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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 Second Quarter Ended June 30, 2010 The Company reported net operating income of $755,000 for the three months ended June 30, 2010 representing an increase of $390,000, or 106%, over $365,000 in the quarter ended March 31, 2010 and an increase of $1.6 million, compared to a net operating loss of $(842,000) for the same period one year ago. Net income available to common shareholders was reduced by preferred dividends of $298,000 resulting in earnings per diluted common share of $0.04 for the second quarter of 2010. Net income available to common shareholders were reduced by $1.1 million during each of the first quarter of 2010 and the quarter ended June 30, 2009 resulting in losses per diluted common share of $(0.11) and $(0.29), respectively. The Company reported net operating income of $1.1 million for the six months ended June 30, 2010 representing an increase of $1.6 million, compared to a net operating loss of $(509,000) for the same period one year ago. Net income available to common shareholders was reduced by preferred dividends of $1.4 million and $2.1 million during the first six months of 2010 and 2009, respectively, resulting in a loss per diluted share of $(0.03) and $(0.39), respectively. For the quarter ended June 30, 2010, the Company’s return on average
assets and return on average equity were 0.35% and 2.72%, respectively,
and compared to (0.39)% and (3.04)%, respectively, for the same period
in 2009. For the six months June 30, 2010, the Company’s return
on average assets and return on average equity were 0.26% and 2.04%,
respectively, and compared to (0.12)% and (0.92)%, respectively, for
the same period in 2009. Second Quarter Highlights
Daniel P. Myers, President and Chief Executive Officer of Bridge Capital Holdings and Bridge Bank, commented on the second quarter results, “We saw a continuation of the positive trends we have experienced over the past few quarters – most notably, increasing revenue, stable expenses, modest balance sheet growth, and general improvement in credit quality. The combined incremental progress in each area helped to push the Company into profitability this quarter. Our non-performing assets increased during the quarter due to one legacy construction loan that was downgraded due to a liquidity covenant violation, even though the loan is still current. With this one exception, we are seeing increased stabilization in the portfolio. “While the general economy continues to struggle, we are seeing
pockets of strength in our technology markets. With our compelling value
proposition and capacity to lend, we are having good success in winning
new business relationships. This is translating into solid loan and deposit
growth. We are optimistic that this trend will continue and we will generate
further improvement in our profitability as we see more broad-based loan
demand,” said Mr. Myers. Net Interest Income and Margin For the six months ended June 30, 2010, net interest income of $20.0
million represented an increase of $687,000, or 4%, from $19.3 million
for the six months ended June 30, 2009 and was primarily attributed to
a lower cost of funds and a decrease in average nonperforming loans,
offset in part by decreased leverage. Average earning assets of $804.4
million for the six months ended June 30, 2010 decreased $37.2 million,
or 4%, compared to $841.5 million for the same period one year ago. The
Company’s loan-to-deposit ratio, a measure of leverage, averaged
80.50% during the six months ended June 30, 2010, which represented a
decrease compared to an average of 89.67% for the same period of 2009. The Company’s net interest margin for the quarter ended June 30, 2010 was 5.00%, compared to 5.05% for the quarter ended March 31, 2010, and 4.76% for the same period one year earlier. The increase in net interest margin from prior year was primarily due to a lower cost of funds. In addition, the negative impact of reversal or foregone interest due to nonperforming assets was 21 basis points in the second quarter of 2010 compared to 23 basis points in the second quarter of 2009. The Company’s net interest margin for the six months ended June 30, 2010 was 5.02%, compared to 4.64% for the same period one year earlier. The increase in net interest margin from prior year was primarily due to a lower cost of funds. In addition, the negative impact of reversal or foregone interest due to nonperforming assets was only 17 basis points in the first six months of 2010 compared to 21 basis points for the same period one year earlier. Non-Interest Income The Company’s non-interest income for the quarter and six months
ended June 30, 2010 was $1.7 million and $3.3 million, respectively,
compared to $2.3 million and $6.3 million for the same periods one year
ago. Non-interest income for the quarter and six months ending June 30,
2009 included $200,000 and $3.0 million as the result of acceleration
of the deferred gain on interest rate swaps terminated during the fourth
quarter of 2008. In addition, non-interest income for the quarter ending
June 30, 2009 included a gain on the sale of “other real estate
owned” of $675,000 compared to a gain of $240,000 recognized in
the second quarter of 2010. Non-Interest Expense Non-interest expense was $9.7 million and $19.3 million for the quarter and six months ended June 30, 2010, respectively, compared to $9.3 million and $18.8 million, respectively for the same periods in 2009. Salary and benefits expense for the quarter and six months ended June 30, 2010 was $5.0 million and $10.3 million, respectively, compared to $5.1 million and $10.7 million, respectively, for the same periods in 2009. As of June 30, 2010, the Company employed 157 full-time equivalents (FTE) compared to 162 FTE at June 30, 2009. “Other real estate owned” and loan related charges of $819,000 and $1.2 million for the quarter and six months ended June 30, 2010, respectively, compared to $447,000 and $755,000, respectively, for the same periods one year ago. The increase in “other real estate owned” and loan related charges was attributed to the Company’s conservative and proactive management of its problem loan portfolio. Regulatory assessments of $578,000 and $1.2 million for the quarter and six months ended June 30, 2010, respectively, compared to $636,000 and $755,000 for the same periods one year ago. The increase in regulatory assessments was attributed to participation in the Transaction Guarantee Program as well as FDIC insurance related to increased deposit balances. The Company’s efficiency ratio, the ratio of non-interest expense to revenues, was 81.46% and 82.67% for the quarter and six months ended June 30, 2010, respectively, compared to 77.74% and 73.25% for the same periods one year earlier. Balance Sheet Bridge Capital Holdings reported total assets at June 30, 2010 of $915.4 million, compared to $829.36 million on the same date one year ago. The increase in total assets of $86.0 million, or 10%, compared to June 30, 2009 was primarily due to a higher balance of investment securities available for sale as a result of liquidity from lower loan balances and increased low cost deposits. Total assets at June 30, 2010 compared to $844.1 million at December 31, 2009 representing an increase of $71.3 million, or 8%. The increase in total assets compared to December 31, 2009 was primarily due to increases in federal funds sold, investment securities available for sale, and the loan portfolio. The Company reported total gross loans outstanding at June 30, 2010 of $595.7 million, which represented a decrease of $10.9 million, or 2%, from $606.5 million for the same date one year earlier. The decrease in gross loans was primarily attributable to the intentional reduction of the construction and land development portfolios, which declined by $46.4 million, or 49%, over the past twelve months. In addition, reduced utilization of lines of credit by commercial borrowers resulted in a decrease in commercial and industrial loan balances of $23.6 million, or 9%. Gross loans outstanding at June 30, 2010 represented a $19.2 million increase over $576.4 million at December 31, 2009. The increase was primarily attributable to growth in the factoring and asset-based lending portfolio. The Company’s total deposits were $774.4 million as of June 30, 2010, which represented an increase of $85.3 million, or 12%, compared to $689.1 million at June 30, 2009. The increase in deposits was primarily due to an increase of $87.3 million in non-interest bearing demand balances and an increase in money market accounts of $63.6 million, offset by the intentional reduction in time deposits, which decreased by $66.6 million. Deposits at June 30, 2010 represented an increase of $69.3 million, or 10%, from $705.0 million at December 31, 2009. The increase from December 31, 2009 was primarily due to increases in non-interest bearing demand deposits and money market accounts. Demand deposits represented 47.4% of total deposits at June 30, 2010, compared to 47.9% at December 31, 2009 and 40.5% at June 30, 2009. Core deposits represented 91.9% of total deposits at June 30, 2010, up from 87.1% at December 31, 2009 and 81.2% at June 30, 2009. Credit Quality At June 30, 2010, nonperforming assets totaled $29.7 million, or 3.25% of total assets, compared to $23.5 million, or 2.79% of total assets, at December 31, 2009, and $29.4 million, or 3.55% of total assets, on the same date one year earlier. The increase in non-performing assets from year-end 2009 is primarily attributable to one legacy construction loan totaling $6.9 million that was transferred from a Troubled Debt Restructuring (TDR) into non-performing loans as a result of a liquidity covenant violation. Despite being current on interest payments, as a result of a covenant violation the Company deemed the loan to be collateral dependent and therefore recognized an impairment charge of $800,000 related to this loan in the second quarter of 2010. The nonperforming assets at June 30, 2010 consisted of loans on nonaccrual or 90 days or more past due totaling $21.9 million, and other real estate owned valued at $7.8 million. Nonperforming loans at June 30, 2010 were comprised of loans with legal contractual balances totaling approximately $27.9 million reduced by impairment charges of $6.0 million which have been charged against the allowance for credit losses. The Company charged-off $2.5 million during the three months ended June 30, 2010 compared to $4.2 million charged-off during the three months ended June 30, 2009. During the six months ended June 30, 2010, the Company charged-off balances totaling $4.6 million which compared to $8.5 million charged-off during the same period of 2009. During the three and six months ended June 30, 2010 the Company recognized $352,000 and $1.3 million, respectively, in loan recoveries compared to $23,000 and $308,000, respectively, in loan recoveries during the same periods of 2009. The allowance for loan losses was $15.1 million, or 2.54% of total loans,
at June, 2010, compared to $16.0 million, or 2.78% of total loans, at
December 31, 2009 and $18.0 million, or 2.96% of total loans, at June
30, 2009. The provision for credit losses for the three months and six
months ended June 30, 2010 was $1.2 million and $2.5 million, respectively,
compared to $4.0 million and $7.7 million for the same periods in 2009.
The provision for credit losses in the first and second quarters of 2010
was primarily added to the general reserve to reflect growth in the loan
portfolio. Capital Adequacy During the second quarter of 2010, the Company continued to strengthen its capital position with the completion of an early conversion of the notes payable held by Carpenter Community BancFund into common stock. The resulting capital ratios substantially exceed the regulatory definition for being “well capitalized” with a Total Risk-Based Capital Ratio of 18.68%, a Tier I Capital Ratio of 17.41%, and a Tier I Leverage Ratio of 14.94%. Additionally, the Company’s tangible common equity ratio at June 30, 2010 was 9.60% and book value per common share was $8.04, representing an increase of $0.23, or 3%, from $7.81 at December 31, 2009 and an increase of $0.13, or 2%, from $7.91 at June 30, 2009. “We are very pleased with the strength of our balance sheet,” said Thomas A. Sa, Executive Vice President, Chief Financial Officer and Chief Strategy Officer of Bridge Capital Holdings. “Our low-cost deposit base, low balance sheet leverage, and strong capital positions us well to grow market share and profitability.” 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 877.477.1461 from the United States, or 973.409.9694 from outside the United States, and providing the conference ID 88517012. 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 August 9, 2010 by dialing
800.642.1687 from the United States, or 706.645.9291 from outside the
United States, and entering the conference ID 88517012. 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." 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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