CORRESP 1 filename1.txt January 13, 2010 Via EDGAR --------- Christian Windsor Special Counsel Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Re: Bridge Bancorp, Inc. Form 10-K for Year Ended December 31, 2008 File No. 001-34096 ------------------------- Dear Mr. Windsor: I am responding to the letter from the Securities and Exchange Commission (the "SEC") addressed to Bridge Bancorp, Inc. (the "Company") dated December 29, 2009 relating to the above-referenced filing. The Company's responses are numbered to correspond with the numbers of the comments contained in the SEC letter. For your convenience, we have included a copy of the text of the staff's comment above each response by the Company. Proxy Statement --------------- Named Executive Officers, page 5 -------------------------------- 1. You only provide compensation information for four persons. Item 402(a)(3)(iii) of Regulation S-K requires that disclosure be provided for your three most highly compensated executive officers, other than the principal executive officer and the principal financial officer, who were serving as executive officers at the end of the last completed fiscal year. An executive officer is any executive with policy making authority, whether or not an executive officer under your charter and bylaws. In future filings please ensure that you provide appropriate disclosure for all individuals for whom disclosure is required under Item 402 of Regulation S-K. Refer to Item 402(a)(3) of Regulation S-K, Instruction 1 to Item 402(a)(3) of Regulation S-K, and Exchange Act Rule 3b-7. Response: We did provide compensation information for all executive -------- officers of the Company other than the principal executive officer and the principal financial officer. We will continue to ensure that compensation information is provided for all individuals for whom disclosure is called for under Item Christian Windsor January 13, 2010 Page 2 402(a)(3), and Instruction 1 to Item 402(a)(3), of Regulation S-K, and Exchange Act Rule 3b-7. Short Term Incentive Compensation, page 15 ------------------------------------------ 2. You say that you are using targets to award compensation. In future filings please provide the actual targets and the company's performance and explain how those targets resulted in the incentive compensation awarded to the named executive officers. If did not disclose the performance targets because you believed that disclosure of the historical targets would result in competitive harm such that the targets could be excluded under Instruction 4 to Item 402(b) of regulation S-K, please provide a detailed supplemental analysis supporting your conclusion, or confirm that you will disclose the targets in future filings. If you choose to provide a competitive harm analysis, your analysis should clearly explain the nexus between disclosure of the performance objectives and the competitive harm that is likely to result from disclosure. Refer to Item 402(b)(2)(v) of Regulation S-K and Regulation S-K Compliance and Disclosure Interpretation of 118.04. Response: In future filings we will provide the actual targets and the company's -------- performance and explain how those targets resulted in the incentive compensation awarded to the named executive officers. Proposed disclosure is set forth below: The Plan has four performance goals: core deposit growth, return on average equity, earnings per share growth and the efficiency ratio. For core deposit growth in 2008, the Board established goals of 8%, 10% and 12% for threshold, target and maximum, respectively. For the other three measures, the Board has chosen to benchmark the Plan to the peer group. For any given year, we look at the trailing twelve months of performance as of September 30. Based on those figures, we set our threshold, target and maximum performance levels as follows: o Threshold Performance: 100% of the Peer Median o Target Performance: 110% of the Peer Median o Maximum Performance: 125% of the Peer Median Christian Windsor January 13, 2010 Page 3 In order to earn a minimum payout, the Company's performance achievement must equal or exceed the threshold level. For 2008, the Company's performance achievement was as follows:
PEER Performance Achievement Threshold Target Maximum 100% of 110% of 125% of BDGE Actual 2008 Performance Measures Median Median Median Results Weight Achievement ------------------------------------------------------------------------------------------------------ ROAE 8.6% 9.5% 10.8% 16.4% 35% 35% EPS Growth -17.7% -16.1% -14.1% 2.9% 35% 35% Efficiency Ratio 63.3% 57.6% 50.7% 57.5% 20% 10.1% Core Deposit Growth 8% 10% 12% 15.2% 10% 10% --------- ------------ % of maximum payout achieved 100% 90.1% --------- ------------
For 2008, the Company achieved 90.1% of the maximum incentive opportunity resulting in the following payout % for each NEO:
Payout Opportunity as a % of Base Salary Actual Payout NEO Threshold % Target % Maximum % % of Base Salary --- ----------- -------- --------------- ---------------- Kevin M. O'Connor 22.5% 45% 90% 81.1% Howard H. Nolan 17.5% 35% 70% 63.1% Kevin L. Santacroce 12.5% 25% 50% 45.1%
September 30, 2009 Form 10-Q ---------------------------- Condensed Notes to the Consolidated Financial Statements -------------------------------------------------------- Note 5. Securities, page 7 -------------------------- 3. Please revise your future filings to separately disclose information related to your mortgage backed securities and your collateralized mortgage obligations. Alternatively, please tell us why you believe these securities have similar economic characteristics that warrant an aggregate disclosure. Please provide us with your proposed disclosures. Refer to ASC 320-10-50-1. Christian Windsor January 13, 2010 Page 4 Response: In future filings we will separately disclose information related to -------- mortgage backed securities and collateralized mortgage obligations. Proposed disclosure is set forth below: The following table summarizes the amortized cost and fair value of the available for sale and held to maturity investment securities portfolio at September 30, 2009 and December 31, 2008 and the corresponding amounts of unrealized gains and losses therein:
September 30, 2009 ----------------------------------------------------------------------- (In thousands) Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value ----------------------------------------------------------------------- Available for sale: U.S. Treasury securities $ 10,000 $ - $ - $ 10,000 U.S. GSE securities 32,102 305 - 32,407 State and municipal obligations 40,592 1,733 - 42,325 Mortgage-backed securities 104,104 5,143 (20) 109,227 Collateralized mortgage obligations 94,594 2,755 - 97,349 ---------------------------------------------------------------------- Total available for sale 281,392 9,936 (20) 291,308 ---------------------------------------------------------------------- Held to maturity: State and municipal obligation 48,051 425 (5) 48,471 Mortgage-backed securities - - - - Collateralized mortgage obligations 14,483 648 - 15,131 ---------------------------------------------------------------------- Total held to maturity 62,534 1,073 (5) 63,602 ---------------------------------------------------------------------- Total securities $ 343,926 $ 11,009 $ (25) $ 354,910 ----------------- ----------------- ----------------- ----------------- December 31, 2008 ----------------------------------------------------------------------- (In thousands) Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value ----------------------------------------------------------------------- Available for sale: U.S. Treasury securities $ - $ - $ - $ - U.S. GSE securities 29,855 306 (27) 30,134 State and municipal obligations 47,848 840 (100) 48,588 Mortgage-backed securities 143,372 3,637 (54) 146,955 Collateralized mortgage obligations 83,953 1,094 (29) 85,018 ----------------------------------------------------------------------- Total available for sale 305,028 5,877 (210) 310,695 ----------------------------------------------------------------------- Held to maturity: State and municipal obligation 24,153 68 (4) 24,217 Mortgage-backed securities - - - - Collateralized mortgage obligations 19,291 382 - 19,673 ----------------------------------------------------------------------- Total held to maturity 43,444 450 (4) 43,890 ----------------------------------------------------------------------- Total securities $ 348,472 $ 6,327 $ (214) $ 354,585 -----------------------------------------------------------------------
Christian Windsor January 13, 2010 Page 5 Securities with unrealized losses at September 30, 2009 and December 31, 2008, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:
September 30, 2009 Less than 12 months Greater than 12 months Total ------------------------- ------------------------- ------------------------- (In thousands) Unrealized Unrealized Unrealized Fair Value losses Fair Value losses Fair Value losses ------------ ------------ ------------ ------------ ------------ ------------ Available for sale: U.S. Treasury securities $ - $ - $ - $ - $ - $ - U.S. GSE securities - - - - - - State and municipal obligations - - - - - - Mortgage-backed securities 3,580 20 - - 3,580 20 Collateralized mortgage obligations - - - - - - ------------ ------------ ------------ ------------ ------------ ------------ Total available for sale $ 3,580 $ 20 $ - $ - $ 3,580 $ 20 ------------ ------------ ------------ ------------ ------------ ------------ Held to maturity: State and municipal obligations $ 8,745 $ 5 $ - $ - $ 8,745 $ 5 Mortgage-backed securities - - - - - - Collateralized mortgage obligations - - - - - - ------------ ------------ ------------ ------------ -- ------------ ------------ Total held to maturity $ 8,745 $ 5 $ - $ - $ 8,745 $ 5 ------------ ------------ ------------ ------------ ------------ ------------ December 31, 2008 Less than 12 months Greater than 12 months Total ------------------------- ------------------------- ------------------------- (In thousands) Unrealized Unrealized Unrealized Fair Value losses Fair Value losses Fair Value losses ------------ ------------ ------------ ------------ ------------ ------------ Available for sale: U.S. Treasury securities $ - $ - $ - $ - $ - $ - U.S. GSE securities 4,319 27 - - 4,319 27 State and municipal obligations 2,160 51 701 49 2,861 100 Mortgage-backed securities 6,924 35 1,529 19 8,453 54 Collateralized mortgage obligations 10,300 29 - - 10,300 29 ------------ ------------ ------------ ------------ ------------ ------------ Total available for sale $ 23,703 $ 142 $ 2,230 $ 68 $ 25,933 $ 210 ------------ ------------ ------------ ------------ ------------ ------------ Held to maturity: State and municipal obligations $ 3,996 $ 4 $ - $ - $ 3,996 $ 4 Mortgage-backed securities - - - - - - Collateralized mortgage obligations - - - - - - ------------ ------------ ------------ ------------ -- ------------ ------------ Total held to maturity $ 3,996 $ 4 $ - $ - $ 3,996 $ 4 ------------ ------------ ------------ ------------ ------------ ------------
Christian Windsor January 13, 2010 Page 6 In addition to the above, we also will provide the following additional disclosure in Note 6, Estimated Fair Value of Financial Instruments, to the Condensed Notes to the Consolidated Financial Statements. Assets and Liabilities Measured on a Recurring Basis:
Fair Value Measurements at September 30, 2009 Using: ------------------------------------------------------------- Significant Quoted Prices In Other Significant Active Markets for Observable Unobservable Carrying Identical Assets Inputs Inputs (In thousands) Value (Level 1) (Level 2) (Level 3) ------------ ------------------------ --------------- --------------- Financial Assets: Available for sale securities U.S. Treasury securities $ 10,000 $ 10,000 U.S. GSE securities 32,407 $ 32,407 State and municipal obligations 42,325 42,325 Mortgage-backed securities 109,228 109,228 Collateralized mortgage obligations 97,348 97,348 ------------ ------------------------ --------------- Total available for sale $ 291,308 $ 10,000 $ 281,308 ============ ======================== =============== Fair Value Measurements at December 31, 2008 Using: ------------------------------------------------------------- Significant Quoted Prices In Other Significant Active Markets for Observable Unobservable Carrying Identical Assets Inputs Inputs (In thousands) Value (Level 1) (Level 2) (Level 3) ------------ ------------------------ --------------- --------------- Financial Assets: Available for sale securities U.S. Treasury securities $ - $ - U.S. GSE securities 30,134 30,134 State and municipal obligations 48,588 48,588 Mortgage-backed securities 146,955 146,955 Collateralized mortgage obligations 85,018 85,018 ------------ --------------- Total available for sale $ 310,695 $ 310,695 ============ ===============
Christian Windsor January 13, 2010 Page 7 Management's Discussion and Analysis of Financial Condition and Results of -------------------------------------------------------------------------- Operations Provision and Allowance for Loan Losses, page 23 ----------------------------------------------------------- 4. Given the material increases in both impaired loans and the provision and allowance for loan losses, please revise your disclosures in all future filings, including interim filings, to provide an analysis of the allowance for loan losses and an allocation of the allowance for loan losses by loan type. Refer to Item IV of Industry Guide 3. Response: In future filings we will provide an analysis of the allowance for -------- loan losses and an allocation of the allowance for loan losses by loan type. Proposed disclosure is set forth below: The following table sets forth changes in the allowance for loan losses.
For the Year Ended For the Nine Months Ended December 31, September 30, 2009 2008 -------------------------------------------------------------------------------------- ----------------- (In thousands) Allowance for loan losses balance at beginning of period $ 3,953 $ 2,954 Charge-offs: Commercial real estate mortgage loans 100 - Residential real estate mortgage loans 529 480 Commercial, financial & agricultural loans 584 534 Installment/consumer loans 214 56 Real estate-construction loans 262 - --------------------------- ----------------- Total 1,689 1,070 Recoveries: Commercial real estate mortgage loans - - Residential real estate mortgage loans - - Commercial, financial & agricultural loans 20 53 Installment/consumer loans 1 16 Real estate-construction loans - - --------------------------- ----------------- Total 21 69 Net charge-offs (1,668) (1,001) Provision for loan losses charged to operations 3,200 2,000 --------------------------- ----------------- Balance at end of period $ 5,485 $ 3,953 =========================== ================= Ratio of net charge-offs during period to average loans outstanding (0.38%) (0.25%) =========================== =================
Christian Windsor January 13, 2010 Page 8 The following table sets forth the allocation of the total allowance for loan losses by loan type.
September 30, December 31, 2009 2008 -------------- -------------- (Dollars in thousands) Percentage Percentage of Loans of Loans to Total to Total Amount Loans Amount Loans ------------------------- ------------------------- Commercial real estate mortgage loans $3,179 49.9% $1,857 46.4% Residential real estate mortgage loans 1,320 31.3 1,152 32.4 Commercial, financial & agricultural loans 842 14.2 617 14.8 Installment/consumer loans 107 2.5 61 2.6 Real estate construction loans 37 2.1 266 3.8 ------------------------- ------------------------- Total $5,485 100.0% $3,953 100.0% ---------- -------------- ---------- --------------
5. Please revise your future annual and interim filings to provide a quantified breakdown of your impaired and restructured loans by loan category. Response: In future filings we will provide a quantified breakdown of our -------- impaired and restructured loans by loan category. Proposed disclosure is set forth below: The following table sets forth impaired loans by loan type.
September 30, December 31, 2009 2008 -------------- -------------- (Dollars in thousands) Nonaccrual Loans: Commercial real estate mortgage loans $ 323 $ - Residential real estate mortgage loans 5,522 426 Commercial, financial & agricultural loans 107 2,636 Installment/consumer loans - 6 Real estate construction loans - - -------------- -------------- Total 5,952 3,068 -------------- --------------
Christian Windsor January 13, 2010 Page 9 Restructured Loans: Commercial real estate mortgage loans 3,229 3,229 Residential real estate mortgage loans - - Commercial, financial & agricultural loans - - Installment/consumer loans - - Real estate construction loans - - -------------- -------------- Total 3,229 3,229 -------------- -------------- Total Impaired Loans $ 9,181 $ 6,297 ============== ============== 6. Please revise your disclosure in future filings to specifically discuss deteriorating credit trends within your Commercial Real Estate loan portfolio and how you consider these trends when determining the appropriate level of allowance for loan losses. Discuss the overall level of collateralization within this portfolio. Please update this disclosure in your future filings as necessary, including interim filings. Response: In future filings we will discuss deteriorating credit trends within -------- the Commercial Real Estate loan portfolio and how these trends are considered when determining the appropriate level of allowance for loan losses. We will discuss the overall level of collateralization within the Commercial Real Estate portfolio. Proposed disclosure is set forth below: Loans of approximately $28.5 million or 6.5% of total loans at September 30, 2009 were classified as potential problem loans compared to $15.3 million or 3.4% at June 30, 2009, $9.8 million or 2.3% at December 31, 2008 and $11.1 million or 2.7% at September 30, 2008. The majority of these loans are commercial real estate ("CRE") loans which are current and well secured. These loans are classified as potential problem loans as management has information that indicates the borrower may not be able to comply with the present repayment terms. These loans are subject to increased management attention and their classification is reviewed on at least a quarterly basis. Due to the structure and nature of the credits, we do not expect to sustain a loss on these relationships. CRE loans represented $219.1 million or 49.9% of the total loan portfolio at September 30, 2009 compared to $217.8 million or 48.8% at June 30, 2009, $199.2 million or 46.3% at December 31, 2008 and $191.2 million or 46.3% at September 30, 2008. The Bank's underwriting standards for CRE loans requires an evaluation of the cash flow of the property, the overall cash flow of the borrower and related guarantors as well as the value of the real estate securing the loan. In addition, the Bank's underwriting standards for CRE loans are consistent with regulatory requirements with loan to value ratios less than or equal to 75%. The Bank considers delinquency trends, cash flow analysis, and the impact of the Christian Windsor January 13, 2010 Page 10 local economy on commercial real estate values when evaluating the appropriate level of the allowance for loan losses. * * * * The Company acknowledges that: (i) the Company is responsible for the adequacy and accuracy of the disclosure in the filing; (ii) staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and (iii) the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. We trust that the above information is responsive to the staff's comments. Please direct any additional comments or questions to the undersigned. Sincerely, /s/ Howard H. Nolan Howard H. Nolan Senior Executive Vice President and Chief Financial Officer cc: John J. Gorman, Esq.