2014 0804 bnb logoBridge Bancorp Inc., the parent company of Bridgehampton National Bank, last week announced second quarter results for 2016.

Highlights of the company’s financial results for the quarter include:

• Net income of $8.9 million, an increase of $8.4 million over 2015, and 50 cents per diluted share.

• Returns on average assets and equity were .91 percent and 10.07 percent, respectively.

• Core net income was $9.1 million and 52 cents per diluted share, an increase of 69 percent over 2015.

• Core returns on average assets and equity were .93 percent and 10.34 percent, respectively.

• Net interest income increased $10.2 million to $30.6 million, with a net interest margin of 3.48 percent.

• Total assets of $3.7 billion at June 2016, 9 percent higher than June 2015.

• Loan growth of $260 million or 11 percent compared to June 2015.

• Deposits of $2.9 billion at June 2016, including $1.1 billion in non-interest bearing demand deposits.

• Continued solid asset quality metrics and reserve coverage.

• All capital ratios exceed the fully phased in requirements of Basel III.

• Declared a dividend of $.23 during the quarter.

“This quarter marked the one year anniversary of the CNB [Community National Bank] acquisition. This acquisition along with organic growth contributed to our record results,” company president and CEO Kevin O’Connor said. “We are also seeing traction with the SBA platform as the bank recently received Preferred Lender Provider status helping accelerate the origination process going forward,” he said.

Net Earnings and Returns
Net income for the quarter was $8.9 million or 50 cents per diluted share, compared to $.5 million or 4 cents per diluted share for the second quarter of 2015. The second quarter of 2015 included $5.3 million of costs, net of income taxes, associated with the Community National Bank acquisition and a reduction in income tax expense of $.4 million associated with New York City tax legislation signed into law on April 13, 2015. Net income for the six months ended June 2016 was $17.5 million or $.99 per diluted share, compared to $5.2 million or 43 cents per diluted share in 2015.

Core net income for the second quarter was $9.1 million or 52 cents per diluted share, compared to $5.4 million or 43 cents per diluted share, for the same period in 2015. Core net income reflects the quarterly results adjusted for certain costs, net of tax, related to the completed CNB acquisition and the tax benefit recorded in 2015. Rising net income reflects the growth in earning assets, generating higher levels of net interest income and offsetting increases in operating expenses. Returns on average assets and equity for the second quarter of 2016 were .91 percent and 10.07 percent, compared to .07 percent and .91 percent in 2015, respectively, while core returns on average assets and equity for the second quarter of 2016 were .93 percent and 10.34 percent, compared to .86 percent and 10.50 percent in 2015, respectively. Return on average tangible common equity for the second quarter of 2016 was 14.83 percent compared to 1.02 percent in 2015. Core return on average tangible common equity for the second quarter of 2016 was 15.56 percent compared to 11.87 percent in 2015.

Interest income grew for the second quarter of 2016 as average earning assets increased by 53 percent or $1.2 billion, while the net interest margin decreased to 3.48 percent from 3.57 percent in the second quarter of 2015. The net interest margin in both periods reflects greater than expected cash flows associated with acquired purchase credit impaired loans. The increase in average earning assets reflects the acquired assets from CNB as well as organic growth in loans and securities. The decrease in the net interest margin reflects the higher costs of borrowings associated with the $80 million in subordinated debentures issued in September 2015, and federal funds purchased and repos.

The provision for loan losses was $.9 million for the quarter, $.2 million higher than the second quarter of 2015. The higher provision in the second quarter of 2016 is principally due to growth in the loan portfolio. The Company realized net recoveries of $9,000 in the second quarter of 2016, compared to net charge-offs of $.1 million in the second quarter of 2015.

Total non-interest income was $4.3 million for the second quarter of 2016, $1.7 million higher than 2015, driven by an increase in other non-interest income, principally customer fee income, bank-owned life insurance (“BOLI”), net securities gains and gains on sales of the guaranteed portion of Small Business Administration (“SBA”) loans.

Non-interest expense for the second quarter of 2016 decreased to $20.4 million from $22.0 million in 2015, which included $8.2 million in costs associated with the CNB acquisition. Non-interest expenses in 2015 excluding CNB acquisition related costs were $13.8 million. The 2016 non-interest expenses compared to the adjusted 2015 non-interest expenses, reflects higher operating costs associated with the acquired CNB operations and facilities, investments in technology, additional marketing costs, and amortization of CNB related intangible assets. Additionally, the Company’s ratio of operating expenses to average assets decreased to 2.10 percent in the second quarter of 2016 from 3.52 percent in 2015. Core operating expenses to average assets decreased to 2.03 percent in the second quarter of 2016 from 2.20 percent in 2015.

Balance Sheet and Asset Quality
Total assets were $3.7 billion at June 30, 2016, $.3 billion higher than June 2015. Average earning assets for the second quarter 2016 increased $1.2 billion or 53 percent compared to June 2015 reflecting both the acquired assets of CNB and organic growth. Total loans at June 2016 of $2.5 billion reflect organic growth of $260 million or 11 percent over June 2015. This increase in loans was funded by growth in deposits and borrowings including the $80 million in subordinated debentures issued in September 2015. Demand deposits totaled $1.1 billion at June 2016, representing 39 percent of total deposits and an increase of $144 million or 15 percent higher than June 2015. Total assets at June 30, 2016 declined $.2 billion compared to March 31, 2016 reflecting the execution of a strategy to deleverage the balance sheet. During the second quarter, the Company sold $235 million of lower yielding securities at a $.4 million gain, paid down $85 million of borrowings, and funded the runoff of $67 million in acquired high rate certificates of deposits, $44 million in loan growth and $30 million in additional BOLI.

Asset quality measures remained strong, as non-performing assets were $2.1 million or .05 percent of total assets at June 2016 compared to $2.0 million or .06 percent at June 2015. Non-performing loans of $2.1 million represent .08 percent of total loans at June 2016, compared to $2.0 million or .09 percent at June 2015. Loans 30 to 89 days past due increased $1.2 million to $3.8 million at June 2016, with $3.3 million representing CNB acquired loans. Loans past due 90 days and still accruing at June 2016 were comprised of acquired loans of $1.9 million, an increase of $.7 million, compared to June 2015. Additionally, the Company had no other real estate owned at June 2016 and June 2015.

The allowance for loan losses increased $3.9 million to $22.7 million at June 2016 from $18.8 million as of June 2015. The allowance as a percentage of loans was .90 percent at June 30, 2016. The allowance as a percentage of BNB originated loans was 1.20 percent at June 2016, compared to 1.27 percent at June 2015. This decline reflects an improving economy and increasing collateral values.
Stockholders’ equity grew $24.2 million to $358.1 million at June 2016, compared to $333.9 million at June 2015. The growth reflects earnings, capital raised in connection with the Dividend Reinvestment Plan, and an increase in the fair value of available for sale investment securities, partially offset by shareholders’ dividends. The Company’s capital ratios exceed all fully phased in capital requirements under the Basel III rules and the Bank remains classified as well capitalized.

“The recent turmoil and volatility in the financial markets and certain events overseas have resulted in historically low interest rates and will likely cause the Federal Reserve to slow the expected pace of increases in short term rates. During the quarter, we executed a strategy to deleverage the balance sheet selling off lower yielding investments at a gain, paying down borrowings and preserving capital to support future loan growth,” O’Connor said.

Challenges and Opportunities
“The banking industry continues to be faced with new and complex regulatory requirements. Banking regulators have become increasingly concerned about commercial real estate concentrations, inclusive of multifamily loans, and related risk management practices. We believe our risk management practices include prudent underwriting, extensive data analytics, stress testing and active monitoring of our CRE portfolio consistent with regulatory expectations. However, community banks today operate in an environment of enhanced regulatory oversight potentially resulting in pressure on revenue growth and higher capital levels,” O’Connor said.

“We continue to see emerging growth opportunities in our marketplace as larger, out-of-state competitors acquire local community banks. We welcome the opportunity to compete for customers, especially customers that value the level of service that a true community bank like BNB can provide.”

“In recognition of these challenges and opportunities, and as a result of our internal Believe iN Beyond initiative, we have realigned certain organizational responsibilities. I am pleased to announce that Howard H. Nolan has been named Chief Operating Officer and that John M. McCaffery will become Chief Financial Officer, following the filing of our Form 10-Q in August. In addition to their new roles, Howard will retain his role as Corporate Secretary and John will continue as Treasurer,” O’Connor said.

About Bridge Bancorp, Inc.
Bridge Bancorp, Inc. is a 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 $3.7 billion, operates 40 retail branch locations serving Long Island and the greater New York metropolitan area. In addition, the Bank operates two loan production offices: one in Manhattan, and one in Riverhead, New York. 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. offers financial planning and investment consultation. For more information visit www.bridgenb.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 the Bank’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; difficulties related to the integration of the businesses following the CNB merger, which could adversely affect operating results; 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.


Source: Press release issued by Bridge Bancorp July 28, 2016

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