Item 1. Business - ----------------
Bridge Bancorp, Inc. (the "Registrant") is a registered bank holding company, the sole subsidiary of which is The Bridgehampton National Bank (the "Bank"). The Registrant was organized as a New York business corporation and incorporated under the laws of the State of New York in 1988, at the direction of the Board of Directors of the Bank for the purpose of becoming a bank holding company pursuant to a plan of reorganization; under the plan the former stockholders of the Bank became the stockholders of the Company. Since commencing business in March 1989 after the reorganization, the Registrant has functioned primarily as the holder of all of the Bank's common stock.
At present, the Registrant does not own or lease any property and has no paid employees. The Registrant uses the Bank's space and employees without separate payment.
The Bank was established in 1910 as a national banking association and is under the supervision of the Office of the Comptroller of the Currency (the "OCC"). Its headquarters are located at 2200 Montauk Highway, Bridgehampton, New York 11932.
The Bank engages in full service commercial and consumer banking and limited trust business, including accepting time and demand deposits, as well as making secured and unsecured commercial and consumer loans, including auto, personal, home equity, home improvement, residential and commercial mortgages, commercial construction and S.B.A. guaranteed loans. In addition the Bank offers merchant credit and debit card processing, automated teller machines, safe deposit boxes and individual retirement accounts.
The Bank employees 91 people on a full-time and part-time basis. The Bank provides a variety of employment benefits and considers its relationship with its employees to be good.
All phases of the Bank's business are highly competitive. The Bank's market is primarily the trade areas of the North and South Forks of Eastern Suffolk County, with concentrations in the Bridgehampton, East Hampton, Mattituck, Montauk, Southampton, and Southold, New York areas. The Bank considers its major competition to be local commercial banks as well as other commercial banks with branches in the Bank's market area.
Regulation - ----------
References in this section to applicable statutes and regulations are brief summaries only, and do not purport to be complete. The reader should consult such statutes and regulations themselves for a full understanding of the details of their operation.
The Registrant is subject to the provisions of the Bank Holding Company Act of 1956, as amended (the "Act") and to supervision by the Federal Reserve Board. The Act requires the Registrant to secure the prior approval of the Federal Reserve Board before it can acquire all or substantially all of the assets of any bank, or acquire ownership or control of any voting shares of any bank other than the Bank, if after such acquisition, it would own or control more than 5 percent of the voting shares of such bank. Federal law also prohibits acquisitions of control of a bank holding company without prior notice to certain federal bank regulators.
As a bank holding company, the Registrant is required to file an annual report with the Federal Reserve Board and any additional information as the Federal Reserve Board may require pursuant to the Act. The Federal Reserve Board may also make examinations of the Registrant and any or all of its subsidiaries.
Subsidiary banks of a bank holding company are subject to certain restrictions imposed by the Act on any extension of credit to the bank holding company or any of its subsidiaries, on investments in the stock or other securities of the bank holding company or its subsidiaries, and on the taking of such stock or securities as collateral for loans to any borrower.
The Federal Reserve Board permits bank holding companies to engage in non-banking activities so closely related to banking or managing or controlling banks so as to be a proper incident thereto including, for example, consumer finance companies, mortgage companies, leasing companies, data processing companies, financial advisor and securities brokerage.
Federal Reserve Board approval is required before the Registrant or a non-bank subsidiary of the Registrant may begin to engage in any of the above activities and before any such business may be acquired. At the present time, the Registrant does not contemplate conduct of any non-banking activities permitted by the Act.
The operations of the Bank are subject to federal and state statutes applicable to banks chartered under the banking laws of the United States, to members of the Federal Reserve System and to banks whose deposits are insured by the Federal Deposit Insurance Corporation (the "FDIC"). Bank operations are also subject to regulations of the OCC, the Federal Reserve Board, the FDIC, and the New York State Banking Department. The primary supervisory authority of the Bank is the OCC, who regularly examines the Bank.
Federal and state banking laws and regulations govern, among other things the scope of a bank's business, the investments a bank may make, the reserves against deposits a bank must maintain, the loans a bank makes and collateral it takes, the maximum interest rates a bank must pay on deposits, the activities of a bank with respect to mergers and consolidations and the establishment of branches.
The Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA") expanded the Federal Reserve Board's authority to prohibit activities of bank holding companies and their non-banking subsidiaries which represent unsafe and unsound banking practices or which constitute violations of laws or regulations. FIRREA increased the amount of civil money penalties that the Federal Reserve Board can assess for such practices or violations. The penalties can be as high as $1 million per day. FIRREA also expanded the scope of individuals and entities against which such penalties may be assessed.
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") required each federal banking agency to revise its risk-based capital standards to ensure that those standards take adequate account of interest rate risk, concentrations of credit risk and the risks of non-traditional activities, as well as reflect the actual performances and expected risk of loss on multi-family mortgages. This law also required each federal banking agency to specify, by regulation the levels at which an insured institution would be considered "well capitalized," "adequately capitalized," "under-capitalized," "significantly under-capitalized" and "critically under-capitalized." Under the regulations adopted by the banking agencies, the Bank is considered "well capitalized."
FDICIA requires bank regulators to take "prompt corrective action" to resolve problems associated with insured depository institutions. In the event an institution becomes "under-capitalized," it must submit a capital restoration plan. If an institution becomes "significantly under-capitalized" or "critically under-Capitalized," additional and significant limitations are placed on the institution. The capital restoration plan of an under-capitalized institution will not be accepted by the regulators unless each company "having control of" the under-capitalized institution "guarantees" the subsidiary's compliance with the capital restoration plan until it becomes "adequately capitalized."
Under FDICIA, the aggregate liability of all companies controlling a particular institution is limited to the lesser of 5% of the institution's assets at the time it became under-capitalized or the amount necessary to bring the institution into compliance with applicable capital standards. FDICIA grants powers to the bank regulators in situations where an institution becomes "significantly" or "critically under-capitalized" or fails to submit a capital restoration plan. For example, a bank holding company controlling such an institution can be required to obtain prior Federal Reserve Board approval of proposed dividends, or might be required to consent to a merger or to divest the troubled institution or other affiliates.
Additionally, Federal Reserve Board policy discourages the payment of dividends by a bank holding company from borrowed funds as well as payments that would adversely affect capital adequacy. Failure to meet the capital guidelines may result in institution by the Federal Reserve Board of appropriate supervisory or enforcement actions.
The prompt corrective action provisions of FDICIA reflect the same concerns which gave rise to a position adopted by the Federal Reserve Board known as the "source of strength doctrine," which is based on the Federal Reserve Board's Regulation Y. Regulation Y directs bank holding companies to "serve as a source of financial and managerial strength" to their subsidiary banks, and bars them from engaging in unsafe and unsound practices.
STATISTICAL INFORMATION -----------------------
The following tables set forth statistical information relating to the Registrant and the Bank. The tables should be read in conjunction with the consolidated financial statements and related notes and the discussion included in Management's Discussion and Analysis of Financial Condition and Results of Operations.
I.A. & I.B. DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY: - ------------------------------------------------------------------------------- INTEREST RATES AND INTEREST DIFFERENTIAL - ---------------------------------------- The information required by Items I.A. & I.B. is included in the "Analysis of Net Interest Income" which appears on page 10 of the Registrant's 1998 Annual Report to Shareholders which is incorporated herein by reference.
I.C. VOLUME AND YIELD/RATE VARIANCES - ------------------------------------- The information required by Item I.C. is included in the "Rate/Volume Analysis" which appears on page 11 of the Registrant's 1998 Annual Report to Shareholders which is incorporated herein by reference.
II.A. & II.B. INVESTMENT PORTFOLIO - ---------------------------------- The information required by Items II.A. & II.B. is included in Footnote 2 of the Notes to Consolidated Financial Statements which appears on pages 22 and 23 of the Registrant's 1998 Annual Report to Shareholders which is incorporated herein by reference.
III.A., III.B., III.C.1 & III.C.3 LOANS - --------------------------------------- The information required by Items III.A., III.B., III.C.1 & III.C.3 is included in Footnote 3 of the Notes to Consolidated Financial Statements which appears on pages 23 through 25 of the Registrant's 1998 Annual Report to Shareholders which is incorporated herein by reference.
III.C.2. POTENTIAL PROBLEM LOANS - -------------------------------- In addition to the total non-performing loans set forth above, loans of approximately $4,439,000 at December 31, 1998, were classified as potential problem loans. These are loans for which management has information which indicated that the borrower may not be able to comply with the present payment terms. These loans are subject to constant management attention and their classification is reviewed on at least a quarterly basis.
III.C.4. LOAN CONCENTRATIONS - ---------------------------- At December 31, 1998, there were no loan concentrations.
IV.A. & IV.B. SUMMARY OF LOAN LOSS EXPERIENCE - ---------------------------------------------- The information required by Items IV.A. & IV.B. is included in Footnote 3 of the Notes to Consolidated Financial Statements which appears on pages 23 through 25 of the Registrant's 1998 Annual Report to Shareholders which is incorporated herein by reference.
V. DEPOSITS - ----------- The information required by Item V. is included in Footnote 4 of the Notes to Consolidated Financial Statements which appears on page 25 of the Registrant's 1998 Annual Report to Shareholders which is incorporated herein by reference.
VI. RETURN ON EQUITY AND ASSETS - --------------------------------- The information required by Item VI. is included in the "Five Year Summary of Operations" which appears on page 7 of the Registrant's 1998 Annual Report to Shareholders which is incorporated herein by reference.
VII. SHORT-TERM BORROWINGS - ---------------------------- The Registrant's average balance outstanding during the period for all categories of short term borrowings was less than thirty percent of stockholders' equity at the end of the period.
Item 2.
Item 2. Properties - ------------------ Facilities of the Registrant are located at 2200 Montauk Highway, Bridgehampton, New York in the Bank's Main Office facility. As such, the Registrant itself has no physical properties.
The Bank's Main Office is owned in fee. The Bank also owns the building which houses its Southold Branch located at 54790 Main Road, Southold, New York. The Bank leases five additional properties as branch locations at 425 County Road 39, Southampton, New York; 26 Park Place, East Hampton, New York; Main Road Mattituck, New York; 94 Main Street, Southampton, NY 11968; and 1 The Plaza, Montauk, New York. The Bank leases additional space at 184 Old Country Road, Riverhead, New York formerly used as a residential mortgage center. The Bank is currently in the process of subletting this space.
It is the opinion of management of the Company that the current facilities are suitable and adequate at the present time.
Item 3.
Item 3. Legal Proceedings - ------------------------- The Bank, and two present executive officers and one former executive officer, have been named as defendants in a lawsuit that was filed on February 18, 1999 by two former employees in Suffolk County Supreme Court. The plaintiffs assert causes of action in connection with their employment, conduct of loan and banking transactions, and subsequent termination or resignation. The plaintiffs seek compensatory and punitive damages. In the opinion of management at the present time, after consultation with legal counsel, the lawsuit is without merit and the ultimate outcome of this matter is not expected to have a material adverse effect on the Company's results of operations, business operations or consolidated financial condition.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders - ----------------------------------------------------------- None
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters - ----------------------------------------------------------------------------- "Common Stock Information" set forth on page 32 of the Annual Report to Shareholders for the year ended December 31, 1998 is incorporated herein by reference.
Item 6.
Item 6. Selected Financial Data - ------------------------------- "Five Year Summary of Operations" set forth on page 7 of the Annual Report to Shareholders for the year ended December 31, 1998 is incorporated herein by reference.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations - ------------- "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth on pages 8 through 15 of the Annual Report to Shareholders for the year ended December 31, 1998 is incorporated herein by reference.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk - -------------------------------------------------------------------- "Market Risk" under Item 7. Management's Discussion and Analysis or Plan of Operation set forth on pages 9 through 10 of the Annual Report to Shareholders for the year ended December 31, 1998 is incorporated herein by reference.
Item 8.
Item 8. Financial Statements and Supplementary Data - --------------------------------------------------- The Consolidated Financial Statements and notes, together with the Report of Independent Public Accountants included on pages 16 through 32 of the Annual Report to Shareholders for the year ended December 31, 1998 is incorporated herein by reference.
Item 9.
Item 9. Changes in and disagreements with Accountants on Accounting and - -------------------------------------------------------------------------------- Financial Disclosure -------------------- None
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant - ----------------------------------------------------------- "Nominees for Director and Directors Continuing in Office", "Shares Beneficially Owned by other Executive Officers and All Directors" and "Compliance with Section 16 (a) of the Exchange Act" set forth on pages 3 through 5 and 15 of the Registrant's Proxy Statement dated March 16, 1999 are incorporated herein by reference.
Item 11.
Item 11. Executive Compensation - ------------------------------- "Compensation of Directors", "Compensation of Executive Officers", and "Employment Contracts and Severance Agreements" set forth on pages 7 through 15 of the Registrant's Proxy Statement dated March 16, 1999 are incorporated herein by reference.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management - ----------------------------------------------------------------------- "Beneficial Ownership" and "Nominees for Director and Directors Continuing in Office" set forth on pages 2 through 5 of the Registrant's Proxy Statement dated March 16, 1999 are incorporated herein by reference.
Item 13.
Item 13. Certain Relationships and Related Transactions - ------------------------------------------------------- "Certain Relationships and Related Transactions" set forth on page 15 of the Registrant's Proxy Statement dated March 16, 1999 is incorporated herein by reference.
"Related party loans" set forth as part of Footnote 3 of the Notes to Consolidated Financial Statements which appears on page 25 of the Annual Report to Shareholders for the year ended December 31, 1998 is incorporated herein by reference.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
Exhibits
The Following Exhibits are incorporated herein by reference:
3.1 Certificate of Incorporation of the Registrant 3.2 By-laws of the Registrant 10.1 Employment Contract - Thomas J. Tobin, Dated January 27, 1997 10.2 Severance Agreement - Anthony Leone, Dated January 13, 1998 10.3 Annual Incentive Plan 10.4 Service Agreement - Fiserv Boston, Inc. 10.5 Equity Incentive Plan
The following Exhibits are filed with this Form 10-K:
10.6 Change in Control Agreement - Christopher Becker
13.1 Registrant's Annual Report to Shareholders for the year ended December 31, 1998 (parts not incorporated by reference are furnished for information purposes only and are not to be deemed filed herewith.)
23.1 Consent of Independent Public Accountants - Arthur Andersen, LLP
Reports on Form 8-K
There were no reports on Form 8K filed during the fourth quarter of 1998.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BRIDGE BANCORP, INC. -------------------- Registrant
Date: March 31, 1999 By /s/ Thomas J. Tobin -------------------- --------------------- Thomas J. Tobin, President/CEO
Date: March 31, 1999 By /s/ Christopher Becker ------------------- ------------------------ Christopher Becker, Senior Vice President/Treasurer
Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Raymond Wesnofske Director March 31, 1999 - --------------------------------- --------------------- Raymond Wesnofske
/s/ Thomas J. Tobin Director March 31, 1999 - --------------------------------- --------------------- Thomas J. Tobin
/s/ Thomas E. Halsey Director March 31, 1999 - --------------------------------- --------------------- Thomas E. Halsey
/s/ Marcia Z. Hefter Director March 31, 1999 - --------------------------------- --------------------- Marcia Z. Hefter
/s/ R. Timothy Maran Director March 31, 1999 - --------------------------------- --------------------- R. Timothy Maran
/s/ Albert E. McCoy Director March 31, 1999 - --------------------------------- --------------------- Albert E. McCoy
/s/ Walter A. Preische, Jr. Director March 31, 1999 - --------------------------------- --------------------- Walter A. Preische, Jr.
/s/ L.H. Strickland Director March 31, 1999 - --------------------------------- --------------------- L.H. Strickland
EXHIBIT INDEX -------------
Exhibit Number Description of Exhibit Exhibit - -------------- ---------------------- -------
3.1 Certificate of Incorporation of the * Registrant (incorporated by reference to Registrant's amended Form 10, File No. 0-18546, filed October 15, 1990)
3.2 By-laws of the Registrant (incorporated * by reference to Registrant's amended Form 10, File No. 0-18546, filed October 15, 1990)
10.1 Employment Contract - Thomas J. Tobin (incorporated by reference to Registrant's * Form 10-KSB, File No. 0-18546, filed March 31, 1997)
10.2 Severance Agreement - Anthony Leone * (incorporated by reference to Registrant's Form 10-KSB, File No. 0-18546, filed March 31, 1998)
10.3 Annual Incentive Plan (incorporated by * reference to Registrant's Form 10-KSB, File No. 0-18546, filed March 31, 1994)
10.4 Service Agreement - Fiserv Boston, Inc. * (incorporated by reference to Registrant's Form 10-KSB, File No 0-18546, filed March 31, 1994)
10.5 Equity Incentive Plan (incorporated by * reference to Registrant's Form 14A, File No. 0-18546, filed April 1, 1996)
10.6 Change in Control Agreement - Christopher 2 Becker, Dated January 19, 1999
13.1 Registrant's Annual Report to Shareholders 1 for the year ended December 31, 1998
23.1 Consent of Independent Public Accountants - 3 Arthur Andersen, LLP
* Denotes incorporated by reference