Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the
parent company of Bridgewater Bank (the Bank), today announced net
income of $11.6 million for the first quarter of 2023, compared to
$13.7 million for the fourth quarter of 2022, and $12.3 million for
the first quarter of 2022. Earnings per diluted common share for
the first quarter of 2023 were $0.37, compared to $0.45 per diluted
common share for the fourth quarter of 2022, and $0.39 per diluted
common share for the same period in 2022.
“While first quarter results included well-controlled expenses,
superb asset quality, moderated loan growth, and expected net
interest margin pressure, our focus was on supporting our clients
and demonstrating the resiliency of our balance sheet and business
model,” said Chairman, Chief Executive Officer, and President,
Jerry Baack. “Bridgewater is a relationship-focused bank supporting
a local real estate and small business client base. With a strong
balance sheet, including a diversified loan portfolio, high level
of insured deposits, and ample liquidity and borrowing capacity, we
feel well-positioned to continue executing on our proven and
successful business model.”
First Quarter 2023 Financial
Results
Diluted
Nonperforming
ROA
PPNR ROA (1)
ROE
earnings per share
Efficiency ratio (1)
assets to total assets
1.07
%
1.49
%
11.70
%
$
0.37
46.2
%
0.02
%
_____________________________________
(1) Represents a non-GAAP financial
measure. See "Non-GAAP Financial Measures" for further details.
First Quarter 2023 Highlights
- Annualized return on average assets (ROA) and annualized return
on average shareholders’ equity (ROE) for the first quarter of 2023
were 1.07% and 11.70%, compared to ROA and ROE of 1.28% and 14.06%,
respectively, for the fourth quarter of 2022. Annualized return on
average tangible common equity, a non-GAAP financial measure, was
12.90% for the first quarter of 2023, compared to 15.86% for the
fourth quarter of 2022.
- Gross loans increased $114.9 million, or 13.1% annualized, from
the fourth quarter of 2022.
- Deposits decreased slightly by $5.4 million, or 0.6%
annualized, from the fourth quarter of 2022.
- Net interest margin (on a fully tax-equivalent basis) was
2.72%, compared to 3.16% in the fourth quarter of 2022.
- Efficiency ratio, a non-GAAP financial measure, was 46.2%,
compared to 43.8% for the fourth quarter of 2022.
- Noninterest expense declined $1.0 million, or 6.7%, from the
fourth quarter of 2022. Annualized noninterest expense to average
assets was 1.31%, compared to 1.42% for the fourth quarter of
2022.
- A credit loss provision of $1.5 million was recorded to support
continued loan growth in the first quarter of 2023. The allowance
for credit losses to total loans was 1.36% at March 31, 2023,
compared to 1.34% at December 31, 2022.
- Annualized net loan charge-offs (recoveries) as a percentage of
average loans were 0.00% for the first quarter of 2023 and for the
fourth quarter of 2022.
- Tangible book value per share, a non-GAAP financial measure,
increased $0.26, or 8.9% annualized, to $11.95 at March 31, 2023
compared to $11.69 at December 31, 2022.
Key Financial Measures
As of and for the Three Months
Ended
March 31,
December 31,
March 31,
2023
2022
2022
Per Common Share Data
Basic Earnings Per Share
$
0.38
$
0.46
$
0.40
Diluted Earnings Per Share
0.37
0.45
0.39
Book Value Per Share
12.05
11.80
11.12
Tangible Book Value Per Share (1)
11.95
11.69
11.01
Basic Weighted Average Shares
Outstanding
27,726,894
27,558,983
28,123,809
Diluted Weighted Average Shares
Outstanding
28,490,046
28,527,306
29,156,085
Shares Outstanding at Period End
27,845,244
27,751,950
28,150,389
Selected Performance
Ratios
Return on Average Assets (Annualized)
1.07
%
1.28
%
1.42
%
Pre-Provision Net Revenue Return on
Average Assets (Annualized) (1)
1.49
1.82
2.12
Return on Average Shareholders' Equity
(Annualized)
11.70
14.06
12.98
Return on Average Tangible Common Equity
(Annualized) (1)
12.90
15.86
14.56
Yield on Interest Earning Assets (2)
4.91
4.67
4.13
Yield on Total Loans, Gross (2)
5.06
4.87
4.45
Cost of Total Deposits
2.01
1.31
0.43
Cost of Funds
2.41
1.67
0.59
Net Interest Margin (2)
2.72
3.16
3.60
Core Net Interest Margin (1)(2)
2.62
3.05
3.34
Efficiency Ratio (1)
46.2
43.8
42.4
Noninterest Expense to Average Assets
(Annualized)
1.31
1.42
1.56
Loan to Deposit Ratio
108.0
104.5
98.4
Core Deposits to Total Deposits (3)
72.4
74.6
84.3
Tangible Common Equity to Tangible Assets
(1)
7.23
7.48
8.60
Capital Ratios (Bank Only)
(4)
Tier 1 Leverage Ratio
10.61
%
10.76
%
11.13
%
Common Equity Tier 1 Risk-based Capital
Ratio
11.37
11.29
11.42
Tier 1 Risk-based Capital Ratio
11.37
11.29
11.42
Total Risk-based Capital Ratio
12.62
12.47
12.65
Capital Ratios (Consolidated)
(4)
Tier 1 Leverage Ratio
9.41
%
9.55
%
10.78
%
Common Equity Tier 1 Risk-based Capital
Ratio
8.48
8.40
9.13
Tier 1 Risk-based Capital Ratio
10.08
10.03
11.08
Total Risk-based Capital Ratio
13.25
13.15
15.02
_____________________________________
(1)
Represents a non-GAAP financial measure.
See "Non-GAAP Financial Measures" for further details.
(2)
Amounts calculated on a tax-equivalent
basis using the statutory federal tax rate of 21%.
(3)
Core deposits are defined as total
deposits less brokered deposits and certificates of deposit greater
than $250,000.
(4)
Preliminary data. Current period subject
to change prior to filings with applicable regulatory agencies.
Selected Financial Data
March 31,
December31,
September 30,
June 30,
March 31,
(dollars in thousands)
2023
2022
2022
2022
2022
Selected Balance Sheet Data
Total Assets
$
4,602,899
$
4,345,662
$
4,128,987
$
3,883,264
$
3,607,920
Total Loans, Gross
3,684,360
3,569,446
3,380,082
3,225,885
2,987,967
Allowance for Credit Losses
50,148
47,996
46,491
44,711
41,692
Goodwill and Other Intangibles
2,866
2,914
2,962
3,009
3,057
Deposits
3,411,123
3,416,543
3,305,074
3,201,953
3,035,611
Tangible Common Equity (1)
332,626
324,636
312,531
305,360
309,870
Total Shareholders' Equity
402,006
394,064
382,007
374,883
379,441
Average Total Assets - Quarter-to-Date
4,405,234
4,251,345
3,948,201
3,743,575
3,513,798
Average Shareholders' Equity -
Quarter-to-Date
403,533
387,589
384,020
381,448
383,024
_____________________________________
(1)
Represents a non-GAAP financial measure.
See "Non-GAAP Financial Measures" for further details.
For the Three Months
Ended
March 31,
December 31,
March 31,
(dollars in thousands)
2023
2022
2022
Selected Income Statement Data
Interest Income
$
51,992
$
48,860
$
34,694
Interest Expense
23,425
15,967
4,514
Net Interest Income
28,567
32,893
30,180
Provision for Credit Losses
625
1,500
1,675
Net Interest Income after Provision for
Credit Losses
27,942
31,393
28,505
Noninterest Income
1,943
1,738
1,557
Noninterest Expense
14,183
15,203
13,508
Income Before Income Taxes
15,702
17,928
16,554
Provision for Income Taxes
4,060
4,193
4,292
Net Income
11,642
13,735
12,262
Preferred Stock Dividends
(1,013
)
(1,014
)
(1,013
)
Net Income Available to Common
Shareholders
$
10,629
$
12,721
$
11,249
Income Statement
Net Interest Income
Net interest income was $28.6 million for the first quarter of
2023, a decrease of $4.3 million, or 13.2%, from $32.9 million in
the fourth quarter of 2022, and a decrease of $1.6 million, or
5.3%, from $30.2 million in the first quarter of 2022. The
linked-quarter and year-over-year decrease in net interest income
was primarily due to higher rates paid on deposits and increased
borrowings in the rising interest rate environment. Average
interest earning assets were $4.32 billion for the first quarter of
2023, an increase of $146.1 million, or 3.5%, from $4.18 billion
for the fourth quarter of 2022, and an increase of $892.9 million,
or 26.0%, from $3.43 billion for the first quarter of 2022. The
linked-quarter increase in average interest earning assets was
primarily due to continued growth in the loan portfolio. The
year-over-year increase in average interest earning assets was
primarily due to strong growth in the loan portfolio and purchases
of investment securities, offset partially by the forgiveness of
PPP loans and the reduction of cash balances.
Net interest margin (on a fully tax-equivalent basis) for the
first quarter of 2023 was 2.72%, a 44 basis point decrease from
3.16% in the fourth quarter of 2022, and an 88 basis point decrease
from 3.60% in the first quarter of 2022. Core net interest margin
(on a fully tax-equivalent basis), a non-GAAP financial measure
which excludes the impact of loan fees and PPP balances, interest,
and fees, for the first quarter of 2023 was 2.62%, a 43 basis point
decrease from 3.05% in the fourth quarter of 2022, and a 72 basis
point decrease from 3.34% in the first quarter of 2022. The decline
in the margin when compared to both prior periods was primarily due
to higher funding costs and increased borrowings in the rising
interest rate environment, offset partially by higher earning asset
yields.
Interest income was $52.0 million for the first quarter of 2023,
an increase of $3.1 million, or 6.4%, from $48.9 million in the
fourth quarter of 2022, and an increase of $17.3 million, or 49.9%,
from $34.7 million in the first quarter of 2022. The yield on
interest earning assets (on a fully tax-equivalent basis) was 4.91%
in the first quarter of 2023, compared to 4.67% in the fourth
quarter of 2022, and 4.13% in the first quarter of 2022. The
linked-quarter increase in the yield on interest earning assets was
primarily due to the increase in market interest rates resulting in
new loan originations, loans repricing, and investment purchases to
be at yields accretive to the existing portfolios. The
year-over-year increase in the yield on interest earning assets was
primarily due to growth and repricing of the loan and securities
portfolios in the rising interest rate environment, offset
partially by the lower recognition of PPP origination fees.
Loan interest income and loan fees remain the primary
contributing factors to the changes in the yield on interest
earning assets. The aggregate loan yield, excluding PPP loans,
increased to 5.06% in the first quarter of 2023, which was 20 basis
points higher than 4.86% in the fourth quarter of 2022, and 66
basis points higher than 4.40% in the first quarter of 2022. While
loan fees have historically maintained a relatively stable
contribution to the aggregate loan yield, the recent periods saw
fewer loan prepayments, which historically has accelerated the
recognition of loan fees. Despite the decrease in fee recognition,
the Company is encouraged that the core loan yield continues to
rise as new loan originations and the existing portfolio reprice in
the higher rate environment.
A summary of interest and fees recognized on loans, excluding
PPP loans, for the periods indicated is as follows:
Three Months Ended
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
Interest
4.95
%
4.74
%
4.42
%
4.17
%
4.15
%
Fees
0.11
0.12
0.17
0.26
0.25
Yield on Loans, Excluding PPP Loans
5.06
%
4.86
%
4.59
%
4.43
%
4.40
%
Interest expense was $23.4 million for the first quarter of
2023, an increase of $7.5 million, or 46.7%, from $16.0 million in
the fourth quarter of 2022, and an increase of $18.9 million, or
418.9%, from $4.5 million in the first quarter of 2022. The cost of
interest bearing liabilities increased 81 basis points on a
linked-quarter basis from 2.22% in the fourth quarter of 2022 to
3.03% in the first quarter of 2023, primarily due to higher rates
paid on deposits and the increased utilization of federal funds
purchased and FHLB advances in the rising interest rate
environment. On a year-over-year basis, the cost of interest
bearing liabilities increased 223 basis points from 0.80% in the
first quarter of 2022 to 3.03% in the first quarter of 2023,
primarily due to the rapid increase in market interest rates that
occurred between the periods, which impacted all funding
sources.
Interest expense on deposits was $16.4 million for the first
quarter of 2023, an increase of $5.6 million, or 51.9%, from $10.8
million in the fourth quarter of 2022, and an increase of $13.2
million, or 418.4%, from $3.2 million in the first quarter of 2022.
The cost of total deposits increased 70 basis points on a
linked-quarter basis from 1.31% in the fourth quarter of 2022, to
2.01% in the first quarter of 2023, primarily due to the rising
interest rate environment and increased competition from other
market alternatives. On a year-over-year basis, the cost of total
deposits increased 158 basis points from 0.43% in the first quarter
of 2022, to 2.01% in the first quarter of 2023, primarily due to
the upward repricing of the deposit portfolio in the higher
interest rate environment.
A summary of the Company’s average balances, interest yields and
rates, and net interest margin for the three months ended March 31,
2023, December 31, 2022, and March 31, 2022 is as follows:
For the Three Months
Ended
March 31, 2023
December 31, 2022
March 31, 2022
Average
Interest
Yield/
Average
Interest
Yield/
Average
Interest
Yield/
Balance
& Fees
Rate
Balance
& Fees
Rate
Balance
& Fees
Rate
(dollars in thousands)
Interest Earning Assets:
Cash Investments
$
63,253
$
447
2.86
%
$
65,393
$
366
2.22
%
$
80,497
$
26
0.13
%
Investment Securities:
Taxable Investment Securities
574,242
5,958
4.21
540,601
5,268
3.87
373,021
2,255
2.45
Tax-Exempt Investment Securities (1)
29,803
330
4.49
67,867
728
4.26
71,591
779
4.41
Total Investment Securities
604,045
6,288
4.22
608,468
5,996
3.91
444,612
3,034
2.77
Paycheck Protection Program Loans (2)
999
2
1.00
1,109
48
17.06
18,140
563
12.58
Loans (1)(2)
3,629,447
45,263
5.06
3,481,041
42,654
4.86
2,881,845
31,275
4.40
Total Loans
3,630,446
45,265
5.06
3,482,150
42,702
4.87
2,899,985
31,838
4.45
Federal Home Loan Bank Stock
25,962
372
5.81
21,633
163
2.99
5,680
54
3.84
Total Interest Earning Assets
4,323,706
52,372
4.91
%
4,177,644
49,227
4.67
%
3,430,774
34,952
4.13
%
Noninterest Earning Assets
81,528
73,701
83,024
Total Assets
$
4,405,234
$
4,251,345
$
3,513,798
Interest Bearing Liabilities:
Deposits:
Interest Bearing Transaction Deposits
$
461,372
$
2,780
2.44
%
$
464,631
$
2,013
1.72
%
$
566,279
$
597
0.43
%
Savings and Money Market Deposits
1,044,794
6,499
2.52
1,048,227
4,533
1.72
876,580
918
0.42
Time Deposits
248,174
1,069
1.75
281,334
1,007
1.42
288,914
745
1.05
Brokered Deposits
743,465
6,026
3.29
537,351
3,228
2.38
406,648
898
0.90
Total Interest Bearing Deposits
2,497,805
16,374
2.66
2,331,543
10,781
1.83
2,138,421
3,158
0.60
Federal Funds Purchased
415,111
4,944
4.83
340,471
3,379
3.94
10,600
9
0.35
Notes Payable
13,750
263
7.77
11,359
202
7.04
—
—
—
FHLB Advances
128,222
861
2.72
94,103
575
2.42
42,500
150
1.43
Subordinated Debentures
78,945
983
5.05
81,242
1,030
5.03
92,286
1,197
5.26
Total Interest Bearing Liabilities
3,133,833
23,425
3.03
%
2,858,718
15,967
2.22
%
2,283,807
4,514
0.80
%
Noninterest Bearing
Liabilities:
Noninterest Bearing Transaction
Deposits
813,598
943,232
822,488
Other Noninterest Bearing Liabilities
54,270
61,806
24,479
Total Noninterest Bearing Liabilities
867,868
1,005,038
846,967
Shareholders' Equity
403,533
387,589
383,024
Total Liabilities and Shareholders'
Equity
$
4,405,234
$
4,251,345
$
3,513,798
Net Interest Income / Interest Rate
Spread
28,947
1.88
%
33,260
2.45
%
30,438
3.33
%
Net Interest Margin (3)
2.72
%
3.16
%
3.60
%
Taxable Equivalent Adjustment:
Tax-Exempt Investment Securities and
Loans
(380
)
(367
)
(258
)
Net Interest Income
$
28,567
$
32,893
$
30,180
_____________________________________
(1)
Interest income and average rates for
tax-exempt investment securities and loans are presented on a
tax-equivalent basis, assuming a statutory federal income tax rate
of 21%.
(2)
Average loan balances include nonaccrual
loans. Interest income on loans includes amortization of deferred
loan fees, net of deferred loan costs.
(3)
Net interest margin includes the tax
equivalent adjustment and represents the annualized results of: (i)
the difference between interest income on interest earning assets
and the interest expense on interest bearing liabilities, divided
by (ii) average interest earning assets for the period.
Provision for Credit Losses
On January 1, 2023, the Company adopted Accounting Standards
Update No. 2016-13 “Financial Instruments – Credit Losses (Topic
326): Measurement of Credit Losses of Financial Instruments,” more
commonly referred to as “CECL.” Upon adoption of CECL, the
Company’s allowance for credit losses on loans increased $650,000
and the allowance on unfunded commitments increased $4.9 million.
The tax-effected impact of these two items totaled $3.9 million and
was recorded as an adjustment to retained earnings as of January 1,
2023.
The provision for credit losses was $1.5 million for both the
first quarter of 2023 and the fourth quarter of 2022, compared to
$1.7 million in the first quarter of 2022. The provision recorded
in the first quarter of 2023 was primarily attributable to the more
moderated growth of the loan portfolio. The allowance for credit
losses to total loans was 1.36% at March 31, 2023, compared to
1.34% at December 31, 2022, and 1.40% at March 31, 2022.
The following table presents the activity in the Company’s
allowance for credit losses for the periods indicated:
Three Months Ended
March 31,
December 31,
March 31,
(dollars in thousands)
2023
2022
2022
Balance at Beginning of Period
$
47,996
$
46,491
$
40,020
Impact of Adopting CECL
650
—
—
Provision for Credit Losses
1,500
1,500
1,675
Charge-offs
(4
)
(3
)
(15
)
Recoveries
6
8
12
Balance at End of Period
$
50,148
$
47,996
$
41,692
The provision for unfunded commitments was a negative provision
of ($875,000) for the first quarter of 2023 and zero for both the
fourth quarter of 2022 and first quarter of 2022. The negative
provision during the quarter was due to a reduction in outstanding
unfunded commitments primarily attributable to the migration to
funded loans.
Noninterest Income
Noninterest income was $1.9 million for the first quarter of
2023, an increase of $205,000 from $1.74 million for the fourth
quarter of 2022, and an increase of $386,000 from $1.6 million for
the first quarter of 2022. The linked-quarter increase was
primarily due to an increase in letter of credit fees and FHLB
prepayment income, offset partially by a decrease in other income.
The year-over-year increase was primarily due to increased letter
of credit fees and FHLB prepayment income, offset partially by no
recorded swap fees.
The following table presents the major components of noninterest
income for the periods indicated:
Three Months Ended
March 31,
December 31,
March 31,
(dollars in thousands)
2023
2022
2022
Noninterest Income:
Customer Service Fees
$
349
$
344
$
281
Net Gain (Loss) on Sales of Securities
(56
)
30
—
Letter of Credit Fees
634
358
242
Debit Card Interchange Fees
138
148
133
Swap Fees
—
—
557
Bank-Owned Life Insurance
234
238
148
FHLB Prepayment Income
299
—
—
Other Income
345
620
196
Totals
$
1,943
$
1,738
$
1,557
Noninterest Expense
Noninterest expense was $14.2 million for the first quarter of
2023, a decrease of $1.0 million from $15.2 million for the fourth
quarter of 2022, and an increase of $675,000 from $13.5 million for
the first quarter of 2022. The linked-quarter decrease was
primarily due to decreases in salaries and employee benefits
resulting from lower discretionary incentive accruals. The
year-over-year increase was primarily attributable to increases in
the FDIC insurance assessment and derivative collateral fees,
offset partially by declines in marketing and advertising and other
expense.
The following table presents the major components of noninterest
expense for the periods indicated:
Three Months Ended
March 31,
December 31,
March 31,
(dollars in thousands)
2023
2023
2022
Noninterest Expense:
Salaries and Employee Benefits
$
8,815
$
9,821
$
8,694
Occupancy and Equipment
1,209
1,177
1,085
FDIC Insurance Assessment
665
360
360
Data Processing
357
371
297
Professional and Consulting Fees
755
635
696
Derivative Collateral Fees
380
535
2
Information Technology and
Telecommunications
683
673
578
Marketing and Advertising
262
403
626
Intangible Asset Amortization
48
48
48
Amortization of Tax Credit Investments
114
114
117
Other Expense
895
1,066
1,005
Totals
$
14,183
$
15,203
$
13,508
The Company had 246 full-time equivalent employees at both March
31, 2023 and December 31, 2022, and 229 employees at March 31,
2022. The efficiency ratio, a non-GAAP financial measure, was 46.2%
for the first quarter of 2023, compared to 43.8% for the fourth
quarter of 2022, and 42.4% for the first quarter of 2022.
Income Taxes
The effective combined federal and state income tax rate for the
first quarter of 2023 was 25.9%, an increase from 23.4% for the
fourth quarter of 2022 and consistent with 25.9% for the first
quarter of 2022.
Balance Sheet
Total assets at March 31, 2023 were $4.60 billion, a 5.9%
increase from $4.35 billion at December 31, 2022, and a 27.6%
increase from $3.61 billion at March 31, 2022. The linked-quarter
increase in total assets was primarily due to continued loan growth
and an increase in cash and cash equivalent balances. The
year-over-year increase in total assets was primarily due to strong
loan growth, purchases of investment securities and an increase in
cash and cash equivalent balances.
Total gross loans at March 31, 2023 were $3.68 billion, an
increase of $114.9 million, or 3.2%, over total gross loans of
$3.57 billion at December 31, 2022, and an increase of $696.4
million, or 23.3%, over total gross loans of $2.99 billion at March
31, 2022. The increase in the loan portfolio during the first
quarter of 2023 was primarily due to growth across all
segments.
The following table presents the dollar composition of the
Company’s loan portfolio, by category, at the dates indicated:
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
(dollars in thousands)
Commercial
$
454,193
$
435,344
$
412,448
$
403,569
$
363,290
Paycheck Protection Program
963
1,049
1,192
4,860
12,309
Construction and Land Development
312,277
295,554
280,380
305,552
272,333
1-4 Family Construction
85,797
70,242
55,177
53,639
48,798
Real Estate Mortgage:
1 - 4 Family Mortgage
380,210
355,474
341,102
334,815
312,201
Multifamily
1,320,081
1,306,738
1,230,509
1,087,865
1,012,623
CRE Owner Occupied
158,650
149,905
151,088
142,214
117,969
CRE Nonowner Occupied
962,671
947,008
900,691
886,432
840,463
Total Real Estate Mortgage Loans
2,821,612
2,759,125
2,623,390
2,451,326
2,283,256
Consumer and Other
9,518
8,132
7,495
6,939
7,981
Total Loans, Gross
3,684,360
3,569,446
3,380,082
3,225,885
2,987,967
Allowance for Loan Losses
(50,148
)
(47,996
)
(46,491
)
(44,711
)
(41,692
)
Net Deferred Loan Fees
(8,735
)
(9,293
)
(9,088
)
(9,536
)
(9,065
)
Total Loans, Net
$
3,625,477
$
3,512,157
$
3,324,503
$
3,171,638
$
2,937,210
Total deposits at March 31, 2023 were $3.41 billion, a decrease
of $5.4 million, or 0.2%, over total deposits of $3.42 billion at
December 31, 2022, and an increase of $375.5 million, or 12.4%,
over total deposits of $3.04 billion at March 31, 2022. Deposits
decreased slightly in the first quarter of 2023 primarily due to a
decrease in noninterest bearing deposits and savings and money
market deposits, offset by an increase in interest bearing deposits
and brokered deposits. Brokered deposits were being used as a
supplemental funding source, as needed, to support the loan
portfolio growth. Uninsured deposits as of March 31, 2023 were 24%
of total deposits, down from 38% as of December 31, 2022.
The following table presents the dollar composition of the
Company’s deposit portfolio, by category, at the dates
indicated:
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
(dollars in thousands)
Noninterest Bearing Transaction
Deposits
$
742,198
$
884,272
$
961,084
$
961,998
$
835,482
Interest Bearing Transaction Deposits
630,037
451,992
510,396
522,151
598,402
Savings and Money Market Deposits
913,013
1,031,873
1,077,333
952,138
890,926
Time Deposits
266,213
272,253
293,052
272,424
286,674
Brokered Deposits
859,662
776,153
463,209
493,242
424,127
Total Deposits
$
3,411,123
$
3,416,543
$
3,305,074
$
3,201,953
$
3,035,611
Capital
Total shareholders’ equity at March 31, 2023 was $402.0 million,
an increase of $7.9 million, or 2.0%, compared to total
shareholders’ equity of $394.1 million at December 31, 2022, and an
increase of $22.6 million, or 5.9%, over total shareholders’ equity
of $379.4 million at March 31, 2022. The linked-quarter increase
was due to net income retained, offset partially by the adoption of
CECL and preferred stock dividends. The year-over-year increase was
due to net income retained and unrealized gains in the derivatives
portfolio, offset partially by an increase in unrealized losses in
the securities portfolio, stock repurchases, the adoption of CECL
and preferred stock dividends. The Company did not purchase any
shares of its common stock during the first quarter of 2023.
Tangible book value per share, a non-GAAP financial measure, was
$11.95 as of March 31, 2023, an increase of 2.2% from $11.69 as of
December 31, 2022, and an increase of 8.5% from $11.01 as of March
31, 2022. The linked-quarter and year-over-year increases occurred
despite the market value depreciation of the securities portfolio
driven by the rapidly rising interest rate environment. Tangible
common equity as a percentage of tangible assets, a non-GAAP
financial measure, was 7.23% at March 31, 2023, compared to 7.48%
at December 31, 2022, and 8.60% at March 31, 2022.
Today, the Company also announced that its Board of Directors
declared a quarterly cash dividend on its 5.875% Non-Cumulative
Perpetual Preferred Stock, Series A (Series A Preferred Stock). The
quarterly cash dividend of $36.72 per share, equivalent to $0.3672
per depositary share, each representing a 1/100th interest in a
share of the Series A Preferred Stock (Nasdaq: BWBBP), is payable
on June 1, 2023 to shareholders of record of the Series A Preferred
Stock at the close of business on May 15, 2023.
Liquidity
Total on- and off-balance sheet liquidity was $1.92 billion as
of March 31, 2023, compared to $1.38 billion at December 31, 2022
and $1.44 billion at March 31, 2022. During the first quarter of
2023, the Company took a number of actions to increase its total
liquidity by more than $500 million, including pledging loans and
securities to create additional borrowing capacity at the Federal
Reserve Bank and increasing its cash on the balance sheet. The
Company did not utilize the Bank Term Funding Program (BTFP) or
Federal Reserve Discount Window during the first quarter of
2023.
Primary Liquidity—On-Balance
Sheet
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
(dollars in thousands)
Cash and Cash Equivalents
$
177,116
$
48,090
$
36,332
$
43,168
$
50,312
Securities Available for Sale
559,430
548,613
542,007
482,583
459,090
Less: Pledged Securities
(234,452
)
—
—
—
—
Total Primary Liquidity
$
502,094
$
596,703
$
578,339
$
525,751
$
509,402
Ratio of Primary Liquidity to Total
Deposits
14.7
%
17.5
%
17.5
%
16.4
%
16.8
%
Secondary Liquidity—Off-Balance
Sheet
Borrowing Capacity
Net Secured Borrowing Capacity with the
FHLB
$
246,795
$
390,898
$
426,604
$
569,076
$
542,489
Net Secured Borrowing Capacity with the
Federal Reserve Bank
990,685
157,827
156,534
169,766
159,328
Unsecured Borrowing Capacity with
Correspondent Lenders
158,000
208,000
208,000
208,000
208,000
Secured Borrowing Capacity with
Correspondent Lender
26,250
26,250
40,000
25,000
25,000
Total Secondary Liquidity
1,421,730
782,975
831,138
971,842
934,817
Total Primary and Secondary Liquidity
$
1,923,824
$
1,379,678
$
1,409,477
$
1,497,593
$
1,444,219
Ratio of Primary and Secondary Liquidity
to Total Deposits
56.4
%
40.4
%
42.6
%
46.8
%
47.6
%
Asset Quality
Annualized net charge-offs (recoveries) as a percentage of
average loans were 0.00% for the first quarter of 2023, fourth
quarter of 2022 and first quarter of 2022. At March 31, 2023, the
Company’s nonperforming assets, which include nonaccrual loans,
loans past due 90 days and still accruing, and foreclosed assets,
were $809,000, or 0.02% of total assets, as compared to $639,000,
or 0.01% of total assets at December 31, 2022, and $706,000, or
0.02% of total assets at March 31, 2022.
Loans that have potential weaknesses that warrant a watchlist
risk rating at March 31, 2023 totaled $27.6 million, compared to
$32.3 million at December 31, 2022, and $46.8 million at March 31,
2022. The increased uncertainty in the economic environment may
result in future watchlist or adverse classifications in the loan
portfolio. Loans that warranted a substandard risk rating at March
31, 2023 totaled $36.3 million, compared to $28.0 million at
December 31, 2022, and $18.6 million at March 31, 2022. The
linked-quarter increase was primarily due to the downgrade of one
loan relationship.
The following table presents a summary of asset quality
measurements at the dates indicated:
As of and for the Three Months
Ended
March 31,
December 31,
September 30,
June 30,
March 31,
(dollars in thousands)
2023
2022
2022
2022
2022
Selected Asset Quality Data
Loans 30-89 Days Past Due
$
21
$
186
$
38
$
225
$
13
Loans 30-89 Days Past Due to Total
Loans
0.00
%
0.01
%
0.00
%
0.01
%
0.00
%
Nonperforming Loans
$
693
$
639
$
663
$
688
$
706
Nonperforming Loans to Total Loans
0.02
%
0.02
%
0.02
%
0.02
%
0.02
%
Foreclosed Assets
$
116
$
—
$
—
$
—
$
—
Nonaccrual Loans to Total Loans
0.02
%
0.02
%
0.02
%
0.02
%
0.02
%
Nonaccrual Loans and Loans Past Due 90
Days and Still Accruing to Total Loans
0.02
0.02
0.02
0.02
0.02
Nonperforming Assets (1)
$
809
$
639
$
663
$
688
$
706
Nonperforming Assets to Total Assets
(1)
0.02
%
0.01
%
0.02
%
0.02
%
0.02
%
Allowance for Credit Losses to Total
Loans
1.36
1.34
1.38
1.39
1.40
Allowance for Credit Losses to Nonaccrual
Loans
7,236.36
7,511.11
7,012.22
6,498.69
5,905.38
Net Loan Charge-Offs (Recoveries)
(Annualized) to Average Loans
0.00
0.00
(0.03
)
0.00
0.00
_____________________________________
(1)
Nonperforming assets are defined as
nonaccrual loans plus loans 90 days past due and still accruing
plus foreclosed assets.
The Company will host a conference call to discuss its first
quarter 2023 financial results on Thursday, April 27, 2023 at 8:00
a.m. Central Time. The conference call can be accessed by dialing
877-270-2148 and requesting to join the Bridgewater Bancshares
earnings call. To listen to a replay of the conference call via
phone, please dial 877-344-7529 and enter access code 7417750. The
replay will be available through May 4, 2023. The conference call
will also be available via a live webcast on the Investor Relations
section of the Company’s website, investors.bridgewaterbankmn.com,
and archived for replay.
About the Company
Bridgewater Bancshares, Inc. (Nasdaq: BWB) is a St. Louis Park,
Minnesota-based financial holding company. Bridgewater's banking
subsidiary, Bridgewater Bank, is a premier, full-service Twin
Cities bank dedicated to serving the diverse needs of commercial
real estate investors, entrepreneurs, business clients and
successful individuals. By pairing a range of deposit, lending, and
business services solutions with a responsive service model,
Bridgewater has seen continuous growth and profitability. With
total assets of $4.6 billion and seven branches as of March 31,
2023, Bridgewater is considered one of the largest locally led
banks in the State of Minnesota, and has received numerous awards
for its growth, banking services, and esteemed corporate
culture.
Use of Non-GAAP financial measures
In addition to the results presented in accordance with U.S.
Generally Accepted Accounting Principles (GAAP), the Company
routinely supplements its evaluation with an analysis of certain
non-GAAP financial measures. The Company believes these non-GAAP
financial measures, in addition to the related GAAP measures,
provide meaningful information to investors to help them understand
the Company’s operating performance and trends, and to facilitate
comparisons with the performance of peers. These disclosures should
not be viewed as a substitute for operating results determined in
accordance with GAAP, nor are they necessarily comparable to
non-GAAP performance measures that may be presented by other
companies. Reconciliations of non-GAAP disclosures used in this
earnings release to the comparable GAAP measures are provided in
the accompanying tables.
Forward-Looking Statements
This earnings release contains “forward-looking statements”
within the meaning of the safe harbor provisions of the U.S.
Private Securities Litigation Reform Act of 1995. Forward-looking
statements include, without limitation, statements concerning
plans, estimates, calculations, forecasts and projections with
respect to the anticipated future performance of the Company. These
statements are often, but not always, identified by words such as
“may”, “might”, “should”, “could”, “predict”, “potential”,
“believe”, “expect”, “continue”, “will”, “anticipate”, “seek”,
“estimate”, “intend”, “plan”, “projection”, “would”, “annualized”,
“target” and “outlook”, or the negative version of those words or
other comparable words of a future or forward-looking nature.
Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
our current beliefs, expectations and assumptions regarding our
business, future plans and strategies, projections, anticipated
events and trends, the economy and other future conditions. Because
forward-looking statements relate to the future, they are subject
to inherent uncertainties, risks and changes in circumstances that
are difficult to predict and many of which are outside of our
control. Our actual results and financial condition may differ
materially from those indicated in the forward-looking statements.
Therefore, you should not rely on any of these forward-looking
statements. Important factors that could cause our actual results
and financial condition to differ materially from those indicated
in the forward-looking statements include, among others, the
following: interest rate risk, including the effects of recent and
anticipated rate increases by the Federal Reserve; fluctuations in
the values of the securities held in our securities portfolio,
including as the result of rising interest rates, which has
resulted in unrealized losses in our portfolio; business and
economic conditions generally and in the financial services
industry, nationally and within our market area, including rising
rates of inflation; the effects of recent developments and events
in the financial services industry, including the large-scale
deposit withdrawals over a short period of time at Silicon Valley
Bank and Signature Bank that resulted in the failure of those
institutions; loan concentrations in our portfolio; the overall
health of the local and national real estate market; our ability to
successfully manage credit risk; our ability to maintain an
adequate level of allowance for loan losses; new or revised
accounting standards, including as a result of the implementation
of the Current Expected Credit Loss standard; the concentration of
large loans to certain borrowers; the concentration of large
deposits from certain clients, who have balances above current FDIC
insurance limits and may withdraw deposits to diversify their
exposure; our ability to successfully manage liquidity risk, which
may increase our dependence on non-core funding sources such as
brokered deposits, and negatively impact our cost of funds; our
ability to raise additional capital to implement our business plan;
our ability to implement our growth strategy and manage costs
effectively; developments and uncertainty related to the future use
and availability of some reference rates, such as the expected
discontinuation of the London Interbank Offered Rate, as well as
other alternative reference rates; the composition of our senior
leadership team and our ability to attract and retain key
personnel; talent and labor shortages and high rates of employee
turnover; the occurrence of fraudulent activity, breaches or
failures of our information security controls or
cybersecurity-related incidents; interruptions involving our
information technology and telecommunications systems or
third-party servicers; competition in the financial services
industry, including from nonbank competitors such as credit unions
and “fintech” companies; the effectiveness of our risk management
framework; the commencement and outcome of litigation and other
legal proceedings and regulatory actions against us; the impact of
recent and future legislative and regulatory changes, including in
response to the recent failures of Silicon Valley Bank and
Signature Bank; risks related to climate change and the negative
impact it may have on our customers and their businesses; the
imposition of tariffs or other governmental policies impacting the
value of products produced by our commercial borrowers; severe
weather, natural disasters, wide spread disease or pandemics
(including the COVID-19 pandemic), acts of war or terrorism or
other adverse external events including the Russian invasion of
Ukraine; potential impairment to the goodwill the Company recorded
in connection with our past acquisition; changes to U.S. or state
tax laws, regulations and guidance, including the new 1% excise tax
on stock buybacks by publicly traded companies; and any other risks
described in the “Risk Factors” sections of reports filed by the
Company with the Securities and Exchange Commission.
Any forward-looking statement made by us in this press release
is based only on information currently available to us and speaks
only as of the date on which it is made. The Company undertakes no
obligation to publicly update any forward-looking statement,
whether written or oral, that may be made from time to time,
whether as a result of new information, future developments or
otherwise.
Bridgewater Bancshares, Inc. and
Subsidiaries
Consolidated Balance Sheets
(dollars in thousands, except share
data)
March 31,
December 31,
March 31,
2023
2022
2022
(Unaudited)
(Unaudited)
ASSETS
Cash and Cash Equivalents
$
209,192
$
87,043
$
71,887
Bank-Owned Certificates of Deposit
1,225
1,181
1,139
Securities Available for Sale, at Fair
Value
559,430
548,613
459,090
Loans, Net of Allowance for Credit Losses
of $50,148 at March 31, 2023 (unaudited), $47,996 at December 31,
2022 and $41,692 at March 31, 2022 (unaudited)
3,625,477
3,512,157
2,937,210
Federal Home Loan Bank (FHLB) Stock, at
Cost
28,632
19,606
6,846
Premises and Equipment, Net
47,801
48,445
49,044
Foreclosed Assets
116
—
—
Accrued Interest
13,377
13,479
9,596
Goodwill
2,626
2,626
2,626
Other Intangible Assets, Net
240
288
431
Bank-Owned Life Insurance
33,719
33,485
25,464
Other Assets
81,064
78,739
44,587
Total Assets
$
4,602,899
$
4,345,662
$
3,607,920
LIABILITIES AND EQUITY
LIABILITIES
Deposits:
Noninterest Bearing
$
742,198
$
884,272
$
835,482
Interest Bearing
2,668,925
2,532,271
2,200,129
Total Deposits
3,411,123
3,416,543
3,035,611
Federal Funds Purchased
437,000
287,000
23,000
Notes Payable
13,750
13,750
—
FHLB Advances
197,000
97,000
42,500
Subordinated Debentures, Net of Issuance
Costs
79,001
78,905
92,349
Accrued Interest Payable
3,257
2,831
1,576
Other Liabilities
59,762
55,569
33,443
Total Liabilities
4,200,893
3,951,598
3,228,479
SHAREHOLDERS' EQUITY
Preferred Stock- $0.01 par value;
Authorized 10,000,000
Preferred Stock - Issued and Outstanding
27,600 Series A shares ($2,500 liquidation preference) at March 31,
2023 (unaudited), December 31, 2022, and March 31, 2022
(unaudited)
66,514
66,514
66,514
Common Stock- $0.01 par value; Authorized
75,000,000
Common Stock - Issued and Outstanding
27,845,244 at March 31, 2023 (unaudited), 27,751,950 at December
31, 2022 and 28,150,389 at March 31, 2022 (unaudited)
278
278
282
Additional Paid-In Capital
97,716
96,529
103,756
Retained Earnings
255,394
248,685
210,596
Accumulated Other Comprehensive Income
(Loss)
(17,896
)
(17,942
)
(1,707
)
Total Shareholders' Equity
402,006
394,064
379,441
Total Liabilities and Equity
$
4,602,899
$
4,345,662
$
3,607,920
Bridgewater Bancshares, Inc. and
Subsidiaries
Consolidated Statements of
Income
(dollars in thousands, except per share
data)
(Unaudited)
Three Months Ended
March 31,
December 31,
March 31,
2023
2022
2022
INTEREST INCOME
Loans, Including Fees
$
44,955
$
42,488
$
31,744
Investment Securities
6,218
5,843
2,870
Other
819
529
80
Total Interest Income
51,992
48,860
34,694
INTEREST EXPENSE
Deposits
16,374
10,781
3,158
Notes Payable
263
202
—
FHLB Advances
861
575
150
Subordinated Debentures
983
1,030
1,197
Federal Funds Purchased
4,944
3,379
9
Total Interest Expense
23,425
15,967
4,514
NET INTEREST INCOME
28,567
32,893
30,180
Provision for Credit Losses
625
1,500
1,675
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES
27,942
31,393
28,505
NONINTEREST INCOME
Customer Service Fees
349
344
281
Net Gain (Loss) on Sales of Available for
Sale Securities
(56
)
30
—
Other Income
1,650
1,364
1,276
Total Noninterest Income
1,943
1,738
1,557
NONINTEREST EXPENSE
Salaries and Employee Benefits
8,815
9,821
8,694
Occupancy and Equipment
1,209
1,177
1,085
Other Expense
4,159
4,205
3,729
Total Noninterest Expense
14,183
15,203
13,508
INCOME BEFORE INCOME TAXES
15,702
17,928
16,554
Provision for Income Taxes
4,060
4,193
4,292
NET INCOME
11,642
13,735
12,262
Preferred Stock Dividends
(1,013
)
(1,014
)
(1,013
)
NET INCOME AVAILABLE TO COMMON
SHAREHOLDERS
$
10,629
$
12,721
$
11,249
EARNINGS PER SHARE
Basic
$
0.38
$
0.46
$
0.40
Diluted
0.37
0.45
0.39
Bridgewater Bancshares, Inc. and
Subsidiaries
Non-GAAP Financial Measures
(dollars in thousands)
(unaudited)
For the Three Months
Ended
March 31,
December 31,
March 31,
2023
2022
2022
Pre-Provision Net Revenue
Noninterest Income
$
1,943
$
1,738
$
1,557
Less: (Gain) Loss on Sales of
Securities
56
(30
)
—
Less: FHLB Advance Prepayment Income
(299
)
—
—
Total Operating Noninterest
Income
1,700
1,708
1,557
Plus: Net Interest Income
28,567
32,893
30,180
Net Operating Revenue
$
30,267
$
34,601
$
31,737
Noninterest Expense
$
14,183
$
15,203
$
13,508
Less: Amortization of Tax Credit
Investments
(114
)
(114
)
(117
)
Total Operating Noninterest
Expense
$
14,069
$
15,089
$
13,391
Pre-Provision Net Revenue
$
16,198
$
19,512
$
18,346
Plus:
Non-Operating Revenue Adjustments
243
30
—
Less:
Provision for Credit Losses
625
1,500
1,675
Non-Operating Expense Adjustments
114
114
117
Provision for Income Taxes
4,060
4,193
4,292
Net Income
$
11,642
$
13,735
$
12,262
Average Assets
$
4,405,234
$
4,251,345
$
3,513,798
Pre-Provision Net Revenue Return on
Average Assets
1.49
%
1.82
%
2.12
%
As of and for the Three Months
Ended
March 31,
December 31,
March 31,
2023
2022
2022
Core Net Interest Margin
Net Interest Income (Tax-Equivalent
Basis)
$
28,947
$
33,260
$
30,438
Less: Loan Fees
(998
)
(1,100
)
(1,743
)
Less: PPP Interest and Fees
(2
)
(48
)
(563
)
Core Net Interest Income
$
27,947
$
32,112
$
28,132
Average Interest Earning Assets
$
4,323,706
$
4,177,644
$
3,430,774
Less: Average PPP Loans
(999
)
(1,109
)
(18,140
)
Core Average Interest Earning Assets
$
4,322,707
$
4,176,535
$
3,412,634
Core Net Interest Margin
2.62
%
3.05
%
3.34
%
Non-GAAP Financial Measures
(dollars in thousands)
(unaudited)
For the Three Months
Ended
March 31,
December 31,
March 31,
2023
2022
2022
Efficiency Ratio
Noninterest Expense
$
14,183
$
15,203
$
13,508
Less: Amortization of Intangible
Assets
(48
)
(48
)
(48
)
Adjusted Noninterest Expense
$
14,135
$
15,155
$
13,460
Net Interest Income
28,567
32,893
30,180
Noninterest Income
1,943
1,738
1,557
Less: (Gain) Loss on Sales of
Securities
56
(30
)
—
Adjusted Operating Revenue
$
30,566
$
34,601
$
31,737
Efficiency Ratio
46.2
%
43.8
%
42.4
%
Adjusted Efficiency Ratio
Noninterest Expense
$
14,183
$
15,203
$
13,508
Less: Amortization of Tax Credit
Investments
(114
)
(114
)
(117
)
Less: Amortization of Intangible
Assets
(48
)
(48
)
(48
)
Adjusted Noninterest Expense
$
14,021
$
15,041
$
13,343
Net Interest Income
28,567
32,893
30,180
Noninterest Income
1,943
1,738
1,557
Less: FHLB Advance Prepayment Income
(299
)
—
—
Less: (Gain) Loss on Sales of
Securities
56
(30
)
—
Adjusted Operating Revenue
$
30,267
$
34,601
$
31,737
Adjusted Efficiency Ratio
46.3
%
43.5
%
42.0
%
Non-GAAP Financial Measures
(dollars in thousands)
(unaudited)
As of and for the Three Months
Ended
March 31,
December 31,
March 31,
2023
2022
2022
Tangible Common Equity and Tangible
Common Equity/Tangible Assets
Total Shareholders' Equity
$
402,006
$
394,064
$
379,441
Less: Preferred Stock
(66,514
)
(66,514
)
(66,514
)
Total Common Shareholders' Equity
335,492
327,550
312,927
Less: Intangible Assets
(2,866
)
(2,914
)
(3,057
)
Tangible Common Equity
$
332,626
$
324,636
$
309,870
Total Assets
$
4,602,899
$
4,345,662
$
3,607,920
Less: Intangible Assets
(2,866
)
(2,914
)
(3,057
)
Tangible Assets
$
4,600,033
$
4,342,748
$
3,604,863
Tangible Common Equity/Tangible Assets
7.23
%
7.48
%
8.60
%
Tangible Book Value Per Share
Book Value Per Common Share
$
12.05
$
11.80
$
11.12
Less: Effects of Intangible Assets
(0.10
)
(0.11
)
(0.11
)
Tangible Book Value Per Common Share
$
11.95
$
11.69
$
11.01
Return on Average Tangible Common
Equity
Net Income Available to Common
Shareholders
$
10,629
$
12,721
$
11,249
Average Shareholders' Equity
$
403,533
$
387,589
$
383,024
Less: Average Preferred Stock
(66,514
)
(66,514
)
(66,514
)
Average Common Equity
337,019
321,075
316,510
Less: Effects of Average Intangible
Assets
(2,894
)
(2,941
)
(3,084
)
Average Tangible Common Equity
$
334,125
$
318,134
$
313,426
Return on Average Tangible Common
Equity
12.90
%
15.86
%
14.56
%
Three Months Ended
March 31,
December 31,
September 30,
June 30,
March 31,
2023
2022
2022
2022
2022
Tangible Common Equity
Total Shareholders' Equity
$
402,006
$
394,064
$
382,007
$
374,883
$
379,441
Less: Preferred Stock
(66,514
)
(66,514
)
(66,514
)
(66,514
)
(66,514
)
Common Shareholders' Equity
335,492
327,550
315,493
308,369
312,927
Less: Intangible Assets
(2,866
)
(2,914
)
(2,962
)
(3,009
)
(3,057
)
Tangible Common Equity
$
332,626
$
324,636
$
312,531
$
305,360
$
309,870
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230425006170/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
Grafico Azioni Bridgewater Bancshares (NASDAQ:BWB)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Bridgewater Bancshares (NASDAQ:BWB)
Storico
Da Gen 2024 a Gen 2025
