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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-KSB
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1996
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-12165
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BRIDGE VIEW BANCORP
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(Name of small business issuer as specified in its charter)
New Jersey 22-3461336
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(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
457 Sylvan Avenue, Englewood Cliffs, NJ 07632
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (201) 871-7800
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Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class: Name of each exchange on which registered:
Common Stock, No Par Value American Stock Exchange
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Securities registered pursuant to Section 12(g) of the Exchange Act: None.
Indicate by check mark whether the Issuer: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, during the preceding 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 __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to the
best of Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10- KSB or any amendment to
this Form 10-KSB. ( )
The aggregate market value of the voting stock held by non-affiliates of
the Issuer as of February 3, 1997, was $22,177,025.
The number of shares of the Issuer's Common Stock, no par value,
outstanding as of February 3, 1997, was 1,051,269.
For the fiscal year ended December 31, 1996, the Issuer had total revenues
of $8,663,000.
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DOCUMENTS INCORPORATED BY REFERENCE
10-KSB Item Document Incorporated
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Item 9. Directors and Executive Proxy Statement for 1997 Annual
Officers of the Company; Meeting of Shareholders to be
Compliance with Section filed no later than April 29, 1997
16(a) of the Exchange Act
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Item 10. Executive Compensation Proxy Statement for 1997 Annual
Meeting of Shareholders to be
filed no later than April 29, 1997
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Item 11. Security Ownership of Proxy Statement for 1997 Annual
Certain Beneficial Owners Meeting of Shareholders to be
and Management filed no later than April 29, 1997
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Item 12. Certain Relationships and Proxy Statement for 1997 Annual
Related Transactions Meeting of Shareholders to be
filed no later than April 29, 1997
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PART I
Item 1. Description of Business
General
Bridge View Bancorp (the "Company" or "Registrant") is a one- bank holding
company incorporated under the laws of the State of New Jersey in May, 1996 to
serve as a holding company for Bridge View Bank (the "Bank"). The Company was
organized at the direction of the Board of Directors of the Bank for the purpose
of acquiring all of the capital stock of the Bank. Pursuant to the New Jersey
Banking Act of 1948, as amended (the "Banking Act"), and pursuant to approval of
the shareholders of the Bank, the Company acquired the Bank and became its
holding company on December 6, 1996. As part of the Acquisition, shareholders of
the Bank received two shares of common stock, no par value ("Common Stock") of
the Company for each outstanding share of the common stock of the Bank, $5.00
per share par value ("Bank Common Stock"). The only significant activities of
the Company are the ownership and supervision of the Bank. The Company's main
office is located at 457 Sylvan Avenue, Englewood Cliffs, Bergen County, New
Jersey 07632.
The Bank is a commercial bank formed under the laws of the State of New
Jersey on October 11, 1988. The Bank operates from its main office at 457 Sylvan
Avenue, Englewood Cliffs, New Jersey 07632, and its three branch offices located
at 1605 Lemoine Avenue, Fort Lee, New Jersey 07024, 115 River Road, Edgewater,
New Jersey 07020, and 899 Palisade Avenue, Fort Lee, New Jersey 07024.
The Company is subject to the supervision and regulation of the Board of
Governors of the Federal Reserve System (the "FRB"). The Bank's deposits are
insured by the Bank Insurance Fund ("BIF") of the Federal Deposit Insurance
Corporation ("FDIC") up to applicable limits. The operations of the Company and
the Bank are subject to the supervision and regulation of the FRB, FDIC and the
New Jersey Department of Banking and Insurance (the "Department"). The principal
executive offices of the Company are located at 457 Sylvan Avenue, Englewood
Cliffs, New Jersey 07632, and the telephone number is (201) 871-7800.
Business of the Company
The Company's primary business is ownership and supervision of the Bank.
The Company, through the Bank, conducts a traditional commercial banking
business, accepting deposits from the general public, including individuals,
businesses, non-profit corporations and governmental units within its trade
area. The Bank makes commercial loans, consumer loans and both residential and
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commercial real estate loans. In addition, the Bank provides other customer
services and makes investments in securities, as permitted by law. The Bank has
sought to offer an alternative, community- oriented style of banking in an area
which at present is mainly dominated by larger, statewide and national
institutions. The Bank has sought to be a positive force in the area by
assisting in the development of the residential sector, by serving the needs of
small and medium-sized businesses and the local professional community, and by
meeting the requirements of individuals residing, working and shopping in the
Bank's eastern Bergen County, New Jersey market area by extending consumer,
commercial and real estate loans and by offering depository services. The Bank
believes that the following attributes of the Bank have made the Bank attractive
to local business people and residents:
* competitively priced services;
* full-service business hours of 7:00 a.m. to 7:00 p.m. weekdays and 9:00
a.m. to 1:00 p.m. Saturdays;
* direct access to Bank management by members of the community, whether
during or after business hours;
* local conditions and needs are taken into account by the Bank when
deciding loan applications and making other business decisions affecting members
of the community;
* responsiveness of the Bank's personnel for requests for information and
services by depositors and others; and
* positive involvement of the Bank in the community affairs of eastern
Bergen County.
Since opening in 1990, the Bank has established three branches in addition
to its main office. The Bank expects to continue to seek additional
strategically-located de novo branch locations within the Bank's eastern Bergen
County trade area. Particular emphasis will be placed on presenting an
alternative banking culture in communities which are dominated by larger
non-local competitors and where no community banking approach exists and in
locations which the Bank perceives to be economically emerging.
Service Area
The Company's service area primarily consists of the greater area of Bergen
County and the northern portion of Hudson County, although the Company makes
loans throughout New Jersey. The Company operates its main office in Englewood
Cliffs, New Jersey and three branch offices in Fort Lee and Edgewater, New
Jersey.
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Competition
The Company operates in a highly competitive environment competing for
deposits and loans with commercial banks, thrifts and other financial
institutions, many of which have greater financial resources than the Company.
Many large financial institutions in New York City and other parts of New Jersey
compete for the business of New Jersey residents located in the Company's
service area. Certain of these institutions have significantly higher lending
limits than the Company and provide services to their customers which the
Company does not offer. In addition, the Company's competitors generally have
established positions in the Service Area and have greater resources than the
Company with which to pay for advertising, physical facilities, personnel and
interest on deposited funds.
Management believes the Company is able to compete on a substantially equal
basis with its competitors because it provides responsive personalized services
through managements' knowledge and awareness of the Company's service area,
customers and business.
Employees
At December 31, 1996, the Company employed 39 full-time employees and 6
part-time employees. None of these employees are covered by a collective
bargaining agreement and the Company believes that its employee relations are
good.
SUPERVISION AND REGULATION
Bank holding companies and banks are extensively regulated under both
federal and state law. These laws and regulations are intended to protect
depositors, not stockholders. To the extent that the following information
describes statutory and regulatory provisions, it is qualified in its entirety
by reference to the particular statutory and regulatory provisions. Any change
in the applicable law or regulation may have a material effect on the business
and prospects of the Company and the Bank.
Bank Holding Company Regulation
General. As a bank holding company registered under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), the Company is subject to the
regulation and supervision of the FRB. The Company is required to file with the
FRB annual reports and other information regarding its business operations and
those of its subsidiaries. Under the BHCA, the Company's activities and those of
its subsidiaries are limited to banking, managing or controlling banks,
furnishing services to or performing services for its subsidiaries or engaging
in any other activity which the FRB determines to be so closely related to
banking or managing or controlling banks as to be properly incident thereto.
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The BHCA requires, among other things, the prior approval of the FRB in any
case where a bank holding company proposes to: (i) acquire all or substantially
all of the assets of any other bank, (ii) acquire direct or indirect ownership
or control of more than 5% of the outstanding voting stock of any bank (unless
it owns a majority of such bank's voting shares), or (iii) merge or consolidate
with any other bank holding company. The FRB will not approve any acquisition,
merger, or consolidation that would have a substantially anti-competitive
effect, unless the anti- competitive impact of the proposed transaction is
clearly outweighed by a greater public interest in meeting the convenience and
needs of the community to be served. The FRB also considers capital adequacy and
other financial and managerial resources and future prospects of the companies
and the banks concerned, together with the convenience and needs of the
community to be served, when reviewing acquisitions or mergers.
Additionally, the BHCA prohibits a bank holding company, with certain
limited exceptions, from (i) acquiring or retaining direct or indirect ownership
or control of more than 5% of the outstanding voting stock of any company which
is not a bank or bank holding company, or (ii) engaging directly or indirectly
in activities other than those of banking, managing or controlling banks, or
performing services for its subsidiaries; unless such non-banking business is
determined by the FRB to be so closely related to banking or managing or
controlling banks as to be properly incident thereto. In making such
determinations, the FRB is required to weigh the expected benefits to the
public, such as greater convenience, increased competition or gains in
efficiency, against the possible adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts of interest, or unsound
banking practices.
There are a number of obligations and restrictions imposed on bank holding
companies and their depository institution subsidiaries by law and regulatory
policy that are designed to minimize potential loss to the depositors of such
depository institutions and the FDIC insurance funds in the event the depository
institution becomes in danger of default. Under a policy of the FRB with respect
to bank holding company operations, a bank holding company is required to serve
as a source of financial strength to its subsidiary depository institutions and
to commit resources to support such institutions in circumstances where it might
not do so absent such policy. The FRB also has the authority under the BHCA to
require a bank holding company to terminate any activity or to relinquish
control of a non-bank subsidiary upon the FRB's determination that such activity
or control constitutes a serious risk to the financial soundness and stability
of any bank subsidiary of the bank holding company.
Capital Adequacy Guidelines for Bank Holding Companies. The FRB has adopted
risk-based capital guidelines for bank holding
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companies. The risk-based capital guidelines are designed to make regulatory
capital requirements more sensitive to differences in risk profile among banks
and bank holding companies to account for off-balance sheet exposure and to
minimize disincentives for holding liquid assets. Under these guidelines, assets
and off-balance sheet items are assigned to broad risk categories each with
appropriate weights. The resulting capital ratios represent capital as a
percentage of total risk-weighted assets and off-balance sheet items.
The risk-based guidelines apply on a consolidated basis to bank holding
companies with consolidated assets of $150 million or more. For bank holding
companies with less than $150 million in consolidated assets, the guidelines
will be applied on a bank-only basis unless: (a) the parent bank holding company
is engaged in non-bank activity involving significant leverage, or (b) the
parent company has a significant amount of outstanding debt that is held by the
general public. The minimum ratio of total capital to risk- weighted assets
(including certain off-balance sheet activities, such as standby letters of
credit) is 8%. At least 4% of the total capital is required to be "Tier I,"
consisting of common stockholders' equity and certain preferred stock, less
certain goodwill items and other intangible assets. The remainder, "Tier II
Capital" may consist of (a) the allowance for loan losses of up to 1.25% of
risk-weighted assets, (b) excess of qualifying preferred stock, (c) hybrid
capital instruments, (d) debt, (e) mandatory convertible securities, and (f)
qualifying subordinated debt. Total capital is the sum of Tier I and Tier II
capital less reciprocal holdings of other banking organizations' capital
instruments, investments in unconsolidated subsidiaries and any other deductions
as determined by the FRB (determined on a case-by- case basis or as a matter of
policy after formal rule-making).
Bank holding company assets are given risk-weights of 0%, 20%, 50% and
100%. In addition, certain off-balance sheet items are given similar credit
conversion factors to convert them to asset equivalent amounts to which an
appropriate risk-weight will apply. These computations result in the total
risk-weighted assets. Most loans are assigned to the 100% risk category, except
for performing first mortgage loans fully secured by residential property which
carry a 50% risk-weighing. Most investment securities (including, primarily,
general obligation claims of states or other political subdivisions of the
United States) are assigned to the 20% category, except for municipal or state
revenue bonds, which have a 50% risk-weight, and direct obligations of the U.S.
treasury or obligations backed by the full faith and credit of the U.S.
Government, which have a 0% risk-weight. In converting off-balance sheet items,
direct credit substitutes including general guarantees and standby letters of
credit backing financial obligations, are given a 100% risk-weighting.
Transaction related contingencies such as bid bonds, standby letters of credit
backing nonfinancial obligations, and undrawn commitments (including commercial
credit
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lines with an initial maturity or more than one year) have a 50% risk-weighting.
Short term commercial letters of credit have a 20% risk-weighting and certain
short-term unconditionally cancelable commitments have a 0% risk-weighting.
In addition to the risk-based capital guidelines, the FRB has adopted a
minimum Tier I capital (leverage) ratio, under which a bank holding company must
maintain a minimum level of Tier I capital to average total consolidated assets
of at least 3% in the case of a bank holding company that has the highest
regulatory examination rating and is not contemplating significant growth or
expansion. All other bank holding companies are expected to maintain a leverage
ratio of at least 100 to 200 basis points above the stated minimum.
Bank Regulation
As a New Jersey-chartered commercial bank, the Bank is subject to the
regulation, supervision and control of the Department. As an FDIC-insured
institution, the Bank is subject to regulation, supervision and control of the
FDIC, an agency of the federal government. The regulations of the FDIC and the
Department impact virtually all activities of the Bank, including the minimum
level of capital the Bank must maintain, the ability of the Bank to pay
dividends, the ability of the Bank to expand through new branches or
acquisitions and various other matters.
Insurance of Deposits. The Bank's deposits are insured up to a maximum of
$100,000 per depositor under the BIF. The Federal Deposit Insurance Corporation
Improvements Act of 1991 ("FDICIA") effected a major restructuring of the
federal regulatory framework applicable to depository institutions and deposit
insurance. FDICIA requires the FDIC to establish a risk-based assessment system
for all insured depository institutions. Under this legislation, the FDIC has
established an insurance premium assessment matrix that sets the assessment
premium for a particular institution in accordance with its capital level and
overall rating by the primary regulator. Under the matrix as currently in
effect, the assessment date ranges from 0 to 31 basis points of assessed
deposits, with those institutions at the low end of the assessment schedule
paying only a statutory mandated $2,000 premium.
Dividend Rights. Under the Banking Act, a bank may declare and pay
dividends only if, after payment of the dividend, the capital stock of the bank
will be unimpaired and either the bank will have a surplus of not less than 50%
of its capital stock or the payment of the dividend will not reduce the bank's
surplus.
Recent Regulatory Enactments. On September 30, 1996, the Deposit Insurance
Funds Act of 1996 (the "Deposit Act") became law. The primary purpose of the
Deposit Act is to recapitalize the Savings Association Insurance Fund of the
FDIC (the "SAIF") by
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charging all SAIF member institutions a one-time special assessment. The Deposit
Act will lead to equalization of the deposit insurance assessments between BIF
and SAIF insured institutions, and will also separate out from insurance
assessments payments required for debt service and principal repayment on bonds
issued by the Federal Finance Corporation ("FICO") in the mid-1980s to fund a
portion of the thrift bailout. Under the Deposit Act, BIF-insured institutions
like the Bank will, for the first time, be required to pay a portion of the
obligations owed under the FICO bonds. SAIF institutions will be required to pay
6.4 basis points on assessed deposits while BIF institutions will only be
required to pay 1.3 basis points on assessed deposits. This disparity will stay
in effect until such time as the federal thrift and commercial bank charters are
merged and the deposit insurance funds are thereafter merged. Under the Deposit
Act, this may occur by January 1, 1999. At that time, all federally insured
institutions should have the same total FDIC assessment.
On September 29, 1994, the Riegle-Neal Interstate Banking and Branching
Efficiency Act (the "Interstate Act") was enacted. The Interstate Act generally
enhances the ability of bank holding companies to conduct their banking business
across state borders. The Interstate Act has two main provisions. The first
provision generally provides that, commencing on September 29, 1995, bank
holding companies may acquire banks located in any state regardless of the
provisions of state law. These acquisitions are subject to certain restrictions,
including caps on the total percentage of deposits that a bank holding company
may control both nationally and in any single state. New Jersey law currently
allows interstate acquisitions by bank holding companies whose home state has
"reciprocal" legislation which would allow acquisitions by New Jersey-based bank
holding companies.
The second major provision of the Interstate Act permits, beginning on June
1, 1997, banks located in different states to merge and continue to operate as a
single institution in more than one state. States may, by legislation passed
before June 1, 1997, opt out of the interstate bank merger provisions of the
Interstate Act. In addition, states may elect to opt in and allow interstate
bank mergers prior to June 1, 1997.
A final provision of the Interstate Act permits banks located in one state
to establish new branches in another state without obtaining a separate bank
charter in that state, but only if the state in which the branch is located has
adopted legislation specifically allowing interstate de novo branching.
In April, 1996, the New Jersey legislature passed legislation which would
permit interstate bank mergers prior to June 1, 1997, provided that the home
state of the institution acquiring the New Jersey institution permits interstate
mergers prior to June 1, 1997. In addition, the legislation permits an
out-of-state
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institution to acquire an existing branch of a New Jersey-based institution, and
thereby conduct a business in New Jersey. The legislation does not permit
interstate de novo branches. This legislation is likely to enhance competition
in the New Jersey marketplace as bank holding companies located outside of New
Jersey become freer to acquire institutions located within the state of New
Jersey.
Item 2. Description of Property
The Company conducts its business through its main office located at 457
Sylvan Avenue, Englewood Cliffs, New Jersey, and its three branch offices. The
following table sets forth certain information regarding the Company's
properties as of December 31, 1996.
Leased Date of Lease
Location or Owned Expiration
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457 Sylvan Avenue Office Building March 1999
Englewood Cliffs, NJ Owned; Land Leased (Land Lease)
1605 Lemoine Avenue Leased November 1997
Fort Lee, NJ
115 River Road Leased April 2006
Edgewater, NJ
899 Palisade Avenue Leased September 2001
Fort Lee, NJ
Item 3. Legal Proceedings
The Company and the Bank are periodically parties to or otherwise involved
in legal proceedings arising in the normal course of business, such as claims to
enforce liens, claims involving the making and servicing of real property loans,
and other issues incident to the Bank's business. Management does not believe
that there is any pending or threatened proceeding against the Company or the
Bank which, if determined adversely, would have a material effect on the
business, financial position or results of operations of the Company or the
Bank.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted for a vote of the Registrant's shareholders
during the Fourth Quarter of fiscal 1996.
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters
Commencing on December 20, 1996, the Company's Common Stock began trading
on the American Stock Exchange under the symbol "BVB." Prior to that time, the
Common Stock was not traded on any recognized securities exchange. As of
December 31, 1996, there were 460 stockholders of record of the Common Stock.
The following table sets forth the high and low bid prices of the Common
Stock for the fourth quarter of 1996, as reported on the American Stock
Exchange, since December 20, 1996.
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Bid
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Cash
High Low Dividend
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1996 Fourth Quarter
(since December 20, 1996) $24.25 $19.75 None
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The Company began paying quarterly dividends of $0.18 per share in January,
1996, as adjusted for the issue of two shares of Common Stock for each share of
Bank Common Stock. Although the amount of dividends to be paid by the Company
will be determined by the Board of Directors of the Company from time to time
based upon the Company's earnings, capital needs, financial condition and other
relevant factors, the Board of Directors of the Company currently intends to
adhere to the dividend policy previously established by the Bank.
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Item 6. Management's Discussion and Analysis or Plan of Operation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the Company's financial statements
and the notes related thereto included herein. When necessary, reclassifications
have been made to prior years' data throughout the following discussion and
analysis for purposes of comparability with 1995 data.
OVERVIEW AND STRATEGY
The Company was formed in 1996 to act as a holding company for the Bank
which began full service operation as a commercial bank on March 15, 1990. The
Company accepts deposits from the general public, including individuals,
businesses, non-profit organizations and governmental units located primarily
within its trade area. The Company makes commercial loans, consumer loans,
residential and commercial real estate loans and issues both mastercard and visa
credit cards. In addition, the Company provides other customer services and
makes investments in securities, as permitted by law. The Company has sought to
offer an alternative, community-oriented style of banking in an area presently
dominated by larger, statewide and national institutions. The Company has sought
to be a positive force in its area by assisting in the development of the
residential sector; by serving the needs of small and medium-sized businesses
and the local professional community, and by meeting the requirements of
individuals residing, working and shopping in the Company's eastern Bergen
County, New Jersey market area by extending consumer, commercial and real estate
loans and by offering depository services. The Company believes that the
following attributes of the Company have made the Company attractive to local
business people and residents:
o Competitively priced services;
o Strategically located branch offices;
o Full service business hours of 7:00 am to 7:00 pm weekdays and 9:00 am to
1:00 pm Saturdays;
o Direct access to management by members of the community, whether during or
after business hours;
o Local conditions and needs are taken into account when deciding loan
applications and making other business decisions effecting members of the
community;
o Responsiveness to requests for information and services by depositors and
others; and
o Positive involvement in the community affairs of eastern Bergen County.
Since opening in 1990, the Bank has established three branches in addition
to its main office. The bank expects to continue to seek additional
strategically-located de novo branch locations within Bergen County. Particular
emphasis will be placed on presenting an alternative banking culture in
communities which are dominated by non-local competitors and where no community
banking approach exists or in locations which the Company perceives to be
economically emerging.
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RESULTS OF OPERATIONS
The Company's results of operations depend primarily on its net interest
income, which is the difference between the interest earned on its
interest-earning assets and the interest paid on funds borrowed to support those
assets - primarily deposits. Net interest margin is the difference between the
weighted average rate received on interest-earning assets and the weighted
average rate paid on interest-bearing liabilities, as well as the average level
of interest-earning assets as compared with that of interest-bearing
liabilities. Net income is also effected by the amount of non-interest income
and other operating expenses.
NET INCOME
For the year ended December 31, 1996, net income increased by $309,000 or
25.0 % to $1,544,000 from $1,235,000 for the year ended December 31, 1995. The
increase in net income is attributable to an increase in interest income of
$1,492,000, or 23.4%; partially offset by a $480,000, or 26.0 % increase in
interest expense. The increase in interest income was primarily attributable to
an increase of 36.6% in total loans and a 56.1% increase in investment
securities. In addition to the increase in net interest income, non-interest
income, consisting primarily of service charges on deposit accounts, increased
by $215,000 or 37.2%. The yield remained relatively stable, with the average
yield on interest earning assets increasing to 7.95% for the year ending
December 31, 1996 as compared to 7.94% for the year ending December 31, 1995.
The volume increases in the bank's loan and securities portfolio were primarily
funded through deposit growth.
Interest expense rose $480,000 or 26.0% for the year ending December 31,
1996 compared to the year ended December 31, 1995. This increase is attributable
to an increase in interest-bearing deposits of $35,000,000 or 56.5% compared to
the December 31, 1995 interest bearing deposits.
Operating expenses increased by $611,000 or 20.3% for the year ended
December 31, 1996 compared to 1995. These increases reflect the Company's
continued growth, the addition of two new branch offices during the second half
1996 and administrative expenses associated with formation of the bank holding
company and listing of its stock on the American Stock Exchange.
On a per share basis, primary earnings per share were $1.41 for the year
ended December 31, 1996 as compared to $1.20 for the year ended December 31,
1995 and fully-diluted earnings per share were $1.29 for the full year 1996 as
compared to $1.20 for the full year 1995.
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The following table sets forth certain information concerning certain of
the Company's financial ratios at the periods presented:
12 month period 12 month period
ended 12/31/96 ended 12/31/95
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Return on Assets 1.42% 1.39%
Return on Equity 13.35% 12.12%
Dividend Payout 24.09% .00%
Equity to Assets 10.62% 11.47%
COMPARATIVE AVERAGE BALANCE SHEETS
The following table reflects the components of the Company's net interest
income, setting forth for the periods presented herein, (1) average assets,
liabilities and stockholder's equity, (2) interest income earned on
interest-earning assets and interest expenses paid on interest-bearing
liabilities, (3) average yields earned on interest-earning assets and average
rates paid on interest-bearing liabilities, (4) the Company's net interest
spread (i.e., the average yield on interest-earning assets less the average rate
on interest-bearing liabilities) and (5) net yield on interest-earning assets.
Rates are computed on a taxable equivalent basis.
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<TABLE>
<CAPTION>
Year Ended December 31,
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1996 1995
Average Average
Interest Rates Interest Rates
Average Income Earned/ Average Income Earned/
Assets Balance Expense Paid Balance Expense Paid
- ------ ------- ------- ------- ------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earnings Assets:
Taxable Loans (net of
unearned income) $ 65,690 $5,961 9.07% $50,181 $4,712 9.39%
Tax-Exempt Securities 6,668 429 6.43% 3,822 250 6.54%
Taxable Investment
Securities 21,974 1,290 5.87% 22,410 1,207 5.39%
Federal Funds Sold 6,426 339 5.28% 4,997 294 5.88%
------- ------ ----- -------- ------ -----
Total Interest-earnings
Assets 101,050 8,038 7.95% 81,410 6,463 7.94%
------- ------
Non-interest earnings
Assets 8,617 8,081
Allowance for Possible
Loan Losses (797) (695)
- ----- -------
TOTAL ASSETS $108,870 $88,796
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Liabilities and Shareholder's Equity
Interest-Bearing Liabilities
NOW Deposits $ 15,134 166 1.10% $12,381 173 1.40%
Savings Deposits 13,212 284 2.15% 14,345 347 2.42%
Money Market Deposits 11,879 259 2.18% 10,770 260 2.41%
Time Deposits 33,159 1,601 4.83% 22,425 1,065 4.75%
Short Term Borrowings 245 14 5.71% - - -
------- ------ ------ --------- ------ -------
Total Interest Bearing
Liabilities $ 73,629 2,324 3.16% $59,921 1,845 3.08%
Non-Interest Bearing Liabilities
Demand Deposits 23,218 18,108
Other Liabilities 461 577
-------- ------
Total Non-Interest
Bearing Liabilities 23,679 18,685
Shareholders' Equity 11,562 10,190
Total Liabilities and
Shareholders' Equity $108,870 $88,796
======== =======
Net Interest Income 5,714 4,618
Net Interest Rate Spread 4.79% 4.86%
Net Interest Margin 5.65% 5.67%
Rate of Interest Earnings
Assets to Interest-Bearing
Liabilities 1.37 1.36
</TABLE>
-15-
<PAGE>
The following table presents, by category, the major factors that
contributed to the changes in net interest income for each of the years ended
December 31, 1996 and 1995. Amounts have been computed on a fully tax-equivalent
basis, assuming a federal tax rate of 39%.
Year Ended December 31,
1996 versus 1995
-----------------
Increase (Decrease)
due to
change in
Average Volume Average Rate Net
-------------- ------------ ---
(in Thousands)
Interest Income:
Taxable Loans
(net of unearned income) $1,460 (211) $1,249
Tax Exempt Securities 186 (7) 179
Taxable Investment Securities (24) 107 83
Federal Funds Sold 83 (38) 45
Federal Home Loan Bank Stock 0 19 19
------ ---- ------
TOTAL INTEREST INCOME $1,705 (130) $1,575
====== ==== ======
Interest Expense:
NOW Deposits 39 (46) (7)
Savings Deposits (27) (36) (63)
Money Market Deposits 45 (46) (1)
Time Deposits 509 27 536
Net Term Borrowings 0 14 14
------ ---- ------
TOTAL INTEREST EXPENSE 566 (87) 479
====== ==== ======
Increase/Decrease in
Net Interest Income $1,139 (43) 1,096
====== ==== ======
-16-
<PAGE>
PROVISIONS FOR LOAN LOSSES
For the year ended December 31, 1996, the Company's provision for loan
losses was $193,000, an increase of $101,000 over the provision of $92,000 for
the year ended December 31, 1995. The increased provisions reflect the continued
growth in the loan portfolio.
OTHER INCOME
Other income, which was primarily attributable to service fees received
from deposit accounts, amounted, for the year ended December 31, 1996, to
$793,000, an increase of $215,000 over the $578,000 received during the year
ended December 31, 1995. This increase is primarily related to the increasing
level of deposits.
OTHER EXPENSES
Other expenses for the year ended December 31, 1996 amounted to $3,615,000,
an increase of $611,000 over the $3,004,000 for the year ended December 31,
1995. These increases are related primarily to staff additions, occupancy and
advertising attributable to the Company's two new branches, administrative
expenses associated with the formation of the bank holding company and listing
of the company's stock on the American Stock Exchange and customary increases in
salary and employee benefits, occupancy expenses and data processing fees
commensurate with the bank's continued growth.
INCOME TAX EXPENSE
The income tax provision, which includes both federal and state taxes for
the years ended December 31, 1996 and 1995 was $987,000 and $781,000
respectively. Increase in income taxes was primarily attributable to increases
in income before taxes in both periods reported.
FINANCIAL CONDITION
At December 31, 1996 the Company's total assets were $139,060,000 compared
to $96,794,000 at December 31, 1995. Total loans increased to $76,718,000 at
December 31, 1996 from $56,141,000 for the year ended 1995. Total deposits at
year end 1996 were $126,333,000, increased from $85,225,000 at December 31,
1995.
LOAN PORTFOLIO
At December 31, 1996 the Company's total loans were $76,718,000, an
increase of $20,577,000 or 36.6% over total loans at December 31, 1995. The
increase in the loan portfolio represents increased penetration of the local
small business market. Management believes that the Company's success in
penetrating this market is attributable to the fact that through mergers and
acquisitions, the Company's trade area is now primarily served by large
institutions frequently headquartered out of state. Management believes that it
is not cost efficient for these larger institutions to provide the level of
personal service to small business borrowers that the Company provides.
-17-
<PAGE>
The Company's loan portfolio consists of commercial and industrial loans,
real estate loans and consumer loans. Commercial and industrial loans are made
for the purpose of providing working capital, financing the purchase of
equipment or inventory and for other business purposes. Real estate loans
consist of loans secured by commercial or residential real property and loans
for the construction of commercial or residential property. Consumer loans are
made for the purpose of financing the purchase of consumer goods, home
improvements and other personal needs, and are generally secured by the personal
property being purchased.
The Company's loans are primarily to businesses and individuals located in
eastern Bergen County, New Jersey. The Company has not made loans to borrowers
outside of the United States. Commercial lending activities are focused
primarily on lending to small business borrowers. The Company believes that its
strategy of customer service, competitive rate structures and selective
marketing have enabled the Company to gain market entry to local loans. Bank
mergers and lending restrictions at larger banks competing with the Company have
also contributed to the Company's efforts to attract borrowers.
The following table sets forth the classification of the Company's loans by
major category as of December 31, 1996 and 1995 respectively:
December 31, 1996 December 31, 1995
----------------- -----------------
Amount Percent Amount Percent
------ ------- ------ -------
(Dollars in Thousands)
Commercial and Industrial 12,555 16.4% 11,295 20.1%
Real Estate:
Non-Residential Properties 23,000 30.0% 13,893 24.7%
Residential Properties 37,706 49.1% 28,164 50.2%
Construction 1,752 2.3% 1,320 2.4%
Consumer 1,705 2.2% 1,469 2.6%
------ ---- ------ -----
TOTAL LOANS 76,718 100% 56,141 100%
The following table sets forth fixed and adjustable rate loans as of
December 31, 1996 in terms of interest rate sensitivity:
Within 1 to 5 After
One Year Years 5 Years Total
-------- ------ ------- ------
Loans with Fixed Rate 3,175 36,609 3,102 42,886
Loans with Adjustable Rate 28,892 4,940 -0- 33,832
-18-
<PAGE>
ASSET QUALITY
The Company's principal assets are its loans. Inherent in the lending
function is the risk of the borrower's inability to repay a loan under its
existing terms. Risk elements include non-accrual loans, past due and
restructured loans, potential problem loans, loan concentrations and other real
estate owned.
Non-performing assets include loans that are not accruing interest
(non-accrual loans) as a result of principal or interest being in default for a
period of 90 days or more. When a loan is classified as non-accrual, interest
accruals discontinue and all past due interest, including interest applicable to
prior years, is reversed and charged against current income. Until the loan
becomes current, any payments received from the borrower are applied to
outstanding principal until such time as management determines that the
financial condition of the borrower and other factors merit recognition of such
payments as interest.
The Bank attempts to minimize overall credit risk through loan
diversification and its loan approval procedures. Due diligence begins at the
time a borrower and the Company begin to discuss the origination of a loan.
Documentation, including a borrower's credit history, materials establishing the
value and liquidity of potential collateral, the purpose of the loan, the source
and timing of the repayment of the loan, and other factors are analyzed before a
loan is submitted for approval. Loans made are also subject to periodic review.
The following table sets forth information concerning the Company's
non-performing assets as of the dates indicated:
Non-Performing Loans (in thousands)
December 31,
-----------------------------
1996 1995
---- ----
Non-accrual loans 0 $163
Non-accrual loans to total loans 0 0.29%
Non-performing assets to total assets 0 0.17%
Allowance for possible loan losses as
a percentage of non-performing loans N/A 424%
As of December 31, 1996 the Company has no non-performing loans; one home
equity line of credit past due more than 90 days, totaling $125,000 and no
restructured loans. The $163,000 in non-accrual loans at December 31, 1995
represents one non-accrual mortgage which is classified as REO as of December
31, 1996 and has been written down to $139,000.
Other than as disclosed above, there were no loans where information about
possible credit problems of borrowers causes management to have serious doubts
as to the ultimate collectibility of such loans.
At the dates indicated in the above table, there were no concentrations of
loans exceeding 10% of the Company's total loans and the Company had no foreign
loans.
-19-
<PAGE>
ALLOWANCE FOR LOAN LOSSES
The Company attempts to maintain an allowance for loan losses at a
sufficient level to provide for potential losses in the loan portfolio. Loan
losses are charged directly to the allowance when they occur and any recovery is
credited to the allowance. Risks within the loan portfolio are analyzed on a
continued basis by the Company's officers, by outside, independent loan review
auditors and by the Company's audit committee. A risk system, consisting of
multiple grading categories, is utilized as an analytical tool to assess risk
and appropriate reserves. Along with the risk system, management further
evaluates risk characteristics of the loan portfolio under current and
anticipated economic conditions and considers such factors as the financial
condition of the borrower, past and expected loss experience, and other factors
which management feels deserve recognition in establishing an appropriate
reserve. These estimates are reviewed at least quarterly, and, as adjustments
become necessary, they are realized in the periods in which they become known.
Additions to the allowance are made by provisions charged to expense and the
allowance is reduced by net charge-offs (i.e. - loans judged to be uncollectible
and charged against the reserve, less any recoveries on such loans.) Although
management attempts to maintain the allowance at a level deemed adequate, future
additions to the allowance may be necessary based upon changes in market
conditions. In addition, various regulatory agencies periodically review the
allowance for loan losses. These agencies may require additional provisions
based on their judgments about information available to them at the time of
their examination.
The Company's allowance for possible loan losses totaled $861,000 and
$692,000 at December 31, 1996 and 1995 respectively. This increase in allowance
is due to continued increase in the loan portfolio. The following is a summary
of the reconciliation of the allowance for loan losses for the years ended
December 31, 1996 and 1995:
(in thousands)
Year Ended December 31,
1996 1995
---- ----
Balance at beginning of period $692 $626
Net charge offs (24) (26)
Provision charged to expense 193 92
---- ----
BALANCE AT END OF PERIOD $861 $692
==== ====
Ratio of net charge offs to
average loans outstanding 0.04% 0.05%
Balance of allowance at end of period as a
percent of loans at end of period 1.12% 1.23%
-20-
<PAGE>
The following table sets forth, for each of the Company's major lending
areas, the amount and percentage of the Company's allowance for loan losses
attributable to such category, and the percentage of total loans represented by
such category, as of the periods indicated:
<TABLE>
<CAPTION>
Allocation of the Allowance for Loan Losses by Category
(Dollars in Thousands)
December
---------------------------------------------------------------------
1996 1995
-------------------------------- --------------------------------
% of % of
Amount % of ALL Total Loans Amount % of ALL Total Loans
------ -------- ----------- ------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance Applicable to:
Commercial & Industrial $235 27.29% 25.43% $167 24.13% 23.38%
Real Estate:
Non-residential Property 238 27.64% 31.04% 156 22.54% 27.74%
Residential Property 234 27.18% 39.02% 220 31.79% 43.98%
Construction 18 2.10% 2.28% 13 1.88% 2.30%
Consumer 21 2.43% 2.23% 18 2.60% 2.60%
---- ----- ----- ---- ----- -----
Sub-total $746 86.64% 100% $574 82.95% 100%
Unallocated Reserves 115 13.36% 118 17.05%
---- ----- ---- -----
Total $861 100% 100% $692 100% 100%
</TABLE>
INVESTMENT SECURITIES
The Company maintains an investment portfolio to fund increased loan demand
or deposit withdrawals and other liquidity needs and to provide an additional
source of interest income. The portfolio is composed of U.S. Treasury
Securities, obligations of U.S. Government Agencies and selected municipal and
state obligations.
The Company adopted Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities," (SFAS115),
effective January 1, 1994. Under SFAS115, securities are classified as
securities held to maturity based on management's intent and the Company's
ability to hold them to maturity. Such securities are stated at cost, adjusted
for unamortized purchase premiums and discounts. Securities that are bought and
held principally for the purpose of selling them in the near term are classified
as trading securities, which are carried at market value. Realized gains and
losses and gains and losses from marking the portfolio to market value are
included in trading revenue. Securities not classified as securities held to
maturity or trading securities are classified as securities available for sale,
and are stated at fair value. Unrealized gains and losses on securities
available for sale are excluded from results of operations, and are reported as
a separate component of stockholders' equity, net of taxes. Securities
classified as available for sale include securities that may be sold in response
to changes in interest rates, changes in prepayment risks, the need to increase
regulatory capital or other similar requirements.
-21-
<PAGE>
Management determines the appropriate classification of securities at the
time of purchase. At December 31, 1996 $27,517,000 of the Company's investment
securities were classified as held to maturity and the remainder were classified
as available for sale. At December 31, 1996 no investment securities were
classified as trading securities.
At December 31, 1996 total investment securities were $36,161,000, an
increase from total investment securities of $24,410,000 at December 31, 1995.
This increase in investment securities from year end 1995 to year end 1996
reflects increases in total deposits in excess of funds needed for new loan
originations.
The following table sets forth the carrying value of the Company's security
portfolio as of the dates indicated:
A comparative summary of investment securities available for sale as of the
periods indicated: (in thousands)
<TABLE>
<CAPTION>
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Market Value
-------------- ---------------------- ----------------------- ------------
<S> <C> <C> <C> <C>
December 31, 1996:
U.S. Government and
Agency Obligations $ 8,647 15 (18) $ 8,644
December 31, 1995:
U.S. Government and
Agency Obligations 6,762 38 (20) 6,780
</TABLE>
A comparative summary of investment securities held to maturity as of
December 31; (in thousands)
<TABLE>
<CAPTION>
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Market Value
-------------- ---------------------- ----------------------- ------------
<S> <C> <C> <C> <C>
December 31, 1996:
U.S. Government and
Agency Obligations $21,183 48 (37) $21,194
Municpal Obligations 6,334 18 -- 6,352
------- -- --- -------
$27,517 66 (37) $27,546
======= == === =======
December 31, 1995:
U.S. Government and
Agency Obligations $12,668 120 (11) 12,777
Municipal Obligations 4,962 28 -- 4,990
------- -- --- -------
$17,630 148 (11) $17,767
======= === === =======
</TABLE>
-22-
<PAGE>
The following table sets forth as of December 31, 1996 and December 31,
1995 the maturity distribution of the Company's investment portfolio:
<TABLE>
Maturity Schedule of Investment Securities
December 31, 1996
Securities Available
Investment Securities For Sale
(in thousands)
-------------------------------- ----------------
Weighted Weighted
Amortized Market Average Amortized Market Average
Cost Value Yield Cost Value Yield
--------- ------ --------- --------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Within
1 Year 15,702 15,723 6.06% 4,000 4,002 5.80%
1 to 5
Years 11,423 11,417 5.67% 4,647 4,642 5.86%
6 to 10
Years 392 406 9.12% - - -
------ ------ ----- ------ ----- -----
27,517 27,546 8,647 8,644
</TABLE>
<TABLE>
December 31, 1995
Securities Available
Investment Securities For Sale
(in thousands)
-------------------------------- ----------------
Weighted Weighted
Amortized Market Average Amortized Market Average
Cost Value Yield Cost Value Yield
--------- ------ --------- --------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Within
1 Year 9,800 9,816 5.55% 4,011 4,020 5.72%
1 to 5
Years 7,439 7,539 6.22% 2,751 2,760 5.86%
6 to 10
Years 391 412 9.12% - - -
------ ------- ----- ----- ----- ----
17,630 17,767 6,762 6,780
</TABLE>
The Company sold no securities from its portfolio during 1996. Proceeds
from the sales of securities available for sale during the year ended December
31, 1995 were $2.9 million. Gross gains of $31,000 and gross losses of $36,000
were realized on those sales in 1995.
-23-
<PAGE>
DEPOSITS
Deposits are the Company's primary source of funds. The Company experienced
a growth in average deposit balances of $18,573,000 or 23.8% to $96,602,000 for
the year ended December 31, 1996 as compared to the year ended December 31,
1995. This growth was accomplished through the third and fourth quarter 1996
addition of two branch offices; through the Company's emphasis on customer
service, extended hours of operation, competitive rate structure and selective
marketing. Among the increase in deposits, average time deposits grew 47.9% or
$10,734,000 from 1995 to 1996 while average demand deposits, which are
non-interest bearing, grew 28.2% or $5,110,000 during 1996 as compared to 1995.
The aggregate amount of average non-interest bearing deposits totaled 24.0% of
the Company's total deposits for the year ended December 31, 1996 as compared to
23.2% for the year ended December 31, 1995. The Company has no foreign deposits,
nor are there any material concentrations of deposits.
The following table sets forth the average amount of various types of
deposits for each of the periods indicated:
December 31, (Dollars in Thousands)
--------------------------------
1996 1995
-------------- ---------------
Amount % Amount %
------- ----- ------- -----
Non-Interest Bearing Demand $23,218 24.0% $18,108 23.2%
Interest Bearing Demand 27,113 28.0% 23,151 29.7%
Savings 13,212 13.7% 14,345 18.4%
Time Deposits 33,159 34.3% 22,425 28.7%
------- ---- ------- ----
TOTAL $96,602 100% $78,029 100%
The Company does not actively solicit short-term deposits of $100,000 or
more because of the liquidity risks posed by such deposits. The following table
summarizes the maturity distribution of certificates of deposit of denominations
of $100,000 or more as of December 31, 1996.
Time Deposits ($100,000 and over)
(in thousands)
Three months or less $12,581
Over three months through six months 9,393
Over six months through twelve months 2,330
Over twelve months 100
-------
TOTAL $24,404
-24-
<PAGE>
LIQUIDITY
The Company's liquidity is a measure of its ability to fund loans,
withdrawals or maturities of deposits and other cash outflows in a
cost-effective manner. The Company's principal sources of funds are deposits,
scheduled amortization and prepayments of loan principal, sales and maturities
of investment securities and funds provided by operations. While scheduled loan
payments and maturing investments are relatively predictable sources of funds,
deposit flows and loan prepayments are greatly influenced by general interest
rates, economic conditions and competition.
The Company's total deposits equaled $126,333,000 at December 31, 1996 as
compared to $85,225,000 at December 31, 1995. The increase in funds provided by
deposit inflows during these years has been more than sufficient to provide for
the Company's loan demand and excess funds have been invested in investment
securities and federal funds sold.
Through the Company's investment portfolio the Company has generally sought
to obtain a safe, yet slightly higher yield than would have been available to
the Company as a net seller of overnight federal funds while still maintaining
liquidity. Through its investment portfolio, the Company also attempts to manage
its maturity gap by seeking maturities of investments which coincide as closely
as possible with maturities of deposits. The bank's investment portfolio also
includes securities held for sale to provide liquidity for anticipated loan
demand and other liquidity needs.
Although the Bank has traditionally been a net "seller" of federal funds,
the Bank does maintain lines of credit with the Federal Home Loan Bank of New
York, Summit Bank and Bank of New York for "purchase" of federal funds in the
event that temporary liquidity needs arise.
Management believes that the Company's current sources of funds provide
adequate liquidity for the current cash flow needs of the Company.
INTEREST RATE SENSITIVITY ANALYSIS
The principal objective of the Company's asset and liability management
function is to evaluate the interest-rate risk included in certain balance sheet
accounts; determine the level of risk appropriate given the Company's business
focus, operating environment, capital and liquidity requirements; establish
prudent asset concentration guidelines; and manage the risk consistent with
Board approved guidelines. The Company seeks to reduce the vulnerability of its
operations to changes in interest rates and to manage the ratio of interest-rate
sensitive assets to interest-rate sensitive liabilities within specified
maturities or repricing dates. The Company's actions in this regard are taken
under the guidance of the Asset/Liability Committee (ALCO) of the Board of
Directors. The ALCO generally reviews the Company's liquidity, cash flow needs,
maturities of investments, deposits and borrowings and current market conditions
and interest rates.
-25-
<PAGE>
One of the monitoring tools used by the ALCO is an analysis of the extent
to which assets and liabilities are interest rate sensitive and measures the
bank's interest rate sensitivity "gap." An asset or liability is said to be
interest rate sensitive within a specific time period if it will mature or
reprice within that time period. A gap is considered positive when the amount of
interest rate sensitive assets exceeds the amount of interest rate sensitive
liabilities. A gap is considered negative when the amount of interest rate
sensitive liabilities exceeds interest rate sensitive assets. Accordingly,
during a period of rising rates, a negative gap may result in the yield on the
institution's assets increasing at a slower rate than the increase in its cost
of interest-bearing liabilities. Conversely, during a period of falling interest
rates, an institution with a negative gap would experience a repricing of its
assets at a slower rate than its interest-bearing liabilities which,
consequently, may result in its net interest income growing.
The following table sets forth the amounts of interest-earnings assets and
interest-bearing liabilities outstanding at the periods indicated which are
anticipated by the bank, based upon certain assumptions, to reprice or mature in
each of the future time periods presented. Except as noted, the amount of assets
and liabilities which reprice or mature during a particular period were
determined in accordance with the earlier of the term to repricing or the
contractual terms of the asset or liability. Because the bank has no
interest-bearing liabilities with a maturity greater than five years, management
believes that a static gap for the over five year time period reflects a more
accurate assessment of interest rate risk. The bank's loan repayment assumptions
are based upon actual historic prepayment rates.
Bridge View Bank
Cumulative Rate Sensitive Balance Sheet (as of December 31, 1996)
(in thousands)
0 - 3 0 - 6 0 to 1 0 to 5 5 + All
Months Months Year Years Years Others Total
------- ------- ------- ------- ------- ------- -------
Fixed Rate Investments 3,500 8,406 20,681 36,246 391 0 36,246
-------
36,246
Loans:
Commercial 17,264 18,586 19,369 42,592 130 0 42,722
Participations 0 180 180 2,359 0 0 2,359
Mortgages 50 0 381 10,381 2,312 0 12,693
Consumer 14,435 14,550 17,157 18,261 683 0 18,944
------
76,718
Federal Funds Sold 14,500 14,500 14,500 14,500 0 0 14,500
Non-Interest Bearing/
Other Assets 0 0 0 0 0 11,205 11,205
------ ------ ------ ------- ------ ------- -------
TOTAL ASSETS 49,749 56,222 72,268 123,863 127,855 139,060 139,060
-26-
<PAGE>
<TABLE>
<CAPTION>
Bridge View Bank
Cumulative Rate Sensitive Balance Sheet (as of December 31, 1996)
(in thousands)
0 - 3 0 - 6 to 1 0 to 5 5 + All
Months Months Year Years Years Others Total
------ ------ ---- ----- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Transaction/
NOW Accounts 18,684 18,684 18,684 18,684 0 0 18,684
Money Market 11,222 11,222 11,222 11,222 0 0 11,222
Other Savings 13,160 13,160 13,160 13,160 0 0 13,160
CD's < $100,000 11,522 25,100 29,008 29,518 0 0 29,518
CD's > $100,000 9,526 20,754 23,984 24,404 0 0 24,404
Non-Interest Bearing/
Other Liabilities 0 0 0 0 0 29,853 29,853
Non-Interest Bearing/
Equity 0 0 0 0 0 12,219 12,219
------- ------- ------- ------- ------ ------- -------
TOTAL LIABILITIES
AND EQUITY 64,114 88,920 96,058 96,988 96,988 139,060 139,060
Dollar Gap (14,365) (32,698) (23,790) 26,875 30,867
Cumulative Gap/
Total Assets -10.48% -23.86% -17.36% 19.61% 22.20%
Target Gap Range +/- 35.0% +/- 30.0% +/- 25.0% +/- 25.0% +/- 25.0%
RSA/RSL * 77.59% 63.23% 75.23% 127.71% 131.33%
<FN>
* RSA/RSL is the percentage of repricing rate sensitive assets to rate sensitive
liabilities.
</FN>
</TABLE>
CAPITAL
A significant measure of the strength of a financial institution is its
capital base. The Company's federal regulators have classified and defined
Company capital into the following components: (1) Tier I capital, which
includes tangible shareholders' equity for common stock and qualifying perpetual
preferred stock, and (2) Tier II capital, which includes a portion of the
allowance for possible loan losses, certain qualifying long-term debt and
preferred stock which does not qualify for Tier I capital. Minimum capital
levels are regulated by risk-based capital adequacy guidelines which require
certain capital as a percent of the Company's assets and certain off-balance
sheet items adjusted for predefined credit risk factors (risk-adjusted assets.)
A Bank Holding Company is required to maintain, at a minimum, Tier I
capital as a percentage of risk-adjusted assets of 4.0% and combined Tier I and
Tier II capital as a percentage of risk-adjusted assets of 8.0%.
-27-
<PAGE>
In addition to the risk-based guidelines, the Company's regulators require
that an institution which meets the regulator's highest performance and
operation standards maintain a minimum leverage ratio (Tier I capital as a
percentage of tangible assets) of 3%. For those institutions with higher levels
of risk or that are experiencing or anticipating significant growth, the minimum
leverage ratio will be evaluated through the ongoing regulatory examination
process. The Bank is subject to substantially similar regulations by its federal
regulations.
The following table summarizes the risk-based and leverage capital ratios
for the bank at December 31, 1996 as well as the required minimum regulatory
capital ratios:
Capital Adequacy
Minimum
December 31, Regulatory
1996 Requirements
----- ------------
Risk Based Capital:
Tier I Capital Ratio 13.72% 4.0%
Total Capital Ratio 14.69% 8.0%
Leverage Ratio 11.20% 4.0%
IMPACT OF INFLATION AND CHANGING PRICES
The financial statements of the Bank and notes thereto, presented elsewhere
herein, have been prepared in accordance with generally accepted accounting
principles, which require the measurement of financial position and operating
results in terms of historical dollars without considering the change in the
relative purchasing power of money over time and due to inflation. The impact of
inflation is reflected in the increased cost of the Company's operations. Unlike
most industrial companies, nearly all the assets and liabilities of the Company
are monetary. As a result, interest rates have a greater impact on the Company's
performance than do the effects of general levels of inflation. Interest rates
do not necessarily move in the same direction or to the same extent as the
prices of goods and services.
-28-
<PAGE>
RECENTLY ISSUED ACCOUNTING STANDARDS
On June 28, 1996, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities." This
Statement provides accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities based on
consistent application of a financial components approach that focuses on
control. It distinguishes transfers of financial assets that are sales from
transfers that are secured borrowings.
Under the financial-components approach, after a transfer of financial
assets, an entity recognizes all financial and servicing assets it controls and
liabilities it has incurred and derecognizes financial assets it no longer
controls and liabilities that have been extinguished. The financial-components
approach focuses on the assets and liabilities that exist after the transfer.
Many of these assets and liabilities are components of financial assets that
existed prior to the transfer. If a transfer does not meet the criteria for a
sale, the transfer is accounted for as a secured borrowing with pledge of
collateral.
It is important to note that this Statement extends the
"available-for-sale" or "trading" approach in SFAS 115, Accounting for Certain
Investments in Debt and Equity Securities, to non-security financial assets that
can contractually be prepaid or otherwise settled in such a way that the holder
of the asset would not recover substantially all of its recorded investment.
Thus, non-security financial assets (no matter how acquired) such as loans,
other receivables, interest-only strips or residual interests in securitization
trusts (for example, branches subordinate to other branches, cash reserve
accounts or rights to future interest from serviced assets that exceed
contractually specified servicing fees) that are subject to prepayment risk that
could prevent recovery of substantially all of the recorded amount are to be
reported at fair value with the change in fair value accounted for depending on
the asset's classification as "available-for-sale" or "trading." The Statement
also amends SFAS 115 to prevent a security from being classified as
held-to-maturity if the security can be prepaid or otherwise settled in such a
way that the holder of the security would not recover substantially all of its
recorded investment.
This Statement requires that a liability be derecognized if and only if
either (a) the debtor pays the creditor and is relieved of its obligation for
the liability or (b) the debtor is legally released from being the primary
obligor under the liability either judicially or by the creditor. Therefore, a
liability is not considered extinguished by an in-substance defeasance.
This Statement provides implementation guidance for accounting for (1)
securitizations, (2) transfers of partial interests, (3) servicing of financial
assets, (4) securities lending transactions, (5) repurchase agreements including
"dollar rolls", (6) "wash sales," (7) loan syndications and participations, (8)
risk participations in banker's acceptances, (9) factoring arrangements, (10)
transfers of receivables with recourse, (11) transfers of sales-type and direct
financing lease receivables and (12) extinguishments of liabilities.
-29-
<PAGE>
A number of existing FASB Statements are superseded or amended by SFAS 125.
SFAS 125 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996, and is to be
applied prospectively. Earlier or retroactive application is not permitted.
Also, the extension of the SFAS 115 approach to certain non-security financial
assets and the amendment to SFAS 115 is effective for financial assets held on
or acquired after January 1, 1997. Reclassifications that are necessary because
of the amendment do not call into question an entity's intent to hold other debt
securities to maturity in the future. The Company, at this time, does not
believe that SFAS 125 will have a significant impact on the consolidated
financial position or results of operations in 1997.
-30-
<PAGE>
Item 7. Financial Statements
The Consolidated Financial Statements of the Company as of December 31,
1996 and 1995, and the related Consolidated Statements of Income, Changes in
Stockholders' Equity, and Cash Flows for each of the years in the three-year
period ended December 31, 1996 are included herein as indicated on the "Index to
Consolidated Financial Statements" on page F-1.
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
-31-
<PAGE>
PART III
Item 9. Directors and Executive Officers of the Company; Compliance
with Section 16(a) of the Exchange Act
Information concerning the directors and executive officers is included in
the definitive Proxy Statement for the Company's 1997 Annual Meeting under the
caption "Proposal I - Election of Directors" and information concerning
compliance with Section 16(a) of the Exchange Act is included under the caption
"Compliance with Section 16(a) of the Securities Exchange Act of 1934," each of
which is incorporated herein by reference. It is expected that such Proxy
Statement will be filed with the Securities and Exchange Commission no later
than April 29, 1997.
Set forth below is the name of and certain biographical information
regarding the additional principal officer of the Company who does not also
serve as a director. The term of office for such officer is one year.
Thomas W. Thomasma, 42, has been Senior Vice President and Senior Lending
Officer of the Bank since 1994. He previously served in Senior Lending
capacities at Independence Bank and at First Fidelity Bank for more than five
years.
Item 10. Executive Compensation
Information concerning executive compensation is included in the definitive
Proxy Statement for the Company's 1997 Annual Meeting under the caption
"Executive Compensation" and is hereby incorporated by reference. It is expected
that such Proxy Statement will be filed with the Securities and Exchange
Commission no later than April 29, 1997.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Information concerning security ownership of certain beneficial owners and
management is included in the definitive Proxy Statement for the Company's 1997
Annual Meeting under the caption "Security Ownership of Certain Beneficial
Owners and Management" which is incorporated herein by reference. It is expected
that such Proxy Statement will be filed with the Securities and Exchange
Commission no later than April 29, 1997.
Item 12. Certain Relationships and Related Transactions
Information concerning certain relationships and related transactions is
included in the definitive Proxy Statement for the Company's 1997 Annual Meeting
under the caption "Certain Transactions with Management" which is incorporated
herein by reference. It is expected that such Proxy Statement will be
-32-
<PAGE>
filed with the Securities and Exchange Commission no later than April 29, 1997.
Item 13. Exhibits, List and Reports on Form 8-K
(a) Exhibits.
================================================================================
Exhibit
Number Description of Exhibits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3(i) Certificate of Incorporation of the Company(1)
- --------------------------------------------------------------------------------
3(ii) Bylaws of the Company(1)
- --------------------------------------------------------------------------------
4(i) Form of Non-Transferable Warrant Certificate(1)
- --------------------------------------------------------------------------------
4(ii) Form of Stock Certificate(2)
- --------------------------------------------------------------------------------
10(i) Bridge View Bank 1994 Stock Option Plan(1)
- --------------------------------------------------------------------------------
10(ii) Bridge View Bank 1994 Stock Option Plan for Non-
Employee Directors(1)
- --------------------------------------------------------------------------------
21 Subsidiaries of the Registrant
- --------------------------------------------------------------------------------
23 Consent of KPMG Peat Marwick LLP
- --------------------------------------------------------------------------------
27 Financial Data Schedule
================================================================================
- ----------
(1) Incorporated by reference from Exhibits 2(a) to 6(b) from the Company's
Registration Statement on Form 10-SB, Registration No. 1-12165.
(2) Incorporated by reference from Exhibit 4(ii) from the Company's
Registration Statement on Form SB-2, Registration No. 333-20697.
(b) Reports on Form 8-K
None.
-33-
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Independent Auditors' Report.................................................F-2
Consolidated Statements of Financial Condition as of
December 31, 1996 and 1995....................................F-3
Consolidated Statements of Income for the years
ended December 31, 1996, 1995 and 1994........................F-4
Consolidated Statements of Changes in Stockholders'
Equity for the years ended December 31, 1996,
1995 and 1994.................................................F-5
Consolidated Statement of Cash Flows for the years
ended December 31, 1996, 1995 and 1994........................F-6
Notes to Consolidated Financial Statements...........................F-7
F-1
<PAGE>
[LOGO KPMG]
New Jersey Headquarters
150 John F. Kennedy Parkway
Short Hills, NJ 07078
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Bridge View Bancorp:
We have audited the accompanying consolidated statements of financial condition
of Bridge View Bancorp and subsidiaries as of December 31, 1996 and 1995, and
the related consolidated statements of income, stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1996.
These consolidated financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Bridge View Bancorp
and subsidiaries at December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1996 in conformity with generally accepted accounting
principles.
/S/ KPMG Peat Marwick LLP /S/
February 7, 1997
F-2
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Consolidated Statements of Financial Condition
December 31, 1996 and 1995
(Dollars in Thousands)
ASSETS 1996 1995
-------- --------
Cash and cash equivalents:
Cash and due from banks (note 3) $ 9,058 8,331
Federal funds sold 14,500 6,200
-------- --------
Total cash and cash equivalents 23,558 14,531
-------- --------
Securities available for sale (note 4) 8,644 6,780
Investment securities, estimated market value of
$27,546 in 1996 and $17,767 in 1995 (note 4) 27,517 17,630
FHLBNY stock, at cost 476 --
Loans (note 5):
Commercial 45,080 30,013
Mortgage 12,693 9,818
Consumer and other 18,945 16,310
-------- --------
Total loans 76,718 56,141
Deferred loan fees (105) (41)
Allowance for loan losses (861) (692)
-------- --------
Net loans 75,752 55,408
-------- --------
Premises and equipment, net (note 6) 1,752 1,553
Accrued interest receivable 1,031 738
Other assets (note 8) 330 154
-------- --------
Total assets $139,060 96,794
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits (note 7):
Noninterest-bearing demand deposits 29,352 23,244
Interest-bearing deposits:
Savings and time deposits 72,577 53,300
Certificates of deposit of $100,000 or more 24,404 8,681
-------- --------
Total deposits 126,333 85,225
Accounts payable and accrued liabilities 509 534
-------- --------
Total liabilities 126,842 85,759
-------- --------
Stockholders' equity (note 11):
Capital stock, no par value. Authorized
5,000,000 shares in 1996 and 2,500,000 shares in
1995; issued and outstanding 1,048,320 shares in
1996 and 995,504 shares in 1995 10,647 10,047
Net unrealized (loss) gain on securities available
for sale (2) 11
Retained earnings 1,573 977
-------- --------
Total stockholders' equity 12,218 11,035
Commitments and contingencies (notes 9 and 14)
Total liabilities and stockholders' equity $139,060 96,794
======== ========
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
Years ended December 31, 1996, 1995 and 1994
(Dollars in Thousands, Except Share Data)
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Interest income:
Loans $5,961 4,712 3,383
Securities available for sale 366 384 382
Municipals - nontaxable 262 165 67
Investment securities 924 823 1,080
Federal funds sold and dividends on FHLBNY stock 357 294 132
------ ------ ------
Total interest income 7,870 6,378 5,044
------ ------ ------
Interest expense:
Savings and time deposits 1,545 1,431 1,132
Certificates of deposit of $100,000 or more 765 413 229
Federal funds purchased 14 -- --
------ ------ ------
2,324 1,844 1,361
------ ------ ------
Net interest income 5,546 4,534 3,683
Provision for loan losses (note 5) 193 92 75
------ ------ ------
Net interest income after pro-
vision for loan losses 5,353 4,442 3,608
------ ------ ------
Other income - principally fees and service charges 793 578 378
------ ------ ------
Other expenses:
Salaries and employee benefits 1,674 1,361 1,155
Occupancy (note 9) 559 534 511
Furniture and equipment expense (note 9) 266 239 254
Advertising and business promotion 105 63 64
Stationery and supplies 111 55 58
Data processing 229 173 147
FDIC insurance 2 87 161
Other operating expenses 669 492 547
------ ------ ------
Total other expenses 3,615 3,004 2,897
------ ------ ------
Income before income tax expense 2,531 2,016 1,089
Income tax expense (note 8) 987 781 349
------ ------ ------
Net income $1,544 1,235 740
====== ====== ======
Earnings per share:
Primary $ 1.41 1.20 75
Fully diluted 1.29 1.20 .75
====== ====== ======
</TABLE>
All share data has been restated to reflect the two-for-one exchange and
the 5% stock dividends in March 1996, March 1995, and February 1994.
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1996, 1995 and 1994
(Dollars in Thousands)
<TABLE>
<CAPTION>
Net unre-
alized
loss on
securities
Capital Retained available
stock earnings for sale Total
-------- -------- --------- -------
<S> <C> <C> <C> <C>
Balance at December 31, 1993 $ 9,015 15 -- 9,030
Cumulative effect of accounting
change - investments -- -- 8 8
Net income -- 740 -- 740
5% stock dividend 495 (495) -- --
Common stock issued upon exercise
of stock warrants 11 -- -- 11
Net change in unrealized loss on
securities available for sale,
net of tax -- -- (202) (202)
------- ------- ------- -------
Balance at December 31, 1994 9,521 260 (194) 9,587
Net income -- 1,235 -- 1,235
5% stock dividend 518 (518) -- --
Common stock issued upon exercise
of stock warrants 8 -- -- 8
Net change in unrealized loss on
securities available for sale,
net of tax -- -- 205 205
------- ------- ------- -------
Balance at December 31, 1995 10,047 977 11 11,035
Net income -- 1,544 -- 1,544
5% stock dividend 576 (576) -- --
Common stock issued upon exercise
of stock warrants 23 -- -- 23
Common stock issued upon exercise
of stock options 1 -- -- 1
Cash dividends paid -- (372) -- (372)
Net change in unrealized loss on
securities available for sale,
net of tax -- -- (13) (13)
------- ------- ------- -------
Balance at December 31, 1996 $10,647 1,573 (2) 12,218
======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 1996, 1995 and 1994
(Dollars in Thousands)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,544 1,235 740
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 193 92 75
Depreciation 152 155 180
Deferred taxes (47) 40 37
Net amortization and accretion of premiums and discounts
on investment securities (2) (21) 7
Net loss on sale of securities available for sale -- 5 --
Loans originated for sale (175) (1,188) (1,693)
Proceeds from sales of loans held for sale 125 1,285 1,701
Gain on sale of loans held for sale (7) (11) (14)
Changes in operating assets and liabilities:
Increase in accrued interest receivable (294) (130) (107)
Decrease (increase) in other assets 17 (38) (29)
(Decrease) increase in accounts payable and accrued
liabilities (26) 166 145
-------- -------- --------
Net cash provided by operating activities 1,480 1,590 1,042
-------- -------- --------
Cash flows from investing activities:
Purchases of investment securities (22,538) (14,310) (10,602)
Maturities of investment securities 12,649 22,012 10,500
Proceeds from repayments of investment securities -- -- 50
Proceeds from repayments of securities available for sale 107 133 89
Proceeds from sale of securities available for sale -- 2,915 --
Maturities of securities available for sale 4,000 1,000 5,000
Purchase of securities available for sale (5,992) (2,982) (2,952)
Net increase in loans (20,612) (12,063) (8,282)
Purchase of FHLBNY stock (476) -- --
Purchases of banking premises and equipment (352) (21) (23)
-------- -------- --------
Net cash used in investing activities (33,214) (3,316) (6,220)
-------- -------- --------
Cash flows from financing activities:
Net increase in deposits 41,109 8,588 4,010
Issuance of common stock and options and warrants exercised 24 8 11
Dividends paid (372) -- --
-------- -------- --------
Net cash provided by financing activities 40,761 8,596 4,021
-------- -------- --------
Increase (decrease) in cash and cash equivalents 9,027 6,870 (1,157)
Cash and cash equivalents at beginning of year 14,531 7,661 8,818
-------- -------- --------
Cash and cash equivalents at end of year $ 23,558 14,531 7,661
======== ======== ========
Supplemental information:
Cash paid during the year for:
Interest on deposits $ 2,105 1,801 1,326
======== ======== ========
Income taxes $ 1,221 408 249
======== ======== ========
Transfer of investment securities to securities available
for sale $ -- -- 9,982
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1996 and 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements include the accounts of
Bridge View Bancorp (the Corporation) and its direct and indirect
wholly-owned subsidiaries, Bridge View Bank and Bridge View Investment
Company (the Bank). All intercompany accounts and transactions have been
eliminated in consolidation. Certain accounts in prior periods have been
restated to conform to the current presentation.
ORGANIZATION
The Bank is a commercial bank which provides a full range of banking
services to individuals and corporate customers in New Jersey. The Bank is
subject to competition from other financial institutions. The Bank is
regulated by state and federal agencies and is subject to periodic
examinations by those regulatory authorities.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the consolidated
financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities as
of the date of the consolidated statement of financial condition and
revenues and expenses for the year. Actual results could differ
significantly from those estimates.
Material estimates that are particularly susceptible to significant change
in the near term relate to the determination of the allowance for loan
losses. In connection with the determination of the allowance for loan
losses, management generally obtains independent appraisals for significant
properties.
SECURITIES AVAILABLE FOR SALE
Management determines the appropriate classification of securities at the
time of purchase. If management has the intent and the Bank has the ability
at the time of purchase to hold securities until maturity, they are
classified as investment securities. Securities to be held for indefinite
periods of time and not intended to be held to maturity are classified as
securities available for sale. Gains or losses on sales of securities
available for sale are based upon the specific identification method.
Securities available for sale are reported at fair value with changes in
the carrying value from period to period included as a separate component
of stockholders' equity.
INVESTMENT SECURITIES
Investment securities are carried at the principal amount outstanding,
adjusted for amortization of premiums and accretion of discounts using a
method that approximates the level-yield method over the terms of the
securities. Investment securities are carried at the principal amount
outstanding because the Bank has the ability and it is management's
intention to hold these securities to maturity.
F-7
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(Continued)
PREMISES AND EQUIPMENT
Premises and equipment are stated at historical cost, less accumulated
depreciation and amortization. Depreciation of fixed assets is accumulated
on a straight-line basis over the estimated useful lives of the related
asset. Leasehold improvements are amortized on a straight-line basis over
the shorter of their estimated useful lives or the term of the lease.
Maintenance and repairs are charged to expense in the year incurred.
LOANS
Loans are stated at their principal amount outstanding, net of deferred
loan origination fees and costs. Interest income on loans is accrued and
credited to interest income when earned. A loan which is 90 days past due
is reviewed to determine whether such loan should be placed on a nonaccrual
status. A loan is placed on nonaccrual when collection of principal and
interest is deemed unlikely. Loans which are well secured and in the
process of collection are not placed on a nonaccrual status. Once a loan is
placed on nonaccrual status, interest previously accrued and uncollected is
charged against current earnings, and interest is included in earnings
thereafter to the extent received in cash. Loan origination fees and
certain direct loan origination costs are deferred and recognized over the
life of the loan as an adjustment to yield using a method which
approximates the interest method.
The Corporation adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 114, "Accounting by Creditors for Impairment of a
Loan," as amended by SFAS No. 118, "Accounting by Creditors for Impairment
of a Loan - Income Recognition and Disclosures," on January 1, 1995.
Management, considering current information and events regarding the
borrowers' ability to repay their obligations, considers a loan to be
impaired when it is probable that the Corporation will be unable to collect
all amounts due according to the contractual terms of the loan agreement.
When a loan is considered to be impaired, the amount of impairment is
measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate or the fair value of the
collateral. Impairment losses are included in the allowance for loan losses
through provisions charged to operations.
ALLOWANCE FOR LOAN LOSSES
Losses on loans are charged to the allowance for loan losses. Additions to
this allowance are made by recoveries of loans previously charged off and
by a provision charged to expense. The determination of the balance of the
allowance for loan losses is based on an analysis of the loan portfolio,
economic conditions and other factors warranting recognition. Management
believes that the allowance for loan losses is adequate. While management
uses available information to recognize losses on loans, future additions
may be necessary based on changes in economic conditions, particularly in
New Jersey. In addition, various regulatory agencies, as an integral part
of their examination process, periodically review the Bank's allowance for
loan losses. Such agencies may require the Bank to recognize additions to
the allowance based on their judgments about information available to them
at the time of their examination.
F-8
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(Continued)
INCOME TAXES
The Bank uses the asset and liability method of accounting for income
taxes. Under this method, deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates in effect for the year
in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date.
EARNINGS PER SHARE
Earnings per share is based on the weighted average number of shares
outstanding, including common stock equivalents, utilizing the modified
treasury stock method. All per share data have been restated to reflect the
two-for-one exchange and all stock dividends.
Average shares outstanding for purposes of calculating primary and fully
diluted earnings per share are as follows:
1996 1995 1994
---- ---- ----
Primary earnings per share 1,097,994 1,028,014 986,746
Fully diluted earnings per share 1,194,610 1,028,014 986,746
========= ========= =======
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash and due from banks and federal funds
sold, which are generally sold for one-day periods.
(2) FORMATION OF BANK HOLDING COMPANY AND EXCHANGE OF COMMON STOCK
The Corporation is a New Jersey corporation organized in May 1996 at the
direction of the Board of Directors of the Bank for the purpose of
acquiring all of the capital stock of the Bank. As part of the acquisition
in December 1996, shareholders of the Bank received shares of the
Corporation's common stock, no par value per share (the Common Stock), in a
ratio of two shares of Common Stock for each outstanding share of the
Common Stock of the Bank, $5.00 per share par value. The acquisition was
accounted for in a manner similar to a pooling of interest resulting in no
changes in the underlying assets and liabilities. The accompanying
consolidated financial statements have been restated beginning with the
earliest year presented.
F-9
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(3) CASH ON HAND AND DUE FROM BANKS
Included in cash on hand and due from banks at both December 31, 1996 and
1995 was $9,000 representing reserves required to be maintained by the
Federal Reserve Bank.
(4) SECURITIES AVAILABLE FOR SALE AND INVESTMENT SECURITIES
A comparative summary of securities available for sale at December 31, 1996
and 1995 is as follows (in thousands):
Gross Gross
Amor- unreal- unreal-
tized ized ized Market
cost gains losses value
------ ------- ------- ------
1996 - U.S. Government
and agency obligations $8,647 15 (18) 8,644
====== == === =====
1995 - U.S. Government
and agency obligations $6,762 38 (20) 6,780
====== == === =====
A comparative summary of investment securities at December 31, 1996 and
1995 is as follows (in thousands):
Gross Gross
Amor- unreal- unreal-
tized ized ized Market
cost gains losses value
------- ------- ------ ------
1996:
U.S. Government and
agency securities $21,183 48 (37) 21,194
Municipal obligations 6,334 18 - 6,352
------- ----- ---- ------
$27,517 66 (37) 27,546
======= ===== ===== ======
1995:
U.S. Government and
agency obligations 12,668 120 (11) 12,777
Municipal obligations 4,962 28 - 4,990
------- ----- ---- ------
$17,630 148 (11) 17,767
======= ===== ==== ======
F-10
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(4) SECURITIES AVAILABLE FOR SALE AND INVESTMENT SECURITIES--(Continued)
The investments held at December 31, 1996 mature as follows (in
thousands):
Securities
Investment available
securities for sale
---------------- ---------------
Amor- Amor-
tized Market tized Market
cost value cost value
------- ------ ----- -----
Within one year $15,702 15,723 4,000 4,002
One to five 11,423 11,417 4,647 4,642
years
Six to ten years 392 406 - -
------- ------ ----- -----
$27,517 27,546 8,647 8,644
======= ====== ===== =====
For the year ended December 31, 1996, there were no sales of securities.
Proceeds from the sales of securities available for sale during 1995 were
$2.9 million. Gross gains of $31,000 and gross losses of $36,000 were
realized on those sales in 1995. For the year ended December 31, 1994,
there were no sales of securities.
Securities with an amortized cost of $2 million and $1.5 million were
pledged to secure public funds on deposit at December 31, 1996 and 1995,
respectively.
During 1996, the Bank became a member of the Federal Home Loan Bank of New
York (FHLBNY). As a result, the Bank is required to hold shares of capital
stock of FHLBNY, which are carried at cost, based upon a specified formula.
The Bank has a $15,000,000 line of credit with the FHLBNY which is
renewable each year. The interest rate is variable and generally at 25
basis points above the federal funds rate. At December 31, 1996, no amount
was outstanding on this line of credit.
(5) LOANS AND ALLOWANCE FOR LOAN LOSSES
The activity in the allowance for loan losses is as follows (in thousands):
1996 1995 1994
---- ---- ----
Balance at beginning of year $692 626 567
Provision charged to expense 193 92 75
Loans charged off, net of recoveries (24) (26) (16)
---- --- ---
Balance at end of year $861 692 626
==== === ===
F-11
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(5) LOANS AND ALLOWANCE FOR LOAN LOSSES--(Continued)
Impaired loans at December 31, 1996 and 1995 totaled $0 and $163,000,
respectively, and the average balance for 1996 and 1995 was $109,000 and
$48,000, respectively. Included in the allowance for loan losses at
December 31, 1995 was $24,440, relating to impaired loans which was charged
off in 1996. There were no commitments to fund additional amounts to these
borrowers.
The Bank grants commercial, mortgage and installment loans to those New
Jersey residents and businesses within its local trading area. Its
borrowers' abilities to repay their obligations are dependent upon various
factors, including the borrowers' income and net worth, cash flows
generated by the underlying collateral, value of the underlying collateral
and priority of the Bank's lien on the property. Such factors are dependent
upon various economic conditions and individual circumstances beyond the
Bank's control; the Bank is therefore subject to risk of loss. The Bank
believes its lending policies and procedures adequately minimize the
potential exposure to such risks and that adequate provisions for loan
losses are provided for all known and inherent risks.
(6) BANKING PREMISES AND EQUIPMENT
At December 31, banking premises and equipment consists of the following
(in thousands):
1996 1995
------ -----
Building $1,677 1,677
Furniture and equipment 807 492
Leasehold improvements 36 -
------ -----
2,520 2,169
Less accumulated depreciation and amortization 768 616
------ -----
Total banking premises and
equipment, net $1,752 1,553
====== =====
F-12
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(7) DEPOSITS
At December 31, a summary of the maturity of time deposits is as follows:
1996 1995
-------- ------
Certificates of deposit maturing:
One year or less $ 52,359 21,032
One to three years 929 1,361
Three to five years 634 277
-------- ------
Total certificates 53,922 22,670
-------- ------
Total deposits $126,333 85,225
======== ======
(8) INCOME TAXES
Income tax expense from operations for the years ended December 31 is as
follows (in thousands):
1996 1995 1994
---- ---- ----
Federal:
Current $855 585 272
Deferred (38) 35 18
---- --- ---
817 620 290
---- --- ---
State:
Current 179 156 40
Deferred (9) 5 19
---- --- ---
170 161 59
---- --- ---
$987 781 349
==== === ===
Total income tax expense for the years ended December 31 is allocated as
follows (in thousands):
1996 1995 1994
---- ---- ----
Income tax expense from operations $987 781 349
Stockholders' equity - unrealized loss (gain)
on securities available for sale 6 (136) 129
---- --- ---
$993 645 478
==== === ===
F-13
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(8) INCOME TAXES--(Continued)
Income tax expense from operations differed from the amounts computed by
applying the U.S. federal income tax rate (34% in 1996, 1995 and 1994) to
income taxes as a result of the following (in thousands):
1996 1995 1994
----- ---- ----
Computed "expected" tax expense $861 685 370
Increase (decrease) in taxes resulting from:
State taxes, net of federal income tax
benefit 112 106 39
Tax-exempt income (67) (29) (15)
Other 81 19 (45)
---- --- ---
$987 781 349
==== === ===
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities as of
December 31, 1996 and 1995 are as follows (in thousands):
1996 1995
---- ----
Deferred tax assets:
Start-up costs $ 11 1
Bank premises, furniture and equipment,
principally due to differences in
depreciation 62 50
Unrealized loss on securities available for sale 1 -
Loans, principally due to allowance for loan
losses and deferred fee income 302 273
---- --
Total gross deferred tax assets 376 324
---- --
Deferred tax liabilities:
Accrued expenses 47 -
Deferred fee income 20 31
Unrealized gain on securities available for sale - 7
Investment securities, principally due to
accretion of discounts 29 22
Accrual to cash adjustment 161 200
---- --
Total gross deferred tax liabilities 257 260
Net deferred tax asset $119 64
==== ==
F-14
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(8) INCOME TAXES--(Continued)
At December 31, 1996, management believes that no valuation allowance for
the deferred tax asset is necessary due to sufficient taxes paid in the
statutory carryback period.
(9) LEASES
The Bank leases land in Englewood Cliffs, New Jersey, on which its
headquarters building is located, from a general partnership owned partly
by a director under a ten-year operating lease with five five-year renewal
options. The Bank has the option to purchase the land six months prior to
expiration of the original ten-year term or six months prior to the end of
the 16th year of the lease. The purchase price shall be the market value of
the land only as determined by an appraisal. The Bank also leases three
other branch facilities in New Jersey.
The following is a schedule of future minimum lease payments (exclusive of
payments for maintenance, insurance, taxes and additional rental payments
based on increases in certain indexes) for operating leases with initial or
remaining terms in excess of one year from December 31, 1996 (in
thousands):
Year ending December 31:
1997 $520
1998 393
1999 183
2000 111
====
Rental expense amounted to $482,000, $432,000 and $411,000 for the years
ended December 31, 1996, 1995 and 1994, respectively.
(10) RELATED-PARTY TRANSACTIONS
Certain directors of the Bank are associated with professional firms that
rendered various professional services for the Bank. The Bank paid the
firms, excluding rental payments, approximately $115,790, $58,000 and
$19,000 during the years ended December 31, 1996, 1995 and 1994,
respectively. It is the Bank's policy not to originate loans to directors,
executive officers or their affiliates.
F-15
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(11) STOCKHOLDERS' EQUITY AND DIVIDEND RESTRICTIONS
Warrants to purchase common stock were distributed to stockholders of
record as of October 1, 1992. One warrant was issued for each five shares
of common stock owned on that date. Each warrant entitles the holder to
purchase one share of common stock at a price of $8.64 per share. The
warrants are exercisable on or before September 30, 1997. During 1996 and
1995, 2,602 and 884 warrants, respectively, were exercised, and 157,506 and
152,024 warrants were outstanding at December 31, 1996 and 1995,
respectively.
During 1994, the Bank's stockholders approved the 1994 Stock Option Plan
for Non Employee Directors (Directors' Plan) and the 1994 Employee Stock
Option Plan (Employees' Plan). The Directors' Plan provides for options to
purchase up to 52,206 shares of the Bank's common stock to be issued to
directors who are not employees of the Bank. The Employees' Plan provides
for the option to purchase up to 52,206 shares of the Bank's common stock
to be issued to employees of the Bank. Previously issued options to an
employee of the Bank were terminated upon adoption of these plans. The
option price per share approximates the market value of the Bank's stock on
the date of grant.
A summary of the stock option plans for the years ended December 31, 1996
and 1995 is as follows:
Option
Number price
of price per
shares share
------ --------------
Outstanding at December 31, 1993 - $ -
Granted 49,612 9.30
Exercised - -
------
Outstanding at December 31, 1994 49,612 9.30
Granted 27,052 10.00
Exercised - -
------
Outstanding at December 31, 1995 76,664 9.30 - 10.00
Granted 7,300 11.50
Exercised (100) 11.50
Forfeited (5,620) 9.30
------
Outstanding at December 31, 1996 78,244 9.30 - 11.50
====== ============
F-16
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(11) STOCKHOLDERS' EQUITY AND DIVIDEND RESTRICTIONS--(Continued)
At December 31, 1996 and 1995, the number of options exercisable was 78,244
and 76,664, respectively, and the weighted-average price of those options
was $9.75 and $9.55, respectively.
At December 31, 1996 and 1995, there were 20,448 and 27,748, respectively,
additional shares available for grant under the Plans. The per share
weighted-average fair value of stock options granted during 1996 and 1995
was $11.50 and $10.00, respectively, on the date of grant using the Black
Scholes option-pricing model with the following weighted-average
assumptions: 1996 - expected dividend yield 3.06%, risk-free increase rate
of 6.3%, and an expected life of five years; 1995 - expected dividend yield
of 0%, risk-free interest rate of 6.0%, and an expected life of five years.
The Corporation applies APB Opinion No. 25 in accounting for its Plans and,
accordingly, no compensation cost has been recognized for its stock options
in the consolidated financial statements. Had the Corporation determined
compensation cost based on the fair value at the grant date for its stock
options under SFAS No. 123, the Corporation's net income and earnings per
share would have been reduced to the pro forma amounts indicated below (in
thousands, except per share data):
1996 1995
----- -----
NBT income:
As reported $1,544 1,235
Pro forma 1,524 1,232
====== =====
Fully diluted earnings per share:
As reported $ 1.29 1.20
Pro forma 1.27 1.20
====== =====
The Bank declared a 5% stock dividend effective March 16, 1996, March 17,
1995 and February 28, 1994.
The Corporation's ability to pay cash dividends is based on its ability to
receive cash from its bank subsidiary. New Jersey law provides that no
dividend may be paid unless, after the payment of such dividend, the
capital of the Bank will not be impaired and either the Bank will have
statutory surplus of not less than 50% of its capital stock or the payment
of such dividend will not reduce the statutory surplus of the Bank. At
December 31, 1996, this restriction did not result in any effective
limitations on the manner in which the Bank is currently operating.
F-17
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(12) EMPLOYEE BENEFIT PLANS
The Bank currently offers a 401(k) profit sharing plan (the Plan) covering
all employees, wherein employees can invest up to 15% of their pretax
earnings. The Bank will contribute 50% of each employee's contributions, up
to 6% of his or her annual earnings. The Bank made matching contributions
of $19,000 and $14,000 in the years ended December 31, 1996 and 1995,
respectively. The Plan was incepted in July 1995.
(13) REGULATORY CAPITAL REQUIREMENTS
Federal Deposit Insurance Corporation (FDIC) regulations require banks to
maintain minimum levels of regulatory capital. Under the regulations in
effect at December 31, 1996, the Bank was required to maintain (i) a
minimum leverage ratio of Tier I capital to total adjusted assets of 4.0%,
and (ii) minimum ratios of Tier I and total capital to risk-weighted assets
of 4.0% and 8.0%, respectively.
Under its prompt corrective actions regulations, the FDIC is required to
take certain supervisory actions (and may take additional discretionary
actions) with respect to an undercapitalized institution. Such actions
could have a direct material effect on the institution's financial
statements. The regulations establish a framework for the classification of
savings institutions into five categories: well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized, and
critically undercapitalized. Generally, an institution is considered well
capitalized if it has a leverage (Tier I) capital ratio of at least 5.0%; a
Tier I risk-based capital ratio of at least 6.0%; and a total risk-based
capital ratio of at least 10.0%.
The foregoing capital ratios are based in part on specific quantitative
measures of assets, liabilities and certain off-balance-sheet items as
calculated under regulatory accounting practices. Capital amounts and
classifications are also subject to qualitative judgments by the FDIC about
capital components, risk weightings and other factors.
Management believes that, as of December 31, 1996, the Bank meets all
capital adequacy requirements to which it is subject. Further, the most
recent FDIC notification categorized the Bank as a well-capitalized
institution under the prompt corrective action regulations. There have been
no conditions or events since that notification that management believes
have changed the Bank's capital classification.
F-18
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(13) REGULATORY CAPITAL REQUIREMENTS--(Continued)
The following is a summary of the Bank's actual capital amounts and ratios
as of December 31, 1996 and 1995, compared to the FDIC minimum capital
adequacy requirements and the FDIC requirements for classification as a
well-capitalized institution:
FDIC requirements
-----------------------------------
Minimum capital For classification
Bank actual adequacy as well capitalized
--------------- -------------- -------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ----- ----- ------ -----
(Dollars in thousands)
December 31, 1996:
Leverage (Tier I) $12,218 11.20% $4,365 4.00% 5,456 5.00%
capital
Risk-based
capital:
Tier I 12,218 13.72 3,562 4.00 5,343 6.00
Total 13,079 14.69 7,125 8.00 8,906 10.00
December 31, 1995
Leverage (Tier I) 11,034 12.36 3,572 4.00 4,465 5.00
capital
Risk-based
capital:
Tier I 11,034 16.95 2,603 4.00 3,905 6.00
Total 11,726 18.02 5,207 8.00 6,509 10.00
======= ===== ====== ==== ===== =====
(14) COMMITMENTS AND CONTINGENCIES
The Bank is a party to transactions with off-balance-sheet risk in the
normal course of business in order to meet the financing needs of its
customers. These transactions consist of commitments to extend credit and
involve, to varying degrees, elements of credit and interest rate risk in
excess of the amount recognized in the accompanying consolidated statements
of financial condition.
The Bank uses the same credit policies and collateral requirements in
making commitments and conditional obligations as it does for
on-balance-sheet loans. Commitments to extend credit are agreements to lend
to customers as long as there is no violation of any condition established
in the contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since the commitments
may expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Bank evaluates each
customer's creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary by the Bank upon extension of
credit, is based on management's credit evaluation of the borrower.
Outstanding available loan commitments, primarily variable rate home equity
loans, at December 31, 1996 and 1995 totaled $21.4 million and $21.1
million, respectively. Additionally, unused credit card commitments totaled
$310,000 at December 31, 1996.
F-19
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(14) COMMITMENTS AND CONTINGENCIES--(Continued)
Most of the Bank's lending activity is with customers located in Bergen
County, New Jersey. The Bank has issued letters of credit to customers
totaling $390,000 and $382,000 at December 31, 1996 and 1995, respectively,
whereby the Bank guarantees performance to a third party. These letters of
credit generally have fixed expiration dates of less than one year.
(15) FINANCIAL INFORMATION OF PARENT COMPANY
Bridge View Bancorp (the parent company) was incorporated on December 6,
1996 for the purpose of acquiring the Bank in a two-for-one stock exchange.
The following information on the parent only financial statements as of
December 31, 1996 and for the period December 6, 1996 to December 31, 1996
should be read in conjunction with the notes to the consolidated financial
statements.
STATEMENT OF FINANCIAL CONDITION
Dec.31, 1996
------------
(In thousands)
Assets:
Investment in subsidiary $12,218
Deferred organization expense 21
-------
Total assets $12,239
=======
Dec.31, 1996
------------
(In thousands)
Liabilities - due to subsidiary $ 21
Shareholders' equity:
Common stock 10,647
Net unrealized loss on securities available
for sale (2)
Retained earnings 1,573
-------
Total shareholders' equity 12,218
Total liabilities and shareholders'
equity $12,239
=======
F-20
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(15) FINANCIAL INFORMATION OF PARENT COMPANY--(Continued)
STATEMENT OF INCOME
For the
period
Dec.6,1996
to Dec.31,
1996
(In thousands)
--------------
Income - equity in undistributed earnings
of subsidiary bank $137
Expenses -
Net income $137
====
STATEMENT OF CASH FLOWS
For the
period
Dec.6,1996
to Dec.31,
1996
(In thousands)
--------------
Cash flows from operating activities:
Net income $ 137
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in undistributed earnings of the subsidiary bank (137)
Increase in other assets (21)
Increase in other liabilities 21
-----
Net cash provided by operating activities -
Cash flows from investing activities -
Cash flows from financial activities -
Net change in cash for the period $ -
=====
F-21
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(16) FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments," requires that the Bank disclose the
estimated fair value of its financial instruments whether or not recognized
in the consolidated balance sheet. Fair value estimates and assumptions are
set forth below for the Bank's financial instruments at December 31, 1996
and 1995 (in thousands):
1996 1995
------------- --------------
Esti- Esti-
Carry- mated Carry- mated
ing fair ing fair
amount value amount value
------- ------- ------- ------
Financial assets:
Cash and cash equivalents $ 23,558 23,558 14,531 14,531
Securities available for
sale 8,644 8,644 6,780 6,780
Investment securities 27,517 27,546 17,630 17,767
Net loans 75,752 75,611 55,408 55,659
FHLBNY stock 476 476 -- --
Accrued interest
receivable 1,031 1,031 738 738
Financial liabilities -
deposits 126,333 126,500 85,225 85,313
======== ======= ====== ======
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
CASH AND CASH EQUIVALENTS
The carrying amount approximates fair value.
SECURITIES AVAILABLE FOR SALE
All securities available for sale are valued using quoted market prices.
INVESTMENT SECURITIES
All investment securities are valued using quoted market prices.
NET LOANS
Fair values are estimated for portfolios of loans with similar financial
characteristics. Loans are segregated by type, such as residential and
commercial real estate, commercial and other consumer. The fair value of
loans is estimated by discounting contractual cash flows using estimated
market discount rates which reflect the credit and interest rate risk
inherent in the loans.
F-22
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(16) FAIR VALUE OF FINANCIAL INSTRUMENTS--(Continued)
FHLBNY STOCK
The carrying amount approximates fair value.
ACCRUED INTEREST RECEIVABLE
The carrying amount approximates fair value.
DEPOSITS
The fair value of deposits with no stated maturity, such as
noninterest-bearing demand deposits, is equal to the amount payable on
demand as of year end. The fair value of certificates of deposit is
based on the discounted value of contractual cash flows. The discount
rate is estimated using the rates currently offered for deposits of
similar remaining maturities.
COMMITMENTS TO EXTEND CREDIT
The fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the
remaining terms of the agreements; at December 31, 1996 and 1995, such
amounts were not material.
LIMITATION
The preceding fair value estimates were made at December 31, 1996 and
1995, based on pertinent market data and relevant information on the
financial instrument. These estimates do not include any premium or
discount that could result from an offer to sell at one time the Bank's
entire holdings of a particular financial instrument or category
thereof. Since no market exists for a substantial portion of the Bank's
financial instruments, fair value estimates were necessarily based on
judgments regarding future expected loss experience, current economic
conditions, risk assessment of various financial instruments, and other
factors. Given the innately subjective nature of these estimates, the
uncertainties surrounding them and the matter of significant judgment
that must be applied, these fair value estimates cannot be calculated
with precision. Modifications in such assumptions could meaningfully
alter these estimates.
Since these fair value approximations were made solely for on- and
off-balance-sheet financial instruments at December 31, 1996 and 1995,
no attempt was made to estimate the value of anticipated future
business. Furthermore, certain tax implications related to the
realization of the unrealized gains and losses could have a substantial
impact on these fair value estimates and have not been incorporated into
the estimates.
F-23
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
(17) RECENT ACCOUNTING PRONOUNCEMENTS
In June 1996, the Financial Accounting Standards Board issued SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" (SFAS No. 125). SFAS No. 125 amends
portions of SFAS No. 115, amends and extends to all servicing assets and
liabilities the accounting standards for mortgage servicing rights now in
SFAS No. 65, and supersedes SFAS No. 122. The statement provides consistent
standards for distinguishing transfers of financial assets which are sales
from transfers that are secured borrowings. Those standards are based upon
consistent application of a financial components approach that focuses on
control. The statement also defines accounting treatment for servicing
assets and other retained interest in the assets that are transferred. SFAS
No. 125 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996 and is to
be applied prospectively. The adoption of the statement is not expected to
have a material effect on the Corporation's financial condition or results
of operations.
F-24
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BRIDGE VIEW BANCORP
By: /s/ Albert F. Buzzetti
----------------------
Albert F. Buzzetti
President and Chief
Executive Officer
Dated: March 28, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
================================================================================
NAME TITLE DATE
- --------------------------------------------------------------------------------
President, Chief
/s/ Albert F. Buzzetti Executive Officer and March 28, 1997
- --------------------------- Director
Albert F. Buzzetti
Comptroller (Principal
/s/ Michael J. Solokas Financial Officer and March 28, 1997
- --------------------------- Accounting Officer)
Michael J. Solokas
/s/ Gerald A. Calabrese Director March 28, 1997
- ---------------------------
Gerald A. Calabrese
/s/ Glenn L. Creamer Director March 28, 1997
- ---------------------------
Glenn L. Creamer
/s/ Bernard Mann Director March 28, 1997
- ---------------------------
Bernard Mann
/s/ Mark Metzger Director March 28, 1997
- ---------------------------
Mark Metzger
/s/Jeremiah F. O'Connor Director March 28, 1997
- ---------------------------
Jeremiah F. O'Connor
/s/ Joseph C. Parisi Director March 28, 1997
- ---------------------------
Joseph C. Parisi
/s/ John A. Schepisi Director March 28, 1997
- ---------------------------
John A. Schepisi
<PAGE>
BRIDGE VIEW BANCORP
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibits
- ------ -----------------------
3(i) Certificate of Incorporation of the Company(1)
3(ii) Bylaws of the Company(1)
4(i) Form of Non-Transferable Warrant Certificate(1)
4(ii) Form of Stock Certificate(2)
10(i) Bridge View Bank 1994 Stock Option Plan(1)
10(ii) Bridge View Bank 1994 Stock Option Plan for Non-
Employee Directors(1)
21 Subsidiaries of the Registrant
23 Consent of KPMG Peat Marwick LLP
27 Financial Data Schedule
- --------------------
(1) Incorporated by reference from Exhibits 2(a) to 6(b) from the
Company's Registration Statement on Form 10-SB, Registration
No. 1-12165.
(2) Incorporated by reference from Exhibit 4(ii) from the
Company's Registration Statement on Form SB-2, Registration
No. 333-20697.
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
The Registrant has one subsidiary, Bridge View Bank.
Bridge View Bank has a single wholly-owned subsidiary, Bridge View
Investment Company.
EXHIBIT 23
CONSENT OF KPMG PEAT MARWICK LLP
Independent Auditors' Consent
The Board of Directors
Bridge View Bancorp:
We consent to incorporation by reference in the registration statement No.
333-19741 on Form S-8 of Bridge View Bancorp of our report dated February 7,
1997, relating to the consolidated statements of financial condition of Bridge
View Bancorp and subsidiaries as of December 31, 1996, and 1995, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 1996, which report
appears in the December 31, 1996, annual report on Form 10-KSB of Bridge View
Bancorp.
/s/ KPMG Peat Marwick LLP
Short Hills, New Jersey
March 27, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S AUDITED DECEMBER 31, 1996 YEAR END FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 9,058,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 14,500,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 8,644,000
<INVESTMENTS-CARRYING> 27,517,000
<INVESTMENTS-MARKET> 27,546,000
<LOANS> 76,718,000
<ALLOWANCE> 861,000
<TOTAL-ASSETS> 139,060,000
<DEPOSITS> 126,333,000
<SHORT-TERM> 0
<LIABILITIES-OTHER> 509,000
<LONG-TERM> 0
0
0
<COMMON> 10,647,000
<OTHER-SE> 1,571,000
<TOTAL-LIABILITIES-AND-EQUITY> 139,060,000
<INTEREST-LOAN> 5,691,000
<INTEREST-INVEST> 1,552,000
<INTEREST-OTHER> 357,000
<INTEREST-TOTAL> 7,870,000
<INTEREST-DEPOSIT> 2,310,000
<INTEREST-EXPENSE> 2,324,000
<INTEREST-INCOME-NET> 5,546,000
<LOAN-LOSSES> 193,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,615,000
<INCOME-PRETAX> 2,531,000
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,544,000
<EPS-PRIMARY> 1.41
<EPS-DILUTED> 1.29
<YIELD-ACTUAL> 7.95
<LOANS-NON> 0
<LOANS-PAST> 125,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 692,000
<CHARGE-OFFS> 36,000
<RECOVERIES> 12,000
<ALLOWANCE-CLOSE> 861,000
<ALLOWANCE-DOMESTIC> 861,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 115,000
</TABLE>
