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Bridge Bancorp, Inc. Reports First Quarter 2019 Results

Bridge Bancorp, Inc. Reports First Quarter 2019 Results

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

The Company's first quarter 2019 financial results included:

  • Net income for the 2019 first quarter of $12.9 million, or $0.65 per diluted share, compared to $12.1 million, or $0.61 per diluted share for the 2018 first quarter.
  • Net interest income for the 2019 first quarter increased $0.2 million over the 2018 fourth quarter to $34.3 million, with a tax-equivalent net interest margin of 3.29%.
  • Adjusted net interest margin (excluding purchase accounting) increased from 3.21% in the 2018 fourth quarter to 3.24% in the 2019 first quarter.
  • Total assets of $4.7 billion at March 31, 2019, 4% higher than March 31, 2018.
  • Loan growth of $189 million, or 6%, compared to March 31, 2018, and $115 million, or 14% annualized, from December 31, 2018.
  • Non-public, non-brokered deposit growth of $404 million, or 16%, compared to March 31, 2018.
  • Non-performing assets of $3.2 million at March 31, 2019, $3.0 million lower than March 31, 2018 and $0.3 million higher than December 31, 2018. Loan loss reserve coverage to total loans of 0.94% at March 31, 2019.
  • All capital ratios remain strong. Declared a dividend of $0.23 during the quarter.

Commenting on the first quarter results, Kevin O’Connor, President and CEO said, “We opened the year with another successful quarter: record revenue, strong loan growth, and an expanding margin.  Our community banking model, built on relationships and our core businesses, continues to deliver consistent results- even in this challenging interest rate environment.”

Net Earnings and Returns
Net income in the 2019 first quarter was $12.9 million, or $0.65 per diluted share, an increase of $0.8 million compared to the 2018 first quarter, driven primarily by a rise in non-interest income and lower provision for loan losses, partially offset by a decline in net interest income.

Returns on average assets and equity in the 2019 first quarter were 1.13% and 11.41%, respectively.  Return on average tangible common equity was 15.01% for the 2019 first quarter.

Net Interest Income
Interest income was $44.5 million in the 2019 first quarter, an increase of $1.0 million compared to the 2018 fourth quarter, driven primarily by loan portfolio growth and higher loan and investment portfolio yields. Interest expense was $10.2 million in the 2019 first quarter, an increase of $0.8 million compared to the 2018 fourth quarter, primarily due to deposit growth and an increase in average cost of interest-bearing liabilities.

The impact of purchase accounting on the net interest margin continues to decrease.  The tax-equivalent net interest margin for the 2019 first quarter showed a year-over-year decline of 13 basis points to 3.29% in 2019 from 3.42% in 2018. However, the adjusted net interest margin, excluding purchase accounting, is up 2 basis points to 3.24% from 3.22% in 2018.  The decreased impact of purchase accounting can also be observed regarding loan yields.  Reported 2019 first quarter loan yields showed a year-over-year increase of 4 basis points from 4.62% in 2018 to 4.66% in 2019, while yields excluding purchase accounting increased 25 basis points to 4.61% in 2019 from 4.36% in 2018.

                                 
    Three Months Ended     Change Compared To
    March 31,    December 31,    March 31,      December 31,    March 31, 
    2019   2018   2018     2018   2018
Average yield on loans, tax-equivalent basis - as reported      4.66    4.56    4.62      10 bp    4  bp
Adjusted average yield on loans (non-GAAP)      4.61      4.50      4.36        11      25  
                                 
Net interest margin - as reported (1)      3.27    3.25    3.40      2 bp    (13 ) bp
Net interest margin, tax-equivalent basis (2)      3.29      3.26      3.42        3      (13 ) bp
Adjusted net interest margin (non-GAAP) (3)      3.24      3.21      3.22        3      2  

_________________________________

(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.

“BNB’s focus on providing banking services to businesses in our footprint results in significant levels of floating rate loans and non-interest-bearing demand deposit balances. Both factors sustain and grow our net interest margin,” stated Mr. O’Connor.

Provision for Loan Losses
The provision for loan losses was $0.6 million for the 2019 first quarter, $0.2 million lower than the 2018 first quarter.  Contributing to the lower provision was continued improved overall credit metrics throughout 2018, partially offset by an increase in net charge-offs in the 2019 first quarter compared to the same period in 2018. The Company recognized net charge-offs of $0.2 million in the 2019 first quarter, compared to recoveries of $0.3 million in the 2018 first quarter.

Non-Interest Income
Non-interest income was $5.2 million for the 2019 first quarter, $1.1 million higher than the 2018 first quarter, primarily attributable to higher loan swap fee income reported in other operating income and higher service charges and other fees, partially offset by lower title fee income and gain on sale of Small Business Administration (“SBA”) loans.  

Non-Interest Expense
Non-interest expense for the 2019 first quarter of $22.6 million was flat compared to the 2018 first quarter. Growth in salaries and benefits expense, and occupancy and equipment costs were offset by lower professional services and other operating expenses. 

Income Tax Expense
Income tax expense was $3.4 million in the 2019 first quarter, an increase of $0.2 million compared to the 2018 first 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 March 31, 2019, $25.5 million lower than December 31, 2018, and $174.6 million higher than March 31, 2018. Total loans at March 31, 2019 of $3.4 billion reflect growth of $189.2 million, or 6%, over March 31, 2018. Deposits totaled $3.7 billion at March 31, 2019, an increase of $294.2 million, or 9%, over March 31, 2018. Demand deposits increased $89.9 million year-over-year to $1.3 billion at March 31, 2019, representing 35% of total deposits.

The allowance for loan losses was $31.8 million at March 31, 2019, $1.0 million lower than March 31, 2018. The allowance as a percentage of loans was 0.94% at March 31, 2019, compared to 1.02% at March 31, 2018. The March 31, 2018 allowance for loan losses included a $1.7 million specific reserve for a fully reserved impaired loan which was charged-off in the 2018 second quarter.

Stockholders’ equity was $465.0 million at March 31, 2019, $31.7 million higher than March 31, 2018. The growth reflects earnings, partially offset by shareholders’ dividends. Book value per share was $23.43 at March 31, 2019, $1.52 higher than March 31, 2018. Tangible book value per share was $17.88 at March 31, 2019, $1.58 higher than March 31, 2018.

                                 
                      Change Compared To  
    March 31,    December 31,    March 31,    December 31,   March 31,   
(Dollars in thousands)   2019   2018   2018   2018   2018  
Total assets   $  4,675,209   $  4,700,744   $  4,500,624   $  (25,535 )   $  174,585    
Total stockholders' equity      465,003      453,830      433,323      11,173        31,680    
                                 
Loans held for investment                                
Investor commercial real estate ("CRE")   $  859,797   $  863,158   $  856,797   $  (3,361 )   $  3,000    
Multi-family ("MF")      624,114      585,827      601,747      38,287        22,367    
Construction and land ("C&L")      147,116      123,393      104,496      23,723        42,620    
Total investor CRE, MF, and C&L      1,631,027      1,572,378      1,563,040      58,649        67,987    
                                 
Commercial and industrial ("C&I")      671,897      645,724      638,711      26,173        33,186    
Owner-occupied CRE      542,836      510,398      483,195      32,438        59,641    
Total C&I and owner-occupied CRE      1,214,733      1,156,122      1,121,906      58,611        92,827    
                                 
Residential real estate      515,173      519,763      493,153      (4,590 )      22,020    
Installment and consumer      22,781      20,509      19,078      2,272        3,703    
Net deferred loan costs and fees      7,390      7,039      4,720      351        2,670    
Total loans held for investment   $  3,391,104   $  3,275,811   $  3,201,897   $  115,293     $  189,207    
                                 
Deposits                                
Total IPC deposits   $  2,974,282   $  2,965,007   $  2,570,079   $  9,275     $  404,203    
Total public and brokered deposits      751,182      921,386      861,166      (170,204 )      (109,984 )  
Total deposits   $  3,725,464   $  3,886,393   $  3,431,245   $  (160,929 )   $  294,219    
 

“Our balance sheet management strategies over the past year and quarter exemplify our commitment to our Community Banking franchise.  We have channeled our efforts in supporting local businesses by providing capital through C&I loans and financing their facilities through owner-occupied CRE loans, growing this business at an annual rate of 26% this quarter.  The expansion of these loan types has outpaced investor CRE loans.  Additionally, we have decreased our reliance on wholesale brokered deposits, using the strong deposit growth in the fourth quarter 2018 to fund growth in this quarter,” Mr. O’Connor said.

Asset Quality
Asset quality measures improved, as non-performing assets were $3.2 million, or 0.07% of total assets, at March 31, 2019, compared to $6.3 million, or 0.14% of total assets, at March 31, 2018. Non-performing assets at March 31, 2019 and 2018 included $175 thousand of other real estate owned. Non-performing loans were $3.1 million, or 0.09% of total loans at March 31, 2019, compared to $6.1 million, or 0.19% of total loans at March 31, 2018.  Loans 30 to 89 days past due increased $13.4 million to $17.9 million at March 31, 2019, compared to $4.5 million at March 31, 2018. The increase in these past due loans is primarily due to one CRE relationship which has more than sufficient collateral protection. Loans past due 90 days and accruing at March 31, 2019 and 2018 were comprised of acquired loans of $0.3 million and $2.7 million, respectively.

Conference Call
The Company will host a conference call on Wednesday, April 24, 2019 at 10:00 AM (ET). Investors who would like to join the conference call are encouraged to pre-register using the following link: http://dpregister.com/10130336. 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, May 8, 2019.

Call and replay information are as follows:

Call Date: Wednesday, April 24, 2019
Call Time: 10:00 AM (ET)
Domestic Call Dial In:  1-888-317-6016
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: 10130336

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 $4.7 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,” “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)

                   
    March 31,    December 31,    March 31, 
    2019   2018   2018
Assets                  
Cash and due from banks   $  68,773     $  142,145     $  50,588  
Interest-earning deposits with banks      31,684        153,223        48,424  
Total cash and cash equivalents      100,457        295,368        99,012  
Securities available for sale, at fair value      707,451        680,886        726,056  
Securities held to maturity      149,512        160,163        176,089  
Total securities      856,963        841,049        902,145  
Securities, restricted      28,068        24,028        36,195  
Loans held for investment      3,391,104        3,275,811        3,201,897  
Allowance for loan losses      (31,784 )      (31,418 )      (32,812 )
Loans held for investment, net      3,359,320        3,244,393        3,169,085  
Premises and equipment, net      34,478        35,008        33,892  
Operating lease right-of-use assets (1)      37,621        —        —  
Goodwill and other intangible assets      110,100        110,324        110,953  
Other real estate owned      175        175        175  
Accrued interest receivable and other assets      148,027        150,399        149,167  
Total assets   $  4,675,209     $  4,700,744     $  4,500,624  
                   
Liabilities and stockholders' equity                  
Demand deposits   $  1,258,544     $  1,275,664     $  1,164,501  
Savings and negotiable order of withdrawal ("NOW") deposits      513,971        496,881        433,757  
Money market deposit accounts ("MMDA")      993,920        975,531        803,267  
Certificates of deposit of less than $100,000      61,240        61,827        58,631  
Certificates of deposit of $100,000 or more      146,607        155,104        109,923  
Total individual, partnership and corporate ("IPC") deposits      2,974,282        2,965,007        2,570,079  
Brokered deposits      166,696        255,408        280,289  
Public funds - demand deposits      55,403        172,941        59,542  
Public funds - other deposits      529,083        493,037        521,335  
Total public and brokered deposits      751,182        921,386        861,166  
Total deposits      3,725,464        3,886,393        3,431,245  
Federal funds purchased and repurchase agreements      721        539        872  
Federal Home Loan Bank ("FHLB") advances      330,217        240,433        520,092  
Subordinated debentures, net      78,815        78,781        78,676  
Operating lease liabilities (1)      40,454        —        —  
Other liabilities and accrued expenses      34,535        40,768        36,416  
Total liabilities      4,210,206        4,246,914        4,067,301  
Total stockholders' equity      465,003        453,830        433,323  
Total liabilities and stockholders' equity   $  4,675,209     $  4,700,744     $  4,500,624  

_______________________________________________

(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  
    March 31,    December 31,    March 31,   
    2019   2018     2018  
Interest income   $  44,515   $  43,480     $  41,364  
Interest expense      10,192      9,382        6,825  
Net interest income      34,323      34,098        34,539  
Provision for loan losses      600      400        800  
Net interest income after provision for loan losses      33,723      33,698        33,739  
                     
Non-interest income:                    
Service charges and other fees      2,428      2,579        2,163  
Title fee income      306      458        505  
Gain on sale of SBA loans      217      492        371  
BOLI income      553      561        546  
Other operating income      1,714      1,025        528  
Total non-interest income      5,218      5,115        4,113  
                     
Non-interest expense:                    
Salaries and employee benefits      13,280      12,457        12,812  
Occupancy and equipment      3,531      3,472        3,243  
Net fraud recovery      —      (600 )      —  
Office relocation costs      —      750        —  
Amortization of other intangible assets      213      214        246  
Other operating expenses      5,575      5,778        6,297  
Total non-interest expense      22,599      22,071        22,598  
                     
Income before income taxes      16,342      16,742        15,254  
Income tax expense      3,415      2,878        3,181  
Net income   $  12,927   $  13,864     $  12,073  
Basic earnings per share   $  0.65   $  0.70     $  0.61  
Diluted earnings per share   $  0.65   $  0.70     $  0.61  
Weighted average common and equivalent shares      19,526      19,492        19,437  


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

               
    Three Months Ended  
    March 31,   December 31,   March 31,  
    2019   2018   2018  
Selected Financial Data:              
Return on average total assets    1.13  1.22  1.09
Adjusted return on average total assets (1)    1.13    1.23    1.09  
Return on average stockholders' equity    11.41    12.32    10.86  
Adjusted return on average stockholders' equity (1)    11.41    12.43    10.86  
Return on average tangible common equity (1) (2)    15.01    16.38    14.41  
Adjusted return on average tangible common equity (1) (2)    15.21    16.72    14.65  
Net interest margin, tax-equivalent basis    3.29    3.26    3.42  
Adjusted net interest margin (1)    3.24    3.21    3.22  
Efficiency ratio    57.15    56.28    58.47  
Adjusted efficiency ratio (1)    56.43    55.16    57.58  
Operating expense/average assets    1.97    1.94    2.05  
Adjusted operating expense/average assets (1)    1.95    1.90    2.03  

______________________________________________

(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.

                     
    March 31,    December 31,    March 31,   
    2019   2018   2018  
Selected Financial Data:                    
Book value per share   $  23.43   $  22.93   $  21.91  
Tangible book value per share (1)   $  17.88   $  17.36   $  16.30  
Common shares outstanding      19,848      19,791      19,780  
                     
Capital Ratios:                    
Total capital to risk-weighted assets      13.3    13.6    13.3 %
Tier 1 capital to risk-weighted assets      10.2      10.4      10.0  
Common equity Tier 1 capital to risk-weighted assets      10.2      10.4      10.0  
Tier 1 capital to average assets      8.1      8.1      7.9  
Tangible common equity to tangible assets (1) (2)      7.8      7.5      7.3  
Tier 1 capital to average assets (Bank)      9.8      9.9      9.5  
                     
Asset Quality:                    
Loans 30-89 days past due   $  17,937   $  4,400   $  4,506  
Loans 90 days past due and accruing (3)   $  318   $  308   $  2,665  
Non-performing loans   $  3,071   $  2,808   $  6,071  
Other real estate owned      175      175      175  
Non-performing assets   $  3,246   $  2,983   $  6,246  
Non-performing loans/total loans      0.09    0.09    0.19 %
Non-performing assets/total assets      0.07      0.06      0.14  
Allowance/non-performing loans     1034.97     1118.87     540.47  
Allowance/total loans      0.94      0.96      1.02  

______________________________________

(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)

null
                                                   
    Three Months Ended March 31,    Three Months Ended December 31,   Three Months Ended March 31,  
    2019   2018   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)   $  3,275,828   $  37,659      4.66   $ 3,206,033   $ 36,848     4.56 %   $ 3,127,900   $ 35,660     4.62 %  
Securities (1)      885,834      6,442      2.95       882,886     6,328     2.84       969,292     5,780     2.42    
Deposits with banks      91,682      544      2.41       74,348     443     2.36       23,108     90     1.58    
Total interest-earning assets (1)      4,253,344      44,645      4.26       4,163,267     43,619     4.16       4,120,300     41,530     4.09    
Non-interest-earning assets:                                                  
Other assets      392,283               359,740               354,893            
Total assets   $  4,645,627             $ 4,523,007             $ 4,475,193