-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QRe9ICAbpFDiJbiFgAR8O6DQTxmuWAYiO2zljzrJTnbt2HZXD7a3YqqoHUzymptV 4nVb3ojvE+lt2mbI3/mbSg== 0000846617-97-000003.txt : 19970329 0000846617-97-000003.hdr.sgml : 19970329 ACCESSION NUMBER: 0000846617-97-000003 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970328 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRIDGE BANCORP INC CENTRAL INDEX KEY: 0000846617 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 112934195 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-18546 FILM NUMBER: 97567393 BUSINESS ADDRESS: STREET 1: 2488 MONTAUK HIGHWAY CITY: BRIDGEHAMPTON STATE: NY ZIP: 11932 BUSINESS PHONE: 5165371000 MAIL ADDRESS: STREET 1: P O BOX 3005 CITY: BRIDGEHAMPTON STATE: NY ZIP: 11932 10KSB 1 BRIDGE BANCORP, INC. 10KSB U.S. Securities and Exchange Commission Washington, DC 20549 FORM 10-KSB (Mark One) [X] ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996 [ ] FOR TRANSACTION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------------- ----------------------- Commission file Number 0-18546 BRIDGE BANCORP, INC. - -------------------------------------------------------------------------------- (Name of small business issuer in its charter) NEW YORK 11-2934195 - ------------------------------ ------------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 2488 Montauk Highway, Bridgehampton, New York 11932 - --------------------------------------------- ------------------------------ (Address of principal executive office) (Zip Code) Issuer's telephone number (516) 537-1000 Securities registered under Section 12 (b) of the Exchange Act: Name of each exchange on Title of each class which registered - ----------------------------------- ---------------------------- - ----------------------------------- ---------------------------- Securities registered under Section 12 (g) of the Exchange Act: Common Stock, Par Value of $5.00 Per Share, - -------------------------------------------------------------------------------- (Title of Class) - -------------------------------------------------------------------------------- (Title of Class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act during the past 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 ---- ---- Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosures will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] The issuer's revenues for its most recent fiscal year were $17,923,000. The aggregate market value of the voting stock of the Registrant as of March 17, 1997 was $29,794,200. As of March 17, 1997, the Registrant had oustanding 469,200 shares of Common Stock, par value $5.00 per share. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Annual Report to Shareholders for the year ended December 31, 1996 are incorporated by reference into Part II and III. Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held April 15, 1997, dated March 13, 1997, are incorporated by reference into Part III. This Report Includes a Total of 71 Pages; Exhibits are listed on Page 27. -- -- PART I Item 1. Description of Business - ------------------------------- Bridge Bancorp, Inc. (the "Registrant") is a registered bank holding company, the sole subsidiary of which is The Bridgehampton National Bank (the "Bank"). The Registrant was organized as a New York business corporation and incorporated under the laws of the State of New York in 1988, at the direction of the Board of Directors of the Bank for the purpose of becoming a bank holding company pursuant to a plan of reorganization; under the plan the former stockholders of the Bank became the stockholders of the Company. Since commencing business in March 1989 after the reorganization, the Registrant has functioned primarily as the holder of all of the Bank's common stock. At present, the Registrant does not own or lease any property and has no paid employees. The Registrant uses the Bank's space and employees without separate payment. The Bank was established in 1910 as a national banking association and is under the supervision of the Office of the Comptroller of the Currency (the "OCC"). Its headquarters are located at 2488 Montauk Highway, Bridgehampton, New York 11932. The Bank engages in full service commercial and consumer banking and limited trust business, including accepting time and demand deposits, as well as making secured and unsecured commercial and consumer loans, including auto, personal, home equity home improvement, residential and commercial mortgages, commercial construction and S.B.A. guaranteed loans. In addition the Bank offers merchant credit and debit card processing, automated teller machines, safe deposit boxes and individual retirement accounts. The Bank employees 86 people on a full-time and part-time basis. The Bank provides a variety of employment benefits and considers its relationship with its employees to be good. All phases of the Bank's business are highly competitive. The Bank's market is primarily the trade areas of the North and South Forks of Eastern Suffolk County, with concentrations in the Bridgehampton, East Hampton, Mattituck, Montauk, Southampton, and Southold, New York areas. The Bank considers its major competition to be local commercial banks as well as other commercial banks with branches in the Bank's market area. Regulation - ---------- References in this section to applicable statutes and regulations are brief summaries only, and do not purport to be complete. The reader should consult such statutes and regulations themselves for a full understanding of the details of their operation. The Registrant is subject to the provisions of the Bank Holding Company Act of 1956, as amended (the "Act") and to supervision by the Federal Reserve Board. The Act requires the Registrant to secure the prior approval of the Federal Reserve Board before it can acquire all or substantially all of the assets of any bank, or acquire ownership or control of any voting shares of any bank other than the Bank, if after such acquisition, it would own or control more than 5 percent of the voting shares of such bank. Federal law also prohibits acquisitions of control of a bank holding company without prior notice to certain federal bank regulators. As a bank holding company, the Registrant is required to file an annual report with the Federal Reserve Board and any additional information as the Federal Reserve Board may require pursuant to the Act. The Federal Reserve Board may also make examinations of the Registrant and any or all of its subsidiaries. Subsidiary banks of a bank holding company are subject to certain restrictions imposed by the Act on any extension of credit to the bank holding company or any of its subsidiaries, on investments in the stock or other securities of the bank holding company or its subsidiaries, and on the taking of such stock or securities as collateral for loans to any borrower. The Federal Reserve Board permits bank holding companies to engage in non-banking activities so closely related to banking or managing or controlling banks so as to be a proper incident thereto including, for example, consumer finance companies, mortgage companies, leasing companies, data processing companies, financial advisor and securities brokerage. Federal Reserve Board approval is required before the Registrant or a non-bank subsidiary of the Registrant may begin to engage in any of the above activities and before any such business may be acquired. At the present time, the Registrant does not contemplate conduct of any non-banking activities permitted by the Act. The operations of the Bank are subject to federal and state statutes applicable to banks chartered under the banking laws of the United States, to members of the Federal Reserve System and to banks whose deposits are insured by the Federal Deposit Insurance Corporation (the "FDIC"). Bank operations are also subject to regulations of the Comptroller of the Currency, the Federal Reserve Board, the FDIC, and the New York State Banking Department. The primary supervisory authority of the Bank is the Comptroller of the Currency, who regularly examines the Bank. Federal and state banking laws and regulations govern, among other things the scope of a bank's business, the investments a bank may make, the reserves against deposits a bank must maintain, the loans a bank makes and collateral it takes, the maximum interest rates a bank must pay on deposits, the activities of a bank with respect to mergers and consolidations and the establishment of branches. The Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA") expanded the Federal Reserve Board's authority to prohibit activities of bank holding companies and their non-banking subsidiaries which represent unsafe and unsound banking practices or which constitute violations of laws or regulations. FIRREA increased the amount of civil money penalties that the Federal Reserve Board can assess for such practices or violations. The penalties can be as high as $1 million per day. FIRREA also expanded the scope of individuals and entities against which such penalties may be assessed. The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") required each federal banking agency to revise its risk-based capital standards to ensure that those standards take adequate account of interest rate risk, concentrations of credit risk and the risks of non-traditional activities, as well as reflect and the actual performances and expected risk of loss on multi-family mortgages. This law also required each federal banking agency to specify, by regulation the levels at which an insured institution would be considered "well capitalized," "adequately capitalized," "under-capitalized," "significantly under-capitalized" and "critically under-capitalized." Under the regulations adopted by the banking agencies, the Bank is considered "well capitalized." FDICIA requires bank regulators to take "prompt corrective action" to resolve problems associated with insured depository institutions. In the event an institution becomes "under-capitalized," it must submit a capital restoration plan. If an institution becomes "significantly under-capitalized" or "critically under-capitalized," additional and significant limitations are placed on the institution. The capital restoration plan of an under-capitalized institution will not be accepted by the regulators unless each company "having control of" the under-capitalized institution "guarantees" the subsidiary's compliance with the capital restoration plan until it becomes "adequately capitalized." Under FDICIA, the aggregate liability of all companies controlling a particular institution is limited to the lesser of 5% of the institution's assets at the time it became under-capitalized or the amount necessary to bring the institution into compliance with applicable capital standards. FDICIA grants powers to the bank regulators in situations where an institution becomes "significantly" or "critically under-capitalized" or fails to submit a capital restoration plan. For example, a bank holding company controlling such an institution can be required to obtain prior Federal Reserve Board approval of proposed dividends, or might be required to consent to a merger or to divest the troubled institution or other affiliates. Additionally, Federal Reserve Board policy discourages the payment of dividends by a bank holding company from borrowed funds as well as payments that would adversely affect capital adequacy. Failure to meet the capital guidelines may result in institution by the Federal Reserve Board of appropriate supervisory or enforcement actions. The prompt corrective action provisions of FDICIA reflect the same concerns which gave rise to a position adopted by the Federal Reserve Board known as the "source of strength doctrine," which is based on the Federal Reserve Board's Regulation Y. Regulation Y directs bank holding companies to "serve as a source of financial and managerial strength" to their subsidiary banks, and bars them from engaging in unsafe and unsound practices.
EXECUTIVES OFFICERS OF THE REGISTRANT AND THE BANK Position with the Held Executive Registrant and the Officer Position Name and Age Bank Since - -------------------------------------------------------------------------------------------------- Thomas J. Tobin President and Chief Executive 1984 52 Officer of the Registrant and Bank Christopher Becker Senior Vice President of the 1991 31 Registrant and the Bank, Treasurer of the Registrant, Chief Financial Officer of the Bank Jean Irvine Senior Vice President of the 1995 52 Registrant and the Bank, Human Resources Officer of the Bank Michael P. Kochanasz Senior Vice President of the 1985 44 Registrant and the Bank, Secretary of the Registrant and Sales and Marketing Officer of the Bank Anthony Leone Senior Vice President of the 1987 49 Registrant and the Bank Credit Administrator of the Bank Diane Reutershan Senior Vice President of the 1985 50 Registrant and the Bank, Cashier and Branch Administrator of the Bank Each officer holds his/her term of office for the current year for which he was elected or appointed by the Board unless he resigns, becomes disqualified, or is removed at the pleasure of the Board of Directors. Mr. Tobin has been President and Chief Executive Officer of the Bank since 3/86.
Prior to 1/97, Mr. Becker was Vice President and Finance and Operations Officer of the Bank. Prior to 1/96 Mr. Becker was Comptroller of the Bank. Prior to 1/93 Mr. Becker was Assistant Vice President of the Registrant and the Bank. Prior to 1/97, Ms. Irvine was Vice President of the Bank. Prior to 1/95 Ms. Irvine was Assistant Vice President of the Bank. Prior to 1/97, Mr. Kochanasz was Vice President of the Bank. Mr. Leone has been Senior Vice President and Credit Administrator of the Bank since 3/89. Prior to 1/97, Mrs. Reutershan was Vice President of the Bank. None of the individuals named in the above table were elected to his or her position pursuant to any arrangement or understanding with any other person. Management is not aware of any family relationships between such officers. The individuals named above do not hold a directorship with a company registered pursuant to Section 12 of the Securities Exchange Act (except for the Registrant), or registered as an investment company under The Investment Company Act of 1940. The individuals named above are not involved in any material legal proceedings. STATISTICAL INFORMATION ----------------------- The following tables set forth statistical information relating to the Registrant and the Bank. The tables should be read in conjunction with the consolidated financial statements and related notes and the discussion included in Management's Discussion and Analysis of Financial Condition and Results of Operations.
I.A. & I. B. DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY: INTEREST RATES AND INTEREST DIFFERENTIAL The following table sets forth certain information relating to the Registrant's average consolidated statements of financial condition and reflects the average yields on assets and average costs of liabilities for the periods indicated. 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. 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 average amounts outstanding. Loan fee income totaled $598,000 in 1996, $425,000 in 1995 and $354,000 in 1994. INTEREST RATES AND INTEREST DIFFERENTIAL Twelve months ended December 31, 1996 1995 1994 - ----------------------------------------------------------------------------------------------------------------------------------- (In thousands) Average Average Average Average Average Average balance Interest yield/cost balance Interest yield/cost balance Interest yield/cost - ------------------------------------------------------------------------------------------------------------------------------------ INTEREST EARNING ASSETS: Federal funds sold $4,422 $243 5.5% $4,524 $262 5.8% $3,684 $140 3.8% Deposits with banks 1,941 99 5.1% 445 29 6.5% 121 3 2.5% Taxable investment securities 19,703 1,286 6.5% 17,797 1,134 6.4% 14,753 913 6.2% Tax exempt investment securities 17,474 907 5.2% 19,961 965 4.8% 20,517 944 4.6% Other securities 736 48 6.5% 637 48 7.5% 596 44 7.4% Mortgage-backed securities 24,670 1,657 6.7% 24,996 1,647 6.6% 30,286 1,749 5.8% Loans(including fee income) 114,220 11,261 9.9% 105,983 10,299 9.7% 82,363 7,394 9.0% --------- ------- --------- --------- ------- --------- --------- ------- --------- Total interest earning assets 183,166 15,501 8.5% 174,343 14,384 8.3% 152,320 11,187 7.3% --------- ------- --------- --------- ------- --------- --------- ------- --------- NONINTEREST EARNING ASSETS Cash and due from banks 8,076 7,106 7,282 Allowance for possible loan losses (1,072) (995) (786) Premises and equipment (net) 4,904 3,647 2,529 Other noninterest earning assets 3,373 3,677 2,914 --------- --------- --------- Total noninterest earning assets 15,281 13,435 11,939 --------- --------- --------- Total assets 198,447 187,778 164,259 ========= ========= ========= Excludes unrealized appreciation/depreciation due to SFAS No. 115. Excludes unrealized appreciation/depreciation due to SFAS No. 115. Excludes unrealized appreciation/depreciation due to SFAS No. 115.
Twelve months ended December 31, 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ (In thousands) Average Average Average Average Average Average balance Interest yield/cost balance Interest yield/cost balance Interest yield/cost - ------------------------------------------------------------------------------------------------------------------------------------ INTEREST BEARING LIABILITIES: Savings, NOW and money market deposits $68,342 $1,598 2.3% $65,740 $1,581 2.4% $74,730 $1,795 2.4% Certificates of deposits of $100,000 or more 18,718 1,000 5.3% 22,733 1,321 5.8% 12,544 444 3.5% Other time deposits 44,848 2,410 5.4% 43,176 2,334 5.4% 26,918 987 3.7% Federal funds purchased 22 1 4.5% - - - - - - Other borrowings 1,143 63 5.5% 342 22 6.4% 818 44 5.4% --------- ------- --------- --------- ------- --------- --------- ------- --------- Total interest bearing liabilities 133,073 5,072 3.8% 131,991 5,258 4.0% 115,010 3,270 2.8% --------- ------- --------- --------- ------- --------- --------- ------- --------- NONINTEREST BEARING LIABILITIES: Demand deposits 47,829 39,496 35,768 Other noninterest bearing liabilities 2,435 1,659 900 --------- --------- --------- Total noninterest bearing liabilities 50,264 41,155 36,668 Stockholders' equity 15,110 14,632 12,581 --------- --------- --------- Total liabilities and stockholders' equity 198,447 187,778 164,259 ========= ========= ========= Net interest income/Interest rate spread 10,429 4.7% 9,126 4.3% 7,917 4.5% ======= ========= ======= ========= ======= ========= Net yield on average interest earning assets 5.7% 5.2% 5.2% ========= ========= ========= Excludes unrealized appreciation/depreciation due to SFAS No. 115.
I.C. VOLUME AND YIELD/RATE VARIANCES 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 Registrant'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. Year Ended December 31, Year Ended December 31, 1996 Over 1995 1995 Over 1994 (In thousands) Changes Due To Changes Due To - -------------------------------------------------------------------------------------------------------------------------------- Volume Rate Net Change Volume Rate Net Change --------------------------------------------------------------- INTEREST INCOME ON INTEREST EARNING ASSETS: Federal funds sold ($6) ($13) ($19) $37 $85 $122 Deposits with banks 77 (7) 70 16 10 26 Taxable investment securities 123 29 152 193 28 221 Tax exempt investment securities (126) 68 (58) (26) 47 21 Other securities 6 (6) - 3 1 4 Mortgage-backed securities (21) 31 10 (329) 227 (102) Loans (including loan fee income) 811 151 962 2,256 649 2,905 --------------------------------------------------------------- Total interest earning assets 865 252 1,117 2,150 1,047 3,197 --------------------------------------------------------------- INTEREST EXPENSE ON INTEREST BEARING LIABILITIES: Savings, NOW and money market deposits 62 (45) 17 (216) 2 (214) Certificates of deposits of $100,000 or more (220) (101) (321) 490 387 877 Other time deposits 90 (14) 76 755 592 1,347 Federal funds purchased 1 - 1 - - - Other borrowings 44 (3) 41 (30) 8 (22) --------------------------------------------------------------- Total interest bearing liabilities (23) (163) (186) 999 989 1,988 --------------------------------------------------------------- Net interest income 888 415 1,303 1,151 58 1,209 =============================================================== The net change in interest income relating to loan fee income was an increase of $173,000 in 1996 over 1995 and an increase of $71,000 in 1995 over 1994.
II.A. Investment Portfolio The following table presents the composition of the carrying value of the securities portfolio in each of the last three years at December 31, (In thousands) 1996 1995 1994 ---- ---- ---- Mortgage-Backed Securities $23,554 $22,517 $26,007 Obligations of State and Political Subdivisions 21,049 18,734 20,967 U.S. Treasury and Government Agencies 18,355 17,200 15,994 Other Securities 1,083 663 611 ------------------------- Total $64,041 $59,114 $63,579 =========================
II.B. INVESTMENT PORTFOLIO The book value, maturities and approximated weighted average yield (based on the estimated annual income divided by book value) at December 31, 1996 are as follows: After one but After five but Within 1 year within five years within ten years After ten years No stated maturity - ------------------------------------------------------------------------------------------------------------------------------------ (In thousands) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Total - ------------------------------------------------------------------------------------------------------------------------------------ Available for sale: U.S.Treasury securities - - $16,346 6.51% - - - - - - $16,346 U.S.Government Agency Sec. - - 2,009 7.01% - - - - - - 2,009 Mortgage-backed securities - - 984 6.44% $1,275 6.77% $21,295 7.08% - - 23,554 Oblig.of state and pol.subs. $3,646 5.44% 5,771 5.40% 6,453 4.79% - - - - 15,870 -------------------------------------------------------------------------------------------------------- Toal available for sale 3,646 5.44% 25,110 6.29% 7,728 5.12% 21,295 7.08% - - 57,779 Held to maturity: Oblig.of state and pol.subs. 5,190 3.91% - - - - - - - - 5,190 -------------------------------------------------------------------------------------------------------- 5,190 3.91% - - - - - - - - 5,190 Non marketable equity securities: Federal Reserve Bank Stock - - - - - - - - $36 6.00% 36 Federal Home Loan Bank Stock - - - - - - - - 1,047 7.00% 1,047 -------------------------------------------------------------------------------------------------------- Total non marketable equity securities - - - - - - - - 1,083 6.97% 1,083 -------------------------------------------------------------------------------------------------------- Total held to maturity 5,190 3.91% - - - - - - 1,083 6.97% 6,273 -------------------------------------------------------------------------------------------------------- Total debt and equity securities $8,836 4.54% $25,110 6.29% $7,728 5.12% $21,295 7.08% $1,083 6.97%$64,052 ======================================================================================================= Yields on a tax exempt obligations are not on a tax equivalent basis. The information required by Item II.C. is included in Footnote 3 of the Notes to Consolidated Financial Statements which appears on page 22 of the Registrant's 1996 Annual Report to Shareholders which is incorporated herein by reference.
III.A. Types of Loans The following table shows the Registrant's loan distribution in each of the last at December 31, December 31, ------------ 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- (in thousands) Real estate loans $93,639 $81,394 $67,921 $55,510 $50,031 Unsecured business and personal loans 13,211 11,798 10,094 6,263 4,252 Secured business and personal loans 317 654 973 741 823 Installment/consumer loans 11,714 17,634 15,773 9,065 3,058 ---------------------------------------------- Total loans $118,881 $111,480 $94,761 $71,579 $58,164 ==============================================
III.B. LOAN PORTFOLIO - ---------------------- The following are the approximate maturities and sensitivity to changes in interest rates of certain loans, exclusive of non-commercial real estate mortgages and consumer loans to individuals as of December 31, 1996: After One Within One But Within After Year Five Years Five Years Total ------------------------------------------------ (In Thousands) Commercial loans $2,206 $2,522 $49,085 $53,813 Construction loans 8,239 623 - 8,862 ------------------------------------------------ Total loans 10,445 3,145 49,085 62,675 ================================================ Rate provisions: Amounts with fixed interest rates 71 1,265 3,275 4,611 Amounts with variable interest rates 10,374 1,880 45,810 58,064 ------------------------------------------------ Total $10,445 $3,145 $49,085 $62,675 ================================================
III.C. NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS The following table shows the Registrant's non-performing assets: December 31, 1996 1995 1994 1993 1992 - ------------------------------------------------------------------------------------------------- (In thousands) Loans 90 days or more past due and still accruing $1 - - $150 - Nonaccrual loans 269 $507 $422 259 $385 Restructured loans - - - - - Other real estate owned, net - 235 782 585 678 ------------------------------------------- Total $270 $742 $1,204 $994 $1,063 ------------------------------------------- III.C.2. The additional interest income that would have been recorded had these nonaccrual loans performed in accordance with their original terms was approximately $8,000 in 1996. The interest income that was recorded on these nonaccrual loans was $74,000 in 1996. The information required by Item III.C.3. is included in Footnote 1 of the Notes to Consolidated Financial Statements which appears on pages 19 and 20 of the Registrant's 1996 Annual Report to Shareholders which is incorporated herein by reference. Potential Problem Loans In addition to the total non-performing loans set forth above, loans of approximately $3,576,000 at December 31, 1996, were classified as potential problem loans. These are loans for which management has information which indicated that the borrower may not be able to comply with the present payment terms. These loans are subject to constant management attention and their classification is reviewed on at least a quarterly basis. Loan Concentrations At December 31, 1996, there were no loan concentrations.
IV.A. SUMMARY OF LOAN LOSS EXPERIENCE Management uses criteria set forth by the OCC in its classification and review of the loan portfolio which includes a general allocation reserve with a low and high range for each loan type. The ranges are reviewed on a quarterly basis to determine if any adjustments are necessary. The information reviewed includes past due trends, charge off trends, economic conditions and concentrations of credit. The $330,000 provision for possible loan losses for 1996 was used to increase the general allocation as a result of average loans increasing 7.8%. Based on the loan classification committee's review of the classified loans and the general allocation reserve as it relates to the entire loan portfolio, management believes the allowance for possible loan losses is adequate. However, future additions to the allowance may be necessary based on changes in conditions. December 31, 1996 1995 1994 1993 1992 - ---------------------------------- ---- ---- ---- ---- ---- (In thousands) Allowance for possible loan losses balance at beginning of period 1038 944 747 846 841 Charge-offs: Real estate loans - 2 26 - 89 Unsecured business & personal loans 11 64 27 118 - Secured business & personal loans - - - - - Installment/consumer loans 264 164 123 77 86 ---------------------------------------- Total 275 230 176 195 175 Recoveries: Real estate loans - 1 - - - Unsecured business & personal loans 79 23 12 15 - Secured business & personal loans - - - - - Installment/consumer loans 66 32 28 37 44 ---------------------------------------- Total 145 56 40 52 44 ---------------------------------------- Net charge-offs 130 174 136 143 131 Provision for possible loan losses charged to operations 330 268 333 44 136 ---------------------------------------- Balance at end of period 1238 1038 944 747 846 ======================================== Ratio of net charge-offs during period to average loans outstanding 0.11% 0.16% 0.17% 0.22% 0.23%
IV.B. The allocation of the allowance for possible loan losses is as follows: Year Ended December 31, 1996 1995 1994 1993 1992 - ------------------------------------------------------------------------------------------------------------------------------- (In thousands, except for percentages) Percentage Percentage Percentage Percentage Percentage of Loans of Loans of Loans of Loans of Loans to Total to Total to Total to Total to Total Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans ------------------------------------------------------------------------------------------- Real estate loans 685 78.8% 576 73.0% 517 71.7% 462 77.5% 597 85.9% Unsecured business and personal loans 301 11.1% 179 10.6% 165 10.7% 172 8.8% 178 7.4% Secured business and personal loans 1 0.3% 1 0.6% 5 1.0% 63 1.0% 6 1.4% Installment/consumer loans 251 9.8% 282 15.8% 257 16.6% 50 12.7% 65 5.3% ------------------------------------------------------------------------------------------- Total 1238 100.0% 1038 100.0% 944 100.0% 747 100.0% 846 100.0% ===========================================================================================
V.A. Deposits - ------------- The following table sets forth the classifications of the average deposits and the average rates paid on the Registrant's deposits for the periods indicated: Year Ended December 31, 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ (In thousands, except for percentages) Average Average Average Average Average Average Deposits Rates Paid Deposits Rates Paid Deposits Rates Paid -------------------------------------------------------------------------------- Demand deposits $47,829 - $39,496 - $35,768 - Savings, NOW and money market deposits $68,342 2.3% $65,740 2.4% $74,730 2.4% Certificates of deposit of $100,000 or more $18,718 5.3% $22,733 5.8% $12,544 3.5% Other time deposits $44,848 5.4% $43,176 5.4% $26,918 3.7% -------------------------------------------------------------------------------- Total $179,737 2.8% $171,145 3.1% $149,960 2.2% ================================================================================ At December 31, 1996, the remaining maturities of the Registrant's time certificates of $100,000 or more were as follows: (In thousands) ----------------------------------------------------- 3 months or less $15,016 Over 3 thru 6 months $2,064 Over 6 thru 12 months $996 Over 12 months $175 ---------- Total $18,251 ==========
VI. RETURN ON EQUITY AND ASSETS - --------------------------------- The information required by Item VI. is included in the "Five Year Summary of Operations" which appears on page 8 of the Registrant's 1996 Annual Report to Shareholders which is incorporated herein by reference. VII. SHORT-TERM BORROWINGS - ---------------------------- The Registrant had no short-term borrowings at the end of the reported period. The average amounts outstanding during the reported period were less than 30 percent of stockholders' equity at the end of the period. Item 2. Description of Property - ------------------------------- Facilities of the Registrant are located at 2488 Montauk Highway, Bridgehampton, New York in the Bank's Main Office facility. As such, the Registrant itself has no physical properties. The Bank's Main Office is owned in fee. During 1996 the Bank continued construction of a new main office and administrative facility on the approximately 3.3 acres located at Snake Hollow Road, Bridgehampton, New York. A Spring 1997 completion date is anticipated. The Bank also owns the building which houses its Southold Branch located at 54790 Main Road, Southold, New York. The Bank leases four additional properties as branch locations at 425 County Road 39, Southampton, New York; 26 Park Place, East Hampton, New York; Main Road Mattituck, New York; and 1 The Plaza, Montauk, New York. The Bank leases additional space at 425 County Road 39, Southampton, New York for its financial operations department and 184 Old Country Road, Riverhead, New York for a loan and residential mortgage center. It is the opinion of management of the Company that the current facilities, including the facility under construction, are suitable and adequate at the present time. Item 3. Legal Proceedings - ------------------------- There are no material legal proceedings, individually or in the aggregate, to which the Registrant or the Bank is a party or of which any of their property is subject. Item 4. Submission of Matters to a Vote of Security Holders - ----------------------------------------------------------- None PART II Item 5. Market for Common Equity and Related Stockholder Matters - ---------------------------------------------------------------- "Common Stock Information" set forth on page 28 of the Annual Report to Shareholders for the year ended December 31, 1996 is incorporated herein by reference. Item 6. Management's Discussion and Analysis or Plan of Operation - ----------------------------------------------------------------- "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth on pages 9 through 14 of the Annual Report to Shareholders for the year ended December 31, 1996 is incorporated herein by reference. Item 7. Financial Statements - ---------------------------- The Consolidated Financial Statements and notes, together with the Report of Independent Public Accountants included on pages 15 through 28 of the Annual Report to Shareholders for the year ended December 31, 1996 is incorporated herein by reference. See Exhibit 13.2 for the independent auditors' report on the consolidated statements of income, stockholders' equity and cash flows for the year ended December 31, 1994. Item 8. Changes in and Disagreements with Accountants on Accounting and - ----------------------------------------------------------------------- Financial Disclosure -------------------- "Independent Accountants" set forth on page 10 of the Registrant's Proxy Statement dated March 13, 1997 is incorporated herein by reference. PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; - --------------------------------------------------------------------- Compliance With Section 16 (a) of the Exchange Act - -------------------------------------------------- "Nominees for Directors and Directors Continuing in Office" set forth on pages 3 through 4 of the Registrant's Proxy Statement dated March 13, 1997 is incorporated herein by reference. Information regarding executive officers of the Registrant is included in Part I, Item 1, Description of Business. "Compliance with Section 16 (a) of the Exchange Act" set forth on page 8 of the Registrant's Proxy Statement dated March 13, 1997 is incorporated herein by reference. Item 10. Executive Compensation - ------------------------------- "Compensation of Directors" and "Compensation of Executive Officers" set forth on page 6 of the Registrant's Proxy Statement dated March 13, 1997 is incorporated herein by reference. Item 11. Security Ownership of Certain Beneficial Owners and Management - ----------------------------------------------------------------------- "Beneficial Ownership" and "Nominees for Director and Directors Continuing in Office" set forth on pages 2 through 4 of the Registrant's Proxy Statement dated March 13, 1997 incorporated herein by reference. Item 12. Certain Relationships and Related Transactions - ------------------------------------------------------- "Certain Relationships and Related Transactions" set forth on page 8 of the Registrant's Proxy Statement dated March 13, 1997 is incorporated herein by reference. "Related party loans" set forth as part of Footnote 4 of the Notes to Consolidated Financial Statements which appears on page 23 of the Annual Report to Share-holders for the year ended December 31, 1996 is incorporated herein by reference. Item 13. Exhibits and Reports on Form 8-K - ----------------------------------------- Exhibits The Following Exhibits are incorporated herein by reference: 3.1 Certificate of Incorporation of the Registrant 3.2 By-laws of the Registrant 10.2 Severance Agreement - Anthony Leone 10.3 Annual Incentive Plan 10.4 Service Agreement - Fiserv Boston, Inc. 10.5 Equity Incentive Plan The following Exhibits are filed with this Form 10-KSB: 10.1 Employment Contract - Thomas J. Tobin Dated January 27, 1997 13.1 Registrant's Annual Report to Shareholders for the year ended December 31, 1996 (parts not incorporated by reference are furnished for information purposes only and are not to be deemed filed herewith.) 13.2 Independent Auditors' Report on the consolidated statements of income, stockholders' equity and cash flows for the year ended December 31, 1994. Reports on Form 8-K There were no reports on Form 8K filed during the fourth quarter of 1996. SIGNATURES In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BRIDGE BANCORP, INC. -------------------- Registrant Date: March 28, 1997 By /s/ Thomas J. Tobin ---------------------- -------------------------------- Thomas J. Tobin, President/CEO Date: March 28, 1997 By /s/ Christopher Becker ---------------------- -------------------------------- Christopher Becker, Senior Vice President/Treasurer In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. /s/ Raymond Wesnofske Director March 28, 1996 - -------------------------------- ------------------------ Raymond Wesnofske /s/ Thomas J. Tobin Director March 28, 1996 - -------------------------------- ------------------------ Thomas J. Tobin /s/ Thomas E. Halsey Director March 28, 1996 - -------------------------------- ------------------------ Thomas E. Halsey /s/ Marcia Z. Hefter Director March 28, 1996 - -------------------------------- ------------------------ Marcia Z. Hefter /s/ R. Timothy Maran Director March 28, 1996 - -------------------------------- ------------------------ R. Timothy Maran /s/ Albert E. McCoy Director March 28, 1996 - -------------------------------- ------------------------ Albert E. McCoy /s/ Walter A. Preische, Jr. Director March 28, 1996 - -------------------------------- ------------------------ Walter A. Preische, Jr. /s/ L.H. Strickland Director March 28, 1996 - -------------------------------- ------------------------ L.H. Strickland
EXHIBIT INDEX ------------- Exhibit Number Description of Exhibit Page - -------------- 3.1 Certificate of Incorporation of the * Registrant (incorporated by reference to Registrant's amended Form 10, File No. 0-18546, filed October 15, 1990) 3.2 By-laws of the Registrant (incorporated * by reference to Registrant's amended Form 10, File No. 0-18546, filed October 15, 1990) 10.1 Employment Contract - Thomas J. Tobin 28 Dated January 27, 1997 10.2 Severance Agreement - Anthony Leone * (incorporated by reference to Registrant's amended Form 10, File No. 0-18546, filed October 15, 1990) 10.3 Annual Incentive Plan (incorporated by * reference to Registrant's Form 10-KSB, File No. 0-18546, filed March 31, 1994) 10.4 Service Agreement - Fiserv Boston, Inc. * (incorporated by reference to Registrant's Form 10-KSB, File No 0-18546, filed March 31, 1994) 10.5 Equity Incentive Plan (incorporated by * reference to Registrant's Form 14A, File No. 0-18546, filed April 1, 1996) 13.1 Registrant's Annual Report to Shareholders 39 for the year ended December 31, 1996 13.2 Independent Auditors' Report on the 71 Consolidated Financial Statements as of December 31, 1994 and for the year ended December 31, 1994. * Denotes incorporated by reference
EX-10.1 2 EMPLOYMENT CONTRACT - THOMAS J. TOBIN EMPLOYMENT AGREEMENT -------------------- THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of January 27, ------------ 1997 and made effective as of January 1, 1997, by and among BRIDGEHAMPTON - ---- NATIONAL BANK (the "Bank"), BRIDGE BANCORP, INC. (the "Company") (the Bank and the Company, collectively, the "Employers") and Thomas J. Tobin (the "Employee"). WHEREAS, the respective Boards of Directors of the Employers (the "Boards") have approved and authorized the entry into this Agreement with the Employee; WHEREAS, the Employee is currently serving as the President and Chief Executive Officer of the Employers under an Employment Agreement dated as of April 1, 1992 (the "Prior Agreement"); WHEREAS, the parties desire to enter into this Agreement to set forth the terms and conditions for the employment relationships of the Employee with the Employers and to replace and supersede the Prior Agreement. NOW, THEREFORE, it is AGREED as follows: 1. EMPLOYMENT. The Employee is employed as the President and Chief ----------- Executive Officer of the Employers from the date hereof through the term of this Agreement. As an executive of the Employers, the Employee shall render executive, policy, and other management services to the Employers of the type customarily performed by persons serving in similar executive officer capacities. As Chief Executive Officer, the Employee shall be responsible for implementing the policies of the Boards and shall report to the Boards, except as otherwise determined by the Boards. All other officers of the Employers shall report directly to the Employee, except as the Employee or the Boards shall otherwise determine, and except that the internal auditor shall report directly to the Boards. The Employee shall also perform such duties as the Boards may from time to time reasonably direct and the Boards may modify the titles and duties of the Employer, in their discretion, provided that such titles and duties shall be reasonably commensurate with the education and experience of the Employee, taking into consideration any changes in the size of the Employers or the nature of their business or assets after the date hereof. During the term of this Agreement, the Employee shall not be required to relocate anywhere outside the area comprised of the Towns of Southampton, East Hampton, Shelter Island, Southold and Riverhead, New York in order to perform the services hereunder. 2. SALARY AND BONUSES. ------------------- (a) The Employers agree to pay the Employee during the term of this Agreement a base salary at an annual rate equal to $182,500.00, with the salary ----------- to be reviewed no less frequently than annually during the term of this Agreement and adjusted as determined by the Boards. In determining salary adjustments, the Boards may consider changes in the cost of living as well as the performance of the Employers and the Employee's individual performance and achievements. (b) In additition to his base salary under this Section 2, the Employee shall be eligible to receive such discretionary bonuses as may be authorized, declared and paid by the Boards. No other compensation provided for in this Agreement shall be deemed a substitute for such bonuses when and as declared by the Boards. (c) The salary under this Section 2 shall be payable by the Bank to the Employee in accordance with the Bank's usual payroll practices for executive employees. The Company agrees to reimburse the Bank for a portion of the compensation paid to the Employee hereunder, which portion shall represent an appropriate allocation for the services rendered to the Company hereunder. (d) The Employee shall be entitled to receive fees in addition to his compensation hereunder for serving as a director of the Company, the Bank, or any subsidiary, or for serving as a member of any committee of the Board of Directors of the Company, the Bank, or any subsidiary. 3. PARTICIPATION IN RETIREMENT AND EMPLOYEE BENEFIT PLANS; FRINGE BENEFITS; ------------------------------------------------------------------------ INSURANCE BENEFITS. - ------------------- (a) The Employee shall be entitled to participate in any plan of the Employers or either of them relating to stock options, stock purchases, pension, thrift, profit sharing, employee stock ownership, group life insurance, medical coverage, disability insurance, education, or other retirement or employee benefits that the Bank or the Company has adopted or may adopt, on a basis no less favorable to the Employee than that applicable to other executive employees. The Employee shall also be entitled to participate in any other fringe benefits that are now or may be or become applicable to the Company's or the Bank's executive employees, including the payment of reasonable expenses for attending annual and periodic meetings of trade associations, the provision of an automobile primarily for business use and any other benefits that are commensurate with the duties and responsibilities to be performed by the Employee under this Agreement. Participation in these plans and fringe benefits (other than pursuant to a salary reduction agreement executed by the Employee) shall not reduce the salary and any bonus payable to the Employee under Section 2 hereof. (b) In addition to the benefits enumerated above, during the term of this Agreement the Employee shall be entitled to the benefits of a special disability income policy (Guardian Policy No. G718042) and a supplemental retirement income plan with a preretirement death benefit (Guardian Policy No. 3505768) purchased by and at the expense of the Company or the Bank (collectively the "Policies"). The Employee shall be the owner of the Policies and shall be entitled to designate the beneficiary or beneficiaries of the Policies. All costs and expenses of the Employers in connection with the Policies in excess of those that are excludable from the Employee's income under applicable law shall be reported as compensation income to the Employee and the Employee shall be responsible for the payment of any and all taxes related to such amounts. 4. TERM. The initial term of employment under this Agreement shall be for a ----- period commencing on the date hereof and ending on December 31, 2001 The Employers may renew this Agreement by written notice to the Employee for one additional year on January 1, 1998 and each subsequent January 1 during the term of this Agreement, unless the Employee gives contrary written notice to the other parties hereto before such renewal date. If at any time during the term of this Agreement, there is a "Change in Control" (as defined in Section 8(b) hereof), the provisions of Sections 7 and 8 hereof shall continue to apply for two years from the date of such Change in Control regardless of whether the term of this Agreement is subsequently renewed under this Section 4. The initial term and all such renewed terms are collectively referred to herein as the "term of this Agreement." 5. STANDARDS. The Employee shall perform the Employee's duties and ---------- responsibilities under this Agreement in accordance with such reasonable standards as may be established from time to time by the Boards. The reasonableness of such standards shall be measured against standards for executive performance generally prevailing in the commercial banking industry. 6. VOLUNTARY ABSENCES; VACATIONS. The Employee shall be entitled, without ------------------------------ without loss of pay, to be absent voluntarily for reasonable periods of time from the performance of the duties and responsibilities under this Agreement. All such voluntary absences shall count as paid vacation time, unless the Boards otherwise approve. The Employee shall be entitled to an annual paid vacation of four weeks per year or such longer period as the Boards may approve. The timing of paid vacations shall be scheduled in a reasonable manner by the Employee. The Employee shall not be entitled (i) to receive any additional compensation from the Bank on account of failure to take a paid vacation or (ii) to accumulate unused paid vacation time from one calendar year to the next. 7. TERMINATION OF EMPLOYMENT. -------------------------- (a) (i) The Boards may terminate the Employee's employment at any time, but any termination other than termination for "Cause" shall not prejudice the Employee's right to compensation or other benefits under this Agreement. The Employee shall have no right to receive compensation or other benefits for any period after termination for Cause. "Cause" shall mean the Employee's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform material stated duties, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, the violation of which has a material adverse effect on the Employers or either of them, or material breach of any provision of this Agreement. In determining incompetence, the acts or omissions shall be measured against standards generally prevailing in the commercial banking industry; provided, it shall be the burden of the Employers to prove the alleged acts and omissions and the prevailing nature of the standards the Employers shall have alleged are violated by such acts and/or omissions. (ii) For purposes of this Agreement, a termination of employment by the Employee for "Good Reason" shall be treated as an involuntary termination of the Employee's employment by the Employers without Cause. "Good Reason" shall mean: (A) a material breach by the Employers or either of them of this Agreement or (B) a reduction, without the prior written consent of the Employee, in his base salary under Section 2 hereof or benefits provided to him under Section 3 hereof (or both). (iii) The parties acknowledge and agree that damages that will result to Employee for termination without Cause shall be extremely difficult or impossible to establish or prove, and agree that, subject to Section 8(c) below, unless the termination is for Cause, the Bank shall be obligated, following such termination, to continue to pay to the Employee as liquidated damages the Employee's then current base salary under Section 2 of this Agreement for a period equal to the remaining term of this Agreement, payable not less frequently than monthly over such remaining term. The Employee agrees that, except for such other payments and benefits to which the Employee may be entitled as expressly provided by the terms of this Agreement or an employee benefit plan or arrangement covering him, such liquidated damages shall be in lieu of all other claims that the Employee may make by reason of such termination. The liquidated damages amount shall not be reduced by any compensation that the Employee may receive for other employment with another employer after termination of his employment with the Employers. (iv) In addition to the liquidated damages that are payable to the Employee, the following shall apply in the event of any termination without Cause or in the event of any termination subject to Section 8(a)(i) hereof: (1) the Employee shall continue to participate in, and accrue benefits under, all retirement, pension, profit-sharing, employee stock ownership, and other deferred compensation plans of the Company or the Bank for the remaining term of this Agreement (or following a "Change in Control" as defined below, if longer, three years) as if the termination of employment of the Employee had not occurred (with the Employee being deemed to receive annually for the purposes of such plans the Employee's salary under Section 2 hereof as of the date of termination or, if applicable, Change in Control, whichever is greater), except to the extent that such continued participation and accrual is expressly prohibited by law, or to the extent such plan constitutes a "qualified plan" under Section 401 of the Internal Revenue Code of 1986, as amended (the "Code"), in which case the Employers shall provide substantially equivalent benefits to the Employee under a nonqualified plan; (2) the Employee shall be entitled to continue to receive all other employee benefits referred to in Section 3 hereof for the remaining term of this Agreement (or following a "Change in Control," if longer, three years) as if the termination of employment had not occurred; and (3) all insurance or other provisions for indemnification, defense or hold-harmless of officers or directors of the Company or the Bank that are in effect on the date the notice of termination is sent to the Employee shall continue for the benefit of the Employee with respect to all of his acts and omissions while an officer or director as fully and completely as if such termination had not occurred, and until the final expiration or running of all periods of limitation against action that may be applicable to such acts or omissions; provided, however, that the Employers shall not be required to provide the benefits described in clause (1) or (2) of this Section 7(a)(iv) to the extent that the Employee has the right to receive substantially identical benefits by reason of his employment by another employer following the termination of his employment hereunder. (b) The Employee shall have no right to terminate his employment under this Agreement before the end of the term of this Agreement, unless (i) such termination is approved in writing by the Boards or (ii) such termination is for Good Reason (as defined above). It shall be the Employee's burden to prove the alleged acts that constitute a material breach by the Employers of their obligations under this Agreement. (c) In the event the employment of the Employee is terminated by the Employers without Cause under Section 7(a) hereof or the Employee's employment is terminated in accordance with Section 8(a)(ii) hereof and the Bank fails to make timely payment of any amount then payable to or for the benefit of the Employee under this Agreement and such failure continues for more than 30 days, the Employee shall be entitled to reimbursement for all reasonable costs, including attorneys' fees, incurred by the Employee in taking action to collect such amounts or otherwise to enforce this Agreement, plus interest on such amounts at the prime rate (defined as the base rate on corporate loans at large U.S. money center commercial banks as published by The Wall Street Journal), compounded monthly, for the period from the date the payment is due until the payment is made. Such reimbursement and interest shall be in addition to all rights that the Employee is otherwise entitled to under this Agreement. (d) In the event of the Employee's death during the term of this Agreement, his estate shall be entitled to receive his accrued salary and bonus through the date of his death. This Agreement shall thereupon terminate, except that any vested rights of the Employee shall then be exercised by his estate. (e) In the event that during the term of this Agreement the Employee is unable to perform his duties hereunder because he is disabled within the meaning of any policy of disability insurance maintained or provided by the Employers under which he is entitled to benefits or, if there is no such policy, within the meaning of Section 22(e) of the Code (a "Disability"), the Employee shall be entitled to continue to receive (i) his base salary then in effect under Section 2 hereof, reduced by any benefits payable to the Employee under any such policy of disability insurance, and (ii) his benefits then in effect under Section 3 hereof, for a period of one year following the occurrence of the Disability (or until he ceases to be disabled, if earlier), and this Agreement shall terminate following such one-year period (unless the Employee shall have returned to employment hereunder before that date). (f) Notwithstanding any other provision in this Agreement, (i) the Employers may terminate or suspend this Agreement and the employment of the Employee hereunder, as if such termination were for Cause under Section 7(a)(i) hereof and for Willful Misconduct under Section 8(a)(ii) hereof, to the extent required by the laws of the State of New York related to banking, by applicable federal law relating to deposit insurance or bank holding companies or by regulations or orders issued by the Banking Commissioner of the State of New York, the Federal Deposit Insurance Corporation or the Board of Governors of the Federal Reserve System and (ii) no payment shall be required to be made to the Employee under this Agreement to the extent such payment is prohibited by applicable law, regulation or order issued by a banking agency or a court of competent jurisdiction; provided, that it shall be the Employers' burden to prove that any such action was so required. 8. CHANGE IN CONTROL. ------------------ (a) (i) If during the term of this Agreement there is a Change in Control (as defined below) and the Employee's employment by the Employers is terminated in accordance with Section 8(a)(ii), the Employee shall be entitled to receive as a severance payment for services previously rendered to the Employers a lump sum cash payment equal to 2.99 times the sum of the Employee's base salary in effect under Section 2 hereof as of date of the Change in Control or the date of termination, whichever is greater, plus the amount of bonuses paid to the Employee during the 12 months preceding the Change in Control (subject to Sections 7(f) above and 8(c) below). Payment under this Section 8(a)(i) shall be in lieu of any amount owed to the Employee as liquidated damages for termination without Cause under Section 7 hereof. However, payment under this Section 8(a) shall not be reduced by any compensation that the Employee may receive from other employment with another employer after termination of the Employee's employment. In addition, Sections 7(a)(iv) and 7(c) shall apply in the case of any termination of employment within the scope of this Section 8(a). Payment to the Employee of severance under this Section 8(a) shall be made on or before the Employee's last day of employment with the Employers. (ii) For purposes of this Agreement, the Employee's employment by the Employers shall be considered terminated "in accordance with Section 8(a)(ii)" if a Change in Control shall occur, and in connection with such Change in Control or within two years thereafter either (x) the Employee's employment with the Employers shall be terminated as a result of an Actual Termination (as defined below), or (y) the Employee's employment with the Employers shall terminate after an event that would constitute Good Reason (as defined above); and the following terms shall have the meanings set out below: (A) "Actual Termination" means involuntary termination of the Employee's employment with the Employers for any reason other than Willful Misconduct, Disability, death or Retirement. (B) "Willful Misconduct" means (I) the continued willful failure by the Employee to substantially perform his duties with the Employers or either of them (other than any such failure resulting from the Employee's incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the Employee by the Boards (or either of the Boards) that specifically identifies the manner in which the Employee has not substantially performed his duties and after a reasonable time period has run to allow the Employee to perform, (II) willful conduct that is a material violation of the Bank's written ethics policy or applicable law and that is materially injurious to the Employers or either of them, (III) other willful and wrongful conduct by the Employee that causes substantial and material injury to the business and operations of the Employers or either of them, the continuation of which, in the reasonable judgment of the Boards (or either of the Boards), will continue to substantially and materially injure the business and operations of the Employers (or either of them) in the future, or (IV) conviction of the Employee of a felony involving moral turpitude; provided, that an act or failure to act shall not be considered "willful" unless done, or omitted to be done, in bad faith and without reasonable belief that the Employee's action or omission was in the best interests of the Employers; (C) "Retirement" means termination of the Employee based on the Employee's having reached the earlier of age 65 or the normal retirement age as defined under Bank's employee's pension plan, if permissible under applicable law. (D) "Date of Termination" means the date specified in the notice of termination. (b) For purposes of this Agreement, a "Change in Control" shall be deemed to have taken place if: (i) any person becomes the beneficial owner of more than 50 percent of the total number of voting shares of the Company; (ii) any person (other than the persons named as proxies solicited on behalf of the Board of Directors of the Company) holds revocable or irrevocable proxies as to the election or removal of members of the board of directors of the Company, for more than 50 percent of the total number of voting shares of the Company; (iii) any person (other than a person controlled directly or indirectly by the Company) becomes the beneficial owner of more than 50 percent of the total number of voting shares of the Bank; (iv) any person has received all required approvals of applicable regulatory authorities to acquire control of the Company or the Bank; or (v) as the result of, or in connection with, any cash tender or exchange offer, merger, or other business combination, sale of assets or contested election, or any combination of the foregoing transactions, the persons who were directors of the Company immediately before such transaction shall cease to constitute at least one-half of the members of the Board of Directors of the Company or any successor corporation. For purposes of this Section 8(b), a "person" includes an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, unincorporated organization, joint-stock company or similar organization or group acting in concert. A person for these purposes shall be deemed to be a beneficial owner as that term is used in Rule 13d-3 under the Securities Exchange Act of 1934. (c) Notwithstanding any other provisions of this Agreement or of any other agreement, contract, or understanding heretofore or hereafter entered into by the Employee with the Company, the Bank or any other entity controlled by the Company, except an agreement, contract, or understanding hereafter entered into that expressly modifies or excludes application of this Section 8(c) (the "Other Agreements"), and notwithstanding any formal or informal plan or other arrangement heretofore or hereafter adopted by the Company or the Bank for the direct or indirect provision of compensation to the Employee (including groups or classes of participants or beneficiaries of which the Employee is a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for the Employee (a "Benefit Plan"), the Employee shall not have any right to receive any payment or other benefit under this Agreement, any Other Agreement, or any Benefit Plan if such payment or benefit, taking into account all other payments or benefits to or for the Employee under this Agreement, all Other Agreements, and all Benefit Plans, would cause any payment to the Employee under this Agreement to be considered a "parachute payment" within the meaning of Section 280G(b)(2) of the Code (a "Parachute Payment"). In the event that the receipt of any such payment or benefit under this Agreement, any Other Agreement, or any Benefit Plan would cause the Employee to be considered to have received a Parachute Payment under this Agreement, then the Employee shall have the right, in the Employee's sole discretion, to designate those payments or benefits under this Agreement, any Other Agreements, and/or any Benefit Plans, that should be reduced or eliminated so as to avoid having the payment to the Employee under this Agreement be deemed to be a Parachute Payment. 9. NONCOMPETITION, CONFIDENTIALITY AND NONINTERFERENCE WITH CUSTOMERS AND ---------------------------------------------------------------------- EMPLOYEES. - ---------- (a) In the event that the Employee terminates his employment under this Agreement before the end of the term of this Agreement, unless (i) such termination is approved in writing by the Boards or (ii) such termination is for Good Reason (as defined above), or in the event the Employers terminate the Employee's employment for Cause (or, in the event of a Change of Control, for Willful Misconduct), the Employee shall not become an employee of, or otherwise provide personal services to, any "Significant Competitor" of the Employers (or either of them) for a period of two years after such termination. "Significant Competitor" shall mean any commercial bank, savings bank, savings and loan association, mortgage banking company or other financial institution, or a holding company affiliate of any of the foregoing, that at the date of its employment of the Employee has an office in Southampton, East Hampton, Shelter Island, Southold or Riverhead, New York. If any court or other tribunal having jurisdiction to determine the validity or enforceability of this paragraph determines that, strictly applied, it would be invalid or unenforceable, the definition of Significant Competitor and the time provisions used shall be deemed modified to the extent necessary (but only to that extent) so that the restrictions, as modified, will be valid and enforceable. (b) Except as authorized or directed by the Employers, the Employee shall not at any time during or subsequent to employment with the Employers, directly or indirectly, publish or disclose to any person or entity any confidential information of the Employers or confidential information of others that has come into the Employers' possession or the Employee's possession in the course of employment with the Employers, and the Employee will not use such information for the Employee's personal gain or make it available for others to use. All information, whether written or not, regarding the business and finances of the Employers, or their customers and contractors, including, without limitation, information relating to existing and contemplated products, services, software, systems, methods, business procedures, construction, operational and marketing plans and programs, prices, costs and revenues, prospective and existing contracts, prospective and existing customers or other business arrangements and any additional information acquired only because of employment with the Employers, shall be presumed to be confidential, except to the extent the same shall have been lawfully and without breach of obligation made available to the general public without restriction. All papers and records of every kind, including all memoranda, notes, lists, plans, reports, data (written or recorded) and documents, whether originals or copies and whether prepared by the Employee or by others, relating to the business and finances of the Employers or their customers or contractors, shall be the sole and exclusive property of the Employers. The Employee will return to the Employers all of the above materials upon termination of employment and will not at any time give or disclose such materials to any unauthorized person or entity. (c) The Employee acknowledges and agrees that, because relationships with customers and prospective customers are expected to constitute a large portion of the goodwill of the Bank's business, it is of great importance to the Employers that the Employee not solicit the Bank's customers and prospective customers (other than on behalf of the Bank) during the period of employment, and that the Employee not solicit such customers and prospective customers during a two-year period after termination of the Employee's employment, with respect to business or contracts for any products or services of the type provided, developed or under development by the Bank during the Employee's employment by the Bank, so that another employee of the Bank will have an opportunity to develop relationships with such clients and prospective clients. The Employee agrees that, while the Employee is employed by the Bank and for a period of two years commencing on the date of termination of the Employee's employment with the Bank (the "Termination Date"), the Employee shall not, within the area referred to in Section 9(a) above, and in any other town in which the Employee performed material services for the Bank, directly or indirectly solicit (other than on behalf of the Bank) business or contracts for any products or services of the type provided, developed or under development by the Bank during the Employee's employment by the Bank, from or with (i) any person or entity that was a customer of the Bank for such products or services as of, or within one year before, the Termination Date, or (ii) any prospective customer that the Bank was actively soliciting as of, or within one year before, the Termination Date. (d) While the Employee is employed by the Employers and for a period of two years commencing on the Termination Date, the Employee shall not solicit any person who is then employed by the Company, the Bank or any subsidiary of either of them, or who within 90 days before the Termination Date had been so employed, to leave such employment or to become employed by any person or entity other than the Company, the Bank or any such subsidiary. (e) The Employee acknowledges that the restrictions contained in this Section 9 are reasonable and necessary to protect the business and interests of the Employers and that any violation of these restrictions would cause substantial irreparable injury. Accordingly, the Employee agrees that a remedy at law for any breach of the foregoing covenants would be inadequate and that the Employers, in addition to any other remedies available, shall be entitled to obtain preliminary and permanent injunctive relief to secure specific performance of such covenants and to prevent a breach or contemplated breach of this Section without the necessity of proving actual damage. The Employee will provide the Employers a full accounting of all proceeds and profits received by the Employee as a result of or in connection with a breach of this Section. Unless prohibited by law, the Employers shall have the right to retain any amounts otherwise payable to the Employee to satisfy any obligations of the Employee as a result of any breach of this Section. The Employee hereby agrees to indemnify and hold harmless the Employers from and against any costs and expenses incurred by the Employers as a result of any breach of this Section by the Employee and in enforcing and preserving the Employers' rights under this Section. 10. NO ASSIGNMENTS. This Agreement is personal to each of the parties ---------------- hereto. No party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the other party hereto. However, in the event of the death of the Employee all rights to receive payments hereunder shall become rights of the Employee's estate. 11. OTHER CONTRACTS. Except for reasonable periods of absence as set out in ---------------- Section 6 hereof, the Employee shall devote such time and effort to the businesses of the Employers as may reasonably be required by the nature of his offices with the Employers and shall not engage in conduct or management of any other business without the prior written approval of the Employers; provided, that he shall not be deemed to be engaged in the conduct or management of such other business merely (i) by reason of having an investment therein or (ii) with the prior written approval of the Employers, by being a member of the board of directors of another corporation, so long as such corporation shall not be a commercial bank, trust company, bank holding company or other financial institution. The Employee shall not, during the term of this Agreement, have any other paid employment other than with a subsidiary of the Company, except with the prior approval of the Boards. 12. PRIOR AGREEMENT SUPERSEDED; ENTIRE AGREEMENT; AMENDMENTS. The Prior ------------------------------------------------------------ Agreement is hereby replaced and superseded and the Prior Agreement shall be of no further force or effect after the date of this Agreement. This Agreement constitutes the entire agreement among the parties hereto with respect to the matters contemplated herein, and it supersedes all prior oral or written agreements, commitments or understandings with respect to the matters provided for herein. No amendment, modification or discharge of this Agreement shall be valid or binding unless set forth in writing and duly executed and delivered by the party against whom enforcement of the amendment, modification, or discharge is sought. 13. SECTION HEADINGS. The section headings used in this Agreement are ------------------ included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement. 14. SEVERABILITY. The provisions of this Agreement shall be deemed ------------- severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. 15. GOVERNING LAW. This Agreement shall be governed by the laws of the --------------- United States to the extent applicable and otherwise by the laws of the State of Connecticut, excluding the choice of law rules thereof. 16. COUNTERPARTS. This Agreement may be executed in two or more ------------- counterparts, for the convenience of the parties, but all such counterparts shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, or caused this Agreement to be duly executed on their behalf, as of the date and year first above written. Attest: BRIDGE BANCORP, INC. /s/ Michael P. Kochanasz By /s/ Raymond Wesnofske - -------------------------------- ------------------------------- Michael P. Kochanasz Raymond Wesnofske Secretary Its: Chariman ---------------------------- Attest: BRIDGEHAMPTON NATIONAL BANK /s/ Michael P. Kochanasz By /s/ Raymond Wesnofske - -------------------------------- ------------------------------- Michael P. Kochanasz Raymond Wesnofske Secretary Its: Chariman ---------------------------- EMPLOYEE /s/ Thomas J. Tobin ---------------------------------- Thomas J. Tobin EX-13.1 3 BRIDGE BANCORP'S ANNUAL REPORT [GRAPHIC LOGO - The Bridgehampton National Bank] BRIDGE BANCORP, INC. [PHOTO] A white picket fence. SM [TRADEMARK - The Bank you can talk to. ] GROWTH AND INCREASED SHAREHOLDER VALUE 1996 ANNUAL REPORT [CAPTION] Critically important to the success of our mission are superior levels of commitment and service to our customers. COMPANY PROFILE Bridge Bancorp, Inc., a New York corporation, is a one-bank holding company engaged in commercial banking through its wholly-owned subsidiary, The Bridgehampton National Bank. Federally charted in 1910, the Bank was founded by local farmers and merchants to serve the needs of the agricultural based villages comprising the area. While growing and expanding over the past eighty-seven years, The Bridgehampton National Bank has continued to maintain its community orientation. Within the Bank's primary market area of Eastern Long Island, it offers a full range of deposit and loan services geared to the needs of businesses and consumers. The Bank operates six full service banking offices located in Bridgehampton, East Hampton, Mattituck, Montauk, Southampton and Southold, New York as well as a Residential Mortgage and Loan Center in Riverhead, New York. In addition, twenty-four hour Automated Teller Machines with access to the MAC and NYCE networks are maintained in Bridgehampton, Mattituck and at the Southampton Hospital. The Bank is an Equal Housing Lender and a member of the Federal Deposit Insurance Corporation. Mission Statement The mission of the employees of The Bridgehampton National Bank is to provide the Company's shareholders with an above average return on investment and increased shareholder value. We will accomplish our mission by profitably providing financial services to all customers, being particularly cognizant of providing fair and evenhanded distribution of credit to all segments of our marketplace while utilizing safe and sound banking practices. Critically important to the success of our mission are superior levels of commitment and service to our customers by all of our employees. Equally important to the success of our mission is the selection and retention of the highest quality employees. The Bank is dedicated to providing its employees with the direction and training necessary to achieve their mission. Bride Bancorp, Inc.
CONSOLIDATED FINANCIAL HIGHLIGHTS (In thousands, except per share data and financial ratios) Year ended December 31, 1996 1995 .................................................................... Net income $3,006 $2,383 Cash dividends declared 987 768 Return on average assets 1.51% 1.27% Return on average equity 18.84% 16.29% December 31, .................................................................... Total assets $204,614 $184,070 Total deposits 184,847 166,144 Total loans 118,881 111,480 Total stockholders' equity 16,926 15,420 Per share data .................................................................... Net income $6.34 $4.96 Cash dividends declared 2.10 1.60 Book value 36.07 32.13
[BAR GRAPH] RETURN ON AVERAGE EQUITY (Percentage) 1996 1995 1994 1993 .................................................................... Return On Average Equity 18.84% 16.29% 15.36% 15.52%
[BAR GRAPH] RETURN ON AVERAGE ASSETS (Percentage) 1996 1995 1994 1993 .................................................................... Return On Average Assets 1.51% 1.27% 1.18% 1.15%
[BAR GRAPH] TOTAL ASSETS (Dollars in millions) 1996 1995 1994 1993 ......................................................................... Total Assets $204,614 $184,070 $171,953 $153,906
[BAR GRAPH] NET INCOME (Dollars in thousands) 1996 1995 1994 1993 ......................................................................... Net Income $3,006 $2,383 $1,933 $1,813
Bridge Bancorp, Inc. 1 [CAPTION] 1996, a year to take pride in record-setting financial accomplishments and related performance ratios at Bridge Bancorp, Inc. DEAR SHAREHOLDERS, Fiscal year 1996 was by all accounts a year to take pride in our financial accomplishments at Bridge Bancorp, Inc. It is with considerable satisfaction that I am able to report to you that your company continued the trend of record-setting earnings and related performance ratios again this year. Return on average equity of 18.84 percent, return on average assets of 1.51 percent and net income per share of $6.34 will result in our being ranked above average among peer group banks nationally. I invite you to review the five year summary of financial highlights and note the significant growth in deposits, net loans, total assets and net income over this period of time. Key to our strong performance trend has been our ability to maintain a high level of demand deposits, primarily the result of our continued growth in market share among both business and consumer accounts. Our goal is to continue on course through our competitive pricing coupled with the highest level of service. Our ability to invest funds locally by providing capital in the form of loans to local businesses and consumers, exclusively on the East End, distinguishes us as one of the few remaining Community Banks within our marketplace and solidifies our position in this market niche. We will continue to strive toward increased market penetration through our singular geographic focus. Our commitment to provide quality customer service is exemplified by our drive to develop and utilize technology that will allow us to become more efficient and consistent in delivering products and services that enhance the value of a relationship with The Bridgehampton National Bank. To this end, we plan the introduction of several enhancements to our product offering, including Teller*Fone, a telephone-based audio response system that will allow our customers access to their accounts on a 24-hour basis. We plan to follow with other product enhancements including P.C. based account access. A high level of enthusiasm has been building throughout the East End concerning our impending move to the new Main Office Headquarters in Bridgehampton later this Spring. In addition to the obvious benefits a new facility affords our employees and customers, we plan to capitalize on the business development and marketing opportunities associated with the positive image of the new building. On a related matter, as previously communicated to all shareholders, the Board of Directors has determined that in the interest of maximizing the sale price and allowing for the most equitable exposure to the widest range of interested parties, the existing Main Office facility will be sold at auction on April 15, 1997. The Board has selected the firm of David R. Maltz & Co., Inc. to act as marketing agent and auctioneer for this critical endeavor. It saddens me to inform you that former Vice-Chairman Frederick Hagerman passed away in January. Those of us who had the pleasure of knowing and working with Dick are deeply saddened by this loss. Dick was a source of encouragement to me, and on numerous occasions when I would see him conducting his personal banking here in Bridgehampton, he always had a kind word of support for the job we were doing and the many changes we have affected over the years. Mr. Hagerman was a good friend and we extend our sincere condolences to his family. It gives me added satisfaction to once again acknowledge the efforts of the employees, officers and directors of the Company without whom our success would not be possible. It is this dedicated group that is responsible for the performance results that distinguish our Company from our competitors. A sincere thank you to them as well as to you, our valued shareholders, for your continued support of the Company. Sincerely, /s/ Thomas J. Tobin - ------------------- Thomas J. Tobin President & Chief Executive Officer Bridge Bancorp, Inc. 2 YEAR IN REVIEW [CAPTION] Growing and getting the word out [PHOTOGRAPH] Rudy DeSanti, Dreesen's Market, East Hampton "They've been extremely responsive. My business is charge and delivery, not cash and carry. So when you sell something, that doesn't mean you get paid for it. You may get paid 60 days later, or 30 days later, or 10 days later. Sometimes in the course of time when you aren't paid, you need a line of credit. BNB has always worked with me. They give you a fair shake. Bridgehampton National works real hard for the businesses out here." [PHOTOGRAPH] James Tuccillo & Dara Minkin, Residential Mortgage, Westhampton [QUOTE] "They make `what if' come true. We were looking for a land to construction to end loan and someone in banking out here recommended Bridgehampton National Bank. They enabled us to really build our dream house...the one that one day we would raise our children in." [SUB HEADLINE] KEY ACCOMPLISHMENTS RESULTING IN 1996 FINANCIAL HIGHLIGHTS [SUB HEADLINE] Bridgehampton National Bank, the bank you can talk to... Our customers tell the story [SIDEBAR] * Expanded business sector market share through growing customer base and enhanced relationships * Steady growth in consumer banking deposits through competitive products and excellence in customer service * Significant growth in number and volume of residential mortgage obligations 1996 was an exciting year of growth and expansion at Bridgehampton National Bank, and key to our marketing effort was our new testimonial-based advertising campaign. Following an extensive search last year, Bridgehampton National outsourced its advertising development for the first time. We retained Jean Govoni + Partners, a local firm, which has helped us bring the Bank's message to the public through a coordinated, cohesive campaign. Additionally, the firm was an active contributor to many of the Bank's marketing efforts throughout the year. Bridgehampton National also engaged outside market research services in 1996, with the objectives of better understanding the East End marketplace and Bridgehampton National's position in relation to the competition. Through expanded capabilities, our marketing department has been able to lend meaningful support to the sales and business development effort throughout the Bank. Getting the word out on the North Fork has been a slow, but steady process. To facilitate the business development effort on the North Fork, Bridgehampton National established the North Fork Business Development Advisory Committee. The Committee is comprised of four Bank members and five outside participants. The objectives of the Committee include expansion of the Bank's presence on the North Fork and the identification and support of issues and programs that are key to the North Fork business community. Bridgehampton National will also continue its tradition of involvement in activities that are directed towards an improved economy and quality of life on the North Fork. In October of 1996, Bridge Bancorp, Inc. engaged Advest, Inc. of Boston, MA as a market maker for the Company's common stock, serving as a resource for the purchase of shares of Bridge Bancorp, Inc. Shares are traded on the NASDAQ over-the-counter bulletin board market under the symbol "BDGE." Bridge Bancorp, Inc. 3 [CAPTION] Outstanding levels of customer service, an intimate knowledge of the East End marketplace, and competitive products and rates set Bridgehampton National apart. BUSINESS SERVICES Our folks at Bridgehampton National Bank are only too happy to go the distance for East End businesses. Why? The answer is simple. The East End is Bridgehampton National's only business, and our people understand value of relationships, and the nuances of the East End Marketplace. The breadth of our business products and services, the competitiveness of our rates, our knowledge and involvement in the marketplace, and the responsiveness of our branch managers and loan officers consistently meet the needs of the East End community. Bridgehampton National Bank offers an uncommon level of responsiveness. Take our Prime Plus Line of Credit...this product was designed specifically to address the seasonal fluctuations in cash flow so common to businesses in our area. Many of our business customers love it, but recently, some of our customers have expressed a need for a revolving business credit line. So, we went back to the drawing board, and have just added a new option: Prime Plus Select Credit, a line that's fully available as long as monthly minimum payments of principal and interest are maintained. Both Prime Plus credit lines are simple, accessible, economical and convenient. Whether it's Prime Plus, business checking, commercial mortgages or merchant credit card processing services, our people have the experience and knowledge to direct our customers to the products and services that will help their businesses succeed. Bridgehampton National is the bank you can talk to about business banking services. In fact, our objective is to grow our business one business at a time. That's the way we approach our business customers at Bridgehampton National Bank. We listen and take the time to learn about each of our customer's operations; if it's a farm, we'll walk the fields, and if it's a restaurant, we'll follow that customer into the kitchen. From tractors to technology, Bridgehampton National is here to meet the needs of East End businesses. [PHOTOGRAPH] Adrienne Noonan, Greenport Tea Co., Greenport [QUOTE] "They've gone out of their way. When we couldn't stop in the middle of the day, someone came down with tape for our credit card machine and another time with checks. Everyone's always been so accommodating." [PHOTOGRAPH] Chris Eggert & Kevin Boles, Santa Fe Junction & Bostwick's, East Hampton [QUOTE] "They actually listened to us. Bridgehampton National Bank was willing to work with us when other people just closed the door. You have a dream and instead of saying `no,' they try to achieve that dream for you. They help you along. It's all been very smooth. They've just been very straightforward and honest with us. The deal had to go down quickly and it was very comforting to have the Bank say to us, `Great! When do we get started?'" [PHOTOGRAPH] Ron Gilliam, Ronnie's Auto Paint Shop, Bridgehampton [QUOTE] "The people are always friendly. They know me by name and the president of the Bank treats me like I'm someone, in the Bank or at the deli. Sure I'd recommend the Bank to other people because anytime you've got good people, you've got to stick with them." Bridge Bancorp, Inc. 4 [CAPTION] The Bridgehampton National Bank has been providing consumer banking services to local residents since 1910. [PHOTOGRAPH] Bill & Val Creutz, Southold [QUOTE] "They remembered us right away. We are new to the area. One day we really just stumbled on the Bank while making a U-turn. We went in. Asked what they would do for us. Opened a checking account on the spot! And a savings account two days later. It's a friendly bank. People always smile and say hello." [PHOTOGRAPH] Wendy Engel, East Hampton [QUOTE] "They respect you for who you are. The Bank has always been accessible and there to help me. If it wasn't for the Bank, I wouldn't be retiring -- it's true!" CONSUMER BANKING SERVICES Back on February 1, 1895, The Bridgehampton News, reported, "A bank would be a creditable institution for the village and very handy for all residents. Now that we are soon to be connected with East Hampton by railroad, it would also be convenient for the people of that village and we believe many of them would keep an account with the Bridgehampton Bank. By all means let us have a bank." During the next 15 years, the subject of establishing a bank was discussed many times over, and in 1910, The Bridgehampton National Bank was founded. Times have changed since the Bank began providing consumer banking services to local residents in 1910-- we are connected to a wider marketplace though our branch network, not to mention telephone, modem, and fax machine. While Bridgehampton National has broadened its scope not only in terms of marketplace, but also in the depth of products and services offered and the channels through which we are able to deliver them, our Company has maintained its focus on providing banking products at extraordinary levels of customer service. That's the story our customers tell time and again: our people really do take the time to find out what our customers' banking needs are, who they are, and yes, even learn their names. In this mad dash, rush about world, our customers enjoy the "hometown" feeling at each of our Bridgehampton National Bank branches. But, the hometown feeling is only half of the customer service story. Our branch staff is experienced and knowledgeable about all our banking products, and is supported by up-to-the-minute systems and technology. In 1996, Bridgehampton National Bank consolidated its systems conversion, streamlined its accounts payable system, developed Teller*Fone, our soon to be introduced telephone banking system, and explored P.C. banking options. Bridgehampton National is committed to incorporating technologies that permit improved efficiencies for the Bank and enhanced delivery of our products to our customers. Bridgehampton National Bank is also exceptional in its commitment to community service, and the Bank has a long and rich tradition of giving back to the East End Community. In 1996, the Bank sponsored the March of Dimes WalkAmerica, which dedicated the funds raised to birth defects research; provided the financing for the improvements to the East Hampton Free Library; provided loans for the first Habitat for Humanity house on the South Fork of Long Island -- Habitat builds homes that are sold to low income families; sponsored and supported the East End Open Space Coalition; and contributed to Mattituck High School's Wired for Education program, which provides Internet access to New York State schools through a State education program. The Bank contributes to worthwhile organizations and events in all of the five East End towns, and its officers and employees donate their time and energies to entities such as the East Hampton RECenter, Alternatives East End Counseling Project, The Retreat, and the Salvation Army. The Bank is proud of its heritage of reinvestment in the East End Community. The Bridgehampton National Bank offers a wide range of consumer banking products and services at competitive rates including: personal checking, checking with interest, Credit Reserve checking, savings accounts, certificates of deposit, money market accounts, MAC ATM cards, MasterCard and Visa credit cards, and senior citizen account services. Integral to each of our product offerings is the outstanding level of customer service for which The Bridgehampton National Bank is known. Bridge Bancorp, Inc. 5 [CAPTION] Thanks to our customers, the word is out that Bridgehampton National Bank is a leader in mortgage lending on the East End. RESIDENTIAL MORTGAGE AND EQUITY PRODUCTS Bridgehampton National Bank has nearly 50 different ways to finance our customers' home sweet homes. Our residential mortgage products include: 15, 20, and 30 year fixed rate mortgages, adjustable rate mortgages, fixed to adjustable mortgages, jumbo mortgages, no income verification mortgages, low down payment mortgages, first time home buyer mortgages, construction loans, construction to permanent loans, land loans, land to construction to permanent loans, refinances, and reverse mortgages -- to name a few. But, the best part is that our Residential Mortgage Consultants have the expertise to direct our customers to the mortgage products that are best for them. Further, our Residential Mortgage Consultants are experts at delivering service. They make themselves available when it's convenient for our customers, and have been known to meet at kitchen tables in the evenings and on the weekends to accommodate our customers' busy schedules. Bridgehampton National Bank's mortgage programs are backed up by our efficient and well-staffed Residential Mortgage Center, centrally located on Route 58 in Riverhead. What's more, our Residential Mortgage consultants are specialists in the East End marketplace where our unique location incorporates both year-round residences and second homes. Our Company also provides a competitively priced Home Equity Line of Credit and Home Advantage Loan. Both residential loans permit home owners to borrow against the equity in their homes for home improvements, college tuition, or even a new car. Whatever the need, Bridgehampton National Bank provides residential mortgage and loan products coupled with outstanding customer service. [PHOTOGRAPH] The Villacis Family, First time home buyers, East Hampton [QUOTE] "It's a special thing to buy a house. This is our first house and Bridgehampton National helped me in a lot of ways. I'd heard about the Bank before. People say it's the best bank in the Hamptons. I'd heard that the Bank was very helpful and that's why I went directly to them and not to any of the other banks. I recommend the Bank for everybody. Because the people are good and they try to help as much as they can. My wife is happy, very happy. I say buy a house. It will make you happy. For you and your family." [PHOTOGRAPH] Bessie Swann, Home Advantage Loan, Greenport [QUOTE] "I saw a presentation the Bank made to our staff where we got information on the Home Advantage Loan. I liked it. It was easy. Didn't take long. Not a lot of paperwork. A one page application. Quick approval. They even brought the application to the office, then came and picked it up." [PHOTOGRAPH] Monte Mathews, Construction Loan and Residential Mortgage, Manhattan & Bridgehampton [QUOTE] "I wanted to deal with a local bank. The Bridgehampton Bank people live here, they know what things are worth and they knew what the value of this house is. I wanted to refinance and make improvements at the same time. So I had a construction loan for the improvements pending the final mortgage. It was complicated. We had to deal with the Bank over the phone and fax, and they made it easy. They came on the weekends. On our schedule, not theirs. They made it a personal experience. It was people every step of the way. BNB's great to deal with and a great place to bank." Bridge Bancorp, Inc. 6 [CAPTION] Bridgehampton National Bank is positioned to serve both the business and consumer market sectors as they grow and prosper. LOOKING AHEAD Bridgehampton National Bank looks toward the future with promise. Our team is well-prepared to work with diligence toward high performance ratios with emphasis on continuing growth in deposits, net loans, total assets and net income. The Bank will continue to embrace technologies that allow the delivery of business and consumer products and services with greater efficiency at competitive rates. Our Company will maintain its focus on the East End marketplace and the banking products and services that are our strengths, fortifying our unique position as the East End's Community Bank. OUR NEW HOME Bridgehampton National's move to the new Main Office Headquarters location, on the Montauk Highway at Snake Hollow Road, will afford new opportunities for improved levels of customer service, operational efficiencies, and a state-of-the-art environment for our customers and employees. [PHOTOGRAPH] New Main Office Headquarters nearing completion, 2200 Montauk Highway at Snake Hollow Road, Bridgehampton (February 1997) We look forward to a positive outcome of the sale of our current Main Office Headquarters building, which has been a good home to the Bank through the expansive growth of these past 87 years. THE FUTURE IS BRIGHT. The economic future of the East End of Long Island has brightened, and Bridgehampton National Bank is positioned to serve both the business and consumer market sectors as they grow and prosper. In turn, our Company remains committed to reinvestment in the communities we serve through business and consumer loans, as well as community service activities. We will strive to maintain a leadership position within our community with regard to protecting the economic environment on the East End through attention to quality of life and environmental integrity issues. Effective utilization of new technologies that affect operational efficiencies and improved levels of customer service will continue to be a high priority in 1997. To this end, the Bank has appointed a technology officer who will be responsible for the effective coordination of the development, implementation, employee training and introduction of improved systems. It is anticipated that Teller*Fone, Bridgehampton National's telephone based audio response system will be introduced to our customer-base this spring, and P.C. banking, stream-lined accounting and collections services, and a direct deposit/debit program designed for business accounts are all part of the Bank's ongoing technology plans. Our future depends on a skilled and ready employee base, led by a dedicated management team. Our collective ability to assess and respond nimbly to marketplace demands lends strength to our determination to achieve our ambitious financial and performance goals. [PHOTOGRAPH] Jim Hagen, J& K Construction, Bridgehampton [QUOTE] "A lot of times you're sitting in traffic and now I can sit in traffic and get payroll started. I think it's a great idea. I really do. Anything to save time. With Teller*Fone I can get balances before I make payroll. Whatever you can save in terms of time, you're well ahead of the game." Bridge Bancorp, Inc. 7 [GRAPHIC LOGO - The Bridgehampton National Bank]
FIVE YEAR SUMMARY OF OPERATIONS (In thousands, except per share data and financial ratios) Set forth below are selected consolidated financial and other data of the Company. The Company's business is primarily the business of the Bank. This financial data is derived in part from, and should be read in conjunction with, the consolidated financial statements of the Company. December 31, 1996 1995 1994 1993 1992 - ------------------------------------------------------------------------------------------------------------- SELECTED FINANCIAL DATA: Securities available for sale $57,779 $52,689 $26,413 $ - $ - Securities held to maturity/for investment 6,262 6,425 37,166 66,626 77,186 Loans, net 117,643 110,442 93,817 70,832 57,317 Total assets 204,614 184,070 171,953 153,906 145,911 Total deposits 184,847 166,144 155,891 140,471 133,499 Total stockholders' equity 16,926 15,420 12,807 12,144 10,907 Year Ended December 31, - ------------------------------------------------------------------------------------------------------------- SELECTED OPERATING DATA: Total interest income (including loan fee income) $15,501 $14,384 $11,187 $10,004 $10,146 Total interest expense 5,072 5,258 3,270 3,363 4,096 ------------------------------------------------------ Net interest income 10,429 9,126 7,917 6,641 6,050 Provision for possible loan losses 330 268 333 44 136 ------------------------------------------------------ Net interest income after provision for possible loan losses 10,099 8,858 7,584 6,597 5,914 Total other income 2,422 1,697 1,512 1,503 1,321 Total other expenses 7,960 7,024 6,318 5,688 4,885 ------------------------------------------------------ Income before income taxes and cumulative effect of accounting change 4,561 3,531 2,778 2,412 2,350 Provision for income taxes 1,555 1,148 845 662 662 ------------------------------------------------------ Income before cumulative effect of accounting change 3,006 2,383 1,933 1,750 1,688 Cumulative effect of accounting change - - - 63 - ------------------------------------------------------ Net Income $3,006 $2,383 $1,933 $1,813 $1,688 ====================================================== December 31, - ------------------------------------------------------------------------------------------------------------- SELECTED FINANCIAL RATIOS AND OTHER DATA: Return on average assets 1.51% 1.27% 1.18% 1.15% 1.18% Return on average equity 18.84% 16.29% 15.36% 15.52% 16.12% Equity to assets 8.07% 8.20% 7.79% 7.89% 7.48% Dividend payout ratio 32.87% 32.23% 32.28% 31.77% 31.28% Earnings per share $6.34 $4.96 $4.03 $3.78 $3.52 Cash dividends declared per common share $2.10 $1.60 $1.30 $1.20 $1.10 The Bank adopted SFAS No. 115 effective January 1, 1994, which resulted in a reclassification of a portion of the investment portfolio to available for sale stated at fair value. On November 15,1995, the FASB issued "A Guide to Implementation of Statement No. 115 on Accounting for Certain Investments in Debt and Equity Securities, Questions and Answers" which resulted in a reclassification of a portion of the held to maturity portfolio to available for sale stated at fair value. Includes income of $.13 per share relating to cumulative effect of accounting change. Does not include the SFAS No. 115 equity adjustment .
8 BRIDGE BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FIANANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL 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 for 1996, 1995 and 1994. 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 the difference between interest income on loans and investments and interest expense on deposits. 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 income from mortgage banking operations and merchant credit card processing programs. The Bank's net income is further affected by the level of its other expenses, such as employees' salaries and benefits and occupancy costs. This discussion and analysis should be read in conjunction with the consolidated financial statements, the notes thereto and the other financial information included elsewhere in this annual report. FINANCIAL CONDITION The Company's assets increased to $204,614,000 at December 31, 1996. This represents an 11.2% increase over assets at December 31, 1995, primarily the result of an increase in loans of $7,401,000, an increase in cash and cash equivalents of $6,085,000, and an increase in investments in debt and equity securities of $4,927,000. The growth in assets at December 31, 1996 was primarily funded by an increase in deposits of $18,703,000 or 11.3%. Stockholders' equity was $16,926,000 at December 31, 1996, an increase of 9.8% over December 31, 1995. The increase of $1,506,000 was the result of net income of $3,006,000 plus the change in net unrealized appreciation in securities available for sale, net of tax, of $108,000; offset by cash dividends declared of $987,000 and the purchase of 10,800 shares of common stock which is now held as treasury stock, at a cost of $621,000. The appreciation in securities available for sale is directly attributable to changes in interest rates. Management has determined such appreciation to be temporary, and does not expect future sales of such securities to result in material gains and thus a material impact on results of operations. ASSET/LIABILITY MANAGEMENT The purpose of the Company's asset/liability policy is to manage risk within acceptable levels and at the same time provide liquidity. The Asset/Liability Committee is responsible for managing interest rate risk by maintaining a gap position within established Bank policy. The committee is also responsible for meeting liquidity and funds management needs. As measured by the Interest Sensitivity Gap Table, the Bank's one year cumulative interest sensitivity gap as a percent of total assets is a negative 16.91%. A negative gap could result in a decrease in net interest income in a rising interest rate environment. 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. 9 BRIDGE BANCORP, INC. AND SUBSIDIARY [GRAPHIC LOGO - The Bridgehampton National Bank] MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
INTEREST SENSITIVITY GAP TABLE (Dollars in thousands, except financial ratios) Over Three Over Six Over One Three Months Months Year Year ended Months Through Through Through Over December 31, 1996 or Less Six Months One Year Five Years Five Years Total - ----------------------------------------------------------------------------------------------------------------------- Interest Earning Assets: Investment in debt and equity securities $1,002 $7,248 $4,343 $43,310 $7,424 $63,327 Total loans 35,162 6,437 15,953 48,805 12,524 $118,881 Federal funds sold 1,250 - - - - $1,250 -------------------------------------------------------------- Total Interest Earning Assets $37,414 $13,685 $20,296 $92,115 $19,948 $183,458 Interest Bearing Liabilities: Savings, N.O.W., and money market accounts $51,043 $ - $ - $ - $22,748 $73,791 Certificates of deposit 30,106 15,486 9,357 5,644 - $60,592 -------------------------------------------------------------- Total Interest Bearing Liabilities $81,149 $15,486 $9,357 $5,644 $22,748 $134,383 -------------------------------------------------------------- Interest Sensitivity Gap Per Period ($43,735) ($1,801) $10,939 $86,471 ($2,800) $49,075 -------------------------------------------------------------- Cumulative Interest Sensitivity Gap ($43,735) ($45,536) ($34,597) $51,874 $49,074 -------------------------------------------------------------- Gap to Total Assets (-21.38%) (-22.26%) (-16.91%) 25.36% 23.99% -------------------------------------------------------------- Investment in debt and equity securities are shown excluding the fair value appreciation of $781,000, before tax, due to the application of SFAS No. 115. A 10% prepayment rate has been assumed for mortgage-backed securities. Investment in debt and equity securities include interest earning deposits with banks of $68,000. For the purpose of this table, nonaccrual loans of approximately $269,000 have been included. Statement savings, N.O.W. and money market accounts have been included in the Three Months or Less" category. Passbook savings have been included in the "Over Five Years" category.
10 BRIDGE BANCORP, INC. AND SUBSIDIARY ANALYSIS OF NET INTEREST INCOME Net 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 Bank's average consolidated statements of condition and reflects the average yield on assets and average cost of liabilities for the periods indicated.
Year ended December 31, 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------------- (Dollars in thousands) AVERAGE Average Average AVERAGE YIELD/ Average Yield/ Average Yield/ BALANCE INTEREST COST Balance Interest Cost Balance Interest Cost - ------------------------------------------------------------------------------------------------------------------------- Interest earning assets: Loans (including fee income) $114,220 $11,261 9.9% $105,983 $10,299 9.7% $82,363 $7,394 9.0% Deposits with banks 1,941 99 5.1% 445 29 6.5% 121 3 2.5% Federal funds sold 4,422 243 5.5% 4,524 262 5.8% 3,684 140 3.8% Investment in debt and equity securities 62,583 3,898 6.2% 63,391 3,794 6.0% 66,152 3,650 5.5% ----------------------------------------------------------------------------------- Total interest earning assets 183,166 15,501 8.5% 174,343 14,384 8.3%$152,320 $11,187 7.3% Interest bearing liabilities: Savings, N.O.W. and money market deposits $68,342 $1,598 2.3% $65,740 $1,581 2.4% $74,730 $1,795 2.4% Certificates of deposit of $100,000 or more 18,718 1,000 5.3% 22,733 1,321 5.8% 12,544 444 3.5% Other time deposits 44,848 2,410 5.4% 43,176 2,334 5.4% 26,918 987 3.7% Other borrowings 1,165 64 5.5% 342 22 6.4% 818 44 5.4% ----------------------------------------------------------------------------------- Total interest bearing liabilities $133,073 $5,072 3.8% $131,991 $5,258 4.0%$115,010 $3,270 2.8% ----------------------------------------------------------------------------------- Net interest income/interest rate spread $10,429 4.7% $9,126 4.3% $7,917 4.5% ------- -------- --------- --------- ---------- --------- Net earning assets/net yield on average interest earnings assets $50,093 5.7% $42,352 5.2% $37,310 5.2% --------- -------- --------- --------- -------- --------- Ratio of interest earning assets to interest bearing liabilities 137.6% 132.1% 132.4% -------- --------- --------- 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 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.
11 BRIDGE BANCORP, INC. AND SUBSIDIARY [GRAPHIC LOGO - The Bridgehampton National Bank] MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 GENERAL Net income for 1996 was $3,006,000, an increase of $623,000 or 26.1% from 1995 net income of $2,383,000. Highlights include: (i) a $1,303,000 or 14.3% increase in net interest income; (ii) a $725,000 or 42.7% increase in total other income; and (iii) a $936,000 or 13.3% increase in total other expenses. NET INTEREST INCOME Net interest income increased from $9,126,000 in 1995 to $10,429,000 in 1996. The increase of 14.3% reflects an increase in average net interest earning assets from $42,352,000 in 1995 to $50,093,000 in 1996. In addition, the net yield on average interest earning assets increased to 5.7% in 1996 from 5.2% in 1995. INTEREST INCOME Total interest income (including loan fee income of $598,000 in 1996 and $425,000 in 1995) increased from $14,384,000 in 1995 to $15,501,000 in 1996, an increase of 7.8%. The increase from 1995 to 1996 was the result of an increase in the average interest earning assets from $174,343,000 in 1995 to $183,166,000 in 1996. The average yield on interest earning assets increased to 8.5% in 1996 from 8.3% in 1995. Interest income on loans (including fee income) increased $962,000 during 1996 the result of an increase in average loans of 7.8% from $105,983,000 in 1995 to $114,220,000 in 1996 coupled with an increase in yield from 9.7% in 1995 to 9.9% in 1996. Interest on investment in debt and equity securities increased $105,000 or 2.8%. The increase was the result of an increase in the average yield from 6.0% in 1995 to 6.2% in 1996 offset by a decrease in average investment in debt and equity securities from $63,391,000 in 1995 to $62,583,000 in 1996. The reduction in average investment in debt and equity securities was the result of funding an increase in average loans of 7.8%. INTEREST EXPENSE Interest expense decreased $186,000 to $5,072,000 in 1996 from $5,258,000 in 1995. The decrease in interest expense was caused by a combination of a decrease in the cost of average interest bearing liabilities from 4.0% in 1995 to 3.8% in 1996, and an increase in average interest bearing liabilities from $131,991,000 in 1995 to $133,073,000 in 1996. PROVISION FOR POSSIBLE LOAN LOSSES The provision for possible loan losses increased $62,000 in 1996 to $330,000. The allowance for possible loan losses increased to $1,238,000 at December 31, 1996 as compared with $1,038,000 at December 31, 1995. The increase in the allowance for possible loan losses was the result of an increase in average loans from 1995 to 1996 of 7.8%. The allowance as a percentage of loans increased to 1.04% at year end 1996 in comparison to .93% at year end 1995. The allowance as a percentage of nonperforming loans (including loans past due 90 days or more and still accruing) was 460.2% at year end 1996 compared to 204.7% at year end 1995. The allowance reflects management's evaluation of classified loans, charge-off trends, economic conditions, past due trends, concentrations of credit and other pertinent factors. In addition to the above see "Assets Quality: Loans." OTHER INCOME Other income increased by $725,000 or 42.7% to $2,422,000 in 1996 compared to $1,697,000 in 1995. While service charges on deposit accounts remained essentially unchanged, the increase was a result of mortgage banking activities totaling $812,000, an increase of $455,000 or 127.5% over the previous year which resulted from the Bank's efforts to further penetrate the mortgage market. The Bank's practice is to originate and sell these mortgages in the secondary market. Other operating income increased $240,000 or 39.8% over the same period last year mainly as a result of interest and expense recoveries on the payoff of nonperforming loans of $105,000; a nonrecurring refund from an outsource provider of $61,000; and increased merchant charge plan income of $48,000. Net gains on securities were $68,000 in 1996 compared to $31,000 in 1995. OTHER EXPENSES Other expenses increased by $936,000 or 13.3% to $7,960,000 in 1996 from $7,024,000 in 1995. The primary components of this change are as follows: (i) increase in salaries and employee benefits of $598,000 or 17.5% reflecting salary increases and increased staffing of the mortgage banking area; and (ii) increase in other operating expenses of $239,000 or 9.1% resulting mainly from increased advertising expense of $133,000 related to a new advertising campaign and increased loan processing expenses of $129,000 resulting mainly from increased mortgage banking volume. PROVISION FOR INCOME TAXES The provision for income taxes increased to $1,555,000 for 1996 from $1,148,000 for 1995. This increase was due to income before income taxes increasing from $3,531,000 in 1995 to $4,562,000 in 1996 and the effective tax rate increasing from 33% in 1995 to 34% in 1996. The increase in the effective tax rate resulted from decreased benefits of tax exempt income in 1996. COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994 GENERAL Net income for 1995 was $2,383,000, an increase of $450,000 or 23.3% from 1994 net income of $1,933,000. Highlights include: (i) a $1,209,000 or 15.3% increase in net interest income; (ii) a $185,000 or 12.2% increase in total other income; and (iii) a $706,000 or 11.2% increase in total other expenses. 12 NET INTEREST INCOME Net interest income increased from $7,917,000 in 1994 to $9,126,000 in 1995. The increase of 15.3% reflects an increase in average net interest earning assets from $37,310,000 in 1994 to $42,352,000 in 1995. INTEREST INCOME Total interest income (including loan fee income of $425,000 in 1995 and $354,000 in 1994) increased from $11,187,000 in 1994 to $14,384,000 in 1995, an increase of 28.6%. The increase from 1994 to 1995 was the result of an increase in the average yield on interest earning assets from 7.3% in 1994 to 8.3% in 1995. In addition, average interest earning assets increased from $152,320,000 in 1994 to $174,343,000 in 1995. Interest income on loans (including fee income) increased $2,905,000 during 1995 the result of an increase in average loans of 28.6% from $82,363,000 in 1994 to $105,983,000 in 1995 coupled with an increase in yield from 9.0% in 1994 to 9.7% in 1995. Interest on investment in debt and equity securities increased $144,000 or 4.0%. The increase was the result of an increase in the average yield from 5.5% in 1994 to 6.0% in 1995 offset by a decrease in average investment in debt and equity securities from $66,152,000 in 1994 to $63,391,000 in 1995. The reduction in average investment in debt and equity securities was the result of an increase in average loans of 28.6%. INTEREST EXPENSE Interest expense increased $1,988,000 to $5,258,000 in 1995 from $3,270,000 in 1994. The increase in interest expense was caused by a combination of an increase in average interest bearing liabilities from $115,010,000 in 1994 to $131,991,000 in 1995 and an increase in the cost of average interest bearing liabilities from 2.8% in 1994 to 4.0% in 1995. PROVISION FOR POSSIBLE LOAN LOSSES The provision for possible loan losses decreased $65,000 in 1995 to $268,000. The allowance for possible loan losses increased to $1,038,000 at December 31, 1995 as compared with $944,000 at December 31, 1994. The increase in the allowance for possible loan losses was the result of an increase in average loans from 1994 to 1995 of 28.6%. The allowance as a percentage of loans decreased slightly, being .93% at year end 1995 in comparison to 1.00% at year end 1994. The allowance as a percentage of nonperforming loans (including loans past due 90 days or more and still accruing) was 204.7% at year end 1995 compared to 223.7% at year end 1994. The allowance reflects management's evaluation of classified loans, charge-off trends, economic conditions, past due trends, concentrations of credit and other pertinent factors. It also reflects input from the Bank's 1995 examination from the Office of the Comptroller of the Currency (O.C.C.) and outside loan review consultants. In addition to the above see "Assets Quality: Loans". OTHER INCOME Other income increased by $185,000 or 12.2% to $1,697,000 in 1995 compared to $1,512,000 in 1994. Service charges on deposit accounts increased $100,000 as a result of an increase in demand deposit accounts. Net gains on securities were $31,000 in 1995 compared to $77,000 in 1994. Fees from mortgage banking operations increased by $85,000 in 1995 as the Bank has made an effort to further penetrate the mortgage market. OTHER EXPENSES Other expenses increased by $706,000 or 11.2% to $7,024,000 in 1995 from $6,318,000 in 1994. The components of these changes are as follows: (i) increase in salaries and employee benefits of $368,000 or 12.1% reflecting a combination of salary increases and staffing for the new Montauk Branch and mortgage banking operations; (ii) increase in occupancy and furniture and fixture expense of $239,000 or 32.6%, the result of relocating the Bank's loan center, relocating the Southold Branch and opening a branch in Montauk, New York; (iii) decrease in FDIC assessments of $199,000 or 52.8% as the Bank Insurance Fund was recapitalized and premiums were reduced; and (iv) increase in other operating expenses of $298,000 or 13.8%. Significant components of the increase in other operating expenses were data processing fees, consulting fees, and check printing fees. PROVISION FOR INCOME TAXES The provision for income taxes increased to $1,148,000 in 1995 from $845,000 for 1994. This increase was due to income before income taxes increasing from $2,778,000 in 1994 to $3,531,000 in 1995 and the effective tax rate increasing from 30% in 1994 to 33% in 1995. The increase in the effective tax rate resulted from decreased benefits of tax exempt income in 1995. ASSETS QUALITY: LOANS The Bank continues to maintain low net loan losses by carefully evaluating originations against the Bank's underwriting standards and by enhancing operating systems of controls for existing loans. The results of these efforts are noted below:
1996 1995 1994 - ------------------------------------------------------- (Dollars in thousands) Loans charged-off $275 $230 $176 Recoveries on loans (145) (56) (40) -------------------------- Net charge-offs $130 $174 $136 ========================== Ratio of net charge-offs to average total loans 0.11% 0.16% 0.17% ==========================
13 BRIDGE BANCORP, INC. AND SUBSIDIARY [GRAPHIC LOGO - The Bridgehampton National Bank] MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Based on the review of the loan portfolio by the loan classification committee, historically low net charge-offs, an analysis of nonaccrual loans, a ratio of non-performing loans to total loans below those of our peers, management believes the allowance for possible loan losses, following the additional $330,000 provision in 1996, is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on, among other things, changes in economic conditions. In addition to the above, see notes 1e and 4 to the consolidated financial statements for a discussion of lending risks and nonaccrual loans. LIQUIDITY AND CAPITAL RESOURCES The Company's principal source of liquidity is dividends from the Bank. Due to regulatory restrictions (see note 1k to the consolidated financial statements), dividends from the Bank to the Company at December 31, 1996 were limited to $4,322,000 which represents the Bank's 1996 retained net income and the net undivided profits from the previous two years. The dividends received from the Bank are used primarily for dividends to the shareholders. In the event the Company subsequently expands its current operations, in addition to dividends from the Bank, it will need to rely on its own earnings, additional capital raised and other borrowings to meet liquidity needs. The Bank is funding construction of a new main office and administrative facility out of current cash flows. The Bank's primary sources of liquidity are funds from deposits, amortization and repayment of loan principal, other borrowings, maturities of securities and overnight federal funds sold, funds provided from operations and advances from the Federal Home Loan Bank of New York (the FHLB-NY). 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 loans to capital ratios. As a result of undistributed net income plus the change in net unrealized appreciation in securities available for sale, net of tax, offset by dividends and purchases of treasury stock, the Company's stockholders' equity increased to $16,926,000 at December 31, 1996 from $15,420,000 at December 31, 1995. The ratio of stockholders' equity to total assets decreased to 8.27% at year end 1996 from 8.38% at year end 1995. The loan commitments outstanding as of December 31, 1996 totaled approximately $25,724,000. The funding of such commitments is derived from the primary sources of liquidity stated previously. See note 10b to the consolidated financial statements for a discussion of loan commitments. The Company exceeds the risk-based capital adequacy ratio levels required by the regulatory agencies and is deemed well capitalized by these agencies. Management believes that the current capital levels along with future retained earnings will allow the Bank to maintain a position exceeding required levels which will be more than adequate to meet the growth of the Bank or any higher ratios required by the discretionary authority of the regulators. The Company is prepared to issue additional common stock should the need arise. The Company had return on average assets of 1.51%, 1.27% and 1.18% and return on average equity of 18.84%, 16.29% and 15.36% for the years ended December 31, 1996, 1995 and 1994, respectively. EFFECTS OF INFLATION Virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution's performance than the effect of general levels of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services. Management believes that continuation of its efforts to manage its net interest spread and the matching of its asset and liability maturities will better insulate the Company from the effects of changes in interest rates. The effect of inflation was not material. 14
CONSOLIDATED STATEMENTS OF CONDITION (In thousands, except share and per share amounts) December 31, 1996 1995 - ------------------------------------------------------------------------------------------------------ ASSETS Cash and due from banks $12,247 $7,404 Interest earning deposits with banks 68 76 Federal funds sold 1,250 - ---------------------- Total cash and cash equivalents 13,565 7,480 Investment in debt and equity securities, net: Securities available for sale, at fair value 57,779 52,689 Securities held to maturity (fair value $6,273 at December 31, 1996 and $6,425 at December 31, 1995) 6,262 6,425 ---------------------- Total investment in debt and equity securities, net 64,041 59,114 Loans 118,881 111,480 Less: Allowance for possible loan losses 1,238 1,038 ---------------------- Loans, net 117,643 110,442 Banking premises and equipment, net 6,773 3,775 Other real estate owned, net - 235 Accrued interest receivable 1,343 1,524 Deferred income taxes, net 51 67 Other assets 1,198 1,433 ---------------------- TOTAL ASSETS $204,614 $184,070 ====================== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Demand deposits $50,464 $44,291 Savings, N.O.W., and money market deposits 73,791 61,518 Certificates of deposit of $100,000 or more 18,251 14,256 Other time deposits 42,341 46,079 ---------------------- Total deposits 184,847 166,144 - Accrued interest on depositors' accounts 1,537 1,474 Other liabilities and accrued expenses 1,304 1,032 ---------------------- TOTAL LIABILITIES 187,688 168,650 ---------------------- STOCKHOLDERS' EQUITY: Common stock, par value $5.00 per share: Authorized: 1,500,000 shares; issued and outstanding 469,200 shares and 480,000 shares at December 31, 1996 and 1995, respectively 2,400 2,400 Surplus 600 600 Undivided profits 14,087 12,068 Unrealized appreciation on securities available for sale, net of tax 460 352 Less: Treasury stock at cost, 10,800 shares (621) - ---------------------- TOTAL STOCKHOLDERS' EQUITY 16,926 15,420 ---------------------- Commitments and contingencies ---------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $204,614 $184,070 ====================== See accompanying notes to consolidated financial statements.
BRIDGE BANCORP, INC. AND SUBSIDIARY 15 [GRAPHIC LOGO - The Bridgehampton National Bank]
CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) Year ended December 31, 1996 1995 1994 - ---------------------------------------------------------------------------------------------------- Interest income: Loans (including fee income) $11,261 $10,299 $7,394 Mortgage-backed securities 1,657 1,647 1,749 U.S. Treasury and government agency securities 1,286 1,134 913 Obligations of NY State & pol. subs. 907 965 944 Federal funds sold 243 262 140 Other 147 77 47 ------------------------------- Total interest income 15,501 14,384 11,187 ------------------------------- Interest expense: Savings, N.O.W. and money market deposits 1,598 1,581 1,795 Certificates of deposit of $100,000 or more 1,000 1,321 444 Other time deposits 2,410 2,334 987 Other borrowings 64 22 44 ------------------------------- Total interest expense 5,072 5,258 3,270 ------------------------------- NET INTEREST INCOME 10,429 9,126 7,917 Provision for possible loan losses 330 268 333 ------------------------------- NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES 10,099 8,858 7,584 ------------------------------- Other income: Service charges on deposit accounts 698 705 605 Net securities gains 68 31 77 Mortgage banking operations 812 357 272 Other operating income 844 604 558 ------------------------------- Total other income 2,422 1,697 1,512 ------------------------------- Other expenses: Salaries and employee benefits 4,017 3,419 3,051 Net occupancy expense 546 547 430 Furniture and fixture expense 526 426 304 Other operating expenses 2,871 2,632 2,533 ------------------------------- Total other expenses 7,960 7,024 6,318 ------------------------------- Income before provision for income taxes 4,561 3,531 2,778 Provision for income taxes 1,555 1,148 845 ------------------------------- NET INCOME $3,006 $2,383 $1,933 =============================== EARNINGS PER COMMON SHARE $6.34 $4.96 $4.03 =============================== See accompanying notes to consolidated financial statements.
16
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands, except per share amounts) Net unrealized appreciation/ (depreciation) in securities Common Undivided Treasury available for sale, Years ended December 31, 1996, 1995 and 1994 stock Surplus profits Stock net of tax Total - ------------------------------------------------------------------------------------------------------------------------------ Balance at December 31, 1993 $2,400 $600 $9,144 $ - - $12,144 Net income - - 1,933 - - 1,933 Cash dividends declared, $1.30 per share - - (624) - - (624) Cumulative effect of accounting change at January 1, 1994 - - - - (192) (192) Net change in unrealized depreciation in securities available for sale, net of tax - - - - (454) (454) ----------------------------------------------------------------- Balance at December 31, 1994 $2,400 $600 $10,453 $ - ($646) $12,807 Net income - - 2,383 - - 2383 Cash dividends declared, $1.60 per share - - (768) - - (768) Net change in unrealized appreciation in securities available for sale, net of tax - - - - 668 668 Net change due to one time reassessment under SFAS No. 115 - - - - 330 330 ----------------------------------------------------------------- Balance at December 31, 1995 $2,400 $600 $12,068 $ - $352 $15,420 Net income - - 3,006 - - 3006 Cash dividends declared, $2.10 per share - - (987) - - (987) Net change in unrealized appreciation in securities available for sale, net of tax - - - - 108 108 Purchase of 10,800 shares to be held in treasury, at cost - - - (621) - (621) ----------------------------------------------------------------- BALANCE AT DECEMBER 31, 1996 $2,400 $600 $14,087 ($621) $460 $16,926 ================================================================= See accompanying notes to consolidated financial statements.
BRIDGE BANCORP, INC. AND SUBSIDIARY 17 [GRAPHIC LOGO - The Bridgehampton National Bank]
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year ended December 31, 1996 1995 1994 - ------------------------------------------------------------------------------------------------------- Operating activities: Net Income $3,006 $2,383 $1,933 Adjustments to reconcile net income to net cash provided by operating activities: Provision for possible loan losses 330 268 333 Depreciation and amortization 415 402 271 Accretion of discounts (96) (72) (64) Amortization of premiums 329 467 719 Net securities gains (68) (31) (77) (Gain) loss on sale of other real estate owned (4) 27 (24) Decrease (Increase) in accrued interest receivable 181 (220) (278) Benefit for deferred income taxes (56) (62) (38) Decrease (Increase) in other assets 235 (40) (652) Increase in accrued and other liabilities 183 955 139 ---------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 4,455 4,077 2,262 ---------------------------- Investing activities: Purchases of securities available for sale (58,901) (5,022) (14,762) Purchases of securities held to maturity (5,599) (8,345) (15,991) Proceeds from sales of securities available for sale 38,473 3,088 8,206 Proceeds from maturing securities available for sale 8,810 2 1,500 Proceeds from maturing securities held to maturity 5,761 10,635 10,396 Proceeds from principal payments on mortgage- backed securities 6,544 5,457 12,009 Net increase in loans (7,531) (16,893) (23,914) Purchases of banking premises and equipment, net of deletions (3,413) (1,329) (767) Proceeds from sales of other real estate owned 239 518 423 ---------------------------- NET CASH USED BY INVESTING ACTIVITIES (15,617) (11,889) (22,900) ---------------------------- Financing activities: Net increase in deposits 18,703 10,253 15,420 (Decrease) increase in other borrowings - (1,800) 1,800 Purchase of treasury stock (621) - - Cash dividends paid (835) (672) (600) ---------------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 17,247 7,781 16,620 ---------------------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,085 (31) (4,018) Cash and cash equivalents beginning of year 7,480 7,511 11,529 ---------------------------- CASH AND CASH EQUIVALENTS END OF YEAR $13,565 $7,480 $7,511 ============================ SUPPLEMENTAL INFORMATION - CASH FLOWS: Cash paid for: Interest $5,016 $4,214 $3,294 Income taxes $1,474 $1,214 $871 Noncash investing and financing activities: Additions to other real estate owned - - $596 Dividends declared and unpaid $680 $528 $432 Securities held for investment transferred to available for sale upon adoption of SFAS No. 115 as of January 1, 1994 - - $30,961 Securities held to maturity, transferred to available for sale due to a one time reassessment under SFAS No. 115. - $26,750 - See accompanying notes to consolidated financial statements.
18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1996, 1995 and 1994 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Bridge Bancorp, Inc. (the Company) is chartered by the State of New York as a one bank holding company. The Company's business currently consists of the operations of its wholly-owned subsidiary, The Bridgehampton National Bank (the Bank). The accounting and reporting policies of the Bank conform to generally accepted accounting principles and to general practices within the banking industry. The following is a description of the more significant accounting policies of the Company: a) BASIS OF FINANCIAL STATEMENT PRESENTATION The accompanying consolidated financial statements are prepared on the accrual basis of accounting and include the accounts of the Company and its wholly-owned subsidiary, the Bank. All material intercompany transactions and balances have been eliminated. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of each consolidated statement of condition and related consolidated statement of income for the year then ended. Actual results could differ from those estimates. Currently, material estimates that are particularly susceptible to change relate to the determination of the allowance for possible loan losses (see note 1e). b) CASH AND CASH EQUIVALENTS For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and federal funds sold which mature overnight. c) INVESTMENT IN DEBT AND EQUITY SECURITIES Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standard (SFAS) No. 115 "Accounting for Certain Investments in Debt and Equity Securities." Under SFAS No. 115, the Company is required to report readily-marketable equity and debt securities in one of the following categories: (i) "held-to-maturity" (management has a positive intent and ability to hold to maturity) which are to be reported at amortized cost; (ii) "trading" (held for current resale) which are to be reported at fair value, with unrealized gains and losses included in earnings; and (iii) "available for sale" (all other debt and marketable equity securities) which are to be reported at fair value, with unrealized gains and losses excluded from earnings and reported, net of tax, as a separate component of stockholders' equity. Accordingly, in adopting SFAS No. 115 the Bank classified all of its holdings of debt and equity securities at January 1, 1994, as either "held-to-maturity" or "available for sale". Securities held for investment with a book value of $30,961,000 were transferred to available for sale upon the adoption of SFAS No. 115 as of January 1, 1994. Adoption of SFAS No. 115 had no impact on net income but resulted in a $192,000 decrease in stockholders' equity at January 1, 1994 due to net unrealized losses on securities classified as "available-for-sale" amounting to $330,000, less estimated taxes of $138,000. Included in investment securities are mortgage-backed securities that represent participating interests in pools of long term mortgage loans originated and serviced by the issuers of the securities and real estate mortgage investment conduit (remic) certificates which represent beneficial interests in a pool of mortgage-backed securities held in a trust. These securities are carried at fair value. Premiums and discounts on investment in debt and equity securities are amortized to expense and accreted to income over the estimated life of the respective securities using a method which approximates the level yield method. Gains and losses on the sales of securities are recognized upon realization based on the specific identification method. On November 15, 1995, the Financial Accounting Standards Board (FASB) issued a special report entitled, "A Guide to Implementation of Statement No. 115 on Accounting for Certain Investments in Debt And Equity Securities, Questions and Answers" (the Guide). The Guide permitted a one-time reassessment and related reclassifications from the held to maturity category (no later than December 31, 1995) that will not call into question the intent of the enterprise to hold other debt securities to maturity in the future. In November 1995, the Company performed a reassessment of its investment in debt and equity securities which resulted in the decision to reclassify "held to maturity" securities with a book value of $26,750,000 to available for sale. The reclassification resulted in a $330,000 increase in stockholders' equity at December 31, 1995 due to unrealized gains on securities transferred to "available for sale" amounting to $563,000, less estimated taxes of $233,000. d) LOANS AND LOAN INTEREST INCOME RECOGNITION Loans are stated at the principal amount outstanding. Interest on loans is credited to income based on the principal outstanding during the period. Loans that are 90 days past due are placed on a nonaccrual basis. Exceptions to this policy are loans that are fully and adequately secured and are in the process of collection. Mortgage loans held for sale are carried at the lower of cost or estimated market value, determined on an aggregate basis. On January 1, 1995, the Bank adopted SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," and SFAS No. 118, "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures." SFAS Nos. 114 and 118 address the accounting by creditors for impairment of certain loans and the recognition of interest income on these loans and require that impairment of certain loans be measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or the fair value of collateral or the loans observable market price. A loan is considered impaired, based on current information and events, if it is probable that the Bank will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. BRIDGE BANCORP, INC. AND SUBSIDIARY 19 [GRAPHIC LOGO - The Bridgehampton National Bank] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The adoption of SFAS Nos. 114 and 118 did not have any effect on the Company's financial condition or results of operations. SFAS No. 91, "Accounting for Nonrefundable Fees and Costs Associated with Originating and Acquiring Loans," requires lenders to recognize loan origination fees, less certain direct costs, as an adjustment of a loan's yield over the life of the loan by the interest method. The Company records loan origination and commitment fees as income when received and expenses direct loan origination costs when incurred. The effect of the non-application of SFAS No.91 is immaterial. e) ALLOWANCE FOR POSSIBLE LOAN LOSSES The adequacy of the allowance for possible loan losses is determined based on management's detailed analysis of classified loans, past loss experience, current economic conditions, delinquency trends and other pertinent factors. Additions to the allowance are charged to expense and realized losses, net of recoveries, are charged to the allowance. Management believes that the allowance for possible 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 possible 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. f) BANKING PREMISES AND EQUIPMENT Banking premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation on banking premises and equipment is computed on the straight-line method over the estimated useful lives of the assets (50 years for buildings and 2 to 10 years for furniture and fixtures.) Leasehold improvements are amortized on a straight-line method over the terms of the related leases. g) OTHER REAL ESTATE OWNED Other real estate owned consists of real estate acquired by foreclosure or deed in lieu of foreclosure and is recorded at the lower of the net unpaid principal balance at the foreclosure date plus acquisition costs or fair value. Subsequent valuation adjustments are made if fair value less estimated costs to sell the property falls below the carrying amount. h) INCOME TAXES The Company follows SFAS No. 109 which requires an asset and liability approach for accounting for income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Under SFAS No. 109 deferred tax assets are recognized if it is more likely than not that a future benefit will be realized. It is management's position, as currently supported by the facts and circumstances, that no valuation allowance is necessary against any of the Company's deferred tax assets. i) TREASURY STOCK Repurchases of common stock are recorded as treasury stock at cost. j) EARNINGS PER SHARE Earnings per share were calculated based upon average shares outstanding of 473,833 in 1996 and 480,000 in 1995 and 1994. k) DIVIDENDS Cash available for dividend distribution to shareholders of the Company must initially come from dividends paid by the Bank to the Company. Therefore, the restrictions of the National Bank Act on the Bank's dividend payments are applicable to the Company and will affect the Company's ability to declare and pay future cash dividends. The Bank may not declare a dividend which would impair capital. In addition, the approval of the Regional Administrator of National Banks is required if the total of all dividends declared by the Bank in any calendar year exceeds the total of the Bank's net income of that year combined with its retained net income of the preceding two years. The Bank's capital is not impaired and under the earnings test, the Bank has approximately $4,322,000 available as of December 31, 1996 which may be paid to the Company as a dividend. l) IMPACT OF NEW ACCOUNTING STANDARDS In October 1995, the FASB issued SFAS No. 123 "Accounting for Stock Based Compensation." This Statement establishes financial accounting and reporting standards for stock based employee compensation plans. SFAS No. 123 was effective for fiscal years beginning after December 15, 1995. In management's opinion, when adopted, the aforementioned pronouncement will not have a material effect on the Company's financial position or results of operations. In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." This Statement provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities . SFAS No. 125 is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after December 31, 1996 to be applied prospectively. In management's opinion, when adopted, the aforementioned pronouncement will not have a material effect on the Company's financial position or results of operations. 20 2. REGULATORY MATTERS 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 December 31, 1996, that the Bank meets all capital adequacy requirements to which it is subject. As of December 31, 1996, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institution's category. The Bank's actual capital amounts and ratios are also presented in the following table:
As of December 31, 1996 - ------------------------------------------------------------------------------------------------------ (In thousands) TO BE WELL FOR CAPITAL CAPITALIZED UNDER ADEQUACY PROMPT CORRECTIVE ACTUAL PURPOSES ACTION PROVISIONS - ------------------------------------------------------------------------------------------------------ AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO --------- --------- --------- --------- --------- --------- Total Capital (to risk weighted assets) 17,704 11.5% 12,295 >8.0% 15,369 >10.0% Tier 1 Capital (to risk weighted assets) 16,466 10.7% 6,147 >4.0 9,221 >6.0 Tier 1 Capital (to average assets) 16,466 8.3% 7,977 >4.0 9,971 >5.0 As of December 31, 1995 - ------------------------------------------------------------------------------------------------------ (In thousands) To Be Well For Capital Capitalized Under Adequacy Prompt Corrective Actual Purposes Action Provisions - ------------------------------------------------------------------------------------------------------ Amount Ratio Amount Ratio Amount Ratio --------- --------- --------- --------- --------- --------- Total Capital (to risk weighted assets) 16,106 11.6% 11,125 >8.0% 13,907 >10.0% Tier 1 Capital (to risk weighted assets) 15,068 10.8% 5,563 >4.0 8,344 >6.0 Tier 1 Capital (to average assets) 15,068 8.0% 7,511 >4.0 9,389 >5.0
BRIDGE BANCORP, INC. AND SUBSIDIARY 21 [GRAPHIC LOGO - The Bridgehampton National Bank] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 3. INVESTMENT IN DEBT AND EQUITY SECURITIES A summary of the amortized cost, gross unrealized gains, gross unrealized losses and estimated fair value of investment securities is as follows:
December 31, 1996 - ------------------------------------------------------------------------------------- (In thousands) Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value ------------------------------------------- Available for sale: U.S. Treasury securities $16,102 $244 - $16,346 Oblig. of U.S. Government agencies 1,985 24 - 2,009 Oblig. of NY State & pol.subs. 15,567 303 - 15,870 Mortgage-backed securities 23,344 210 - 23,554 ------------------------------------------- Total available for sale $56,998 $781 - $57,779 ------------------------------------------- Held to maturity: Oblig. of NY State & pol.subs. $5,179 $11 - $5,190 Non marketable Equity securities: Federal Reserve Bank Stock $36 - - $36 Federal Home Loan Bank Stock 1,047 - - 1,047 ------------------------------------------- Total held to maturity $6,262 $11 - $6,273 ------------------------------------------- Total debt and equity securities $63,260 $792 - $64,052 =========================================== December 31, 1995 - ------------------------------------------------------------------------------------- (In thousands) Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value ------------------------------------------- Available for sale: U.S. Treasury securities $16,947 $254 $1 $17,200 Oblig. of NY State & pol.subs. 12,708 268 4 12,972 Mortgage-backed securities 22,433 261 177 22,517 ------------------------------------------- Total available for sale $52,088 $783 $182 $52,689 ------------------------------------------- Held to maturity: Oblig. of NY State & pol.subs. $5,762 - - $5,762 Non marketable Equity securities: Federal Reserve Bank Stock $36 - - $36 Federal Home Loan Bank Stock 627 - - 627 ------------------------------------------- Total held to maturity $6425 - - $6425 ------------------------------------------- Total debt and equity securities $58,513 $783 $182 $59,114 ===========================================
The amortized cost and estimated fair value of investment in debt securities at December 31, 1996, by contractual maturity, are shown below. 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.
December 31, 1996 - ---------------------------------------------------------------------------- (In thousands) Amortized Estimated Cost Fair Value -------------------- Available for Sale: Due in one year or less $3,609 $3,646 Due after one year through five years 24,690 25,110 Due after five years through ten years 7,621 7,728 Due after ten years 21,078 21,295 -------------------- Total debt securities $56,998 $57,779 ==================== Held to Maturity: Due in one year or less $6,262 $6,273 -------------------- Total debt securities $6,262 $6,273 ====================
Proceeds from sales of available for sale securities were approximately $38,473,000, $3,088,000 and $8,206,000 in 1996, 1995 and 1994, respectively. Gross gains of approximately $257,000, $38,000 and $93,000 were realized on sales of available for sale securities during 1996, 1995 and 1994, respectively. Gross losses of approximately $189,000, $7,000 and $16,000 were realized on sales of available for sale securities during 1996, 1995 and 1994, respectively. There were no sales of held to maturity securities during 1996, 1995 and 1994. Investment securities having an amortized cost of approximately $60,478,000 and $26,487,000 at December 31, 1996 and 1995, respectively, were pledged to secure public deposits. Investments in debt and equity securities which exceed 10% of stockholders' equity for any one issuer (other than U.S. Government securities) are as follows:
December 31, 1996 - ----------------------------------------------------------- (In thousands) Estimated Amortized Fair Cost Value - ----------------------------------------------------------- Montauk UFSD $1,895 $1,899 ------------------------ Total $1,895 $1,899 ========================
22 4. LOANS Loans are summarized as follows:
December 31, 1996 1995 - ------------------------------------------------------------ (In thousands) Real estate loans $93,639 $81,394 Unsecured business and personal loans 13,211 11,798 Secured business and personal loans 317 654 Installment/consumer loans 11,714 17,634 -------------------- Loans 118,881 111,480 Less: Allowance for possible loan losses 1,238 1,038 -------------------- Net loans $117,643 $110,442 ====================
LENDING RISK The principal business of the Bank is lending, primarily in commercial real estate loans, building loan mortgages, home equity loans, land loans, consumer loans, home advantage loans, residential mortgages and commercial loans. . The Bank considers its primary lending area as the five east end towns of Suffolk County, New York. Since the primary lending area of the Bank is the eastern end of Long Island, the loan portfolio as a whole is dependent on the economic conditions of the geographical market served by the Bank. At December 31, 1996 and 1995, the recorded investment in loans for which impairment has been recognized in accordance with SFAS Nos. 114 and 118 totaled $269,000 and $507,000, respectively. all of which were nonaccrual loans. No valuation allowance has been recorded. The average recorded investment in impaired loans for the years ended December 31, 1996 and 1995 was approximately $238,000 and $400,000, respectively. NONACCRUAL LOANS Nonaccrual loans at December 31, 1996, 1995 and 1994 amounted to approximately $269,000, $507,000 and $422,000, respectively. The additional interest income that would have been recorded had these nonaccrual loans performed in accordance with their original terms was approximately $8,000, $58,000 and $19,000 in 1996, 1995 and 1994, respectively. At December 31, 1996 there was one loan totaling $1,000 over 90 days past due and still accruing interest. There were no loans over 90 days past due and still accruing at December 31, 1995 and 1994. RELATED PARTY LOANS Certain directors and related parties, including their immediate families and companies in which they are principal owners, were loan customers of the Bank during 1996, 1995 and 1994. Such loans were made in the ordinary course of business at normal credit terms, including interest rate and security, and do not represent more than normal risk of collection. The aggregate amount of these loans was approximately $192,000, $164,000, and $309,000 at December 31, 1996, 1995 and 1994, respectively. There were no letters of credit for directors at December 31, 1996, 1995 and 1994. The following analysis shows the activity of director loans for 1996 and 1995:
1996 1995 - ---------------------------------------------------- (In thousands) Balance at January 1, $164 $309 Loans originated 115 200 Principal payments (87) (345) ---------------- Balance at December 31, $192 $164 ================
After one year of continuous service, employees of the Bank receive a discount on the interest rate charged for all loan types. Employees also receive a discount on the origination fees of real estate loans. The aggregate amount of these loans was approximately $895,000 and $637,000 at December 31, 1996 and 1995, respectively. 5. ALLOWANCE FOR POSSIBLE LOAN LOSS Changes in the allowance for possible loan losses are summarized as follows:
December 31, 1996 1995 1994 - ------------------------------------------------------------------------ (In thousands) Balance at January 1, $1,038 $944 $747 ------------------------- Provision for possible loan losses 330 268 333 ------------------------- Recoveries 145 56 40 Loans charged-off (275) (230) (176) ------------------------- Net loans charged- off (130) (174) (136) ------------------------- Balance at December 31, $1,238 $1,038 $944 =========================
6. BANKING PREMISES AND EQUIPMENT Banking premises and equipment consist of:
December 31, 1996 1995 - ------------------------------------------------------------ (In thousands) Land $1,546 $1,546 Building and improvements 4,125 1,150 Furniture and fixtures 2,354 1,936 Leasehold improvements 246 227 ---------------- 8,271 4,859 Less accumulated depreciation and amortization 1,498 1,084 ---------------- Balance at December 31, $6,773 $3,775 ================
BRIDGE BANCORP, INC. AND SUBSIDIARY 23 [GRAPHIC LOGO - The Bridgehampton National Bank] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The Bank owns approximately 3.3 acres of property obtained at a total cost of approximately $1,396,000 for the planned construction of a new 18,500 square foot main office and administrative facility. During 1995, the Bank received town planning board approval and a building permit was issued. Construction began in October of 1995 and continued throughout 1996. The construction and site work costs of the project are estimated at $4,000,000. To date $3,447,000 has been capitalized to construction in progress and is included in building and improvements in the preceding table. A spring 1997 completion date is anticipated. 7. INCOME TAXES The components of the provision for income taxes are as follows:
Year ended December 31, 1996 1995 1994 - ------------------------------------------------------------- (In thousands) Current: Federal $1,152 $846 $581 State 459 364 302 ------------------------- 1,611 1,210 883 ------------------------- Deferred: Federal (43) (51) (27) State (13) (11) (11) ------------------------- (56) (62) (38) ------------------------- Total $1,555 $1,148 $845 =========================
The reconciliation of the expected Federal income tax expense at the statutory tax rate to the actual provision follows:
Year ended December 31, 1996 1995 1994 - ------------------------------------------------------------------------------------------------ (In thousands) PERCENTAGE Percentage Percentage OF PRE-TAX of Pre-tax of Pre-tax AMOUNT EARNINGS Amount Earnings Amount Earnings - ------------------------------------------------------------------------------------------------ Federal income tax expense computed by applying the statutory rate to income before income taxes $1,551 34% $1,201 34% $945 34% Tax exempt interest (330) (7) (328) (9) (321) (12) State taxes, net of Federal income tax benefit 294 6 233 7 192 7 Interest disallowed 32 1 37 1 27 1 Other 8 - 5 - 2 - ---------------------------------------------------------- Provision for income taxes $1,555 34% $1,148 33% $845 30% ==========================================================
Deferred tax assets and liabilities are comprised of the following: December 31December 31December 31, 1996 1995 1994 - ------------------------------------------------------------------------ (In thousands) Deferred tax assets: Allowance for possible loan losses $414 $346 $313 Depreciation - 7 - Pension expense - - 19 Securities available for sale - - 465 Other 1 - - --------------------------------- Total $415 $353 $797 --------------------------------- Deferred tax liabilities: Pension expense ($1) ($28) $ - Depreciation (42) - (69) Other - (9) (9) Securities available for sale (321) (249) - --------------------------------- Total ($364) ($286) ($78) --------------------------------- Net deferred tax assets $51 $67 $719 =================================
8. EMPLOYEE BENEFITS a. PENSION PLAN The Bank maintains a non-contributory pension plan through the New York State Bankers Association Retirement System covering all eligible employees. The following table sets forth the plan's funded status as of September 30, 1996 and 1995 (measurement dates). 24
1996 1995 1994 - -------------------------------------------------------------------------------- (In thousands) Actuarial present value of benefit obligations at September 30: Accumulated benefit obligation, including vested benefits of approximately $(757) in 1996 and $(668) in 1995 ($786) ($685) ================= Projected benefit obligation for service rendered to date (1,132) (1,000) Plan assets, primarily marketable securities, at fair value 1,324 1,116 ----------------- Plan assets in excess of projected benefit obligation 192 116 Unrecognized net (gain)/loss from past experience different than assumed 28 83 Unrecognized prior service cost (22) (23) Unrecognized net asset being recognized over 18.31 years (83) (92) ----------------- Prepaid pension cost $115 $84 ================= Net periodic pension cost for fiscal 1996, 1995 and 1994 included the following components: Service cost - benefits earned during the period $115 $97 $95 Interest cost on projected benefit obligation 74 68 60 Expected return on plan assets (96) (78) (71) Amortization of transition asset (9) (9) (9) Amortization of prior service cost (2) (2) 2 ------------------------- Net periodic pension cost $82 $76 $77 =========================
At September 30, 1996 and 1995 weighted-average discount rates of 7.75% and 8.0%, respectively, a rate of increase in future compensation levels of 5.5% and 5.0%, respectively, were used in determining the actuarial present value of the projected benefit obligation. The expected long-term rate of return on assets was 8.5% at September 30, 1996 and 1995. b. EQUITY INCENTIVE PLAN During 1996, an equity incentive plan was approved by the stockholders to provide for the grant of options to purchase up to a total of 48,000 shares of common stock of the Company and for the award of shares of common stock as a bonus. Such shares may be subject to restrictions based on continued service or performance as employees of the Company or subsidiaries of the Company. Options awarded under the plan are determined by the Incentive Compensation Committee of the Board of Directors. Subsequent to December 31, 1996, options to purchase 4,800 shares were awarded to ten key decision making executives at an exercise price of $61.00 per share, which options vest immediately and are based on the fair market value of the stock on the date of the grant of the options. 9. OTHER INCOME AND EXPENSES a) Components of other operating income which exceed one percent of the aggregate of total interest income and other income are as follows:
December 31, 1996 1995 1994 - ----------------------------------------------------------- (In thousands) Checkbook charges $187 $174 $150 Credit card processing 369 321 299
b) Components of other operating expenses which exceed one percent of the aggregate of total interest income and other income are as follows:
December 31, 1996 1995 1994 - ----------------------------------------------------------- (In thousands) Data\Item processing $336 $345 $344 Check printing $160 $146 122 Credit card processing $122 $104 140 Loan Servicing $222 $249 236 Advertising $225 $93 $78
10. COMMITMENTS AND CONTINGENCIES AND OTHER MATTERS a. LEASES The Company is obligated to make minimum annual rental payments under non-cancellable operating leases on its premises and automobiles. The projected minimum rentals under existing leases at December 31, 1996 are as follows (in thousands):
1997 175 1998 143 1999 72 2000 42 2001 44 Thereafter 156
Certain leases contain renewal options and rent escalation clauses. In addition, certain leases provide for additional payments based upon real estate taxes, interest and other charges. Rental expenses under these leases for the years ended December 31, 1996, 1995 and 1994 approximated $243,000, $266,000 and $212,000, respectively. BRIDGE BANCORP, INC. AND SUBSIDIARY 25 [GRAPHIC LOGO - The Bridgehampton National Bank] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) b. LOANS In the normal course of business, there are various outstanding commitments and contingent liabilities, such as guarantees and commitments to extend credit, which are not reflected in the accompanying financial statements. No material losses are anticipated as a result of these transactions. The following represents commitments outstanding:
December 31, 1996 1995 - --------------------------------------------------------- (In thousands) Standby letters of credit $1,170 $1,993 Loan commitments outstanding 6,720 6,508 Unused equity lines 4,279 2,934 Unused construction lines 6,328 2,854 Unused lines of credit 5,381 3,703 Unused overdraft lines 1,846 1,676 ------------------ Total commitments outstanding $25,724 $19,668 ==================
c. OTHER During 1996, the Bank was required to maintain certain cash balances with the Federal Reserve Bank of New York for reserve and clearing requirements. These balances averaged $1,232,000 in 1996. The Bank maintains an overnight line of credit with the Federal Home Loan Bank of New York. At year end 1996 and 1995, the line of credit available was $9,913,700 and $9,235,400, respectively. There was no amount outstanding at years ending December 31, 1996 and 1995. 11. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS The following table presents the carrying amounts and fair values of the Bank's financial instruments at December 31, 1996 and 1995. SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale:
December 31, 1996 1995 - ----------------------------------------------------------------------------------------- (in thousands) CARRYING FAIR Carrying Fair AMOUNT VALUE Amount Value --------------------------------------------- Financial Assets: Cash and due from banks 12,247 12,247 7,404 7,404 Interest bearing deposits with banks 68 68 76 76 Securities available-for-sale 57,779 57,779 52,689 52,689 Securities held-to-maturity 6,262 6,273 6,425 6,425 Loans 117,643 117,775 110,442 111,044 Accrued interest receivable 1,343 1,343 1,524 1,524 Financial Liabilities: Demand and other deposits 184,847 184,849 166,144 166,154 Accrued interest payable 1,537 1,537 1,474 1,474
LIMITATIONS The preceding estimates are made at a specific point in time and may be based on judgments regarding losses expected in the future, risk, and other factors which are subjective in nature. The methods and assumptions used to produce the fair value estimates are listed below. CASH AND DUE FROM BANKS, FEDERAL FUNDS SOLD AND INTEREST BEARING DEPOSITS WITH BANKS For these short term instruments, the carrying amount is a reasonable estimate of fair value. INVESTMENT SECURITIES For securities held in the Bank's investment portfolio, fair value was determined by reference to quoted market prices. LOANS The fair value of the Bank's loan portfolio is based on the credit and interest rate characteristics of the individual loans within each sector of the portfolio. The loan portfolio was stratified by type, maturity, interest rate, collateral type, where applicable, and credit quality ratings. The fair valuation of loans were estimated by discounting scheduled cash flows through the estimated maturities using discount rates, which in the opinion of management best reflect current market interest rates that would be charged on loans (or groups of loans) with similar characteristics and credit quality. Credit risk concerns were reflected either by adjusting cash flow forecasts or by adjusting the discount rate, or by a combination of both. ACCRUED INTEREST As accrued interest represents short term receivables and payables, the carrying amount is a reasonable estimate of the fair value. DEPOSIT LIABILITIES The estimated fair value of demand deposits, savings accounts, and money market deposits with no stated maturities is the amount payable on demand at the reporting date. The fair value of fixed maturity certificates of deposit is estimated by the present value of estimated future cash flows using rates currently offered for deposits of similar remaining maturities. COMMITMENTS TO EXTEND CREDIT, STANDBY LETTERS OF CREDIT The fair value of the commitments to extend credit listed in the preceding Note 10 "Commitments and Contingencies and Other Matters" were estimated to be insignificant. The fair value of commitments to extend credit and standby letters of credit were evaluated using fees currently charged to enter into similar agreements, taking into account the risk characteristics of the borrower. 26
12. BRIDGE BANCORP, INC. (PARENT COMPANY ONLY) CONDENSED STATEMENTS OF FINANCIAL CONDITION December 31, 1996 1995 - ---------------------------------------------------------------------------------- (In Thousands) ASSETS Cash and cash equivalents $3 $4 Dividend receivable 680 528 Investment in the Bank 16,923 15,416 -------------------- TOTAL ASSETS $17,606 $15,948 ==================== LIABILITIES Dividends payable 680 528 -------------------- TOTAL LIABILITIES $680 $528 ==================== STOCKHOLDERS' EQUITY Stockholders' Equity $17,547 $15,420 Treasury stock at cost, 10,800 shares ($621) - -------------------- TOTAL STOCKHOLDERS' EQUITY $16,926 $15,420 ==================== TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,606 $15,948 ====================
CONDENSED STATEMENTS OF INCOME Year ended December 31, 1996 1995 1994 - -------------------------------------------------------------------------------------------- (In Thousands) Dividend income from the Bank $1,608 $768 $624 Other operating expenses $1 - - ------------------------------ Income before income taxes and equity in undistributed earnings of the Bank 1,607 768 624 Income tax provision - - (2) ------------------------------ Income before equity in undistributed earnings of the Bank 1,607 768 622 Equity in undistributed earnings of the Bank 1,399 1,615 1,311 ------------------------------ Net income $3,006 $2,383 $1,933 ==============================
CONDENSED STATEMENTS OF CASH FLOWS Year ended December 31, 1996 1995 1994 - -------------------------------------------------------------------------------------------- (In Thousands) Cash flows used by operations: Other operating expenses ($1) - - ------------------------------ Net cash used by operating activities ($1) - - Cash flows from investing activities: Dividends received 1,456 672 600 ------------------------------ Net cash provided by investing activities 1,456 672 600 Cash flows used by financing activities: Payment for the purchase of treasury stock (621) Dividends paid (835) (672) (600) ------------------------------ Net cash used by financing activities (1,456) (672) (600) Net decrease in cash and cash equivalents (1) - - Cash and cash equivalents at beginning of year 4 4 4 ------------------------------ Cash and cash equivalents at end of year $3 $4 $4 ============================== Reconciliation of net income to net cash used by operating activities: Net income $3,006 $2,383 $1,933 Adjustments to reconcile net income to net cash used by operating activities: Equity in undistributed earnings of the Bank (1,399) (1,615) (1,311) Dividend income (1,608) (768) (624) Decrease in other assets - - 2 ------------------------------ Net cash used by operating activities ($1) $ - $ - ==============================
BRIDGE BANCORP, INC. AND SUBSIDIARY 27 [GRAPHIC LOGO - The Bridgehampton National Bank] REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS The Board of Directors and Stockholders Bridge Bancorp, Inc.: We have audited the consolidated statements of condition of Bridge Bancorp, Inc. and subsidiary as of December 31, 1996 and 1995, and the related consolidated statements of income, stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management . Our responsibility is to express an opinion on these financial statements based on our audits. The consolidated financial statements of Bridge Bancorp, Inc. and subsidiary as of December 31, 1994, and for the year then ended were audited by other auditors whose report, dated February 3, 1995, expressed an unqualified opinion on those statements. Such report included an explanatory paragraph that discussed a change in accounting principles relating to the adoption of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities", effective January 1, 1994. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bridge Bancorp, Inc. and subsidiary as of December 31, 1996 and 1995, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ Arthur Andersen LLP - ----------------------- Arthur Andersen LLP New York, New York January 31, 1997
COMMON STOCK INFORMATION The Company's common stock is traded on the NASDQ over the counter bulletin board market under the symbol "BDGE". The following table details the quarterly high and low prices of the Company's common stock and the dividends declared for such periods. At December 31, 1996 the Company had approximately 606 holders of its common stock. Cash Stock Prices Dividends High Low Declared - ------------------------------------------------------------------------------------ BY QUARTER 1996 - ------------------------------------------------------------------------------------ FIRST $48 $48 - SECOND 57 48 $0.65 THIRD 60 57 - FOURTH 61 60 $1.45 - ------------------------------------------------------------------------------------ By Quarter 1995 - ------------------------------------------------------------------------------------ First $33 1/2 $33 1/2 - Second $0.50 Third $38 $34 1/2 - Fourth $48 $39 $1.10 There were no per share prices known to the Company during the period indicated. There were no per share prices known to the Company during the period indicated.
28
BOARD OF DIRECTORS AND AFFILIATIONS BANK OFFICERS NOTICE OF ANNUAL MEETING The Annual Meeting of Shareholders is Raymond Wesnofske Thomas J. Tobin scheduled for 3:30 p.m. Tuesday, April Chairman President and Chief Executive Officer 15, 1997 at the Bridgehampton Wesnofske Produce, Inc. Community House, Main Street, Bridgehampton, NY SENIOR VICE PRESIDENTS Bridgehampton, NY 11932. Thomas J. Tobin Christopher Becker BANKING OFFICES President and Chief Executive Officer Chief Financial Officer The Bridgehampton National Bank MAIN OFFICE Jean Irvine Montauk Highway, Bridgehampton, Thomas E. Halsey Human Resources and CRA NY 11932 Holly Hill Nursery 516/537-1000 Fax 516/537-1835 Water Mill, NY Michael P. Kochanasz Sales and Marketing SOUTHAMPTON Marcia Z. Hefter 425 County Road 39, Southampton, Esseks, Hefter & Angel Anthony Leone NY 11968 Counselor of Law Credit Administration 516/283-1286 Fax 516/287-3309 Riverhead, NY Diane Reutershan EAST HAMPTON R. Timothy Maran Branch Administration and Cashier 26 Park Place, East Hampton, Maran, DeBaun, Cruise & Simonson NY 11937 Southampton, Hampton Bays, VICE PRESIDENTS 516/324-8480 Fax 516/329-1485 Westhampton, NY Peter M. Coleman SOUTHOLD Albert E. McCoy Commercial Loan Officer 54970 Main Road, Southold, NY 11971 W.F. McCoy Petroleum Products, Inc. 516/765-1500 Fax 516/765-1605 McCoy Bus Co., Inc. Donald P. Gauthier, Jr. Bridgehampton, NY Residential Loan Officer MATTITUCK Mattituck Shopping Center, Main Road, Walter A. Preische, Jr. Carol Kennedy Mattituck, NY 11952 Markowitz Preische & Stevens, P.C. Loan compliance and workouts 516/298-0190 Fax 516/298-0194 Certified Public Accountant East Hampton, NY Thomas H. Simson MONTAUK Chief Information Officer 1 The Plaza, Montauk, NY 11954 Lawrence H. Strickland 516/668-6400 Fax 516/668-6412 Vice Chairman Janet T. Verneuille Peter Lyle, Inc., Financial Services Comptroller RESIDENTIAL MORTGAGE AND Bridgehampton, NY LOAN CENTER ASSISTANT VICE PRESIDENTS 184 Old Country Road, Route 58, COMPANY OFFICERS Riverhead, NY 11901 Donald Brancaccio 516/369-4300 Fax 516/369-4388 Thomas J. Tobin Residential Mortgage Center President and Chief Executive Officer 10-KSB REPORT Michelle Dosch A copy of the Annual Report on Form Christopher Becker Financial Operations 10-KSB, filed with the Securities and Senior Vice President and Treasurer Exchange Commission, is available upon Maureen P. Mougios request by any shareholder of the Jean Irvine Director of Internal Audit Company at no charge. Write to Senior Vice President Michael P. Kochanasz, Senior Vice Susan Ruthinowski President and Secretary at Bridge Michael P. Kochanasz Small Business Services Bancorp, Inc., P.O. Box 3005, Senior Vice President and Secretary Bridgehampton, NY 11932. Peter Schaefer Anthony Leone Loan Representative INTERNET WEBSITE ADDRESS Senior Vice President http://www.peconic.net/bnb/ Robert Staron Diane Reutershan Loan Representative Senior Vice President Ann K. Sweeney Loan Representative ASSISTANT CASHIERS Donna A. Cramer Branch Manager - Main Office David E. Hawkes Branch Manager - Southampton Henry B. Jacobs Branch Manager - Mattituck John J. McDonald Branch Manager - Montauk Kimberly Romano Deputy Comptroller Toni Somerstein Branch Manager - East Hampton Kenneth M. Tobin Systems Analyst Designed by Curran & Connors, Inc. Testimonial Photographs: Michael Pateman Architectural Photograph: Gil Amiaga
[GRAPHIC LOGO - The Bridgehampton National Bank] BRIDGE BANCORP, INC. MONTAUK HIGHWAY BRIDGEHAMPTON, NEW YORK 11932 (516) 537-1000 EX-13.2 4 INDEPENDENT AUDITORS' REPORT DECEMBER 31, 1994 Independent Auditors' Report ---------------------------- The Stockholders and Board of Directors Bridge Bancorp: We have audited the consolidated statements of income, stockholders' equity, and cash flows of Bridge Bancorp and subsidiary for the year ended December 31, 1994. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statement referred to above present faily, in all material respects, the results of operations and the cash flows of Bridge Bancorp and subsidiary for the year ended December 31, 1994, in conformity with generally accepted accounting principles. As described in note 1(c), the Company adopted the provisions of Statement of Accounting Standards No. 115, "Accounting for Certain Debt and Equity Securities" effective January 1, 1994. KPMG PEAT MARWICK LLP Jericho, New York February 3, 1995 EX-27 5 FDS - 12/31/96
9 0000846617 Bridge Bancorp, Inc. 1000 12-MOS Dec-31-1996 Dec-31-1996 12,247 68 1250 0 57779 6262 6273 118881 1238 204614 184847 1537 1304 0 0 0 2400 621 204614 11261 3850 390 15501 5008 5072 10099 330 68 7960 4561 4561 0 0 3006 6.34 0 5.70 269 1 0 0 1038 275 145 1238 1238 0 0
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