Bridge Bancorp, Inc. (NASDAQ:BDGE), the parent company of The Bridgehampton National Bank (BNB), today announced its results for the first quarter of 2014 and reported core net income and core earnings per share of $4.0 million and $.35 per share. Core net income excludes $3.6 million or $0.31 per share of charges, net of tax, associated with the February 2014 acquisition of FNBNY Bancorp and its wholly owned subsidiary, the First National Bank of New York (collectively “FNBNY”), branch restructuring costs and net losses on sales of securities. Net income and earnings per share inclusive of these charges was $0.4 million and $.04 per share, respectively. Highlights of the Company’s financial results for the quarter include:
- Record core net income of $4.0 million and $.35 per share for the quarter, a 39% increase in core net income over March 2013.
- Core returns on average assets and equity for 2014 were .83% and 9.32%, respectively.
- Net interest income increased $3.6 million to $15.5 million for March 2014, with a net interest margin of 3.46%.
- Total assets of $2.1 billion at March 2014, 34% higher than 2013.
- Loan growth of $274 million or 32%, compared to March 2013.
- Deposits of $1.67 billion, a 22% increase compared to the first quarter of 2013.
- Continued solid asset quality metrics and reserve coverage.
- Tier 1 Capital increased by $44.6 million, or 33% higher than March 2013.
- Declared a dividend of $.23 during the quarter.
“The first quarter of 2014 featured several noteworthy accomplishments for the Company. We completed the acquisition of FNBNY and converted their core systems in mid February 2014. This adds three branches in new markets: Melville, in Suffolk County and Massapequa and Merrick, our first two branches in Nassau County, along with a loan production office in Manhattan. Our 26 branch locations, along with two loan production offices, combined with our expanded network of nearly 600 surcharge-free ATMs in select Rite Aid pharmacies across Long Island, New York City, and throughout New York State, offer our customers more convenient access to our community banking services,” commented Kevin M. O’Connor, President and CEO of Bridge Bancorp, Inc.
“In addition to the FNBNY acquisition, we experienced strong organic growth in loans and deposits during the quarter. This growth contributed to record core net interest income and core net income. Our strong, well-capitalized balance sheet, funded by core branch deposits, positions us to successfully fulfill our mission to be the community bank of choice for the communities we serve,” added Mr. O’Connor.
Net Earnings and Returns
Net income for the quarter ended March 2014 was $0.4 million or $0.04 per share, while core net income was $4.0 million or $.35 per share, a 39% increase in core net income compared to $2.9 million or $.32 per share, for the same period in 2013. Core net income excludes (i) $2.9 million of costs, net of tax, related to the FNBNY acquisition, and branch restructuring charges associated with the relocation of the Mattituck branch to a superior location; and (ii) $0.7 million of losses, net of tax, on the sales of securities resulting from repositioning of the securities portfolio to mitigate interest rate risk. Additionally, first quarter 2014 earnings per share reflect the additional 1.9 million shares issued with the $37.5 million common stock offering in October 2013. Core returns on average assets and equity for 2014 were .83% and 9.32%, respectively, compared to .74% and 9.92%, respectively for 2013.
“During the first quarter, we worked diligently to quickly assimilate the employees and operations of FNBNY in order to diminish disruption to the Company’s operations and minimize future integration costs. As such, we recorded acquisition related costs associated with transitional employees’ salaries and benefits, employee severance and separation costs, contract terminations, professional fees, as well as costs associated with closing the former FNBNY Melville headquarters. We believe most of the acquisition related costs have been recognized as of quarter end as a result of these efforts,” noted Mr. O’Connor.
Net interest income grew in the first quarter of 2014, as average earning assets increased by 23% or $343.0 million, and the net interest margin increased to 3.46% from 3.29% in March 2013. These developments reflect the positive impacts of increased loan demand and higher deposit balances, including the acquired loans and deposits of FNBNY for a portion of the first quarter. The net interest margin’s improvement reflects higher yields on earning assets, primarily securities, and a reduced cost of funds associated with lower deposit costs.
The provision for loan losses was $0.7 million for the quarter, $0.2 million higher than March 2013, while net charge-offs were $0.3 million for the first quarter of 2014. Total non-interest income decreased $1.3 million, due primarily to $1.1 million in net securities losses in 2014, compared to $0.3 million in net securities gains in 2013. Non-interest expense increased $6.1 million for the quarter compared to March 2013, reflecting $4.4 million in acquisition related and branch restructuring costs, along with investments in new branches, enhancements to technology and additional staffing.
Balance Sheet and Asset Quality
Total assets were $2.1 billion at March 31, 2014, $536 million or 34% higher than March 2013 and average assets increased $379 million or 24%. Contributing to the growth was the impact of the FNBNY acquisition adding total assets on a fair value basis of $210 million, with loans of $87 million and deposits of $170 million. Additionally, the Company issued approximately 240,600 of its common shares with an aggregate value of $6.1 million and recorded goodwill of $8.7 million.
Total asset growth, excluding the impact of the FNBNY transaction, was solid at $326 million or 21% over March 2013, including growth of $187 million or 22% in loans. Earning asset growth continues to be funded principally by deposits, which increased $301 million or 22% to $1.67 billion at March 2014. The increase in deposits at quarter end, exclusive of FNBNY deposits, reflects organic growth of $130.7 million or 10% compared to March 2013. Demand deposits totaled $520.0 million at March 2014, $109.4 million or 27% higher than March 2013.
Asset quality measures remained strong as non-performing assets decreased $2.3 million from $6.1 million at December 2013 to $3.8 million at March 31, 2014, reflecting the sale of OREO, without any gain or loss. Non-performing loans at March 31, 2014 were unchanged at $3.8 million or 0.33% of total loans, compared to 0.38% at December 2013. Loans 30 to 89 days past due increased $1.1 million to $2.6 million due to the addition of $1.6 million of FNBNY acquired loans.
The $87 million of acquired FNBNY loans are recorded at their fair value, as required, effectively netting estimated future losses against the loan balances. Accordingly, the allowance for loan losses to total loans ratio is calculated on BNB loans originated and excludes the FNBNY acquired loans. The allowance for loan losses increased $0.4 million to $16.4 million from $16.0 million as of December 2013. The allowance as a percentage of BNB originated loans was 1.56% at March 2014, compared to 1.58% at December 2013, and 1.73% at March 2013; these declines reflect an improving economy, increasing collateral values, and stable asset quality trends.
Stockholders’ equity grew $7.4 million to $166.9 million at March 2014, compared to $159.5 million at December 2013. The growth reflects earnings, as well as the capital raised in connection with Dividend Reinvestment Plan, an increase in the fair value of available for sale investment securities partially offset by shareholders’ dividends. Overall, Tier 1 Capital increased to $180.8 million, 33% higher than the March 2013 level. The Company’s capital ratios continue to exceed all regulatory minimums, and the Bank remains classified as “well capitalized”.
Challenges and Opportunities
“The regulatory, economic, and interest rate environments continue to be our principal challenges. Regulations stemming from the Dodd-Frank Act and Basel III continue to be issued requiring higher capital levels, stress testing, more robust risk management systems, and additional compliance resources. The national economy, while improving, is still fragile, requiring the Federal Reserve to maintain the current historically low interest rate environment. Managing interest rate risk in this rate environment requires active balance sheet management as reflected by our repositioning of the securities portfolio during the quarter. Locally, the Long Island economy appears healthier with real estate values and increased activity, particularly on the East End, demonstrating significant improvement compared to prior years,” noted Mr. O’Connor.
“Although this banking environment is challenging, opportunities are present for strong, vibrant community banks who focus on the customer and their banking needs. We are well-positioned to benefit from these opportunities as we continue to strengthen our organization, build our franchise and deliver long term results for our shareholders,” concluded Mr. O’Connor.
About Bridge Bancorp, Inc.
Bridge Bancorp, Inc. is a one bank holding company engaged in commercial banking and financial services through its wholly owned subsidiary, The Bridgehampton National Bank (BNB). Established in 1910, BNB, with assets of approximately $2.1 billion, and a primary market area of Suffolk and Southern Nassau Counties, Long Island, operates 26 retail branch locations. Through this 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. offers financial planning and investment consultation.
BNB continues a rich tradition of involvement in the community by 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. (See full report below.)
BRIDGE BANCORP, INC. REPORTS FIRST QUARTER 2014 RESULTS
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