Bridgewater Bancshares, Inc. Announces Fourth Quarter 2020 Financial Results

January 28, 2021 7:05 AM EST
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ST. LOUIS PARK, Minn.--(BUSINESS WIRE)-- Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the parent company of Bridgewater Bank (the Bank), today announced net income of $5.0 million, or $0.17 per diluted common share, for the fourth quarter of 2020, compared to net income of $7.2 million, or $0.25 per diluted common share, for the third quarter of 2020, and net income of $8.6 million, or $0.29 per diluted common share, for the fourth quarter of 2019. The net income decline in the fourth quarter of 2020 was primarily attributable to FHLB prepayment fees of $5.6 million.

“2020 has been an unprecedented year on many levels but despite the challenges faced, the Company excelled through adversity. With the team’s steadfast commitment, we grew BWB’s client base, fast tracked technology initiatives, meaningfully lowered our cost of funds, and delivered double-digit growth. We are extremely proud of the team’s unwavering dedication to serve our clients, our shareholders, and our communities in this volatile environment,” commented Chairman, Chief Executive Officer, and President, Jerry Baack. “This quarter’s results include a significant non-recurring charge of $5.6 million related to prepayment penalties on the early retirement of FHLB advances. Given the historically low interest rate environment and extraordinary deposit inflows during the year, the Company took the opportunity to remove inefficient, longer term FHLB advances from the balance sheet. While this non-recurring charge overshadows strong, near-term operating results, this strategic action better orients the balance sheet, improves the net interest margin outlook and future earnings power of the Company. As we look to 2021, we remain nimble and well positioned to perform in the current environment with strong core earnings, capital levels well in excess of regulatory thresholds, adequate loan loss reserves, and solid credit quality.”

Fourth Quarter 2020 Financial Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

Nonperforming

 

Adjusted

ROA

 

PPNR ROA (1)

 

ROE

 

earnings per share

 

assets to total assets

 

efficiency ratio (1)

0.70%

 

2.30%

 

7.45%

 

$

0.17

 

0.03%

 

36.6%

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

Linked-Quarter Highlights

  • The fourth quarter results included $5.6 million of prepayment fees related to the early extinguishment of $69.0 million of FHLB term advances, which had a weighted average rate of 2.85%.
  • Net income for the fourth quarter of 2020 totaled $9.3 million, or $0.32 per diluted common share, when excluding the FHLB prepayment fees and tax-adjusting at an effective rate of 23.8%.
  • Annualized return on average assets (ROA) and annualized return on average common equity (ROE) for the fourth quarter of 2020 were 1.31% and 13.86%, respectively, when excluding the FHLB prepayment fees and tax-adjusting at an effective rate of 23.8%.
  • Annualized pre-provision net revenue return on average assets (PPNR ROA), a non-GAAP financial measure, was 2.30% for the fourth quarter of 2020, compared to 1.94% for the third quarter of 2020.
  • Net interest margin increased 33 basis points from 3.28% for the third quarter of 2020 to 3.61% for the fourth quarter of 2020, primarily due to the accelerated recognition of Paycheck Protection Program (PPP) loan fees and continued reduction in the cost of interest bearing liabilities.
  • Cost of interest bearing deposits declined 25 basis points to 0.96% in the fourth quarter of 2020, compared to 1.21% in the third quarter of 2020.
  • The adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 36.6% for the fourth quarter of 2020, compared to 41.7% for the third quarter of 2020.
  • A loan loss provision of $3.9 million was recorded for the fourth quarter of 2020, primarily due to increased allocations for economic factors associated with the COVID-19 pandemic and strong organic loan growth. The allowance for loan losses to total loans was 1.50% at December 31, 2020, compared to 1.39% at September 30, 2020. The allowance for loan losses to total loans, excluding $138.5 million of PPP loans, was 1.59% at December 31, 2020, compared to 1.51% at September 30, 2020.
  • Loan modification balances as a percent of totals loans, excluding PPP loans, decreased from 9.2% at the end of the third quarter of 2020 to 3.0% at the end of the fourth quarter of 2020.
  • The Company repurchased 624,933 shares of common stock at a weighted average price of $11.18 for a total of $7.0 million during the fourth quarter of 2020.

Annual 2020 Highlights

  • Diluted earnings per common share for the year ended December 31, 2020 were $0.93, compared to $1.05 for the year ended December 31, 2019. Diluted earnings per common share for the year ended December 31, 2020 were $1.12, when excluding the $7.0 million of FHLB prepayment fees and tax-adjusting at an effective tax rate of 23.8%.
  • Pre-provision net revenue, a non-GAAP financial measure, was $54.7 million for the year ended December 31, 2020, an increase of 25.1%, compared to $43.7 million for the year ended December 31, 2019. PPNR ROA, a non-GAAP financial measure, was 2.09% for the year ended December 31, 2020, compared to 2.07% for the year ended December 31, 2019.
  • The adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 40.5% for the year ended December 31, 2020, compared to 43.3% for the year ended December 31, 2019.
  • Extinguished $94.0 million of FHLB term advances with a weighted average rate of 2.83%, incurring $7.0 million of prepayment fees.
  • Gross loans increased $414.4 million at December 31, 2020, or 21.7%, compared to December 31, 2019. Excluding $138.5 million of PPP loans, gross loans increased 14.4%, at December 31, 2020, compared to December 31, 2019.
  • Deposits increased $678.3 million at December 31, 2020, or 37.2%, compared to December 31, 2019. Excluding brokered deposits and remaining PPP loan funds, deposits increased 27.8% at December 31, 2020, compared to December 31, 2019.
  • Tangible book value per share, a non-GAAP financial measure, increased 11.8%, or $0.98, to $9.31 at December 31, 2020, compared to $8.33 at December 31, 2019.
  • Net loan charge-offs as a percentage of average loans were 0.02% for the year ended December 31, 2020, compared to 0.01% for the year ended December 31, 2019.
  • The ratio of nonperforming assets to total assets was 0.03% at December 31, 2020, compared to 0.02% at December 31, 2019.

Recent Developments

The outbreak of the novel coronavirus, or COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, has continued to create uncertainty and extraordinary change for the Company, its clients, its communities and the country as a whole. In response to this pandemic, the Company rapidly deployed its business continuity plan and continues to take steps to protect the health and safety of its employees and clients. Given the fluidity of the situation, management cannot estimate the duration and full impact of the COVID-19 pandemic on the economy, financial markets and the Company’s financial condition and results of operations.

The Company’s primary banking market area is in the Minneapolis-St.Paul-Bloomington, MN-WI Metropolitan Statistical Area. In November 2020, Minnesota’s Governor issued a number of new restrictions impacting business and gatherings due to a significant increase in positive COVID-19 cases within the state. The new restrictions closed gyms and entertainment spaces and limited restaurants to take-out operations only. In January 2021, the November restrictions were eased on restaurants, gyms and entertainment spaces to allow the businesses to operate with limited capacity. The Company’s branch operations, including openings and any restrictions, continue to operate in compliance with fluid statewide mandates, maintaining the safety of employees and clients as the utmost priority, all the while attempting to ensure clients' diverse banking needs are met.

The Company participated in the Small Business Administration’s (SBA) PPP, which stemmed from the Coronavirus Aid, Relief and Economic Security, or CARES, Act that was signed into law on March 27, 2020. As of December 31, 2020, PPP principal loan balances totaled $138.5 million, compared to $181.6 million at September 30, 2020. Beginning in October 2020, the SBA began forgiving PPP loans. During the fourth quarter of 2020, the Company recognized $1.7 million in PPP deferred origination fees, including approximately $1.1 million from the forgiveness of $43.1 million of loans.

The SBA reopened the PPP loan program as authorized by the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act, which was signed into law on December 27, 2020 (Economic Aid Act). The Company intends to participate in originating additional PPP loans under the Economic Aid Act through the new application deadline of March 31, 2021. As of January 25, 2021, the Company has submitted 203 loans totaling $29.8 million to the SBA under the reopened program.

The Company continues to monitor the loan portfolio and work with clients to provide relief when appropriate. The Company has developed programs for clients who are experiencing business and personal disruptions due to the COVID-19 pandemic by providing loan payment deferrals, interest-only, and extended amortization modifications. In accordance with interagency regulatory guidance and the CARES Act, qualifying loans modified in response to the COVID-19 pandemic will not be considered troubled debt restructurings. New modification activity was limited in the fourth quarter of 2020. The Company had 26 modified loans totaling $66.6 million outstanding as of December 31, 2020, representing 3.0% of the total loan portfolio, excluding PPP loans.

The following table presents a rollforward of loan modification activity, by modification type, from September 30, 2020 to December 31, 2020:

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

Interest-Only

 

Payment Deferral

 

Extended Amortization

 

Total

Principal Balance - September 30, 2020

 

$

160,885

 

 

$

30,496

 

 

$

 

$

191,381

 

Modification Expired

 

 

(112,150

)

 

 

(30,496

)

 

 

 

 

(142,646

)

Multiple Modifications Granted

 

 

21,362

 

 

 

597

 

 

 

4,834

 

 

26,793

 

New Modifications

 

 

1,545

 

 

 

16

 

 

 

 

 

1,561

 

Net Principal Advances (Payments)

 

 

(10,537

)

 

 

 

 

 

 

 

(10,537

)

Principal Balance - December 31, 2020

 

$

61,105

 

 

$

613

 

 

$

4,834

 

$

66,552

 

The following table presents a summary of active loan modifications, by loan segment and modification type, at December 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-Only

 

Payment Deferral

 

Extended Amortization

 

Total

(dollars in thousands)

 

Amount

 

# of Loans

 

Amount

 

# of Loans

 

Amount

 

# of Loans

 

Amount

 

# of Loans

Commercial

 

$

5,212

 

9

 

$

 

 

$

4,834

 

1

 

$

10,046

 

10

Real Estate Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 - 4 Family Mortgage

 

 

48

 

1

 

 

 

 

 

 

 

 

48

 

1

Multifamily

 

 

23,636

 

1

 

 

 

 

 

 

 

 

23,636

 

1

CRE Owner Occupied

 

 

 

 

 

613

 

3

 

 

 

 

 

613

 

3

CRE Nonowner Occupied

 

 

32,209

 

11

 

 

 

 

 

 

 

 

32,209

 

11

Totals

 

$

61,105

 

22

 

$

613

 

3

 

$

4,834

 

1

 

$

66,552

 

26

Modifications have been granted on a case-by-case basis based on the specific needs and circumstances affecting each borrower. Interest-only modifications have been primarily granted for three to six-month periods, but range up to twelve months. Payment deferral modifications have been granted for three to six-month periods.

Key Financial Measures

     

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

As of and for the Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

 

 

2020

 

2020

 

2019

 

2020

 

2019

Per Common Share Data

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

 

$

0.18

 

 

$

0.25

 

 

$

0.30

 

 

$

0.95

 

 

$

1.07

 

Diluted Earnings Per Share

 

 

0.17

 

 

 

0.25

 

 

 

0.29

 

 

 

0.93

 

 

 

1.05

 

Book Value Per Share

 

 

9.43

 

 

 

9.25

 

 

 

8.45

 

 

 

 

 

Tangible Book Value Per Share (1)

 

 

9.31

 

 

 

9.13

 

 

 

8.33

 

 

 

 

 

Basic Weighted Average Shares Outstanding

 

 

28,179,768

 

 

 

28,683,855

 

 

 

28,833,576

 

 

 

28,582,064

 

 

 

29,358,644

 

Diluted Weighted Average Shares Outstanding

 

 

28,823,384

 

 

 

29,174,601

 

 

 

29,561,103

 

 

 

29,170,220

 

 

 

29,996,776

 

Shares Outstanding at Period End

 

 

28,143,493

 

 

 

28,710,775

 

 

 

28,973,572

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Performance Ratios

 

 

 

 

 

 

 

 

 

 

Return on Average Assets (Annualized)

 

 

0.70

%

 

 

1.05

%

 

 

1.53

%

 

 

1.04

%

 

 

1.49

%

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

 

 

2.30

 

 

 

1.94

 

 

 

2.09

 

 

 

2.09

 

 

 

2.07

 

Return on Average Common Equity (Annualized)

 

 

7.45

 

 

 

10.84

 

 

 

14.16

 

 

 

10.51

 

 

 

13.50

 

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

 

 

7.55

 

 

 

10.98

 

 

 

14.37

 

 

 

10.65

 

 

 

13.72

 

Yield on Interest Earning Assets

 

 

4.46

 

 

 

4.30

 

 

 

5.01

 

 

 

4.51

 

 

 

5.01

 

Yield on Total Loans, Gross

 

 

4.89

 

 

 

4.73

 

 

 

5.33

 

 

 

4.90

 

 

 

5.31

 

Cost of Interest Bearing Liabilities

 

 

1.24

 

 

 

1.50

 

 

 

1.96

 

 

 

1.53

 

 

 

2.03

 

Cost of Total Deposits

 

 

0.69

 

 

 

0.87

 

 

 

1.34

 

 

 

0.93

 

 

 

1.42

 

Net Interest Margin (2)

 

 

3.61

 

 

 

3.28

 

 

 

3.65

 

 

 

3.46

 

 

 

3.59

 

Efficiency Ratio (1)

 

 

59.0

 

 

 

42.3

 

 

 

49.6

 

 

 

49.0

 

 

 

47.4

 

Adjusted Efficiency Ratio (1)

 

 

36.6

 

 

 

41.7

 

 

 

44.3

 

 

 

40.5

 

 

 

43.3

 

Noninterest Expense to Average Assets (Annualized)

 

 

2.16

 

 

 

1.42

 

 

 

1.87

 

 

 

1.73

 

 

 

1.75

 

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

 

 

1.34

 

 

 

1.40

 

 

 

1.67

 

 

 

1.44

 

 

 

1.59

 

Loan to Deposit Ratio

 

 

93.0

 

 

 

99.4

 

 

 

104.9

 

 

 

 

 

Core Deposits to Total Deposits

 

 

78.1

 

 

 

77.1

 

 

 

80.7

 

 

 

 

 

Tangible Common Equity to Tangible Assets (1)

 

 

8.96

 

 

 

9.46

 

 

 

10.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios (Bank Only) (3)

 

 

 

 

 

 

 

 

 

 

Tier 1 Leverage Ratio

 

 

10.89

%

 

 

11.24

%

 

 

11.01

%

 

 

 

 

Tier 1 Risk-based Capital Ratio

 

 

12.12

 

 

 

12.60

 

 

 

11.72

 

 

 

 

 

Total Risk-based Capital Ratio

 

 

13.37

 

 

 

13.85

 

 

 

12.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios (Consolidated) (3)

 

 

 

 

 

 

 

 

 

 

Tier 1 Leverage Ratio

 

 

9.28

%

 

 

9.83

%

 

 

10.69

%

 

 

 

 

Tier 1 Risk-based Capital Ratio

 

 

10.35

 

 

 

11.03

 

 

 

11.39

 

 

 

 

 

Total Risk-based Capital Ratio

 

 

14.58

 

 

 

15.45

 

 

 

12.98

 

 

 

 

 

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

 

Selected Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

(dollars in thousands)

 

2020

 

2020

 

2020

 

2020

 

2019

Selected Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

2,927,345

 

$

2,774,564

 

$

2,754,463

 

$

2,418,730

 

$

2,268,830

Total Loans, Gross

 

 

2,326,428

 

 

2,259,228

 

 

2,193,778

 

 

2,002,817

 

 

1,912,038

Allowance for Loan Losses

 

 

34,841

 

 

31,381

 

 

27,633

 

 

24,585

 

 

22,526

Goodwill and Other Intangibles

 

 

3,296

 

 

3,344

 

 

3,391

 

 

3,439

 

 

3,487

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

2,501,636

 

 

2,273,044

 

 

2,242,051

 

 

1,900,127

 

 

1,823,310

Tangible Common Equity (1)

 

 

262,109

 

 

262,088

 

 

253,799

 

 

244,704

 

 

241,307

Total Shareholders' Equity

 

 

265,405

 

 

265,432

 

 

257,190

 

 

248,143

 

 

244,794

Average Total Assets - Quarter-to-Date

 

 

2,816,032

 

 

2,711,755

 

 

2,622,272

 

 

2,317,040

 

 

2,221,370

Average Common Equity - Quarter-to-Date

 

 

265,716

 

 

263,195

 

 

255,109

 

 

250,800

 

 

240,188

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

(dollars in thousands)

 

2020

 

2020

 

2019

 

2020

 

2019

Selected Income Statement Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Income

 

$

30,699

 

$

28,493

 

$

27,419

 

$

114,826

 

$

103,778

Interest Expense

 

 

5,858

 

 

6,814

 

 

7,491

 

 

26,862

 

 

29,646

Net Interest Income

 

 

24,841

 

 

21,679

 

 

19,928

 

 

87,964

 

 

74,132

Provision for Loan Losses

 

 

3,900

 

 

3,750

 

 

600

 

 

12,750

 

 

2,700

Net Interest Income after Provision for Loan Losses

 

 

20,941

 

 

17,929

 

 

19,328

 

 

75,214

 

 

71,432

Noninterest Income

 

 

986

 

 

1,157

 

 

1,112

 

 

5,839

 

 

3,826

Noninterest Expense

 

 

15,258

 

 

9,672

 

 

10,489

 

 

45,387

 

 

36,932

Income Before Income Taxes

 

 

6,669

 

 

9,414

 

 

9,951

 

 

35,666

 

 

38,326

Provision for Income Taxes

 

 

1,690

 

 

2,240

 

 

1,380

 

 

8,472

 

 

6,923

Net Income

 

$

4,979

 

$

7,174

 

$

8,571

 

$

27,194

 

$

31,403

Income Statement

Net Interest Income

Net interest income was $24.8 million for the fourth quarter of 2020, an increase of $3.2 million, or 14.6%, from $21.7 million in the third quarter of 2020, and an increase of $4.9 million, or 24.7%, from $19.9 million in the fourth quarter of 2019. The linked-quarter and year-over-year increases in net interest income were primarily due to 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 $2.76 billion for the fourth quarter of 2020, an increase of $103.7 million, or 3.9%, from $2.66 billion for the third quarter of 2020, and an increase of $570.5 million, or 26.1%, from $2.19 billion for the fourth quarter of 2019. This increase in average interest earning assets during both periods was primarily due to continued organic growth in the loan portfolio, as well as the funding of PPP loans.

Net interest margin (on a fully tax-equivalent basis) for the fourth quarter of 2020 was 3.61%, a 33 basis point increase from 3.28% in the third quarter of 2020, and a 4 basis point decrease from 3.65% in the fourth quarter of 2019.

While the origination volume of PPP loans earning 1.00% negatively impacted net interest margin, the recognition of fees associated with the originations benefited net interest margin in the fourth quarter. The SBA began forgiving PPP loans in October of 2020, which accelerated the recognition of PPP fees in the fourth quarter of 2020. The Company recognized $1.7 million of PPP origination fees during the fourth quarter of 2020, compared to $716,000 during the third quarter of 2020. The elevated fee recognition is illustrated in the 5.05% PPP loan yield for the fourth quarter of 2020 compared to 2.57% for the third quarter of 2020. Even with headwinds surrounding earning asset yields, the Company was encouraged by another quarter of meaningful deposit repricing that ultimately translated to net interest margin expansion. The cost of total deposits declined 18 basis points to 0.69% in the fourth quarter of 2020, compared to 0.87% in the third quarter of 2020.

Given the volatility of 2020 and competing dynamics on both sides of the balance sheet, the Company was pleased to report only a 4 basis point decline in the net interest margin on a year-over-year basis. Despite a significant reduction in interest bearing deposit costs over the year, the historically low interest rate environment coupled with a more liquid balance sheet mix pressured earning asset yields lower and ultimately compressed the net interest margin. Furthermore, the Company’s subordinated debenture issuance and the PPP loan origination volumes, both occurring during the second quarter of 2020, had a negative impact on the net interest margin during the year.

Interest income was $30.7 million for the fourth quarter of 2020, an increase of $2.2 million, or 7.7%, from $28.5 million in the third quarter of 2020, and an increase of $3.3 million, or 12.0%, from $27.4 million in the fourth quarter of 2019. The yield on interest earning assets (on a fully tax-equivalent basis) was 4.46% in the fourth quarter of 2020, compared to 4.30% in the third quarter of 2020, and 5.01% in the fourth quarter of 2019. The linked-quarter increase in the yield on interest earning assets was due primarily to the recognition of $1.7 million of PPP loan origination fees, offset partially by lower market rates resulting in lower loan and security yields. The year-over-year decrease in the yield on interest earning assets was primarily due to the falling interest rate environment resulting in lower loan and security yields, the impact of PPP loans originated at a meaningfully lower rate than the aggregate loan portfolio yield, and an increase in cash balances due to extraordinary deposit inflows.

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 4.87% in the fourth quarter of 2020, which was 6 basis points lower than 4.93% in the third quarter of 2020, and 46 basis points lower than 5.33% in the fourth quarter of 2019. While loan fees have maintained a 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

 

 

 

December 31, 2020

 

 

September 30, 2020

 

 

June 30, 2020

 

 

March 31, 2020

 

 

December 31, 2019

 

Interest

 

4.59

%

 

4.69

%

 

4.76

%

 

4.90

%

 

5.00

%

Fees

 

0.28

 

 

0.24

 

 

0.25

 

 

0.27

 

 

0.33

 

Yield on Loans, Excluding PPP Loans

 

4.87

%

 

4.93

%

 

5.01

%

 

5.17

%

 

5.33

%

Interest expense was $5.9 million for the fourth quarter of 2020, a decrease of $956,000, or 14.0%, from $6.8 million in the third quarter of 2020, and a decrease of $1.6 million, or 21.8%, from $7.5 million in the fourth quarter of 2019. The cost of interest bearing liabilities declined 26 basis points on a linked-quarter basis from 1.50% in the third quarter of 2020 to 1.24% in the fourth quarter of 2020, primarily due to lower rates paid on deposits. On a year-over-year basis, the cost of interest bearing liabilities decreased 72 basis points from 1.96% in the fourth quarter of 2019 to 1.24% in the fourth quarter of 2020 primarily due to lower rates paid on deposits, offset partially by strong growth of interest bearing deposits and additional subordinated debentures.

Interest expense on deposits was $4.1 million for the fourth quarter of 2020, a decrease of $761,000, or 15.7%, from $4.8 million in the third quarter of 2020, and a decrease of $2.0 million, or 32.7%, from $6.1 million in the fourth quarter of 2019. The cost of total deposits declined 18 basis points on a linked-quarter basis from 0.87% in the third quarter of 2020, and declined 65 basis points on a year-over-year basis from 1.34% in the fourth quarter of 2019, to 0.69% in the fourth quarter of 2020, primarily due to deposit rate cuts consistent with a lower rate environment and the repricing of time deposits.

Given strong deposit growth and ample time deposit maturities over the next 12 months, the Company anticipates continued deposit repricing opportunities in the future. Moreover, the significant FHLB de-leveraging strategy executed in the fourth quarter of 2020 will begin to manifest lower interest bearing liability costs in subsequent quarters.

A summary of the Company’s average balances, interest yields and rates, and net interest margin for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

December 31, 2020

 

September 30, 2020

 

December 31, 2019

 

 

 

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

 

$

79,896

 

$

32

 

0.16

%

$

101,787

 

$

42

 

0.16

%

$

45,818

 

$

150

 

1.30

%

Investment Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable Investment Securities

 

 

290,093

 

 

1,632

 

2.24

 

 

256,808

 

 

1,389

 

2.15

 

 

168,911

 

 

1,228

 

2.88

 

Tax-Exempt Investment Securities (1)

 

 

81,370

 

 

888

 

4.34

 

 

82,579

 

 

900

 

4.33

 

 

95,015

 

 

1,019

 

4.26

 

Total Investment Securities

 

 

371,463

 

 

2,520

 

2.70

 

 

339,387

 

 

2,289

 

2.68

 

 

263,926

 

 

2,247

 

3.38

 

Paycheck Protection Program Loans (2)

 

 

165,099

 

 

2,097

 

5.05

 

 

181,397

 

 

1,173

 

2.57

 

 

 

 

 

 

Loans (1)(2)

 

 

2,136,229

 

 

26,168

 

4.87

 

 

2,025,410

 

 

25,081

 

4.93

 

 

1,872,234

 

 

25,132

 

5.33

 

Total Loans

 

 

2,301,328

 

 

28,265

 

4.89

 

 

2,206,807

 

 

26,254

 

4.73

 

 

1,872,234

 

 

25,132

 

5.33

 

Federal Home Loan Bank Stock

 

 

6,856

 

 

92

 

5.35

 

 

7,901

 

 

127

 

6.38

 

 

7,947

 

 

103

 

5.13

 

Total Interest Earning Assets

 

 

2,759,543

 

 

30,909

 

4.46

%

 

2,655,882

 

 

28,712

 

4.30

%

 

2,189,925

 

 

27,632

 

5.01

%

Noninterest Earning Assets

 

 

56,489

 

 

 

 

 

 

 

55,873

 

 

 

 

 

 

 

31,445

 

 

 

 

 

 

Total Assets

 

$

2,816,032

 

 

 

 

 

 

$

2,711,755

 

 

 

 

 

 

$

2,221,370

 

 

 

 

 

 

Interest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Bearing Transaction Deposits

 

 

353,806

 

 

420

 

0.47

%

 

306,162

 

 

400

 

0.52

%

 

257,777

 

 

503

 

0.77

%

Savings and Money Market Deposits

 

 

538,030

 

 

1,003

 

0.74

 

 

501,246

 

 

1,106

 

0.88

 

 

487,424

 

 

1,963

 

1.60

 

Time Deposits

 

 

362,469

 

 

1,607

 

1.76

 

 

369,975

 

 

1,899

 

2.04

 

 

353,351

 

 

2,151

 

2.41

 

Brokered Deposits

 

 

433,037

 

 

1,049

 

0.96

 

 

419,744

 

 

1,435

 

1.36

 

 

243,358

 

 

1,447

 

2.36

 

Total Interest Bearing Deposits

 

 

1,687,342

 

 

4,079

 

0.96

 

 

1,597,127

 

 

4,840

 

1.21

 

 

1,341,910

 

 

6,064

 

1.79

 

Federal Funds Purchased

 

 

4,072

 

 

4

 

0.33

 

 

152

 

 

 

0.33

 

 

3,011

 

 

14

 

1.82

 

Notes Payable

 

 

11,000

 

 

105

 

3.77

 

 

11,500

 

 

108

 

3.74

 

 

13,000

 

 

123

 

3.75

 

FHLB Advances

 

 

99,196

 

 

551

 

2.21

 

 

129,457

 

 

748

 

2.30

 

 

136,554

 

 

897

 

2.61

 

Subordinated Debentures

 

 

73,696

 

 

1,119

 

6.04

 

 

73,649

 

 

1,118

 

6.04

 

 

24,725

 

 

393

 

6.31

 

Total Interest Bearing Liabilities

 

 

1,875,306

 

 

5,858

 

1.24

%

 

1,811,885

 

 

6,814

 

1.50

%

 

1,519,200

 

 

7,491

 

1.96

%

Noninterest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Bearing Transaction Deposits

 

 

654,299

 

 

 

 

 

 

 

615,214

 

 

 

 

 

 

 

451,265

 

 

 

 

 

 

Other Noninterest Bearing Liabilities

 

 

20,711

 

 

 

 

 

 

 

21,461

 

 

 

 

 

 

 

10,717

 

 

 

 

 

 

Total Noninterest Bearing Liabilities

 

 

675,010

 

 

 

 

 

 

 

636,675

 

 

 

 

 

 

 

461,982

 

 

 

 

 

 

Shareholders' Equity

 

 

265,716

 

 

 

 

 

 

 

263,195

 

 

 

 

 

 

 

240,188

 

 

 

 

 

 

Total Liabilities and Shareholders' Equity

 

$

2,816,032

 

 

 

 

 

 

$

2,711,755

 

 

 

 

 

 

$

2,221,370

 

 

 

 

 

 

Net Interest Income / Interest Rate Spread

 

 

 

 

 

25,051

 

3.22

%

 

 

 

 

21,898

 

2.80

%

 

 

 

 

20,141

 

3.05

%

Net Interest Margin (3)

 

 

 

 

 

 

 

3.61

%

 

 

 

 

 

 

3.28

%

 

 

 

 

 

 

3.65

%

Taxable Equivalent Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-Exempt Investment Securities

 

 

 

 

 

(210)

 

 

 

 

 

 

 

(219)

 

 

 

 

 

 

 

(213)

 

 

 

Net Interest Income

 

 

 

 

$

24,841

 

 

 

 

 

 

$

21,679

 

 

 

 

 

 

$

19,928

 

 

 

  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 $3.9 million for the fourth quarter of 2020, an increase of $150,000 from $3.8 million for the third quarter of 2020, and an increase of $3.3 million from $600,000 for the fourth quarter of 2019. The allowance for loan losses to total loans was 1.50% at December 31, 2020, compared to 1.39% at September 30, 2020, and 1.18% at December 31, 2019. The allowance for loan losses to total loans, excluding $138.5 million of PPP loans, was 1.59% at December 31, 2020. The continued reserve build in the fourth quarter of 2020 was primarily attributable to growth of the loan portfolio, economic uncertainties, and evolving risks driven by the impacts of the COVID-19 pandemic.

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

 

Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

(dollars in thousands)

 

2020

 

2020

 

2019

 

2020

 

2019

Balance at Beginning of Period

 

$

31,381

 

 

$

27,633

 

 

$

22,124

 

 

$

22,526

 

 

$

20,031

 

Provision for Loan Losses

 

 

3,900

 

 

 

3,750

 

 

 

600

 

 

 

12,750

 

 

 

2,700

 

Charge-offs

 

 

(463

)

 

 

(6

)

 

 

(205

)

 

 

(517

)

 

 

(388

)

Recoveries

 

 

23

 

 

 

4

 

 

 

7

 

 

 

82

 

 

 

183

 

Balance at End of Period

 

$

34,841

 

 

$

31,381

 

 

$

22,526

 

 

$

34,841

 

 

$

22,526

 

Noninterest Income

Noninterest income was $986,000 for the fourth quarter of 2020, a decrease of $171,000 from $1.2 million for the third quarter of 2020, and a decrease of $126,000 from $1.1 million for the fourth quarter of 2019. The linked-quarter decrease was primarily due to decreased gains on sales of securities, offset partially by increased customer service fees. The year-over-year decrease was primarily due to decreased swap fees, partially offset by increased letter of credit fees and customer service fees.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

 

(dollars in thousands)

 

2020

 

2020

 

2019

 

2020

 

2019

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer Service Fees

 

$

251

 

$

200

 

$

196

 

$

826

 

$

760

 

Net Gain on Sales of Securities

 

 

30

 

 

109

 

 

 

 

1,503

 

 

516

 

Net Gain on Sales of Foreclosed Assets

 

 

 

 

 

 

 

 

 

 

69

 

Letter of Credit Fees

 

 

477

 

 

487

 

 

394

 

 

1,503

 

 

1,184

 

Debit Card Interchange Fees

 

 

118

 

 

119

 

 

105

 

 

428

 

 

418

 

Swap Fees

 

 

 

 

 

 

255

 

 

907

 

 

255

 

Other Income

 

 

110

 

 

242

 

 

162

 

 

672

 

 

624

 

Totals

 

$

986

 

$

1,157

 

$

1,112

 

$

5,839

 

$

3,826

 

Noninterest Expense

Noninterest expense was $15.3 million for the fourth quarter of 2020, an increase of $5.6 million from $9.7 million for the third quarter of 2020, and an increase of $4.8 million from $10.5 million for the fourth quarter of 2019. The linked-quarter increase was primarily due to $5.6 million of prepayment fees associated with the extinguishment of $69.0 million of FHLB term advances, as well as increases in FDIC insurance assessment and occupancy and equipment expenses, partially offset by a decrease in salaries and employee benefits. The year-over-year increase was primarily attributable to increased data processing, professional and consulting fees and FHLB advance prepayment fees, offset partially by decreased marketing and advertising expenses and lower amortization of tax credit investments.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

(dollars in thousands)

 

2020

 

2020

 

2019

 

2020

 

2019

Noninterest Expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and Employee Benefits

 

$

6,216

 

$

6,550

 

$

6,235

 

$

25,568

 

$

22,076

Occupancy and Equipment

 

 

979

 

 

894

 

 

883

 

 

3,258

 

 

3,085

FDIC Insurance Assessment

 

 

270

 

 

160

 

 

165

 

 

788

 

 

735

Data Processing

 

 

293

 

 

267

 

 

161

 

 

1,027

 

 

647

Professional and Consulting Fees

 

 

566

 

 

492

 

 

437

 

 

1,966

 

 

1,690

Information Technology and Telecommunications

 

 

397

 

 

385

 

 

319

 

 

1,374

 

 

996

Marketing and Advertising

 

 

143

 

 

94

 

 

299

 

 

788

 

 

1,507

Intangible Asset Amortization

 

 

48

 

 

48

 

 

48

 

 

191

 

 

191

Amortization of Tax Credit Investments

 

 

146

 

 

145

 

 

1,128

 

 

738

 

 

3,225

FHLB Advance Prepayment Fees

 

 

5,613

 

 

 

 

 

 

7,043

 

 

Other Expense

 

 

587

 

 

637

 

 

814

 

 

2,646

 

 

2,780

Totals

 

$

15,258

 

$

9,672

 

$

10,489

 

$

45,387

 

$

36,932

The Company had 183 full-time equivalent employees at December 31, 2020, compared to 180 employees at September 30, 2020, and 160 employees at December 31, 2019. Despite the uncertainty surrounding the COVID-19 pandemic, the Company continues to attract strategic hires in lending, deposit gathering, technology and risk management roles. The efficiency ratio, a non-GAAP financial measure, was 59.0% for the fourth quarter of 2020, compared to 42.3% for the third quarter of 2020, and 49.6% for the fourth quarter of 2019. Excluding the impact of certain non-routine income and expenses, the adjusted efficiency ratio, a non-GAAP financial measure, was 36.6% for the fourth quarter of 2020, 41.7% for the third quarter of 2020 and 44.3% for the fourth quarter of 2019. The efficiencies of the Company’s “branch-light” model have been evident throughout the pandemic, and going forward, have positioned the Company well to continue making investments in technology as the industry adapts to evolving client behavior.

Income Taxes

The effective combined federal and state income tax rate for the fourth quarter of 2020 was 25.3%, an increase from 23.8% for the third quarter of 2020, and an increase from 13.9% for the fourth quarter of 2019. The higher effective combined rate in the fourth quarter of 2020 compared to the fourth quarter of 2019 was primarily due to fewer tax credits being recognized. The effective combined federal and state income tax rate was 23.8% for the year ended December 31, 2020, compared to 18.1% for the year ended December 31, 2019.

Balance Sheet

Total assets at December 31, 2020 were $2.93 billion, a 5.5% increase from $2.77 billion at September 30, 2020, and a 29.0% increase from $2.27 billion at December 31, 2019. The linked-quarter increase in total assets was primarily due to organic loan growth, purchases of investment securities, and excess cash balances linked to extraordinary deposit growth at year-end. The year-over-year increase in total assets was primarily due to organic loan growth, PPP loan growth, purchases of investment securities, and excess cash balances.

Total gross loans at December 31, 2020 were $2.33 billion, an increase of $67.2 million, or 3.0%, over total gross loans of $2.26 billion at September 30, 2020, and an increase of $414.4 million, or 21.7%, over total gross loans of $1.91 billion at December 31, 2019. The linked-quarter increase of $67.2 million was net of $43.1 million in PPP forgiven loans during the quarter. When excluding the PPP loans altogether, gross loans grew $110.3 million, or 21.2% on an annualized basis.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

September 30, 2020

 

June 30, 2020

 

March 31, 2020

 

December 31, 2019

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

304,220

 

 

$

287,254

 

 

$

302,536

 

 

$

299,425

 

 

$

276,035

 

Paycheck Protection Program

 

 

138,454

 

 

 

181,596

 

 

 

180,228

 

 

 

 

 

 

 

Construction and Land Development

 

 

170,217

 

 

 

175,882

 

 

 

191,768

 

 

 

183,350

 

 

 

196,776

 

Real Estate Mortgage:

 

 

 

 

 

 

 

 

 

 

1 - 4 Family Mortgage

 

 

294,479

 

 

 

286,089

 

 

 

289,456

 

 

 

272,590

 

 

 

260,611

 

Multifamily

 

 

626,465

 

 

 

585,814

 

 

 

522,491

 

 

 

536,380

 

 

 

515,014

 

CRE Owner Occupied

 

 

75,604

 

 

 

75,963

 

 

 

73,539

 

 

 

75,207

 

 

 

66,584

 

CRE Nonowner Occupied

 

 

709,300

 

 

 

660,058

 

 

 

627,651

 

 

 

631,541

 

 

 

592,545

 

Total Real Estate Mortgage Loans

 

 

1,705,848

 

 

 

1,607,924

 

 

 

1,513,137

 

 

 

1,515,718

 

 

 

1,434,754

 

Consumer and Other

 

 

7,689

 

 

 

6,572

 

 

 

6,109

 

 

 

4,324

 

 

 

4,473

 

Total Loans, Gross

 

 

2,326,428

 

 

 

2,259,228

 

 

 

2,193,778

 

 

 

2,002,817

 

 

 

1,912,038

 

Allowance for Loan Losses

 

 

(34,841

)

 

 

(31,381

)

 

 

(27,633

)

 

 

(24,585

)

 

 

(22,526

)

Net Deferred Loan Fees

 

 

(9,151

)

 

 

(10,367

)

 

 

(10,287

)

 

 

(5,336

)

 

 

(5,512

)

Total Loans, Net

 

$

2,282,436

 

 

$

2,217,480

 

 

$

2,155,858

 

 

$

1,972,896

 

 

$

1,884,000

 

Total deposits at December 31, 2020 were $2.50 billion, an increase of $228.6 million, or 10.1%, over total deposits of $2.27 billion at September 30, 2020, and an increase of $678.3 million, or 37.2%, over total deposits of $1.82 billion at December 31, 2019. Deposit growth in the fourth quarter of 2020 was primarily due to an increase in savings and money market deposits, offset partially by a decline in noninterest bearing and time deposits. The growth in savings and money market deposits is a result of both successful new client acquisition initiatives and pandemic-related accumulation of liquidity by existing clients. Given the fluid environment, management believes deposits could experience fluctuations in future periods.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

September 30, 2020

 

June 30, 2020

 

March 31, 2020

 

December 31, 2019

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Bearing Transaction Deposits

 

$

671,903

 

$

685,773

 

$

648,869

 

$

476,217

 

$

447,509

 

Interest Bearing Transaction Deposits

 

 

366,290

 

 

322,253

 

 

285,386

 

 

255,483

 

 

264,627

 

Savings and Money Market Deposits

 

 

657,617

 

 

498,397

 

 

516,543

 

 

514,113

 

 

516,785

 

Time Deposits

 

 

353,543

 

 

363,897

 

 

382,187

 

 

393,340

 

 

360,027

 

Brokered Deposits

 

 

452,283

 

 

402,724

 

 

409,066

 

 

260,974

 

 

234,362

 

Total Deposits

 

$

2,501,636

 

$

2,273,044

 

$

2,242,051

 

$

1,900,127

 

$

1,823,310

 

Total shareholders’ equity at December 31, 2020 and September 30, 2020 was $265.4 million, an increase of $20.6 million, or 8.4%, over total shareholders’ equity of $244.8 million at December 31, 2019. The linked-quarter balances remained the same due to stock repurchases made under the Company’s stock repurchase program offset by net income retained and an increase in unrealized gains in the securities portfolio. The year-over-year increase was due to net income retained, partially offset by stock repurchases made throughout 2020 under the Company’s stock repurchase program.

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 late in the third quarter of 2020. On October 27, 2020, the Company’s Board of Directors approved a $15.0 million increase to the Company’s previously announced stock repurchase program, increasing the amount of common stock that may be repurchased from $25.0 million to up to $40.0 million for the duration of the program, which is approved to run through October 27, 2022. 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 fourth quarter of 2020, the Company repurchased 624,933 shares of its common stock, or approximately 2% of the basic weighted average shares outstanding during the quarter. Shares were repurchased at a weighted average price of $11.18 for a total of $7.0 million. At December 31, 2020, the remaining amount that could be used to repurchase shares under the stock repurchase program was $14.7 million.

Tangible book value per share, a non-GAAP financial measure, was $9.31 as of December 31, 2020, an increase of 2.0% from $9.13 as of September 30, 2020, and an increase of 11.8% from $8.33 as of December 31, 2019.

Asset Quality

Annualized net charge-offs as a percent of average loans for the fourth quarter of 2020 were 0.08%, compared to 0.00% for the third quarter of 2020, and 0.04% for the fourth quarter of 2019. At December 31, 2020, the Company’s nonperforming assets, which include nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $775,000, or 0.03% of total assets, as compared to $433,000, or 0.02% of total assets at September 30, 2020, and $461,000 or 0.02% of total assets at December 31, 2019.

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. With the change in economic conditions and the uncertain duration of the COVID-19 pandemic, the Company’s portfolio is expected to be negatively impacted and management anticipates that delinquencies and charge-offs could rise in future periods. Loans that have potential weaknesses that warrant a watchlist risk rating at December 31, 2020, were $44.8 million, compared to $50.9 million at September 30, 2020. As the COVID-19 pandemic continues to evolve, the length and extent of the economic contraction may result in further watchlist or adverse classifications in the loan portfolio. Loans that warranted a substandard risk rating at December 31, 2020 were $15.2 million, compared to $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

 

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

(dollars in thousands)

 

2020

 

2020

 

2020

 

2020

 

2019

Selected Asset Quality Data

 

 

 

 

 

 

 

 

 

 

Loans 30-89 Days Past Due

 

$

13

 

 

$

458

 

 

$

153

 

 

$

21

 

 

$

403

 

Loans 30-89 Days Past Due to Total Loans

 

 

0.00

%

 

 

0.02

%

 

 

0.01

%

 

 

0.00

%

 

 

0.02

%

Nonperforming Loans

 

$

775

 

 

$

433

 

 

$

602

 

 

$

606

 

 

$

461

 

Nonperforming Loans to Total Loans

 

 

0.03

%

 

 

0.02

%

 

 

0.03

%

 

 

0.03

%

 

 

0.02

%

Foreclosed Assets

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Nonaccrual Loans to Total Loans

 

 

0.03

%

 

 

0.02

%

 

 

0.03

%

 

 

0.03

%

 

 

0.02

%

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

 

 

0.03

 

 

 

0.02

 

 

 

0.03

 

 

 

0.03

 

 

 

0.02

 

Nonperforming Assets (1)

 

$

775

 

 

$

433

 

 

$

602

 

 

$

606

 

 

$

461

 

Nonperforming Assets to Total Assets (1)

 

 

0.03

%

 

 

0.02

%

 

 

0.02

%

 

 

0.03

%

 

 

0.02

%

Allowance for Loan Losses to Total Loans

 

 

1.50

 

 

 

1.39

 

 

 

1.26

 

 

 

1.23

 

 

 

1.18

 

Allowance for Loan Losses to Total Loans, Excluding PPP Loans

 

 

1.59

 

 

 

1.51

 

 

 

1.37

 

 

 

N/A

 

 

 

N/A

 

Allowance for Loans Losses to Nonperforming Loans

 

 

4,495.61

 

 

 

7,247.34

 

 

 

4,590.20

 

 

 

4,056.93

 

 

 

4,886.33

 

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

 

 

0.08

 

 

 

0.00

 

 

 

(0.01

)

 

 

0.01

 

 

 

0.04

 

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

About the Company

Bridgewater Bancshares, Inc. is a financial holding company headquartered in St. Louis Park, Minnesota. The Company has two wholly owned subsidiaries, Bridgewater Bank, a Minnesota-chartered commercial bank founded in November 2005, and Bridgewater Risk Management, Inc., a captive insurance company founded in December 2016. Bridgewater Bank has two wholly owned subsidiaries, Bridgewater Investment Management, Inc. and BWB Holdings, LLC. Bridgewater Bank currently operates through 7 branches in Bloomington, Greenwood, Minneapolis (2), St. Louis Park, Orono, and St. Paul, all located within the Minneapolis-St. Paul-Bloomington metropolitan statistical area.

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, 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; 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; 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)

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

September 30,

 

December 31,

 

 

2020

 

2020

 

2019

 

 

(Unaudited)

 

(Unaudited)

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

160,675

 

$

91,510

 

$

31,935

Bank-Owned Certificates of Deposit

 

 

2,860

 

 

2,862

 

 

2,654

Securities Available for Sale, at Fair Value

 

 

390,629

 

 

373,955

 

 

289,877

Loans, Net of Allowance for Loan Losses of $34,841 at December 31, 2020 (unaudited), $31,381 at September 30, 2020 (unaudited) and $22,526 at December 31, 2019

 

 

2,282,436

 

 

2,217,480

 

 

1,884,000

Federal Home Loan Bank (FHLB) Stock, at Cost

 

 

5,027

 

 

7,817

 

 

7,824

Premises and Equipment, Net

 

 

50,987

 

 

48,885

 

 

27,628

Accrued Interest

 

 

9,172

 

 

9,647

 

 

6,775

Goodwill

 

 

2,626

 

 

2,626

 

 

2,626

Other Intangible Assets, Net

 

 

670

 

 

718

 

 

861

Other Assets

 

 

22,263

 

 

19,064

 

 

14,650

Total Assets

 

$

2,927,345

 

$

2,774,564

 

$

2,268,830

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Noninterest Bearing

 

$

671,903

 

$

685,773

 

$

447,509

Interest Bearing

 

 

1,829,733

 

 

1,587,271

 

 

1,375,801

Total Deposits

 

 

2,501,636

 

 

2,273,044

 

 

1,823,310

Notes Payable

 

 

11,000

 

 

11,500

 

 

13,000

FHLB Advances

 

 

57,500

 

 

127,500

 

 

136,500

Subordinated Debentures, Net of Issuance Costs

 

 

73,739

 

 

73,665

 

 

24,733

Accrued Interest Payable

 

 

1,615

 

 

2,082

 

 

1,982

Other Liabilities

 

 

16,450

 

 

21,341

 

 

24,511

Total Liabilities

 

 

2,661,940

 

 

2,509,132

 

 

2,024,036

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Preferred Stock- $0.01 par value

 

 

 

 

 

 

 

 

 

Authorized 10,000,000; None Issued and Outstanding at December 31, 2020 and December 31, 2019

 

 

 

 

 

 

Common Stock- $0.01 par value

 

 

 

 

 

 

 

 

 

Common Stock - Authorized 75,000,000; Issued and Outstanding 28,143,493 at December 31, 2020 (unaudited), 28,710,775 at September 30, 2020 (unaudited) and 28,973,572 at December 31, 2019

 

 

281

 

 

287

 

 

290

Additional Paid-In Capital

 

 

103,714

 

 

110,010

 

 

112,093

Retained Earnings

 

 

154,831

 

 

149,852

 

 

127,637

Accumulated Other Comprehensive Income

 

 

6,579

 

 

5,283

 

 

4,774

Total Shareholders' Equity

 

 

265,405

 

 

265,432

 

 

244,794

Total Liabilities and Shareholders' Equity

 

$

2,927,345

 

$

2,774,564

 

$

2,268,830

 

Bridgewater Bancshares, Inc. and Subsidiaries

 

Consolidated Statements of Income

(dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

 

 

2020

 

2020

 

2019

 

2020

 

2019

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, Including Fees

 

$

28,242

 

$

26,224

 

$

25,132

 

$

105,492

 

$

94,852

Investment Securities

 

 

2,333

 

 

2,100

 

 

2,034

 

 

8,720

 

 

7,773

Other

 

 

124

 

 

169

 

 

253

 

 

614

 

 

1,153

Total Interest Income

 

 

30,699

 

 

28,493

 

 

27,419

 

 

114,826

 

 

103,778

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

4,079

 

 

4,840

 

 

6,064

 

 

19,813

 

 

23,996

Notes Payable

 

 

105

 

 

108

 

 

123

 

 

439

 

 

501

FHLB Advances

 

 

551

 

 

748

 

 

897

 

 

3,390

 

 

3,407

Subordinated Debentures

 

 

1,119

 

 

1,118

 

 

393

 

 

3,109

 

 

1,556

Federal Funds Purchased

 

 

4

 

 

 

 

14

 

 

111

 

 

186

Total Interest Expense

 

 

5,858

 

 

6,814

 

 

7,491

 

 

26,862

 

 

29,646

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

 

 

24,841

 

 

21,679

 

 

19,928

 

 

87,964

 

 

74,132

Provision for Loan Losses

 

 

3,900

 

 

3,750

 

 

600

 

 

12,750

 

 

2,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME AFTER

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROVISION FOR LOAN LOSSES

 

 

20,941

 

 

17,929

 

 

19,328

 

 

75,214

 

 

71,432

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer Service Fees

 

 

251

 

 

200

 

 

196

 

 

826

 

 

760

Net Gain on Sales of Available for Sale Securities

 

 

30

 

 

109

 

 

 

 

1,503

 

 

516

Net Gain on Sales of Foreclosed Assets

 

 

 

 

 

 

 

 

 

 

69

Other Income

 

 

705

 

 

848

 

 

916

 

 

3,510

 

 

2,481

Total Noninterest Income

 

 

986

 

 

1,157

 

 

1,112

 

 

5,839

 

 

3,826

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and Employee Benefits

 

 

6,216

 

 

6,550

 

 

6,235

 

 

25,568

 

 

22,076

Occupancy and Equipment

 

 

979

 

 

894

 

 

883

 

 

3,258

 

 

3,085

Other Expense

 

 

8,063

 

 

2,228

 

 

3,371

 

 

16,561

 

 

11,771

Total Noninterest Expense

 

 

15,258

 

 

9,672

 

 

10,489

 

 

45,387

 

 

36,932

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

6,669

 

 

9,414

 

 

9,951

 

 

35,666

 

 

38,326

Provision for Income Taxes

 

 

1,690

 

 

2,240

 

 

1,380

 

 

8,472

 

 

6,923

NET INCOME

 

$

4,979

 

$

7,174

 

$

8,571

 

$

27,194

 

$

31,403

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.18

 

$

0.25

 

$

0.30

 

$

0.95

 

$

1.07

Diluted

 

 

0.17

 

 

0.25

 

 

0.29

 

 

0.93

 

 

1.05

Dividends Paid Per Share

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures

     

(dollars in thousands) (unaudited)

     

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

 

 

2020

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

Efficiency Ratio

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

$

15,258

 

 

$

9,672

 

 

$

10,489

 

 

$

45,387

 

 

$

36,932

 

Less: Amortization of Intangible Assets

 

 

(48

)

 

 

(48

)

 

 

(48

)

 

 

(191

)

 

 

(191

)

Adjusted Noninterest Expense

 

$

15,210

 

 

$

9,624

 

 

$

10,441

 

 

$

45,196

 

 

$

36,741

 

Net Interest Income

 

$

24,841

 

 

$

21,679

 

 

$

19,928

 

 

$

87,964

 

 

$

74,132

 

Noninterest Income

 

 

986

 

 

 

1,157

 

 

 

1,112

 

 

 

5,839

 

 

 

3,826

 

Less: Gain on Sales of Securities

 

 

(30

)

 

 

(109

)

 

 

 

 

 

(1,503

)

 

 

(516

)

Adjusted Operating Revenue

 

$

25,797

 

 

$

22,727

 

 

$

21,040

 

 

$

92,300

 

 

$

77,442

 

Efficiency Ratio

 

 

59.0

%

 

 

42.3

%

 

 

49.6

%

 

 

49.0

%

 

 

47.4

%

 

 

 

 

 

 

 

 

 

 

 

Adjusted Efficiency Ratio

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

$

15,258

 

 

$

9,672

 

 

$

10,489

 

 

$

45,387

 

 

$

36,932

 

Less: Amortization of Tax Credit Investments

 

 

(146

)

 

 

(145

)

 

 

(1,128

)

 

 

(738

)

 

 

(3,225

)

Less: FHLB Advance Prepayment Fees

 

 

(5,613

)

 

 

 

 

 

 

 

 

(7,043

)

 

 

 

Less: Amortization of Intangible Assets

 

 

(48

)

 

 

(48

)

 

 

(48

)

 

 

(191

)

 

 

(191

)

Adjusted Noninterest Expense

 

$

9,451

 

 

$

9,479

 

 

$

9,313

 

 

$

37,415

 

 

$

33,516

 

Net Interest Income

 

$

24,841

 

 

$

21,679

 

 

$

19,928

 

 

$

87,964

 

 

$

74,132

 

Noninterest Income

 

 

986

 

 

 

1,157

 

 

 

1,112

 

 

 

5,839

 

 

 

3,826

 

Less: Gain on Sales of Securities

 

 

(30

)

 

 

(109

)

 

 

 

 

 

(1,503

)

 

 

(516

)

Adjusted Operating Revenue

 

$

25,797

 

 

$

22,727

 

 

$

21,040

 

 

$

92,300

 

 

$

77,442

 

Adjusted Efficiency Ratio

 

 

36.6

%

 

 

41.7

%

 

 

44.3

%

 

 

40.5

%

 

 

43.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

 

 

2020

 

2020

 

2019

 

2020

 

2019

Pre-Provision Net Revenue

 

 

 

 

 

 

 

 

 

 

Noninterest Income

 

$

986

 

 

$

1,157

 

 

$

1,112

 

 

$

5,839

 

 

$

3,826

 

Less: Gain on sales of Securities

 

 

(30

)

 

 

(109

)

 

 

 

 

 

(1,503

)

 

 

(516

)

Total Operating Noninterest Income

 

 

956

 

 

 

1,048

 

 

 

1,112

 

 

 

4,336

 

 

 

3,310

 

Plus: Net Interest income

 

 

24,841

 

 

 

21,679

 

 

 

19,928

 

 

 

87,964

 

 

 

74,132

 

Net Operating Revenue

 

$

25,797

 

 

$

22,727

 

 

$

21,040

 

 

$

92,300

 

 

$

77,442

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

$

15,258

 

 

$

9,672

 

 

$

10,489

 

 

$

45,387

 

 

$

36,932

 

Less: Amortization of Tax Credit Investments

 

 

(146

)

 

 

(145

)

 

 

(1,128

)

 

 

(738

)

 

 

(3,225

)

Less: FHLB Advance Prepayment Fees

 

 

(5,613

)

 

 

 

 

 

 

 

 

(7,043

)

 

 

 

Total Operating Noninterest Expense

 

$

9,499

 

 

$

9,527

 

 

$

9,361

 

 

$

37,606

 

 

$

33,707

 

 

 

 

 

 

 

 

 

 

 

 

Pre-Provision Net Revenue

 

$

16,298

 

 

$

13,200

 

 

$

11,679

 

 

$

54,694

 

 

$

43,735

 

 

 

 

 

 

 

 

 

 

 

 

Plus:

 

 

 

 

 

 

 

 

 

 

Non-Operating Revenue Adjustments

 

 

30

 

 

 

109

 

 

 

 

 

 

1,503

 

 

 

516

 

Less:

 

 

 

 

 

 

 

 

 

 

Provision for Loan Losses

 

 

3,900

 

 

 

3,750

 

 

 

600

 

 

 

12,750

 

 

 

2,700

 

Non-Operating Expense Adjustments

 

 

5,759

 

 

 

145

 

 

 

1,128

 

 

 

7,781

 

 

 

3,225

 

Provision for Income Taxes

 

 

1,690

 

 

 

2,240

 

 

 

1,380

 

 

 

8,472

 

 

 

6,923

 

Net Income

 

$

4,979

 

 

$

7,174

 

 

$

8,571

 

 

$

27,194

 

 

$

31,403

 

 

 

 

 

 

 

 

 

 

 

 

Average Assets

 

$

2,816,032

 

 

$

2,711,755

 

 

$

2,221,370

 

 

$

2,617,579

 

 

$

2,114,211

 

Pre-Provision Net Revenue Return on Average Assets

 

 

2.30

%

 

1.94

%

 

2.09

%

 

2.09

%

 

2.07

%

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

As of and for the Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

 

 

2020

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

Tangible Common Equity and Tangible Common Equity/Tangible Assets

 

 

 

 

 

 

 

 

 

 

Common Equity

 

$

265,405

 

 

$

265,432

 

 

$

244,794

 

 

 

 

 

Less: Intangible Assets

 

 

(3,296

)

 

 

(3,344

)

 

 

(3,487

)

 

 

 

 

Tangible Common Equity

 

 

262,109

 

 

 

262,088

 

 

 

241,307

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

 

2,927,345

 

 

 

2,774,564

 

 

 

2,268,830

 

 

 

 

 

Less: Intangible Assets

 

 

(3,296

)

 

 

(3,344

)

 

 

(3,487

)

 

 

 

 

Tangible Assets

 

$

2,924,049

 

 

$

2,771,220

 

 

$

2,265,343

 

 

 

 

 

Tangible Common Equity/Tangible Assets

 

 

8.96

%

 

 

9.46

%

 

 

10.65

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Book Value Per Share

 

 

 

 

 

 

 

 

 

 

Book Value Per Common Share

 

$

9.43

 

 

$

9.25

 

 

$

8.45

 

 

 

 

 

Less: Effects of Intangible Assets

 

 

(0.12

)

 

 

(0.12

)

 

 

(0.12

)

 

 

 

 

Tangible Book Value Per Common Share

 

$

9.31

 

 

$

9.13

 

 

$

8.33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

Average Common Equity

 

$

265,716

 

 

$

263,195

 

 

$

240,188

 

 

$

258,736

 

 

$

232,539

 

Less: Effects of Average Intangible Assets

 

 

(3,323

)

 

 

(3,371

)

 

 

(3,510

)

 

 

(3,395

)

 

 

(3,582

)

Average Tangible Common Equity

 

$

262,393

 

 

$

259,824

 

 

$

236,678

 

 

$

255,341

 

 

$

228,957

 

 

Bridgewater Bancshares, Inc. and Subsidiaries

 

Analysis of Average Balances, Yields and Rates (year-to-date)

 

(dollars in thousands, except per share data) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

December 31, 2019

 

 

Average

 

Interest

 

Yield/

 

Average

 

Interest

 

Yield/

 

 

Balance

 

& Fees

 

Rate

 

Balance

 

& Fees

 

Rate

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Interest Earning Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash Investments

 

$

80,113

 

$

170

 

 

0.21

%

 

$

46,366

 

$

755

 

 

1.63

%

Investment Securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable Investment Securities

 

 

234,873

 

 

5,712

 

 

2.43

 

 

 

149,967

 

 

4,354

 

 

2.90

 

Tax-Exempt Investment Securities (1)

 

 

87,587

 

 

3,807

 

 

4.35

 

 

 

101,012

 

 

4,327

 

 

4.28

 

Total Investment Securities

 

 

322,460

 

 

9,519

 

 

2.95

 

 

 

250,979

 

 

8,681

 

 

3.46

 

Paycheck Protection Program Loans (2)

 

 

122,240

 

 

4,143

 

 

3.39

 

 

 

 

 

 

 

 

Loans (1)(2)

 

 

2,032,180

 

 

101,469

 

 

4.99

 

 

 

1,785,937

 

 

94,852

 

 

5.31

 

Total Loans

 

 

2,154,420

 

 

105,612

 

 

4.90

 

 

 

1,785,937

 

 

94,852

 

 

 

Federal Home Loan Bank Stock

 

 

8,866

 

 

444

 

 

5.01

 

 

 

7,916

 

 

398

 

 

5.03

 

Total Interest Earning Assets

 

 

2,565,859

 

 

115,745

 

 

4.51

%

 

 

2,091,198

 

 

104,686

 

 

5.01

%

Noninterest Earning Assets

 

 

51,720

 

 

 

 

 

 

23,013

 

 

 

 

Total Assets

 

$

2,617,579

 

 

 

 

 

$

2,114,211

 

 

 

 

Interest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Interest Bearing Transaction Deposits

 

 

295,036

 

 

1,626

 

 

0.55

%

 

 

223,376

 

 

1,634

 

 

0.73

%

Savings and Money Market Deposits

 

 

523,520

 

 

5,341

 

 

1.02

 

 

 

447,040

 

 

7,747

 

 

1.73

 

Time Deposits

 

 

374,195

 

 

7,806

 

 

2.09

 

 

 

349,148

 

 

8,379

 

 

2.40

 

Brokered Deposits

 

 

348,126

 

 

5,040

 

 

1.45

 

 

 

261,023

 

 

6,236

 

 

2.39

 

Total Interest Bearing Deposits

 

 

1,540,877

 

 

19,813

 

 

1.29

 

 

 

1,280,587

 

 

23,996

 

 

1.87

 

Federal Funds Purchased

 

 

7,239

 

 

111

 

 

1.53

 

 

 

7,433

 

 

186

 

 

2.50

 

Notes Payable

 

 

11,749

 

 

439

 

 

3.73

 

 

 

13,750

 

 

501

 

 

3.64

 

FHLB Advances

 

 

148,524

 

 

3,390

 

 

2.28

 

 

 

133,968

 

 

3,407

 

 

2.54

 

Subordinated Debentures

 

 

50,954

 

 

3,109

 

 

6.10

 

 

 

24,686

 

 

1,556

 

 

6.30

 

Total Interest Bearing Liabilities

 

 

1,759,343

 

 

26,862

 

 

1.53

%

 

 

1,460,424

 

 

29,646

 

 

2.03

%

Noninterest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Bearing Transaction Deposits

 

 

579,595

 

 

 

 

 

 

414,377

 

 

 

 

Other Noninterest Bearing Liabilities

 

 

19,905

 

 

 

 

 

 

6,871

 

 

 

 

Total Noninterest Bearing Liabilities

 

 

599,500

 

 

 

 

 

 

421,248

 

 

 

 

Shareholders' Equity

 

 

258,736

 

 

 

 

 

 

232,539

 

 

 

 

Total Liabilities and Shareholders' Equity

 

$

2,617,579

 

 

 

 

 

$

2,114,211

 

 

 

 

Net Interest Income / Interest Rate Spread

 

 

 

 

88,883

 

 

2.98

%

 

 

 

 

75,040

 

 

2.98

%

Net Interest Margin (3)

 

 

 

 

 

3.46

%

 

 

 

 

 

3.59

%

Taxable Equivalent Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

Tax-Exempt Investment Securities

 

 

 

 

(919

)

 

 

 

 

 

 

(908

)

 

 

Net Interest Income

 

 

 

$

87,964

 

 

 

 

 

 

$

74,132

 

 

 

  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.

 

Investor Relations Contact:
Jerry Baack
Chief Executive Officer
investorrelations@bwbmn.com
952-893-6866

Source: Bridgewater Bancshares, Inc.



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