Bridge Bancorp Inc. Annual Report 2004

FY2004 Annual Report · Bridge Bancorp Inc.

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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)

500

400

300

200

100

$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

2004

2.0

1.5

1.0

0.5

0.0

200

150

100

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

2004

Total Assets

(Dollars in Millions)

Total Assets

(Dollars in millions)

600

500

400

300

200

100

$547.2

$511.6

$464.0

$393.5

$354.6

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

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)

$10.4
Sustained and steady top line growth. Bridge Bancorp, Inc. has posted record earnings since 1992. Top
10

$9.6

line growth is essential to this trend.

$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

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

2004

1.89%

1.90% 1.91%

1.73%

1.62%

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

$1.64

$1.53

$1.37

$1.07

$0.88

2004

200

150

100

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

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

Total Assets
(Dollars in millions)

$547.2

$511.6

$464.0

$393.5

$354.6

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)

500

400

300

200

100

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.

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

Total Deposits
(Dollars in millions)

Total Loans
(Dollars in millions)

200

150

100

2.0

1.5

1.0

0.5

0.0

$469.3

$457.2

$406.4

$357.2

$313.4

$201.1 $215.4

$296.1

$273.2

$248.4

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

strong foundation. ”
Kevin Santacroce, Senior Vice President and

Chief Lending Officer

2004

300

250

200

150

100

2.0

1.5

1.0

0.5

0.0

600

500

400

300

200

100

$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

$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

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%

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

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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

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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