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Bridge Bancorp, Inc. Reports First Quarter 2020 Results

Bridge Bancorp, Inc. Reports First Quarter 2020 Results

BRIDGEHAMPTON, N.Y., April 29, 2020 (GLOBE NEWSWIRE) -- Bridge Bancorp, Inc. (BDGE) (the “Company”), the parent company of BNB Bank (“BNB”), today announced first quarter results for 2020.

The Company's first quarter 2020 financial results included:

  • Net income for the 2020 first quarter of $9.3 million, or $0.47 per diluted share.
  • Net interest income for the 2020 first quarter increased $2.3 million over the 2019 first quarter to $36.7 million, with a tax-equivalent net interest margin of 3.26%.
  • Total assets of $5.1 billion at March 31, 2020, 8% higher than March 31, 2019.
  • Loan growth of $371 million, or 11%, compared to March 31, 2019, and $82 million, or 9% annualized, from December 31, 2019.
  • Loan and line of credit originations of $220 million for the first quarter of 2020.
  • Non-public, non-brokered deposit growth of $141 million, or 5%, compared to March 31, 2019, and $74 million, or 10% annualized, from December 31, 2019.
  • Non-performing assets of $4.6 million at March 31, 2020, $1.4 million higher than March 31, 2019 and $0.2 million higher than December 31, 2019. Allowance for credit losses coverage to total loans of 1.04% at March 31, 2020.
  • The Company adopted CECL on January 1, 2020, which resulted in a charge to retained earnings and reduction to stockholders’ equity of $1.5 million.
  • The provision of $5.0 million included approximately $4.0 million related to our initial estimate of the economic impact of the COVID-19 pandemic.
  • Purchased 179,620 shares of the Company’s common stock at a cost of $4.6 million.
  • All capital ratios remain strong. Declared a dividend of $0.24 during the quarter.

Commenting on the first quarter results, Kevin O’Connor, President and CEO said, “We ended the first quarter with a sound foundation; our margin holding steady, fee income staying strong, and solid capital.  In addition to being well capitalized from a financial perspective, the human capital and cultural values that have developed over the Bank’s 110 year history enabled us to meet the challenges of this current crisis and continue to serve our customers and our communities. To that end, we actively participated in the Payroll Protection Program (PPP) and originated over $900 million for 3,500 small businesses.” 

Net Earnings and Returns
Net income in the 2020 first quarter was $9.3 million, or $0.47 per diluted share, a decrease of $3.6 million compared to the 2019 first quarter, driven primarily by higher provision for credit losses and non-interest expense, partially offset by higher net interest income.

Returns on average assets and equity in the 2020 first quarter were 0.76% and 7.50%, respectively.  Return on average tangible common equity was 9.59% for the 2020 first quarter.

“Our reported net income of $0.47 per diluted share was impacted by a higher provision for credit losses primarily related to the COVID-19 pandemic, which reduced earnings per share by approximately $0.15, and reduced returns on average assets, equity and tangible common equity by approximately 25 basis points, 248 basis points and 318 basis points, respectively,” noted Mr. O’Connor.

Net Interest Income
Interest income was $44.6 million in the 2020 first quarter, an increase of $0.3 million compared to the 2019 fourth quarter, primarily due to loan portfolio growth and higher average yield in the securities portfolio, partially offset by lower average yield in the loan portfolio. Interest expense was $8.0 million in the 2020 first quarter, a decrease of $0.7 million compared to the 2019 fourth quarter, primarily due to a decrease in average cost of deposits coupled with a decrease in average borrowings, partially offset by an increase in average deposits.

The tax-equivalent net interest margin was 3.26% in the 2020 first quarter, which was unchanged compared to the 2019 fourth quarter and down 3 basis points year-over-year.

Commenting on the margin Mr. O’Connor said, “Similar to last year, we reacted quickly to the Fed’s rate cuts.  Our total deposit costs dropped 12 basis points quarter-over-quarter with most of the impact in March.  In fact, for the quarter, March had the highest margin of the three months at 3.29%.” 

Provision for Credit Losses
The provision for credit loss expense was $5.0 million for the 2020 first quarter, $4.4 million higher than the 2019 first quarter. The higher provision was primarily attributable to higher expected credit losses due to the current projected economic impact of the COVID-19 pandemic. The Company recognized net charge-offs of $0.2 million in the 2020 first quarter, which was unchanged compared to the 2019 first quarter.

“We decided to implement the new accounting standard for credit losses “CECL” and not opt to delay adoption.  In response to the COVID-19 pandemic, we assumed near-term economic stress, which resulted in a sizable credit loss expense.  We will continue to focus on the ongoing effects of this crisis and provide accordingly. In addition, we recognized a $1.5 million charge to stockholders’ equity on January 1 for the cumulative effect of adopting this standard,” noted Mr. O’Connor.

Non-Interest Income
Non-interest income was $5.2 million for the 2020 first quarter, which was flat compared to the 2019 first quarter, primarily attributable to higher gain on sale of SBA loans, loan swap fees, and service charges and other fees, partially offset by a decrease in other income.

Non-Interest Expense
Non-interest expense for the 2020 first quarter of $24.8 million was $2.2 million higher than the 2019 first quarter. The increase in the first quarter was primarily due to higher salaries and benefits expense. Our operating expenses to average assets dropped by 10 basis points compared to the fourth quarter.

Income Tax Expense
Income tax expense was $2.7 million in the 2020 first quarter, a decrease of $0.7 million compared to the 2019 first quarter. The Company estimates it will record income tax at an effective tax rate of approximately 22.5% for the remainder of 2020.

Balance Sheet
Total assets were $5.1 billion at March 31, 2020, $139.4 million higher than December 31, 2019, and $385.7 million higher than March 31, 2019. Total loans held for investment at March 31, 2020 of $3.8 billion reflects growth of $371.0 million, or 11%, over March 31, 2019. Deposits totaled $4.1 billion at March 31, 2020, an increase of $330.3 million, or 9%, compared to March 31, 2019. Demand deposits increased $167.6 million year-over-year to $1.5 billion at March 31, 2020, representing 37% of total deposits.

The allowance for credit losses was $39.2 million at March 31, 2020, $7.4 million higher than March 31, 2019. The allowance as a percentage of loans was 1.04% at March 31, 2020, compared to 0.94% at March 31, 2019.

Stockholders’ equity was $493.3 million at March 31, 2020, $28.3 million higher than March 31, 2019. The growth reflects earnings, partially offset by shareholders’ dividends and stock repurchases. During the 2020 first quarter, the Company purchased 179,620 shares of its common stock under the repurchase plan at a cost of $4.6 million. Book value per share was $25.01 at March 31, 2020, $1.58 higher than March 31, 2019. Tangible book value per share was $19.46 at March 31, 2020, $1.58 higher than March 31, 2019.

                               
                      Change Compared To
    March 31,    December 31,   March 31,   December 31,   March 31,
(Dollars in thousands)   2020   2019   2019   2019
  2019
Total assets   $  5,060,872   $ 4,921,520   $ 4,675,209   $ 139,352     $ 385,663  
Total stockholders' equity      493,253     497,154     465,003     (3,901 )     28,250  
                               
Loans held for investment                              
Investor commercial real estate ("CRE")   $  1,053,901   $ 1,034,599   $ 859,797   $ 19,302     $ 194,104  
Owner-occupied CRE      529,877     531,088     542,836     (1,211 )     (12,959 )
Construction and land      100,643     97,311     147,116     3,332       (46,473 )
Commercial and industrial      758,683     679,444     671,897     79,239       86,786  
Total commercial      2,443,104     2,342,442     2,221,646     100,662       221,458  
                               
Multi-family      800,556     812,174     624,114     (11,618 )     176,442  
Residential real estate      485,492     493,144     515,173     (7,652 )     (29,681 )
Installment and consumer      25,051     24,836     22,781     215       2,270  
Net deferred loan costs and fees      7,927     7,689     7,390     238       537  
Total loans held for investment   $  3,762,130   $ 3,680,285   $ 3,391,104   $ 81,845     $ 371,026  
                               
Deposits                              
Total IPC deposits   $  3,115,746   $ 3,042,171   $ 2,974,282   $ 73,575     $ 141,464  
Brokered deposits      201,566     164,034     166,696     37,532       34,870  
Public deposits      738,423     608,442     584,486     129,981       153,937  
Total public and brokered deposits      939,989     772,476     751,182     167,513       188,807  
Total deposits   $  4,055,735   $ 3,814,647   $ 3,725,464   $ 241,088     $ 330,271  


Loan and Line of Credit Origination Information (unaudited)

                   
    Three Months Ended
    March 31,    December 31,   March 31,
(Dollars in thousands)   2020   2019   2019
Investor CRE   $  41,738   $ 68,562   $ 13,975
Owner-occupied CRE      33,720     20,221     51,365
Commercial and industrial      75,796     79,404     55,223
Multi-family      38,915     175,906     28,216
Residential real estate      8,969     9,228     8,159
Other      21,011     18,618     13,967
Total loan and line of credit originations   $  220,149   $ 371,939   $ 170,905
                   

“We continued to generate business during the first quarter through additional C&I originations. This, along with greater line usage, resulted in a net increase in C&I loans outstanding of $79 million. IPC deposits also grew accordingly. At the end of the quarter, as the pandemic’s impact became clearer, we enhanced our liquidity profile by deferring investment purchases and adding to our brokered deposits,” Mr. O’Connor said.

Asset Quality
Asset quality measures remained solid, as non-performing assets were $4.6 million, or 0.09% of total assets, at March 31, 2020, compared to $3.2 million, or 0.07% of total assets, at March 31, 2019. Non-performing assets at March 31, 2019 included $0.2 million of other real estate owned. Non-performing loans were $4.6 million, or 0.12% of total loans at March 31, 2020, compared to $3.1 million, or 0.09% of total loans at March 31, 2019.  Loans 30 to 89 days past due decreased $5.0 million to $12.9 million at March 31, 2020, compared to $17.9 million at March 31, 2019. Loans past due 90 days and accruing at March 31, 2020 and 2019 totaled $0.3 million. The increase in the current quarter of 30 to 89 days past due loans is primarily comprised of several residential loans. 

Commenting on asset quality and the current environment, Mr. O’Connor stated, “Stating the obvious, we are seeing now and facing in the future, levels of economic inactivity not seen since the great depression.  This will be a challenge to our industry. We have been working with borrowers, on a case by case basis, as they seek forbearance. Where granted we are working with them assessing their cash flows and ability to service their obligations. The historical performance of our Bank, while not an indication of future performance does evidence a credit discipline to potentially weather these difficult times. Although the environment is somewhat different it is useful to note that during the financial crisis the highest level of charge-offs we experienced in a given year was 47 basis points, and the cumulative losses experienced was 143 basis points.  Also, one should note that originated LTV on our multi-family/commercial real estate portfolio is 64%.”

Conference Call
The Company will host a conference call on Thursday, April 30, 2020 at 10:00 AM (ET) to discuss the 2020 first quarter results. In addition to this press release, supplemental information regarding the Company and COVID-19 related matters will be available on the Company’s website at www.bnbbank.com under “Investor Relations” and will be filed as a Current Report on Form 8-K prior to the conference call.

Investors who would like to join the conference call are encouraged to pre-register using the following link: http://dpregister.com/10141514. 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 beginning approximately one hour after the conclusion of the call through Thursday, May 14, 2020.

Call and replay information are as follows:

Call Date: Thursday, April 30, 2020
Call Time: 10:00 AM (ET)
Domestic Call Dial In:  1-844-746-0738
International Call Dial In:  1-412-317-5271

Replay Domestic Dial In:  1-877-344-7529
Replay International Dial In:  1-412-317-0088
Access Code: 10141514

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 $5.1 billion, operates 39 branch locations serving Long Island and the greater New York metropolitan area. 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, tax rates, 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; and other risk factors discussed elsewhere, and in our reports filed with the Securities and Exchange Commission. In addition, the COVID-19 pandemic is having an adverse impact on the Company, its customers and the communities it serves. The adverse effect of the COVID-19 pandemic on the Company, its customers and the communities where it operates may adversely affect the Company’s business, results of operations and financial condition for an indefinite period of time. 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,
    2020
  2019
  2019
Assets                  
Cash and due from banks   $  61,352     $ 77,693     $ 68,773  
Interest-earning deposits with banks      172,830       39,501       31,684  
Total cash and cash equivalents      234,182       117,194       100,457  
Securities available for sale, at fair value      553,278       638,291       707,451  
Securities held to maturity      124,231       133,638       149,512  
Total securities      677,509       771,929       856,963  
Securities, restricted      26,354       32,879       28,068  
Loans held for sale      12,643       12,643        
Loans held for investment      3,762,130       3,680,285       3,391,104  
Allowance for credit losses      (39,215 )     (32,786 )     (31,784 )
Loans held for investment, net      3,722,915       3,647,499       3,359,320  
Premises and equipment, net      34,521       34,062       34,478  
Operating lease right-of-use assets      41,939       43,450       37,621  
Goodwill and other intangible assets      109,422       109,627       110,100  
Other real estate owned      —             175  
Accrued interest receivable and other assets      201,387       152,237       148,027  
Total assets   $  5,060,872     $ 4,921,520     $ 4,675,209  
                   
Liabilities and stockholders' equity                  
Demand deposits   $  1,421,743     $ 1,386,037     $ 1,258,544  
Savings and negotiable order of withdrawal ("NOW") deposits      421,212       438,902       513,971  
Money market deposit accounts ("MMDA")      1,074,310       1,012,322       993,920  
Certificates of deposit of less than $100,000      58,820       58,640       61,240  
Certificates of deposit of $100,000 or more      139,661       146,270       146,607  
Total individual, partnership and corporate ("IPC") deposits      3,115,746       3,042,171       2,974,282  
Brokered deposits      201,566       164,034       166,696  
Public funds - demand deposits      59,809       132,921       55,403  
Public funds - other deposits      678,614       475,521       529,083  
Total public and brokered deposits      939,989       772,476       751,182  
Total deposits      4,055,735       3,814,647       3,725,464  
Federal funds purchased and repurchase agreements      1,195       999       721  
Federal Home Loan Bank ("FHLB") advances      290,000       435,000       330,217  
Subordinated debentures, net      78,955       78,920       78,815  
Operating lease liabilities      44,571       45,977       40,454  
Other liabilities and accrued expenses      97,163       48,823       34,535  
Total liabilities      4,567,619       4,424,366       4,210,206  
Total stockholders' equity      493,253       497,154       465,003  
Total liabilities and stockholders' equity   $  5,060,872     $ 4,921,520     $ 4,675,209  


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

                   
    Three Months Ended
    March 31,    December 31,   March 31,
    2020
  2019
  2019
Interest income   $  44,602     $ 44,320     $ 44,515  
Interest expense      7,952       8,672       10,192  
Net interest income      36,650       35,648       34,323  
Provision for credit losses      5,000       600       600  
Net interest income after provision for credit losses      31,650       35,048       33,723  
                   
Non-interest income:                  
Service charges and other fees      2,500       2,487       2,428  
Title fees      329       571       306  
Net securities losses      (15 )            
Gain on sale of SBA loans      371       322       217  
Bank owned life insurance      548       560       553  
Loan swap fees      1,231       4,260       1,115  
Other      253       226       599  
Total non-interest income      5,217       8,426       5,218  
                   
Non-interest expense:                  
Salaries and employee benefits      15,549       15,011       13,280  
Occupancy and equipment      3,499       3,791       3,531  
Amortization of other intangible assets      181       182       213  
Other      5,614       6,348       5,575  
Total non-interest expense      24,843       25,332       22,599  
                   
Income before income taxes      12,024       18,142       16,342  
Income tax expense      2,676       3,934       3,415  
Net income   $  9,348     $ 14,208     $ 12,927  
                   
                   
                   
Earnings Per Share (unaudited)                  
(In thousands, except per share data)   Three Months Ended
    March 31,    December 31,   March 31,
    2020
  2019
  2019
Net income   $  9,348     $ 14,208     $ 12,927  
Dividends paid on and earnings allocated to participating securities      (195 )     (299 )     (277 )
Income attributable to common stock   $  9,153     $ 13,909     $ 12,650  
                   
Weighted average common shares outstanding, including participating securities      19,946       19,957       19,926  
Weighted average participating securities      (414 )     (419 )     (426 )
Weighted average common shares outstanding      19,532       19,538       19,500  
Basic earnings per common share   $  0.47     $ 0.71     $ 0.65  
                   
Weighted average common shares outstanding      19,532       19,538       19,500  
Incremental shares from assumed conversions of options and restricted stock units      34       40       26  
Weighted average common and equivalent shares outstanding      19,566       19,578       19,526  
Diluted earnings per common share   $  0.47     $ 0.71     $ 0.65  


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,  
    2020   2019   2019  
Selected Financial Data:              
Return on average total assets    0.76 1.18 % 1.13 %
Return on average stockholders' equity    7.50   11.40   11.41  
Return on average tangible common equity (1) (2)    9.59   14.66   15.01  
Adjusted return on average tangible common equity (1) (2)    9.74   14.81   15.21  
Net interest margin, tax-equivalent basis    3.26   3.26   3.29  
Efficiency ratio    59.34   57.48   57.15  
Adjusted efficiency ratio (1)    58.74   56.93   56.43  
Operating expense/average assets    2.01   2.10   1.97  
Adjusted operating expense/average assets (1)    1.99   2.09   1.95  

_______________________________
(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.

null
                     
    March 31,    December 31,   March 31,  
    2020   2019   2019  
Selected Financial Data:                    
Book value per share   $  25.01   $ 25.06   $ 23.43  
Tangible book value per share (1)   $  19.46   $ 19.54   $ 17.88  
Common shares outstanding      19,722     19,837     19,848  
                     
Capital Ratios:                    
Total capital to risk-weighted assets      12.9   13.1 %   13.3 %
Tier 1 capital to risk-weighted assets      10.0     10.2