Bridge Bancorp, the parent company of The Bridgehampton National Bank, Friday announced fourth quarter and year-end results for 2016. Highlights of the company’s financial results for the quarter and year include:
• Record net income of $9.2 million, an increase of $1.2 million or 15 percent over 2015, and $.50 per diluted share for the quarter.
• Record net income of $35.5 million, an increase of $14.4 million or 68 percent over 2015, and $2.00 per diluted share for the year.
• Returns on average assets and equity were .93 percent and 9.50 percent, respectively, for the 2016 fourth quarter and .92 percent and 9.82 percent, respectively, for the full year.
• Net interest income increased $2.3 million to $30.2 million, with a net interest margin of 3.41 percent for the 2016 fourth quarter and increased $24.8 million to $120.9 million, with a net interest margin of 3.48 percent for the year as compared to the same periods the prior year.
• Total assets of $4.1 billion at December 2016, 7-percent higher than December 2015.
• Loan growth of $190 million or 8 percent compared to December 2015.
• Deposits of $2.9 billion at December 2016, including $1.2 billion in non-interest bearing demand deposits.
• Continued solid asset quality metrics and reserve coverage.
• All capital ratios exceed the fully phased-in requirements of Basel III rules.
• Declared a dividend of $.23 during the quarter.
BNB president and CEO Kevin O’Connor said 2016 was another strong year for the bank. “In addition to adding customers and growing loans and deposits we launched our ‘Believe iN Beyond’ initiative. This created a company stronger and better prepared for further expansion,” he said. “We also implemented financial and organizational changes to improve financial strength, risk management processes and operating structure providing a platform more appropriate for a bank approaching $5 billion in assets. All of this was accomplished while achieving record earnings and delivering strong results,” O’Connor said.
Net Earnings and Returns
Net income for the quarter was $9.2 million or $.50 per diluted share, compared to $8.0 million or $.46 per diluted share for the fourth quarter of 2015. Returns on average assets and equity for the fourth quarter of 2016 were .93 percent and 9.50 percent, compared to .88 percent and 9.27 percent in 2015, respectively. Return on average tangible common equity for the fourth quarter of 2016 was 13.43 percent compared to 13.33 percent in 2015. Net income for the year ended December 2016 was $35.5 million or $2.00 per diluted share, compared to $21.1 million or $1.43 per diluted share in 2015. Returns on average assets and equity for the full year 2016 were .92 percent and 9.82 percent, compared to .71 percent and 7.91 percent in 2015, respectively. Return on average tangible common equity for 2016 was 14.21 percent compared to 10.23 percent in 2015. The significant increases in net income and related returns for 2016 over 2015 relate primarily to the acquisition of CNB in June 2015.
Core net income reflects the quarterly and full year results adjusted for certain costs, net of tax, primarily related to the CNB acquisition. Core net income for the fourth quarter was $9.1 million or $.50 per diluted share, compared to $8.5 million or $.49 per diluted share, for the same period in 2015. Core returns on average assets and equity for the fourth quarter of 2016 were .92 percent and 9.43 percent, compared to .94 percent and 9.90 percent in 2015, respectively. Core return on average tangible common equity for the fourth quarter of 2016 was 13.60 percent compared to 14.56 percent in 2015. Core net income for the full year 2016 was $35.6 million or $2.00 per diluted share, compared to $27.3 million or $1.85 per diluted share, for the same period in 2015. Core returns on average assets and equity for the full year 2016 were .93 percent and 9.87 percent, compared to .92 percent and 10.23 percent in 2015, respectively. Core return on average tangible common equity for the full year 2016 was 14.57 percent compared to 13.47 percent in 2015.
Interest income increased $3.0 million for the fourth quarter of 2016 over the same period in 2015 as average earning assets increased by $258.5 million or 8 percent, due primarily to loan growth, and the net interest margin increased to 3.41 percent from 3.39 percent. Interest income increased $31.5 million for the full year 2016 over 2015 as average earning assets increased by $779.2 million or 29 percent while the net interest margin decreased to 3.48 percent from 3.57 percent. The increase in average earning assets year over year reflects the full year effect of assets acquired from CNB as well as organic growth in loans and securities. The decrease in the net interest margin reflects the higher costs of borrowings associated with the $80 million in subordinated debentures issued in September 2015 and higher overall borrowing costs due to the Fed Funds rate increase in December 2015.
The provision for loan losses was $1.4 million for the 2016 fourth quarter, $.4 million higher than the fourth quarter of 2015 and $5.6 million for the full year 2016, $1.6 million higher than 2015. The higher provision for the fourth quarter and full year of 2016 is due to portfolio growth as well as certain acquired loans being refinanced by BNB. Acquired loans are recorded at fair value at acquisition, effectively netting estimated future losses against the loan balances, whereas loans originated and refinanced by BNB have recorded reserves. The Company recognized net recoveries of $.2 million in the fourth quarter of 2016 compared to net charge-offs of $.4 million for the same period in 2015. The Company recognized net charge-offs of $.4 million for the full year 2016 compared to net charge-offs of $.9 million for 2015.
Total non-interest income was $3.7 million for the fourth quarter of 2016, $.3 million higher than 2015, resulting from an increase in BOLI income and gain on sale of SBA loans offset by a decrease in fees for other customer services. Total non-interest income was $16.0 million for the full year 2016, $3.4 million higher than 2015, primarily attributable to the CNB acquisition and resulting from increases in BOLI income, gain on sale of SBA loans, service charges, fees for other customer services and gain on sales of securities.
Non-interest expense for the fourth quarter of 2016 increased to $18.5 million from $18.2 million in 2015. The increase is a result of increases in salaries and benefits expense, technology and communications, marketing and advertising, professional services, amortization of intangibles and other operating expenses, offset by decreases in acquisition costs and FDIC assessment. Non-interest expense for the full year 2016 increased to $77.1 million from $72.9 million in 2015. The increase is a result of increases in all expense categories, offset by a decrease in acquisitions costs, all of which are attributable to the CNB acquisition. The reversal of accrued acquisition costs for the 2016 fourth quarter and full year is due to the reversal of pending merger-related liabilities recorded at the acquisition date which have since been settled. The Company’s ratio of operating expenses to average assets decreased to 1.88 percent in the fourth quarter of 2016 from 2.00 percent in 2015. The Company’s ratio of operating expenses to average assets decreased to 2.00 percent for the full year 2016 from 2.46 percent in 2015. Core operating expenses to average assets was 1.97 percent for the full year 2016 compared to 2.08 percent in 2015.
Balance Sheet and Asset Quality
Total assets were $4.1 billion at December 31, 2016, $272.6 million higher than December 2015. Total loans at December 2016 of $2.6 billion reflect growth of $189.7 million or 8 percent over December 2015. This increase in loans was funded by growth in deposits and borrowings. Deposits totaled $2.9 billion at December 2016, an increase of $82.4 million over 2015. Demand deposits totaled $1.2 billion at December 2016, representing 39 percent of total deposits.
Asset quality measures remained strong, as non-performing assets were $1.2 million or .03 percent of total assets at December 2016 compared to $1.6 million or .04 percent of total assets at December 2015. Non-performing loans were $1.2 million or .05 percent of total loans at December 2016 compared to $1.3 million or .06 percent of total loans at December 2015. Loans 30 to 89 days past due increased $.7 million to $2.2 million at December 2016, with $1.0 million representing CNB acquired loans. Loans past due 90 days and still accruing at December 31, 2016 and 2015 were comprised of acquired loans of $1.0 million. Additionally, the Company held no other real estate owned at December 2016 compared to $0.3 million at December 2015.
The allowance for loan losses increased $5.2 million to $25.9 million at December 2016 from $20.7 million as of December 2015. The allowance as a percentage of loans was 1.00 percent at December 31, 2016 compared to .86 percent at December 31, 2015. The allowance as a percentage of BNB originated loans was 1.23 percent, based on BNB originated loans totaling $2.1 billion, at December 2016, compared to 1.21 percent, based on BNB originated loans totaling $1.7 billion, at December 2015. The increase in the allowance for loan losses is due to portfolio growth, as well as certain acquired loans being refinanced by BNB.
Stockholders’ equity grew $66.9 million to $408.0 million at December 2016, compared to $341.1 million at December 2015. The growth reflects earnings, the $47.5 million in net capital raised in connection with the November 2016 common stock offering and the dividend reinvestment plan, partially offset by shareholders’ dividends and a decrease in the fair value of available for sale investment securities. The Company’s capital ratios exceed all fully phased in capital requirements under the Basel III rules and the Bank remains classified as well capitalized.
“As many expected, the Federal Reserve raised rates in December and is expected to continue doing so throughout 2017. This will present new challenges for the industry as it has been quite some time since the Fed’s last sustained rate increase. We have been, and will continue to be, thoughtful about our asset/liability mix and how to best position our balance sheet for this new environment. Additionally, we anticipate our effective income tax rate in 2017 will remain between 34 percent and 35 percent. However, the effective income tax rate may change materially should changes to current tax law be enacted in 2017. Any changes to current tax law may also have an impact on our deferred tax position,” noted Mr. O’Connor.
“During the fourth quarter, we took advantage of the market’s positive outlook for financial stocks and raised close to $50 million in common equity. This strengthened our balance sheet and will enable us to take advantage of opportunities in our marketplace. Long Island continues to be one of the most attractive banking markets in the country and our model of on-the-ground bankers and local decision makers gives us a competitive advantage,” stated Mr. O’Connor.
About Bridge Bancorp, Inc.
Bridge Bancorp, Inc. is a bank holding company engaged in commercial banking and financial services through its wholly-owned subsidiary, The Bridgehampton National Bank. Established in 1910, BNB, with assets of approximately $4.1 billion, operates 40 retail branch locations serving Long Island and the greater New York metropolitan area. In addition, the Bank operates two loan production offices: one in Manhattan, and one in Riverhead, New York. Through its branch network and its electronic delivery channels, BNB provides deposit and loan products and financial services to local businesses, consumers and municipalities. Title insurance services are offered through BNB’s wholly owned subsidiary, Bridge Abstract. Bridge Financial Services, Inc. offers financial planning and investment consultation. For more information visit www.bridgenb.com. BNB also has a rich tradition of involvement in the community, supporting programs and initiatives that promote local business, the environment, education, healthcare, social services and the arts.
(1) See reconciliations of As Reported (GAAP) to Core (Non-GAAP) disclosure provided elsewhere herein.
Factors that could cause future results to vary from current management expectations include, but are not limited to, changing economic conditions; legislative and regulatory changes, including increases in FDIC insurance rates; monetary and fiscal policies of the federal government; changes in tax policies; rates and regulations of federal, state and local tax authorities; changes in interest rates; deposit flows; the cost of funds; demands for loan products; demand for financial services; competition; changes in the quality and composition of the Bank’s loan and investment portfolios; changes in management’s business strategies; changes in accounting principles, policies or guidelines; changes in real estate values; an unexpected increase in operating costs; expanded regulatory requirements as a result of the Dodd-Frank Act; and other risk factors discussed elsewhere, and in our reports filed with the Securities and Exchange Commission. The forward-looking statements are made as of the date of this report, and the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.
Source: Press release issued by Bridge Bancop, Inc. dated Jan. 27, 2017.