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Bridgewater Bancshares, Inc. Announces First Quarter 2023 Net Income of $11.6 Million, $0.37 Diluted Earnings Per Common Share

Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the parent company of Bridgewater Bank (the Bank), today announced net income of $11.6 million for the first quarter of 2023, compared to $13.7 million for the fourth quarter of 2022, and $12.3 million for the first quarter of 2022. Earnings per diluted common share for the first quarter of 2023 were $0.37, compared to $0.45 per diluted common share for the fourth quarter of 2022, and $0.39 per diluted common share for the same period in 2022.

“While first quarter results included well-controlled expenses, superb asset quality, moderated loan growth, and expected net interest margin pressure, our focus was on supporting our clients and demonstrating the resiliency of our balance sheet and business model,” said Chairman, Chief Executive Officer, and President, Jerry Baack. “Bridgewater is a relationship-focused bank supporting a local real estate and small business client base. With a strong balance sheet, including a diversified loan portfolio, high level of insured deposits, and ample liquidity and borrowing capacity, we feel well-positioned to continue executing on our proven and successful business model.”

First Quarter 2023 Financial Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

Nonperforming

 

ROA

 

 

PPNR ROA (1)

 

 

ROE

 

 

earnings per share

 

 

Efficiency ratio (1)

 

 

assets to total assets

 

1.07

%

 

1.49

%

 

11.70

%

 

$

0.37

 

 

46.2

%

 

0.02

%

_____________________________________

(1) Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.

First Quarter 2023 Highlights

  • Annualized return on average assets (ROA) and annualized return on average shareholders’ equity (ROE) for the first quarter of 2023 were 1.07% and 11.70%, compared to ROA and ROE of 1.28% and 14.06%, respectively, for the fourth quarter of 2022. Annualized return on average tangible common equity, a non-GAAP financial measure, was 12.90% for the first quarter of 2023, compared to 15.86% for the fourth quarter of 2022.
  • Gross loans increased $114.9 million, or 13.1% annualized, from the fourth quarter of 2022.
  • Deposits decreased slightly by $5.4 million, or 0.6% annualized, from the fourth quarter of 2022.
  • Net interest margin (on a fully tax-equivalent basis) was 2.72%, compared to 3.16% in the fourth quarter of 2022.
  • Efficiency ratio, a non-GAAP financial measure, was 46.2%, compared to 43.8% for the fourth quarter of 2022.
  • Noninterest expense declined $1.0 million, or 6.7%, from the fourth quarter of 2022. Annualized noninterest expense to average assets was 1.31%, compared to 1.42% for the fourth quarter of 2022.
  • A credit loss provision of $1.5 million was recorded to support continued loan growth in the first quarter of 2023. The allowance for credit losses to total loans was 1.36% at March 31, 2023, compared to 1.34% at December 31, 2022.
  • Annualized net loan charge-offs (recoveries) as a percentage of average loans were 0.00% for the first quarter of 2023 and for the fourth quarter of 2022.
  • Tangible book value per share, a non-GAAP financial measure, increased $0.26, or 8.9% annualized, to $11.95 at March 31, 2023 compared to $11.69 at December 31, 2022.

Key Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

 

 

2023

 

2022

 

2022

 

Per Common Share Data

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

 

$

0.38

 

$

0.46

 

$

0.40

 

Diluted Earnings Per Share

 

 

0.37

 

 

0.45

 

 

0.39

 

Book Value Per Share

 

 

12.05

 

 

11.80

 

 

11.12

 

Tangible Book Value Per Share (1)

 

 

11.95

 

 

11.69

 

 

11.01

 

Basic Weighted Average Shares Outstanding

 

 

27,726,894

 

 

27,558,983

 

 

28,123,809

 

Diluted Weighted Average Shares Outstanding

 

 

28,490,046

 

 

28,527,306

 

 

29,156,085

 

Shares Outstanding at Period End

 

 

27,845,244

 

 

27,751,950

 

 

28,150,389

 

 

 

 

 

 

 

 

 

 

 

 

Selected Performance Ratios

 

 

 

 

 

 

 

 

 

 

Return on Average Assets (Annualized)

 

 

1.07

%

 

1.28

%

 

1.42

%

Pre-Provision Net Revenue Return on Average Assets (Annualized) (1)

 

 

1.49

 

 

1.82

 

 

2.12

 

Return on Average Shareholders' Equity (Annualized)

 

 

11.70

 

 

14.06

 

 

12.98

 

Return on Average Tangible Common Equity (Annualized) (1)

 

 

12.90

 

 

15.86

 

 

14.56

 

Yield on Interest Earning Assets (2)

 

 

4.91

 

 

4.67

 

 

4.13

 

Yield on Total Loans, Gross (2)

 

 

5.06

 

 

4.87

 

 

4.45

 

Cost of Total Deposits

 

 

2.01

 

 

1.31

 

 

0.43

 

Cost of Funds

 

 

2.41

 

 

1.67

 

 

0.59

 

Net Interest Margin (2)

 

 

2.72

 

 

3.16

 

 

3.60

 

Core Net Interest Margin (1)(2)

 

 

2.62

 

 

3.05

 

 

3.34

 

Efficiency Ratio (1)

 

 

46.2

 

 

43.8

 

 

42.4

 

Noninterest Expense to Average Assets (Annualized)

 

 

1.31

 

 

1.42

 

 

1.56

 

Loan to Deposit Ratio

 

 

108.0

 

 

104.5

 

 

98.4

 

Core Deposits to Total Deposits (3)

 

 

72.4

 

 

74.6

 

 

84.3

 

Tangible Common Equity to Tangible Assets (1)

 

 

7.23

 

 

7.48

 

 

8.60

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios (Bank Only) (4)

 

 

 

 

 

 

 

 

 

 

Tier 1 Leverage Ratio

 

 

10.61

%

 

10.76

%

 

11.13

%

Common Equity Tier 1 Risk-based Capital Ratio

 

 

11.37

 

 

11.29

 

 

11.42

 

Tier 1 Risk-based Capital Ratio

 

 

11.37

 

 

11.29

 

 

11.42

 

Total Risk-based Capital Ratio

 

 

12.62

 

 

12.47

 

 

12.65

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios (Consolidated) (4)

 

 

 

 

 

 

 

 

 

 

Tier 1 Leverage Ratio

 

 

9.41

%

 

9.55

%

 

10.78

%

Common Equity Tier 1 Risk-based Capital Ratio

 

 

8.48

 

 

8.40

 

 

9.13

 

Tier 1 Risk-based Capital Ratio

 

 

10.08

 

 

10.03

 

 

11.08

 

Total Risk-based Capital Ratio

 

 

13.25

 

 

13.15

 

 

15.02

 

_____________________________________

(1)

Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.

(2)

Amounts calculated on a tax-equivalent basis using the statutory federal tax rate of 21%.

(3)

Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000.

(4)

Preliminary data. Current period subject to change prior to filings with applicable regulatory agencies.

Selected Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December31,

September 30,

 

June 30,

 

March 31,

(dollars in thousands)

 

2023

 

2022

 

2022

 

2022

 

2022

Selected Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

4,602,899

 

$

4,345,662

 

$

4,128,987

 

$

3,883,264

 

$

3,607,920

Total Loans, Gross

 

 

3,684,360

 

 

3,569,446

 

 

3,380,082

 

 

3,225,885

 

 

2,987,967

Allowance for Credit Losses

 

 

50,148

 

 

47,996

 

 

46,491

 

 

44,711

 

 

41,692

Goodwill and Other Intangibles

 

 

2,866

 

 

2,914

 

 

2,962

 

 

3,009

 

 

3,057

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

3,411,123

 

 

3,416,543

 

 

3,305,074

 

 

3,201,953

 

 

3,035,611

Tangible Common Equity (1)

 

 

332,626

 

 

324,636

 

 

312,531

 

 

305,360

 

 

309,870

Total Shareholders' Equity

 

 

402,006

 

 

394,064

 

 

382,007

 

 

374,883

 

 

379,441

Average Total Assets - Quarter-to-Date

 

 

4,405,234

 

 

4,251,345

 

 

3,948,201

 

 

3,743,575

 

 

3,513,798

Average Shareholders' Equity - Quarter-to-Date

 

 

403,533

 

 

387,589

 

 

384,020

 

 

381,448

 

 

383,024

_____________________________________

(1)

Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

(dollars in thousands)

 

2023

 

2022

 

2022

Selected Income Statement Data

 

 

 

 

 

 

 

 

 

Interest Income

 

$

51,992

 

 

$

48,860

 

 

$

34,694

 

Interest Expense

 

 

23,425

 

 

 

15,967

 

 

 

4,514

 

Net Interest Income

 

 

28,567

 

 

 

32,893

 

 

 

30,180

 

Provision for Credit Losses

 

 

625

 

 

 

1,500

 

 

 

1,675

 

Net Interest Income after Provision for Credit Losses

 

 

27,942

 

 

 

31,393

 

 

 

28,505

 

Noninterest Income

 

 

1,943

 

 

 

1,738

 

 

 

1,557

 

Noninterest Expense

 

 

14,183

 

 

 

15,203

 

 

 

13,508

 

Income Before Income Taxes

 

 

15,702

 

 

 

17,928

 

 

 

16,554

 

Provision for Income Taxes

 

 

4,060

 

 

 

4,193

 

 

 

4,292

 

Net Income

 

 

11,642

 

 

 

13,735

 

 

 

12,262

 

Preferred Stock Dividends

 

 

(1,013

)

 

 

(1,014

)

 

 

(1,013

)

Net Income Available to Common Shareholders

 

$

10,629

 

 

$

12,721

 

 

$

11,249

 

Income Statement

Net Interest Income

Net interest income was $28.6 million for the first quarter of 2023, a decrease of $4.3 million, or 13.2%, from $32.9 million in the fourth quarter of 2022, and a decrease of $1.6 million, or 5.3%, from $30.2 million in the first quarter of 2022. The linked-quarter and year-over-year decrease in net interest income was primarily due to higher rates paid on deposits and increased borrowings in the rising interest rate environment. Average interest earning assets were $4.32 billion for the first quarter of 2023, an increase of $146.1 million, or 3.5%, from $4.18 billion for the fourth quarter of 2022, and an increase of $892.9 million, or 26.0%, from $3.43 billion for the first quarter of 2022. The linked-quarter increase in average interest earning assets was primarily due to continued growth in the loan portfolio. The year-over-year increase in average interest earning assets was primarily due to strong growth in the loan portfolio and purchases of investment securities, offset partially by the forgiveness of PPP loans and the reduction of cash balances.

Net interest margin (on a fully tax-equivalent basis) for the first quarter of 2023 was 2.72%, a 44 basis point decrease from 3.16% in the fourth quarter of 2022, and an 88 basis point decrease from 3.60% in the first quarter of 2022. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and PPP balances, interest, and fees, for the first quarter of 2023 was 2.62%, a 43 basis point decrease from 3.05% in the fourth quarter of 2022, and a 72 basis point decrease from 3.34% in the first quarter of 2022. The decline in the margin when compared to both prior periods was primarily due to higher funding costs and increased borrowings in the rising interest rate environment, offset partially by higher earning asset yields.

Interest income was $52.0 million for the first quarter of 2023, an increase of $3.1 million, or 6.4%, from $48.9 million in the fourth quarter of 2022, and an increase of $17.3 million, or 49.9%, from $34.7 million in the first quarter of 2022. The yield on interest earning assets (on a fully tax-equivalent basis) was 4.91% in the first quarter of 2023, compared to 4.67% in the fourth quarter of 2022, and 4.13% in the first quarter of 2022. The linked-quarter increase in the yield on interest earning assets was primarily due to the increase in market interest rates resulting in new loan originations, loans repricing, and investment purchases to be at yields accretive to the existing portfolios. The year-over-year increase in the yield on interest earning assets was primarily due to growth and repricing of the loan and securities portfolios in the rising interest rate environment, offset partially by the lower recognition of PPP origination fees.

Loan interest income and loan fees remain the primary contributing factors to the changes in the yield on interest earning assets. The aggregate loan yield, excluding PPP loans, increased to 5.06% in the first quarter of 2023, which was 20 basis points higher than 4.86% in the fourth quarter of 2022, and 66 basis points higher than 4.40% in the first quarter of 2022. While loan fees have historically maintained a relatively stable contribution to the aggregate loan yield, the recent periods saw fewer loan prepayments, which historically has accelerated the recognition of loan fees. Despite the decrease in fee recognition, the Company is encouraged that the core loan yield continues to rise as new loan originations and the existing portfolio reprice in the higher rate environment.

A summary of interest and fees recognized on loans, excluding PPP loans, for the periods indicated is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 2023

 

 

December 31, 2022

 

 

September 30, 2022

 

 

June 30, 2022

 

 

March 31, 2022

 

Interest

 

4.95

%

 

4.74

%

 

4.42

%

 

4.17

%

 

4.15

%

Fees

 

0.11

 

 

0.12

 

 

0.17

 

 

0.26

 

 

0.25

 

Yield on Loans, Excluding PPP Loans

 

5.06

%

 

4.86

%

 

4.59

%

 

4.43

%

 

4.40

%

Interest expense was $23.4 million for the first quarter of 2023, an increase of $7.5 million, or 46.7%, from $16.0 million in the fourth quarter of 2022, and an increase of $18.9 million, or 418.9%, from $4.5 million in the first quarter of 2022. The cost of interest bearing liabilities increased 81 basis points on a linked-quarter basis from 2.22% in the fourth quarter of 2022 to 3.03% in the first quarter of 2023, primarily due to higher rates paid on deposits and the increased utilization of federal funds purchased and FHLB advances in the rising interest rate environment. On a year-over-year basis, the cost of interest bearing liabilities increased 223 basis points from 0.80% in the first quarter of 2022 to 3.03% in the first quarter of 2023, primarily due to the rapid increase in market interest rates that occurred between the periods, which impacted all funding sources.

Interest expense on deposits was $16.4 million for the first quarter of 2023, an increase of $5.6 million, or 51.9%, from $10.8 million in the fourth quarter of 2022, and an increase of $13.2 million, or 418.4%, from $3.2 million in the first quarter of 2022. The cost of total deposits increased 70 basis points on a linked-quarter basis from 1.31% in the fourth quarter of 2022, to 2.01% in the first quarter of 2023, primarily due to the rising interest rate environment and increased competition from other market alternatives. On a year-over-year basis, the cost of total deposits increased 158 basis points from 0.43% in the first quarter of 2022, to 2.01% in the first quarter of 2023, primarily due to the upward repricing of the deposit portfolio in the higher interest rate environment.

A summary of the Company’s average balances, interest yields and rates, and net interest margin for the three months ended March 31, 2023, December 31, 2022, and March 31, 2022 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

March 31, 2023

 

December 31, 2022

 

March 31, 2022

 

 

 

Average

 

Interest

 

Yield/

 

Average

 

Interest

 

Yield/

 

Average

 

Interest

 

Yield/

 

 

 

Balance

 

& Fees

 

Rate

 

Balance

 

& Fees

 

Rate

 

Balance

 

& Fees

 

Rate

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Earning Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Investments

 

$

63,253

 

$

447

 

 

2.86

%

$

65,393

 

$

366

 

 

2.22

%

$

80,497

 

$

26

 

 

0.13

%

Investment Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable Investment Securities

 

 

574,242

 

 

5,958

 

 

4.21

 

 

540,601

 

 

5,268

 

 

3.87

 

 

373,021

 

 

2,255

 

 

2.45

 

Tax-Exempt Investment Securities (1)

 

 

29,803

 

 

330

 

 

4.49

 

 

67,867

 

 

728

 

 

4.26

 

71,591

 

 

779

 

 

4.41

 

Total Investment Securities

 

 

604,045

 

 

6,288

 

 

4.22

 

 

608,468

 

 

5,996

 

 

3.91

 

 

444,612

 

 

3,034

 

 

2.77

 

Paycheck Protection Program Loans (2)

 

 

999

 

 

2

 

 

1.00

 

 

1,109

 

 

48

 

 

17.06

 

 

18,140

 

 

563

 

 

12.58

 

Loans (1)(2)

 

 

3,629,447

 

 

45,263

 

 

5.06

 

 

3,481,041

 

 

42,654

 

 

4.86

 

 

2,881,845

 

 

31,275

 

 

4.40

 

Total Loans

 

 

3,630,446

 

 

45,265

 

 

5.06

 

 

3,482,150

 

 

42,702

 

 

4.87

 

 

2,899,985

 

 

31,838

 

 

4.45

 

Federal Home Loan Bank Stock

 

 

25,962

 

 

372

 

 

5.81

 

 

21,633

 

 

163

 

 

2.99

 

 

5,680

 

 

54

 

 

3.84

 

Total Interest Earning Assets

 

 

4,323,706

 

 

52,372

 

 

4.91

%

 

4,177,644

 

 

49,227

 

 

4.67

%

 

3,430,774

 

 

34,952

 

 

4.13

%

Noninterest Earning Assets

 

 

81,528

 

 

 

 

 

 

 

73,701

 

 

 

 

 

 

 

83,024

 

 

 

 

 

 

Total Assets

 

$

4,405,234

 

 

 

 

 

 

$

4,251,345

 

 

 

 

 

 

$

3,513,798

 

 

 

 

 

 

Interest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Bearing Transaction Deposits

 

$

461,372

 

$

2,780

 

 

2.44

%

$

464,631

 

$

2,013

 

 

1.72

%

$

566,279

 

$

597

 

 

0.43

%

Savings and Money Market Deposits

 

 

1,044,794

 

 

6,499

 

 

2.52

 

 

1,048,227

 

 

4,533

 

 

1.72

 

 

876,580

 

 

918

 

 

0.42

 

Time Deposits

 

 

248,174

 

 

1,069

 

 

1.75

 

 

281,334

 

 

1,007

 

 

1.42

 

 

288,914

 

 

745

 

 

1.05

 

Brokered Deposits

 

 

743,465

 

 

6,026

 

 

3.29

 

 

537,351

 

 

3,228

 

 

2.38

 

 

406,648

 

 

898

 

 

0.90

 

Total Interest Bearing Deposits

 

 

2,497,805

 

 

16,374

 

 

2.66

 

 

2,331,543

 

 

10,781

 

 

1.83

 

 

2,138,421

 

 

3,158

 

 

0.60

 

Federal Funds Purchased

 

 

415,111

 

 

4,944

 

 

4.83

 

 

340,471

 

 

3,379

 

 

3.94

 

 

10,600

 

 

9

 

 

0.35

 

Notes Payable

 

 

13,750

 

 

263

 

 

7.77

 

 

11,359

 

 

202

 

 

7.04

 

 

 

 

 

 

 

FHLB Advances

 

 

128,222

 

 

861

 

 

2.72

 

 

94,103

 

 

575

 

 

2.42

 

 

42,500

 

 

150

 

 

1.43

 

Subordinated Debentures

 

 

78,945

 

 

983

 

 

5.05

 

 

81,242

 

 

1,030

 

 

5.03

 

 

92,286

 

 

1,197

 

 

5.26

 

Total Interest Bearing Liabilities

 

 

3,133,833

 

 

23,425

 

 

3.03

%

 

2,858,718

 

 

15,967

 

 

2.22

%

 

2,283,807

 

 

4,514

 

 

0.80

%

Noninterest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Bearing Transaction Deposits

 

 

813,598

 

 

 

 

 

 

 

943,232

 

 

 

 

 

 

 

822,488

 

 

 

 

 

 

Other Noninterest Bearing Liabilities

 

 

54,270

 

 

 

 

 

 

 

61,806

 

 

 

 

 

 

 

24,479

 

 

 

 

 

 

Total Noninterest Bearing Liabilities

 

 

867,868

 

 

 

 

 

 

 

1,005,038

 

 

 

 

 

 

 

846,967

 

 

 

 

 

 

Shareholders' Equity

 

 

403,533

 

 

 

 

 

 

 

387,589

 

 

 

 

 

 

 

383,024

 

 

 

 

 

 

Total Liabilities and Shareholders' Equity

 

$

4,405,234

 

 

 

 

 

 

$

4,251,345

 

 

 

 

 

 

$

3,513,798

 

 

 

 

 

 

Net Interest Income / Interest Rate Spread

 

 

 

 

 

28,947

 

 

1.88

%

 

 

 

 

33,260

 

 

2.45

%

 

 

 

 

30,438

 

 

3.33

%

Net Interest Margin (3)

 

 

 

 

 

 

 

2.72

%

 

 

 

 

 

 

3.16

%

 

 

 

 

 

 

3.60

%

Taxable Equivalent Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-Exempt Investment Securities and Loans

 

 

 

 

 

(380

)

 

 

 

 

 

 

 

(367

)

 

 

 

 

 

 

 

(258

)

 

 

 

Net Interest Income

 

 

 

 

$

28,567

 

 

 

 

 

 

 

$

32,893

 

 

 

 

 

 

 

$

30,180

 

 

 

 

_____________________________________

(1)

Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a statutory federal income tax rate of 21%.

(2)

Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

(3)

Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

Provision for Credit Losses

On January 1, 2023, the Company adopted Accounting Standards Update No. 2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments,” more commonly referred to as “CECL.” Upon adoption of CECL, the Company’s allowance for credit losses on loans increased $650,000 and the allowance on unfunded commitments increased $4.9 million. The tax-effected impact of these two items totaled $3.9 million and was recorded as an adjustment to retained earnings as of January 1, 2023.

The provision for credit losses was $1.5 million for both the first quarter of 2023 and the fourth quarter of 2022, compared to $1.7 million in the first quarter of 2022. The provision recorded in the first quarter of 2023 was primarily attributable to the more moderated growth of the loan portfolio. The allowance for credit losses to total loans was 1.36% at March 31, 2023, compared to 1.34% at December 31, 2022, and 1.40% at March 31, 2022.

The following table presents the activity in the Company’s allowance for credit losses for the periods indicated:

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

(dollars in thousands)

 

2023

2022

 

2022

Balance at Beginning of Period

 

$

47,996

 

 

$

46,491

 

 

$

40,020

 

Impact of Adopting CECL

 

 

650

 

 

 

 

 

 

 

Provision for Credit Losses

 

 

1,500

 

 

 

1,500

 

 

 

1,675

 

Charge-offs

 

 

(4

)

 

 

(3

)

 

 

(15

)

Recoveries

 

 

6

 

 

 

8

 

 

 

12

 

Balance at End of Period

 

$

50,148

 

 

$

47,996

 

 

$

41,692

 

The provision for unfunded commitments was a negative provision of ($875,000) for the first quarter of 2023 and zero for both the fourth quarter of 2022 and first quarter of 2022. The negative provision during the quarter was due to a reduction in outstanding unfunded commitments primarily attributable to the migration to funded loans.

Noninterest Income

Noninterest income was $1.9 million for the first quarter of 2023, an increase of $205,000 from $1.74 million for the fourth quarter of 2022, and an increase of $386,000 from $1.6 million for the first quarter of 2022. The linked-quarter increase was primarily due to an increase in letter of credit fees and FHLB prepayment income, offset partially by a decrease in other income. The year-over-year increase was primarily due to increased letter of credit fees and FHLB prepayment income, offset partially by no recorded swap fees.

The following table presents the major components of noninterest income for the periods indicated:

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

(dollars in thousands)

 

2023

 

2022

 

2022

Noninterest Income:

 

 

 

 

 

 

 

 

 

Customer Service Fees

 

$

349

 

 

$

344

 

$

281

Net Gain (Loss) on Sales of Securities

 

 

(56

)

 

 

30

 

 

Letter of Credit Fees

 

 

634

 

 

 

358

 

 

242

Debit Card Interchange Fees

 

 

138

 

 

 

148

 

 

133

Swap Fees

 

 

 

 

 

 

 

557

Bank-Owned Life Insurance

 

 

234

 

 

 

238

 

 

148

FHLB Prepayment Income

 

 

299

 

 

 

 

 

Other Income

 

 

345

 

 

 

620

 

 

196

Totals

 

$

1,943

 

 

$

1,738

 

$

1,557

Noninterest Expense

Noninterest expense was $14.2 million for the first quarter of 2023, a decrease of $1.0 million from $15.2 million for the fourth quarter of 2022, and an increase of $675,000 from $13.5 million for the first quarter of 2022. The linked-quarter decrease was primarily due to decreases in salaries and employee benefits resulting from lower discretionary incentive accruals. The year-over-year increase was primarily attributable to increases in the FDIC insurance assessment and derivative collateral fees, offset partially by declines in marketing and advertising and other expense.

The following table presents the major components of noninterest expense for the periods indicated:

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

(dollars in thousands)

 

2023

 

2023

 

2022

Noninterest Expense:

 

 

 

 

 

 

 

 

 

Salaries and Employee Benefits

 

$

8,815

 

$

9,821

 

$

8,694

Occupancy and Equipment

 

 

1,209

 

 

1,177

 

 

1,085

FDIC Insurance Assessment

 

 

665

 

 

360

 

 

360

Data Processing

 

 

357

 

 

371

 

 

297

Professional and Consulting Fees

 

 

755

 

 

635

 

 

696

Derivative Collateral Fees

 

 

380

 

 

535

 

 

2

Information Technology and Telecommunications

 

 

683

 

 

673

 

 

578

Marketing and Advertising

 

 

262

 

 

403

 

 

626

Intangible Asset Amortization

 

 

48

 

 

48

 

 

48

Amortization of Tax Credit Investments

 

 

114

 

 

114

 

 

117

Other Expense

 

 

895

 

 

1,066

 

 

1,005

Totals

 

$

14,183

 

$

15,203

 

$

13,508

The Company had 246 full-time equivalent employees at both March 31, 2023 and December 31, 2022, and 229 employees at March 31, 2022. The efficiency ratio, a non-GAAP financial measure, was 46.2% for the first quarter of 2023, compared to 43.8% for the fourth quarter of 2022, and 42.4% for the first quarter of 2022.

Income Taxes

The effective combined federal and state income tax rate for the first quarter of 2023 was 25.9%, an increase from 23.4% for the fourth quarter of 2022 and consistent with 25.9% for the first quarter of 2022.

Balance Sheet

Total assets at March 31, 2023 were $4.60 billion, a 5.9% increase from $4.35 billion at December 31, 2022, and a 27.6% increase from $3.61 billion at March 31, 2022. The linked-quarter increase in total assets was primarily due to continued loan growth and an increase in cash and cash equivalent balances. The year-over-year increase in total assets was primarily due to strong loan growth, purchases of investment securities and an increase in cash and cash equivalent balances.

Total gross loans at March 31, 2023 were $3.68 billion, an increase of $114.9 million, or 3.2%, over total gross loans of $3.57 billion at December 31, 2022, and an increase of $696.4 million, or 23.3%, over total gross loans of $2.99 billion at March 31, 2022. The increase in the loan portfolio during the first quarter of 2023 was primarily due to growth across all segments.

The following table presents the dollar composition of the Company’s loan portfolio, by category, at the dates indicated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2023

 

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

454,193

 

 

$

435,344

 

 

$

412,448

 

 

$

403,569

 

 

$

363,290

 

Paycheck Protection Program

 

 

963

 

 

 

1,049

 

 

 

1,192

 

 

 

4,860

 

 

 

12,309

 

Construction and Land Development

 

 

312,277

 

 

 

295,554

 

 

 

280,380

 

 

 

305,552

 

 

 

272,333

 

1-4 Family Construction

 

 

85,797

 

 

 

70,242

 

 

 

55,177

 

 

 

53,639

 

 

 

48,798

 

Real Estate Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 - 4 Family Mortgage

 

 

380,210

 

 

 

355,474

 

 

 

341,102

 

 

 

334,815

 

 

 

312,201

 

Multifamily

 

 

1,320,081

 

 

 

1,306,738

 

 

 

1,230,509

 

 

 

1,087,865

 

 

 

1,012,623

 

CRE Owner Occupied

 

 

158,650

 

 

 

149,905

 

 

 

151,088

 

 

 

142,214

 

 

 

117,969

 

CRE Nonowner Occupied

 

 

962,671

 

 

 

947,008

 

 

 

900,691

 

 

 

886,432

 

 

 

840,463

 

Total Real Estate Mortgage Loans

 

 

2,821,612

 

 

 

2,759,125

 

 

 

2,623,390

 

 

 

2,451,326

 

 

 

2,283,256

 

Consumer and Other

 

 

9,518

 

 

 

8,132

 

 

 

7,495

 

 

 

6,939

 

 

 

7,981

 

Total Loans, Gross

 

 

3,684,360

 

 

 

3,569,446

 

 

 

3,380,082

 

 

 

3,225,885

 

 

 

2,987,967

 

Allowance for Loan Losses

 

 

(50,148

)

 

 

(47,996

)

 

 

(46,491

)

 

 

(44,711

)

 

 

(41,692

)

Net Deferred Loan Fees

 

 

(8,735

)

 

 

(9,293

)

 

 

(9,088

)

 

 

(9,536

)

 

 

(9,065

)

Total Loans, Net

 

$

3,625,477

 

 

$

3,512,157

 

 

$

3,324,503

 

 

$

3,171,638

 

 

$

2,937,210

 

Total deposits at March 31, 2023 were $3.41 billion, a decrease of $5.4 million, or 0.2%, over total deposits of $3.42 billion at December 31, 2022, and an increase of $375.5 million, or 12.4%, over total deposits of $3.04 billion at March 31, 2022. Deposits decreased slightly in the first quarter of 2023 primarily due to a decrease in noninterest bearing deposits and savings and money market deposits, offset by an increase in interest bearing deposits and brokered deposits. Brokered deposits were being used as a supplemental funding source, as needed, to support the loan portfolio growth. Uninsured deposits as of March 31, 2023 were 24% of total deposits, down from 38% as of December 31, 2022.

The following table presents the dollar composition of the Company’s deposit portfolio, by category, at the dates indicated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2023

 

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Bearing Transaction Deposits

 

$

742,198

 

$

884,272

 

$

961,084

 

$

961,998

 

$

835,482

 

Interest Bearing Transaction Deposits

 

 

630,037

 

 

451,992

 

 

510,396

 

 

522,151

 

 

598,402

 

Savings and Money Market Deposits

 

 

913,013

 

 

1,031,873

 

 

1,077,333

 

 

952,138

 

 

890,926

 

Time Deposits

 

 

266,213

 

 

272,253

 

 

293,052

 

 

272,424

 

 

286,674

 

Brokered Deposits

 

 

859,662

 

 

776,153

 

 

463,209

 

 

493,242

 

 

424,127

 

Total Deposits

 

$

3,411,123

 

$

3,416,543

 

$

3,305,074

 

$

3,201,953

 

$

3,035,611

 

Capital

Total shareholders’ equity at March 31, 2023 was $402.0 million, an increase of $7.9 million, or 2.0%, compared to total shareholders’ equity of $394.1 million at December 31, 2022, and an increase of $22.6 million, or 5.9%, over total shareholders’ equity of $379.4 million at March 31, 2022. The linked-quarter increase was due to net income retained, offset partially by the adoption of CECL and preferred stock dividends. The year-over-year increase was due to net income retained and unrealized gains in the derivatives portfolio, offset partially by an increase in unrealized losses in the securities portfolio, stock repurchases, the adoption of CECL and preferred stock dividends. The Company did not purchase any shares of its common stock during the first quarter of 2023.

Tangible book value per share, a non-GAAP financial measure, was $11.95 as of March 31, 2023, an increase of 2.2% from $11.69 as of December 31, 2022, and an increase of 8.5% from $11.01 as of March 31, 2022. The linked-quarter and year-over-year increases occurred despite the market value depreciation of the securities portfolio driven by the rapidly rising interest rate environment. Tangible common equity as a percentage of tangible assets, a non-GAAP financial measure, was 7.23% at March 31, 2023, compared to 7.48% at December 31, 2022, and 8.60% at March 31, 2022.

Today, the Company also announced that its Board of Directors declared a quarterly cash dividend on its 5.875% Non-Cumulative Perpetual Preferred Stock, Series A (Series A Preferred Stock). The quarterly cash dividend of $36.72 per share, equivalent to $0.3672 per depositary share, each representing a 1/100th interest in a share of the Series A Preferred Stock (Nasdaq: BWBBP), is payable on June 1, 2023 to shareholders of record of the Series A Preferred Stock at the close of business on May 15, 2023.

Liquidity

Total on- and off-balance sheet liquidity was $1.92 billion as of March 31, 2023, compared to $1.38 billion at December 31, 2022 and $1.44 billion at March 31, 2022. During the first quarter of 2023, the Company took a number of actions to increase its total liquidity by more than $500 million, including pledging loans and securities to create additional borrowing capacity at the Federal Reserve Bank and increasing its cash on the balance sheet. The Company did not utilize the Bank Term Funding Program (BTFP) or Federal Reserve Discount Window during the first quarter of 2023.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Primary Liquidity—On-Balance Sheet

 

March 31, 2023

 

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

177,116

 

 

$

48,090

 

$

36,332

 

$

43,168

 

$

50,312

 

Securities Available for Sale

 

 

559,430

 

 

 

548,613

 

 

542,007

 

 

482,583

 

 

459,090

 

Less: Pledged Securities

 

 

(234,452

)

 

 

 

 

 

 

 

 

 

Total Primary Liquidity

 

$

502,094

 

 

$

596,703

 

$

578,339

 

$

525,751

 

$

509,402

 

Ratio of Primary Liquidity to Total Deposits

 

 

14.7

 

%

 

17.5

%

 

17.5

%

 

16.4

%

 

16.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secondary Liquidity—Off-Balance Sheet

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowing Capacity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Secured Borrowing Capacity with the FHLB

 

$

246,795

 

 

$

390,898

 

$

426,604

 

$

569,076

 

$

542,489

Net Secured Borrowing Capacity with the Federal Reserve Bank

 

 

990,685

 

 

 

157,827

 

 

156,534

 

 

169,766

 

 

159,328

 

Unsecured Borrowing Capacity with Correspondent Lenders

 

 

158,000

 

 

 

208,000

 

 

208,000

 

 

208,000

 

 

208,000

 

Secured Borrowing Capacity with Correspondent Lender

 

 

26,250

 

 

 

26,250

 

 

40,000

 

 

25,000

 

 

25,000

 

Total Secondary Liquidity

 

 

1,421,730

 

 

 

782,975

 

 

831,138

 

 

971,842

 

 

934,817

 

Total Primary and Secondary Liquidity

 

$

1,923,824

 

 

$

1,379,678

 

$

1,409,477

 

$

1,497,593

 

$

1,444,219

 

Ratio of Primary and Secondary Liquidity to Total Deposits

 

 

56.4

 

%

 

40.4

%

 

42.6

%

 

46.8

%

 

47.6

%

Asset Quality

Annualized net charge-offs (recoveries) as a percentage of average loans were 0.00% for the first quarter of 2023, fourth quarter of 2022 and first quarter of 2022. At March 31, 2023, the Company’s nonperforming assets, which include nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $809,000, or 0.02% of total assets, as compared to $639,000, or 0.01% of total assets at December 31, 2022, and $706,000, or 0.02% of total assets at March 31, 2022.

Loans that have potential weaknesses that warrant a watchlist risk rating at March 31, 2023 totaled $27.6 million, compared to $32.3 million at December 31, 2022, and $46.8 million at March 31, 2022. The increased uncertainty in the economic environment may result in future watchlist or adverse classifications in the loan portfolio. Loans that warranted a substandard risk rating at March 31, 2023 totaled $36.3 million, compared to $28.0 million at December 31, 2022, and $18.6 million at March 31, 2022. The linked-quarter increase was primarily due to the downgrade of one loan relationship.

The following table presents a summary of asset quality measurements at the dates indicated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

(dollars in thousands)

 

2023

 

2022

 

2022

 

2022

 

2022

 

Selected Asset Quality Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans 30-89 Days Past Due

 

$

21

 

$

186

 

$

38

 

 

$

225

 

$

13

 

Loans 30-89 Days Past Due to Total Loans

 

 

0.00

%

 

0.01

%

 

0.00

 

%

 

0.01

%

 

0.00

%

Nonperforming Loans

 

$

693

 

$

639

 

$

663

 

 

$

688

 

$

706

 

Nonperforming Loans to Total Loans

 

 

0.02

%

 

0.02

%

 

0.02

 

%

 

0.02

%

 

0.02

%

Foreclosed Assets

 

$

116

 

$

 

$

 

 

$

 

$

 

Nonaccrual Loans to Total Loans

 

 

0.02

%

 

0.02

%

 

0.02

 

%

 

0.02

%

 

0.02

%

Nonaccrual Loans and Loans Past Due 90 Days and Still Accruing to Total Loans

 

 

0.02

 

 

0.02

 

 

0.02

 

 

 

0.02

 

 

0.02

 

Nonperforming Assets (1)

 

$

809

 

$

639

 

$

663

 

 

$

688

 

$

706

 

Nonperforming Assets to Total Assets (1)

 

 

0.02

%

 

0.01

%

 

0.02

 

%

 

0.02

%

 

0.02

%

Allowance for Credit Losses to Total Loans

 

 

1.36

 

 

1.34

 

 

1.38

 

 

 

1.39

 

 

1.40

 

Allowance for Credit Losses to Nonaccrual Loans

 

 

7,236.36

 

 

7,511.11

 

 

7,012.22

 

 

 

6,498.69

 

 

5,905.38

 

Net Loan Charge-Offs (Recoveries) (Annualized) to Average Loans

 

 

0.00

 

 

0.00

 

 

(0.03

)

 

 

0.00

 

 

0.00

 

_____________________________________

(1)

Nonperforming assets are defined as nonaccrual loans plus loans 90 days past due and still accruing plus foreclosed assets.

The Company will host a conference call to discuss its first quarter 2023 financial results on Thursday, April 27, 2023 at 8:00 a.m. Central Time. The conference call can be accessed by dialing 877-270-2148 and requesting to join the Bridgewater Bancshares earnings call. To listen to a replay of the conference call via phone, please dial 877-344-7529 and enter access code 7417750. The replay will be available through May 4, 2023. The conference call will also be available via a live webcast on the Investor Relations section of the Company’s website, investors.bridgewaterbankmn.com, and archived for replay.

About the Company

Bridgewater Bancshares, Inc. (Nasdaq: BWB) is a St. Louis Park, Minnesota-based financial holding company. Bridgewater's banking subsidiary, Bridgewater Bank, is a premier, full-service Twin Cities bank dedicated to serving the diverse needs of commercial real estate investors, entrepreneurs, business clients and successful individuals. By pairing a range of deposit, lending, and business services solutions with a responsive service model, Bridgewater has seen continuous growth and profitability. With total assets of $4.6 billion and seven branches as of March 31, 2023, Bridgewater is considered one of the largest locally led banks in the State of Minnesota, and has received numerous awards for its growth, banking services, and esteemed corporate culture.

Use of Non-GAAP financial measures

In addition to the results presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP), the Company routinely supplements its evaluation with an analysis of certain non-GAAP financial measures. The Company believes these non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors to help them understand the Company’s operating performance and trends, and to facilitate comparisons with the performance of peers. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of non-GAAP disclosures used in this earnings release to the comparable GAAP measures are provided in the accompanying tables.

Forward-Looking Statements

This earnings release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, identified by words such as “may”, “might”, “should”, “could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized”, “target” and “outlook”, or the negative version of those words or other comparable words of a future or forward-looking nature.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: interest rate risk, including the effects of recent and anticipated rate increases by the Federal Reserve; fluctuations in the values of the securities held in our securities portfolio, including as the result of rising interest rates, which has resulted in unrealized losses in our portfolio; business and economic conditions generally and in the financial services industry, nationally and within our market area, including rising rates of inflation; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time at Silicon Valley Bank and Signature Bank that resulted in the failure of those institutions; loan concentrations in our portfolio; the overall health of the local and national real estate market; our ability to successfully manage credit risk; our ability to maintain an adequate level of allowance for loan losses; new or revised accounting standards, including as a result of the implementation of the Current Expected Credit Loss standard; the concentration of large loans to certain borrowers; the concentration of large deposits from certain clients, who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure; our ability to successfully manage liquidity risk, which may increase our dependence on non-core funding sources such as brokered deposits, and negatively impact our cost of funds; our ability to raise additional capital to implement our business plan; our ability to implement our growth strategy and manage costs effectively; developments and uncertainty related to the future use and availability of some reference rates, such as the expected discontinuation of the London Interbank Offered Rate, as well as other alternative reference rates; the composition of our senior leadership team and our ability to attract and retain key personnel; talent and labor shortages and high rates of employee turnover; the occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents; interruptions involving our information technology and telecommunications systems or third-party servicers; competition in the financial services industry, including from nonbank competitors such as credit unions and “fintech” companies; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and regulatory actions against us; the impact of recent and future legislative and regulatory changes, including in response to the recent failures of Silicon Valley Bank and Signature Bank; risks related to climate change and the negative impact it may have on our customers and their businesses; the imposition of tariffs or other governmental policies impacting the value of products produced by our commercial borrowers; severe weather, natural disasters, wide spread disease or pandemics (including the COVID-19 pandemic), acts of war or terrorism or other adverse external events including the Russian invasion of Ukraine; potential impairment to the goodwill the Company recorded in connection with our past acquisition; changes to U.S. or state tax laws, regulations and guidance, including the new 1% excise tax on stock buybacks by publicly traded companies; and any other risks described in the “Risk Factors” sections of reports filed by the Company with the Securities and Exchange Commission.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. The Company undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

March 31,

 

 

2023

 

2022

 

2022

 

 

(Unaudited)

 

 

 

 

(Unaudited)

ASSETS

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

209,192

 

 

$

87,043

 

 

$

71,887

 

Bank-Owned Certificates of Deposit

 

 

1,225

 

 

 

1,181

 

 

 

1,139

 

Securities Available for Sale, at Fair Value

 

 

559,430

 

 

 

548,613

 

 

 

459,090

 

Loans, Net of Allowance for Credit Losses of $50,148 at March 31, 2023 (unaudited), $47,996 at December 31, 2022 and $41,692 at March 31, 2022 (unaudited)

 

 

3,625,477

 

 

 

3,512,157

 

 

 

2,937,210

 

Federal Home Loan Bank (FHLB) Stock, at Cost

 

 

28,632

 

 

 

19,606

 

 

 

6,846

 

Premises and Equipment, Net

 

 

47,801

 

 

 

48,445

 

 

 

49,044

 

Foreclosed Assets

 

 

116

 

 

 

 

 

 

 

Accrued Interest

 

 

13,377

 

 

 

13,479

 

 

 

9,596

 

Goodwill

 

 

2,626

 

 

 

2,626

 

 

 

2,626

 

Other Intangible Assets, Net

 

 

240

 

 

 

288

 

 

 

431

 

Bank-Owned Life Insurance

 

 

33,719

 

 

 

33,485

 

 

 

25,464

 

Other Assets

 

 

81,064

 

 

 

78,739

 

 

 

44,587

 

Total Assets

 

$

4,602,899

 

 

$

4,345,662

 

 

$

3,607,920

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Noninterest Bearing

 

$

742,198

 

 

$

884,272

 

 

$

835,482

 

Interest Bearing

 

 

2,668,925

 

 

 

2,532,271

 

 

 

2,200,129

 

Total Deposits

 

 

3,411,123

 

 

 

3,416,543

 

 

 

3,035,611

 

Federal Funds Purchased

 

 

437,000

 

 

 

287,000

 

 

 

23,000

 

Notes Payable

 

 

13,750

 

 

 

13,750

 

 

 

 

FHLB Advances

 

 

197,000

 

 

 

97,000

 

 

 

42,500

 

Subordinated Debentures, Net of Issuance Costs

 

 

79,001

 

 

 

78,905

 

 

 

92,349

 

Accrued Interest Payable

 

 

3,257

 

 

 

2,831

 

 

 

1,576

 

Other Liabilities

 

 

59,762

 

 

 

55,569

 

 

 

33,443

 

Total Liabilities

 

 

4,200,893

 

 

 

3,951,598

 

 

 

3,228,479

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Preferred Stock- $0.01 par value; Authorized 10,000,000

 

 

 

 

 

 

 

 

 

Preferred Stock - Issued and Outstanding 27,600 Series A shares ($2,500 liquidation preference) at March 31, 2023 (unaudited), December 31, 2022, and March 31, 2022 (unaudited)

 

 

66,514

 

 

 

66,514

 

 

 

66,514

 

Common Stock- $0.01 par value; Authorized 75,000,000

 

 

 

 

 

 

 

 

 

Common Stock - Issued and Outstanding 27,845,244 at March 31, 2023 (unaudited), 27,751,950 at December 31, 2022 and 28,150,389 at March 31, 2022 (unaudited)

 

 

278

 

 

 

278

 

 

 

282

 

Additional Paid-In Capital

 

 

97,716

 

 

 

96,529

 

 

 

103,756

 

Retained Earnings

 

 

255,394

 

 

 

248,685

 

 

 

210,596

 

Accumulated Other Comprehensive Income (Loss)

 

 

(17,896

)

 

 

(17,942

)

 

 

(1,707

)

Total Shareholders' Equity

 

 

402,006

 

 

 

394,064

 

 

 

379,441

 

Total Liabilities and Equity

 

$

4,602,899

 

 

$

4,345,662

 

 

$

3,607,920

 

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

 

 

2023

 

2022

 

2022

INTEREST INCOME

 

 

 

 

 

 

 

 

 

Loans, Including Fees

 

$

44,955

 

 

$

42,488

 

 

$

31,744

 

Investment Securities

 

 

6,218

 

 

 

5,843

 

 

 

2,870

 

Other

 

 

819

 

 

 

529

 

 

 

80

 

Total Interest Income

 

 

51,992

 

 

 

48,860

 

 

 

34,694

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

Deposits

 

 

16,374

 

 

 

10,781

 

 

 

3,158

 

Notes Payable

 

 

263

 

 

 

202

 

 

 

 

FHLB Advances

 

 

861

 

 

 

575

 

 

 

150

 

Subordinated Debentures

 

 

983

 

 

 

1,030

 

 

 

1,197

 

Federal Funds Purchased

 

 

4,944

 

 

 

3,379

 

 

 

9

 

Total Interest Expense

 

 

23,425

 

 

 

15,967

 

 

 

4,514

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

 

 

28,567

 

 

 

32,893

 

 

 

30,180

 

Provision for Credit Losses

 

 

625

 

 

 

1,500

 

 

 

1,675

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME AFTER

 

 

 

 

 

 

 

 

 

PROVISION FOR CREDIT LOSSES

 

 

27,942

 

 

 

31,393

 

 

 

28,505

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

Customer Service Fees

 

 

349

 

 

 

344

 

 

 

281

 

Net Gain (Loss) on Sales of Available for Sale Securities

 

 

(56

)

 

 

30

 

 

 

 

Other Income

 

 

1,650

 

 

 

1,364

 

 

 

1,276

 

Total Noninterest Income

 

 

1,943

 

 

 

1,738

 

 

 

1,557

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

Salaries and Employee Benefits

 

 

8,815

 

 

 

9,821

 

 

 

8,694

 

Occupancy and Equipment

 

 

1,209

 

 

 

1,177

 

 

 

1,085

 

Other Expense

 

 

4,159

 

 

 

4,205

 

 

 

3,729

 

Total Noninterest Expense

 

 

14,183

 

 

 

15,203

 

 

 

13,508

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

15,702

 

 

 

17,928

 

 

 

16,554

 

Provision for Income Taxes

 

 

4,060

 

 

 

4,193

 

 

 

4,292

 

NET INCOME

 

 

11,642

 

 

 

13,735

 

 

 

12,262

 

Preferred Stock Dividends

 

 

(1,013

)

 

 

(1,014

)

 

 

(1,013

)

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

 

$

10,629

 

 

$

12,721

 

 

$

11,249

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

Basic

 

$

0.38

 

 

$

0.46

 

 

$

0.40

 

Diluted

 

 

0.37

 

 

 

0.45

 

 

 

0.39

 

Bridgewater Bancshares, Inc. and Subsidiaries

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

 

 

2023

 

2022

 

2022

 

Pre-Provision Net Revenue

 

 

 

 

 

 

 

 

 

 

Noninterest Income

 

$

1,943

 

 

$

1,738

 

 

$

1,557

 

 

Less: (Gain) Loss on Sales of Securities

 

 

56

 

 

 

(30

)

 

 

 

 

Less: FHLB Advance Prepayment Income

 

 

(299

)

 

 

 

 

 

 

 

Total Operating Noninterest Income

 

 

1,700

 

 

 

1,708

 

 

 

1,557

 

 

Plus: Net Interest Income

 

 

28,567

 

 

 

32,893

 

 

 

30,180

 

 

Net Operating Revenue

 

$

30,267

 

 

$

34,601

 

 

$

31,737

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

$

14,183

 

 

$

15,203

 

 

$

13,508

 

 

Less: Amortization of Tax Credit Investments

 

 

(114

)

 

 

(114

)

 

 

(117

)

 

Total Operating Noninterest Expense

 

$

14,069

 

 

$

15,089

 

 

$

13,391

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-Provision Net Revenue

 

$

16,198

 

 

$

19,512

 

 

$

18,346

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus:

 

 

 

 

 

 

 

 

 

 

Non-Operating Revenue Adjustments

 

 

243

 

 

 

30

 

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

 

Provision for Credit Losses

 

 

625

 

 

 

1,500

 

 

 

1,675

 

 

Non-Operating Expense Adjustments

 

 

114

 

 

 

114

 

 

 

117

 

 

Provision for Income Taxes

 

 

4,060

 

 

 

4,193

 

 

 

4,292

 

 

Net Income

 

$

11,642

 

 

$

13,735

 

 

$

12,262

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Assets

 

$

4,405,234

 

 

$

4,251,345

 

 

$

3,513,798

 

 

Pre-Provision Net Revenue Return on Average Assets

 

 

1.49

 

%

 

1.82

 

%

 

2.12

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

 

 

2023

 

2022

 

2022

 

Core Net Interest Margin

 

 

 

 

 

 

 

 

 

 

Net Interest Income (Tax-Equivalent Basis)

 

$

28,947

 

 

$

33,260

 

 

$

30,438

 

 

Less: Loan Fees

 

 

(998

)

 

 

(1,100

)

 

 

(1,743

)

 

Less: PPP Interest and Fees

 

 

(2

)

 

 

(48

)

 

 

(563

)

 

Core Net Interest Income

 

$

27,947

 

 

$

32,112

 

 

$

28,132

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Interest Earning Assets

 

$

4,323,706

 

 

$

4,177,644

 

 

$

3,430,774

 

 

Less: Average PPP Loans

 

 

(999

)

 

 

(1,109

)

 

 

(18,140

)

 

Core Average Interest Earning Assets

 

$

4,322,707

 

 

$

4,176,535

 

 

$

3,412,634

 

 

Core Net Interest Margin

 

 

2.62

 

%

 

3.05

 

%

 

3.34

 

%

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

 

 

2023

 

2022

 

2022

 

Efficiency Ratio

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

$

14,183

 

 

$

15,203

 

 

$

13,508

 

 

Less: Amortization of Intangible Assets

 

 

(48

)

 

 

(48

)

 

 

(48

)

 

Adjusted Noninterest Expense

 

$

14,135

 

 

$

15,155

 

 

$

13,460

 

 

Net Interest Income

 

 

28,567

 

 

 

32,893

 

 

 

30,180

 

 

Noninterest Income

 

 

1,943

 

 

 

1,738

 

 

 

1,557

 

 

Less: (Gain) Loss on Sales of Securities

 

 

56

 

 

 

(30

)

 

 

 

 

Adjusted Operating Revenue

 

$

30,566

 

 

$

34,601

 

 

$

31,737

 

 

Efficiency Ratio

 

 

46.2

 

%

 

43.8

 

%

 

42.4

 

%

 

 

 

 

 

 

 

 

 

 

 

Adjusted Efficiency Ratio

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

$

14,183

 

 

$

15,203

 

 

$

13,508

 

 

Less: Amortization of Tax Credit Investments

 

 

(114

)

 

 

(114

)

 

 

(117

)

 

Less: Amortization of Intangible Assets

 

 

(48

)

 

 

(48

)

 

 

(48

)

 

Adjusted Noninterest Expense

 

$

14,021

 

 

$

15,041

 

 

$

13,343

 

 

Net Interest Income

 

 

28,567

 

 

 

32,893

 

 

 

30,180

 

 

Noninterest Income

 

 

1,943

 

 

 

1,738

 

 

 

1,557

 

 

Less: FHLB Advance Prepayment Income

 

 

(299

)

 

 

 

 

 

 

 

Less: (Gain) Loss on Sales of Securities

 

 

56

 

 

 

(30

)

 

 

 

 

Adjusted Operating Revenue

 

$

30,267

 

 

$

34,601

 

 

$

31,737

 

 

Adjusted Efficiency Ratio

 

 

46.3

 

%

 

43.5

 

%

 

42.0

 

%

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

 

 

2023

 

2022

 

2022

 

Tangible Common Equity and Tangible Common Equity/Tangible Assets

 

 

 

 

 

 

 

 

 

 

Total Shareholders' Equity

 

$

402,006

 

 

$

394,064

 

 

$

379,441

 

 

Less: Preferred Stock

 

 

(66,514

)

 

 

(66,514

)

 

 

(66,514

)

 

Total Common Shareholders' Equity

 

 

335,492

 

 

 

327,550

 

 

 

312,927

 

 

Less: Intangible Assets

 

 

(2,866

)

 

 

(2,914

)

 

 

(3,057

)

 

Tangible Common Equity

 

$

332,626

 

 

$

324,636

 

 

$

309,870

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

4,602,899

 

 

$

4,345,662

 

 

$

3,607,920

 

 

Less: Intangible Assets

 

 

(2,866

)

 

 

(2,914

)

 

 

(3,057

)

 

Tangible Assets

 

$

4,600,033

 

 

$

4,342,748

 

 

$

3,604,863

 

 

Tangible Common Equity/Tangible Assets

 

 

7.23

 

%

 

7.48

 

%

 

8.60

 

%

 

 

 

 

 

 

 

 

 

 

 

Tangible Book Value Per Share

 

 

 

 

 

 

 

 

 

 

Book Value Per Common Share

 

$

12.05

 

 

$

11.80

 

 

$

11.12

 

 

Less: Effects of Intangible Assets

 

 

(0.10

)

 

 

(0.11

)

 

 

(0.11

)

 

Tangible Book Value Per Common Share

 

$

11.95

 

 

$

11.69

 

 

$

11.01

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on Average Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

Net Income Available to Common Shareholders

 

$

10,629

 

 

$

12,721

 

 

$

11,249

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Shareholders' Equity

 

$

403,533

 

 

$

387,589

 

 

$

383,024

 

 

Less: Average Preferred Stock

 

 

(66,514

)

 

 

(66,514

)

 

 

(66,514

)

 

Average Common Equity

 

 

337,019

 

 

 

321,075

 

 

 

316,510

 

 

Less: Effects of Average Intangible Assets

 

 

(2,894

)

 

 

(2,941

)

 

 

(3,084

)

 

Average Tangible Common Equity

 

$

334,125

 

 

$

318,134

 

 

$

313,426

 

 

Return on Average Tangible Common Equity

 

 

12.90

 

%

 

15.86

 

%

 

14.56

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

 

2023

 

2022

 

2022

 

2022

 

2022

Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Shareholders' Equity

 

$

402,006

 

 

$

394,064

 

 

$

382,007

 

 

$

374,883

 

 

$

379,441

 

Less: Preferred Stock

 

 

(66,514

)

 

 

(66,514

)

 

 

(66,514

)

 

 

(66,514

)

 

 

(66,514

)

Common Shareholders' Equity

 

 

335,492

 

 

 

327,550

 

 

 

315,493

 

 

 

308,369

 

 

 

312,927

 

Less: Intangible Assets

 

 

(2,866

)

 

 

(2,914

)

 

 

(2,962

)

 

 

(3,009

)

 

 

(3,057

)

Tangible Common Equity

 

$

332,626

 

 

$

324,636

 

 

$

312,531

 

 

$

305,360

 

 

$

309,870

 

 

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