SOURCE: Bridge Capital Holdings

April 17, 2008 16:30 ET

Bridge Capital Holdings Reports Financial Results for the First Quarter Ended March 31, 2008

Management to Host Conference Call and Webcast on April 18 at 9:00 a.m. Eastern Time

SAN JOSE, CA--(Marketwire - April 17, 2008) - Bridge Capital Holdings (NASDAQ: BBNK), whose subsidiary is Bridge Bank, National Association, one of the best performing full-service business banks in California and the Nation, announced today its financial results for the first quarter ended March 31, 2008.

The Company reported net income of $1.5 million, or $0.22 per diluted share, for the three months ended March 31, 2008. This represented a decrease of $922,000, or 38%, compared to net income of $2.4 million, or $0.35 per diluted share, in the same period one year ago.

First Quarter Highlights

--  Net income of $1.5 million for the first quarter of 2008 represented a
    decrease of $922,000 or 38% compared to $2.4 million for the first quarter
    of 2007.
    
--  Provision for credit losses of $2.4 million for the first quarter of
    2008 represented an increase of $2.2 million compared to the first quarter
    of 2007.
    
--  Growth in average earning assets produced an increase in net interest
    income of $1.0 million, or 10%, compared to the same period one year
    earlier.
    
--  Net interest margin for the first quarter of 2008 remained strong at
    6.59% and compares with 6.96% in the first quarter of 2007.
    
--  Non-interest income increased $377,000, or 29%, to $1.7 million in the
    first quarter of 2008 from $1.3 million in the first quarter of 2007
    primarily due to increased international fee income.
    
--  The Company continues to be "well-capitalized" as total risk-based
    capital increased to 11.72%.
    

"The results for the quarter ended March 31, 2008 are disappointing due to a loss provision related to one specific real estate credit, which masks some very positive achievements in other segments of our business," said Daniel P. Myers, President and Chief Executive Officer of Bridge Capital Holdings and Bridge Bank. "Our commercial and technology industries lines continue to benefit from the relative health of the Silicon Valley economy. We continue to believe that our primary focus on business banking, our diversified business lines, and our determination to manage risk exposure will produce relatively better results than the banking industry as a whole."

Net Interest Income and Margin

Net interest income of $12.0 million for the quarter ended March 31, 2008 represented an increase of approximately $1.0 million, or 10%, over $11.0 million reported for the same quarter one year earlier and was primarily attributed to growth in average earning assets of $96.2 million, or 15%, compared to the same quarter in 2007. The Company's loan-to-deposit ratio, a measure of leverage, averaged 97.63% during the quarter ended March 31, 2008, which represented an increase compared to an average of 89.23% for the same quarter of 2007 as a result of faster loan growth relative to deposit funding.

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 6.23% in the quarter ended March 31, 2008 compared to 8.25% in the same period one year earlier.

The Company's net interest margin for the quarter ended March 31, 2008 was 6.59% compared to 6.96% for the same period one year earlier primarily as a result of the decrease in short term interest rates offset, in part, by an increase in loan related fees and income from interest rate swaps. During the quarter ended March 31, 2008, the Company recognized $400,000 as a success fee resulting from the completion of a capital raising event of a loan client. In addition, the net settlement from interest rate swaps contributed $340,000 to support net interest income in the quarter ended March 31, 2008 compared to a loss of $98,000 for the quarter ended March 31, 2007.

"The results for the quarter ended March 31, 2008 were achieved in the face of significant headwinds caused by increased credit costs and a 200 basis point decline in short-term interest rates," said Thomas A. Sa, Executive Vice President and Chief Financial Officer of Bridge Capital Holdings and Bridge Bank. "Hedging strategies put in place last year and increased leverage from a higher loan to deposit ratio enabled us to maintain net interest margin at 6.59%. As a result of this strong net interest margin and a $25 million increase in earning assets compared to the preceding quarter, total revenue was equal to the fourth quarter of 2007 and up 12% compared to the same quarter last year. We believe these results reflect continued progress in our core business."

Non-Interest Income

The Company's non-interest income for the quarter ended March 31, 2008 was $1.7 million compared to $1.3 million for the same period one year ago. The increase in non-interest income is primarily the result of increased international fee income. For the quarter ended March 31, 2008 international fee income was $378,000 compared to $78,000 for the quarter ended March 31, 2007. Additionally, included in non-interest income for the quarter ended March 31, 2008 was a hedge accounting adjustment of $279,000 pertaining to the Company's interest rate swap and $82,000 from the sale of commercial real estate loans. The increase in non-interest income for the first quarter of 2008 was offset, in part, by a lower volume of SBA loan sales. During the quarter ended March 31, 2008, the Company sold SBA loans totaling $8.6 million compared to $23.5 million for the same period in 2007.

Net interest income and non-interest income comprised total revenue of $13.7 million for the three months ended March 31, 2008 compared to $12.2 million for the same period one year earlier, representing an increase of $1.5 million, or 12%.

Non-Interest Expense

Non-interest expense was $8.7 million for the quarter ended March 31, 2008 compared to $7.9 million for the same period in 2007. 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 March 31, 2008 was $5.7 million, an increase of $650,000 over $5.0 million in the same period of 2007. As of March 31, 2008 the Company employed 172 full-time equivalents (FTE) compared to 142 FTE on the same date one year earlier.

The Company's efficiency ratio, the ratio of non-interest expense to revenues, was 63.75% for the quarter ended March 31, 2008 compared to 64.14% for the same period one year earlier.

Balance Sheet

Bridge Capital Holdings reported total assets at March 31, 2008 of $785.0 million, compared to $731.1 million at March 31, 2007, representing growth of $53.9 million, or 7%.

The Company reported total gross loans outstanding at March 31, 2008 of $671.3 million, which represented an increase of $96.2 million, or 17%, over $575.1 million as of March 31, 2007.

The Company's total deposits were $689.2 million as of March 31, 2008, compared to total deposits of $653.4 million as of March 31, 2007. The increase in deposits represented growth of $35.8 million, or 6%, compared to March 31, 2007.

For the quarter ended March 31, 2008, the Company's return on average assets and return on average equity were 0.79% and 9.07%, respectively, and compared to 1.44% and 19.52%, respectively, for the same period in 2007. Return on average equity for the first quarter of 2008 was reduced, in part, by the impact of appreciation in the value of interest rate swaps of approximately $6.7 million which increased average other comprehensive income by approximately $2.7 million.

Credit Quality

The allowance for loan losses was $11.0 million, or 1.64% of total loans, at March 31, 2008, compared to $8.6 million, or 1.32% of total loans, at December 31, 2007. The provision for credit losses for the three months ended March 31, 2008 was $2.4 million compared to $200,000 for the same period in 2007.

At March 31, 2008 nonperforming assets totaled $15.9 million, or 2.03% of total assets, compared to $5.3 million, or 0.69% of total assets, on December 31, 2007. The nonperforming assets at March 31, 2008 consisted of seven lending relationships totaling $15.6 million that were on non-accrual status and determined to be impaired based upon the criteria set forth in SFAS No. 114, and two commercial properties valued at $348,000 that were categorized as "other real estate owned."

Included in the non-performing loans were two lending relationships totaling $11.2 million at March 31, 2008 that were collateralized by undeveloped land. The largest of the relationships, representing $7.5 million, represents two loans secured by lots for luxury single family construction in Monterey County. The second relationship is a land development loan for $3.7 million in Fresno County. These loans had an indicated potential loss exposure of approximately $1.4 million and an impairment reserve was included in the allowance for loan losses.

Also included in the non-performing loans was a construction loan totaling $2.6 million as of March 31, 2008. The loan is secured by three completed luxury homes in the hills of the East Bay region of the San Francisco Bay area. This loan had an indicated potential loss exposure of approximately $540,000 and an impairment reserve was included in the allowance for loan losses. The two other significant non-performing loans were SBA loans totaling $1.5 million at March 31, 2008. These loans had an indicated potential loss exposure of approximately $73,000 and an impairment reserve was included in the allowance for loan losses.

The Company had one loan totaling $1.1 million at March 31, 2008 that was performing but determined to be impaired based upon the criteria set forth in SFAS No. 114. This loan was adequately collateralized by commercial real estate. As such, no specific reserve was required for this loan.

Although there has been an increase in impaired loans, the Company had no loan charge-off activity for the three months ended March 31, 2008 and 2007. The Company recognized no loan recoveries for the three months ended March 31, 2008 and $4,000 for the same period on year earlier.

Capital Adequacy

At March 31, 2008, shareholders' equity in the Company totaled $68.9 million, which included approximately $3.9 million in other comprehensive income as the result of increased value of interest rate swaps and the Bank's investment portfolio. Shareholder's equity at March 31, 2008 compared to $52.5 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 11.72%, 10.47%, and 10.52%, respectively, were all substantially above the regulatory standards for "well-capitalized" institutions.

Conference Call and Webcast

Management will host a conference call tomorrow, April 18, 2008 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 800.762.9441 from the U.S., or 480.629.9041 from outside the U.S. 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 for 48 hours following the conclusion of the call by dialing 303.590.3030 from the U.S., or 800.406.7325 from outside the U.S., and entering reservation code 3870952. A webcast replay will be available for 90 days.

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 holds a Global Select listing 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 Silicon Valley's full-service professional business bank. The Bank is dedicated to meeting the financial needs of small, middle market, and emerging technology businesses. 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.

-Financial Tables Follow-

                  BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY
        INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                          (Dollars in Thousands)

                                                Three months ended
                                           -------------------------------
                                           03/31/08   12/31/07   03/31/07
                                           ---------  ---------  ---------

INTEREST INCOME
Loans                                      $  15,227  $  15,806  $  14,184
Federal funds sold                               177        233        524
Investment securities available for sale         617        765        670
                                           ---------  ---------  ---------
     Total interest income                    16,021     16,804     15,378
                                           ---------  ---------  ---------

INTEREST EXPENSE
Deposits:
    Interest-bearing demand                        4          7         13
    Money market and savings                   2,581      3,174      2,997
    Certificates of deposit                    1,088        974      1,156
Other                                            315        274        260
                                           ---------  ---------  ---------
    Total interest expense                     3,988      4,429      4,426
                                           ---------  ---------  ---------

Net interest income                           12,033     12,375     10,952
Provision for credit losses                    2,370        600        200
                                           ---------  ---------  ---------
Net interest income after provision
 for credit losses                             9,663     11,775     10,752
                                           ---------  ---------  ---------

NON-INTEREST INCOME
Service charges on deposit accounts              229        173        152
Gain on sale of SBA loans                        283        580        731
Other non-interest income                      1,159        618        411
                                           ---------  ---------  ---------
     Total non-interest income                 1,671      1,371      1,294
                                           ---------  ---------  ---------

OPERATING EXPENSES
Salaries and benefits                          5,650      5,194      5,001
Premises and fixed assets                      1,105      1,189        949
Other                                          1,981      2,200      1,904
                                           ---------  ---------  ---------
     Total operating expenses                  8,736      8,583      7,854
                                           ---------  ---------  ---------

Income before income taxes                     2,598      4,563      4,192
Income taxes                                   1,076      1,876      1,748

                                           ---------  ---------  ---------
NET INCOME                                 $   1,522  $   2,687  $   2,444
                                           =========  =========  =========

EARNINGS PER SHARE
Basic earnings per share                   $    0.24  $    0.42  $    0.38
                                           =========  =========  =========
Diluted earnings per share                 $    0.22  $    0.39  $    0.35
                                           =========  =========  =========
Average common shares outstanding          6,434,900  6,410,099  6,330,610
                                           =========  =========  =========
Average common and equivalent
 shares outstanding                        6,954,014  6,945,475  6,882,435
                                           =========  =========  =========

PERFORMANCE MEASURES
Return on average assets                        0.79%      1.42%      1.44%
Return on average equity                        9.07%     17.12%     19.52%
Efficiency ratio                               63.75%     62.44%     64.14%




                  BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY
              INTERIM CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                          (Dollars in Thousands)

                      03/31/08   12/31/07   09/30/07   06/30/07   03/31/07
                     ---------  ---------  ---------  ---------  ---------

ASSETS
Cash and due from
 banks               $  25,138  $  27,440  $  19,076  $  21,274  $  21,673
Federal funds sold      16,880     13,395     70,155     39,790     60,620
Investment securities
 available for sale     46,823     55,482     66,071     73,362     53,920
Loans:
  Commercial           271,390    272,660    264,360    258,978    213,436
  SBA                   61,472     56,945     63,205     56,176     60,871
  Real estate
   construction         85,522     85,378     83,030    104,652    116,282
  Real estate other    188,917    171,042    144,438    134,299    123,853
  Factoring and asset-
   based lending        53,108     57,662     43,942     42,683     51,904
  Other                 10,898      9,042     12,231      9,341      8,794
                     ---------  ---------  ---------  ---------  ---------
     Loans, gross      671,307    652,729    611,206    606,129    575,140
  Unearned fee income   (1,664)    (1,856)    (1,616)    (1,483)    (1,586)
  Allowance for
   credit losses       (10,978)    (8,608)    (8,003)    (7,590)    (7,533)
                     ---------  ---------  ---------  ---------  ---------
     Loans, net        658,665    642,265    601,587    597,056    566,021
Premises and
 equipment, net          5,045      5,005      4,618      4,966      4,050
Accrued interest
 receivable              4,074      4,400      4,748      4,608      4,212
Other assets            28,381     26,845     23,622     22,741     20,626
                     ---------  ---------  ---------  ---------  ---------
     Total assets    $ 785,006  $ 774,832  $ 789,877  $ 763,797  $ 731,122
                     =========  =========  =========  =========  =========

LIABILITIES
Deposits:
  Demand
   noninterest-
    bearing          $ 200,567  $ 198,641  $ 201,133  $ 218,651  $ 195,965
  Demand interest-
   bearing               4,587      5,350      4,271      4,563      9,611
  Money market and
   savings             386,369    372,923    418,503    372,470    352,975
  Time                  97,719     94,442     78,943     85,442     94,847
                     ---------  ---------  ---------  ---------  ---------
     Total deposits    689,242    671,356    702,850    681,126    653,398
                     ---------  ---------  ---------  ---------  ---------

Junior subordinated
 debt securities        17,527     17,527     17,527     17,527     17,527
Other borrowings             -     10,000          -          -          -
Accrued interest payable   190        210        298        276        289
Other liabilities        9,176     10,655      9,187      9,882      7,449
                     ---------  ---------  ---------  ---------  ---------
     Total liabilities 716,135    709,748    729,862    708,811    678,663
                     ---------  ---------  ---------  ---------  ---------

SHAREHOLDERS' EQUITY
Common stock            38,040     37,697     36,888     36,466     35,954
Retained earnings       26,931     25,409     22,722     19,970     16,987
Accumulated other
 comprehensive (loss)    3,900      1,978        405     (1,450)      (482)
                     ---------  ---------  ---------  ---------  ---------
     Total
      shareholders'
      equity            68,871     65,084     60,015     54,986     52,459
                     ---------  ---------  ---------  ---------  ---------
     Total liabilities
      and shareholders'
      equity         $ 785,006  $ 774,832  $ 789,877  $ 763,797  $ 731,122
                     =========  =========  =========  =========  =========

CAPITAL ADEQUACY
Tier I leverage ratio    10.52%     10.66%     10.20%     10.13%     10.15%
Tier I risk-based
 capital ratio           10.47%     10.54%     10.68%     10.48%     10.55%
Total risk-based
 capital ratio           11.72%     11.67%     11.80%     11.56%     11.69%
Total equity / total
 assets                   8.77%      8.40%      7.60%      7.20%      7.18%
Book value per share $   10.58  $   10.04  $    9.32  $    8.61  $    8.21




                  BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY
  INTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED)
                          (Dollars in Thousands)

                                   Three Months Ended March 31,
                        ---------------------------------------------------
                                  2008                     2007
                        ------------------------ --------------------------

                                Yields  Interest          Yields  Interest
                        Average    or   Income/  Average     or   Income/
                        Balance  Rates  Expense  Balance   Rates  Expense
                        -------- -----  -------- --------- -----  ---------
ASSETS
Interest earning
 assets (2):
  Loans (1)             $660,083  9.28% $ 15,227 $ 544,357 10.57% $  14,184
  Federal funds sold      24,181  2.94%      177    40,536  5.24%       524
  Investment securities   49,908  4.97%      617    53,122  5.12%       670
                        -------- -----  -------- --------- -----  ---------
Total interest earning
 assets                  734,172  8.78%   16,021   638,015  9.78%    15,378
                        -------- -----  -------- --------- -----  ---------

Noninterest-earning
 assets:
  Cash and due from
   banks                  18,496                    30,872
  All other assets (3)    25,653                    19,228
                        --------                 ---------

      TOTAL             $778,320                 $ 688,115
                        ========                 =========

LIABILITIES AND
 SHAREHOLDERS' EQUITY
Interest-bearing
 liabilities:
  Deposits:
   Demand               $  4,954  0.32% $      4 $   5,517  0.96% $      13
   Money market and
    savings              367,923  2.82%    2,581   316,481  3.84%     2,997
   Time                   98,019  4.46%    1,088    98,033  4.78%     1,156
Other                     23,341  5.43%      315    17,527  6.02%       260
                        -------- -----  -------- --------- -----  ---------
Total interest-bearing
 liabilities             494,237  3.25%    3,988   437,558  4.01%     4,426
                        -------- -----  -------- --------- -----  ---------

Noninterest-bearing
 liabilities:
   Demand deposits       205,187                   190,002
   Accrued expenses and
    other liabilities     11,428                     9,770
Shareholders' equity      67,468                    50,785
                        --------                 ---------
    TOTAL               $778,320                 $ 688,115
                        ========                 =========

                                 -----  --------           -----  ---------
Net interest income and
 margin                           6.59% $ 12,033            6.96% $  10,952
                                 =====  ========           =====  =========

(1)  Loan fee amortization of $1.7 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 $8.9 million and $7.3
     million, respectively.




                  BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY
               INTERIM CONSOLIDATED CREDIT DATA (UNAUDITED)
                          (Dollars in Thousands)

                          03/31/08  12/31/07  09/30/07  06/30/07  03/31/07
                          --------  --------  --------  --------  --------

ALLOWANCE FOR CREDIT
 LOSSES
Balance, beginning of
 period                   $  8,608  $  8,003  $  7,590  $  7,533  $  7,329
Provision for credit
 losses, quarterly           2,370       600       475     1,000       200
Charge-offs, quarterly           -         -      (312)     (943)        -
Recoveries, quarterly            -         5       250         -         4
                          --------  --------  --------  --------  --------
Balance, end of period    $ 10,978  $  8,608  $  8,003  $  7,590  $  7,533
                          ========  ========  ========  ========  ========



NONPERFORMING ASSETS
Loans accounted for on a
 non-accrual basis        $ 15,578  $  4,914  $      -  $      -  $  5,450
Loans restructured and in
 compliance with modified
 terms                           -         -         -         -         -
Other loans with principal
 or interest contractually
 past due 90 days or more        -         -         -         -         -
                          --------  --------  --------  --------  --------
     Nonperforming loans    15,578     4,914         -         -     5,450
Other real estate owned        348       425       425       425         -
                          --------  --------  --------  --------  --------
     Nonperforming assets $ 15,926  $  5,339  $    425  $    425  $  5,450
                          ========  ========  ========  ========  ========


ASSET QUALITY
Allowance for credit
 losses / gross loans         1.64%     1.32%     1.31%     1.25%     1.31%
Allowance for credit
 losses / nonperforming
 loans                       70.47%   175.17%     0.00%     0.00%   138.22%
Nonperforming assets /
 total assets                 2.03%     0.69%     0.05%     0.06%     0.75%
Nonperforming loans /
 gross loans                  2.32%     0.75%     0.00%     0.00%     0.95%
Net quarterly charge-offs
 / gross loans                0.00%     0.00%     0.01%     0.16%     0.00%