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Bridge Capital Holdings Reports Financial Results For the First Quarter Ended March 31, 2013

Conference Call and Webcast Scheduled for Thursday, April 25, 2013 at  5:00 p.m. Eastern Time

San Jose, CA – April 25, 2013 – Bridge Capital Holdings (NASDAQ: BBNK), whose subsidiary is Bridge Bank, National Association, announced today its financial results for the first quarter ended March 31, 2013.

The Company reported net income of $3.4 million for the three months ended March 31, 2013, which remained consistent with the quarter ended December 31, 2012, and represents an increase of $715,000, or 26%, compared to net income of $2.7 million for the same period one year ago.

For the quarter ended March 31, 2013, the Company reported earnings per diluted share of $0.23, which remained consistent with the quarter ended December 31, 2012. This also compares with earnings per diluted share of $0.18 for the quarter ended March 31, 2012.

For the quarter ended March 31, 2013, the Company’s return on average assets and return on average equity were 1.06% and 9.29%, respectively, and compared to 1.06% and 9.41%, respectively, for the quarter ended December 31, 2012 and 0.94% and 8.21%, respectively, for the same period in 2012.

“We executed well in the first quarter on our business banking strategy and generated a 28% year-over-year increase in earnings per share,” said Daniel P. Myers, president and chief executive officer of Bridge Bank, N.A. and Bridge Capital Holdings. “Our first quarter results were driven by strong new client acquisition, loan growth, stable credit quality, and a relatively stable net interest margin. The investments we have made to both increase our penetration of our core Silicon Valley market and expand our presence in other business technology hubs around the United States are producing good results. During the first quarter, our total loans increased at an annualized rate of 20%, with all of our offices making solid contributions and new banking relationships being established with companies across a broad variety of business sectors. Our compelling value proposition and growing brand allow us to continue to generate measured growth, manage risk, and build franchise value.”

First Quarter Highlights

First quarter 2013 results, compared to fourth quarter 2012 (unless otherwise noted), reflected strong performance across all areas of the Company’s business and included the following:

  • Total assets grew to $1.35 billion at March 31, 2013, with loans continuing to comprise 71% of the average earning asset mix, consistent with the prior quarter. Total deposits of $1.17 billion at March 31, 2013 represented the highest level of deposit balances since the inception of the Company, and compared to $1.16 billion at December 31, 2012.
  • Loan growth continued to be strong, particularly in the commercial lending portfolio. Average gross loans reached $894.6 million for the quarter ended March 31, 2013, representing an increase of $17.8 million, or 2%, compared to average gross loans of $876.8 million for the quarter ended December 31, 2012. Period-end loan balances increased $45.6 million, or 5%, to $954.2 million, compared to $908.6 million at December 31, 2012.
  • Net interest margin declined slightly to 5.05% for the quarter ended March 31, 2013 compared to 5.10% for the fourth quarter of 2012.
  • Credit quality overall remained solid with the allowance for credit losses representing 2.15% of total gross loans and 214.26% of nonperforming loans at March 31, 2013, compared to 2.20% of total gross loans and 200.14% of nonperforming loans at December 31, 2012. The provision for credit losses of $750,000 for the first quarter of 2013 primarily related to growth in the loan portfolio. Net charge-offs were $160,000 for the quarter ended March 31, 2013, and compared to $1.3 million for the quarter ended December 31, 2012.
  • Nonperforming assets decreased by $492,000 to $9.6 million, or 0.71% of total assets at March 31, 2013, compared to $10.1 million, or 0.75% of total assets at December 31, 2012.
  • Capital ratios remained strong and continued to support the Company’s growth. Total Risk-Based Capital Ratio was 15.19%, Tier I Capital Ratio was 13.94%, and Tier I Leverage Ratio was 12.81% at March 31, 2013.

Net Interest Income and Margin

Net interest income of $15.5 million for the quarter ended March 31, 2013 represented a decrease of $264,000, or 2%, compared to $15.8 million for the quarter ended December 31, 2012 and an increase of $698,000, or 5%, compared to $14.8 million for the quarter ended March 31, 2012. The increase in net interest income from the same period in 2012 was primarily attributable to an increase in average earning assets as a result of loan growth. Average earning assets of $1.25 billion for the quarter ended March 31, 2013 increased $16.7 million, or 1%, compared to $1.23 billion for the quarter ended December 31, 2012 and increased $150.5 million, or 14%, compared to $1.10 billion for the same quarter in 2012.

The Company’s net interest margin for the quarter ended March 31, 2013 was 5.05%, compared to 5.10% for the quarter ended December 31, 2012, and 5.43% for the same period one year earlier. The decrease in net interest margin compared to the fourth quarter of 2012 and the same period one year ago was primarily due to a lower level of loan fees. The Company’s loan-to-deposit ratio, a measure of leverage, averaged 79.5% during the three months ended March 31, 2013, which represented an increase compared to an average of 78.9% for the quarter ended December 31, 2012 and an average of 79.4% for the same period of 2012. The negative impact on the net interest margin from decreased loan fees for the three months ended March 31, 2013 compared to the prior quarter and the same period one year ago was 19 basis points and 20 basis points, respectively.

Non-Interest Income

The Company’s non-interest income for the quarters ended March 31, 2013, December 31, 2012, and March 31, 2012 was $2.9 million, $3.7 million, and $2.5 million, respectively.

During the first quarter of 2013, the Company recognized a gain from the sale of SBA loans of $400,000 compared to $989,000 for fourth quarter of 2012 and $276,000 for the first quarter of 2012. The successful resolution of one “other real estate owned” property contributed $370,000 to non-interest income for the first quarter of 2013. During the fourth quarter of 2012, the Company recognized $416,000 as a result of real estate related gains. There were no gains recognized in the first quarter of 2012. The Company received warrant related income of $13,000 for the first quarter of 2013 compared to $149,000 for the fourth quarter of 2012 and $23,000 for the first quarter of 2012.

Net interest income and non-interest income comprised total revenue of $18.5 million for the three months ended March 31, 2013, compared to $19.5 million for the three months ended December 31, 2012 and $17.4 million for the same period one year earlier.

Non-Interest Expense

Non-interest expense was $11.9 million for the quarter ended March 31, 2013, compared to $12.2 million and $11.1 million for the quarters ended December 31, 2012 and March 31, 2012, respectively. Overall, trends in non-interest expenses continue to reflect a lower level of expenses related to problem asset valuation and resolution, and higher expenses related to supporting growth and investments in new initiatives.

Salary and benefits expense for the quarter ended March 31, 2013 was $7.6 million, compared to $8.3 million and $7.0 million for the quarters ended December 31, 2012 and March 31, 2012, respectively. The decrease in salary and benefits expense from the fourth quarter of 2012 was primarily due to the additional incentive compensation accruals that were recognized during that quarter related to 2012 performance. The increase in salary and benefits expense compared to the same period in the prior year primarily related to an increase in headcount to support growth and new initiatives and increased stock-based compensation due to long-term retention awards granted during the third quarter of 2012. As of March 31, 2013, the Company employed 218 full-time equivalents (FTE) compared to 207 FTE at December 31, 2012 and 200 FTE at March 31, 2012.

“Other real estate owned” and loan-related charges were $208,000 for the quarter ended March 31, 2013, compared to $334,000 and $191,000 for the quarters ended December 31, 2012 and March 31, 2012, respectively. The decrease in “other real estate owned” and loan related charges from prior year was primarily attributed to a decline in nonperforming assets.

Regulatory assessments related to participation in the Transaction Guarantee Program as well as FDIC insurance pertaining to deposit balances, totaled $226,000 for the quarter ended March 31, 2013, compared to $224,000 for the quarter ended December 31, 2012 and $248,000 for the same period one year ago.

The Company’s efficiency ratio, the ratio of non-interest expense to revenues, was 64.23%, 62.55%, and 63.70% for the quarters ended March 31, 2013, December 31, 2012, and March 31, 2012, respectively.

Balance Sheet

Bridge Capital Holdings reported total assets at March 31, 2013 of $1.35 billion, compared to $1.34 billion at December 31, 2012 and $1.16 billion on the same date one year ago. The increase in total assets of $186.3 million, or 16%, from March 31, 2012 was driven by an increase in deposit production which was primarily used to fund loan growth and increase the investment portfolio.

The Company reported total gross loans outstanding at March 31, 2013 of $954.2 million, which represented an increase of $45.6 million, or 5%, over $908.6 million at December 31, 2012 and an increase of $137.2 million, or 17%, over $817.0 million at March 31, 2012. The increase in total gross loans from December 31, 2012 and March 31, 2012 was broad-based throughout the portfolio, with the most significant growth reflected in the commercial lending, factoring, and asset-based lending portfolios.

The Company’s total deposits were $1.17 billion as of March 31, 2013, which represented an increase of $3.7 million, or 0.3%, compared to $1.16 billion at December 31, 2012 and an increase of $169.7 million, or 17%, compared to $996.6 million at March 31, 2012. The increase in deposits from December 31, 2012 was primarily attributable to continued growth in money market and savings accounts. The increase in deposits from March 31, 2012 was primarily attributable to continued growth in money market and savings, and noninterest-bearing demand deposit accounts. Total deposit balances at March 31, 2013 reflect the typical seasonal outflow of demand deposits in the first quarter due to tax payments and bonus payments among the Bank’s professional services clients.

Demand deposits represented 62.4% of total deposits at March 31, 2013, compared to 63.1% at December 31, 2012 and 64.7% for the same period one year ago. Core deposits represented 95.8% of total deposits at March 31, 2013, compared to 95.9% at December 31, 2012 and 96.8% at March 31, 2012.

Credit Quality

Nonperforming assets decreased to $9.6 million, or 0.71% of total assets, as of March 31, 2013, compared to $10.1 million, or 0.75% of total assets, as of December 31, 2012 and $13.0 million, or 1.12% of total assets, at March 31, 2012. The nonperforming assets at March 31, 2013 consisted of loans on nonaccrual or 90 days or more past due totaling $9.6 million, and OREO valued at $31,000.

Nonperforming loans at March 31, 2013 were comprised of loans with legal contractual balances totaling approximately $15.5 million reduced by $1.6 million received in non-accrual interest and impairment charges of $4.3 million which have been charged against the allowance for credit losses.

Nonperforming loans were $9.6 million, or 1.00% of total gross loans, as of March 31, 2013, compared to $10.0 million, or 1.10% of total gross loans, as of December 31, 2012, and $8.9 million, or 1.09% of total gross loans, at March 31, 2012.

The carrying value of OREO was $31,000 as of March 31, 2013 compared to $144,000 at December 31, 2012 and $4.1 million as of March 31, 2012.

The Company charged-off $350,000 in loan balances during the three months ended March 31, 2013, compared to $1.6 million charged-off during the three months ended December 31, 2012 and $1.0 million charged-off during the three months ended March 31, 2012.

During the three months ended March 31, 2013, the Company recognized $195,000 in loan recoveries compared to $222,000 and $24,000, respectively, in loan recoveries for the three months ended December 31, 2012 and March 31, 2012.

The allowance for loan losses was $20.5 million, or 2.15% of total loans, at March 31, 2013, compared to $19.9 million, or 2.20% of total loans, at December 31, 2012 and $19.3 million, or 2.36% of total loans, at March 31, 2012. The provision for credit losses for the first quarter of 2013 was $750,000 compared to $1.5 million for the fourth quarter of 2012 and $1.8 million for the same period one year ago.

Capital Adequacy

The Company’s capital ratios at March 31, 2013 substantially exceed the regulatory definition for being “well capitalized” with a Total Risk-Based Capital Ratio of 15.19%, a Tier I Risk-Based Capital Ratio of 13.94%, and a Tier I Leverage Ratio of 12.81%. Additionally, the Company’s tangible common equity ratio at March 31, 2013 was 11.24% and book value per common share was $9.61, representing an increase of $0.29, or 3.1%, from $9.32 at December 31, 2012 and an increase of $0.89, or 10.2%, from $8.72 at March 31, 2012.

Conference Call and Webcast

Management will host a conference call today at 5:00 p.m. Eastern time/2:00 p.m. Pacific time to discuss the Company’s financial results and answer questions.

Individuals interested in participating in the conference call may do so by dialing 800.762.8908 from the United States, or 480.629.9677 from outside the United States and referencing conference ID 4615486. Those interested in listening to the conference call live via the Internet may do so by visiting the Investor Relations section of the Company’s Web site at www.bridgebank.com.

A telephone replay will be available through May 2, 2013, by dialing 800.406.7325 from the United States, or 303.590.3030 from outside the United States, and entering conference ID 4615486. A webcast replay will be available for 90 days.

About Bridge Capital Holdings
Bridge Capital Holdings is the holding company for Bridge Bank, National Association. Bridge Capital Holdings was formed on October 1, 2004 and holds a Global Select listing on The NASDAQ Stock Market under the trading symbol BBNK. For additional information, visit the Bridge Capital Holdings website at http://www.bridgecapitalholdings.com.

About Bridge Bank, National Association
Bridge Bank, N.A. is Silicon Valley’s full-service professional business bank. The Bank is dedicated to meeting the financial needs of small, middle market, and emerging technology businesses. Bridge Bank provides its clients with a comprehensive package of business banking solutions delivered through experienced, professional bankers.

For additional information, visit the Bridge Bank website at  www.bridgebank.com or follow us @BridgeBank.

Contacts

Daniel P. Myers
President
Chief Executive Officer
408-556-6510
dan.myers@bridgebank.com  
Thomas A. Sa
Executive Vice President
Chief Strategy Officer and Chief Financial Officer
408-556-8308
tom.sa@bridgebank.com

Forward-Looking Statements

Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are subject to the safe harbors created by that Act. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements are based on currently available information, expectations, assumptions, projections, and management’s judgment about the Company, the banking industry and general economic conditions. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely.

Forward-looking statements involve significant risks and uncertainties and actual results may differ materially from those presented, either expressed or implied, in this press release. Factors that might cause such differences include, but are not limited to: the Company’s ability to successfully execute its business plans and achieve its objectives; changes in general economic, real estate and financial market conditions, either nationally or locally in areas in which the Company conducts its operations; changes in interest rates; new litigation or changes in existing litigation; future credit loss experience; increased competitive challenges and expanding product and pricing pressures among financial institutions; legislation or regulatory changes which adversely affect the Company’s operations or business; loss of key personnel; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies; and the ability to satisfy requirements related to the Sarbanes-Oxley Act and other regulation on internal control.

The reader should refer to the more complete discussion of such risks in Bridge Capital Holdings’ annual reports on Forms 10-K and quarterly reports on Forms 10-Q on file with the Securities and Exchange Commission. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

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