<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
(X) Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended March 31, 1998
( ) Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from _____________ to _____________.
Commission file number : 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)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class: Name of each exchange on which registered:
Common Stock, No Par Value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Indicate by check mark whether the Issuer: (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to
such filing requirements for the past 90 days. YES (X) NO___
APPLICABLE TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of the Registrant's classes of
common stock, as of the last practicable date.
2,647,900 shares of Common Stock as of April 21, 1998
1
<PAGE>
INDEX
BRIDGE VIEW BANCORP
Part I - Financial Information
Item 1. Financial Statement
Consolidated Statements of Financial Condition
as of March 31, 1998 and December 31, 1997 (unaudited)
Consolidated Statements of Income
for the three months ended March 31, 1998 and 1997 (unaudited)
Consolidated Statements of Cash Flows
for the three months ended March 31, 1998 and 1997 (unaudited)
Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
2
<PAGE>
BRIDGE VIEW BANCORP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
-------- --------
<S> <C> <C>
ASSETS (unaudited)
Cash and cash equivalents:
Cash and due from banks ........................... $ 12,545 $ 9,629
Federal funds sold ................................ 15,800 12,000
-------- --------
TOTAL CASH AND CASH EQUIVALENTS ........................ 28,345 21,629
-------- --------
Securities:
FHLBNY Stock, at cost ............................. 476 476
Available for sale ................................ 11,485 12,543
Held to maturity .................................. 26,523 24,781
-------- --------
TOTAL SECURITIES ....................................... 38,484 37,800
-------- --------
Loans, net of allowance for losses of $1,086 and $1,009,
and deferred loan fees of $153 and $129, respectively .. 81,468 82,186
Premises and equipment, net ............................ 1,633 1,652
Accrued interest receivable and other
assets ................................................. 1,290 1,353
-------- --------
TOTAL ASSETS ........................................... $151,220 $144,620
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing demand
deposits .......................................... $ 36,381 $ 38,790
Interest bearing deposits:
Savings and time deposits .................... 76,075 71,260
Certificates of deposit $100,000 + ........... 22,241 18,695
-------- --------
TOTAL DEPOSITS ......................................... 134,697 128,745
Accrued interest payable and other liabilities ......... 989 718
-------- --------
TOTAL LIABILITIES ...................................... 135,686 129,463
Commitments and Contingencies
Stockholders' equity:
Common stock, no par value,
authorized 10,000,000 shares issued
and outstanding 2,521,810 in 1998
and 2,521,010 in 1997 ............................. 13,353 13,347
Retained earnings ................................. 2,158 1,788
Accumulated other comprehensive income ............ 23 22
-------- --------
TOTAL STOCKHOLDERS' EQUITY ............................. 15,534 15,157
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............. $151,220 $144,620
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
3
<PAGE>
BRIDGE VIEW BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands)
Three months ended March 31,
1998 1997
---- ----
Interest Income:
Loans, including fees ........................... $1,856 $1,665
Federal funds sold .............................. 184 159
Investment Securities
Taxable ...................................... 446 519
Tax - exempt ................................. 64 59
------ ------
TOTAL INTEREST INCOME 2,550 2,402
Interest Expense:
Savings deposits ................................ 213 176
Other time deposits ............................. 262 395
Time deposits $100,000 + ........................ 254 329
------ ------
TOTAL INTEREST EXPENSE 729 900
Net Interest Income 1,821 1,502
Provision for loan losses .......................... 80 60
Net interest income after provision for loan
losses 1,741 1,442
Non-interest income:
Service charge income ........................... 300 238
------ ------
TOTAL NON-INTEREST INCOME 300 238
Non-interest expense:
Salaries and related expenses ................... 553 493
Premises and fixed assets ....................... 272 200
Other ........................................... 397 390
------ ------
TOTAL NON-INTEREST EXPENSE 1,222 1,083
Income before income taxes 819 597
Income tax expense 323 233
------ ------
NET INCOME $ 496 $ 364
====== ======
Earnings per share:
Basic $ 0.20 $ 0.16
Diluted $ 0.19 $ 0.16
See notes to unaudited consolidated financial statements.
4
<PAGE>
BRIDGE VIEW BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
Three months ended March 31,
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net Income ...................................... $ 496 $ 364
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ................ 45 41
Provision for loan losses .................... 80 60
Proceeds from sales of loans held for sale ... 823 53
Loans originated for sale .................... (815) (50)
Decrease in accrued interest receivable
and other assets ............................. (63) (211)
Increase in accrued interest payable and other
liabilities .................................. 271 220
-------- --------
Net Cash Provided by Operating Activities ............ 837 477
Cash flows from investing activities:
Proceeds from maturities of investment securities 5,107 3,624
Purchases of investment securities .............. (5,751) (12,416)
Net decrease (increase) in loans ................ 718 (1,000)
Additions to premises and equipment ............. (27) (8)
-------- --------
Net Cash Provided by (Used in) Investing Activities .. 47 (9,800)
Cash flows from financing activities:
Net increase in deposits ........................ 5,952 2,387
Proceeds from issuance of common stock .......... 6 209
Cash paid for dividends ......................... (126) (105)
-------- --------
Net Cash Provided by Financing Activities ............ 5,832 2,491
Net change in cash and cash equivalents .............. 6,716 (6,832)
Cash and cash equivalents at beginning of period ..... 21,629 23,558
-------- --------
Cash and cash equivalents at end of period ........... $ 28,345 $ 16,276
Cash paid during the period for:
Interest ........................................ 688 874
Income taxes .................................... -- --
</TABLE>
See notes to unaudited consolidated financial statements.
5
<PAGE>
BRIDGE VIEW BANCORP AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
The accompanying consolidated financial statements include the accounts
of Bridge View Bancorp (the Company) and its direct and indirect
wholly-owned subsidiaries, Bridge View Bank and Bridge View Investment
Company (the Bank). All significant inter-company accounts and
transactions have been eliminated in consolidation. Certain accounts in
prior periods have been restated to conform to the current
presentation.
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, 1997. The results for the three months ended March 31, 1998 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1998.
Organization
The Bank is a commercial bank which provides a full range of banking
services to individuals and corporate customers in New Jersey. The Bank
is subject to competition from other financial institutions. The Bank
is regulated by state and federal agencies and is subject to periodic
examinations by those regulatory authorities.
Basis of Financial Statement Presentation
The consolidated financial statements have been prepared in conformity
with generally accepted accounting principles. In preparing the
consolidated financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets
and liabilities as of the date of the consolidated statement of
financial condition and revenues and expenses for the year. Actual
results could differ significantly from those estimates.
6
<PAGE>
Material estimates that are particularly susceptible to significant
change in the near term relate to the determination of the allowance
for loan losses. In connection with the determination of the allowance
for loan losses, management generally obtains independent appraisals
for significant properties.
Securities Available for Sale
Management determines the appropriate classification of securities at
the time of purchase. If management has the intent and the Bank has the
ability at the time of purchase to hold securities until maturity, they
are classified as investment securities. Securities to be held for
indefinite periods of time and not intended to be held to maturity are
classified as securities available for sale. Gains or losses on sales
of securities available for sale are based upon the specific
identification method. Securities available for sale are reported at
fair value with changes in the carrying value from period to period
included as a separate component of stockholders' equity.
Investment Securities
Investment securities are carried at the principal amount outstanding,
adjusted for amortization of premiums and accretion of discounts using
a method that approximates the level-yield method over the terms of the
securities. Investment securities are carried at the principal amount
outstanding because the Bank has the ability and it is management's
intention to hold these securities to maturity.
Earnings Per Share
Earnings per share is based upon the computational standards
established by the FASB Statement of Financial Accounting Standards No.
128. This statement provided for the replacement of Primary EPS and
Fully Diluted EPS with Basic EPS and Diluted EPS. Basic EPS excludes
dilution and represents the effect of earnings upon the weighted
average number of shares outstanding for the period. Diluted EPS
reflects the effect of earnings upon weighted average shares including
the potential dilution that could occur if securities or contracts to
issue common stock were converted or exercised. All per share data has
been restated to reflect this new statement as well as the two-for-one
exchanges in 1997 and 1996, respectively, and all stock dividends.
(2) Formation of Bank Holding Company and Exchange of Common Stock
The Company is a New Jersey corporation organized in May 1996 at the
direction of the Board of Directors of the Bank for the purpose of
acquiring all of the capital stock of the Bank. As part of the
acquisition in December 1996, shareholders of the Bank received shares
of the Company's common stock, no par value per share (the Common
Stock), in a ratio of two shares of Common Stock for each outstanding
share of the Common Stock of the Bank, $5.00 per share par value. The
acquisition was accounted for in a manner similar to a pooling of
interest resulting in no changes in the underlying assets and
liabilities.
7
<PAGE>
(3) Earnings Per Share Reconciliation
In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 "Earnings per
Share" (SFAS 128). SFAS 128 establishes standards for the presentation
and disclosure for earnings per share (EPS). It also simplifies the
standards for computing EPS and makes them comparable to international
EPS standards. SFAS 128 replaces the presentation of primary and fully
diluted EPS with basic and diluted EPS, respectively, and requires the
reconciliation of the numerator and the denominator of basic EPS with
that of diluted EPS. Basic EPS is computed by dividing net income by
the weighted-average number of common shares outstanding for the
period. The diluted EPS computation includes the potential impact of
dilutive securities including stock options and restricted stock
grants. The dilutive effect of stock options is computed using the
treasury stock method which assumes the repurchase of common shares of
the Company at the average market price for the period.
The reconciliation of the numerator and the denominator of basic EPS
with that of diluted EPS is presented for the three month periods ended
March 31, 1998, and 1997.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
---- ----
(in thousands,
except per share data)
<S> <C> <C>
Basic earnings per share :
Net Income $ 496 364
====== ======
Average number of shares outstanding 2,521 2,210
====== ======
Basic earnings per share $ 0.20 0.16
====== ======
Diluted earnings per share :
Net Income $ 496 364
====== ======
Average number of shares of common stock and equivalents outstanding :
Average common shares outstanding 2,521 2,210
Additional shares considered in diluted computation assuming :
Exercise of options and warrants 79 124
------ ------
Average number of shares outstanding
on a diluted basis 2,600 2,334
====== ======
Diluted earnings per share $ 0.19 0.16
====== ======
</TABLE>
8
<PAGE>
(4) Comprehensive Income
Financial Accounting Standards Board Statement No. 130, "Reporting
Comprehensive Income", (SFAS 130) establishes standards for reporting
and displaying 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 to 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. The Company adopted Statement 130
on January 1, 1998. Total comprehensive income includes net income and
other comprehensive income which is comprised of unrealized holding
gains and losses on securities available for sale, net of taxes. Total
comprehensive income is as follows:
<TABLE>
<CAPTION>
Three months ended March 31,
(in thousands) 1998 1997
---- ----
<S> <C> <C>
Comprehensive Income
Net income $ 496 $ 364
Other comprehensive income, net of taxes 1 (57)
------ ------
Total comprehensive income $ 497 $ 307
</TABLE>
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the Company's consolidated
financial statements and the notes thereto included herein. When necessary,
reclassifications have been made to prior years' data throughout the following
discussion and analysis for purposes of comparability.
RESULTS OF OPERATIONS - Three Months Ended March 31, 1998 and 1997
The Company's results of operations depend primarily on its net interest
income, which is the difference between the interest earned on its
interest-earning assets and the interest paid on funds borrowed to support
those assets, primarily deposits. Net interest margin is the difference
between the weighted average rate received on interest-earning assets and the
weighted average rate paid on interest-bearing liabilities, as well as the
average level of interest-earning assets as compared with that of
interest-bearing liabilities. Net income is also affected by the amount of
non-interest income and other operating expenses.
NET INCOME
For the three months ended March 31, 1998, net income increased by $132,000 or
36.3% to $496,000 from $364,000 for the three months ended March 31, 1997. The
increase in net income is the result of a 21.2%, increase in net interest
income to $1,821,000 from $1,502,000 in the prior year combined with an
increase in fee income to $300,000 from $238,000 in 1997 producing a 37.2%
increase in pre-tax income to $819,000 for first quarter, 1998 compared to
$597,000 for first quarter, 1997.
Interest expense fell $171,000 or 19.0% for the three months ended March 31,
1998 compared to the three months ended March 31, 1997. This decrease reflects
the effect of a shift in the deposit portfolio during late 1997 resulting in
cost efficient deposits.
Operating expenses increased by $139,000 or 12.8% for the three month period
ended March 31, 1998 compared to 1997. These increases reflect the Company's
continued growth which also affected staff additions, occupancy expenses,
salary and employee benefits, data processing, as well as other administrative
expenses attributable to the Company's expected opening of two new branches
during the second half, 1998.
On a per share basis, basic earnings per share were $0.20 for the quarter
ended March 31, 1998 as compared to $0.16 for the quarter ended March 31,
1997. Diluted earnings per share were $0.19 for the first quarter of 1998 as
compared to $0.16 for the first quarter of 1997. Per share data has been
restated to reflect 5% stock dividends and the 2 for 1 stock split in 1997.
PROVISION FOR LOAN LOSSES
For the quarter ended March 31, 1998, the Company's provision for loan losses
was $80,000, an increase of $20,000 from the provision of $60,000 for the
quarter ended March 31, 1997. The increased provision reflects the anticipated
growth of the loan portfolio.
10
<PAGE>
NON-INTEREST INCOME
Non-interest income, which was primarily attributable to service fees received
from deposit accounts, amounted, for the three months ended March 31,1998, to
$300,000, an increase of $62,000 above the $238,000 from the three months
ended March 31, 1997. The increase in service fees is attributable to the
higher level of average deposits.
NON-INTEREST EXPENSE
Non-interest expenses for the quarter ended March 31,1998 amounted to
$1,222,000, an increase of $139,000 over the $1,083,000 for the quarter ended
March 31, 1997. These increases are related primarily to staff additions,
occupancy expense, data processing fees, customary increases for salary and
employee benefits, as well as other administrative expenses resulting from the
bank's growth.
INCOME TAX EXPENSE
The income tax provision, which includes both federal and state taxes, for the
quarters ended March 31, 1998 and 1997 was $323,000 and $233,000,
respectively. The increase in income taxes is a direct result of the increase
in income before taxes in 1997.
FINANCIAL CONDITION: March 31, 1998 and December 31, 1997
At March 31, 1998, the Company's total assets were $151,220,000 compared to
$144,620,000 at December 31, 1997. Total loans decreased to $82,707,000 at
March 31, 1998 from $83,324,000 at December 31, 1997. Total deposits at
quarter end 1998 were $134,697,000 compared to $128,745,000 at December 31,
1997.
LOAN PORTFOLIO
At March 31, 1998, the Company's total loans were $82,707,000, a decrease of
$617,000 or 0.7% over total loans of $83,324,000 at December 31, 1997. The
decrease in the loan portfolio is due to loan prepayments. Management
maintains that the Company will remain successful in penetrating this market
due to the fact that, through mergers and acquisitions, the Company's trade
area is now primarily served by large institutions, frequently headquartered
out of state. Management believes that it is not cost-efficient for these
larger institutions to provide the level of personal service to small business
borrowers that the Company provides.
The Company's loan portfolio consists of commercial loans, real estate loans,
and consumer loans. Commercial loans are made for the purpose of providing
working capital, financing the purchase of equipment or inventory, as well as
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.
11
<PAGE>
The Company's loans are primarily to businesses and individuals located in
eastern Bergen County, New Jersey. The Company has not made loans to borrowers
outside of the United States. Commercial lending activities are focused
primarily on lending to small business borrowers. The Company believes that
its strategy of customer service, competitive rate structures, and selective
marketing have enabled the Company to gain market entry to local loans. Bank
mergers and lending restrictions at larger banks competing with the Company
have also contributed to the Company's efforts to attract borrowers.
The following table sets forth the classification of the Company's loans by
major category as of March 31, 1998 and December 31, 1997, respectively :
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------- ------------------
(Dollars in thousands)
Amount Percent Amount Percent
<S> <C> <C> <C> <C>
Commercial and Industrial $14,641 17.7% $15,568 18.7%
Real Estate:
Non-residential properties 25,578 30.9% 25,929 31.1%
Residential properties 37,794 45.7% 36,988 44.4%
Construction 3,029 3.7% 2,783 3.3%
Consumer 1,665 2.0% 2,056 2.5%
------- -------- ------- --------
Total Loans $82,707 100% $83,324 100%
======= ======== ======= ========
</TABLE>
ASSET QUALITY
The Company's principal assets are its loans. Inherent in the lending function
is the risk of the borrower's inability to repay a loan under its existing
terms. Risk elements include non-accrual loans, past due and restructured
loans, potential problem loans, loan concentrations, and other real estate
owned.
Non-performing assets include loans that are not accruing interest
(non-accrual loans) as a result of principal or interest being in default for
a period of 90 days or more. When a loan is classified as non-accrual,
interest accruals discontinue and all past due interest, including interest
applicable to prior years, is reversed and charged against current income.
Until the loan becomes current, any payments received from the borrower are
applied to outstanding principal until such time as management determines that
the financial condition of the borrower and other factors merit recognition of
such payments of interest.
The Company attempts to minimize overall credit risk through loan
diversification and its loan approval procedures. Due diligence begins at the
time a borrower and the Company begin to discuss the origination of a loan.
Documentation, including a borrower's credit history, materials establishing
the value and liquidity of potential collateral, the purpose of the loan, the
source and timing of the repayment of the loan, and other factors are analyzed
before a loan is submitted for approval. Loans made are also subject to
periodic audit and review.
12
<PAGE>
The following table sets forth information concerning the Company's
non-performing assets as of the dates indicated:
Non-Performing Assets
(dollars in thousands)
March 31, December 31,
1998 1997
---- ----
Non-accrual loans $ 439 $ 439
Non-accrual loans to total loans 0.53% 0.53%
Non-performing assets to total assets 0.29% 0.30%
Allowance for possible loan losses as
a percentage of non-performing loans 247.38% 229.84%
As of March 31, 1998, the Company has two non-accrual loans. One represents a
construction loan totaling $234,676, while the other is a home equity loan
aggregating $203,975. The Company has no other non-performing loans and has no
real estate owned (REO) as a result of a foreclosure.
Other than as disclosed above, there were no loans where information about
possible credit problems of borrowers causes management to have serious doubts
as to the ultimate collectibility of such loans.
As of March 31, 1998 and December 31, 1997, there were no concentrations of
loans exceeding 10% of the Company's total loans and the Company had no
foreign loans. The Company's loans are primarily to businesses and individuals
located in eastern Bergen County, New Jersey.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is a reserve established through charges to
earnings in the form of a provision 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 continuous 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. In addition to 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 the expense and
the allowance is reduced by net-chargeoffs (i.e. loans judged to be
uncollectible are charged against the reserve, less any recoveries on the
loans.) Although management attempts to maintain the allowance at an adequate
level, future addition to the allowance may be required based upon changes in
market conditions. Additionally, various regulatory agencies periodically
review the allowance for loan losses. These agencies may require additional
provisions based upon their judgment about information available to them at
the time of their examination.
13
<PAGE>
The Company's allowance for loan losses totaled $1,086,000 and $934,000 at
March 31, 1998 and 1997, respectively. This increase in the allowance is due
to the continued growth of the loan portfolio. The following is a summary of
the reconciliation of the allowance for loan losses for the three month
periods ended March 31, 1998 and 1997, respectively :
Three months ended
March 31,
1998 1997
---- ----
(dollars in thousands)
Balance, beginning of period $ 1,009 $ 861
Charge-offs (3) (4)
Recoveries 0 17
Provision charged to expense 80 60
------- -------
Balance, end of period $ 1,086 $ 934
======= =======
Ratio of net charge-offs to
average loans outstanding 0.00% 0.02%
Balance of allowance at end of period as
a percentage of loans at end of period 1.31% 1.21%
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.
Securities are classified as "held-to-maturity" (HTM), "available for sale"
(AFS), or "trading" at time of purchase. Securities classified as HTM are
based upon 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 which 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 as well as gains and losses from marking the portfolio to market value
are included in trading revenue. Securities not classified as HTM or trading
securities are classified as AFS and are stated at fair value. Unrealized
gains and losses on AFS securities are excluded from results of operations,
and are reported as a separate component of stockholders' equity, net of
taxes. Securities classified as AFS include securities that may be sold in
response to changes in interest rates, changes in prepayment risks, the need
to increase regulatory capital, or other similar requirements.
Management determines the appropriate classification of securities at the time
of purchase. At March 31, 1998, $26,523,000 of the Company's investment
securities were classified as held to maturity and $11,485,000 were classified
as available for sale. At March 31, 1998, the Company held no securities which
it classified as trading securities.
14
<PAGE>
At March 31, 1998, total investment securities were $38,484,000, an increase
of $684,000, from total investment securities of $37,800,000 at December 31,
1997. This increase in investment securities from year end 1997 to quarter end
1998 reflects increases in total deposits in excess of funds needed for new
loan originations.
The following table sets forth the carrying value of the Company's security
portfolio as of the dates indicated.
A comparative summary of securities available for sale at March 31, 1998 and
December 31, 1997 is as follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Market
cost gains losses value
--------- ---------- ---------- -----
<S> <C> <C> <C> <C>
1998 - U.S. Government and
agency obligations $ 11,446 47 (8) $ 11,485
======== ====== ====== ========
1997 - U.S. Government and
agency obligations $ 12,507 46 (10) $ 12,543
======== ====== ===== ========
</TABLE>
A comparative summary of investment securities held to maturity at March 31,
1998 and December 31, 1997 is as follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Market
cost gains losses value
--------- ---------- ---------- -----
<S> <C> <C> <C> <C>
1998:
U.S. Government and agency
securities $19,933 64 (8) $19,989
Municipal obligations 6,590 3 - 6,593
-------- ------ ---- -------
$ 26,523 67 (8) $26,582
======== ====== ==== =======
1997:
U.S. Government and agency
obligations $ 19,442 37 ( 9) $19,470
Municipal obligations 5,339 25 - 5,364
-------- ------ ---- -------
$ 24,781 62 ( 9) $24,834
======== ====== ==== =======
</TABLE>
15
<PAGE>
The following table sets forth as of March 31, 1998, the maturity distribution
of the Company's investment portfolio :
Maturity of Investment Securities
March 31, 1998
(in thousands)
<TABLE>
<CAPTION>
Securities
Investment Securities Available 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 $16,443 $16,464 6.06% $ 7,428 $ 7,443 5.95%
1 to 5 Years 10,080 10,118 5.79% 4,018 4,042 6.10%
------- ------- ------- -------
$26,523 $26,582 $11,446 $11,485
======= ======= ======= =======
</TABLE>
The Company sold no securities from its portfolio during the first quarter of
1998 or 1997.
DEPOSITS
Deposits are the Company's primary source of funds. The Company experienced a
growth in deposit balances of $5,952,000 or 4.6% to $134,697,000 at March 31,
1998 as compared to $128,745,000 at December 31, 1997. This growth was
accomplished as a result of the growth of two new branches which were opened
during the third and fourth quarters of 1996 and the Company's continued
emphasis upon customer service through extended hours of operation and a
competitive rate structure. Within the increase in total deposits, interest
bearing deposits grew $5,552,000 or 16.9% from December 31, 1997 to March 31,
1998 while time deposits grew $2,325,000 or 5.7% during the same period. The
aggregate amount of interest bearing deposits totaled 28.5% of the Company's
total deposits at March 31, 1998 as compared to 25.5% at December 31, 1997.
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 (in thousands) :
<TABLE>
<CAPTION>
March 31, December 31 ,
1998 1997
---- ----
Amount % Amount %
--------- ----- --------- -----
<S> <C> <C> <C> <C>
Non-interest Bearing Demand $ 36,381 27.0% $ 38,790 30.1%
Interest Bearing Demand 38,445 28.5% 32,893 25.5%
Savings 16,776 12.5% 16,292 12.7%
Time Deposits 43,095 32.0% 40,770 31.7%
-------- ---- -------- ----
$134,697 100% $128,745 100%
======== ===== ======== =====
</TABLE>
16
<PAGE>
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 March 31, 1998 (in thousands).
Three months or less $ 15,666
Over three months through twelve months 5,990
Over one year through three years 426
Over three years 159
-----------
TOTAL $ 22,241
===========
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, maturities of investment securities, and
funds provided by operations. While scheduled loan payments and maturing
investments are relatively predictable sources of funds, deposit flow and loan
prepayments are greatly influenced by general interest rates, economic
conditions, and competition.
The Company's total deposits equaled $134,697,000 at March 31, 1998 as
compared to $128,745,000 at December 31, 1997. The increase in funds provided
by deposit inflows during this period has been more than sufficient to provide
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 investments portfolio, the Company also attempts to
manage its maturity gap by seeking maturities of investments which coincide as
closely as possible with maturities of deposits. The Bank's investment
portfolio also includes securities held for sale to provide liquidity for
anticipated loan demand and other liquidity needs.
Although the Bank has been traditionally been a net "seller" of federal funds,
the Bank does maintain lines of credit with the Federal Home Loan Bank of New
York, Summit Bank, and Bank of New York for "purchase" of federal funds in the
event that temporary liquidity needs arise.
Management believes that the Company's current sources of funds provide
adequate liquidity for the current cash flow needs of the Company.
17
<PAGE>
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.
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 the amount of 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 resulting
in a decrease in net interest income. 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 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 Company's loan
repayment assumptions are based upon actual historical repayment rates.
18
<PAGE>
Cumulative Rate Sensitive Balance Sheet
March 31, 1998
(in thousands)
<TABLE>
<CAPTION>
0 - 3 0 - 6 0 - 1 0 - 5 All
Months Months Year Year 5 + Years Others TOTAL
------ ------ ---- ---- --------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Securities $ 4,107 $10,853 $23,928 $ 38,008 $ 0 $ 0 $ 38,008
Loans :
Commercial 19,728 20,095 22,753 46,487 2,237 0 48,724
Participations 479 479 479 2,251 179 0 2,430
Mortgages 0 181 596 12,515 2,043 0 14,558
Consumer 14,765 14,773 14,845 16,514 482 0 16,996
Federal Funds Sold 15,800 15,800 15,800 15,800 0 0 15,800
Other Assets 0 0 0 0 0 14,704 14,704
------- ------- ------- -------- -------- -------- --------
TOTAL ASSETS $54,879 $62,181 $78,401 $131,575 $136,516 $151,220 $151,220
======= ======= ======= ======== ======== ======== ========
Transaction /
NOW Accounts $25,934 $25,934 $25,934 $25,934 $ 0 $ 0 $ 25,934
Money Market 12,512 12,512 12,512 12,512 0 0 12,512
Savings 16,774 16,774 16,774 16,774 0 0 16,774
CD's < $100,000 9,904 15,731 18,977 20,824 30 0 20,854
CD's > $100,000 15,666 16,959 21,656 22,241 0 0 22,241
Other Liabilities 0 0 0 0 0 37,371 37,371
Equity 0 0 0 0 0 15,534 15,534
------- ------- ------- -------- -------- -------- --------
TOTAL LIABILITIES AND
EQUITY $80,790 $87,910 $95,853 $98,285 $98,315 $151,220 $151,220
======= ======= ======= ======= ======= ======== ========
Dollar Gap (25,911) (25,729) (17,452) 33,290 38,201
Gap / Total Assets -17.13% -17.01% -11.54% 22.01% 25.26%
Target Gap Range +/-35.0% +/- 30.0% +/- 25.0% +/-25.0%
RSA / RSL 67.93% 70.73% 81.79% 133.87% 138.86%
(Rate Sensitive Assets to
Rate Sensitive Liabilities)
</TABLE>
19
<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
perpetual preferred stock, and (2) Tier II Capital, which includes a portion
of the allowance for possible loan losses, certain qualifying long-term debt,
and preferred stock which does not qualify for Tier I Capital. Minimum capital
levels are regulated by risk-based capital adequacy guidelines which require
certain capital as a percent of the Company's assets and certain off-balance
sheet items adjusted for predefined credit risk factors (risk-adjusted
assets).
A Bank Holding Company is required to maintain, at a minimum, Tier I Capital
as a percentage of risk-adjusted assets of 4.0% and combined Tier I and Tier
II Capital as a percentage 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 3.0%. For those institutions with higher
levels of risk or that are experiencing or anticipating significant growth,
the minimum leverage ratio will be evaluated through the ongoing regulatory
examination process. The Company 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 March 31, 1998, as well as the required minimum regulatory capital
ratios:
Capital Adequacy
Minimum
March 31, Regulatory
1998 Requirements
------------ ------------
Risk-Based Capital:
Tier I Capital Ratio 16.05% 4.0%
Total Capital Ratio 17.18% 8.0%
Leverage Ratio 10.67% 3.0%
IMPACT OF INFLATION AND CHANGING PRICES
The consolidated financial statements of the Company and notes thereto,
presented elsewhere herein, have been prepared in accordance with generally
accepted accounting principles, which require the measurement of financial
position and operating results in terms of historical dollars without
considering the change in the relative purchasing power of money over time and
due to inflation. The impact of inflation is reflected in the increased cost
of the Company's operations. Unlike most industrial companies, nearly all of
the assets and liabilities of the Company are monetary. As a result, interest
rates have a greater impact on the Company's performance than do the effects
of general levels of inflation. Interest rates do not necessarily move in the
same direction or to the same extent as the prices of goods and services.
20
<PAGE>
CURRENT OPERATIONAL AND ACCOUNTING ISSUES
YEAR 2000
Due to the technological issues surrounding the Year 2000, the Company has
adopted a Year 2000 Compliance Plan. The Company has also established a Year
2000 Compliance Committee, which includes members of senior management from
all operating areas. The objectives of the plan and the committee are to
ensure that the Bank will be prepared for the new millenium. As recommended by
the Federal Financial Institutions Examination Council, the Year 2000 Plan
includes the following phases: Awareness, Assessment, Renovation, Validation,
and Implementation.
The Company is currently in the Assessment stage and has identified the most
critical applications, which includes addressing contract and service
agreements. Management believes that it is currently on target to be
appropriately prepared for any changes and no material expenses have been
identified.
21
<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 - NONE
Item 5. Other information - NONE
Item 6. Exhibits and reports on Form 8-K - NONE
22
<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.
/s/ Michael Lesler
By: _____________________________
(Registrant - Bridge View Bancorp)
Michael Lesler
Principal Financial Officer and
Manager - Financial Reporting
Date: May 11, 1998
23
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibits
- ------- -----------------------
27 Financial Data Schedule
24
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's unaudited March 31, 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-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 12,545,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 15,800,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 11,485,000
<INVESTMENTS-CARRYING> 26,523,000
<INVESTMENTS-MARKET> 26,582,000
<LOANS> 82,707,000
<ALLOWANCE> 1,086,000
<TOTAL-ASSETS> 151,220,000
<DEPOSITS> 134,697,000
<SHORT-TERM> 0
<LIABILITIES-OTHER> 989,000
<LONG-TERM> 0
0
0
<COMMON> 13,353,000
<OTHER-SE> 2,181,000
<TOTAL-LIABILITIES-AND-EQUITY> 151,220,000
<INTEREST-LOAN> 1,847,000
<INTEREST-INVEST> 703,000
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2,550,000
<INTEREST-DEPOSIT> 729,000
<INTEREST-EXPENSE> 729,000
<INTEREST-INCOME-NET> 1,821,000
<LOAN-LOSSES> 80,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,222,000
<INCOME-PRETAX> 819,000
<INCOME-PRE-EXTRAORDINARY> 819,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 819,000
<EPS-PRIMARY> $0.20
<EPS-DILUTED> $0.19
<YIELD-ACTUAL> 0
<LOANS-NON> 439,000
<LOANS-PAST> 439,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,009,000
<CHARGE-OFFS> 3,000
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,086,000
<ALLOWANCE-DOMESTIC> 1,086,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 294,000
</TABLE>
