Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the parent company of Bridgewater Bank (the Bank), today announced net income of $12.5 million for the fourth quarter of 2021, an 8.7% increase over net income of $11.5 million for the third quarter of 2021, and a 151.3% increase over net income of $5.0 million for the fourth quarter of 2020. Net income per diluted common share for the fourth quarter of 2021 was $0.39, a 1.2% decrease compared to $0.40 per diluted common share for the third quarter of 2021, and a 126.1% increase compared to $0.17 per diluted common share for the same period in 2020.
“Bridgewater reported a fourth consecutive quarter of record net income driven by the continuation of many of the same trends and momentum we created throughout 2021,” said Chairman, Chief Executive Officer, and President, Jerry Baack. “During the quarter, we continued to generate strong loan production and gather high-quality deposits across the Twin Cities market, leading to robust balance sheet growth. This level of consistent growth in today’s environment, along with a business model operating with a low 40% adjusted efficiency ratio, stable net interest margin and strong asset quality, remain key differentiators for us. As we look ahead to 2022, we expect to continue to leverage the ongoing M&A-related market disruption and our strengthening brand to drive additional balance sheet and revenue growth; make proactive investments in business scalability, automation and back-office functions; and maintain our highly efficient operating strategy. With a hard-working team of talented professionals supporting our clients every day and a strong capital and liquidity position, we are poised to build on our momentum into 2022 and beyond.”
The Company today also announced that its Board of Directors declared a quarterly cash dividend on its 5.875% Non-Cumulative Perpetual Preferred Stock, Series A ("Series A Preferred Stock"). The quarterly cash dividend of $36.72 per share, equivalent to $0.3672 per depositary share, each representing a 1/100th interest in a share of the Series A Preferred Stock (Nasdaq: BWBBP), is payable on March 1, 2022 to shareholders of record of the Series A Preferred Stock at the close of business on February 15, 2022.
Fourth Quarter 2021 Financial Results
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Diluted |
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Nonperforming |
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Adjusted |
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ROA |
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PPNR ROA (1) |
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ROE |
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earnings per share |
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assets to total assets |
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efficiency ratio (1) |
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1.46 |
% |
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2.11 |
% |
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13.27 |
% |
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$ |
0.39 |
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0.02 |
% |
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40.3 |
% |
| _________________________________ | |
(1) |
Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details. |
Fourth Quarter 2021 Highlights
- Diluted earnings per common share were $0.39 for the fourth quarter of 2021, compared to $0.40 per common share for the third quarter of 2021.
- Payment of the Company’s first quarterly preferred stock dividend negatively impacted diluted earnings per common share by $0.04 in the fourth quarter of 2021, compared to no preferred stock dividend payment in the third quarter of 2021.
- Annualized return on average assets (ROA) and annualized return on average shareholders’ equity (ROE) for the fourth quarter of 2021 were 1.46% and 13.27%, compared to ROA and ROE of 1.37% and 13.81%, respectively, for the third quarter of 2021. Annualized return on average tangible common equity, a non-GAAP financial measure, was 14.78% for the fourth quarter of 2021, compared to 15.47% for the third quarter of 2021.
- Pre-provision net revenue (PPNR), a non-GAAP financial measure, was $18.1 million for the fourth quarter of 2021, compared to $17.5 million for the third quarter of 2021. PPNR ROA, a non-GAAP financial measure, was 2.11% for the fourth quarter of 2021, compared to 2.09% for the third quarter of 2021.
- Gross loans increased $107.5 million in the fourth quarter of 2021, or 15.7% annualized, compared to the third quarter of 2021. Gross loans, excluding Paycheck Protection Program (PPP) loans, increased $135.5 million in the fourth quarter of 2021, or 20.2% annualized, compared to the third quarter of 2021.
- Deposits increased $92.1 million in the fourth quarter of 2021, or 12.8% annualized, compared to the third quarter of 2021.
- Net interest margin (on a fully tax-equivalent basis) was 3.51% for the fourth quarter of 2021, compared to 3.54% in the third quarter of 2021. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and PPP balances, interest, and fees, expanded 3 basis points from 3.22% in the third quarter of 2021 to 3.25% in the fourth 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 40.3% for the fourth quarter of 2021, compared to 41.5% for the third quarter of 2021.
- A loan loss provision of $1.2 million was recorded in the fourth quarter of 2021 to support strong organic loan growth. The allowance for loan losses to total loans was 1.42% at December 31, 2021, compared to 1.43% at September 30, 2021. The allowance for loan losses to total loans, excluding PPP loans, was 1.43% at December 31, 2021, compared to 1.46% at September 30, 2021.
- Annualized net loan charge-offs as a percentage of average loans were 0.00% for both the fourth quarter of 2021, and the third quarter of 2021.
- Tangible book value per share, a non-GAAP financial measure, increased $0.36, or 13.6% annualized, to $10.98 at December 31, 2021, compared to $10.62 at September 30, 2021.
Annual 2021 Highlights
- Diluted earnings per common share for the year ended December 31, 2021 were $1.54, a 64.8% increase, compared to $0.93 for the year ended December 31, 2020.
- PPNR, a non-GAAP financial measure, was $67.1 million for the year ended December 31, 2021, an increase of 22.7%, compared to $54.7 million for the year ended December 31, 2020. PPNR ROA, a non-GAAP financial measure, was 2.10% for the year ended December 31, 2021, compared to 2.09% for the year ended December 31, 2020.
- Gross loans increased $493.0 million at December 31, 2021, or 21.2%, compared to December 31, 2020. Excluding PPP loans, gross loans increased 27.7%, at December 31, 2021, compared to December 31, 2020.
- Deposits increased $444.6 million at December 31, 2021, or 17.8%, compared to December 31, 2020.
- Net interest margin (on a fully tax-equivalent basis) was 3.54% for the year ended December 31, 2021, compared to 3.46% for the year ended December 31, 2020. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure, for the year ended December 31, 2021 was 3.28%, compared to 3.25% for the year ended December 31, 2020.
- The adjusted efficiency ratio, a non-GAAP financial measure, was 41.0% for the year ended December 31, 2021, compared to 40.5% for the year ended December 31, 2020.
- Net loan charge-offs as a percentage of average loans were 0.00% for the year ended December 31, 2021, compared to 0.02% for the year ended December 31, 2020.
- The ratio of nonperforming assets to total assets was 0.02% at December 31, 2021, compared to 0.03% at December 31, 2020.
- Tangible book value per share, a non-GAAP financial measure, increased 17.9%, or $1.66, to $10.98 at December 31, 2021, compared to $9.31 at December 31, 2020.
Key Financial Measures
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As of and for the Three Months Ended |
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As of and for the Year Ended |
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December 31, |
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September 30, |
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December 31, |
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December 31, |
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December 31, |
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2021 |
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2021 |
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2020 |
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2021 |
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2020 |
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Per Common Share Data |
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Basic Earnings Per Share |
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$ |
0.41 |
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$ |
0.41 |
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$ |
0.18 |
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$ |
1.59 |
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$ |
0.95 |
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Diluted Earnings Per Share |
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0.39 |
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0.40 |
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|
0.17 |
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1.54 |
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|
0.93 |
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Adjusted Diluted Earnings Per Share (1) |
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0.39 |
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0.41 |
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0.32 |
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1.55 |
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1.12 |
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Book Value Per Share |
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11.09 |
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10.73 |
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9.43 |
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Tangible Book Value Per Share (1) |
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10.98 |
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10.62 |
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9.31 |
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Basic Weighted Average Shares Outstanding |
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28,004,334 |
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28,047,280 |
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28,179,768 |
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28,027,454 |
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28,582,064 |
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Diluted Weighted Average Shares Outstanding |
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29,038,785 |
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29,110,547 |
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28,823,384 |
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28,968,286 |
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29,170,220 |
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Shares Outstanding at Period End |
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28,206,566 |
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28,066,822 |
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28,143,493 |
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Selected Performance Ratios |
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Return on Average Assets (Annualized) |
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1.46 |
% |
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1.37 |
% |
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0.70 |
% |
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1.43 |
% |
|
1.04 |
% |
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Pre-Provision Net Revenue Return on Average Assets (Annualized) (1) |
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2.11 |
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2.09 |
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2.30 |
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|
2.10 |
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|
2.09 |
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Return on Average Shareholders' Equity (Annualized) |
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13.27 |
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|
13.81 |
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7.45 |
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14.45 |
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|
10.51 |
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Return on Average Tangible Common Equity (Annualized) (1) |
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14.78 |
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15.47 |
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7.55 |
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|
15.45 |
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|
10.65 |
|
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Yield on Interest Earning Assets |
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4.06 |
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4.14 |
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4.46 |
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4.16 |
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4.51 |
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Yield on Total Loans, Gross |
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4.49 |
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4.65 |
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4.89 |
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4.60 |
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|
4.90 |
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Cost of Interest Bearing Liabilities |
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0.86 |
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0.88 |
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1.24 |
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0.93 |
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1.53 |
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Cost of Total Deposits |
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0.45 |
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|
0.48 |
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|
0.69 |
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|
0.51 |
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|
0.93 |
|
||||
Net Interest Margin (2) |
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3.51 |
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|
3.54 |
|
|
3.61 |
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|
3.54 |
|
|
3.46 |
|
||||
Core Net Interest Margin (1)(2) |
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3.25 |
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3.22 |
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3.29 |
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|
3.28 |
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3.25 |
|
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Efficiency Ratio (1) |
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40.8 |
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43.9 |
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59.0 |
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42.0 |
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49.0 |
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Adjusted Efficiency Ratio (1) |
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40.3 |
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41.5 |
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36.6 |
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41.0 |
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40.5 |
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Noninterest Expense to Average Assets (Annualized) |
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1.45 |
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1.58 |
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2.16 |
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1.51 |
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|
1.73 |
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Adjusted Noninterest Expense to Average Assets (Annualized) (1) |
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1.43 |
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1.49 |
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1.34 |
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|
1.47 |
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|
1.44 |
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Loan to Deposit Ratio |
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95.7 |
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95.0 |
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|
93.0 |
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Core Deposits to Total Deposits (3) |
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85.4 |
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83.3 |
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78.1 |
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Tangible Common Equity to Tangible Assets (1) |
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8.91 |
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8.81 |
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8.96 |
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Capital Ratios (Bank Only) (4) |
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Tier 1 Leverage Ratio |
|
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11.09 |
% |
|
10.96 |
% |
|
10.89 |
% |
|
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Common Equity Tier 1 Risk-based Capital Ratio |
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11.69 |
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|
11.88 |
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12.12 |
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Tier 1 Risk-based Capital Ratio |
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11.69 |
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11.88 |
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12.12 |
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Total Risk-based Capital Ratio |
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12.94 |
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13.13 |
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13.37 |
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Capital Ratios (Consolidated) (4) |
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Tier 1 Leverage Ratio |
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10.82 |
% |
|
10.70 |
% |
|
9.28 |
% |
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Common Equity Tier 1 Risk-based Capital Ratio |
|
|
9.36 |
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9.47 |
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10.35 |
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Tier 1 Risk-based Capital Ratio |
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|
11.43 |
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|
11.65 |
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|
10.35 |
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Total Risk-based Capital Ratio |
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15.55 |
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|
15.93 |
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|
14.58 |
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| _________________________________ | |
(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
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December 31, |
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September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
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(dollars in thousands) |
|
2021 |
|
2021 |
|
2021 |
|
2021 |
|
2020 |
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Selected Balance Sheet Data |
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Total Assets |
|
$ |
3,477,659 |
|
$ |
3,389,125 |
|
$ |
3,162,612 |
|
$ |
3,072,359 |
|
$ |
2,927,345 |
|||||
Total Loans, Gross |
|
|
2,819,472 |
|
|
|
2,712,012 |
|
|
|
2,594,186 |
|
|
|
2,426,123 |
|
|
|
2,326,428 |
|
Allowance for Loan Losses |
|
|
40,020 |
|
|
|
38,901 |
|
|
|
37,591 |
|
|
|
35,987 |
|
|
|
34,841 |
|
Goodwill and Other Intangibles |
|
|
3,105 |
|
|
|
3,153 |
|
|
|
3,200 |
|
|
|
3,248 |
|
|
|
3,296 |
|
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Deposits |
|
|
2,946,237 |
|
|
|
2,854,157 |
|
|
|
2,720,906 |
|
|
|
2,638,654 |
|
|
|
2,501,636 |
|
Tangible Common Equity (1) |
|
|
309,653 |
|
|
|
298,135 |
|
|
|
287,630 |
|
|
|
275,923 |
|
|
|
262,109 |
|
Total Shareholders' Equity |
|
|
379,272 |
|
|
|
367,803 |
|
|
|
290,830 |
|
|
|
279,171 |
|
|
|
265,405 |
|
Average Total Assets - Quarter-to-Date |
|
|
3,403,270 |
|
|
|
3,332,301 |
|
|
|
3,076,712 |
|
|
|
2,940,262 |
|
|
|
2,816,032 |
|
Average Shareholders' Equity - Quarter-to-Date |
|
|
374,035 |
|
|
|
330,604 |
|
|
|
286,311 |
|
|
|
272,729 |
|
|
|
265,716 |
|
| _________________________________ | |
(1) |
Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details. |
|
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||||||||||
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For the Three Months Ended |
|
For the Year Ended |
||||||||||||||||
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
||||||||||
(dollars in thousands) |
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||||
Selected Income Statement Data |
|
|
|
|
|
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||||||||||
Interest Income |
|
$ |
33,775 |
|
|
$ |
33,517 |
|
$ |
30,699 |
|
$ |
128,879 |
|
|
$ |
114,826 |
|||
Interest Expense |
|
|
4,622 |
|
|
|
4,844 |
|
|
|
5,858 |
|
|
|
19,370 |
|
|
|
26,862 |
|
Net Interest Income |
|
|
29,153 |
|
|
|
28,673 |
|
|
|
24,841 |
|
|
|
109,509 |
|
|
|
87,964 |
|
Provision for Loan Losses |
|
|
1,150 |
|
|
|
1,300 |
|
|
|
3,900 |
|
|
|
5,150 |
|
|
|
12,750 |
|
Net Interest Income after Provision for Loan Losses |
|
|
28,003 |
|
|
|
27,373 |
|
|
|
20,941 |
|
|
|
104,359 |
|
|
|
75,214 |
|
Noninterest Income |
|
|
1,288 |
|
|
|
1,410 |
|
|
|
986 |
|
|
|
5,309 |
|
|
|
5,839 |
|
Noninterest Expense |
|
|
12,459 |
|
|
|
13,236 |
|
|
|
15,258 |
|
|
|
48,095 |
|
|
|
45,387 |
|
Income Before Income Taxes |
|
|
16,832 |
|
|
|
15,547 |
|
|
|
6,669 |
|
|
|
61,573 |
|
|
|
35,666 |
|
Provision for Income Taxes |
|
|
4,318 |
|
|
|
4,038 |
|
|
|
1,690 |
|
|
|
15,886 |
|
|
|
8,472 |
|
Net Income |
|
|
12,514 |
|
|
|
11,509 |
|
|
|
4,979 |
|
|
|
45,687 |
|
|
|
27,194 |
|
Preferred Stock Dividends |
|
|
(1,171 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,171 |
) |
|
|
— |
|
Net Income Available to Common Shareholders |
|
$ |
11,343 |
|
|
$ |
11,509 |
|
|
$ |
4,979 |
|
|
$ |
44,516 |
|
|
$ |
27,194 |
|
Income Statement
Net Interest Income
Net interest income was $29.2 million for the fourth quarter of 2021, an increase of $480,000, or 1.7%, from $28.7 million in the third quarter of 2021, and an increase of $4.3 million, or 17.4%, from $24.8 million in the fourth quarter of 2020. The linked-quarter and year-over-year increases in net interest income were primarily due to growth in average interest earning assets and lower rates paid on deposits, offset partially by declining yields on loans. Average interest earning assets were $3.32 billion for the fourth quarter of 2021, an increase of $86.3 million, or 2.7%, from $3.23 billion for the third quarter of 2021, and an increase of $561.1 million, or 20.3%, from $2.76 billion for the fourth quarter of 2020. The linked-quarter increase in average interest earning assets was primarily due to continued strong organic growth in the loan portfolio, offset partially by the payoff of PPP loans and the reduction of cash balances. 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 fourth quarter of 2021 was 3.51%, a 3 basis point decrease from 3.54% in the third quarter of 2021, and a 10 basis point decrease from 3.61% in the fourth 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 fourth quarter of 2021 was 3.25%, a 3 basis point increase from 3.22% in the third quarter of 2021, and a 4 basis point decline from 3.29% in the fourth quarter of 2020.
As the PPP loan portfolio pays down, 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 through the fourth quarter of 2021. The Company recognized $958,000 of PPP origination fees during the fourth quarter of 2021, compared to $1.6 million during the third quarter of 2021. The elevated fee recognition is illustrated in the 10.51% PPP loan yield for the fourth quarter of 2021, compared to 9.15% for the third quarter of 2021. Remaining PPP origination fees to be recognized as of December 31, 2021 were $898,000.
The following table summarizes PPP loan originations and net origination fees as of December 31, 2021:
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Originated |
|
Outstanding |
|
Program Lifetime |
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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 |
|
17 |
|
$ |
1,109 |
|
$ |
5,706 |
|
$ |
5,698 |
Round Two PPP Loans |
|
651 |
|
|
78,386 |
|
136 |
|
|
25,053 |
|
|
3,544 |
|
|
2,654 |
Totals |
|
1,851 |
|
$ |
259,986 |
|
153 |
|
$ |
26,162 |
|
$ |
9,250 |
|
$ |
8,352 |
Interest income was $33.8 million for the fourth quarter of 2021, an increase of $258,000, or 0.8%, from $33.5 million in the third quarter of 2021, and an increase of $3.1 million, or 10.0%, from $30.7 million in the fourth quarter of 2020. The yield on interest earning assets (on a fully tax-equivalent basis) was 4.06% in the fourth quarter of 2021, compared to 4.14% in the third quarter of 2021, and 4.46% in the fourth quarter of 2020. The linked-quarter decrease in the yield on interest earning assets was primarily due to the historically low interest rate environment resulting in a lower core loan yield, as well as lower PPP origination fees recognized during the period. 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 4.41% in the fourth quarter of 2021, which was 10 basis points lower than 4.51% in the third quarter of 2021, and 46 basis points lower than 4.87% in the fourth 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 |
|||||||||||||
|
|
December 31, 2021 |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
|||||
Interest |
|
4.20 |
% |
|
4.28 |
% |
|
4.37 |
% |
|
4.50 |
% |
|
4.59 |
% |
Fees |
|
0.21 |
|
|
0.23 |
|
|
0.17 |
|
|
0.22 |
|
|
0.28 |
|
Yield on Loans, Excluding PPP Loans |
|
4.41 |
% |
|
4.51 |
% |
|
4.54 |
% |
|
4.72 |
% |
|
4.87 |
% |
Interest expense was $4.6 million for the fourth quarter of 2021, a decrease of $222,000, or 4.6%, from $4.8 million in the third quarter of 2021, and a decrease of $1.2 million, or 21.1%, from $5.9 million in the fourth quarter of 2020. The cost of interest bearing liabilities declined 2 basis points on a linked-quarter basis from 0.88% in the third quarter of 2021 to 0.86% in the fourth quarter of 2021, primarily due to lower rates paid on deposits. On a year-over-year basis, the cost of interest bearing liabilities decreased 38 basis points from 1.24% in the fourth quarter of 2020 to 0.86% in the fourth 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 $3.2 million for the fourth quarter of 2021, a decrease of $176,000, or 5.2%, from $3.4 million in the third quarter of 2021, and a decrease of $838,000, or 20.5%, from $4.1 million in the fourth quarter of 2020. The cost of total deposits declined 3 basis points on a linked-quarter basis from 0.48% in the third quarter of 2021, and declined 24 basis points on a year-over-year basis from 0.69% in the fourth quarter of 2020, to 0.45% in the fourth 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 December 31, 2021, September 30, 2021, and December 31, 2020 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
For the Three Months Ended |
|||||||||||||||||||||||||||||||
|
|
December 31, 2021 |
|
September 30, 2021 |
|
December 31, 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 |
|
$ |
146,744 |
|
$ |
65 |
|
|
0.18 |
% |
$ |
187,405 |
|
$ |
67 |
|
|
0.14 |
% |
$ |
79,896 |
|
$ |
32 |
|
|
0.16 |
% |
|||||
Investment Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Taxable Investment Securities |
|
|
341,325 |
|
|
|
1,893 |
|
|
2.20 |
|
|
314,367 |
|
|
|
1,751 |
|
|
2.21 |
|
|
290,093 |
|
|
|
1,632 |
|
|
2.24 |
|
||
Tax-Exempt Investment Securities (1) |
|
|
71,602 |
|
|
|
782 |
|
|
4.33 |
|
|
71,801 |
|
|
|
737 |
|
|
4.07 |
|
|
81,370 |
|
|
|
888 |
|
|
4.34 |
|
||
Total Investment Securities |
|
|
412,927 |
|
|
|
2,675 |
|
|
2.57 |
|
|
386,168 |
|
|
|
2,488 |
|
|
2.56 |
|
|
371,463 |
|
|
|
2,520 |
|
|
2.70 |
|
||
Paycheck Protection Program Loans (2) |
|
|
39,900 |
|
|
|
1,057 |
|
|
10.51 |
|
|
76,006 |
|
|
|
1,753 |
|
|
9.15 |
|
|
165,099 |
|
|
|
2,097 |
|
|
5.05 |
|
||
Loans (1)(2) |
|
|
2,715,722 |
|
|
|
30,154 |
|
|
4.41 |
|
|
2,579,021 |
|
|
|
29,348 |
|
|
4.51 |
|
|
2,136,229 |
|
|
|
26,168 |
|
|
4.87 |
|
||
Total Loans |
|
|
2,755,622 |
|
|
|
31,211 |
|
|
4.49 |
|
|
2,655,027 |
|
|
|
31,101 |
|
|
4.65 |
|
|
2,301,328 |
|
|
|
28,265 |
|
|
4.89 |
|
||
Federal Home Loan Bank Stock |
|
|
5,310 |
|
|
|
59 |
|
|
4.39 |
|
|
5,701 |
|
|
|
68 |
|
|
4.65 |
|
|
6,856 |
|
|
|
92 |
|
|
5.35 |
|
||
Total Interest Earning Assets |
|
|
3,320,603 |
|
|
|
34,010 |
|
|
4.06 |
% |
|
3,234,301 |
|
|
|
33,724 |
|
|
4.14 |
% |
|
2,759,543 |
|
|
|
30,909 |
|
|
4.46 |
% |
||
Noninterest Earning Assets |
|
|
82,667 |
|
|
|
|
|
|
98,000 |
|
|
|
|
|
|
56,489 |
|
|
|
|
|
|||||||||||
Total Assets |
|
$ |
3,403,270 |
|
|
|
|
|
$ |
3,332,301 |
|
|
|
|
|
$ |
2,816,032 |
|
|
|
|
|
|||||||||||
Interest Bearing Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Interest Bearing Transaction Deposits |
|
$ |
499,475 |
|
|
$ |
548 |
|
|
0.43 |
% |
$ |
479,580 |
|
|
$ |
562 |
|
|
0.47 |
% |
$ |
353,806 |
|
|
$ |
420 |
|
|
0.47 |
% |
||
Savings and Money Market Deposits |
|
|
803,848 |
|
|
|
876 |
|
|
0.43 |
|
|
801,354 |
|
|
|
904 |
|
|
0.45 |
|
|
538,030 |
|
|
|
1,003 |
|
|
0.74 |
|
||
Time Deposits |
|
|
299,823 |
|
|
|
830 |
|
|
1.10 |
|
|
318,222 |
|
|
|
928 |
|
|
1.16 |
|
|
362,469 |
|
|
|
1,607 |
|
|
1.76 |
|
||
Brokered Deposits |
|
|
404,438 |
|
|
|
987 |
|
|
0.97 |
|
|
440,167 |
|
|
|
1,023 |
|
|
0.92 |
|
|
433,037 |
|
|
|
1,049 |
|
|
0.96 |
|
||
Total Interest Bearing Deposits |
|
|
2,007,584 |
|
|
|
3,241 |
|
|
0.64 |
|
|
2,039,323 |
|
|
|
3,417 |
|
|
0.66 |
|
|
1,687,342 |
|
|
|
4,079 |
|
|
0.96 |
|
||
Federal Funds Purchased |
|
|
10 |
|
|
|
— |
|
|
0.67 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
4,072 |
|
|
|
4 |
|
|
0.33 |
|
||
Notes Payable |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
11,000 |
|
|
|
105 |
|
|
3.77 |
|
||
FHLB Advances |
|
|
44,185 |
|
|
|
162 |
|
|
1.46 |
|
|
54,130 |
|
|
|
213 |
|
|
1.56 |
|
|
99,196 |
|
|
|
551 |
|
|
2.21 |
|
||
Subordinated Debentures |
|
|
92,189 |
|
|
|
1,219 |
|
|
5.25 |
|
|
91,337 |
|
|
|
1,214 |
|
|
5.27 |
|
|
73,696 |
|
|
|
1,119 |
|
|
6.04 |
|
||
Total Interest Bearing Liabilities |
|
|
2,143,968 |
|
|
|
4,622 |
|
|
0.86 |
% |
|
2,184,790 |
|
|
|
4,844 |
|
|
0.88 |
% |
|
1,875,306 |
|
|
|
5,858 |
|
|
1.24 |
% |
||
Noninterest Bearing Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Noninterest Bearing Transaction Deposits |
|
|
861,473 |
|
|
|
|
|
|
784,148 |
|
|
|
|
|
|
654,299 |
|
|
|
|
|
|||||||||||
Other Noninterest Bearing Liabilities |
|
|
23,794 |
|
|
|
|
|
|
32,759 |
|
|
|
|
|
|
20,711 |
|
|
|
|
|
|||||||||||
Total Noninterest Bearing Liabilities |
|
|
885,267 |
|
|
|
|
|
|
816,907 |
|
|
|
|
|
|
675,010 |
|
|
|
|
|
|||||||||||
Shareholders' Equity |
|
|
374,035 |
|
|
|
|
|
|
330,604 |
|
|
|
|
|
|
265,716 |
|
|
|
|
|
|||||||||||
Total Liabilities and Shareholders' Equity |
|
$ |
3,403,270 |
|
|
|
|
|
$ |
3,332,301 |
|
|
|
|
|
$ |
2,816,032 |
|
|
|
|
|
|||||||||||
Net Interest Income / Interest Rate Spread |
|
|
|
|
29,388 |
|
|
3.20 |
% |
|
|
|
28,880 |
|
|
3.26 |
% |
|
|
|
25,051 |
|
|
3.22 |
% |
||||||||
Net Interest Margin (3) |
|
|
|
|
|
3.51 |
% |
|
|
|
|
3.54 |
% |
|
|
|
|
3.61 |
% |
||||||||||||||
Taxable Equivalent Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Tax-Exempt Investment Securities and Loans |
|
|
|
|
(235 |
) |
|
|
|
|
|
(207 |
) |
|
|
|
|
|
(210 |
) |
|
|
|||||||||||
Net Interest Income |
|
|
|
$ |
29,153 |
|
|
|
|
|
$ |
28,673 |
|
|
|
|
|
$ |
24,841 |
|
|
|
|||||||||||
| _________________________________ | |
(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 $1.2 million for the fourth quarter of 2021, a decrease of $150,000 from $1.3 million for the third quarter of 2021, and a decrease of $2.8 million from $3.9 million for the fourth quarter of 2020. The provision recorded in the fourth quarter of 2021 was primarily attributable to growth of the loan portfolio. The allowance for loan losses to total loans was 1.42% at December 31, 2021, compared to 1.43% at September 30, 2021, and 1.50% at December 31, 2020. The allowance for loan losses to total loans, excluding PPP loans, was 1.43% at December 31, 2021, compared to 1.46% at September 30, 2021, and 1.59% at December 31, 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 |
|
Year Ended |
||||||||||||||||
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
||||||||||
(dollars in thousands) |
|
|
2021 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Balance at Beginning of Period |
|
$ |
38,901 |
|
|
$ |
37,591 |
|
|
$ |
31,381 |
|
|
$ |
34,841 |
|
|
$ |
22,526 |
|
Provision for Loan Losses |
|
|
1,150 |
|
|
|
1,300 |
|
|
|
3,900 |
|
|
|
5,150 |
|
|
|
12,750 |
|
Charge-offs |
|
|
(37 |
) |
|
|
(20 |
) |
|
|
(463 |
) |
|
|
(74 |
) |
|
|
(517 |
) |
Recoveries |
|
|
6 |
|
|
|
30 |
|
|
|
23 |
|
|
|
103 |
|
|
|
82 |
|
Balance at End of Period |
|
$ |
40,020 |
|
|
$ |
38,901 |
|
|
$ |
34,841 |
|
|
$ |
40,020 |
|
|
$ |
34,841 |
|
Noninterest Income
Noninterest income was $1.3 million for the fourth quarter of 2021, a decrease of $122,000 from $1.4 million for the third quarter of 2021, and an increase of $302,000 from $986,000 for the fourth quarter of 2020. The linked-quarter decrease was primarily due to decreased gains on sales of securities and 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 |
|
Year Ended |
||||||||||||||||
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
||||||||||
(dollars in thousands) |
|
|
2021 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Noninterest Income: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Customer Service Fees |
|
$ |
274 |
|
$ |
268 |
|
$ |
251 |
|
$ |
1,007 |
|
$ |
826 |
|||||
Net Gain on Sales of Securities |
|
|
— |
|
|
|
48 |
|
|
|
30 |
|
|
|
750 |
|
|
|
1,503 |
|
Letter of Credit Fees |
|
|
541 |
|
|
|
577 |
|
|
|
477 |
|
|
|
1,676 |
|
|
|
1,503 |
|
Debit Card Interchange Fees |
|
|
149 |
|
|
|
143 |
|
|
|
118 |
|
|
|
563 |
|
|
|
428 |
|
Swap Fees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
907 |
|
Bank-Owned Life Insurance |
|
|
150 |
|
|
|
166 |
|
|
|
— |
|
|
|
316 |
|
|
|
— |
|
Other Income |
|
|
174 |
|
|
|
208 |
|
|
|
110 |
|
|
|
997 |
|
|
|
672 |
|
Totals |
|
$ |
1,288 |
|
|
$ |
1,410 |
|
|
$ |
986 |
|
|
$ |
5,309 |
|
|
$ |
5,839 |
|
Noninterest Expense
Noninterest expense was $12.5 million for the fourth quarter of 2021, a decrease of $777,000 from $13.2 million for the third quarter of 2021, and a decrease of $2.8 million from $15.3 million for the fourth quarter of 2020. The linked-quarter decrease was primarily due to lower salaries and employee benefits related to higher bonus accruals in the third quarter of 2021, and $582,000 of debt prepayment fees associated with a partial early redemption of $11.3 million of subordinated debentures issued in July 2017 that occurred in the third quarter of 2021. The year-over-year decrease was primarily attributable to $5.6 million of debt prepayment fees associated with the early extinguishment of $69.0 million of FHLB term advances incurred in the fourth quarter of 2020, partially offset by an increase in salaries and employee benefits, and marketing and advertising expenses.
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) |
|
|
2021 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Noninterest Expense: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Salaries and Employee Benefits |
|
$ |
7,966 |
|
$ |
8,309 |
|
$ |
6,216 |
|
$ |
30,889 |
|
$ |
25,568 |
|||||
Occupancy and Equipment |
|
|
939 |
|
|
|
942 |
|
|
|
979 |
|
|
|
3,916 |
|
|
|
3,258 |
|
FDIC Insurance Assessment |
|
|
345 |
|
|
|
355 |
|
|
|
270 |
|
|
|
1,305 |
|
|
|
788 |
|
Data Processing |
|
|
306 |
|
|
|
325 |
|
|
|
293 |
|
|
|
1,222 |
|
|
|
1,027 |
|
Professional and Consulting Fees |
|
|
719 |
|
|
|
708 |
|
|
|
566 |
|
|
|
2,523 |
|
|
|
1,966 |
|
Information Technology and Telecommunications |
|
|
554 |
|
|
|
598 |
|
|
|
397 |
|
|
|
2,163 |
|
|
|
1,374 |
|
Marketing and Advertising |
|
|
469 |
|
|
|
418 |
|
|
|
143 |
|
|
|
1,487 |
|
|
|
788 |
|
Intangible Asset Amortization |
|
|
48 |
|
|
|
48 |
|
|
|
48 |
|
|
|
191 |
|
|
|
191 |
|
Amortization of Tax Credit Investments |
|
|
152 |
|
|
|
152 |
|
|
|
146 |
|
|
|
562 |
|
|
|
738 |
|
Debt Prepayment Fees |
|
|
— |
|
|
|
582 |
|
|
|
5,613 |
|
|
|
582 |
|
|
|
7,043 |
|
Other Expense |
|
|
961 |
|
|
|
799 |
|
|
|
587 |
|
|
|
3,255 |
|
|
|
2,646 |
|
Totals |
|
$ |
12,459 |
|
|
$ |
13,236 |
|
|
$ |
15,258 |
|
|
$ |
48,095 |
|
|
$ |
45,387 |
|
The Company continues to add key talent across the organization, reaching 220 full-time equivalent employees at December 31, 2021, compared to 219 employees at September 30, 2021, and 183 employees at December 31, 2020.
The efficiency ratio, a non-GAAP financial measure, was 40.8% for the fourth quarter of 2021, compared to 43.9% for the third quarter of 2021, and 59.0% for the fourth quarter of 2020. Excluding the impact of certain non-routine income and expenses, the adjusted efficiency ratio, a non-GAAP financial measure, was 40.3% for the fourth quarter of 2021, 41.5% for the third quarter of 2021 and 36.6% for the fourth 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 fourth quarter of 2021 was 25.7%, a decrease from 26.0% for the third quarter of 2021 and an increase from 25.3% for the fourth quarter of 2020. The effective combined federal and state income tax rate for the year ended December 31, 2021 was 25.8%, compared to 23.8% for the year ended December 31, 2020.
Balance Sheet
Total assets at December 31, 2021 were $3.48 billion, a 2.6% increase from $3.39 billion at September 30, 2021, and an 18.8% increase from $2.93 billion at December 31, 2020. The linked-quarter increase in total assets was primarily due to strong organic loan growth, offset partially by a decrease in cash and cash equivalents. The year-over-year increase in total assets was primarily due to robust organic loan growth, as well as the continued purchases of investment securities.
Total gross loans at December 31, 2021 were $2.82 billion, an increase of $107.5 million, or 4.0%, over total gross loans of $2.71 billion at September 30, 2021, and an increase of $493.0 million, or 21.2%, over total gross loans of $2.33 billion at December 31, 2020. The increase in the loan portfolio during the fourth quarter of 2021 was primarily due to growth in the construction and land development, multifamily and CRE nonowner occupied segments, offset partially by the payoff of PPP loans. When excluding PPP loans, gross loans grew $135.5 million during the fourth quarter of 2021, or 20.2% on an annualized basis. The Company's continued strong loan growth has been driven by the expansion of its talented lending teams, PPP-related new client acquisitions, the strong, growing brand of the Bank in the Twin Cities market and the M&A-related market disruption in the Twin Cities resulting in client and banker acquisition opportunities.
The following table presents the dollar composition of the Company’s loan portfolio, by category, at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
December 31, 2021 |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
||||||||||
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial |
|
$ |
360,169 |
|
|
$ |
350,081 |
|
|
$ |
321,474 |
|
|
$ |
301,023 |
|
|
$ |
304,220 |
|
Paycheck Protection Program |
|
|
26,162 |
|
|
|
54,190 |
|
|
|
99,072 |
|
|
|
163,258 |
|
|
|
138,454 |
|
Construction and Land Development |
|
|
281,474 |
|
|
|
257,167 |
|
|
|
251,573 |
|
|
|
193,372 |
|
|
|
170,217 |
|
Real Estate Mortgage: |
|
|
|
|
|
|
|
|
|
|
||||||||||
1 - 4 Family Mortgage |
|
|
305,317 |
|
|
|
290,535 |
|
|
|
277,943 |
|
|
|
294,964 |
|
|
|
294,479 |
|
Multifamily |
|
|
910,243 |
|
|
|
865,172 |
|
|
|
790,275 |
|
|
|
665,415 |
|
|
|
626,465 |
|
CRE Owner Occupied |
|
|
111,096 |
|
|
|
101,834 |
|
|
|
87,507 |
|
|
|
79,665 |
|
|
|
75,604 |
|
CRE Nonowner Occupied |
|
|
818,569 |
|
|
|
786,271 |
|
|
|
758,101 |
|
|
|
720,396 |
|
|
|
709,300 |
|
Total Real Estate Mortgage Loans |
|
|
2,145,225 |
|
|
|
2,043,812 |
|
|
|
1,913,826 |
|
|
|
1,760,440 |
|
|
|
1,705,848 |
|
Consumer and Other |
|
|
6,442 |
|
|
|
6,762 |
|
|
|
8,241 |
|
|
|
8,030 |
|
|
|
7,689 |
|
Total Loans, Gross |
|
|
2,819,472 |
|
|
|
2,712,012 |
|
|
|
2,594,186 |
|
|
|
2,426,123 |
|
|
|
2,326,428 |
|
Allowance for Loan Losses |
|
|
(40,020 |
) |
|
|
(38,901 |
) |
|
|
(37,591 |
) |
|
|
(35,987 |
) |
|
|
(34,841 |
) |
Net Deferred Loan Fees |
|
|
(9,535 |
) |
|
|
(10,199 |
) |
|
|
(11,450 |
) |
|
|
(11,273 |
) |
|
|
(9,151 |
) |
Total Loans, Net |
|
$ |
2,769,917 |
|
|
$ |
2,662,912 |
|
|
$ |
2,545,145 |
|
|
$ |
2,378,863 |
|
|
$ |
2,282,436 |
|
Total deposits at December 31, 2021 were $2.95 billion, an increase of $92.1 million, or 3.2%, over total deposits of $2.85 billion at September 30, 2021, and an increase of $444.6 million, or 17.8%, over total deposits of $2.50 billion at December 31, 2020. Deposit growth in the fourth 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 declines 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. However, given the prospect for higher interest rates, management believes deposits could experience fluctuations in future periods.
The following table presents the dollar composition of the Company’s deposit portfolio, by category, at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
December 31, 2021 |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
||||||||||
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Noninterest Bearing Transaction Deposits |
|
$ |
875,084 |
|
$ |
846,490 |
|
$ |
758,023 |
|
$ |
712,999 |
|
$ |
671,903 |
|||||
Interest Bearing Transaction Deposits |
|
|
544,789 |
|
|
|
488,785 |
|
|
|
432,123 |
|
|
|
433,344 |
|
|
|
366,290 |
|
Savings and Money Market Deposits |
|
|
863,567 |
|
|
|
791,861 |
|
|
|
761,485 |
|
|
|
791,583 |
|
|
|
657,617 |
|
Time Deposits |
|
|
293,474 |
|
|
|
309,824 |
|
|
|
321,857 |
|
|
|
344,581 |
|
|
|
353,543 |
|
Brokered Deposits |
|
|
369,323 |
|
|
|
417,197 |
|
|
|
447,418 |
|
|
|
356,147 |
|
|
|
452,283 |
|
Total Deposits |
|
$ |
2,946,237 |
|
|
$ |
2,854,157 |
|
|
$ |
2,720,906 |
|
|
$ |
2,638,654 |
|
|
$ |
2,501,636 |
|
Capital
Total shareholders’ equity at December 31, 2021 was $379.3 million, an increase of $11.5 million, or 3.1%, over total shareholders’ equity of $367.8 million at September 30, 2021, and an increase of $113.9 million, or 42.9%, over total shareholders’ equity of $265.4 million at December 31, 2020. The linked-quarter increase was due to net income retained. 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.
During the fourth quarter of 2021, the Company repurchased 3,320 shares of its common stock. Shares were repurchased at a weighted average price of $16.36 for a total of $54,000. The Company remains committed to maintaining strong capital levels while enhancing shareholder value as it strategically executes its stock repurchase program in this fluid economic environment.
Tangible book value per share, a non-GAAP financial measure, was $10.98 as of December 31, 2021, an increase of 3.3% from $10.62 as of September 30, 2021, and an increase of 17.9% from $9.31 as of December 31, 2020. Tangible common equity as a percentage of tangible assets, a non-GAAP financial measure, was 8.91% at December 31, 2021, compared to 8.81% at September 30, 2021, and 8.96% at December 31, 2020.
Asset Quality
Annualized net charge-offs as a percent of average loans for both the third and fourth quarters of 2021 were 0.00%, compared to 0.08% for the fourth quarter of 2020. At December 31, 2021, the Company’s nonperforming assets, which include nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $722,000, or 0.02% of total assets, as compared to $734,000, or 0.02% of total assets at September 30, 2021, and $775,000 or 0.03% of total assets at December 31, 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 December 31, 2021 totaled $49.3 million, compared to $67.4 million at September 30, 2021, and $44.8 million at December 31, 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 December 31, 2021 totaled $22.6 million, compared to $7.7 million at September 30, 2021, and $15.2 million at December 31, 2020. The linked-quarter increase to substandard loans was primarily due to the migration of two relationships previously listed as watch and both negatively impacted by the pandemic. Management continues to actively work with the borrowers and closely monitor substandard credits.
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) |
|
|
2021 |
|
|
|
2021 |
|
|
|
2021 |
|
|
|
2021 |
|
|
|
2020 |
|
Selected Asset Quality Data |
|
|
|
|
|
|
||||||||||||||
Loans 30-89 Days Past Due |
|
$ |
49 |
|
$ |
18 |
|
$ |
— |
|
$ |
— |
|
$ |
13 |
|
||||
Loans 30-89 Days Past Due to Total Loans |
|
|
0.00 |
% |
|
0.00 |
% |
|
0.00 |
% |
|
0.00 |
% |
|
0.00 |
% |
||||
Nonperforming Loans |
|
$ |
722 |
|
$ |
734 |
|
$ |
761 |
|
$ |
770 |
|
$ |
775 |
|
||||
Nonperforming Loans to Total Loans |
|
|
0.03 |
% |
|
0.03 |
% |
|
0.03 |
% |
|
0.03 |
% |
|
0.03 |
% |
||||
Foreclosed Assets |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
||||
Nonaccrual Loans to Total Loans |
|
|
0.03 |
% |
|
0.03 |
% |
|
0.03 |
% |
|
0.03 |
% |
|
0.03 |
% |
||||
Nonaccrual Loans and Loans Past Due 90 Days and Still Accruing to Total Loans |
|
|
0.03 |
|
|
0.03 |
|
|
0.03 |
|
|
0.03 |
|
|
0.03 |
|
||||
Nonperforming Assets (1) |
|
$ |
722 |
|
$ |
734 |
|
$ |
761 |
|
$ |
770 |
|
$ |
775 |
|
||||
Nonperforming Assets to Total Assets (1) |
|
|
0.02 |
% |
|
0.02 |
% |
|
0.02 |
% |
|
0.03 |
% |
|
0.03 |
% |
||||
Allowance for Loan Losses to Total Loans |
|
|
1.42 |
|
|
1.43 |
|
|
1.45 |
|
|
1.48 |
|
|
1.50 |
|
||||
Allowance for Loan Losses to Total Loans, Excluding PPP Loans |
|
|
1.43 |
|
|
1.46 |
|
|
1.50 |
|
|
1.59 |
|
|
1.59 |
|
||||
Allowance for Loans Losses to Nonaccrual Loans |
|
|
5,542.94 |
|
|
5,299.86 |
|
|
4,939.68 |
|
|
4,673.64 |
|
|
4,495.61 |
|
||||
Net Loan Charge-Offs (Recoveries) (Annualized) to Average Loans |
|
|
0.00 |
|
|
0.00 |
|
|
0.00 |
|
|
(0.01 |
) |
|
0.08 |
|
||||
| _________________________________ | |
(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 12 modified loans totaling $35.0 million outstanding as of December 31, 2021, representing 1.3% of the total loan portfolio, excluding PPP loans, which is down slightly from $35.4 million at September 30, 2021.
The following table presents a rollforward of loan modification activity, by modification type, from September 30, 2021 to December 31, 2021:
|
|
|
|
|
|
|
||||||
(dollars in thousands) |
|
Interest-Only |
|
Extended Amortization |
|
Total |
||||||
Principal Balance - Beginning of Period |
|
$ |
30,597 |
|
|
$ |
4,764 |
|
|
$ |
35,361 |
|
Modification Expired |
|
|
(468 |
) |
|
|
— |
|
|
|
(468 |
) |
Net Principal Advances (Payments) |
|
|
120 |
|
|
|
(24 |
) |
|
|
96 |
|
Principal Balance - End of Period |
|
$ |
30,249 |
|
|
$ |
4,740 |
|
|
$ |
34,989 |
|
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 $3.5 billion and seven branches as of December 31, 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 ongoing COVID-19 pandemic, including its effects on the economic environment, our clients and our operations, including due to supply chain disruptions, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic; loan concentrations in our portfolio; the overall health of the local and national real estate market; our ability to successfully manage credit risk; business and economic conditions generally and in the financial services industry, nationally and within our market area, including rising rates of inflation; our ability to maintain an adequate level of allowance for loan losses; new or revised accounting standards, including as a result of the future implementation of the Current Expected Credit Loss standard; the concentration of large loans to certain borrowers; the concentration of large deposits from certain clients; our ability to successfully manage liquidity risk, especially in light of recent excess liquidity at the Bank; our dependence on non-core funding sources and our cost of funds; our ability to raise additional capital to implement our business plan; our ability to implement our growth strategy and manage costs effectively; developments and uncertainty related to the future use and availability of some reference rates, such as the London Interbank Offered Rate, as well as other alternative reference rates; the composition of our senior leadership team and our ability to attract and retain key personnel; talent and labor shortages and high rates of employee turnover; the occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents; interruptions involving our information technology and telecommunications systems or third-party servicers; competition in the financial services industry, including from nonbank competitors such as credit unions and “fintech” companies; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and regulatory actions against us; the impact of recent and future legislative and regulatory changes, including changes to federal and state corporate tax rates; interest rate risk, including the effects of anticipated rate increases by the Federal Reserve; fluctuations in the values of the securities held in our securities portfolio; the imposition of tariffs or other governmental policies impacting the value of products produced by our commercial borrowers; severe weather, natural disasters, wide spread disease or pandemics (including the COVID-19 pandemic), acts of war or terrorism or other adverse external events; 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)
|
||||||||||||
|
|
December 31, |
|
September 30, |
|
December 31, |
||||||
|
|
|
2021 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
||||||
ASSETS |
|
|
|
|
|
|
||||||
Cash and Cash Equivalents |
|
$ |
143,473 |
|
$ |
189,502 |
|
$ |
160,675 |
|||
Bank-Owned Certificates of Deposit |
|
|
1,876 |
|
|
|
1,877 |
|
|
|
2,860 |
|
Securities Available for Sale, at Fair Value |
|
|
439,362 |
|
|
|
413,149 |
|
|
|
390,629 |
|
Loans, Net of Allowance for Loan Losses of $40,020 at December 31, 2021 (unaudited), $38,901 at September 30, 2021 (unaudited) and $34,841 at December 31, 2020 |
|
|
2,769,917 |
|
|
|
2,662,912 |
|
|
|
2,282,436 |
|
Federal Home Loan Bank (FHLB) Stock, at Cost |
|
|
5,242 |
|
|
|
5,442 |
|
|
|
5,027 |
|
Premises and Equipment, Net |
|
|
49,395 |
|
|
|
49,803 |
|
|
|
50,987 |
|
Accrued Interest |
|
|
9,186 |
|
|
|
8,550 |
|
|
|
9,172 |
|
Goodwill |
|
|
2,626 |
|
|
|
2,626 |
|
|
|
2,626 |
|
Other Intangible Assets, Net |
|
|
479 |
|
|
|
527 |
|
|
|
670 |
|
Other Assets |
|
|
56,103 |
|
|
|
54,737 |
|
|
|
22,263 |
|
Total Assets |
|
$ |
3,477,659 |
|
|
$ |
3,389,125 |
|
|
$ |
2,927,345 |
|
|
|
|
|
|
|
|
||||||
LIABILITIES AND EQUITY |
|
|
|
|
|
|
||||||
LIABILITIES |
|
|
|
|
|
|
||||||
Deposits: |
|
|
|
|
|
|
||||||
Noninterest Bearing |
|
$ |
875,084 |
|
|
$ |
846,490 |
|
|
$ |
671,903 |
|
Interest Bearing |
|
|
2,071,153 |
|
|
|
2,007,667 |
|
|
|
1,829,733 |
|
Total Deposits |
|
|
2,946,237 |
|
|
|
2,854,157 |
|
|
|
2,501,636 |
|
Notes Payable |
|
|
— |
|
|
|
— |
|
|
|
11,000 |
|
FHLB Advances |
|
|
42,500 |
|
|
|
47,500 |
|
|
|
57,500 |
|
Subordinated Debentures, Net of Issuance Costs |
|
|
92,239 |
|
|
|
92,153 |
|
|
|
73,739 |
|
Accrued Interest Payable |
|
|
1,409 |
|
|
|
1,656 |
|
|
|
1,615 |
|
Other Liabilities |
|
|
16,002 |
|
|
|
25,856 |
|
|
|
16,450 |
|
Total Liabilities |
|
|
3,098,387 |
|
|
|
3,021,322 |
|
|
|
2,661,940 |
|
|
|
|
|
|
|
|
||||||
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 December 31, 2021 (unaudited), 2,760,000 at September 30, 2021 (unaudited) and -0- at December 31, 2020 |
|
|
66,514 |
|
|
|
66,515 |
|
|
|
— |
|
Common Stock- $0.01 par value; Authorized 75,000,000 |
|
|
|
|
|
|
||||||
Common Stock - Issued and Outstanding 28,206,566 at December 31, 2021 (unaudited), 28,066,822 at September 30, 2021 (unaudited) and 28,143,493 at December 31, 2020 |
|
|
282 |
|
|
|
281 |
|
|
|
281 |
|
Additional Paid-In Capital |
|
|
104,123 |
|
|
|
103,471 |
|
|
|
103,714 |
|
Retained Earnings |
|
|
199,347 |
|
|
|
188,004 |
|
|
|
154,831 |
|
Accumulated Other Comprehensive Income |
|
|
9,006 |
|
|
|
9,532 |
|
|
|
6,579 |
|
Total Shareholders' Equity |
|
|
379,272 |
|
|
|
367,803 |
|
|
|
265,405 |
|
Total Liabilities and Shareholders' Equity |
|
$ |
3,477,659 |
|
|
$ |
3,389,125 |
|
|
$ |
2,927,345 |
|
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, |
||||||||||
|
|
|
2021 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
|
||||||||||
INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans, Including Fees |
|
$ |
31,140 |
|
$ |
31,049 |
|
$ |
28,242 |
|
$ |
118,845 |
|
$ |
105,492 |
|||||
Investment Securities |
|
|
2,511 |
|
|
|
2,333 |
|
|
|
2,333 |
|
|
|
9,576 |
|
|
|
8,720 |
|
Other |
|
|
124 |
|
|
|
135 |
|
|
|
124 |
|
|
|
458 |
|
|
|
614 |
|
Total Interest Income |
|
|
33,775 |
|
|
|
33,517 |
|
|
|
30,699 |
|
|
|
128,879 |
|
|
|
114,826 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits |
|
|
3,241 |
|
|
|
3,417 |
|
|
|
4,079 |
|
|
|
13,842 |
|
|
|
19,813 |
|
Notes Payable |
|
|
— |
|
|
|
— |
|
|
|
105 |
|
|
|
61 |
|
|
|
439 |
|
FHLB Advances |
|
|
162 |
|
|
|
213 |
|
|
|
551 |
|
|
|
831 |
|
|
|
3,390 |
|
Subordinated Debentures |
|
|
1,219 |
|
|
|
1,214 |
|
|
|
1,119 |
|
|
|
4,630 |
|
|
|
3,109 |
|
Federal Funds Purchased |
|
|
— |
|
|
|
— |
|
|
|
4 |
|
|
|
6 |
|
|
|
111 |
|
Total Interest Expense |
|
|
4,622 |
|
|
|
4,844 |
|
|
|
5,858 |
|
|
|
19,370 |
|
|
|
26,862 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INTEREST INCOME |
|
|
29,153 |
|
|
|
28,673 |
|
|
|
24,841 |
|
|
|
109,509 |
|
|
|
87,964 |
|
Provision for Loan Losses |
|
|
1,150 |
|
|
|
1,300 |
|
|
|
3,900 |
|
|
|
5,150 |
|
|
|
12,750 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INTEREST INCOME AFTER |
|
|
|
|
|
|
|
|
|
|
||||||||||
PROVISION FOR LOAN LOSSES |
|
|
28,003 |
|
|
|
27,373 |
|
|
|
20,941 |
|
|
|
104,359 |
|
|
|
75,214 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NONINTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
||||||||||
Customer Service Fees |
|
|
274 |
|
|
|
268 |
|
|
|
251 |
|
|
|
1,007 |
|
|
|
826 |
|
Net Gain on Sales of Available for Sale Securities |
|
|
— |
|
|
|
48 |
|
|
|
30 |
|
|
|
750 |
|
|
|
1,503 |
|
Other Income |
|
|
1,014 |
|
|
|
1,094 |
|
|
|
705 |
|
|
|
3,552 |
|
|
|
3,510 |
|
Total Noninterest Income |
|
|
1,288 |
|
|
|
1,410 |
|
|
|
986 |
|
|
|
5,309 |
|
|
|
5,839 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NONINTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
||||||||||
Salaries and Employee Benefits |
|
|
7,966 |
|
|
|
8,309 |
|
|
|
6,216 |
|
|
|
30,889 |
|
|
|
25,568 |
|
Occupancy and Equipment |
|
|
939 |
|
|
|
942 |
|
|
|
979 |
|
|
|
3,916 |
|
|
|
3,258 |
|
Other Expense |
|
|
3,554 |
|
|
|
3,985 |
|
|
|
8,063 |
|
|
|
13,290 |
|
|
|
16,561 |
|
Total Noninterest Expense |
|
|
12,459 |
|
|
|
13,236 |
|
|
|
15,258 |
|
|
|
48,095 |
|
|
|
45,387 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME BEFORE INCOME TAXES |
|
|
16,832 |
|
|
|
15,547 |
|
|
|
6,669 |
|
|
|
61,573 |
|
|
|
35,666 |
|
Provision for Income Taxes |
|
|
4,318 |
|
|
|
4,038 |
|
|
|
1,690 |
|
|
|
15,886 |
|
|
|
8,472 |
|
NET INCOME |
|
|
12,514 |
|
|
|
11,509 |
|
|
|
4,979 |
|
|
|
45,687 |
|
|
|
27,194 |
|
Preferred Stock Dividends |
|
|
1,171 |
|
|
|
— |
|
|
|
— |
|
|
|
1,171 |
|
|
|
— |
|
NET INCOME TO COMMON SHAREHOLDERS |
|
$ |
11,343 |
|
|
$ |
11,509 |
|
|
$ |
4,979 |
|
|
$ |
44,516 |
|
|
$ |
27,194 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EARNINGS PER SHARE |
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic |
|
$ |
0.41 |
|
|
$ |
0.41 |
|
|
$ |
0.18 |
|
|
$ |
1.59 |
|
|
$ |
0.95 |
|
Diluted |
|
|
0.39 |
|
|
|
0.40 |
|
|
|
0.17 |
|
|
|
1.54 |
|
|
|
0.93 |
|
Dividends Paid Per Common Share |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Bridgewater Bancshares, Inc. and Subsidiaries Analysis of Average Balances, Yields and Rates (dollars in thousands, except per share data)
|
||||||||||||||||||||||
|
|
For the Year Ended |
||||||||||||||||||||
|
|
December 31, 2021 |
|
December 31, 2020 |
||||||||||||||||||
|
|
Average |
|
Interest |
|
Yield/ |
|
Average |
|
Interest |
|
Yield/ |
||||||||||
|
|
Balance |
|
& Fees |
|
Rate |
|
Balance |
|
& Fees |
|
Rate |
||||||||||
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest Earning Assets: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cash Investments |
|
$ |
132,188 |
|
$ |
199 |
|
0.15 |
% |
$ |
80,113 |
|
$ |
170 |
|
0.21 |
% |
|||||
Investment Securities: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Taxable Investment Securities |
|
|
317,954 |
|
|
|
7,015 |
|
|
2.21 |
|
|
234,873 |
|
|
|
5,712 |
|
|
2.43 |
|
|
Tax-Exempt Investment Securities (1) |
|
|
75,313 |
|
|
|
3,242 |
|
|
4.30 |
|
|
87,587 |
|
|
|
3,807 |
|
|
4.35 |
|
|
Total Investment Securities |
|
|
393,267 |
|
|
|
10,257 |
|
|
2.61 |
|
|
322,460 |
|
|
|
9,519 |
|
|
2.95 |
|
|
Paycheck Protection Program Loans (2) |
|
|
103,151 |
|
|
|
6,441 |
|
|
6.24 |
|
|
122,240 |
|
|
|
4,143 |
|
|
3.39 |
|
|
Loans (1)(2) |
|
|
2,481,706 |
|
|
|
112,587 |
|
|
4.54 |
|
|
2,032,180 |
|
|
|
101,469 |
|
|
4.99 |
|
|
Total Loans |
|
|
2,584,857 |
|
|
|
119,028 |
|
|
4.60 |
|
|
2,154,420 |
|
|
|
105,612 |
|
|
4.90 |
|
|
Federal Home Loan Bank Stock |
|
|
5,571 |
|
|
|
259 |
|
|
4.65 |
|
|
8,866 |
|
|
|
444 |
|
|
5.01 |
|
|
Total Interest Earning Assets |
|
|
3,115,883 |
|
|
|
129,743 |
|
|
4.16 |
% |
|
2,565,859 |
|
|
|
115,745 |
|
|
4.51 |
% |
|
Noninterest Earning Assets |
|
|
73,917 |
|
|
|
|
|
|
51,720 |
|
|
|
|
|
|||||||
Total Assets |
|
$ |
3,189,800 |
|
|
|
|
|
$ |
2,617,579 |
|
|
|
|
|
|||||||
Interest Bearing Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest Bearing Transaction Deposits |
|
$ |
441,528 |
|
|
$ |
2,052 |
|
|
0.46 |
% |
$ |
295,036 |
|
|
$ |
1,626 |
|
|
0.55 |
% |
|
Savings and Money Market Deposits |
|
|
773,779 |
|
|
|
3,729 |
|
|
0.48 |
|
|
523,520 |
|
|
|
5,341 |
|
|
1.02 |
|
|
Time Deposits |
|
|
323,638 |
|
|
|
4,099 |
|
|
1.27 |
|
|
374,195 |
|
|
|
7,806 |
|
|
2.09 |
|
|
Brokered Deposits |
|
|
406,863 |
|
|
|
3,962 |
|
|
0.97 |
|
|
348,126 |
|
|
|
5,040 |
|
|
1.45 |
|
|
Total Interest Bearing Deposits |
|
|
1,945,808 |
|
|
|
13,842 |
|
|
0.71 |
|
|
1,540,877 |
|
|
|
19,813 |
|
|
1.29 |
|
|
Federal Funds Purchased |
|
|
2,479 |
|
|
|
6 |
|
|
0.24 |
|
|
7,239 |
|
|
|
111 |
|
|
1.53 |
|
|
Notes Payable |
|
|
1,658 |
|
|
|
61 |
|
|
3.66 |
|
|
11,749 |
|
|
|
439 |
|
|
3.73 |
|
|
FHLB Advances |
|
|
53,294 |
|
|
|
831 |
|
|
1.56 |
|
|
148,524 |
|
|
|
3,390 |
|
|
2.28 |
|
|
Subordinated Debentures |
|
|
82,865 |
|
|
|
4,630 |
|
|
5.59 |
|
|
50,954 |
|
|
|
3,109 |
|
|
6.10 |
|
|
Total Interest Bearing Liabilities |
|
|
2,086,104 |
|
|
|
19,370 |
|
|
0.93 |
% |
|
1,759,343 |
|
|
|
26,862 |
|
|
1.53 |
% |
|
Noninterest Bearing Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Noninterest Bearing Transaction Deposits |
|
|
764,087 |
|
|
|
|
|
|
579,595 |
|
|
|
|
|
|||||||
Other Noninterest Bearing Liabilities |
|
|
23,372 |
|
|
|
|
|
|
19,905 |
|
|
|
|
|
|||||||
Total Noninterest Bearing Liabilities |
|
|
787,459 |
|
|
|
|
|
|
599,500 |
|
|
|
|
|
|||||||
Shareholders' Equity |
|
|
316,237 |
|
|
|
|
|
|
258,736 |
|
|
|
|
|
|||||||
Total Liabilities and Shareholders' Equity |
|
$ |
3,189,800 |
|
|
|
|
|
$ |
2,617,579 |
|
|
|
|
|
|||||||
Net Interest Income / Interest Rate Spread |
|
|
|
|
110,373 |
|
|
3.23 |
% |
|
|
|
88,883 |
|
|
2.98 |
% |
|||||
Net Interest Margin (3) |
|
|
|
|
|
3.54 |
% |
|
|
|
|
3.46 |
% |
|||||||||
Taxable Equivalent Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tax-Exempt Investment Securities |
|
|
|
|
(864 |
) |
|
|
|
|
|
(919 |
) |
|
|
|||||||
Net Interest Income |
|
|
|
$ |
109,509 |
|
|
|
|
|
$ |
87,964 |
|
|
|
|||||||
| _________________________________ | |
(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 Year Ended |
||||||||||||||||
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
||||||||||
|
|
|
2021 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Pre-Provision Net Revenue |
|
|
|
|
|
|
||||||||||||||
Noninterest Income |
|
$ |
1,288 |
|
$ |
1,410 |
|
$ |
986 |
|
$ |
5,309 |
|
$ |
5,839 |
|
||||
Less: Gain on sales of Securities |
|
|
— |
|
|
(48 |
) |
|
(30 |
) |
|
(750 |
) |
|
(1,503 |
) |
||||
Total Operating Noninterest Income |
|
|
1,288 |
|
|
1,362 |
|
|
956 |
|
|
4,559 |
|
|
4,336 |
|
||||
Plus: Net Interest Income |
|
|
29,153 |
|
|
28,673 |
|
|
24,841 |
|
|
109,509 |
|
|
87,964 |
|
||||
Net Operating Revenue |
|
$ |
30,441 |
|
$ |
30,035 |
|
$ |
25,797 |
|
$ |
114,068 |
|
$ |
92,300 |
|
||||
|
|
|
|
|
|
|
||||||||||||||
Noninterest Expense |
|
$ |
12,459 |
|
$ |
13,236 |
|
$ |
15,258 |
|
$ |
48,095 |
|
$ |
45,387 |
|
||||
Less: Amortization of Tax Credit Investments |
|
|
(152 |
) |
|
(152 |
) |
|
(146 |
) |
|
(562 |
) |
|
(738 |
) |
||||
Less: Debt Prepayment Fees |
|
|
— |
|
|
(582 |
) |
|
(5,613 |
) |
|
(582 |
) |
|
(7,043 |
) |
||||
Total Operating Noninterest Expense |
|
$ |
12,307 |
|
$ |
12,502 |
|
$ |
9,499 |
|
$ |
46,951 |
|
$ |
37,606 |
|
||||
|
|
|
|
|
|
|
||||||||||||||
Pre-Provision Net Revenue |
|
$ |
18,134 |
|
$ |
17,533 |
|
$ |
16,298 |
|
$ |
67,117 |
|
$ |
54,694 |
|
||||
|
|
|
|
|
|
|
||||||||||||||
Plus: |
|
|
|
|
|
|
||||||||||||||
Non-Operating Revenue Adjustments |
|
|
— |
|
|
48 |
|
|
30 |
|
|
750 |
|
|
1,503 |
|
||||
Less: |
|
|
|
|
|
|
||||||||||||||
Provision for Loan Losses |
|
|
1,150 |
|
|
1,300 |
|
|
3,900 |
|
|
5,150 |
|
|
12,750 |
|
||||
Non-Operating Expense Adjustments |
|
|
152 |
|
|
734 |
|
|
5,759 |
|
|
1,144 |
|
|
7,781 |
|
||||
Provision for Income Taxes |
|
|
4,318 |
|
|
4,038 |
|
|
1,690 |
|
|
15,886 |
|
|
8,472 |
|
||||
Net Income |
|
$ |
12,514 |
|
$ |
11,509 |
|
$ |
4,979 |
|
$ |
45,687 |
|
$ |
27,194 |
|
||||
|
|
|
|
|
|
|
||||||||||||||
Average Assets |
|
$ |
3,403,270 |
|
$ |
3,332,301 |
|
$ |
2,816,032 |
|
$ |
3,189,800 |
|
$ |
2,617,579 |
|
||||
Pre-Provision Net Revenue Return on Average Assets |
|
|
2.11 |
% |
|
2.09 |
% |
|
2.30 |
% |
|
2.10 |
% |
|
2.09 |
% |
||||
|
|
|
|
|
|
|
|
|||||||||||||
|
|
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, |
||||||||||
|
|
|
2021 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Core Net Interest Margin |
|
|
|
|
|
|
|
|||||||||||||
Net Interest Income (Tax-Equivalent Basis) |
|
$ |
29,388 |
|
$ |
28,880 |
|
$ |
25,051 |
|
|
$ |
110,373 |
|
$ |
88,883 |
|
|||
Less: Loan Fees |
|
|
(1,462 |
) |
|
(1,487 |
) |
|
(1,514 |
) |
|
|
(5,173 |
) |
|
(5,283 |
) |
|||
Less: PPP Interest and Fees |
|
|
(1,057 |
) |
|
(1,753 |
) |
|
(2,097 |
) |
|
|
(6,441 |
) |
|
(4,143 |
) |
|||
Core Net Interest Income |
|
$ |
26,869 |
|
$ |
25,640 |
|
$ |
21,440 |
|
|
$ |
98,759 |
|
$ |
79,457 |
|
|||
|
|
|
|
|
|
|
|
|||||||||||||
Average Interest Earning Assets |
|
|
3,320,603 |
|
|
3,234,301 |
|
|
2,759,543 |
|
|
|
3,115,883 |
|
|
2,565,859 |
|
|||
Less: Average PPP Loans |
|
|
(39,900 |
) |
|
(76,006 |
) |
|
(165,099 |
) |
|
|
(103,151 |
) |
|
(122,240 |
) |
|||
Core Average Interest Earning Assets |
|
$ |
3,280,703 |
|
$ |
3,158,295 |
|
$ |
2,594,444 |
|
|
$ |
3,012,732 |
|
$ |
2,443,619 |
|
|||
Core Net Interest Margin |
|
|
3.25 |
% |
|
3.22 |
% |
|
3.29 |
% |
|
|
3.28 |
% |
|
3.25 |
% |
|||
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, |
||||||||||
|
|
|
2021 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Efficiency Ratio |
|
|
|
|
|
|
|
|||||||||||||
Noninterest Expense |
|
$ |
12,459 |
|
$ |
13,236 |
|
$ |
15,258 |
|
|
$ |
48,095 |
|
$ |
45,387 |
|
|||
Less: Amortization of Intangible Assets |
|
|
(48 |
) |
|
(48 |
) |
|
(48 |
) |
|
|
(191 |
) |
|
(191 |
) |
|||
Adjusted Noninterest Expense |
|
$ |
12,411 |
|
$ |
13,188 |
|
$ |
15,210 |
|
|
$ |
47,904 |
|
$ |
45,196 |
|
|||
Net Interest Income |
|
$ |
29,153 |
|
$ |
28,673 |
|
$ |
24,841 |
|
|
$ |
109,509 |
|
$ |
87,964 |
|
|||
Noninterest Income |
|
|
1,288 |
|
|
1,410 |
|
|
986 |
|
|
|
5,309 |
|
|
5,839 |
|
|||
Less: Gain on Sales of Securities |
|
|
— |
|
|
(48 |
) |
|
(30 |
) |
|
|
(750 |
) |
|
(1,503 |
) |
|||
Adjusted Operating Revenue |
|
$ |
30,441 |
|
$ |
30,035 |
|
$ |
25,797 |
|
|
$ |
114,068 |
|
$ |
92,300 |
|
|||
Efficiency Ratio |
|
|
40.8 |
% |
|
43.9 |
% |
|
59.0 |
% |
|
|
42.0 |
% |
|
49.0 |
% |
|||
|
|
|
|
|
|
|
|
|||||||||||||
Adjusted Efficiency Ratio |
|
|
|
|
|
|
|
|||||||||||||
Noninterest Expense |
|
$ |
12,459 |
|
$ |
13,236 |
|
$ |
15,258 |
|
|
$ |
48,095 |
|
$ |
45,387 |
|
|||
Less: Amortization of Tax Credit Investments |
|
|
(152 |
) |
|
(152 |
) |
|
(146 |
) |
|
|
(562 |
) |
|
(738 |
) |
|||
Less: Debt Prepayment Fees |
|
|
— |
|
|
(582 |
) |
|
(5,613 |
) |
|
|
(582 |
) |
|
(7,043 |
) |
|||
Less: Amortization of Intangible Assets |
|
|
(48 |
) |
|
(48 |
) |
|
(48 |
) |
|
|
(191 |
) |
|
(191 |
) |
|||
Adjusted Noninterest Expense |
|
$ |
12,259 |
|
$ |
12,454 |
|
$ |
9,451 |
|
|
$ |
46,760 |
|
$ |
37,415 |
|
|||
Net Interest Income |
|
$ |
29,153 |
|
$ |
28,673 |
|
$ |
24,841 |
|
|
$ |
109,509 |
|
$ |
87,964 |
|
|||
Noninterest Income |
|
|
1,288 |
|
|
1,410 |
|
|
986 |
|
|
|
5,309 |
|
|
5,839 |
|
|||
Less: Gain on Sales of Securities |
|
|
— |
|
|
(48 |
) |
|
(30 |
) |
|
|
(750 |
) |
|
(1,503 |
) |
|||
Adjusted Operating Revenue |
|
$ |
30,441 |
|
$ |
30,035 |
|
$ |
25,797 |
|
|
$ |
114,068 |
|
$ |
92,300 |
|
|||
Adjusted Efficiency Ratio |
|
|
40.3 |
% |
|
41.5 |
% |
|
36.6 |
% |
|
|
41.0 |
% |
|
40.5 |
% |
|||
|
|
|
|
|
|
|
|
||||||||||||||
|
|
For the Three Months Ended |
|
|
For the Year Ended |
||||||||||||||||
|
|
December 31, |
|
September 30, |
|
December 31, |
|
|
December 31, |
|
December 31, |
||||||||||
|
|
|
2021 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
2021 |
|
|
|
2020 |
|
Adjusted Noninterest Expense to Average Assets (Annualized) |
|
|
|
|
|
|
|
||||||||||||||
Noninterest Expense |
|
$ |
12,459 |
|
$ |
13,236 |
|
$ |
15,258 |
|
|
$ |
48,095 |
|
$ |
45,387 |
|
||||
Less: Amortization of Tax Credit Investments |
|
|
(152 |
) |
|
(152 |
) |
|
(146 |
) |
|
|
(562 |
) |
|
(738 |
) |
||||
Less: Debt Prepayment Fees |
|
|
— |
|
|
(582 |
) |
|
(5,613 |
) |
|
|
(582 |
) |
|
(7,043 |
) |
||||
Adjusted Noninterest Expense |
|
$ |
12,307 |
|
$ |
12,502 |
|
$ |
9,499 |
|
|
$ |
46,951 |
|
$ |
37,606 |
|
||||
|
|
|
|
|
|
|
|
||||||||||||||
Average Assets |
|
$ |
3,403,270 |
|
$ |
3,332,301 |
|
$ |
2,816,032 |
|
|
$ |
3,189,800 |
|
$ |
2,617,579 |
|
||||
Adjusted Noninterest Expense to Average Assets (Annualized) |
|
|
1.43 |
% |
|
1.49 |
% |
|
1.34 |
% |
|
|
1.47 |
% |
|
1.44 |
% |
||||
Non-GAAP Financial Measures (dollars in thousands) (unaudited)
|
|||||||||||||||||||||
|
|
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, |
||||||||||
|
|
|
2021 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
2021 |
|
|
|
2020 |
|
Tangible Common Equity and Tangible Common Equity/Tangible Assets |
|
|
|
|
|
|
|
||||||||||||||
Total Shareholders' Equity |
|
$ |
379,272 |
|
$ |
367,803 |
|
$ |
265,405 |
|
|
|
|
||||||||
Less: Preferred Stock |
|
|
(66,514 |
) |
|
(66,515 |
) |
|
— |
|
|
|
|
||||||||
Total Common Shareholders' Equity |
|
|
312,758 |
|
|
301,288 |
|
|
265,405 |
|
|
|
|
||||||||
Less: Intangible Assets |
|
|
(3,105 |
) |
|
(3,153 |
) |
|
(3,296 |
) |
|
|
|
||||||||
Tangible Common Equity |
|
$ |
309,653 |
|
$ |
298,135 |
|
$ |
262,109 |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||||||||
Total Assets |
|
$ |
3,477,659 |
|
$ |
3,389,125 |
|
$ |
2,927,345 |
|
|
|
|
||||||||
Less: Intangible Assets |
|
|
(3,105 |
) |
|
(3,153 |
) |
|
(3,296 |
) |
|
|
|
||||||||
Tangible Assets |
|
$ |
3,474,554 |
|
$ |
3,385,972 |
|
$ |
2,924,049 |
|
|
|
|
||||||||
Tangible Common Equity/Tangible Assets |
|
|
8.91 |
% |
|
8.81 |
% |
|
8.96 |
% |
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||||||||
Tangible Book Value Per Share |
|
|
|
|
|
|
|
||||||||||||||
Book Value Per Common Share |
|
$ |
11.09 |
|
$ |
10.73 |
|
$ |
9.43 |
|
|
|
|
||||||||
Less: Effects of Intangible Assets |
|
|
(0.11 |
) |
|
(0.11 |
) |
|
(0.12 |
) |
|
|
|
||||||||
Tangible Book Value Per Common Share |
|
$ |
10.98 |
|
$ |
10.62 |
|
$ |
9.31 |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||||||||
Return on Average Tangible Common Equity |
|
|
|
|
|
|
|
||||||||||||||
Net Income Available to Common Shareholders |
|
$ |
11,343 |
|
$ |
11,509 |
|
$ |
4,979 |
|
|
$ |
44,516 |
|
$ |
27,194 |
|
||||
|
|
|
|
|
|
|
|
||||||||||||||
Average Shareholders' Equity |
|
$ |
374,035 |
|
$ |
330,604 |
|
$ |
265,716 |
|
|
$ |
316,237 |
|
$ |
258,736 |
|
||||
Less: Average Preferred Stock |
|
|
(66,515 |
) |
|
(32,332 |
) |
|
— |
|
|
|
(24,915 |
) |
|
— |
|
||||
Average Common Equity |
|
|
307,520 |
|
|
298,272 |
|
|
265,716 |
|
|
|
291,322 |
|
|
258,736 |
|
||||
Less: Effects of Average Intangible Assets |
|
|
(3,132 |
) |
|
(3,180 |
) |
|
(3,323 |
) |
|
|
(3,204 |
) |
|
(3,395 |
) |
||||
Average Tangible Common Equity |
|
$ |
304,388 |
|
$ |
295,092 |
|
$ |
262,393 |
|
|
$ |
288,118 |
|
$ |
255,341 |
|
||||
Return on Average Tangible Common Equity |
|
|
14.78 |
% |
|
15.47 |
% |
|
7.55 |
% |
|
|
15.45 |
% |
|
10.65 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Three Months Ended |
||||||||||||||||||
|
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
||||||||||
|
|
|
2021 |
|
|
|
2021 |
|
|
|
2021 |
|
|
|
2021 |
|
|
|
2020 |
|
Tangible Common Equity |
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Shareholders' Equity |
|
$ |
379,272 |
|
|
$ |
367,803 |
|
|
$ |
290,830 |
|
|
$ |
279,171 |
|
|
$ |
265,405 |
|
Less: Preferred Stock |
|
|
(66,514 |
) |
|
|
(66,515 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Common Shareholders' Equity |
|
|
312,758 |
|
|
|
301,288 |
|
|
|
290,830 |
|
|
|
279,171 |
|
|
|
265,405 |
|
Less: Intangible Assets |
|
|
(3,105 |
) |
|
|
(3,153 |
) |
|
|
(3,200 |
) |
|
|
(3,248 |
) |
|
|
(3,296 |
) |
Tangible Common Equity |
|
$ |
309,653 |
|
|
$ |
298,135 |
|
|
$ |
287,630 |
|
|
$ |
275,923 |
|
|
$ |
262,109 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
As of and for the Three Months Ended |
|
As of and for the Year Ended |
||||||||||||||||
|
|
December 31, 2021 |
|
September 30, 2021 |
|
December 31, 2020 |
|
December 31, 2021 |
|
December 31, 2020 |
||||||||||
Adjusted Diluted Earnings Per Common Share |
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Income Available to Common Shareholders |
|
$ |
11,343 |
|
$ |
11,509 |
|
|
$ |
4,979 |
|
|
$ |
44,516 |
|
|
$ |
27,194 |
|
|
Add: Debt Prepayment Fees |
|
|
— |
|
|
|
582 |
|
|
|
5,613 |
|
|
|
582 |
|
|
|
7,043 |
|
Less: Tax Impact |
|
|
— |
|
|
|
(151 |
) |
|
|
(1,336 |
) |
|
|
(151 |
) |
|
|
(1,676 |
) |
Net Income, Excluding Impact of Debt Prepayment Fees |
|
$ |
11,343 |
|
|
$ |
11,940 |
|
|
$ |
9,256 |
|
|
$ |
44,947 |
|
|
$ |
32,561 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted Weighted Average Shares Outstanding |
|
|
29,038,785 |
|
|
|
29,110,547 |
|
|
|
28,823,384 |
|
|
|
28,968,286 |
|
|
|
29,170,220 |
|
Adjusted Diluted Earnings Per Common Share |
|
$ |
0.39 |
|
|
$ |
0.41 |
|
|
$ |
0.32 |
|
|
$ |
1.55 |
|
|
$ |
1.12 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220126005633/en/
Contacts
Investor Relations Contact:
Justin Horstman
Director of Investor Relations
investorrelations@bwbmn.com
952-542-5169
