Bridge Bancorp Inc.
Annual Report 2004

Plain-text annual report

2 0 0 4 A n n u a l R e p o r t 2004 Annual Report TIMES CHANGE. VALUES DON’T. C OM PA N Y PROF I L E Bridge Bancorp, Inc. (the “Company”), a New York corporation (NASDAQ®/OTCBB: BDGE), is a one bank holding company engaged in commercial banking and financial services through its wholly owned subsidiary, The Bridgehampton National Bank (“BNB”). Bridge Bancorp, Inc., The Bridgehampton National Bank and Bridge Abstract LLC comprise The Bridge Group of companies. Federally chartered in 1910, The Bridgehampton National Bank was founded by local farmers and merchants. For nearly a century, The Bridgehampton National Bank has focused on building business and consumer banking rela- tionships on eastern Long Island. The Bank’s primary business includes the provision of deposit and loan products and financial services through its full service branch network and electronic delivery channels. Bridge Abstract LLC brokers title insurance services. The Bridge Group maintains a community orientation, continuing a rich tradition of involvement in programs and initiatives that promote local businesses, the environment, education, healthcare, social services and the arts. The Company’s primary market area includes the South and North forks of eastern Long Island, extending westward to Brookhaven Town. C ONSOL I DAT E D F I N A NCI A L H IGH L IGH TS (In thousands, except per share data and financial ratios) December 31, FOR THE YEAR ENDED Net income AT YEAR END Total assets Total deposits Total loans Total stockholders’ equity SIGNIFICANT RATIOS FOR THE YEAR ENDED Return on average equity Return on average assets PER SHARE DATA(1) Diluted earnings per share Regular cash dividends declared per common share(2) Book value 2004 2003 $ 10,377 $ 9,598 $ 547,200 $ 469,311 $ 296,134 $ 47,213 $ 511,613 $ 457,159 $ 273,188 $ 42,794 22.82% 1.89% 22.58% 1.91% $ $ $ 1.64 0.72 7.55 $ $ $ 1.53 0.51 6.87 (1) Amounts have been restated for a three-for-two stock split, payable in the form of a stock dividend, effective July 9, 2004. (2) Regular quarterly cash dividends declared, excluding a special dividend of approximately $1,660,000, or $0.27 per share declared on December 15, 2003. Net Income (Dollars in Millions) Net Income (Dollars in millions) Return on Average Assets (Percent) Return on Average Equity (Percent) Market Capitalization (At December 31, dollars in millions) Price per Share Market Cap (Dollars in Millions) Return on Average Assets Return on Average Equity (Percent) (Percent) 12 10 8 6 4 2 0 500 400 300 200 100 0 $10.4 $9.6 $8.5 1.73% 1.62% 1.89% 1.90% 1.91% 22.41% 22.82% 23.93% 22.58% 21.41% $191.1 $145.4 $6.7 $5.6 $91.4 $75.4 $68.0 00 01 02 03 00 01 02 03 00 01 02 03 2004 2004 2004 00 01 02 03 2004 2.0 1.5 1.0 0.5 0.0 25 20 15 10 5 0 200 150 100 50 0 2.0 1.5 1.0 0.5 0.0 Total Deposits (Dollars in Millions) Total Deposits (Dollars in millions) Total Loans (Dollars in millions) Total Loans (Dollars in millions) Earnings per Share (Diluted in dollars) Earnings per Share (Dollars in millions) $469.3 $457.2 $406.4 $296.1 $273.2 $248.4 $357.2 $313.4 $201.1 $215.4 $1.64 $1.53 $1.37 $1.07 $0.88 300 250 200 150 100 50 0 00 01 02 03 00 01 02 03 2004 2004 00 01 02 03 2004 Total Assets (Dollars in Millions) Total Assets (Dollars in millions) 600 500 400 300 200 100 0 $547.2 $511.6 $464.0 $393.5 $354.6 00 01 02 03 2004 DE A R SH A R E HOL DE R S , Results of operations for 2004 reflect the high performance standards that our Company consistently strives for. Returns on average equity of 22.82% and average assets of 1.89% continue Bridge Bancorp, Inc.’s ranking among top performing financial institutions nationwide. We met key challenges successfully, posting net income of $10,377,000 for 2004, up 8.1% over the prior year and upholding Bridge Bancorp, Inc.’s trend of record earnings. This trend is significant as it attests to consistent, steady growth, not only for 2004, but over the past 13 years and through various economic cycles. The Company continued to provide value to shareholders. Shares of Bridge Bancorp, Inc. increased 31% in value from year end 2003 to year end 2004. Additionally, excluding the special dividend declared in December 2003, the regular quarterly cash dividends paid in 2004 increased 37% over the prior year, providing a yield of 2.34% at December 31, 2004. On June 21, 2004, the Company declared a three-for-two stock split payable in the form of a stock dividend. The dividend payout ratio was 43.4% in 2004, and although opportunities for the Company to repur- chase shares were limited over the past two years, 21,500 shares were repurchased in 2004. Well managed capital levels are sufficient to both exceed regulatory requirements and position the Company well for future growth. Despite increased margin compression further fueled by a flattening yield curve, sound balance sheet management contributed to growth in net interest income of 5.2%. Competition for both loans and deposits heightened throughout the year as industry merger and acquisition activity and de novo branching resulted in strong national and regional competitors entering our market. At the same time, local competitors turned attention back to eastern Long Island for deposit gathering. Irrespective of these competitive pressures, the Company recorded total asset growth of 7.0% while maintaining prudent pricing and underwriting standards. For the year, we funded $300,000 to the allowance for loan losses on loan growth of 8.4%. The quality of the loan portfolio remains strong. Increased regulatory burden resulting mainly from the implementation of provisions of the Sarbanes–Oxley Act of 2002 was profound for many public companies in 2004. Increased expense, both monetary and human resources, was required last year, and we anticipate continued compliance costs. However, we remain committed to reinvest- ment in our Company. During 2004, we imple- mented or laid the groundwork for several significant technology projects with the objectives of improving service for existing customers as well as positioning the Bank for future growth. We look forward to new service and efficiency benefits in loan processing systems, state of the art voice and data communication systems, and network and ATM upgrades. Regulatory compliance and Company reinvestment were achieved while increas- ing total expenses, net of taxes, just 4.0% in 2004 Bridge Bancorp, Inc. 3. service culture as well as our community orienta- tion, which further distinguishes our brand. Thank you, our shareholders, for your continued interest and support of Bridge Bancorp, Inc. We invite you to learn more about the Company and our 2004 results of operations in the attached Form 10-K. As we begin 2005 with excitement and con- fidence, we recognize the important guidance and oversight of our Board of Directors, and the efforts of our extraordinary team of professionals that deliver on our promise each day. Sincerely, Thomas J. Tobin President and Chief Executive Officer over the prior year, and maintaining an efficiency ratio of 43.9%. Management continues to explore opportunities for non-interest income that are consistent with the Company’s strategic plan. Strong revenue growth of 153.2% for Bridge Abstract, the Bank’s wholly owned title abstract subsidiary, demonstrates the advantages of diversification of the Company’s income stream. Bridge Abstract generated mean- ingful gross revenues of $866,000 in 2004. Lengthy municipal approval processes for new facilities in existing and new markets added to our challenge in meeting our growth goals. Although we did not open a new branch in 2004, we were able to grow average deposits and loans 9.0% and 10.8%, respectively. As we enter 2005, we will strive to offset anticipated smaller interest margins with continued growth, fully expecting competition for loans and deposits to continue to intensify. We will both broaden our base in existing markets and con- tinue to expand the footprint of our franchise. We plan to open at least one new branch in 2005; our Westhampton Beach branch office is currently under construction. We will grow our business in new and existing markets with a continued focus on our value-added business model. Looking back, we are aware that we have been successful through our consistency of vision and dedication to our market niche. As we look forward, we will not be distracted from our commitment to controlled and steady growth or from our dedication to superior asset quality. We remain committed to reinvestment in Bridge Bancorp, Inc. so that we are prepared to leverage opportunities in the future. And, we will continue to maintain our 4. CHALLENGES ON THE LANDSCAPE The following challenges have been identified as top priorities in 2005. Net Income (Dollars in Millions) Net Income (Dollars in millions) Return on Average Assets (Percent) Return on Average Equity Market Capitalization (At December 31, dollars in millions) Price per Share Market Cap (Dollars in Millions) Return on Average Assets Return on Average Equity (Percent) (Percent) $10.4 Sustained and steady top line growth. Bridge Bancorp, Inc. has posted record earnings since 1992. Top 10 $9.6 12 line growth is essential to this trend. 8 $8.5 “ Our commitment to planning has been key to our long history of steady growth. Averaging of our entire staff are actively involved on an ongoing basis. ” double-digit asset increases for twenty years does not just happen. Our planning process goes well beyond the active participation of our board of directors and executive management. Nearly 50% Christopher Becker, Executive Vice President and Chief Operating Officer $5.6 01 02 03 00 0 4 6 2 2004 $6.7 “ Our top line growth goals are aggressive. Our ability to maintain our earnings trends requires both growth in our core business and addi- tional opportunities for non-interest income. We are focused on building our base through a studied plan for expansion of the Bank’s footprint while also enhancing share in existing markets. Volume is $469.3 Total Deposits (Dollars in millions) Total Deposits (Dollars in Millions) 500 essential. Customer retention objectives are fundamental. ” Sandra Novick, Vice President and Director of Marketing “ Managing our balance sheet to maintain increasing profitability through a forty-year low in diverse revenue streams. ” interest rates provided unique challenges. Historically, our balance sheet grows from the liability side. Looking forward, corporate strategies focus on deposit generation as well as development of Janet Verneuille, CPA, Senior Vice President and Chief Financial Officer $313.4 $357.2 $406.4 $457.2 100 200 300 400 01 02 03 00 0 2004 1.89% 1.90% 1.91% 1.73% 1.62% 00 01 02 03 00 01 02 03 00 01 02 03 2004 2004 2004 Total Loans (Dollars in millions) Total Loans (Dollars in millions) Earnings per Share (Diluted in dollars) Earnings per Share (Dollars in millions) $296.1 $273.2 $248.4 $201.1 $215.4 300 250 200 150 100 50 0 $1.64 $1.53 $1.37 $1.07 $0.88 00 01 02 03 2004 00 01 02 03 2004 200 150 100 50 0 2.0 1.5 1.0 0.5 0.0 (Percent) 22.41% 22.82% 23.93% 22.58% 21.41% $191.1 $145.4 $91.4 $75.4 $68.0 2.0 1.5 1.0 0.5 0.0 25 20 15 10 5 0 Maintaining competitive advantage in the face of increased competition. The Bank maintains competitive product pricing while focusing on its service commitment and community orientation. Access to decision makers, profes- sionalism and knowledge of the marketplace strengthen our brand. Total Assets (Dollars in Millions) “ The ability to recognize competitive forces, yet NOT become distracted from our focus on our market niche is what we do well and what has proven time and again to be a successful business model. Truly, “Times change. Values don’t.” Our customers are not chasing rate, nor a short-term promotion. They are looking for a value-added, local banking 100 200 300 500 400 600 0 Total Assets (Dollars in millions) $547.2 $511.6 $464.0 $393.5 $354.6 00 01 02 03 2004 relationship.” Sandra Novick, Vice President and Director of Marketing Bridge Bancorp, Inc. 5. AGGRESSIVE TOP LINE GROWTH GOALS Whether growing our share in existing markets or expanding the Bank’s geographic footprint, our focus is on efficiency and service to businesses and consumers and active involvement in our local communities. Below—Candy Kitchen, Main Street, Bridgehampton, our oldest market, and right—Main Street, Westhampton Beach where BNB’s branch office is scheduled to open in 2005. 7. Bridge Bancorp, Inc. Net Income (Dollars in Millions) Net Income (Dollars in millions) Return on Average Assets (Percent) Return on Average Equity (Percent) Market Capitalization (At December 31, dollars in millions) Price per Share Market Cap (Dollars in Millions) Return on Average Assets Return on Average Equity (Percent) (Percent) 6. 12 10 8 6 4 2 0 500 400 300 200 100 0 Total Deposits (Dollars in Millions) $10.4 $9.6 $8.5 1.73% 1.62% 1.89% 1.90% 1.91% 22.41% 22.82% 23.93% 22.58% 21.41% $191.1 $145.4 $6.7 Customer loyalty. Solidifying customer loyalty is paramount to our Company’s growth objectives. We are $5.6 dedicated to earning our customers’ trust, resulting in Bridgehampton National Bank’s consistently $68.0 $91.4 $75.4 strong customer retention levels. 00 03 01 02 00 03 02 01 2004 success is evident in the number of long standing, multi-generational businesses that have con- tinued to bank with us through the years. We hold their trust to be inviolate, which in turn has “ Our focus is on building long-term, comprehensive banking relationships based on trust. Our fostered a high degree of customer loyalty. ” Michael Spolarich, Vice President and Retail Banking Officer 2004 2004 2004 02 01 03 00 01 02 03 00 Total Deposits (Dollars in millions) Total Loans (Dollars in millions) 200 150 100 50 0 2.0 1.5 1.0 0.5 0.0 25 20 15 10 5 0 $469.3 $457.2 $406.4 $357.2 $313.4 $201.1 $215.4 $296.1 $273.2 $248.4 00 01 02 03 00 01 02 03 2004 2004 Total Assets (Dollars in Millions) Total Assets (Dollars in millions) Earnings per Share (Dollars in millions) Total Loans (Dollars in millions) Earnings per Share (Diluted in dollars) “ You have to earn customer loyalty. It is impor- tant to be part of the client’s business team... the one they turn to for advice. We need to be able to provide value to their business. It’s much more than just lending money or tak- $0.88 ing deposits. It’s a relationship built on a $1.64 $1.07 $1.37 $1.53 50 strong foundation. ” Kevin Santacroce, Senior Vice President and Chief Lending Officer 01 02 03 00 0 2004 300 250 200 150 100 2.0 1.5 1.0 0.5 0.0 600 500 400 300 200 100 0 $547.2 $511.6 $464.0 Regulatory compliance issues. Strong corporate governance practices continue to be the standard at Bridge Bancorp, Inc. However, both the USA PATRIOT Act and Sarbanes–Oxley legislation have resulted 01 02 $393.5 in increased financial and human resource demands on financial institutions across the country. $354.6 tomers and work force. Substantial costs are flowing through the income statements of all public companies as they strive to comply with regulatory burdens imposed on all for the misdeeds of a “ Management decisions at Bridge Bancorp serve the collective well-being of our investors, cus- few. Ethical behavior is difficult to legislate. Honesty, candor and service are customary at BNB.” “ Compliance with recently enacted legislation in the areas of corporate governance 00 Janet Verneuille, CPA, Senior Vice President and Chief Financial Officer and financial crimes identification presents a substantial challenge for the bank- ing industry. BNB remains committed to dedicating the resources necessary to meet this challenge at all levels of the organization. We have always recognized our responsibility to protect our shareholders and the public at large, and will 2004 03 continue to do so into the future. ” Michael Spolarich, Vice President and Retail Banking Officer Bridge Bancorp, Inc. 7. LONG-TERM COMMITMENTS BASED ON TRUST Through the seasons, businesses and consumers on eastern Long Island have confi- dence in the strength, stability and know-how of The Bridgehampton National Bank to meet their needs. Below—4th of July in Sag Harbor, and right—a wintry lane in Cutchogue. 43.9% 8. Cost control. While we have to spend money to make money, Bridge Bancorp, Inc. strives for efficiency. In 2004, the Company’s efficiency ratio was 43.9%. Kevin Santacroce, Senior Vice President and Chief Lending Officer ing the Company vision and mission...if not, why do it? Discipline is woven into the fabric of “ You have to understand the return on each dollar spent. You need to make sure you are follow- our culture. We have to be vigilant in this message to succeed. ” “ Controlling costs is half the equation to returning profits to tion to grow revenues exponentially over related expenses.” the shareholders. Our efficiency ratio reflects our determina- Janet Verneuille, CPA, Senior Vice President and Chief Financial Officer Speed, flexibility and adaptability to change. Our size and management style enable our Company to respond quickly to the market. We are a nimble company. “ BNB’s lean size and sophisticated systems allow us to react to chang- ing market forces more rapidly than our larger competitors. Unlike other banks, our technology infra- structure is not a hodgepodge of systems collected from acquired banks, but a well integrated unit designed to work together. This enables us to offer robust technology and seamless presentation between Chief Information Officer Farm stand sunflowers—North Fork. all our delivery channels.” Thomas Simson, Senior Vice President and “ As a community bank, with all key decision makers locally based, we are able to meet the gives us a competitive advantage in customer service.” Christopher Becker, Executive Vice President and Chief Operating Officer needs of our stakeholders in rapid fashion. While our values don’t change, the needs of our customers do. The speed and flexibility we can provide in modifying product and procedures No doubt, our Company operates in a changing, challenging market environment. The preceding quotes, from some of our senior managers, reflect the knowledge, expertise and global views that position our Company to continue meeting business challenges with both confidence and success. We encourage you to also review the more detailed report of our Company’s results of operations in the Form 10-K that follows. C OR POR AT E I N FOR M AT ION Board of Directors and Affiliations Raymond Wesnofske Chairperson Marcia Z. Hefter Peter M. Coleman Senior Lending Officer, North Fork Seamus J. Doyle Senior Lending Officer, South Fork Vice Chairperson Partner Esseks, Hefter & Angel, Esqs. Riverhead, Water Mill, NY Thomas J. Tobin President and Chief Executive Officer Diane Murray, CPA Controller Sandra K. Novick Director of Marketing Michael J. Spolarich Retail Banking Officer Thomas E. Halsey Owner Halsey Farm Water Mill, NY R. Timothy Maran Insurance Broker, Retired Maran Corporate Risk Associates, Inc. Southampton, NY Charles I. Massoud President Paumanok Vineyard Aquebogue, NY Howard H. Nolan, CPA Vice President, Finance Gentiva Health Services Melville, NY Dennis A. Suskind Partner, Retired Goldman, Sachs & Co. New York, NY Company Officers Thomas J. Tobin President and Chief Executive Officer Christopher Becker Executive Vice President and Chief Operating Officer Janet T. Verneuille, CPA Senior Vice President, Chief Financial Officer and Treasurer Sandra K. Novick Vice President and Corporate Secretary BANK OFFICERS Thomas J. Tobin ASSISTANT V ICE PR ESIDENTS Kimberly Cioch Loan Operations Manager Deborah Cosgrove Branch Operations Manager Ronald Cyr Branch Manager, Bridgehampton Lauren D’Elia Senior Systems Analyst Michelle Dosch Financial Operations Manager Michael Hadix Loan Officer, South Fork Janet Hawley Branch Manager, Mattituck Caroline Kalish Data Processing Operations Manager Deborah McGrory Human Resources Officer Margaret Meighan Branch Manager, East Hampton Nancy Messer Loan Officer, North Fork Jason Milleisen Loan Officer, Hampton Bays/Westhampton Beach Maureen P. Mougios Director of Internal Audit Marion Stark Branch Manager, Westhampton Beach Lee J. Stevens Branch Manager, Southampton President and Chief Executive Officer Aidan Wood s e n o J l i e n a D : y h p a r g o t o h P . c n i , s r o n n o c & n a r r u c y b d e n g i s e d Christopher Becker Executive Vice President and Chief Operating Officer SENIOR V ICE PR ESIDENTS Janet T. Verneuille, CPA Chief Financial Officer Kevin L. Santacroce Chief Lending Officer Thomas H. Simson Chief Information Officer V ICE PR ESIDENTS John R. Blasi Credit Administration Steven Bodziner, Esq. Bridge Abstract LLC Loan Officer, East Hampton/Montauk ASSISTANT CASHIERS Peter Hillick Credit Department Manager Claudia Pilato Assistant Director of Marketing Maria Press Electronic Delivery Systems Susan G. Schaefer Branch Manager, Sag Harbor Notice of Annual Meeting The Annual Meeting of Shareholders is scheduled for 11:00 a.m. on Friday, April 29, 2005, in the Community Room, Bridgehampton National Bank, 2200 Montauk Highway, Bridgehampton, NY. Banking Offices BRIDGEHAMPTON—MAIN OFFICE 631.537.1000 EAST HAMPTON 631.324.8480 GREENPORT 631.477.0220 HAMPTON BAYS 631.728.9041 MATTITUCK 631.298.0190 MONTAUK 631.668.6400 PECONIC LANDING 631.477.8150 SAG HARBOR 631.725.6622 SOUTHAMPTON 631.283.1286 SOUTHAMPTON VILLAGE 631.287.5880 SOUTHOLD 631.765.1500 BRIDGE ABSTR ACT LLC 2200 Montauk Highway P.O. Box 3031 Bridgehampton, NY 11932 631.537.5750 www.bridgenb.com Investor Relations: Exchange: NASDAQ/OTCBB Symbol: BDGE Sandra K. Novick Vice President and Corporate Secretary 2200 Montauk Highway, P.O. Box 3005 Bridgehampton, NY 11932, 631.537.1000 snovick@bridgenb.com Shareholders seeking information about the Company may access presentations, press releases and government filings through the Bank’s web site, www.bridgenb.com. Stock Transfers: Registrar and Transfer Co. 10 Commerce Drive Cranford, NJ 07016, 800.368.5948 www.rtco.com Shareholders that would like to make changes to the name, address or ownership of their stock, consolidate accounts, eliminate duplicate mailings, or replace lost certificates or dividend checks, should contact Registrar and Transfer Co. Securities Counsel: Luse Gorman Pomerenk & Schick, PC 5335 Wisconsin Avenue NW, Suite 400 Washington, DC 20015-2035 2 0 0 4 A n n u a l R e p o r t 220 0 Montau k Hig hway P.O. Box 30 05 Bridgeha mpton, Ne w York 11932 631.537.10 0 0 w w w.bridgenb.com 

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