumulated
Other
Common Stock Comprehensive Undivided Treasury Comprehensive
Shares Amount Surplus Income profits Stock Income Total
-----------------------------------------------------------------------------------------------
================================== ===============================================
Balance at December 31, 1997 ...... 1,407,999 $ 7,202 $ 607 $ 0 $ 11,509 ($ 621) $ 754 $ 19,451
Net income ........................ -- -- -- $ 820 $ 820 -- -- $ 820
Net change in unrealized
appreciation in securities
available for sale, net of tax .. -- -- -- $ 73 -- -- $ 73 $ 73
---------
Comprehensive Income .............. -- -- -- $ 893 -- -- --
------------------------------------=========--------------------------------------------------
Balance at March 31, 1998 ......... 1,407,999 $ 7,202 $ 607 $ 12,329 ($ 621) $ 827 $ 20,344
==================================== ==================================================
BRIDGE BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three months ended March 31,
1998 1997
- ----------------------------------------------------------------------------------------------
Operating activities:
Net Income ................................................... $ 820 $ 757
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for possible loan losses ....................... 90 60
Depreciation and amortization ............................ 166 111
Accretion of discounts ................................... (16) (15)
Amortization of premiums ................................. 32 32
(Increase) in accrued interest receivable ................ (380) (389)
(Increase) in other assets ............................... (624) (206)
Increase in accrued and other liabilities ................ 110 4
-------- --------
Net cash provided by operating activites ....................... 198 354
-------- --------
Investing activities:
Purchases of securities available for sale ................... -- (6,300)
Purchases of securities held to maturity ..................... -- (789)
Proceeds from maturing securities available for sale ......... 55 --
Proceeds from maturing securities held to maturity ........... 809 --
Proceeds from principal payments on mortgage-backed securities 1,326 814
Net increase in loans ........................................ (11,032) (2,977)
Purchases of banking premises and equipment, net of deletions (194) (878)
-------- --------
Net cash used by investing activities .......................... (9,036) (10,130)
-------- --------
Financing activities:
Net increase in deposits ..................................... 15,455 4,848
(Decrease) Increase in other borrowings ...................... (4,500) 6,700
Cash dividends paid .......................................... (1,620) (680)
-------- --------
Net cash provided by financing activities ...................... 9,335 10,868
-------- --------
(Decrease) increase in cash and cash equivalents ............... 497 1,092
Cash and cash equivalents beginning of period .................. 12,829 13,565
-------- --------
Cash and cash equivalents end of period ........................ $ 13,326 $ 14,657
======== ========
Supplemental information-Cash Flows:
Cash paid for:
Interest ................................................... $ 1,381 $ 1,375
Income taxes ............................................... $ 189 $ 117
Noncash investing and financing activities:
None
See accompanying notes to the unaudited consolidated financial statements.
=====================
BRIDGE BANCORP, INC. AND SUBSIDIARY
NOTES TO THE UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
1. Basis of Financial Statement Presentation
The accompanying unaudited consolidated financial statements include the
accounts of Bridge Bancorp, Inc. (the Registrant or Company) and its
wholly-owned subsidiary, The Bridgehampton National Bank (the Bank). The
unaudited consolidated financial statements included herein reflect all normal
recurring adjustments which are, in the opinion of management, necessary for a
fair presentation of the results for the interim periods presented. In preparing
the interim financial statements, management has made estimates and assumptions
that affect the reported amounts of assets and liabilities and the revenue and
expense for the reported periods. Actual future results could differ
significantly from these estimates. The results of operations for the three
months ended March 31, 1998 are not necessarily indicative of the results of
operations that may be expected for the entire fiscal year. Certain information
and note disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. The unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Company's 1997 Annual Report on Form 10-KSB.
2. Earnings Per Share
Earnings per share is computed by dividing net income by the weighted average
number of shares of common stock and dilutive common stock equivalents
outstanding. For the three months ended March 31, 1998 and 1997, diluted
weighted average common stock and common stock equivalent shares outstanding for
the diluted earnings per share were 1,422,897 and 1,407,600, respectively. For
the three months ended March 31, 1998 and 1997, the total weighted average
number of shares of common stock outstanding for the basic earnings per share
calculation were 1,407,999 and 1,407,600 respectively.
3. Comprehensive Income
The Company adopted Statement of SFAS No. 130 "Reporting Comprehensive Income"
this quarter. All comparative financial statements provided for earlier periods
have been reclassified to reflect application of the provisions of this
Statement.
Comprehensive income includes net income and all other changes in equity during
a period except those resulting from investments by owners and distributions to
owners. Other comprehensive income includes revenues, expenses, gains and losses
that under generally accepted accounting principles are included in
comprehensive income but excluded from net income.
Comprehensive income and accumulated other comprehensive income are reported net
of related income taxes. Accumulated other comprehensive income for the Company
consists solely of unrealized holding gains or losses on available for sale
securities. Such gains or losses are net of reclassification adjustments for
realized gains (losses) on sales of available for sale securities.
4. Investment in Debt and Equity Securities
A summary of the amortized cost and estimated fair value of investment
securities is as follows:
March 31, 1998 December 31,1997
- ---------------------------------------------------------------------------------------------
(In thousands)
Estimated Estimated
Amortized Fair Amortized Fair
Cost Value Cost Value
- ---------------------------------------------------------------------------------------------
Available for sale:
U.S. Treasury securities ............. $14,080 $14,435 $14,084 $14,409
Oblig. of NY State & pol.subs ........ 18,567 19,001 18,636 19,063
Mortgage-backed securities ........... 24,866 25,478 26,190 26,718
-------------------------------------------------
Total available for sale ........... $57,513 $58,914 $58,910 $60,190
-------------------------------------------------
Held to maturity:
Oblig. of NY State & pol.subs ........ $ 9,920 $ 9,930 $10,729 $10,740
Non marketable Equity securities:
Federal Reserve Bank Stock ........... $ 36 $ 36 $ 36 $ 36
Federal Home Loan Bank Stock ......... 1,047 1,047 1,047 1,047
-------------------------------------------------
Total held to maturity ............. $11,003 $11,013 $11,812 $11,823
--------------------------------------------------
Total debt and equity securities ....... $68,516 $69,927 $70,722 $72,013
=================================================
5. Loans
Loans are summarized as follows:
III.A. Types of Loans
The following table shows the Registrant's loan distribution in each of the periods ended,
03/31/98 12/31/97
Percent of Percent of
Balance Total Loans Balance Total Loans
- -----------------------------------------------------------------------------------------
(in thousands)
Mortgage Loans:
Single-family residential ....... $ 22,516 15.05% $ 20,322 14.66%
Multi-family residential ........ $ 76 0.05% $ 76 0.05%
Commercial real estate .......... $ 60,469 40.41% $ 57,853 41.73%
Construction and Land ........... $ 27,472 18.36% $ 22,166 15.99%
Home Equity ..................... $ 14,479 9.68% $ 13,940 10.06%
-----------------------------------------------
Total mortage loans ................. $125,012 83.54% $114,357 82.49%
Other Loans:
Unsecured business and personal loans 19,553 13.07% 17,638 12.72%
Secured business and personal loans . 714 0.48% 725 0.52%
Installment/consumer loans .......... 4,358 2.91% 5,916 4.27%
-----------------------------------------------
Total loans ......................... $149,637 100% $138,636 100%
===============================================
6. Allowance for Loan Loss
Management uses criteria set forth by the OCC in its classification and review
of the loan portfolio which includes a general allocation reserve with a high
and low range for each loan type. The ranges are reviewed on a quarterly basis
to determine if any adjustments are necessary. The information reviewed includes
past due trends, economic conditions and concentrations of credit. Based on the
loan classification committee's review of the classified loans and the general
allocation reserve as it relates to the entire loan portfolio, management
believes the allowance for possible loan losses is adequate. However, future
additions to the the allowance may be necessary based on changes in conditions.
Changes in the allowance for possible loan losses are summarized as follows:
IV.A. SUMMARY OF LOAN LOSS EXPERIENCE
- --------------------------------------
Period ended, 03/31/98 12/31/97 03/31/97
- --------------------------------------------------------------------------------
(In thousands)
Allowance for possible loan losses
balance at beginning of period ............ $1,393 $1,238 $1,238
Charge-offs:
Real estate loans ........................... -- -- --
Unsecured business & personal loans ......... 2 87 0
Secured business & personal loans ........... -- -- --
Installment/consumer loans .................. 47 229 4
------------------------------
Total .................................... 49 316 4
Recoveries:
Real estate loans ........................... -- -- --
Unsecured business & personal loans ......... 3 6 0
Secured business & personal loans ........... -- -- --
Installment/consumer loans .................. 15 55 18
------------------------------
Total .................................... 18 61 18
------------------------------
Net charge-offs ............................. 31 255 -14
Provision for possible loan losses
charged to operations ...................... 90 410 60
------------------------------
Balance at end of period .................... $1,452 $1,393 $1,312
==============================
Ratio of net charge-offs during period
to average loans outstanding .............. 0.02% 0.20% -0.01%
==============================
7. Asset Quality
The following table summarizes non-performing loans:
III.C. NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS
- ---------------------------------------------------
03/31/98 12/31/97
- --------------------------------------------------------------------------------
(In thousands)
Loans 90 days or more past due and still accruing:
Other .......................................... $ 6 $ 1
Nonaccrual loans:
Mortgage loans:
Single-family residential .................... 133 134
Commercial real estate ....................... 674 674
Other ........................................ 122 167
-------------------
Total nonaccrual loans ........................... 929 975
Restructured loans ............................... -- --
Other real estate owned, net ..................... -- --
-------------------
Total ............................................ $935 $976
===================
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Bridge Bancorp, Inc. (the Company), a New York corporation, is a one-bank
holding company formed effective March 31, 1989, and on a parent only basis, has
minimal results of operations. In the event the Company subsequently expands its
current operations, it will be dependent on dividends from its wholly owned
subsidiary, The Bridgehampton National Bank (the Bank), its own earnings,
additional capital raised and borrowings as sources of funds. The information
below reflects principally the financial condition and results of operations of
the Bank. The Bank's results of operations are primarily dependent on its net
interest income, which is mainly the difference between interest income on loans
and investments and interest expense on deposits. Interest income on loans and
investments is a function of the average balances outstanding and the average
rates earned during a period. Interest expense is a function of the average
amount of interest-bearing deposits and the average rates paid on such deposits
during a period. The Bank also generates other income, such as fee income on
deposit accounts and income from mortgage banking operations and merchant credit
card processing programs. The Bank's net income is further affected by the level
of its other expenses, such as employees' salaries and benefits and occupancy
costs. This discussion and analysis should be read in conjunction with the
audited consolidated financial statements and notes thereto included in the
Company's 1997 Annual Report on Form 10-KSB.
Financial Condition
- -------------------
The assets of the Registrant totaled $243,498,000 at March 31, 1998, an increase
of $10,386,000 or 4.5% from the year end. This increase mainly results from the
increase in net loans of $10,942,000 or 8.0%, partially offset by a decrease in
debt and equity securities of $ 2,085,000 or 2.9%. The source of funds for the
increase in assets was derived from an increase in deposits of $15,455,000 or
7.6%. Demand deposits decreased $2,334,000 or 3.67% over December 31, 1997. This
decrease is mainly attributed to seasonal fluctuations. Certificates of deposit
of $100,000 or more increased $10,834,000 or 51.9% over the prior year end
primarily as a result of increased public fund deposits.
Total stockholders' equity was $20,344,000 at March 31, 1998, an increase of
4.60% over December 31, 1997. The increase of $893,000 was the result of net
income for the three month period ended March 31, 1998, of $820,000, plus the
net increase in unrealized appreciation in securities available for sale, net of
tax, of $73,000. The net increase in securities available for sale is directly
attributable to appreciation due to changes in market conditions.
Analysis of Net Interest Income
- -------------------------------
Net interest income, the primary contributor to earnings, represents the
difference between income on interest earning assets and expenses on interest
bearing liabilities.
The following table sets forth certain information relating to the Company's
average consolidated statements of financial condition and reflects the average
yields on assets and average costs of liabilities for the three month periods
ended March 31, 1998 and 1997, respectively. Average balances are derived from
daily average balances. Interest on nonaccruing loans has been included only to
the extent reflected in the consolidated statements of income. However, the loan
balances are included in the average amounts outstanding.
I.A. & I. B. DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY: INTEREST RATES AND INTEREST DIFFERENTIAL
Three months ended March 31, 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
- ------------------------------------------------------------------------------------------------------------------------------------
Interest earning assets:
Loans (including fee income) <F1> ............. $145,271 $ 3,364 9.4% $121,541 $ 2,921 9.7%
Deposits with banks ........................... 136 2 6.0% 2,024 25 5.0%
Federal funds sold ............................ 491 7 5.8% 4,141 53 5.2%
Taxable investment securities ................. 14,083 228 6.6% 18,085 294 6.6%
Tax exempt investment securities .............. 29,214 330 4.6% 20,872 252 4.9%
Other securities .............................. 1,083 19 7.1% 1,083 16 6.0%
Mortgage backed securities .................... 25,639 449 7.1% 25,405 451 7.2%
-------------------------------------------------------------------------------
Total interest earning assets ................... $215,917 $ 4,399 8.3% $193,151 $ 4,012 8.4%
Interest bearing liabilities:
Savings, N.O.W. and
money market deposits ....................... $ 81,357 $ 432 2.2% $ 68,851 $ 395 2.3%
Certificates of deposit of $100,000
or more .................................... 29,461 394 5.4% 29,026 379 5.3%
Other time deposits ........................... 42,421 544 5.2% 43,135 551 5.2%
Federal funds purchased ....................... 0 0 0.0% 0 0 0.0%
Other borrowings .............................. 3,293 44 5.4% 906 13 5.8%
-------------------------------------------------------------------------------
Total interest bearing liabilities .............. $156,532 $ 1,414 3.7% $141,918 $ 1,338 3.8%
-------------------------------------------------------------------------------
Net interest income/interest
rate spread ................................... $ 2,985 4.6% $ 2,674 4.6%
-------------------- --------------------
Net earning assets/net yield on
average interest earnings assets .............. $ 59,385 5.6% $ 51,233 5.6%
-------- ----------------------- ------
Ratio of interest earning assets to
interest bearing liabilities .................. 137.9% 136.1%
------ ------
<FN>
<F1>
Interest on nonaccruing loans has been included only to the extent reflected in
the consolidated statements of income. However, the loan balances are included
in average amounts outstanding.
<F2>
For purposes of this table the average balances for investment in debt and
equity securities exclude unrealized appreciation\depreciation due to the
application of SFAS No. 115.
</FN>
Rate/Volume Analysis
- --------------------
The following table sets forth a summary analysis of the relative impact on net
interest income of changes in the average volume of interest earning assets and
interest bearing liabilities and changes in average rates on such assets and
liabilities. Information is provided in each category with respect to changes
attributable to changes in volume (changes in volume multiplied by prior rate),
changes attributable to changes in rates (changes in rates multiplied by prior
volume) and the net changes. Due to the numerous simultaneous volume and rate
changes during the period analyzed, it is not possible to precisely allocate
changes between volume and rates. For presentation purposes, changes which are
not solely due to volume changes or rate changes have been allocated to these
categories based on the respective percentage changes in average volume and
average rates as they compare to each other. In addition, average earning assets
include nonaccrual loans.
I.C. VOLUME AND YIELD/RATE VARIANCES
- -------------------------------------
Three months ended March
1998 Over 1997
(In thousands)
- --------------------------------------------------------------------------------
Changes Due To Net
Volume Rate Change
------------------------------
INTEREST INCOME ON INTEREST
EARNING ASSETS:
Federal funds sold ........................... ($ 84) $ 38 ($ 46)
Deposits with banks .......................... (51) 28 (23)
Taxable investment securities ................ (65) (1) (66)
Tax exempt investment securities ............. 181 (103) 78
Other securities ............................. 0 3 3
Mortgage-backed securities ................... 19 (21) (2)
Loans (including loan fee income*) ........... 1,102 (659) 443
------------------------------
Total interest earning assets ............. 1,103 (716) 387
------------------------------
INTEREST EXPENSE ON INTEREST
BEARING LIABILITIES:
Savings, NOW and money market deposits ....... 196 (159) 37
Certificates of deposits of $100,000 or more.. 6 9 15
Other time deposits .......................... (20) 13 (7)
Other borrowings ............................. 38 (7) 31
------------------------------
Total interest bearing liabilities ........ 220 (144) 76
------------------------------
Net interest income .......................... 883 (572) 311
------------------------------
Capital
- -------
The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory and possibly additional discretionary actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance sheet items calculated under regulatory
accounting practices. The Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier 1 capital (as defined in the regulations) to risk
weighted assets (as defined), and of Tier 1 capital (as defined) to average
assets (as defined). Management believes, as of March 31, 1998, that the Bank
meets all capital adequacy requirements to which it is subject.
The Bank's actual capital amounts and ratios are presented in the following
table:
As of March 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands) To Be Well
For Capital Capitalized Under
Adequacy Prompt Corrective
Actual Purposes Action Provisions
- ------------------------------------------------------------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
---------------------------------------------------------------------
Total Capital (to risk weighted assets) ................ 20,969 12.2% 13,790 >8.0% 17,238 >10.0%
Tier 1 Capital (to risk weighted assets) ............... 19,517 11.3% 6,895 >4.0 10,343 >6.0
Tier 1 Capital (to average assets) ..................... 19,517 8.2% 9,523 >4.0 11,903 >5.0
As of December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands) To Be Well
CapitalizedtUnder For Capital Capitalized Under
PrompteCorrective Adequacy Prompt Corrective
Actual Purposes Action Provisions
- ------------------------------------------------------------------------------------------------------------------------------------
Amount Ratio Amount Ratio
-------------------------------------------------------------------
Total Capital (to risk weighted assets) ................ 20,090 12.3% 13,104 >8.0% 16,381 >10.0%
Tier 1 Capital (to risk weighted assets) ............... 18,697 11.4% 6,552 >4.0 9,828 >6.0
Tier 1 Capital (to average assets) ..................... 18,697 8.3% 9,037 >4.0 11,296 >5.0
Comparison of Operating Results for the Three Months Ended March 31, 1998 and
- --------------------------------------------------------------------------------
1997
- ----
During the first three months of 1998, the Registrant earned net income of
$820,000 or $.58 per share as compared with $757,000 or $.54 per share for the
same period in 1997. Highlights for the three months ended March 31, 1998
include: (i) a $311,000 or 11.6% increase in net interest income; (ii) a
$174,000 or 32.3% increase in total other income; and (iii) a $371,000 or 18.4%
increase in total other expenses.
Net income for the first three months of 1998 reflects annualized returns of
17.60% on average total stockholders' equity and 1.40% on average total assets
as compared to the corresponding figures for the preceding calendar year of
18.52% on average total stockholders' equity and 1.49% on average total assets
excluding the gain on the sale of the building. Including the gain on the sale
of the building, return on average equity was 23.08% and return on average
assets was 1.86% for the preceding calendar year.
For purposes of these calculations, average stockholder's equity excludes the
effects of changes in the unrealized appreciation (depreciation) on securities
available for sale, net of taxes.
Net interest income, the primary source of income, increased by $311,000 or
11.6% for the current three month period over the same period last year. The
increase primarily resulted from an increase in average total interest earning
assets from $193,151,000 in the first three months of 1997 to $215,917,000 for
the comparable period in 1998, an 11.8% increase. The yield on average interest
earning assets at March 31, 1998 decreased to 8.3% from 8.4% during the same
period in 1997. The cost of average interest bearing liabilities decreased to
3.7% from 3.8% during the same period in 1997. The net yield on average earning
assets of 5.6% for the period ended March 31, 1998 was consistent with the same
period in 1997.
A $90,000 provision for possible loan losses was made during the three month
period ended March 31, 1998, compared to a $60,000 provision for the same period
in 1997. The provision for loan losses for 1998 was used to increase the general
allocation as a result of average loans for the period increasing 19.5% over the
same period last year. The allowance for possible loan losses increased to
$1,452,000 at March 31, 1998, as compared to $1,393,000 at December 31, 1997. As
a percentage of loans the allowance was .97% at March 31, 1998 and 1.00% at
December 31, 1997. The allowance as a percentage of nonperforming loans
(including loans past due 90 days or more and still accruing) was 156.3% at
March 31, 1998 compared to 142.6% at December 31, 1997. The allowance reflects
management's evaluation of classified loans, charge-off trends, concentrations
of credit and other pertinent factors. It also reflects input from the Bank's
outside loan review consultants.
Total other income increased during the three month period ended March 31, 1998
by $174,000 or 32.3% over the same period last year. Mortgage banking activities
totaled $326,000, an increase of $84,000 or 34.7% over the same period last
year. This increase results from the Bank's efforts to further penetrate the
mortgage market, and the low interest rate environment fueling the refinance
market. Other operating income totaled $188,000 an increase of $68,000 or 56.7%
over the same period last year. This increase primarily results from increased
fee income including new surcharges imposed on non-bank customers at automatic
teller machines and higher merchant processing revenues.
Total other expenses increased during the three month period ended March 31,
1998 by $371,000 or 18.4% over the same period last year. Salary and benefit
expense increased $133,000 or 12.1% over the same period in the prior year. This
increase mainly results from increased staffing and salary increases. Other
operating expenses increased $149,000 or 22.9% for the three month period as
compared to last year, primarily as a result of increased loan processing
expenses relative to the mortgage banking operations, and increased merchant
processing expenses both of which are attributable to increased volumes.
The provision for income taxes increased during the three month period ended
March 31, 1998 by $21,000 or 5.6% over the same period last year. The effective
tax rate for the three month period ended March 31, 1998 was 32.5% as compared
to the prior year period of 33.1%. mainly as a result of increased benefits of
tax exempt income in the current year.
Asset/Liability Management
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The Company's primary earnings source is net interest income, which is affected
by changes in the level of interest rates, the relationship between rates, the
impact of interest rate fluctuations on asset prepayments, the level and
composition of deposits, and the credit quality of the portfolio. Management's
asset/liability objectives are to maintain a strong, stable net interest margin,
to utilize its capital effectively without taking undue risks and to maintain
adequate liquidity.
The Company's Asset/ Liability Committee, comprised of members of senior
management and the Board, meets periodically to evaluate the impact of changes
in market interest rates on assets and liabilities, net interest margin, capital
and liquidity. Risk assessments are governed by policies and limits established
by senior management which are reviewed and approved by the full Board of
Directors.
Liquidity
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The objective of liquidity management is to ensure the availability of
sufficient resources to meet all financial commitments. Liquidity management
addresses the ability to meet deposit withdrawals either on demand or
contractual maturity, to repay other borrowings as they mature and to make new
loans and investments as opportunities arise.
The Company's most liquid assets are cash and cash equivalents, securities
available for sale, and securities held to maturity due within one year. The
levels of these assets are dependent upon the Company's operating, financing,
lending and investing activities during any given period. Other sources of
liquidity include loan and security principal repayments and maturities, lines
of credit with other financial institutions, the sale of securities from the
available for sale portfolio, and growth in the core deposit base. At March 31,
1998, the Company had aggregate lines of credit of $3,000,000 with correspondent
banks to provide short term credit for liquidity requirements. The Company also
has the ability, as a member of the Federal Home Loan Bank ("FHLB") system, to
borrow approximately $10,786,000. At March 31, 1998 the Company had $2,000,000
in such borrowings outstanding.
The Company's liquidity positions are monitored daily to ensure the maintenance
of an optimum level and efficient use of available funds. Management believes
the Company has sufficient liquidity to meet its operating requirements.
Part II Other Information
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Item 1. Legal Proceedings
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Not applicable
Item 2. Changes in Securities
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Not applicable
Item 3. Defaults upon Senior Securities
- ---------------------------------------
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
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Not applicable
Item 5. Other Information
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Not applicable
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(A) Exhibit Index
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11.0 Statement re: Computation of Per Share Earnings
27.0 Financial Data Schedule
(B) Reports on Form 8-K
-----------------------
Not applicable
Submitted only with filing in electronic format.
In accordance with the requirement of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BRIDGE BANCORP, INC.
Date: May 14, 1998 Thomas J. Tobin
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Thomas J. Tobin
President and Chief Executive Officer
Date: May 14, 1998 Christopher Becker
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Christopher Becker
Senior Vice President and Treasurer