<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 1999
( ) 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.
2,781,683 shares of Common Stock as of October 31, 1999
1
<PAGE>
INDEX
BRIDGE VIEW BANCORP
Part I - Financial Information
- --------------------------------
Item 1. Financial Statement
Consolidated Statements of Financial Condition
as of September 30, 1999(unaudited) and December 31, 1998
Consolidated Statements of Income
for the three months ended September 30, 1999 and 1998 (unaudited)
and the nine months ended September 30, 1999 and 1998 (unaudited)
Consolidated Statements of Cash Flows
for the nine months ended September 30, 1999 and 1998 (unaudited)
Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
2
<PAGE>
BRIDGE VIEW BANCORP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
( in thousands)
<TABLE>
<CAPTION>
September 30, December 31, 1998
1999 1998
------------------ ------------------
(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents:
Cash and due from banks........................................... $ 7,361 $ 11,534
Federal funds sold................................................ 24,800 22,600
-------- --------
TOTAL CASH AND CASH EQUIVALENTS ....................................... 32,161 34,134
-------- --------
Securities:
Available for sale................................................ 20,630 6,979
Held to maturity.................................................. 37,368 28,474
-------- --------
TOTAL SECURITIES ...................................................... 57,998 35,453
-------- --------
Loans, net of allowance for losses of $1,254 and $1,127,
and deferred loan fees of $243 and $151, respectively.................. 110,262 96,955
Premises and equipment, net............................................ 3,916 2,243
Accrued interest receivable and other assets........................... 2,057 1,983
-------- --------
TOTAL ASSETS .......................................................... $206,394 $ 170,768
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing demand deposits.............................. $ 56,332 $ 43,253
Interest bearing deposits:
Savings and time deposits.................................... 98,287 89,449
Certificates of deposit $100,000 +........................... 32,421 19,998
-------- --------
TOTAL DEPOSITS ........................................................ 187,040 152,700
Accrued interest payable and other liabilities......................... 575 831
-------- --------
TOTAL LIABILITIES ..................................................... 187,615 153,531
Commitments and Contingencies
Stockholders' equity:
Common stock, no par value,
authorized 10,000,000 shares issued
and outstanding 2,781,683 in 1999
and 2,780,295 in 1998............................................. 19,035 16,379
(Accumulated deficit)retained earnings............................ (19) 841
Accumulated other comprehensive (loss)income...................... (237) 17
-------- --------
TOTAL STOCKHOLDERS' EQUITY ............................................ 18,779 17,237
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............................ $ 206,394 $170,768
========= ========
</TABLE>
See notes to unaudited consolidated financial statements.
3
<PAGE>
BRIDGE VIEW BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest Income:
Loans, including fees........................ $ 2,339 $ 2,065 $ 6,540 $ 5,844
Federal funds sold........................... 159 233 591 667
Investment Securities
Taxable................................... 658 437 1,544 1,345
Tax - exempt.............................. 113 114 303 252
------- -------- ------- -------
TOTAL INTEREST INCOME .......................... 3,269 2,849 8,978 8,108
Interest Expense:
Savings deposits............................. 193 211 566 654
Other time deposits.......................... 290 284 828 807
Time deposits $100,000 +..................... 331 270 806 795
------- -------- ------- -------
TOTAL INTEREST EXPENSE ......................... 814 765 2,200 2,256
Net Interest Income ............. 2,455 2,084 6,778 5,852
Provision for loan losses....................... 45 20 135 140
Net interest income after provision for loan
losses ......................................... 2,410 2,064 6,643 5,712
Non-interest income:
Service charge income........................ 341 350 1,027 938
------- -------- ------- -------
TOTAL NON-INTEREST INCOME ...................... 341 350 1,027 938
Non-interest expense:
Salaries and related expenses................ 705 569 2,044 1,657
Premises and fixed assets.................... 286 294 903 845
Other........................................ 420 384 1,267 1,145
------- -------- ------- -------
TOTAL NON-INTEREST EXPENSE ..................... 1,411 1,247 4,214 3,647
Income before income taxes ..................... 1,340 1,167 3,456 3,003
Income tax expense ............................. 488 442 1,257 1,156
------- -------- ------- -------
NET INCOME ..................................... $ 852 $ 725 $ 2,199 $ 1,847
======= ======= ======= =======
Earnings per share:
Basic ..................................... $0.31 $0.26 $0.79 $0.66
Diluted ................................... $0.30 $0.25 $0.77 $0.64
</TABLE>
See notes to unaudited consolidated financial statements.
4
<PAGE>
BRIDGE VIEW BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
Nine months ended September 30,
1999 1998
------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net Income...................................................... $ 2,199 $ 1,847
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................................ 232 141
Provision for loan losses.................................... 135 140
Gains from sales of loans held for sale...................... 35 37
Increase in accrued interest receivable
and other assets......................................... (74) (146)
(Decrease)increase in accrued interest payable and
other liabilities........................................ (256) 12
-------- ---------
Net Cash Provided by Operating Activities ........................... 2,271 2,031
Cash flows from investing activities:
Proceeds from maturities of investment securities............... 11,447 17,674
Purchases of investment securities.............................. (34,648) (20,625)
Net increase in loans........................................... (13,307) (6,220)
Increase to premises and equipment.............................. (1,673) (556)
-------- ---------
Net Cash Used in Investing Activities ............................... (38,181) (9,727)
Cash flows from financing activities:
Net increase in deposits........................................ 34,340 15,159
Proceeds from issuance of common stock.......................... 8 6
Cash paid for dividends......................................... (411) (390)
-------- ---------
Net Cash Provided by Financing Activities ........................... 33,937 14,775
Net change in cash and cash equivalents ............................. (1,973) 7,079
Cash and cash equivalents at beginning of period .................... 34,134 21,629
-------- ---------
Cash and cash equivalents at end of period .......................... $ 32,161 $ 28,708
Cash paid during the period for:
Interest........................................................ 2,048 2,244
Income taxes.................................................... 1,449 1,218
</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, 1998. The results for the nine months ended September 30, 1999 are
not necessarily indicative of the results that may be expected for the
year ended December 31, 1999.
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 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. Certain prior period amounts
have been reclassified to conform to the financial statements
presentation of 1999. The reclassifications have no effect upon
stockholders' equity or net income as previously reported.
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 in
accumulated other comprehensive income(loss) as a separate component of
stockholders' equity.
Investment Securities Held to Maturity
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.
(2) Retained Earnings - Stock Dividend
The Company declared a 5% Stock Dividend (the "1999 Stock Dividend") in
February, 1999 and paid the dividend in April, 1999. Retained earnings
decreased by the market value of shares issued in connection with the
1999 Stock Dividend. Earnings per share for 1998 has been restated to
reflect the effect of the stock dividend.
7
<PAGE>
(3) Earnings Per Share Reconciliation
The reconciliation of the numerator and the denominator of basic EPS with
that of diluted EPS is presented for the three month periods and the nine
month periods ended September 30, 1999 and 1998, respectively.
(unaudited, in thousands)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic earnings per share
- ------------------------
Net Income $ 852 $ 725 $2,199 $ 1,847
===== ===== ====== =======
Average number of shares outstanding 2,782 2,781 2,781 2,780
===== ===== ===== =====
Basic earnings per share $ 0.31 $ 0.26 $ 0.79 $ 0.66
====== ====== ====== ======
Diluted earnings per share
- --------------------------
Net Income $ 852 $ 725 $2,199 $ 1,847
===== ===== ====== =======
Average number of shares of common stock
and equivalents outstanding:
Average common shares outstanding 2,782 2,780 2,780 2,780
Additional shares considered in
Diluted computation assuming:
Exercise of options and warrants 80 83 85 90
------ ------- ------ ------
Average number of shares outstanding on a
diluted basis 2,862 2,863 2,865 2,870
===== ===== ===== =====
Diluted earnings per share $ 0.30 $ 0.25 $ 0.77 $ 0.64
====== ====== ====== ======
</TABLE>
8
<PAGE>
(4) Comprehensive Income
Total comprehensive income is presented for the three month periods and
the nine month periods ended September 30, 1999 and 1998, respectively.
(unaudited)
Three months ended September 30,
(in thousands) 1999 1998
---- ----
Comprehensive Income
--------------------
Net income $ 852 $ 725
Other comprehensive (loss)income,
net of taxes (115) 11
------- -------
Total comprehensive income $ 737 $ 736
Nine months ended September 30,
(in thousands) 1999 1998
---- ----
Comprehensive Income
--------------------
Net income $ 2,199 $1,847
Other comprehensive loss(income),
net of taxes (254) 10
------- ------
Total comprehensive income $ 1,945 $1,857
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 September 30, 1999 and 1998 and Nine
Months Ended September 30, 1999 and 1998
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 September 30, 1999, net income increased by $127,000
or 17.5% to $852,000 from $725,000 for the three months ended September 30,
1998. For the nine months ended September 30, 1999, net income reached
$2,199,000, an increase of $352,000 or 19.1%, when compared to net income of
$1,847,000 for the nine months ended September 30, 1998. The increase in net
income for the first nine months of 1999 compared to 1998 is the result of a
15.8% increase in net interest income to $6,778,000 from $5,852,000 in the prior
year which was driven by an $870,000 or 10.7% increase in interest income from
$8,108,000 in 1998 to $8,978,000 in 1999 as well as a $56,000 or 2.5% decrease
in interest expense from $2,256,000 in 1998 to $2,200,000 for the same period in
1999. The Company also experienced a 9.5% increase in fee income, reaching
$1,027,000 for the nine months ended September 30, 1999 from $938,000 for the
same period in 1998.
Interest expense rose $49,000 or 6.4% for the three month period ending
September 30, 1999 as compared to the three month period ended September 30,
1998. This increase is a direct result of a $7,730,000 or 31.3% increase in time
deposits greater than $100,000 between September 30, 1999 and 1998. The increase
in interest expense for the above three month period is attributable to a one
time promotional rate offered for the Bank's Tenafly office opening and is
expected to level out during second quarter 2000.
Non-interest expense increased by $164,000 or 13.2% and $567,000 or 15.5% for
the three month periods and the nine month periods ended September 30, 1999
compared to 1998, respectively. 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 new branch offices which opened in the fourth
quarter of 1998 and the third quarter of 1999.
10
<PAGE>
On a per share basis, basic and diluted earnings per share were $0.31 and $0.30
for the quarter ended September 30, 1999 as compared to $0.26 and $0.25 for the
quarter ended September 30, 1998. For the first nine months of 1999, basic and
diluted earnings per share were $0.79 and $0.77 as compared to $0.66 and $0.64
for the first nine months of 1998. Per share data has been restated to reflect
the 1999 5% stock dividend.
PROVISION FOR LOAN LOSSES
For the quarter ended September 30, 1999, the Company's provision for loan
losses was $45,000, an increase of $25,000 from the provision of $20,000 for the
quarter ended September 30, 1998. The provision for the nine months ended
September 30, 1999 decreased $5,000 to $135,000 from $140,000 for the nine
months ended September 30, 1998. The provision is directly related to growth of
the Company's loan portfolio and to management's view of the local economy.
NON-INTEREST INCOME
Non-interest income, which was primarily attributable to service fees received
from deposit accounts, amounted, for the three months ended September 30, 1999,
to $341,000, a decrease of $9,000, or 2.6%, from $350,000 for the three months
ended September 30, 1998. The decrease for the quarter is a result of a one time
fee received in third quarter 1998 which was non-recurring in 1999. For the nine
months ended September 30, 1999, non-interest income reflected $1,027,000, an
increase of $89,000 or 9.5% above the non-interest income level of $938,000 for
the nine months ended September 30, 1998. The overall increase in service fees
is attributable to the higher level of average deposits.
NON-INTEREST EXPENSE
Non-interest expense for the quarter ended September 30, 1999 amounted to
$1,411,000, an increase of $164,000 or 13.2% from $1,247,000 for the quarter
ended September 30, 1998. For the nine months ended September 30, 1999,
non-interest expense aggregated $4,214,000, an increase of $567,000 or 15.5%,
from $3,647,000 for the nine months ended September 30, 1998. As mentioned,
these increases are related primarily to the Company's growth and the resulting
effect upon administrative expenses.
INCOME TAX EXPENSE
The income tax provision, which includes both federal and state taxes, for the
quarters ended September 30, 1999 and 1998 was $488,000 and $442,000,
respectively. For the first nine months of 1999 and 1998, the income tax
provision totaled $1,257,000 and $1,156,000, respectively. The increase in
income taxes is a direct result of the increase in income before taxes for both
periods.
FINANCIAL CONDITION: September 30, 1999 and December 31, 1998
At September 30, 1999, the Company's total assets were $206,394,000 compared to
$170,768,000 at December 31, 1998, an increase of 20.9%. Total loans experienced
a 13.8% increase to $111,759,000 at September 30, 1999 from $98,233,000 at
December 31, 1998. Total deposits at September 30, 1999 were $187,040,000, 22.5%
higher than the $152,700,000 at December 31, 1998.
11
<PAGE>
LOAN PORTFOLIO
At September 30, 1999, the Company's total loans were $111,759,000, an increase
of $13,526,000 or 13.8% over total loans of $98,233,000 at December 31, 1998.
The increase in the loan portfolio represents continued penetration of the
Company's local small business market. Management believes 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 maintains
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.
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 September 30, 1999 and December 31, 1998, respectively :
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
------------------ ------------------
(Dollars in thousands)
Amount Percent Amount Percent
------ ------- ------ -------
<S> <C> <C> <C> <C>
Commercial and Industrial $17,490 15.7% $18,906 19.3%
Real Estate:
Non-residential properties 46,263 41.4% 33,487 34.1%
Residential properties 40,565 36.3% 37,703 38.4%
Construction 5,188 4.6% 5,443 5.5%
Consumer 2,253 2.0% 2,694 2.7%
------- ------ ------- ------
Total Loans $111,759 100% $98,233 100%
======== ====== ======= ======
</TABLE>
12
<PAGE>
ASSET QUALITY
The Company's principal assets are its loans. Inherent in the lending function
is the risk of the borrower's inability to repay a loan under its existing
terms. Risk elements include non-accrual loans, past due and restructured loans,
potential problem loans, loan concentrations, and other real estate owned.
Non-performing assets include loans that are not accruing interest (non-accrual
loans) as a result of principal or interest being in default for a period of 90
days or more. When a loan is classified as non-accrual, interest accruals
discontinue and all past due interest, including interest applicable to prior
years, is reversed and charged against current income. Until the loan becomes
current, any payments received from the borrower are applied to outstanding
principal until such time as management determines that the financial condition
of the borrower and other factors merit recognition of such payments 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.
The following table sets forth information concerning the Company's
non-performing assets as of the dates indicated:
Non-Performing Assets
(dollars in thousands)
September 30, December 31,
1999 1998
------------- ------------
Non-performing loans $ 25 $ 0
Other real estate 0 163
------ ------
Total non-performing assets $ 25 $ 163
Non-performing loans to total gross loans 0.02% 0.00%
Non-performing assets to total assets 0.01% 0.10%
As of September 30, 1999, the Company has one non-accrual loan which represents
a commercial line of credit, totaling $24,763, which had matured, but was not
repaid due to the customer's financial condition. The Company has no other
non-performing loans and has no real estate owned (OREO) at September 30, 1999.
At December 31, 1998, the Company had no non-accrual loans.
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.
13
<PAGE>
As of September 30, 1999 and December 31, 1998, 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.
OTHER REAL ESTATE OWNED
As of September 30, 1999, the Company has no other real estate compared to one
foreclosed property aggregating $163,000 at December 31, 1998. This decrease is
due to sale of this property to a third party. The Company carries other real
estate at the lower of the carrying value or fair market value less estimated
cost to sell.
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
losses inherent 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.
14
<PAGE>
The Company's allowance for loan losses totaled $1,254,000 and $1,133,000 at
September 30, 1999 and 1998, 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 nine month periods ended
September 30, 1999 and 1998, respectively :
Nine months ended
September 30,
1999 1998
---- ----
\ (dollars in thousands)
Balance, beginning of period $1,127 $1,009
Charge-offs (9) (16)
Recoveries 1 0
Provision charged to expense 135 140
------ ------
Balance, end of period $1,254 $1,133
====== ======
Balance of allowance at end of period as
a percentage of loans at end of period 1.12% 1.27%
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, obligation of U.S. Government Agencies, selected municipal and state
obligations, stock in the Federal Home Loan Bank ("FHLB"), and equity securities
of another financial institution.
Management determines the appropriate classification of securities at the time
of purchase. At September 30, 1999, $37,368,000 of the Company's investment
securities were classified as held to maturity and $20,630,000 were classified
as available for sale. At September 30, 1999, the Company held no securities
which it classified as trading securities.
At September 30, 1999, total investment securities were $57,998,000, an increase
of $22,545,000 or 63.6%, from total investment securities of $35,453,000 at
December 31, 1998. This increase in investment securities from year end 1998 to
September 30, 1999 was funded by 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.
15
<PAGE>
A comparative summary of securities available for sale at September 30, 1999 and
December 31, 1998 is as follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross Fair
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
September 30, 1999
- ------------------
U.S. Government and agency
Obligations $20,045 - (302) $19,743
FHLBNY stock 512 - - 512
Other equity securities 469 - (94) 375
------- -------- ------- -------
Total available for sale $21,026 - (396) $20,630
December 31, 1998
- -----------------
U.S. Government and agency
Obligations $6,006 28 - $6,034
FHLBNY stock 476 - - 476
Other equity securities 469 - - 469
------- -------- ------- -------
Total available for sale $6,951 28 - $6,979
</TABLE>
A comparative summary of securities held to maturity at September 30, 1999 and
December 31, 1998 is as follows (in thousands) :
<TABLE>
<CAPTION>
Gross Gross Fair
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
September 30, 1999
- ------------------
U.S. Government and agency
Obligations $26,009 18 (105) $25,922
Municipal and state obligations 11,359 5 - 11,364
------- -------- ------- -------
Total held to maturity $37,368 23 (105) $37,286
December 31, 1998
- ----------------=
U.S. Government and agency
Obligations $16,278 124 - $16,402
Municipal and state obligations 12,196 16 - 12,212
------- -------- ------- -------
Total held to maturity $28,474 140 - $28,614
</TABLE>
16
<PAGE>
The following table sets forth as of September 30, 1999, the maturity
distribution of the Company's debt investment portfolio :
Maturity of Investment Securities
September 30, 1999
(in thousands)
<TABLE>
<CAPTION>
Securities Securities
Held to Maturity 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 $27,539 $27,547 5.51% $ 5,974 $5,854 5.87%
1 to 5 Years 9,829 9,739 5.51% 15,052 14,776 6.37%
------- ------- ------- ------
$37,368 $37,286 $21,026 $ 20,630
======= ======= ======= ========
</TABLE>
The Company sold no securities from its portfolio during the first nine months
of 1999 or 1998.
17
<PAGE>
DEPOSITS
Deposits are the Company's primary source of funds. The Company experienced a
growth in deposit balances of $34,340,000 or 22.5% to $187,040,000 at September
30, 1999 as compared to $152,700,000 at December 31, 1998. This growth was
accomplished as a result of effective selective marketing and growth within the
local Bergen County community based upon the Company's continued emphasis upon
customer service through extended hours of operation and a competitive rate
structure and the addition of two branch offices; in Hackensack and in Tenafly,
NJ. Within the increase in total deposits, non-interest bearing deposits grew
$13,079,000 or 30.2% from December 31, 1998 to September 30, 1999 while time
deposits grew $18,885,000 or 43.8% during the same period. 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>
September 30, December 31,
1999 1998
------------- ------------
Amount % Amount %
------ ---- ------ -----
<S> <C> <C> <C> <C>
Non-interest Bearing Demand $56,332 30.1% $43,253 28.3%
Interest Bearing Demand 47,708 25.5% 47,560 31.2%
Savings 20,988 11.2% 18,760 12.3%
Time Deposits 62,012 33.2% 43,127 28.2%
------- ----- ------- -----
$187,040 100% $152,700 100%
======== ==== ======== ====
</TABLE>
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 September 30, 1999 (in thousands).
Three months or less $ 18,188
Over three months through twelve months 13,610
Over one year through three years 623
Over three years 0
-----------
TOTAL $ 32,421
===========
18
<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, 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 $187,040,000 at September 30, 1999 as
compared to $152,700,000 at December 31, 1998. 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 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. It additionally has the ability to obtain
longer term financing through the Federal Home Loan Bank based upon its mortgage
portfolio.
Management believes that the Company's current sources of funds provide adequate
liquidity for the current cash flow needs of the Company.
19
<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.
20
<PAGE>
Cumulative Rate Sensitive Balance Sheet
September 30, 1999
(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>
Debt Investment
Securities $ 6,557 $18,110 $27,522 $ 57,111 $ 0 $ 0 $ 57,111
Loans :
Commercial 23,846 24,662 26,469 62,128 3,245 0 65,373
Participations 641 1,867 3,867 10,957 176 0 11,133
Mortgages 0 75 422 13,025 6,144 0 19,169
Consumer 13,733 13,745 14,414 15,831 253 0 16,084
Federal Funds Sold 24,800 24,800 24,800 24,800 0 0 24,800
Other Assets 0 0 0 0 0 12,724 12,724
-------- -------- ------- -------- ----- ------ -------
TOTAL ASSETS $69,577 $83,259 $97,494 $183,852 $193,670 $206,394 $206,394
======= ======= ======= ======== ======== ======== ========
Transaction Accounts $29,495 $29,495 $29,495 $29,495 $ 0 $ 0 $29,495
Money Market 18,213 18,213 18,213 18,213 0 0 18,213
Savings 20,988 20,988 20,988 20,988 0 0 20,988
CD's < $100,000 10,234 20,613 28,878 29,591 0 0 29,591
CD's > $100,000 18,188 30,131 31,798 32,421 0 0 32,421
Other Liabilities 0 0 0 0 0 56,907 56,907
Equity 0 0 0 0 0 18,779 18,779
-------- -------- ------- -------- ----- ------ -------
TOTAL LIABILITIES AND EQUITY $97,118 $119,440 $129,372 $130,708 $130,708 $206,394 $206,394
======== ======== ======== ======== ======== ======== ========
Dollar Gap (27,541) (36,181) (31,878) 53,144 62,962
Gap / Total Assets -13.34% -17.53% -15.45% 25.75% 30.51%
Target Gap Range +/-35.0% +/- 30.0% +/- 25.0% +/-25.0%
RSA / RSL 71.64% 69.71% 75.36% 140.66% 148.17%
(Rate Sensitive Assets to
Rate Sensitive Liabilities)
</TABLE>
21
<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 following table summarizes the risk-based and leverage capital ratios for
the Bank at September 30, 1999, as well as the required minimum regulatory
capital ratios :
Capital Adequacy
Minimum
September 30, Regulatory
1999 Requirements
-------------- ------------
Risk-Based Capital:
Tier I Capital Ratio 15.70% 4.0%
Total Capital Ratio 16.71% 8.0%
Leverage Ratio 10.14% 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.
22
<PAGE>
CURRENT OPERATIONAL AND ACCOUNTING ISSUES
SFAS No. 133
In June, 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This statement establishes accounting and
reporting standards for derivative instruments and for hedging activities. SFAS
No. 133 supersedes the disclosure requirements in SFAS No. 80, 105, and 119.
This statement is effective for periods after June 15, 1999. The adoption of
SFAS No. 133 is not expected to have a material impact on the financial position
or results of operations of the Company.
SFAS No. 137
In June, 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of SFAS No.
133", which amends SFAS No. 133 to be effective for all fiscal years beginning
after June 15, 2000.
YEAR 2000
Due to the technological issues surrounding the Year 2000, the Company formally
initiated an ongoing project during 1997 in order to attempt to ensure that its
financial condition, results of operations or liquidity will not be adversely
affected by Year 2000 computer software failures. The Company adopted a Year
2000 Compliance Plan and established a Year 2000 Compliance Committee, which
includes members of senior management from all areas of company and from the
Company's Board of Directors. 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 has recently completed the Implementation stage and has satisfied
the testing of certain functions which have been upgraded. While the Company
believes it has taken the appropriate steps to assure Year 2000 compliance, it
is dependent on vendor compliance to some extent. Accordingly, the Company
continues to require its systems and software vendors to represent that the
services and products provided are, or will be, Year 2000 compliant and that the
vendors have planned, or have begun to perform, a program of testing compliance.
The Company's plan also addresses compliance of its non-EDP systems as well as
evaluation of its major loan customers for Year 2000 state of readiness.
Management believes that it will be appropriately prepared for the Year 2000. To
date, the Company has not incurred any material costs related to the Y2K
conversion and no material expenses have been identified or are expected.
Management continues to believe that the costs to bring the Company's systems
into Year 2000 compliance will not have a materially adverse effect upon the
Company's financial condition, results of operations, or liquidity.
The primary risks affecting the Company's Year 2000 conversion relate to the
proper functioning of its on-line banking system after December 31, 1999. This
risk is mitigated by the use of a major on-line banking system provider which
has performed and verified Y2K readiness with its own "testing and
implementation phases" to ensure proper operation. The Bank has performed its
own independent validation testing of the on-line system to ensure reliance.
Additionally, the Company has developed a contingency plan for all "mission
critical" applications which are not compliant by the "trigger date". If any
application is not Y2K compliant or is incapable of providing banking support in
the Year 2000, the Bank has adopted a Business Resumption Contingency Plan which
is also being tested by management.
23
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risk
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
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
24
<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/ Albert F. Buzzetti
By: ------------------------------------
(Registrant - Bridge View Bancorp)
Albert F. Buzzetti
President and Chief Executive Officer
Date: November 11, 1999
25
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibits
- ------- ------------------------
27 Financial Data Schedule
26
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's unaudited September 30, 1999 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-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 7,361,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 24,800,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 20,630,000
<INVESTMENTS-CARRYING> 37,368,000
<INVESTMENTS-MARKET> 37,286,000
<LOANS> 111,759,000
<ALLOWANCE> 1,254,000
<TOTAL-ASSETS> 206,394,000
<DEPOSITS> 187,040,000
<SHORT-TERM> 0
<LIABILITIES-OTHER> 575,000
<LONG-TERM> 0
0
0
<COMMON> 19,035,000
<OTHER-SE> (256,000)
<TOTAL-LIABILITIES-AND-EQUITY> 206,394,000
<INTEREST-LOAN> 6,540,000
<INTEREST-INVEST> 1,847,000
<INTEREST-OTHER> 591,000
<INTEREST-TOTAL> 8,978,000
<INTEREST-DEPOSIT> 2,200,000
<INTEREST-EXPENSE> 2,200,000
<INTEREST-INCOME-NET> 6,778,000
<LOAN-LOSSES> 135,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,187,000
<INCOME-PRETAX> 3,456,000
<INCOME-PRE-EXTRAORDINARY> 3,456,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,199,000
<EPS-BASIC> 0.79
<EPS-DILUTED> 0.77
<YIELD-ACTUAL> 0
<LOANS-NON> 25,000
<LOANS-PAST> 25,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,127,000
<CHARGE-OFFS> 9,000
<RECOVERIES> 1,000
<ALLOWANCE-CLOSE> 1,254,000
<ALLOWANCE-DOMESTIC> 1,254,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 36,000
</TABLE>
