<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
(X) Quarterly report pursuant to section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 1997.
( ) Transaction report pursuant to section 13 or 15 (d) of the
Securities Exchange Act of 1934 for the transition period from
___________ to ____________.
Commission file number: 1-12165
Bridge View Bancorp
(Exact name of registrant as specified in its charter)
New Jersey 22-3461336
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification)
457 Sylvan Avenue, Englewood Cliffs, NJ 07632
(Address of principal executive offices) (zip code)
201-871-7800
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
____X___YES _________NO
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of the Registrant's classes of
common stock, as of the last practicable date.
1,167,465 shares of Common Stock as of July 31, 1997.
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Part I - Financial Information
Item 1. Financial Statements
Consolidated Statements of Financial Condition
June 30, 1997 and December 31, 1996 (unaudited)
Consolidated Statements of Income
Three months ended June 30, 1997 and 1996 (unaudited) and
Six months ended June 30, 1997 and 1996 (unaudited)
Consolidated Statements of Cash Flows
Six months ended June 30, 1997 and 1996 (unaudited)
Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
1
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
<TABLE>
<CAPTION>
June 30, 1997
(Unaudited) December 31, 1996
------------- -----------------
(000's omitted)
<S> <C> <C>
ASSETS
Cash and cash equivalents:
Cash and due from banks ..................... $ 11,769 $ 9,058
Federal funds sold .......................... 0 14,500
- -----------------------------------------------------------------------------------------
TOTAL CASH AND CASH EQUIVALENTS...................... 11,769 23,558
- -----------------------------------------------------------------------------------------
Securities:
FHLBNY Stock, at cost ....................... 476 476
Available for sale .......................... 15,604 8,644
Held to maturity ............................ 27,308 27,517
- -----------------------------------------------------------------------------------------
TOTAL SECURITIES .................................... 43,388 36,637
- -----------------------------------------------------------------------------------------
Loans, net of allowance for loan losses
of $981 at June 30, 1997 and $861 at
December 31, 1996 ............................... 81,239 75,752
Premises and equipment, net ......................... 1,721 1,752
Other real estate owned ............................. 131 139
Accrued interest receivable and other assets ........ 1,402 1,222
- -----------------------------------------------------------------------------------------
TOTAL ASSETS ........................................ 139,650 139,060
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing demand deposits ........ 33,738 29,352
Interest bearing deposits:
Savings and time deposits ............ 75,897 72,577
Certificates of deposit $100,000+ .... 16,276 24,404
- -----------------------------------------------------------------------------------------
TOTAL DEPOSITS ...................................... 125,911 126,333
- -----------------------------------------------------------------------------------------
Accrued Interest Payable & Other Liabilities ........ 469 509
- -----------------------------------------------------------------------------------------
TOTAL LIABILITIES ................................... 126,380 126,842
- -----------------------------------------------------------------------------------------
Commitments and contingencies
Stockholders' equity:
Common stock, no par value, authorized
5,000,000 shares issued and outstanding
1,143,638 in 1997 and 1,048,320 in 1996 ..... 12,425 10,647
Undivided profits ........................... 847 1,573
Net unrealized holding (losses) on
securities available for sale ............... (2) (2)
- -----------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY .......................... 13,270 12,218
- -----------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity .......... $ 139,650 $ 139,060
========= =========
</TABLE>
See notes to unaudited consolidated financial statements.
2
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
-------------------- -----------------
(000's omitted except per share data)
<S> <C> <C> <C> <C>
Interest Income:
Loans, including fees ................. $1,812 $1,445 $3,477 $2,774
Federal funds sold .................... 56 21 215 125
Investment Securities:
Taxable ...................... 572 328 1,091 625
Tax-exempt ................... 56 50 115 100
- ---------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME .......................... 2,496 1,844 4,898 3,624
- ---------------------------------------------------------------------------------------------------
Interest expense:
Savings deposits ...................... 203 169 379 345
Other time deposits ................... 358 173 752 346
Certificates of deposit $100,000+ ..... 234 142 564 286
Borrowed funds ........................ 1 5 1 5
- ---------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE ......................... 796 489 1,696 982
- ---------------------------------------------------------------------------------------------------
Net Interest Income .......... 1,700 1,355 3,202 2,642
Provision for loan losses ...................... 60 60 120 113
- ---------------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses .............. 1,640 1,295 3,082 2,529
- ---------------------------------------------------------------------------------------------------
Non-interest income:
Service charge income ................. 289 179 527 363
--
- ---------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME ...................... 289 179 527 363
- ---------------------------------------------------------------------------------------------------
Non-interest expense:
Salaries and related expenses ......... 488 389 998 765
Premises and fixed assets ............. 234 175 468 359
Other ................................. 361 302 700 578
- ---------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE ..................... 1,083 866 2,166 1,702
- ---------------------------------------------------------------------------------------------------
Income before income taxes ............ 846 608 1,443 1,190
Income tax expense ............................. 331 237 564 464
- ---------------------------------------------------------------------------------------------------
NET INCOME ..................................... $ 515 $ 371 $ 879 $ 726
- ---------------------------------------------------------------------------------------------------
Per Common Share:
Net Income (Primary) .................. $ 0.39 $ 0.31 $ 0.71 $ 0.61
Net Income (Fully Diluted) ........... $ 0.39 $ 0.31 $ 0.71 $ 0.61
</TABLE>
See notes to unaudited consolidated financial statements.
3
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended
June 30
1997 1996
------------------------
(000's omitted)
Cash flows from operating activities:
Net income ................................. $ 879 $ 726
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization ......... 81 76
Provision for loan losses ............. 120 113
Increase in accrued interest receivable
and other assets .................... (180) (272)
(Decrease) in accrued interest
Payable and other liabilities ....... (40) (30)
Other ................................. 6 0
- ------------------------------------------------------------------------------
Net Cash Provided by Operating Activities .......... 866 613
- ------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from maturities of
investment securities ............... 8,406 5,881
Purchase of investment securities .......... (15,263) (10,419)
Net increase in loans ...................... (5,487) (11,395)
Retirements (additions) to premises
and equipment ....................... (50) (50)
- ------------------------------------------------------------------------------
Net Cash Used in Investing Activities .............. (12,394) (15,983)
- ------------------------------------------------------------------------------
Cash flows from financing activities:
Net (decrease) increase in deposits ........ (422) 4,880
Net increase in Fed Funds Borrowed ......... 0 2,500
Proceeds from issuance of common stock ..... 385 15
Cash paid for dividends .................... (224) (184)
- ------------------------------------------------------------------------------
Net Cash Provided by Financing Activities .......... (261) 7,211
- ------------------------------------------------------------------------------
Net change in cash and cash equivalents ............ (11,789) (8,159)
Cash and cash equivalents as of beginning of period 23,558 14,531
- ------------------------------------------------------------------------------
Cash and Cash Equivalents as of End of Period ...... $ 11,769 $ 6,372
- ------------------------------------------------------------------------------
Cash paid during the period for:
Interest ................................... $ 1,151 $ 960
Income Taxes ............................... $ 521 $ 769
See notes to unaudited consolidated financial statements.
4
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
A. Basis of Presentation
Bridge View Bancorp ("the Company"), a bank holding company, was incorporated
in May 1996 with authorized capital of 5,000,000 shares of no par value common
stock. On December 6, 1996 the Company acquired 100 percent of the shares of
Bridge View Bank ("the Bank") in an exchange of two shares of Company common
stock for each share of Bank common stock (the "Exchange Rate.") The
consolidated condensed financial statements presented for the period ended
June 30, 1996 reflect information for the Bank prior to its acquisition by the
Company and have been restated to reflect the Exchange Rate.
The consolidated condensed financial statements included herein have been
prepared without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. The accompanying consolidated financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented. Such adjustments are
of a normal recurring nature. These consolidated unaudited financial statements
should be read in conjunction with the audited financial statements and the
notes thereto as of and for the year ended December 31, 1996. The results for
the three and six months ended June 30, 1997 are not necessarily indicative of
the results that may be expected for the year ended December 31, 1997.
The unaudited consolidated financial statements include the accounts of the
Company and the Bank, its wholly owned subsidiary. All significant
inter-company accounts and transactions have been eliminated.
B. Investment Securities
The Company classifies debt and equity securities into one of two categories
at the time of purchase:
5
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Securities are classified as securities held to maturity based on management's
intent and the Company's ability to hold them to maturity. Such securities are
stated at cost, adjusted for unamortized purchase premiums and discounts.
Securities not classified as securities held to maturity 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 similar
requirements. At June 30, 1997 $27,308,000 of investment securities were
classified as held to maturity and the remainder were available for sale.
The following table sets forth the carrying value of the Company's security
portfolio as of the dates indicated:
A comparative summary of investment securities available for sale as of the
dates indicated:
(in thousands, Unaudited)
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ------
June 30, 1997:
U.S. Government and
Agency Obligations $15,608 - (4) 15,604
======= ======= =======
December 31, 1996
U.S. Government and
Agency Obligations $ 8,647 15 (18) 8,644
======= ==== ======= =======
A comparative summary of investment securities held to maturity as of the dates
indicated:
(in thousands, Unaudited)
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ------
June 30, 1997:
U.S. Government and
Agency Obligations $22,418 - (8) 22,410
State and Municipal
Obligations 4,890 19 - 4,909
------- ---- ------- -------
$27,308 19 (8) 27,319
======= ==== ======= =======
December 31, 1996:
U.S. Government
and Agency Obligations $21,183 48 (37) 21,194
State and Municipal
Obligations 6,334 18 - 6,352
------- ---- ------- -------
$27,517 66 (37) 27,546
======= ==== ======= =======
6
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Continued
C. Loans and Allowance for Loan Losses
The following table summarizes the components of the loan portfolio as
of June 30, 1997 and as of December 31, 1996.
Loan Portfolio By Type of Loan
(Unaudited)
June 30, 1997 December 31, 1996
------------------ ------------------
Amount % Amount %
-------- --- -------- ---
(Dollars in thousands)
Commercial and Industrial $14,220 17.3% $12,455 16.3%
Non-residential Properties 24,763 30.1 22,998 30.0
Residential Properties ... 39,203 47.7 37,703 49.2
Construction ............. 2,296 2.8 1,752 2.3
Consumer ................. 1,738 2.1 1,705 2.2
------- ----- ------- -----
$82,220 100.0% $76,613 100.0%
======= ===== ======= =====
The following table represents activity in the allowance for loan losses for
the three month periods ended June 30, 1997 and as of June 30, 1996:
Allowance for Loan Losses
(Unaudited)
Three Months Ended
June 30
---------------------
1997 1996
------ ------
(Dollars in thousands)
Balance - beginning of period ................... $ 934 $ 756
Recoveries ...................................... 1 3
Charge-offs ..................................... (14) 0
------------------
Net (charge-offs) recoveries .................... (13) 3
Provision for loan losses ....................... 60 60
------------------
Balance - end of period ......................... $ 981 $ 819
==================
D. Earnings Per Share
Earnings per share is based upon the weighted average number of shares
outstanding, including common stock equivalents, utilizing the modified
treasury stock method. All per share data has been restated to reflect the
Exchange Rate and the 5% stock dividend in April 1997. Average shares
outstanding for purposes of calculating primary and fully diluted earnings per
share are as follows:
<TABLE>
<CAPTION>
Three months Ended Six Months Ended
6/30/97 6/30/96 6/30/97 6/30/96
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Primary Earnings per Share 1,331,680 1,189,945 1,249,622 1,194,343
Fully Diluted Earnings per Share 1,331,680 1,189,945 1,249,622 1,194,343
</TABLE>
7
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARY
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations : Three Months Ended and Six Months Ended
June 30, 1997 and 1996
Net Income
For the three months ended June 30, 1997, net income increased by $144,000 or
38.8% to $515,000 from $371,000 for the three months ended June 30, 1996. For
the six months ended June 30, 1997, net income reached $879,000, an increase
of $153,000 or 21.1%, when compared to net income of $726,000 for the six
months ended June 30, 1996. The increase in net income is attributable to an
increase in net-interest income of $345,000 or 25.5% and an increase of
$560,000 or 21.2% for the three month period and six month period ended June
30, 1997, respectively, when compared to their same periods in 1996. This
increase in interest income and non-interest income was primarily attributable
to an increase of 21.6% in net loans, a 50.4% increase in investment
securities, and a 39.7% increase in total deposits. In addition to the
increase in net interest income, non-interest income, consisting primarily of
service charges on deposit accounts, increased by $110,000 or 61.5%.
Interest expense rose $307,000 or 62.8% for the three month period ending June
30, 1997 compared to the three months ending June 30, 1996. Interest expense
also rose $714,000 or 72.7% to $1,696,000 for the six months ended June 30,
1997 compared to $982,000 for the six month period ended June 30, 1996. This
increase reflects the effect of time deposit promotions in each of the
Company's new branch offices and an increase in interest bearing deposits of
$24,354,000 or 35.9% for the three months ending June 30, 1997 as compared to
the same period in 1996.
Non-interest expense increased by $217,000 or 25.1% and $464,000 or 27.3% for
the three month period and the six month period ended June 30, 1997 compared
to the same periods in 1996. These increases reflect the Company's continued
growth coupled with the effect of ongoing expenses associated with two de novo
branches opened in the second half of 1996.
On a per share basis, primary and fully-diluted earnings per share were $0.39
for the three months ended June 30, 1997 as compared to $0.31 per share for
the three months ended June 30, 1996. For the six month period ended June 30,
1997, primary and fully diluted earnings per share represented $0.71 as
compared to $0.61 for the same period in 1996.
8
<PAGE>
The following table sets forth certain information concerning certain of the
Company's financial ratios at the periods presented for the three month and
the six month periods and not annualized:
(Unaudited)
Three Month Period Ended Six Month Period Ended
6/30/97 6/30/96 6/30/97 6/30/96
------- ------- ------- -------
Return on Average Assets 0.37% 0.42% 0.73% 0.84%
Return on Average Equity 3.46% 3.72% 6.92% 7.44%
Equity to Average Assets 9.51% 11.45% 9.44% 11.51%
Provisions for Loan Losses
For the three month period ended June 30, 1997, the Company's provision for
loan losses which was $60,000; remained consistent with the provision for the
three month period ended June 30, 1996. The provision for the six months ended
June 30, 1997 was $120,000, an increase of $7,000 or 6.2% above the $113,000
provision for the six months ended June 30, 1996. The stability of the
provisions reflects management's view of the economy of its service area
coupled with consistent loan growth.
Non-Interest Expense
Non-interest expenses for the three month and six month periods ended June 30,
1997 amounted to $1,083,000 and $2,166,000, respectively; an increase of
$217,000 and $464,000 over the $866,000 and $1,702,000 for the respective
periods in 1996. This increase is related primarily to staff additions and
occupancy attributable to the Company's two new branches and customary merit
increases in salary and employee benefits and data processing fees
commensurate with the Bank's continued growth.
Income Tax Expense
The income tax provision, which includes both Federal and State taxes for the
quarter ended June 30, 1997 and 1996 was $331,000 and $237,000 respectively.
For the first half of 1997 and 1996, the income tax provision aggregated
$564,000 and $464,000, respectively. The increase in income taxes was
attributable to the increase in pre-tax income between both periods reported.
FINANCIAL CONDITION : June 30, 1997 and December 31, 1996
At June 30, 1997 the Company's total assets were $139,650,000 compared to
$139,060,000 at December 31, 1996. Net loans increased to $81,239,000 at June
30, 1997 from $75,752,000 at December 31, 1996. Total deposits at June 30,
1997 were $125,911,000; a decrease of $422,000 from $126,333,000 at December
31, 1996.
9
<PAGE>
Loan Portfolio
At June 30, 1997 the Company's net loans were $81,239,000, an increase of
$5,487,000 or 7.2% over net loans at December 31, 1996. The increase in the
loan portfolio represents increased penetration of the local small business
market. Management believes that the Company's success in penetrating this
market is due to the Company's trade area now being served by large
out-of-state institutions which resulted from mergers and acquisitions in the
industry. Management believes that it is not cost-efficient for these larger
institutions to provide the level of personal service to small business
borrowers that the Company provides.
The Company's loans are primarily to businesses and individuals located in
Bergen County, New Jersey. The Company has not made loans to borrowers outside
of the United States. Commercial lending activities are focused primarily on
lending to small business borrowers. The Company believes that its strategy of
customer service, competitive rate structure and selective marketing have
enabled the Company to gain market entry to local loans.
The following table sets forth the classification of the Company's loans by
major category as of June 30, 1997 and December 31, 1996 respectively:
(Unaudited)
June 30, 1997 December 31, 1996
------------------ -----------------
Amount % Amount %
------ --- ------ ---
(Dollars in thousands)
Commercial and Industrial $14,220 17.3% $12,455 16.3%
Non-Residential Properties 24,763 30.1 22,998 30.0
Residential Properties ... 39,203 47.7 37,703 49.2
Construction ............. 2,296 2.8 1,752 2.3
Consumer ................. 1,738 2.1 1,705 2.2
------- ----- ------- -----
TOTAL LOANS .............. $82,220 100.0% $76,613 100.0%
The following table sets forth fixed and adjustable rate loans as of June 30,
1997 in terms of interest rate sensitivity:
(Unaudited) (In thousands)
Within 1 to 5 After
One Year Years 5 Years Total
-------- ------ ------- -----
Loans with Fixed Rate .... 3,010 40,399 3,399 46,808
Loans with Adjustable Rate 28,386 6,120 906 35,412
10
<PAGE>
Asset Quality
The Company's principal assets are its loans. Inherent in the lending function
is the risk of the borrower's inability to repay a loan under its existing
terms. Risk exposure could result in non-accrual loans, past due and
restructured loans, potential problem loans, loan concentrations and other
real estate owned.
Non-performing assets include loans that are not accruing interest
(non-accrual loans) as a result of principal or interest being in default for
a period of 90 days or more. When a loan is classified as non-accrual,
interest accruals discontinue and all past due interest, including interest
applicable to prior years, is reversed and charged against current income. Any
payments received from the borrower are applied to outstanding principal until
such time as management determines that the financial condition of the
borrower and other factors merit recognition of such payments as interest.
The Bank attempts to minimize overall credit risk through loan diversification
and its loan approval procedures. Due diligence begins at the time the
borrower and the Company begin discussion of a loan request. Documentation,
including a borrower's credit history, materials establishing the value and
liquidity of potential collateral, the purpose of the loan, source and timing
of repayment and other factors are analyzed before a loan is submitted for
approval.
The following table sets forth information concerning the Company's
non-performing assets as of the dates indicated:
Non-Performing Loans
June 30, 1997 December 31, 1996
------------- -----------------
(in thousands, Unaudited)
Non-Accrual Loans ..................... $ 439 $ 0
Non-Accrual Loans to Total Loans ...... 0.53% 0.00%
Non-Performing Assets to Total Assets . 0.41% 0.10%
Allowance for Possible Loan Losses
as a Percentage of Non-Performing Loans 172.11% 619.42%
Other than as disclosed above, there were no loans where information about
possible credit problems of borrowers caused management to have serious doubts
as to the ultimate collectibility of such loans.
As of the dates indicated in the above table, there were no concentrations of
loans exceeding 10% of the Company's total loans and the Company had no
foreign loans.
11
<PAGE>
Allowance for Loan Losses
The Company attempts to maintain an allowance for loan losses at a sufficient
level to provide for potential losses in the loan portfolio. Loan losses are
charged directly to the allowance when they occur and any recovery is credited
to the allowance. Risks within the loan portfolio are analyzed on a continual
basis by the Company's officers, by external independent loan review auditors
and by the Company's audit committee. A risk system, consisting of multiple
grading categories, is utilized as an analytical tool to assess risk and
appropriate reserves. Along with the risk system, management further evaluates
risk characteristics of the loan portfolio under current and anticipated
economic conditions and considers such factors as the financial condition of
the borrower, past and expected loss experience, and other factors which
management feels deserve recognition in establishing an appropriate reserve.
These estimates are reviewed at least quarterly, and, as adjustments become
necessary, they are realized in the periods in which they become known.
Additions to the allowance are made by provisions charged to expense and the
allowance is reduced by net charge-offs (i.e. - loans judged to be
uncollectible and charged against the reserve, less any recoveries on such
loans.) Although management attempts to maintain the allowance at a level
deemed adequate, future additions to the allowance may be necessary based upon
changes in market conditions. In addition, various regulatory agencies
periodically review the allowance for loan losses. These agencies may require
additional provisions based on their judgments about information available to
them at the time of their examination.
The Company's allowance for loan losses totaled $981,000 and $861,000 at June
30, 1997 and December 31, 1996, respectively. This increase in allowance is
due to continued increase in the loan portfolio. The following is a summary of
the reconciliation of the allowance for loan losses for the six months ended
June 30, 1997 and the year ended December 31, 1996.
(Unaudited) (In thousands)
June 30, December 31,
1997 1996
-------- ------------
Balance at beginning of period $861 $692
Recoveries, net (0) (24)
Provision charged to expense 120 193
---- -----
BALANCE AT END OF PERIOD $981 $ 861
Balance of allowance at end of period as
a percent of loans at end of period 1.19% 1.12%
12
<PAGE>
The following table sets forth, for each of the Company's major lending areas,
the amount and percentage of the Company's allowance for loan losses
attributable to such category and the percentage of total loans represented by
such category, as of the periods indicated:
(Unaudited)
Allocation of the Allowance for
Loan Losses by Category
(Dollars in thousands)
June 30, 1997 December 31, 1996
-------------------- ----------------------
Amount % of ALL Amount % of ALL
------ -------- ------ --------
Balance applicable to:
Commercial & Industrial $243 24.77% $235 27.29%
Real Estate:
Non-Residential Property 258 26.30 238 27.64
Residential Property 241 24.57 234 27.18
Construction 23 2.34 18 2.10
Consumer 20 2.04 21 2.43
---- ------ ---- -----
Sub Total 785 80.02 746 86.64
Unallocated Reserves 196 19.98 115 13.36
---- ------ ---- -----
TOTAL $981 100% $861 100%
Investment Securities
The Company maintains an investment portfolio to fund increased loan demand or
deposit withdrawals and other liquidity needs and to provide an additional
source of interest income. The portfolio is composed of U.S. Treasury
Securities, obligations of U.S. Government Agencies and selected municipal and
state obligations.
At June 30, 1997 total investment securities excluding FHLBNY stock, were
$42,912,000, an increase of $6,751,000 or 18.7% from total investment
securities excluding FHLBNY stock of $36,161,000 at December 31, 1996. This
increase in investment securities reflects increases in total deposits in
excess of funds needed for new loan originations.
The following table sets forth, as of June 30, 1997 the maturity distribution
of the Company's investment portfolio:
Maturity Schedule of Investment Securities
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Investment Securities Securities for Sale
------------------------------------ ------------------------------------
Weighted Weighted
Amortized Market Average Amortized Market Average
Cost Value Yield Cost Value Yield
--------- ------ ------- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Within 1 Year 18,757 18,749 5.79% 4,005 4,005 5.52%
1 to 5 Years 8,551 8,570 6.01% 11,603 11,599 5.98%
5 to 10 Years -- -- -- % -- -- -- %
----- ----- ------ ------
27,308 27,319 15,608 15,604
</TABLE>
The Company sold no securities during 1996 or during the first half of 1997.
13
<PAGE>
Deposits
Deposits are the Company's primary source of funds. The Company experienced a
slight decline in deposit balances of $422,000 or 0.3% to $125,911,000 for the
period ended June 30, 1997 from $126,333,000 at December 31, 1996. This
overall decline occurred, primarily, due to runoff of certificates of deposit
which were obtained through promotions during 1996. The Company did experience
increases in non-interest bearing deposits as well as in savings and time
deposits through the Company's emphasis on customer service, extended hours of
operation, competitive rate structure and selective marketing. Savings and
time deposits grew $3,320,000 or 4.6% to $75,897,000 at June 30, 1997 as
compared to $72,577,000 at December 31, 1996, while non-interest bearing
demand deposits grew 14.9% or $4,386,000 during the first half of 1997 as
compared to year end 1996. The aggregate amount of non-interest bearing
deposits totaled 26.8% of the Company's total deposits for the period ended
June 30, 1997 as compared to 23.2% at December 31, 1996. The Company has no
foreign deposits, nor are there any material concentrations of deposits.
The following table sets forth the amount of various types of deposits for
each of the periods indicated:
(Unaudited) (In thousands)
June 30, 1997 December 31, 1996
------------------ --------------------
Amount % Amount %
------ --- ------ ---
Non-Interest Bearing Demand $ 33,738 26.8% $ 29,352 23.3%
Interest Bearing Demand 35,475 28.2 29,906 23.7
Savings 16,873 13.4 13,160 10.4
Time Deposits 39,825 31.6 53,915 42.6
-------- ---- -------- ---
TOTAL $125,911 100% $126,333 100%
The Company does not actively solicit short-term deposits of $100,000 or more
because of the liquidity risks posed by such deposits. The following table
summarizes the maturity distribution of certificates of deposit of
denominations of $100,000 or more as of June 30, 1997:
(Unaudited)
(Dollars in Thousands)
Time Deposits ($100,000 and over)
Three months or less $11,336
Over three months through twelve months 4,580
Over twelve months 360
-------
TOTAL $16,276
14
<PAGE>
Liquidity
The Company's liquidity is a measure of its ability to fund loans, withdrawals
or maturities of deposits and other cash outflows in a cost-effective manner.
The Company's principal sources of funds are deposits, scheduled amortization
and prepayments of loan principal, sales and maturities of investment
securities and funds provided by operations. While scheduled loan payments and
maturing investments are relatively predictable sources of funds, deposit
flows and loan prepayments are greatly influenced by general interest rates,
economic conditions and competition.
The Company's total deposits equaled $ 125,911,000 at June 30, 1997 as
compared to $126,333,000 at December 31, 1996. The deposit levels have been
more than sufficient to provide for the Company's loan demand and excess funds
have been invested in investment securities and federal funds sold.
Through the Company's investment portfolio the Company has generally sought to
obtain a safe, yet slightly higher yield than would have been available to the
company as a net seller of overnight federal funds while still maintaining
liquidity. Through its investment portfolio, the Company also attempts to
manage its maturity gap by seeking maturities of investments which coincide as
closely as possible with maturities of deposits. The Company's investment
portfolio also includes securities held for sale to provide liquidity for
anticipated loan demand and other liquidity needs.
Although the Company has traditionally been a net "seller" of federal funds,
the Company does maintain lines of credit with the Federal Home Loan Bank of
New York, Summit Bank and Bank of New York for "purchase" of federal funds in
the event that temporary liquidity needs arise.
Management believes that the Company's current sources of funds provide
adequate liquidity for the current cash flow needs of the Company.
Interest Rate Sensitivity Analysis
The principal objective of the Company's asset and liability management
function is to evaluate the interest-rate risk included in certain balance
sheet accounts; determine the level of risk appropriate given the Company's
business focus, operating environment, capital and liquidity requirements;
establish prudent asset concentration guidelines; and manage the risk
consistent with Board approved guidelines. The Company seeks to reduce the
vulnerability of its operations to changes in interest rates and to manage the
ratio of interest-rate sensitive assets to interest-rate sensitive liabilities
within specified maturities or repricing dates. The Company's actions in this
regard are taken under the guidance of the Asset/Liability Committee (ALCO) of
the Board of Directors. The ALCO generally reviews the Company's liquidity,
cash flow needs, maturities of investments, deposits and borrowings and
current market conditions and interest rates.
15
<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
Company'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 Company, 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 Company 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 Company's loan
repayment assumptions are based upon actual historic repayment rates.
16
<PAGE>
Cumulative Rate Sensitive Balance Sheet as of June 30, 1997
(Unaudited) (In thousands)
<TABLE>
<CAPTION>
0 - 3 0 - 6 0 to 1 0 to 5 5+ All
Months Months Year Years Years Others Total
-------- ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate Investments 7,571 13,634 22,762 42,521 391 0 42,912
-------
42,912
Loans:
Commercial ........... 19,029 19,529 21,281 46,563 532 0 47,095
Participations ....... 0 0 138 1,930 180 0 2,110
Mortgages ............ 183 183 183 12,150 2,496 0 14,646
Consumer ............. 13,594 15,536 16,204 18,045 463 18,508
-------
82,359
Other Assets ......... 0 0 0 0 0 14,379 14,379
-------
14,379
TOTAL ASSETS ......... 40,377 48,882 60,568 121,209 4,062 14,379 139,650
=============================================================================
0 - 3 0 - 6 0 to 1 0 to 5 5+ All
Months Months Year Years Years Others Total
-------- ------ ------ ------ ------ ------ -------
Transaction/NOW Accounts . 23,759 23,759 23,759 23,759 0 0 23,759
Money Market ............. 11,715 11,715 11,715 11,715 0 0 11,715
Other Savings ............ 16,873 16,873 16,873 16,873 0 0 16,873
CD's Less than $100,000 .. 12,486 20,195 22,308 23,550 0 0 23,550
CD's greater than $100,000 8,630 13,957 15,418 16,276 0 0 16,276
Other Liabilities ........ 0 0 0 0 0 34,207 34,207
Equity ................... 0 0 0 0 0 13,270 13,270
-----------------------------------------------------------------------------
TOTAL LIABILITIES
AND EQUITY ............... 73,463 86,499 90,073 92,173 0 47,477 139,650
=============================================================================
Dollar Gap ............... (33,086) (37,617) (29,505) 29,036 0 (33,098)
Gap/Total Assets ......... -23.69% -26.94% -21.13% 20.79% 0 -23.70%
Target Gap Range ......... +/-35.00% +/-30.00% +/-25.00% +/-25.00% 0 +/-25.00%
RSA/RSL * ................ 54.96% 56.51% 67.24% 131.50% 0 134.83%
</TABLE>
* RSA/RSL is the percentage of repricing rate sensitive assets to rate
sensitive liabilities
17
<PAGE>
Capital
A significant measure of the strength of a financial institution is its
capital base. The Company's federal regulators have classified and defined
Company capital into the following components: (1) Tier I Capital, which
includes tangible shareholders' equity for common stock and qualifying
preferred stock, and (2) Tier II Capital, which includes a portion of the
allowance for possible loan losses, certain qualifying long-term debt and
preferred stock which does not qualify for Tier I Capital. Minimum capital
levels are regulated by risk-based capital adequacy guidelines which require
certain capital as a percent of the Company's assets and certain off-balance
sheet items adjusted for predefined credit risk factors (risk-adjusted
assets.)
A bank holding company is required to maintain, at a minimum, Tier I Capital
as a percentage of risk-adjusted assets of 4.0% and combined Tier I and Tier
II Capital as a percentage of risk-adjusted assets of 8.0%.
In addition to the risk-based guidelines, the Company's regulators require
that an institution which meets the regulator's highest performance and
operation standards maintain a minimum leverage ratio (Tier I Capital as a
percentage of tangible assets) of 3%. For those institutions with higher
levels of risk or that are experiencing or anticipating significant growth,
the minimum leverage ratio will be evaluated through the on-going regulatory
examination process. The Bank is subject to substantially similar regulations
by its federal regulations.
The following table summarizes the risk-based and leverage capital ratios for
the Bank at June 30, 1997 as well as the required minimum regulatory capital
ratios:
Capital Adequacy
Minimum
June 30, Regulatory
1997 Requirements
-------- ------------
Risk Based Capital:
Tier I Capital Ratio 14.45% 4.0%
Total Capital Ratio 15.52% 8.0%
Leverage Ratio 10.02% 3.0%
18
<PAGE>
RECENT ACCOUNTING PRONOUNCEMENTS
SFAS No. 125
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities" (SFAS 125.)
SFAS 125 amends portions of SFAS 115, amends and extends to all servicing
assets and liabilities the accounting standards for mortgage servicing rights
now in SFAS 65, and supersedes SFAS 122. The statement provides consistent
standards for distinguishing transfers of financial assets which are sales
from transfers that are secured borrowings. Those standards are based upon
consistent application of a financial components approach that focuses on
control. The statement also defines accounting treatment for servicing assets
and other retained interest in the assets that are transferred. SFAS 125 is
effective for transfers and servicing of financial assets and extinguishments
of liabilities occurring after December 31, 1996 and is to be applied
prospectively. The adoption of the statement did not have a material effect on
the Company' financial condition or results of operations.
SFAS No. 128
FASB Statement No. 128, Earnings Per Share (Statement 128) supersedes APB
Opinion No. 15, Earnings Per Share, and specifies the computation,
presentation, and disclosure requirements for earnings per share (EPS) for
entities with publicly held common stock or potential common stock. Statement
128 was issued to simplify the computation of EPS and to make the U.S.
standard more compatible with the EPS standards of other countries and that of
the International Accounting Standards Committee: (IASC.) it replaces Primary
EPS and Fully Diluted EPS with Basic EPS and Diluted EPS, respectively. It
also requires dual presentation of Basic EPS and Diluted EPS on the face of
the income statement for all entities with complex capital structures and
requires a reconciliation of the numerator and denominator of the Basic EPS
computation to the numerator and denominator of the Diluted EPS computation.
Basic EPS, unlike Primary EPS, excludes all dilution while Diluted EPS, like
Fully Diluted EPS, reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity. For many entities Basic EPS will be
higher than Primary EPS and Diluted EPS will be approximately the same as
Fully Diluted EPS. Statement 128 is applicable to all entities that have
issued common stock or potential common stock (e.g., options, warrants,
convertible securities, contingent stock agreements, etc.) if those securities
trade in a public market either on a stock exchange (domestic or foreign) or
in the over-the-counter market, including securities quoted only locally or
regionally. This Statement also applies to an entity that has made a filing or
19
<PAGE>
is in the process of filing with a regulatory agency in preparation for the
sale of those securities in a public market. However, Statement 128 does not
require presentation of EPS for investment companies or in statements of
wholly-owned subsidiaries.
Statement 128 is effective for financial statements for both interim and
annual periods ending after December 15, 1997. Earlier application is not
permitted (although pro forma EPS disclosure in the footnotes for periods
prior to required adoption is permitted.) After adoption, all prior period EPS
data presented shall be restated (including interim financial statements,
summaries of earnings and selected financial data) to conform with Statement
128. The Company does not believe the adoption of Statement 128 will have a
material effect on any Company's reported income or financial condition.
SFAS No. 130
FASB Statement No. 130, "Reporting Comprehensive Income", (SFAS 130)
established standards for reporting and display of comprehensive income and
its components (revenues, expenses, gains, and losses) in a full set of
general-purpose financial statements. SFAS 130 requires all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial statements. SFAS 130 does not
require a specific format for that financial statement but requires that an
enterprise display an amount representing total comprehensive income for the
period in that financial statement. SFAS 130 requires that an enterprise (a)
classify items of other comprehensive income by their nature in a financial
statement and (b) display the accumulated balance of other comprehensive
income separately from retained earnings and additional paid-in capital in the
equity section of a statement of financial position.
SFAS 130 is effective for fiscal years beginning after December 15, 1997.
Reclassification of financial statements for earlier periods provided for
comparative purposes is required.
20
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings - NONE
Item 2. Changes in Securities - NONE
Item 3. Defaults Upon Senior Securities - NONE
Item 4. Submission of Matters to a Vote of
Securities Holders - INSERT 4
The Company's Annual Meeting of Shareholders was held on May 15,
1997. At the Annual Meeting, the following matters were voted on:
1. ELECTION OF DIRECTORS -- The following Directors received the
following votes:
- -----------------------------------------------------------------------------
DIRECTOR FOR AGAINST ABSTAINED
- -----------------------------------------------------------------------------
Albert F. Buzzetti ....... 826,555 0 0
- -----------------------------------------------------------------------------
Gerald A. Calabrese, Jr . 826,555 0 0
- -----------------------------------------------------------------------------
Glenn L. Creamer ......... 826,555 0 0
- -----------------------------------------------------------------------------
Bernard Mann ............. 826,555 0 0
- -----------------------------------------------------------------------------
Mark Metzger ............. 826,555 0 0
- -----------------------------------------------------------------------------
Jeremiah F. O'Connor, Jr 826,555 0 0
- -----------------------------------------------------------------------------
Joseph C. Parisi ......... 826,555 0 0
- -----------------------------------------------------------------------------
John A. Schepisi ......... 826,555 0 0
- -----------------------------------------------------------------------------
All nominees were reelected.
2. Amendments to the Company's Certificate of Incorporation to
classify the Board of Directors into three classes and to
prevent removal of Directors by stockholders without cause:
764,568 FOR 16,211 AGAINST 606 ABSTAIN
Item 5. Other Information - NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See INDEX TO EXHIBITS
(b) Reports on Form 8-K - NONE
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
By: /s/ Albert F. Buzzetti
------------------------------
(Registrant - Bridge View Bancorp)
Albert F. Buzzetti
President and CEO
Date: August 12, 1997
22
<PAGE>
BRIDGE VIEW BANCORP
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibits
- --------- ----------------------------
27 Financial Data Schedule
23
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED JUNE 30, 1997 FINANCIAL STATEMENTS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 11,769,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 15,604,000
<INVESTMENTS-CARRYING> 27,308,000
<INVESTMENTS-MARKET> 27,319,000
<LOANS> 82,220,000
<ALLOWANCE> 981,000
<TOTAL-ASSETS> 139,650,000
<DEPOSITS> 125,911,000
<SHORT-TERM> 0
<LIABILITIES-OTHER> 469,000
<LONG-TERM> 0
0
0
<COMMON> 12,425,000
<OTHER-SE> 845,000
<TOTAL-LIABILITIES-AND-EQUITY> 139,650,000
<INTEREST-LOAN> 3,477,000
<INTEREST-INVEST> 1,206,000
<INTEREST-OTHER> 215,000
<INTEREST-TOTAL> 4,898,000
<INTEREST-DEPOSIT> 1,695,000
<INTEREST-EXPENSE> 1,696,000
<INTEREST-INCOME-NET> 3,202,000
<LOAN-LOSSES> 120,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,166,000
<INCOME-PRETAX> 1,443,000
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 879,000
<EPS-PRIMARY> 0.71
<EPS-DILUTED> 0.71
<YIELD-ACTUAL> 5.02
<LOANS-NON> 439,000
<LOANS-PAST> 451,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 861,000
<CHARGE-OFFS> 18,000
<RECOVERIES> 18,000
<ALLOWANCE-CLOSE> 981,000
<ALLOWANCE-DOMESTIC> 981,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 196,000
</TABLE>
