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These risks and uncertainties include, but are not limited to: (1) competitive pressures in the banking industry; (2) changes in interest rate environment; (3) general economic conditions, nationally, regionally, and in operating markets; (4) changes in the regulatory environment; (5) changes in business conditions and inflation; (6) changes in securities markets; (7) future credit loss experience; (8) the ability to satisfy requirements related to the Sarbanes-Oxley Act and other regulation on internal control; (9) civil disturbances or terrorist threats or acts, or apprehension about the possible future occurrences of acts of this type; and (10) the involvement of the United States in war or other hostilities |
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Bridge Capital Holdings Reports Financial Results For the Fourth Quarter and Year Ended December 31, 2009 Fourth Quarter Summary
Operating Results “The operating profit generated in the fourth quarter of 2009 was a direct result of our aggressive actions to reduce the risk profile of our loan portfolio over the past several quarters,” said Daniel P. Myers, President and Chief Executive Officer of Bridge Capital Holdings and Bridge Bank. “In the past year, we reduced our exposure to construction and land development loans by $88.3 million or 73%, and this category now comprises only 5.7% of total loans. We are seeing improving demand for loans, and we are funding these lending opportunities with core deposits, which creates a foundation for profitable growth. While we expect continuing challenges for our industry, we believe Bridge Bank is strongly positioned with liquidity and capital to continue to support our business clients and pursue attractive opportunities in the businesses and markets we know.” The operating profit for the fourth quarter of 2009 was reduced by preferred dividends of $1.1 million resulting in a net profit available to common shareholders of $340,000, or $0.05 per diluted common share, and compared to a net loss available to common shareholders of $(525,000), or $(0.08) per diluted common share, net of preferred dividends of $1.1 million in the preceding quarter ended September 30, 2009. The fourth quarter result also represented a decrease of $1.2 million compared to a net profit available to common shareholders of $1.5 million, or $0.23 per diluted common share, for the same period one year ago. The operating profit for the fourth quarter of 2008 was reduced by preferred dividends of $152,000. The Company reported an operating profit of $1.4 million for the twelve months ended December 31, 2009, representing an improvement of $8.8 million compared to an operating loss of $(7.4) million for the same period one year ago. The operating profit for 2009 was reduced by preferred dividends of $4.2 million resulting in a net loss available to common shareholders of $(2.8) million, or $(0.42) per diluted common share. This represented an improvement of $4.7 million compared to a net loss available to common shareholders of $(7.5) million, or $(1.15) per diluted common share, for the same period one year ago. The operating profit for 2008 was reduced by preferred dividends of $152,000. Net Interest Income and Margin For the year ended December 31, 2009, net interest income of $37.8 million represented a decline of $7.1 million, or 16%, from $44.9 million for the year ended December 31, 2008 and was primarily attributable to the decrease in short-term interest rates, lower balance sheet leverage and increased levels of nonperforming loans. Average earning assets of $824.9 million for the year ended December 31, 2009 increased $36.1 million, or 5%, compared to $788.7 million for the same period one year ago. The Company’s loan-to-deposit ratio, a measure of leverage, averaged 85.16% during the year ended December 31, 2009, which represented a decrease compared to an average of 94.51% for the same period of 2008. The Company’s net interest margin for the quarter ended December 31, 2009 increased to 4.68% from 4.38% in the third quarter of 2009 and compared to 4.82% for the same period one year earlier. The increase compared to the third quarter was the result of increased investment activities and lower levels of nonperforming assets. The decline compared to the same period one year ago was primarily due to lower short-term interest rates and lower balance sheet leverage. In addition, nonperforming loans had a negative impact on net interest margin of approximately 23 basis points in the fourth quarter of 2009. The net interest margin for the twelve months ended December 31, 2009 was 4.58% compared to 5.69% for the twelve months ended December 31, 2008. The decline was also primarily the result of lower short-term interest rates and lower balance sheet leverage. Nonperforming loans had a negative impact on net interest margin of approximately 24 basis points in 2009. Non-Interest Income The Company’s non-interest income for the quarter and twelve months ended December 31, 2009 was $2.3 million and $10.3 million, respectively, compared to $4.6 million and $10.0 million, respectively, for the same periods one year ago. The decrease in non-interest income for the fourth quarter of 2009 compared to the same period one year ago was primarily attributable to the recognition of $3.9 million from the acceleration of the deferred gain on interest rate swaps terminated during the fourth quarter of 2008. The increase in non-interest income for the twelve months ended December 31, 2009 compared to the same period one year ago was primarily attributable to increases of $1.5 million from gains on the sale of “other real estate owned” and $734,000 for deposit service charges during the current year, offset in part by decreases of $711,000 from gains on the sale of securities, $584,000 from the acceleration of the deferred gain on terminated interest rate swaps, and $247,000 from international fee income during the current year. Excluding the impact of accounting related to hedging strategies, non-interest income is primarily comprised of foreign exchange fee income, deposit service charges, gains on the sale of “other real estate owned”, gains on the sale of securities, and gains on the sale of SBA loans. Net interest income and non-interest income comprised total revenue of $11.8 million for the three months ended December 31, 2009 represented an increase of $1.1 million, or 10.2%, over $10.7 million for the third quarter of 2009 and compared to $14.8 million for the same period one year earlier, a decrease of $3.0 million, or 20%. For the twelve months ended December 31, 2009, total revenue of $48.1 million represented a decrease of $6.7 million, or 12%, from $54.8 million for the twelve months ended December 31, 2008. Non-Interest Expense Non-interest expense was $10.1 million and $38.1 million for the quarter and twelve months ended December 31, 2009, respectively, compared to $8.3 million and $36.3 million, respectively, for the same periods in 2008. The increases in operating expenses primarily reflects increased credit collection costs and higher FDIC insurance assessments offset, in part, by lower personnel related expenses. Salary and benefits expense for the quarter ended December 31, 2009 was $4.5 million, representing an increase of $559,000 from $4.0 million in the same period of 2008. Salary and benefits expense for the twelve months ended December 31, 2009 was $20.3 million, a decrease of $1.1 million from $21.4 million in the same period of 2008. As of December 31, 2009 the Company employed 164 full-time equivalents (FTE) compared to 170 FTE on the same date one year earlier. The Company’s efficiency ratio, the ratio of non-interest expense to revenues, was 85.52% and 79.12% for the quarter and year ended December 31, 2009 compared to 56.06% and 66.23%, respectively, in the same periods one year earlier. The Company recognized a tax benefit of $600,000 in the fourth quarter related to recognition of certain housing tax credits and revision of the estimated effective tax rate for the year. The impact of these items was to reduce income tax expense by $847,000 in the fourth quarter. Balance Sheet Bridge Capital Holdings reported total assets at December 31, 2009 of $844.1 million, compared to $947.6 million on the same date one year ago. The decrease in total assets represented a decline of $103.5 million, or 11%, compared to December 31, 2008 and was primarily the result of paying off short-term borrowings and higher cost wholesale deposits that were raised to support liquidity in the fourth quarter of 2008. The Company’s total deposits were $705.0 million as of December 31, 2009, compared to total deposits of $777.2 million as of December 31, 2008. The decrease in deposits was $72.2 million, or 9%, compared to December 31, 2008 and was primarily due to reducing higher cost wholesale deposits as core liquidity improved. Core liquidity was enhanced by growth in noninterest bearing demand deposits of $48.9 million. Demand deposits represented 47.9% of total deposits at December 31, 2009, up from 37.1% at December 31, 2008. The Company reported total gross loans outstanding at December 31, 2009 of $576.4 million, which represented a decrease of $123.2 million, or 18%, from $699.6 million for the same date one year earlier. The decrease in gross loans included a decrease of $88.3 million, or 73%, in construction and land development loans. In addition, de-leveraging by commercial borrowers resulted in a decrease in commercial and industrial loan balances of $47.2 million, or 16%. Gross loans outstanding at December 31, 2009 represented a $2.7 million increase over September 30, 2009. Credit Quality At December 31, 2009, nonperforming assets totaled $23.5 million, or 2.79% of total assets, compared to $32.1 million, or 3.84% of total assets as of September 30, 2009, and $16.9 million, or 1.78% of total assets, on the same date one year earlier. The nonperforming assets at December 31, 2009 consisted of loans on nonaccrual or 90 days or more past due totaling $17.0 million, and other real estate owned valued at $6.5 million. Nonperforming loans at December 31, 2009 were comprised of loans with legal contractual balances totaling approximately $28.4 million reduced by impairment charges of $11.4 million which have been charged against the allowance for credit losses. The Company charged-off $2.5 million during the three months ended December 31, 2009 compared to $3.2 million charged-off during the three months ended December 31, 2008. During the twelve months ended December 31, 2009, the Company charged-off balances totaling $12.8 million which compared to $21.7 million charged-off during the same period of 2008. During the three and twelve months ended December 31, 2009 the Company recognized $734,000 and $1.1 million, respectively, in loan recoveries compared to $86,000 and $121,000, respectively, in loan recoveries during the same periods of 2008. Construction and land development loans together totaled approximately $33.4 million as of December 31, 2009, compared to $121.6 million one year earlier, representing a decrease of $88.3 million or 73%. Land development loans decreased by $10.8 million, or 46%, from $23.5 million at December 31, 2008 to $12.7 million on December 31, 2009. The allowance for loan losses was $16.0 million, or 2.78% of total loans, at December 31, 2009, compared to $18.6 million, or 2.65% of total loans, at December 31, 2008. The provision for credit losses for the three and twelve months ended December 31, 2009 was $900,000 and $9.2 million, respectively, compared to $4.0 million and $31.5 million, respectively, for the same periods in 2008. “We saw notable improvement in credit quality and key operating metrics in the fourth quarter,” said Thomas A. Sa, Executive Vice President and Chief Financial Officer of Bridge Capital Holdings, “Nonperfoming assets decreased considerably during the quarter, which drove our reserve coverage ratio to 94%, its highest level in the past year. Improved liquidity allowed us to reduce non-core funding and redeploy a portion of our assets invested in fed funds into higher yielding securities and loans. Combined with the reduction in nonperforming loans, this asset mix shift produced a 30 basis point improvement in net interest margin compared to the third quarter of 2009. We also achieved sufficient operating profitability to more than cover the preferred dividend payments.” Capital Adequacy At December 31, 2009, shareholders’ equity in the Company totaled $109.3 million, which included approximately $53.9 million in preferred stock and $(617,000) in other comprehensive income/(loss). Shareholders’ equity at December 31, 2009 compared to $112.5 million on the same date one year earlier. The decrease in shareholders’ equity was primarily attributable to $4.2 million of preferred dividends during the current year, offset in part by net income of $1.4 million. In October 2009 and January 2010, the Company elected to exercise its rights under the mandatorily convertible preferred stock to defer the dividend payments of $750,000 and $750,000 that were due on October 15, 2009 and January 15, 2010, respectively. The dividends are cumulative and shareholders’ equity at December 31, 2009 has been reduced for these future payments, which may be effected in cash or the distribution of common shares of equivalent value. The Company’s tangible common equity ratio was 6.57% at December 31, 2009 compared to 6.19% at December 31, 2008. The Company’s Total Risk-Based Capital Ratio, Tier I Capital Ratio, and Tier I Leverage Ratio of 19.45%, 15.26%, and 12.53%, respectively, were all substantially above the regulatory standards for “well-capitalized” institutions. Conference Call and Webcast Management will host a conference call today, January 28, 2010 at 5:00 p.m. Eastern time/2:00 p.m. Pacific time to further discuss the Company’s financial results and answer questions. Individuals interested in participating in the conference call may do so by dialing 877.477.1461 from the United States, or 973.409.9694 from outside the United States, and using the conference ID 53157607. 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 February 12, 2010 by dialing 800.642.1687 from the United States, or 706.645.9291 from outside the United States, and entering the conference ID 53157607. A webcast replay will be available for 90 days.
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." Examples of forward-looking statements include, but are not limited to: statements concerning future profitability or financial performance; statements concerning the adequacy of loan loss reserves or capital; statements of plans and expectations of the Company or its management or board of directors, including those relating to products or services; and stated assumptions underlying such statements. 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. Readers should not place undue reliance on the forward-looking statements, which reflect management's view only as of the date hereof. 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; the length and severity of current difficulties in the national and California economies and the effects of federal and state government efforts to address those difficulties; changes in interest rates; fluctuations in assets prices including, but not limited to, stocks, bonds and real estate; new litigation or changes in existing litigation; future credit loss experience; increased competitive challenges and expanding product and pricing pressures among financial institutions; changes in legislation, regulations or the regulatory environment which adversely affect the Company's operations or business, including without limitation those relating to the TARP Capital Purchase Program and related executive compensation requirements; loss of key personnel; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies; operational risks including data processing system failures; 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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