<TABLE>
<CAPTION>
FORM 10-Q
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended March 31, 1999
OR
[ ] 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: 000-18546
-------------------------
<S> <C>
BRIDGE BANCORP, INC. 11-2934195
(Exact name of registrant as specified in its charter) (IRS Employer Identification Number)
NEW YORK
(State or other jurisdiction of
incorporation or organization)
2200 MONTAUK HIGHWAY
BRIDGEHAMPTON, NEW YORK 11932
(Address of principal executive offices) (Zip Code)
(516) 537-1000
(Issuer's telephone number)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. There were 4,249,047 shares of
common stock outstanding as of April 30, 1999.
</TABLE>
<PAGE>
BRIDGE BANCORP, INC.
INDEX
Part 1. FINANCIAL INFORMATION
- -----------------------------
Item 1. Financial Statements
Unaudited Consolidated Statements of Condition as of March 31, 1999 and
December 31, 1998
Unaudited Consolidated Statements of Income for the three months ended
March 31, 1999 and 1998
Unaudited Consolidated Statements of Stockholders' Equity for the three
months Ended March 31, 1999
Unaudited Consolidated Statements of Cash Flows for the three months ended
March 31, 1999 and 1998
Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION
- --------------------------
Part II Other Information
Item 6. Exhibits and Reports on Form 8K
Exhibit Index
- -------------
11.0 Statement re: Computation of Per Share Earnings
27.0 Financial Data Schedule
SIGNATURES
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
BRIDGE BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except share and per share amounts)
March 31, December 31,
1999 1998
- ------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks .................................. $ 15,813 $ 10,881
Interest earning deposits with banks ..................... 272 251
Federal funds sold ....................................... 8,500 3,150
-------- --------
Total cash and cash equivalents ................... 24,585 14,282
Investment in debt and equity securities, net:
Securities available for sale, at fair value .......... 70,136 69,443
Securities held to maturity (fair value of $6,995
and $5,067 respectively) .............................. 6,978 5,052
-------- --------
Total investment in debt and equity securities, net 77,114 74,495
Loans .................................................... 171,516 168,696
Less:
Allowance for loan losses .............................. (1,828) (1,713)
-------- --------
Loans, net ........................................ 169,688 166,983
Banking premises and equipment, net ...................... 8,499 8,583
Accrued interest receivable .............................. 1,800 1,525
Other assets ............................................. 1,572 1,083
-------- --------
TOTAL ASSETS ............................................. $283,258 $266,951
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits .......................................... $ 72,555 $ 74,457
Savings, NOW, and money market deposits .................. 114,458 103,016
Certificates of deposit of $100,000 or more .............. 29,365 21,177
Other time deposits ...................................... 41,683 42,881
-------- --------
Total deposits ................................... 258,061 241,531
Accrued interest on depositors' accounts ................. 1,424 1,439
Other liabilities and accrued expenses ................... 1,032 1,749
-------- --------
Total Liabilities ................................ 260,517 244,719
-------- --------
Stockholders' equity:
Common stock, par value $5.00 per share:
Authorized: 6,500,000 shares; issued and outstanding
4,249,047 at 03/31/99 and 4,234,797 shares at 12/31/98 .. 21,731 21,660
Surplus ................................................ 136 51
Undivided profits ...................................... 708 180
Less: Treasury Stock at cost, 97,200 shares ............ (621) (621)
-------- --------
21,954 21,270
Accumulated other comprehensive income, net of taxes ... 787 962
-------- --------
Total Stockholders' Equity ....................... 22,741 22,232
-------- --------
Commitments and contingencies
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............... $283,258 $266,951
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
BRIDGE BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
Three Months Ended March 31,
1999 1998
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest income:
Loans (including fee income) ................................... $3,642 $3,364
Mortgage-backed securities ..................................... 556 449
State and municipal obligations ................................ 296 330
U.S. Treasury and government agency securities ................. 194 228
Other securities ............................................... 17 19
Federal funds sold ............................................. 147 7
Deposits with banks ............................................ 4 2
------ ------
Total interest income ........................................ 4,856 4,399
Interest expense:
Savings, N.O.W. and money market deposits ...................... 644 432
Certificates of deposit of $100,000 or more .................... 325 394
Other time deposits ............................................ 520 544
Other borrowed money ........................................... -- 44
------ ------
Total interest expense ....................................... 1,489 1,414
------ ------
Net interest income .............................................. 3,367 2,985
Provision for possible loan losses ............................... 105 90
------ ------
Net interest income after provision for
possible loan losses ........................................... 3,262 2,895
------ ------
Other income:
Mortgage banking activities .................................... 221 326
Service charges on deposit accounts ............................ 220 198
Other operating income ......................................... 160 188
------ ------
Total other income ........................................... 601 712
------ ------
Other expenses:
Salaries and employee benefits ................................. 1,218 1,233
Net occupancy expense .......................................... 194 197
Furniture and fixture expense .................................. 192 163
Other operating expenses ....................................... 799 799
------ ------
Total other expenses ......................................... 2,403 2,392
------ ------
Income before provision for income taxes ......................... 1,460 1,215
Provision for income taxes ....................................... 507 395
------ ------
Net income ....................................................... $ 953 $ 820
====== ======
Basic earnings per share ......................................... $ 0.22 $ 0.19
====== ======
Diluted earnings per share ....................................... $ 0.22 $ 0.19
====== ======
</TABLE>
See accompanying notes to the unaudited consolidated financial statements. All
per share amounts have been adjusted to reflect the effects of the stock split.
<PAGE>
<TABLE>
Bridge Bancorp, Inc. and Subsidiary
Unaudited Consolidated Statements of Stockholders' Equity
(In thousands, except per share amounts)
Accumulated
Other
Common Stock Comprehensive Undivided Treasury Comprehensive
Shares Amount Surplus Income profits Stock Income Total
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
================================= ==================================================
Balance at December 31, 1998 .......... 4,234,797 $21,660 $ 51 $ 180 ($ 621) $ 962 $ 22,232
Net income ............................ -- -- -- 953 953 -- -- 953
Exercise of stock options ............. 14,250 71 85 156
Cash dividends declared, $.10 per share (425) (425)
Net change in unrealized appreciation
in securities available
for sale, net of tax ................ -- -- -- (175) -- -- (175) (175)
--------
Comprehensive Income .................. -- -- -- $ 778 -- -- -- --
---------------------------------========--------------------------------------------------
Balance at March 31, 1999 ............. 4,249,047 $21,731 $ 136 $ 708 ($ 621) $ 787 $ 22,741
================================= ==================================================
</TABLE>
<PAGE>
<TABLE>
BRIDGE BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three months ended March 31,
1999 1998
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Operating activities:
Net Income ................................................... $ 953 $ 820
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for possible loan losses ....................... 105 90
Depreciation and amortization ............................ 188 166
Accretion of discounts ................................... (26) (16)
Amortization of premiums ................................. 40 32
(Increase) in accrued interest receivable ................ (275) (380)
(Increase) in other assets ............................... (458) (624)
(Decrease) Increase in accrued and other liabilities ..... (7) 110
-------- --------
Net cash provided by operating activites ....................... 520 198
-------- --------
Investing activities:
Purchases of securities available for sale ................... (3,978) --
Purchases of securities held to maturity ..................... (2,000) --
Proceeds from sales of securities available for sale ......... -- --
Proceeds from maturing securities available for sale ......... -- 55
Proceeds from maturing securities held to maturity ........... 73 809
Proceeds from principal payments on mortgage-backed securities 2,975 1,326
Net increase in loans ........................................ (2,810) (11,032)
Proceeds from sale of other real estate owned ................ -- --
Purchases of banking premises and equipment, net of deletions (104) (194)
-------- --------
Net cash used by investing activities .......................... (5,844) (9,036)
-------- --------
Financing activities:
Net increase in deposits ..................................... 16,530 15,455
(Decrease)in other borrowings ................................ -- (4,500)
Payment for purchase of treasury stock ....................... -- --
Net proceeds from issuance of restricted common stock
issued pursuant to equity incentive plan .............. -- --
Net proceeds from excercise of Stock options
issued pursuant to equity incentive plan .............. 156
Cash dividends paid .......................................... (1,059) (1,620)
-------- --------
Net cash provided by financing activities ...................... 15,627 9,335
-------- --------
Increase in cash and cash equivalents .......................... 10,303 497
Cash and cash equivalents beginning of period .................. 14,282 12,829
-------- --------
Cash and cash equivalents end of period ........................ $ 24,585 $ 13,326
======== ========
Supplemental information-Cash Flows:
Cash paid for:
Interest ................................................... $ 1,504 $ 1,381
Income taxes ............................................... $ 303 $ 189
Noncash investing and financing activities:
Dividends declared and unpaid $ 425 $ --
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
<PAGE>
=====================
BRIDGE BANCORP, INC. AND SUBSIDIARY
NOTES TO THE UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
1. Basis of Financial Statement Presentation
The accompanying unaudited consolidated financial statements include the
accounts of Bridge Bancorp, Inc. (the Registrant or Company) and its
wholly-owned subsidiary, The Bridgehampton National Bank (the Bank). The
unaudited consolidated financial statements included herein reflect all normal
recurring adjustments which are, in the opinion of management, necessary for a
fair presentation of the results for the interim periods presented. In preparing
the interim financial statements, management has made estimates and assumptions
that affect the reported amounts of assets and liabilities and the revenue and
expense for the reported periods. Actual future results could differ
significantly from these estimates. The results of operations for the three
months ended March 31, 1999 are not necessarily indicative of the results of
operations that may be expected for the entire fiscal year. Certain information
and note disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. The unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Company's 1998 Annual Report on Form 10-K.
2. Earnings Per Share
Earnings per share is computed by dividing net income by the weighted average
number of shares of common stock and dilutive common stock equivalents
outstanding. For the three months ended March 31, 1999 and 1998, diluted
weighted average common stock and common stock equivalent shares outstanding for
the diluted earnings per share were 4,274,978 and 4,268,691 respectively. For
the three months ended March 31, 1999 and 1998, the total weighted average
number of shares of common stock outstanding for the basic earnings per share
calculation were 4,244,791 and 4,223,997, respectively.
3. Stock Split
On July 20, 1998, the Board of Directors declared a three-for-one stock split in
the form of a stock dividend payable August 31, 1998 to stockholders of record
as of August 19, 1998. The stock split increased outstanding common shares from
1,411,599 to 4,234,797. Stockholders' equity has been restated to give
retroactive recognition to the stock split for all periods presented by
reclassifying from undivided profits and capital surplus to common stock the par
value of additional shares resulting from the stock split. In addition, all
references in the Consolidated Financial Statements and Notes thereto to number
of shares, per share amounts, and market prices of the common stock have been
restated giving retroactive recognition to the stock split.
4. Comprehensive Income
The Company adopted Statement of Accounting Standards No. 130 "Reporting
Comprehensive Income" in the first quarter of 1998.
Comprehensive income includes net income and all other changes in equity during
a period except those resulting from investments by owners and distributions to
owners. Other comprehensive income includes revenues, expenses, gains and losses
that under generally accepted accounting principles are included in
comprehensive income but excluded from net income.
<PAGE>
Comprehensive income and accumulated other comprehensive income are reported net
of related income taxes. Accumulated other comprehensive income for the Company
consists solely of unrealized holding gains or losses on available for sale
securities. Such gains or losses are net of reclassification adjustments for
realized gains (losses) on sales of available for sale securities.
5. Investment in Debt and Equity Securities
A summary of the amortized cost and estimated fair value of investment
securities is as follows:
<TABLE>
<CAPTION>
03/31/99 12/31/98
- ----------------------------------------------------------------------------------------
(In thousands)
Estimated Estimated
Amortized Fair Amortized Fair
Cost Value Cost Value
-------------------------------------------------
<S> <C> <C> <C> <C>
Available for sale:
U.S. Treasury securities ......... $12,063 $12,383 $12,065 $12,549
Oblig. of U.S. Government agencies 1,000 1,000 -- --
Oblig. of NY State & pol.subs .... 21,381 22,004 21,395 22,022
Mortgage-backed securities ....... 34,359 34,749 34,354 34,872
-------------------------------------------------
Total available for sale ....... $68,803 $70,136 $67,814 $69,443
-------------------------------------------------
Held to maturity:
Oblig. of NY State & pol.subs .... $ 5,895 $ 5,912 $ 3,969 $ 3,984
Non marketable Equity securities:
Federal Reserve Bank Stock ....... $ 36 $ 36 $ 36 $ 36
Federal Home Loan Bank Stock ..... 1,047 $ 1,047 1,047 1,047
-------------------------------------------------
Total held to maturity ......... $ 6,978 $ 6,995 $ 5,052 $ 5,067
-------------------------------------------------
Total debt and equity securities ... $75,781 $77,131 $72,866 $74,510
=================================================
</TABLE>
6. Loans
Loans are summarized as follows:
Types of Loans
The following table shows the Registrant's loan distribution in each of the
periods ended, <TABLE> <CAPTION>
03/31/99 12/31/98
- --------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Real Estate Loans ..................... $ 141,619 $ 141,625
Unsecured business and personal loans.. 27,159 23,639
Secured business and personal loans ... 2,104 2,534
Installment/consumer loans ............ 944 1,182
--------------------------
Total loans ........................... $ 171,826 $ 168,980
Unearned income ....................... ($ 310) ($ 284)
--------------------------
$ 171,516 $ 168,696
Allowance for loan losses ............. (1,828) (1,713)
--------------------------
Net loans ............................. $ 169,688 $ 166,983
==========================
</TABLE>
7. Allowance for Possible Loan Loss
The adequacy of the allowance for loan losses is determined based on
management's detailed analysis of classified loans, input from the Bank's
outside loan review consultants, past loss experience, current economic
conditions, delinquency trends and other pertinent factors.The reserves are
reviewed on a quarterly basis to determine if any adjustments are necessary. The
information reviewed includes past due trends, charge-off trends, economic
conditions and concentrations of credit. Based on the loan classification
committee's review of the classified loans and the overall reserve levels as
they relate to the entire loan portfolio, management believes the allowance for
possible loan losses is adequate. However, future additions to the allowance may
be necessary based on changes in conditions.
<PAGE>
Changes in the allowance for possible loan losses are summarized as follows:
<TABLE>
<CAPTION>
Period ended, 03/31/99 12/31/98 03/31/98
- -----------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Allowance for loan losses
balance at beginning of period ........... $ 1,713 $ 1,393 $ 1,393
Charge-offs:
Real estate loans .......................... -- -- --
Unsecured business & personal loans ........ -- (31) (2)
Secured business & personal loans .......... -- -- --
Installment/consumer loans ................. (14) (165) (47)
------------------------------------
Total ................................... (14) (196) (49)
Recoveries:
Real estate loans .......................... -- -- --
Unsecured business & personal loans ........ -- 32 3
Secured business & personal loans .......... -- -- --
Installment/consumer loans ................. 24 59 15
------------------------------------
Total ................................... 24 91 18
------------------------------------
Net recoveries (charge-offs) ............... 10 (105) (31)
Provision for loan losses
charged to operations ..................... 105 425 90
------------------------------------
Balance at end of period ................... $ 1,828 $ 1,713 $ 1,452
====================================
Ratio of net recoveries (charge-offs) during
period to average loans outstanding ...... 0.01% -0.07% -0.02%
====================================
</TABLE>
8. Asset Quality
The following table summarizes non-performing loans:
NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS
- -------------------------------------------
<TABLE>
<CAPTION>
03/31/99 12/31/98
- -----------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Loans 90 days or more past due and still accruing:
Other ........................................ $ 4 $ 4
Nonaccrual loans:
Mortgage loans
Single-family residential 135 4
Commercial real estate ..................... 156 156
Construction and Land ...................... 600 600
Other ...................................... 482 448
----------------------
Total nonaccrual loans ......................... 1,373 1,208
Restructured loans ............................. -- --
Other real estate owned, net -- --
---------------------
Total .......................................... $1,377 $1,212
=====================
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Bridge Bancorp, Inc. (the Company), a New York corporation, is a one-bank
holding company formed effective March 31, 1989, and on a parent only basis, has
minimal results of operations. In the event the Company subsequently expands its
current operations, it will be dependent on dividends from its wholly owned
subsidiary, The Bridgehampton National Bank (the Bank), its own earnings,
additional capital raised and borrowings as sources of funds. The information
below reflects principally the financial condition and results of operations of
the Bank. The Bank's results of operations are primarily dependent on its net
interest income, which represents the difference between income on interest
earning assets and expenses on interest bearing liabilities. Interest income on
loans and investments is a function of the average balances outstanding and the
average rates earned during a period. Interest expense is a function of the
average amount of interest-bearing deposits and the average rates paid on such
deposits during a period. The Bank also generates other income, such as fee
income on deposit accounts and income from mortgage banking operations and
merchant credit card processing programs. The Bank's net income is further
affected by the level of its other expenses, such as employees' salaries and
benefits and occupancy costs. This discussion and analysis should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Company's 1998 Annual Report on Form 10-K.
Financial Condition
- -------------------
The assets of the Registrant totaled $283,258,000 at March 31, 1999, an increase
of $16,307,000 or 6.1% from the year end. This increase mainly results from an
increase in cash and cash equivalents of $10,303,000 or 72.1%. Net loans
increased $2,705,000 or 1.6%, and debt and equity securities increased
$2,619,000 or 3.5%. The primary source of funds for the increase in assets was
derived from increased deposits of $16,530,000 or 6.8%. Demand deposits
decreased $1,902,000 or 2.6% over December 31, 1998; however, savings, NOW and
money market deposits increased $11,442,000 or 11.1% and certificates of
deposits of $100,000 or more increased $8,188,000 or 38.7% over December 31,
1998. The decrease in demand deposits is mainly attributed to seasonal
fluctuations. The increase in deposits is attributed to increased public fund
deposits and the introduction of a new money market product targeted to high
balance accounts.
Total stockholders' equity was $22,741,000 at March 31, 1999, an increase of
2.3% over December 31, 1998. The increase of $509,000 was the result of net
income for the three month period ended March 31, 1999, of $953,000; plus the
proceeds of $156,000 from the exercise of stock options pursuant to the equity
incentive plan; less cash dividends declared of $425,000; and less the net
decrease in unrealized appreciation in securities available for sale, net of
tax, of $175,000. The net decrease in unrealized appreciation in securities
available for sale is attributable to changes in market conditions.
Analysis of Net Interest Income
- -------------------------------
Net interest income, the primary contributor to earnings, represents the
difference between income on interest earning assets and expenses on interest
bearing liabilities.
The following table sets forth certain information relating to the Company's
average consolidated statements of financial condition and reflects the average
yields on assets and average costs of liabilities for the three month periods
ended March 31, 1999 and 1998, respectively. Such yields and costs are derived
by dividing income or expense by the average balance of assets or liabilities,
respectively, for the periods shown. Average balances are derived from daily
average balances. Interest on nonaccruing loans has been included only to the
extent reflected in the consolidated statements of income. However, the loan
balances are included in the average amounts outstanding. Loan fee income for
the quarter totaled $42,000 in 1999 and $69,000 in 1998. For purposes of this
table the average balances for investment in debt and equity securities exclude
unrealized appreciation/depreciation due to the application of SFAS No. 115.
<PAGE>
I.A. & I. B. DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY:
INTEREST RATES AND INTEREST DIFFERENTIAL
<TABLE>
Three months ended March 31, 1999 1998
- ------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest earning assets:
Loans (including fee income) ...... $168,735 $3,642 8.75% $145,271 $3,364 9.39%
Deposits with banks ............... 343 5 5.91% 136 2 5.96%
Federal funds sold ................ 12,975 146 4.56% 491 7 5.78%
Taxable investment securities ..... 12,175 196 6.53% 14,083 228 6.57%
Tax exempt investment securities .. 26,884 294 4.44% 29,214 330 4.58%
Other securities .................. 1,083 17 6.37% 1,083 19 7.12%
Mortgage backed securities ........ 33,454 556 6.74% 25,639 449 7.10%
-------------------------------------------------------------------
Total interest earning assets ....... $255,649 $4,856 7.70% $215,917 $4,399 8.26%
Interest bearing liabilities:
Savings, N.O.W. and
money market deposits ........... $112,476 $644 2.32% $81,357 $432 2.15%
Certificates of deposit of $100,000
or more ........................ 27,263 325 4.83% 29,461 394 5.42%
Other time deposits ............... 42,895 520 4.92% 42,421 544 5.20%
Federal funds purchased ........... -- -- -- -- -- --
Other borrowings .................. -- -- -- 3,293 44 5.42%
-------------------------------------------------------------------
Total interest bearing liabilities .. $182,634 $1,489 3.31% $156,532 $1,414 3.66%
--------------------------------------------------------------------
Net interest income/interest
rate spread ....................... $3,367 4.40% $2,985 4.60%
------ ----- ------ -----
Net earning assets/net yield on
average interest earnings assets .. $73,015 5.34% $59,385 5.61%
------- ----- ------- ----
Ratio of interest earning assets to
interest bearing liabilities ...... 139.98% 137.94%
------- -------
</TABLE>
Rate/Volume Analysis
- --------------------
Net interest income can also be analyzed in terms of the impact of changing
rates and changing volumes. The following table describes the extent to which
changes in interest rates and changes in the volume of interest earning assets
and interest bearing liabilities have affected the Bank's interest income and
interest expense during the periods indicated. Information is provided in each
category with respect to (i) changes attributable to changes in volume (changes
in volume multiplied by prior rate), (ii) changes attributable to changes in
rates (changes in rates multiplied by prior volume), and (iii) the net changes.
For purposes of this table, changes which are not due solely to volume changes
or rate changes have been allocated to these categories based on the respective
percentage changes in average volume and average rate as they compare to each
other. Due to the numerous simultaneous volume and rate changes during the
period analyzed, it is not possible to precisely allocate changes between volume
and rates. In addition, average earning assets include nonaccrual loans.
<PAGE>
I.C. VOLUME AND YIELD/RATE VARIANCES
<TABLE>
<CAPTION>
Three months ended March
1999 Over 1998
(In thousands) Changes Due To
- -------------------------------------------------------------------------------------
Volume Rate Net Change
--------------------------------------
INTEREST INCOME ON INTEREST
EARNING ASSETS:
<S> <C> <C> <C>
Federal funds sold ......................... $ 150 ($ 11) $ 139
Deposits with banks ........................ 3 (0) 3
Taxable investment securities .............. (31) (1) (32)
Tax exempt investment securities ........... (26) (10) (36)
Other securities ........................... -- (2) (2)
Mortgage-backed securities ................. 251 (144) 107
Loans (including loan fee income*) ......... 1,500 (1,222) 278
-----------------------------------
Total interest earning assets ........... 1,847 (1,390) 457
-----------------------------------
INTEREST EXPENSE ON INTEREST
BEARING LIABILITIES:
Savings, NOW and money market deposits ..... 176 36 212
Certificates of deposits of $100,000 or more (28) (41) (69)
Other time deposits ........................ 37 (61) (24)
Federal funds purchased .................... -- -- --
Other borrowings ........................... (44) 0 (44)
-----------------------------------
Total interest bearing liabilities ...... 141 (66) 75
-----------------------------------
Net interest income ........................ 1,706 (1,324) 382
-----------------------------------
</TABLE>
Capital
- -------
The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory and possibly additional discretionary actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance sheet items calculated under regulatory
accounting practices. The Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier 1 capital (as defined in the regulations) to risk
weighted assets (as defined), and of Tier 1 capital (as defined) to average
assets (as defined). Management believes, as of March 31, 1999, that the Bank
meets all capital adequacy requirements to which it is subject.
The Bank's actual capital amounts and ratios are presented in the following
table:
<TABLE>
<CAPTION>
As of March 31, 1999
- ---------------------------------------------------------------------------------------------------------------
(In thousands) To Be Well
For Capital Capitalized Under
Adequacy Prompt Corrective
Actual Purposes Action Provisions
- ---------------------------------------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to risk weighted assets) ...... 23,782 12.1% 15,735 >8.0% 19,669 >10.0%
Tier 1 Capital (to risk weighted assets) ..... 21,954 11.2% 7,868 >4.0% 11,801 > 6.0%
Tier 1 Capital (to average assets) ........... 21,954 7.8% 11,216 >4.0% 14,020 > 5.0%
As of December 31, 1998
- ---------------------------------------------------------------------------------------------------------------
(In thousands) To Be Well
For Capital Capitalized Under
Adequacy Prompt Corrective
Actual Purposes Action Provisions
- ---------------------------------------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to risk weighted assets) ...... 22,983 12.0% 15,372 >8.0% 19,215 >10.0%
Tier 1 Capital (to risk weighted assets) ..... 21,270 11.1% 7,686 >4.0% 11,529 > 6.0%
Tier 1 Capital (to average assets) ........... 21,270 8.2% 10,319 >4.0% 12,899 > 5.0%
</TABLE>
<PAGE>
Recent Accounting Developments
- ------------------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards NO. 133 "Accounting for Derivative Instruments
and Hedging Activities" (SFAS No. 133). This Statement established accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measures those instruments at fair value.
The accounting for changes in the fair value of a derivative depends on the
intended use of a derivative an the resulting designation. SFAS No. 133, which
is effective for all fiscal quarters of fiscal years beginning after June 15,
1999, will not effect the company's accounting or disclosures.
Comparison of Operating Results for the Three Months Ended March 31, 1999 and
- --------------------------------------------------------------------------------
1998
- ----
During the three month period ended March 31, 1999, the Registrant earned net
income of $953,000 or $ .22 per share as compared with $820,000 or $.19 per
share for the same period in 1998. Highlights for the three months ended March
31, 1999 include: (i) a $382,000 or 12.8% increase in net interest income; (ii)
a $111,000 or 15.6% decrease in total other income; and (iii) a $11,000 or .5%
increase in total other expenses over the same period in 1998.
Net income for the first three months of 1999 reflects annualized returns of
17.73% on average total stockholders' equity and 1.38% on average total assets
as compared to the corresponding figures for the preceding calendar year of
19.19% on average total stockholders' equity and 1.51% on average total assets.
For purposes of these calculations, average stockholders' equity excludes the
effects of changes in the unrealized appreciation (depreciation) on securities
available for sale, net of taxes.
Net interest income, the primary source of income, increased by $382,000 or
12.8% for the current three month period over the same period last year. The
increase primarily resulted from an increase in average total interest earning
assets from $215,917,000 in the first three months of 1998 to $255,649,000 for
the comparable period in 1999, a 18.4% increase. Average interest bearing
liabilities increased 16.7% to $182,634,000 in 1999 from $156,532,000 for the
same period last year. The yield on average interest earning assets for the
current three month period decreased to 7.7% from 8.3% for the same period last
year. The cost of average interest bearing liabilities decreased to 3.3% from
3.7% during the same period in 1998. The net yield on average earning assets
decreased to 5.3% from 5.6% during the same period in 1998.
A $105,000 provision for possible loan losses was made during the three month
period ended March 31, 1999, compared to a $90,000 provision for the same period
in 1998. The allowance for possible loan losses increased to $1,828,000 at March
31, 1999, as compared to $1,713,000 at December 31, 1998. As a percentage of
loans, the allowance was 1.07% at March 31, 1999 and 1.02% at December 31, 1998.
The allowance as a percentage of nonperforming loans (including loans past due
90 days or more and still accruing) was 132.8% at March 31, 1999 compared to
141.3% at December 31, 1998.
The adequacy of the allowance for loan losses is determined based on
management's detailed analysis of classified loans, input from the Bank's
outside loan review consultants, past loss experience, current economic
conditions, delinquency trends and other pertinent factors. Additions to the
allowance are charged to expense and realized losses, net of recoveries, are
charged to the allowance.
Management believes that the allowance for loan losses is adequate. While
management uses available information to recognize losses on loans, future
additions to the allowance may be necessary based on changes in conditions. In
addition, various regulatory agencies, as an integral part of the examination
process, periodically review the Bank's allowance for loan losses. Such agencies
may require the Bank to recognize additions to the allowance based on their
judgments about information available to them at the time of their examination.
Total other income decreased during the three month period ended March 31, 1999
by $111,000 or 15.6% over the same period last year. Income from mortgage
banking activities for the three month period ended March 31, 1999 totaled
$221,000, a decrease of $105,000 or 32.2% over the same period last year. The
Bank's practice is to originate and sell these mortgages in the secondary
market. Increased competition has decreased the Bank's return on residential
mortgages. The department has been streamlined to become more efficient. While
revenue is down, corresponding expense reductions partially offset such decline.
<PAGE>
Other operating income for the three month period ended March 31, 1999 totaled
$160,000, a decrease of $28,000 or 14.9% over the same period last year. This
change primarily results from a decrease in merchant processing fees resulting
from increased interchange costs that took effect in Spring 1998.
Total other expenses remained relatively stable during the three month period
ended March 31, 1999 as compared to the same period last year, with an increase
of $11,000 or .5%. Furniture and fixture expense increased approximately $29,000
or 17.8% for the three month period ended March 31, 1999 over the same period
last year. This increase primarily results from increased depreciation expenses
relative to equipment upgrades in preparation for year 2000 readiness.
Total other operating expenses for the three month period ended March 31, 1999
totaled $799,000, consistent with the quarter end balance from the prior year.
Fluctuations within other operating expenses include increased personnel
education costs from the development of training programs and increased
advertising and promotion expenses. Savings were recognized as a result of the
Bank servicing certain consumer loans in house thereby eliminating an outside
servicer. A decrease in travel expense is attributed to the reorganization of
mortgage banking operations and the relocation of loan officers originating
residential mortgage loans throughout the Bank's market area.
Asset/Liability Management
- --------------------------
The Company's primary earnings source is net interest income, which is affected
by changes in the level of interest rates, the relationship between rates, the
impact of interest rate fluctuations on asset prepayments, the level and
composition of deposits, and the credit quality of the portfolio. Management's
asset/liability objectives are to maintain a strong, stable net interest margin,
to utilize its capital effectively without taking undue risks and to maintain
adequate liquidity.
The Company's Asset/ Liability Committee, comprised of members of senior
management and the Board, meets periodically to evaluate the impact of changes
in market interest rates on assets and liabilities, net interest margin, capital
and liquidity. Risk assessments are governed by policies and limits established
by senior management which are reviewed and approved by the full Board of
Directors.
Liquidity
- ---------
The objective of liquidity management is to ensure the availability of
sufficient resources to meet all financial commitments. Liquidity management
addresses the ability to meet deposit withdrawals either on demand or
contractual maturity, to repay other borrowings as they mature and to make new
loans and investments as opportunities arise.
The Company's most liquid assets are cash and cash equivalents, securities
available for sale and securities held to maturity due within one year. The
levels of these assets are dependent upon the Company's operating, financing,
lending and investing activities during any given period. Other sources of
liquidity include loan and security principal repayments and maturities, lines
of credit with other financial institutions, the sale of securities from the
available for sale portfolio, and growth in the core deposit base. While
scheduled loan amortization, maturing securities and short term investments are
a relatively predictable source of funds, deposit flows and loan prepayments are
greatly influenced by general interest rates, economic conditions and
competition. The Bank adjusts its liquidity levels as appropriate to meet
funding needs such as deposit outflows, loans, asset/liability objectives and
suggested O.C.C. measurements such as loans to capital ratios. At March 31,
1999, the Company had aggregate lines of credit of $8,000,000 with correspondent
banks to provide short term credit for liquidity requirements. The Company also
has the ability, as a member of the Federal Home Loan Bank ("FHLB") system, to
borrow approximately $12,171,800 in the form of an overnight line of credit, and
an additional $12,171,800 in the form of a one month line of credit. At March
31, 1999, the Company had no such borrowings outstanding.
<PAGE>
The Company's liquidity positions are monitored daily to ensure the maintenance
of an optimum level and efficient use of available funds. Management believes
the Company has sufficient liquidity to meet its operating requirements.
Year 2000
- ---------
The Bank is working diligently to assure a smooth transition into the new
millennium. To accomplish Year 2000 compliance, the Bank has implemented a
project plan as established by the banking regulatory authorities. The
established timetable breaks the plan into seven phases; the awareness phase,
inventory phase, assessment phase, renovation phase, validation phase,
implementation phase, and post implementation phase. Completion of the plan
through the implementation phase is targeted for the late spring of 1999.
The Bank uses software purchased from third party vendors for all processing
applications; therefore, no significant internal program renovation by Bank
staff is necessary to prepare these systems to handle transactions in the Year
2000. The majority of the Bank's efforts in preparation for Year 2000 processing
relate to replacing or upgrading noncompliant software and hardware as well as
testing purchased and outsourced processing systems.
The Bank has established formal processes for identifying, assessing, and
managing the Year 2000 risks posed by internal bank activities, vendors, and
customers. By the end of the second quarter 1999, the Bank expects to complete
an initial assessment of the risks posed by its customers. The Bank has begun
evaluating Year 2000 readiness of commercial loan applicants as part of the
underwriting process, and is calling upon significant existing borrowers to
assess their readiness for Year 2000. Seminars have been offered to the Bank's
commercial and municipal customers, and the Bank has presented these seminars to
different community groups to educate the local public about the Year 2000
matter and the Bank's preparedness to address the issue.
Testing of internal systems was substantially completed by December 31, 1998.
Testing with significant third party vendors is expected to be substantially
completed by June 30, 1999. During 1999 the Bank will continue to monitor its
own internal activities and the plans of its vendors and customers to address
the Year 2000 issue.
The Bank utilizes Fiserv, Inc., one of the largest data processing providers for
banks and savings institutions to perform its core systems data processing.
Fiserv runs software from Information Technology Inc. (ITI), a subsidiary of
Fiserv, to perform the vast majority of its data processing activities. This
system, which handles processing of loans, deposits, general ledger, accounts
payable, stockholder ledger, fixed assets, and other ancillary applications, is
believed to be Year 2000 ready according to the vendor. However, the Bank has
embarked on a project to thoroughly test the system for Year 2000 compliance. If
Year 2000 processing problems are uncovered during the testing phase, ITI is
committed to correct those problems. To date, no problems have been encountered
in testing. In addition, the Bank is currently in the process of developing
contingency plans with respect to all critical services and operations
regardless if performed internally or by external sources including outside
vendors. This plan is a coordinated effort with a three fold goal of ensuring
that the century date change occurs with minimal, if any, disruptions of service
to both the institution and its customers, minimizing any possibility of
financial losses, and ensuring a timely resumption of normal banking operations.
Monitoring and managing the Year 2000 project will result in additional direct
and indirect costs to the Bank. Direct costs include potential charges by third
party software vendors for product enhancements, costs involved in testing
software products for Year 2000 compliance, and any resulting costs for
developing and implementing contingency plans for critical software products.
Indirect costs will principally consist of time devoted by existing employees in
monitoring software vendor progress, testing renovated software products and
implementing any necessary contingency plans. These costs will be charged to
earnings as incurred.
The Bank has upgraded equipment in its branch and back office systems to better
serve its customers and improve the efficiency of its operations. The timing of
the upgrades was accelerated as a result of the Year 2000 issue. The total cost
of the upgrades is expected to be approximately $350,000 of which approximately
$132,000 remains to be placed in service by the first half of 1999. Based on
current information, management does not expect these costs when taken together
with other Year 2000 compliance costs to materially impact the Company's future
results of operations, financial condition, or liquidity.
<PAGE>
Private Securities Litigation Reform Act Safe Harbor Statement
- ---------------------------------------------------------------
In addition to historical information, this Management's discussion and analysis
includes certain forward-looking statements based on current management
expectations. The Bank's annual results could differ materially from those
management expectations contemplated by the forward-looking statements. Factors
that could cause future results to vary from current management expectations
include, but are not limited to, general economic conditions, legislative and
regulatory changes, monetary and fiscal policies of the federal government,
changes in tax policies, rates and regulations of federal, state and local tax
authorities, changes in interest rates, deposit flows, the cost of funds, demand
for loan products, demand for financial services, competition, changes in the
quality and composition of the Bank's loan and investment portfolios, changes in
accounting principles, policies or guidelines, and other economic, competitive,
governmental and technological factors affecting the Bank's operations, markets,
products, services and prices. In addition, the Bank assumes no duty to update
forward-looking statements.
Part II Other Information
- -------------------------
Item 1. Legal Proceedings
- -------------------------
The Bank, and two present executive officers and one former executive officer,
have been named as defendants in a lawsuit that was filed on February 18, 1999
by two former employees in Suffolk County Supreme Court. The plaintiffs assert
causes of action in connection with their employment, conduct of loan and
banking transactions, and subsequent termination or resignation. The plaintiffs
seek compensatory and punitive damages. In the opinion of management at the
present time, after consultation with legal counsel, the lawsuit is without
merit and the ultimate outcome of this matter is not expected to have a material
adverse effect on the Company's results of operations, business operations or
consolidated financial condition.
Item 2. Changes in Securities
- -----------------------------
Not applicable
Item 3. Defaults upon Senior Securities
- ---------------------------------------
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
Not applicable
Item 5. Other Information
- -------------------------
Not applicable
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(A) Exhibit Index
-----------------
11.0 Statement re: Computation of Per Share Earnings
27.0 Financial Data Schedule
(B) Reports on Form 8-K
-----------------------
On February 2,1999 the Registrant filed a Form 8K relative to the
resignation of Anthony Leone as Senior Vice President and Secretary of
the registrant and as Senior Vice President and Chief Banking Officer
of the Registrant's subsidiary, The Bridgehampton National Bank.
Submitted only with filing in electronic format.
<PAGE>
In accordance with the requirement of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BRIDGE BANCORP, INC.
Date: May 7, 1999 /s/ Thomas J. Tobin
---------------
Thomas J. Tobin
President and Chief Executive Officer
Date: May 7, 1999 /s/ Christopher Becker
------------------
Christopher Becker
Executive Vice President and Treasurer
<TABLE>
<CAPTION>
Bridge Bancorp Inc. and Subsidiary
Unaudited Computation of Per Share Income
March 31, 1999
-------------------------
Three months ended
March 31, March 31,
1999 1998
-------------------------
<S> <C> <C>
Net Income ......................................... $ 953,000 $ 820,000
Common Equivalent Shares:
Weighted Average Common Shares Outstanding ......... 4,244,791 4,223,997
Weighted Average Common Equivalent Shares .......... 30,187 44,694
-------------------------
Weighted Average Common and Common Equivalent Shares 4,274,978 4,268,691
-------------------------
Net Income per Common Equivalent Share ............. $ 0.22 $ 0.19
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000846617
<NAME> Bridge Bancorp, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Mar-31-1999
<CASH> 15,813
<INT-BEARING-DEPOSITS> 272
<FED-FUNDS-SOLD> 8,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 70,136
<INVESTMENTS-CARRYING> 6,978
<INVESTMENTS-MARKET> 6,995
<LOANS> 171,516
<ALLOWANCE> 1,828
<TOTAL-ASSETS> 283,258
<DEPOSITS> 258,061
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,456
<LONG-TERM> 0
0
0
<COMMON> 21,731
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 283,258
<INTEREST-LOAN> 3,642
<INTEREST-INVEST> 1,063
<INTEREST-OTHER> 151
<INTEREST-TOTAL> 4,856
<INTEREST-DEPOSIT> 1,489
<INTEREST-EXPENSE> 1,489
<INTEREST-INCOME-NET> 3,367
<LOAN-LOSSES> 105
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,403
<INCOME-PRETAX> 1,460
<INCOME-PRE-EXTRAORDINARY> 1,460
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 953
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
<YIELD-ACTUAL> 5.34
<LOANS-NON> 1,373
<LOANS-PAST> 4
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,713
<CHARGE-OFFS> 14
<RECOVERIES> 24
<ALLOWANCE-CLOSE> 1,828
<ALLOWANCE-DOMESTIC> 1,828
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
