Third Quarter Net Income Increases 19% Year-Over-Year
-- Net income of $2.8 million for the third quarter of 2007 represented an increase of $444,000 compared to $2.3 million for the third quarter of 2006. -- Growth in average earning assets produced an increase in net interest income of 22%, or $2.2 million, compared to the same period one year earlier. -- Net interest margin for the third quarter of 2007 remained strong at 6.46%. -- Non-interest income increased $600,000 to $1.4 million in the third quarter of 2007 from $800,000 in the third quarter of 2006, in part, due to recognition of approximately $375,000 from the liquidation of a warrant position in one of the Bank's loan clients. -- Total assets increased $134.2 million to $789.9 million as of September 30, 2007 compared to $655.7 million on the same date one year earlier. -- Return on average assets and return on average equity were 1.36% and 19.02%, respectively, for the third quarter of 2007.Net Interest Income and Margin Earnings growth was driven primarily by growth in net interest income. Net interest income of $12.3 million for the quarter ended September 30, 2007 represented an increase of approximately $2.2 million, or 22%, over $10.1 million reported for the same quarter one year earlier and was primarily attributed to growth in average earning assets of $162.4 million, or 27%, compared to the same quarter in 2006. The Company's loan-to-deposit ratio, a measure of leverage, averaged 83.54% during the quarter ended September 30, 2007, which represented a slight decrease compared to an average of 83.61% for the same quarter of 2006. For the nine months ended September 30, 2007, net interest income of $35.2 million represented growth of $7.3 million, or 26%, over $27.9 million for the first nine months of 2006. For the nine month period, growth in average earning assets was the primary driver of growth in net interest income. Average earning assets were $701.8 million compared to $539.3 million for the same period one year earlier. The Company's average loan-to-deposit ratio for the nine months ended September 30, 2007 was 86.52% compared to 88.56% for the same period one year earlier reflecting slightly faster growth in deposit funding relative to loan growth. Changes in short-term interest rates also 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 8.18% and 8.23%, respectively, in the quarter and nine months ended September 30, 2007 compared to 8.25% and 7.86%, respectively, in the same periods one year earlier. The Company's net interest margin for the quarter and nine months ended September 30, 2007 was 6.46% and 6.71%, respectively, declining slightly from 6.73% and 6.91%, respectively, in the same periods one year earlier as a result of the decrease in the prime rate noted above, a decrease in loan fees as a percentage of loans, growth in the volume of average interest bearing liabilities and decreased balance sheet leverage. Non-Interest Income The Company's non-interest income for the quarter and nine months ended September 30, 2007 was $1.4 million and $5.3 million, respectively, compared to $800,000 and $3.0 million, respectively, for the same periods one year ago. Non-interest income is primarily comprised of gains realized on sales of SBA loans, and the increase in non-interest income primarily reflects a higher volume of SBA loan sales in 2007. During the quarter and nine months ended September 30, 2007, the Company sold SBA loans totaling $20.3 million and $76.8 million, respectively, compared to $8.1 million and $51.4 million, respectively, for the same periods during 2006. In addition, non-interest income for the quarter included approximately $375,000 resulting from the liquidation of a warrant position in one of the Bank's loan clients. Net interest income and non-interest income comprise total revenue of $13.8 million for the three months ended September 30, 2007 compared to $10.9 million for the same period one year earlier, representing an increase of $2.9 million, or 26%. For the nine months ended September 30, 2007, total revenue of $40.6 million represented an increase of $9.7, or 34%, over $30.9 million for the first nine months of 2006. "Key operating measures remained strong in the third quarter of 2007," said Thomas A. Sa, Executive Vice President and Chief Financial Officer of Bridge Capital Holdings and Bridge Bank. "However, during the third quarter, deposit growth outpaced loan growth which reduced balance sheet leverage. As a result, our ROAA decreased slightly to 1.36%, and the net interest margin declined slightly to 6.46%. While these remain strong measures, maintaining or exceeding these levels will depend on our ability to increase and sustain the loan-to-deposit ratio. In addition, for the first time we saw a meaningful contribution from a successful liquidation of a warrant position in our technology division. We believe this demonstrates the benefit of diversity in our mix of business lines." Non-Interest Expense Non-interest expense was $8.7 million and $25.0 million for the quarter and nine months ended September 30, 2007, respectively, compared to $7.1 million and $20.0 million, respectively, for the same periods in 2006. The increase in non-interest expense was primarily due to an increase in salary and benefits expense associated with the Company's expansion. Salary and benefits expense for the quarter ended September 30, 2007 was $5.5 million, an increase of $900,000 over $4.6 million in the same period of 2006. Salary and benefits expense for the nine months ended September 30, 2007 was $15.8 million, an increase of $3.1 million over $12.7 million in the same period of 2006. As of September 30, 2007 the Company employed 164 full-time equivalents (FTE) compared to 132 FTE on the same date one year earlier. The Company's efficiency ratio, the ratio of non-interest expense to revenues, was 63.30% and 61.63% for the quarter and nine months ended September 30, 2007 compared to 64.89% and 64.94%, respectively, in the same periods one year earlier. Balance Sheet Bridge Capital Holdings reported total assets at September 30, 2007 of $789.9 million, compared to $655.7 million on the same date one year ago. The increase in total assets represented growth of $134.2 million, or 21%, compared to September 30, 2006. Total assets at September 30, 2007 represented growth of $67.9 million, or 9%, compared to $722.0 million at December 31, 2006. The Company reported total gross loans outstanding at September 30, 2007 of $611.2 million, which represented an increase of $125.6 million, or 26%, over $485.6 million for the same date one year earlier. Total loans at September 30, 2007 represented growth of $70.4 million, or 13%, compared to $540.8 million at December 31, 2006. The Company's total deposits were $702.9 million as of September 30, 2007, compared to total deposits of $585.8 million as of September 30, 2006. The increase in deposits represented growth of $117.1 million, or 20%, compared to September 30, 2006. Total deposits at September 30, 2007 represented growth of $57.9 million, or 9%, compared to $645.0 million at December 31, 2006. For the quarter ended September 30, 2007, the Company's return on average assets and return on average equity were 1.36% and 19.02%, respectively, and compared to 1.44% and 19.99%, respectively, for the same period in 2006. Return on average assets and return on average equity for the nine months ended September 30, 2007 were 1.46% and 20.20%, respectively, up from 1.44% and 19.31%, respectively, for the same period one year earlier. Credit Quality The allowance for loan losses was $8.0 million, or 1.31% of total loans, at September 30, 2007, compared to $6.7 million, or 1.39% of total loans, at September 30, 2006. The provision for credit losses for the three and nine months ended September 30, 2007 was $475,000 and $1.7 million, respectively, compared to $100,000 and $772,000, respectively, for the same periods in 2006. During the three and nine months ended September 30, 2007, the Company charged-off balances totaling $312,000 and $1.3 million, respectively, which compared to no loan charge-off activity during the same periods of 2006. During the third quarter of 2007, the Company recognized $250,000 in loan recoveries. The loan recoveries in the third quarter represented all of the activity for the first nine months of 2007 and compared to no loan recoveries during the same periods of 2006. At September 30, 2007 nonperforming assets totaled $425,000, or 0.05% of total assets, compared to $2.6 million, or 0.39% of total assets, on the same date one year earlier. The single nonperforming asset at September 30, 2007 was a commercial property categorized as "other real estate owned." Capital Adequacy At September 30, 2007, shareholders' equity in the Company totaled $60.0 million, up from $47.0 million on the same date one year earlier. As a result, the Company's total risk-based capital ratio, tier one capital ratio, and leverage ratio of 11.80%, 10.68%, and 10.20%, respectively, were all substantially above the regulatory standards for "well-capitalized" institutions. About Bridge Capital Holdings Bridge Capital Holdings is the holding company for Bridge Bank, National Association. Bridge Capital Holdings was formed on October 1, 2004 and is listed on The NASDAQ Stock Market under the trading symbol BBNK. For additional information, visit the Bridge Capital Holdings website at http://www.bridgecapitalholdings.com. About Bridge Bank, N.A. Bridge Bank, N.A. is Santa Clara County's full-service professional business bank. The bank is dedicated to meeting the financial needs of small and middle market, and emerging technology businesses, in the Silicon Valley, Palo Alto, Redwood City, San Ramon-Pleasanton, Sacramento, San Diego, Bakersfield, Fresno, Orange County, Dallas, TX, and Reston, VA business communities. Bridge Bank provides its clients with a comprehensive package of business banking solutions delivered through experienced, professional bankers. For additional information, visit the Bridge Bank website at http://www.bridgebank.com. 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 describe future plans, strategies, and expectations, and are based on currently available information, expectations, assumptions, projections, and management's judgment about the Bank, the banking industry and general economic conditions. These forward-looking statements are subject to certain risks and uncertainties that could cause the actual results, performance or achievements to differ materially from those expressed, suggested or implied by the forward-looking statements. 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. 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 Exchange Commission.
BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Dollars in Thousands) Three months ended Nine months ended ------------------------------- -------------------- 09/30/07 06/30/07 09/30/06 09/30/07 09/30/06 --------- --------- --------- --------- --------- INTEREST INCOME Loans $ 15,585 $ 15,433 $ 12,762 $ 45,202 $ 34,696 Federal funds sold 1,138 753 1,453 2,415 2,723 Investment securities available for sale 904 750 113 2,324 316 --------- --------- --------- --------- --------- Total interest income 17,627 16,936 14,328 49,941 37,735 --------- --------- --------- --------- --------- INTEREST EXPENSE Deposits: Interest-bearing demand 10 10 9 33 23 Money market and savings 3,984 3,628 2,733 10,609 6,073 Certificates of deposit 1,039 1,112 1,239 3,307 2,924 Other 262 260 257 782 825 --------- --------- --------- --------- --------- Total interest expense 5,295 5,010 4,238 14,731 9,845 --------- --------- --------- --------- --------- Net interest income 12,332 11,926 10,090 35,210 27,890 Provision for credit losses 475 1,000 100 1,675 772 --------- --------- --------- --------- --------- Net interest income after provision for credit losses 11,857 10,926 9,990 33,535 27,118 --------- --------- --------- --------- --------- NON-INTEREST INCOME Service charges on deposit accounts 166 181 131 497 370 Gain on sale of SBA loans 363 1,890 225 2,986 1,064 Other non-interest income 906 542 443 1,859 1,526 --------- --------- --------- --------- --------- Total non-interest income 1,435 2,613 799 5,342 2,960 --------- --------- --------- --------- --------- OPERATING EXPENSES Salaries and benefits 5,530 5,265 4,627 15,796 12,706 Premises and fixed assets 1,173 1,026 808 3,149 2,122 Other 2,012 2,131 1,631 6,046 5,206 --------- --------- --------- --------- --------- Total operating expenses 8,715 8,422 7,066 24,991 20,034 --------- --------- --------- --------- --------- Income before income taxes 4,577 5,117 3,723 13,886 10,044 Income taxes 1,825 2,134 1,415 5,707 3,786 --------- --------- --------- --------- --------- NET INCOME $ 2,752 $ 2,983 $ 2,308 $ 8,179 $ 6,258 ========= ========= ========= ========= ========= EARNINGS PER SHARE Basic earnings per share $ 0.43 $ 0.47 $ 0.37 $ 1.28 $ 1.00 ========= ========= ========= ========= ========= Diluted earnings per share $ 0.40 $ 0.43 $ 0.34 $ 1.18 $ 0.92 ========= ========= ========= ========= ========= Average common shares outstanding 6,397,140 6,381,493 6,283,125 6,369,991 6,262,169 ========= ========= ========= ========= ========= Average common and equivalent shares outstanding 6,947,833 6,933,273 6,819,049 6,923,726 6,795,493 ========= ========= ========= ========= ========= PERFORMANCE MEASURES Return on average assets 1.36% 1.57% 1.44% 1.46% 1.44% Return on average equity 19.02% 22.09% 19.99% 20.20% 19.31% Efficiency ratio 63.30% 57.93% 64.89% 61.63% 64.94% BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY INTERIM CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in Thousands) 09/30/07 06/30/07 03/31/07 12/31/06 09/30/06 --------- --------- --------- --------- --------- ASSETS Cash and due from banks $ 19,076 $ 21,274 $ 21,673 $ 24,360 $ 18,987 Federal funds sold 70,155 39,790 60,620 93,845 116,165 Investment securities available for sale 66,071 73,362 53,920 43,933 18,971 Loans: Commercial 264,360 258,978 213,436 197,174 185,789 SBA 63,205 56,176 60,871 59,888 51,894 Real estate construction 83,030 104,652 116,282 103,710 99,427 Real estate other 144,438 134,299 123,853 115,313 105,395 Factoring and asset-based lending 43,942 42,683 51,904 56,924 36,658 Other 12,231 9,341 8,794 7,771 6,469 --------- --------- --------- --------- --------- Loans, gross 611,206 606,129 575,140 540,780 485,632 Unearned fee income (1,616) (1,483) (1,586) (1,495) (1,601) Allowance for credit losses (8,003) (7,590) (7,533) (7,329) (6,728) --------- --------- --------- --------- --------- Loans, net 601,587 597,056 566,021 531,956 477,303 Premises and equipment, net 4,618 4,966 4,050 3,479 2,935 Accrued interest receivable 4,748 4,608 4,212 4,292 3,041 Other assets 23,622 22,741 20,626 20,114 18,304 --------- --------- --------- --------- --------- Total assets $ 789,877 $ 763,797 $ 731,122 $ 721,979 $ 655,706 ========= ========= ========= ========= ========= LIABILITIES Deposits: Demand noninterest- bearing $ 201,133 $ 218,651 $ 195,965 $ 198,639 $ 164,483 Demand interest-bearing 4,271 4,563 9,611 3,901 4,005 Money market and savings 418,503 372,470 352,975 333,838 294,698 Time 78,943 85,442 94,847 108,609 122,638 --------- --------- --------- --------- --------- Total deposits 702,850 681,126 653,398 644,987 585,824 --------- --------- --------- --------- --------- Junior subordinated debt securities 17,527 17,527 17,527 17,527 17,527 Accrued interest payable 298 276 289 318 355 Other liabilities 9,187 9,882 7,449 10,053 5,044 --------- --------- --------- --------- --------- Total liabilities 729,862 708,811 678,663 672,885 608,750 --------- --------- --------- --------- --------- SHAREHOLDERS' EQUITY Common stock 36,888 36,466 35,954 35,427 34,824 Retained earnings 22,722 19,970 16,987 14,543 12,167 Accumulated other comprehensive (loss) 405 (1,450) (482) (876) (35) --------- --------- --------- --------- --------- Total shareholders' equity 60,015 54,986 52,459 49,094 46,956 --------- --------- --------- --------- --------- Total liabilities and shareholders' equity $ 789,877 $ 763,797 $ 731,122 $ 721,979 $ 655,706 ========= ========= ========= ========= ========= CAPITAL ADEQUACY Tier I leverage ratio 10.20% 10.13% 10.15% 10.97% 10.75% Tier I risk-based capital ratio 10.68% 10.48% 10.55% 10.52% 11.03% Total risk-based capital ratio 11.80% 11.56% 11.69% 11.74% 12.46% Total equity/ total assets 7.60% 7.20% 7.18% 6.80% 7.16% Book value per share $ 9.32 $ 8.61 $ 8.21 $ 7.77 $ 7.46 BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY INTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED) (Dollars in Thousands) Three months ended September 30, ----------------------------------------------------------- 2007 2006 ----------------------------- ----------------------------- Yields Interest Yields Interest Average or Income/ Average or Income/ Balance Rates Expense Balance Rates Expense --------- -------- --------- --------- -------- --------- ASSETS Interest earning assets (2): Loans (1) $ 597,214 10.35% $ 15,585 $ 473,311 10.70% $ 12,763 Federal funds sold 89,483 5.05% 1,138 110,219 5.23% 1,453 Investment securities 70,498 5.09% 904 11,272 3.98% 113 Other - 0.00% - - 0.00% - --------- -------- --------- --------- -------- --------- Total interest earning assets 757,195 9.24% 17,627 594,802 9.56% 14,329 --------- -------- --------- --------- -------- --------- Noninterest- earning assets: Cash and due from banks 20,882 26,209 All other assets (3) 23,172 15,262 --------- --------- TOTAL $ 801,249 $ 636,273 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Interest- bearing liabilities: Deposits: Demand $ 5,761 0.69% $ 10 $ 3,900 0.92% $ 9 Money market and savings 417,255 3.79% 3,984 288,895 3.75% 2,733 Time 84,149 4.90% 1,039 116,353 4.22% 1,239 Other 17,527 5.93% 262 17,527 5.84% 258 --------- -------- --------- --------- -------- --------- Total interest- bearing liabilities 524,692 4.00% 5,295 426,675 3.94% 4,239 --------- -------- --------- --------- -------- --------- Noninterest- bearing liabilities: Demand deposits 207,753 156,935 Accrued expenses and other liabilities 11,404 6,849 Shareholders' equity 57,400 45,814 --------- --------- TOTAL $ 801,249 $ 636,273 ========= ========= Net interest income and -------- --------- -------- --------- margin 6.46% $ 12,332 6.73% $ 10,090 ======== ========= ======== ========= (1) Loan fee amortization of $1.5 million and $1.3 million, respectively, is included in interest income. Nonperforming loans have been included in average loan balances. (2) Interest income is reflected on an actual basis, not a fully taxable equivalent basis. Yields are based on amortized cost. (3) Net of average allowance for credit losses of $7.8 million and $6.7 million, respectively. BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY INTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED) (Dollars in Thousands) Nine months ended September 30, ----------------------------------------------------------- 2007 2006 ----------------------------- ----------------------------- Yields Interest Yields Interest Average or Income/ Average or Income/ Balance Rates Expense Balance Rates Expense --------- -------- --------- --------- -------- --------- ASSETS Interest earning assets (2): Loans (1) $ 578,204 10.45% $ 45,202 $ 453,891 10.22% $ 34,696 Federal funds sold 62,803 5.14% 2,415 73,177 4.98% 2,723 Investment securities 60,809 5.11% 2,324 12,240 3.45% 316 Other - 0.00% - - 0.00% - --------- -------- --------- --------- -------- --------- Total interest earning assets 701,816 9.51% 49,941 539,308 9.35% 37,735 --------- -------- --------- --------- -------- --------- Noninterest- earning assets: Cash and due from banks 27,210 27,596 All other assets (3) 21,145 15,545 --------- --------- TOTAL $ 750,171 $ 582,449 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Interest- bearing liabilities: Deposits: Demand $ 5,563 0.79% $ 33 $ 3,595 0.86% $ 23 Money market and savings 370,379 3.83% 10,609 245,230 3.31% 6,073 Time 91,247 4.85% 3,307 95,708 4.08% 2,924 Other 17,527 5.97% 782 19,638 5.62% 825 --------- -------- --------- --------- -------- --------- Total interest- bearing liabilities 484,716 4.06% 14,731 364,171 3.61% 9,845 --------- -------- --------- --------- -------- --------- Noninterest- bearing liabilities: Demand deposits 201,103 167,993 Accrued expenses and other liabilities 10,209 6,957 Shareholders' equity 54,143 43,328 --------- --------- TOTAL $ 750,171 $ 582,449 ========= ========= Net interest income and -------- --------- -------- --------- margin 6.71% $ 35,210 6.91% $ 27,890 ======== ========= ======== ========= (1) Loan fee amortization of $4.3 million and $3.1 million, respectively, is included in interest income. Nonperforming loans have been included in average loan balances. (2) Interest income is reflected on an actual basis, not a fully taxable equivalent basis. Yields are based on amortized cost. (3) Net of average allowance for credit losses of $7.5 million and $6.3 million, respectively. BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY INTERIM CONSOLIDATED CREDIT DATA (UNAUDITED) (Dollars in Thousands) 09/30/07 06/30/07 03/31/07 12/31/06 09/30/06 -------- -------- -------- -------- -------- ALLOWANCE FOR CREDIT LOSSES Balance, beginning of period $ 7,590 $ 7,533 $ 7,329 $ 6,728 $ 6,620 Provision for credit losses, quarterly 475 1,000 200 600 100 Charge-offs, quarterly (312) (943) - - - Recoveries, quarterly 250 - 4 1 8 -------- -------- -------- -------- -------- Balance, end of period $ 8,003 $ 7,590 $ 7,533 $ 7,329 $ 6,728 ======== ======== ======== ======== ======== NONPERFORMING ASSETS Loans accounted for on a non-accrual basis $ - $ - $ 5,450 $ 437 $ 2,572 Loans restructured and in compliance with modified terms - - - - - Other loans with principal or interest contractually past due 90 days or more - - - - - -------- -------- -------- -------- -------- Nonperforming loans - - 5,450 437 2,572 Other real estate owned 425 425 - - - -------- -------- -------- -------- -------- Nonperforming assets $ 425 $ 425 $ 5,450 $ 437 $ 2,572 ======== ======== ======== ======== ======== ASSET QUALITY Allowance for credit losses / gross loans 1.31% 1.25% 1.31% 1.36% 1.39% Allowance for credit losses / nonperforming loans 0.00% 0.00% 138.22% 1677.12% 261.59% Nonperforming assets / total assets 0.05% 0.06% 0.75% 0.06% 0.39% Nonperforming loans / gross loans 0.00% 0.00% 0.95% 0.08% 0.53% Net quarterly charge-offs / gross loans 0.01% 0.16% 0.00% 0.00% 0.00%