10-Q 1 b311541_10q.txt QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) (X) Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended March 31, 2001 ( ) Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _____________ to _____________. Commission file number : 1-12165 Bridge View Bancorp (Exact name of registrant as specified in its charter) New Jersey 22-3461336 ---------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification) 457 Sylvan Avenue, Englewood Cliffs, NJ 07632 (Address of principal executive offices) (Zip Code) 201-871-7800 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Exchange Act: Title of each class: Name of each exchange on which registered: Common Stock, No Par Value American Stock Exchange Securities registered pursuant to Section 12(g) of the Exchange Act: None Indicate by check mark whether the Issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. YES (X) NO___ APPLICABLE TO CORPORATE ISSUERS: Indicate the number of shares outstanding of the Registrant's classes of common stock, as of the last practicable date. 3,226,145 shares of Common Stock as of April 30, 2001 INDEX BRIDGE VIEW BANCORP Part I - Financial Information Item 1. Financial Statement Consolidated Statements of Financial Condition as of March 31, 2001 (unaudited) and December 31, 2000 Consolidated Statements of Income for the three months ended March 31, 2001 and 2000 (unaudited) Consolidated Statements of Cash Flows for the three months ended March 31, 2001 and 2000 (unaudited) Notes to Unaudited Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Explanatory Note: This Form 10-Q contains certain "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 which involve risks and uncertainties. Such statements are not historical facts and include expressions about management's confidence, strategies, and expectations about new and existing programs, products, relationships, opportunities, technology, and market conditions. These statements may be identified by the use of such words as "believe," "expect," "anticipate," "should," "may," "potential," or similar statements or variations of such terms. Examples of forward looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations, and business of Bridge View Bancorp, that are subject to various factors which could cause actual results to differ materially from these estimates. These factors include: changes in general, economic and market conditions, legislative and regulatory conditions, or the development of an interest rate environment which adversely affects Bridge View Bancorp's interest rate margin or other income anticipated from operations and investments. As used in this Form 10-Q, "we" and "us" and "our" refer to Bridge View Bancorp and its consolidated subsidiary Bridge View Bank, depending on the context. 2 BRIDGE VIEW BANCORP CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION ( in thousands)

3 See notes to unaudited consolidated financial statements. BRIDGE VIEW BANCORP CONSOLIDATED STATEMENTS OF INCOME (unaudited, in thousands)

4 See notes to unaudited consolidated financial statements. BRIDGE VIEW BANCORP CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands)

5 See notes to unaudited consolidated financial statements. BRIDGE VIEW BANCORP AND SUBSIDIARIES Notes to Unaudited Consolidated Financial Statements (1) Summary of Significant Accounting Policies The accompanying consolidated financial statements include the accounts of Bridge View Bancorp (the Company) and its direct and indirect wholly-owned subsidiaries, Bridge View Bank, Bridge View Investment Company, and Bridge View Delaware, Inc. (the Bank). All significant inter-company accounts and transactions have been eliminated in consolidation. Certain accounts in prior periods have been restated to conform to the current presentation. The consolidated condensed financial statements included herein have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The accompanying consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Such adjustments are of a normal recurring nature. These consolidated unaudited financial statements should be read in conjunction with the audited financial statements and the notes thereto as of and for the year ended December 31, 2000. The results for the three months ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001. Organization The Company is a New Jersey Corporation and registered bank holding company with the Board of Governors of the Federal Reserve System. The Bank is a commercial bank which provides a full range of banking services to individuals and corporate customers in New Jersey. Both the Company and the Bank are subject to competition from other financial institutions. The Bank is regulated by state and federal agencies and is subject to periodic examinations by those regulatory authorities. Basis of Financial Presentation The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statement of financial condition and revenues and expenses for the quarter. Actual results could differ significantly from those estimates. Certain prior period amounts have been reclassified to conform to the financial statements presentation of 2001. The reclassifications have no effect upon stockholders' equity or net income as previously reported. 6 Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses. In connection with the determination of the allowance for loan losses, management generally obtains independent appraisals for significant properties. Securities Available for Sale Management determines the appropriate classification of securities at the time of purchase. If management has the intent and the Bank has the ability at the time of purchase to hold securities until maturity, they are classified as investment securities. Securities to be held for indefinite periods of time and not intended to be held to maturity are classified as securities available for sale. Gains or losses on sales of securities available for sale are based upon the specific identification method. Securities available for sale are reported at fair value with changes in the carrying value from period to period included as a separate component of stockholders' equity. Securities Held to Maturity Investment securities are carried at the principal amount outstanding, adjusted for amortization of premiums and accretion of discounts using a method that approximates the level-yield method over the terms of the securities. Investment securities are carried at the principal amount outstanding because the Bank has the ability and it is management's intention to hold these securities to maturity. (2) Retained Earnings - Stock Dividend The Company declared a 10% Stock Dividend (the "2001 Stock Dividend") on March 1, 2001 and paid the dividend on April 2, 2001. Retained earnings decreased by the market value of shares issued in connection with the 2001 Stock Dividend. Earnings per share and all share data has been restated to reflect the effect of the 2001 stock dividend. 7 (3) Earnings Per Share Reconciliation The reconciliation of the numerator and the denominator of Basic EPS with that of Diluted EPS is presented for the three month periods ended March 31, 2001, and 2000. Three Months Ended March 31, 2001 2000 ---- ---- (in thousands, except per share data) Basic earnings per share: Net Income $ 980 866 ====== ====== Average number of shares outstanding 3,223 3,213 ====== ====== Basic earnings per share $ 0.30 0.27 ====== ====== Diluted earnings per share: Net Income $ 980 866 ====== ====== Average number of shares of common stock and equivalents outstanding: Average common shares outstanding 3,223 3,213 Additional shares considered in diluted computation assuming: Exercise of options 92 90 ------ ------ Average number of shares outstanding on a diluted basis 3,315 3,303 ====== ====== Diluted earnings per share $ 0.30 0.26 ====== ====== 8 (4) Comprehensive Income Total comprehensive income is presented for the three month periods ended March 31, 2001 and 2000, respectively. Three months ended March 31, (in thousands) 2001 2000 ---- ---- Comprehensive Income Net income $ 980 $ 866 Other comprehensive income, net of taxes 33 63 -------- -------- Total comprehensive income $1,013 $ 929 Other comprehensive income consists of net unrealized gains or losses on securities available for sale. (5) Recent Accounting Pronouncements SFAS No. 140 In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (A Replacement of FASB Statement 125)." SFAS No. 140 supersedes and replaces the guidance in SFAS No. 125 and, accordingly, provides guidance on the following topics: securitization transactions involving financial assets, sales of financial assets such as receivables, loans, and securities; factoring transactions and wash sales; servicing assets and liabilities, collateralized borrowing arrangements, securities lending transactions; repurchase transactions; loan participations; and extinguishment of liabilities. While most of the provisions of SFAS No. 140 are effective for transactions entered into after March 31, 2001, companies with fiscal year ends that hold beneficial interests from previous securitizations will be required to make additional disclosures in their December 31, 2000 financial statements. The initial adoption of SFAS No. 140 is not expected to have a material impact on the Company's financial statements. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The following discussion and analysis of financial condition and results of operations should be read in conjunction with the Company's consolidated financial statements and the notes thereto included herein. When necessary, reclassifications have been made to prior years' data throughout the following discussion and analysis for purposes of comparability. RESULTS OF OPERATIONS - Three Months Ended March 31, 2001 and 2000 The Company's results of operations depend primarily on its net interest income, which is the difference between the interest earned on its interest-earning assets and the interest paid on funds borrowed to support those assets, primarily deposits. Net interest margin is the difference between the weighted average rate received on interest-earning assets and the weighted average rate paid on interest-bearing liabilities, as well as the average level of interest-earning assets as compared with that of interest-bearing liabilities. Net income is also affected by the amount of non-interest income and other operating expenses. NET INCOME For the three months ended March 31, 2001, net income increased by $114,000 or 13.2% to $980,000 from $866,000 for the three months ended March 31, 2000. The increase in net income is primarily the result of a 6.3% increase in net interest income to $2,723,000 in 2001 from $2,561,000 in the prior year coupled with a 27.0%, or $88,000, increase in other operating income, primarily fee income, to $414,000 in 2001 from $326,000 in 2000. Interest expense increased $141,000 or 14.3% for the three months ended March 31, 2001 to $1,130,000 as compared to $989,000 for the three months ended March 31, 2000. This increase reflects the increase in average deposits since March, 2000. On a per share basis, basic earnings per share were $0.30 for the quarter ended March 31, 2001 as compared to $0.27 for the quarter ended March 31, 2000, representing an increase of $0.03 or 11.1%. Diluted earnings per share were $0.30 for the first quarter of 2001 as compared to $0.26 for the first quarter of 2000, reflecting an increase of $0.04 or 15.4%. Per share data has been restated to reflect the 2001 10% stock dividend. PROVISION FOR LOAN LOSSES For the quarter ended March 31, 2001, the Company's provision for loan losses was $10,000, a decrease of $40,000 from the provision of $50,000 for the quarter ended March 31, 2000. The decreased provision reflects management's view of the economy of its service area and the strength of the Company's loan portfolio. NON-INTEREST INCOME Non-interest income, which was primarily attributable to service fees received from deposit accounts, amounted to $414,000 for the three months ended March 31, 2001, an increase of $88,000 or 27.0%, above the $326,000 earned during the three months ended March 31, 2000. The increase in service fees is attributable to the higher level of average deposits. 10 NON-INTEREST EXPENSE Non-interest expenses for the quarter ended March 31, 2001 amounted to $1,620,000, an increase of $142,000, or 9.6%, above the $1,478,000 for the quarter ended March 31, 2000. This increase continues to be related primarily to staff additions, occupancy expense, data processing fees, customary increases for salary and employee benefits, as well as other administrative expenses resulting from the Company's growth since the first quarter of 2000. INCOME TAX EXPENSE The income tax provision, which includes both federal and state taxes, for the quarters ended March 31, 2001 and 2000 was $527,000 and $493,000, respectively. The increase in income taxes is a direct result of the increase in income before taxes in 2001. FINANCIAL CONDITION: March 31, 2001 and December 31, 2000 At March 31, 2001, the Company's total assets were $231,526,000 compared to $234,927,000 at December 31, 2000. Total loans decreased slightly to $132,473,000 at March 31, 2001 from $133,255,000 at December 31, 2000. Total deposits at the first quarter end 2001 were $204,205,000 compared to $208,365,000 at December 31, 2000. LOAN PORTFOLIO At March 31, 2001, the Company's total loans were $132,473,000, a slight decrease of $782,000 or 0.6% over total loans of $133,255,000 at December 31, 2000. The decrease in the loan portfolio at quarter end is reflective of payoffs of short term loans primarily construction related. Management continues to believe that the Company will remain successful in loan acquisition in this market. The Company's success will continue to be attributable to the effect of continued customer referrals, selective marketing, and continued growth within the local Bergen County community combined with the fact that, through mergers and acquisitions, the Company's trade area is becoming increasingly served by large institutions, frequently headquartered out of state. Management believes that it is not cost-efficient for these larger institutions to provide the level of personal service the Company provides to small business borrowers. The Company's loan portfolio consists of commercial loans, real estate loans, and consumer loans. Commercial loans are made for the purpose of providing working capital, financing the purchase of equipment or inventory, as well as for other business purposes. Real estate loans consist of loans secured by commercial or residential real property and loans for the construction of commercial or residential property. Consumer loans are made for the purpose of financing the purchase of consumer goods, home improvements, and other personal needs, and are generally secured by the personal property being purchased. The Company's loans are primarily to businesses and individuals located in eastern Bergen County, New Jersey. The Company has not made loans to borrowers outside of the United States. Commercial lending activities are focused primarily on lending to small business borrowers. The Company believes that its strategy of customer service, competitive rate structures, and selective marketing have enabled the Company to gain market entry to local loans. Bank mergers and lending restrictions at larger banks competing with the Company have also contributed to the Company's efforts to attract borrowers. 11 The following table sets forth the classification of the Company's loans by major category as of March 31, 2001 and December 31, 2000, respectively:

ASSET QUALITY The Company's principal assets are its loans. Inherent in the lending function is the risk of the borrower's inability to repay a loan under its existing terms. Risk elements include non-accrual loans, past due and restructured loans, potential problem loans, loan concentrations, and other real estate owned. Non-performing assets include loans that are not accruing interest (non-accrual loans) as a result of principal or interest being in default for a period of 90 days or more. When a loan is classified as non-accrual, interest accruals discontinue and all past due interest, including interest applicable to prior years, is reversed and charged against current income. Until the loan becomes current, any payments received from the borrower are applied to outstanding principal until such time as management determines that the financial condition of the borrower and other factors merit recognition of such payments of interest. The Company attempts to minimize overall credit risk through loan diversification and its loan approval procedures. Due diligence begins at the time a borrower and the Company begin to discuss the origination of a loan. Documentation, including a borrower's credit history, materials establishing the value and liquidity of potential collateral, the purpose of the loan, the source and timing of the repayment of the loan, and other factors are analyzed before a loan is submitted for approval. Loans made are also subject to periodic audit and review. 12 The following table sets forth information concerning the Company's non-performing assets as of the dates indicated: Non-Performing Assets (dollars in thousands) March 31, December 31, 2001 2000 ---- ---- Non-performing loans $ 0 $25 Other real estate 0 0 --- --- Total non-performing assets $ 0 $25 Non-performing loans to total gross loans N/A 0.02% Non-performing assets to total assets N/A 0.01% As of March 31, 2001, the Company had no non-accrual loans. At December 31, 2000, the Company had one non-accrual loan which represented a line of credit. Other than as disclosed above, there were no loans where information about possible credit problems of borrowers causes management to have serious doubts as to the ultimate collectibility of such loans. As of March 31, 2001 and December 31, 2000, there were no concentrations of loans exceeding 25% of the Company's total loans and the Company had no foreign loans. The Company's loans are primarily to businesses and individuals located in eastern Bergen County, New Jersey. ALLOWANCE FOR LOAN LOSSES The allowance for loan losses is a reserve established through charges to earnings in the form of a provision for loan losses. The Company maintains an allowance for loan losses at a level believed sufficient by management to provide for potential losses in the loan portfolio. Loan losses are charged directly to the allowance when they occur and any recovery is credited to the allowance. Risks within the loan portfolio are analyzed on a continuous basis by the Company's officers, by external independent loan review auditors, and by the Company's audit committee. A risk system, consisting of multiple grading categories, is utilized as an analytical tool to assess risk and appropriate reserves. In addition to the risk system, management further evaluates risk characteristics of the loan portfolio under current and anticipated economic conditions and considers such factors as the financial condition of the borrower, past and expected loss experience, and other factors which management feels deserve recognition in establishing an appropriate reserve. These estimates are reviewed at least quarterly, and, as adjustments become necessary, they are realized in the periods in which they become known. Additions to the allowance are made by provisions charged to the expense and the allowance is reduced by net-chargeoffs (i.e. loans judged to be uncollectible are charged against the reserve, less any recoveries on the loans.) Although management attempts to maintain the allowance at an adequate level, future addition to the allowance may be required based upon changes in market conditions. Additionally, various regulatory agencies periodically review the allowance for loan losses. These agencies may require additional provisions based upon their judgment about information available to them at the time of their examination. 13 The Company's allowance for loan losses totaled $1,456,000 and $1,335,000 at March 31, 2001 and 2000, respectively. This increase in the allowance is due provisions exceeding charge-offs, reflecting both the continued growth of the loan portfolio and its high credit quality during that period. The following is a summary of the reconciliation of the allowance for loan losses for the three month periods ended March 31, 2001 and 2000, respectively: Three months ended March 31, 2001 2000 ---- ---- (dollars in thousands) Balance, beginning of period $ 1,473 $ 1,310 Charge-offs (27) (25) Recoveries 0 0 Provision charged to expense 10 50 ------- ------- Balance, end of period $ 1,456 $ 1,335 ======= ======= Ratio of net charge-offs to average loans outstanding 0.02% 0.02% Balance of allowance at end of period as a percentage of loans at end of period 1.10% 1.09% INVESTMENT SECURITIES The Company maintains an investment portfolio to fund increased loan demand or deposit withdrawals and other liquidity needs and to provide an additional source of interest income. The portfolio is composed of U.S. Treasury Securities, obligation of U.S. Government Agencies, selected municipal and state obligations, stock in the Federal Home Loan Bank ("FHLB"), and equity securities of another financial institution. Management determines the appropriate classification of securities at the time of purchase. At March 31, 2001, $26,255,000 of the Company's investment securities were classified as held to maturity and $8,968,000 were classified as available for sale. At March 31, 2001, the Company held no securities which it classified as trading securities. 14 At March 31, 2001, total investment securities were $35,223,000, a decrease of $20,446,000, from total investment securities of $55,669,000 at December 31, 2000. This decrease in investment securities from year end 2000 to first quarter end 2001 reflects maturity of investment securities which will be used to fund loan growth. The following table sets forth the carrying value of the Company's security portfolio as of the dates indicated. A comparative summary of securities available for sale at March 31, 2001 and December 31, 2000 is as follows (in thousands):

A comparative summary of securities held to maturity at March 31, 2001 and December 31, 2000 is as follows (in thousands):

15 The following table sets forth as of March 31, 2001, the maturity distribution of the Company's debt investment portfolio: Maturity of Debt Investment Securities March 31, 2001 (in thousands)

The Company sold no securities from its portfolio during the first quarter of 2001 or during 2000. 16 DEPOSITS Deposits are the Company's primary source of funds. The Company experienced a decrease in deposit balances of $4,160,000 or 2.0% to $204,205,000 at March 31, 2001 as compared to $208,365,000 at December 31, 2000. This decrease was due mainly to the loss of time deposits, which experienced a $3,724,000, or 6.1%, decrease, resulting from the interest rate environment. Within the aggregate decrease in total deposits, interest bearing demand deposits experienced growth of $9,332,000 or 20.4% to $55,092,000 at March 31, 2001 from $45,760,000 at December 31, 2000. The Company has no foreign deposits, nor are there any material concentrations of deposits. The following table sets forth the amount of various types of deposits for each of the periods indicated (in thousands):

The Company does not actively solicit short-term deposits of $100,000 or more because of the liquidity risks posed by such deposits. The following table summarizes the maturity distribution of certificates of deposit of denominations of $100,000 or more as of March 31, 2001 (in thousands). Three months or less $ 19,992 Over three months through twelve months 10,033 Over one year through three years 622 Over three years 0 ------------ TOTAL $ 30,647 ============ 17 LIQUIDITY The Company's liquidity is a measure of its ability to fund loans, withdrawals or maturities of deposits, and other cash outflows in a cost-effective manner. The Company's principal sources of funds are deposits, scheduled amortization and prepayments of loan principal, maturities of investment securities, and funds provided by operations. While scheduled loan payments and maturing investments are relatively predictable sources of funds, deposit flow and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. The Company's total deposits equaled $204,205,000 at March 31, 2001 as compared to $208,365,000 at December 31, 2000. Although there has been a decrease in funds provided by deposit inflows during this period, the Company is sufficiently funded to provide for the Company's loan demand and excess funds have been invested in investment securities and federal funds sold. Through the Company's investment portfolio, the Company has generally sought to obtain a safe, yet slightly higher yield than would have been available to the Company as a net seller of overnight federal funds while still maintaining liquidity. Through its investments portfolio, the Company also attempts to manage its maturity gap by seeking maturities of investments which coincide as closely as possible with maturities of deposits. The Bank's investment portfolio also includes securities held for sale to provide liquidity for anticipated loan demand and other liquidity needs. Although the Bank has been traditionally been a net "seller" of federal funds, the Bank does maintain lines of credit with the Federal Home Loan Bank of New York, Summit Bank, and Bank of New York for "purchase" of federal funds in the event that temporary liquidity needs arise. Management believes that the Company's current sources of funds provide adequate liquidity for the current cash flow needs of the Company. INTEREST RATE SENSITIVITY ANALYSIS The principal objective of the Company's asset and liability management function is to evaluate the interest-rate risk included in certain balance sheet accounts; determine the level of risk appropriate given the Company's business focus, operating environment, capital and liquidity requirements; establish prudent asset concentration guidelines; and manage the risk consistent with Board approved guidelines. The Company seeks to reduce the vulnerability of its operations to changes in interest rates and to manage the ratio of interest-rate sensitive assets to interest-rate sensitive liabilities within specified maturities or repricing dates. The Company's actions in this regard are taken under the guidance of the Asset/Liability Committee (ALCO) of the Board of Directors. The ALCO generally reviews the Company's liquidity, cash flow needs, maturities of investments, deposits and borrowings, and current market conditions and interest rates. 18 One of the monitoring tools used by the ALCO is an analysis of the extent to which assets and liabilities are interest rate sensitive and measures the Company's interest rate sensitivity "gap". An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period. A gap is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities. A gap is considered negative when the amount of interest rate sensitive liabilities exceeds the amount of interest rate sensitive assets. Accordingly, during a period of rising rates, a negative gap may result in the yield on the institution's assets increasing at a slower rate than the increase in its cost of interest-bearing liabilities resulting in a decrease in net interest income. Conversely, during a period of falling interest rates, an institution with a negative gap would experience a repricing of its assets at a slower rate than its interest-bearing liabilities which, consequently, may result in its net interest income growing. The following table sets forth the amounts of interest-earning assets and interest-bearing liabilities outstanding at the periods indicated which are anticipated by the Company, based upon certain assumptions, to reprice or mature in each of the future time periods presented. Except as noted, the amount of assets and liabilities which reprice or mature during a particular period were determined in accordance with the earlier of the term to repricing or the contractual terms of the asset or liability. Because the Bank has no interest bearing liabilities with a maturity greater than five years, management believes that a static gap for the over five year time period reflects a more accurate assessment of interest rate risk. The Company's loan repayment assumptions are based upon actual historical repayment rates. 19

20 CAPITAL A significant measure of the strength of a financial institution is its capital base. The Company's federal regulators have classified and defined Company capital into the following components : (1) Tier I Capital, which includes tangible shareholders' equity for common stock and qualifying preferred stock, and (2) Tier II Capital, which includes a portion of the allowance for possible loan losses, certain qualifying long-term debt, and preferred stock which does not qualify for Tier I Capital. Minimum capital levels are regulated by risk-based capital adequacy guidelines which require certain capital as a percent of the Company's assets and certain off-balance sheet items adjusted for predefined credit risk factors (risk-adjusted assets). A bank holding company is required to maintain, at a minimum, Tier I Capital as a percentage of risk-adjusted assets of 4.0% and combined Tier I and Tier II Capital as a percentage risk-adjusted assets of 8.0%. In addition to the risk-based guidelines, the Company's regulators require that an institution which meets the regulator's highest performance and operation standards maintain a minimum leverage ratio (Tier I Capital as a percentage of tangible assets) of 3.0%, although most institutions will be expected to have a ratio 100-200 basis points higher. For those institutions with higher levels of risk or that are experiencing or anticipating significant growth, the minimum leverage ratio will be evaluated through the ongoing regulatory examination process. The Company is subject to substantially similar regulations by its federal regulations. The following table summarizes the risk-based and leverage capital ratios for the Bank at March 31, 2001, as well as the required minimum regulatory capital ratios : Capital Adequacy Minimum March 31, Regulatory 2001 Requirements ----------- -------------- Risk-Based Capital : Tier I Capital Ratio 16.78% 4.0% Total Capital Ratio 17.80% 8.0% Leverage Ratio 10.45% 3.0% IMPACT OF INFLATION AND CHANGING PRICES The consolidated financial statements of the Company and notes thereto, presented elsewhere herein, have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time and due to inflation. The impact of inflation is reflected in the increased cost of the Company's operations. Unlike most industrial companies, nearly all of the assets and liabilities of the Company are monetary. As a result, interest rates have a greater impact on the Company's performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services. 21 PART II OTHER INFORMATION Item 1. Legal proceedings The Company and the Bank are periodically parties to or otherwise involved in legal proceedings arising in the normal course of business, such as claims to enforce liens, claims involving the making and servicing of real property loans, and other issues incident to the Bank's business. Management does not believe that there is any pending or threatened proceedings against the Company or the Bank which, if determined adversely, would have a material effect on the business, financial position or results of operations of the Company or the Bank. Item 2. Changes in securities - NONE Item 3. Defaults upon senior securities - NONE Item 4. Submission of matters to a vote of securities holders - NONE Item 5. Other information - NONE Item 6. Exhibits and reports on Form 8-K - NONE 22 SIGNATURES Pursuant to the requirements 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. By: /s/ Albert F. Buzzetti -------------------------------------------- (Registrant - Bridge View Bancorp) Albert F. Buzzetti President and Chief Executive Officer Date: May 14, 2001

BRIDGE VIEW BANCORP 10-Q