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Bridge Capital Holdings (BBNK)

Q2 2008 Earnings Call

July 18, 2008 9:00 am ET


Daniel P. Myers - President, Chief Executive Officer, Director

Thomas A. Sa - Chief Financial Officer, Executive Vice President, Chief Administrative Officer

Debra Bradford - Senior Vice President, Accounting & Financial Reporting Officer


Jeffrey Rulis - D.A. Davidson & Co.

Donald Worthington - Howe Barnes Hoefer & Arnett, Inc.

Bobby Boland – Keefe, Bruyette & Woods

Aaron Deer - Sandler O’Neill



Welcome to the Bridge Bank second quarter financial results conference call. (Operator Instructions) I would now like to turn the conference over to Ms. Bradford, Senior Vice President of Bridge Bank.

Debra Bradford

Welcome to Bridge Capital Holdings conference call to discuss the second quarter results. Joining me today from management are President and Chief Executive Officer Dan Myers and Executive Vice President and Chief Financial Officer Tom Sa. We have allotted approximately one hour for today’s call and we plan to conclude the call at 10:00 a.m. Eastern time.

Before we begin I’d like to review our Safe Harbor statement. Certain matters discussed during today’s call 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 competitive pressures in the banking industry, changes in interest rate environment, general economic conditions nationally, regionally and in operating markets, changes in the regulatory environment, changes in business conditions and inflation, changes in security markets, future credit loss experience, the ability to satisfy requirements related to the Sarbanes-Oxley Act and other regulations on internal control, civil disturbances, or terrorist threats or acts or apprehension about the possible future occurrences of acts of this time and the involvement of the United States in war or other hostilities. A more complete discussion of such risks can be found in Bridge Capital Holdings’ annual report on Forms 10K and quarterly reports on Forms 10Q on file with the Securities and Exchange Commission.

With that I would now like to introduce Dan Myers.

Daniel P. Myers

We issued our earnings press release for the quarter ended June 30, 2008 yesterday afternoon. As you read our earnings, while strongly positive at $1.6 million or $0.23 per diluted share for the period, were less than we had hoped for. This was primarily the result of incurring additional credit costs as a prudent response to specific credit exposures in our loan portfolio, the impact to net interest income of the steep decline in short-term market interest rates, and lower-than-anticipated non-interest income.

It is widely acknowledged that the operating environment for all banks in recent quarters has been challenging to say the least. The severity of this view differs depending on where your bank operates. We operate primarily in the Silicon Valley region. Because of that we believe that we are relatively insulated from the worst challenges of the current economy compared to most banks, but that does not mean that we are immune from some impact particularly in our real estate lending activities.

At this point, while we see some impact developing we do not see significant deterioration in the general economic condition of our core market of Silicon Valley. However, the deterioration in national economic conditions including areas of California outside of the Silicon Valley region are certainly of concern as we experience the same indirect impacts as all banks particularly lower short-term interest rates, disruptions of capital markets, and the rapid downward adjustment of real estate values as the result of fallout from the subprime and credit crises.

Tom Sa, our Chief Financial Officer, will now provide a brief overview of our results for the quarter. Following Tom’s comments I will have some closing remarks and then we will open up the call to your questions. And as a reminder to many of you that have seen and listened to our presentations in the past, our policy is not to issue any specific forward guidance.

Now I’d like to turn the call over to Tom.

Thomas A. Sa

As you saw in the release yesterday the company reported for the quarter net income of $1.6 million or $0.23 per share. This was a slight increase over $1.5 million for the first quarter of 2008 but it was down $1.4 million when compared to the same period last year. For the six months ended net income was $3.1 million or $0.45 per diluted share which was a decrease of $2.3 million compared to the first six months of 2007.

The results for the quarter reflect the impact of an elevated provision for credit losses, greater NIM compression than we had anticipated, and lower fee income contribution from SBA lending operations. I’ll touch on each of these topics but the primary purpose of this call is to provide some color on our credit quality. As a reminder, Bridge Bank’s core franchise is a diversified business banking model. Our commercial and technology industry lines continue to benefit from the relative health within the Silicon Valley economy, which remains among the healthiest economic regions in the State of California.

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