Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the
parent company of Bridgewater Bank (the Bank), today announced
record net income of $14.5 million for the third quarter of 2022, a
12.7% increase over net income of $12.9 million for the second
quarter of 2022, and a 26.1% increase over net income of $11.5
million for the third quarter of 2021. Earnings per diluted common
share for the third quarter of 2022 were $0.47, a 14.6% increase
compared to $0.41 per diluted common share for the second quarter
of 2022, and a 19.4% increase compared to $0.40 per diluted common
share for the same period in 2021.
“Bridgewater’s ability to produce consistent financial results
remained evident in the third quarter with record pre-provision net
revenue and continued growth of tangible book value per share,”
said Chairman, Chief Executive Officer, and President, Jerry Baack.
“Our impressive profitability was driven by robust loan growth,
well controlled expenses and the hard work of our team members to
expand and deepen our client relationships.
“While the current economic environment creates an elevated
level of uncertainty, we remain confident in our business model. As
the rise in interest rates drives deposit costs higher and creates
near-term net interest margin pressure, we believe our proven
ability to grow the balance sheet can support our continued focus
on overall revenue growth. Couple this with our superb credit
quality and an efficiency ratio among the best in the industry and
we have a story that is poised to continue driving sustained
shareholder value.”
Third Quarter 2022 Financial Results
Diluted
Adjusted
Nonperforming
ROA
PPNR ROA (1)
ROE
earnings per share
efficiency ratio (1)
assets to total assets
1.46
%
2.15
%
14.99
%
$
0.47
39.4
%
0.02
%
________________________________
(1)
Represents a non-GAAP financial measure.
See "Non-GAAP Financial Measures" for further details.
Third Quarter 2022 Highlights
- Diluted earnings per common share were $0.47, compared to $0.41
per common share for the second quarter of 2022.
- Tangible book value per share, a non-GAAP financial measure,
increased $0.30, or 10.8% annualized, to $11.33, compared to $11.03
at June 30, 2022, despite the market value depreciation of the
securities portfolio due to rapidly rising interest rates, which
continues to negatively impact accumulated other comprehensive
income.
- Record pre-provision net revenue (PPNR), a non-GAAP financial
measure, of $21.4 million, compared to $20.4 million for the second
quarter of 2022, an increase of $1.0 million, or 4.9%. PPNR ROA, a
non-GAAP financial measure, was 2.15%, compared to 2.19% for the
second quarter of 2022.
- Annualized return on average assets (ROA) and annualized return
on average shareholders’ equity (ROE) for the third quarter of 2022
were 1.46% and 14.99%, compared to ROA and ROE of 1.38% and 13.55%,
respectively, for the second quarter of 2022. Annualized return on
average tangible common equity, a non-GAAP financial measure, was
17.03% for the third quarter of 2022, compared to 15.26% for the
second quarter of 2022.
- Gross loans increased $154.2 million, or 19.0% annualized, from
the end of the second quarter of 2022.
- Deposits increased $103.1 million, or 12.8% annualized, from
the end of the second quarter of 2022.
- Net interest margin (on a fully tax-equivalent basis) was
3.53%, compared to 3.58% in the second 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, was 3.38%, compared to 3.34% in the
second 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 39.4%, compared to 40.0% for the second
quarter of 2022.
- A loan loss provision of $1.5 million was recorded to support
strong organic loan growth. The allowance for loan losses to total
loans was 1.38% at September 30, 2022, compared to 1.39% at June
30, 2022.
- Annualized net loan charge-offs (recoveries) as a percentage of
average loans were (0.03)% for the third quarter of 2022, compared
to 0.00% for the second quarter of 2022.
Year-Over-Year Highlights
- Net income was $14.5 million for the third quarter of 2022,
compared to $11.5 million for the third quarter of 2021, an
increase of $3.0 million, or 26.1%.
- Diluted earnings per common share for the third quarter of 2022
were $0.47, compared to $0.40 for the third quarter of 2021, an
increase of 19.4%.
- Net interest margin (on a fully tax-equivalent basis) was 3.53%
for the third quarter of 2022 compared to 3.54% for the third
quarter of 2021. Core net interest margin (on a fully
tax-equivalent basis), a non-GAAP financial measure, was 3.38% for
the third quarter of 2022, compared to 3.22% for the third quarter
of 2021.
- Gross loans increased $668.1 million at September 30, 2022, or
24.6%, compared to September 30, 2021.
- Deposits increased $450.9 million at September 30, 2022, or
15.8%, compared to September 30, 2021.
Key Financial Measures
As of and for the Three Months
Ended
As of and for the Nine Months
Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2022
2022
2021
2022
2021
Per Common Share Data
Basic Earnings Per Share
$
0.49
$
0.43
$
0.41
$
1.32
$
1.18
Diluted Earnings Per Share
0.47
0.41
0.40
1.27
1.14
Book Value Per Share
11.44
11.14
10.73
11.44
10.73
Tangible Book Value Per Share (1)
11.33
11.03
10.62
11.33
10.62
Basic Weighted Average Shares
Outstanding
27,520,117
27,839,260
28,047,280
27,825,517
28,035,246
Diluted Weighted Average Shares
Outstanding
28,592,854
28,803,842
29,110,547
28,882,701
29,077,850
Shares Outstanding at Period End
27,587,978
27,677,372
28,066,822
27,587,978
28,066,822
Selected Performance
Ratios
Return on Average Assets (Annualized)
1.46
%
1.38
%
1.37
%
1.42
%
1.42
%
Pre-Provision Net Revenue Return on
Average Assets (Annualized) (1)
2.15
2.19
2.09
2.15
2.10
Return on Average Shareholders' Equity
(Annualized)
14.99
13.55
13.81
13.85
14.95
Return on Average Tangible Common Equity
(Annualized) (1)
17.03
15.26
15.47
15.63
15.69
Yield on Interest Earning Assets(2)
4.37
4.16
4.14
4.23
4.20
Yield on Total Loans, Gross(2)
4.59
4.45
4.65
4.50
4.65
Cost of Total Deposits
0.73
0.46
0.48
0.55
0.53
Cost of Funds
0.93
0.63
0.65
0.73
0.70
Net Interest Margin (2)
3.53
3.58
3.54
3.57
3.55
Core Net Interest Margin (1)(2)
3.38
3.34
3.22
3.36
3.29
Efficiency Ratio (1)
39.8
40.2
43.9
40.7
42.4
Adjusted Efficiency Ratio (1)
39.4
40.0
41.5
40.4
41.3
Noninterest Expense to Average Assets
(Annualized)
1.42
1.47
1.58
1.48
1.53
Adjusted Noninterest Expense to Average
Assets (Annualized) (1)
1.41
1.47
1.49
1.47
1.49
Loan to Deposit Ratio
102.3
100.7
95.0
Core Deposits to Total Deposits (3)
83.0
82.9
83.3
Tangible Common Equity to Tangible Assets
(1)
7.57
7.87
8.81
Capital Ratios (Bank Only)
(4)
Tier 1 Leverage Ratio
11.24
%
11.43
%
10.96
%
Common Equity Tier 1 Risk-based Capital
Ratio
11.46
11.53
11.88
Tier 1 Risk-based Capital Ratio
11.46
11.53
11.88
Total Risk-based Capital Ratio
12.67
12.74
13.13
Capital Ratios (Consolidated)
(4)
Tier 1 Leverage Ratio
9.98
%
10.33
%
10.70
%
Common Equity Tier 1 Risk-based Capital
Ratio
8.47
8.50
9.47
Tier 1 Risk-based Capital Ratio
10.19
10.29
11.65
Total Risk-based Capital Ratio
13.78
13.98
15.93
________________________________
(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
September 30,
June 30,
March 31,
December 31,
September 30,
(dollars in thousands)
2022
2022
2022
2021
2021
Selected Balance Sheet Data
Total Assets
$
4,128,987
$
3,883,264
$
3,607,920
$
3,477,659
$
3,389,125
Total Loans, Gross
3,380,082
3,225,885
2,987,967
2,819,472
2,712,012
Allowance for Loan Losses
46,491
44,711
41,692
40,020
38,901
Goodwill and Other Intangibles
2,962
3,009
3,057
3,105
3,153
Deposits
3,305,074
3,201,953
3,035,611
2,946,237
2,854,157
Tangible Common Equity (1)
312,531
305,360
309,870
309,653
298,135
Total Shareholders' Equity
382,007
374,883
379,441
379,272
367,803
Average Total Assets - Quarter-to-Date
3,948,201
3,743,575
3,513,798
3,403,270
3,332,301
Average Shareholders' Equity -
Quarter-to-Date
384,020
381,448
383,024
374,035
330,604
________________________________
(1)
Represents a non-GAAP financial measure.
See "Non-GAAP Financial Measures" for further details.
For the Three Months
Ended
For the Nine Months
Ended
September 30,
June 30,
September 30,
September 30,
September 30,
(dollars in thousands)
2022
2022
2021
2022
2021
Selected Income Statement Data
Interest Income
$
42,359
$
37,782
$
33,517
$
114,835
$
95,104
Interest Expense
8,264
5,252
4,844
18,030
14,748
Net Interest Income
34,095
32,530
28,673
96,805
80,356
Provision for Loan Losses
1,500
3,025
1,300
6,200
4,000
Net Interest Income after Provision for
Loan Losses
32,595
29,505
27,373
90,605
76,356
Noninterest Income
1,387
1,650
1,410
4,594
4,021
Noninterest Expense
14,157
13,752
13,236
41,417
35,636
Income Before Income Taxes
19,825
17,403
15,547
53,782
44,741
Provision for Income Taxes
5,312
4,521
4,038
14,125
11,568
Net Income
14,513
12,882
11,509
39,657
33,173
Preferred Stock Dividends
(1,013)
(1,014)
—
(3,040)
—
Net Income Available to Common
Shareholders
$
13,500
$
11,868
$
11,509
$
36,617
$
33,173
Income Statement
Net Interest Income
Net interest income was $34.1 million for the third quarter of
2022, an increase of $1.6 million, or 4.8%, from $32.5 million in
the second quarter of 2022, and an increase of $5.4 million, or
18.9%, from $28.7 million in the third quarter of 2021. The
linked-quarter increase in net interest income was primarily due to
growth in average interest earning assets and higher yields on
investment securities and loans, offset partially by higher rates
paid on deposits. The year-over-year increase in net interest
income was primarily due to growth in average interest earning
assets and higher yields on investment securities and core loans,
offset partially by higher rates paid on deposits and lower PPP fee
recognition. Average interest earning assets were $3.87 billion for
the third quarter of 2022, an increase of $200.1 million, or 5.5%,
from $3.67 billion for the second quarter of 2022, and an increase
of $637.6 million, or 19.7%, from $3.23 billion for the third
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
third quarter of 2022 was 3.53%, a five basis point decrease from
3.58% in the second quarter of 2022, and a modest one basis point
decline from 3.54% in the third 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 third quarter of 2022 was 3.38%, a four
basis point increase from 3.34% in the second quarter of 2022, and
a 16 basis point increase from 3.22% in the third quarter of 2021.
The Company remains focused on managing the impact of continued
interest rate hikes and the evolving shape of the yield curve
during this unique interest rate environment.
As the PPP loan portfolio has almost fully paid off, the
recognition of fees associated with the originations has decreased
significantly, which impacts comparability between periods. The
Company recognized $90,000 of PPP origination fees during the third
quarter of 2022, compared to $244,000 during the second quarter of
2022, and $1.6 million during the third quarter of 2021. Remaining
PPP origination fees to be recognized as of September 30, 2022 were
$45,000.
Interest income was $42.4 million for the third quarter of 2022,
an increase of $4.6 million, or 12.1%, from $37.8 million in the
second quarter of 2022, and an increase of $8.8 million, or 26.4%,
from $33.5 million in the third quarter of 2021. The yield on
interest earning assets (on a fully tax-equivalent basis) was 4.37%
in the third quarter of 2022, compared to 4.16% in the second
quarter of 2022, and 4.14% in the third quarter of 2021. The
linked-quarter expansion in the yield on interest earning assets
was primarily due to the rapid increase in market interest rates
resulting in new loan originations and investment purchases 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 4.59% in the third quarter of 2022, which was 16 basis
points higher than 4.43% in the second quarter of 2022, and eight
basis points higher than 4.51% in the third quarter of 2021. While
loan fees have maintained a relatively stable contribution to the
aggregate loan yield, the current period was impacted by 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
September 30, 2022
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
Interest
4.42
%
4.17
%
4.15
%
4.20
%
4.28
%
Fees
0.17
0.26
0.25
0.21
0.23
Yield on Loans, Excluding PPP Loans
4.59
%
4.43
%
4.40
%
4.41
%
4.51
%
Interest expense was $8.3 million for the third quarter of 2022,
an increase of $3.0 million, or 57.3%, from $5.3 million in the
second quarter of 2022, and an increase of $3.4 million, or 70.6%,
from $4.8 million in the third quarter of 2021. The cost of
interest bearing liabilities increased 44 basis points on a
linked-quarter basis from 0.86% in the second quarter of 2022 to
1.30% in the third quarter of 2022, primarily due to the rapid
increase in market interest rates that occurred during the quarter.
On a year-over-year basis, the cost of interest bearing liabilities
increased 42 basis points from 0.88% in the third quarter of 2021
to 1.30% in the third quarter of 2022, 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.
Interest expense on deposits was $6.0 million for the third
quarter of 2022, an increase of $2.5 million, or 73.1%, from $3.5
million in the second quarter of 2022, and an increase of $2.6
million, or 75.1%, from $3.4 million in the third quarter of 2021.
The cost of total deposits increased 27 basis points on a
linked-quarter basis from 0.46% in the second quarter of 2022, to
0.73% in the third quarter of 2022, primarily due to the rapid
increase in rates in 2022. On a year-over-year basis, the cost of
total deposits increased 25 basis points from 0.48% in the third
quarter of 2021, to 0.73% in the third quarter of 2022, 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 September
30, 2022, June 30, 2022, and September 30, 2021 is as follows:
For the Three Months
Ended
September 30, 2022
June 30, 2022
September 30, 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
$
57,613
$
165
1.13
%
$
61,046
$
40
0.26
%
$
187,405
$
67
0.14
%
Investment Securities:
Taxable Investment Securities
461,255
3,741
3.22
417,142
2,696
2.59
314,367
1,751
2.21
Tax-Exempt Investment Securities (1)
75,801
799
4.18
74,261
795
4.30
71,801
737
4.07
Total Investment Securities
537,056
4,540
3.35
491,403
3,491
2.85
386,168
2,488
2.56
Paycheck Protection Program Loans (2)
2,424
96
15.75
8,335
263
12.67
76,006
1,753
9.15
Loans (1)(2)
3,263,390
37,724
4.59
3,099,344
34,205
4.43
2,579,021
29,348
4.51
Total Loans
3,265,814
37,820
4.59
3,107,679
34,468
4.45
2,655,027
31,101
4.65
Federal Home Loan Bank Stock
11,413
156
5.42
11,620
59
2.04
5,701
68
4.65
Total Interest Earning Assets
3,871,896
42,681
4.37
%
3,671,748
38,058
4.16
%
3,234,301
33,724
4.14
%
Noninterest Earning Assets
76,305
71,827
98,000
Total Assets
$
3,948,201
$
3,743,575
$
3,332,301
Interest Bearing Liabilities:
Deposits:
Interest Bearing Transaction Deposits
$
517,658
$
1,032
0.79
%
$
552,502
$
694
0.50
%
$
479,580
$
562
0.47
%
Savings and Money Market Deposits
999,932
2,494
0.99
925,354
1,185
0.51
801,354
904
0.45
Time Deposits
288,621
847
1.16
280,645
665
0.95
318,222
928
1.16
Brokered Deposits
447,034
1,612
1.43
403,931
912
0.91
440,167
1,023
0.92
Total Interest Bearing Deposits
2,253,245
5,985
1.05
2,162,432
3,456
0.64
2,039,323
3,417
0.66
Federal Funds Purchased
106,826
709
2.63
137,379
410
1.20
—
—
—
FHLB Advances
72,343
328
1.80
47,511
167
1.41
54,130
213
1.56
Subordinated Debentures
92,503
1,242
5.33
92,396
1,219
5.29
91,337
1,214
5.27
Total Interest Bearing Liabilities
2,524,917
8,264
1.30
%
2,439,718
5,252
0.86
%
2,184,790
4,844
0.88
%
Noninterest Bearing
Liabilities:
Noninterest Bearing Transaction
Deposits
991,545
882,477
784,148
Other Noninterest Bearing Liabilities
47,719
39,932
32,759
Total Noninterest Bearing Liabilities
1,039,264
922,409
816,907
Shareholders' Equity
384,020
381,448
330,604
Total Liabilities and Shareholders'
Equity
$
3,948,201
$
3,743,575
$
3,332,301
Net Interest Income / Interest Rate
Spread
34,417
3.07
%
32,806
3.30
%
28,880
3.26
%
Net Interest Margin (3)
3.53
%
3.58
%
3.54
%
Taxable Equivalent Adjustment:
Tax-Exempt Investment Securities and
Loans
(322)
(276)
(207)
Net Interest Income
$
34,095
$
32,530
$
28,673
________________________________
(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 $1.5 million for the third
quarter of 2022, a decrease of $1.5 million from $3.0 million for
the second quarter of 2022, and an increase of $200,000 from $1.3
million for the third quarter of 2021. The provision recorded in
the third quarter of 2022 was primarily attributable to the strong
growth of the loan portfolio. The allowance for loan losses to
total loans was 1.38% at September 30, 2022, compared to 1.39% at
June 30, 2022, and 1.43% at September 30, 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
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
(dollars in thousands)
2022
2022
2021
2022
2021
Balance at Beginning of Period
$
44,711
$
41,692
$
37,591
$
40,020
$
34,841
Provision for Loan Losses
1,500
3,025
1,300
6,200
4,000
Charge-offs
(5)
(14)
(20)
(34)
(37)
Recoveries
285
8
30
305
97
Balance at End of Period
$
46,491
$
44,711
$
38,901
$
46,491
$
38,901
Noninterest Income
Noninterest income was $1.4 million for the third quarter of
2022, a decrease of $263,000 from $1.7 million for the second
quarter of 2022, and a decrease of $23,000 from $1.4 million for
the third quarter of 2021. The linked-quarter decrease was
primarily due to a decrease in letter of credit fees and other
income, offset partially by an increase in bank-owned life
insurance income. The year-over-year decrease was primarily due to
decreased letter of credit fees and gains on sales of securities,
offset partially by an increase in bank-owned life insurance
income.
The following table presents the major components of noninterest
income for the periods indicated:
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
(dollars in thousands)
2022
2022
2021
2022
2021
Noninterest Income:
Customer Service Fees
$
313
$
298
$
268
$
892
$
733
Net Gain on Sales of Securities
—
52
48
52
750
Letter of Credit Fees
428
564
577
1,234
1,135
Debit Card Interchange Fees
153
152
143
438
414
Swap Fees
—
—
—
557
—
Bank-Owned Life Insurance
227
149
166
524
166
Other Income
266
435
208
897
823
Totals
$
1,387
$
1,650
$
1,410
$
4,594
$
4,021
Noninterest Expense
Noninterest expense was $14.2 million for the third quarter of
2022, an increase of $405,000 from $13.8 million for the second
quarter of 2022, and an increase of $921,000 from $13.2 million for
the third quarter of 2021. The linked-quarter increase was
primarily due to an increase in salaries and employee benefits and
technology expenses, offset partially by a decrease in professional
and consulting fees, marketing and advertising expenses, and other
expenses. The year-over-year increase was primarily attributable to
increases in salaries and employee benefits, occupancy and
equipment, and other expenses, offset partially by a decrease in
debt prepayment fees.
The following table presents the major components of noninterest
expense for the periods indicated:
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
(dollars in thousands)
2022
2022
2021
2022
2021
Noninterest Expense:
Salaries and Employee Benefits
$
9,449
$
8,977
$
8,309
$
27,120
$
22,923
Occupancy and Equipment
1,086
1,042
942
3,213
2,977
FDIC Insurance Assessment
315
330
355
1,005
960
Data Processing
372
356
325
1,025
916
Professional and Consulting Fees
716
769
708
2,181
1,804
Information Technology and
Telecommunications
650
594
598
1,822
1,609
Marketing and Advertising
479
524
418
1,629
1,018
Intangible Asset Amortization
48
47
48
143
143
Amortization of Tax Credit Investments
114
63
152
294
410
Debt Prepayment Fees
—
—
582
—
582
Other Expense
928
1,050
799
2,985
2,294
Totals
$
14,157
$
13,752
$
13,236
$
41,417
$
35,636
The Company continues to add key talent across the organization,
reaching 246 full-time equivalent employees at September 30, 2022,
compared to 236 employees at June 30, 2022, and 219 employees at
September 30, 2021.
The efficiency ratio, a non-GAAP financial measure, was 39.8%
for the third quarter of 2022, compared to 40.2% for the second
quarter of 2022, and 43.9% for the third quarter of 2021. Excluding
the impact of certain non-routine income and expenses, the adjusted
efficiency ratio, a non-GAAP financial measure, was 39.4% for the
third quarter of 2022, 40.0% for the second quarter of 2022 and
41.5% for the third quarter of 2021.
Income Taxes
The effective combined federal and state income tax rate for the
third quarter of 2022 was 26.8%, a slight increase from 26.0% for
the second quarter of 2022 and 26.0% for the third quarter of
2021.
Balance Sheet
Total assets at September 30, 2022 were $4.13 billion, a 6.3%
increase from $3.88 billion at June 30, 2022, and a 21.8% increase
from $3.39 billion at September 30, 2021. The linked-quarter
increase in total assets was primarily due to strong organic loan
growth and continued purchases of investment securities. The
year-over-year increase in total assets was primarily due to robust
organic loan growth and purchases of investment securities, offset
partially by a decrease in cash and cash equivalents.
Total gross loans at September 30, 2022 were $3.38 billion, an
increase of $154.2 million, or 4.8%, over total gross loans of
$3.23 billion at June 30, 2022, and an increase of $668.1 million,
or 24.6%, over total gross loans of $2.71 billion at September 30,
2021. The increase in the loan portfolio during the third quarter
of 2022 was primarily due to growth in the commercial and
multifamily segments, offset partially by a decrease in the
construction and land development segment which was the result of
completed construction projects migrating to permanent financing.
While the Company’s loan growth in the third quarter of 2022
remained strong, the pace began to moderate slightly, compared to
the first half of 2022 due to active balance sheet management to
align loan growth with the funding outlook, sales of participations
on larger originations to manage growth, and the impact of the
higher interest rate environment on the number of deals that made
financial sense.
The following table presents the dollar composition of the
Company’s loan portfolio, by category, at the dates indicated:
September 30, 2022
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
(dollars in thousands)
Commercial
$
412,448
$
403,569
$
363,290
$
360,169
$
350,081
Paycheck Protection Program
1,192
4,860
12,309
26,162
54,190
Construction and Land Development
335,557
359,191
321,131
281,474
257,167
Real Estate Mortgage:
1 - 4 Family Mortgage
341,102
334,815
312,201
305,317
290,535
Multifamily
1,230,509
1,087,865
1,012,623
910,243
865,172
CRE Owner Occupied
151,088
142,214
117,969
111,096
101,834
CRE Nonowner Occupied
900,691
886,432
840,463
818,569
786,271
Total Real Estate Mortgage Loans
2,623,390
2,451,326
2,283,256
2,145,225
2,043,812
Consumer and Other
7,495
6,939
7,981
6,442
6,762
Total Loans, Gross
3,380,082
3,225,885
2,987,967
2,819,472
2,712,012
Allowance for Loan Losses
(46,491)
(44,711)
(41,692)
(40,020)
(38,901)
Net Deferred Loan Fees
(9,088)
(9,536)
(9,065)
(9,535)
(10,199)
Total Loans, Net
$
3,324,503
$
3,171,638
$
2,937,210
$
2,769,917
$
2,662,912
Total deposits at September 30, 2022 were $3.31 billion, an
increase of $103.1 million, or 3.2%, over total deposits of $3.20
billion at June 30, 2022, and an increase of $450.9 million, or
15.8%, over total deposits of $2.85 billion at September 30, 2021.
Deposit growth in the third quarter of 2022 was primarily due to an
increase in savings and money market deposits and time deposits,
offset partially by a decline in interest bearing transaction
deposits and brokered deposits. In addition to the continued growth
of core deposits, brokered deposits are also being used as a
supplemental funding source, as needed, for the robust loan
portfolio growth. Given the rapid rise in interest rates in 2022
and the prospect for more, 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:
September 30, 2022
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
(dollars in thousands)
Noninterest Bearing Transaction
Deposits
$
961,084
$
961,998
$
835,482
$
875,084
$
846,490
Interest Bearing Transaction Deposits
510,396
522,151
598,402
544,789
488,785
Savings and Money Market Deposits
1,077,333
952,138
890,926
863,567
791,861
Time Deposits
293,052
272,424
286,674
293,474
309,824
Brokered Deposits
463,209
493,242
424,127
369,323
417,197
Total Deposits
$
3,305,074
$
3,201,953
$
3,035,611
$
2,946,237
$
2,854,157
Capital
Total shareholders’ equity at September 30, 2022 was $382.0
million, an increase of $7.1 million compared to total
shareholders’ equity of $374.9 million at June 30, 2022, and an
increase of $14.2 million, or 3.9%, over total shareholders’ equity
of $367.8 million at September 30, 2021. The linked-quarter
increase was due to net income retained and unrealized gains in the
derivatives portfolio, offset partially by unrealized losses in the
securities portfolio. The year-over-year increase was due to net
income retained and unrealized gains in the derivatives portfolio,
offset partially by an increase in stock repurchases made under the
Company’s stock repurchase program and an increase in unrealized
losses in the securities portfolio.
During the third quarter of 2022, the Company repurchased 99,310
shares of its common stock. Shares were repurchased at a weighted
average price of $16.27 per share, for a total of $1.6 million. On
August 18, 2022, the Company announced that its board of directors
approved a new stock repurchase program which authorizes the
Company to repurchase up to $25.0 million of its common stock,
subject to certain limitations and conditions. The new stock
repurchase program replaced and superseded the $40.0 million stock
repurchase program, under which approximately $1.6 million
remained. As of September 30, 2022, no shares have been repurchased
under the new plan. The Company remains committed to maintaining
strong capital levels while enhancing shareholder value as it
strategically executes its stock repurchase program based on
various factors including valuation, capital levels and other uses
of capital.
Tangible book value per share, a non-GAAP financial measure, was
$11.33 as of September 30, 2022, an increase of 2.7% from $11.03 as
of June 30, 2022, and an increase of 6.6% from $10.62 as of
September 30, 2021. The linked-quarter and year-over-year increase
occurred despite the market value depreciation of the securities
portfolio driven by the rapidly rising interest rate environment,
which continues to negatively impact accumulated other
comprehensive income. Tangible common equity as a percentage of
tangible assets, a non-GAAP financial measure, was 7.57% at
September 30, 2022, compared to 7.87% at June 30, 2022, and 8.81%
at September 30, 2021.
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 December 1, 2022 to shareholders of record of the Series
A Preferred Stock at the close of business on November 15,
2022.
Asset Quality
Annualized net charge-offs (recoveries) as a percent of average
loans were (0.03)% for the third quarter of 2022, compared to 0.00%
for each of the previous four quarters. At September 30, 2022, the
Company’s nonperforming assets, which include nonaccrual loans,
loans past due 90 days and still accruing, and foreclosed assets,
were $663,000, or 0.02% of total assets, as compared to $688,000,
or 0.02% of total assets at June 30, 2022, and $734,000, or 0.02%
of total assets at September 30, 2021.
Loans that have potential weaknesses that warrant a watchlist
risk rating at September 30, 2022 totaled $22.8 million, compared
to $34.7 million at June 30, 2022, and $67.4 million at September
30, 2021. The linked-quarter decrease was primarily due to the
migration of one relationship to substandard and the payoff of one
other relationship. Loans that warranted a substandard risk rating
at September 30, 2022 totaled $30.8 million, compared to $27.0
million at June 30, 2022, and $7.7 million at September 30,
2021.
The following table presents a summary of asset quality
measurements at the dates indicated:
As of and for the Three Months
Ended
September 30,
June 30,
March 31,
December 31,
September 30,
(dollars in thousands)
2022
2022
2022
2021
2021
Selected Asset Quality Data
Loans 30-89 Days Past Due
$
38
$
225
$
13
$
49
$
18
Loans 30-89 Days Past Due to Total
Loans
0.00
%
0.01
%
0.00
%
0.00
%
0.00
%
Nonperforming Loans
$
663
$
688
$
706
$
722
$
734
Nonperforming Loans to Total Loans
0.02
%
0.02
%
0.02
%
0.03
%
0.03
%
Foreclosed Assets
$
—
$
—
$
—
$
—
$
—
Nonaccrual Loans to Total Loans
0.02
%
0.02
%
0.02
%
0.03
%
0.03
%
Nonaccrual Loans and Loans Past Due 90
Days and Still Accruing to Total Loans
0.02
0.02
0.02
0.03
0.03
Nonperforming Assets (1)
$
663
$
688
$
706
$
722
$
734
Nonperforming Assets to Total Assets
(1)
0.02
%
0.02
%
0.02
%
0.02
%
0.02
%
Allowance for Loan Losses to Total
Loans
1.38
1.39
1.40
1.42
1.43
Allowance for Loan Losses to Total Loans,
Excluding PPP Loans
1.38
1.39
1.40
1.43
1.46
Allowance for Loans Losses to Nonaccrual
Loans
7,012.22
6,498.69
5,905.38
5,542.94
5,299.86
Net Loan Charge-Offs (Recoveries)
(Annualized) to Average Loans
(0.03)
0.00
0.00
0.00
0.00
________________________________
(1)
Nonperforming assets are defined as
nonaccrual loans plus loans 90 days past due and still accruing
plus foreclosed assets.
During the COVID-19 pandemic, the Company developed programs for
clients who experienced business and personal disruptions 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 one modified loan totaling $10.6
million outstanding as of September 30, 2022, representing 0.3% of
the total loan portfolio, excluding PPP loans, which is down from
$29.8 million at June 30, 2022.
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 $4.1 billion and seven branches as of September 30,
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: 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; business and
economic conditions generally and in the financial services
industry, nationally and within our market area, including rising
rates of inflation; 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; 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; 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 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. 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)
September 30,
December 31,
September 30,
2022
2021
2021
(Unaudited)
(Unaudited)
ASSETS
Cash and Cash Equivalents
$
75,496
$
143,473
$
189,502
Bank-Owned Certificates of Deposit
1,182
1,876
1,877
Securities Available for Sale, at Fair
Value
542,007
439,362
413,149
Loans, Net of Allowance for Loan Losses of
$46,491 at September 30, 2022 (unaudited), $40,020 at December 31,
2021 and $38,901 at September 30, 2021 (unaudited)
3,324,503
2,769,917
2,662,912
Federal Home Loan Bank (FHLB) Stock, at
Cost
15,603
5,242
5,442
Premises and Equipment, Net
48,941
49,395
49,803
Accrued Interest
11,198
9,186
8,550
Goodwill
2,626
2,626
2,626
Other Intangible Assets, Net
336
479
527
Other Assets
107,095
56,103
54,737
Total Assets
$
4,128,987
$
3,477,659
$
3,389,125
LIABILITIES AND EQUITY
LIABILITIES
Deposits:
Noninterest Bearing
$
961,084
$
875,084
$
846,490
Interest Bearing
2,343,990
2,071,153
2,007,667
Total Deposits
3,305,074
2,946,237
2,854,157
Federal Funds Purchased
212,000
—
—
FHLB Advances
71,500
42,500
47,500
Subordinated Debentures, Net of Issuance
Costs
92,559
92,239
92,153
Accrued Interest Payable
2,214
1,409
1,656
Other Liabilities
63,633
16,002
25,856
Total Liabilities
3,746,980
3,098,387
3,021,322
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 September
30, 2022 (unaudited), December 31, 2021, and September 30, 2021
(unaudited)
66,514
66,514
66,515
Common Stock- $0.01 par value; Authorized
75,000,000
Common Stock - Issued and Outstanding
27,587,978 at September 30, 2022 (unaudited), 28,206,566 at
December 31, 2021 and 28,066,822 at September 30, 2021
(unaudited)
276
282
281
Additional Paid-In Capital
95,973
104,123
103,471
Retained Earnings
235,964
199,347
188,004
Accumulated Other Comprehensive Income
(Loss)
(16,720)
9,006
9,532
Total Shareholders' Equity
382,007
379,272
367,803
Total Liabilities and Equity
$
4,128,987
$
3,477,659
$
3,389,125
Bridgewater Bancshares, Inc. and
Subsidiaries
Consolidated Statements of
Income
(dollars in thousands, except per share
data)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
June 30
September 30,
September 30,
September 30,
2022
2022
2021
2022
2021
INTEREST INCOME
Loans, Including Fees
$
37,666
$
34,358
$
31,049
$
103,768
$
87,705
Investment Securities
4,372
3,325
2,333
10,567
7,065
Other
321
99
135
500
334
Total Interest Income
42,359
37,782
33,517
114,835
95,104
INTEREST EXPENSE
Deposits
5,984
3,456
3,417
12,598
10,601
Notes Payable
—
—
—
—
61
FHLB Advances
329
167
213
646
669
Subordinated Debentures
1,242
1,219
1,214
3,658
3,411
Federal Funds Purchased
709
410
—
1,128
6
Total Interest Expense
8,264
5,252
4,844
18,030
14,748
NET INTEREST INCOME
34,095
32,530
28,673
96,805
80,356
Provision for Loan Losses
1,500
3,025
1,300
6,200
4,000
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES
32,595
29,505
27,373
90,605
76,356
NONINTEREST INCOME
Customer Service Fees
313
298
268
892
733
Net Gain on Sales of Available for Sale
Securities
—
52
48
52
750
Other Income
1,074
1,300
1,094
3,650
2,538
Total Noninterest Income
1,387
1,650
1,410
4,594
4,021
NONINTEREST EXPENSE
Salaries and Employee Benefits
9,449
8,977
8,309
27,120
22,923
Occupancy and Equipment
1,086
1,042
942
3,213
2,977
Other Expense
3,622
3,733
3,985
11,084
9,736
Total Noninterest Expense
14,157
13,752
13,236
41,417
35,636
INCOME BEFORE INCOME TAXES
19,825
17,403
15,547
53,782
44,741
Provision for Income Taxes
5,312
4,521
4,038
14,125
11,568
NET INCOME
14,513
12,882
11,509
39,657
33,173
Preferred Stock Dividends
(1,013)
(1,014)
—
(3,040)
—
NET INCOME AVAILABLE TO COMMON
SHAREHOLDERS
$
13,500
$
11,868
$
11,509
$
36,617
$
33,173
EARNINGS PER SHARE
Basic
$
0.49
$
0.43
$
0.41
$
1.32
$
1.18
Diluted
0.47
0.41
0.40
1.27
1.14
Bridgewater Bancshares, Inc. and
Subsidiaries
Analysis of Average Balances, Yields
and Rates
(dollars in thousands, except per share
data)
(Unaudited)
For the Nine Months
Ended
September 30, 2022
September 30, 2021
Average
Interest
Yield/
Average
Interest
Yield/
Balance
& Fees
Rate
Balance
& Fees
Rate
(dollars in thousands)
Interest Earning Assets:
Cash Investments
$
66,301
$
231
0.47
%
$
127,283
$
134
0.14
%
Investment Securities:
Taxable Investment Securities
417,462
8,692
2.78
310,078
5,122
2.21
Tax-Exempt Investment Securities (1)
73,900
2,373
4.29
76,564
2,460
4.30
Total Investment Securities
491,362
11,065
3.01
386,642
7,582
2.62
Paycheck Protection Program Loans (2)
9,575
922
12.88
124,466
5,384
5.78
Loans (1)(2)
3,082,924
103,204
4.48
2,402,844
82,433
4.59
Total Loans
3,092,499
104,126
4.50
2,527,310
87,817
4.65
Federal Home Loan Bank Stock
9,593
269
3.75
5,658
200
4.71
Total Interest Earning Assets
3,659,755
115,691
4.23
%
3,046,893
95,733
4.20
%
Noninterest Earning Assets
77,028
70,968
Total Assets
$
3,736,783
$
3,117,861
Interest Bearing Liabilities:
Deposits:
Interest Bearing Transaction Deposits
$
545,301
$
2,322
0.57
%
$
422,000
$
1,504
0.48
%
Savings and Money Market Deposits
934,408
4,597
0.66
763,646
2,853
0.50
Time Deposits
286,059
2,257
1.05
331,664
3,269
1.32
Brokered Deposits
419,352
3,422
1.09
407,680
2,975
0.98
Total Interest Bearing Deposits
2,185,120
12,598
0.77
1,924,990
10,601
0.74
Federal Funds Purchased
85,287
1,128
1.77
3,311
6
0.24
Notes Payable
—
—
—
2,216
61
3.66
FHLB Advances
54,227
646
1.59
56,364
669
1.59
Subordinated Debentures
92,396
3,658
5.29
79,723
3,411
5.72
Total Interest Bearing Liabilities
2,417,030
18,030
1.00
%
2,066,604
14,748
0.95
%
Noninterest Bearing
Liabilities:
Noninterest Bearing Transaction
Deposits
899,456
731,269
Other Noninterest Bearing Liabilities
37,463
23,228
Total Noninterest Bearing Liabilities
936,919
754,497
Shareholders' Equity
382,834
296,760
Total Liabilities and Shareholders'
Equity
$
3,736,783
$
3,117,861
Net Interest Income / Interest Rate
Spread
97,661
3.23
%
80,985
3.25
%
Net Interest Margin (3)
3.57
%
3.55
%
Taxable Equivalent Adjustment:
Tax-Exempt Investment Securities and
Loans
(856)
(629)
Net Interest Income
$
96,805
$
80,356
________________________________
(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.
Bridgewater Bancshares, Inc. and
Subsidiaries
Non-GAAP Financial Measures
(dollars in thousands)
(unaudited)
For the Three Months
Ended
For the Nine Months
Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2022
2022
2021
2022
2021
Pre-Provision Net Revenue
Noninterest Income
$
1,387
$
1,650
$
1,410
$
4,594
$
4,021
Less: Gain on Sales of Securities
—
(52)
(48)
(52)
(750)
Total Operating Noninterest
Income
1,387
1,598
1,362
4,542
3,271
Plus: Net Interest Income
34,095
32,530
28,673
96,805
80,356
Net Operating Revenue
$
35,482
$
34,128
$
30,035
$
101,347
$
83,627
Noninterest Expense
$
14,157
$
13,752
$
13,236
$
41,417
$
35,636
Less: Amortization of Tax Credit
Investments
(114)
(63)
(152)
(294)
(410)
Total Operating Noninterest
Expense
$
14,043
$
13,689
$
12,502
$
41,123
$
34,644
Pre-Provision Net Revenue
$
21,439
$
20,439
$
17,533
$
60,224
$
48,983
Plus:
Non-Operating Revenue Adjustments
—
52
48
52
750
Less:
Provision for Loan Losses
1,500
3,025
1,300
6,200
4,000
Non-Operating Expense Adjustments
114
63
734
294
992
Provision for Income Taxes
5,312
4,521
4,038
14,125
11,568
Net Income
$
14,513
$
12,882
$
11,509
$
39,657
$
33,173
Average Assets
$
3,948,201
$
3,743,575
$
3,332,301
$
3,736,783
$
3,117,861
Pre-Provision Net Revenue Return on
Average Assets
2.15
%
2.19
%
2.09
%
2.15
%
2.10
%
As of and for the Three Months
Ended
As of and for the Nine Months
Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2022
2022
2021
2022
2021
Core Net Interest Margin
Net Interest Income (Tax-Equivalent
Basis)
$
34,417
$
32,806
$
28,880
$
97,662
$
80,985
Less: Loan Fees
(1,400)
(2,030)
(1,487)
(5,173)
(3,712)
Less: PPP Interest and Fees
(96)
(263)
(1,753)
(922)
(5,384)
Core Net Interest Income
$
32,921
$
30,513
$
25,640
$
91,567
$
71,889
Average Interest Earning Assets
$
3,871,896
$
3,671,748
$
3,234,301
$
3,659,755
$
3,046,893
Less: Average PPP Loans
(2,424)
(8,335)
(76,006)
(9,575)
(124,466)
Core Average Interest Earning Assets
$
3,869,472
$
3,663,413
$
3,158,295
$
3,650,180
$
2,922,427
Core Net Interest Margin
3.38
%
3.34
%
3.22
%
3.35
%
3.29
%
Non-GAAP Financial Measures
(dollars in thousands)
(unaudited)
For the Three Months
Ended
For the Nine Months
Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2022
2022
2021
2022
2021
Efficiency Ratio
Noninterest Expense
$
14,157
$
13,752
$
13,236
$
41,417
$
35,636
Less: Amortization of Intangible
Assets
(48)
(47)
(48)
(143)
(143)
Adjusted Noninterest Expense
$
14,109
$
13,705
$
13,188
$
41,274
$
35,493
Net Interest Income
34,095
32,530
28,673
96,805
80,356
Noninterest Income
1,387
1,650
1,410
4,594
4,021
Less: Gain on Sales of Securities
—
(52)
(48)
(52)
(750)
Adjusted Operating Revenue
$
35,482
$
34,128
$
30,035
$
101,347
$
83,627
Efficiency Ratio
39.8
%
40.2
%
43.9
%
40.7
%
42.4
%
Adjusted Efficiency Ratio
Noninterest Expense
$
14,157
$
13,752
$
13,236
$
41,417
$
35,636
Less: Amortization of Tax Credit
Investments
(114)
(63)
(152)
(294)
(410)
Less: Debt Prepayment Fees
—
—
(582)
—
(582)
Less: Amortization of Intangible
Assets
(48)
(47)
(48)
(143)
(143)
Adjusted Noninterest Expense
$
13,995
$
13,642
$
12,454
$
40,980
$
34,501
Net Interest Income
34,095
32,530
28,673
96,805
80,356
Noninterest Income
1,387
1,650
1,410
4,594
4,021
Less: Gain on Sales of Securities
—
(52)
(48)
(52)
(750)
Adjusted Operating Revenue
$
35,482
$
34,128
$
30,035
$
101,347
$
83,627
Adjusted Efficiency Ratio
39.4
%
40.0
%
41.5
%
40.4
%
41.3
%
For the Three Months
Ended
For the Nine Months
Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2022
2022
2021
2022
2021
Adjusted Noninterest Expense to Average
Assets (Annualized)
Noninterest Expense
$
14,157
$
13,752
$
13,236
$
41,417
$
35,636
Less: Amortization of Tax Credit
Investments
(114)
(63)
(152)
(294)
(410)
Less: Debt Prepayment Fees
—
—
(582)
—
(582)
Adjusted Noninterest Expense
$
14,043
$
13,689
$
12,502
$
41,123
$
34,644
Average Assets
$
3,948,201
$
3,743,575
$
3,332,301
$
3,736,783
$
3,117,861
Adjusted Noninterest Expense to Average
Assets (Annualized)
1.41
%
1.47
%
1.49
%
1.47
%
1.49
%
Non-GAAP Financial Measures
(dollars in thousands)
(unaudited)
As of and for the Three Months
Ended
As of and for the Nine Months
Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2022
2022
2021
2022
2021
Tangible Common Equity and Tangible
Common Equity/Tangible Assets
Total Shareholders' Equity
$
382,007
$
374,883
$
367,803
Less: Preferred Stock
(66,514)
(66,514)
(66,515)
Total Common Shareholders' Equity
315,493
308,369
301,288
Less: Intangible Assets
(2,962)
(3,009)
(3,153)
Tangible Common Equity
$
312,531
$
305,360
$
298,135
Total Assets
$
4,128,987
$
3,883,264
$
3,389,125
Less: Intangible Assets
(2,962)
(3,009)
(3,153)
Tangible Assets
$
4,126,025
$
3,880,255
$
3,385,972
Tangible Common Equity/Tangible Assets
7.57
%
7.87
%
8.81
%
Tangible Book Value Per Share
Book Value Per Common Share
$
11.44
$
11.14
$
10.73
Less: Effects of Intangible Assets
(0.11)
(0.11)
(0.11)
Tangible Book Value Per Common Share
$
11.33
$
11.03
$
10.62
Return on Average Tangible Common
Equity
Net Income Available to Common
Shareholders
$
13,500
$
11,868
$
11,509
$
36,617
$
33,173
Average Shareholders' Equity
$
384,020
$
381,448
$
330,604
$
382,834
$
296,760
Less: Average Preferred Stock
(66,514)
(66,514)
(32,332)
(66,514)
(10,896)
Average Common Equity
317,506
314,934
298,272
316,320
285,864
Less: Effects of Average Intangible
Assets
(2,989)
(3,037)
(3,180)
(3,036)
(3,227)
Average Tangible Common Equity
$
314,517
$
311,897
$
295,092
$
313,284
$
282,637
Return on Average Tangible Common
Equity
17.03
%
15.26
%
15.47
%
15.63
%
15.69
%
Three Months Ended
September 30,
June 30,
March 31,
December 31,
September 30,
2022
2022
2022
2021
2021
Tangible Common Equity
Total Shareholders' Equity
$
382,007
$
374,883
$
379,441
$
379,272
$
367,803
Less: Preferred Stock
(66,514)
(66,514)
(66,514)
(66,514)
(66,515)
Common Shareholders' Equity
315,493
308,369
312,927
312,758
301,288
Less: Intangible Assets
(2,962)
(3,009)
(3,057)
(3,105)
(3,153)
Tangible Common Equity
$
312,531
$
305,360
$
309,870
$
309,653
$
298,135
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version on businesswire.com: https://www.businesswire.com/news/home/20221026005659/en/
Media Contact: Jessica Stejskal | SVP Marketing
Jessica.stejskal@bwbmn.com | 952.893.6860
Investor Contact: Justin Horstman | Director of Investor
Relations Justin.Horstman@bwbmn.com | 952.542.5169
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