<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 June 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 July 31, 1999
<PAGE>
INDEX
BRIDGE VIEW BANCORP
Part I - Financial Information
- --------------------------------
Item 1. Financial Statement
Consolidated Statements of Financial Condition
as of June 30, 1999(unaudited) and December 31, 1998
Consolidated Statements of Income
for the three months ended June 30, 1999 and 1998 (unaudited)
and the six months ended June 30, 1999 and 1998 (unaudited)
Consolidated Statements of Cash Flows
for the six months ended June 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
2
<PAGE>
BRIDGE VIEW BANCORP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
--------- ---------
ASSETS (unaudited)
<S> <C> <C>
Cash and cash equivalents:
Cash and due from banks ............................................... $ 12,853 $ 11,534
Federal funds sold .................................................... 8,800 22,600
--------- ---------
TOTAL CASH AND CASH EQUIVALENTS ............................................ 21,653 34,134
--------- ---------
Securities:
Available for sale .................................................... 17,808 6,979
Held to maturity ...................................................... 38,845 28,474
--------- ---------
TOTAL SECURITIES ........................................................... 56,653 35,453
--------- ---------
Loans, net of allowance for losses of $1,210 and $1,127,
and deferred loan fees of $202 and $151, respectively ...................... 105,864 96,955
Premises and equipment, net ................................................ 3,755 2,243
Accrued interest receivable and other assets ............................... 1,749 1,983
--------- ---------
TOTAL ASSETS ............................................................... $ 189,674 $ 170,768
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing demand deposits .................................. $ 52,578 $ 43,253
Interest bearing deposits:
Savings and time deposits ........................................ 95,694 89,449
Certificates of deposit $100,000 + ............................... 22,891 19,998
--------- ---------
TOTAL DEPOSITS ............................................................. 171,163 152,700
Accrued interest payable and other liabilities ............................. 330 831
--------- ---------
TOTAL LIABILITIES .......................................................... 171,493 153,531
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 ............................... (732) 841
Accumulated other comprehensive (loss) income ......................... (122) 17
--------- ---------
TOTAL STOCKHOLDERS' EQUITY ................................................. 18,181 17,237
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................................. $ 189,674 $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 Six months ended
June 30, June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest Income:
Loans, including fees .............................. $2,152 $1,923 $4,201 $3,779
Federal funds sold ................................. 176 250 432 434
Investment Securities
Taxable ......................................... 521 462 886 908
Tax - exempt .................................... 90 74 190 138
------ ------ ------ ------
TOTAL INTEREST INCOME ................................. 2,939 2,709 5,709 5,259
Interest Expense:
Savings deposits ................................... 189 231 373 443
Other time deposits ................................ 264 260 538 523
Time deposits $100,000 + ........................... 228 271 475 525
------ ------ ------ ------
TOTAL INTEREST EXPENSE ................................ 681 762 1,386 1,491
Net Interest Income .................... 2,258 1,947 4,323 3,768
Provision for loan losses ............................. 50 40 90 120
Net interest income after provision for loan losses ... 2,208 1,907 4,233 3,648
Non-interest income:
Service charge income .............................. 364 288 686 588
------ ------ ------ ------
TOTAL NON-INTEREST INCOME ............................. 364 288 686 588
Non-interest expense:
Salaries and related expenses ...................... 682 535 1,339 1,088
Premises and fixed assets .......................... 276 279 617 551
Other .............................................. 470 364 847 761
------ ------ ------ ------
TOTAL NON-INTEREST EXPENSE ............................ 1,428 1,178 2,803 2,400
Income before income taxes ............................ 1,144 1,017 2,116 1,836
Income tax expense .................................... 414 391 769 714
------ ------ ------ ------
NET INCOME ............................................ $ 730 $ 626 $1,347 $1,122
====== ====== ====== ======
Earnings per share:
Basic ............................................ $ 0.26 $ 0.23 $ 0.48 $ 0.40
Diluted .......................................... $ 0.25 $ 0.22 $ 0.47 $ 0.39
</TABLE>
See notes to unaudited consolidated financial statements.
4
<PAGE>
BRIDGE VIEW BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
Six months ended June 30,
1999 1998
-------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net Income ......................................................... $ 1,347 $ 1,122
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation and amortization ................................... 144 92
Provision for loan losses ....................................... 90 120
Gains from sales of loans held for sale ......................... 33 16
Decrease in accrued interest receivable and other assets ........ 234 180
Increase (decrease) in accrued interest payable and
other Liabilities ........................................... 501 (68)
-------- --------
Net Cash Provided by Operating Activities ............................... 2,349 1,462
Cash flows from investing activities:
Proceeds from maturities of investment securities .................. 7,029 9,107
Purchases of investment securities ................................. (32,661) (13,386)
Net increase in loans .............................................. (8,909) (3,645)
Increase to premises and equipment ................................. 1,512 59
-------- --------
Net Used in Investing Activities ........................................ (33,029) (7,865)
Cash flows from financing activities:
Net increase in deposits ........................................... 18,463 13,963
Proceeds from issuance of common stock ............................. 8 6
Cash paid for dividends ............................................ (272) (258)
-------- --------
Net Cash Provided by Financing Activities ............................... 18,199 13,711
Net change in cash and cash equivalents ................................. (12,481) 7,308
Cash and cash equivalents at beginning of period ........................ 34,134 21,629
-------- --------
Cash and cash equivalents at end of period .............................. $ 21,653 $ 28,937
Cash paid during the period for:
Interest ........................................................... 1,887 1,449
Income taxes ....................................................... 869 753
</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 six months ended June 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 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
As required under SFAS 128, 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 six month periods ended June 30, 1999 and
1998, respectively.
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic earnings per share
Net Income ..................................... $ 730 $ 626 $1,347 $1,122
====== ====== ====== ======
Average number of shares outstanding ................ 2,782 2,780 2,781 2,780
====== ====== ====== ======
Basic earnings per share ............................ $ 0.26 $ 0.23 $ 0.48 $ 0.40
====== ====== ====== ======
Diluted earnings per share
Net Income ..................................... $ 730 $ 626 $1,347 $1,122
====== ====== ====== ======
Average number of shares of common
stock and equivalents outstanding:
Average common shares outstanding .............. 2,782 2,780 2,781 2,780
Additional shares considered in
Diluted computation assuming:
Exercise of options and warrants ............ 80 88 82 90
------ ------ ------ ------
Average number of shares outstanding
on a diluted basis ................................ 2,862 2,868 2,863 2,870
====== ====== ====== ======
Diluted earnings per share .......................... $ 0.25 $ 0.22 $ 0.47 $ 0.39
====== ====== ====== ======
</TABLE>
8
<PAGE>
(4) Comprehensive Income
As required under SFAS 130, total comprehensive income is presented for
the three month periods and the six months periods ended June 30, 1999
and 1998, respectively.
Three months ended June 30,
(in thousands) 1999 1998
---- ----
Comprehensive Income
Net income $ 730 $ 626
Other comprehensive loss, net of taxes (127) (3)
------ ------
Total comprehensive income $ 603 $ 623
Six months ended June 30,
(in thousands) 1999 1998
---- ----
Comprehensive Income
Net income $ 1,347 $1,122
Other comprehensive loss, net of taxes (139) (1)
------- ------
Total comprehensive income $ 1,208 $1,121
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 June 30, 1999 and 1998 and
Six Months Ended June 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 June 30, 1999, net income increased by $104,000 or
16.6% to $730,000 from $626,000 for the three months ended June 30, 1998. For
the six months ended June 30, 1999, net income reached $1,347,000, an increase
of $225,000 or 20.1%, when compared to net income of $1,122,000 for the six
months ended June 30, 1998. The increase in net income for the first half of
1999 compared to 1998 is a result of a 14.7% increase in net interest income to
$4,323,000 from $3,768,000 in the prior year which was driven by a $105,000 or
7.0% decrease in interest expense from $1,491,000 in 1998 to $1,386,000 for the
same time period in 1999. The Company also experienced a 16.7% increase in fee
income, reaching $686,000 for the six months ended June 30, 1999 from $588,000
for the same period in 1998.
Interest expense fell $81,000 or 10.6% for the three month period ended June 30,
1999 compared to the three month period ended June 30, 1998. As previously
mentioned, interest expense also decreased $105,000 or 7.0% to $1,386,000 for
the six month period ended June 30, 1999 compared to $1,491,000 for the six
month period ended June 30, 1998. This decrease reflects the continued effect of
a shift in the deposit portfolio to more cost efficient deposits.
Non-interest expense increased by $250,000 or 21.2% and $403,000 or 16.8% for
the three month periods and the six month periods ended June 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 office which opened in the fourth quarter of 1998.
10
<PAGE>
On a per share basis, basic and diluted earnings per share were $0.26 and $0.25
for the quarter ended June 30, 1999 as compared to $0.23 and $0.22 for the
quarter ended June 30, 1998. For the first half of 1999, basic and diluted
earnings per share were $0.48 and $0.47 as compared to $0.40 and $0.39 for the
first half of 1998. Per share data has been restated to reflect the 1999 5%
stock dividend.
PROVISION FOR LOAN LOSSES
For the quarter ended June 30, 1999, the Company's provision for loan losses was
$50,000, an increase of $10,000 from the provision of $40,000 for the quarter
ended June 30, 1998. The provision for the six months ended June 30, 1999
decreased $30,000 to $90,000 from $120,000 for the six months ended June 30,
1998. The strength of the provision reflects management's view of the economy of
its service area and its effect upon the Company's loan portfolio.
NON-INTEREST INCOME
Non-interest income, which was primarily attributable to service fees received
from deposit accounts, amounted, for the three months ended June 30, 1999, to
$364,000, an increase of $76,000, or 26.4%, from $288,000 for the three months
ended June 30, 1998. For the six months ended June 30, 1999, non-interest income
reflected $686,000, an increase of $98,000 or 16.7% above the non-interest
income level of $588,000 for the six months ended June 30, 1998. The increase in
service fees is attributable to the higher level of average deposits.
NON-INTEREST EXPENSE
Non-interest expense for the quarter ended June 30, 1999 amounted to $1,428,000,
an increase of $250,000 or 21.2% from $1,178,000 for the quarter ended June 30,
1998. For the six months ended June 30, 1999, non-interest expense aggregated
$2,803,000, an increase of $403,000 or 16.8%, from $2,400,000 for the six months
ended June 30, 1998. As mentioned, these increases are related primarily to the
Company's growth and that effect upon administrative expenses.
INCOME TAX EXPENSE
The income tax provision, which includes both federal and state taxes, for the
quarters ended June 30, 1999 and 1998 was $414,000 and $391,000, respectively.
For the first half of 1999 and 1998, the income tax provision totaled $769,000
and $714,000, respectively. The increase in income taxes is a direct result of
the increase in income before taxes for both periods.
FINANCIAL CONDITION: June 30, 1999 and December 31, 1998
At June 30, 1999, the Company's total assets were $189,674,000 compared to
$170,768,000 at December 31, 1998, an increase of 11.1%. Total loans experienced
a 9.2% increase to $107,276,000 at June 30, 1999 from $98,233,000 at December
31, 1998. Total deposits at June 30, 1999 were $171,163,000, 12.1% higher than
the $152,700,000 at December 31, 1998.
11
<PAGE>
LOAN PORTFOLIO
At June 30, 1999, the Company's total loans were $107,276,000, an increase of
$9,043,000 or 9.2% over total loans of $98,233,000 at December 31, 1998. The
increase in the loan portfolio represents increased 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 June 30, 1999 and December 31, 1998, respectively:
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
------------- ------------------
(Dollars in thousands)
Amount Percent Amount Percent
------ ------- ------ -------
<S> <C> <C> <C> <C>
Commercial and Industrial $17,667 16.5% $18,906 19.3%
Real Estate:
Non-residential properties 43,185 40.3% 33,487 34.1%
Residential properties 38,827 36.2% 37,703 38.4%
Construction 4,663 4.3% 5,443 5.5%
Consumer 2,934 2.7% 2,694 2.7%
-------- ---- ------- ----
Total Loans $107,276 100% $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)
June 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 June 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) as a result of a
foreclosure at June 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.
As of June 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.
13
<PAGE>
OTHER REAL ESTATE OWNED
As of June 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.
The Company's allowance for loan losses totaled $1,210,000 and $1,126,000 at
June 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 six month periods ended
June 30, 1999 and 1998, respectively:
Six months ended
June 30,
1999 1998
---- ----
(dollars in thousands)
Balance, beginning of period $1,127 $1,009
Charge-offs (7) (3)
Recoveries 0 0
Provision charged to expense 90 120
------ ------
Balance, end of period $1,210 $1,126
====== ======
Balance of allowance at end of period as
a percentage of loans at end of period 1.13% 1.29%
14
<PAGE>
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 June 30, 1999, $38,845,000 of the Company's investment
securities were classified as held to maturity and $17,808,000 were classified
as available for sale. At June 30, 1999, the Company held no securities which it
classified as trading securities.
At June 30, 1999, total investment securities were $56,653,000, an increase of
$21,200,000 or 59.8%, from total investment securities of $35,453,000 at
December 31, 1998. This increase in investment securities from year end 1998 to
June 30, 1999 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.
15
<PAGE>
A comparative summary of securities available for sale at June 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>
June 30, 1999
U.S. Government and agency
Obligations $17,031 8 (270) $16,769
FHLBNY stock 512 -- -- 512
Other equity securities 469 58 -- 527
------- ------- ------- -------
Total available for sale $18,012 66 (270) $17,808
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 June 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>
June 30, 1999
U.S. Government and agency
Obligations $ 27,021 28 (161) $ 26,888
Municipal and state obligations 11,824 15 (8) 11,831
-------- -------- -------- --------
Total held to maturity $ 38,845 43 (169) $ 38,719
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 June 30, 1999, the maturity distribution of
the Company's debt investment portfolio:
Maturity of Debt Investment Securities
June 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 $28,351 $28,374 5.57% $5,962 $ 5,801 5.87%
1 to 5 Years 10,494 10,345 5.46% 12,050 12,007 6.19%
------- ------- --------- --------
$38,845 $38,719 $ 18,012 $ 17,808
======= ======= ========= ========
</TABLE>
The Company sold no securities from its portfolio during the first six 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 $18,463,000 or 12.1% to $171,163,000 at June 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. Within the increase in total deposits, non-interest bearing deposits
grew $9,325,000 or 21.6% from December 31, 1998 to June 30, 1999 while savings
deposits grew $16,552,000 or 88.2% 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>
June 30, December 31,
1999 1998
---- ----
Amount % Amount %
------ --- ------ ---
<S> <C> <C> <C> <C>
Non-interest Bearing Demand $52,578 30.7% $43,253 28.3%
Interest Bearing Demand 36,471 21.3% 47,560 31.2%
Savings 35,312 20.6% 18,760 12.3%
Time Deposits 46,802 27.4% 43,127 28.2%
-------- ----- -------- -----
$171,163 100% $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 June 30, 1999 (in thousands).
Three months or less $ 17,950
Over three months through twelve months 4,632
Over one year through three years 309
Over three years 0
-----------
TOTAL $ 22,891
===========
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 $171,163,000 at June 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 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.
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
June 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>
Investment Securities $ 5,458 $12,014 $29,733 $ 56,653 $ 0 $ 0 $ 56,653
Loans:
Commercial 23,097 23,873 28,090 58,596 3,286 0 61,882
Participations 930 1,100 2,350 11,024 176 0 11,200
Mortgages 357 357 563 12,477 4,634 0 17,111
Consumer 13,931 13,948 14,814 16,806 277 0 17,083
Federal Funds Sold 8,800 8,800 8,800 8,800 0 0 8,800
Other Assets 0 0 0 0 0 16,945 16,945
------- ------- ------- -------- -------- -------- --------
TOTAL ASSETS $52,573 $60,092 $84,350 $164,356 $172,729 $189,674 $189,674
======= ======= ======= ======== ======== ======== ========
Transaction Accounts $35,212 $35,212 $35,212 $35,212 $ 0 $ 0 $35,212
Money Market 15,591 15,591 15,591 15,591 0 0 15,591
Savings 20,979 20,979 20,979 20,979 0 0 20,979
CD's < $100,000 8,529 16,946 22,882 23,911 0 0 23,911
CD's > $100,000 17,950 22,235 22,582 22,891 0 0 22,891
Other Liabilities 0 0 0 0 0 52,909 52,909
Equity 0 0 0 0 0 18,181 18,181
------- ------- ------- -------- -------- -------- --------
TOTAL LIABILITIES AND EQUITY $98,261 $110,963 $117,246 $118,584 $118,584 $189,674 $189,674
======= ======== ======== ======== ======== ======== ========
Dollar Gap (45,688) (50,871) (32,896) 45,772 54,145
Gap / Total Assets -24.09% -26.82% -17.34% 24.13% 28.55%
Target Gap Range +/-35.0% +/- 30.0% +/- 25.0% +/-25.0%
RSA / RSL 53.50% 54.15% 71.94% 138.60% 145.66%
(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 June 30, 1999, as well as the required minimum regulatory capital
ratios:
Capital Adequacy
Minimum
June 30, Regulatory
1999 Requirements
-------- ------------
Risk-Based Capital:
Tier I Capital Ratio 16.17% 4.0%
Total Capital Ratio 16.71% 8.0%
Leverage Ratio 10.41% 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 to ensure that its financial condition,
results of operations or liquidity will not be adversely affected by the 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 is currently completing the Implementation stage and has satisfied
the testing of certain functions which have been upgraded. While the Company
believes it is taking all appropriate steps to assure Year 2000 compliance, it
is dependent on vendor compliance to some extent. 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 is currently on target to 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 will convert to an alternative software. The Bank
continues to evaluate its software options.
23
<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
The Company's Annual Meeting was held on May 20, 1999. At the Annual
Meeting, the following matter was voted on:
1. ELECTION OF DIRECTORS - The following directors received the
following votes:
- ----------------------------------------------------------------------------
DIRECTORS FOR AGAINST WITHHELD
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Gerald A. Calabrese, Jr. 1,163,021 -- --
- ----------------------------------------------------------------------------
Glenn L. Creamer 1,163,021 -- --
- ----------------------------------------------------------------------------
Bernard Mann 1,163,021 -- --
- ----------------------------------------------------------------------------
All nominees were reelected.
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.
By: /s/ Albert F. Buzzetti
----------------------------------------
(Registrant - Bridge View Bancorp)
Albert F. Buzzetti
President and Chief Executive Officer
Date: August 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 June 30, 1999 financial statements and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001022809
<NAME> BRIDGE VIEW BANCORP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 12,853,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 8,800,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 17,808,000
<INVESTMENTS-CARRYING> 38,845,000
<INVESTMENTS-MARKET> 38,719,000
<LOANS> 107,276,000
<ALLOWANCE> 1,210,000
<TOTAL-ASSETS> 189,674,000
<DEPOSITS> 171,163,000
<SHORT-TERM> 0
<LIABILITIES-OTHER> 330,000
<LONG-TERM> 0
0
0
<COMMON> 19,035,000
<OTHER-SE> (854,000)
<TOTAL-LIABILITIES-AND-EQUITY> 189,674,000
<INTEREST-LOAN> 4,201,000
<INTEREST-INVEST> 1,508,000
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 5,709,000
<INTEREST-DEPOSIT> 1,386,000
<INTEREST-EXPENSE> 1,386,000
<INTEREST-INCOME-NET> 4,323,000
<LOAN-LOSSES> 90,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,117,000
<INCOME-PRETAX> 2,116,000
<INCOME-PRE-EXTRAORDINARY> 2,116,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,347,000
<EPS-BASIC> 0.48
<EPS-DILUTED> 0.47
<YIELD-ACTUAL> 0
<LOANS-NON> 25,000
<LOANS-PAST> 25,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,127,000
<CHARGE-OFFS> 7,000
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,210,000
<ALLOWANCE-DOMESTIC> 1,210,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 22,000
</TABLE>
