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Bridgewater Bancshares, Inc. Announces Record Third Quarter 2021 Net Income of $11.5 Million, $0.40 Diluted Earnings Per Common Share

Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the parent company of Bridgewater Bank (the Bank), today announced net income of $11.5 million for the third quarter of 2021, a 4.7% increase over net income of $11.0 million for the second quarter of 2021, and a 60.4% increase over net income of $7.2 million for the third quarter of 2020. Net income per diluted common share for the third quarter of 2021 was $0.40, a 4.8% increase compared to $0.38 per diluted common share for the second quarter of 2021, and a 60.8% increase, compared to $0.25 per diluted common share for the same period in 2020.

“Bridgewater’s third consecutive quarter of record net income was highlighted by a continuation of our robust organic loan growth, as well as two capital raising transactions to support our ongoing growth plans,” said Chairman, Chief Executive Officer, and President, Jerry Baack. “Driven by expanded lending teams, strong brand penetration and M&A-related market disruption, we are generating consistent loan growth by providing our clients with our signature high-touch and responsive level of service. As a result, we have been able to drive continued revenue growth and maintain an adjusted efficiency ratio in the low 40% range, even as we make incremental investments in the business to support our broader growth strategy. With superb asset quality trends and successful subordinated debt and preferred stock issuances during the third quarter, we are well positioned to continue our unique growth story and drive shareholder value going forward.”

Third Quarter 2021 Financial Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

Nonperforming

 

Adjusted

ROA

 

PPNR ROA (1)

 

ROE

 

earnings per share

 

 

assets to total assets

 

efficiency ratio (1)

1.37

%

 

2.09

%

 

13.81

%

 

$

0.40

 

 

0.02

%

 

41.5

%

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

Third Quarter 2021 Highlights

  • Diluted earnings per common share were $0.40 for the third quarter of 2021, compared to $0.38 per common share for the second quarter of 2021. Adjusted diluted earnings per common share, a non-GAAP financial measure, were $0.41 for the third quarter of 2021, excluding a $582,000 loss, or $0.01 per common share, on the extinguishment of subordinated debt from the partial early redemption of $11.3 million of subordinated debentures issued in July 2017.
  • Annualized return on average assets (ROA) and annualized return on average shareholders’ equity (ROE) for the third quarter of 2021 were 1.37% and 13.81%, compared to ROA and ROE of 1.43% and 15.40%, respectively, for the second quarter of 2021. Annualized return on average tangible common equity, a non-GAAP financial measure, was 15.47% for the third quarter of 2021, compared to 15.58% for the second quarter of 2021.
  • Pre-provision net revenue (PPNR), a non-GAAP financial measure, was $17.5 million for the third quarter of 2021, an increase of 10.3%, compared to $15.9 million for the second quarter of 2021. PPNR ROA, a non-GAAP financial measure, was 2.09% for the third quarter of 2021, compared to 2.07% for the second quarter of 2021.
  • Gross loans increased $117.8 million in the third quarter of 2021, or 18.0% annualized, compared to the second quarter of 2021. Gross loans, excluding Paycheck Protection Program (PPP) loans, increased $162.7 million in the third quarter of 2021, or 25.9% annualized, compared to the second quarter of 2021.
  • Deposits increased $133.3 million in the third quarter of 2021, or 19.4% annualized, compared to the second quarter of 2021.
  • Net interest margin (on a fully tax-equivalent basis) was 3.54% for the third quarter of 2021, compared to 3.52% in the second quarter of 2021.
  • The adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 41.5% for the third quarter of 2021, compared to 41.5% for the second quarter of 2021.
  • A loan loss provision of $1.3 million was recorded in the third quarter of 2021 to support strong organic loan growth. The allowance for loan losses to total loans was 1.43% at September 30, 2021, compared to 1.45% at June 30, 2021. The allowance for loan losses to total loans, excluding PPP loans, was 1.46% at September 30, 2021, compared to 1.50% at June 30, 2021.
  • Annualized net loan charge-offs (recoveries) as a percentage of average loans were 0.00% for the third quarter of 2021, compared to 0.00% for the second quarter of 2021.
  • Tangible book value per share, a non-GAAP financial measure, increased 3.9%, or $0.40, to $10.62 at September 30, 2021, compared to $10.22 at June 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,

 

 

2021

 

2021

 

2020

 

2021

 

2020

Per Common Share Data

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

 

$

0.41

 

 

$

0.39

 

 

$

0.25

 

 

$

1.18

 

 

$

0.77

 

Diluted Earnings Per Share

 

 

0.40

 

 

 

0.38

 

 

 

0.25

 

 

 

1.14

 

 

 

0.76

 

Adjusted Diluted Earnings Per Share (1)

 

 

0.41

 

 

 

0.38

 

 

 

0.25

 

 

 

1.16

 

 

 

0.80

 

Book Value Per Share

 

 

10.73

 

 

 

10.33

 

 

 

9.25

 

 

 

10.73

 

 

 

9.25

 

Tangible Book Value Per Share (1)

 

 

10.62

 

 

 

10.22

 

 

 

9.13

 

 

 

10.62

 

 

 

9.13

 

Basic Weighted Average Shares Outstanding

 

 

28,047,280

 

 

 

28,040,762

 

 

 

28,683,855

 

 

 

28,035,246

 

 

 

28,717,142

 

Diluted Weighted Average Shares Outstanding

 

 

29,110,547

 

 

 

29,128,181

 

 

 

29,174,601

 

 

 

29,077,850

 

 

 

29,300,763

 

Shares Outstanding at Period End

 

 

28,066,822

 

 

 

28,162,777

 

 

 

28,710,775

 

 

 

28,066,822

 

 

 

28,710,775

 

 

 

 

 

 

 

 

 

 

 

 

Selected Performance Ratios

 

 

 

 

 

 

 

 

 

 

Return on Average Assets (Annualized)

 

 

1.37

%

 

 

1.43

%

 

 

1.05

%

 

 

1.42

%

 

 

1.16

%

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

 

 

2.09

 

 

 

2.07

 

 

 

1.94

 

 

 

2.10

 

 

 

2.01

 

Return on Average Shareholders' Equity (Annualized)

 

 

13.81

 

 

 

15.40

 

 

 

10.84

 

 

 

14.95

 

 

 

11.57

 

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

 

 

15.47

 

 

 

15.58

 

 

 

10.98

 

 

 

15.69

 

 

 

11.73

 

Yield on Interest Earning Assets

 

 

4.14

 

 

 

4.17

 

 

 

4.30

 

 

 

4.20

 

 

 

4.53

 

Yield on Total Loans, Gross

 

 

4.65

 

 

 

4.56

 

 

 

4.73

 

 

 

4.65

 

 

 

4.91

 

Cost of Interest Bearing Liabilities

 

 

0.88

 

 

 

0.96

 

 

 

1.50

 

 

 

0.95

 

 

 

1.63

 

Cost of Total Deposits

 

 

0.48

 

 

 

0.54

 

 

 

0.87

 

 

 

0.53

 

 

 

1.03

 

Net Interest Margin (2)

 

 

3.54

 

 

 

3.52

 

 

 

3.28

 

 

 

3.55

 

 

 

3.41

 

Core Net Interest Margin (1)(2)

 

 

3.22

 

 

 

3.31

 

 

 

3.14

 

 

 

3.29

 

 

 

3.24

 

Efficiency Ratio (1)

 

 

43.9

 

 

 

42.0

 

 

 

42.3

 

 

 

42.4

 

 

 

45.1

 

Adjusted Efficiency Ratio (1)

 

 

41.5

 

 

 

41.5

 

 

 

41.7

 

 

 

41.3

 

 

 

42.0

 

Noninterest Expense to Average Assets (Annualized)

 

 

1.58

 

 

 

1.50

 

 

 

1.42

 

 

 

1.53

 

 

 

1.58

 

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

 

 

1.49

 

 

 

1.48

 

 

 

1.40

 

 

 

1.49

 

 

 

1.47

 

Loan to Deposit Ratio

 

 

95.0

 

 

 

95.3

 

 

 

99.4

 

 

 

 

 

Core Deposits to Total Deposits (3)

 

 

83.3

 

 

 

81.2

 

 

 

77.1

 

 

 

 

 

Tangible Common Equity to Tangible Assets (1)

 

 

8.81

 

 

 

9.10

 

 

 

9.46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios (Bank Only) (4)

 

 

 

 

 

 

 

 

 

 

Tier 1 Leverage Ratio

 

 

10.96

%

 

 

10.57

%

 

 

11.24

%

 

 

 

 

Common Equity Tier 1 Risk-based Capital Ratio

 

 

11.88

 

 

 

11.24

 

 

 

12.60

 

 

 

 

 

Tier 1 Risk-based Capital Ratio

 

 

11.88

 

 

 

11.24

 

 

 

12.60

 

 

 

 

 

Total Risk-based Capital Ratio

 

 

13.13

 

 

 

12.49

 

 

 

13.85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios (Consolidated) (4)

 

 

 

 

 

 

 

 

 

 

Tier 1 Leverage Ratio

 

 

10.70

%

 

 

9.08

%

 

 

9.83

%

 

 

 

 

Common Equity Tier 1 Risk-based Capital Ratio

 

 

9.47

 

 

 

9.67

 

 

 

11.03

 

 

 

 

 

Tier 1 Risk-based Capital Ratio

 

 

11.65

 

 

 

9.67

 

 

 

11.03

 

 

 

 

 

Total Risk-based Capital Ratio

 

 

15.93

 

 

 

13.49

 

 

 

15.45

 

 

 

 

 

     

(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)

 

2021

 

2021

 

2021

 

2020

 

2020

Selected Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

3,389,125

 

$

3,162,612

 

$

3,072,359

 

$

2,927,345

 

$

2,774,564

Total Loans, Gross

 

 

2,712,012

 

 

2,594,186

 

 

2,426,123

 

 

2,326,428

 

 

2,259,228

Allowance for Loan Losses

 

 

38,901

 

 

37,591

 

 

35,987

 

 

34,841

 

 

31,381

Goodwill and Other Intangibles

 

 

3,153

 

 

3,200

 

 

3,248

 

 

3,296

 

 

3,344

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

2,854,157

 

 

2,720,906

 

 

2,638,654

 

 

2,501,636

 

 

2,273,044

Tangible Common Equity (1)

 

 

298,135

 

 

287,630

 

 

275,923

 

 

262,109

 

 

262,088

Total Shareholders' Equity

 

 

367,803

 

 

290,830

 

 

279,171

 

 

265,405

 

 

265,432

Average Total Assets - Quarter-to-Date

 

 

3,332,301

 

 

3,076,712

 

 

2,940,262

 

 

2,816,032

 

 

2,711,755

Average Shareholders' Equity - Quarter-to-Date

 

 

330,604

 

 

286,311

 

 

272,729

 

 

265,716

 

 

263,195

 
(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)

 

2021

 

2021

 

2020

 

2021

 

2020

Selected Income Statement Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Income

 

$

33,517

 

$

31,147

 

$

28,493

 

$

95,104

 

$

84,127

Interest Expense

 

 

4,844

 

 

4,859

 

 

6,814

 

 

14,748

 

 

21,004

Net Interest Income

 

 

28,673

 

 

26,288

 

 

21,679

 

 

80,356

 

 

63,123

Provision for Loan Losses

 

 

1,300

 

 

1,600

 

 

3,750

 

 

4,000

 

 

8,850

Net Interest Income after Provision for Loan Losses

 

 

27,373

 

 

24,688

 

 

17,929

 

 

76,356

 

 

54,273

Noninterest Income

 

 

1,410

 

 

1,603

 

 

1,157

 

 

4,021

 

 

4,853

Noninterest Expense

 

 

13,236

 

 

11,477

 

 

9,672

 

 

35,636

 

 

30,129

Income Before Income Taxes

 

 

15,547

 

 

14,814

 

 

9,414

 

 

44,741

 

 

28,997

Provision for Income Taxes

 

 

4,038

 

 

3,821

 

 

2,240

 

 

11,568

 

 

6,782

Net Income

 

$

11,509

 

$

10,993

 

$

7,174

 

$

33,173

 

$

22,215

Income Statement

Net Interest Income

Net interest income was $28.7 million for the third quarter of 2021, an increase of $2.4 million, or 9.1%, from $26.3 million in the second quarter of 2021, and an increase of $7.0 million, or 32.3%, from $21.7 million in the third quarter of 2020. The linked-quarter and year-over-year increases in net interest income were primarily due to robust growth in average interest earning assets, lower rates paid on deposits, and the recognition of PPP loan origination fees, offset partially by declining yields on loans. Average interest earning assets were $3.23 billion for the third quarter of 2021, an increase of $214.9 million, or 7.1%, from $3.02 billion for the second quarter of 2021, and an increase of $578.4 million, or 21.8%, from $2.66 billion for the third quarter of 2020. The linked-quarter increase in average interest earning assets was primarily due to increased cash balances and continued strong organic growth in the loan portfolio, offset partially by the payoff of PPP loans. The year-over-year increase in average interest earning assets was primarily due to increased cash balances, continued purchases of investment securities, and strong organic growth in the loan portfolio, offset partially by the payoff of PPP loans.

Net interest margin (on a fully tax-equivalent basis) for the third quarter of 2021 was 3.54%, a 2 basis point increase from 3.52% in the second quarter of 2021, and a 26 basis point increase from 3.28% in the third quarter of 2020. 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 2021 was 3.22%, a 9 basis point decline from 3.31% in the second quarter of 2021, and an 8 basis point increase from 3.14% in the third quarter of 2020. Even though the capital raises during the quarter increased capital levels to support future growth, it is worth noting the net proceeds in the near-term compounded excess liquidity and negatively affected the net interest margin by 6 basis points.

While the origination volume of PPP loans earning 1.00% has negatively impacted net interest margin, the recognition of fees associated with the originations has benefited net interest margin for each of the past four quarters. The SBA has been forgiving PPP loans, which has accelerated the recognition of PPP fees starting in the fourth quarter of 2020 and continuing into the third quarter of 2021. The Company recognized $1.6 million of PPP origination fees during the third quarter of 2021, compared to $1.4 million during the second quarter of 2021. The elevated fee recognition is illustrated in the 9.15% PPP loan yield for the third quarter of 2021, compared to 4.75% for the second quarter of 2021.

The following table summarizes PPP loan originations and net origination fees as of September 30, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated

 

Outstanding

 

Program Lifetime

 

 

Number

 

Principal

 

Number

 

Principal

 

Net Origination

 

Net Origination

(dollars in thousands)

 

of Loans

 

Balance

 

of Loans

 

Balance

 

Fees Generated

 

Fees Earned

Round One PPP Loans

 

 

1,200

 

$

181,600

 

 

72

 

$

6,715

 

$

5,706

 

$

5,624

Round Two PPP Loans

 

 

651

 

 

78,386

 

 

301

 

 

47,475

 

 

3,544

 

 

1,769

Totals

 

 

1,851

 

$

259,986

 

 

373

 

$

54,190

 

$

9,250

 

$

7,393

Interest income was $33.5 million for the third quarter of 2021, an increase of $2.4 million, or 7.6%, from $31.1 million in the second quarter of 2021, and an increase of $5.0 million, or 17.6%, from $28.5 million in the third quarter of 2020. The yield on interest earning assets (on a fully tax-equivalent basis) was 4.14% in the third quarter of 2021, compared to 4.17% in the second quarter of 2021, and 4.30% in the third quarter of 2020. The linked-quarter decrease in the yield on interest earning assets was primarily due to excess cash balances and the historically low interest rate environment resulting in a lower core loan yield, offset partially by $1.6 million of PPP loan origination fees. The year-over-year decline in the yield on interest earning assets was primarily due to excess cash balances and the historically low interest rate environment resulting in lower loan and security yields.

Loan interest income and loan fees remain the primary contributing factors to the changes in yield on interest earning assets. The aggregate loan yield, excluding PPP loans, decreased to 4.51% in the third quarter of 2021, which was 3 basis points lower than 4.54% in the second quarter of 2021, and 42 basis points lower than 4.93% in the third quarter of 2020. While loan fees have maintained a relatively stable contribution to the aggregate loan yield, the historically low yield curve has resulted in a declining core yield on loans in comparison to both prior periods.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30, 2021

 

June 30, 2021

 

March 31, 2021

 

December 31, 2020

 

September 30, 2020

Interest

 

4.28

%

 

4.37

%

 

4.50

%

 

4.59

%

 

4.69

%

Fees

 

0.23

 

 

0.17

 

 

0.22

 

 

0.28

 

 

0.24

 

Yield on Loans, Excluding PPP Loans

 

4.51

%

 

4.54

%

 

4.72

%

 

4.87

%

 

4.93

%

Interest expense was $4.8 million for the third quarter of 2021, a decrease of $15,000, or 0.3%, from $4.9 million in the second quarter of 2021, and a decrease of $2.0 million, or 28.9%, from $6.8 million in the third quarter of 2020. The cost of interest bearing liabilities declined 8 basis points on a linked-quarter basis from 0.96% in the second quarter of 2021 to 0.88% in the third quarter of 2021, primarily due to lower rates paid on deposits, offset partially by additional subordinated debentures. On a year-over-year basis, the cost of interest bearing liabilities decreased 62 basis points from 1.50% in the third quarter of 2020 to 0.88% in the third quarter of 2021, primarily due to lower rates paid on deposits, the payoff of the Company’s notes payable, and the early extinguishment of $94.0 million of longer term FHLB advances, offset partially by strong growth of interest bearing deposits and additional subordinated debentures.

Interest expense on deposits was $3.4 million for the third quarter of 2021, a decrease of $96,000, or 2.7%, from $3.5 million in the second quarter of 2021, and a decrease of $1.4 million, or 29.4%, from $4.8 million in the third quarter of 2020. The cost of total deposits declined 6 basis points on a linked-quarter basis from 0.54% in the second quarter of 2021, and declined 39 basis points on a year-over-year basis from 0.87% in the third quarter of 2020, to 0.48% in the third quarter of 2021, primarily due to deposit rate cuts consistent with a lower rate environment and the continued downward repricing of time deposits.

A summary of the Company’s average balances, interest yields and rates, and net interest margin for the three months ended September 30, 2021, June 30, 2021, and September 30, 2020 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

September 30, 2021

 

June 30, 2021

 

September 30, 2020

 

 

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

 

$

187,405

 

$

67

 

 

0.14

%

 

$

88,067

 

$

33

 

 

0.15

%

 

$

101,787

 

$

42

 

 

0.16

%

Investment Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable Investment Securities

 

 

314,367

 

 

1,751

 

 

2.21

 

 

 

314,049

 

 

1,647

 

 

2.10

 

 

 

256,808

 

 

1,389

 

 

2.15

 

Tax-Exempt Investment Securities (1)

 

 

71,801

 

 

737

 

 

4.07

 

 

 

77,029

 

 

842

 

 

4.38

 

 

 

82,579

 

 

900

 

 

4.33

 

Total Investment Securities

 

 

386,168

 

 

2,488

 

 

2.56

 

 

 

391,078

 

 

2,489

 

 

2.55

 

 

 

339,387

 

 

2,289

 

 

2.68

 

Paycheck Protection Program Loans (2)

 

 

76,006

 

 

1,753

 

 

9.15

 

 

 

149,312

 

 

1,767

 

 

4.75

 

 

 

181,397

 

 

1,173

 

 

2.57

 

Loans (1)(2)

 

 

2,579,021

 

 

29,348

 

 

4.51

 

 

 

2,384,759

 

 

27,011

 

 

4.54

 

 

 

2,025,410

 

 

25,081

 

 

4.93

 

Total Loans

 

 

2,655,027

 

 

31,101

 

 

4.65

 

 

 

2,534,071

 

 

28,778

 

 

4.56

 

 

 

2,206,807

 

 

26,254

 

 

4.73

 

Federal Home Loan Bank Stock

 

 

5,701

 

 

68

 

 

4.65

 

 

 

6,221

 

 

54

 

 

3.51

 

 

 

7,901

 

 

127

 

 

6.38

 

Total Interest Earning Assets

 

 

3,234,301

 

 

33,724

 

 

4.14

%

 

 

3,019,437

 

 

31,354

 

 

4.17

%

 

 

2,655,882

 

 

28,712

 

 

4.30

%

Noninterest Earning Assets

 

 

98,000

 

 

 

 

 

 

57,275

 

 

 

 

 

 

55,873

 

 

 

 

Total Assets

 

$

3,332,301

 

 

 

 

 

$

3,076,712

 

 

 

 

 

$

2,711,755

 

 

 

 

Interest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Bearing Transaction Deposits

 

$

479,580

 

$

562

 

 

0.47

%

 

$

421,132

 

$

520

 

 

0.50

%

 

$

306,162

 

$

400

 

 

0.52

%

Savings and Money Market Deposits

 

 

801,354

 

 

904

 

 

0.45

 

 

 

764,632

 

 

940

 

 

0.49

 

 

 

501,246

 

 

1,106

 

 

0.88

 

Time Deposits

 

 

318,222

 

 

928

 

 

1.16

 

 

 

332,346

 

 

1,075

 

 

1.30

 

 

 

369,975

 

 

1,899

 

 

2.04

 

Brokered Deposits

 

 

440,167

 

 

1,023

 

 

0.92

 

 

 

379,768

 

 

978

 

 

1.03

 

 

 

419,744

 

 

1,435

 

 

1.36

 

Total Interest Bearing Deposits

 

 

2,039,323

 

 

3,417

 

 

0.66

 

 

 

1,897,878

 

 

3,513

 

 

0.74

 

 

 

1,597,127

 

 

4,840

 

 

1.21

 

Federal Funds Purchased

 

 

 

 

 

 

 

 

 

9,932

 

 

6

 

 

0.24

 

 

 

152

 

 

 

 

0.33

 

Notes Payable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,500

 

 

108

 

 

3.74

 

FHLB Advances

 

 

54,130

 

 

213

 

 

1.56

 

 

 

57,500

 

 

228

 

 

1.59

 

 

 

129,457

 

 

748

 

 

2.30

 

Subordinated Debentures

 

 

91,337

 

 

1,214

 

 

5.27

 

 

 

73,862

 

 

1,112

 

 

6.04

 

 

 

73,649

 

 

1,118

 

 

6.04

 

Total Interest Bearing Liabilities

 

 

2,184,790

 

 

4,844

 

 

0.88

%

 

 

2,039,172

 

 

4,859

 

 

0.96

%

 

 

1,811,885

 

 

6,814

 

 

1.50

%

Noninterest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Bearing Transaction Deposits

 

 

784,148

 

 

 

 

 

 

732,299

 

 

 

 

 

 

615,214

 

 

 

 

Other Noninterest Bearing Liabilities

 

 

32,759

 

 

 

 

 

 

18,930

 

 

 

 

 

 

21,461

 

 

 

 

Total Noninterest Bearing Liabilities

 

 

816,907

 

 

 

 

 

 

751,229

 

 

 

 

 

 

636,675

 

 

 

 

Shareholders' Equity

 

 

330,604

 

 

 

 

 

 

286,311

 

 

 

 

 

 

263,195

 

 

 

 

Total Liabilities and Shareholders' Equity

 

$

3,332,301

 

 

 

 

 

$

3,076,712

 

 

 

 

 

$

2,711,755

 

 

 

 

Net Interest Income / Interest Rate Spread

 

 

 

 

28,880

 

 

3.26

%

 

 

 

 

26,495

 

 

3.21

%

 

 

 

 

21,898

 

 

2.80

%

Net Interest Margin (3)

 

 

 

 

 

3.54

%

 

 

 

 

 

3.52

%

 

 

 

 

 

3.28

%

Taxable Equivalent Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-Exempt Investment Securities and Loans

 

 

 

 

(207

)

 

 

 

 

 

 

(207

)

 

 

 

 

 

 

(219

)

 

 

Net Interest Income

 

 

 

$

28,673

 

 

 

 

 

 

$

26,288

 

 

 

 

 

 

$

21,679

 

 

 

 
(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 $1.3 million for the third quarter of 2021, a decrease of $300,000 from $1.6 million for the second quarter of 2021, and a decrease of $2.5 million from $3.8 million for the third quarter of 2020. The provision recorded in the third quarter of 2021 was attributable to growth of the loan portfolio. The allowance for loan losses to total loans was 1.43% at September 30, 2021, compared to 1.45% at June 30, 2021, and 1.39% at September 30, 2020. The allowance for loan losses to total loans, excluding PPP loans, was 1.46% at September 30, 2021, compared to 1.50% at June 30, 2021, and 1.51% at September 30, 2020.

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)

 

2021

 

2021

 

2020

 

2021

 

2020

Balance at Beginning of Period

 

$

37,591

 

 

$

35,987

 

 

$

27,633

 

 

$

34,841

 

 

$

22,526

 

Provision for Loan Losses

 

 

1,300

 

 

 

1,600

 

 

 

3,750

 

 

 

4,000

 

 

 

8,850

 

Charge-offs

 

 

(20

)

 

 

(3

)

 

 

(6

)

 

 

(37

)

 

 

(54

)

Recoveries

 

 

30

 

 

 

7

 

 

 

4

 

 

 

97

 

 

 

59

 

Balance at End of Period

 

$

38,901

 

 

$

37,591

 

 

$

31,381

 

 

$

38,901

 

 

$

31,381

 

Noninterest Income

Noninterest income was $1.4 million for the third quarter of 2021, a decrease of $193,000 from $1.6 million for the second quarter of 2021, and an increase of $253,000 from $1.2 million for the third quarter of 2020. The linked-quarter decrease was primarily due to decreased gains on sales of securities, offset partially by an increase in letter of credit fees. The year-over-year increase was primarily due to increased letter of credit fees and 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)

 

2021

 

2021

 

2020

 

2021

 

2020

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer Service Fees

 

$

268

 

$

231

 

$

200

 

$

733

 

$

575

Net Gain on Sales of Securities

 

 

48

 

 

702

 

 

109

 

 

750

 

 

1,473

Letter of Credit Fees

 

 

577

 

 

231

 

 

487

 

 

1,135

 

 

1,026

Debit Card Interchange Fees

 

 

143

 

 

141

 

 

119

 

 

414

 

 

310

Swap Fees

 

 

 

 

 

 

 

 

 

 

907

Other Income

 

 

374

 

 

298

 

 

242

 

 

989

 

 

562

Totals

 

$

1,410

 

$

1,603

 

$

1,157

 

$

4,021

 

$

4,853

Noninterest Expense

Noninterest expense was $13.2 million for the third quarter of 2021, an increase of $1.8 million from $11.5 million for the second quarter of 2021, and an increase of $3.6 million from $9.7 million for the third quarter of 2020. The increase in both periods was primarily due to increases in salaries and employee benefits, professional and consulting fees, marketing and advertising, and $582,000 of prepayment fees associated with a partial early redemption of $11.3 million of subordinated debentures issued in July 2017. The linked-quarter increase in salaries and employee benefits reflects both annual merit increases and a full quarter of salaries expense related to the significant net FTE growth experienced during the second quarter of 2021.

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)

 

2021

 

2021

 

2020

 

2021

 

2020

Noninterest Expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and Employee Benefits

 

$

8,309

 

$

7,512

 

$

6,550

 

$

22,923

 

$

19,352

Occupancy and Equipment

 

 

942

 

 

980

 

 

894

 

 

2,977

 

 

2,279

FDIC Insurance Assessment

 

 

355

 

 

290

 

 

160

 

 

960

 

 

518

Data Processing

 

 

325

 

 

300

 

 

267

 

 

916

 

 

734

Professional and Consulting Fees

 

 

708

 

 

552

 

 

492

 

 

1,804

 

 

1,400

Information Technology and Telecommunications

 

 

598

 

 

549

 

 

385

 

 

1,609

 

 

977

Marketing and Advertising

 

 

418

 

 

314

 

 

94

 

 

1,018

 

 

645

Intangible Asset Amortization

 

 

48

 

 

47

 

 

48

 

 

143

 

 

143

Amortization of Tax Credit Investments

 

 

152

 

 

140

 

 

145

 

 

410

 

 

592

Debt Prepayment Fees

 

 

582

 

 

 

 

 

 

582

 

 

1,430

Other Expense

 

 

799

 

 

793

 

 

637

 

 

2,294

 

 

2,059

Totals

 

$

13,236

 

$

11,477

 

$

9,672

 

$

35,636

 

$

30,129

The Company continues to make hires, reaching 219 full-time equivalent employees at September 30, 2021, compared to 214 employees at June 30, 2021, and 180 employees at September 30, 2020.

The efficiency ratio, a non-GAAP financial measure, was 43.9% for the third quarter of 2021, compared to 42.0% for the second quarter of 2021, and 42.3% for the third quarter of 2020. Excluding the impact of certain non-routine income and expenses, the adjusted efficiency ratio, a non-GAAP financial measure, was 41.5% for the third quarter of 2021, 41.5% for the second quarter of 2021 and 41.7% for the third quarter of 2020. The efficiencies of the Company’s “branch-light” model have positioned the Company well, and going forward, provide more flexibility for the Company to make significant investments in technology as the industry adapts to evolving client behavior.

Income Taxes

The effective combined federal and state income tax rate for the third quarter of 2021 was 26.0%, an increase from 25.8% for the second quarter of 2021 and an increase from 23.8% for the third quarter of 2020. The effective combined federal and state income tax rate for the nine months ended September 30, 2021 was 25.9%, compared to 23.4% for the nine months ended September 30, 2020.

Balance Sheet

Total assets at September 30, 2021 were $3.39 billion, a 7.2% increase from $3.16 billion at June 30, 2021, and a 22.1% increase from $2.77 billion at September 30, 2020. The linked-quarter increase in total assets was primarily due to strong organic loan growth and increased on-balance sheet liquidity. The year-over-year increase in total assets was primarily due to increased cash balances, robust organic loan growth, as well as continued purchases of investment securities.

Total gross loans at September 30, 2021 were $2.71 billion, an increase of $117.8 million, or 4.5%, over total gross loans of $2.59 billion at June 30, 2021, and an increase of $452.8 million, or 20.0%, over total gross loans of $2.26 billion at September 30, 2020. The increase in the loan portfolio during the third quarter of 2021 was primarily due to growth in the commercial, multifamily and CRE nonowner occupied segments, offset partially by the payoff of PPP loans. When excluding the PPP loans altogether, gross loans grew $162.7 million during the third quarter of 2021, or 25.9% on an annualized basis. The Company's continued strong loan growth has been driven by the expansion of the talented lending teams, PPP-related client acquisition opportunities, the strong and growing brand of the Bank in the Twin Cities market and the M&A-related market disruption in the Twin Cities resulting in client and banker acquisition opportunities.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2021

 

June 30, 2021

 

March 31, 2021

 

December 31, 2020

 

September 30, 2020

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

350,081

 

 

$

321,474

 

 

$

301,023

 

 

$

304,220

 

 

$

287,254

 

Paycheck Protection Program

 

 

54,190

 

 

 

99,072

 

 

 

163,258

 

 

 

138,454

 

 

 

181,596

 

Construction and Land Development

 

 

257,167

 

 

 

251,573

 

 

 

193,372

 

 

 

170,217

 

 

 

175,882

 

Real Estate Mortgage:

 

 

 

 

 

 

 

 

 

 

1 - 4 Family Mortgage

 

 

290,535

 

 

 

277,943

 

 

 

294,964

 

 

 

294,479

 

 

 

286,089

 

Multifamily

 

 

865,172

 

 

 

790,275

 

 

 

665,415

 

 

 

626,465

 

 

 

585,814

 

CRE Owner Occupied

 

 

101,834

 

 

 

87,507

 

 

 

79,665

 

 

 

75,604

 

 

 

75,963

 

CRE Nonowner Occupied

 

 

786,271

 

 

 

758,101

 

 

 

720,396

 

 

 

709,300

 

 

 

660,058

 

Total Real Estate Mortgage Loans

 

 

2,043,812

 

 

 

1,913,826

 

 

 

1,760,440

 

 

 

1,705,848

 

 

 

1,607,924

 

Consumer and Other

 

 

6,762

 

 

 

8,241

 

 

 

8,030

 

 

 

7,689

 

 

 

6,572

 

Total Loans, Gross

 

 

2,712,012

 

 

 

2,594,186

 

 

 

2,426,123

 

 

 

2,326,428

 

 

 

2,259,228

 

Allowance for Loan Losses

 

 

(38,901

)

 

 

(37,591

)

 

 

(35,987

)

 

 

(34,841

)

 

 

(31,381

)

Net Deferred Loan Fees

 

 

(10,199

)

 

 

(11,450

)

 

 

(11,273

)

 

 

(9,151

)

 

 

(10,367

)

Total Loans, Net

 

$

2,662,912

 

 

$

2,545,145

 

 

$

2,378,863

 

 

$

2,282,436

 

 

$

2,217,480

 

Total deposits at September 30, 2021 were $2.85 billion, an increase of $133.3 million, or 4.9%, over total deposits of $2.72 billion at June 30, 2021, and an increase of $581.1 million, or 25.6%, over total deposits of $2.27 billion at September 30, 2020. Deposit growth in the third quarter of 2021 was primarily due to an increase in noninterest bearing and interest bearing transaction deposits and savings and money market deposits, offset partially by a decline in time deposits and brokered deposits. Similar to the loan portfolio, the growth in core deposits has been a result of successful new client and banker acquisition initiatives and the strong, growing brand of the Bank in the Twin Cities market.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2021

 

June 30, 2021

 

March 31, 2021

 

December 31, 2020

 

September 30, 2020

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Bearing Transaction Deposits

 

$

846,490

 

$

758,023

 

$

712,999

 

$

671,903

 

$

685,773

Interest Bearing Transaction Deposits

 

 

488,785

 

 

432,123

 

 

433,344

 

 

366,290

 

 

322,253

Savings and Money Market Deposits

 

 

791,861

 

 

761,485

 

 

791,583

 

 

657,617

 

 

498,397

Time Deposits

 

 

309,824

 

 

321,857

 

 

344,581

 

 

353,543

 

 

363,897

Brokered Deposits

 

 

417,197

 

 

447,418

 

 

356,147

 

 

452,283

 

 

402,724

Total Deposits

 

$

2,854,157

 

$

2,720,906

 

$

2,638,654

 

$

2,501,636

 

$

2,273,044

Capital

On July 8, 2021, the Company announced the completion of a private placement of $30.0 million in aggregate principal amount of 3.25% fixed-to-floating rate subordinated debentures due 2031. The Company intends to use the net proceeds of the private placement for general corporate purposes, including support for organic growth plans, support for bank level capital ratios and possible redemption or repurchase of outstanding indebtedness.

In July of 2021, the Company redeemed $11.3 million of the $25.0 million outstanding of its fixed-to-floating rate subordinated debentures due in 2027. The early redemption of the subordinated debentures was recorded as a loss on the extinguishment of subordinated debt, included in noninterest expense, in the amount of $582,000, consisting of $532,000 in prepayment penalties and $50,000 in unamortized issuance costs.

On August 17, 2021, the Company announced the closing of its underwritten public offering of 2,400,000 depositary shares, each representing a 1/100th interest in a share of the Company’s 5.875% Non-Cumulative Perpetual Preferred Stock, Series A (“Series A Preferred Stock”). On August 20, 2021, the underwriters of the offering exercised in full their option to purchase 360,000 additional depositary shares to cover over-allotments. As a result, the gross proceeds from the offering totaled $69.0 million. The Company intends to use the net proceeds from the offering for general corporate purposes, including support for organic growth plans, support for bank level capital ratios and possible redemption or repurchase of outstanding indebtedness. On October 26, 2021, the Company’s Board of Directors declared a quarterly cash dividend on the Series A Preferred Stock, payable on December 1, 2021 to shareholders of record on the Series A Preferred Stock at the close of business on November 15, 2021.

Total shareholders’ equity at September 30, 2021 was $367.8 million, an increase of $77.0 million, or 26.5%, over total shareholders’ equity of $290.8 million at June 30, 2021, and an increase of $102.4 million, or 38.6%, over total shareholders’ equity of $265.4 million at September 30, 2020. The linked-quarter increase was due to net income retained and the issuance of preferred stock, offset partially by stock repurchases made under the Company’s stock repurchase program. The year-over-year increase was due to net income retained, the issuance of preferred stock and an increase in unrealized gains in the securities and derivatives portfolios, offset partially by stock repurchases made under the Company’s stock repurchase program. The consolidated tier 1 leverage ratio increased to 10.70% at September 30, 2021, compared to 9.08% at June 30, 2021, primarily due to the preferred stock issuance.

Strong earnings and capital growth coupled with better asset quality visibility as loan modifications expired, supported management’s decision to resume repurchases under the Company’s stock repurchase program. The Company remains committed to maintaining strong capital levels while enhancing shareholder value as it strategically executes its stock repurchase program in this fluid economic environment. During the third quarter of 2021, the Company repurchased 126,507 shares of its common stock. Shares were repurchased at a weighted average price of $16.11 for a total of $2.0 million.

Tangible book value per share, a non-GAAP financial measure, was $10.62 as of September 30, 2021, an increase of 3.9% from $10.22 as of June 30, 2021, and an increase of 16.4% from $9.13 as of September 30, 2020. Tangible common equity as a percentage of tangible assets, a non-GAAP financial measure, was 8.81% at September 30, 2021, compared to 9.10% at June 30, 2021.

Asset Quality

Annualized net charge-offs as a percent of average loans for the third quarter of 2021 were 0.00%, consistent with 0.00% for the second quarter of 2021 and the third quarter of 2020. At September 30, 2021, the Company’s nonperforming assets, which include nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $734,000, or 0.02% of total assets, as compared to $761,000, or 0.02% of total assets at June 30, 2021, and $433,000 or 0.02% of total assets at September 30, 2020.

The Company has increased oversight and analysis of all segments of the loan portfolio in response to the COVID-19 pandemic, especially in vulnerable industries such as hospitality and restaurants, to proactively monitor evolving credit risk. Loans that have potential weaknesses that warrant a watchlist risk rating at September 30, 2021 totaled $67.4 million, compared to $56.7 million at June 30, 2021, and $50.9 million at September 30, 2020. As the COVID-19 pandemic continues to evolve, the length and extent of the economic uncertainty may result in further watchlist or adverse classifications in the loan portfolio. Loans that warranted a substandard risk rating at September 30, 2021 totaled $7.7 million, compared to $7.2 million at June 30, 2021, and $16.1 million at September 30, 2020.

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)

 

2021

 

2021

 

2021

 

2020

 

2020

Selected Asset Quality Data

 

 

 

 

 

 

 

 

 

 

Loans 30-89 Days Past Due

 

$

18

 

 

$

 

 

$

 

 

$

13

 

 

$

458

 

Loans 30-89 Days Past Due to Total Loans

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.02

%

Nonperforming Loans

 

$

734

 

 

$

761

 

 

$

770

 

 

$

775

 

 

$

433

 

Nonperforming Loans to Total Loans

 

 

0.03

%

 

 

0.03

%

 

 

0.03

%

 

 

0.03

%

 

 

0.02

%

Foreclosed Assets

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Nonaccrual Loans to Total Loans

 

 

0.03

%

 

 

0.03

%

 

 

0.03

%

 

 

0.03

%

 

 

0.02

%

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

 

 

0.03

 

 

 

0.03

 

 

 

0.03

 

 

 

0.03

 

 

 

0.02

 

Nonperforming Assets (1)

 

$

734

 

 

$

761

 

 

$

770

 

 

$

775

 

 

$

433

 

Nonperforming Assets to Total Assets (1)

 

 

0.02

%

 

 

0.02

%

 

 

0.03

%

 

 

0.03

%

 

 

0.02

%

Allowance for Loan Losses to Total Loans

 

 

1.43

 

 

 

1.45

 

 

 

1.48

 

 

 

1.50

 

 

 

1.39

 

Allowance for Loan Losses to Total Loans, Excluding PPP Loans

 

 

1.46

 

 

 

1.50

 

 

 

1.59

 

 

 

1.59

 

 

 

1.51

 

Allowance for Loans Losses to Nonperforming Loans

 

 

5,299.86

 

 

 

4,939.68

 

 

 

4,673.64

 

 

 

4,495.61

 

 

 

7,247.34

 

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

 

 

0.00

 

 

 

0.00

 

 

 

(0.01

)

 

 

0.08

 

 

 

0.00

 

       
(1) Nonperforming assets are defined as nonaccrual loans plus loans 90 days past due plus foreclosed assets.

The Company developed programs for clients who experienced business and personal disruptions due to the COVID-19 pandemic by providing interest-only modifications, loan payment deferrals, and extended amortization modifications. In accordance with interagency regulatory guidance and the CARES Act, qualifying loans modified in response to the COVID-19 pandemic are not considered troubled debt restructurings. The Company had 13 modified loans totaling $35.4 million outstanding as of September 30, 2021, representing 1.3% of the total loan portfolio, excluding PPP loans, which is down slightly from 1.4% at June 30, 2021.

The following table presents a rollforward of loan modification activity, by modification type, from June 30, 2021 to September 30, 2021:

 

 

 

 

 

 

 

(dollars in thousands)

 

Interest-Only

 

Extended Amortization

 

Total

Principal Balance - June 30, 2021

 

$

29,159

 

 

$

4,778

 

 

$

33,937

 

Modification Expired

 

 

(27,521

)

 

 

(4,764

)

 

 

(32,285

)

Additional Modification Granted

 

 

18,313

 

 

 

4,764

 

 

 

23,077

 

New Modifications

 

 

10,623

 

 

 

 

 

 

10,623

 

Net Principal Advances (Payments)

 

 

23

 

 

 

(14

)

 

 

9

 

Principal Balance - September 30, 2021

 

$

30,597

 

 

$

4,764

 

 

$

35,361

 

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 high-net-worth individuals. By pairing a range of deposit, lending and business services solutions with a responsive service model, Bridgewater has seen continuous growth and profitability. With total assets of $3.4 billion and seven branches as of September 30, 2021, Bridgewater is considered one of the largest locally led banks in the State of Minnesota, and has received numerous awards for its growth, banking services and esteemed corporate culture.

Use of Non-GAAP financial measures

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

Forward-Looking Statements

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

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: the negative effects of the COVID-19 pandemic, including its effects on the economic environment, our clients and our operations, including due to supply chain disruptions, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic; loan concentrations in our portfolio; the overall health of the local and national real estate market; our ability to successfully manage credit risk; business and economic conditions generally and in the financial services industry, nationally and within our market area; 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; 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; 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; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and regulatory actions against us; the impact of recent and future legislative and regulatory changes, including changes to federal and state corporate tax rates; interest rate risk; fluctuations in the values of the securities held in our securities portfolio; the imposition of tariffs or other governmental policies impacting the value of products produced by our commercial borrowers; severe weather, natural disasters, wide spread disease or pandemics (including the COVID-19 pandemic), acts of war or terrorism or other adverse external events; potential impairment to the goodwill we recorded in connection with our past acquisition; changes to U.S. or state tax laws, regulations and guidance, including recent proposals to increase the federal corporate tax rate; and any other risks described in the “Risk Factors” sections of reports filed by the Company with the Securities and Exchange Commission.

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

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

September 30,

 

 

2021

 

2020

 

2020

 

 

(Unaudited)

 

 

 

 

(Unaudited)

ASSETS

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

189,502

 

$

160,675

 

$

91,510

Bank-Owned Certificates of Deposit

 

 

1,877

 

 

2,860

 

 

2,862

Securities Available for Sale, at Fair Value

 

 

413,149

 

 

390,629

 

 

373,955

Loans, Net of Allowance for Loan Losses of $38,901 at September 30, 2021 (unaudited), $34,841 at December 31, 2020 and $31,381 at September 30, 2020 (unaudited)

 

 

2,662,912

 

 

2,282,436

 

 

2,217,480

Federal Home Loan Bank (FHLB) Stock, at Cost

 

 

5,442

 

 

5,027

 

 

7,817

Premises and Equipment, Net

 

 

49,803

 

 

50,987

 

 

48,885

Accrued Interest

 

 

8,550

 

 

9,172

 

 

9,647

Goodwill

 

 

2,626

 

 

2,626

 

 

2,626

Other Intangible Assets, Net

 

 

527

 

 

670

 

 

718

Other Assets

 

 

54,737

 

 

22,263

 

 

19,064

Total Assets

 

$

3,389,125

 

$

2,927,345

 

$

2,774,564

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Noninterest Bearing

 

$

846,490

 

$

671,903

 

$

685,773

Interest Bearing

 

 

2,007,667

 

 

1,829,733

 

 

1,587,271

Total Deposits

 

 

2,854,157

 

 

2,501,636

 

 

2,273,044

Notes Payable

 

 

 

 

11,000

 

 

11,500

FHLB Advances

 

 

47,500

 

 

57,500

 

 

127,500

Subordinated Debentures, Net of Issuance Costs

 

 

92,153

 

 

73,739

 

 

73,665

Accrued Interest Payable

 

 

1,656

 

 

1,615

 

 

2,082

Other Liabilities

 

 

25,856

 

 

16,450

 

 

21,341

Total Liabilities

 

 

3,021,322

 

 

2,661,940

 

 

2,509,132

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Preferred Stock - Issued and Outstanding 2,760,000 Series A shares ($25 liquidation preference) at September 30, 2021 (unaudited), -0- at December 31, 2020 and -0- at September 30, 2020 (unaudited)

 

 

66,515

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Common Stock - Issued and Outstanding 28,066,822 at September 30, 2021 (unaudited), 28,143,493 at December 31, 2020 and 28,710,775 at September 30, 2020 (unaudited)

 

 

281

 

 

281

 

 

287

Additional Paid-In Capital

 

 

103,471

 

 

103,714

 

 

110,010

Retained Earnings

 

 

188,004

 

 

154,831

 

 

149,852

Accumulated Other Comprehensive Income

 

 

9,532

 

 

6,579

 

 

5,283

Total Shareholders' Equity

 

 

367,803

 

 

265,405

 

 

265,432

Total Liabilities and Equity

 

$

3,389,125

 

$

2,927,345

 

$

2,774,564

 

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

September 30,

 

 

2021

 

2021

 

2020

 

2021

 

2020

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, Including Fees

 

$

31,049

 

$

28,748

 

$

26,224

 

$

87,705

 

$

77,250

Investment Securities

 

 

2,333

 

 

2,312

 

 

2,100

 

 

7,065

 

 

6,387

Other

 

 

135

 

 

87

 

 

169

 

 

334

 

 

490

Total Interest Income

 

 

33,517

 

 

31,147

 

 

28,493

 

 

95,104

 

 

84,127

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

3,417

 

 

3,513

 

 

4,840

 

 

10,601

 

 

15,734

Notes Payable

 

 

 

 

 

 

108

 

 

61

 

 

334

FHLB Advances

 

 

213

 

 

228

 

 

748

 

 

669

 

 

2,839

Subordinated Debentures

 

 

1,214

 

 

1,112

 

 

1,118

 

 

3,411

 

 

1,990

Federal Funds Purchased

 

 

 

 

6

 

 

 

 

6

 

 

107

Total Interest Expense

 

 

4,844

 

 

4,859

 

 

6,814

 

 

14,748

 

 

21,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

 

 

28,673

 

 

26,288

 

 

21,679

 

 

80,356

 

 

63,123

Provision for Loan Losses

 

 

1,300

 

 

1,600

 

 

3,750

 

 

4,000

 

 

8,850

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME AFTER

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROVISION FOR LOAN LOSSES

 

 

27,373

 

 

24,688

 

 

17,929

 

 

76,356

 

 

54,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer Service Fees

 

 

268

 

 

231

 

 

200

 

 

733

 

 

575

Net Gain on Sales of Available for Sale Securities

 

 

48

 

 

702

 

 

109

 

 

750

 

 

1,473

Other Income

 

 

1,094

 

 

670

 

 

848

 

 

2,538

 

 

2,805

Total Noninterest Income

 

 

1,410

 

 

1,603

 

 

1,157

 

 

4,021

 

 

4,853

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and Employee Benefits

 

 

8,309

 

 

7,512

 

 

6,550

 

 

22,923

 

 

19,352

Occupancy and Equipment

 

 

942

 

 

980

 

 

894

 

 

2,977

 

 

2,279

Other Expense

 

 

3,985

 

 

2,985

 

 

2,228

 

 

9,736

 

 

8,498

Total Noninterest Expense

 

 

13,236

 

 

11,477

 

 

9,672

 

 

35,636

 

 

30,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

15,547

 

 

14,814

 

 

9,414

 

 

44,741

 

 

28,997

Provision for Income Taxes

 

 

4,038

 

 

3,821

 

 

2,240

 

 

11,568

 

 

6,782

NET INCOME

 

$

11,509

 

$

10,993

 

$

7,174

 

$

33,173

 

$

22,215

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.41

 

$

0.39

 

$

0.25

 

$

1.18

 

$

0.77

Diluted

 

 

0.40

 

 

0.38

 

 

0.25

 

 

1.14

 

 

0.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended

 

 

September 30, 2021

 

September 30, 2020

 

 

Average

 

Interest

 

Yield/

 

Average

 

Interest

 

Yield/

 

 

Balance

 

& Fees

 

Rate

 

Balance

 

& Fees

 

Rate

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Interest Earning Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash Investments

 

$

127,283

 

$

134

 

 

0.14

%

 

$

80,186

 

$

138

 

 

0.23

%

Investment Securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable Investment Securities

 

 

310,078

 

 

5,122

 

 

2.21

 

 

 

216,332

 

 

4,080

 

 

2.52

 

Tax-Exempt Investment Securities (1)

 

 

76,564

 

 

2,460

 

 

4.30

 

 

 

89,674

 

 

2,920

 

 

4.35

 

Total Investment Securities

 

 

386,642

 

 

7,582

 

 

2.62

 

 

 

306,006

 

 

7,000

 

 

3.06

 

Paycheck Protection Program Loans (2)

 

 

124,466

 

 

5,384

 

 

5.78

 

 

 

107,541

 

 

2,046

 

 

2.54

 

Loans (1)(2)

 

 

2,402,844

 

 

82,433

 

 

4.59

 

 

 

1,997,553

 

 

75,301

 

 

5.04

 

Total Loans

 

 

2,527,310

 

 

87,817

 

 

4.65

 

 

 

2,105,094

 

 

77,347

 

 

4.91

 

Federal Home Loan Bank Stock

 

 

5,658

 

 

200

 

 

4.71

 

 

 

9,541

 

 

352

 

 

4.93

 

Total Interest Earning Assets

 

 

3,046,893

 

 

95,733

 

 

4.20

%

 

 

2,500,827

 

 

84,837

 

 

4.53

%

Noninterest Earning Assets

 

 

70,968

 

 

 

 

 

 

50,118

 

 

 

 

Total Assets

 

$

3,117,861

 

 

 

 

 

$

2,550,945

 

 

 

 

Interest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Interest Bearing Transaction Deposits

 

$

422,000

 

$

1,504

 

 

0.48

%

 

$

275,303

 

$

1,207

 

 

0.58

%

Savings and Money Market Deposits

 

 

763,646

 

 

2,853

 

 

0.50

 

 

 

518,648

 

 

4,338

 

 

1.12

 

Time Deposits

 

 

331,664

 

 

3,269

 

 

1.32

 

 

 

378,133

 

 

6,199

 

 

2.19

 

Brokered Deposits

 

 

407,680

 

 

2,975

 

 

0.98

 

 

 

319,615

 

 

3,990

 

 

1.67

 

Total Interest Bearing Deposits

 

 

1,924,990

 

 

10,601

 

 

0.74

 

 

 

1,491,699

 

 

15,734

 

 

1.41

 

Federal Funds Purchased

 

 

3,311

 

 

6

 

 

0.24

 

 

 

8,302

 

 

107

 

 

1.73

 

Notes Payable

 

 

2,216

 

 

61

 

 

3.66

 

 

 

12,000

 

 

334

 

 

3.72

 

FHLB Advances

 

 

56,364

 

 

669

 

 

1.59

 

 

 

165,088

 

 

2,839

 

 

2.30

 

Subordinated Debentures

 

 

79,723

 

 

3,411

 

 

5.72

 

 

 

43,318

 

 

1,990

 

 

6.14

 

Total Interest Bearing Liabilities

 

 

2,066,604

 

 

14,748

 

 

0.95

%

 

 

1,720,407

 

 

21,004

 

 

1.63

%

Noninterest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Bearing Transaction Deposits

 

 

731,269

 

 

 

 

 

 

554,513

 

 

 

 

Other Noninterest Bearing Liabilities

 

 

23,228

 

 

 

 

 

 

19,632

 

 

 

 

Total Noninterest Bearing Liabilities

 

 

754,497

 

 

 

 

 

 

574,145

 

 

 

 

Shareholders' Equity

 

 

296,760

 

 

 

 

 

 

256,393

 

 

 

 

Total Liabilities and Shareholders' Equity

 

$

3,117,861

 

 

 

 

 

$

2,550,945

 

 

 

 

Net Interest Income / Interest Rate Spread

 

 

 

 

80,985

 

 

3.25

%

 

 

 

 

63,833

 

 

2.90

%

Net Interest Margin (3)

 

 

 

 

 

3.55

%

 

 

 

 

 

3.41

%

Taxable Equivalent Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

Tax-Exempt Investment Securities and Loans

 

 

 

 

(629

)

 

 

 

 

 

 

(710

)

 

 

Net Interest Income

 

 

 

$

80,356

 

 

 

 

 

 

$

63,123

 

 

 

 
(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.

 

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,

 

 

2021

 

2021

 

2020

 

2021

 

2020

Pre-Provision Net Revenue

 

 

 

 

 

 

 

 

 

 

Noninterest Income

 

$

1,410

 

 

$

1,603

 

 

$

1,157

 

 

$

4,021

 

 

$

4,853

 

Less: Gain on sales of Securities

 

 

(48

)

 

 

(702

)

 

 

(109

)

 

 

(750

)

 

 

(1,473

)

Total Operating Noninterest Income

 

 

1,362

 

 

 

901

 

 

 

1,048

 

 

 

3,271

 

 

 

3,380

 

Plus: Net Interest Income

 

 

28,673

 

 

 

26,288

 

 

 

21,679

 

 

 

80,356

 

 

 

63,123

 

Net Operating Revenue

 

$

30,035

 

 

$

27,189

 

 

$

22,727

 

 

$

83,627

 

 

$

66,503

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

$

13,236

 

 

$

11,477

 

 

$

9,672

 

 

$

35,636

 

 

$

30,129

 

Less: Amortization of Tax Credit Investments

 

 

(152

)

 

 

(140

)

 

 

(145

)

 

 

(410

)

 

 

(592

)

Less: Debt Prepayment Fees

 

 

(582

)

 

 

 

 

 

 

 

 

(582

)

 

 

(1,430

)

Total Operating Noninterest Expense

 

$

12,502

 

 

$

11,337

 

 

$

9,527

 

 

$

34,644

 

 

$

28,107

 

 

 

 

 

 

 

 

 

 

 

 

Pre-Provision Net Revenue

 

$

17,533

 

 

$

15,852

 

 

$

13,200

 

 

$

48,983

 

 

$

38,396

 

 

 

 

 

 

 

 

 

 

 

 

Plus:

 

 

 

 

 

 

 

 

 

 

Non-Operating Revenue Adjustments

 

 

48

 

 

 

702

 

 

 

109

 

 

 

750

 

 

 

1,473

 

Less:

 

 

 

 

 

 

 

 

 

 

Provision for Loan Losses

 

 

1,300

 

 

 

1,600

 

 

 

3,750

 

 

 

4,000

 

 

 

8,850

 

Non-Operating Expense Adjustments

 

 

734

 

 

 

140

 

 

 

145

 

 

 

992

 

 

 

2,022

 

Provision for Income Taxes

 

 

4,038

 

 

 

3,821

 

 

 

2,240

 

 

 

11,568

 

 

 

6,782

 

Net Income

 

$

11,509

 

 

$

10,993

 

 

$

7,174

 

 

$

33,173

 

 

$

22,215

 

 

 

 

 

 

 

 

 

 

 

 

Average Assets

 

$

3,332,301

 

 

$

3,076,712

 

 

$

2,711,755

 

 

$

3,117,861

 

 

$

2,550,945

 

Pre-Provision Net Revenue Return on Average Assets

 

 

2.09

%

 

 

2.07

%

 

 

1.94

%

 

 

2.10

%

 

 

2.01

%

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

 

2021

 

2021

 

2020

 

2021

 

2020

Core Net Interest Margin

 

 

 

 

 

 

 

 

 

 

Net Interest Income (Tax-Equivalent Basis)

 

$

28,880

 

 

$

26,495

 

 

$

21,898

 

 

$

80,985

 

 

$

63,833

 

Less: Loan Fees

 

 

(1,487

)

 

 

(1,023

)

 

 

(1,198

)

 

 

(3,712

)

 

 

(3,769

)

Less: PPP Interest and Fees

 

 

(1,753

)

 

 

(1,767

)

 

 

(1,173

)

 

 

(5,384

)

 

 

(2,046

)

Core Net Interest Income

 

$

25,640

 

 

$

23,705

 

 

$

19,527

 

 

$

71,889

 

 

$

58,018

 

 

 

 

 

 

 

 

 

 

 

 

Average Interest Earning Assets

 

 

3,234,301

 

 

 

3,019,437

 

 

 

2,655,882

 

 

 

3,046,893

 

 

 

2,500,827

 

Less: Average PPP Loans

 

 

(76,006

)

 

 

(149,312

)

 

 

(181,397

)

 

 

(124,466

)

 

 

(107,541

)

Core Average Interest Earning Assets

 

$

3,158,295

 

 

$

2,870,125

 

 

$

2,474,485

 

 

$

2,922,427

 

 

$

2,393,286

 

Core Net Interest Margin

 

 

3.22

%

 

 

3.31

%

 

 

3.14

%

 

 

3.29

%

 

 

3.24

%

 

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,

 

 

2021

 

2021

 

2020

 

2021

 

2020

Efficiency Ratio

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

$

13,236

 

 

$

11,477

 

 

$

9,672

 

 

$

35,636

 

 

$

30,129

 

Less: Amortization of Intangible Assets

 

 

(48

)

 

 

(47

)

 

 

(48

)

 

 

(143

)

 

 

(143

)

Adjusted Noninterest Expense

 

$

13,188

 

 

$

11,430

 

 

$

9,624

 

 

$

35,493

 

 

$

29,986

 

Net Interest Income

 

 

28,673

 

 

 

26,288

 

 

 

21,679

 

 

 

80,356

 

 

 

63,123

 

Noninterest Income

 

 

1,410

 

 

 

1,603

 

 

 

1,157

 

 

 

4,021

 

 

 

4,853

 

Less: Gain on Sales of Securities

 

 

(48

)

 

 

(702

)

 

 

(109

)

 

 

(750

)

 

 

(1,473

)

Adjusted Operating Revenue

 

$

30,035

 

 

$

27,189

 

 

$

22,727

 

 

$

83,627

 

 

$

66,503

 

Efficiency Ratio

 

 

43.9

%

 

 

42.0

%

 

 

42.3

%

 

 

42.4

%

 

 

45.1

%

 

 

 

 

 

 

 

 

 

 

 

Adjusted Efficiency Ratio

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

$

13,236

 

 

$

11,477

 

 

$

9,672

 

 

$

35,636

 

 

$

30,129

 

Less: Amortization of Tax Credit Investments

 

 

(152

)

 

 

(140

)

 

 

(145

)

 

 

(410

)

 

 

(592

)

Less: Debt Prepayment Fees

 

 

(582

)

 

 

 

 

 

 

 

 

(582

)

 

 

(1,430

)

Less: Amortization of Intangible Assets

 

 

(48

)

 

 

(47

)

 

 

(48

)

 

 

(143

)

 

 

(143

)

Adjusted Noninterest Expense

 

$

12,454

 

 

$

11,290

 

 

$

9,479

 

 

$

34,501

 

 

$

27,964

 

Net Interest Income

 

 

28,673

 

 

 

26,288

 

 

 

21,679

 

 

 

80,356

 

 

 

63,123

 

Noninterest Income

 

 

1,410

 

 

 

1,603

 

 

 

1,157

 

 

 

4,021

 

 

 

4,853

 

Less: Gain on Sales of Securities

 

 

(48

)

 

 

(702

)

 

 

(109

)

 

 

(750

)

 

 

(1,473

)

Adjusted Operating Revenue

 

$

30,035

 

 

$

27,189

 

 

$

22,727

 

 

$

83,627

 

 

$

66,503

 

Adjusted Efficiency Ratio

 

 

41.5

%

 

 

41.5

%

 

 

41.7

%

 

 

41.3

%

 

 

42.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

September 30,

 

 

2021

 

2021

 

2020

 

2021

 

2020

Adjusted Noninterest Expense to Average Assets (Annualized)

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

$

13,236

 

 

$

11,477

 

 

$

9,672

 

 

$

35,636

 

 

$

30,129

 

Less: Amortization of Tax Credit Investments

 

 

(152

)

 

 

(140

)

 

 

(145

)

 

 

(410

)

 

 

(592

)

Less: Debt Prepayment Fees

 

 

(582

)

 

 

 

 

 

 

 

 

(582

)

 

 

(1,430

)

Adjusted Noninterest Expense

 

$

12,502

 

 

$

11,337

 

 

$

9,527

 

 

$

34,644

 

 

$

28,107

 

 

 

 

 

 

 

 

 

 

 

 

Average Assets

 

$

3,332,301

 

 

$

3,076,712

 

 

$

2,711,755

 

 

$

3,117,861

 

 

$

2,550,945

 

Adjusted Noninterest Expense to Average Assets (Annualized)

 

 

1.49

%

 

 

1.48

%

 

 

1.40

%

 

 

1.49

%

 

 

1.47

%

 

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,

 

 

2021

 

2021

 

2020

 

2021

 

2020

Tangible Common Equity and Tangible Common Equity/Tangible Assets

 

 

 

 

 

 

 

 

 

 

Total Shareholders' Equity

 

$

367,803

 

 

$

290,830

 

 

$

265,432

 

 

 

 

 

Less: Preferred Stock

 

 

(66,515

)

 

 

 

 

 

 

 

 

 

 

Total Common Shareholders' Equity

 

 

301,288

 

 

 

290,830

 

 

 

265,432

 

 

 

 

 

Less: Intangible Assets

 

 

(3,153

)

 

 

(3,200

)

 

 

(3,344

)

 

 

 

 

Tangible Common Equity

 

$

298,135

 

 

$

287,630

 

 

$

262,088

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

3,389,125

 

 

$

3,162,612

 

 

$

2,774,564

 

 

 

 

 

Less: Intangible Assets

 

 

(3,153

)

 

 

(3,200

)

 

 

(3,344

)

 

 

 

 

Tangible Assets

 

$

3,385,972

 

 

$

3,159,412

 

 

$

2,771,220

 

 

 

 

 

Tangible Common Equity/Tangible Assets

 

 

8.81

%

 

 

9.10

%

 

 

9.46

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Book Value Per Share

 

 

 

 

 

 

 

 

 

 

Book Value Per Common Share

 

$

10.73

 

 

$

10.33

 

 

$

9.25

 

 

 

 

 

Less: Effects of Intangible Assets

 

 

(0.11

)

 

 

(0.11

)

 

 

(0.12

)

 

 

 

 

Tangible Book Value Per Common Share

 

$

10.62

 

 

$

10.22

 

 

$

9.13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on Average Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

11,509

 

 

$

10,993

 

 

$

7,174

 

 

$

33,173

 

 

$

22,215

 

 

 

 

 

 

 

 

 

 

 

 

Average Shareholders' Equity

 

$

330,604

 

 

$

286,311

 

 

$

263,195

 

 

$

296,760

 

 

$

256,393

 

Less: Average Preferred Stock

 

 

(32,332

)

 

 

 

 

 

 

 

 

(10,896

)

 

 

 

Average Common Equity

 

 

298,272

 

 

 

286,311

 

 

 

263,195

 

 

 

285,864

 

 

 

256,393

 

Less: Effects of Average Intangible Assets

 

 

(3,180

)

 

 

(3,228

)

 

 

(3,371

)

 

 

(3,227

)

 

 

(3,418

)

Average Tangible Common Equity

 

$

295,092

 

 

$

283,083

 

 

$

259,824

 

 

$

282,637

 

 

$

252,975

 

Return on Average Tangible Common Equity

 

 

15.47

%

 

 

15.58

%

 

 

10.98

%

 

 

15.69

%

 

 

11.73

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

 

2021

 

2021

 

2021

 

2020

 

2020

Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

Total Shareholders' Equity

 

$

367,803

 

 

$

290,830

 

 

$

279,171

 

 

$

265,405

 

 

$

265,432

 

Less: Preferred Stock

 

 

(66,515

)

 

 

 

 

 

 

 

 

 

 

 

 

Common Shareholders' Equity

 

 

301,288

 

 

 

290,830

 

 

 

279,171

 

 

 

265,405

 

 

 

265,432

 

Less: Intangible Assets

 

 

(3,153

)

 

 

(3,200

)

 

 

(3,248

)

 

 

(3,296

)

 

 

(3,344

)

Tangible Common Equity

 

$

298,135

 

 

$

287,630

 

 

$

275,923

 

 

$

262,109

 

 

$

262,088

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

As of and for the Nine Months Ended

 

 

September 30, 2021

 

June 30, 2021

 

September 30, 2020

 

September 30, 2021

 

September 30, 2020

Adjusted Diluted Earnings Per Common Share

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

11,509

 

 

$

10,993

 

$

7,174

 

$

33,173

 

 

$

22,215

 

Add: Debt Prepayment Fees

 

 

582

 

 

 

 

 

 

 

582

 

 

 

1,430

 

Less: Tax Impact

 

 

(151

)

 

 

 

 

 

 

(151

)