Form 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2009
Commission file number 001-34096
BRIDGE BANCORP, INC.
(Exact name of registrant as specified in its charter)
|
|
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NEW YORK
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11-2934195 |
|
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(IRS Employer Identification Number) |
|
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|
2200 MONTAUK HIGHWAY, BRIDGEHAMPTON, NEW YORK
|
|
11932 |
|
|
|
(Address of principal executive offices)
|
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(Zip Code) |
Registrants telephone number, including area code: (631) 537-1000
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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or non-accelerated filer. See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act. (Check one):
|
|
|
|
|
|
|
Large accelerated filer o
|
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Accelerated filer þ
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Non-accelerated filer o
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|
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes o No þ
There were 6,225,501 shares of common stock outstanding as of August 4, 2009.
Item 1. Financial Statements
BRIDGE BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets (unaudited)
(In thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2009 |
|
|
2008 |
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
12,382 |
|
|
$ |
24,744 |
|
Interest earning deposits with banks |
|
|
3,666 |
|
|
|
4,141 |
|
|
|
|
|
|
|
|
Total cash and cash equivalents |
|
|
16,048 |
|
|
|
28,885 |
|
|
|
|
|
|
|
|
|
|
Securities available for sale, at fair value |
|
|
262,277 |
|
|
|
310,695 |
|
Securities held to maturity (fair value of $44,177 and $43,890, respectively) |
|
|
43,623 |
|
|
|
43,444 |
|
|
|
|
|
|
|
|
Total securities, net |
|
|
305,900 |
|
|
|
354,139 |
|
|
|
|
|
|
|
|
|
|
Securities, restricted |
|
|
1,205 |
|
|
|
3,800 |
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
446,562 |
|
|
|
429,683 |
|
Allowance for loan losses |
|
|
(5,023 |
) |
|
|
(3,953 |
) |
|
|
|
|
|
|
|
Loans, net |
|
|
441,539 |
|
|
|
425,730 |
|
|
|
|
|
|
|
|
|
|
Premises and equipment, net |
|
|
19,608 |
|
|
|
18,377 |
|
Accrued interest receivable |
|
|
3,424 |
|
|
|
3,626 |
|
Other assets |
|
|
5,485 |
|
|
|
4,502 |
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
793,209 |
|
|
$ |
839,059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
Demand deposits |
|
$ |
206,148 |
|
|
$ |
181,213 |
|
Savings, NOW and money market deposits |
|
|
341,855 |
|
|
|
344,860 |
|
Certificates of deposit of $100,000 or more |
|
|
84,965 |
|
|
|
78,165 |
|
Other time deposits |
|
|
66,739 |
|
|
|
54,847 |
|
|
|
|
|
|
|
|
Total deposits |
|
|
699,707 |
|
|
|
659,085 |
|
|
|
|
|
|
|
|
|
|
Federal funds purchased and Federal Home Loan Bank overnight borrowings |
|
|
10,000 |
|
|
|
70,900 |
|
Federal Home Loan Bank term advances |
|
|
|
|
|
|
30,000 |
|
Repurchase agreements |
|
|
15,000 |
|
|
|
15,000 |
|
Accrued interest payable |
|
|
677 |
|
|
|
672 |
|
Other liabilities and accrued expenses |
|
|
8,872 |
|
|
|
7,263 |
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
734,256 |
|
|
|
782,920 |
|
|
|
|
|
|
|
|
|
|
Stockholders equity: |
|
|
|
|
|
|
|
|
Preferred stock, par value $.01 per share (2,000,000 shares authorized; none issued) |
|
|
|
|
|
|
|
|
Common stock, par value $.01 per share: |
|
|
|
|
|
|
|
|
Authorized: 20,000,000 shares; 6,386,306 issued; 6,219,978 and 6,184,080 shares outstanding,
respectively |
|
|
64 |
|
|
|
64 |
|
Surplus |
|
|
20,008 |
|
|
|
20,452 |
|
Retained earnings |
|
|
41,453 |
|
|
|
40,081 |
|
Less: Treasury Stock at cost, 166,328 and 202,226 shares, respectively |
|
|
(5,565 |
) |
|
|
(6,309 |
) |
|
|
|
|
|
|
|
|
|
|
55,960 |
|
|
|
54,288 |
|
Accumulated other comprehensive income (loss): |
|
|
|
|
|
|
|
|
Net unrealized gain on securities, net of deferred taxes of ($2,974) and ($2,250), respectively |
|
|
4,517 |
|
|
|
3,417 |
|
Change in pension liabilities, net of deferred taxes of $1,032 and $1,060, respectively |
|
|
(1,524 |
) |
|
|
(1,566 |
) |
|
|
|
|
|
|
|
Total Stockholders Equity |
|
|
58,953 |
|
|
|
56,139 |
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders Equity |
|
$ |
793,209 |
|
|
$ |
839,059 |
|
|
|
|
|
|
|
|
See accompanying condensed notes to the Unaudited Consolidated Financial Statements.
Page 1
BRIDGE BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income (unaudited)
(In thousands, except per share amounts)
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30, |
|
|
For the six months ended June 30, |
|
|
|
2009 |
|
|
2008 |
|
|
2009 |
|
|
2008 |
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans (including fee income) |
|
$ |
7,323 |
|
|
$ |
6,906 |
|
|
$ |
14,543 |
|
|
$ |
13,763 |
|
Mortgage-backed securities |
|
|
2,816 |
|
|
|
1,875 |
|
|
|
5,854 |
|
|
|
3,476 |
|
State and municipal obligations |
|
|
544 |
|
|
|
446 |
|
|
|
1,107 |
|
|
|
898 |
|
U.S. GSE securities |
|
|
173 |
|
|
|
260 |
|
|
|
373 |
|
|
|
511 |
|
Federal funds sold |
|
|
8 |
|
|
|
70 |
|
|
|
9 |
|
|
|
100 |
|
Deposits with banks |
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income |
|
|
10,864 |
|
|
|
9,558 |
|
|
|
21,887 |
|
|
|
18,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW and money market deposits |
|
|
903 |
|
|
|
1,325 |
|
|
|
1,880 |
|
|
|
2,902 |
|
Certificates of deposit of $100,000 or more |
|
|
536 |
|
|
|
523 |
|
|
|
1,018 |
|
|
|
1,054 |
|
Other time deposits |
|
|
395 |
|
|
|
254 |
|
|
|
755 |
|
|
|
577 |
|
Federal funds purchased and repurchase agreements |
|
|
101 |
|
|
|
120 |
|
|
|
221 |
|
|
|
231 |
|
Federal Home Loan Bank Advances |
|
|
|
|
|
|
26 |
|
|
|
1 |
|
|
|
30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest expense |
|
|
1,935 |
|
|
|
2,248 |
|
|
|
3,875 |
|
|
|
4,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
8,929 |
|
|
|
7,310 |
|
|
|
18,012 |
|
|
|
13,958 |
|
Provision for loan losses |
|
|
1,400 |
|
|
|
325 |
|
|
|
2,300 |
|
|
|
525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for loan losses |
|
|
7,529 |
|
|
|
6,985 |
|
|
|
15,712 |
|
|
|
13,433 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
|
|
805 |
|
|
|
805 |
|
|
|
1,435 |
|
|
|
1,504 |
|
Fees for other customer services |
|
|
415 |
|
|
|
437 |
|
|
|
741 |
|
|
|
775 |
|
Title fee income |
|
|
153 |
|
|
|
317 |
|
|
|
360 |
|
|
|
695 |
|
Net securities gains |
|
|
529 |
|
|
|
|
|
|
|
529 |
|
|
|
|
|
Other operating income |
|
|
23 |
|
|
|
50 |
|
|
|
39 |
|
|
|
81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non interest income |
|
|
1,925 |
|
|
|
1,609 |
|
|
|
3,104 |
|
|
|
3,055 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
3,488 |
|
|
|
3,081 |
|
|
|
7,100 |
|
|
|
6,139 |
|
Net occupancy expense |
|
|
566 |
|
|
|
440 |
|
|
|
1,148 |
|
|
|
907 |
|
Furniture and fixture expense |
|
|
253 |
|
|
|
204 |
|
|
|
479 |
|
|
|
410 |
|
FDIC assessments |
|
|
676 |
|
|
|
64 |
|
|
|
955 |
|
|
|
83 |
|
Other operating expenses |
|
|
1,467 |
|
|
|
1,494 |
|
|
|
2,857 |
|
|
|
2,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non interest expense |
|
|
6,450 |
|
|
|
5,283 |
|
|
|
12,539 |
|
|
|
10,272 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
3,004 |
|
|
|
3,311 |
|
|
|
6,277 |
|
|
|
6,216 |
|
Income tax expense |
|
|
981 |
|
|
|
1,076 |
|
|
|
2,045 |
|
|
|
2,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
2,023 |
|
|
$ |
2,235 |
|
|
$ |
4,232 |
|
|
$ |
4,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.33 |
|
|
$ |
0.37 |
|
|
$ |
0.69 |
|
|
$ |
0.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
0.33 |
|
|
$ |
0.37 |
|
|
$ |
0.69 |
|
|
$ |
0.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income |
|
$ |
1,663 |
|
|
$ |
(583 |
) |
|
$ |
5,374 |
|
|
$ |
3,633 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying condensed notes to the Unaudited Consolidated Financial Statements.
Page 2
BRIDGE BANCORP, INC. AND SUBSIDIARY
Consolidated Statements Stockholders Equity (unaudited)
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
Common |
|
|
|
|
|
|
Comprehensive |
|
|
Retained |
|
|
Treasury |
|
|
Comprehensive |
|
|
|
|
|
|
Stock |
|
|
Surplus |
|
|
Income |
|
|
Earnings |
|
|
Stock |
|
|
Income |
|
|
Total |
|
Balance at December 31, 2008 |
|
$ |
64 |
|
|
$ |
20,452 |
|
|
|
|
|
|
$ |
40,081 |
|
|
$ |
(6,309 |
) |
|
$ |
1,851 |
|
|
$ |
56,139 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
4,232 |
|
|
|
4,232 |
|
|
|
|
|
|
|
|
|
|
|
4,232 |
|
Proceeds from issuance of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
1 |
|
Stock awards granted |
|
|
|
|
|
|
(920 |
) |
|
|
|
|
|
|
|
|
|
|
920 |
|
|
|
|
|
|
|
|
|
Vesting of stock awards |
|
|
|
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
Exercise of stock options, including tax benefit |
|
|
|
|
|
|
173 |
|
|
|
|
|
|
|
|
|
|
|
165 |
|
|
|
|
|
|
|
338 |
|
Shares surrendered with the vesting of restricted stock
and exercising stock options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(342 |
) |
|
|
|
|
|
|
(342 |
) |
Share based compensation expense |
|
|
|
|
|
|
304 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
304 |
|
Cash dividend declared, $0.46 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,860 |
) |
|
|
|
|
|
|
|
|
|
|
(2,860 |
) |
Other comprehensive income, net of deferred taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized net gains in securities available
for sale,
net of deferred tax effects |
|
|
|
|
|
|
|
|
|
|
1,100 |
|
|
|
|
|
|
|
|
|
|
|
1,100 |
|
|
|
1,100 |
|
Adjustment to pension liability, net of deferred taxes |
|
|
|
|
|
|
|
|
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
42 |
|
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
5,374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2009 |
|
$ |
64 |
|
|
$ |
20,008 |
|
|
|
|
|
|
$ |
41,453 |
|
|
$ |
(5,565 |
) |
|
$ |
2,993 |
|
|
$ |
58,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying condensed notes to the Unaudited Consolidated Financial Statements.
Page 3
BRIDGE BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
Six months ended June 30, |
|
2009 |
|
|
2008 |
|
Operating activities: |
|
|
|
|
|
|
|
|
Net Income |
|
$ |
4,232 |
|
|
$ |
4,205 |
|
Adjustments to reconcile net income to net cash
provided by operating activities: |
|
|
|
|
|
|
|
|
Provision for loan losses |
|
|
2,300 |
|
|
|
525 |
|
Depreciation and amortization |
|
|
695 |
|
|
|
594 |
|
Amortization and (accretion), net |
|
|
37 |
|
|
|
(23 |
) |
Share based compensation expense |
|
|
304 |
|
|
|
197 |
|
SERP expense |
|
|
140 |
|
|
|
83 |
|
Net securities gains |
|
|
(529 |
) |
|
|
|
|
Decrease (increase) in accrued interest receivable |
|
|
202 |
|
|
|
(393 |
) |
Increase in other assets |
|
|
(983 |
) |
|
|
(1,463 |
) |
Increase in accrued and other liabilities |
|
|
784 |
|
|
|
2,951 |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
7,182 |
|
|
|
6,676 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
|
|
|
|
Purchases of securities available for sale |
|
|
(21,910 |
) |
|
|
(99,551 |
) |
Purchases of FHLB stock |
|
|
(19,514 |
) |
|
|
(21,776 |
) |
Purchases of securities held to maturity |
|
|
(26,113 |
) |
|
|
(3,783 |
) |
Proceeds from sales of securities available for sale |
|
|
13,087 |
|
|
|
|
|
Redemption of FHLB stock |
|
|
22,109 |
|
|
|
22,505 |
|
Maturities and calls of securities available for sale |
|
|
27,230 |
|
|
|
25,215 |
|
Maturities of securities held to maturity |
|
|
22,683 |
|
|
|
5,234 |
|
Principal payments on mortgage-backed securities |
|
|
35,578 |
|
|
|
14,072 |
|
Net increase in loans |
|
|
(18,109 |
) |
|
|
(24,699 |
) |
Purchase of premises and equipment |
|
|
(1,926 |
) |
|
|
(552 |
) |
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
|
|
33,115 |
|
|
|
(83,335 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities: |
|
|
|
|
|
|
|
|
Net increase in deposits |
|
|
40,622 |
|
|
|
108,886 |
|
Net (decrease) increase in federal funds purchased and FHLB overnight borrowings |
|
|
(60,900 |
) |
|
|
10,300 |
|
Net decrease in FHLB term advances |
|
|
(30,000 |
) |
|
|
(10,000 |
) |
Net decrease in repurchase agreements |
|
|
|
|
|
|
(10,000 |
) |
Proceeds from issuance of common stock |
|
|
1 |
|
|
|
|
|
Repurchase of surrendered stock from exercise of stock options and vesting
of restricted stock awards |
|
|
(5 |
) |
|
|
|
|
Cash dividends paid |
|
|
(2,852 |
) |
|
|
(2,820 |
) |
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities |
|
|
(53,134 |
) |
|
|
96,366 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents |
|
|
(12,837 |
) |
|
|
19,707 |
|
Cash and cash equivalents at beginning of period |
|
|
28,885 |
|
|
|
14,348 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
16,048 |
|
|
$ |
34,055 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Information-Cash Flows: |
|
|
|
|
|
|
|
|
Cash paid for: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
3,870 |
|
|
$ |
4,822 |
|
Income tax |
|
$ |
1,205 |
|
|
$ |
2,030 |
|
|
|
|
|
|
|
|
|
|
Noncash investing and financing activities: |
|
|
|
|
|
|
|
|
Securities which settled in the subsequent period |
|
$ |
|
|
|
$ |
3,000 |
|
Dividends declared and unpaid at end of period |
|
$ |
1,431 |
|
|
$ |
1,413 |
|
See accompanying condensed notes to the Unaudited Consolidated Financial Statements.
Page 4
BRIDGE BANCORP, INC. AND SUBSIDIARY
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
Bridge Bancorp, Inc. (the Company) is incorporated under the laws of the State of New York as a
bank holding company. The Companys business currently consists of the operations of its
wholly-owned subsidiary, The Bridgehampton National Bank (the Bank). The Banks operations
include its real estate investment trust subsidiary, Bridgehampton Community, Inc. (BCI) and a
financial title insurance subsidiary, Bridge Abstract LLC (Bridge Abstract).
The accompanying Unaudited Consolidated Financial Statements, which include the accounts of the
Company and its wholly-owned subsidiary, the Bank, have been prepared in accordance with U.S.
generally accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. The Unaudited Consolidated Financial
Statements included herein reflect all normal recurring adjustments that 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 disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and expense
during the reported periods. Such estimates are subject to change in the future as additional
information becomes available or previously existing circumstances are modified. Actual future
results could differ significantly from those estimates. The annualized results of operations for
the six months ended June 30, 2009 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 U.S. generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain reclassifications have been made to prior year amounts, and the
related discussion and analysis, to conform to the current year presentation. The Unaudited
Consolidated Financial Statements should be read in conjunction with the Audited Consolidated
Financial Statements and notes thereto included in the Companys Annual Report on Form 10-K for the
year ended December 31, 2008.
2. EARNINGS PER SHARE
Basic earnings per common share is computed by dividing net income by the weighted-average number
of common shares outstanding for the period. Diluted earnings per share, which reflect the
potential dilution that could occur if outstanding stock options were exercised and dilutive stock
awards were fully vested and resulted in the issuance of common stock that then shared in the
earnings of the Company, is computed by dividing net income by the weighted average number of
common shares and common stock equivalents.
Computation of Per Share Income
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2009 |
|
|
2008 |
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
$ |
2,023 |
|
|
$ |
2,235 |
|
|
$ |
4,232 |
|
|
$ |
4,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Equivalent Shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding |
|
|
6,091 |
|
|
|
6,076 |
|
|
|
6,090 |
|
|
|
6,076 |
|
Weighted Average Common Equivalent Shares Outstanding |
|
|
30 |
|
|
|
18 |
|
|
|
19 |
|
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common and Equivalent Shares
Outstanding |
|
|
6,121 |
|
|
|
6,094 |
|
|
|
6,109 |
|
|
|
6,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings per Share |
|
$ |
0.33 |
|
|
$ |
0.37 |
|
|
$ |
0.69 |
|
|
$ |
0.69 |
|
Diluted Earnings per Share |
|
$ |
0.33 |
|
|
$ |
0.37 |
|
|
$ |
0.69 |
|
|
$ |
0.69 |
|
There were approximately 55,505 and 61,705 options outstanding at June 30, 2009 and June 30,
2008, respectively, that were not included in the computation of diluted earnings per share because
the options exercise prices were greater than the average market price of common stock and were,
therefore, antidilutive. There were approximately 17,500 and 59,070 shares of unvested restricted
stock at June 30, 2009 and June 30, 2008, respectively, that were not included in the computation
of diluted earnings per share because they were antidilutive.
Page 5
3. REPURCHASE STOCK
The Companys Board of Directors approved a stock repurchase program on March 27, 2006 that
authorized the repurchase of up to 309,000 shares or approximately 5% of its total issued and
outstanding common shares. These shares can be purchased from time to time in the open market or
through private purchases, depending on market conditions, availability of stock, the trading price
of the stock, alternative uses for capital, and the Companys financial performance. Repurchased
shares are held in the Companys treasury account and may be utilized for general corporate
purposes.
For the six months ended June 30, 2009 and June 30, 2008, the Company did not repurchase any of its
common shares. At June 30, 2009, 167,041 shares were available for repurchase under the Board
approved program.
4. STOCK BASED COMPENSATION PLANS
The Compensation Committee of the Board of Directors determines stock options and restricted stock
awarded under the Bridge Bancorp, Inc. Equity Incentive Plan (Plan) and the Company accounts for
this plan under FAS 123(R).
No new grants of stock options were awarded during the six months ended June 30, 2009 and June 30,
2008. Compensation expense attributable to stock options was $10,000 and $21,000 for the three
months and six months ended June 30, 2009, respectively, and $10,000 and $18,000 for the three
months and six months ended June 30, 2008, respectively.
The intrinsic value for stock options is calculated based on the exercise price of the underlying
awards and the market price of our common stock as of the reporting date. The intrinsic value of
options exercised during the second quarter of 2009 and 2008 was $175,000 and $0, respectively.
The intrinsic value of options outstanding and exercisable at
June 30, 2009 and June 30, 2008 was
$149,000 and $225,000, respectively.
A summary of the status of the Companys stock options as of and for the six months ended June 30,
2009 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
Average |
|
|
|
|
|
|
Number |
|
|
Average |
|
|
Remaining |
|
|
Aggregate |
|
|
|
of |
|
|
Exercise |
|
|
Contractual |
|
|
Intrinsic |
|
|
|
Options |
|
|
Price |
|
|
Life |
|
|
Value |
|
Outstanding, December 31, 2008 |
|
|
81,205 |
|
|
$ |
22.67 |
|
|
|
|
|
|
|
|
|
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(19,400 |
) |
|
$ |
17.40 |
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, June 30, 2009 |
|
|
61,805 |
|
|
$ |
24.32 |
|
|
6.35 years |
|
$ |
187,111 |
|
Vested or expected to vest |
|
|
58,250 |
|
|
$ |
24.27 |
|
|
6.28 years |
|
$ |
180,106 |
|
Exercisable, June 30, 2009 |
|
|
41,995 |
|
|
$ |
23.86 |
|
|
5.96 years |
|
$ |
149,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Exercise |
|
|
|
|
|
|
|
|
|
Range of Exercise Prices |
|
Options |
|
|
Price |
|
|
|
|
|
|
|
|
|
|
|
|
1,800 |
|
|
$ |
12.53 |
|
|
|
4,500 |
|
|
$ |
15.47 |
|
|
|
|
|
|
|
|
|
|
|
|
5,659 |
|
|
$ |
24.00 |
|
|
|
44,443 |
|
|
$ |
25.25 |
|
|
|
|
|
|
|
|
|
|
|
|
3,000 |
|
|
$ |
26.55 |
|
|
|
2,403 |
|
|
$ |
30.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,805 |
|
|
|
|
During the six months ended June 30, 2009 and June 30, 2008, restricted stock awards of 29,392
shares and 42,470 shares were granted, respectively. These awards vest over five years with a
third vesting after three years, four years and five years from the date of grant. Compensation
expense attributable to restricted stock awards was $134,000 and $272,000 for the three months and
six months ended June 30, 2009, respectively, and $107,000 and $177,000 for the three months and
six months ended June 30, 2008, respectively.
Page 6
A summary of the status of the Companys unvested restricted stock as of and for the six months
ended June 30, 2009 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
Average Grant-Date |
|
|
|
Shares |
|
|
Fair Value |
|
Unvested, December 31, 2008 |
|
|
95,570 |
|
|
$ |
21.55 |
|
Granted |
|
|
29,392 |
|
|
$ |
18.99 |
|
Vested |
|
|
(500 |
) |
|
$ |
26.55 |
|
Forfeited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested, June 30, 2009 |
|
|
124,462 |
|
|
$ |
20.93 |
|
|
|
|
|
|
|
|
In April 2009, the Company adopted a Directors Deferred Compensation Plan. Under the Plan,
independent directors may elect to defer all or a portion of their annual retainer fee in the form of
restricted stock units. These restricted stock units vest ratably over one year and have dividend
rights but no voting rights. In connection with this Plan, the Company recorded an expense of
approximately $11,000 for the three and six months ended June 30, 2009.
5. SECURITIES
The following table summarizes the amortized cost and fair value of the available-for-sale and
held-to-maturity investment securities portfolio at June 30, 2009 and December 31, 2008 and the
corresponding amounts of unrealized gains and losses therein:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2009 |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
Estimated |
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
(In thousands) |
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
Available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GSE securities |
|
$ |
23,555 |
|
|
$ |
208 |
|
|
$ |
(43 |
) |
|
$ |
23,720 |
|
State and municipal obligations |
|
|
41,811 |
|
|
|
1,219 |
|
|
|
(42 |
) |
|
|
42,988 |
|
Mortgage-backed securities and
collateralized mortgage obligations |
|
|
189,420 |
|
|
|
6,181 |
|
|
|
(32 |
) |
|
|
195,569 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available for sale |
|
|
254,786 |
|
|
|
7,608 |
|
|
|
(117 |
) |
|
|
262,277 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State and municipal obligation |
|
|
27,576 |
|
|
|
82 |
|
|
|
(117 |
) |
|
|
27,541 |
|
Mortgage-backed securities and
collateralized mortgage obligations |
|
|
16,047 |
|
|
|
589 |
|
|
|
|
|
|
|
16,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total held to maturity |
|
|
43,623 |
|
|
|
671 |
|
|
|
(117 |
) |
|
|
44,177 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities |
|
$ |
298,409 |
|
|
$ |
8,279 |
|
|
$ |
(234 |
) |
|
$ |
306,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008 |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
Estimated |
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
(In thousands) |
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
Available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GSE securities |
|
$ |
29,855 |
|
|
$ |
306 |
|
|
$ |
(27 |
) |
|
$ |
30,134 |
|
State and municipal obligations |
|
|
47,848 |
|
|
|
840 |
|
|
|
(100 |
) |
|
|
48,588 |
|
Mortgage-backed securities and
collateralized mortgage obligations |
|
|
227,325 |
|
|
|
4,731 |
|
|
|
(83 |
) |
|
|
231,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available for sale |
|
|
305,028 |
|
|
|
5,877 |
|
|
|
(210 |
) |
|
|
310,695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State and municipal obligation |
|
|
24,153 |
|
|
|
68 |
|
|
|
(4 |
) |
|
|
24,217 |
|
Mortgage-backed securities and
collateralized mortgage obligations |
|
|
19,291 |
|
|
|
382 |
|
|
|
|
|
|
|
19,673 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total held to maturity |
|
|
43,444 |
|
|
|
450 |
|
|
|
(4 |
) |
|
|
43,890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities |
|
$ |
348,472 |
|
|
$ |
6,327 |
|
|
$ |
(214 |
) |
|
$ |
354,585 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 7
The following table sets forth the fair value, amortized costs and maturities at June 30,
2009. Expected maturities will differ from contractual maturities because borrowers may have the
right to call or prepay obligations with or without call or prepayment penalties.
|
|
|
|
|
|
|
|
|
|
|
June 30, 2009 |
|
|
|
Amortized |
|
|
Fair |
|
(In thousands) |
|
Cost |
|
|
Value |
|
Maturity |
|
|
|
|
|
|
|
|
Available
for sale: |
|
|
|
|
|
|
|
|
Within one year |
|
$ |
7,912 |
|
|
$ |
8,028 |
|
One to five years |
|
|
49,227 |
|
|
|
50,209 |
|
Five to ten years |
|
|
47,914 |
|
|
|
49,147 |
|
Beyond ten years |
|
|
149,733 |
|
|
|
154,893 |
|
|
|
|
|
|
|
|
Total |
|
$ |
254,786 |
|
|
$ |
262,277 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to
maturity: |
|
|
|
|
|
|
|
|
Within one year |
|
$ |
9,331 |
|
|
$ |
9,379 |
|
One to five years |
|
|
17,716 |
|
|
|
17,641 |
|
Five to ten years |
|
|
529 |
|
|
|
521 |
|
Beyond ten years |
|
|
16,047 |
|
|
|
16,636 |
|
|
|
|
|
|
|
|
Total |
|
$ |
43,623 |
|
|
$ |
44,177 |
|
|
|
|
|
|
|
|
Securities with unrealized losses at June 30, 2009 and December 31, 2008, aggregated by
category and length of time that individual securities have been in a continuous unrealized loss
position, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months |
|
|
Greater than 12 months |
|
|
Total |
|
June 30, 2009 |
|
|
|
|
|
Unrealized |
|
|
|
|
|
|
Unrealized |
|
|
|
|
|
|
Unrealized |
|
(In thousands) |
|
Fair Value |
|
|
losses |
|
|
Fair Value |
|
|
losses |
|
|
Fair Value |
|
|
losses |
|
Available
for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GSE securities |
|
$ |
8,718 |
|
|
$ |
43 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
8,718 |
|
|
$ |
43 |
|
State and municipal obligations |
|
|
1,416 |
|
|
|
15 |
|
|
|
722 |
|
|
|
27 |
|
|
|
2,138 |
|
|
|
42 |
|
Mortgage-backed securities and
collateralized mortgage obligations |
|
|
1,363 |
|
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
1,363 |
|
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available for sale |
|
$ |
11,497 |
|
|
$ |
90 |
|
|
$ |
722 |
|
|
$ |
27 |
|
|
$ |
12,219 |
|
|
$ |
117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to
maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State and municipal obligations |
|
$ |
11,628 |
|
|
$ |
117 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
11,628 |
|
|
$ |
117 |
|
Mortgage-backed securities and
collateralized mortgage obligations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total held to maturity |
|
$ |
11,628 |
|
|
$ |
117 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
11,628 |
|
|
$ |
117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months |
|
|
Greater than 12 months |
|
|
Total |
|
December 31, 2008 |
|
|
|
|
|
Unrealized |
|
|
|
|
|
|
Unrealized |
|
|
|
|
|
|
Unrealized |
|
(In thousands) |
|
Fair Value |
|
|
losses |
|
|
Fair Value |
|
|
losses |
|
|
Fair Value |
|
|
losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available
for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GSE securities |
|
$ |
4,319 |
|
|
$ |
27 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
4,319 |
|
|
$ |
27 |
|
State and municipal obligations |
|
|
2,160 |
|
|
|
51 |
|
|
|
701 |
|
|
|
49 |
|
|
|
2,861 |
|
|
|
100 |
|
Mortgage-backed securities and
collateralized mortgage obligations |
|
|
17,224 |
|
|
|
64 |
|
|
|
1,529 |
|
|
|
19 |
|
|
|
18,753 |
|
|
|
83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available for sale |
|
$ |
23,703 |
|
|
$ |
142 |
|
|
$ |
2,230 |
|
|
$ |
68 |
|
|
$ |
25,933 |
|
|
$ |
210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to
maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State and municipal obligations |
|
$ |
3,996 |
|
|
$ |
4 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
3,996 |
|
|
$ |
4 |
|
Mortgage-backed securities and
collateralized mortgage obligations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total held to maturity |
|
$ |
3,996 |
|
|
$ |
4 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
3,996 |
|
|
$ |
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 8
Other-Than-Temporary-Impairment
Management evaluates securities for other-than-temporary impairment (OTTI) at least on a
quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.
The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two
general segments and applying the appropriate OTTI model. Investment securities classified as
available for sale or held-to-maturity are generally evaluated for OTTI under Statement of
Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and
Equity Securities. In determining OTTI under the SFAS No. 115 model, management considers many
factors, including: (1) the length of time and the extent to which the fair value has been less
than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the
market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent
to sell the debt security or more likely than not will be required to sell the debt security before
its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves
a high degree of subjectivity and judgment and is based on the information available to management
at a point in time.
At June 30, 2009, the majority of unrealized losses are related to the Companys State and
municipal obligations. The securities represent New York State and local municipalities with
underlying ratings of A or better and include municipal bond insurance. Because the decline in
fair value is attributable to changes in interest rates and not credit quality, and because the
Company does not have the intent to sell these securities and it is likely that it will not be
required to sell the securities before their anticipated recovery, the Company does not consider
these securities to be other-than-temporarily impaired at June 30, 2009.
Proceeds from sales and calls of securities available for sale were $12.6 million and $2.0 million
for the three months ended June 30, 2009 and 2008, respectively. Proceeds from sales and calls of
securities available for sale were $32.6 million and $2.4 million for the six months ended June 30,
2009 and 2008, respectively. Gross gains of $0.5 million were realized on these sales during the
three and six months ended June 30, 2009. There were no securities gains or losses during the
three and six months ended June 30, 2008.
Securities having a fair value of approximately $151.4 million and $276.0 million at June 30, 2009
and December 31, 2008, respectively, were pledged to secure public deposits and Federal Home Loan
Bank and Federal Reserve Bank overnight borrowings. The Bank did not hold any trading securities
during the six months ended June 30, 2009 or the year ended December 31, 2008.
The Bank is a member of the Federal Home Loan Bank (FHLB) of New York. Members are required to
own a particular amount of stock based on the level of borrowings and other factors, and may invest
in additional amounts. The Bank is also a member of the Federal Reserve Bank (FRB) system and
required to own FRB stock. FHLB and FRB stock is carried at cost and periodically evaluated for
impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as
income. The Bank owned approximately $1.2 million in FHLB and FRB stock at June 30, 2009 and $3.8
million at December 31, 2008, respectively and reported these amounts as restricted securities in
the consolidated balance sheets.
6. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards (SFAS) No. 157 defines fair value as the exchange
price that would be received for an asset or paid to transfer a liability (exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. SFAS No. 157 also establishes a fair value hierarchy
which requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. The standard describes three levels of inputs that
may be used to measure fair values:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the
entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for
similar assets or liabilities; quoted prices in markets that are not active; or other inputs that
are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a reporting entitys own assumptions about
the assumptions that market participants would use in pricing an asset or liability.
The fair value of securities available for sale is determined by obtaining quoted prices on
nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a
mathematical technique widely used in the industry to value debt securities without relying
exclusively on quoted prices for the specific securities but rather by relying on the securities
relationship to other benchmark quoted securities (Level 2 inputs).
Page 9
Assets
and Liabilities Measured on a Recurring Basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at |
|
|
|
|
|
|
|
June 30, 2009 Using: |
|
|
|
|
|
|
|
|
|
|
|
Significant |
|
|
|
|
|
|
|
|
|
|
Quoted Prices In |
|
|
Other |
|
|
Significant |
|
|
|
|
|
|
|
Active Markets for |
|
|
Observable |
|
|
Unobservable |
|
|
|
Carrying |
|
|
Identical Assets |
|
|
Inputs |
|
|
Inputs |
|
(In thousands) |
|
Value |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GSE securities |
|
$ |
23,720 |
|
|
|
|
|
|
$ |
23,720 |
|
|
|
|
|
State and municipal obligations |
|
|
42,988 |
|
|
|
|
|
|
|
42,988 |
|
|
|
|
|
Mortgage-backed securities and
collateralized mortgage obligations |
|
|
195,569 |
|
|
|
|
|
|
|
195,569 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available for sale |
|
$ |
262,277 |
|
|
|
|
|
|
$ |
262,277 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at |
|
|
|
|
|
|
|
December 31, 2008 Using: |
|
|
|
|
|
|
|
|
|
|
|
Significant |
|
|
|
|
|
|
|
|
|
|
Quoted Prices In |
|
|
Other |
|
|
Significant |
|
|
|
|
|
|
|
Active Markets for |
|
|
Observable |
|
|
Unobservable |
|
|
|
Carrying |
|
|
Identical Assets |
|
|
Inputs |
|
|
Inputs |
|
(In thousands) |
|
Value |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GSE securities |
|
$ |
30,134 |
|
|
|
|
|
|
$ |
30,134 |
|
|
|
|
|
State and municipal obligations |
|
|
48,588 |
|
|
|
|
|
|
|
48,588 |
|
|
|
|
|
Mortgage-backed securities and
collateralized mortgage obligations |
|
|
231,973 |
|
|
|
|
|
|
|
231,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available for sale |
|
$ |
310,695 |
|
|
|
|
|
|
$ |
310,695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value estimates are made at specific points in time and are based on existing on-and
off-balance sheet financial instruments. Such estimates are generally subjective in nature and
dependent upon a number of significant assumptions associated with each financial instrument or
group of financial instruments, including estimates of discount rates, risks associated with
specific financial instruments, estimates of future cash flows, and relevant available market
information. Changes in assumptions could significantly affect the estimates. In addition, fair
value estimates do not reflect the value of anticipated future business, premiums or discounts that
could result from offering for sale at one time the Banks entire holdings of a particular
financial instrument, or the tax consequences of realizing gains or losses on the sale of financial
instruments.
The Company used the following method and assumptions in estimating the fair value of its financial
instruments:
Cash and Due from Banks and Federal Funds Sold: Carrying amounts approximate fair value, since
these instruments are either payable on demand or have short-term maturities.
Securities Available for Sale and Held to Maturity: The estimated fair values are based on
independent dealer quotations on nationally recognized securities exchanges or matrix pricing,
which is a mathematical technique widely used in the industry to value debt
securities without relying exclusively on quoted prices for the specific securities but rather by
relying on the securities relationship to other benchmark quoted securities.
Page 10
Restricted Stock: It is not practicable to determine the fair value of FHLB and FRB stock due to
restrictions placed on its transferability.
Loans: The estimated fair values of real estate mortgage loans and other loans receivable are based
on discounted cash flow calculations that use available market benchmarks when establishing
discount factors for the types of loans. All nonaccrual loans are carried at their current fair
value. Exceptions may be made for adjustable rate loans (with resets of one year or less), which
would be discounted straight to their rate index plus or minus an appropriate spread.
Deposits: The estimated fair value of certificates of deposits are based on discounted cash flow
calculations that use a replacement cost of funds approach to establishing discount rates for
certificates of deposits maturities. Stated value is fair value for all other deposits.
Borrowed Funds and Brokered Deposits: The estimated fair value of borrowed funds and wholesale
certificates of deposit are based on discounted cash flow calculations that use a replacement cost
of funds approach to establishing discount rates for funding maturities.
Accrued Interest Receivable and Payable: For these short-term instruments, the carrying amount is a
reasonable estimate of the fair value.
Off-Balance-Sheet Liabilities: The fair value of off-balance-sheet commitments to extend credit is
estimated using fees currently charged to enter into similar agreements. The fair value is
immaterial as of June 30, 2009 and December 31, 2008.
The estimated fair values and recorded carrying values of the Banks financial instruments are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2009 |
|
|
December 31, 2008 |
|
|
|
Carrying |
|
|
Fair |
|
|
Carrying |
|
|
Fair |
|
(In thousands) |
|
Amount |
|
|
Value |
|
|
Amount |
|
|
Value |
|
Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
12,382 |
|
|
$ |
12,382 |
|
|
$ |
24,744 |
|
|
$ |
24,744 |
|
Interest bearing deposits with banks |
|
|
3,666 |
|
|
|
3,666 |
|
|
|
4,141 |
|
|
|
4,141 |
|
Securities available for sale |
|
|
262,277 |
|
|
|
262,277 |
|
|
|
310,695 |
|
|
|
310,695 |
|
Securities restricted |
|
|
1,205 |
|
|
|
|
|
|
|
3,800 |
|
|
|
|
|
Securities held to maturity |
|
|
43,623 |
|
|
|
44,176 |
|
|
|
43,444 |
|
|
|
43,890 |
|
Loans, net |
|
|
441,539 |
|
|
|
450,458 |
|
|
|
425,730 |
|
|
|
437,265 |
|
Accrued interest receivable |
|
|
3,424 |
|
|
|
3,424 |
|
|
|
3,626 |
|
|
|
3,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand and other deposits |
|
|
699,707 |
|
|
|
701,186 |
|
|
|
659,085 |
|
|
|
660,176 |
|
Federal funds purchased and Federal Home Loan Bank
overnight borrowings |
|
|
10,000 |
|
|
|
9,998 |
|
|
|
70,900 |
|
|
|
70,882 |
|
Federal Home Loan Bank term advances |
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
29,998 |
|
Repurchase agreements |
|
|
15,000 |
|
|
|
16,014 |
|
|
|
15,000 |
|
|
|
15,368 |
|
Accrued interest payable |
|
|
677 |
|
|
|
677 |
|
|
|
672 |
|
|
|
672 |
|
Page 11
7. LOANS
The following table sets forth the major classifications of loans:
|
|
|
|
|
|
|
|
|
(In thousands) |
|
June 30, 2009 |
|
|
December 31, 2008 |
|
|
Commercial real estate mortgage loans |
|
$ |
217,797 |
|
|
$ |
199,156 |
|
Residential real estate mortgage loans |
|
|
141,351 |
|
|
|
139,342 |
|
Commercial, financial, and agricultural loans |
|
|
67,167 |
|
|
|
63,468 |
|
Installment/consumer loans |
|
|
10,912 |
|
|
|
11,081 |
|
Real estate-construction loans |
|
|
9,087 |
|
|
|
16,370 |
|
|
|
|
|
|
|
|
Total loans |
|
|
446,314 |
|
|
|
429,417 |
|
Net deferred loan costs and fees |
|
|
248 |
|
|
|
266 |
|
|
|
|
|
|
|
|
|
|
|
446,562 |
|
|
|
429,683 |
|
Allowance for loan losses |
|
|
(5,023 |
) |
|
|
(3,953 |
) |
|
|
|
|
|
|
|
Net loans |
|
$ |
441,539 |
|
|
$ |
425,730 |
|
|
|
|
|
|
|
|
The principal business of the Bank is lending, primarily in commercial real estate loans,
residential mortgage loans, construction loans, home equity loans, commercial and industrial loans,
land loans and consumer loans. The Bank considers its primary lending area to be eastern Long
Island in Suffolk County, New York, and a substantial portion of the Banks loans are secured by
real estate in this area. Accordingly, the ultimate collectibility of such a loan portfolio is
susceptible to changes in market and economic conditions in this region.
Nonaccrual loans at June 30, 2009 and December 31, 2008 were $2.3 million and $3.1 million,
respectively. There were no loans 90 days or more past due that were still accruing at June 30,
2009 and December 31, 2008.
As of June 30, 2009 and December 31, 2008, the Company had impaired loans as defined by SFAS No.
114, Accounting by Creditors for Impairment of a Loan An Amendment of FASB Statement No. 5 and
15 (SFAS 114) of $4.8 million and $5.7 million, respectively. Impaired loans include
individually classified nonaccrual loans and trouble debt restructured (TDR) loans. Recognition
of interest income on impaired loans is discontinued when reasonable doubt exists as to the
ultimate collectability of the interest and principal of the loan. The TDR loans of $3.2 million at
June 30, 2009 and December 31, 2008 are current and are secured with collateral that has a fair
value of approximately $5.4 million as well as personal guarantors. Management believes that the
ultimate collection of principal and interest is reasonably assured and therefore continues to
recognize interest income on an accrual basis. In addition, the Bank has no commitment to lend
additional funds to this debtor. The average recorded investment in the impaired loan during the
six months ended June 30, 2009 was $5.7 million and was $0.8 million for the year ended December
31, 2008. There were no impaired loans as of June 30, 2008. At June 30, 2009 and December 31,
2008, there was no specifically allocated allowance for loan losses related to impaired loans.
The Bank had no foreclosed real estate at June 30, 2009, December 31, 2008 and June 30, 2008,
respectively.
8. ALLOWANCE FOR LOAN LOSSES
The Company monitors its entire loan portfolio on a regular basis, with consideration given to
detailed analyses of classified loans, repayment patterns, probable incurred losses, past loss
experience, current economic conditions, and various types of concentrations of credit. Additions
to the allowance are charged to expense and realized losses, net of recoveries, are charged to the
allowance. Based on the determination of management and the Classification Committee, the overall
level of reserves is periodically adjusted to account for the inherent and specific risks within
the entire portfolio. Based on the Classification Committees review of the classified loans and
the overall reserve levels as they relate to the entire loan portfolio at June 30, 2009 and
December 31, 2008, the Company determined the allowance for loan losses to be adequate.
Page 12
The
following table sets forth changes in the allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
|
For the Year Ended |
|
(In thousands) |
|
June 30, 2009 |
|
|
June 30, 2008 |
|
|
December 31, 2008 |
|
Beginning balance |
|
$ |
3,953 |
|
|
$ |
2,954 |
|
|
$ |
2,954 |
|
Provision for loan loss |
|
|
2,300 |
|
|
|
525 |
|
|
|
2,000 |
|
Net charge-offs |
|
|
(1,230 |
) |
|
|
(155 |
) |
|
|
(1,001 |
) |
|
|
|
|
|
|
|
|
|
|
Ending balance |
|
$ |
5,023 |
|
|
$ |
3,324 |
|
|
$ |
3,953 |
|
|
|
|
|
|
|
|
|
|
|
9. EMPLOYEE BENEFITS
The Bank maintains a noncontributory pension plan through the New York State Bankers Association
Retirement System covering all eligible employees.
The Bridgehampton National Bank Supplemental Executive Retirement Plan (SERP) provides benefits
to certain employees, as recommended by the Compensation Committee of the Board of Directors and
approved by the full Board of Directors, whose benefits under the Pension Plan are limited by the
applicable provisions of the Internal Revenue Code. The benefit under the SERP is equal to the
additional amount the employee would be entitled to under the Pension Plan and the 401(k) Plan in
the absence of such Internal Revenue Code limitations. The assets of the SERP are held in a rabbi
trust to maintain the tax-deferred status of the plan and are subject to the general, unsecured
creditors of the Company. As a result, the assets of the trust are reflected on the Consolidated
Balance Sheets of the Company. The effective date of the SERP was January 1, 2001.
The Company made a $400,000 contribution to the pension plan during the six months ended June 30,
2009. There were no contributions made to the SERP during the six months ended June 30, 2009. The
Company does not anticipate making any additional contributions to the pension plan or the SERP
through the end of the year.
The Companys funding policy with respect to its benefit plans is to contribute at least the
minimum amounts required by applicable laws and regulations.
The following table sets forth the components of net periodic benefit cost and other amounts
recognized in Other Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
|
Pension Benefits |
|
|
SERP Benefits |
|
|
Pension Benefits |
|
|
SERP Benefits |
|
(In thousands) |
|
2009 |
|
|
2008 |
|
|
2009 |
|
|
2008 |
|
|
2009 |
|
|
2008 |
|
|
2009 |
|
|
2008 |
|
Service cost |
|
$ |
120 |
|
|
$ |
110 |
|
|
$ |
40 |
|
|
$ |
18 |
|
|
$ |
238 |
|
|
$ |
220 |
|
|
$ |
80 |
|
|
$ |
35 |
|
Interest cost |
|
|
80 |
|
|
|
70 |
|
|
|
15 |
|
|
|
12 |
|
|
|
158 |
|
|
|
139 |
|
|
|
29 |
|
|
|
24 |
|
Expected return on plan assets |
|
|
(129 |
) |
|
|
(124 |
) |
|
|
|
|
|
|
|
|
|
|
(256 |
) |
|
|
(247 |
) |
|
|
|
|
|
|
|
|
Amortization of net loss |
|
|
22 |
|
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
44 |
|
|
|
|
|
|
|
7 |
|
|
|
|
|
Amortization of unrecognized prior service cost |
|
|
2 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
4 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
Amortization of unrecognized transition
obligation |
|
|
|
|
|
|
|
|
|
|
7 |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
14 |
|
|
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost |
|
$ |
95 |
|
|
$ |
58 |
|
|
$ |
65 |
|
|
$ |
36 |
|
|
$ |
188 |
|
|
$ |
116 |
|
|
$ |
130 |
|
|
$ |
72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
At
June 30, 2009, December 31, 2008 and June 30, 2008 securities sold under agreements to
repurchase totaled $15.0 million and were secured by mortgage-backed securities with a carrying
amount of $21.5 million, $23.4 million and $21.5 million, respectively.
Securities sold under agreements to repurchase are financing arrangements with $5.0 million
maturing during the first quarter of 2013 and $10.0 million maturing during the first quarter of
2015. At maturity, the securities underlying the agreements are returned to the Company.
Page 13
Information concerning the securities sold under agreements to repurchase is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
|
|
For the year ended |
|
(Dollars in thousands) |
|
June 30, 2009 |
|
|
June 30, 2008 |
|
|
December 31, 2008 |
|
Average daily balance |
|
$ |
15,000 |
|
|
$ |
11,346 |
|
|
$ |
13,183 |
|
Average interest rate |
|
|
2.34 |
% |
|
|
2.27 |
% |
|
|
2.39 |
% |
Maximum month-end
balance |
|
$ |
15,000 |
|
|
$ |
15,000 |
|
|
$ |
15,000 |
|
Weighted average
interest rate |
|
|
2.34 |
% |
|
|
2.27 |
% |
|
|
2.39 |
% |
11. FEDERAL HOME LOAN BANK ADVANCES AND OVERNIGHT BORROWINGS
As of June 30, 2009, there were no term advances or overnight borrowings outstanding from the
Federal Home Loan Bank. As of December 31, 2008, there was one term advance from the Federal Home
Loan Bank for $30.0 million with a fixed interest rate of 0.49% that matured in January 2009. The
term advance was payable at its maturity date and was subject to a prepayment penalty. The term
advance was collateralized by $35.3 million of mortgage-backed securities as of December 31, 2008.
In addition to the term advance, there was $34.9 million of overnight borrowings from the Federal
Home Loan Bank outstanding as of December 31, 2008. The overnight borrowings were collateralized
by $15.8 million of securities and a blanket lien on residential mortgages as of December 31, 2008.
As of June 30, 2008 there was $17.3 million of overnight borrowings outstanding from the Federal
Home Loan Bank. The overnight borrowings were collateralized by a blanket lien on residential
mortgages as of June 30, 2008.
12. SUBSEQUENT EVENTS
As defined in FAS 165, subsequent events are events or transactions that occur after the balance
sheet date but before financial statements are issued or available to be issued. Financial
statements are considered issued when they are widely distributed to shareholders and other
financial statement users for general use and reliance in a form and format that complies with
GAAP. The Company has evaluated subsequent events through August 6, 2009, which is the date that
the Companys financial statements are being issued.
|
|
|
Item 2. |
|
Managements Discussion and Analysis of Financial Condition and Results of Operations |
Private Securities Litigation Reform Act Safe Harbor Statement
This report may contain statements relating to the future results of the Company (including certain
projections and business trends) that are considered forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995 (the PSLRA). Such forward-looking statements,
in addition to historical information, which involve risk and uncertainties, are based on the
beliefs, assumptions and expectations of management of the Company. Words such as expects,
believes, should, plans, anticipates, will, potential, could, intend, may,
outlook, predict, project, would, estimates, assumes, likely, and variations of such
similar expressions are intended to identify such forward-looking statements. Examples of
forward-looking statements include, but are not limited to, possible or assumed estimates with
respect to the financial condition, expected or anticipated revenue, and results of operations and
business of the Company, including earnings growth; revenue growth in retail banking, lending and
other areas; origination volume in the Companys consumer, commercial and other lending businesses;
current and future capital management programs; non-interest income levels, including fees from the
abstract subsidiary and banking services as well as product sales; tangible capital generation;
market share; expense levels; and other business operations and strategies. For this presentation,
the Company claims the protection of the safe harbor for forward-looking statements contained in
the PSLRA.
Factors that could cause future results to vary from current management expectations include, but
are not limited to: changes in economic conditions including an economic recession that could
affect the value of real estate collateral and the ability for borrowers to repay their loans;
legislative and regulatory changes, including increases in FDIC insurance rates; 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 and other financial services; competition; changes in the quality
and composition of the Banks loan and investment portfolios; changes in managements business
strategies; changes in accounting principles, policies or guidelines; changes in real estate values
and other factors discussed elsewhere in this report, factors set forth under Item 1A., Risk
Factors, in our Annual Report on Form 10-K for the year ended December 31, 2008 and in other
reports filed by the Company with the Securities and Exchange Commission. The forward-looking
statements are made as of the date of this report, and the Company assumes no obligation to update
the forward-looking statements or to update the reasons why actual results could differ from those
projected in the forward-looking statements.
Page 14
Overview
Who We Are and How We Generate Income
Bridge Bancorp, Inc. (the Company), a New York corporation, is a bank holding company formed in
1989. On a parent-only basis, the Company has had minimal results of operations. The Company is
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 in this report reflects principally the financial condition and results of operations
of the Bank. The Banks results of operations are primarily dependent on its net interest income,
which is mainly the difference between interest income on loans and investments and interest
expense on deposits and borrowings. The Bank also generates non interest income, such as fee
income on deposit accounts and merchant credit and debit card processing programs, income from its
title abstract subsidiary, and net gains on sales of securities and loans. The level of its non
interest expenses, such as salaries and benefits, occupancy and equipment costs, other general and
administrative expenses, expenses from its title insurance subsidiary, and income tax expense,
further affects the Banks net income. Certain reclassifications have been made to prior year
amounts and the related discussion and analysis to conform to the current year presentation.
Quarterly Highlights
|
|
Net income of $2.0 million or $.33 per diluted share, including an expense of $.4 million
or $.04 per diluted share for a FDIC special assessment for the second quarter of 2009, as
compared to net income of $2.2 million or $.37 per diluted share for the second quarter in
2008. |
|
|
Returns on average assets and equity of .99% and 14.72%, respectively, which includes the
effect of the FDIC special assessment. |
|
|
Net interest income increased to $8.9 million for the second quarter of 2009 compared to
$7.3 million in 2008. |
|
|
A net interest margin of 4.78% for the second quarter of 2009 compared to 4.76% for 2008. |
|
|
Total loans at June 30, 2009 of $446.6 million, an increase of $16.9 million or 3.9% over
December 31, 2008 and an increase of $46.8 million or 11.7% over June 30, 2008. |
|
|
Total assets of $793.2 million at June 30, 2009, a decrease of $45.9 million or 5.5%
compared to December 31, 2008 and an increase of $83.0 million or 11.7% compared to June 30,
2008. |
|
|
Deposits of $699.7 million, an increase of $40.6 million or 6.2% over December 31, 2008 and
an increase of $81.9 million or 13.3% compared to June 30, 2008 levels. |
|
|
The opening of a 15th branch, in Shirley, NY. |
|
|
The addition of the Companys shares to the Russell 3000® stock market index. |
|
|
Announced a Dividend Reinvestment Plan and declared quarterly dividend of $.23 per share. |
Principal Products and Services and Locations of Operations
The Bank operates fifteen branches on eastern Long Island. Federally chartered in 1910, the Bank
was founded by local farmers and merchants. For nearly a century, the Bank has maintained its
focus on building customer relationships in this market area. The mission of the Company is to
grow through the provision of exceptional service to its customers, its employees, and the
community. The Company strives to achieve excellence in financial performance and build long term
shareholder value. The Bank engages in full service commercial and consumer banking business,
including accepting time, savings and demand deposits from the consumers, businesses and local
municipalities surrounding its branch offices. These deposits, together with funds generated from
operations and borrowings, are invested primarily in: (1) commercial real estate loans; (2) home
equity loans; (3) construction loans; (4) residential mortgage loans; (5) secured and unsecured
commercial and consumer loans; (6) FHLB, FNMA, GNMA and FHLMC mortgage-backed securities and
collateralized mortgage obligations; (7) New York State and local municipal obligations; and (8)
U.S. government sponsored entity (U.S. GSE) securities. The Bank also offers the CDARS program,
providing up to $50,000,000 of FDIC insurance to its customers. In addition, the Bank offers
merchant credit and debit card processing, automated teller machines, cash management services,
lockbox processing, online banking services, safe deposit boxes, individual retirement accounts and
investment services through Bridge Investment Services, offering a full range of investment
products and services through a third
party broker dealer. Through its title insurance abstract subsidiary, the Bank acts as a broker
for title insurance services. The Banks customer base is comprised principally of small
businesses, municipal relationships and consumer relationships.
Page 15
Significant Events
On February 27, 2009, the FDIC issued a final rule, effective April 1, 2009, to change the way that
the FDICs assessment system differentiates for risk and to set new assessment rates beginning with
the second quarter of 2009. In May 2009, the FDIC issued a final rule to impose an emergency
special assessment of 5 basis points on all banks based on their total assets less tier one capital
as of June 30, 2009. The special assessment is payable on September 30, 2009. During the second
quarter of 2009, the Company recorded an expense of $375,000 related to the FDIC special
assessment.
Opportunities and Challenges
The economic and competitive landscape has changed dramatically over the past two years.
Recognizing that our market areas are generally affluent, large money center banks increasingly
meet their funding needs by aggressively pricing deposits in the Banks markets. Competition for
deposits and loans is intense as various banks in the marketplace, large and small, promise
excellent service yet often price their products aggressively. Deposit growth is essential to the
Banks ability to increase earnings; therefore branch expansion and building share in our existing
markets remain key strategic goals. Controlling funding costs yet protecting the deposit base along
with focusing on profitable growth, presents a unique set of challenges in this operating
environment.
Since the second half of 2007 and continuing through 2009, the financial markets experienced
significant volatility resulting from the continued fallout of sub-prime lending and the global
liquidity crises. A multitude of government initiatives along with eight rate cuts by the Federal
Reserve totaling 500 basis points have been designed to improve liquidity for the distressed
financial markets. The ultimate objective of these efforts has been to help the beleaguered
consumer, and reduce the potential surge of residential mortgage loan foreclosures and stabilize
the banking system. Despite these actions, many of our competitors, due to liquidity concerns, have
not yet fully adjusted their deposit pricing. This contrasts with the impact on assets where yields
on loans and securities have declined. The squeeze between declining asset yields and more slowly
declining liability pricing could impact margins.
Growth and service strategies have the potential to offset the tighter net interest margin with
volume as the customer base grows through expanding the Banks footprint, while maintaining and
developing existing relationships. Since 2007, the Bank has opened four new branches. In January
2007, the Bank opened in the Village of Southampton; in February 2007, in Cutchogue; and in
September 2007, the Bank opened a new branch in Wading River. In April 2009, the Bank opened a new
branch in Shirley, New York. The opening of the branch facilities in Wading
River and Shirley, move the Bank geographically westward and demonstrate our commitment to
traditional growth through branch expansion.
In April 2008, the Bank received approval from the Office of the Comptroller of the Currency
(OCC) and expects that the opening of the new full service branch facility in the Village of East
Hampton will be a fourth quarter 2009 event. In addition, in November 2008, the Bank received OCC
approval to open a branch in Deer Park, New York, and the Bank anticipates opening the location
during the fourth quarter of 2009. In July 2009, the Company received OCC approval to open a new
branch in Center Moriches, New York.
The Bank routinely adds to its menu of products and services, continually meeting the needs of
consumers and businesses. We believe positive outcomes in the future will result from the expansion
of our geographic footprint, investments in infrastructure and technology, such as BridgeNEXUS, our
remote deposit capture product as well as the introduction of lockbox processing in the fourth
quarter of 2008, and continued focus on placing our customers first. In January 2009, the Bank
launched Bridge Investment Services, offering a full range of investment products and services
through a third party broker dealer.
Corporate objectives for 2009 include: leveraging our expanding branch network to build customer
relationships and grow loans and deposits; focusing on opportunities and processes that continue to
enhance the customer experience at the Bank; improving operational efficiencies and prudent
management of non-interest expense; and maximizing non-interest income through Bridge Abstract as
well as other lines of business. The ability to attract, retain, train and cultivate employees at
all levels of the Company remains significant to meeting these objectives. The Company has made
great progress toward the achievement of these objectives, and avoided many of the problems facing
other financial institutions as a result of maintaining discipline in its underwriting, expansion
strategies, investing and general business practices. The Company has capitalized on opportunities
presented by the market in 2008 and continues during 2009 to diligently seek opportunities for
growth and to strengthen the franchise. The causes of the current economic crisis are many and have
occurred over a prolonged period and therefore cannot be expected to be resolved in days, weeks or
months. The Company recognizes the potential risks of the current economic environment and will
monitor the impact of market events as we consider growth initiatives and evaluate loans and
investments.
Page 16
Critical Accounting Policies
Allowance for Loan Losses
We consider the accounting policy on the allowance for loan losses to be the most critical and
requires complex management judgment as discussed below. The judgments made regarding the allowance
for loan losses can have a material effect on the results of operations of the Company.
The allowance for loan losses is established and maintained through a provision for loan losses
based on probable incurred losses inherent in the Banks loan portfolio. We evaluate the adequacy
of the allowance on a quarterly basis. The allowance is comprised of both individual valuation
allowances and loan pool valuation allowances. If the allowance for loan losses is not sufficient
to cover actual loan losses, the Companys earnings could decrease.
The Bank monitors its entire loan portfolio on a regular basis, with consideration given to
detailed analysis of classified loans, repayment patterns, probable incurred losses, past loss
experience, current economic conditions, and various types of concentrations of credit. Additions
to the allowance are charged to expense and realized losses, net of recoveries, are charged to the
allowance.
Individual valuation allowances are established in connection with specific loan reviews and the
asset classification process including the procedures for impairment testing under Statement of
Financial Accounting Standard (SFAS) No. 114, Accounting by Creditors for Impairment of a Loan,
an Amendment of FASB Statements No. 5 and 15, and SFAS No. 118, Accounting by Creditors for
Impairment of a Loan Income Recognition and Disclosures, an Amendment of SFAS No. 114. Such
valuation, which includes a review of loans for which full collectibility in accordance with
contractual terms is not reasonably assured, considers the estimated fair value of the underlying
collateral less the costs to sell, if any, or the present value of expected future cash flows, or
the loans observable market value. Any shortfall that exists from this analysis results in a
specific allowance for the loan. Pursuant to our policy, loan losses must be charged-off in the
period the loans, or portions thereof, are deemed uncollectible. Assumptions and judgments by
management, in conjunction with outside sources, are used to determine whether full collectibility
of a loan is not reasonably assured. These assumptions and judgments also are used to determine the
estimates of the fair value of the underlying collateral or the present value of expected future
cash flows or the loans observable market value. Individual valuation allowances could differ
materially as a result of changes in these assumptions and judgments. Individual loan analyses are
periodically performed on specific loans considered impaired. The results of the individual
valuation allowances are aggregated and included in the overall allowance for loan losses.
Loan pool valuation allowances represent loss allowances that have been established to recognize
the inherent risks associated with our lending activities, but which, unlike individual allowances,
have not been allocated to particular problem assets. Pool evaluations are broken down as follows:
first, loans with homogenous characteristics are pooled by loan type and include home equity loans,
residential mortgages, land loans and consumer loans. Then all remaining loans are segregated into
pools based upon the risk rating of each credit. Key factors in determining a credits risk rating
include managements evaluation of: cash flow, collateral, guarantor support, financial
disclosures, industry trends and strength of borrowers management. The determination of the
adequacy of the valuation allowance is a process that takes into consideration a variety of
factors. The Bank has developed a range of valuation allowances necessary to adequately provide for
probable incurred losses inherent in each pool of loans. We consider our own charge-off history
along with the growth in the portfolio as well as the Banks credit administration and asset
management philosophies and procedures when determining the allowances for each pool. In addition,
we evaluate and consider the impact that economic and market conditions may have on the portfolio
as well as known and inherent risks in the portfolio. Finally, we evaluate and consider the
allowance ratios and coverage percentages of both peer group and regulatory agency data. These
evaluations are inherently subjective because, even though they are based on objective data, it is
managements interpretation of that data that determines the amount of the appropriate allowance.
If the evaluations prove to be incorrect, the allowance for loan losses may not be sufficient to
cover losses inherent in the loan portfolio, resulting in additions to the allowance for loan
losses.
The Classification Committee is comprised of members of both management and the Board of Directors.
The adequacy of the allowance is analyzed quarterly, with any adjustment to a level deemed
appropriate by the Classification Committee, based on its risk assessment of the entire portfolio.
Based on the Classification Committees review of the classified loans and the overall allowance
levels as they relate to the entire loan portfolio at June 30, 2009, management believes the
allowance for loan losses has been established at levels sufficient to cover the probable incurred
losses in the Banks loan portfolio. Future additions or reductions to the allowance may be
necessary based on changes in economic, market or other conditions. Changes in estimates could
result in a material change in the allowance. In addition, various regulatory agencies, as an
integral part of the examination process, periodically review the allowance for loan losses. Such
agencies may require the Bank to recognize adjustments to the allowance based on their judgments of
the information available to them at the time of their examination.
Page 17
Comparison of Operating Results
Net Income
Net income for the three months ended June 30, 2009 was $2.0 million or $0.33 per diluted share as
compared to $2.2 million or $0.37 per diluted share for the same period in 2008. Changes for the
three months ended June 30, 2009 compared to June 30, 2008 include: (i) $1.6 million or 22.1%
increase in net interest income; (ii) $0.3 million or 19.6% increase in total non interest income
as a result of net securities gains of $0.5 million, partially offset by lower fee income for
customer services and lower title insurance revenues; (iii) $1.2 million or 22.1% increase in total
non interest expenses, primarily due to a $0.4 million increase in salaries and employee benefits
related to increased staffing and greater incentive based compensation, a $0.6 million increase in
other operating expenses primarily related to higher FDIC insurance premiums including the special
assessment of $0.4 million and higher occupancy costs associated with new branches. In addition, a
provision for loan losses of $1.4 million was recorded this quarter due to the continued growth of
our loan portfolio as well as our assessment of risk factors considering the weakening economic
environment and overall industry trends. Non interest income for the three months ended June 30,
2008 did not include any net securities losses. The effective income tax rate was 32.7% for the
quarter ended June 30, 2009 compared to 32.5% for the same period last year.
Net income was unchanged at $4.2 million or $0.69 per diluted share for the six months ended June
30, 2009 and 2008, however the following fluctuations did occur: (i) $4.1 million or 29.0% increase
in net interest income; (ii) a provision for loan losses of $2.3 million was recorded in 2009
compared to $0.5 million in 2008 due to the continued growth of our loan portfolio and changes in
economic conditions, (iii) $49,000 or 1.6% increase in total non interest income as a result of net
securities gains of $0.5 million partially offset by lower service charges on deposit accounts and
fees on customer services and lower title insurance income and merchant income, and (iv) $2.3
million or 22.1% increase in total non interest expenses, primarily due to a $1.0 million increase
in salaries and employee benefits related to higher staff levels associated with expanding the
Companys infrastructure and the opening of new branch offices and higher incentive based
compensation, and a $1.0 million increase in other operating expenses primarily related to higher
FDIC insurance premiums related to growth in deposits, higher rates and the special assessment.
The effective income tax rate increased to 32.6% from 32.4% for the same period last year.
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. Net interest income
depends upon the volume of interest earning assets and interest bearing liabilities and the
interest rates earned or paid on them.
The following tables set forth certain information relating to the Companys average consolidated
balance sheets and its consolidated statements of income for the periods indicated and reflect the
average yield on assets and average cost of liabilities for the periods indicated. 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 and
include nonaccrual loans. The yields and costs include fees, which are considered adjustments to
yields. Interest on nonaccrual loans has been included only to the extent reflected in the
consolidated statements of income. For purposes of this table, the average balances for
investments in debt and equity securities exclude unrealized appreciation/depreciation due to the
application of SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities.
Page 18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, |
|
2009 |
|
|
2008 |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
Average |
|
|
|
|
|
|
Yield/ |
|
|
Average |
|
|
|
|
|
|
Yield/ |
|
|
|
Balance |
|
|
Interest |
|
|
Cost |
|
|
Balance |
|
|
Interest |
|
|
Cost |
|
Interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net (including loan fee income) |
|
$ |
441,236 |
|
|
$ |
7,323 |
|
|
|
6.66 |
% |
|
$ |
393,886 |
|
|
$ |
6,906 |
|
|
|
7.05 |
% |
Mortgage-backed securities |
|
|
226,806 |
|
|
|
2,816 |
|
|
|
4.98 |
|
|
|
153,366 |
|
|
|
1,875 |
|
|
|
4.92 |
|
Tax exempt securities (1) |
|
|
70,090 |
|
|
|
836 |
|
|
|
4.78 |
|
|
|
52,695 |
|
|
|
653 |
|
|
|
4.98 |
|
Taxable securities |
|
|
21,141 |
|
|
|
173 |
|
|
|
3.28 |
|
|
|
22,207 |
|
|
|
260 |
|
|
|
4.71 |
|
Federal funds sold |
|
|
10,618 |
|
|
|
8 |
|
|
|
0.30 |
|
|
|
13,438 |
|
|
|
70 |
|
|
|
2.10 |
|
Deposits with banks |
|
|
3,601 |
|
|
|
|
|
|
|
|
|
|
|
128 |
|
|
|
1 |
|
|
|
3.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest earning assets |
|
|
773,492 |
|
|
|
11,156 |
|
|
|
5.79 |
|
|
|
635,720 |
|
|
|
9,765 |
|
|
|
6.18 |
|
Non interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
|
14,217 |
|
|
|
|
|
|
|
|
|
|
|
16,330 |
|
|
|
|
|
|
|
|
|
Other assets |
|
|
29,322 |
|
|
|
|
|
|
|
|
|
|
|
26,494 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
817,031 |
|
|
|
|
|
|
|
|
|
|
$ |
678,544 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW and
money market deposits |
|
$ |
374,189 |
|
|
$ |
903 |
|
|
|
0.97 |
% |
|
$ |
304,329 |
|
|
$ |
1,325 |
|
|
|
1.75 |
% |
Certificates of deposit of $100,000
or more |
|
|
83,430 |
|
|
|
536 |
|
|
|
2.58 |
|
|
|
62,202 |
|
|
|
523 |
|
|
|
3.38 |
|
Other time deposits |
|
|
69,095 |
|
|
|
395 |
|
|
|
2.29 |
|
|
|
32,846 |
|
|
|
254 |
|
|
|
3.11 |
|
Federal funds purchased and
repurchase agreements |
|
|
32,593 |
|
|
|
101 |
|
|
|
1.24 |
|
|
|
20,773 |
|
|
|
120 |
|
|
|
2.32 |
|
Federal Home Loan Bank term advances |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,615 |
|
|
|
26 |
|
|
|
2.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest bearing liabilities |
|
|
559,307 |
|
|
|
1,935 |
|
|
|
1.39 |
|
|
|
424,765 |
|
|
|
2,248 |
|
|
|
2.13 |
|
Non interest bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
|
196,522 |
|
|
|
|
|
|
|
|
|
|
|
196,945 |
|
|
|
|
|
|
|
|
|
Other liabilities |
|
|
6,088 |
|
|
|
|
|
|
|
|
|
|
|
4,347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
761,917 |
|
|
|
|
|
|
|
|
|
|
|
626,057 |
|
|
|
|
|
|
|
|
|
Stockholders equity |
|
|
55,114 |
|
|
|
|
|
|
|
|
|
|
|
52,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
817,031 |
|
|
|
|
|
|
|
|
|
|
$ |
678,544 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income/interest rate spread (2) |
|
|
|
|
|
|
9,221 |
|
|
|
4.40 |
% |
|
|
|
|
|
|
7,517 |
|
|
|
4.05 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest earning assets/net interest margin (3) |
|
$ |
214,185 |
|
|
|
|
|
|
|
4.78 |
% |
|
$ |
210,955 |
|
|
|
|
|
|
|
4.76 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of interest earning assets to
interest bearing liabilities |
|
|
|
|
|
|
|
|
|
|
138.29 |
% |
|
|
|
|
|
|
|
|
|
|
149.66 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Tax equivalent adjustment |
|
|
|
|
|
|
(292 |
) |
|
|
|
|
|
|
|
|
|
|
(207 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
|
|
|
$ |
8,929 |
|
|
|
|
|
|
|
|
|
|
$ |
7,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The above table is presented on a tax equivalent basis. |
|
(2) |
|
Net interest rate spread represents the difference between the yield on average interest
earning assets and the cost of average interest bearing liabilities. |
|
(3) |
|
Net interest margin represents net interest income divided by average interest earning assets. |
Page 19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, |
|
2009 |
|
|
2008 |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
Average |
|
|
|
|
|
|
Yield/ |
|
|
Average |
|
|
|
|
|
|
Yield/ |
|
|
|
Balance |
|
|
Interest |
|
|
Cost |
|
|
Balance |
|
|
Interest |
|
|
Cost |
|
Interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net (including loan fee income) |
|
$ |
435,233 |
|
|
$ |
14,543 |
|
|
|
6.74 |
% |
|
$ |
386,136 |
|
|
$ |
13,763 |
|
|
|
7.17 |
% |
Mortgage-backed securities |
|
|
234,825 |
|
|
|
5,854 |
|
|
|
5.03 |
|
|
|
142,425 |
|
|
|
3,476 |
|
|
|
4.91 |
|
Tax exempt securities (1) |
|
|
70,076 |
|
|
|
1,700 |
|
|
|
4.89 |
|
|
|
53,013 |
|
|
|
1,328 |
|
|
|
5.04 |
|
Taxable securities |
|
|
18,519 |
|
|
|
373 |
|
|
|
4.06 |
|
|
|
22,762 |
|
|
|
511 |
|
|
|
4.51 |
|
Federal funds sold |
|
|
6,059 |
|
|
|
9 |
|
|
|
0.30 |
|
|
|
8,743 |
|
|
|
100 |
|
|
|
2.30 |
|
Deposits with banks |
|
|
3,019 |
|
|
|
1 |
|
|
|
0.07 |
|
|
|
153 |
|
|
|
4 |
|
|
|
5.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest earning assets |
|
|
767,731 |
|
|
|
22,480 |
|
|
|
5.90 |
|
|
|
613,232 |
|
|
|
19,182 |
|
|
|
6.29 |
|
Non interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
|
13,982 |
|
|
|
|
|
|
|
|
|
|
|
16,473 |
|
|
|
|
|
|
|
|
|
Other assets |
|
|
28,790 |
|
|
|
|
|
|
|
|
|
|
|
26,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
810,503 |
|
|
|
|
|
|
|
|
|
|
$ |
656,531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW and
money market deposits |
|
$ |
370,823 |
|
|
$ |
1,880 |
|
|
|
1.02 |
% |
|
$ |
299,122 |
|
|
$ |
2,902 |
|
|
|
1.95 |
% |
Certificates of deposit of $100,000
or more |
|
|
81,759 |
|
|
|
1,018 |
|
|
|
2.51 |
|
|
|
58,878 |
|
|
|
1,054 |
|
|
|
3.60 |
|
Other time deposits |
|
|
64,574 |
|
|
|
755 |
|
|
|
2.36 |
|
|
|
34,039 |
|
|
|
577 |
|
|
|
3.41 |
|
Federal funds purchased and
repurchase agreements |
|
|
42,610 |
|
|
|
221 |
|
|
|
1.05 |
|
|
|
17,735 |
|
|
|
231 |
|
|
|
2.62 |
|
Federal Home Loan Bank term advances |
|
|
166 |
|
|
|
1 |
|
|
|
1.21 |
|
|
|
2,473 |
|
|
|
30 |
|
|
|
2.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest bearing liabilities |
|
|
559,932 |
|
|
|
3,875 |
|
|
|
1.40 |
|
|
|
412,247 |
|
|
|
4,794 |
|
|
|
2.34 |
|
Non interest bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
|
189,899 |
|
|
|
|
|
|
|
|
|
|
|
186,610 |
|
|
|
|
|
|
|
|
|
Other liabilities |
|
|
5,295 |
|
|
|
|
|
|
|
|
|
|
|
4,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
755,126 |
|
|
|
|
|
|
|
|
|
|
|
603,296 |
|
|
|
|
|
|
|
|
|
Stockholders equity |
|
|
55,377 |
|
|
|
|
|
|
|
|
|
|
|
53,235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
810,503 |
|
|
|
|
|
|
|
|
|
|
$ |
656,531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income/interest rate spread (2) |
|
|
|
|
|
|
18,605 |
|
|
|
4.50 |
% |
|
|
|
|
|
|
14,388 |
|
|
|
3.95 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest earning assets/net interest margin (3) |
|
$ |
207,799 |
|
|
|
|
|
|
|
4.89 |
% |
|
$ |
200,985 |
|
|
|
|
|
|
|
4.72 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of interest earning assets to
interest bearing liabilities |
|
|
|
|
|
|
|
|
|
|
137.11 |
% |
|
|
|
|
|
|
|
|
|
|
148.75 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Tax equivalent adjustment |
|
|
|
|
|
|
(593 |
) |
|
|
|
|
|
|
|
|
|
|
(430 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
|
|
|
$ |
18,012 |
|
|
|
|
|
|
|
|
|
|
$ |
13,958 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The above table is presented on a tax equivalent basis. |
|
(2) |
|
Net interest rate spread represents the difference between the yield on average interest
earning assets and the cost of average interest bearing liabilities. |
|
(3) |
|
Net interest margin represents net interest income divided by average interest earning assets. |
Page 20
Rate/Volume Analysis
Net interest income can be analyzed in terms of the impact of changes in rates and volumes. The
following table illustrates the extent to which changes in interest rates and in the volume of
average interest earning assets and interest bearing liabilities have affected the Banks 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 or rate changes have been allocated to these categories based on the respective
percentage changes in average volume and rate. Due to the numerous simultaneous volume and rate
changes during the periods analyzed, it is not possible to precisely allocate changes between
volume and rates. In addition, average earning assets include nonaccrual loans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
|
2009 Over 2008 |
|
|
2009 Over 2008 |
|
|
|
Changes Due To |
|
|
Changes Due To |
|
(In thousands) |
|
Volume |
|
|
Rate |
|
|
Net Change |
|
|
Volume |
|
|
Rate |
|
|
Net Change |
|
Interest income on interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net (including loan fee income) |
|
$ |
2,407 |
|
|
$ |
(1,990 |
) |
|
$ |
417 |
|
|
$ |
2,785 |
|
|
$ |
(2,005 |
) |
|
$ |
780 |
|
Mortgage-backed securities |
|
|
917 |
|
|
|
24 |
|
|
|
941 |
|
|
|
2,292 |
|
|
|
86 |
|
|
|
2,378 |
|
Tax exempt securities (1) |
|
|
351 |
|
|
|
(168 |
) |
|
|
183 |
|
|
|
483 |
|
|
|
(111 |
) |
|
|
372 |
|
Taxable securities |
|
|
(12 |
) |
|
|
(75 |
) |
|
|
(87 |
) |
|
|
(90 |
) |
|
|
(48 |
) |
|
|
(138 |
) |
Federal funds sold |
|
|
(12 |
) |
|
|
(50 |
) |
|
|
(62 |
) |
|
|
(24 |
) |
|
|
(67 |
) |
|
|
(91 |
) |
Deposits with banks |
|
|
3 |
|
|
|
(4 |
) |
|
|
(1 |
) |
|
|
12 |
|
|
|
(15 |
) |
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest earning assets |
|
|
3,654 |
|
|
|
(2,263 |
) |
|
|
1,391 |
|
|
|
5,458 |
|
|
|
(2,160 |
) |
|
|
3,298 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense on interest bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW and money market deposits |
|
|
1,474 |
|
|
|
(1,896 |
) |
|
|
(422 |
) |
|
|
1,518 |
|
|
|
(2,540 |
) |
|
|
(1,022 |
) |
Certificates of deposit of $100,000 or more |
|
|
598 |
|
|
|
(585 |
) |
|
|
14 |
|
|
|
701 |
|
|
|
(737 |
) |
|
|
(36 |
) |
Other time deposits |
|
|
548 |
|
|
|
(407 |
) |
|
|
140 |
|
|
|
665 |
|
|
|
(487 |
) |
|
|
178 |
|
Federal funds purchased and repurchase agreements |
|
|
237 |
|
|
|
(256 |
) |
|
|
(19 |
) |
|
|
384 |
|
|
|
(394 |
) |
|
|
(10 |
) |
Federal Home Loan Bank Advances |
|
|
(13 |
) |
|
|
(13 |
) |
|
|
(26 |
) |
|
|
(19 |
) |
|
|
(10 |
) |
|
|
(29 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest bearing liabilities |
|
|
2,844 |
|
|
|
(3,157 |
) |
|
|
(313 |
) |
|
|
3,249 |
|
|
|
(4,168 |
) |
|
|
(919 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
810 |
|
|
$ |
894 |
|
|
$ |
1,704 |
|
|
$ |
2,209 |
|
|
$ |
2,008 |
|
|
$ |
4,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The above table is presented on a tax equivalent basis. |
Analysis of Net Interest Income for the Three Months ended June 30, 2009 and June 30, 2008
Net interest income was $8.9 million for the three months ended June 30, 2009 compared to $7.3
million for the same period in 2008, an increase of $1.6 million or 22.1%. Net interest margin
improved to 4.78% for the quarter ended June 30, 2009 as compared to 4.76% for the quarter ended
June 30, 2008. This increase was primarily the result of an increase in average interest earnings
assets of $137.8 million and the decrease in the cost of the average total interest bearing
liabilities being greater than the decrease in the yield on average total interest earning assets.
The cost of interest bearing liabilities decreased approximately 74 basis points during the second
quarter of 2009 compared to 2008, which was partly offset by a decrease in yields of approximately
39 basis points on interest earning assets.
For the three months ended June 30, 2009, average loans grew by $47.4 million or 12.0% to $441.2
million as compared to $393.9 million for the same period in 2008. Real estate mortgage loans and
commercial loans primarily contributed to the growth. The Bank remains committed to growing loans
with prudent underwriting, sensible pricing and limited credit and extension risk.
For the three months ended June 30, 2009, average total investments increased by $89.7 million or
39.3% to $318.0 million as compared to $228.3 million for the three months ended June 30, 2008.
Average federal funds sold decreased to $10.6 million or 20.9% for the three months ended June 30,
2009 from $13.4 million in 2008. The decrease in the average federal funds sold for the three
months ended June 30, 2009 was primarily due to growth in the average investments.
Page 21
Average total interest bearing liabilities totaled $559.3 million for the three months ended June
30, 2009 compared to $424.8 million for the same period in 2008. During the three months ended
June 30, 2009, the Bank reduced interest rates on deposit products in
response to the reductions in the federal funds and discount rate by the Federal Reserve and the
prudent management of deposit pricing. The reduction in deposit rates along with lower borrowing
costs resulted in a decrease in the cost of interest bearing liabilities from 2.13% for the three
months ended June 30, 2008 to 1.39% for the same period in 2009. Since the Companys interest
bearing liabilities generally reprice or mature more quickly than its interest earning assets, a
decrease in short term interest rates initially result in an increase in net interest income.
Additionally, the large percentages of deposits in money market accounts reprice at short term
market rates making the balance sheet more liability sensitive.
For the three months ended June 30, 2009, average total deposits increased by $126.9 million or
21.3% to $723.2 million as compared to average total deposits of $596.3 million for the same period
in 2008. Components of this increase include an increase in average balances in savings, NOW and
money market accounts of $69.9 million or 23.0% to $374.2 million for the three months ended June
30, 2009 compared to $304.3 million for the same period last year. Average balances in
certificates of deposit of $100,000 or more and other time deposits increased $57.5 million or
60.5% to $152.5 million for 2009 as compared to 2008. Average public fund deposits comprised 19.1%
of total average deposits during the three months ended June 30, 2009 and 22.0% of total average
deposits for the same period in 2008. Average federal funds purchased and repurchase agreements
and average Federal Home Loan Bank advances increased $7.2 million to $32.6 million for the three
months ended June 30, 2009 as compared to $25.4 million for the same period in the prior year.
Total interest income increased $1.3 million or 13.7% to $10.9 million for the three months ended
June 30, 2009 from $9.6 million for the same period in 2008. Interest income on loans increased
$0.4 million or 6.0% to $7.3 million in 2009 compared to $6.9 million in 2008 primarily due to
growth in the loan portfolio partially offset by a decrease in yield on average loans. The yield on
average loans was 6.7% for 2009 as compared to 7.1% in 2008.
Interest income on investment in mortgage-backed, taxable and tax exempt securities increased $0.9
million to $3.5 million for the three months ended June 30, 2009 compared to $2.6 million for the
same period in 2008. Interest income on securities included net amortization of premium of $46,000
in the 2009 period compared to accretion of discounts of $22,000 for the same period in 2008. The
tax adjusted average yield on total securities decreased to 4.8% in 2009 from 4.9% in 2008.
Interest expense decreased $0.3 million or 13.9% to $1.9 million for the three months ended June
30, 2009 compared to $2.2 million for the same period in 2008. The decrease in interest expense in
2009 resulted from the Federal Reserve reducing the targeted federal funds rate and discount rate
at 0.25% and 0.50%, respectively and the prudent management of deposit pricing which was partially
offset by the growth in average balances for deposits and borrowings.
Analysis of Net Interest Income for the Six Months ended June 30, 2009 and June 30, 2008
Net interest income was $18.0 million for the six months ended June 30, 2009 compared to $14.0
million for the same period in 2008, an increase of $4.0 million or 29.0%. Net interest margin
improved to 4.89% for the six months ended June 30, 2009 as compared to 4.72% for the same period
in 2008. This increase was primarily the result of an increase in average interest earnings assets
of $154.5 million and the decrease in the cost of the average total interest bearing liabilities
being greater than the decrease in the yield on average total interest earning assets. The cost of
interest bearing liabilities decreased approximately 94 basis points during the six months ended
June 30, 2009 compared to 2008, which was partly offset by a decrease in yields of approximately 39
basis points on interest earning assets.
For the six months ended June 30, 2009, average loans grew by $49.1 million or 12.7% to $435.2
million as compared to $386.1 million for the same period in 2008. Real estate mortgage loans and
commercial loans primarily contributed to the growth. The Bank remains committed to growing loans
with prudent underwriting, sensible pricing and limited credit and extension risk.
For the six months ended June 30, 2009, average total investments increased by $105.2 million or
48.2% to $323.4 million as compared to $218.2 million for the same period in 2008. Average federal
funds sold decreased to $6.1 million or 30.7% for the six months ended June 30, 2009 from $8.7
million in 2008. The decrease in the average federal funds sold for the three months ended June 30,
2009 was primarily due to growth in the average investments.
Average total interest bearing liabilities totaled $559.9 million for the six months ended June 30,
2009 compared to $412.2 million for the same period in 2008. During the six months ended June 30,
2009, the Bank reduced interest rates on deposit products in response to the reductions in the
federal funds and discount rate by the Federal Reserve and the prudent management of deposit
pricing. The reduction in deposit rates along with lower borrowing costs resulted in a decrease in
the cost of interest bearing liabilities from 2.34% for the six months ended June 30, 2008 to 1.40%
for the same period in 2009. Since the Companys interest bearing liabilities generally reprice or
mature more quickly than its interest earning assets, a decrease in short term interest rates
initially result in an increase in net interest income. Additionally, the large percentages of
deposits in money market accounts reprice at short term market rates making the balance sheet more
liability sensitive.
Page 22
For the six months ended June 30, 2009, average total deposits increased by $128.5 million or 22.2%
to $707.1 million as compared to average total deposits of $578.6 million for the same period in
2008. Components of this increase include an increase in average balances in savings, NOW and
money market accounts of $71.7 million or 24.0% to $370.8 million for the six months ended June 30,
2009 compared to $299.1 million for the same period last year. Average balances in certificates of
deposit of $100,000 or more and other time deposits increased $53.4 million or 57.5% to $146.3
million for 2009 as compared to $92.9 million in 2008. Average public fund deposits comprised
20.7% of total average deposits during the six months ended June 30, 2009 and 23.2% of total
average deposits for the same period in 2008. Average federal funds purchased and repurchase
agreements and average Federal Home Loan Bank advances increased $22.6 million to $42.8 million for
the six months ended June 30, 2009 as compared to $20.2 million for the same period in the prior
year.
Total interest income increased $3.1 million or 16.7% to $21.9 million for the six months ended
June 30, 2009 from $18.8 million for the same period in 2008. Interest income on loans increased
$0.8 million or 5.7% to $14.5 million in 2009 compared to $13.8 million in 2008 primarily due to
growth in the loan portfolio partially offset by a decrease in yield on average loans. The yield on
average loans was 6.7% for 2009 as compared to 7.2% in 2008.
Interest income on investment in mortgage-backed, taxable and tax exempt securities increased $2.4
million to $7.3 million for the six months ended June 30, 2009 compared to $4.9 million for the
same period in 2008. Interest income on securities included net amortization of premium of $37,000
in the 2009 period compared to accretion of discounts of $23,000 for the same period in 2008. The
tax adjusted average yield on total securities stayed flat at 4.9% for the six months ended June
30, 2009 and 2008, respectively.
Interest expense decreased $0.9 million or 19.2% to $3.9 million for the six months ended June 30,
2009 compared to $4.8 million for the same period in 2008. The decrease in interest expense in 2009
resulted from the Federal Reserve reducing the targeted federal funds rate and discount rate to
0.25% and 0.50%, respectively and the prudent management of deposit pricing which was partially
offset by the growth in average balances for deposits and borrowings.
Provision and Allowance for Loan Losses
The Banks loan portfolio consists primarily of real estate loans secured by commercial and
residential real estate properties located in the Banks principal lending area on eastern Long
Island. The interest rates charged by the Bank on loans are affected primarily by the demand for
such loans, the supply of money available for lending purposes, the rates offered by its
competitors, the Banks relationship with the customer and the related credit risks of the
transaction. These factors are affected by general and economic conditions including, but not
limited to, monetary policies of the federal government, including the Federal Reserve Board,
legislative policies and governmental budgetary matters.
The performance of the loan portfolio remained strong for the three months ended June 30, 2009.
Non performing assets were $2.3 million at June 30, 2009 compared to $3.1 million at December 31,
2008 and $0.8 million at June 30, 2008 representing 0.52% of total loans at June 30, 2009 compared
to 0.71% at December 31, 2008 and 0.19% at June 30, 2008. As of June 30, 2009 and December 31,
2008, the Company had impaired loans as defined by SFAS No. 114, Accounting by Creditors for
Impairment of a Loan An Amendment of FASB Statement No. 5 and 15 (SFAS 114) of $4.8
million and $5.7 million, respectively. Impaired loans include individually classified nonaccrual
loans and trouble debt restructured (TDR) loans. Recognition of interest income on impaired loans
is discontinued when reasonable doubt exists as to the ultimate collectability of the interest and
principal of the loan. The TDR loans of $3.2 million at June 30, 2009 and December 31, 2008 are
current and are secured with collateral that has a fair value of approximately $5.4 million as well
as personal guarantors. Management believes that the ultimate collection of principal and interest
is reasonably assured and therefore continues to recognize interest income on an accrual basis. In
addition, the Bank has no commitment to lend additional funds to this debtor. The average recorded
investment in the impaired loan during the six months ended June 30, 2009 was $5.7 million and was
$0.8 million for the year ended December 31, 2008. There were no impaired loans as of June 30,
2008. At June 30, 2009 and December 31, 2008, there was no specifically allocated allowance for
loan losses related to impaired loans.
The Bank had no foreclosed real estate at June 30, 2009, December 31, 2008 and June 30, 2008,
respectively.
Loans of approximately $15.3 million or 3.4% of total loans at June 30, 2009 were classified as
potential problem loans compared to $12.1 million or 2.7% at March 31, 2009, $3.5 million or 0.8%
at December 31, 2008 and $12.3 million or 3.1% at June 30, 2008. These are loans for which
management has information that indicates the borrower may not be able to comply with the present
repayment terms. These loans are subject to increased management attention and their classification
is reviewed on at least a quarterly basis. Due to the structure and nature of the credits, we do
not expect to sustain a loss on these relationships.
Page 23
Based on our continuing review of the overall loan portfolio, the current asset quality of the
portfolio, the growth in our loan portfolio, and the net charge-offs, a provision for loan losses
of $1.4 million and $2.3 million was recorded during the three and six months ended June 30, 2009
compared to a provision for loan loss of $0.3 million and $0.5 million that was recorded during the
same periods in 2008. The Bank recognized net charge-offs in the amount of $1.2 million for the
six months ended June 30, 2009 as compared to $0.2 million for the same period in 2008. The
allowance for loan losses increased to $5.0 million at June 30, 2009, as compared to $4.0 million
at December 31, 2008 and $3.3 million at June 30, 2008. As a percentage of total loans, the
allowance increased to 1.12% at June 30, 2009 compared to 0.92% at December 31, 2008 and 0.83% at
June 30, 2008. Management continues to carefully monitor the loan portfolio as well as real estate
trends on eastern Long Island. The Banks consistent and rigorous underwriting standards preclude
sub prime lending, and management remains cautious about the potential for an indirect impact on
the local economy and real estate values in the future.
Non Interest Income
Total non interest income increased $0.3 million or 19.6% to $1.9 million for the three months
ended June 30, 2009 compared to $1.6 million for the same period in 2008. Net securities gains
were $0.5 million for the three months ended June 30, 2009. There were no net securities gains or
losses for the three months ended June 30, 2008. Service charges on deposit accounts remained at
$0.8 million for the three months ended June 30, 2009 and 2008. Fees for other customer services
were $0.4 million for the three months ended June 30, 2009 and 2008, respectively. Title fee
income related to Bridge Abstract decreased $164,000 or 51.7% to $153,000 for the three months
ended June 30, 2009 compared to $317,000 for the same period in 2008.
Total non interest income increased during the six months ended June 30, 2009 by $49,000 or 1.6%
from the same period last year. Net securities gains were $0.5 million for the six months ended
June 30, 2009. There were no net securities gains or losses for the six months ended June 30, 2008.
Fees for other customer services totaled $0.7 million and service charges on deposit accounts
totaled $1.4 million for the six months ended June 30, 2009, compared to $0.8 million and $1.5
million, respectively, from the same period in 2008. The decline in service charges on deposit
accounts represents lower overdraft fees. Bridge Abstract, the Banks title insurance abstract
subsidiary, generated title fee income of $0.4 million during the six months ended June 30, 2009
compared to $0.7 million for the same period in 2008. The decrease was attributable to a decline in
the number and value of transactions processed by the subsidiary. Other operating income for the
six months ended June 30, 2009 totaled $39,000, a decrease of $42,000 from $81,000 for the six
months ended June 30, 2008. The decline represents lower check book fees and bank rental income.
Non Interest Expense
Total non interest expense increased $1.2 million or 22.1% to $6.5 million during the three months
ended June 30, 2009 over the same period in 2008. The primary components of these increases were
higher salaries and employee benefits, net occupancy expense, furniture and fixture expense and
FDIC assessments. Salary and benefit expense increased $0.4 million or 13.2% to $3.5
million for the three months ended June 30, 2009 from $3.1 million for the same periods in 2008.
The increase reflects filling vacant positions, hiring new employees to support the Companys
expanding infrastructure and new branch offices, and related employee benefit costs. Net occupancy
expense increased $126,000 or 28.6% to $566,000 for the three months ended June 30, 2009 from
$440,000 for the same periods in 2008. Higher net occupancy expenses were due to increases in
maintenance and supplies, and rent expense related to the new branch offices in 2009 as well as
annual rent increases in other branch locations. Furniture and fixture expense increased $49,000 or
24.0% to $253,000 for the three months ended June 30, 2009 from $204,000 for the same period in
2008. The increase in furniture and fixture expense in 2009 relates primarily to the new branches.
FDIC assessments increased $0.6 million to $0.7 million for the three months ended
June 30, 2009 from $0.1 million for the same period in 2008. The increase during 2009 was due to
growth in deposits, higher rates, and a special assessment of $0.4
million.
Total non interest expense increased $2.2 million or 22.1% to $12.5 million during the six months
ended June 30, 2009 from $10.3 million for the same period in 2008. The primary components of
these increases were higher salaries and employee benefits, net occupancy expense, furniture and
fixture expense and FDIC assessments. Salary and benefit expense increased $1.0 million or
15.7% to $7.1 million for the six months ended June 30, 2009 from $6.1 million for the same period
in 2008. The increases in salary and benefits reflect base salary increases for staff, filling
vacant positions, hiring new employees to support the Companys expanding infrastructure and new
branch offices, increases in incentive based compensation and an increase in employee benefit
costs, particularly related to pension and SERP expense. Net occupancy expense increased $0.2
million or 26.6% to $1.1 million for the six months ended June 30, 2009 from $0.9 million for the
same period in 2008. Higher net occupancy expenses were due to increases in maintenance and
supplies, and rent expense related to the new branch offices in 2009 as well as annual rent
increases in other branch locations. Furniture and fixture expense increased $0.1 million or 16.8%
to $0.5 million for the six months ended June 30, 2009 from $0.4 million for the same period in
2008. The increase in furniture and fixture expense in 2009 relates primarily to the new branches.
FDIC assessments increased $0.9 million to $1.0 million for the six months ended
June 30, 2009 from $0.1 million for the same period in 2008. The increase during 2009 was due
to growth in deposits, higher
rates, and a special assessment of $0.4 million.
Page 24
Income Taxes
The provision for income taxes decreased $0.1 million to $1.0 million during the three months ended
June 30, 2009 from $1.1 million for the same period in 2008 due to lower income before income
taxes. The effective tax rate for the three months ended June 30, 2009 increased to 32.7% from
32.5% for the same period last year. For the six months ended June 30, 2009 and 2008, the provision
for income taxes remained at $2.0 million. The effective tax rate for the six months ended June 30,
2009 increased to 32.6% from 32.4% for the same period in 2008.
Financial Condition
Assets totaled $793.2 million at June 30, 2009, a decrease of $45.9 million or 5.5% from $839.1
million at December 31, 2008. This change is primarily a result of a decrease in total securities
of $48.2 million or 13.6% due to maturities, principal payments and the sale of $12.6 million of
mortgage backed securities as well as a decrease in cash and cash equivalents of $12.8 million or
44.4% which was partially offset by increases in total loans of $16.9 million or 3.9%. Total
deposits grew $40.6 million to $699.7 million at June 30, 2009, compared to $659.1 million at
December 31, 2008. Demand deposits increased $24.9 million to $206.1 million compared to $181.2
million at December 31, 2008. Savings, NOW and money market deposits decreased $3.0 million to
$341.9 million at June 30, 2009 from $344.9 million at December 31, 2008. Certificates of deposit
of $100,000 or more and other time deposits also increased $18.7 million or 14.1%. The increase in
deposits and the decline in the investment portfolio resulted in a decrease in borrowings at June
30, 2009. Federal funds purchased and Federal Home Loan Bank overnight borrowings decreased $60.9
million to $10.0 million at June 30, 2009 compared to $70.9 million at December 31, 2008. There
were no Federal Home Loan Bank term advances outstanding at June 30, 2009 compared to $30.0 million
at December 31, 2008. Accrued interest payable and other liabilities increased $1.6 million to
$9.5 million at June 30, 2009 from $7.9 million at December 31, 2008. The increase in other
liabilities at June 30, 2009 relates to an increase in accrued taxes payable and an increase in
deferred tax liabilities as a result of higher unrealized gains on the security portfolio.
Total stockholders equity was $59.0 million at June 30, 2009, an increase of $2.8 million or
5.0% from December 31, 2008, primarily due to net income of $4.2 million and an increase in net
unrealized gains on securities of $1.1 million, partially offset by the declaration of dividends
totaling $2.9 million.
In April 2009, the Company announced a dividend reinvestment plan effective with the second
quarter 2009 dividend. In June 2009, the Company declared a quarterly dividend of $0.23 per
share. The Company continues its long term trend of uninterrupted dividends.
Liquidity
The objective of liquidity management is to ensure the sufficiency of funds available to respond to
the needs of depositors and borrowers, and to take advantage of unanticipated earnings enhancement
opportunities for Company growth. Liquidity management addresses the ability of the Company to
meet financial obligations that arise in the normal course of business. Liquidity is primarily
needed to meet customer borrowing commitments, deposit withdrawals either on demand or contractual
maturity, to repay other borrowings as they mature, to fund current and planned expenditures and to
make new loans and investments as opportunities arise.
The Holding Companys principal sources of liquidity included cash and cash equivalents of $5.9
million as of June 30, 2009, and dividends from the Bank. Cash available for distribution of
dividends to shareholders of the Company is primarily derived from dividends paid by the Bank to
the Company. During 2009, the Bank declared and paid $4.5 million in cash dividends to the Company.
At June 30, 2009, the Bank had $5.6 million of retained net income available for dividends to the
Company. Prior regulatory approval is required if the total of all dividends declared by the Bank
in any calendar year exceeds the total of the Banks net income of that year combined with its
retained net income of the preceding two years. In the event that the Company subsequently expands
its current operations, in addition to dividends from the Bank, it will need to rely on its own
earnings, additional capital raised and other borrowings to meet liquidity needs.
The Banks 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
Banks operating, financing, lending and investing activities during any given period. Other
sources of liquidity include principal repayments and maturities of loan and investment securities,
lines of credit with other financial institutions including the Federal Home Loan Bank and the
Federal Reserve Bank, growth in core deposits and sources of wholesale funding such as brokered
certificates of deposits. While scheduled loan amortization, maturing securities and short term
investments are a relatively predictable source of funds, deposit flows and loan and
mortgage-backed securities 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 seasonal deposit
outflows, loans, and asset and liability management objectives. Historically, the Bank has relied
on its deposit base, drawn through its full-service branches that serve its market area and local
municipal deposits, as its principal source of funding. The Bank seeks to retain existing deposits
and loans and maintain customer relationships by offering quality service and competitive interest
rates to its customers, while managing the overall cost of funds needed to finance its strategies.
Page 25
The Banks Asset/Liability and Funds Management Policy allows for wholesale borrowings of up to 25%
of total assets. At June 30, 2009, the Bank had aggregate lines of credit of $217.5 million with
unaffiliated correspondent banks to provide short term credit for liquidity requirements. Of these
aggregate lines of credit, $197.5 million is available on an unsecured basis. The Bank also has
the ability, as a member of the Federal Home Loan Bank (FHLB) system, to borrow against
unencumbered residential and commercial mortgages owned by the Bank. The Bank also has a master
repurchase agreement with the FHLB, which increases its borrowing capacity. In addition, the Bank
has an approved broker relationship for the purpose of issuing brokered certificates of deposit.
As of June 30, 2009, the Bank had no brokered certificates of deposit compared to $5.0 million at
December 31, 2008. As of June 30, 2009 and December 31, 2008, the Bank had $10.0 million and $70.9
million, respectively, in overnight borrowings. The Bank had $15.0 million of securities sold
under agreements to repurchase outstanding as of June 30, 2009 and December 31, 2008. The Bank had
a $30.0 million advance that was collateralized by securities outstanding as of December 31, 2008
with the FHLB. There were no advances outstanding as of June 30, 2009.
Management continually monitors the liquidity position and believes that sufficient liquidity
exists to meet all of our operating requirements. Based on the objectives determined by the Asset
and Liability Committee, the Banks liquidity levels may be affected by the use of short term and
wholesale borrowings, and the amount of public funds in the deposit mix. The Asset and Liability
Committee is comprised of members of senior management and the Board. Excess short term liquidity
is invested in overnight federal funds sold.
Capital Resources
The Company and the Bank are subject to various regulatory capital requirements administered by the
federal banking agencies. Failure to meet minimum capital requirements can result in certain
mandatory and possibly additional discretionary actions by regulators that, if undertaken, could
have a direct material effect on the Companys and the Banks financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the
Bank must meet specific capital guidelines that involve quantitative measures of the Companys and
Banks assets, liabilities, and certain off-balance sheet items calculated under regulatory
accounting practices. The Companys and the Banks capital amounts and classification also are
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 Company and
the Bank to maintain minimum amounts and ratios (set forth in the following table) 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). As of June 30, 2009, the Company and the Bank
met all capital adequacy requirements. In April 2009, the Company announced that its Board of
Directors approved and adopted a Dividend Reinvestment Plan (DRP Plan) and filed a registration
statement on Form S-3 to register 600,000 shares of common stock with the Securities and Exchange
Commission (SEC) pursuant to the DRP Plan. In June 2009, the Company filed a shelf registration
statement on Form S-3 to register up to $50 million of securities with the SEC.
Page 26
At June 30, 2009 and December 31, 2008, actual capital levels and minimum required levels for the
Company and the Bank were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bridge
Bancorp, Inc. (Consolidated) As of June 30, |
|
2009 |
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To Be Well |
|
|
|
|
|
|
|
|
|
|
|
For Capital |
|
|
Capitalized Under |
|
|
|
|
|
|
|
|
|
|
|
Adequacy |
|
|
Prompt Corrective |
|
|
|
Actual |
|
|
Purposes |
|
|
Action Provisions |
|
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
Total Capital (to risk weighted assets) |
|
$ |
61,102 |
|
|
|
11.6 |
% |
|
$ |
41,990 |
|
|
|
8.0 |
% |
|
|
n/a |
|
|
|
n/a |
|
Tier 1 Capital (to risk weighted assets) |
|
|
55,960 |
|
|
|
10.7 |
% |
|
|
20,995 |
|
|
|
4.0 |
% |
|
|
n/a |
|
|
|
n/a |
|
Tier 1 Capital (to average assets) |
|
|
55,960 |
|
|
|
6.9 |
% |
|
|
32,658 |
|
|
|
4.0 |
% |
|
|
n/a |
|
|
|
n/a |
|
|
As of December 31, |
|
2008 |
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To Be Well |
|
|
|
|
|
|
|
|
|
|
|
For Capital |
|
|
Capitalized Under |
|
|
|
|
|
|
|
|
|
|
|
Adequacy |
|
|
Prompt Corrective |
|
|
|
Actual |
|
|
Purposes |
|
|
Action Provisions |
|
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
Total Capital (to risk weighted assets) |
|
$ |
58,360 |
|
|
|
11.1 |
% |
|
$ |
42,137 |
|
|
|
8.0 |
% |
|
|
n/a |
|
|
|
n/a |
|
Tier 1 Capital (to risk weighted assets) |
|
|
54,288 |
|
|
|
10.3 |
% |
|
|
21,068 |
|
|
|
4.0 |
% |
|
|
n/a |
|
|
|
n/a |
|
Tier 1 Capital (to average assets) |
|
|
54,288 |
|
|
|
6.9 |
% |
|
|
31,304 |
|
|
|
4.0 |
% |
|
|
n/a |
|
|
|
n/a |
|
|
As of June 30, |
|
2009 |
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To Be Well |
|
|
|
|
|
|
|
|
|
|
|
For Capital |
|
|
Capitalized Under |
|
|
|
|
|
|
|
|
|
|
|
Adequacy |
|
|
Prompt Corrective |
|
|
|
Actual |
|
|
Purposes |
|
|
Action Provisions |
|
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
Total Capital (to risk weighted assets) |
|
$ |
56,668 |
|
|
|
10.8 |
% |
|
$ |
41,983 |
|
|
|
8.0 |
% |
|
$ |
52,478 |
|
|
|
10.0 |
% |
Tier 1 Capital (to risk weighted assets) |
|
|
51,526 |
|
|
|
9.8 |
% |
|
|
20,991 |
|
|
|
4.0 |
% |
|
|
31,487 |
|
|
|
6.0 |
% |
Tier 1 Capital (to average assets) |
|
|
51,526 |
|
|
|
6.3 |
% |
|
|
32,655 |
|
|
|
4.0 |
% |
|
|
40,818 |
|
|
|
5.0 |
% |
|
As of December 31, |
|
2008 |
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To Be Well |
|
|
|
|
|
|
|
|
|
|
|
For Capital |
|
|
Capitalized Under |
|
|
|
|
|
|
|
|
|
|
|
Adequacy |
|
|
Prompt Corrective |
|
|
|
Actual |
|
|
Purposes |
|
|
Action Provisions |
|
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
Total Capital (to risk weighted assets) |
|
$ |
55,431 |
|
|
|
10.5 |
% |
|
$ |
42,130 |
|
|
|
8.0 |
% |
|
$ |
52,662 |
|
|
|
10.0 |
% |
Tier 1 Capital (to risk weighted assets) |
|
|
51,359 |
|
|
|
9.8 |
% |
|
|
21,065 |
|
|
|
4.0 |
% |
|
|
31,597 |
|
|
|
6.0 |
% |
Tier 1 Capital (to average assets) |
|
|
51,359 |
|
|
|
6.6 |
% |
|
|
31,279 |
|
|
|
4.0 |
% |
|
|
39,099 |
|
|
|
5.0 |
% |
Impact of Inflation and Changing Prices
The Unaudited Consolidated Financial Statements and notes thereto presented herein have been
prepared in accordance with U.S. generally accepted accounting principles, which require the
measurement of financial position and operating results in terms of historical dollars without
considering changes in the relative purchasing power of money over time due to inflation. The
primary effect of inflation on the operations of the Company is reflected in increased operating
costs. Unlike most industrial companies, virtually all of the assets and liabilities of a
financial institution are monetary in nature. As a result, changes in interest rates have a more
significant effect on the performance of a financial institution than do the effects of changes in
the general rate of inflation and changes in prices. Changes in interest rates could aversely
affect our results of operations and financial condition. Interest rates do not necessarily move
in the same direction, or in the same magnitude, as the prices of goods and services. Interest
rates are highly sensitive to many factors, which are beyond the control of the Company, including
the influence of domestic and foreign economic conditions and the monetary and fiscal policies of
the United States government and federal agencies, particularly the Federal Reserve Bank.
Recent Regulatory and Accounting Developments
In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in
Shared-Based Payment Transactions Are Participating Securities. This FSP addresses whether
instruments granted in share-based payment transactions are participating securities prior to
vesting and, therefore, need to be included in the earnings allocation in computing earnings per
share (EPS). This FSP is effective for financial statements issued for fiscal years beginning
after December 15, 2008, and interim periods within those years. All prior-period EPS data
presented shall be adjusted retrospectively. The Company adopted this FSP for the quarter ending
March 31, 2009 and determined that there was no material impact to earnings per share.
Page 27
In April 2009, the FASB issued FASB Staff Position (FSP) FAS 157-4, Determining Fair Value When
the Volume and Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly. This FSP emphasizes that even if there has been a significant
decrease in the volume and level of activity for the asset or liability and regardless of the
valuation technique(s) used, the objective of a fair value measurement remains the same. It also
provides guidance to determine whether transactions are orderly. FSP FAS 157-4 is effective for
interim and annual periods ending after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009, if FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairment and FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of
Financial Instruments, are adopted simultaneously. The adoption of this FSP did not have a
significant impact on the Companys financial statements.
In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of
Financial Information. This FSP amends FASB Statement No. 107, Disclosures about the Fair Value
of Financial Instruments to require disclosures about fair value of financial instruments for
interim reporting periods of publicly traded companies as well as in annual financial statements.
This FSP also amends APB Opinion No. 28, Interim Financial Reporting to require those disclosures
in summarized financial information at interim reporting periods. This FSP shall be effective for
interim reporting periods ending after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009. An entity may early adopt this FSP only if it also elects to early
adopt FSP FAS 157-4, Determining Fair Value When the Volume and Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, and FSP
FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments. The
adoption of this FSP at June 30, 2009 did not have a material impact on the results of operations
or financial position as it only required disclosures which are included in Note 6.
In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments. This FSP amends the other-than-temporary impairment guidance in
U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation
and disclosure of other-than-temporary impairments on debt and equity securities in the financial
statements. The FSP shall be effective for interim and annual reporting periods ending after June
15, 2009, with early adoption permitted for periods ending after March 15, 2009. Earlier adoption
for periods ending before March 15, 2009, is not permitted. If an entity elects to adopt early
either FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, or FSP
FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, the entity
also is required to adopt early this FSP. Additionally, if an entity elects to adopt early this
FSP, it is required to adopt FSP FAS 157-4. The adoption of this FSP did not have a significant
impact on the Companys financial statements.
In April 2009, the FASB issued FSP FAS 141(R)-1, Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination That Arise from Contingencies. This FSP shall be effective for
assets or liabilities arising from contingencies in business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning on or after
December 15, 2008. The adoption of this FSP had no impact on the Companys financial statements.
In May 2009, the FASB issued Statement 165 Subsequent Events which addresses accounting and
disclosure requirements related to subsequent events. Statement 165 requires management to evaluate
subsequent events through the date the financial statements are either issued or available to be
issued, depending on the companys expectation of whether it will widely distribute its financial
statements to its shareholders and other financial statement users. Companies are required to
disclose the date through which subsequent events have been evaluated. Statement 165 is effective
for interim or annual financial periods ending after June 15, 2009 and should be applied
prospectively.
In June 2009, the FASB issued Statement No. 168, The FASB Accounting Standards Codification and
the Hierarchy of Generally Accepted Accounting Principles A Replacement of FASB Statement No.
162. With the issuance of Statement No. 168 on June 29, 2009, the FASB Accounting Standards
CodificationTM (Codification) became the source of authoritative U.S. generally accepted accounting
principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and
interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal
securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date
of this Statement, the Codification superseded all then-existing non-SEC accounting and reporting
standards. All other nongrandfathered non-SEC accounting literature not included in the
Codification became nonauthoritative. This Statement is effective for financial statements issued
for interim and annual periods ending after September 15, 2009.
Page 28
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Asset/Liability Management
Management considers interest rate risk to be the most significant market risk for the Company.
Market risk is the risk of loss from adverse changes in market prices and rates. Interest rate
risk is the exposure to adverse changes in the net income of the Company as a result of changes in
interest rates.
The Companys 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 liabilities, and the credit quality
of earning assets. The Companys objectives in its asset and liability management are to maintain
a strong, stable net interest margin, to utilize its capital effectively without taking undue risks,
to maintain adequate liquidity, and to reduce vulnerability of its operations to changes in
interest rates.
The Companys Asset and Liability Committee evaluates periodically, but at least four times a year,
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 at least annually. The
economic environment continually presents uncertainties as to future interest rate trends. The
Asset and Liability Committee regularly utilizes a model that projects net interest income based on
increasing or decreasing interest rates, in order to be better able to respond to changes in
interest rates.
At June 30, 2009, $262.9 million or 85.6% of the Companys securities had fixed interest rates.
Changes in interest rates affect the value of the Companys interest earning assets and in
particular its securities portfolio. Generally, the value of securities fluctuates inversely with
changes in interest rates. Increases in interest rates could result in decreases in the market
value of interest earning assets, which could adversely affect the Companys results of operations
if sold. The Company is also subject to reinvestment risk associated with changes in interest
rates. Changes in interest rates may affect the average life of loans and mortgage related
securities. In periods of decreasing interest rates, the average life of loans and securities held
by the Company may be shortened to the extent increased prepayment activity occurs during such
periods which, in turn, may result in the investment of funds from such prepayments in lower
yielding assets. Under these circumstances the Company is subject to reinvestment risk to the
extent that it is unable to reinvest the cash received from such prepayments at rates that are
comparable to the rates on existing loans and securities. Additionally, increases in interest
rates may result in decreasing loan prepayments with respect to fixed rate loans, (and therefore an
increase in the average life of such loans), may result in a decrease in loan demand, and make it
more difficult for borrowers to repay adjustable rate loans.
The Company utilizes the results of a detailed and dynamic simulation model to quantify the
estimated exposure to net interest income to sustained interest rate changes. Management routinely
monitors simulated net interest income sensitivity over a rolling two-year horizon. The simulation
model captures the seasonality of the Companys deposit flows and the impact of changing interest
rates on the interest income received and the interest expense paid on all assets and liabilities
reflected on the Companys consolidated balance sheet. This sensitivity analysis is compared to
the asset and liability policy limits that specify a maximum tolerance level for net interest
income exposure over a one-year horizon given a 100 and 200 basis point upward shift in interest
rates and a 100 basis point downward shift in interest rates. A parallel and pro rata shift in
rates over a twelve-month period is assumed.
The following reflects the Companys net interest income sensitivity analysis at June 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2009 |
|
|
|
December 31, 2008 |
|
|
|
|
Potential Change |
|
|
|
Potential Change |
|
Change in Interest |
|
|
in Net |
|
|
|
in Net |
|
Rates in Basis Points |
|
Interest Income |
|
|
Interest Income |
|
(Dollars in thousands) |
|
$ Change |
|
|
% Change |
|
|
$ Change |
|
|
% Change |
|
200 |
|
$ |
(1,078 |
) |
|
|
(3.09 |
%) |
|
$ |
(2,617 |
) |
|
|
(7.27 |
%) |
100 |
|
$ |
(503 |
) |
|
|
(1.44 |
%) |
|
$ |
(1,250 |
) |
|
|
(3.47 |
%) |
Static |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100) |
|
$ |
74 |
|
|
|
0.21 |
% |
|
$ |
249 |
|
|
|
0.69 |
% |
The preceding sensitivity analysis does not represent a Company forecast and should not be
relied upon as being indicative of expected operating results. These hypothetical estimates are
based upon numerous assumptions including, but not limited to, the nature and timing of interest
rate levels and yield curve shapes, prepayments on loans and securities, deposit decay rates,
pricing decisions on loans and deposits, and reinvestment and replacement of asset and liability
cash flows. While assumptions are developed based upon perceived current economic and local market
conditions, the Company cannot make any assurances as to the predictive nature of these assumptions
including how customer preferences or competitor influences may change.
Page 29
Also, as market conditions vary from those assumed in the sensitivity analysis, actual results will
also differ due to prepayment and refinancing levels likely deviating from those assumed, the
varying impact of interest rate change caps or floors on adjustable rate assets, the potential
effect of changing debt service levels on customers with adjustable rate loans, depositor early
withdrawals, prepayment penalties and product preference changes and other internal and external
variables. Furthermore, the sensitivity analysis does not reflect actions that management might
take in responding to, or anticipating changes in interest rates and market conditions.
Item 4. Controls and Procedures
An evaluation was performed under the supervision and with the participation of the Companys
management, including the Principal Executive Officer and Principal Financial Officer, of the
effectiveness of the design and operation of the Companys disclosure controls and procedures (as
defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as
of June 30, 2009. Based on that evaluation, the Companys Principal Executive Officer and
Principal Financial Officer concluded that the Companys disclosure controls and procedures were
effective as of the end of the period covered by this quarterly report. There has been no change
in the Companys internal control over financial reporting during the quarter that has materially
affected, or is reasonably likely to materially affect, the Companys internal control over
financial reporting.
Page 30
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
There have been no material changes to the factors disclosed in Item 1A., Risk Factors, in our
Annual Report on Form 10-K for the year ended December 31, 2008.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders was held at The Bridgehampton National Bank, 2200 Montauk
Highway, Bridgehampton, New York 11932 on April 24, 2009.
Routine items included the election of three Directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominees for Director |
|
Term |
|
|
Votes For |
|
|
Votes Withheld |
|
Class A |
|
|
|
|
|
|
|
|
|
|
|
|
Albert E. McCoy, Jr. |
|
Three Years |
|
|
5,264,702 |
|
|
|
101,263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis Suskind |
|
Three Years |
|
|
5,146,026 |
|
|
|
219,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Timothy Maran |
|
Three Years |
|
|
5,261,081 |
|
|
|
104,884 |
|
The other item voted upon was the ratification of the appointment of the Companys Independent
Registered Public Accounting Firm, Crowe Horwath LLP, for the year ending December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Votes For |
|
|
Votes Against |
|
|
Abstentions |
|
Ratification of Independent Registered
Public Accounting Firm |
|
|
5,351,959 |
|
|
|
2,479 |
|
|
|
11,530 |
|
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
|
|
|
|
|
|
3.2 |
|
|
Revised By-laws of the Registrant |
|
|
|
|
|
|
10.2 |
|
|
Amended and Restated Employment Agreement Howard H. Nolan |
|
|
|
|
|
|
31.1 |
|
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) |
|
|
|
|
|
|
31.2 |
|
|
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) |
|
|
|
|
|
|
32.1 |
|
|
Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350 |
Page 31
SIGNATURES
In accordance with the requirement of the Securities Exchange Act of 1934, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
|
BRIDGE BANCORP, INC.
Registrant
|
|
August 6, 2009 |
/s/ Kevin M. OConnor
|
|
|
Kevin M. OConnor |
|
|
President and Chief Executive Officer |
|
|
|
|
August 6, 2009 |
/s/ Howard H. Nolan
|
|
|
Howard H. Nolan |
|
|
Senior Executive Vice President, Chief Financial Officer |
|
Page 32
|
|
|
|
|
Exhibit |
|
|
No. |
|
Description |
|
|
|
|
|
|
3.2 |
|
|
Revised By-laws of the Registrant |
|
|
|
|
|
|
10.2 |
|
|
Amended and restated employment agreement Howard H. Nolan |
|
|
|
|
|
|
31.1 |
|
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) |
|
|
|
|
|
|
31.2 |
|
|
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) |
|
|
|
|
|
|
32.1 |
|
|
Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350 |
Page 33