SECURITIES
AND EXCHANGE COMMISSION
|
Item 1. Financial Statements
Unaudited Consolidated Statements of Condition as of September 30, 2002
and December 31, 2001
Unaudited Consolidated Statements of Income and Comprehensive Income for the Three Months and Nine Months Ended
September 30, 2002 and 2001
Unaudited Consolidated Statements of Stockholders' Equity for the Nine Months
Ended September 30, 2002
Unaudited Consolidated Statements of Cash Flows for the Nine Months
Ended September 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 4. Controls and Procedures
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) September 30, December 31,
2002 2001
- ---------------------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks $18,310 $10,813
Interest earning deposits with banks 81 50
Federal funds sold 8,700 13,500
------------------------------------
Total cash and cash equivalents 27,091 24,363
Investments:
Securities available for sale, at fair value 186,630 125,709
Securities held to maturity (fair value of $11,215 and $17,611
at September 30,2002 and December 31, 2001 respectively) 11,200 17,552
------------------------------------
Total investments 197,830 143,261
Loans 237,807 215,362
Less:
Allowance for loan losses (2,413) (2,249)
------------------------------------
Loans, net 235,394 213,113
Banking premises and equipment, net 8,654 8,781
Accrued interest receivable 2,749 2,153
Other assets 2,146 1,852
------------------------------------
Total Assets $473,864 $393,523
====================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits $131,135 $115,066
Savings, N.O.W. and money market deposits 241,096 184,261
Certificates of deposit of $100,000 or more 25,102 22,993
Other time deposits 32,697 34,835
------------------------------------
Total deposits 430,030 357,155
Accrued interest on depositors' accounts 457 625
Other liabilities and accrued expenses 4,457 2, 882
------------------------------------
Total Liabilities 434,944 360,662
------------------------------------
Stockholders' equity:
Common stock, par value $.01 per share:
Authorized: 20,000,000 shares; 4,257,597 issued; 4,115,486
and 4,166,264 shares outstanding at 9/30/02 and 12/31/01 respectively 43 43
Surplus 21,150 21,154
Undivided profits 15,758 11,240
Less: Treasury Stock at cost, 142,111 and 91,333 shares at
9/30/02 and 12/31/01 respectively (2,566) (1,608)
------------------------------------
34,385 30,829
Accumulated other comprehensive income:
Net unrealized gain on securities, net of taxes of $3,012 and $1,387
at 9/30/02 and 12/31/01 respectively 4,588 2,085
Net minimum pension liability, net of taxes of $35 at 9/30/02 and
12/31/01 (53) (53)
------------------------------------
Total Stockholders' Equity 38,920 32,861
------------------------------------
Total Liabilities and Stockholders' Equity $473,864 $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 September 30, Nine months ended September 30,
2002 2001 2002 2001
- ---------------------------------------------------------------------------------------------------------------------
Interest income:
Loans (including fee income) $4,602 $4,511 $13,005 $13,852
Mortgage-backed securities 1,249 1,488 3,925 4,270
State and municipal obligations 391 393 1,259 1,280
U.S. Treasury and government agency securities 557 219 1,258 527
Federal funds sold 116 163 274 375
Other securities 16 20 46 58
Deposits with banks - 2 1 32
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Total interest income 6,931 6,796 19,768 20,394
Interest expense:
Savings, N.O.W. and money market deposits 850 1,321 2,349 4,352
Certificates of deposit of $100,000 or more 172 246 522 957
Other time deposits 208 350 676 1,140
Federal funds purchased and securities sold under
agreement to repurchase - - 3 19
Other borrowed money - - 4 3
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Total interest expense 1,230 1,917 3,554 6,471
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Net interest income 5,701 4,879 16,214 13,923
Provision for loan losses 60 60 180 230
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Net interest income after provision for loan losses 5,641 4,819 16,034 13,693
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Other income:
Service charges on deposit accounts 512 307 1,492 1,017
Net securities gains - - - 78
Fees for other customer services 465 315 966 654
Other operating income 34 9 77 92
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Total other income 1,011 631 2,535 1,841
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Other expenses:
Salaries and employee benefits 1,589 1,485 4,773 4,548
Net occupancy expense 325 272 845 772
Furniture and fixture expense 248 234 716 656
Other operating expenses 884 750 2,391 2,256
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Total other expenses 3,046 2,741 8,725 8,232
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Income before provision for income taxes 3,606 2,709 9,844 7,302
Provision for income taxes 1,351 914 3,468 2,374
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Net income $2,255 $1,795 $6,376 $4,928
=================================================================
Basic earnings per share $0.55 $0.42 $1.55 $1.17
=================================================================
Diluted earnings per share $0.54 $0.42 $1.54 $1.16
=================================================================
Comprehensive Income $3,878 $2,732 $8,879 $6,673
=================================================================
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
Common Other
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 - - - $6,376 6,376 - - 6,376
Purchase of Treasury Stock - - - (1,067) (1,067)
Issuance of vested stock awards from treasury 7 53 60
Exercise of stock options, and related tax
benefit (11) - 56 45
Cash dividends declared, $.45 per share - - - (1,858) (1,858)
Other comprehensive income, net of tax
Unrealized gains in securities available for
sale, net of tax - - - 2,503 - - 2,503 2,503
Minimum pension liability adjustment, net of
tax - - - - - - - -
--------------
Comprehensive Income - - - $8,879 - - - -
-------------------------==============---------------------------------------
Balance at September 30, 2002 4,257,597 $43 $21,150 $15,758 ($2,566) $4,535 $38,920
======================== =======================================
See accompanying notes to the Unaudited Consolidated Financial Statements.
BRIDGE BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(In thousands)
Nine months ended September 30, 2002 2001
- ---------------------------------------------------------------------------------------------------------
Operating activities:
Net Income 6,376 4,928
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 180 230
Depreciation and amortization 726 685
Accretion of discounts (230) (188)
Amortization of premiums 608 127
Earned or allocated expense of restricted stock awards 67 44
Gain on sale of assets - 6
Net securities gains - (78)
(Increase) in accrued interest receivable (596) (286)
(Increase) in other assets (294) (112)
(Decrease) in accrued interest payable and other liabilities (225) (84)
--------------------------------------
Net cash provided by operating activities 6,612 5,272
--------------------------------------
Investing activities:
Purchases of securities available for sale (88,922) (44,953)
Purchases of securities held to maturity (9,793) (12,979)
Proceeds from sales of securities available for sale - 9,747
Proceeds from maturing securities available for sale 8,385 1,455
Proceeds from maturing securities held to maturity 16,145 11,130
Proceeds from principal payments on mortgage-backed securities 23,366 13,585
Net (increase) in loans (22,455) (16,151)
Purchases of banking premises and equipment, net of disposals (600) (404)
--------------------------------------
Net cash used by investing activities (73,874) (38,570)
--------------------------------------
Financing activities:
Net increase in deposits 72,875 51,942
(Decrease) in other borrowings - (9,700)
Payment for the purchase of treasury stock (1,067) (690)
Net proceeds from exercise of stock options
issued pursuant to equity incentive plan 45 173
Cash dividends paid (1,863) (1,642)
--------------------------------------
Net cash provided by financing activities 69,990 40,083
--------------------------------------
Increase in cash and cash equivalents 2,728 6,785
Cash and cash equivalents beginning of period 24,363 16,044
--------------------------------------
Cash and cash equivalents end of period 27,091 22,829
======================================
Supplemental information-Cash Flows:
Cash paid for:
Interest 3,775 6,483
Income taxes 3,526 2,430
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 subsidiary, Bridgehampton Abstract Holding LLC. This subsidiary, through its majority investment in Bridge Abstract LLC, provides an opportunity 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 nine months ended September 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 ShareDiluted earnings per share, which reflects the potential dilution that could occur if outstanding stock options were exercised and stock awards were fully vested thereby resulting in the issuance of common stock entitled to share 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 Nine months ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
- ----------------------------------------------------------------------------------------------------------------------
Net Income $2,255,000 $1,795,000 $6,376,000 $4,928,000
Common Equivalent Shares:
Weighted Average Common Shares Outstanding 4,116,682 4,201,901 4,124,684 4,208,231
Weighted Average Common Equivalent Shares 35,684 22,403 29,050 25,309
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Weighted Average Common and Common Equivalent
Shares 4,152,366 4,224,304 4,153,734 4,233,540
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Basic earnings per share $0.55 $0.42 $1.55 $1.17
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Diluted earnings per share $0.54 $0.42 $1.54 $1.16
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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 plan 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 September 30, 2002 was 142,111, or 3.5% of the total number of outstanding common shares of 4,115,486. At September 30, 2002, 200,875 shares remain to be repurchased under the current approved stock repurchase plan.
4. Investments
9/30/02 12/31/01
- --------------------------------------------------------------------------------------------------------------------
(In thousands)
Amortized Fair Amortized Fair
Cost Value Cost Value
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Available for sale:
U.S. Treasury and government agency securities $57,471 $59,669 $17,073 $17,300
State and municipal obligations 31,910 33,835 25,900 26,776
Mortgage-backed securities 89,650 93,126 79,264 81,633
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Total available for sale $179,031 $186,630 $122,237 $125,709
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Held to maturity:
Obligation of NY State and political subs. $9,584 $9,599 $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 $11,200 $11,215 $17,552 $17,611
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Total $190,231 $197,845 $139,789 $143,320
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Securities of $101,318 and $77,292 were pledged at September 30, 2002 and December 31, 2001 respectively.
5. Loans
09/30/02 12/31/01
- --------------------------------------------------------------------------------------------
(In thousands)
Real estate mortgage loans $184,712 $172,214
Commercial, financial and agricultural loans 33,907 28,281
Installment/consumer loans 7,174 6,149
Real estate construction loans 12,017 8,784
------------------------------------
Total loans $237,810 $215,428
Unearned income (3) (66)
------------------------------------
$237,807 $215,362
Allowance for loan losses (2,413) (2,249)
------------------------------------
Net loans $235,394 $213,113
====================================
The principal business of the Bank is lending, primarily in commercial real estate loans, commercial loans, home equity loans, residential mortgages, construction loan mortgages, consumer loans, land loans and home advantage 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 probable incurred losses, classified loans, delinquency trends, 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 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 September 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
09/30/02 12/31/01
- ----------------------------------------------------------------------------
(In thousands)
Loans 90 days or more past due
and still accruing:
Other $ - $ -
Nonaccrual loans:
Mortgage loans:
Single-family residential 126 513
Commercial real estate - 17
Construction and land - -
Unsecured business loans 106 -
Other - 2
------------------------------
Total nonaccrual loans 232 532
Restructured loans - -
Other real estate owned, net - -
------------------------------
Total $232 $532
==============================
8. Recent Regulatory Developments
On July 30, 2002, President Bush signed the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). This legislation impacts corporate governance of public companies, affecting their officers and directors, their audit committees, their relationships with their accountants and the audit function itself. Certain provisions of the Act became effective on July 30, 2002. Others will become effective as the SEC adopts appropriate rules.
The Sarbanes-Oxley Act implements a broad range of corporate governance and accounting measures for public companies designed to promote honesty and transparency in corporate America and better protect investors from corporate wrongdoing. The Sarbanes-Oxley Act’s principal legislation includes:
- the creation of an independent accounting oversight board to oversee the audit of public companies and auditors who perform
such audits;
- auditor independence provisions which restrict non-audit services that independent accountants may provide to their audit
clients;
- additional corporate governance and responsibility measures, including
(i) requiring the chief executive officer and chief financial officer to
certify financial statements; (ii) prohibiting trading of securities by officers
and directors during periods in which certain employee benefit plans are
prohibited from trading; (iii) requiring chief executive officer and chief
financial officer to forfeit salary and bonuses, including profits on the sale
of company securities, in certain situations; and (iv) protecting
whistleblowers and informants;
- expansion of the power of the audit committee, including the requirements that
the audit committee (i) have direct control of the outside auditor,
(ii) be able to hire and fire the auditor, and (iii) approve all
non-audit services;
- expanded disclosure requirements, including accelerated reporting of stock
transactions by insiders and the prohibition of most loans to directors and
executive officers of non-financial institutions;
- mandatory disclosure by analysts of potential conflicts of interest; and
- a range of enhanced penalties for fraud and other violations.
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 $473,864,000 at September 30, 2002, an increase of $80,341,000 or 20.4% from the year-end. This increase mainly results from an increase in debt and equity securities of $54,569,000 or 38.1%; an increase in net loans of $22,281,000 or 10.5%; and an increase in cash and cash equivalents of $2,728,000 or 11.2%. The primary source of funds for the increase in assets was derived from increased deposits of $72,875,000 or 20.4%. Demand deposits increased $16,069,000 or 14.0% over December 31, 2001. Savings N.O.W. and money market deposits increased $56,835,000 or 30.8%. This increase is partially attributed to increased money market deposits of public funds of $21,395,000 or 50.6%, over December 31, 2001. Individual, partnership, and corporate savings accounts increased $15,488,000 or 29.6% over December 31, 2001. Money market fund accounts for individuals, partnerships, and corporations increased $19,040,000 or 24.4%.
Total stockholders’ equity was $38,920,000 at September 30, 2002, an increase of 18.4% over December 31, 2001. The increase of $6,059,000 was the result of net income for the nine month period ended September 30, 2002 of $6,376,000; 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 $1,858,000; less the purchase price of 57,000 shares of common stock which were acquired and are now held as treasury stock at a cost of $1,067,000; and plus the increase in other comprehensive income, net of taxes, of $2,503,000. Total capital before the increase in accumulated other comprehensive income increased by $3,556,000 or 11.5%.
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 nine month periods ended September 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 September 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) $232,383 $4,602 7.9% $214,082 $4,511 8.5%
Mortgage backed securities 76,825 1,249 6.5% 82,419 1,488 7.2%
State and municipal obligations (1) 40,224 625 6.2% 36,798 593 6.5%
U.S. Treasury and government agency securities 55,643 557 4.0% 14,650 219 6.0%
Federal funds sold 26,308 116 1.8% 18,537 163 3.5%
Other securities 1,616 16 4.0% 1,393 20 5.8%
Deposits with banks 76 0 0.0% 180 2 4.5%
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Total interest earning assets $433,075 $7,165 6.6% $368,059 $6,996 7.6%
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Non interest earning assets:
Cash and due from banks 16,475 15,128
Other assets 13,227 14,372
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Total assets $462,777 $397,559
============= ============
Liabilities and Stockholders' Equity:
Interest bearing liabilities:
Savings, N.O.W. and
money market deposits $238,444 $850 1.4% $191,749 $1,321 2.8%
Certificates of deposit of $100,00 or more 23,425 172 2.9% 25,958 246 3.8%
Other time deposits 32,438 208 2.6% 32,970 350 4.3%
Federal funds purchased & securities sold under
agreement to repurchase - - - - - -
Other borrowings - - - - - -
----------------------------------------------------------------
Total interest bearing liabilities $294,307 $1,230 1.7% $250,677 $1,917 3.1%
Non interest bearing liabilities:
Demand deposits 133,007 115,750
Other liabilities 2,071 1,364
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Total liabilities 429,385 367,791
Stockholders' equity 33,392 29,768
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Total liabilities and stockholders' equity $462,777 $397,559
============= ============
Net interest income & interest rate spread(2) $5,935 4.9% $5,079 4.5%
---------------------- --------------------
Net interest earning assets & net interest margin(3) $138,768 5.5% $117,382 5.6%
------------- ----------------------- -----------
Ratio of interest earning assets to
interest bearing liabilities 147.2% 146.8%
------------ -----------
Less: Tax equivalent adjustment ($234) ($200)
----------- ----------
Net interest income $5,701 $4,879
----------- ----------
(1) The above table is presented on a tax equivalent basis.
(2) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of
interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.
Nine months ended September 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) $225,147 $13,005 7.7% $210,376 $13,852 8.8%
Mortgage backed securities 79,198 3,925 6.6% 78,161 4,270 7.3%
State and municipal obligations (1) 42,991 1,944 6.0% 38,053 1,896 6.7%
U.S. Treasury and government agency securities 37,017 1,258 4.5% 10,879 527 6.5%
Federal funds sold 20,979 274 1.7% 12,395 375 4.1%
Other securities 1,548 46 4.0% 1,297 58 6.0%
Deposits with banks 74 1 1.8% 1,081 32 4.0%
------------------------------------------------------
-----------
Total interest earning assets $406,954 $20,453 6.7% $352,242 $21,010 8.0%
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Non interest earning assets:
Cash and due from banks 16,136 14,371
Other assets 12,945 13,456
------------- ------------
Total assets $436,035 $380,069
============= ============
Liabilities and Stockholders' Equity:
Interest bearing liabilities:
Savings, N.O.W. and
money market deposits $223,218 $2,349 1.4% $181,903 $4,352 3.2%
Certificates of deposit of $100,000 or more 22,897 522 3.0% 25,958 957 4.9%
Other time deposits 33,023 676 2.7% 33,276 1,140 4.6%
Federal funds purchased & securities sold under
agreements to repurchase 169 3 2.4% 639 19 4.0%
Other borrowings 311 4 1.7% 92 3 4.4%
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Total interest bearing liabilities $279,618 $3,554 1.7% $241,868 $6,471 3.6%
Non interest bearing liabilities:
Demand deposits 122,659 108,149
Other liabilities 1,666 1,310
------------- ------------
Total liabilities 403,943 351,327
Stockholders' equity 32,092 28,742
------------- ------------
Total liabilities and stockholders' equity $436,035 $380,069
============= ============
Net interest income & interest rate spread(2) $16,899 5.0% $14,539 4.4%
---------------------- --------------------
Net interest earning assets & net interest margin(3) $127,336 5.6% $110,374 5.5%
------------- ----------------------- -----------
Ratio of interest earning assets to
interest bearing liabilities 145.5% 145.6%
------------ -----------
Less: Tax equivalent adjustment ($685) ($616)
----------- ----------
Net interest income $16,214 $13,923
----------- ----------
(1) The above table is presented on a tax equivalent basis.
(2) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of
interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.
Rate/Volume Analysis
Net 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 September 30, Three months ended Nine 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) $1,332 $(1,241) $ 91 $1,366 $(2,213) $(847)
Mortgage-backed securities (97) (142) (239) 91 (436) (345)
Tax exempt investment securities (1) 145 (113) 32 177 (129) 48
Taxable investment securities 821 (483) 338 1,027 (296) 731
Federal funds sold 276 (323) (47) 259 (360) (101)
Other securities 16 (20) (4) 15 (27) (12)
Deposits with banks (1) (1) (2) (20) (11) (31)
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Total interest earning assets $2,492 $(2,323) $ 169 $2,915 $(3,472) $(557)
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Interest expense on interest
bearing liabilities:
Savings, N.O.W. and money $1,564 $(2,035) $(471) $1,310 $(3,313) $(2,003)
market deposits
Certificates of deposit of (23) (51) (74) (102) (333) (435)
$100,000 or more
Other time deposits (6) (136) (142) (9) (455) (464)
Federal funds purchased - - - (11) (5) (16)
Other borrowings - - - 4 (3) 1
-----------------------------------------------------------------------------------------------------------
Total interest bearing liabilities $1,535 $(2,222) $(687) $1,192 $(4,109) $(2,917)
-----------------------------------------------------------------------------------------------------------
Net interest income $ 957 $ (101) $ 856 $1,723 $ 637 $ 2,360
===========================================================================================================
(1) The above table is presented on a tax equivalent basis.
Capital
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 September 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 September 30, actual capital levels and minimum required levels for the Bank were:
As of September 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) $36,616 12.5% $23,506 >8.0% $29,383 >10.0%
Tier 1 Capital (to risk weighted assets) 34,203 11.6% 11,753 >4.0 17,630 >6.0
Tier 1 Capital (to average assets) 34,203 7.8% 17,441 >4.0 21,802 >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
On October 1, 2002, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS)" No. 147, "Acquisitions of Certain Financial Institutions." SFAS No. 147 is effective October 1, 2002, and may be applied early. SFAS No. 147 supersedes SFAS No. 72, "Accounting for Certain Acquisitions of Banking or Thrift Institutions." SFAS No. 147 provides guidance on the accounting for the acquisition of a financial institution, and applies to all such acquisitions except those between two or more mutual enterprises. Under SFAS No. 147, the excess of the fair value of liabilities assumed over the fair value of tangible and identifiable intangible assets acquired in a financial institution business combination represents goodwill that should be accounted for under SFAS No. 142, "Goodwill and Other Intangible Assets." If certain criteria are met, the amount of the unidentifiable intangible asset resulting from prior financial institutions acquisitions is to be reclassified to goodwill upon adoption of this Statement. Financial institutions meeting conditions outlined in SFAS No. 147 are required to restate previously issued financial statements. The objective of the restatement is to present the balance sheet and income statement as if the amount accounted for under SFAS No. 72 as an unidentifiable intangible asset had been reclassified to goodwill as of the date the Company adopted SFAS No. 142. Adoption of SFAS No. 147 on October 1, 2002 did not have any effect on the Company's consolidated financial portion of results of operations.
Comparison of Operating Results for the Three Months And Nine Months ended September 30, 2002 and 2001During the three month period ended September 30, 2002, the Registrant earned net income of $2,255,000 or $.54 per diluted share as compared with $1,795,000 or $.42 per diluted share for the same period in 2001. During the nine month period ended September 30, 2002, the Registrant earned net income of $6,376,000 or $1.54 per diluted share as compared with $4,928,000 or $1.16 per diluted share for the same period in 2001. Highlights for the three months ended September 30, 2002 include: (i) a $822,000 or 16.9% increase in net interest income; (ii) a $380,000 or 60.2% increase in total other income; and (iii) a $305,000 or 11.1% increase in total other expenses over the same period in 2001. The effective income tax rate increased to 37.5% from 33.7% for the same period last year. Highlights for the nine months ended September 30, 2002 include: (i) a $2,291,000 or 16.5% increase in net interest income; (ii) a $694,000 or 37.7% increase in total other income; and (iii) a $493,000 or 6.0% increase in total other expenses over the same period in 2001. The effective income tax rate increased to 35.2% from 32.5% for the same period last year.
Net income for the first nine months of 2002 reflects annualized returns of 26.6% on average total stockholders’ equity and 1.96% 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 on securities available for sale, net of taxes.
Net interest income, the primary source of income, increased by $822,000 or 16.9% 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 $368,059,000 in 2001 to $433,075,000 for the comparable period in 2002, a 17.7% increase. Average interest bearing liabilities increased 17.4% to $294,307,000 in 2002 from $250,677,000 for the same period last year. The yield on average interest earning assets for the three-month period ended September 30, 2002 decreased to 6.6% from 7.6% during the same period in 2001. The cost of average interest bearing liabilities decreased to 1.7% from 3.1% during the same period in 2001. The net interest margin on average earning assets decreased to 5.5% from 5.6% for the same period in 2001.
Net interest income increased by $2,291,000 or 16.5% for the current nine month period over the same period last year. The increase primarily resulted from an increase in average total interest earning assets from $352,242,000 in 2001 to $406,954,000 for the comparable period in 2002, a 15.5% increase. This increase in average balance was partially offset by a decrease in average yield on total interest earning assets from 8.0 % for the quarter ended September 30, 2001 to 6.7% for the comparable 2002 quarter. Average interest bearing liabilities increased 15.6% to $279,618,000 in 2002 from $241,868,000 for the same period last year. The yield on average interest earning assets for the nine-month period ended September 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 3.6% during the same period in 2001. The net interest margin on average earning assets increased to 5.6% from 5.5% during the same period.
Average taxable investment securities for the first nine months of 2002 grew 30.4% from $90,337,000 to $117,763,000, as compared to the first nine months of 2001. 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 mortgage backed securities as the bank filled out its liquidity ladder while maintaining shorter maturities in this historically low rate environment.
Average deposits grew by $52,511,000 or 15.0% over the same nine-month period last year. Components of this growth include an increase in average demand deposits of $14,510,000 or 13.4% and an increase in average savings, NOW and money market deposits of $41,315,000 or 22.7%.
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 Greenport, Sag Harbor, and Hampton Bays, NY. The Bank’s added presence in these markets coupled with its business development efforts support deposit growth. Additionally, recent volatility in financial markets has likely contributed to growth in deposits.
Average loans grew by $18,301,000 or 8.6% when compared to the same three-month period in 2001. Real-estate mortgage loans were the main contributor to the increase in the loan portfolio. They increased $8,302,000 or 4.8% over September 30, 2001. Commercial loans increased $5,641,000 or 20.0% over the September 30, 2001. Installment consumer loans increased $1,138,000 or 18.9% over September 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 15.9% of total loans at September 30, 2002 and 12.4% of total loans at September 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 nine months ended September 30, 2002. Since December 31, 2001 non-performing loans decreased $300,000 from $532,000 to $232,000, representing 0.10% of loans, net, at September 30, 2002. This decrease is attributed to one loan relationship that 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 September 30, 2002. Total non-performing assets represented 0.05% 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 $9,000 for the nine months ended September 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 1040.1% and 422.7% at September 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 third quarters of 2002 and 2001. A $180,000 provision for loan losses was recorded during the nine month period ended September 30, 2002 as compared to a $230,000 provision for the same period in 2001. The allowance for loan losses increased to $2,413,000 at September 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 September 30, 2002 and 1.04% at December 31, 2001.
Loans of approximately $7,622,000 at September 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 probable incurred losses, classified loans, delinquency trends, 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 September 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 September 30, 2002 by $380,000 or 60.2% over the same period last year. For the nine-month period ended September 30, 2002 total other income increased $694,000 or 37.7% over the same period last year. Service charges on deposit accounts for the three-month period ended September 30, 2002 totaled $512,000, an increase of $205,000 or 66.8% over the same period last year. Service charges on deposit accounts for the nine-month period ended September 30, 2002 totaled $1,492,000, an increase of $475,000 or 46.7% 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 three quarters of 2002. There were no net gains on securities for the three or nine-month periods ended September 30, 2002. For the nine month period ended September 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 September 30,2002 totaled $465,000, an increase of $150,000 or 47.6% over the same period last year. Fees for other customer services for the nine-month period ended September 30, 2002 totaled $966,000, an increase of $312,000 or 47.7% over the same period in 2001. This increase is partially 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 September 30, 2002 totaled $34,000, a increase of $25,000 over the same period last year. For the nine-month period ended September 30, 2002 other operating income totaled $77,000 a decrease of $15,000 or 16.3% 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 September 30, 2002 by $305,000 or 11.1% over the same period last year. For the nine-month period ended September 30, 2001 total other expenses increased by $493,000 or 6.0% over the same period last year. Compensation and benefit expense increased $104,000 or 7.0% for the three-month period ended September 30, 2002 over the same period last year. For the nine-month period ended September 30, 2002 compensation and benefits expense increased $225,000 or 5.0% 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 $53,000 or 19.5% during the three-month period ended September 30, 2002. For the nine-month period ended September 30, 2002 net occupancy expenses increased $73,000 or 9.5% over the same period last year. Furniture and fixture expense for the three-month period ended September 30, 2002 increased $14,000 or 6.0% over the same period last year. For the nine month period ended September 30, 2002 furniture and fixture expense increased $60,000 or 9.2% 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 depreciation expense of management information systems that were purchased during 2001 and the first quarter of 2002. They were purchased, partially, due to the introduction of consumer internet banking.
Total other operating expenses for the three-month period ended September 30, 2002 totaled $884,000, an increase of $134,000 or 17.9% over the same period last year. Total other operating expense for the nine-month period ended September 30, 2002 totaled $2,391,000, an increase of $135,000 or 6.0% over the same period last year. Increased marketing and business development costs partially attributed to this change as the Company expands its branch network and product offerings.
The provision for income taxes increased during the three-month period ended September 30, 2002 by $437,000 or 47.8% over the same period last year. The effective tax rate for the three-month period ended September 30, 2002 increased to 37.48% as compared to 33.73% for the same period last year. The provision for income tax increased during the nine-month period ended September 30, 2002 by $1,094,000 or 46.1% over the same period last year. The effective tax rate for the nine-month period ended September 30, 2002 increased to 35.23% as compared to 32.50% for the same period last year. This increase is attributable to the increase in income before the provision for income taxes, the decrease in tax exempt securities revenue a percentage of income before provision for taxes, 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 ten 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 September 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 September 30, 2002, there has been no material change in market risk from December 31, 2001.
Within the 90 days prior to the date of this report, the Company’s Chief Executive Officer and Chief Financial Officer carried out an evaluation, with the participation of other members of management as they deemed appropriate, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as contemplated by Exchange Act Rule 13a-14. Based upon, and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are, to the best of their knowledge, effective, in all material respects, in timely alerting them to material information relating to the Company (and its consolidated subsidiaries) required to be included in the periodic reports that the Company is required to file and submit to the SEC under the Exchange Act.
There were no significant changes to the Company’s internal controls or in other factors that could significantly affect these internal controls subsequent to the date the Company carried out its evaluation of its internal controls. There were no significant deficiencies or material weaknesses identified in the evaluation and, therefore, no corrective actions were taken.
Item 1. Legal Proceedings
Not applicableItem 2. Changes in Securities
Not applicableItem 3. Defaults upon Senior Securities
Not applicableItem4. Submission of Matters to a Vote of Security Holders
Not applicableItem 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 July 23, 2002 the Registrant filed a Form 8-K relative to the election of two new directors to the Board.
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: November 13, 2002 /s/Thomas J. Tobin
Thomas J. Tobin
President and Chief Executive Officer
Date: November 13, 2002 /s/Janet T. Verneuille
Janet T. Verneuille
Senior Vice President and Treasurer
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5) The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal controls; and
6) The registrant’s other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 13, 2002
/s/Thomas J. Tobin
President and Chief Executive Officer
CERTIFICATION
OF PRINCIPAL EXECUTIVE OFFICER
I, Janet T. Verneuille, Senior Vice President and Treasurer, certify that:
1) I have reviewed this quarterly report on Form 10-Q of Bridge Bancorp, Inc.;
2) Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3) Based on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this quarterly report;
4) The registrant’s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a)
designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b)
evaluated the effectiveness of the registrant’s disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the “Evaluation Date”); and
c)
presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5) The registrant’s other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant’s auditors and the audit
committee of registrant’s board of directors (or persons performing the
equivalent function):
a)
all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant’s ability to record, process,
summarize and report financial data and have identified for the
registrant’s auditors any material weaknesses in internal controls; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal controls; and
6) The registrant’s other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 13, 2002
/s/Janet T. Verneuille
Senior Vice President and Treasurer