SECURITIES
AND EXCHANGE COMMISSION
|
Item 1. Financial Statements
Unaudited Consolidated Statements of Condition as of June 30, 2002
and December 31, 2001
Unaudited Consolidated Statements of Income and Comprehensive income for the Three Months and Six Months Ended June
30, 2002 and 2001
Unaudited Consolidated Statements of Stockholders' Equity for the Six Months
Ended June 30, 2002
Unaudited Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2002 and 2001
Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
Signatures
BRIDGE BANCORP, INC. AND SUBSIDIARY
Unaudited Consolidated Statements of Condition
(In thousands, except share and per share amounts) June 30, December 31,
2002 2001
- ---------------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks $20,157 $10,813
Interest earning deposits with banks 67 50
Federal funds sold 15,000 13,500
-------------------------
Total cash and cash equivalents 35,224 24,363
Investment in debt and equity securities, net:
Securities available for sale, at fair value (securities pledged of $122,499
and $77,292 at June 30, 2002 and December 31, 2001 respectively) 150,048 125,709
Securities held to maturity (fair value of $11,389 and $17,611 at June 30, 2002
and December 31, 2001 respectively) 11,375 17,552
-------------------------
Total investment in debt and equity securities, net 161,423 143,261
Loans 232,784 215,362
Less:
Allowance for loan losses (2,364) (2,249)
-------------------------
Loans, net 230,420 213,113
Banking premises and equipment, net 8,691 8,781
Accrued interest receivable 2,409 2,153
Other assets 1,608 1,852
-------------------------
Total Assets $439,775 $393,523
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits $126,454 $115,066
Savings, N.O.W. and money market deposits 218,993 184,261
Certificates of deposit of $100,000 or more 22,464 22,993
Other time deposits 32,233 34,835
-------------------------
Total deposits 400,144 357,155
Accrued interest on depositors' accounts 544 625
Other liabilities and accrued expenses 3,301 2, 882
-------------------------
Total Liabilities 403,989 360,662
-------------------------
Stockholders' equity:
Common stock, par value $.01 per share:
Authorized: 20,000,000 shares; 4,257,597 issued; 4,120,486
and 4,166,264 shares outstanding at 6/30/02 and 12/31/01 respectively 43 43
Surplus 21,150 21,154
Undivided profits 14,122 11,240
Less: Treasury Stock at cost, 137,111 and 91,333 shares at 6/30/02 and
12/31/01 respectively (2,441) (1,608)
-------------------------
32,874 30,829
Accumulated other comprehensive income(loss):
Net unrealized gain on securities, net of taxes of 1,946,000 and $1,387,000
at 6/30/02 and 12/31/01 respectively 2,965 2,085
Net minimum pension liability, net of taxes of $35,000 at 6/30/02 and
12/31/01 (53) (53)
-------------------------
Total Stockholders' Equity 35,786 32,861
-------------------------
Total Liabilities and Stockholders' Equity $439,775 $393,523
=========================
See accompanying notes to the Unaudited Consolidated Financial Statements.
BRIDGE BANCORP, INC. AND SUBSIDIARY
Unaudited Consolidated Statements of Income
(In thousands, except per share amounts)
Three months ended June 30, Six months ended June 30,
2002 2001 2002 2001
- --------------------------------------------------------------------------------------------------------------
Interest income:
Loans (including fee income) $4,215 $4,701 $8,403 $9,341
Mortgage-backed securities 1,277 1,430 2,676 2,782
State and municipal obligations 453 434 868 887
U.S. Treasury and government agency securities 400 155 701 308
Federal funds sold 52 104 158 212
Other securities 15 19 30 38
Deposits with banks 1 29 1 30
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Total interest income 6,413 6,872 12,837 13,598
Interest expense:
Savings, N.O.W. and money market deposits 754 1,392 1,499 3,031
Certificates of deposit of $100,000 or more 166 382 350 711
Other time deposits 217 387 468 790
Federal funds purchased and securities sold under
agreement to repurchase 2 9 3 19
Other borrowed money 4 3 4 3
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Total interest expense 1,143 2,173 2,324 4,554
----------------------------------------------------------
Net interest income 5,270 4,699 10,513 9,044
Provision for loan losses 60 85 120 170
----------------------------------------------------------
Net interest income after provision for loan losses 5,210 4,614 10,393 8,874
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Other income:
Service charges on deposit accounts 557 361 980 710
Net securities gains - - - 78
Fees for other customer services 265 188 501 339
Other operating income 17 77 43 83
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Total other income 839 626 1,524 1,210
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Other expenses:
Salaries and employee benefits 1,558 1,524 3,184 3,063
Net occupancy expense 260 244 520 500
Furniture and fixture expense 237 213 468 422
Other operating expenses 792 775 1,507 1,506
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Total other expenses 2,847 2,756 5,679 5,491
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Income before provision for income taxes 3,202 2,484 6,238 4,593
Provision for income taxes 1,088 808 2,117 1,460
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Net income $2,114 $1,676 $4,121 $3,133
==========================================================
Basic earnings per share $0.51 $0.40 $1.00 $0.75
==========================================================
Diluted earnings per share $0.50 $0.40 $0.98 $0.74
==========================================================
Comprehensive Income $3,443 $1,401 $5,001 $3,941
==========================================================
See accompanying notes to the Unaudited Consolidated Financial Statements.
BRIDGE BANCORP, INC. AND SUBSIDIARY
Unaudited Consolidated Statements of Stockholders' Equity
(In thousands, except share and per share amounts)
Accumulated
Other
Common Stock Comprehensive Undivided Treasury Comprehensive
Shares Amount Surplus Income Profits Stock Income Total
-----------------------------------------------------------------------------------
============================ ==========================================
Balance at December 31, 2001 4,257,597 $43 $21,154 $11,240 ($1,608) $2,032 $32,861
Net income - - - $4,121 4,121 - - 4,121
Purchase of Treasury Stock - - - (942) (942)
Issuance of vested stock awards from
treasury 7 53 60
Exercise of stock options, and related tax
benefit (11) - 56 45
Cash dividends declared, $.30 per share - - - (1,239) (1,239)
Other comprehensive income, net of tax
Unrealized gains in securities available
for sale, net of tax - - - 880 - - 880 880
Minimum pension liability adjustment,
net of tax - - - - - - - -
-------------
Comprehensive Income - - - $5,001 - - - -
---------------------------=============-------------------------------------------
Balance at June 30, 2002 4,257,597 $43 $21,150 $14,122 ($2,441) $2,912 $35,786
========================== ==========================================
See accompanying notes to the Unaudited Consolidated Financial Statements.
BRIDGE BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(In thousands)
Six months ended June 30, 2002 2001
- ------------------------------------------------------------------------------------------
Operating activities:
Net Income 4,121 3,133
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 120 170
Depreciation and amortization 470 450
Accretion of discounts (162) (116)
Amortization of premiums 349 69
Earned or allocated expense of restricted stock awards 45 29
Gain on sale of assets - 4
Net securities gains - (78)
(Increase) Decrease in accrued interest receivable (256) 110
Decrease (Increase) in other assets 244 (239)
(Decrease) in accrued interest payable and other liabilities (188) (587)
-----------------------
Net cash provided by operating activities 4,743 2,945
-----------------------
Investing activities:
Purchases of securities available for sale (44,471) (24,014)
Purchases of securities held to maturity (7,493) (6,504)
Proceeds from sales of securities available for sale - 9,747
Proceeds from maturing securities available for sale 5,410 820
Proceeds from maturing securities held to maturity 13,670 10,032
Proceeds from principal payments on mortgage-backed securities 15,972 8,038
Net (increase) in loans (17,437) (18,504)
Purchases of banking premises and equipment, net of disposals (380) (256)
-----------------------
Net cash used by investing activities (34,729) (20,641)
-----------------------
Financing activities:
Net increase in deposits 42,989 35,109
(Decrease) in other borrowings - (9,700)
Payment for the purchase of treasury stock (942) (445)
Net proceeds from exercise of stock options
issued pursuant to equity incentive plan 45 24
Cash dividends paid (1,245) (1,097)
-----------------------
Net cash provided by financing activities 40,847 23,891
-----------------------
Increase in cash and cash equivalents 10,861 6,195
Cash and cash equivalents beginning of period 24,363 16,044
-----------------------
Cash and cash equivalents end of period 35,224 22,239
=======================
Supplemental information-Cash Flows:
Cash paid for:
Interest 2,458 4,634
Income taxes 2,117 1,623
See accompanying notes to the Unaudited Consolidated Financial Statements.
The accompanying Unaudited Consolidated Financial Statements include the accounts of Bridge Bancorp, Inc. (the "Registrant" or "Company") and its wholly-owned subsidiary, The Bridgehampton National Bank (the "Bank"). In May 1999, the Bank established a real estate investment trust subsidiary, Bridgehampton Community, Inc. ("BCI"). The assets transferred to BCI are viewed by the regulators as part of the Bank's assets in consolidation. The establishment of BCI provides an additional vehicle for access by the Company to the capital markets for future investment purposes. In April 2002 the Bank capitalized a financial subsidary, The Bridgehampton Abstract Holding, LLC. This subsidary, through its majority investment in Bridge Abstract, LLC, provides an oportunity for the Bank to include title insurance as a product offering. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The Unaudited Consolidated Financial Statements included herein reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual future results could differ significantly from those estimates. The annualized results of operations for the three and six months ended June 30, 2002 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. Certain reclassifications have been made to prior year amounts to conform to current year presentations. Certain information and note disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The Unaudited Consolidated Financial Statements should be read in conjunction with the Audited Consolidated Financial Statements and notes thereto included in the Company's 2001 Annual Report on Form 10-K.
2. Earnings Per ShareFor the three months ended June 30, 2002 and 2001, diluted weighted average common stock and common stock equivalent shares outstanding for the diluted earnings per share were 4,148,681 and 4,237,397, respectively. For the three months ended June 30, 2002 and 2001, the total weighted average number of shares of common stock outstanding for the basic earnings per share calculation were 4,119,959 and 4,208,659, respectively. For the six months ended June 30, 2002 and 2001,diluted weighted average common stock and common stock equivalent shares outstanding for the diluted earnings per share were 4,154,486 and 4,238,210, respectively. For the six months ended June 30, 2002 and 2001, the total weighted average shares of common stock outstanding for the basic earnings per share calculation were 4,128,753 and 4,211,448, respectively. Diluted earnings per share, which reflects the potential dilution that could occur if outstanding stock options were exercised and stock awards were fully vested and resulted in the issuance of common stock that then shared in the earnings of the Company, is computed by dividing net income by the weighted average number of common shares and common stock equivalents.
BRIDGE BANCORP, INC. AND SUBSIDIARY
Unaudited Computation of Per Share Income Three months ended Six months ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
- ----------------------------------------------------------------------------------------------------------------------
Net Income $2,114,000 $1,676,000 $4,121,000 $3,133,000
Common Equivalent Shares:
Weighted Average Common Shares Outstanding 4,119,959 4,208,659 4,128,753 4,211,448
Weighted Average Common Equivalent Shares 36,455 28,738 29,599 26,762
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Weighted Average Common and Common Equivalent Shares 4,156,414 4,237,397 4,158,352 4,238,210
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3. Repurchased Stock
As part of the Company’s strategy to find ways to best utilize its available capital, during 2001 the Company instituted a stock repurchase program repurchasing 117,590 shares of its common stock under the plan. In February 2002 the Company reapproved its stock repurchase plan allowing the repurchase of up to 5% of its current outstanding shares. The total number of treasury shares at June 30, 2002 was 137,111, or 3.3% of the total number of outstanding common shares of 4,120,486. At June 30, 2002, 205,875 shares remain to be repurchased under the current approved stock repurchase program.
4. Investment in Debt and Equity Securities
6/30/02 12/31/01
- ----------------------------------------------------------------------------------------------------------
(In thousands) Estimated Estimated
Amortized Fair Amortized Fair
Cost Value Cost Value
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Available for sale:
Obligation of U.S. Government agencies $43,290 $43,930 $17,073 $17,300
Obligation of NY State & political subs. 28,237 29,569 25,900 26,776
Mortgage-backed securities 73,610 76,549 79,264 81,633
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Total available for sale $145,137 $150,048 $122,237 $125,709
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Held to maturity:
Obligation of NY State & political subs. $9,759 $9,773 $16,159 $16,218
Non marketable equity securities:
Federal Reserve Bank Stock $36 $36 $36 $36
Federal Home Loan Bank Stock 1,580 $1,580 1,357 1,357
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Total held to maturity $11,375 $11,389 $17,552 $17,611
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Total debt and equity securities $156,512 $161,437 $139,789 $143,320
===============================================================
5. Loans
06/30/02 12/31/01
- --------------------------------------------------------------------------
(In thousands)
Real estate mortgage loans $178,262 $172,214
Commercial, financial and agricultural loans 46,202 28,281
Installment/consumer loans 5,734 6,149
Real estate construction loans 2,584 8,874
---------------------------
Total loans $232,782 $215,428
Unearned income 2 (66)
---------------------------
$232,784 $215,362
Allowance for loan losses (2,364) (2,249)
---------------------------
Net loans $230,420 $213,113
===========================
The principal business of the Bank is lending, primarily in commercial real estate loans, construction loan mortgages, home equity loans, land loans, consumer loans, home advantage loans, residential mortgages and commercial loans. The Bank considers its primary lending area as the two forks of the eastern end of Long Island in Suffolk County, New York, therefore, the loan portfolio as a whole is dependent on the economic conditions of the geographic market served by the Bank.
6. Allowance for Loan LossesThe Bank monitors its portfolio on a regular basis, with consideration given to detailed analysis of classified loans, delinquency trends, probable incurred losses, past loss experience, current economic conditions, concentrations of credit, input from the Bank’s outside loan review consultants and other pertinent factors. Additions to the allowance are charged to expense and realized losses, net of recoveries, are charged to the allowance. Based on management’s and the loan classification committee’s determination of the condition of the portfolio, the overall level of reserves is periodically adjusted to account for the inherent and specific risks within the entire portfolio. At a minimum, the adequacy of these reserves are adjusted quarterly, to a level deemed appropriate by management based on their risk assessment of the entire portfolio. Based on the loan classification committee’s review of the classified loans and the overall reserve levels as they relate to the entire loan portfolio at the quarter ended June 30, 2002, management believes the allowance for loan losses is adequate.
While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in conditions. In addition, various regulatory agencies, as an integral part of the examination process, periodically review the Bank’s allowance for loan losses. Such agencies may require the Bank to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.
7. Asset Quality
06/30/02 12/31/01
- ----------------------------------------------------------------------------
(In thousands)
Loans 90 days or more past due
and still accruing:
Other $ - $ -
Nonaccrual loans:
Mortgage loans:
Single-family residential 437 513
Commercial real estate 573 17
Construction and land - -
Unsecured business loans 1 -
Other - 2
------------------------------
Total nonaccrual loans 1,011 532
Restructured loans - -
Other real estate owned, net - -
------------------------------
Total $1,011 $532
==============================
Bridge Bancorp, Inc. (“the Company”), a New York corporation, is a one-bank holding company formed effective March 31, 1989, and on a parent only basis, had minimal results of operations. In the event the Company subsequently expands its current operations, it will be dependent on dividends from its wholly owned subsidiary, The Bridgehampton National Bank (“the Bank”), its own earnings, additional capital raised and borrowings as sources of funds. The information below reflects principally the financial condition and results of operations of the Bank. The Bank’s results of operations are primarily dependent on its net interest income, which is mainly the difference between interest income on loans and investments and interest expense on deposits and borrowings. Interest income on loans and investments is a function of the average balances outstanding and the average rates earned during a period. Interest expense is a function of the average amount of interest bearing deposits and the average rates paid on such deposits during a period. The Bank also generates other income, such as fee income on deposit accounts and merchant credit and debit card processing programs, and net gains and losses on sales of securities and loans. The Bank’s net income is further affected by the level of its other expenses, such as employees’ salaries and benefits, occupancy and equipment costs, other general and administrative expenses and income tax expense. This discussion and analysis should be read in conjunction with the Audited Consolidated Financial Statements, the notes thereto, and other financial information included in the Company’s 2001 Form 10-K and this filing. Certain reclassifications have been made to prior year amounts, and the related discussion and analysis, to conform to the current year presentation.
Financial ConditionThe assets of the Registrant totaled $439,775,000 at June 30, 2002, an increase of $46,252,000 or 11.8% from the year-end. This increase mainly results from an increase in debt and equity securities of $18,162,000 or 12.7%; an increase in net loans of $17,307,000 or 8.1%; and an increase in cash and cash equivalents of $10,861,000 or 44.6%. The primary source of funds for the increase in assets was derived from increased deposits of $42,989,000 or 12%. Demand deposits increased $11,388,000 or 9.9% over December 31, 2001. Savings N.O.W. and money market deposits increased $34,732,000 or 18.9%. This increase is partially attributed to increased money market deposits in public funds of 11,859,000 or 28%, over December 31, 2001. Individual, partnership, and corporate savings accounts increased $6,677,000 or 12.8% over December 31, 2001. Money market fund accounts for individuals, partnerships, and corporations increased 13,135,000 or 16.8%.
Total stockholders’ equity was $35,786,000 at June 30, 2002, an increase of 8.9% over December 31, 2001. The increase of $2,925,000 was the result of net income for the six month period ended June 30, 2002, of $4,121,000; plus the proceeds of $45,000 from the exercise of incentive stock options pursuant to the equity incentive plan; plus $60,000 for the issuance of vested stock awards from treasury; less cash dividends declared of $1,239,000; less the purchase price of 52,000 shares of common stock which was acquired and is now held as treasury stock at a cost of $942,000; and plus the increase in other comprehensive income, net of taxes, of $880,000. Total capital before the increase in accumulated other comprehensive income increased by $2,045,000 or 6.6%.
Analysis of Net Interest IncomeNet interest income, the primary contributor to earnings, represents the difference between income on interest earning assets and expenses on interest bearing liabilities.
The following table sets forth certain information relating to the Company’s average consolidated statements of financial condition and reflects the average yields on assets and average costs of liabilities for the three and six month periods ended June 30, 2002 and 2001, respectively. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods shown. Average balances are derived from daily average balances and include non-performing loans. The yields and costs include fees, which are considered adjustments to yields. Interest on nonaccruing loans has been included only to the extent reflected in the consolidated statements of income. However, the loan balances are included in the average amounts outstanding. For purposes of this table the average balances for investment in debt and equity securities exclude unrealized appreciation/depreciation due to the application of SFAS No. 115.
Three months ended June 30, 2002 2001
- --------------------------------------------------------------------------------------------------------------------
(In thousands) Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
- --------------------------------------------------------------------------------------------------------------------
Assets:
Interest earning assets:
Loans, net (including fee income) $226,013 $4,215 7.5% $213,281 $4,701 8.8%
Mortgage backed securities 77,174 1,277 6.6% 78,284 1,430 7.3%
Tax exempt investment securities (1) 46,724 685 5.9% 38,005 643 6.8%
Taxable investment securities 32,923 400 4.9% 8,965 155 6.9%
Federal funds sold 12,081 52 1.7% 10,646 104 3.9%
Other securities 1,616 15 3.7% 1,393 19 5.5%
Deposits with banks 63 1 6.4% 3,014 29 3.9%
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Total interest earning assets $396,594 $6,651 6.7% $353,588 $7,081 8.0%
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Non interest earning assets:
Cash and due from banks 16,592 13,751
Other assets 13,202 14,749
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Total assets $426,388 $382,088
============= ============
Liabilities and Stockholders' Equity:
Interest bearing liabilities:
Savings, N.O.W. and
money market deposits $216,077 $754 1.4% $181,135 $1,392 3.1%
Certificates of deposit of $100,000
or more 21,924 166 3.0% 31,718 382 4.8%
Other time deposits 32,671 217 2.7% 33,938 387 4.6%
Federal funds purchased 346 2 2.3% 921 9 3.9%
Other borrowings 934 4 1.7% 275 3 4.4%
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Total interest bearing liabilities $271,952 $1,143 1.7% $247,987 $2,173 3.5%
Non interest bearing liabilities:
Demand deposits 120,722 105,543
Other liabilities 1,767 1,254
------------- ------------
Total liabilities 394,441 354,784
Stockholders' equity 31,947 27,304
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Total liabilities and stockholders' equity $426,388 $382,088
============= ============
Net interest income/interest rate spread $5,508 5.0% $4,908 4.5%
---------------------- --------------------
Net interest earning assets/net interest margin(2) $124,642 5.6% $105,601 5.6%
------------- ----------------------- -----------
Ratio of interest earning assets to
interest bearing liabilities 145.8% 142.6%
------------ -----------
Less: Tax equivalent adjustment ($232) ($209)
----------- ----------
Net interest income $5,270 $4,699
----------- ----------
(1) The above table is presented on a tax equivalent basis. Net interest rate spread represents the difference between the yield on
interest-earning assets and the cost of interest-bearing liabilities.
(2) Net interest margin represents net interest income divided by average interest-earning assets.
Six months ended June 30, 2002 2001
- --------------------------------------------------------------------------------------------------------------------
(In thousands) Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
- --------------------------------------------------------------------------------------------------------------------
Assets:
Interest earning assets:
Loans, net (including fee income) $221,469 $8,403 7.7% $208,492 $9,341 9.0%
Mortgage backed securities 80,404 2,676 6.7% 75,995 2,782 7.4%
Tax exempt investment securities (1) 44,398 1,314 6.0% 38,691 1,300 6.8%
Taxable investment securities 27,550 701 5.1% 8,963 308 6.9%
Federal funds sold 18,270 158 1.7% 9,273 212 4.6%
Other securities 1,513 30 4.0% 1,249 38 6.1%
Deposits with banks 73 1 2.8% 1,539 30 3.9%
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Total interest earning assets $393,677 $13,283 6.8% $344,202 $14,011 8.2%
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Non interest earning assets:
Cash and due from banks 15,965 13,986
Other assets 12,800 13,064
------------- ------------
Total assets $422,442 $371,252
============= ============
Liabilities and Stockholders' Equity:
Interest bearing liabilities:
Savings, N.O.W. and
money market deposits $215,478 $1,499 1.4% $176,897 $3,031 3.4%
Certificates of deposit of $100,000
or more 22,629 350 3.1% 27,899 711 5.1%
Other time deposits 33,321 468 2.8% 33,431 790 4.8%
Federal funds purchased 174 3 3.5% 911 19 4.2%
Other borrowings 550 4 1.5% 138 3 4.4%
----------------------------------------------------------------
Total interest bearing liabilities $272,152 $2,324 1.7% $239,276 $4,554 3.8%
Non interest bearing liabilities:
Demand deposits 117,399 101,270
Other liabilities 1,464 2,436
------------- ------------
Total liabilities 391,015 342,982
Stockholders' equity 31,427 28,270
------------- ------------
Total liabilities and stockholders' equity $422,442 $371,252
============= ============
Net interest income/interest rate spread $10,959 5.1% $9,457 4.4%
---------------------- --------------------
Net interest earning assets/net interest margin(2) $121,525 5.6% $104,926 5.5%
------------- ----------------------- -----------
Ratio of interest earning assets to
interest bearing liabilities 144.7% 143.9%
------------ -----------
Less: Tax equivalent adjustment ($446) ($413)
----------- ----------
Net interest income $10,513 $9,044
----------- ----------
(1) The above table is presented on a tax equivalent basis. Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(2) Net interest margin represents net interest income divided by average interest-earning assets.
Rate/Volume AnalysisNet interest income can also be analyzed in terms of the impact of changing rates and changing volumes. The following table describes the extent to which changes in interest rates and changes in the volume of interest earning assets and interest bearing liabilities have affected the Bank’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rates (changes in rates multiplied by prior volume), and (iii) the net changes. For purposes of this table, changes which are not due solely to volume changes or rate changes have been allocated to these categories based on the respective percentage changes in average volume and average rate as they compare to each other. Due to the numerous simultaneous volume and rate changes during the period analyzed, it is not possible to precisely allocate changes between volume and rates. In addition, average earning assets include nonaccrual loans.
For the Period Ended June 30, Three months ended Six months ended
2002 Over 2001 2002 Over 2001
(In thousands) Changes Due To Changes Due To
- --------------------------------------------------------------------------------------------------------------------------------------------
Volume Rate Net Change Volume Rate Net Change
Interest income on interest
earning assets:
Loans (including loan fee income) 1,487 (1,973) (486) 1,381 (2,319) (938)
Mortgage-backed securities (20) (133) (153) 350 (456) (106)
Tax exempt investment securities(1) 451 (403) 48 349 (335) 14
Taxable investment securities 553 (308) 245 633 (240) 393
Federal funds sold 81 (133) (52) 290 (344) (54)
Other securities 15 (19) (4) 17 (25) (8)
Deposits with banks (108) 80 (28) (23) (6) (29)
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Total interest earning assets 2,459 (2,889) (430) 2,997 (3,725) (728)
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Interest expense on interest
bearing liabilities:
Savings, N.O.W. and money
market deposits 1,431 (2,069) (638) 1,532 (3,064) (1,532)
Certificates of deposit of
$100,000 or more (108) (108) (216) (117) (244) (361)
Other time deposits (14) (156) (170) (2) (320) (322)
Federal funds purchased (4) (3) (7) (13) (3) (16)
Other borrowings 12 (11) 1 7 (6) 1
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Total interest bearing liabilities 1,317 (2,347) (1,030) 1,407 (3,637) (2,230)
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Net interest income 1,142 (542) 600 1,590 (88) 1,502
=======================================================================
(1) The above table is presented on a tax equivalent basis.The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of June 30, 2002, that the Bank meets all capital adequacy requirements to which it is subject.
The Company’s only activity is ownership of the Bank, and, therefore, its capital, capital ratios, and minimum required levels of capital are materially the same as the Bank’s. At June 30, actual capital levels and minimum required levels for the Bank were:
As of June 30, 2002
- --------------------------------------------------------------------------------------------------------------------
(In thousands) To Be Well
Capitalized
Under
For Capital Prompt
Adequacy Corrective
Actual Purposes Action
Provisions
- --------------------------------------------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
-------------------------------------------------------------------
Total Capital (to risk weighted assets) 35,056 12.6% 22,222 >8.0% 27,777 >10.0%
Tier 1 Capital (to risk weighted assets) 32,692 11.8% 11,111 >4.0 16,666 >6.0
Tier 1 Capital (to average assets) 32,692 7.7% 16,898 >4.0 21,122 >5.0
As of December 31, 2001
- --------------------------------------------------------------------------------------------------------------------
(In thousands) To Be Well
Capitalized
Under
For Capital Prompt
Adequacy Corrective
Actual Purposes Action
Provisions
- --------------------------------------------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
-------------------------------------------------------------------
Total Capital (to risk weighted assets) 33,099 13.2% 20,064 >8.0% 25,080 >10.0%
Tier 1 Capital (to risk weighted assets) 30,751 12.3% 10,032 >4.0 15,048 >6.0
Tier 1 Capital (to average assets) 30,751 7.9% 15,490 >4.0 19,363 >5.0
Recent Accounting Developments
In August 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which replaced SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." SFAS No. 144 established a single accounting model, based on the framework established in SFAS No. 121, for long-lived assets to be disposed of by sale. SFAS No. 144 also resolved significant implementation issues related to SFAS No. 121. The provisions of SFAS No. 144 are effective for financial statements issued for fiscal years beginning after December 15, 2001. This pronouncement is not currently applicable to the Company.
In June 2001, the FASB issued SFAS No. 143 "Accounting For Asset Retirement Obligations" ("SFAS No. 143"). SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. This pronouncement is not currently applicable to the Company.
The FASB recently issued SFAS No. 145 and No. 146. SFAS No. 145 applies for years beginning after May 14, 2002 and may be adopted sooner. SFAS No. 145 covers extinguishments of debt and leases, and includes some minor technical corrections. Under previous accounting guidance, gains or losses from extinguishments of debt were always treated as extraordinary items. Under SFAS No. 145 they will no longer be considered extraordinary, except under very limited conditions. Upon adoption of SFAS No. 145, any prior gains and losses from extinguishments of debt must be reclassified as ordinary gains and losses. Under SFAS No. 145, if a capital lease is modified to become an operating lease, it will be accounted for as a sale-leaseback, by following the accounting guidance of SFAS No. 98, instead of being accounted for as a new lease. SFAS No. 146 covers accounting for costs associated with exit or long-lived asset disposal activities, such as restructurings, consolidation or closing of facilities, lease termination costs or employee relocation or severance costs. SFAS No. 146 replaces Emerging Issues Task Force (EITF) 94-3, and is to be applied prospectively to exit or disposal activities initiated after December 31, 2002, and may be adopted sooner. A Company may not restate its previously issued financial statements. SFAS No. 146 requires exit or long-lived asset disposal costs to be recognized as an expense when the liability is incurred and can be measured at fair value, rather than at the date of making a commitment to an exit or disposal plan. Management does not expect the effects of the future adoptions of SFAS No. 145 and SFAS No. 146 to be material to the Company’s consolidated financial position or results of operations.
Comparison of Operating Results for the Three Months And Six Months ended June 30, 2002 and 2001During the three month period ended June 30, 2002, the Registrant earned net income of $2,114,000 or $.50 per diluted share as compared with $1,676,000 or $.40 per diluted share for the same period in 2001. During the six month period ended June 30, 2002, the Registrant earned net income of $4,121,000 or $.98 per diluted share as compared with $3,133,000 or $.74 per diluted share for the same period in 2001. Highlights for the three months ended June 30, 2002 include: (i) a $571,000 or 12.2% increase in net interest income; (ii) a $213,000 or 34% increase in total other income; and (iii) a $91,000 or 3.3% increase in total other expenses over the same period in 2001. The effective income tax rate increased to 33.96% from 32.52% for the same period last year. Highlights for the six months ended June 30, 2002 include: (i) a $1,469,000 or 16.2% increase in net interest income; (ii) a $314,000 or 26% increase in total other income; and (iii) a $188,000 or 3.4% increase in total other expenses over the same period in 2001. The effective income tax rate increased to 33.93% from 31.78% for the same period last year.
Net income for the first six months of 2002 reflects annualized returns of 26.44% on average total stockholders’ equity and 1.97% on average total assets as compared to the corresponding figures for December 31, 2001 of 23.13% on average total stockholders’ equity and 1.74% on average total assets. For purposes of these calculations, average stockholders’ equity excludes the effects of changes in the unrealized appreciation (depreciation) on securities available for sale, net of taxes.
Net interest income, the primary source of income, increased by $571,000 or 12.2% for the current three month period over the same period last year. The increase resulted from an increase in average total interest earning assets from $353,588,000 in 2001 to $396,594,000 for the comparable period in 2002, a 12.2% increase. Average interest bearing liabilities increased 9.7% to $271,952,000 in 2002 from $247,987,000 for the same period last year. The yield on average interest earning assets for the three-month period ended June 30, 2002 decreased to 6.7% from 8.0% during the same period in 2001. The cost of average interest bearing liabilities decreased to 1.7% from 3.5% during the same period in 2001. The net yield on average earning assets remained unchanged at 5.6% from the same period in 2001. The ratio of interest earning assets to interest bearing liabilities for the three-month period increased to 145.8% from 142.6% the prior quarter.
Net interest income increased by $1,469,000 or 16.2% for the current six-month period over the same period last year. The increase primarily resulted from an increase in average total interest earning assets from $344,202,000 in 2001 to $393,677,000 for the comparable period in 2002, a 14.4% increase. Average interest bearing liabilities increased 13.7% to $272,152,000 in 2002 from $239,276,000 for the same period last year. The yield on average interest earning assets for the six-month period ended June 30, 2002 decreased to 6.8% from 8.2% during the same period in 2001. The cost of average interest bearing liabilities decreased to 1.7% from 3.8% during the same period in 2001. The net yield on average earning assets increased to 5.6% from 5.5% during the same period.
Average taxable investment securities grew 207.4% from $8,963,000 to $27,550,000. This increase is partially due to deposit growth outpacing loan growth. Excess funds from increased deposits, and increases in principal repayments on loans and securities, were deployed primarily into bullet agency securities and motgage backed securities as the bank filled out its liquidity ladder while maintaining shorter maturities in this historically low rate environment.
Average deposits grew by $49,330,000 or 14.5% over the same six-month period last year. Components of this growth include an increase in average demand deposits of $16,129,000 or 15.9% and an increase in average savings, NOW and money market deposits of $33,201,000 or 13.9%. Average public fund deposits were 21.3% of total average deposits at June 30, 2002 and 21.2% of total average deposits at June 30, 2001.
The increase in total deposits in part reflects the Bank’s continued emphasis on attracting individual, partnership and corporate deposits, as well as expanding public fund relationships in our marketplace. Over the past two years, the Bank opened branches in both Greenport and Sag Harbor, NY. The Bank’s added presence in these markets coupled with business development efforts support deposit growth. Additionally, recent volatility in financial markets has likely contributed to growth in deposits.
Average loans grew by $12,732,000 or 6.0% when compared to the same three-month period in 2001. Commercial loans were the main contributor to the increase in the loan portfolio. They increased $15,691,000 or 51.4% over June 30, 2001. Real estate mortgage loans increased $4,568,000 over the June 30, 2001. Installment consumer loans decreased $286,000 or 4.8% over June 30, 2001. Growth in real estate loans is partially attributed to an increase in commercial mortgages and a marketing campaign promoting home equity loans. Fixed rate loans represented 12.4% of total loans at June 30, 2002 and 12.4% of total loans at June 30, 2001.
The Bank’s loan portfolio consists primarily of real estate loans secured by commercial real estate properties and residential properties located in the Bank’s principal lending area. The interest rates charged by the Bank on loans are affected principally by the demand for such loans, the supply of money available for lending purposes, the risk profile of the specific credit and the rates offered by its competitors. These factors are, in turn, affected by general and economic conditions, monetary policies of the federal government, including the Federal Reserve Board, legislative tax policies and governmental budgetary matters.
The performance of the loan portfolio continued to be strong for the six months ended June 30, 2002. Since December 31, 2001 non-performing loans increased $479,000 from $532,000 to $1,011,000, representing 0.44 % of loans, net, at June 30, 2002. This increase is attributed to one loan relationship that, subsequent to quarter end, has been fully collected. Typically these non performing loans have adequate collateral protection of secondary and tertiary repayment sources. The Bank had no foreclosed real estate at June 30, 2002. Total non-performing assets represented 0.23% of total assets at the corresponding date.
By adherence to its disciplined underwriting standards the Bank has been able to minimize net losses from impaired loans with net charge-offs of $15,000 for the six months ended June 30, 2002 as opposed to net charge-offs of $75,000 for the year ended December 31, 2001. The Bank’s ratio of allowance for loan losses to nonperforming loans was 233.8% and 422.7% at June 30, 2002 and December 31, 2001, respectively.
Based on management’s continuing review of the overall loan portfolio and the current asset quality of the portfolio, a provision for loan losses of $60,000 was recorded during the second quarter of 2002, as compared to a $85,000 provision for the same period in 2001. A $120,000 provision for loan losses was recorded during the six month period ended June 30, 2002 as compared to a $170,000 provision for the same period in 2001. The allowance for loan losses increased to $2,364,000 at June 30, 2002, as compared to $2,249,000 at December 31, 2001. In the first quarter of 2002 the Bank reclassified a portion of the allowance for loan losses, attributed to off balance sheet credit exposures, into other liabilities. As a percentage of loans, the allowance was 1.02% at June 30, 2002 and 1.04% at December 31, 2001.
Loans of approximately $8,134,000 at June 30, 2002 were classified as potential problem loans. These are loans for which management has information that indicates the borrower may not be able to comply with the present payment terms. These loans are subject to increased management attention and their classification is reviewed on at least a quarterly basis. Due to the structure and nature of the credits, management is confident that the likelihood of sustaining a loss on these relationships is remote.
The Bank seeks to maintain its loans in performing status through, among other things, consistent monitoring of delinquent loans in an effort to return them to current status. The Bank also monitors its entire loan portfolio on a regular basis, with consideration given to detailed analysis of classified loans, delinquency trends, probable incurred losses, loan growth, past loss experience, current economic conditions, concentrations of credit and other pertinent factors. Weight is also given to input from the Bank’s outside loan review consultants. Additions to the allowance are charged to expense and realized losses, net of recoveries, are charged to the allowance.
The allowance for loan losses has been determined in accordance with the provisions of Statement of Financial Accounting Standards No. 5, “Accounting for Contingencies.” The Bank’s formalized process for assessing the adequacy of the allowance for loan losses, and the resultant needed, if any, for periodic provisions to the allowance charged to expense entails both individual loan analyses and loan pool analyses. The individual loan analyses are periodically performed on individually significant loans or when otherwise deemed necessary, and encompass commercial real estate, consumer real estate, commercial and industrial, and construction and land development loans. The result of these analyses is the allocation of the overall allowance to specific allowances for individual loans considered impaired and non-impaired.
The loan pool analyses are performed on the balance of the Bank’s loan portfolio, primarily consisting of real estate loans as well as secured and unsecured commercial and consumer loans. The pools consist of aggregations of homogeneous loans having similar credit risk characteristics. Examples of pools defined by the Bank for this purpose are home equity lines of credit, residential mortgages, commercial mortgages, consumer and commercial construction loans, commercial lines of credit and commercial installment loans. For each such defined pool there is a set of sub-pools based upon delinquency status, including: current, 30-59 days, 60-89 days, over 90 days and loans deemed classified by the Classification Committee. For each sub-pool, the Bank has developed a range of allowances necessary to adequately provide for probable incurred losses inherent in that pool of loans. These ranges are based upon a number of factors, including the risk characteristics of the pool, actual loss and migration experience, expected loss and migration experience considering current economic conditions and industry norms. The ranges of allowance developed by the Bank are applied to the outstanding principal balance of the loans in each sub-pool; as a result, further general allocations of the overall allowance are made.
The adequacy of the reserves are adjusted quarterly, to a level deemed appropriate by management based on their risk assessment of the entire portfolio. Based on the loan classification committee’s review of the classified loans and the overall reserve levels as they relate to the entire loan portfolio at the quarter ended June 30, 2002, management believes the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in conditions. In addition, various regulatory agencies, as an integral part of the examination process, periodically review the Bank’s allowance for loan losses. Such agencies may require the Bank to recognize additions to the allowance based on their judgements of the information available to them at the time of their examination.
Total other income increased during the three-month period ended June 30, 2002 by $213,000 or 34.0% over the same period last year. For the six-month period ended June 30, 2001 total other income increased $314,000 or 26.0% over the same period last year. Service charges on deposit accounts for the three-month period ended June 30, 2002 totaled $557,000, an increase of $196,000 or 54.3% over the same period last year. Service charges on deposit accounts for the six-month period ended June 30, 2002 totaled $980,000, an increase of $270,000 or 38.0% over the same period last year. This increase is primarily attributed to an increase in service charge fees implemented in February 2002; and a decrease in the volume of waived fees during the first two quarters of 2002. There were no net gains on securities for the three or six-month periods ended June 30, 2002. For the six month period ended June 30, 2001 net gains on securities totaled $78,000. In the first quarter of 2001 management sold a portion of the lowest yielding securities in the available for sale investment portfolio and reinvested the funds in securities earning current market rates of return. Fees for other customer services for the three-month period ended June 30,2002 totaled $265,000, an increase of $77,000 or 41.0% over the same period last year. Fees for other customer services for the six-month period ended June 30, 2002 totaled $501,000, an increase of $162,000 or 47.8% over the same period in 2001. This increase is primarily attributed to an increase in merchant processing income due to an increase in the volume of merchant sales during 2002.
Other operating income for the three-month period ended June 30, 2002 totaled $17,000, a decrease of $60,000 or 77.9% over the same period last year. For the six-month period ended June 30, 2002 other operating income totaled $43,000 a decrease of $40,000 or 48.2% over the same period last year. This decrease is primarily due to the receipt of an insurance recovery resulting from a prior year loss totaling approximately $51,000 that was recognized during the second quarter of 2001.
Total other expenses increased during the three-month period ended June 30, 2002 by $91,000 or 3.3% over the same period last year. For the six-month period ended June 30, 2001 total other expenses increased by $188,000 or 3.4% over the same period last year. Compensation and benefit expense increased $34,000 or 2.2% for the three-month period ended June 30, 2002 over the same period last year. For the six-month period ended June 30, 2002 compensation and benefits expense increased $121,000 or 4.0% over the same period last year. The increase in compensation expense is attributed to increased staffing, primarily for the new branch office in Hampton Bays that was staffed during the second quarter and opened in July of this year, and salary increases. Net occupancy expenses increased $16,000 or 6.6% during the three-month period ended June 30, 2002. For the six-month period ended June 30, 2002 net occupancy expenses increased $20,000 or 4.0% over the same period last year. Furniture and fixture expense for the three-month period ended June 30, 2002 increased $24,000 or 11.3% over the same period last year. For the six month period ended June 30, 2002 furniture and fixture expense increased $46,000 or 10.9% over the same period last year. Increases in net occupancy, as well as furniture and fixture expense, are partially attributed to the cost associated with the new branch offices. This increase is also attributed to management information systems purchased during 2001 and in the first quarter of 2002 partially due to the introduction of consumer Internet banking.
Total other operating expenses for the three-month period ended June 30, 2002 totaled $792,000, an increase of $17,000 or 2.2% over the same period last year. Total other operating expense for the six-month period ended June 30, 2002 totaled $1,507,000, an increase of $1,000 or .1% over the same period last year.
The provision for income taxes increased during the three-month period ended June 30, 2002 by $280,000 or 34.7% over the same period last year. The effective tax rate for the three-month period ended June 30, 2002 increased to 34.4% as compared to 32.52% for the same period last year. The provision for income tax increased during the six- month period ended June 30, 2002 by $657,000 or 45.0% over the same period last year. The effective tax rate for the six-month period ended June 30, 2002 increased to 33.93% as compared to 31.78% for the same period last year. This increase primarily results from the Bank holding less tax exempt securities, and a reduction in the consolidated subsidiary’s income as a percentage of total income.
Asset/Liability ManagementThe Company’s primary earnings source is net interest income, which is affected by changes in the level of interest rates, the relationship between rates, the impact of interest rate fluctuations on asset prepayments, the level and composition of deposits, and the credit quality of earning assets. Management’s asset/liability objectives are to maintain a strong, stable net interest margin, to utilize its capital effectively without taking undue risks, maintain adequate liquidity, and reduce vulnerability of its operations to changes in interest rates.
The Company’s Asset/Liability Committee, comprised of members of senior management and the Board, meets periodically to evaluate the impact of changes in market interest rates on assets and liabilities, net interest margin, capital and liquidity. Risk assessments are governed by policies and limits established by senior management which are reviewed and approved by the full Board of Directors.
The economic environment continually presents uncertainties as to future interest rate trends. The Asset/Liability Committee regularly monitors the cumulative gap position, in addition to utilizing a model that projects net interest income based on increasing or decreasing interest rates, in order to be able to respond to changes in interest rates by adjusting the gap position.
LiquidityThe objective of liquidity management is to ensure the availability of sufficient resources to meet all financial commitments. Liquidity management addresses the ability to meet deposit withdrawals either on demand or contractual maturity, to repay other borrowings as they mature and to make new loans and investments as opportunities arise.
The Bank’s most liquid assets are cash and cash equivalents, securities available for sale and securities held to maturity due within one year. The levels of these assets are dependent upon the Bank’s operating, financing, lending and investing activities during any given period. Other sources of liquidity include loan and security principal repayments and maturities, lines of credit with other financial institutions including the Federal Home Loan Bank, and growth in the core deposit base. While scheduled loan amortization, maturing securities and short term investments are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. The Bank adjusts its liquidity levels as appropriate to meet funding needs such as deposit outflows, loans, asset/liability objectives and suggested O.C.C. measurements such as loan to capital ratios. Historically, the Bank has relied on its deposit base, drawn from its market area through its nine full service offices, as its principal source of funding. Although the Bank seeks to retain existing deposits and maintain depositor relationships by offering quality service and competitive interest rates to its customers, the Bank also strives to manage the overall cost of the funds needed to finance its strategies. At June 30, 2002, the Bank had aggregate lines of credit of $37,000,000 with unaffiliated correspondent banks to provide short term credit for liquidity requirements. Of these aggregate lines of credit, $17,000,000 is available on an unsecured basis. The Bank also has the ability, as a member of the Federal Home Loan Bank (“FHLB”) system, to borrow against its unencumbered residential mortgages owned by the Bank. During the first quarter of 2001, the Bank also executed a master repurchase agreement with the FHLB which increased its borrowing capacity.
The Company’s liquidity positions are monitored daily to ensure the maintenance of an optimum level and efficient use of available funds. Excess short term liquidity is invested in overnight federal funds sold. Management believes the Company has sufficient liquidity to meet its operating requirements.
Private Securities Litigation Reform Act Safe Harbor StatementThis report, as well as other written communications made from time to time by the Company or the Bank and oral communications made from time to time by authorized officers of the Company or the Bank, 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, which involve risk and uncertainties, are based on the beliefs, assumptions and expectations of management of the Company. Words such as “expects”, “believes”, “should”, “plans”, “anticipates”, “will”, “potential”, “estimates”, and variations 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 with respect to earnings growth (on both a generally accepted accounting principles (GAAP) and cash basis); revenue growth in retail banking, lending and other areas; origination volume in the Company’s consumer, commercial and other lending businesses; current and future capital management programs; non-interest income levels, including fees from services and product sales; tangible capital generation; market share; expense levels; and other business operations and strategies. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the PSLRA.
The Bank’s annual results could differ materially from those management expectations contemplated by the forward-looking statements. Factors that could cause future results to vary from current management expectations include, but are not limited to, prevailing economic conditions, legislative and regulatory changes, 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, demand for loan products, demand for financial services, competition, changes in the quality and composition of the Bank’s loan and investment portfolios, changes in accounting principles, policies or guidelines, and other economic, competitive, governmental, regulatory and technological factors affecting the Bank’s operations, markets, products, services and prices. 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.
At June 30, 2002, there has been no material change in market risk from December 31, 2001.
Item 1. Legal Proceedings
Not applicableItem 2. Changes in Securities
Not applicableItem 3. Defaults upon Senior Securities
Not applicableItem 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders was held at The Bridgehampton National Bank, 2200 Montauk Highway, Bridgehampton, New York 11932 on April 15, 2002. A proposal to approve the amendment of the Bylaws to increase the authorized classes of directors from two to three and to redesignate the current Class 1 directors as Class A directors was approved. Additionally, two Class B directors were elected for a term of two years and two Class C directors were elected for a term of three years. The shareholder proposal regarding mandatory retirement of Directors was not properly presented and therefore was not voted on. The following table details the vote:
Against or Broker
Amendment to Bylaws For Withheld Abstain Non-Votes
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Change in Director Classification 3,333,190 310,887 23,638 0
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Nominees for Director For Against or
Withheld
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Class B (two year term):
Thomas Halsey 3,414,647 152,538
Marcia Z. Hefter 3,414,611 152,574
Class C (three year term):
Raymond Wesnofske 3,411,495 155,690
Thomas J. Tobin 3,410,996 156,189
Directors Continuing in Office
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Class A (one year term):
R. Timothy Maran
Walter A. Preische, Jr.
L.H. Strickland
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Item 5. Other Information
Not applicableItem 6. Exhibits and Reports on Form 8-K
a. Exhibit
99.1 Certification Pursuant to 18 U.S.C. Section 1350, As adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 from the Company's Chief Executive Officer (attached as an exhibit and
incorporated herein by reference.
99.2 Certification Pursuant to 18 U.S.C. Section 1350, As adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 from the Company's Executive Vice President (attached as an exhibit and incorporated herein by
reference.
b. Reports on Form 8-K
On June 7, 2002 the registrant filed a form 8K relative to the approval by the Board of Directors of a change in auditors.
SIGNATURES
In accordance with the requirement of the Exchange Act, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BRIDGE BANCORP, INC.
Date: August 14, 2002 /s/ Thomas J. Tobin
Thomas J. Tobin
President and Chief Executive Officer
Date: August 14, 2002 /s/ Janet T. Verneuille
Janet T. Verneuille
Senior Vice President and Treasurer