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Press Release

Bridge Bancorp, Inc. Reports Third Quarter 2018 Results With Earnings Per Share of $0.33 (As Reported) And Record Adjusted Earnings per Share of $0.70

Company Release - 10/23/2018 4:15 PM ET

With Record Revenues

BRIDGEHAMPTON, N.Y., Oct. 23, 2018 (GLOBE NEWSWIRE) -- Bridge Bancorp, Inc. (NASDAQ:BDGE), (the “Company”), the parent company of BNB Bank (“BNB”), today announced third quarter results for 2018.

The Company's third quarter 2018 financial results included:

  • Net income for the 2018 third quarter of $6.5 million, or $0.33 per diluted share, inclusive of a pre-tax charge of $9.5 million, or $0.37 per diluted share after tax, related to the fraudulent conduct of a business customer through its deposit accounts at BNB Bank.
  • Excluding the impact of the fraud loss, net income for the 2018 third quarter was $14.0 million, or $0.70 per diluted share.
  • Net interest income for the 2018 third quarter increased $1.9 million over 2017 to $34.2 million, with a net interest margin of 3.32%.
  • Total assets of $4.4 billion at September 30, 2018, 4% higher than September 30, 2017.
  • Loan growth of $276 million, or 9%, compared to September 30, 2017, and $95 million, or 4% annualized, from December 31, 2017.
  • Deposit growth of $416 million, or 13%, compared to September 30, 2017, and $285 million, or 11% annualized, from December 31, 2017.
  • Non-public, non-brokered deposit growth of $338 million, or 13%, compared to September 30, 2017, and $322 million, or 17% annualized, from December 31, 2017.
  • Non-performing assets of $2.1 million at September 30, 2018, $5.3 million lower than September 30, 2017 and $4.8 million lower than December 31, 2017. Continued solid loan loss reserve coverage.
  • All capital ratios remain strong. Declared a dividend of $0.23 during the quarter.

Commenting on the third quarter results, Kevin O’Connor, President and CEO said, “I am pleased to announce that, despite headwinds, we are reporting record revenues this quarter, with many positive core trends in our businesses.”

Net Earnings and Returns
Net income in the 2018 third quarter was $6.5 million, or $0.33 per diluted share, a decrease of $2.9 million compared to the 2017 third quarter. Excluding the impact of the fraud loss, net income for the 2018 third quarter was $14.0 million, or $0.70 per diluted share. Net income for the nine months ended September 30, 2018 was $25.4 million, or $1.28 per diluted share, compared to $27.5 million, or $1.39 per diluted share, in 2017. Returns on average assets and equity in the 2018 third quarter were 0.58% and 5.64%, respectively, compared to 0.88% and 8.41%, respectively, in the 2017 third quarter. Return on average tangible common equity for the third quarter of 2018 was 7.43%, compared to 11.21% in 2017. The decreases in the asset and equity related returns were primarily due to the fraud loss in the 2018 third quarter.

Interest income was $42.6 million in the 2018 third quarter, an increase of $1.0 million compared to the 2018 second quarter, driven primarily by higher investment portfolio and loan yields. Interest expense was $8.4 million in the 2018 third quarter, an increase of $0.8 million compared to the 2018 second quarter, due to an increase in average cost of interest bearing liabilities.

“Our net interest margin improved on a linked quarter basis due to the balance sheet restructuring executed in the second quarter. Improved yields on the investment portfolio, combined with reduced reliance on wholesale borrowings, enabled us to realize slight margin improvement. Our deposit beta of 23% since the FOMC began to raise rates continues to support our margin,” stated Mr. O’Connor. “This metric is driven by our ability to maintain a high percentage of our deposits in non-interest-bearing demand deposit accounts (DDA).”

The provision for loan losses was $0.2 million for the 2018 third quarter, $1.7 million lower than the 2017 third quarter. Contributing to the lower provision were decreases in loan growth and net charge-offs in the 2018 third quarter compared to the same period in 2017. The Company recognized net recoveries of $17 thousand in the 2018 third quarter, compared to net charge-offs of $0.2 million in the 2017 third quarter.

Non-interest income was $4.9 million for the 2018 third quarter, $0.1 million lower than the 2017 third quarter, attributable to lower title fee income and net securities gains, partially offset by higher gain on sale of Small Business Administration (“SBA”) loans, and service charges and other fees.

Regarding the gains on sale of SBA loans, Mr. O’Connor said, “As we continue to integrate the SBA business into our ongoing operations, the contribution from this line of business continues to stabilize. We look forward to providing capital to an expanding number of small businesses on Long Island.”

Non-interest expense for the 2018 third quarter increased to $31.0 million from $21.3 million in the 2017 third quarter.  The increase in 2018 is primarily due to the fraud loss, higher salaries and benefits expense and other operating expenses, partially offset by lower occupancy and equipment expense. Excluding the impact of the fraud loss, total non-interest expense in the third quarter 2018 would have been $21.5 million.

Income tax expense was $1.4 million in the 2018 third quarter, a decrease of $3.3 million compared with the 2017 third quarter.  The decrease reflects lower pre-tax income and a lower effective tax rate in 2018 due to the enactment of the Tax Cuts and Jobs Act in the fourth quarter of 2017.  The Company estimates it will record income tax at an effective tax rate of approximately 18% for the remainder of 2018.

Balance Sheet and Asset Quality
Total assets were $4.4 billion at September 30, 2018, $18.7 million higher than December 31, 2017 and $164.5 million higher than September 30, 2017. Total loans at September 30, 2018 of $3.2 billion reflect growth of $275.7 million, or 9%, over September 30, 2017. Loans held for sale at September 30, 2018 were SBA loans closed during the third quarter, which had not yet been sold in the secondary market. Deposits totaled $3.6 billion at September 30, 2018, an increase of $415.8 million, or 13%, over September 30, 2017. Demand deposits increased $138.0 million year-over-year to $1.3 billion at September 30, 2018, representing 37% of total deposits.

Asset quality measures improved as non-performing assets were $2.1 million, or 0.05% of total assets, at September 30, 2018, compared to $7.5 million, or 0.17%, at September 30, 2017. Non-performing assets at September 30, 2018 includes $0.2 million of other real estate owned. Non-performing loans were $1.9 million, or 0.06% of total loans at September 30, 2018, compared to $7.5 million, or 0.26% of total loans at September 30, 2017.  Loans 30 to 89 days past due increased $2.0 million to $5.8 million at September 30, 2018, compared to $3.8 million at September 30, 2017. Loans past due 90 days and accruing at September 30, 2018 and 2017 were comprised of acquired loans of $0.3 million and $2.4 million, respectively.

The allowance for loan losses was $31.9 million at September 30, 2018, $2.6 million higher than September 30, 2017. The allowance as a percentage of loans was 1.00% at September 30, 2018 and September 30, 2017.

Stockholders’ equity was $440.0 million at September 30, 2018, $2.0 million lower than September 30, 2017. The decrease reflects shareholders’ dividends and a decrease in the fair value of available for sale investment securities, partially offset by earnings. Tangible book value per share was $16.64 at September 30, 2018, $0.14 lower than September 30, 2017.

About Bridge Bancorp, Inc.
Bridge Bancorp, Inc. is a bank holding company engaged in commercial banking and financial services through its wholly owned subsidiary, BNB Bank, formerly known as The Bridgehampton National Bank. Established in 1910, BNB, with assets of approximately $4.4 billion, operates 38 retail branch locations serving Long Island and the greater New York metropolitan area. In addition, BNB operates one loan production office in Manhattan. Through its branch network and its electronic delivery channels, BNB provides deposit and loan products and financial services to local businesses, consumers and municipalities. Title insurance services are offered through BNB's wholly owned subsidiary, Bridge Abstract. Bridge Financial Services, Inc., a wholly owned subsidiary of BNB, offers financial planning and investment consultation.  For more information visit www.bnbbank.com.

BNB also has a rich tradition of involvement in the community, supporting programs and initiatives that promote local business, the environment, education, healthcare, social services and the arts.

Please see the attached tables for selected financial information.

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, involve risk and uncertainties, and 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,” “estimated,” “assumes,” “likely,” and variation 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  consumer, commercial and other lending businesses; current and future capital management programs; non-interest income levels, including fees from the title abstract subsidiary and banking services as well as product sales; tangible capital generation; market share; expense levels; and other business operations and strategies.  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, changing economic  conditions; 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; demands for loan products; demand for financial services; competition; changes in the quality and composition of BNB’s loan and investment portfolios; changes in management’s business strategies; changes in accounting principles, policies or guidelines; changes in real estate values; an unexpected increase in operating costs; expanded regulatory requirements as a result of the Dodd-Frank Act; and other risk factors discussed elsewhere, and in our reports filed 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.

 
BRIDGE BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Condition (unaudited)
(In thousands)
 
  September 30,  December 31, September 30,
  2018  2017  2017 
Assets         
Cash and due from banks $ 63,687  $76,614  $57,915 
Interest earning deposits with banks   61,414   18,133   29,038 
Total cash and cash equivalents   125,101   94,747   86,953 
Securities available for sale, at fair value   661,862   759,916   792,058 
Securities held to maturity   164,438   180,866   189,603 
Total securities   826,300   940,782   981,661 
Securities, restricted   25,162   35,349   34,234 
Loans held for sale   1,619       
Loans held for investment   3,197,427   3,102,752   2,921,705 
Allowance for loan losses   (31,869)  (31,707)  (29,273)
Loans held for investment, net   3,165,558   3,071,045   2,892,432 
Premises and equipment, net   35,893   33,505   35,000 
Goodwill and other intangible assets   110,667   111,164   111,170 
Other real estate owned   175       
Accrued interest receivable and other assets   158,282   143,410   142,828 
Total assets $ 4,448,757  $4,430,002  $4,284,278 
          
Liabilities and stockholders' equity         
Demand deposits $ 1,332,792  $1,338,701  $1,194,819 
Savings, NOW and money market deposits   1,958,258   1,773,478   1,785,184 
Certificates of deposit of $100,000 or more   205,857   158,584   159,511 
Other time deposits   122,235   63,780   63,794 
Total deposits   3,619,142   3,334,543   3,203,308 
Federal funds purchased and repurchase agreements   816   50,877   50,846 
Federal Home Loan Bank advances   265,648   501,374   476,674 
Subordinated debentures, net   78,746   78,641   78,606 
Other liabilities and accrued expenses   44,420   35,367   32,905 
Total liabilities   4,008,772   4,000,802   3,842,339 
Total stockholders' equity   439,985   429,200   441,939 
Total liabilities and stockholders' equity $ 4,448,757  $4,430,002  $4,284,278 
             


BRIDGE BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (unaudited)
(In thousands, except per share amounts)
 
  Three Months Ended  Nine Months Ended
  September 30,  June 30, September 30, September 30,  September 30,
  2018 2018  2017 2018  2017
Interest income $ 42,589 $41,551  $38,438 $ 125,504  $109,889
Interest expense   8,375  7,622   6,093   22,822   16,290
Net interest income   34,214  33,929   32,345   102,682   93,599
Provision for loan losses   200  400   1,900   1,400   3,650
Net interest income after provision for loan losses   34,014  33,529   30,445   101,282   89,949
                
Non-interest income:               
Service charges and other fees   2,549  2,562   2,392   7,274   6,662
Title fee income   384  450   757   1,339   1,848
Net securities (losses) gains   —  (7,921)  260   (7,921)  260
Gain on sale of Small Business Administration loans   524  691   100   1,586   1,442
BOLI income   557  555   563   1,658   1,690
Other operating income   904  1,085   900   2,517   1,701
Total non-interest income (loss)   4,918  (2,578)  4,972   6,453   13,603
                
Non-interest expense:               
Salaries and employee benefits   12,134  13,055   11,962   38,001   35,054
Occupancy and equipment   3,325  3,205   3,514   9,773   10,351
Fraud loss   9,500        9,500   
Amortization of other intangible assets   215  242   247   703   800
Other operating expenses   5,830  6,005   5,548   18,132   16,368
Total non-interest expense   31,004  22,507   21,271   76,109   62,573
                
Income before income taxes   7,928  8,444   14,146   31,626   40,979
Income tax expense   1,381  1,701   4,703   6,263   13,524
Net income $ 6,547 $6,743  $9,443 $ 25,363  $27,455
Basic earnings per share $ 0.33 $0.34  $0.48 $ 1.28  $1.39
Diluted earnings per share $ 0.33 $0.34  $0.48 $ 1.28  $1.39
Weighted average common and equivalent shares   19,485  19,468   19,405   19,461   19,387
                  


BRIDGE BANCORP, INC. AND SUBSIDIARIES
Consolidated Financial Highlights (unaudited)
(In thousands, except per share amounts and financial ratios)
 
  
  Three Months Ended  Nine Months Ended  
  September 30,  June 30, September 30, September 30,  September 30, 
  2018 2018 2017 2018 2017 
Selected Financial Data:           
Return on average total assets  0.580.60%0.88% 0.760.89%
Adjusted return on average total assets (1)  1.24 1.15 0.88  1.16 0.89 
Return on average stockholders' equity  5.64 5.96 8.41  7.45 8.36 
Adjusted return on average stockholders' equity (1)  12.03 11.43 8.41  11.45 8.36 
Return on average tangible common equity (1) (2)  7.43 7.90 11.21  9.86 11.21 
Adjusted return on average tangible common equity (1) (2)  16.03 15.35 11.40  15.36 11.43 
Net interest margin, tax equivalent basis (1)  3.32 3.31 3.33  3.35 3.33 
Adjusted net interest margin (1)  3.24 3.24 3.14  3.24 3.13 
Efficiency ratio  79.23 71.79 57.00  69.74 58.37 
Adjusted efficiency ratio (1)  54.22 56.47 56.22  56.08 57.21 
Operating expense/average assets  2.75 2.01 1.99  2.27 2.02 
Adjusted operating expense/average assets (1)  1.89 1.99 1.96  1.97 1.99 

(1) See reconciliation of this non-GAAP financial measure provided elsewhere herein.
(2) Average tangible common equity represents a non-GAAP financial measure calculated as average total stockholders' equity less average goodwill and intangible assets.

           
  September 30,  December 31, September 30, 
  2018 2017 2017 
Selected Financial Data:          
Book value per share $ 22.23 $21.78 $22.43 
Tangible book value per share (1) $ 16.64 $16.14 $16.78 
Common shares outstanding   19,789  19,709  19,707 
           
Capital Ratios:          
Total capital to risk weighted assets   13.6 13.3% 14.2%
Tier 1 capital to risk weighted assets   10.3  10.0  10.8 
Common equity Tier 1 capital to risk weighted assets   10.3  10.0  10.8 
Tier 1 capital to average assets   8.0  7.9  8.3 
Tangible common equity to tangible assets (1) (2)   7.6  7.4  7.9 
Tier 1 capital to average assets (Bank)   9.7  9.6  9.9 
           
Asset Quality:          
Loans 30-89 days past due $ 5,801 $3,614 $3,755 
Loans 90 days past due and accruing (3) $ 299 $1,834 $2,444 
Non-performing loans $ 1,944 $6,955 $7,451 
Other real estate owned   175     
Non-performing assets $ 2,119 $6,955 $7,451 
Non-performing loans/total loans   0.06 0.22% 0.26%
Non-performing assets/total assets   0.05  0.16  0.17 
Allowance/non-performing loans  1639.35  455.89  392.87 
Allowance/total loans   1.00  1.02  1.00 

(1) Tangible common equity represents a non-GAAP financial measure calculated as total stockholders' equity less goodwill and intangible assets.
(2) Tangible assets represents a non-GAAP financial measure calculated as total assets less goodwill and intangible assets.
(3) Represents loans acquired in connection with the Community National Bank, FNBNY Bancorp, Inc., and Hamptons State Bank acquisitions.

  
  
BRIDGE BANCORP, INC. AND SUBSIDIARIES
Supplemental Financial Information
Condensed Consolidated Average Balance Sheets And Average Rate Data (unaudited)
(Dollars in thousands)
 
  
  Three Months Ended September 30,  Three Months Ended June 30, Three Months Ended September 30, 
  2018  2018  2017  
      Average     Average     Average 
  Average   Yield/ Average   Yield/ Average   Yield/ 
  Balance Interest Cost Balance Interest Cost Balance Interest Cost 
Interest earning assets:                         
Loans, net (including loan fee income) (1) $ 3,157,422 $ 36,243   4.55 $3,179,632 $35,817  4.52 %$2,817,775 $32,667  4.60 %
Securities (1)   867,174   6,044   2.77   924,979  5,784  2.51   1,050,811  6,019  2.27  
Deposits with banks   84,986   437   2.04   25,206  106  1.69   26,243  91  1.38  
Total interest earning assets (1)   4,109,582   42,724   4.12   4,129,817  41,707  4.05   3,894,829  38,777  3.95  
Non interest earning assets:                         
Other assets   369,305       365,038       354,215      
Total assets $ 4,478,887      $4,494,855      $4,249,044      
                          
Interest bearing liabilities:                         
Deposits $ 2,279,820 $ 6,047   1.05 $2,196,618 $4,513  0.82 %$1,977,119 $2,852  0.57 %
Federal funds purchased and repurchase agreements   3,487   12   1.37   122,463  567  1.86   118,499  402  1.35  
Federal Home Loan Bank advances   269,909   1,182   1.74   337,615  1,407  1.67   398,234  1,704  1.70  
Subordinated debentures   78,723   1,134   5.72   78,688  1,135  5.79   78,583  1,135  5.73  
Total interest bearing liabilities   2,631,939   8,375   1.26   2,735,384  7,622  1.12   2,572,435  6,093  0.94  
Non interest bearing liabilities:                         
Demand deposits   1,343,107       1,265,370       1,196,179      
Other liabilities   43,432       40,633       34,875      
Total liabilities   4,018,478       4,041,387       3,803,489      
Stockholders' equity   460,409       453,468       445,555      
Total liabilities and stockholders' equity $ 4,478,887      $4,494,855      $4,249,044      
                          
Net interest income/interest rate spread (1)      34,349   2.86     34,085  2.93 %    32,684  3.01 %
                          
Net interest earning assets/net interest margin (1) $ 1,477,643     3.32 $1,394,433    3.31 %$1,322,394    3.33 %
                          
Tax equivalent adjustment      (135)  (0.02)    (156) (0.01)%    (339) (0.04)%
                          
Net interest income/net interest margin    $ 34,214   3.30    $33,929  3.30 %   $32,345  3.29 %
                                

 (1) Presented on a non-GAAP tax equivalent basis.

  
  
BRIDGE BANCORP, INC. AND SUBSIDIARIES
Supplemental Financial Information
Condensed Consolidated Average Balance Sheets And Average Rate Data (unaudited)
(Dollars in thousands) 
 
  
  Nine Months Ended September 30,  
  2018  2017  
      Average     Average 
  Average   Yield/ Average   Yield/ 
  Balance Interest Cost Balance Interest Cost 
Interest Earning Assets:                 
Loans, net (including loan fee income) (1) $ 3,155,093 $ 107,720   4.56 $ 2,703,634 $ 92,493   4.57 %
Securities (1)   920,108   17,608   2.56    1,064,974   18,222   2.29  
Deposits with banks   44,660   633   1.90    25,537   208