BDGE - Bridge Bancorp Inc. Reports Second Quarter 2020 Results

BRIDGEHAMPTON, N.Y., July 28, 2020 (GLOBE NEWSWIRE) -- Bridge Bancorp, Inc. (NASDAQ: BDGE) (the “Company”), the parent company of BNB Bank (“BNB”), today announced second quarter results for 2020.

The Company's second quarter 2020 financial results included:

• Net income for the 2020 second quarter of $10.7 million, or $0.54 per diluted share.
• Adjusted pre-tax pre-provision net revenue was $20.9 million, an increase of $3.9 million over both the 2020 first quarter and 2019 second quarter.
• Net interest income for the 2020 second quarter increased $4.9 million over the 2019 second quarter to $40.4 million, with a tax-equivalent net interest margin of 3.00%.
• Total assets of $6.2 billion at June 30, 2020, 30% higher than June 30, 2019.
• Loan growth of $1.2 billion, or 35%, compared to June 30, 2019, and $940.5 million, or 51% annualized, from December 31, 2019.
• Loan and line of credit originations of $1.1 billion for the second quarter of 2020, inclusive of $950 million Paycheck Protection Program (“PPP”) loans.
• Non-public, non-brokered deposit growth of $841.8 million, or 27%, compared to June 30, 2019, and $954.4 million, or 63% annualized, from December 31, 2019.
• Non-performing assets of $7.7 million at June 30, 2020, $2.2 million higher than June 30, 2019 and $3.4 million higher than December 31, 2019. Allowance for credit losses coverage to total loans of 0.94% at June 30, 2020.
• The provision of $4.5 million included approximately $3.5 million related to our estimate of the economic impact of the COVID-19 pandemic. Additionally, we recorded a $2.6 million charge related to our one loan held for sale.
• All capital ratios remain strong. Declared a dividend of $0.24 during the quarter.

Reflecting on the second quarter results, Kevin O’Connor, President and CEO said, “The second quarter of 2020 was an unprecedented time for our country, our industry, our customers and our employees.  I am proud that our employees rallied to support our customers on several fronts. First, our branches remained open, while adopting measures to protect customers and employees alike. Second, in one capacity or another, the entire bank was involved with processing over 5,000 applications, resulting in almost $1 billion in Paycheck Protection Program loans for our existing customers and the one thousand new customers who came to us because of BNB’s reputation for superior customer service. This program also generated approximately $30 million in fees which will flow into income over the life of the loans. Another milestone event that occurred is our planned merger-of-equals with Dime Community.  We consider this a unique opportunity to capture incremental share in a market where we have low penetration by doing what BNB does best – acquiring and retaining business banking customers. This merger of complementary business models and geographies allows BNB and Dime Community to optimize best-in-class practices, consolidate vendor relationships to reduce expenses and expand our product offerings.”

Net Earnings and Returns
Net income in the 2020 second quarter was $10.7 million, or $0.54 per diluted share, which was comparable with the 2019 second quarter, driven primarily by higher net interest income, partially offset by lower non-interest income, higher provision for credit losses, and higher non-interest expense. Net income for the six months ended June 30, 2020 was $20.0 million, or $1.00 per diluted share, compared to $23.6 million, or $1.18 per diluted share, in 2019.

Returns on average assets and equity in the 2020 second quarter were 0.72% and 8.56%, respectively.  Return on average tangible common equity was 10.95% for the 2020 second quarter.

“Our reported net income of $0.54 per diluted share was impacted by a higher provision for credit losses primarily related to the COVID-19 pandemic, and a write-down of a loan previously classified as held for sale, which reduced earnings per share by approximately $0.13 and $0.10, respectively. These charges reduced returns on average assets, equity and tangible common equity by approximately 31 basis points, 371 basis points, and 474 basis points, respectively,” noted Mr. O’Connor. 

Net Interest Income
Interest income was $45.9 million in the 2020 second quarter, an increase of $1.2 million compared to the 2020 first quarter, primarily due to loan portfolio growth from the PPP program, partially offset by lower average yields in loans, securities and deposits with banks. Interest expense was $5.4 million in the 2020 second quarter, a decrease of $2.5 million compared to the 2020 first quarter, primarily due to a decrease in average cost of deposits, partially offset by an increase in average deposits and average borrowings.

The tax-equivalent net interest margin in the 2020 second quarter showed a year-over-year decline of 30 basis points to 3.00% in 2020 from 3.30% in 2019. The adjusted net interest margin, excluding PPP loans, was down 24 basis points to 3.06% in 2020.  Reported 2020 second quarter loan yields showed a year-over-year decrease of 94 basis points from 4.76% in 2019 to 3.82% in 2020, while yields excluding PPP loans decreased 70 basis points to 4.06% in 2020 from 4.76% in 2019.

___________________________

(1) Net interest margin represents net interest income divided by average interest-earning assets.
(2) Net interest margin, tax-equivalent basis represents net interest income on a tax-equivalent basis divided by average interest-earning assets.
(3) Adjusted net interest margin represents adjusted net interest income on a tax-equivalent basis, excluding PPP loans, divided by adjusted average interest-earning assets, excluding PPP loans.

Commenting on the margin Mr. O’Connor said, “The PPP loans and excess liquidity have had a negative impact on our net interest margin. The all-in yield on PPP loans, including amortization of fees and costs, was about 2.55% in Q2.  When the pandemic began, we thought it prudent to bolster our liquidity position.  However, the decline in economic activity during the shut-down resulted in more of our customers keeping more money in the bank. The subsequent excess liquidity had the effect of depressing the margin by approximately 20 basis points,” stated Mr. O’Connor.

Provision for Credit Losses
The provision for credit loss expense was $4.5 million for the 2020 second quarter, $1.0 million higher than the 2019 second quarter. The higher provision was primarily attributable to higher expected credit losses related to our estimate of the economic impact of the COVID-19 pandemic and an increase in specific reserves. The Company recognized net charge-offs of $0.3 million in the 2020 second quarter, compared to net charge-offs of $4.1 million in the 2019 second quarter, which included a $3.7 million charge-off related to one loan currently held for sale.

Non-Interest Income
Non-interest income was $2.3 million for the 2020 second quarter, which was $3.2 million lower compared to the 2019 second quarter, primarily attributable to a decrease in fair value of one loan held for sale, lower service charges and other fees, and lower gain on sale of SBA loans, partially offset by an increase in loan swap fees.

Non-Interest Expense
Non-interest expense for the 2020 second quarter of $24.4 million was $0.4 million higher than the 2019 second quarter. The increase in the second quarter was primarily due to higher salaries and benefits expense. Our operating expenses to average assets dropped by 35 basis points compared to the first quarter.

Income Tax Expense
Income tax expense was $3.1 million in the 2020 second quarter, an increase of $0.3 million compared to the 2019 second quarter. The Company estimates it will record income tax at an effective tax rate of approximately 22.7% for the remainder of 2020.

Balance Sheet
Total assets were $6.2 billion at June 30, 2020, $1.2 billion higher than December 31, 2019, and $1.4 billion higher than June 30, 2019. Total loans held for investment at June 30, 2020 of $4.6 billion reflects growth of $1.2 billion, or 35%, over June 30, 2019, inclusive of PPP loans totaling $950 million. Net deferred loan fees were $17.3 million at June 30, 2020, inclusive of $26.0 million remaining unamortized net loan fees related to PPP loans. Deposits totaled $5.1 billion at June 30, 2020, an increase of $1.2 billion, or 32%, compared to June 30, 2019. Demand deposits increased $778.5 million year-over-year to $2.2 billion at June 30, 2020, representing 43% of total deposits.

The allowance for credit losses was $43.4 million at June 30, 2020, $12.2 million higher than June 30, 2019. The allowance as a percentage of loans was 0.94% at June 30, 2020, compared to 0.91% at June 30, 2019. The PPP loans had the effect of decreasing the Company’s allowance as a percentage of loans by approximately 22 basis points at June 30, 2020.

Stockholders’ equity was $502.6 million at June 30, 2020, $27.4 million higher than June 30, 2019. The growth reflects earnings, partially offset by shareholders’ dividends and stock repurchases. During the 2020 first quarter, the Company purchased 179,620 shares of its common stock under the repurchase plan at a cost of $4.6 million. Book value per share was $25.47 at June 30, 2020, $1.51 higher than June 30, 2019. Tangible book value per share was $19.93 at June 30, 2020, $1.52 higher than June 30, 2019.

Loan and Line of Credit Origination Information (unaudited)

Asset Quality
Asset quality measures remained solid, as non-performing assets were $7.7 million, or 0.13% of total assets, at June 30, 2020, compared to $5.5 million, or 0.12% of total assets, at June 30, 2019. Non-performing loans were $7.7 million, or 0.17% of total loans at June 30, 2020, compared to $5.5 million, or 0.16% of total loans at June 30, 2019. The quarter-over-quarter increase in non-performing assets is primarily related to one C&I relationship which was previously restructured and subsequently moved into non-accrual in the current quarter. Loans 30 to 89 days past due increased $1.7 million to $5.1 million at June 30, 2020, compared to $3.4 million at June 30, 2019. The increase in 30 to 89 days past due loans compared to prior year is primarily comprised of several residential loans.

Regarding asset quality and the current environment, Mr. O’Connor stated, “As the crisis unfolded our customers applied for forbearance on certain loans.  We granted payment moratoriums on approximately 500 loans totaling $630 million.  At this time, approximately $400 million of these loans have reached the end of their three-month deferral period.  Of those loans, 54% have returned to making their agreed-on payments, 36% have requested an extension, and 10% are pending. Extensions are being granted on a case-by-case basis.”

Conference Call
The Company will host a conference call on Wednesday, July 29, 2020 at 10:00 AM (ET) to discuss the 2020 second quarter results. 

Investors who would like to join the conference call are encouraged to pre-register using the following link: http://dpregister.com/10145180. Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time. Telephonic replay will be available through the Company’s website beginning approximately one hour after the conclusion of the call through Wednesday, August 12, 2020.

Call and replay information are as follows:

Call Date: Wednesday, July 29, 2020
Call Time: 10:00 AM (ET)
Domestic Call Dial In:  1-844-746-0738
International Call Dial In:  1-412-317-5271

Replay Domestic Dial In:  1-877-344-7529
Replay International Dial In:  1-412-317-0088
Access Code: 10145180

About Bridge Bancorp, Inc.
Bridge Bancorp, Inc. is a bank holding company engaged in commercial banking and financial services through its wholly-owned subsidiary, BNB Bank. Established in 1910, BNB, with assets of approximately $6.2 billion, operates 39 branch locations serving Long Island and the greater New York metropolitan area. Through its branch network and its electronic delivery channels, BNB provides deposit and loan products and financial services to local businesses, consumers and municipalities. Title insurance services are offered through BNB's wholly-owned subsidiary, Bridge Abstract. Bridge Financial Services, Inc., a wholly-owned subsidiary of BNB, offers financial planning and investment consultation.  For more information visit www.bnbbank.com.

BNB also has a rich tradition of involvement in the community, supporting programs and initiatives that promote local business, the environment, education, healthcare, social services and the arts.

Please see the attached tables for selected financial information.

Forward Looking Statements

This release may contain statements relating to the future results of the Company (including certain projections and business trends) that are considered “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (the “PSLRA”).  Such forward-looking statements, in addition to historical information, involve risk and uncertainties, and are based on the beliefs, assumptions and expectations of management of the Company.  Words such as “expects,” “believes,” “should,” “plans,” “anticipates,” “will,” “potential,” “could,” “intends,” “may,” “outlook,” “predicts,” “projects,” “would,” “estimates,” “assumes,” “likely,” and variation of such similar expressions are intended to identify such forward-looking statements.  Examples of forward-looking statements include, but are not limited to, possible or assumed estimates with respect to the financial condition, expected or anticipated revenue, tax rates, and results of operations and business of the Company, including earnings growth; revenue growth in retail banking, lending and other areas; origination volume in the  consumer, commercial and other lending businesses; current and future capital management programs; non-interest income levels, including fees from the title abstract subsidiary and banking services as well as product sales; tangible capital generation; market share; expense levels; and other business operations and strategies.  The Company claims the protection of the safe harbor for forward-looking statements contained in the PSLRA.

Factors that could cause future results to vary from current management expectations include, but are not limited to, changing economic  conditions; legislative and regulatory changes, including increases in FDIC insurance rates; monetary and fiscal policies of the federal government; changes in tax policies; rates and regulations of federal, state and local tax authorities; changes in interest rates; deposit flows; the cost of funds; demands for loan products; demand for financial services; competition; changes in the quality and composition of BNB’s loan and investment portfolios; changes in management’s business strategies; changes in accounting principles, policies or guidelines; changes in real estate values; an unexpected increase in operating costs; expanded regulatory requirements; expenses related to our proposed merger with Dime Community Bancshares, Inc., unexpected delays related to the merger, or our inability to obtain regulatory approvals or satisfy other closing conditions required to complete the merger; and other risk factors discussed elsewhere, and in our reports filed with the Securities and Exchange Commission. In addition, the COVID-19 pandemic is having an adverse impact on the Company, its customers and the communities it serves. The adverse effect of the COVID-19 pandemic on the Company, its customers and the communities where it operates may adversely affect the Company’s business, results of operations and financial condition for an indefinite period of time. 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.

BRIDGE BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Condition (unaudited)
(In thousands)

BRIDGE BANCORP, INC. AND SUBSIDIARIES 
Condensed Consolidated Statements of Income (unaudited)
(In thousands)

BRIDGE BANCORP, INC. AND SUBSIDIARIES
Consolidated Financial Highlights (unaudited)
(In thousands, except per share amounts and financial ratios)

__________________________

(1) See reconciliation of this non-GAAP financial measure provided elsewhere herein.
(2) Average tangible common equity represents a non-GAAP financial measure calculated as average total stockholders' equity less average goodwill and intangible assets.

_________________________

(1) Tangible common equity represents a non-GAAP financial measure calculated as total stockholders' equity less goodwill and intangible assets.
(2) Tangible assets represent a non-GAAP financial measure calculated as total assets less goodwill and intangible assets.

BRIDGE BANCORP, INC. AND SUBSIDIARIES
Supplemental Financial Information
Condensed Consolidated Average Balance Sheets and Average Rate Data (unaudited)
(Dollars in thousands)