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Press Release

Bridge Bancorp, Inc. Reports Second Quarter 2019 Results

Company Release - 7/23/2019 4:15 PM ET

BRIDGEHAMPTON, N.Y., July 23, 2019 (GLOBE NEWSWIRE) -- Bridge Bancorp, Inc. (NASDAQ: BDGE) (the “Company”), the parent company of BNB Bank (“BNB”), today announced second quarter results for 2019.

The Company's second quarter 2019 financial results included:

  • Net income for the 2019 second quarter of $10.7 million, or $0.53 per diluted share, compared to $6.7 million, or $0.34 per diluted share for the 2018 second quarter, inclusive of pre-tax net securities losses of $7.9 million, or $0.31 per diluted share after tax, related to the Company’s balance sheet restructure in the 2018 period.
  • Net interest income for the 2019 second quarter increased $1.2 million over the 2019 first quarter to $35.5 million, with a tax-equivalent net interest margin of 3.30%.
  • Total assets of $4.7 billion at June 30, 2019, 7% higher than June 30, 2018.
  • Loan growth of $249 million, or 8%, compared to June 30, 2018, and $154 million, or 9% annualized, from December 31, 2018.
  • Non-public, non-brokered deposit growth of $431 million, or 16%, compared to June 30, 2018, and $190 million, or 13% annualized, from December 31, 2018.
  • Non-performing assets of $5.5 million at June 30, 2019, $3.7 million higher than June 30, 2018 and $2.5 million higher than December 31, 2018. Loan loss reserve coverage to total loans of 0.91% at June 30, 2019.
  • All capital ratios remain strong. Declared a dividend of $0.23 during the quarter.

Commenting on the second quarter results, Kevin O’Connor, President and CEO said, “Our continued growth as measured by an expanded customer base, and higher loan and deposit balance reflects the strength in our markets and our ability to attract clients to BNB Bank. The quarterly results show record revenue, a stabilizing margin, and continued prudent liquidity management, notwithstanding an increased loan loss provision related to one specific credit. Our SBA business bolstered our non-interest income.  Expenses grew as we capitalized on branch closures by our competitors with targeted advertising campaigns and hired more bankers.  BNB Bank remains a strong, core funded community bank making loans funded by deposits supporting our customers and our marketplace.”

Net Earnings and Returns
Net income in the 2019 second quarter was $10.7 million, or $0.53 per diluted share, an increase of $3.9 million compared to the 2018 second quarter, driven primarily by a rise in non-interest income and net interest income, partially offset by higher provision for loan losses and non-interest expense. Excluding the impact of the balance sheet restructure, net income in the 2018 second quarter was $12.9 million, or $0.65 per diluted share. Net income for the six months ended June 30, 2019 was $23.6 million, or $1.18 per diluted share, compared to $18.8 million, or $0.95 per diluted share, in 2018.

Returns on average assets and equity in the 2019 second quarter were 0.90% and 9.06%, respectively.  Return on average tangible common equity was 11.82% for the 2019 second quarter.  

“Our reported net income of $0.53 per diluted share was impacted by a higher provision for loan losses related to one credit, which reduced earnings per share by approximately $0.12, and reduced returns on average assets, equity and tangible common equity by approximately 19 basis points, 188 basis points and 245 basis points, respectively,” noted Mr. O’Connor.

Net Interest Income
Interest income was $46.4 million in the 2019 second quarter, an increase of $1.8 million compared to the 2019 first quarter, driven primarily by loan portfolio growth and higher loan portfolio yields. Interest expense was $10.8 million in the 2019 second quarter, an increase of $0.6 million compared to the 2019 first quarter, primarily due to deposit growth and an increase in average cost of interest-bearing liabilities.

The tax-equivalent net interest margin for the 2019 second quarter showed a year-over-year decline of 1 basis point to 3.30% in 2019 from 3.31% in 2018. The adjusted net interest margin, excluding purchase accounting, is down 1 basis point to 3.23% from 3.24% in 2018.  Reported 2019 second quarter loan yields showed a year-over-year increase of 24 basis points from 4.52% in 2018 to 4.76% in 2019, while yields excluding purchase accounting increased 23 basis points to 4.66% in 2019 from 4.43% in 2018.

                  
  Three Months Ended  Change Compared To  
  June 30,  March 31,  June 30,  March 31,  June 30,   
  2019 2019 2018 2019  2018   
Average yield on loans, tax-equivalent basis - as reported   4.76  4.66  4.52  10 bp  24 bp 
Adjusted average yield on loans (non-GAAP)   4.66   4.61   4.43   5    23   
                  
Net interest margin - as reported (1)   3.29  3.27  3.30  2 bp  (1)bp 
Net interest margin, tax-equivalent basis (2)   3.30   3.29   3.31   1    (1)  
Adjusted net interest margin (non-GAAP) (3)   3.23   3.24   3.24   (1)   (1)  

_______________________________

(1) Net interest margin represents net interest income divided by average interest-earning assets.
(2) Net interest margin, tax-equivalent basis represents net interest income on a tax-equivalent basis divided by average interest-earning assets.
(3) Adjusted net interest margin represents adjusted net interest income on a tax-equivalent basis divided by adjusted average interest-earning assets.

“Despite a flattening yield curve, we maintained our margin by focusing on our core relationship businesses.  We also sold lower yielding bonds and reduced our brokered deposits, while keeping our loan-to-deposit ratio below 90%.   Our proven strategy is to actively manage the balance sheet based on the changing environment,” stated Mr. O’Connor.

Provision for Loan Losses
The provision for loan losses was $3.5 million for the 2019 second quarter, $3.1 million higher than the 2018 second quarter.  Contributing to the higher provision was a $3.7 million charge-off for one loan in the 2019 second quarter. The Company recognized net charge-offs of $4.1 million in the 2019 second quarter, compared to net charge-offs of $1.6 million in the 2018 second quarter.

Non-Interest Income
Non-interest income was $5.5 million for the 2019 second quarter, $8.1 million higher than the 2018 second quarter, primarily attributable to the impact of the balance sheet restructure in the 2018 second quarter, and higher gain on sale of Small Business Administration (“SBA”) loans in the 2019 second quarter.  

Non-Interest Expense
Non-interest expense for the 2019 second quarter of $24.0 million was $1.5 million higher than the 2018 second quarter. The increase in 2019 was due to higher salaries and benefits expense, occupancy and equipment costs and other operating expenses.

Income Tax Expense
Income tax expense was $2.9 million in the 2019 second quarter, an increase of $1.2 million compared to the 2018 second quarter. The Company estimates it will record income tax at an effective tax rate of approximately 22% for the remainder of 2019. 

Balance Sheet
Total assets were $4.7 billion at June 30, 2019, $13.8 million higher than December 31, 2018, and $299.8 million higher than June 30, 2018. Total loans held for investment at June 30, 2019 of $3.4 billion reflects growth of $249.3 million, or 8%, over June 30, 2018. Deposits totaled $3.8 billion at June 30, 2019, an increase of $283.4 million, or 8%, over June 30, 2018. Demand deposits increased $78.4 million year-over-year to $1.4 billion at June 30, 2019, representing 36% of total deposits.

The allowance for loan losses was $31.2 million at June 30, 2019, $0.5 million lower than June 30, 2018. The allowance as a percentage of loans was 0.91% at June 30, 2019, compared to 1.00% at June 30, 2018.

Stockholders’ equity was $475.2 million at June 30, 2019, $35.5 million higher than June 30, 2018. The growth reflects earnings, partially offset by shareholders’ dividends. Book value per share was $23.96 at June 30, 2019, $1.73 higher than June 30, 2018. Tangible book value per share was $18.41 at June 30, 2019, $1.79 higher than June 30, 2018.

                
           Change Compared To
  June 30,  December 31,  June 30,  December 31, June 30, 
(Dollars in thousands) 2019 2018 2018 2018  2018 
Total assets $ 4,714,535 $ 4,700,744 $ 4,414,785 $ 13,791  $ 299,750 
Total stockholders' equity   475,205   453,830   439,755   21,375    35,450 
                
Loans held for investment               
Investor commercial real estate ("CRE") $ 910,892 $ 863,158 $ 844,295 $ 47,734  $ 66,597 
Multi-family ("MF")   631,146   585,827   570,670   45,319    60,476 
Construction and land ("C&L")   150,868   123,393   116,899   27,475    33,969 
Total investor CRE, MF, and C&L   1,692,906   1,572,378   1,531,864   120,528    161,042 
                
Commercial and industrial ("C&I")   675,168   645,724   629,906   29,444    45,262 
Owner-occupied CRE   525,329   510,398   483,652   14,931    41,677 
Total C&I and owner-occupied CRE   1,200,497   1,156,122   1,113,558   44,375    86,939 
                
Residential real estate   503,354   519,763   510,303   (16,409)   (6,949)
Installment and consumer   25,825   20,509   20,051   5,316    5,774 
Net deferred loan costs and fees   7,441   7,039   4,900   402    2,541 
Total loans held for investment $ 3,430,023 $ 3,275,811 $ 3,180,676 $ 154,212  $ 249,347 
                
Deposits               
Total IPC deposits $ 3,154,801 $ 2,965,007 $ 2,724,208 $ 189,794  $ 430,593 
Total public and brokered deposits   681,775   921,386   828,989   (239,611)   (147,214)
Total deposits $ 3,836,576 $ 3,886,393 $ 3,553,197 $ (49,817) $ 283,379 


“The first half of 2019 shows our continued ability to generate new business in our marketplace.  We grew loans at 9%. Year to date we closed nearly $500 million in new credits. IPC deposit growth was 13% for the same period.  Equally important, our western markets- where we have lower market share and thus more opportunity- are showing accelerated growth. We are committed to providing capital as well as a comprehensive product suite to the businesses in our footprint,” Mr. O’Connor said.

Asset Quality
Asset quality measures remained solid, as non-performing assets were $5.5 million, or 0.12% of total assets, at June 30, 2019, compared to $1.8 million, or 0.04% of total assets, at June 30, 2018. Non-performing assets at June 30, 2018 included $175 thousand of other real estate owned. Non-performing loans were $5.5 million, or 0.16% of total loans at June 30, 2019, compared to $1.6 million, or 0.05% of total loans at June 30, 2018.  Loans 30 to 89 days past due decreased $1.0 million to $3.4 million at June 30, 2019, compared to $4.4 million at June 30, 2018. Loans past due 90 days and accruing at June 30, 2019 and 2018 were comprised of acquired loans of $0.3 million and $0.9 million, respectively.

Conference Call
The Company will host a conference call on Wednesday, July 24, 2019 at 9:00 AM (ET) to discuss the 2019 second quarter results. Investors who would like to join the conference call are encouraged to pre-register using the following link: http://dpregister.com/10132796. Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time. Telephonic replay will be available through the Company’s website approximately one hour after the conclusion of the call through Wednesday, August 7, 2019.

Call and replay information are as follows:

Call Date: Wednesday, July 24, 2019
Call Time: 9:00 AM (ET)
Domestic Call Dial In:  1-844-746-0738
International Call Dial In:  1-412-317-6016

Replay Domestic Dial In:  1-877-344-7529
Replay International Dial In:  1-412-317-0088
Access Code: 10132796

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. Established in 1910, BNB, with assets of approximately $4.7 billion, operates 39 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 release 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,” “intends,” “may,” “outlook,” “predicts,” “projects,” “would,” “estimates,” “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)

          
  June 30,  December 31,  June 30, 
  2019 2018 2018
Assets         
Cash and due from banks $ 71,292  $ 142,145  $ 74,255 
Interest-earning deposits with banks   87,349    153,223    31,636 
Total cash and cash equivalents   158,641    295,368    105,891 
Securities available for sale, at fair value   642,897    680,886    659,076 
Securities held to maturity   144,716    160,163    169,717 
Total securities   787,613    841,049    828,793 
Securities, restricted   24,104    24,028    26,747 
Loans held for sale   12,643    —    6,338 
Loans held for investment   3,430,023    3,275,811    3,180,676 
Allowance for loan losses   (31,171)   (31,418)   (31,652)
Loans held for investment, net   3,398,852    3,244,393    3,149,024 
Premises and equipment, net   34,006    35,008    36,043 
Operating lease right-of-use assets (1)   37,619    —    — 
Goodwill and other intangible assets   109,975    110,324    110,816 
Other real estate owned   —    175    175 
Accrued interest receivable and other assets   151,082    150,399    150,958 
Total assets $ 4,714,535  $ 4,700,744  $ 4,414,785 
          
Liabilities and stockholders' equity         
Demand deposits $ 1,322,625  $ 1,275,664  $ 1,248,383 
Savings and negotiable order of withdrawal ("NOW") deposits   613,431    496,881    436,227 
Money market deposit accounts ("MMDA")   1,002,768    975,531    843,390 
Certificates of deposit of less than $100,000   60,658    61,827    59,053 
Certificates of deposit of $100,000 or more   155,319    155,104    137,155 
Total individual, partnership and corporate ("IPC") deposits   3,154,801    2,965,007    2,724,208 
Brokered deposits   127,196    255,408    318,164 
Public funds - demand deposits   63,084    172,941    58,941 
Public funds - other deposits   491,495    493,037    451,884 
Total public and brokered deposits   681,775    921,386    828,989 
Total deposits   3,836,576    3,886,393    3,553,197 
Federal funds purchased and repurchase agreements   945    539    1,437 
Federal Home Loan Bank ("FHLB") advances   240,000    240,433    300,863 
Subordinated debentures, net   78,850    78,781    78,711 
Operating lease liabilities (1)   40,263    —    — 
Other liabilities and accrued expenses   42,696    40,768    40,822 
Total liabilities   4,239,330    4,246,914    3,975,030 
Total stockholders' equity   475,205    453,830    439,755 
Total liabilities and stockholders' equity $ 4,714,535  $ 4,700,744  $ 4,414,785 

___________________________

(1) The Company adopted ASU 2016-02, Leases (Topic 842) using the transition approach at the beginning of the period of adoption on January 1, 2019 and did not restate comparative prior periods.


BRIDGE BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (unaudited)
(In thousands, except per share amounts)

                
  Three Months Ended  Six Months Ended
  June 30,  March 31,  June 30,  June 30,  June 30, 
  2019 2019 2018 2019 2018
Interest income $ 46,352 $ 44,515 $ 41,551  $ 90,867 $ 82,915 
Interest expense   10,835   10,192   7,622    21,027   14,447 
Net interest income   35,517   34,323   33,929    69,840   68,468 
Provision for loan losses   3,500   600   400    4,100   1,200 
Net interest income after provision for loan losses   32,017   33,723   33,529    65,740   67,268 
                
Non-interest income:               
Service charges and other fees   2,556   2,428   2,562    4,984   4,725 
Title fee income   335   306   450    641   955 
Net securities gains (losses)   201   —   (7,921)   201   (7,921)
Gain on sale of SBA loans   844   217   691    1,061   1,062 
BOLI income   556   553   555    1,109   1,101 
Other operating income   1,007   1,714   1,085    2,721   1,613 
Total non-interest income (loss)   5,499   5,218   (2,578)   10,717   1,535 
                
Non-interest expense:               
Salaries and employee benefits   13,659   13,280   13,055    26,939   25,867 
Occupancy and equipment   3,560   3,531   3,205    7,091   6,448 
Amortization of other intangible assets   210   213   242    423   488 
Other operating expenses   6,575   5,575   6,005    12,150   12,302 
Total non-interest expense   24,004   22,599   22,507    46,603   45,105 
                
Income before income taxes   13,512   16,342   8,444    29,854   23,698 
Income tax expense   2,859   3,415   1,701    6,274   4,882 
Net income $ 10,653 $ 12,927 $ 6,743  $ 23,580 $ 18,816 
Basic earnings per share $ 0.53 $ 0.65 $ 0.34  $ 1.18 $ 0.95 
Diluted earnings per share $ 0.53 $ 0.65 $ 0.34  $ 1.18 $ 0.95 
Weighted average common and equivalent shares   19,565   19,526   19,468    19,545   19,453 


BRIDGE BANCORP, INC. AND SUBSIDIARIES
Consolidated Financial Highlights (unaudited)
(In thousands, except per share amounts and financial ratios)

            
  Three Months Ended  Six Months Ended  
  June 30,  March 31,  June 30,  June 30,  June 30,  
  2019 2019 2018 2019 2018 
Selected Financial Data:           
Return on average total assets  0.90 1.13 0.60 1.01 0.85%
Adjusted return on average total assets (1)  0.90  1.13  1.15  1.01  1.12 
Return on average stockholders' equity  9.06  11.41  5.96  10.22  8.39 
Adjusted return on average stockholders' equity (1)  9.06  11.41  11.43  10.22  11.15 
Return on average tangible common equity (1) (2)  11.82  15.01  7.90  13.38  11.12 
Adjusted return on average tangible common equity (1) (2)  12.01  15.21  15.35  13.57  15.00 
Net interest margin, tax-equivalent basis  3.30  3.29  3.31  3.29  3.36 
Adjusted net interest margin (1)  3.23  3.24  3.24  3.24  3.23 
Efficiency ratio  58.52  57.15  71.79  57.85  64.43 
Adjusted efficiency ratio (1)  58.03  56.43  56.47  57.24  57.02 
Operating expense/average assets  2.03  1.97  2.01  2.00  2.03 
Adjusted operating expense/average assets (1)  2.01  1.95  1.99  1.98  2.01 

____________________________

(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.


           
  June 30,  December 31,  June 30,  
  2019 2018 2018 
Selected Financial Data:          
Book value per share $ 23.96 $ 22.93 $ 22.23 
Tangible book value per share (1) $ 18.41 $ 17.36 $ 16.62 
Common shares outstanding   19,834   19,791   19,786 
           
Capital Ratios:          
Total capital to risk-weighted assets   13.3  13.6  13.6%
Tier 1 capital to risk-weighted assets   10.3   10.4   10.3 
Common equity Tier 1 capital to risk-weighted assets   10.3   10.4   10.3 
Tier 1 capital to average assets   8.1   8.1   7.9 
Tangible common equity to tangible assets (1) (2)   7.9   7.5   7.6 
Tier 1 capital to average assets (Bank)   9.7   9.9   9.6 
           
Asset Quality:          
Loans 30-89 days past due $ 3,382 $ 4,400 $ 4,391 
Loans 90 days past due and accruing (3) $ 329 $ 308 $ 934 
Non-performing loans $ 5,509 $ 2,808 $ 1,599 
Other real estate owned   —   175   175 
Non-performing assets $ 5,509 $ 2,983 $ 1,774 
Non-performing loans/total loans   0.16  0.09  0.05%
Non-performing assets/total assets   0.12   0.06   0.04 
Allowance/non-performing loans  565.82  1118.87  1979.49 
Allowance/total loans   0.91   0.96   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 represent 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 and FNBNY Bancorp, Inc. 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 June 30,  Three Months Ended March 31,  Three Months Ended June 30,  
  2019
 2019 2018 
      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) $ 3,373,601 $ 40,000   4.76 $ 3,275,828 $ 37,659   4.66 $ 3,179,632 $ 35,817   4.52 %
Securities (1)   860,031   5,940   2.77    885,834   6,442   2.95    924,979   5,784   2.51  
Deposits with banks   102,515   599   2.34    91,682   544   2.41    25,206   106   1.69  
Total interest-earning assets (1)   4,336,147   46,539   4.30    4,253,344   44,645   4.26    4,129,817   41,707   4.05  
Non-interest-earning assets:                         
Other assets   401,720        392,283        365,038      
Total assets $ 4,737,867      $ 4,645,627      $ 4,494,855      
                          
Interest-bearing liabilities:                         
  Savings $ 443,830 $ 1,231   1.11 $ 398,499 $ 905   0.92 $ 296,882 $ 132   0.18 
  NOW   124,329   48   0.15    105,996   41   0.16    130,000   30   0.09  
  MMDA   1,012,419   3,840   1.52    983,942   3,586   1.48    808,845   1,833   0.91  
  Savings, NOW and MMDA   1,580,578   5,119   1.30    1,488,437   4,532   1.23    1,235,727   1,995   0.65  
  Certificates of deposit of less than $100,000   60,940   285   1.88    61,317   261   1.73    57,753   170   1.18  
  Certificates of deposit of $100,000 or more   152,809   806   2.12    150,102   732   1.98    117,380   384   1.31  
Total IPC deposits   1,794,327   6,210   1.39    1,699,856   5,525   1.32    1,410,860   2,549   0.72  
  Brokered deposits   134,720   771   2.30    209,409   1,210   2.34    276,405   1,299   1.89  
  Public funds   546,432   1,383   1.02    534,568   1,179   0.89