As filed with the Securities and Exchange Commission on January 30, 1997
Registration Statement No. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
BRIDGE VIEW BANCORP
(Exact Name of Small Business Issuer in Its Charter)
NEW JERSEy 6712 22-3461336
- -------------------- --------------------- --------------------
(State or Other (Primary Standard (IRS Employer
Jurisdiction of Industrial Identification
Incorporation or Classification No.)
Organization) Code Number)
457 SYLVAN AVENUE, ENGLEWOOD CLIFFS, NEW JERSEY 07632
(201) 871-7800
-------------------------------------------------------------
(Address and Telephone Number of Principal Executive Offices)
457 SYLVAN AVENUE, ENGLEWOOD CLIFFS, NEW JERSEY 07632
- --------------------------------------------------------------------------------
(Address of Principal Place of Business or Intended Principal Place of Business)
BRIDGE VIEW BANCORP
457 Sylvan Avenue
Englewood Cliffs, New Jersey 07632
Attn: Albert F. Buzzetti
President and Chief
Executive Officer
(201) 871-7800
------------------------------------------------------
(Name, Address, Telephone Number of Agent for Service)
-----------------
With copies of communication to:
McCarter & English
Four Gateway Center
Newark, New Jersey 07102
Attn: Robert A. Schwartz, Esq.
(201) 639-2093
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
================================================================================
Proposed
Title of Each Proposed Maximum
Class of Amount to Maximum Aggregate Amount of
Securities to be Offering Offering Registration
be Registered Registered Price(1) Price Fee
- --------------------------------------------------------------------------------
Common Stock, 158,488(2) $8.64 $1,369,336 $415
no par value Per Share
- --------------------------------------------------------------------------------
Total ............................................ $415
================================================================================
- ---------------
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Issuable upon exercise of outstanding Warrants.
-----------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
BRIDGE VIEW BANCORP
Cross Reference Sheet Form SB-2
----------
Prospectus Caption or
Items of Form SB-2 Location
- ------------------ ----------------------
1. Front of Registration
Statement and Outside Front
Cover of Prospectus ......................... Facing Page of
Registration Statement;
Front cover page of
Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus.................... Inside Front Cover Page;
AVAILABLE INFORMATION;
TABLE OF CONTENTS
3. Summary Information and Risk Factors .......... PROSPECTUS SUMMARY;
SPECIAL CONSIDERATIONS
AND RISK FACTORS
4. Use of Proceeds................................ USE OF PROCEEDS
5. Determination of Offering Price................ DESCRIPTION OF
SECURITIES
6. Dilution....................................... DESCRIPTION OF
SECURITIES
7. Selling Security-Holders....................... Not Applicable
8. Plan of Distribution........................... THE OFFERING; PLAN OF
DISTRIBUTION
9. Legal Proceedings.............................. BUSINESS
10. Directors, Executive Officers,
Promoters and Control Persons................ MANAGEMENT--Certain
Transactions with
Management
11. Security Ownership of Certain
Beneficial Owners and Management............. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
12. Description of Securities...................... DESCRIPTION OF
SECURITIES
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<PAGE>
Prospectus Caption or
Items of Form SB-2 Location
- ------------------ ----------------------
13. Interest of Named Experts and Counsel.......... Not Applicable
14. Disclosure of Commission
Position on Indemnification for
Securities Act Liabilities .................. Not Applicable
15. Organization within last five years............ MANAGEMENT--Certain
Transactions with
Management
16. Description of Business........................ BUSINESS
17. Management's Discussion and
Analysis of Plan of Operation................ MANAGEMENT'S DISCUSSION
AND ANALYSIS OF
FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
18. Description of Property........................ BUSINESS--Properties
19. Certain Relationships and
Related Transactions......................... MANAGEMENT--Certain
Transactions with
Management
20. Market for Common Equity and
Related Stockholder Matters.................. MARKET AND PRICE RANGE
OF COMMON STOCK;
Dividend Policy
21. Executive Compensation......................... MANAGEMENT--Executive
Compensation
22. Financial Statements........................... CONSOLIDATED FINANCIAL
STATEMENTS
23. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure..................... Not Applicable
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<PAGE>
PROSPECTUS
DATED ____________ __, 1997
--------------------
BRIDGE VIEW BANCORP
--------------------
158,488 SHARES OF COMMON STOCK, NO PAR VALUE, ISSUABLE UPON
EXERCISE OF WARRANTS
--------------------
Bridge View Bancorp, a New Jersey corporation (the "Company") is offering
up to 158,488 shares of its common stock, no par value ("Common Stock"),
purchasable upon the exercise of outstanding Common Stock Purchase Warrants (the
"Warrants").
Each Warrant entitles the holder thereof to purchase one share of Common
Stock at a purchase price of $8.64 per share (the "Purchase Price"), subject to
adjustment upon the occurrence of certain events described in and governed by
the form of warrant certificate (the "Certificate") representing the Warrants.
Prior to the purchase of Common Stock upon the exercise of a Warrant, the holder
of a Warrant will have none of the rights or privileges of a stockholder of the
Company.
The Common Stock is offered hereunder in accordance with the terms of the
Certificate on a continuous basis through and including September 30, 1997, the
date the Warrants will expire.
PROSPECTIVE PURCHASERS SHOULD CAREFULLY CONSIDER THE INFORMATION CONTAINED
HEREIN UNDER THE HEADING "SPECIAL CONSIDERATIONS AND RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
================================================================================
Underwriting Proceeds to
Price to Public Discount Company
- --------------------------------------------------------------------------------
Per Shares of Not
Common Stock................ $1,369,336 Applicable $1,369,336
================================================================================
The date of this Prospectus is __________________ __, 1997.
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<PAGE>
THE SECURITIES OFFERED BY THIS PROSPECTUS ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY.
AVAILABLE INFORMATION
Bridge View Bancorp has filed with the Commission in Washington, D.C., a
Registration Statement on Form SB-2 (herein, together with all amendments
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the shares of Common Stock
offered hereby. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement and the exhibits thereto and reference is made to the Registration
Statement and exhibits thereto for further information with respect to Bridge
View Bancorp and the shares of Common Stock offered hereby. Statements herein
concerning the contents of any contract or other document are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. The Registration
Statement, together with exhibits, may be inspected without charge, and copied
at prescribed rates at the principal or regional offices of the Commission at
the addresses indicated above. Copies also may be obtained at prescribed rates
from the public reference facilities maintained by the Commission, at 450 Fifth
Street, N.W., Washington, D.C.
The Company is subject to the informational requirements of Section 12(b)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission" or the "SEC"). Such reports and other
information can be inspected without charge and copied at prescribed rates at
the public reference facilities maintained by the SEC at Room 1024 Judiciary
Plaza, 450 Fifth Street, N.W., Washington, DC 20549 and at its regional offices
located at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, IL 60661 and 7 World Trade Center, 15th Floor, New York, NY 10048.
Copies of such material can also be obtained at prescribed rates from the SEC's
Public Reference Section, 450 Fifth Street, N.W., Washington, DC 20549 and its
public reference facilities in Chicago, Illinois and New York, New York.
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<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and consolidated financial
statements (including the notes thereto) appearing elsewhere in this Prospectus.
The term Company as used herein refers to Bridge View Bancorp and its wholly
owned subsidiary, Bridge View Bank (the "Bank").
THE COMPANY
The Company 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 the Bank.
The Company was organized at the direction of the Board of Directors of the Bank
for the purpose of acquiring all the capital stock of the Bank (the
"Acquisition"). 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 for each outstanding share of the common stock of
the Bank, $5.00 per share par value (the "Bank Common Stock"). The only
significant asset of the Company is its investment in 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 New Jersey on
October 11, 1988. The Bank received its Certificate of Authority to transact
business from the Commissioner of the New Jersey Department of Banking and
Insurance (the "Department") on April 7, 1989 and the Bank commenced operations
on March 15, 1990. The Bank opened for business on March 15, 1990. The Bank
operates from its main office at 457 Sylvan Avenue, Englewood Cliffs, Bergen
County, New Jersey and its three branch offices located at 1605 Lemoine Avenue,
Fort Lee, Bergen County, New Jersey 07024, 115 River Road, Edgewater, Bergen
County, New Jersey 07020, and 899 Palisade Avenue, Fort Lee, Bergen County, New
Jersey 07024. See "BUSINESS--Properties."
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"). The operations of the Company and the Bank are subject to
the supervision and regulation of FRB, FDIC and 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.
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<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data set forth at and for each of the
two years presented below are derived from the consolidated financial statements
of the Company, which have been audited by KPMG Peat Marwick LLP, independent
auditors, whose report, which refers to a change in accounting for certain
investments in debt and equity securities, is included elsewhere herein. The
selected consolidated financial information for the nine month periods ended
September 30, 1996 and 1995 are derived from unaudited financial statements of
the Company. The results of operations for the nine months ended September 30,
1996 are unaudited and are not necessarily indicative of the results of
operations to be expected for the twelve months ending December 31, 1996. In
connection with the Acquisition, the Company issued two shares of Common Stock
for each share of Bank Common Stock. Therefore, all per share data included
herein reflects the effect of this two for one exchange. The selected
consolidated financial information should be read in conjunction with the
consolidated financial statements of the Company, including the related notes
thereto set forth elsewhere in this Prospectus.
Nine Months Ended Years Ended
September 30, December 31,
--------------------- --------------------
(Unaudited)
1996 1995 1995 1994
------ ------ ------ ------
(Dollars in thousands, except per share data)
INCOME STATEMENT DATA:
Interest income............. $5,633 $4,629 $6,378 $5,044
Interest expense............ 1,582 1,361 1,844 1,361
------ ------ ------ ------
Net interest income......... 4,051 3,268 4,534 3,683
Provision for loan losses... 163 92 92 75
Non-Interest income ........ 551 388 578 378
Non-Interest expense........ 2,613 2,288 3,004 2,897
------ ------ ------ ------
Income before income taxes.. 1,826 1,276 2,016 1,089
Income tax expense.......... 712 491 781 349
------ ------ ------ ------
Net income.................. $1,114 $ 785 $1,235 $ 740
====== ====== ====== ======
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<PAGE>
Nine Months Ended Years Ended
September 30, December 31,
--------------------- -------------------
(Unaudited)
1996 1995 1995 1994
-------- -------- ------- -------
PER SHARE DATA:
Net Income..................... $ 1.07 $ 0.75 $ 1.20 $ 0.75
Cash dividends................. 0.27 -- -- --
Weighted average shares
outstanding.................. 1,047,238 1,047,238 -- --
BALANCE SHEET DATA:
Total Assets................... $ 118,633 $ 92,646 $96,794 $86,592
Loans, net..................... 69,680 53,293 55,408 43,437
Investment securities(1)....... 30,316 26,281 24,410 32,821
Deposits....................... 106,379 81,633 85,225 76,637
Total stockholders' equity..... 11,867 10,549 11,035 9,587
PERFORMANCE RATIOS:
Return on average assets....... 1.08% 0.91% 1.39% 0.88%
Return on average
stockholders' equity......... 9.77% 7.85% 12.12% 8.00%
Dividend payout ratio ......... 3.26% 0.00% 0.00% 0.00%
Equity to assets ratio ........ 10.00% 11.39% 11.40% 11.07%
- --------------
(1) Includes securities held to maturity and securities available for sale.
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SPECIAL CONSIDERATIONS AND RISK FACTORS
A Warrant holder should review and consider carefully the following
factors, together with the other information contained in this Prospectus, in
evaluating whether to exercise their Warrants.
LIMITED TRADING HISTORY
The Common Stock began trading on the American Stock Exchange under the
symbol "BVB" on December 20, 1996. Prior to that time, the Common Stock was not
traded on any established trading market. Therefore, there is no established
trading history for the Common Stock. No assurances can be given that an active
public trading market for the Common Stock will develop, or if such a market
develops, that it will be sustained.
SOURCES OF DIVIDENDS ON COMMON STOCK
The Company is a legal entity separate and distinct from the Bank. The
Company has no material assets other than its ownership of the Bank. Earnings of
the Company are wholly dependent on the earnings of the Bank, as the Company has
engaged in no significant operations of its own. Accordingly, the earnings of
the Company, and its ability to pay dividends with respect to the Common Stock,
is largely dependent on the receipt by the Company of the earnings of the Bank
in the form of dividends. Any restriction on the ability of the Bank to pay
dividends to the Company could significantly and adversely affect the ability of
the Company to pay dividends with respect to the Common Stock.
The Bank's ability to pay dividends or make other capital distributions to
the Company is governed by regulations imposed by the FDIC and the Department,
the Bank's primary regulators. See "Supervision and Regulation."
COMPETITION
The banking and financial services field in which the Company is engaged is
highly competitive and most competitors have substantially greater financial
resources than the Company does. The Company's principal market area is served
by branch offices of large commercial banks and thrift institutions. Such
institutions have substantially greater resources than the Company to expend
upon advertising and marketing, and their substantially greater capitalization
enables those competitors to make much larger loans. The Company's success
depends a great
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<PAGE>
deal upon its judgment that large and mid-size financial institutions do not
adequately serve small businesses and consumers in its principal market area and
the Company's ability to compete favorably for such customers.
In addition to existing competition, on September 29, 1994, the Riegel-Neal
Interstate Banking and Branching Efficiency Act (the "Interstate Act") was
signed into law. The Interstate Act reduces restrictions on the acquisition of
New Jersey financial institutions by out of state bank holding companies and
financial institutions, and permits the operations of acquired New Jersey
institutions to be conducted under existing charters, thereby making
acquisitions of New Jersey institutions more efficient and cost effective for
out of state bank holding companies and financial service institutions. Adoption
of the Interstate Act may make the New Jersey banking market even more
competitive than it currently is. See "SUPERVISION AND REGULATION."
LENDING RISKS
The risk of non-payment (or deferred or delayed payment) of loans is
inherent in commercial banking. Such non-payment, or delayed or deferred payment
of loans to the Company, if they occur, may have a material adverse effect on
the Company's earnings and overall financial condition. Additionally, in
compliance with applicable banking laws and regulations and in light of sound
judgment, the Company maintains an allowance for loan losses created through
charges against earnings. As of September 30, 1996, the Company's allowance for
loan losses was $855,000. The Company's marketing focus on small to medium-size
businesses may result in the assumption by the Company of certain lending risks
that are different from or greater than those which would apply to loans made to
larger companies. Company management seeks to minimize the Company's credit risk
exposure through credit controls which include evaluation of potential
borrowers, collateral available, liquidity and cash flow. However, there can be
no assurance that such procedures will actually reduce loan losses.
POTENTIAL IMPACT OF CHANGES IN MONETARY POLICY AND INTEREST RATES
The operating results of the Company may be significantly affected
(favorably or unfavorably) by market rates of interest which, in turn, are
affected by prevailing economic conditions, by the fiscal and monetary policies
of the United States Government and by the policies of various regulatory
agencies. The earnings of the Company will depend primarily upon its interest
rate spread (i.e., the difference between income earned on its loans and
investments and the interest paid on its deposits). Like many financial
institutions, the Company may be subject to the risk of fluctuations in interest
rates, which, if significant,
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<PAGE>
may have a material adverse effect on its operations. See "SUPERVISION AND
REGULATION".
SUPERVISION AND REGULATION
The Federal and state laws and regulations applicable to the Company and
the Bank give regulatory authorities extensive discretion in connection with
their supervisory and enforcement responsibilities, and generally have been
promulgated to protect depositors and the deposit insurance funds and not for
the purpose of protecting stockholders. These laws and regulations can
materially affect the future business of the Company and the Bank. Laws and
regulations now affecting the Company and the Bank may be changed at any time,
and the interpretation of such laws and regulations by bank regulatory
authorities is also subject to change. The Company can give no assurance that
future changes in laws and regulations or changes in their interpretation will
not adversely affect the business of the Company and the Bank. See "SUPERVISION
AND REGULATION."
USE OF PROCEEDS
The proceeds to the Company from the exercise of the Warrants is estimated
to be approximately $1,369,336.
The Company intends to use the proceeds of the Offering for general
corporate purposes.
MARKET AND PRICE RANGE OF COMMON STOCK
Commencing on December 20, 1996, the 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 September 30,
1996, there were 460 stockholders of record of the Common Stock.
The following table sets forth the high and low sales price of the Common
Stock, as reported on the American Stock Exchange since December 20, 1996, as
well as dividends declared since such date.
Bid
------------------------------
Cash
High Low Dividend
------ ------ --------
1996
4th Quarter (since December 20, 1996) ...... $24.25 $19.75 None
1997
1st Quarter (through January 27, 1997) ..... $36.00 $25.00 $0.10
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<PAGE>
DIVIDEND POLICY
The Bank began paying quarterly dividends of $0.09, adjusted to reflect the
two for one exchange of stock, in January, 1996. 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. The Company has declared a dividend of $0.10 per share
payable February 1, 1997 to shareholders of record on January 15, 1997.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 30, 1996 and as adjusted to give effect to exercise of the Warrants.
As adjusted numbers are based upon full exercise of the Warrants at the current
Purchase Price for the Common Stock offered hereby.
September 30, 1996
-----------------------
Actual As Adjusted
------- -----------
(Dollars in Thousands)
Stockholders' equity:(1)
Common Stock, no par value 5,000,000 shares
authorized, 1,047,288 shares issued and
1,205,776 shares issued, as adjusted.............. $ 4,986 $ 5,778
Capital Surplus....................................... 5,076 5,653
Undivided Profits..................................... 1,813 1,813
------- -------
Total stockholders' equity................... $11,867 $13,244
======= =======
The following tables set forth the capital ratios of the Company and the
Bank as of September 30, 1996 and as adjusted to give effect to the exercise of
the Warrants at the Purchase Price, as well as the minimum required regulatory
capital for the Company and the Bank.
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THE COMPANY
September 30, 1996 Required
---------------------- Regulatory
Actual As Adjusted Minimum
------ ----------- ----------
Risk based capital(1):
Tier I capital.................. 14.66% 16.36% 4%
Total capital................... 15.72% 17.42% 8%
Leverage ratio...................... 11.49% 12.82% 3.00-5.00%
THE BANK
September 30, 1996 Required
---------------------- Regulatory
Actual As Adjusted Minimum
------ ----------- ----------
Risk based capital(1)
Tier I capital.................. 14.66% 16.36% 4.00%
Total capital................... 15.72% 17.42% 8.00%
Leverage ratio...................... 11.49% 12.82% 3.00-5.00%
- ---------------
(1) Both the Company and the Bank are subject to minimum capital requirements
promulgated by the FRB, the FDIC and the Department, their respective
primary regulators. See "SUPERVISION AND REGULATION -- Bank Holding Company
Regulation -- Capital Adequacy Guidelines for Bank Holding Companies."
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<PAGE>
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 Bank's financial statements
and the notes relating thereto including herein. When necessary,
reclassifications have been made to prior years' data throughout the following
discussion and analysis for purposes of comparability with 1995 data. In
connection with the Acquisition, the Company issued two shares of Common Stock
for each share of Bank Common Stock. Therefore, all per share data included
herein reflects the effect of this two for one exchange.
OVERVIEW AND STRATEGY
The Bank began full service operation as a commercial bank on March 15,
1990. The Bank accepts 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
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:
o competitively priced services;
o 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;
o direct access to Bank management by members of the community, whether
during or after business hours;
o local conditions and needs are taken into account by the Bank when
deciding loan applications and making
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<PAGE>
other business decisions affecting members of the
community;
o responsiveness of the Bank's personnel for requests for information
and services by depositors and others;
o 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.
RESULTS OF OPERATIONS
The Bank'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, such as deposits. Net interest margin is a function of the difference
between the weighted average rate received on interest-earning assets and the
weighted average paid on interest-bearing liabilities, as well as the average
level of interest-bearing assets as compared with that of interest-bearing
liabilities. Net income is also affected by the amount of non-interest income
and operating expenses.
NET INCOME
For the nine months ended September 30, 1996, net income increased by
$329,000, or 41.9%, to $1,114,000 from $785,000 for the comparable period of
1995. The increase in net income is attributable to an increase in interest
income of $1,004,000, or 21.7%, partially offset by an $221,000, or 16.2%,
increase in interest expense. The increase in interest income was primarily
attributable to a 31% increase in total loans and a 15% increase in investment
securities. In addition to the increases in net interest income, non-interest
income, consisting primarily of service charges on deposit accounts, increased
by $213,000, or 54.9%.
The Bank's net income increased from 1994 to 1995 by $495,000, or 66.9% to
$1,235,000 for the year ended December 31, 1995 from $740,000 for the year ended
December 31, 1994. This increase was primarily attributable to an increase in
net interest income of $851,000, or 23.1%, during 1995. The increase
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in net interest income was attributable to an increase in interest income of
$1,334,000, or 26.4%, to $6,378,000 for the year ended December 31, 1995
compared to year ended December 31, 1994, primarily as a result of an increase
in the Bank's loan portfolio. The volume increases in the Bank's loan portfolio
were primarily funded through the maturation of lower yielding securities,
thereby increasing the Bank's average yield and net margin. The Bank's average
yield on interest earning assets increased to 7.96% for the nine months ended
September 30, 1996 from 7.94% for the year ended December 31, 1995 and 6.61% for
the year ended December 31, 1994, reflecting increased yield on investment
securities offset by a slight decline on loan yield in 1996.
Interest expense rose $221,000, or 16.2%, for the nine months ended
September 30, 1996 compared to the comparable period of 1995, and $483,000, or
35.5%, from 1994 to 1995. This increase, at September 30, 1996, is attributable
to an increase in interest-bearing deposits of $21,192,000, or 34.6% compared to
the September 30, 1995 interest bearing deposits.
Operating expenses increased by $325,000, or 14.2%, for the nine months
ended September 30, 1996 compared to the comparable period of 1995. Operating
expenses increased by $107,000, or 3.7%, for the year ended December 31, 1995
compared to the year ended December 31, 1994. These increases in operating
expenses reflect the Bank's continued growth and, during the first nine months
of 1996, the opening of the Bank's new branch offices located at 115 River Road,
Edgewater, New Jersey and 899 Palisades Avenue, Fort Lee, New Jersey.
On a per share basis, earnings were $1.07 for the nine months ended
September 30, 1996, $1.20 for the year ended December 31, 1995, and $0.75 for
the year ended December 31, 1994.
COMPARATIVE AVERAGE BALANCE SHEETS
The following table reflects the components of the Bank's net interest
income, setting forth for the periods presented herein, (1) average assets,
liabilities and stockholders' 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 Bank's net interest spread
(i.e., the average yield on interest-earnings assets less the average rate on
interest-bearing liabilities) and (5) the Bank's net yield on interest-earning
assets. Rates are computed on a taxable equivalent basis.
<TABLE>
<CAPTION>
Year Ended December 31,
Nine Months Ended September 30, ----------------------------------------------------------------
1996 1995 1994
(Unaudited)
------------------------------ ------------------------------- ------------------------------
Interest Average Interest Average Interest Average
Average Income/ Rates Average Income/ Rates Average Income/ Rates
Balance Expense Earned/Paid Balance Expense Earned/Paid Balance Expense Earned/Paid
------- ------- ----------- ------- -------- ----------- ------- -------- -----------
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-Earning Assets:
Taxable Loans (net of
unearned income) ............ $ 63,182 $4,328 9.13% $50,181 $4,712 9.39% $39,268 $3,383 8.62%
Tax Exempt Securities ......... 4,799 221 6.14 3,822 250 6.54 1,552 101 6.51
Taxable Investment
Securities .................. 22,634 963 5.67 22,410 1,207 5.39 32,881 1,462 4.45
Federal Funds Sold ............ 5,001 196 5.23 4,997 294 5.88 3,114 132 4.24
-------- ------ ------- ------ ------- ------
Total Interest-Earning
Assets ..................... 95,616 5,708 7.96 81,410 6,463 7.94 76,815 5,078 6.61
-------- ------ ------ ------
Non-Interest Earning
Assets ...................... 8,209 8,081 7,711
Allowance for possible
loan losses ................. (776) (695) (615)
-------- ------- -------
Total Assets ................ $103,049 $88,796 $83,911
======== ======= =======
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
NOW Deposits .................. $14,460 $ 119 1.10% $12,381 $ 173 1.40% $12,557 $ 166 1.32%
Savings Deposits .............. 13,188 212 2.14 14,345 347 2.42 15,391 360 2.34
Money Market Deposits ......... 12,037 197 2.18 10,770 260 2.41 12,932 291 2.25
Time Deposits ................. 29,342 1,040 4.73 22,425 1,065 4.75 17,062 544 3.19
Short Term Borrowings ......... 327 14 5.71 -- -- 0.00 -- -- 0.00
-------- ------ ------- ------ ------- ------
Total Interest-Bearing
Liabilities ................. 69,354 1,582 3.04 59,921 1,845 3.08 57,942 1,361 2.35
Non-Interest Bearing Liabilities:
Demand Deposits ............... 21,813 18,108 15,774
Other Liabilities ............. 474 577 950
-------- ------- -------
Total Non-Interest Bearing
Liabilities ................. 22,287 18,685 16,724
Shareholders' Equity .......... 11,408 10,190 9,245
Total Liabilities and
Shareholders' Equity ........ $103,049 $88,796 $83,911
======== ======= =======
Net Interest Income ........... $4,126 $4,618 $3,717
====== ====== ======
Net Interest Rate Spread ...... 4.92% 4.86% 4.26%
==== ==== ====
Net Interest Margin ........... 5.75% 5.67% 4.84%
==== ==== ====
Rate of Interest Earning
Assets to interest-bearing
liabilities ................. 1.38 1.36 1.33
==== ==== ====
</TABLE>
-13-
<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,
1995 and 1994 and for the nine months ended September 30, 1996, as compared to
each respective previous period. Amounts have been computed on a fully
tax-equivalent basis, assuming a Federal income tax rate of 39%.
<TABLE>
<CAPTION>
Nine Months Ended September 30, Year Ended December 31,
1996 versus 1995 1995 versus 1994
(Unaudited)
-------------------------------- -----------------------------------
Increase (Decrease)
Due to Change in:
------------------------------------------------------------------------------
Average Average Average Average
Volume Rate Net Volume Rate Net
------- ------- --- ------- ------- -------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest Income:
Taxable Loans (net of unearned income) . $1,004 $(84) $ 920 $1,006 $323 $1,329
Tax Exempt Securities .................. 52 (6) 46 149 -- 149
Taxable Investment Securities .......... (13) 71 58 (525) 270 (255)
Federal Funds Sold ....................... 19 (23) (4) 99 63 162
------ ---- ------ ------ ---- ------
Total Interest Income .................... $1,062 $(42) $1,020 $ 729 $656 $1,385
------ ---- ------ ------ ---- ------
Interest Expense:
NOW Deposits ........................... 21 (39) (18) (2) 9 7
Savings Deposits ....................... (18) (34) (52) (25) 12 (13)
Money Market Deposits .................. 24 (23) 1 (52) 21 (31)
Time Deposits .......................... 261 15 276 203 317 520
Net Term Borrowings .................... 14 -- 14 -- -- --
------ ---- ------ ------ ---- ------
Total Interest Expense ................... 302 (81) 221 124 359 483
------ ---- ------ ------ ---- ------
Increase (Decrease) in net interest income $ 760 $ 39 $ 799 $ 605 $297 $ 902
====== ==== ====== ====== ==== ======
</TABLE>
PROVISION FOR LOAN LOSSES
For the nine months ended September 30, 1996, the Bank's provision for loan
losses was $163,000, an increase of $71,000 over the provision of $92,000 for
the nine month period ended September 30, 1995. For the year ended December 31,
1995, the Bank's provision for loan losses was $92,000, an increase of $17,000
over the provision of $75,000 for the year ended December 31, 1994. The
increased provisions reflect the continued growth in the Bank's loan portfolio.
OTHER INCOME
Other income, which was primarily attributable to service fees received
from deposit accounts, amounted to $551,000 for the nine months ended September
30, 1996 an increase of $163,000 or 42.0%, from the comparable period of 1995.
Other income for the year ended December 31, 1995 increased by $200,000 to
$578,000 compared to $378,000 in 1994, an increase of 52.9%. These increases
were primarily related to the Bank's increasing levels of deposits.
OTHER EXPENSES
Other expenses for the nine month period ended September 30, 1996 amounted
to $2,613,000, an increase of $325,000 from the comparable period of 1995. For
the year ended December 31, 1995, other expenses increased by $107,000 to
$3,004,000 compared to the year ended December 31, 1994. These increases were
primarily attributable to customary increases in salary and employee benefits,
occupancy expenses and data processing expenses attributable to the Bank's
continued growth, partially offset by a reduction in FDIC insurance premiums and
other operating expenses.
INCOME TAX EXPENSE
The income tax provision, which includes both federal and state taxes, for
the nine months ended September 30, 1996 and for the years ended December 31,
1995 and 1994 was $712,000, $781,000 and $349,000, respectively. Increase in
income taxes were primarily attributable to increases in income before taxes in
all periods reported.
-14-
<PAGE>
FINANCIAL CONDITION
At September 30, 1996, the Bank's total assets were $118,633,000, compared
to $96,794,000 at December 31, 1995 and $86,592,000 at December 31, 1994. Total
loans increased to $70,535,000 at September 30, 1996 from $56,141,000 at
December 31, 1995 and $44,076,000 at December 31, 1994. Total deposits increased
to $106,379,000 at September 30, 1996 from $85,225,000 at December 31, 1995 and
$77,005,000 at December 31, 1994.
LOAN PORTFOLIO
At September 30, 1996, the Bank's total loans were $70,535,000, an increase
of $14,394,000, or 25.6%, over total loans at December 31, 1995. The Bank's loan
portfolio at December 31, 1995 totaled $56,141,000, an increase of $12,065,000,
or 27.4%, over total loans at December 31, 1994. The increases in the Bank's
loan portfolio represent increased penetration by the Bank of the local small
business market. Management believes the Bank's success in penetrating this
market is attributable to the fact that through mergers and acquisitions, the
Bank's trade area is primarily served through large banking institutions
frequently headquartered out of state. Management believes it is not cost
efficient for these larger institutions to provide the level of personal service
to small business borrowers that the Bank provides.
The Bank'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 Bank's loans are primarily to businesses and individuals located in
eastern Bergen County, New Jersey. The Bank has not made loans to borrowers
outside of the United States. Commercial lending activities are focused
primarily on lending to small business borrowers. The Bank believes that its
strategy of customer service, competitive rate structures and selective
marketing have enabled the Bank to gain market entry to local loans. Bank
mergers and lending curtailments at larger banks competing with the Bank have
also contributed to the Bank's efforts to attract borrowers.
-15-
<PAGE>
The following table sets forth the classification of the Bank's loans by
major category at September 30, 1996 and as of December 31, 1995 and 1994,
respectively.
<TABLE>
<CAPTION>
December 31,
September 30, ---------------------------------------------------
1996 1995 1994
-------------------- ---------------------- -----------------------
(Dollars in Thousands)
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Commercial and Industrial .... $12,726 18.0% $11,295 20.1% $ 9,347 21.2%
Real Estate--
Non-residential Properties .. 21,615 30.6 13,893 24.7 10,914 24.7
Residential Properties ...... 33,131 47.0 28,164 50.2 22,217 50.3
Construction ................ 1,436 2.0 1,320 2.4 549 1.2
Consumer ..................... 1,627 2.3 1,469 2.6 1,135 2.6
------- ----- ------- ----- ------- -----
Total Loans .................. $70,535 100.0% $56,141 100.0% $44,162 100.0%
======= ===== ======= ===== ======= =====
</TABLE>
The following table sets forth fixed and adjustable rate loans as of
September 30, 1996 in terms of interest rate sensitivity.
<TABLE>
<CAPTION>
Within 1 Year 1 to 5 Years After 5 years Total
------------- ------------ ------------- -----
(In Thousands)
<S> <C> <C> <C> <C>
Loans with fixed rate .......... $ 3,318 $32,381 $4,146 $39,845
Loans with adjustable rate ..... $30,690 -- -- $30,690
------- -------
$70,535
=======
</TABLE>
ASSET QUALITY
The Bank's principal earning assets are its loans. Inherent in the lending
function is the risk of the borrower's inability to repay their 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.
Non-performing assets include loans that are not accruing interest
(non-accruing 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. The Bank's due diligence
begins at the time a borrower and the Bank 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 Bank's
non-performing assets as of the dates indicated:
Non-Performing Loans
December 31,
-------------------
September 30, 1996 1995 1994
------------------ ---- ----
(Unaudited)
(In Thousands)
Non-accrual loans ......................... $ 0 $163 $.00
Non-accrual loans to total loans .......... 0% 0.29% 0%
Non-performing assets to total assets ..... 0.13% 0.17% 0%
Allowance for possible loan losses as a
percentage of non-performing loans ....... N/A 424% N/A
The $163,000 in non-accrual loans at December 31, 1995 represents one
non-accruing residential mortgage which is classified as REO as of September 30,
1996. As of September 30, 1996, the Bank has no other non-performing loans, no
loans contractually more than 90 days past due, no other REO and no restructured
loans.
Other than as disclosed above, there are no loans where information about
possible credit problems of borrowers causes
-16-
<PAGE>
management to have serious doubts as to the ability of such borrowers to comply
with the present loan repayment terms.
At the dates indicated in the above table, there were no concentrations of
loans exceeding 10% of the Bank's total loans and the Bank had no foreign loans.
ALLOWANCE FOR LOAN LOSSES
The Bank attempts to maintain 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 continuous
basis by the Bank's officers, by outside, independent loan review auditors and
by the Bank'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 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 Bank's allowance for loan
losses. These agencies may require the Bank to take additional provisions based
on their judgments about information available to them at the time of their
examination.
The Bank's allowance for possible loan losses totalled $855,000, $692,000
and $626,000 at September 30, 1996, December 31, 1995 and 1994, respectively.
The increases in the allowance are due to the continued increase in the Bank's
total loan portfolio.
The following is a summary of the reconciliation of the allowance for loan
losses for the nine month periods ended September 30, 1996 and 1995 and for the
years ended December 31, 1995 and 1994.
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
---------------- ------------------
(Unaudited)
1996 1995 1995 1994
---- ---- ---- ----
(Dollars In Thousands)
<S> <C> <C> <C> <C>
Balance at Beginning of Period.................... $692 $626 $626 $567
Net Charge Offs .................................. -- (10) (26) (16)
Provision Charged to Expense ..................... 163 92 92 75
---- ---- ---- ----
Balance of Allowance at End of Period ............ $855 $708 $692 $626
==== ==== ==== ====
Ratio of Net Charge-Offs to Average Loans
Outstanding ..................................... 0% 0.02% 0.05% 0.04%
Balance of Allowance at End of Period as
a Percent of Loans at End of Period ............. 1.21% 1.31% 1.23% 1.42%
</TABLE>
-17-
<PAGE>
The following table sets forth, for each of the Bank's major lending areas,
the amount and percentage of the Bank's allowance for loan losses attributable
to such category, and the percentage of total loans represented by such
category, as of the periods indicated:
Allocation of the Allowance for Loan Losses by Category
<TABLE>
<CAPTION>
December 31,
September 30, 1996 -----------------------------------------------------------------
-------------------------------- 1995 1994
(Unaudited) -------------------------------- ------------------------------
% of % of Total % of % of Total % of % of Total
Amount ALL loans Amount ALL loans Amount ALL loans
------ ---- ---------- ------ ---- ---------- ------ ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance Applicable to:
Commercial and Industrial .... $222 25.96% 25.26% $167 24.13% 23.38% $135 21.57% 24.85%
Real Estate --
Non-Residential ............. 222 25.96% 31.48% 156 22.54% 27.74% 101 16.13% 22.89%
Properties
Residential Properties ...... 214 25.03% 38.91% 220 31.79% 43.98% 173 27.64% 48.52%
Construction ................ 14 1.64% 2.04% 13 1.88% 2.30% 5 0.80% 1.24%
Consumer ..................... 20 2.34% 2.31% 18 2.60% 2.60% 14 2.24% 2.50%
---- ------- ------- ---- ------- ------- ---- ------- -------
Subtotal .................... 692 80.94% 100.00% 574 82.95% 100.00% 428 68.37% 100.00%
Unallocated Reserves ......... 163 19.06% -- 118 17.05% -- 198 31.63% --
---- ------- ------- ---- ------- ------- ---- ------- -------
Total ....................... $855 100.00% 100.00% $692 100.00% 100.00% $626 100.00% 100.00%
==== ======= ======= ==== ======= ======= ==== ======= =======
</TABLE>
INVESTMENT SECURITIES
The Bank maintains an investment portfolio to fund increased loans or
decreased deposits 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 Bank adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," (SFAS 115),
effective January 1, 1994. Under SFAS 115, securities are classified as
securities held to maturity based on management's intent and the Bank'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 requirement.
Management determines the appropriate classification of securities at the
time of purchase. At September 30, 1996, $24,651,000 of the Bank's investment
securities were classified as held to maturity and the remainder were classified
as available for sale. At September 30, 1996, no investment securities were
classified as trading securities.
At September 30, 1996, total investment securities were $30,316,000 an
increase from total investment securities of $24,410,000 at December 31, 1995,
which was a decrease from total securities of $32,821,000 at December 31, 1994.
The increase in investment securities from December 31, 1995 to September 30,
-18-
<PAGE>
1996 reflects increases in the Bank's total deposits in excess of funds needed
for new loan originations. The decline in investment securities from December
31, 1994 to December 31, 1995 is attributable to the Bank using the proceeds of
maturing investment securities to fund new loan demand during 1995.
The following table sets forth the carrying value of the Bank's security
portfolio as of the dates indicated.
A comparative summary of securities available for sale at September 30,
1996, December 31, 1995 and 1994 is as follows (in thousands):
<TABLE>
<CAPTION>
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Market Value
-------------- ---------------------- ----------------------- ------------
<S> <C> <C> <C> <C>
(Unaudited) September 30, 1996:
U.S. Government and Agency Obligations ...... $5,685 $ 3 $ (23) $5,665
December 31, 1995:
U.S. Government and Agency Obligations ...... 6,762 38 (20) 6,780
December 31, 1994:
U.S. Government and Agency Obligations ...... 7,836 -- (323) 7,513
</TABLE>
A comparative summary of investment securities held to maturity at
September 30, 1996, December 31, 1995 and 1994 is as follows (in thousands):
<TABLE>
<CAPTION>
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Market Value
-------------- ---------------------- ----------------------- ------------
<S> <C> <C> <C> <C>
(Unaudited) September 30, 1996:
U.S. Government and Agency Obligations ...... $15,663 $ -- $ (13) $15,650
Municipal Obligations ....................... 8,988 15 -- 9,003
------- ---- ----- -------
$24,651 15 (13) $24,653
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
December 31, 1994:
U.S. Government and Agency Obligations ...... $21,889 4 (319) 21,574
Municipal Obligations ....................... 3,419 1 (5) 3,415
------- ---- ----- -------
$25,308 $ 5 $(324) $24,989
======= ==== ===== =======
</TABLE>
The following table sets forth as of September 30, 1996 and December 31,
1995 the maturity distribution of the Bank's investment portfolio.
<TABLE>
<CAPTION>
MATURITY SCHEDULE OF INVESTMENT SECURITIES
September 30, 1996
---------------------------------------------------------------------------------
(Unaudited)
Investment Securities Securities Available
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 One Year ..... $16,324 $16,359 6.27% $ 3,998 $ 3,996 5.72%
One to Five Years ... 7,936 7,894 5.67% 1,687 1,664 5.83%
Six to Ten Years .... 391 400 9.12% -- -- --
------- ------- ------- -------
$24,651 $24,653 $ 5,685 $ 5,665
======= ======= ======= =======
December 31, 1995
--------------------------------------------------------------------------------
Investment Securities Securities Available
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 One Year ..... $ 9,800 $ 9,816 5.55% $ 4,011 $ 4,020 5.72%
One to Five Years ... 7,439 7,539 6.22% 2,751 2,760 5.86%
Six to Ten Years .... 391 412 9.12% -- -- --
------- ------- ------- -------
$17,630 $17,767 $ 6,762 $ 6,780
======= ======= ======= =======
</TABLE>
The Bank sold no securities from its portfolio during the first nine months of
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.
-19-
<PAGE>
DEPOSITS
Deposits are the Bank's primary source of funds. The Bank experienced a
growth in average deposit balances of $12,811,000, or 16.4% to $90,840,000 for
the nine months ended September 30, 1996, and $4,313,000, or 5.9% during the
year ended December 31, 1995 as compared to the year ended December 31, 1994
when total average deposits were $73,716,000. This growth was accomplished
through the Bank's emphasis on customer service, extended hours of operations,
competitive rate structures and selective marketing. Among the increase in
deposits, average time deposits grew 31.4% or $5,363,000, from 1994 to 1995,
while average demand deposits, which are non-interest bearing, grew 14.8% or
$2,334,000 during 1995 as compared to 1994. The aggregate amount of average
non-interest-bearing deposits has been 24.0%, 23.2% and 21.4% of average total
deposits during the first nine months of 1996 and the years ended December 31,
1995 and 1994, respectively. The Bank has no foreign deposits, nor are there any
material concentrations of deposits.
The following table sets forth the average amounts of various types of
deposits for each of the periods indicated:
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------
September 30, 1996 1995 1994
---------------------- ----------------------- -----------------------
(Unaudited)
Amount % Amount % Amount %
------ ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Non-interest-bearing demand ........... $21,813 24.0% $18,108 23.2% $15,774 21.4%
Interest-bearing demand ............... 26,487 29.2% 23,151 29.7% 25,489 34.6%
Savings deposit ....................... 13,188 14.5% 14,345 18.4% 15,391 20.9%
Time deposits ......................... 29,342 32.3% 22,425 28.7% 17,062 23.1%
------- ---- ------- ---- ------- ----
Total ................................. $90,840 100% $78,029 100% $73,716 100%
======= ==== ======= ==== ======= ====
</TABLE>
The Bank 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 deposits of
denominations of $100,000 or more as of September 30, 1996.
Time Deposits ($100,000 and over):
(In Thousands)
Three months or less ........................................... $14,090
Over three months through six months ........................... $ 7,589
Over six months through twelve months .......................... $ 1,907
Over twelve months ............................................. $ 767
-------
Total ................................................. $24,353
=======
LIQUIDITY
The Bank'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 Bank'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
-20-
<PAGE>
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 Bank's total deposits equaled $106,379,000, $85,225,000 and $76,637,000
as of September 30, 1996, December 31, 1995, and December 31, 1994,
respectively. The increase in funds provided by deposit inflows during these
years has been more than sufficient to provide for the Bank's lending demand.
Through the Bank's investment portfolio the Bank has generally sought to
obtain a safe yet slightly higher yield than would have been available to the
Bank as a net seller of overnight Federal Funds while still maintaining
liquidity. Through its investment portfolio, the Bank 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
(or overnight loans to large banks), 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 Bank's current sources of funds provide
adequate liquidity for the current cash flow needs of the Bank.
INTEREST RATE SENSITIVITY ANALYSIS
The principal objective of the Bank'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 Bank's business
focus, operating environment, capital, and liquidity requirements; establish
prudent asset concentration guidelines; and manage the risk consistent with
Board approved guidelines. The Bank 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 Bank'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 Bank's liquidity, cash flow needs, maturities of
investments, deposits and borrowings and current market conditions and interest
rates.
-21-
<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-earning 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 prepayment
assumptions are based upon actual historic prepayment rates.
<TABLE>
<CAPTION>
BRIDGE VIEW BANK
CUMULATIVE RATE SENSITIVE BALANCE SHEET (as of September 30, 1996)
0-3 0-6 0-1 0-5 5- All
Months Months Year Years Years Others TOTALS
------ ------ ---- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENTS
FIXED RATE .................. 6,713 10,213 20,327 29,925 391 476 30,792
-------
30,792
-------
LOANS:
COMMERCIAL .................. 16,515 16,652 17,438 37,970 1,122 0 39,092
PARTICIPATIONS .............. 190 190 370 2,369 0 0 2,369
MORTGAGES ................... 570 570 755 9,365 2,513 0 11,878
CONSUMER .................... 13,352 13,464 15,273 16,405 791 0 17,196
-------
70,535
-------
FED FUNDS SOLD ................ 7,500 7,500 7,500 7,500 7,500 0 7,500
NON-INT BEARING/OTHER ASSETS .. 0 0 0 0 0 9,806 9,806
------- ------- ------- ------- ------- ------- -------
TOTAL ASSETS ............. 44,840 48,589 61,663 103,534 108,351 118,633 118,633
======= ======= ======= ======= ======= ======= =======
TRANSACTION/NOW ............... 16,680 16,680 16,680 16,680 0 0 16,680
MONEY MARKET .................. 11,250 11,250 11,250 11,250 0 0 11,250
OTHER SAVINGS ................. 12,725 12,725 12,725 12,725 0 0 12,725
C/D'S LESS THAN $100,000 ...... 8,071 13,101 16,029 17,406 0 0 17,406
C/D'S GREATER THAN $100,000 ... 14,687 22,276 24,183 24,353 0 0 24,353
NON-INT BEARING/OTHER LIAB. ... 0 0 0 0 0 24,352 24,352
INT BEARING/EQUITY ............ 0 0 0 0 0 11,867 11,867
------- ------- ------- ------- ------- ------- -------
TOTAL LIAB. & EQUITY ..... 63,413 76,032 80,867 82,414 82,414 118,633 118,633
======= ======= ======= ======= ======= ======= =======
DOLLAR GAP .................... (18,573) (27,443) (19,204) 21,120 0
CUM.GAP/TOTAL ASSETS .......... -15.66% -23.13% -16.19% 17.80%
TARGET GAP RANGE .............. +/-35.00% +/-30.00% +/-25.00% +/-25.00%
R.S.A./R.S.L.* ................ 70.71% 63.91% 76.25% 125.63% 131.47%
- ----------------
* R.S.A./R.S.L. IS THE PERCENTAGE OF RE-PRICING RATE SENSITIVE ASSETS TO RATE
SENSITIVE LIABILITIES
</TABLE>
A significant measure of the strength of a financial institution is its
capital base. The Bank's federal regulators have classified and defined bank
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 for banks are regulated by risk-based capital adequacy guidelines which
require a bank to maintain certain capital as a percent of the bank's assets and
certain off-balance sheet items adjusted for predefined credit risk factors
(risk-adjusted assets).
-22-
<PAGE>
A bank 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%.
In addition to the risk-based guidelines, the Bank's regulators require
that a bank 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 banks with higher levels of risk or that are
experiencing or anticipating significant growth, the minimum leverage ratio will
be proportionately increased. Minimum leverage ratios for each bank are
evaluated through the ongoing regulatory examination process.
The following table summarizes the risk-based and leverage capital ratios
for the Bank at September 30, 1996, as well as the required minimum regulatory
capital ratios:
CAPITAL ADEQUACY
September 30, 1996 Minimum
(Unaudited) Regulatory Requirements
------------- ----------------------
Risk-based Capital:
Tier I capital ratio .......... 14.66% 4.00%
Total capital ratio ........... 15.72 8.00
Leverage ratio ..................... 11.49 3.00-5.00
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 Bank's operations. Unlike
most industrial companies, nearly all the assets and liabilities of the Bank are
monetary. As a result, interest rates have a greater impact on the Bank'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.
RECENTLY ISSUED ACCOUNTING STANDARDS
In October 1995 the Financial Accounts Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123). This statement establishes financial accounting and
reporting standards for stock-based employee compensation plans. SFAS 123
encourages all entities to adopt the "fair value based method" of accounting for
employee stock compensation plans. However, SFAS 123 also allows an entity to
continue to measure compensation cost under such plans using the "intrinsic
value based method." The accounting requirements of this statement are effective
for transactions entered into in fiscal years that begin after December 15,
1995. The Company intends to continue accounting for compensation cost under the
intrinsic value based method and
-23-
<PAGE>
will provide pro forma disclosures for all awards granted after December 31,
1994. Such disclosures include net income and earnings per share as if the fair
value based method had been applied.
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 Extinguishment of Liabilities". This
Statement provides accounting and reporting standards for transfers and
servicing of financial assets and extinguishment 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, tranches subordinate to other tranches, 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
-24-
<PAGE>
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", (5) "wash salos," (6) loan syndications and participations, (7)
risk participations in banker's acceptances, (8) factoring arrangements, (9)
transfers of receivables with recourse, (10) transfers of sales-type and direct
financing lease receivables and (11) extinguishment of liabilities.
The FASB waS made aware that the volume and variety of certain transactions
and the related changes to information systems and accounting processes that
are necessary to comply with the requirements of SFAS 125 would make it
extremely difficult, if not impossible, for some affected enterprises to
apply the transfer and collateral provisions of SFAS 125 to those transactions
as soon as January 1, 1997. As a result the FASB issued SFAS 127, "deferral of
effective date of certain provisions of SFAS 125," which defers for one year
the effective date (a) of paragraph 15 of SFAS 125 and (b) for repurchase
agreement, dollar-roll, securities lending, and similar transactions, of
paragraphs 9-12 and 237(b) of SFAS 125. All provisions of SFAS 125 should
continue to be applied prospectively, and earlier or retroactive application is
not permitted. 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.
-25-
<PAGE>
BUSINESS
The Bank engages in the general business of commercial banking. The Bank
offers traditional commercial banking services such as savings and checking
accounts and provides commercial, consumer and mortgage loans. Bank deposits are
insured by the FDIC. The Bank provides a wide range of commercial banking
products and services, including personal and business checking accounts and
time deposits, money market accounts and regular savings accounts. The Bank does
not presently have any trust powers and, therefore, does not offer any trust
services.
The Bank structures its specific services and charges in a manner designed
to attract the business of small and medium-sized businesses and the
professional community, as well as that of individuals, in the eastern Bergen
County, New Jersey area. As a general rule, specific banking services are
offered only on a basis believed to be profitable. Such services are charged for
fully unless other aspects of the account relationship provide sufficient
earnings to offset the cost of the services provided.
The Bank engages in a wide range of lending activities and offers
commercial, consumer, mortgage, construction and personal loans. All lending
decisions are made primarily on the basis of soundness and in compliance with
all applicable laws. The Bank from time to time participates in multi-bank
credit arrangements in order to take part in loans for amounts which are in
excess of the Bank's legal lending limit. In commercial lending, the Bank offers
loans for equipment and working capital needs, as well as for financing of
commercial real estate. The Bank also bids for tax anticipation notes and bond
anticipation notes for local governments. In consumer lending, the Bank offers
cash reserve credit lines and personal, automobile, bridge, home equity, home
improvement loans and Visa and Mastercard credit cards. The Bank also makes
one-to-four-family residential real estate loans.
The Bank believes it offers competitive rates for its services, thereby
enabling consumers and business entities in its service area to avail themselves
of the Bank's credit and non-credit services.
The Bank is fully computerized and outsources its data processing and
management information services to Electronic Data Systems, Inc. (EDS) of
Belpre, Ohio. All Bank departments are automated, and the Bank believes the data
processing services available to Bank customers compare favorably with those of
competing financial institutions. The Bank is also a member of the MAC(TM) money
access service.
-26-
<PAGE>
TRADE AREA
The Primary Trade Area is defined as the neighborhoods served by the Bank's
offices. The Bank's main office, located in Englewood Cliffs, New Jersey, in
combination with its Fort Lee and Edgewater, New Jersey offices, serve the
greater area of Bergen County and the northern portion of Hudson County.
COMPETITION
The Company is located in an extremely competitive environment. The
Company's Trade Area is already serviced by major regional banks, large thrift
institutions and by a variety of credit unions. Most of the Company's
competitors have substantially more capital and therefore greater lending limits
than the Company. The Company's competitors generally have established positions
in the Trade Area and have greater resources than the Company with which to pay
for advertising, physical facilities, personnel and interest on deposited funds.
The Company relies upon the competitive pricing of its loans, deposits and other
services as well as its ability to provide local decision making and personal
service in order to compete with these larger institutions.
EMPLOYEES
The Company employs 35 full-time and one part-time employees. None of the
Company's employees are represented by any collective bargaining agreements. The
Company believes that its relations with its employees are good.
PROPERTIES
The Bank's main office is located at 457 Sylvan Avenue, Englewood Cliffs,
New Jersey. The Bank owns the 10,000 square foot building at this location and
leases the land under a lease which expires on March 31, 1999. The lease
provides the Bank options to renew at various intervals for an additional
twenty-five years. The Bank has an option to purchase the land during the
six-month period prior to the tenth anniversary of the lease and again six
months prior to the sixteenth anniversary. The purchase price is to be fixed
according to an appraisal of vacant land only. A Director of the Bank is a
general partner in the partnership which leases the land to the Bank. The terms
of the Bank's lease were negotiated by the Bank Board and are considered to be
as favorable to the Bank as the terms of a comparable lease with an unaffiliated
party would be. See "MANAGEMENT -- Certain Transactions With Management."
The Bank has a branch office at 1605 Lemoine Avenue, Fort Lee, New Jersey
in the Whiteman Park Plaza Shopping Center and a branch office at 115 River
Road, Edgewater, New Jersey, both of which it leases. The office at 1605 Lemoine
Avenue, Fort Lee, New Jersey is leased at $11,113 monthly under a lease which
expires in November 1997. The Bank has the option to renew for three further
periods of five years each. The Bank also pays a proportionate share of common
charges, taxes and insurance equipment to 21% of those charges for the Whiteman
Park Plaza Shopping Center.
The office at 115 River Road, Edgewater, New Jersey is leased at $2,000
monthly until April 1997, $2,350 monthly until April 1998, $2,600 monthly until
April 1999, $3,000 monthly until April 2000 and $4,198 monthly until April 2006.
The Bank has the option to renew for four additional five year terms after the
2006 expiration and pays no common charges, taxes or insurance but has agreed to
pay a proportionate share of any increase in taxes.
The office at 899 Palisade Avenue, Fort Lee, New Jersey is leased at an
average of $5,138 monthly until September 30, 2001. The Bank has the option to
renew for three additional five year terms after the 2001 expiration. The Bank
has agreed to pay a proportionate share equal to 35% of common charges and
expenses.
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 or financial position of the Company or the Bank.
-27-
<PAGE>
SUPERVISION AND REGULATION
GENERAL
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. See "SPECIAL CONSIDERATIONS AND RISK
FACTORS--Supervision and Regulation."
BANK HOLDING COMPANY REGULATION
General. As a bank holding company registered under 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.
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
-28-
<PAGE>
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. In January 1989,
the FRB adopted risk-based capital guidelines for bank holding 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 nonbank 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
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<PAGE>
letters of credit) is 8%. At least 4% of the total capital is required to be
"Tier I Capital," consisting of common stockholders' equity, noncumulative
perpetual preferred stock, and a limited amount of cumulative perpetual
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 perpetual
preferred stock, (c) hybrid capital instruments, (d) perpetual debt, (e)
mandatory convertible securities, and (f) qualifying subordinated debt and
intermediate-term preferred stock up to 50% of Tier I Capital. 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-weighing.
Transaction related contingencies such as bid bonds, standby letters of credit
backing nonfinancial obligations, and undrawn commitments (including commercial
credit lines with an initial maturity or more than one year) have a 50%
risk-weighing. Short term commercial letters of credit have a 20% risk-weighing
and certain short-term unconditionally cancelable commitments have a 0%
risk-weighing.
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.
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<PAGE>
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 is
required to establish an insurance premium assessment system based upon: (i) the
probability that the insurance fund will incur a loss with respect to the
institution; (ii) the likely amount of the loss; and (iii) the revenue needs of
the insurance fund. In compliance with this mandate, FDIC has developed a matrix
that sets the assessment premium for a particular institution in accordance with
its capital level and overall rating by the primary regulator. The FDIC's risk
based insurance assessment system is not expected to have a material effect upon
the operations of the Bank.
Dividend Rights. Under the New Jersey Banking Act of 1948, 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 29, 1994, the Riegel-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 boarders. 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
-31-
<PAGE>
"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 of 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 institution to acquire an existing branch of a New Jersey based
institution, and thereby conduct business in New Jersey. The legislation does
not permit interstate de novo branching. 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.
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<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Direction of the Bank is vested in the Board of Directors which must
consist of not less than five nor more than twenty five persons who are elected
under the Bank's Certificate of Incorporation. The term of each Director is one
year. The board presently consists of eight Directors, each of whom has served
as a Director of the Bank since its inception.
The Board of Directors of the Company will initially consist of the members
of the Board of Directors of the Bank. Each Director of the Company is to serve
a one-year term and until his successor is duly elected by the shareholders of
the Company and qualified to serve on the Board of Directors.
Set forth below are the names and certain biographical information
regarding the Directors of the Bank:
Name, Age and Position Principal Occupation Director
with the Bank for Past Five Years Since
- ----------------------- -------------------- --------
Albert F. Buzzetti, 56, President and Chief Executive
President and Chief Officer of the Bank 1988
Executive Officer
Gerald A. Calabrese, Jr., 45 President, Century 21 Calabrese
Realty and Chairman and Chief
Executive Officer, Metropolitan
Mortgage Company 1988
Glenn L. Creamer, 43 Treasurer and Safety Director, J.
Fletcher Creamer & Son, Inc.
(Construction) 1988
Bernard Mann, 66 President and Chief Executive
Officer, Carolace Industries
(textiles) 1988
Mark Metzger, 54 Managing Director, BEM Management,
Inc. (equity investment fund) 1988
Jeremiah F. O'Connor, Jr., 39 President, AtHome Medical, Inc.,
(supplier of medical equipment) 1988
Joseph C. Parisi, 70, President and Chief Executive
Chairman of the Board Officer, Otterstedt Insurance Agency 1988
John A. Schepisi, 51, Senior Partner, Schepisi &
Vice Chairman McLaughlin (attorneys) 1988
No director of the Bank is also a director of a company having a class of
securities registered under Section 12 of the Securities Exchange Act of 1934 or
subject to the requirements of Section 15(d) of such Act or any company
registered as an investment company under the Investment Company Act of 1940.
PRINCIPAL OFFICERS
Set forth below is the name of and certain biographical information
regarding the additional principal officer of the Bank who does not also serve
as a Director. The term of office for such officer is one year.
Thomas W. Thomasma
Mr. 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.
-33-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth a summary for the last three (3) fiscal
years of the cash and non-cash compensation awarded to, earned by, or paid to,
the Chief Executive Officer of the Bank and each of the four (4) most highly
compensated executive officers whose individual remuneration exceeded $100,000
for the last fiscal year.
SUMMARY COMPENSATION TABLE
Cash and Cash Equivalent Forms
of Remuneration
<TABLE>
<CAPTION>
Long Term
Compensation
Name and Principal Annual Annual Other Annual Securities
Position Year Salary Bonus Compensation(1) Underlying Options
----------------- ---- ------ ----- --------------- ------------------
<S> <C> <C> <C> <C> <C>
Albert F. Buzzetti,
President and Chief
Executive Officer 1996 $160,000 $ 0 $2,700 5,000
1995 $160,000 $15,000 $2,700 5,000
1994 $140,000 $15,000 $2,700 2,500
- -----------------
</TABLE>
(1) Other annual compensation includes the estimated personal benefit of usage
of bank-leased automobiles.
STOCK OPTION PLANS
The Company maintains the 1994 Employee Stock Option Plan (the "Employees'
Plan"). The Employees' Plan provides for the granting of options to purchase up
to 57,557 shares of the Common Stock to employees of the Company and its
subsidiaries. Under the Employee Plan, the exercise price of the options is to
be the fair market value of the Bank Common Stock on the date of grant.
The following table sets forth information concerning individual grants of
stock options made during 1995 to each of the named executive officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options/
Underlying SARs Granted Exercise or
Options/SAR's to Employees Base Price Expir.
Name Granted (#) in Fiscal Year ($/Sh) Date
---- ------------ -------------- ----------- ------
<S> <C> <C> <C> <C>
Albert F. Buzzetti. ........ 4,000 76.2 % $10.08 2006
</TABLE>
The following table sets forth information concerning the fiscal year-end
value of unexercised options held by the executive officers of the Bank named in
the table above. No stock options were exercised by such executive officers
during 1995.
AGGREGATED OPTIONS/SARS EXERCISED IN LAST FISCAL
YEAR AND FISCAL YEAR END OPTION VALUES
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities In-the-Money Options at
Underlying Unexercised FY-End ($) (based on
Options at FY-End (#) $23.00 per share)
Shares Acquired Value Exercise/ Exercisable/
Name On Exercise (#) Realized $ Unexercisable Unexercisable
- ---- --------------- ---------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Albert F. Buzzetti ...... N/A $ N/A 20,012/0 $281,181/$0
</TABLE>
34
<PAGE>
COMPENSATION OF DIRECTORS
Directors of the Bank, other than full-time employees of the Bank, receive
fees of $500 per Board meeting attended and $250 per committee meeting attended.
The Company maintains a Stock Option Plan for Non-employee Directors (the
"Outside Directors' Plan"). Under the Outside Directors' Plan, 57,557 shares of
Company Common Stock have been reserved for issuance. Non-employee Directors of
the Company and any other subsidiaries which the Company may acquire or
incorporate participate in the Outside Directors' Plan. Under the Outside
Directors' Plan, each current non-employee member of the Board of Directors has
received options to purchase 7,456 shares of Common Stock at exercise prices
ranging from $9.25 to $9.975, 100% of the fair market value on the date the
options were granted.
CERTAIN TRANSACTIONS WITH MANAGEMENT
By Board policy, the Bank does not extend credit to any director of officer
or their affiliates or immediate family members.
Director Bernard Mann is a 30% partner in Three R Realty Associates, a
partnership which owns the land at 457 Sylvan Avenue, Englewood Cliffs, New
Jersey which is leased by the Bank. See "BUSINESS -- Properties." In approving
this lease, the Board conducted an independent appraisal to determine that the
terms of the lease were fair to the Bank. The Bank intends to exercise its
option to purchase the land in October, 1998. Lease payments to Three R Realty
Associates were $299,680 in 1994 and $306,804 in 1995.
The firm of Breslin & Trovini, Attorneys at Law, acted as the Bank's
general counsel during 1994. Michael J. Breslin, Jr., the firm's Senior Partner,
was a Director of the Bank during 1994 and part of 1995. During 1994 the Bank
paid legal fees totaling $4,059 to Breslin & Trovini while in 1995 those fees
totaled $124.
The firm of Schepisi & McLaughlin, Attorneys at Law, have acted as the
Bank's general counsel since April 1995. John A. Schepisi, the firm's Senior
Partner, is a Director and Vice Chairman of the Bank's Board. During 1994 the
Bank paid legal fees totaling $910 to Schepisi & McLaughlin while in 1995 these
fees totaled $7,642.
The Bank's Blanket Bond as well as other policies have been placed with
various insurance carriers by the Otterstedt Agency of which the Bank Board
Chairman, Joseph C. Parisi, is Chief Executive Officer. Gross insurance
premiums in 1994 totaled $49,781 while 1995 premiums were $35,247.
Residential appraisals on the Bank's home equity lines of credit are
conducted at the expense of the Bank. Certain of those appraisals were conducted
by Gerald A. Calabrese, Jr., a state-licensed appraiser and a Bank Director. The
cost of 1994 appraisals was $11,225 while 1995 appraisal costs totaled $15,500.
-35-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of December 31, 1996, certain
information concerning the ownership of shares of the Company's Common Stock by
(i) each person who is known by the Company to own beneficially more than five
percent (5%) of the issued and outstanding Bank Common Stock, (ii) each director
of the Company, (iii) each named executive officer described in the section of
this Registration Statement captioned "Executive Compensation," and (iv) all
directors and executive officers as a group. Except as otherwise indicated, each
individual named has sole investment and voting power with respect to the
securities shown.
Name and Address of Amount and Nature of Percent of
Beneficial Owner(1) Beneficial Owner Class
------------------- -------------------- ----------
Albert F. Buzzetti(2) ................... 34,172 3.20%
Gerald A. Calabrese, Jr.(3) ............. 40,046 3.79%
Glenn L. Creamer(4) ..................... 17,038 1.61%
Bernard Mann(5) ......................... 48,100 4.56%
Mark Metzger(6) ......................... 64,054 6.07%
Jeremiah F. O'Connor, Jr.(7) ............ 40,562 3.84%
Joseph C. Parisi(8) ..................... 43,920 4.16%
John A. Schepisi(9) ..................... 53,792 5.10%
------- -----
Directors and Executive
Officers as a Group ................... 341,684 30.49%
======= =====
- ---------------
(1) Beneficially owned shares include shares over which the named person
exercised either sole or shared voting power or sole or shared investment
power. It also includes shares owned (i) by a spouse, minor children or by
relatives sharing the same home, (ii) by entities owned or controlled by
the named person, or (iii) by other persons if the named person has the
right to acquire such shares within 60 days by the exercise of any right or
option. Unless otherwise noted, all shares are owned of record and
beneficially by the named person, either directly or through the dividend
reinvestment plan.
(2) Includes 2,028 shares owned by Mr. Buzzetti's wife and does not include
shares owned by Mr. Buzzetti's emancipated children. Mr. Buzzetti disclaims
beneficial ownership of the shares owned by his wife and of shares owned by
other family members. Includes an aggregate of 20,012 shares purchasable
pursuant to options which are presently exercisable or exercisable within
sixty (60) days.
(3) Includes 1,738 shares owned by Mr. Calabrese's minor children. Mr.
Calabrese disclaims any beneficial ownership of shares owned by other
family members who are not dependents. Includes an aggregate of 7,456
shares purchasable pursuant to options which are presently exercisable or
exercisable within sixty (60) days.
(4) Mr. Creamer disclaims any beneficial ownership of shares owned by family
members who are not dependents. Includes an aggregate of 7,456 shares
purchasable pursuant to options which are presently exercisable or
exercisable within sixty (60) days.
(5) Includes 14,038 shares owned by Mr. Mann's wife. Mr. Mann disclaims any
beneficial ownership of shares owned by his wife as well as shares by other
family members. Includes an aggregate of 7,456 shares purchasable pursuant
to options which are presently exercisable or exercisable within sixty (60)
days.
(6) Includes 578 shares owned by Mr. Metzger's wife and 350 shares owned by the
Metzger Family Partnership of which he is trustee. Mr. Metzger disclaims
beneficial ownership of shares owned by his wife and of any other shares
held by emancipated members of his family. Includes an aggregate of 7,456
shares purchasable pursuant to options which are presently exercisable or
exercisable within sixty (60) days.
(7) Includes 346 shares owned by Mr. O'Connor's wife; 2,706 shares owned by Mr.
O'Connor's dependent children; and 6,458 shares held by the AtHome Medical
Pension Plan. Mr. O'Connor disclaims beneficial ownership of shares owned
by his wife and of any shares held by emancipated family members. Includes
an aggregate of 7,456 shares purchasable pursuant to options which are
presently exercisable or exercisable within sixty (60) days.
(8) Includes 26,692 shares owned jointly by Mr. Parisi and his wife. Mr. Parisi
disclaims beneficial ownership of any shares owned by emancipated family
members. Includes an aggregate of 7,456 shares purchasable pursuant to
options which are presently exercisable or exercisable within sixty (60)
days.
(9) Includes 2,316 shares owned by Mr. Schepisi's wife; and 5,980 shares owned
by Homaro Co., a partnership, which Mr. Schepisi manages but disclaims
beneficial interest. Mr. Schepisi disclaims beneficial ownership of any
shares owned by his wife or by any emancipated family members. Includes an
aggregate of 7,456 shares purchasable pursuant to options which are
presently exercisable or exercisable within sixty (60) days.
-36-
<PAGE>
DESCRIPTION OF THE COMPANY'S SECURITIES
COMMON STOCK
The authorized capital stock of the Company consists of one class of
5,000,000 shares of common stock, no par value (the "Common Stock"). The Company
currently has 1,047,288 shares issued and outstanding. In addition, the Company
has issued options for an aggregate of 81,048 shares of Common Stock and has
reserved 158,488 shares for issuance upon the exercise of outstanding Common
Stock purchase warrants.
Dividends. The Company may pay dividends as declared from time to time by
the Company's Board of Directors out of funds legally available therefor,
subject to certain restrictions. Since dividends from the Bank will be the
Company's sole source of income, any restriction on the Bank's ability to pay
dividends will act as a restriction on the Company's ability to pay dividends.
Under the New Jersey Banking Act of 1948 (the "Banking Act"), no cash dividend
may be paid by the Bank unless, following the payment of such dividend, the
capital stock of the Bank will be unimpaired and the Bank will have a surplus of
no less than 50% of its capital stock or, if not, the payment of such dividend
will not reduce the surplus of the Bank. In addition, the Bank cannot pay
dividends in such amounts as would reduce its capital below the regulatorily
imposed minimums. The Company has declared a $0.10 cash dividend per share of
Common Stock payable on February 1, 1997 to shareholders of record as of January
15, 1997.
Voting Rights. Each holder of the Common Stock is entitled to one vote for
each share held on all matters voted upon by the shareholders, including the
election of directors. There is no cumulative voting in the election of
directors.
Rights in Liquidation. In the event of a liquidation, dissolution or
winding up of the Company, each holder of the Common Stock would be entitled to
receive a pro rata portion of all assets of the Company available for
distribution to holders of the Common Stock after payment of all debts and
liabilities of the Company.
No Preemptive Rights; Redemption. Holders of shares of the Common Stock are
not entitled to preemptive rights with respect to any shares of the Common Stock
that may be issued. The Common Stock is not subject to call or redemption and is
fully paid and nonassessable.
SHAREHOLDERS PROTECTION ACT
A provision of New Jersey law, the New Jersey Shareholders Protection Act
(the "Shareholders Act") prohibits certain transactions involving an "interested
shareholder" and a corporation. An "interested shareholder" is generally defined
as one who is the beneficial owner, directly or indirectly, of ten percent or
more of the voting power of the outstanding stock of the corporation. The
Shareholders Act prohibits certain business combinations between an interested
shareholder and a New Jersey corporation subject to the Shareholders Act for a
period of five years after the date the interested shareholder acquired his
stock, unless the transaction was approved by the corporation's board of
directors prior to the time the interested shareholder acquired his shares.
After the five year period expires, the prohibition on business combinations
with an interested shareholder continues unless certain conditions are met. The
conditions include (i) that the business combination is approved by the board of
directors of the target corporation; (ii) that the business combination is
approved by a vote of two-thirds of the voting stock not owned by the interested
shareholder; and (iii) that the shareholders of the corporation receive a price
in accordance with a fair price formula set forth in the statute. Because the
Company is a reporting company under Section 12 of the Exchange Act, the
Shareholders Act is applicable to Company. The Shareholders Act as applicable to
the Company could inhibit unsolicited offers to acquire the Company.
The Shareholders Act is not applicable to the Bank. Although a party
seeking control of the Bank is required to file applications with the FDIC
pursuant to the Bank Merger Act and with the Commissioner pursuant to the
Banking Act, neither the Bank Merger Act nor the Banking Act have prohibitions
and standards similar to those contained in the Shareholders Act.
-37-
<PAGE>
WARRANTS
Each warrant entitles the holder to purchase one share of the Common
Stock at a purchase price equal to $8.64, subject to adjustment as hereinafter
described. The Warrants are non-transferable and will expire on September 30,
1997. Any warrant not exercised on or before the expiration date will expire
and will not thereafter be exercisable.
The number of shares purchasable upon exercise and the exercise price of
each warrant will be proportionately adjusted upon the occurrence of certain
events, including stock dividends, stock splits, reclassifications and
reorganizations.
TRANSFER AGENT
The Company's transfer agent for the Common Stock is American Stock
Transfer & Trust Co., with offices at 40 Wall Street, New York, New York 10005.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
the Company by McCarter & English, Newark, New Jersey.
EXPERTS
The financial statements of Bridge View Bancorp and its wholly-owned
subsidiary, Bridge View Bank as of December 31, 1995 and 1994, and for each of
the years in the two year period ended December 31, 1995, have been included
herein and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP refers to a change in accountants
for certain investments in debt and equity securities in 1994.
-38-
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF
BRIDGE VIEW BANCORP AND SUBSIDIARY
Consolidated Balance Sheets as of September 30, 1996 and 1995............. F-1
Consolidated Statements of Income for the nine months ended
September 30, 1996 and 1995............................................. F-2
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1996 and 1995............................................. F-3
Notes to Unaudited Consolidated Financial Statement....................... F-4
AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF
BRIDGE VIEW BANCORP AND SUBSIDIARY
Report of Independent Accountants......................................... F-5
Consolidated Statement of Financial Condition as of December 31, 1995
and 1994................................................................ F-6
Consolidated Statements of Income for the years ended December 31, 1995
and 1994................................................................ F-7
Consolidated Statement of Stockholders' Equity for the years ended
December 31, 1995 and 1994.............................................. F-8
Consolidated Statements of Cash Flows for the years ended
December 31, 1995 and 1994.............................................. F-9
Notes to Consolidated Financial Statements................................ F-11
-39-
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
September 30, September 30,
1996 1995
-------- -------
Assets
Cash and Due from Banks ........................... $ 7,961 $ 5,686
Federal Funds Sold ................................ 7,500 5,000
Investment Securities:
Held to Maturity Securities
(Market Value $24,653 on 9/30/96 and
$18.530 on 9/30/95) ........................... 24,651 18,494
Available for Sale Securities
(Net of unrealized holding losses of
$20 on 9/30/96 and $22 on 9/30/95) ............. 5,665 7,787
Federal Home Loan Bank Stock ...................... 476 --
Loans, Less Allowance for Loan Losses of
$855 on 9/30/96 and $708 on 9/30/95 ............. 69,680 53,293
Net Deferred Loan Fees ............................ (120) (83)
Premises and Equipment, Net ....................... 1,588 1,582
Other Real Estate Owned ........................... 155 --
Accrued Interest Receivable and Other Assets ...... 1,077 887
-------- -------
Total Assets ................................ $118,633 $92,646
======== =======
Liabilities and Stockholders' Equity
Deposits
Non-Interest Bearing Demand Deposits ............ $ 23,964 $20,410
Interest Bearing
Savings, NOW and Money Market Deposits ........ 40,656 38,126
Other Time Deposits ........................... 17,406 13,124
Certificates of Deposit $100,000 and over ..... 24,353 9,973
-------- -------
Total Deposits .............................. 106,379 81,633
Federal Funds Borrowed ............................ -- --
Accrued Interest Payable and Other Liabilities .... 387 464
-------- -------
Total Liabilities ........................... 106,766 82,097
Stockholders' Equity
Common Stock, authorized 5,000,000 shares,
issued and outstanding 1,047,288 shares
on 9/30/96 and 995,390 shares on 9/30/95 ...... 10,062 10,039
Undivided Profits ............................... 1,813 527
Reserve for Unrealized Losses on Available
For Sale Securities ............................. (8) (17)
Total Stockholders' Equity .................. 11,867 10,549
-------- -------
Total Liabilities and Stockholders' Equity .. $118,633 $92,646
======== =======
See accompanying notes to unaudited consolidated financial statements.
F-1
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(DOLLARS IN THOUSANDS--EXCEPT PER SHARE DATA)
Nine Months Ended
--------------------------
September 30, September 30,
1996 1995
-------- --------
Interest Income:
Interest and Fees on Loans ....................... $4,328 $3,408
Interest on Federal Funds Sold ................... 196 200
Interest on Investment Securities:
Taxable Interest Income ........................ 963 905
Tax-Exempt Interest Income ..................... 146 116
------ ------
Total Interest Income ........................ 5,633 4,629
Interest Expense:
Savings, NOW and Money Market Deposits ........... 528 597
Other Time Deposits .............................. 553 472
Certificates of Deposit $100,000 and over ........ 487 292
Borrowed Funds ................................... 14 --
------ ------
Total Interest Expense ....................... 1,582 1,361
Net Interest Income .......................... 4,051 3,268
Provision for Loan Losses ........................ 163 92
------ ------
Net Interest Income After Provision
for Loan Losses ............................ 3,888 3,176
Non-Interest Income:
Service Fees on Deposits ......................... 374 223
Other Fees and Commissions ....................... 177 170
Investment Securities Gains (Losses) ............. -- (5)
------ ------
Total Non-Interest Income .................... 551 388
------ ------
Non-Interest Expense:
Salaries and Wages ............................... 1,134 928
Employee Benefits ................................ 93 86
Occupancy Expense ................................ 404 400
Furniture and Equipment .......................... 189 180
Other ............................................ 793 694
------ ------
Total Non-Interest Expense ................... 2,613 2,288
------ ------
Income Before Income Taxes ................... 1,826 1,276
Income Tax Expense ................................. 712 491
------ ------
Net Income ................................... $1,114 $ 785
====== ======
Net Income Per Share ............................... $ 1.07 $ 0.75
Weighted Average Shares Outstanding ................ 1,047,238 1,047,238
See accompanying notes to unaudited consolidated financial statements.
F-2
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS)
Nine Months Ended
-----------------------------
September 30, September 30,
1996 1995
-------------- -------------
Cash Flows from Operating Activities:
Net Income ....................................... $ 1,114 $ 785
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Provision for Loan Losses .................... 163 92
Depreciation ................................. 112 119
Net Amortization and Accretion of Premiums
and Discounts on Investment Securities ..... 8 (41)
Proceeds from Sale of Loans Held for Sale .... 0 87
Gain on Sale of Loans Held for Sale .......... 0 (1)
Gain on Sale of Securities Available for Sale. 0 6
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Accrued Interest
Receivable and Other Assets............... (174) (76)
(Decrease) Increase in Accounts Payable
and Accrued Liabilities .................. (147) 96
Other ...................................... -- --
---------- ----------
Net Cash Provided by Operating Activities .... 1,076 1,061
---------- ----------
Cash Flows from Investing Activities:
Purchases of Investment Securities ............... (13,772) (13,218)
Maturities of Investment Securities .............. 6,746 20,078
Proceeds from Repayments of Securities
Available for Sale ............................. 82 79
Proceeds from Sale of Securities Available
for Sale ....................................... 0 2,890
Maturities of Securities Available for Sale ...... 2,000 0
Purchase of Securities Available for Sale ........ (1,000) (2,982)
Net Increase in Loans ............................ (14,470) (9,865)
Purchase of Federal Home Loan Bank Stock ......... (476) --
Purchase of Premises and Equipment ............... (147) (14)
---------- ----------
Net Cash Used in Investing Activities .......... (21,037) (3,032)
---------- ----------
Cash Flows from Financing Activities:
Net Increase in Deposits ......................... 21,154 4,996
Issuance of Common Stock and Options
and Warrants Exercised ......................... 15 0
Dividends Paid.................................... (278) 0
---------- ----------
Net Cash Provided by Financing Activities ...... 20,891 4,996
---------- ----------
Increase in Cash and Cash Equivalents .......... 930 3,025
Cash and Cash Equivalents at Beginning of Year ... 14,531 7,661
---------- ----------
Cash and Cash Equivalents at End of Year ......... $ 15,461 $ 10,686
========== ==========
Cash Paid During the Year for:
Interest on Deposits ........................... $1,582,307 $1,360,841
Income Taxes ................................... $ 712,225 $ 491,650
Supplemental Schedule of Noncash Investing
Activities:
Real Estate Acquired in Settlement of Loans..... $ 155 $ --
See accompanying notes to unaudited consolidated financial statements.
F-3
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDARY
Notes to Unaudited Consolidated Financial Statements
(1) Basis of Unaudited Financial Statement Presentation
In the opinion of management, the accompanying unaudited consolidated
financial statements include all adjustments of a normal recurring nature
necessary to present fairly the Company's financial position as of
September 30, 1996, the results of its operations for the nine months
ended, and the cash flows for the nine months of 1996. The results of
operations for such interim periods are not necessarily indicative of the
results to be expected for the full year.
F-4
<PAGE>
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 subsidiary as of December 31, 1995 and
1994, and the related consolidated statements of income, stockholders' equity,
and cash flows for the years then ended. These consolidated financial statements
are the responsibility of the Bank'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 subsidiary at December 31, 1995 and 1994, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
As discussed in Note 1B to the consolidated financial statements, the Bank
adopted Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," in 1994.
KPMG Peat Marwick LLP
Short Hills, New Jersey
February 16, 1996, except as to Note 1A,
which is as of December 6, 1996
F-5
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, 1995 and 1994
(Dollars in Thousands)
1995 1994
-------- --------
ASSETS
Cash and cash equivalents:
Cash and due from banks ............................ $ 8,331 $ 4,011
Federal funds sold ................................. 6,200 3,650
-------- --------
Total cash and cash equivalents ................ 14,531 7,661
-------- --------
Securities available for sale (note 2) ............... 6,780 7,513
Investment securities, estimated market value of
$17,767 in 1995 and $24,989 in 1994 (note 2) ....... 17,630 25,308
Loans held for sale .................................. -- 86
Loans (note 3):
Commercial ......................................... 30,013 21,597
Mortgage ........................................... 9,818 7,879
Consumer and other ................................. 16,310 14,600
-------- --------
Total loans .................................... 56,141 44,076
Deferred loan fees ................................. (41) (13)
Allowance for loan losses .......................... (692) (626)
-------- --------
Net loans ...................................... 55,408 43,437
-------- --------
Premises and equipment, net (note 4) ................. 1,553 1,687
Accrued interest receivable .......................... 738 608
Other assets (note 5) ................................ 154 292
-------- --------
Total assets ................................... $ 96,794 $ 86,592
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand deposits ................ 23,244 19,502
Interest-bearing deposits:
Savings and time deposits ........................ 53,300 49,416
Certificates of deposit of $100,000 or more ...... 8,681 7,719
-------- --------
Total deposits ................................. 85,225 76,637
Accounts payable and accrued liabilities ............. 534 368
-------- --------
Total liabilities .............................. 85,759 77,005
-------- --------
Stockholders' equity (note 8):
Common stock,
Authorized 5,000,000 shares in
1995 and 1,200,000 shares in 1994;
issued and outstanding 995,390
shares in 1995 and 947,500 shares in 1994 ........ 10,047 9,521
Net unrealized gain (loss) on securities
available for sale ............................... 11 (194)
Retained earnings .................................. 977 260
-------- --------
Total stockholders' equity ..................... 11,035 9,587
-------- --------
Commitments and contingencies (notes 6 and 9)
Total liabilities and stockholders' equity ..... $ 96,794 $ 86,592
======== ========
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Consolidated Statements of Income
Years ended December 31, 1995 and 1994
(Dollars in Thousands, Except Share Data)
1995 1994
------ ------
Interest income:
Interest and fees on loans .......................... $4,712 $3,383
Interest on investments available for sale .......... 384 382
Interest on municipals--nontaxable .................. 165 67
Interest on investments ............................. 823 1,080
Interest on Federal funds sold ...................... 294 132
------ ------
Total interest income .......................... 6,378 5,044
------ ------
Interest expense:
Savings and time deposits ........................... 1,431 1,132
Certificates of deposit of $100,000 or more ......... 413 229
------ ------
1,844 1,361
Net interest income ............................ 4,534 3,683
Provision for loan losses (note 3) .................... 92 75
------ ------
Net interest income after pro-
vision for loan losses ...................... 4,442 3,608
------ ------
Other income--fees and service charges ................ 578 378
------ ------
Other expenses:
Salaries and employee benefits ...................... 1,361 1,155
Occupancy (note 6) .................................. 534 511
Furniture and equipment expense (note 6) ............ 239 254
Advertising and business promotion .................. 63 64
Data processing ..................................... 173 147
FDIC insurance ...................................... 87 161
Other insurance ..................................... 32 42
Other operating expenses ............................ 515 563
------ ------
Total other expenses ........................... 3,004 2,897
------ ------
Income before income tax expense ............... 2,016 1,089
Income tax expense (note 5) ........................... 781 349
------ ------
Net income ..................................... $1,235 $ 740
====== ======
Earnings per share:
Primary ............................................. $ 1.20 $ 0.75
Fully diluted ....................................... 1.20 0.75
====== ======
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1995 and 1994
(Dollars in Thousands)
<TABLE>
<CAPTION>
Net unrealized
gain (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
======= ===== ==== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-8
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended December 31, 1995 and 1994
(Dollars in Thousands)
<TABLE>
<CAPTION>
1995 1994
------- ------
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................................................ $ 1,235 $ 740
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for loan losses ................................................... 92 75
Depreciation ................................................................ 155 180
Net amortization and accretion of premiums and discounts on
investment securities ................................................... (21) 7
Net loss on sale of securities available for sale ........................... 5 --
Loans originated for sale ................................................... (1,188) (1,693)
Proceeds from sales of loans held for sale .................................. 1,285 1,701
Gain on sale of loans held for sale ......................................... (11) (14)
Changes in operating assets and liabilities:
Increase in accrued interest receivable ................................. (130) (107)
Decrease in other assets ................................................ 2 8
Increase in accounts payable and accrued liabilities .................... 166 145
------- ------
Net cash provided by operating activities ............................ 1,590 1,042
------- ------
Cash flows from investing activities:
Purchases of investment securities ................................................ (14,310) (10,602)
Maturities of investment securities ............................................... 22,012 10,500
Proceeds from repayments of investment securities ................................. -- 50
Proceeds from repayments of securities available for sale ......................... 133 89
Proceeds from sale of securities available for sale ............................... 2,915 --
Maturities of securities available for sale ....................................... 1,000 5,000
Purchase of securities available for sale ......................................... (2,982) (2,952)
Net increase in loans ............................................................. (12,063) (8,282)
Purchases of premises and equipment ............................................... (21) (23)
------- ------
Net cash used in investing activities ................................ (3,316) (6,220)
------- ------
Cash flows from financing activities:
Net increase in deposits .......................................................... 8,588 4,010
Issuance of common stock and options and warrants exercised ....................... 8 11
------- ------
Net cash provided by financing activities ............................ 8,596 4,021
------- ------
Increase (decrease) in cash and cash equivalents ..................... 6,870 (1,157)
Cash and cash equivalents at beginning of year ...................................... 7,661 8,818
------- ------
Cash and cash equivalents at end of year ............................................ $14,531 $7,661
======= ======
</TABLE>
F-9
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Consolidated Statements of Cash Flows, Continued
(Dollars in Thousands)
1995 1994
------ ------
Supplemental information:
Cash paid during the year for:
Interest on deposits ................................ $1,801 $1,326
====== ======
Income taxes ........................................ $ 408 $ 249
====== ======
Transfer of investment securities to
securities available for sale ...................... $ -- $9,982
====== ======
See accompanying notes to consolidated financial statements.
F-10
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1995 and 1994
(1A) Bridge View Bancorp (the "Company") 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 acquired all of the capital stock of the Bank in a two for one
stock exchange and became its holding company on December 6, 1996 in a
transaction accounted for as if it were a pooling of interests.
Common Stock and per share amounts have been restated to reflect the
two for one stock exchange. Accordingly, prior to December 6, 1996,
the operations of the Company consist solely of the operations of the
Bank.
(1B) Summary of Significant Accounting Policies
The accompanying consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiary, the Bank. All
intercompany accounts and transactions have been eliminated in
consolidation.
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
Company and 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 Company 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.
As of January 1, 1994, the Company has adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (SFAS 115). SFAS 115 requires that
securities available for sale be reported at fair value with changes in
the carrying value from period to period included as a separate
component of stockholders' equity.
F-11
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(1B) Summary of Significant Accounting Policies, cont.
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. Gains or losses on sales of investment securities are based
upon the specific identification method. Investment securities are
carried at the principal amount outstanding because the Company has the
ability and it is management's intention to hold these securities to
maturity.
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. The accrual of income on
loans is discontinued when certain factors indicate reasonable doubt as
to the collectibility of such income, and the interest income on such
loans is recognized only when subsequently collected. 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.
As of January 1, 1995, the Company has adopted Statement of Financial
Accounting Standards No. 114 "Accounting by Creditors for Impairment
of a Loan" and No. 118 "Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosure." These statements address
the accounting for impaired loans and specify how allowances for
loan losses related to impaired loans are calculated. Smaller
balance homogenous loans that are collectively evaluated for impairment
such as residential mortgage loans are specifically excluded from the
impaired loan portfolio. Adoption of these new standards had no effect
on the level of the allowance for loan losses or operating results
for the year ended December 31, 1995.
Loans Held for Sale
Mortgage loans intended for sale are carried at the lower of unpaid
principal balance, net, or market value on an aggregate basis.
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
F-12
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(1B) Summary of Significant Accounting Policies, cont.
Allowance for Loan Losses, cont.
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.
Income Taxes
The Company 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
For the year ended December 31, 1995, earnings per share is based on
the weighted average number of shares outstanding, including common
stock equivalents (1,028,014), utilizing the modified treasury stock
method.
For the year ended December 31, 1994, earnings per share was computed
by dividing net income by the weighted average number of shares
outstanding (986,746), retroactively adjusted for stock dividends.
Common stock equivalents were not included in the calculation as they
were not material.
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.
Reclassifications
Certain reclassifications have been made to amounts reported in 1994 to
conform to the 1995 presentation.
F-13
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(2) Securities Available for Sale and Investment Securities
A comparative summary of securities available for sale at December 31,
1995 and 1994 is as follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amor- unreal- unreal-
tized ized ized Market
cost gains losses value
------- ------ ------ -------
<S> <C> <C> <C> <C>
1995--U.S. Government and agency
obligations ............................... $6,762 $38 $(20) $6,780
====== === ==== ======
1994--U.S. Government and agency
obligations ............................... $7,836 -- (323) 7,513
====== === ==== ======
</TABLE>
A comparative summary of investment securities at December 31, 1995 and
1994 is as follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amor- unreal- unreal-
tized ized ized Market
cost gains losses value
------- ------ ------ ------
<S> <C> <C> <C> <C>
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
======= ==== ===== =======
1994:
U.S. Government and agency obligations ............ 21,889 4 (319) 21,574
Municipal obligations ............................. 3,419 1 (5) 3,415
------- ---- ----- -------
$25,308 $ 5 $(324) $24,989
======= ==== ===== =======
</TABLE>
F-14
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(2) SECURITIES AVAILABLE FOR SALE AND INVESTMENT SECURITIES, CONT.
The investments held at December 31, 1995 mature as follows (in thousands):
Investment Securities available
securities for sale
--------------------- ---------------------
Amortized Market Amortized Market
cost value cost value
-------- ------ --------- -------
Within one year ........... $ 9,800 $9,816 $4,011 $4,020
One to five years ......... 7,439 7,539 2,751 2,760
Six to ten years .......... 391 412 -- --
------- ------ ------ ------
$17,630 $7,767 $6,762 $6,780
======= ====== ====== ======
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 a carrying value of $1.5 million at
December 31, 1995 and 1994 were pledged to secure public funds on deposit.
(3) LOANS AND ALLOWANCE FOR LOAN LOSSES
Transactions in the allowance for loan losses for the years ended December
31, 1995 and 1994 are as follows (in thousands):
1995 1994
---- ----
Balance at beginning of year ..................... $626 $567
Provision charged to expense ..................... 92 75
Loans charged off, net of recoveries ............. (26) (16)
---- ----
Balance at end of year ........................... $692 $626
==== ====
Nonaccrual loans that are contractually past due 90 days or more amount to
$163,000 and $0 as of December 31, 1995 and 1994, respectively. Interest on
nonaccrual loans excluded from interest income was insignificant for 1995; there
was no interest on nonaccrual loans excluded from income in 1994.
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.
F-15
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(4) PREMISES AND EQUIPMENT
At December 31, 1995 and 1994, premises and equipment consists of the
following (in thousands):
1995 1994
------ -----
Building ........................................ $1,677 $1,677
Furniture, fixtures and equipment ............... 492 472
Leasehold improvements .......................... -- 15
------ ------
Total fixed assets .............. 2,169 2,164
Less accumulated depreciation and amortization .. 616 477
Net carrying value .............. $1,553 $1,687
====== ======
(5) INCOME TAXES
Income tax expense from operations for the years ended December 31, 1995
and 1994 aggregated $781,000 and $349,000, respectively. The current and
deferred amounts of such provisions are as follows (in thousands):
1995 1994
---- ----
Federal:
Current ............... $585 $272
Deferred .............. 35 18
---- ----
620 290
State:
Current ............... 156 40
Deferred .............. 5 19
---- ----
161 59
$781 $349
==== ====
Total income tax expense for the years ended December 31, 1995 and 1994 was
allocated as follows (in thousands):
1995 1994
----- ----
Income tax expense from operations ............................ $ 781 $349
Stockholders' equity--unrealized (gain) loss on securities
available for sale ......................................... (136) 129
----- ----
$ 645 $478
===== ====
F-16
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(5) INCOME TAXES, CONT.
Income tax expense from operations differed from the amounts computed by
applying the U.S. Federal income tax rate (34% in 1995 and 1994) to income taxes
as a result of the following (in thousands):
1995 1994
---- ----
Computed "expected" tax expense ......................... $685 $370
Increase (decrease) in taxes resulting from:
State taxes, net of Federal income tax benefit ..... 106 39
Tax-exempt income .................................. (29) (15)
Other .............................................. 19 (45)
---- ----
$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, 1995 and 1994 are as follows (in thousands):
1995 1994
---- ----
Deferred tax assets:
Start-up costs .............................................. $ 1 $ 5
Bank premises, furniture and equipment, principally due to
differences in depreciation .............................. 50 40
Unrealized loss on securities available for sale ............ -- 129
Loans, principally due to allowance for loan losses and
deferred fee income ...................................... 273 247
--- ----
Total gross deferred tax assets .................. 324 421
--- ----
Deferred tax liabilities:
Deferred fee income ......................................... 31 --
Unrealized gain on securities available for sale 7 --
Investment securities, principally due to accretion of
discounts ................................................ 22 11
Accrual to cash adjustment .................................. 200 181
--- ----
Total gross deferred tax liabilities ............. 260 192
---- ----
Net deferred tax asset ........................... $ 64 $229
==== ====
F-17
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(5) INCOME TAXES, CONT.
At December 31, 1995, management believes that no valuation allowance for
the deferred tax asset is necessary due to sufficient taxes paid in the
statutory carryback period.
(6) LEASES
The Company leases its land in Englewood Cliffs, New Jersey from a general
partnership owned partly by a director under a ten-year operating lease with
five five-year renewal options. The Company 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 a
branch facility in Fort Lee, 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 (which include both
branches) with initial or remaining terms in excess of one year from December
31, 1995 (in thousands):
Year ending December 31:
1996 ................................... $443
1997 ................................... 423
1998 ................................... 292
1999 ................................... 76
====
Rental expense amounted to $432,000 and $411,000 for the years ended
December 31, 1995 and 1994, respectively.
(7) RELATED-PARTY TRANSACTIONS
Certain directors of the Company are associated with professional firms
that rendered various professional services for the Bank. The Company paid the
firms, excluding rental payments, approximately $58,000 and $19,000 during the
years ended December 31, 1995 and 1994, respectively. It is the Company's policy
not to originate loans to directors, executive officers or their affiliates.
(8) 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 $9.07 per share. The warrants are
exercisable on or before September 30, 1997. During 1995 and 1994, 884 and 1,258
warrants, respectively, were exercised, and 152,024 and 152,908 warrants were
outstanding at December 31, 1995 and 1994, respectively.
F-18
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(8) STOCKHOLDERS' EQUITY AND DIVIDEND RESTRICTIONS, CONT.
During 1994, the Bank's stockholders approved the 1994 Stock Option Plan
for Non Employee Directors (Directors' Plan) and the 1994 Employee Stock Option
Plan (Employees' Plan), both of which have been assumed by the Company. The
Directors' Plan provides for options to purchase up to 49,720 shares of the
Company's common stock to be issued to directors who are not employees of the
Bank. The Employees' Plan provides for the option to purchase up to 49,720
shares of the Company's common stock to be issued to employees of the Company
and its subsidiary. Previously issued options to an employee of the Company were
terminated upon adoption of these plans. The option price per share approximates
the market value of the Company's stock on the date of grant.
A summary of the stock option plans for the years ended December 31, 1995
and 1994 is as follows:
Number
of Option price
shares per share($)
------ ---------------
Outstanding at December 31, 1993 -- --
Granted 47,250 9.76
Exercised -- --
------
Outstanding at December 31, 1994 47,250 9.76
Granted 25,764 10.50
Exercised -- --
------
Outstanding at December 31, 1995 73,014 10.50 -- 9.76
====== =============
The Bank declared a 5% stock dividend effective March 17, 1995 and February
28, 1994.
New Jersey law provides that no dividend may be paid unless, after the
payment of such dividend, the capital of the Company will not be impaired and
either the Company 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.
(9) COMMITMENTS AND CONTINGENCIES
The Company 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.
F-19
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(9) COMMITMENTS AND CONTINGENCIES, CONT.
The Company 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 Company evaluates each customer's creditworthiness on a
case-by-case basis. The amount of collateral obtained, if deemed necessary by
the Company 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, 1995 and 1994 totaled $21.1 million and $17.1
million, respectively. Additionally, unused credit card commitments totaled
$394,000 at December 31, 1995.
Most of the Company's lending activity is with customers located in Bergen
County, New Jersey. The Company has issued letters of credit to customers
totaling $382,000 and $668,000 at December 31, 1995 and 1994, respectively,
whereby the Bank guarantees performance to a third party. These letters of
credit generally have fixed expiration dates of less than one year.
(10) REGULATORY MATTERS
On December 19, 1991, the Federal Deposit Insurance Corporation Improvement
Act of 1991 (FDICIA) became law. Regulations implementing the prompt corrective
action provisions of FDICIA became effective on December 19, 1992. In addition
to the prompt corrective action requirements, FDICIA includes significant
changes to the legal and regulatory environment for insured depository
institutions, including reductions in insurance coverage for certain kinds of
deposits, increased supervision by the Federal regulatory agencies, increased
reporting requirements for insured institutions, and new regulations concerning
internal controls, accounting and operations.
The prompt corrective action regulations define specific capital categories
based on an institution's capital ratios. The capital categories, in declining
order, are "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," and "critically undercapitalized." To be
considered "well capitalized," an institution must generally have a leverage
ratio of at least 5%, a Tier 1 risk-based capital ratio of at least 10%, and a
total risk-based capital ratio of at least 6%. An institution is deemed to be
"critically undercapitalized" if it has a tangible equity ratio of 2% or less.
At December 31, 1995, the Bank's (unaudited) leverage ratio, Tier 1 risk-based
capital ratio and total risk-based capital ratio were 12.4%, 17% and 18%,
respectively. The Bank currently meets the criteria of a "well capitalized"
institution.
(11) FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments" (SFAS 107), requires that the Bank disclose
F-20
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(11) FAIR VALUE OF FINANCIAL INSTRUMENTS, CONT.
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 Company's financial instruments at
December 31, 1995 (in thousands):
Estimated
Carrying fair
amount value
-------- ---------
Financial assets:
Cash and cash equivalents ............ $14,531 $14,531
Securities available for sale ........ 6,780 6,780
Investment securities ................ 17,630 17,767
Net loans ............................ 55,408 55,659
Accrued interest receivable .......... 738 738
Financial liabilities--deposits ........... 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.
ACCRUED INTEREST RECEIVABLE
The carrying amount approximates fair value.
F-21
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(11) FAIR VALUE OF FINANCIAL INSTRUMENTS, CONT.
DEPOSITS
The fair value of deposits with no stated maturity, such as
non-interest-bearing demand deposits is equal to the amount payable on demand as
of December 31, 1995. 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, 1995 such amounts were not material.
LIMITATION
The preceding fair value estimates were made at December 31, 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, 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.
(12) RECENT ACCOUNTING PRONOUNCEMENTS
In March 1995 the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
(SFAS 121). This statement requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed for
impairment whenever
F-22
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(12) RECENT ACCOUNTING PRONOUNCEMENTS, CONT.
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Goodwill is included in the scope of SFAS 121,
while core deposit intangibles and mortgage servicing rights are specifically
excluded. SFAS 121 is effective for fiscal years beginning after December 15,
1995 and was adopted by the Bank in 1996. The effect of adopting SFAS 121 is
expected to be immaterial.
In May 1995 the FASB issued Statement of Financial Accounting Standards No.
122, "Accounting for Mortgage Servicing Rights" (SFAS 122). This statement
requires recognition of the rights to service mortgage loans for others, whether
those rights were acquired through purchase or origination. SFAS 122 also
requires that capitalized mortgage servicing rights be evaluated for impairment
based on the fair value of those rights with impairment recognized through a
valuation allowance. The accounting requirements of this statement are effective
for fiscal years beginning after December 15, 1995. The impact of adopting SFAS
122 on the consolidated financial statements of the Bank is expected to be
immaterial.
In October 1995, FASB issued Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation (SFAS 123). This statement
establishes financial accounting and reporting standards for stock-based
employee compensation plans. SFAS 123 encourages all entities to adopt the "fair
value based method" of accounting for employee stock compensation plans.
However, SFAS 123 also allows an entity to continue to measure compensation cost
under such plans using the "intrinsic value based method." The accounting
requirements of this statement are effective for transactions entered into in
fiscal years that begin after December 15, 1995.
F-23
<PAGE>
================================================================================
No person is authorized to give any information or make any representation other
than as contained in this Prospectus and, if given or made, such other
information or representations must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby to any
person in any jurisdiction where such offer would be unlawful. Neither the
delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create any implications that there had been no change in the
affairs of the Company since any of the dates of which information of the dates
of which information is furnished herein or since the date hereof.
----------
TABLE OF CONTENTS
Page
----
Available Information.................................................. 2
Prospectus Summary..................................................... 3
Selected Consolidated Financial Data................................... 4
Special Considerations and Risk Factors................................ 6
Use of Proceeds........................................................ 8
Market and Price Range of Securities................................... 8
Dividend Policy........................................................ 9
Capitalization......................................................... 9
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................. 11
Business............................................................... 26
Supervision and Regulation............................................. 28
Management............................................................. 33
Executive Compensation................................................. 34
Certain Transactions with Management................................... 35
Security Ownership of Certain Beneficial Owners and Management......... 36
Description of the Company's Securities................................ 37
Legal Matters.......................................................... 38
Experts................................................................ 38
Index to Consolidated Financial Statements............................. 39
Consolidated Financial Statements...................................... F-1
----------------------------------------
158,488 SHARES
OF COMMON STOCK
BRIDGE VIEW BANCORP
----------
PROSPECTUS
----------
_______________, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VII of the Certificate of Incorporation of the Company provides
that the Company shall indemnify its present and former officers, directors,
employees and agents and persons serving at its request against expenses,
including attorneys' fees, judgments, fines or amounts paid in settlement
incurred in connection with any pending or threatened civil or criminal
proceeding to the fullest extent permitted by the New Jersey Business
Corporation Act. Article VII also provides that such indemnification shall not
exclude any other rights to indemnification to which a person may otherwise be
entitled, and authorizes the Company to purchase insurance on behalf of any of
the persons enumerated against any liability whether or not the Company would
have the power to indemnify him under the provisions of Article VII.
The New Jersey Business Corporation Act empowers a corporation to indemnify
a corporate agent against his expenses and liabilities incurred in connection
with any proceeding (other than a derivative lawsuit) involving the corporate
agent by reason of his being or having been a corporate agent if (a) the agent
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and (b) with respect to any
criminal proceeding, the corporate agent had not reasonable cause to believe his
conduct was unlawful. For purposes of the Act, the term "corporate agent"
includes any present or former director, officer, employee or agent of the
corporation, and a person serving as a "corporate agent" for any other
enterprise at the request of the corporation.
With respect to any derivative action, the corporation is empowered to
indemnify a corporate agent against his expenses (but not his liabilities)
incurred in connection with any proceeding involving the corporate agent by
reason of his being or having been a corporate agent if the agent acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation. However, only the court in which the proceeding
was brought can empower a corporation to indemnify a corporate agent against
expenses with respect to any claim, issue or matter as to which the agent was
adjudged liable for negligence or misconduct.
The corporation may indemnify a corporate agent in a specific case if a
determination is made by any of the following that the applicable standard of
conduct was met: (i) the Board of Directors, or a committee thereof, acting by a
majority vote of a quorum consisting of disinterested directors; (ii) by
independent legal counsel if there is not a quorum of disinterested directors or
if the disinterested quorum empowers counsel to make the determination; or (iii)
by the stockholders.
A corporate agent is entitled to mandatory indemnification to the extent
that the agent is successful on the merits or otherwise in any proceeding, or in
defense of any claim, issue or matter in the proceeding. If a corporation fails
or refuses to indemnify a corporate agent, whether the indemnification is
permissive or mandatory, the agent may apply to a court to grant him the
requested indemnification. In advance of the final disposition of a proceeding,
the corporation may pay an agent's expenses if the agent agrees to repay the
expenses unless it is ultimately determined that he is entitled to
indemnification.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
SEC Registration Fee........................................... $ 415
Accounting Fees and Expenses .................................. 2,000
Printing and Engraving......................................... 500
Legal Fees and Expenses........................................ 2,000
Transfer Agent and Registrar Fees.............................. 500
Miscellaneous Expenses......................................... 585
------
Total...................................................... $6,000
======
II-1
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
In connection with the Acquisition of the Bank, the Company issued
1,047,288 shares of Common Stock. These shares were issued pursuant to the
exemption from registration provided by Section 3(a)(12) of the Securities Act
of 1993, as amended.
ITEM 27. 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
4(iii) Bridge View Bank 1994 Employee Stock Option Plan (1)
4(iv) Bridge View Bank 1994 Stock Option Plan for Non-Employee Directors (1)
5 Opinion of McCarter & English
21 Subsidiaries of the Registrant
23(i) Consent of McCarter & English (See Exhibit 5)
23(ii) Consent of KPMG Peat Marwick LLP
24 Power of Attorney
27 Financial Data Schedule
- ----------
(1) Incorporated by reference from Exhibits 2(a) to 6(b) from the Registrant's
Registration Statement on Form 10-SB, Registration No. 1-12165.
II-2
<PAGE>
ITEM 28. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned registrant will:
(1) For determining any liability under the Securities Act, treat
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the small business issuer under Rule 44(b)(1) or
(4) or 497(h) under the Securities Act as part of this registration
statement as of the time the Commission declared it effective; and
(2) For determining any liability under the Securities Act, treat
each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.
II-3
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe it meets all of the
requirements for filing on Form SB-2 and has duly authorized this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Englewood Cliffs in the State of New Jersey on
January 29, 1997.
BRIDGE VIEW BANCORP
By: /s/ ALBERT F. BUZZETTI
-------------------------------------
Albert F. Buzzetti
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Albert F. Buzzetti his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement of Bridge View Bancorp on Form SB-2, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
This Power of Attorney may be signed in one or more counterparts.
In accordance with the requirements of the Securities Act, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Name Title Date
---- ----- ----
/s/ ALBERT F. BUZZETTI President, Chief
- ------------------------ Executive Officer January 29, 1997
Albert F. Buzzetti and Director
/s/ ALBERT F. BUZZETTI* Comptroller (Principal
- ------------------------ Financial Officer and January 29, 1997
Michael J. Solokas Accounting Officer)
/s/ ALBERT F. BUZZETTI*
- ------------------------ Director January 27, 1997
Gerald A. Calabrese
- ------------------------ Director
Glenn L. Creamer
/s/ ALBERT F. BUZZETTI*
- ------------------------ Director January 29, 1997
Bernard Mann
- ------------------------ Director
Mark Metzger
/s/ ALBERT F. BUZZETTI*
- ------------------------ Director January 29, 1997
Jeremiah F. O'Connor
/s/ ALBERT F. BUZZETTI*
- ------------------------ Director January 29, 1997
Joseph C. Parisi
/s/ ALBERT F. BUZZETTI*
- ------------------------ Director January 29, 1997
John A. Schepisi
- ----------
* Pursuant to Power of Attorney.
II-4
<PAGE>
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
4(iii) Bridge View Bank 1994 Employee Stock Option Plan (1)
4(iv) Bridge View Bank 1994 Stock Option Plan for Non-Employee Directors (1)
5 Opinion of McCarter & English
21 Subsidiaries of the Registrant
23(i) Consent of McCarter & English (See Exhibit 5)
23(ii) Consent of KPMG Peat Marwick LLP
24 Power of Attorney
27 Financial Data Schedule
- ----------
(1) Incorporated by reference from Exhibits 2(a) to 6(b) from the Registrant's
Registration Statement on Form 10-SB, Registration No. 1-12165.
SPECIMEN STOCK CERTIFICATE
COMMON SHARES COMMON SHARES
[LOGO BRIDGE VIEW BANCORP]
INCORPORATED UNDER THE LAWS OF THE STATE OF NEW JERSEY
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP 108058 10 8
THIS CERTIFIES THAT
is the owner
FULLY PAID AND NON-ASSESSABLE COMMON SHARES OF
BRIDGE VIEW BANCORP
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney, upon surrender of this Certificate properly
endorsed. This Certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the Certificate of
Incorporation of the Corporation and any amendments thereto. This Certificate is
not valid until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
(New York, N.Y.) Transfer Agent
By
Authorized Signature
[CORPORATE SEAL]
CORPORATE SECRETARY PRESIDENT
<PAGE>
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM--as tenants in common
TEN ENT--as tenants by the entireties
JT TEN --as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT--_________ Custodian _________
(Cust) (Minor)
Under Uniform Gifts to Minors
Act ________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received, _________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE.
- --------------------------------------
- --------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
__________________________________________________________________ Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
____________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated __________________________
______________________________________
NOTICE:
The signature to this assignment must correspond with the name as written
upon the face of the certificate in every particular, without alteration
or enlargement or any change whatever.
Exhibit 5--Legal Opinion
January 29, 1997
Re: Bridge View Bancorp
Registration Statement on Form SB-2
-----------------------------------
Bridge View Bancorp
457 Sylvan Avenue
Englewood Cliffs, New Jersey 07632
Dear Sirs:
We have acted as counsel for Bridge View Bancorp, a New Jersey corporation
(the "Company"), in connection with the Registration Statement on Form SB-2 (the
"Registration Statement") being filed by the Company with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended, relating
to an aggregate of 158,488 shares of common stock, no par value, of the Company
(the "Common Stock") purchasable upon the exercise of outstanding warrants (the
"Warrants") of the Company.
In so acting, we have examined, and relied as to matters of fact upon, the
originals, or copies certified or otherwise identified to our satisfaction, of
the Certificate of Incorporation and By-laws of the Company and such other
certificates (including certificates of officers of the Company), records,
instruments and documents, and have made such other and further investigations,
as we have deemed necessary or appropriate to enable us to express the opinion
set forth below. In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such latter documents.
<PAGE>
Bridge View Bancorp
January 29, 1997
Page 2
Based upon the foregoing, we are of the opinion that upon issuance and
delivery by the Company of the Common Stock issuable upon exercise of the
Warrants, such Common Stock will be legally issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving the foregoing consent, we do not admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
Very truly yours,
/s/ McCARTER & ENGLISH
--------------------------
McCarter & English
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Bridge View Bank is a wholly-owned subsidiary of the Registrant and Bridge
View Investment Company is a wholly-owned subsidiary of Bridge View Bank.
INDEPENDENT AUDITORS' REPORT
Board of Directors
Bridge View Bancorp:
We consent to use of our report dated February 16, 1996 except for Note 1A
which is as of December 16, 1996, with respect to the consolidated statements of
financial condition of Bridge View Bancorp as of December 31, 1995 and 1994, and
the related consolidated statements of income, stockholders' equity, and cash
flows for each of the years in the two-year period ended December 31, 1995,
which report appears in the Form SB-2 of Bridge View Bancorp. We also consent to
the reference to our firm under the headings "Selected Consolidated Financial
Data" and "Experts" in the registration statement.
Our report refers to a change in accounting for certain investments in debt
and equity securities in 1994.
KPMG PEAT MARWICK LLP
Short Hills, New Jersey
January 29, 1997
EXHIBIT 24
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Albert F. Buzzetti, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement of Bridge View Bancorp on Form SB-2, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
This Power of Attorney may be signed in one or more counterparts.
In accordance with the requirements of the Securities Act, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Name Title Date
---- ----- ----
/s/ MICHAEL J. SOLOKAS Comptroller (Principal
- ------------------------ Financial Officer and January 23, 1997
Michael J. Solokas Accounting Officer)
/s/ GERALD A. CALABRESE
- ------------------------ Director January 23, 1997
Gerald A. Calabrese
- ------------------------ Director
Glenn L. Creamer
/s/ BERNARD MANN
- ------------------------ Director January 23, 1997
Bernard Mann
- ------------------------ Director
Mark Metzger
/s/ JEREMIAH F. O'CONNOR
- ------------------------ Director January 23, 1997
Jeremiah F. O'Connor
/s/ JOSEPH C. PARISI
- ------------------------ Director January 23, 1997
Joseph C. Parisi
/s/ JOHN A. SCHEPISI
- ------------------------ Director January 23, 1997
John A. Schepisi
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED SEPTEMBER 30, 1996 INTERIM FINANCIAL STATEMENTS
AND AUDITED DECEMBER 31, 1995 YEAR END FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-END> SEP-30-1996 DEC-31-1995
<CASH> 7,961,000 8,331,000
<INT-BEARING-DEPOSITS> 82,415,000 61,981,000
<FED-FUNDS-SOLD> 7,500,000 6,200,000
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 5,665,000 6,780,000
<INVESTMENTS-CARRYING> 24,651,000 17,630,000
<INVESTMENTS-MARKET> 24,653,000 17,767,000
<LOANS> 70,530,000 56,141,000
<ALLOWANCE> 855,000 692,000
<TOTAL-ASSETS> 118,633,000 96,794,000
<DEPOSITS> 106,379,000 85,225,000
<SHORT-TERM> 0 0
<LIABILITIES-OTHER> 387,000 534,000
<LONG-TERM> 0 0
0 0
0 0
<COMMON> 997,000 996,000
<OTHER-SE> 11,867,000 11,035,000
<TOTAL-LIABILITIES-AND-EQUITY> 118,633,000 96,794,000
<INTEREST-LOAN> 4,328,000 4,712,000
<INTEREST-INVEST> 1,109,000 1,372,000
<INTEREST-OTHER> 196,000 294,000
<INTEREST-TOTAL> 5,633,000 6,378,000
<INTEREST-DEPOSIT> 1,568,000 1,844,000
<INTEREST-EXPENSE> 1,582,000 1,844,000
<INTEREST-INCOME-NET> 4,051,000 4,534,000
<LOAN-LOSSES> 163,000 92,000
<SECURITIES-GAINS> 0 (5,000)
<EXPENSE-OTHER> 2,613 3,004,000
<INCOME-PRETAX> 1,826 2,016,000
<INCOME-PRE-EXTRAORDINARY> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,114,000 1,235,000
<EPS-PRIMARY> 1.07 1.20
<EPS-DILUTED> 1.07 1.20
<YIELD-ACTUAL> 7.96 7.96
<LOANS-NON> 0 163,000
<LOANS-PAST> 0 0
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 692,000 626,000
<CHARGE-OFFS> 0 26,000
<RECOVERIES> 0 0
<ALLOWANCE-CLOSE> 855,000 692,000
<ALLOWANCE-DOMESTIC> 855,000 692,000
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 163,000 118,000
</TABLE>
