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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 First Quarter Ended March 31, 2009 For the quarter ended March 31, 2009, the Company’s return on average assets and return on average equity were 0.15% and 1.20%, respectively, and compared to 0.79% and 9.07%, respectively, for the same period in 2008. First Quarter Highlights
“We continue to respond aggressively to position the Company strongly in this difficult economic environment,” said Daniel P. Myers, President and Chief Executive Officer of Bridge Capital Holdings and Bridge Bank. “In the first quarter of 2009 we continued to build on the steps taken late last year to greatly enhance the Company’s capital, reserves and liquidity. With this strength, Bridge Bank is committed to being a consistent, reliable partner for meeting the needs of new and existing creditworthy clients as they face the challenges of this economic cycle.” Net Interest Income and Margin Changes in short-term interest rates impact growth in net interest income as the interest rate earned on a majority of the Company’s assets, specifically the loan portfolio, adjust with changes in short-term market rates. As such, the nature of the Company’s balance sheet is that over time as short-term interest rates change, income on interest earning assets has a greater impact on net interest income than interest paid on liabilities. The Company’s prime rate averaged 3.25% in the quarter ended March 31, 2009 compared to 4.07% for the quarter ended December 31, 2008 and 6.23% in the same period one year earlier. The Company’s net interest margin for the quarter ended March 31, 2009 was 4.52% compared to 4.82% for the quarter ended December 31, 2008 and 6.59% for the same period one year earlier, primarily due to lower short-term interest rates and decreased balance sheet leverage. The Company’s loan-to-deposit ratio, a measure of leverage, averaged 91.89% during the quarter ended March 31, 2009, compared to an average of 91.08% for the quarter ended December 31, 2008 and an average of 97.63% for the quarter ended March 31, 2008. In addition, an increased level of nonperforming assets resulted in a negative impact of approximately 25 basis points and 29 basis points in the first quarter of 2009 and fourth quarter of 2008, respectively, from reversed or foregone interest. Non-Interest Income The Company’s non-interest income for the quarter ended March 31,
2009 was $4.0 million compared to $4.6 million for the quarter ended December
31, 2008 and $1.7 million for the same period one year ago. Non-interest
income for the quarters ending March 31, 2009 and December 31, 2008 included
$2.8 million and $3.3 million, respectively, as the result of acceleration
of the deferred gain on interest rate swaps terminated during the fourth
quarter of 2008. The acceleration of the deferred gain during the first
quarter of 2009 was a result of further reductions in the loan pools that
were originally designated as hedged against interest rate swaps. Excluding
the impact of accounting related to hedging strategies, non-interest income
is primarily comprised of foreign exchange fee income, deposit service
charges and gains on the sale of SBA loans. Non-Interest Expense Non-interest expense was $9.5 million for the quarter ended March 31, 2009, respectively, compared to $8.3 million for the quarter ended December 31, 2008, and $8.7 million for the same period in 2008. The increase in noninterest expense is primarily due to costs related to management of problem loans and OREO. Salary and benefits expense for the quarter ended March 31, 2009 was $5.6 million compared to $4.0 million for the quarter ended December 31, 2008 and $5.7 million in the quarter ended March 31, 2008. As of March 31, 2009 the Company employed 168 full-time equivalents (FTE) compared to 171 FTE at December 31, 2008 and 172 FTE on the same date one year earlier. The Company’s efficiency ratio, the ratio of non-interest expense to revenues, was 69.31% for the quarter ended March 31, 2009 compared to 56.06% for the quarter ended December 31, 2008 and 63.75% in the same period one year earlier. Balance Sheet Bridge Capital Holdings reported total assets at March 31, 2009 of $881.6 million, compared to $785.0 million on the same date one year ago. The increase in total assets represented growth of $96.6 million, or 12.3%, compared to March 31, 2008 and was primarily due to deposit growth of $43.9 million; a net increase in capital of $41.5 million; and an increase in wholesale borrowings of $10.0 million. Total assets at March 31, 2009 compared to $947.6 million at December 31, 2008 representing a decrease of $66.0 million, or 7.0%. The decrease in total assets compared to December 31, 2008 was primarily due to decreases in wholesale borrowings and deposits in response to improved liquidity. The Company’s total deposits were $733.1 million as of March 31, 2009, which represented growth of $43.9 million, or 6.4%, compared to March 31, 2008. The increase in deposits was centered in noninterest bearing demand deposits and time deposits, which grew by $86.2 million and $47.2 million respectively, offset by a decrease of $89.6 million in money market balances. Deposits at March 31, 2009 represented a decrease of $44.1 million or 5.7% from $777.2 million at December 31, 2008. The decrease from December 31, 2008 was primarily due to a reduction in higher cost wholesale deposits in addition to seasonal outflow of money market balances. Demand deposits represented 39.1% of total deposits at March 31, 2009, up from 36.6% at December 31, 2008 and 29.1% at March 31, 2008. The Company reported total gross loans outstanding at March 31, 2009 of $656.1 million, which represented decreases of $15.2 million, or 2.3%, from $671.3 million for the same date one year earlier and $43.5 million, or 6.2%, compared to $699.6 million at December 31, 2008. Credit Quality At March 31, 2009, nonperforming assets totaled $28.3 million, or 3.21% of total assets, compared to $16.9 million, or 1.78% of total assets, and $15.9 million, or 2.03% of total assets, on the same date one year earlier. The nonperforming assets at March 31, 2009 consisted of loans on nonaccrual or 90 days or more past due totaling $24.6 million, and other real estate owned valued at $3.6 million. Nonperforming loans at March 31, 2009 were comprised of loans with legal contractual balances totaling approximately $35.1 million reduced by impairment charges of $10.5 million which have been charged against the allowance for credit losses. The increase in nonperforming assets at March 31, 2009 was primarily attributable to two construction loans and one land development loan. The Company charged-off $4.3 million during the three months ended March 31, 2009 and had no charge-off activity during the three months ended March 31, 2008. During the three months ended March 31, 2009 the Company recognized $285,000 in loan recoveries compared to no loan recoveries during the same period of 2008. Construction and land development loans together totaled approximately $109.3 million as of March 31, 2009, compared to $146.3 million one year earlier, representing a decrease of $37.0 million or 25%. Land development loans decreased by $40.6 million, or 66.8%, from $60.8 million at March 31, 2008 to $19.1 million on March 31, 2009. During the same period, unfunded commitments on construction and land development loans decreased by $49.7 million. The allowance for loan losses was $18.2 million, or 2.77% of total loans, at March 31, 2009, compared to $11.0 million, or 1.64% of total loans, at March 31, 2008. The provision for credit losses for the three months ended March 31, 2009 was $3.7 million compared to $2.4 million for the same period in 2008. “We are pleased with our progress in adjusting the risk profile of the balance sheet,” said Thomas A. Sa, Executive Vice President and Chief Financial Officer of Bridge Capital Holdings and Bridge Bank, “Since March 31, 2008, the Company has nearly doubled the amount of its capital and reserves while substantially reducing exposure to the most impacted segment of our loan portfolio, land development, by over two-thirds.” Capital Adequacy At March 31, 2009, shareholders’ equity in the Company totaled $110.3 million, which included approximately $53.9 million in preferred stock and $(1.0) million in other comprehensive income. The $110.3 million of shareholders’ equity at March 31, 2009 compared to $68.9 million on the same date one year earlier. The increase was the result of capital raised in the fourth quarter of 2008 in the form of $30.0 million of mandatorily convertible preferred stock and $23.8 million of preferred stock issued under the US Treasury’s Capital Purchase Program. The Company's tangible common equity ratio was 6.40% at March 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 18.15%, 14.20%, and 11.82%, respectively, were all substantially above the regulatory standards for “well-capitalized” institutions. Conference Call and Webcast Management will host a conference call tomorrow, April 24, 2009 at 9:00 a.m. Eastern time/6:00 a.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 800.891.6020 from the United States, or 702.696.4830 from outside the United States. 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 9, 2009 by dialing 800.642.1687
from the United States, or 706.645.9291 from outside the United States,
and entering the conference ID 95990189. 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 describe future plans, strategies and expectations, such as, for example, the Company's plans to divest itself of non-performing assets, to sell convertible preferred shares and expectations regarding capital ratios. 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 reach definitive agreements regarding and to subsequently complete the sales of nonperforming assets and convertible preferred shares, 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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