10-Q 1 a14-19729_110q.htm 10-Q

Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

FORM 10-Q

______________________

 

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

 

 

SECURITIES EXCHANGE ACT OF 1934

 

 

For the quarterly period ended September 30, 2014

______________________

Commission file number 001-34096

______________________

BRIDGE BANCORP, INC.

(Exact name of registrant as specified in its charter)

 

NEW YORK

 

11-2934195

(State or other jurisdiction of incorporation or organization)

 

(IRS Employer Identification Number)

 

 

 

2200 MONTAUK HIGHWAY, BRIDGEHAMPTON, NEW YORK

 

11932

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (631) 537-1000

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [ ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

 

Large accelerated filer [  ]

 

Accelerated filer [X]

 

 

 

Non-accelerated filer [  ] (Do not check if a smaller reporting company)

 

Smaller reporting company [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

There were 11,650,722 shares of common stock outstanding as of November 3, 2014.

 

 



Table of Contents

 

 

BRIDGE BANCORP, INC.

 

 

PART I -

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

3

 

 

 

 

Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013

3

 

 

 

 

Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2014 and 2013

4

 

 

 

 

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2014 and 2013

5

 

 

 

 

Consolidated Statements of Stockholders’ Equity for the Nine Months Ended September 30, 2014 and 2013

6

 

 

 

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013

7

 

 

 

 

Condensed Notes to Consolidated Financial Statements

8

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

35

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

50

 

 

 

Item 4.

Controls and Procedures

52

 

 

 

PART II -

OTHER INFORMATION

52

 

 

 

Item 1.

Legal Proceedings

52

 

 

 

Item 1A.

Risk Factors

52

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

52

 

 

 

Item 3.

Defaults Upon Senior Securities

52

 

 

 

Item 4.

Mine Safety Disclosures

52

 

 

 

Item 5.

Other Information

52

 

 

 

Item 6.

Exhibits

52

 

 

 

Signatures

 

53

 

 

 

 

 



Table of Contents

 

 

Item 1. Financial Statements

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (unaudited)

(In thousands, except share and per share amounts)

 

 

 

September 30,

 

December 31,

 

 

 

2014

 

2013

 

ASSETS

 

 

 

 

 

Cash and due from banks

 

$

40,481

 

$

39,997

 

Interest earning deposits with banks

 

7,280

 

5,576

 

Total cash and cash equivalents

 

47,761

 

45,573

 

 

 

 

 

 

 

Securities available for sale, at fair value

 

612,901

 

575,179

 

Securities held to maturity (fair value of $209,789 and $197,339, respectively)

 

209,777

 

201,328

 

Total securities

 

822,678

 

776,507

 

 

 

 

 

 

 

Securities, restricted

 

10,600

 

7,034

 

 

 

 

 

 

 

Loans held for investments

 

1,243,560

 

1,013,263

 

Allowance for loan losses

 

(17,017

)

(16,001

)

Loans, net

 

1,226,543

 

997,262

 

 

 

 

 

 

 

Premises and equipment, net

 

31,862

 

27,983

 

Accrued interest receivable

 

6,467

 

5,648

 

Goodwill

 

10,668

 

2,034

 

Core deposit intangible

 

892

 

190

 

Bank owned life insurance

 

30,409

 

10,035

 

Prepaid pension

 

10,006

 

8,586

 

Other real estate owned

 

577

 

2,242

 

Other assets

 

17,790

 

13,652

 

Total Assets

 

$

2,216,253

 

$

1,896,746

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Demand deposits

 

$

605,456

 

$

582,938

 

Savings, NOW and money market deposits

 

1,040,566

 

855,246

 

Certificates of deposit of $100,000 or more

 

97,170

 

64,445

 

Other time deposits

 

60,061

 

36,450

 

Total deposits

 

1,803,253

 

1,539,079

 

 

 

 

 

 

 

Federal Funds Purchased

 

41,000

 

64,000

 

Federal Home Loan Bank advances

 

150,955

 

98,000

 

Repurchase agreements

 

11,774

 

11,370

 

Junior subordinated debentures

 

16,002

 

16,002

 

Other liabilities and accrued expenses

 

18,294

 

8,835

 

Total Liabilities

 

2,041,278

 

1,737,286

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock, par value $.01 per share (2,000,000 shares authorized; none issued)

 

 

 

Common stock, par value $.01 per share:

 

 

 

 

 

Authorized: 20,000,000 shares; 11,644,370 and 11,317,367 shares issued, respectively; 11,644,370 and 11,307,607 shares outstanding, respectively

 

116

 

113

 

Surplus

 

118,368

 

111,377

 

Retained earnings

 

63,065

 

61,441

 

Less: Treasury Stock at cost, 0 and 9,760 shares, respectively

 

 

(235

)

 

 

181,549

 

172,696

 

Accumulated other comprehensive loss, net of income tax

 

(6,574

)

(13,236

)

Total Stockholders’ Equity

 

174,975

 

159,460

 

Total Liabilities and Stockholders’ Equity

 

$

2,216,253

 

$

1,896,746

 

 

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

 

3



Table of Contents

 

 

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of  Income (unaudited)

(In thousands, except per share amounts)

 

 

 

For the

 

For the

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans (including fee income)

 

$

14,995

 

$

11,583

 

$

42,377

 

$

33,433

 

Mortgage-backed securities, CMOs and other asset-backed securities

 

2,687

 

1,796

 

7,927

 

4,708

 

U.S. GSE securities

 

623

 

749

 

2,128

 

2,199

 

State and municipal obligations

 

613

 

650

 

2,005

 

1,976

 

Corporate Bonds

 

195

 

100

 

560

 

301

 

Deposits with banks

 

8

 

7

 

23

 

20

 

Other interest and dividend income

 

98

 

28

 

287

 

115

 

Total interest income

 

19,219

 

14,913

 

55,307

 

42,752

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

Savings, NOW and money market deposits

 

808

 

905

 

2,446

 

2,648

 

Certificates of deposit of $100,000 or more

 

203

 

257

 

587

 

927

 

Other time deposits

 

111

 

86

 

327

 

257

 

Federal funds purchased and repurchase agreements

 

149

 

123

 

418

 

373

 

Federal Home Loan Bank advances

 

245

 

153

 

792

 

241

 

Junior subordinated debentures

 

341

 

341

 

1,024

 

1,024

 

Total interest expense

 

1,857

 

1,865

 

5,594

 

5,470

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

17,362

 

13,048

 

49,713

 

37,282

 

Provision for loan losses

 

500

 

500

 

1,700

 

1,650

 

Net interest income after provision for loan losses

 

16,862

 

12,548

 

48,013

 

35,632

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

765

 

777

 

2,442

 

2,424

 

Fees for other customer services

 

1,050

 

925

 

2,596

 

2,486

 

Net securities gains (losses)

 

9

 

11

 

(1,119

)

659

 

Title fee income

 

400

 

357

 

1,183

 

1,041

 

Other operating income (loss)

 

338

 

(10

)

554

 

22

 

Total non-interest income

 

2,562

 

2,060

 

5,656

 

6,632

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

6,656

 

5,292

 

19,274

 

16,012

 

Occupancy and equipment

 

1,997

 

1,407

 

5,545

 

4,016

 

Technology and communications

 

811

 

726

 

2,294

 

1,885

 

Marketing and advertising

 

726

 

589

 

1,796

 

1,470

 

Professional services

 

433

 

336

 

1,189

 

957

 

FDIC assessments

 

318

 

239

 

952

 

675

 

Acquisition costs and branch restructuring

 

 

338

 

4,734

 

338

 

Amortization of core deposit intangible

 

96

 

14

 

250

 

45

 

Other operating expenses

 

1,057

 

920

 

3,197

 

2,726

 

Total non-interest expense

 

12,094

 

9,861

 

39,231

 

28,124

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

7,330

 

4,747

 

14,438

 

14,140

 

Income tax expense

 

2,459

 

1,624

 

4,843

 

4,652

 

Net income

 

$

4,871

 

$

3,123

 

$

9,595

 

$

9,488

 

Basic earnings per share

 

$

0.42

 

$

0.34

 

$

0.83

 

$

1.04

 

Diluted earnings per share

 

$

0.42

 

$

0.34

 

$

0.83

 

$

1.04

 

 

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

 

4



Table of Contents

 

 

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (unaudited)

(In thousands)

 

 

 

For the

 

For the

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

Net Income

 

$

4,871

 

$

3,123

 

$

9,595

 

$

9,488

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

Change in unrealized net (losses) gains on securities available for sale, net of reclassification and deferred income taxes

 

(813

)

(2,237

)

6,777

 

(11,380

)

Adjustment to pension liability, net of deferred income taxes

 

(3

)

44

 

(10

)

132

 

Unrealized gains (losses) on cash flow hedge, net of deferred income taxes

 

242

 

(331

)

(105

)

(158

)

Total other comprehensive (loss) income

 

(574

)

(2,524

)

6,662

 

(11,406

)

Comprehensive income (loss)

 

$

4,297

 

$

599

 

$

16,257

 

$

(1,918

)

 

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

 

5



Table of Contents

 

 

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity (unaudited)

(In thousands, except per share amounts)

 

 

 

Common
Stock

 

Surplus

 

Retained
Earnings

 

Treasury
Stock

 

Accumulated
Other
Comprehensive
Loss

 

Total

 

Balance at January 1, 2014

 

$

113

 

$

111,377

 

$

61,441

 

$

(235

)

$

(13,236

)

$

159,460

 

Net income

 

 

 

 

 

9,595

 

 

 

 

 

9,595

 

Shares issued under the dividend reinvestment plan (“DRP”)

 

 

 

475

 

 

 

 

 

 

 

475

 

Shares issued in the acquisition of FNBNY Bancorp, net of offering costs (240,598 shares)

 

2

 

5,946

 

 

 

 

 

 

 

5,948

 

Stock awards granted and distributed

 

1

 

(432

)

 

 

431

 

 

 

 

Stock awards forfeited

 

 

 

58

 

 

 

(58

)

 

 

 

Vesting of stock awards

 

 

 

 

 

 

 

(147

)

 

 

(147

)

Exercise of stock options

 

 

 

(2

)

 

 

9

 

 

 

7

 

Income tax effect of stock plans

 

 

 

30

 

 

 

 

 

 

 

30

 

Share based compensation expense

 

 

 

916

 

 

 

 

 

 

 

916

 

Cash dividend declared, $0.69 per share

 

 

 

 

 

(7,971

)

 

 

 

 

(7,971

)

Other comprehensive income, net of deferred income taxes

 

 

 

 

 

 

 

 

 

6,662

 

6,662

 

Balance at September 30, 2014

 

$

116

 

$

118,368

 

$

63,065

 

$

 

$

(6,574

)

$

174,975

 

 

 

 

Common
Stock

 

Surplus

 

Retained
Earnings

 

Treasury
Stock

 

Accumulated
Other
Comprehensive
Loss

 

Total

 

Balance at January 1, 2013

 

$

89

 

$

64,208

 

$

55,102

 

$

(309

)

$

(418

)

$

118,672

 

Net income

 

 

 

 

 

9,488

 

 

 

 

 

9,488

 

Shares issued under the dividend reinvestment plan (“DRP”)

 

3

 

5,608

 

 

 

 

 

 

 

5,611

 

Stock awards granted and distributed

 

1

 

(435

)

 

 

434

 

 

 

 

Stock awards forfeited

 

 

 

79

 

 

 

(79

)

 

 

 

Vesting of stock awards

 

 

 

 

 

 

 

(149

)

 

 

(149

)

Income tax effect of stock plans

 

 

 

(9

)

 

 

 

 

 

 

(9

)

Share based compensation expense

 

 

 

977

 

 

 

 

 

 

 

977

 

Cash dividend declared, $0.46 per share

 

 

 

 

 

(4,177

)

 

 

 

 

(4,177

)

Other comprehensive loss, net of deferred income taxes

 

 

 

 

 

 

 

 

 

(11,406

)

(11,406

)

Balance at September 30, 2013

 

$

93

 

$

70,428

 

$

60,413

 

$

(103

)

$

(11,824

)

$

119,007

 

 

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

 

6



Table of Contents

 

 

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)

(In thousands)

 

 

 

For the

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2014

 

2013

 

Cash flows from operating activities:

 

 

 

 

 

Net Income

 

$

9,595

 

$

9,488

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Provision for loan losses

 

1,700

 

1,650

 

Depreciation and amortization

 

1,860

 

1,498

 

Net amortization on securities

 

2,600

 

4,280

 

Increase in cash surrender value of bank owned life insurance

 

(374

)

 

Amortization of core deposit intangible

 

250

 

45

 

Share based compensation expense

 

916

 

977

 

Net securities losses (gains)

 

1,119

 

(659

)

Increase in accrued interest receivable

 

(819

)

(18

)

Decrease (increase) in other assets

 

3,344

 

(1,822

)

Increase in accrued expenses and other liabilities

 

2,899

 

806

 

Net cash provided by operating activities

 

23,090

 

16,245

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of securities available for sale

 

(328,512

)

(228,021

)

Purchases of securities, restricted

 

(326,562

)

(49,843

)

Purchases of securities held to maturity

 

(41,310

)

(55,105

)

Proceeds from sales of securities available for sale

 

350,010

 

129,431

 

Redemption of securities, restricted

 

325,596

 

48,397

 

Maturities, calls and principal payments of securities available for sale

 

53,750

 

117,771

 

Maturities, calls and principal payments of securities held to maturity

 

32,236

 

69,950

 

Net increase in loans

 

(143,457

)

(135,394

)

Proceeds from sales of other real estate owned, net

 

2,242

 

218

 

Purchase of bank owned life insurance

 

(20,000

)

 

Purchase of premises and equipment

 

(3,951

)

(3,327

)

Net cash acquired in business combination

 

2,926

 

 

Net cash used in investing activities

 

(97,032

)

(105,923

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Net increase in deposits

 

94,301

 

53,702

 

Net decrease in federal funds purchased

 

(23,000

)

(3,500

)

Net increase in FHLB advances

 

13,673

 

25,000

 

Repayment of acquired unsecured debt

 

(1,450

)

 

Net increase (decrease) in repurchase agreements

 

404

 

(1,075

)

Net proceeds from issuance of common stock

 

475

 

5,611

 

Net proceeds from exercise of stock options

 

7

 

 

Repurchase of surrendered stock from vesting of restricted stock awards

 

(147

)

(149

)

Excess tax benefit (expense) from share based compensation

 

30

 

(9

)

Cash dividends paid

 

(7,971

)

(4,177

)

Other, net

 

(192

)

 

Net cash provided in financing activities

 

76,130

 

75,403

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

2,188

 

(14,275

)

Cash and cash equivalents at beginning of period

 

45,573

 

51,249

 

Cash and cash equivalents at end of period

 

$

47,761

 

$

36,974

 

 

 

 

 

 

 

Supplemental Information-Cash Flows:

 

 

 

 

 

Cash paid for:

 

 

 

 

 

Interest

 

$

5,508

 

$

5,398

 

Income tax

 

$

883

 

$

4,152

 

 

 

 

 

 

 

Noncash investing and financing activities:

 

 

 

 

 

Securities which settled in the subsequent period

 

$

4,235

 

$

3,000

 

Transfers from portfolio loans to OREO

 

$

577

 

$

 

 

 

 

 

 

 

Acquisition of noncash assets and liabilities:

 

 

 

 

 

Fair value of assets acquired

 

$

207,326

 

$

 

Fair value of liabilities assumed

 

$

212,747

 

$

 

 

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

 

7



Table of Contents

 

 

BRIDGE BANCORP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

1. BASIS OF PRESENTATION

 

Bridge Bancorp, Inc. (the “Company”) is a bank holding company incorporated under the laws of the State of New York. The Company’s business currently consists of the operations of its wholly-owned subsidiary, The Bridgehampton National Bank (the “Bank”). The Bank’s operations include its real estate investment trust subsidiary, Bridgehampton Community, Inc. (“BCI”), a financial title insurance subsidiary, Bridge Abstract LLC (“Bridge Abstract”), and an investment services subsidiary, Bridge Financial Services LLC that was formed on March 26, 2014. In addition to the Bank, the Company has another subsidiary Bridge Statutory Capital Trust II which was formed in 2009. In accordance with current accounting guidance, the trust is not consolidated in the Company’s financial statements.

 

The accompanying Unaudited Consolidated Financial Statements, which include the accounts of the Company and its wholly-owned subsidiary, the Bank, have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) 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 that 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 months and nine months ended September 30, 2014 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain reclassifications have been made to prior year amounts, and the related discussion and analysis, to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders’ equity. The Unaudited Consolidated Financial Statements should be read in conjunction with the Audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

 

2. EARNINGS PER SHARE

 

Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) No. 260-10-45 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (“EPS”).  The restricted stock awards and restricted stock units granted by the Company contain non-forfeitable rights to dividends and therefore are considered participating securities.  The two-class method for calculating basic EPS excludes dividends paid to participating securities and any undistributed earnings attributable to participating securities.

 

The computation of EPS for the three and nine months ended September 30, 2014 and 2013 is as follows:

 

 

 

Three months ended,

 

Nine months ended,

 

 

 

September 30,

 

September 30,

 

(In thousands, except per share data)

 

2014

 

2013

 

2014

 

2013

 

Net Income

 

$

4,871

 

$

3,123

 

$

9,595

 

$

9,488

 

Less: Dividends paid on and earnings allocated to participating securities

 

(119

)

(85

)

(218

)

(254

)

Income attributable to common stock

 

$

4,752

 

$

3,038

 

$

9,377

 

$

9,234

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding, including participating securities

 

11,674

 

9,241

 

11,616

 

9,109

 

Less: weighted average participating securities

 

(284

)

(248

)

(276

)

(242

)

Weighted average common shares outstanding

 

11,390

 

8,993

 

11,340

 

8,867

 

Basic earnings per common share

 

$

0.42

 

$

0.34

 

$

0.83

 

$

1.04

 

 

 

 

 

 

 

 

 

 

 

Income attributable to common stock

 

$

4,752

 

$

3,038

 

$

9,377

 

$

9,234

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

11,390

 

8,993

 

11,340

 

8,867

 

Weighted average common equivalent shares outstanding

 

 

 

 

 

Weighted average common and equivalent shares outstanding

 

11,390

 

8,993

 

11,340

 

8,867

 

Diluted earnings per common share

 

$

0.42

 

$

0.34

 

$

0.83

 

$

1.04

 

 

8



Table of Contents

 

 

There were 41,100 and 49,362 options outstanding at September 30, 2014 and September 30, 2013, respectively, that were not included in the computation of diluted earnings per share because the options’ exercise prices were greater than the average market price of common stock and were, therefore, antidilutive. The $16.0 million in convertible trust preferred securities outstanding at September 30, 2014, were not included in the computation of diluted earnings per share because the assumed conversion of the trust preferred securities was antidilutive.

 

3. STOCK BASED COMPENSATION PLANS

 

The Compensation Committee of the Board of Directors determines stock options and restricted stock awarded under the Bridge Bancorp, Inc. Equity Incentive Plan (“Plan”) and the Company accounts for this Plan under the FASB ASC No. 718 and 505. On May 4, 2012, the stockholders of the Company approved the Company’s 2012 Stock-Based Incentive Plan which supersedes the Bridge Bancorp, Inc. Equity Incentive Plan that was approved in 2006 (the “2006 Plan”). The plan provides for the grant of stock-based and other incentive awards to officers, employees and directors of the Company.

 

No new grants of stock options were awarded and no compensation expense was attributable to stock options for the nine months ended September 30, 2014 and September 30, 2013 because all stock options were vested.

 

The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market price of our common stock as of the reporting date.  The intrinsic value of options exercised during the nine months ended September 30, 2014 and September 30, 2013, was $1,000 and $0, respectively. The intrinsic value of options outstanding and exercisable at September 30, 2014 and September 30, 2013 was $0.

 

A summary of the status of the Company’s stock options as of and for the nine months ended September 30, 2014 is as follows:

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

Weighted

 

Average

 

 

 

 

 

Number

 

Average

 

Remaining

 

Aggregate

 

 

 

of

 

Exercise

 

Contractual

 

Intrinsic

 

(Dollars in thousands, except per share amounts)

 

Options

 

Price

 

Life

 

Value

 

Outstanding, January 1, 2014

 

45,395

 

$

25.54

 

 

 

 

 

Granted

 

 

 

 

 

 

 

Exercised

 

(1,274

)

$

24.00

 

 

 

 

 

Forfeited

 

(2,460

)

$

25.25

 

 

 

 

 

Expired

 

(561

)

$

24.00

 

 

 

 

 

Outstanding, September 30, 2014

 

41,100

 

$

25.62

 

1.96 years

 

 

Vested and Exercisable, September 30, 2014

 

41,100

 

$

25.62

 

1.96 years

 

 

 

 

 

Number of

 

Exercise

 

Range of Exercise Prices

 

Options

 

Price

 

 

 

35,969

 

$

25.25

 

 

 

3,000

 

$

26.55

 

 

 

2,131

 

$

30.60

 

 

 

41,100

 

 

 

 

During the nine months ended September 30, 2014 restricted stock awards of 80,073 shares were granted. Of the 80,073 shares granted, 53,425 shares vest over seven years with a third vesting after years five, six and seven, 20,398 shares vest over five years with a third vesting after years three, four and five and the remaining 6,250 shares vest ratably over approximately two years. During the nine months ended September 30, 2013, restricted stock awards of 72,940 shares were granted. Of the 72,940 shares granted, 51,175 shares vest over seven years with one third vesting after each of the years five, six and seven; 12,652 shares vest over five years with one third vesting after each of the years three, four and five; and the remaining 9,113 shares vest ratably over approximately five years. Compensation expense attributable to restricted stock awards was $289,000 and $803,000 for the three and nine months ended September 30, 2014, respectively, and $281,000 and $868,000 for the three and nine months ended September 30, 2013, respectively.

 

9



Table of Contents

 

 

A summary of the status of the Company’s unvested restricted stock as of and for the nine months ended September 30, 2014 is as follows:

 

 

 

 

 

Weighted

 

 

 

 

 

Average Grant-Date

 

 

 

Shares

 

Fair Value

 

Unvested, January 1, 2014

 

197,599

 

$

21.18

 

Granted

 

80,073

 

$

25.32

 

Vested

 

(23,695

)

$

21.58

 

Forfeited

 

(2,398

)

$

22.33

 

Unvested, September 30, 2014

 

251,579

 

$

22.45

 

 

In April 2009, the Company adopted a Directors Deferred Compensation Plan. Under the Plan, independent directors may elect to defer all or a portion of their annual retainer fee in the form of restricted stock units. In addition, Directors receive a non-election retainer in the form of restricted stock units.  These restricted stock units vest ratably over one year and have dividend rights but no voting rights. In connection with this Plan, the Company recorded expenses of approximately $34,000 and $113,000 for the three and nine months ended September 30, 2014, respectively, and $34,000 and $109,000 for the three and nine months ended September 30, 2013, respectively.

 

4. SECURITIES

 

The following table summarizes the amortized cost and fair value of the available for sale and held to maturity investment securities portfolio at September 30, 2014 and December 31, 2013 and the corresponding amounts of unrealized gains and losses therein:

 

 

 

September 30, 2014

 

 

 

 

 

Gross

 

Gross

 

Estimated

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

(In thousands)

 

Cost

 

Gains

 

Losses

 

Value

 

Available for sale:

 

 

 

 

 

 

 

 

 

U.S. GSE securities

 

$

104,296

 

$

7

 

$

(3,522

)

$

100,781

 

State and municipal obligations

 

64,823

 

404

 

(268

)

64,959

 

U.S. GSE residential mortgage-backed securities

 

99,054

 

3

 

(349

)

98,708

 

U.S. GSE residential collateralized mortgage obligations

 

278,002

 

77

 

(4,752

)

273,327

 

U.S. GSE commercial mortgage-backed securities

 

3,032

 

 

(120

)

2,912

 

U.S. GSE commercial collateralized mortgage obligations

 

25,206

 

63

 

(151

)

25,118

 

Other Asset backed securities

 

29,189

 

4

 

 

29,193

 

Corporate Bonds

 

17,950

 

59

 

(106

)

17,903

 

Total available for sale

 

621,552

 

617

 

(9,268

)

612,901

 

 

 

 

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

 

 

 

 

U.S. GSE securities

 

11,276

 

73

 

(69

)

11,280

 

State and municipal obligations

 

55,267

 

1,648

 

(86

)

56,829

 

U.S. GSE residential mortgage-backed securities

 

7,090

 

 

(173

)

6,917

 

U.S. GSE residential collateralized mortgage obligations

 

61,757

 

575

 

(1,663

)

60,669

 

U.S. GSE commercial mortgage-backed securities

 

13,298

 

93

 

(88

)

13,303

 

U.S. GSE commercial collateralized mortgage obligations

 

38,157

 

239

 

(666

)

37,730

 

Corporate Bonds

 

22,932

 

142

 

(13

)

23,061

 

Total held to maturity

 

209,777

 

2,770

 

(2,758

)

209,789

 

Total securities

 

$

831,329

 

$

3,387

 

$

(12,026

)

$

822,690

 

 

10



Table of Contents

 

 

 

 

December 31, 2013

 

 

 

 

 

Gross

 

Gross

 

Estimated

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

(In thousands)

 

Cost

 

Gains

 

Losses

 

Value

 

Available for sale:

 

 

 

 

 

 

 

 

 

U.S. GSE securities

 

$

164,278

 

$

15

 

$

(11,536

)

$

152,757

 

State and municipal obligations

 

62,141

 

602

 

(1,087

)

61,656

 

U.S. GSE residential mortgage-backed securities

 

14,609

 

36

 

(210

)

14,435

 

U.S. GSE residential collateralized mortgage obligations

 

285,595

 

559

 

(6,963

)

279,191

 

U.S. GSE commercial mortgage-backed securities

 

3,076

 

 

(242

)

2,834

 

U.S. GSE commercial collateralized mortgage obligations

 

26,740

 

194

 

(24

)

26,910

 

Non Agency commercial mortgage-backed securities

 

3,658

 

 

(80

)

3,578

 

Other Asset backed securities

 

34,970

 

42

 

(1,194

)

33,818

 

Total available for sale

 

595,067

 

1,448

 

(21,336

)

575,179

 

 

 

 

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

 

 

 

 

U.S. GSE securities

 

11,254

 

 

(375

)

10,879

 

State and municipal obligations

 

67,232

 

863

 

(179

)

67,916

 

U.S. GSE residential mortgage-backed securities

 

8,001

 

 

(312

)

7,689

 

U.S. GSE residential collateralized mortgage obligations

 

68,197

 

537

 

(3,655

)

65,079

 

U.S. GSE commercial mortgage-backed securities

 

10,132

 

 

(356

)

9,776

 

U.S. GSE commercial collateralized mortgage obligations

 

13,627

 

 

(706

)

12,921

 

Corporate Bonds

 

22,885

 

203

 

(9

)

23,079

 

Total held to maturity

 

201,328

 

1,603

 

(5,592

)

197,339

 

Total securities

 

$

796,395

 

$

3,051

 

$

(26,928

)

$

772,518

 

 

The following table summarizes the amortized cost, fair value and maturities of the available for sale and held to maturity investment securities portfolio at September 30, 2014. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

 

 

September 30, 2014

 

 

 

Amortized

 

Fair

 

(In thousands)

 

Cost

 

Value

 

Maturity

 

 

 

 

 

Available for sale:

 

 

 

 

 

Within one year

 

$

15,983

 

$

16,081

 

One to five years

 

31,614

 

31,773

 

Five to ten years

 

132,528

 

129,309

 

Beyond ten years

 

441,427

 

435,738

 

Total

 

$

621,552

 

$

612,901

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

Within one year

 

$

12,407

 

$

12,442

 

One to five years

 

34,983

 

35,157

 

Five to ten years

 

45,316

 

46,272

 

Beyond ten years

 

117,071

 

115,918

 

Total

 

$

209,777

 

$

209,789

 

 

11



Table of Contents

 

 

Securities with unrealized losses at September 30, 2014 and December 31, 2013, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

 

 

 

Less than 12 months

 

Greater than 12 months

 

September 30, 2014

 

 

 

Unrealized

 

 

 

Unrealized

 

(In thousands)

 

Fair Value

 

losses

 

Fair Value

 

losses

 

Available for sale:

 

 

 

 

 

 

 

 

 

U.S. GSE securities

 

$

 

$

 

$

100,509

 

$

3,522

 

State and municipal obligations

 

12,118

 

60

 

12,752

 

208

 

U.S. GSE residential mortgage-backed securities

 

86,937

 

285

 

1,539

 

64

 

U.S. GSE residential collateralized mortgage obligations

 

122,023

 

879

 

113,484

 

3,873

 

U.S. GSE commercial mortgage-backed securities

 

 

 

2,912

 

120

 

U.S. GSE commercial collateralized mortgage obligations

 

18,549

 

151

 

 

 

Other Asset backed securities

 

 

 

 

 

Corporate Bonds

 

9,894

 

106

 

 

 

Total available for sale

 

249,521

 

1,481

 

231,196

 

7,787

 

 

 

 

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

 

 

 

 

U.S. GSE securities

 

 

 

78,384

 

69

 

State and municipal obligations

 

7,761

 

86

 

 

 

U.S. GSE residential mortgage-backed securities

 

 

 

6,917

 

173

 

U.S. GSE residential collateralized mortgage obligations

 

8,914

 

86

 

31,892

 

1,577

 

U.S. GSE commercial mortgage-backed securities

 

 

 

4,152

 

88

 

U.S. GSE commercial collateralized mortgage obligations

 

14,290

 

160

 

8,461

 

506

 

Corporate Bonds

 

5,987

 

13

 

 

 

Total held to maturity

 

$

36,952

 

$

345

 

$

129,806

 

$

2,413

 

 

 

 

Less than 12 months

 

Greater than 12 months

 

December 31, 2013

 

 

 

Unrealized

 

 

 

Unrealized

 

(In thousands)

 

Fair Value

 

losses

 

Fair Value

 

losses

 

Available for sale:

 

 

 

 

 

 

 

 

 

U.S. GSE securities

 

$

128,468

 

$

8,915

 

$

23,966

 

$

2,621

 

State and municipal obligations

 

23,765

 

1,046

 

966

 

41

 

U.S. GSE residential mortgage-backed securities

 

10,410

 

210

 

 

 

U.S. GSE residential collateralized mortgage obligations

 

218,415

 

6,476

 

12,757

 

487

 

U.S. GSE commercial mortgage-backed securities

 

2,834

 

242

 

 

 

U.S. GSE commercial collateralized mortgage obligations

 

4,912

 

24

 

 

 

Non Agency commercial mortgage-backed securities

 

3,578

 

80

 

 

 

Other Asset backed securities

 

21,144

 

1,103

 

2,906

 

91

 

Total available for sale

 

413,526

 

18,096

 

40,595

 

3,240

 

 

 

 

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

 

 

 

 

U.S. GSE securities

 

10,879

 

375

 

 

 

State and municipal obligations

 

24,079

 

178

 

385

 

1

 

U.S. GSE residential mortgage-backed securities

 

7,689

 

312

 

 

 

U.S. GSE residential collateralized mortgage obligations

 

29,570

 

2,169

 

17,752

 

1,486

 

U.S. GSE commercial mortgage-backed securities

 

9,776

 

356

 

 

 

U.S. GSE commercial collateralized mortgage obligations

 

12,921

 

706

 

 

 

Corporate Bonds

 

1,993

 

7

 

999

 

2

 

Total held to maturity

 

$

96,907

 

$

4,103

 

$

19,136

 

$

1,489

 

 

Other-Than-Temporary-Impairment

 

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant. The investment securities portfolio is evaluated for OTTI by segregating the portfolio

 

12



Table of Contents

 

 

into two general segments and applying the appropriate OTTI model. Investment securities classified as available for sale or held-to-maturity are generally evaluated for OTTI under FASB ASC 320, Accounting for Certain Investments in Debt and Equity Securities. In determining OTTI under the FASB ASC 320 model, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: (1) OTTI related to credit loss, which must be recognized in the income statement and (2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

 

At September 30, 2014, the majority of unrealized losses on both the available for sale and held to maturity securities are related to the Company’s U.S. GSE securities and U.S. GSE residential collateralized mortgage obligations.  The decrease in fair value of the U.S. GSE securities and U.S. GSE residential collateralized mortgage obligations is attributable to changes in interest rates and not credit quality.  The Company does not have the intent to sell these securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. Therefore, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2014.

 

Proceeds from sales of securities available for sale were $115.3 million and $54.3 million for the three months ended September 30, 2014 and 2013, respectively.  Proceeds from sales of securities available for sale were $350.0 million and $129.4 million for the nine months ended September 30, 2014 and 2013, respectively.  Net gains of $9,000 and $11,000 were realized on these sales during the three months ended September 30, 2014 and 2013, respectively.   Net losses of $1.1 million and net gains of $0.7 million were realized on these sales during the nine months ended September 30, 2014 and 2013, respectively.  Proceeds from calls of securities were $0.3 million and $1.1 million for the three months ended September 30, 2014 and 2013, respectively.  Proceeds from calls of securities were $2.8 million and $47.8 million for the nine months ended September 30, 2014 and 2013, respectively.

 

Securities having a fair value of approximately $378.7 million and $397.5 million at September 30, 2014 and December 31, 2013, respectively, were pledged to secure public deposits and Federal Home Loan Bank and Federal Reserve Bank overnight borrowings.  The Bank did not hold any trading securities during the nine months ended September 30, 2014 or the year ended December 31, 2013.

 

The Bank is a member of the Federal Home Loan Bank (“FHLB”) of New York. Members are required to own a particular amount of stock based on the level of borrowings and other factors, and may invest in additional amounts.  The Bank is a member of the Atlantic Central Banker’s Bank (“ACBB”) and is required to own ACBB stock. The Bank is also a member of the Federal Reserve Bank (“FRB”) system and required to own FRB stock.  FHLB, ACBB and FRB stock is carried at cost and periodically evaluated for impairment based on ultimate recovery of par value.  Both cash and stock dividends are reported as income.  The Bank owned approximately $10.6 million and $7.0 million in FHLB, ACBB and FRB stock at September 30, 2014 and December 31, 2013.  These amounts were reported as restricted securities in the consolidated balance sheets.

 

5. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

 

FASB ASC No. 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair values:

 

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

 

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

 

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

 

13



Table of Contents

 

 

Assets and liabilities measured on a recurring basis:

 

 

 

 

 

Fair Value Measurements at

 

 

 

 

 

September 30, 2014 Using:

 

 

 

 

 

 

 

Significant

 

 

 

 

 

 

 

Quoted Prices In

 

Other

 

Significant

 

 

 

 

 

Active Markets for

 

Observable

 

Unobservable

 

 

 

Carrying

 

Identical Assets

 

Inputs

 

Inputs

 

(In thousands)

 

Value

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Financial Assets:

 

 

 

 

 

 

 

 

 

Available for sale securities:

 

 

 

 

 

 

 

 

 

U.S. GSE securities

 

$

100,781

 

 

 

$

100,781

 

 

 

State and municipal obligations

 

64,959

 

 

 

64,959

 

 

 

U.S. GSE residential mortgage-backed securities

 

98,708

 

 

 

98,708

 

 

 

U.S. GSE residential collateralized mortgage obligations

 

273,327

 

 

 

273,327

 

 

 

U.S. GSE commercial mortgage-backed securities

 

2,912

 

 

 

2,912

 

 

 

U.S. GSE commercial collateralized mortgage obligations

 

25,118

 

 

 

25,118

 

 

 

Other Asset backed securities

 

29,193

 

 

 

29,193

 

 

 

Corporate Bonds

 

17,903

 

 

 

17,903

 

 

 

Total available for sale

 

$

612,901

 

 

 

$

612,901

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

Derivatives

 

$

(338

)

 

 

$

(338

)

 

 

 

 

 

 

 

Fair Value Measurements at

 

 

 

 

 

December 31, 2013 Using:

 

 

 

 

 

 

 

Significant

 

 

 

 

 

 

 

Quoted Prices In

 

Other

 

Significant

 

 

 

 

 

Active Markets for

 

Observable

 

Unobservable

 

 

 

Carrying

 

Identical Assets

 

Inputs

 

Inputs

 

(In thousands)

 

Value

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Financial Assets:

 

 

 

 

 

 

 

 

 

Available for sale securities:

 

 

 

 

 

 

 

 

 

U.S. GSE securities

 

$

152,757

 

 

 

$

152,757

 

 

 

State and municipal obligations

 

61,656

 

 

 

61,656

 

 

 

U.S. GSE residential mortgage-backed securities

 

14,435

 

 

 

14,435

 

 

 

U.S. GSE residential collateralized mortgage obligations

 

279,191

 

 

 

279,191

 

 

 

U.S. GSE commercial mortgage-backed securities

 

2,834

 

 

 

2,834

 

 

 

U.S. GSE commercial collateralized mortgage obligations

 

26,910

 

 

 

26,910

 

 

 

Non Agency commercial mortgage-backed securities

 

3,578

 

 

 

3,578

 

 

 

Other Asset backed securities

 

33,818

 

 

 

33,818

 

 

 

Total available for sale

 

$

575,179

 

 

 

$

575,179

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

Derivatives

 

$

(164

)

 

 

$

(164

)

 

 

 

14



Table of Contents

 

 

Assets measured at fair value on a non-recurring basis are summarized below: