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Bridgewater Bancshares, Inc. Announces First Quarter 2022 Net Income of $12.3 Million, $0.39 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 $12.3 million for the first quarter of 2022, a 2.0% decrease over net income of $12.5 million for the fourth quarter of 2021, and a 14.9% increase over net income of $10.7 million for the first quarter of 2021. Earnings per diluted common share for the first quarter of 2022 were $0.39, flat compared to $0.39 per diluted common share for the fourth quarter of 2021, and a 4.7% increase compared to $0.37 per diluted common share for the same period in 2021.

“Bridgewater began 2022 by continuing the same growth and profitability trends that made 2021 such a successful year,” said Chairman, Chief Executive Officer, and President, Jerry Baack. “During the first quarter, we again produced consistent results highlighted by robust loan growth with strong asset quality, while growing revenue and maintaining one of the lowest efficiency ratios in the industry. We also took an important step toward enhancing organizational efficiencies to support future growth through the successful launch of our new commercial loan origination system in March, which digitizes the end-to-end lending process. While we are not immune to the various economic challenges and uncertainties related to higher interest rates and inflation, we continue to position the organization for success in the current environment by investing in the business, adding top talent and deepening our relationships throughout the Twin Cities market.”

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, 2022 to shareholders of record of the Series A Preferred Stock at the close of business on May 13, 2022.

First Quarter 2022 Financial Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

Nonperforming

 

 

Adjusted

 

ROA

 

 

PPNR ROA (1)

 

 

ROE

 

 

earnings per share

 

 

assets to total assets

 

 

efficiency ratio (1)

 

1.42

%

 

2.12

%

 

12.98

%

 

$

0.39

 

 

0.02

%

 

42.0

%

___________________________________

(1)

 

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

 

Linked-Quarter Highlights

  • Diluted earnings per common share were $0.39 for both the first quarter of 2022 and the fourth quarter of 2021.
  • Annualized return on average assets (ROA) and annualized return on average shareholders’ equity (ROE) for the first quarter of 2022 were 1.42% and 12.98%, compared to ROA and ROE of 1.46% and 13.27%, respectively, for the fourth quarter of 2021. Annualized return on average tangible common equity, a non-GAAP financial measure, was 14.56% for the first quarter of 2022, compared to 14.78% for the fourth quarter of 2021.
  • Record pre-provision net revenue (PPNR), a non-GAAP financial measure, of $18.3 million for the first quarter of 2022, compared to $18.1 million for the fourth quarter of 2021. PPNR ROA, a non-GAAP financial measure, was 2.12% for the first quarter of 2022, compared to 2.11% for the fourth quarter of 2021.
  • Gross loans increased $168.5 million in the first quarter of 2022, or 24.2% annualized, compared to the fourth quarter of 2021. Gross loans, excluding Paycheck Protection Program (PPP) loans, increased $182.3 million in the first quarter of 2022, or 26.5% annualized, compared to the fourth quarter of 2021.
  • Deposits increased $89.4 million in the first quarter of 2022, or 12.3% annualized, compared to the fourth quarter of 2021.
  • Net interest margin (on a fully tax-equivalent basis) was 3.60% for the first quarter of 2022, compared to 3.51% in the fourth quarter of 2021. 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, expanded 9 basis points from 3.25% in the fourth quarter of 2021 to 3.34% in the first quarter of 2022.
  • Adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 42.0% for the first quarter of 2022, compared to 40.3% for the fourth quarter of 2021.
  • A loan loss provision of $1.7 million was recorded in the first quarter of 2022 to support strong organic loan growth. The allowance for loan losses to total loans was 1.40% at March 31, 2022, compared to 1.42% at December 31, 2021.
  • Annualized net loan charge-offs as a percentage of average loans were 0.00% for both the first quarter of 2022 and the fourth quarter of 2021.
  • Tangible book value per share, a non-GAAP financial measure, was $11.01 at March 31, 2022, an increase compared to $10.98 at December 31, 2021, despite the market value depreciation of the securities portfolio due to rising interest rates, which negatively impacted accumulated other comprehensive income.

Year-Over-Year Highlights

  • Net income was $12.3 million for the first quarter of 2022, compared to $10.7 million for the first quarter of 2021, an increase of $1.6 million, or 14.9%.
  • Diluted earnings per common share for the first quarter of 2022 were $0.39, compared to $0.37 for the first quarter of 2021, an increase of 4.7%.
  • Net interest margin (on a fully tax-equivalent basis) was stable at 3.60% for both the first quarter of 2022 and the first quarter of 2021. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure, was also stable at 3.34% for both the first quarter of 2022 and the first quarter of 2021.
  • Gross loans increased $561.8 million at March 31, 2022, or 23.2%, compared to March 31, 2021. Gross loans, excluding PPP loans, increased 31.5%, compared to March 31, 2021.
  • Deposits increased $397.0 million at March 31, 2022, or 15.0%, compared to March 31, 2021.
  • Tangible book value per share, a non-GAAP financial measure, increased 12.3%, or $1.21, to $11.01 at March 31, 2022, compared to $9.80 at March 31, 2021.

     

Key Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

 

 

2022

 

2021

 

2021

 

Per Common Share Data

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

 

$

0.40

 

$

0.41

 

$

0.38

 

Diluted Earnings Per Share

 

 

0.39

 

 

0.39

 

 

0.37

 

Book Value Per Share

 

 

11.12

 

 

11.09

 

 

9.92

 

Tangible Book Value Per Share (1)

 

 

11.01

 

 

10.98

 

 

9.80

 

Basic Weighted Average Shares Outstanding

 

 

28,123,809

 

 

28,004,334

 

 

28,017,366

 

Diluted Weighted Average Shares Outstanding

 

 

29,156,085

 

 

29,038,785

 

 

28,945,212

 

Shares Outstanding at Period End

 

 

28,150,389

 

 

28,206,566

 

 

28,132,929

 

 

 

 

 

 

 

 

 

 

 

 

Selected Performance Ratios

 

 

 

 

 

 

 

 

 

 

Return on Average Assets (Annualized)

 

 

1.42

%

 

1.46

%

 

1.47

%

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

 

 

2.12

 

 

2.11

 

 

2.15

 

Return on Average Shareholders' Equity (Annualized)

 

 

12.98

 

 

13.27

 

 

15.87

 

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

 

 

14.56

 

 

14.78

 

 

16.06

 

Yield on Interest Earning Assets

 

 

4.13

 

 

4.06

 

 

4.31

 

Yield on Total Loans, Gross

 

 

4.45

 

 

4.49

 

 

4.74

 

Cost of Interest Bearing Liabilities

 

 

0.80

 

 

0.86

 

 

1.04

 

Cost of Total Deposits

 

 

0.43

 

 

0.45

 

 

0.59

 

Net Interest Margin (2)

 

 

3.60

 

 

3.51

 

 

3.60

 

Core Net Interest Margin (1)(2)

 

 

3.34

 

 

3.25

 

 

3.34

 

Efficiency Ratio (1)

 

 

42.4

 

 

40.8

 

 

41.2

 

Adjusted Efficiency Ratio (1)

 

 

42.0

 

 

40.3

 

 

40.7

 

Noninterest Expense to Average Assets (Annualized)

 

 

1.56

 

 

1.45

 

 

1.51

 

Adjusted Noninterest Expense to Average Assets (Annualized) (1)

 

 

1.55

 

 

1.43

 

 

1.49

 

Loan to Deposit Ratio

 

 

98.4

 

 

95.7

 

 

91.9

 

Core Deposits to Total Deposits (3)

 

 

84.3

 

 

85.4

 

 

83.5

 

Tangible Common Equity to Tangible Assets (1)

 

 

8.60

 

 

8.91

 

 

8.99

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios (Bank Only) (4)

 

 

 

 

 

 

 

 

 

 

Tier 1 Leverage Ratio

 

 

11.13

%

 

11.09

%

 

10.65

%

Common Equity Tier 1 Risk-based Capital Ratio

 

 

11.42

 

 

11.69

 

 

12.08

 

Tier 1 Risk-based Capital Ratio

 

 

11.42

 

 

11.69

 

 

12.08

 

Total Risk-based Capital Ratio

 

 

12.65

 

 

12.94

 

 

13.33

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios (Consolidated) (4)

 

 

 

 

 

 

 

 

 

 

Tier 1 Leverage Ratio

 

 

10.78

%

 

10.82

%

 

9.11

%

Common Equity Tier 1 Risk-based Capital Ratio

 

 

9.13

 

 

9.36

 

 

10.34

 

Tier 1 Risk-based Capital Ratio

 

 

11.08

 

 

11.43

 

 

10.34

 

Total Risk-based Capital Ratio

 

 

15.02

 

 

15.55

 

 

14.46

 

____________________________

(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,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

(dollars in thousands)

 

2022

 

2021

 

2021

 

2021

 

2021

Selected Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

3,607,920

 

$

3,477,659

 

$

3,389,125

 

$

3,162,612

 

$

3,072,359

Total Loans, Gross

 

 

2,987,967

 

 

2,819,472

 

 

2,712,012

 

 

2,594,186

 

 

2,426,123

Allowance for Loan Losses

 

 

41,692

 

 

40,020

 

 

38,901

 

 

37,591

 

 

35,987

Goodwill and Other Intangibles

 

 

3,057

 

 

3,105

 

 

3,153

 

 

3,200

 

 

3,248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

3,035,611

 

 

2,946,237

 

 

2,854,157

 

 

2,720,906

 

 

2,638,654

Tangible Common Equity (1)

 

 

309,870

 

 

309,653

 

 

298,135

 

 

287,630

 

 

275,923

Total Shareholders' Equity

 

 

379,441

 

 

379,272

 

 

367,803

 

 

290,830

 

 

279,171

Average Total Assets - Quarter-to-Date

 

 

3,513,798

 

 

3,403,270

 

 

3,332,301

 

 

3,076,712

 

 

2,940,262

Average Shareholders' Equity - Quarter-to-Date

 

 

383,024

 

 

374,035

 

 

330,604

 

 

286,311

 

 

272,729

____________________________

(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)

 

2022

 

2021

 

2021

Selected Income Statement Data

 

 

 

 

 

 

 

 

 

Interest Income

 

$

34,694

 

 

$

33,775

 

 

$

30,440

Interest Expense

 

 

4,514

 

 

 

4,622

 

 

 

5,045

Net Interest Income

 

 

30,180

 

 

 

29,153

 

 

 

25,395

Provision for Loan Losses

 

 

1,675

 

 

 

1,150

 

 

 

1,100

Net Interest Income after Provision for Loan Losses

 

 

28,505

 

 

 

28,003

 

 

 

24,295

Noninterest Income

 

 

1,557

 

 

 

1,288

 

 

 

1,008

Noninterest Expense

 

 

13,508

 

 

 

12,459

 

 

 

10,923

Income Before Income Taxes

 

 

16,554

 

 

 

16,832

 

 

 

14,380

Provision for Income Taxes

 

 

4,292

 

 

 

4,318

 

 

 

3,709

Net Income

 

 

12,262

 

 

 

12,514

 

 

 

10,671

Preferred Stock Dividends

 

 

(1,013

)

 

 

(1,171

)

 

 

Net Income Available to Common Shareholders

 

$

11,249

 

 

$

11,343

 

 

$

10,671

Income Statement

Net Interest Income

Net interest income was $30.2 million for the first quarter of 2022, an increase of $1.0 million, or 3.5%, from $29.2 million in the fourth quarter of 2021, and an increase of $4.8 million, or 18.8%, from $25.4 million in the first quarter of 2021. The linked-quarter and year-over-year increases in net interest income were primarily due to growth in average interest earning assets and lower rates paid on deposits, offset partially by declining yields on loans and lower PPP fee recognition. Average interest earning assets were $3.43 billion for the first quarter of 2022, an increase of $110.2 million, or 3.3%, from $3.32 billion for the fourth quarter of 2021, and an increase of $547.7 million, or 19.0%, from $2.88 billion for the first quarter of 2021. The linked-quarter and year-over-year increases in average interest earning assets were primarily due to strong organic growth in the loan portfolio and continued 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 2022 was 3.60%, a 9 basis point increase from 3.51% in the fourth quarter of 2021, and no change from 3.60% in the first quarter of 2021. 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 2022 was 3.34%, a 9 basis point increase from 3.25% in the fourth quarter of 2021, and no change from 3.34% in the first quarter of 2021. The increase in core net interest margin compared to the fourth quarter of 2021 was primarily due to the deployment of cash into higher yielding assets and the continued reduction of funding costs. The Company remains focused on the impact of anticipated interest rate hikes and the evolving shape of the yield curve throughout 2022.

As the PPP loan portfolio pays down, the recognition of fees associated with the originations has decreased, which impacts comparability between periods. The Company recognized $519,000 of PPP origination fees during the first quarter of 2022, compared to $958,000 during the fourth quarter of 2021. Remaining PPP origination fees to be recognized as of March 31, 2022 were $379,000.

The following table summarizes PPP loan originations and net origination fees as of March 31, 2022:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated

 

Outstanding

 

Program Lifetime

 

 

Number

 

Principal

 

Number

 

Principal

 

Net Origination

 

Net Origination

(dollars in thousands)

 

of Loans

 

Balance

 

of Loans

 

Balance

 

Fees Generated

 

Fees Earned

Round One PPP Loans

 

 

1,200

 

$

181,600

 

 

4

 

$

293

 

$

5,706

 

$

5,706

Round Two PPP Loans

 

 

651

 

 

78,386

 

 

59

 

 

12,016

 

 

3,544

 

 

3,165

Totals

 

 

1,851

 

$

259,986

 

 

63

 

$

12,309

 

$

9,250

 

$

8,871

Interest income was $34.7 million for the first quarter of 2022, an increase of $919,000, or 2.7%, from $33.8 million in the fourth quarter of 2021, and an increase of $4.3 million, or 14.0%, from $30.4 million in the first quarter of 2021. The yield on interest earning assets (on a fully tax-equivalent basis) was 4.13% in the first quarter of 2022, compared to 4.06% in the fourth quarter of 2021, and 4.31% in the first quarter of 2021. The linked-quarter expansion in the yield on interest earning assets was primarily due to the decrease in average cash balances, which were deployed to support growth of the higher yielding loan and investment securities portfolios. The year-over-year decline in the yield on interest earning assets was primarily due to the historically low interest rate environment resulting in lower loan yields.

Loan interest income and loan fees remain the primary contributing factors to the changes in yield on interest earning assets. The aggregate loan yield, excluding PPP loans, decreased to 4.40% in the first quarter of 2022, which was 1 basis point lower than 4.41% in the fourth quarter of 2021, and 32 basis points lower than 4.72% in the first quarter of 2021. While loan fees have maintained a relatively stable contribution to the aggregate loan yield, the historically low yield curve has resulted in a declining core yield on loans in comparison to both prior periods.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

September 30, 2021

 

 

June 30, 2021

 

 

March 31, 2021

 

Interest

 

4.15

%

 

4.20

%

 

4.28

%

 

4.37

%

 

4.50

%

Fees

 

0.25

 

 

0.21

 

 

0.23

 

 

0.17

 

 

0.22

 

Yield on Loans, Excluding PPP Loans

 

4.40

%

 

4.41

%

 

4.51

%

 

4.54

%

 

4.72

%

Interest expense was $4.5 million for the first quarter of 2022, a decrease of $108,000, or 2.3%, from $4.6 million in the fourth quarter of 2021, and a decrease of $531,000, or 10.5%, from $5.0 million in the first quarter of 2021. The cost of interest bearing liabilities declined 6 basis points on a linked-quarter basis from 0.86% in the fourth quarter of 2021 to 0.80% in the first quarter of 2022, primarily due to lower rates paid on deposits. On a year-over-year basis, the cost of interest bearing liabilities decreased 24 basis points from 1.04% in the first quarter of 2021 to 0.80% in the first quarter of 2022, primarily due to lower rates paid on deposits, and the payoff of the Company’s notes payable, offset partially by strong growth of interest bearing deposits and the issuance of additional subordinated debentures.

Interest expense on deposits was $3.2 million for the first quarter of 2022, a decrease of $83,000, or 2.6%, from $3.2 million in the fourth quarter of 2021, and a decrease of $513,000, or 14.0%, from $3.7 million in the first quarter of 2021. The cost of total deposits declined 2 basis points on a linked-quarter basis from 0.45% in the fourth quarter of 2021, and declined 16 basis points on a year-over-year basis from 0.59% in the first quarter of 2021, to 0.43% in the first quarter of 2022, primarily due to deposit rate cuts consistent with a lower rate environment and the continued downward repricing of time deposits.

A summary of the Company’s average balances, interest yields and rates, and net interest margin for the three months ended March 31, 2022, December 31, 2021, and March 31, 2021 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

March 31, 2022

 

December 31, 2021

 

March 31, 2021

 

 

 

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

 

$

80,497

 

$

26

 

 

0.13

%

$

146,744

 

$

65

 

 

0.18

%

$

105,477

 

$

34

 

 

0.13

%

Investment Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable Investment Securities

 

 

373,021

 

 

2,255

 

 

2.45

 

 

341,325

 

 

1,893

 

 

2.20

 

 

301,680

 

 

1,723

 

 

2.32

 

Tax-Exempt Investment Securities (1)

 

 

71,591

 

 

779

 

 

4.41

 

 

71,602

 

 

782

 

 

4.33

 

 

80,963

 

 

881

 

 

4.41

 

Total Investment Securities

 

 

444,612

 

 

3,034

 

 

2.77

 

 

412,927

 

 

2,675

 

 

2.57

 

 

382,643

 

 

2,604

 

 

2.76

 

Paycheck Protection Program Loans (2)

 

 

18,140

 

 

563

 

 

12.58

 

 

39,900

 

 

1,057

 

 

10.51

 

 

148,881

 

 

1,864

 

 

5.08

 

Loans (1)(2)

 

 

2,881,845

 

 

31,275

 

 

4.40

 

 

2,715,722

 

 

30,154

 

 

4.41

 

 

2,241,038

 

 

26,074

 

 

4.72

 

Total Loans

 

 

2,899,985

 

 

31,838

 

 

4.45

 

 

2,755,622

 

 

31,211

 

 

4.49

 

 

2,389,919

 

 

27,938

 

 

4.74

 

Federal Home Loan Bank Stock

 

 

5,680

 

 

54

 

 

3.84

 

 

5,310

 

 

59

 

 

4.39

 

 

5,045

 

 

78

 

 

6.28

 

Total Interest Earning Assets

 

 

3,430,774

 

 

34,952

 

 

4.13

%

 

3,320,603

 

 

34,010

 

 

4.06

%

 

2,883,084

 

 

30,654

 

 

4.31

%

Noninterest Earning Assets

 

 

83,024

 

 

 

 

 

 

 

82,667

 

 

 

 

 

 

 

57,178

 

 

 

 

 

 

Total Assets

 

$

3,513,798

 

 

 

 

 

 

$

3,403,270

 

 

 

 

 

 

$

2,940,262

 

 

 

 

 

 

Interest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Bearing Transaction Deposits

 

$

566,279

 

$

597

 

 

0.43

%

$

499,475

 

$

548

 

 

0.43

%

$

364,017

 

 

422

 

 

0.47

%

Savings and Money Market Deposits

 

 

876,580

 

 

918

 

 

0.42

 

 

803,848

 

 

876

 

 

0.43

 

 

724,104

 

 

1,008

 

 

0.56

 

Time Deposits

 

 

288,914

 

 

745

 

 

1.05

 

 

299,823

 

 

830

 

 

1.10

 

 

344,715

 

 

1,267

 

 

1.49

 

Brokered Deposits

 

 

406,648

 

 

898

 

 

0.90

 

 

404,438

 

 

987

 

 

0.97

 

 

402,694

 

 

974

 

 

0.98

 

Total Interest Bearing Deposits

 

 

2,138,421

 

 

3,158

 

 

0.60

 

 

2,007,584

 

 

3,241

 

 

0.64

 

 

1,835,530

 

 

3,671

 

 

0.81

 

Federal Funds Purchased

 

 

10,600

 

 

9

 

 

0.35

 

 

10

 

 

 

 

0.67

 

 

 

 

 

 

 

Notes Payable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,722

 

 

61

 

 

3.66

 

FHLB Advances

 

 

42,500

 

 

150

 

 

1.43

 

 

44,185

 

 

162

 

 

1.46

 

 

57,500

 

 

228

 

 

1.61

 

Subordinated Debentures

 

 

92,286

 

 

1,197

 

 

5.26

 

 

92,189

 

 

1,219

 

 

5.25

 

 

73,776

 

 

1,085

 

 

5.96

 

Total Interest Bearing Liabilities

 

 

2,283,807

 

 

4,514

 

 

0.80

%

 

2,143,968

 

 

4,622

 

 

0.86

%

 

1,973,528

 

 

5,045

 

 

1.04

%

Noninterest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Bearing Transaction Deposits

 

 

822,488

 

 

 

 

 

 

 

861,473

 

 

 

 

 

 

 

676,173

 

 

 

 

 

 

Other Noninterest Bearing Liabilities

 

 

24,479

 

 

 

 

 

 

 

23,794

 

 

 

 

 

 

 

17,832

 

 

 

 

 

 

Total Noninterest Bearing Liabilities

 

 

846,967

 

 

 

 

 

 

 

885,267

 

 

 

 

 

 

 

694,005

 

 

 

 

 

 

Shareholders' Equity

 

 

383,024

 

 

 

 

 

 

 

374,035

 

 

 

 

 

 

 

272,729

 

 

 

 

 

 

Total Liabilities and Shareholders' Equity

 

$

3,513,798

 

 

 

 

 

 

$

3,403,270

 

 

 

 

 

 

$

2,940,262

 

 

 

 

 

 

Net Interest Income / Interest Rate Spread

 

 

 

 

 

30,438

 

 

3.33

%

 

 

 

 

29,388

 

 

3.20

%

 

 

 

 

25,609

 

 

3.27

%

Net Interest Margin (3)

 

 

 

 

 

 

 

3.60

%

 

 

 

 

 

 

3.51

%

 

 

 

 

 

 

3.60

%

Taxable Equivalent Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-Exempt Investment Securities and Loans

 

 

 

 

 

(258

)

 

 

 

 

 

 

 

(235

)

 

 

 

 

 

 

 

(214

)

 

 

 

Net Interest Income

 

 

 

 

$

30,180

 

 

 

 

 

 

 

$

29,153

 

 

 

 

 

 

 

$

25,395

 

 

 

 

___________________________

(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 Loan Losses

The provision for loan losses was $1.7 million for the first quarter of 2022, an increase of $525,000 from $1.2 million for the fourth quarter of 2021, and an increase of $575,000 from $1.1 million for the first quarter of 2021. The provision recorded in the first quarter of 2022 was primarily attributable to the robust growth of the loan portfolio. The allowance for loan losses to total loans was 1.40% at March 31, 2022, compared to 1.42% at December 31, 2021, and 1.48% at March 31, 2021. The allowance for loan losses to total loans, excluding PPP loans, was 1.40% at March 31, 2022, compared to 1.43% at December 31, 2021, and 1.59% at March 31, 2021.

As an emerging growth company, the Company is not subject to Accounting Standards Update No. 2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments,“ or CECL, until January 1, 2023.

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

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

(dollars in thousands)

 

2022

 

2021

 

2021

Balance at Beginning of Period

 

$

40,020

 

 

$

38,901

 

 

$

34,841

 

Provision for Loan Losses

 

 

1,675

 

 

 

1,150

 

 

 

1,100

 

Charge-offs

 

 

(15

)

 

 

(37

)

 

 

(14

)

Recoveries

 

 

12

 

 

 

6

 

 

 

60

 

Balance at End of Period

 

$

41,692

 

 

$

40,020

 

 

$

35,987

 

Noninterest Income

Noninterest income was $1.6 million for the first quarter of 2022, an increase of $269,000 from $1.3 million for the fourth quarter of 2021, and an increase of $549,000 from $1.0 million for the first quarter of 2021. The linked-quarter increase was primarily due to increased swap fees, offset partially by a decrease in letter of credit fees. The year-over-year increase was primarily due to increased swap fees and bank-owned life insurance income.

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)

 

2022

 

2021

 

2021

Noninterest Income:

 

 

 

 

 

 

 

 

 

Customer Service Fees

 

$

281

 

$

274

 

$

234

Letter of Credit Fees

 

 

242

 

 

541

 

 

327

Debit Card Interchange Fees

 

 

133

 

 

149

 

 

130

Swap Fees

 

 

557

 

 

 

 

Bank-Owned Life Insurance

 

 

148

 

 

150

 

 

Other Income

 

 

196

 

 

174

 

 

317

Totals

 

$

1,557

 

$

1,288

 

$

1,008

Noninterest Expense

Noninterest expense was $13.5 million for the first quarter of 2022, an increase of $1.0 million from $12.5 million for the fourth quarter of 2021, and an increase of $2.6 million from $10.9 million for the first quarter of 2021. The linked-quarter increase was primarily due to an increase in salaries and employee benefits, occupancy and equipment, and marketing and advertising expenses, offset partially by lower amortization of tax credit investments. The linked-quarter increase in salaries and employee benefits was impacted by the timing of merit increases, which all went into effect during the first quarter of 2022, a change from prior years in which merit increases occurred throughout the year based on service anniversary dates. The year-over-year increase was primarily attributable to increased salaries and employee benefits, professional and consulting fees, technology, and marketing and advertising expenses.

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)

 

2022

 

2022

 

2021

Noninterest Expense:

 

 

 

 

 

 

 

 

 

Salaries and Employee Benefits

 

$

8,694

 

$

7,966

 

$

7,102

Occupancy and Equipment

 

 

1,085

 

 

939

 

 

1,055

FDIC Insurance Assessment

 

 

360

 

 

345

 

 

315

Data Processing

 

 

297

 

 

306

 

 

291

Professional and Consulting Fees

 

 

696

 

 

719

 

 

544

Information Technology and Telecommunications

 

 

578

 

 

554

 

 

462

Marketing and Advertising

 

 

626

 

 

469

 

 

286

Intangible Asset Amortization

 

 

48

 

 

48

 

 

48

Amortization of Tax Credit Investments

 

 

117

 

 

152

 

 

118

Other Expense

 

 

1,007

 

 

961

 

 

702

Totals

 

$

13,508

 

$

12,459

 

$

10,923

The Company continues to add key talent across the organization, reaching 229 full-time equivalent employees at March 31, 2022, compared to 220 employees at December 31, 2021, and 200 employees at March 31, 2021.

The efficiency ratio, a non-GAAP financial measure, was 42.4% for the first quarter of 2022, compared to 40.8% for the fourth quarter of 2021, and 41.2% for the first quarter of 2021. Excluding the impact of certain non-routine income and expenses, the adjusted efficiency ratio, a non-GAAP financial measure, was 42.0% for the first quarter of 2022, 40.3% for the fourth quarter of 2021 and 40.7% for the first quarter of 2021.

Income Taxes

The effective combined federal and state income tax rate for the first quarter of 2022 was 25.9%, a slight increase from 25.7% for the fourth quarter of 2021 and a slight increase from 25.8% for the first quarter of 2021.

Balance Sheet

Total assets at March 31, 2022 were $3.61 billion, a 3.7% increase from $3.48 billion at December 31, 2021, and a 17.4% increase from $3.07 billion at March 31, 2021. The linked-quarter increase in total assets was primarily due to strong organic loan growth, offset partially by a decrease in cash and cash equivalents. The year-over-year increase in total assets was primarily due to robust organic loan growth and the continued purchases of investment securities, offset partially by a decrease in cash and cash equivalents.

Total gross loans at March 31, 2022 were $2.99 billion, an increase of $168.5 million, or 6.0%, over total gross loans of $2.82 billion at December 31, 2021, and an increase of $561.8 million, or 23.2%, over total gross loans of $2.43 billion at March 31, 2021. The increase in the loan portfolio during the first quarter of 2022 was primarily due to growth in the construction and land development, multifamily and CRE nonowner occupied segments, offset partially by the payoff of PPP loans. When excluding PPP loans, gross loans grew $182.3 million during the first quarter of 2022, or 26.5% on an annualized basis. The Company's continued strong loan growth has been driven by the expansion of its talented lending teams, new client acquisitions, the strong, growing brand of the Bank in the Twin Cities market and the M&A-related market disruption in the Twin Cities resulting in client and banker acquisition opportunities.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2022

 

December 31, 2021

 

September 30, 2021

 

June 30, 2021

 

March 31, 2021

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

363,290

 

 

$

360,169

 

 

$

350,081

 

 

$

321,474

 

 

$

301,023

 

 

Paycheck Protection Program

 

 

12,309

 

 

 

26,162

 

 

 

54,190

 

 

 

99,072

 

 

 

163,258

 

 

Construction and Land Development

 

 

321,131

 

 

 

281,474

 

 

 

257,167

 

 

 

251,573

 

 

 

193,372

 

 

Real Estate Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 - 4 Family Mortgage

 

 

312,201

 

 

 

305,317

 

 

 

290,535

 

 

 

277,943

 

 

 

294,964

 

 

Multifamily

 

 

1,012,623

 

 

 

910,243

 

 

 

865,172

 

 

 

790,275

 

 

 

665,415

 

 

CRE Owner Occupied

 

 

117,969

 

 

 

111,096

 

 

 

101,834

 

 

 

87,507

 

 

 

79,665

 

 

CRE Nonowner Occupied

 

 

840,463

 

 

 

818,569

 

 

 

786,271

 

 

 

758,101

 

 

 

720,396

 

 

Total Real Estate Mortgage Loans

 

 

2,283,256

 

 

 

2,145,225

 

 

 

2,043,812

 

 

 

1,913,826

 

 

 

1,760,440

 

 

Consumer and Other

 

 

7,981

 

 

 

6,442

 

 

 

6,762

 

 

 

8,241

 

 

 

8,030

 

 

Total Loans, Gross

 

 

2,987,967

 

 

 

2,819,472

 

 

 

2,712,012

 

 

 

2,594,186

 

 

 

2,426,123

 

 

Allowance for Loan Losses

 

 

(41,692

)

 

 

(40,020

)

 

 

(38,901

)

 

 

(37,591

)

 

 

(35,987

)

 

Net Deferred Loan Fees

 

 

(9,065

)

 

 

(9,535

)

 

 

(10,199

)

 

 

(11,450

)

 

 

(11,273

)

 

Total Loans, Net

 

$

2,937,210

 

 

$

2,769,917

 

 

$

2,662,912

 

 

$

2,545,145

 

 

$

2,378,863

 

 

Total deposits at March 31, 2022 were $3.04 billion, an increase of $89.4 million, or 3.0%, over total deposits of $2.95 billion at December 31, 2021, and an increase of $397.0 million, or 15.0%, over total deposits of $2.64 billion at March 31, 2021. Deposit growth in the first quarter of 2022 was primarily due to an increase in interest bearing transaction deposits, savings and money market deposits, and brokered deposits, offset partially by declines in noninterest bearing transaction deposits and time deposits. On a year-over-year basis, noninterest bearing transaction deposits increased $122.5 million, or 17.2%, compared to March 31, 2021. Similar to the loan portfolio, the growth in core deposits has been a result of successful new client and banker acquisition initiatives and the strong, growing brand of the Bank in the Twin Cities market. Given the likelihood of higher interest rates, management believes deposits could experience fluctuations in future periods.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2022

 

December 31, 2021

 

September 30, 2021

 

June 30, 2021

 

March 31, 2021

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Bearing Transaction Deposits

 

$

835,482

 

$

875,084

 

$

846,490

 

$

758,023

 

$

712,999

 

Interest Bearing Transaction Deposits

 

 

598,402

 

 

544,789

 

 

488,785

 

 

432,123

 

 

433,344

 

Savings and Money Market Deposits

 

 

890,926

 

 

863,567

 

 

791,861

 

 

761,485

 

 

791,583

 

Time Deposits

 

 

286,674

 

 

293,474

 

 

309,824

 

 

321,857

 

 

344,581

 

Brokered Deposits

 

 

424,127

 

 

369,323

 

 

417,197

 

 

447,418

 

 

356,147

 

Total Deposits

 

$

3,035,611

 

$

2,946,237

 

$

2,854,157

 

$

2,720,906

 

$

2,638,654

 

Capital

Total shareholders’ equity at March 31, 2022 was $379.4 million, a slight increase of $169,000 over total shareholders’ equity of $379.3 million at December 31, 2021, and an increase of $100.3 million, or 35.9%, over total shareholders’ equity of $279.2 million at March 31, 2021. The linked-quarter increase was due to net income retained and unrealized gains in the derivatives portfolio, offset by stock repurchases made under the Company’s stock repurchase program and unrealized losses in the securities portfolio. The year-over-year increase was due to net income retained, the issuance of preferred stock, and unrealized gains in the derivatives portfolio, offset partially by an increase in stock repurchases made under the Company’s stock repurchase program and unrealized losses in the securities portfolio.

During the first quarter of 2022, the Company repurchased 71,038 shares of its common stock. Shares were repurchased at a weighted average price of $16.95 for a total of $1.2 million. The Company remains committed to maintaining strong capital levels while enhancing shareholder value as it strategically executes its stock repurchase program in this fluid economic environment.

Tangible book value per share, a non-GAAP financial measure, was $11.01 as of March 31, 2022, an increase of 0.3% from $10.98 as of December 31, 2021, and an increase of 12.3% from $9.80 as of March 31, 2021. The linked-quarter increase occurred despite the market value depreciation of the securities portfolio due to increases in interest rates, which negatively impacted accumulated other comprehensive income. Tangible common equity as a percentage of tangible assets, a non-GAAP financial measure, was 8.60% at March 31, 2022, compared to 8.91% at December 31, 2021, and 8.99% at March 31, 2021.

Asset Quality

Annualized net charge-offs (recoveries) as a percent of average loans for both the first quarter of 2022 and fourth quarter of 2021 were 0.00%, compared to (0.01)% for the first quarter of 2021. At March 31, 2022, the Company’s nonperforming assets, which include nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $706,000, or 0.02% of total assets, as compared to $722,000, or 0.02% of total assets at December 31, 2021, and $770,000 or 0.03% of total assets at March 31, 2021.

The Company has increased oversight and analysis of all segments of the loan portfolio in response to the COVID-19 pandemic, especially in vulnerable industries such as hospitality and restaurants, to proactively monitor evolving credit risk. Loans that have potential weaknesses that warrant a watchlist risk rating at March 31, 2022 totaled $46.8 million, compared to $49.3 million at December 31, 2021, and $58.3 million at March 31, 2021. Loans that warranted a substandard risk rating at March 31, 2022, totaled $18.6 million, compared to $22.6 million at December 31, 2021, and $6.7 million at March 31, 2021.

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)

 

2022

 

2021

 

2021

 

2021

 

2021

 

Selected Asset Quality Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans 30-89 Days Past Due

 

$

13

 

$

49

 

$

18

 

$

 

$

 

 

Loans 30-89 Days Past Due to Total Loans

 

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

 

%

Nonperforming Loans

 

$

706

 

$

722

 

$

734

 

$

761

 

$

770

 

 

Nonperforming Loans to Total Loans

 

 

0.02

%

 

0.03

%

 

0.03

%

 

0.03

%

 

0.03

 

%

Foreclosed Assets

 

$

 

$

 

$

 

$

 

$

 

 

Nonaccrual Loans to Total Loans

 

 

0.02

%

 

0.03

%

 

0.03

%

 

0.03

%

 

0.03

 

%

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

 

 

0.02

 

 

0.03

 

 

0.03

 

 

0.03

 

 

0.03

 

 

Nonperforming Assets (1)

 

$

706

 

$

722

 

$

734

 

$

761

 

$

770

 

 

Nonperforming Assets to Total Assets (1)

 

 

0.02

%

 

0.02

%

 

0.02

%

 

0.02

%

 

0.03

 

%

Allowance for Loan Losses to Total Loans

 

 

1.40

 

 

1.42

 

 

1.43

 

 

1.45

 

 

1.48

 

 

Allowance for Loan Losses to Total Loans, Excluding PPP Loans

 

 

1.40

 

 

1.43

 

 

1.46

 

 

1.50

 

 

1.59

 

 

Allowance for Loans Losses to Nonaccrual Loans

 

 

5,905.38

 

 

5,542.94

 

 

5,299.86

 

 

4,939.68

 

 

4,673.64

 

 

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

 

 

0.00

 

 

0.00

 

 

0.00

 

 

0.00

 

 

(0.01

)

 

_______________________________

(1)

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

 

The Company developed programs for clients who experienced business and personal disruptions due to the COVID-19 pandemic by providing interest-only modifications, loan payment deferrals, and extended amortization modifications. In accordance with interagency regulatory guidance and the CARES Act, qualifying loans modified in response to the COVID-19 pandemic are not considered troubled debt restructurings. The Company had 10 modified loans totaling $30.4 million outstanding as of March 31, 2022, representing 1.2% of the total loan portfolio, excluding PPP loans, which is down from $35.0 million at December 31, 2021.

The following table presents a rollforward of loan modification activity, by modification type, from December 31, 2021 to March 31, 2022:

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

Interest-Only

 

Extended Amortization

 

Total

Principal Balance - December 31, 2021

 

$

30,249

 

 

$

4,740

 

 

$

34,989

 

Modification Expired

 

 

(4,011

)

 

 

 

 

 

(4,011

)

Net Principal Advances (Payments)

 

 

(563

)

 

 

(25

)

 

 

(588

)

Principal Balance - March 31, 2022

 

$

25,675

 

 

$

4,715

 

 

$

30,390

 

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 $3.6 billion and seven branches as of March 31, 2022, 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: the negative effects of the ongoing COVID-19 pandemic, including its effects on the economic environment, our clients and our operations, including due to supply chain disruptions, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic; loan concentrations in our portfolio; the overall health of the local and national real estate market; our ability to successfully manage credit risk; business and economic conditions generally and in the financial services industry, nationally and within our market area, including rising rates of inflation; our ability to maintain an adequate level of allowance for loan losses; new or revised accounting standards, including as a result of the future implementation of the Current Expected Credit Loss standard; the concentration of large loans to certain borrowers; the concentration of large deposits from certain clients; our ability to successfully manage liquidity risk, especially in light of recent excess liquidity at the Bank; our dependence on non-core funding sources and 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 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 changes to federal and state corporate tax rates; interest rate risk, including the effects of anticipated rate increases by the Federal Reserve; fluctuations in the values of the securities held in our securities portfolio; 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 we recorded in connection with our past acquisition; changes to U.S. or state tax laws, regulations and guidance, including recent proposals to increase the federal corporate tax rate; 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. We undertake 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,

 

 

2022

 

2021

 

2021

 

 

(Unaudited)

 

 

 

 

(Unaudited)

ASSETS

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

71,887

 

 

$

143,473

 

$

200,896

Bank-Owned Certificates of Deposit

 

 

1,139

 

 

 

1,876

 

 

2,369

Securities Available for Sale, at Fair Value

 

 

459,090

 

 

 

439,362

 

 

397,326

Loans, Net of Allowance for Loan Losses of $41,692 at March 31, 2022 (unaudited), $40,020 at December 31, 2021 and $35,987 at March 31, 2021 (unaudited)

 

 

2,937,210

 

 

 

2,769,917

 

 

2,378,863

Federal Home Loan Bank (FHLB) Stock, at Cost

 

 

6,846

 

 

 

5,242

 

 

5,820

Premises and Equipment, Net

 

 

49,044

 

 

 

49,395

 

 

51,297

Accrued Interest

 

 

9,596

 

 

 

9,186

 

 

8,718

Goodwill

 

 

2,626

 

 

 

2,626

 

 

2,626

Other Intangible Assets, Net

 

 

431

 

 

 

479

 

 

622

Other Assets

 

 

70,051

 

 

 

56,103

 

 

23,822

Total Assets

 

$

3,607,920

 

 

$

3,477,659

 

$

3,072,359

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Noninterest Bearing

 

$

835,482

 

 

$

875,084

 

$

712,999

Interest Bearing

 

 

2,200,129

 

 

 

2,071,153

 

 

1,925,655

Total Deposits

 

 

3,035,611

 

 

 

2,946,237

 

 

2,638,654

Federal Funds Purchased

 

 

23,000

 

 

 

 

 

FHLB Advances

 

 

42,500

 

 

 

42,500

 

 

57,500

Subordinated Debentures, Net of Issuance Costs

 

 

92,349

 

 

 

92,239

 

 

73,826

Accrued Interest Payable

 

 

1,576

 

 

 

1,409

 

 

1,736

Other Liabilities

 

 

33,443

 

 

 

16,002

 

 

21,472

Total Liabilities

 

 

3,228,479

 

 

 

3,098,387

 

 

2,793,188

 

 

 

 

 

 

 

 

 

 

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, 2022 (unaudited), 27,600 at December 31, 2021 and -0- at March 31, 2021 (unaudited)

 

 

66,514

 

 

 

66,514

 

 

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

 

 

 

 

 

 

 

 

 

Common Stock - Issued and Outstanding 28,150,389 at March 31, 2022 (unaudited), 28,206,566 at December 31, 2021 and 28,132,929 at March 31, 2021 (unaudited)

 

 

282

 

 

 

282

 

 

281

Additional Paid-In Capital

 

 

103,756

 

 

 

104,123

 

 

104,087

Retained Earnings

 

 

210,596

 

 

 

199,347

 

 

165,502

Accumulated Other Comprehensive Income (Loss)

 

 

(1,707

)

 

 

9,006

 

 

9,301

Total Shareholders' Equity

 

 

379,441

 

 

 

379,272

 

 

279,171

Total Liabilities and Equity

 

$

3,607,920

 

 

$

3,477,659

 

$

3,072,359

 

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,

 

 

2022

 

2021

 

2021

INTEREST INCOME

 

 

 

 

 

 

 

 

 

Loans, Including Fees

 

$

31,744

 

 

$

31,140

 

 

$

27,908

Investment Securities

 

 

2,870

 

 

 

2,511

 

 

 

2,420

Other

 

 

80

 

 

 

124

 

 

 

112

Total Interest Income

 

 

34,694

 

 

 

33,775

 

 

 

30,440

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

Deposits

 

 

3,158

 

 

 

3,241

 

 

 

3,671

Notes Payable

 

 

 

 

 

 

 

 

61

FHLB Advances

 

 

150

 

 

 

162

 

 

 

228

Subordinated Debentures

 

 

1,197

 

 

 

1,219

 

 

 

1,085

Federal Funds Purchased

 

 

9

 

 

 

 

 

 

Total Interest Expense

 

 

4,514

 

 

 

4,622

 

 

 

5,045

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

 

 

30,180

 

 

 

29,153

 

 

 

25,395

Provision for Loan Losses

 

 

1,675

 

 

 

1,150

 

 

 

1,100

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME AFTER

 

 

 

 

 

 

 

 

 

PROVISION FOR LOAN LOSSES

 

 

28,505

 

 

 

28,003

 

 

 

24,295

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

Customer Service Fees

 

 

281

 

 

 

274

 

 

 

234

Other Income

 

 

1,276

 

 

 

1,014

 

 

 

774

Total Noninterest Income

 

 

1,557

 

 

 

1,288

 

 

 

1,008

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

Salaries and Employee Benefits

 

 

8,694

 

 

 

7,966

 

 

 

7,102

Occupancy and Equipment

 

 

1,085

 

 

 

939

 

 

 

1,055

Other Expense

 

 

3,729

 

 

 

3,554

 

 

 

2,766

Total Noninterest Expense

 

 

13,508

 

 

 

12,459

 

 

 

10,923

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

16,554

 

 

 

16,832

 

 

 

14,380

Provision for Income Taxes

 

 

4,292

 

 

 

4,318

 

 

 

3,709

NET INCOME

 

 

12,262

 

 

 

12,514

 

 

 

10,671

Preferred Stock Dividends

 

 

(1,013

)

 

 

(1,171

)

 

 

NET INCOME TO COMMON SHAREHOLDERS

 

$

11,249

 

 

$

11,343

 

 

$

10,671

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

Basic

 

$

0.40

 

 

$

0.41

 

 

$

0.38

Diluted

 

 

0.39

 

 

 

0.39

 

 

 

0.37

 

Bridgewater Bancshares, Inc. and Subsidiaries

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

 

 

2022

 

2021

 

2021

 

 

Pre-Provision Net Revenue

 

 

 

 

 

 

 

 

 

 

Noninterest Income

 

$

1,557

 

 

$

1,288

 

 

$

1,008

 

 

Less: Gain on sales of Securities

 

 

 

 

 

 

 

 

 

 

Total Operating Noninterest Income

 

 

1,557

 

 

 

1,288

 

 

 

1,008

 

 

Plus: Net Interest Income

 

 

30,180

 

 

 

29,153

 

 

 

25,395

 

 

Net Operating Revenue

 

$

31,737

 

 

$

30,441

 

 

$

26,403

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

$

13,508

 

 

$

12,459

 

 

$

10,923

 

 

Less: Amortization of Tax Credit Investments

 

 

(117

)

 

 

(152

)

 

 

(118

)

 

Total Operating Noninterest Expense

 

$

13,391

 

 

$

12,307

 

 

$

10,805

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-Provision Net Revenue

 

$

18,346

 

 

$

18,134

 

 

$

15,598

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus:

 

 

 

 

 

 

 

 

 

 

Non-Operating Revenue Adjustments

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

 

Provision for Loan Losses

 

 

1,675

 

 

 

1,150

 

 

 

1,100

 

 

Non-Operating Expense Adjustments

 

 

117

 

 

 

152

 

 

 

118

 

 

Provision for Income Taxes

 

 

4,292

 

 

 

4,318

 

 

 

3,709

 

 

Net Income

 

$

12,262

 

 

$

12,514

 

 

$

10,671

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Assets

 

$

3,513,798

 

 

$

3,403,270

 

 

$

2,940,262

 

 

Pre-Provision Net Revenue Return on Average Assets

 

 

2.12

 

%

 

2.11

 

%

 

2.15

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

 

 

2022

 

2021

 

2021

 

 

Core Net Interest Margin

 

 

 

 

 

 

 

 

 

 

Net Interest Income (Tax-Equivalent Basis)

 

$

30,438

 

 

$

29,388

 

 

$

25,609

 

 

Less: Loan Fees

 

 

(1,743

)

 

 

(1,462

)

 

 

(1,202

)

 

Less: PPP Interest and Fees

 

 

(563

)

 

 

(1,057

)

 

 

(1,864

)

 

Core Net Interest Income

 

$

28,132

 

 

$

26,869

 

 

$

22,543

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Interest Earning Assets

 

 

3,430,774

 

 

 

3,320,603

 

 

 

2,883,084

 

 

Less: Average PPP Loans

 

 

(18,140

)

 

 

(39,900

)

 

 

(148,881

)

 

Core Average Interest Earning Assets

 

$

3,412,634

 

 

$

3,280,703

 

 

$

2,734,203

 

 

Core Net Interest Margin

 

 

3.34

 

%

 

3.25

 

%

 

3.34

 

%

 

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

 

 

2022

 

2021

 

2021

 

 

Efficiency Ratio

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

$

13,508

 

 

$

12,459

 

 

$

10,923

 

 

Less: Amortization of Intangible Assets

 

 

(48

)

 

 

(48

)

 

 

(48

)

 

Adjusted Noninterest Expense

 

$

13,460

 

 

$

12,411

 

 

$

10,875

 

 

Net Interest Income

 

 

30,180

 

 

 

29,153

 

 

 

25,395

 

 

Noninterest Income

 

 

1,557

 

 

 

1,288

 

 

 

1,008

 

 

Adjusted Operating Revenue

 

$

31,737

 

 

$

30,441

 

 

$

26,403

 

 

Efficiency Ratio

 

 

42.4

 

%

 

40.8

 

%

 

41.2

 

%

 

 

 

 

 

 

 

 

 

 

 

Adjusted Efficiency Ratio

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

$

13,508

 

 

$

12,459

 

 

$

10,923

 

 

Less: Amortization of Tax Credit Investments

 

 

(117

)

 

 

(152

)

 

 

(118

)

 

Less: Amortization of Intangible Assets

 

 

(48

)

 

 

(48

)

 

 

(48

)

 

Adjusted Noninterest Expense

 

$

13,343

 

 

$

12,259

 

 

$

10,757

 

 

Net Interest Income

 

 

30,180

 

 

 

29,153

 

 

 

25,395

 

 

Noninterest Income

 

 

1,557

 

 

 

1,288

 

 

 

1,008

 

 

Adjusted Operating Revenue

 

$

31,737

 

 

$

30,441

 

 

$

26,403

 

 

Adjusted Efficiency Ratio

 

 

42.0

 

%

 

40.3

 

%

 

40.7

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

 

 

2022

 

2021

 

2021

 

Adjusted Noninterest Expense to Average Assets (Annualized)

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

$

13,508

 

 

$

12,459

 

 

$

10,923

 

 

Less: Amortization of Tax Credit Investments

 

 

(117

)

 

 

(152

)

 

 

(118

)

 

Adjusted Noninterest Expense

 

$

13,391

 

 

$

12,307

 

 

$

10,805

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Assets

 

$

3,513,798

 

 

$

3,403,270

 

 

$

2,940,262

 

 

Adjusted Noninterest Expense to Average Assets (Annualized)

 

 

1.55

 

%

 

1.43

 

%

 

1.49

 

%

 

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

 

 

2022

 

2021

 

2021

 

Tangible Common Equity and Tangible Common Equity/Tangible Assets

 

 

 

 

 

 

 

 

 

 

Total Shareholders' Equity

 

$

379,441

 

 

$

379,272

 

 

$

279,171

 

 

Less: Preferred Stock

 

 

(66,514

)

 

 

(66,514

)

 

 

 

 

Total Common Shareholders' Equity

 

 

312,927

 

 

 

312,758

 

 

 

279,171

 

 

Less: Intangible Assets

 

 

(3,057

)

 

 

(3,105

)

 

 

(3,248

)

 

Tangible Common Equity

 

$

309,870

 

 

$

309,653

 

 

$

275,923

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

3,607,920

 

 

$

3,477,659

 

 

$

3,072,359

 

 

Less: Intangible Assets

 

 

(3,057

)

 

 

(3,105

)

 

 

(3,248

)

 

Tangible Assets

 

$

3,604,863

 

 

$

3,474,554

 

 

$

3,069,111

 

 

Tangible Common Equity/Tangible Assets

 

 

8.60

 

%

 

8.91

 

%

 

8.99

 

%

 

 

 

 

 

 

 

 

 

 

 

Tangible Book Value Per Share

 

 

 

 

 

 

 

 

 

 

Book Value Per Common Share

 

$

11.12

 

 

$

11.09

 

 

$

9.92

 

 

Less: Effects of Intangible Assets

 

 

(0.11

)

 

 

(0.11

)

 

 

(0.12

)

 

Tangible Book Value Per Common Share

 

$

11.01

 

 

$

10.98

 

 

$

9.80

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on Average Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

Net Income Available to Common Shareholders

 

$

11,249

 

 

$

11,343

 

 

$

10,671

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Shareholders' Equity

 

$

383,024

 

 

$

374,035

 

 

$

272,729

 

 

Less: Average Preferred Stock

 

 

(66,514

)

 

 

(66,515

)

 

 

 

 

Average Common Equity

 

 

316,510

 

 

 

307,520

 

 

 

272,729

 

 

Less: Effects of Average Intangible Assets

 

 

(3,084

)

 

 

(3,132

)

 

 

(3,276

)

 

Average Tangible Common Equity

 

$

313,426

 

 

$

304,388

 

 

$

269,453

 

 

Return on Average Tangible Common Equity

 

 

14.56

 

%

 

14.78

 

%

 

16.06

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

 

2022

 

2021

 

2021

 

2021

 

2021

Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Shareholders' Equity

 

$

379,441

 

 

$

379,272

 

 

$

367,803

 

 

$

290,830

 

 

$

279,171

 

Less: Preferred Stock

 

 

(66,514

)

 

 

(66,514

)

 

 

(66,515

)

 

 

 

 

 

 

Common Shareholders' Equity

 

 

312,927

 

 

 

312,758

 

 

 

301,288

 

 

 

290,830

 

 

 

279,171

 

Less: Intangible Assets

 

 

(3,057

)

 

 

(3,105

)

 

 

(3,153

)

 

 

(3,200

)

 

 

(3,248

)

Tangible Common Equity

 

$

309,870

 

 

$

309,653

 

 

$

298,135

 

 

$

287,630

 

 

$

275,923

 

 

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