• Press Release
  • Bridgewater Bancshares, Inc. Announces Third Quarter 2020 Net Income of $7.2 Million, $0.25 Diluted Earnings Per Share

    Company Release - 10/29/2020

    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 $7.2 million, or $0.25 per diluted common share, for the third quarter of 2020, compared to net income of $7.6 million, or $0.26 per diluted common share, for the second quarter of 2020, and net income of $7.8 million, or $0.27 per diluted common share, for the third quarter of 2019.

    “The third quarter marked the unveiling of our long awaited new corporate headquarters, and we could not be more excited to complete our relocation to this unconventional space in the heart of our market area,” commented Chairman, Chief Executive Officer, and President, Jerry Baack. “Not only does our new headquarters create an opportunity for us to safely return to the office, the campus-like atmosphere complements our unique culture. Our third quarter results remained strong, demonstrating our ability to adjust quickly to this historically low interest rate environment and other operating challenges introduced by the pandemic. We remain diligent in the monitoring of our loan portfolio and given the uncertainty of the credit outlook and the current economic environment, we continued to build reserves in the third quarter. The duration of this challenging operating environment is unknown, but we believe our incredibly deep and talented team is ready and capable of handling any challenges that come our way.”

    Third Quarter 2020 Financial Results

     

     

     

     

    Diluted

     

    Nonperforming

     

    Adjusted

     

    Tangible common equity

    ROA

     

    ROE

     

    earnings per share

     

    assets to total assets

     

    efficiency ratio (1)

     

    to tangible assets (1)

    1.05%

     

    10.84%

     

    $

    0.25

     

    0.02%

     

    41.7%

     

    9.46%

    __________________________________

    (1)

     

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

    Linked-Quarter Highlights

    • Annualized pre-provision net revenue return on average assets, a non-GAAP financial measure, was 1.94% for the third quarter of 2020, compared to 2.00% for the second 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 41.7% for the third quarter of 2020, compared to 40.4% for the second quarter of 2020.
    • Cost of total deposits declined 12 basis points to 0.87% in the third quarter of 2020, compared to 0.99% in the second quarter of 2020.
    • Loans increased $65.5 million, or 11.9% on an annualized basis, to $2.26 billion at September 30, 2020, compared to June 30, 2020.
    • Deposits increased $31.0 million, or 5.5% on an annualized basis, to $2.27 billion at September 30, 2020, compared to June 30, 2020.
    • Annualized net loan charge-offs (recoveries) as a percent of average loans were 0.00% for the third quarter of 2020, compared to (0.01)% for the second quarter of 2020.
    • A loan loss provision of $3.8 million was recorded for the third quarter of 2020, primarily due to increased allocations for economic factors associated with the COVID-19 pandemic. The allowance for loan losses to total loans was 1.39% at September 30, 2020, compared to 1.26% at June 30, 2020. The allowance for loan losses to total loans, excluding $181.6 million of Paycheck Protection Program (PPP) loans, was 1.51% at September 30, 2020, compared to 1.37% at June 30, 2020.
    • 75 loan modifications totaling $113.7 million, or 38.8% of total loan modifications, returned to regular payment status during the third quarter of 2020. Loan modification balances as a percent of totals loans, excluding PPP loans, decreased from 14.6% at the end of the second quarter of 2020 to 9.2% at the end of the third quarter of 2020.

    Year-Over-Year Highlights

    • Diluted earnings per common share for the third quarter of 2020 were $0.25, compared to $0.27 for the third quarter of 2019.
    • Cost of total deposits declined 55 basis points to 0.87% in the third quarter of 2020, compared to 1.42% in the third quarter of 2019.
    • Tangible book value per share, a non-GAAP financial measure, increased 13.0%, or $1.05, to $9.13 at September 30, 2020, compared to $8.08 at September 30, 2019.
    • Gross loans increased $413.0 million at September 30, 2020, or 22.4%, compared to September 30, 2019. Year-over-year loan growth was $231.4 million, or 12.5%, excluding $181.6 million of PPP loans.
    • Deposits increased $470.8 million at September 30, 2020, or 26.1%, compared to September 30, 2019. Year-over-year growth consisted of $284.1 million in organic deposits, excluding an estimated $30.0 million in growth attributable to remaining PPP loan funds.
    • The ratio of nonperforming assets to total assets was 0.02% at September 30, 2020, compared to 0.04% at September 30, 2019.

    Year-To-Date Highlights

    • Diluted earnings per common share for the nine months ended September 30, 2020 were $0.76, compared to $0.76 for the nine months ended September 30, 2019.
    • Year-to-date pre-provision net revenue, a non-GAAP financial measure, was $38.4 million for the nine months ended September 30, 2020, an increase of 19.8%, compared to $32.1 million for the nine months ended September 30, 2019. Year-to-date annualized pre-provision net revenue return on average assets, a non-GAAP financial measure, was 2.01% for the nine months ended September 30, 2020, compared to 2.06% for the nine months ended September 30, 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 42.0% for the nine months ended September 30, 2020, compared to 42.9% for the nine months ended September 30, 2019.
    • Year-to-date annualized loan growth for 2020, excluding PPP loans, was 11.6% as of September 30, 2020.
    • Year-to-date annualized organic deposit growth for 2020, excluding brokered deposits and remaining PPP loan funds, was 21.1% as of September 30, 2020.

    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. During the third quarter of 2020, the Company began returning employees to the office pursuant to new health and safety procedures, including increasing physical space between employees, using face coverings, alternating schedules for employees in the workspace and requiring employees with COVID-19 symptoms or exposure to quarantine away from the office. 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. At this point, management does not expect that the Company’s financial results in future quarters will track with the Company’s historical performance.

    During the third quarter of 2020, the Company opened its newly constructed office complex in St. Louis Park, Minnesota. The Company relocated its headquarters from Bloomington, Minnesota and relocated its current branch location in St. Louis Park to the new office complex. Management expects that occupancy and equipment expense will increase in future periods related to the operations and depreciation of the building.

    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 September 30, 2020, PPP principal loan balances totaled $181.6 million, compared to $180.2 million at June 30, 2020. In the third quarter of 2020, the Company began to shift its efforts to principal forgiveness processing; however, there was no forgiveness granted to any borrowers during the third quarter of 2020.

    The Company continues to monitor the loan portfolio, working 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 and interest-only 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 has been limited in the third quarter of 2020.

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

     

     

    Interest-Only

     

     

    Payment Deferral

     

     

    Total

    Principal Balance - June 30, 2020

     

    $

    175,307

     

     

    $

    117,703

     

     

    $

    293,010

     

    Modification Expired

     

     

    (45,392

    )

     

     

    (90,108

    )

     

     

    (135,500

    )

    Second Modification Granted

     

     

    18,909

     

     

     

    2,909

     

     

     

    21,818

     

    New Modifications

     

     

    10,502

     

     

     

     

     

     

    10,502

     

    Net Principal Advances (Payments)

     

     

    1,559

     

     

     

    (8

    )

     

     

    1,551

     

    Principal Balance - September 30, 2020

     

    $

    160,885

     

     

    $

    30,496

     

     

    $

    191,381

     

    The following table presents a summary of active loan modifications, by loan segment and modification type, at September 30, 2020:

     

     

    Interest-Only

     

    Payment Deferral

     

    Total

     

     

    Amount

     

    # of Loans

     

    Amount

     

    # of Loans

     

    Amount

     

    # of Loans

    Commercial

     

    $

    11,705

     

    21

     

    $

    414

     

    2

     

    $

    12,119

     

    23

    Construction and Land Development

     

     

     

     

     

     

     

     

     

    Real Estate Mortgage:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    1 - 4 Family Mortgage

     

     

    5,589

     

    10

     

     

     

     

     

    5,589

     

    10

    Multifamily

     

     

    42,273

     

    6

     

     

     

     

     

    42,273

     

    6

    CRE Owner Occupied

     

     

    1,646

     

    4

     

     

    1,502

     

    3

     

     

    3,148

     

    7

    CRE Nonowner Occupied

     

     

    99,672

     

    35

     

     

    28,580

     

    6

     

     

    128,252

     

    41

    Consumer and Other

     

     

     

     

     

     

     

     

     

    Totals

     

    $

    160,885

     

    76

     

    $

    30,496

     

    11

     

    $

    191,381

     

    87

    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. The Company has 52 modified loans totaling $99.8 million set to expire in October 2020. As of October 22, 2020, based on lender and client surveys, the Company estimates that $73.6 million will return to regular payment status, bringing loan modification balances as a percent of total loans, excluding PPP loans, to 5.6%.

     

    Key Financial Measures

     

     

    As of and for the Three Months Ended

     

    As of and for the Nine Months Ended

     

     

    September 30,

     

    June 30,

     

    September 30,

     

    September 30,

     

    September 30,

     

     

    2020

     

    2020

     

    2019

     

    2020

     

    2019

    Per Common Share Data

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Basic Earnings Per Share

     

    $

    0.25

     

     

    $

    0.26

     

     

    $

    0.27

     

     

    $

    0.77

     

    $

    0.77

     

    Diluted Earnings Per Share

     

     

    0.25

     

     

     

    0.26

     

     

     

    0.27

     

     

     

    0.76

     

     

    0.76

     

    Book Value Per Share

     

     

    9.25

     

     

     

    8.92

     

     

     

    8.20

     

     

     

    9.25

     

     

    8.20

     

    Tangible Book Value Per Share (1)

     

     

    9.13

     

     

     

    8.80

     

     

     

    8.08

     

     

     

    9.13

     

     

    8.08

     

    Basic Weighted Average Shares Outstanding

     

     

    28,683,855

     

     

     

    28,676,441

     

     

     

    28,820,144

     

     

     

    28,717,142

     

     

    29,535,589

     

    Diluted Weighted Average Shares Outstanding

     

     

    29,174,601

     

     

     

    29,165,157

     

     

     

    29,497,961

     

     

     

    29,300,763

     

     

    30,181,556

     

    Shares Outstanding at Period End

     

     

    28,710,775

     

     

     

    28,837,560

     

     

     

    28,781,162

     

     

     

    28,710,775

     

     

    28,781,162

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Selected Performance Ratios

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Return on Average Assets (Annualized)

     

     

    1.05

    %

     

     

    1.17

    %

     

     

    1.43

    %

     

     

    1.16

    %

     

    1.46

    %

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

     

     

    1.94

     

     

     

    2.00

     

     

     

    2.08

     

     

     

    2.01

     

     

    2.06

     

    Return on Average Common Equity (Annualized)

     

     

    10.84

     

     

     

    11.98

     

     

     

    13.31

     

     

     

    11.57

     

     

    13.27

     

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

     

     

    10.98

     

     

     

    12.14

     

     

     

    13.52

     

     

     

    11.73

     

     

    13.49

     

    Yield on Interest Earning Assets

     

     

    4.30

     

     

     

    4.45

     

     

     

    4.98

     

     

     

    4.53

     

     

    5.01

     

    Yield on Total Loans, Gross

     

     

    4.73

     

     

     

    4.85

     

     

     

    5.32

     

     

     

    4.91

     

     

    5.31

     

    Cost of Interest Bearing Liabilities

     

     

    1.50

     

     

     

    1.58

     

     

     

    2.04

     

     

     

    1.63

     

     

    2.06

     

    Cost of Total Deposits

     

     

    0.87

     

     

     

    0.99

     

     

     

    1.42

     

     

     

    1.03

     

     

    1.44

     

    Net Interest Margin (2)

     

     

    3.28

     

     

     

    3.38

     

     

     

    3.56

     

     

     

    3.41

     

     

    3.57

     

    Efficiency Ratio (1)

     

     

    42.3

     

     

     

    48.6

     

     

     

    45.6

     

     

     

    45.1

     

     

    46.6

     

    Adjusted Efficiency Ratio (1)

     

     

    41.7

     

     

     

    40.4

     

     

     

    42.9

     

     

     

    42.0

     

     

    42.9

     

    Noninterest Expense to Average Assets (Annualized)

     

     

    1.42

     

     

     

    1.64

     

     

     

    1.66

     

     

     

    1.58

     

     

    1.70

     

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

     

     

    1.40

     

     

     

    1.37

     

     

     

    1.56

     

     

     

    1.47

     

     

    1.56

     

    Loan to Deposit Ratio

     

     

    99.4

     

     

     

    97.8

     

     

     

    102.4

     

     

     

     

     

     

     

     

    Core Deposits to Total Deposits

     

     

    77.1

     

     

     

    75.7

     

     

     

    79.9

     

     

     

     

     

     

     

     

    Tangible Common Equity to Tangible Assets (1)

     

     

    9.46

     

     

     

    9.23

     

     

     

    10.43

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Capital Ratios (Bank Only) (3)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Tier 1 Leverage Ratio

     

     

    11.24

    %

     

     

    11.36

    %

     

     

    10.88

    %

     

     

     

     

     

     

     

    Tier 1 Risk-based Capital Ratio

     

     

    12.60

     

     

     

    12.96

     

     

     

    11.61

     

     

     

     

     

     

     

     

    Total Risk-based Capital Ratio

     

     

    13.85

     

     

     

    14.21

     

     

     

    12.44

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Capital Ratios (Consolidated) (3)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Tier 1 Leverage Ratio

     

     

    9.83

    %

     

     

    9.94

    %

     

     

    10.53

    %

     

     

     

     

     

     

     

    Tier 1 Risk-based Capital Ratio

     

     

    11.03

     

     

     

    11.39

     

     

     

    11.26

     

     

     

     

     

     

     

     

    Total Risk-based Capital Ratio

     

     

    15.45

     

     

     

    15.99

     

     

     

    13.31

     

     

     

     

     

     

     

     

    __________________________________

    (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

     

     

    September 30,

     

    June 30,

     

    March 31,

     

    December 31,

     

    September 30,

    (dollars in thousands)

     

    2020

     

    2020

     

    2020

     

    2019

     

    2019

    Selected Balance Sheet Data

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total Assets

     

    $

    2,774,564

     

    $

    2,754,463

     

    $

    2,418,730

     

    $

    2,268,830

     

    $

    2,232,339

    Total Loans, Gross

     

     

    2,259,228

     

     

    2,193,778

     

     

    2,002,817

     

     

    1,912,038

     

     

    1,846,218

    Allowance for Loan Losses

     

     

    31,381

     

     

    27,633

     

     

    24,585

     

     

    22,526

     

     

    22,124

    Goodwill and Other Intangibles

     

     

    3,344

     

     

    3,391

     

     

    3,439

     

     

    3,487

     

     

    3,535

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Deposits

     

     

    2,273,044

     

     

    2,242,051

     

     

    1,900,127

     

     

    1,823,310

     

     

    1,802,236

    Tangible Common Equity (1)

     

     

    262,088

     

     

    253,799

     

     

    244,704

     

     

    241,307

     

     

    232,524

    Total Shareholders' Equity

     

     

    265,432

     

     

    257,190

     

     

    248,143

     

     

    244,794

     

     

    236,059

    Average Total Assets - Quarter-to-Date

     

     

    2,711,755

     

     

    2,622,272

     

     

    2,317,040

     

     

    2,221,370

     

     

    2,168,909

    Average Common Equity - Quarter-to-Date

     

     

    263,195

     

     

    255,109

     

     

    250,800

     

     

    240,188

     

     

    232,590

    __________________________________

    (1)

     

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

     

     

    For the Three Months Ended

     

    For the Nine Months Ended

     

     

    September 30,

     

    June 30,

     

    September 30,

     

    September 30,

     

    September 30,

    (dollars in thousands)

     

    2020

     

    2020

     

    2019

     

    2020

     

    2019

    Selected Income Statement Data

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Interest Income

     

    $

    28,493

     

    $

    28,166

     

    $

    26,572

     

    $

    84,127

     

    $

    76,359

    Interest Expense

     

     

    6,814

     

     

    6,824

     

     

    7,637

     

     

    21,004

     

     

    22,155

    Net Interest Income

     

     

    21,679

     

     

    21,342

     

     

    18,935

     

     

    63,123

     

     

    54,204

    Provision for Loan Losses

     

     

    3,750

     

     

    3,000

     

     

    900

     

     

    8,850

     

     

    2,100

    Net Interest Income after Provision for Loan Losses

     

     

    17,929

     

     

    18,342

     

     

    18,035

     

     

    54,273

     

     

    52,104

    Noninterest Income

     

     

    1,157

     

     

    1,977

     

     

    946

     

     

    4,853

     

     

    2,714

    Noninterest Expense

     

     

    9,672

     

     

    10,711

     

     

    9,084

     

     

    30,129

     

     

    26,443

    Income Before Income Taxes

     

     

    9,414

     

     

    9,608

     

     

    9,897

     

     

    28,997

     

     

    28,375

    Provision for Income Taxes

     

     

    2,240

     

     

    2,010

     

     

    2,092

     

     

    6,782

     

     

    5,543

    Net Income

     

    $

    7,174

     

    $

    7,598

     

    $

    7,805

     

    $

    22,215

     

    $

    22,832

    Income Statement

    Net Interest Income

    Net interest income was $21.7 million for the third quarter of 2020, an increase of $337,000, or 1.6%, from $21.3 million in the second quarter of 2020, and an increase of $2.7 million, or 14.5%, from $18.9 million in the third quarter of 2019. The linked-quarter increase in net interest income was primarily due to growth in average interest earning assets and lower rates paid on deposits, offset partially by lower rates on interest earning assets. The year-over-year increase in net interest income was largely attributed to growth in average interest earning assets, which increased by $521.0 million, or 24.4%, to $2.66 billion for the third quarter of 2020, from $2.13 billion for the third quarter of 2019. This increase in average interest earning assets was primarily due to continued organic growth in the loan portfolio and most recently, the funding of PPP loans.

    Net interest margin (on a fully tax-equivalent basis) for the third quarter of 2020 was 3.28%, a 10 basis point decrease from 3.38% in the second quarter of 2020, and a 28 basis point decrease from 3.56% in the third quarter of 2019.

    While the Company is encouraged by the continued reduction in the cost of interest bearing liabilities during the third quarter of 2020, the linked-quarter decrease in net interest margin was primarily attributed to the historically low and flat yield curve weighing on earning asset yields. Furthermore, the Company’s participation in the PPP generated strong loan origination volume during the second quarter of 2020; however, the interest rate of 1.00% earned on these loans is significantly lower than the aggregate loan yield, thus impacting the net interest margin during the quarter. It is worth noting that the core net interest margin, excluding PPP loans and corresponding deposit balances, was 3.33% for the third quarter of 2020. The year-over-year decline in net interest margin largely followed the same themes as the quarter. 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 continued to compress the net interest margin.

    Interest income was $28.5 million for the third quarter of 2020, an increase of $327,000, or 1.2%, from $28.2 million in the second quarter of 2020, and an increase of $1.9 million, or 7.2%, from $26.6 million in the third quarter of 2019. The yield on interest earning assets (on a fully tax-equivalent basis) was 4.30% in the third quarter of 2020, compared to 4.45% in the second quarter of 2020, and 4.98% in the third quarter of 2019. The linked-quarter decrease in the yield on interest earning assets was due primarily to lower market rates resulting in lower loan and security yields. The year-over-year decrease in the yield on interest earning assets was 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 held by the Company due to the uncertain impacts of the COVID-19 pandemic.

    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 4.93% in the third quarter of 2020, which was 8 basis points lower than 5.01% in the second quarter of 2020, and 39 basis points lower than 5.32% in the third quarter of 2019. While loan fees have maintained a stable contribution to the aggregate loan yield, the historically low and flat yield curve has resulted in a declining core yield on loans in comparison to both prior periods.

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

     

     

    Three Months Ended

     

     

     

    September 30, 2020

     

     

    June 30, 2020

     

     

    March 31, 2020

     

     

    December 31, 2019

     

     

    September 30, 2019

     

    Interest

     

    4.69

    %

     

    4.76

    %

     

    4.90

    %

     

    5.00

    %

     

    5.07

    %

    Fees

     

    0.24

     

     

    0.25

     

     

    0.27

     

     

    0.33

     

     

    0.25

     

    Yield on Loans, Excluding PPP Loans

     

    4.93

    %

     

    5.01

    %

     

    5.17

    %

     

    5.33

    %

     

    5.32

    %

    Interest expense was $6.8 million for the third quarter of 2020, a decrease of $10,000, or 0.1%, from $6.8 million in the second quarter of 2020, and a decrease of $823,000, or 10.8%, from $7.6 million in the third quarter of 2019. The cost of interest bearing liabilities declined 8 basis points on a linked-quarter basis from 1.58% in the second quarter of 2020 to 1.50% in the third quarter of 2020, primarily due to lower rates paid on deposits. On a year-over-year basis, the cost of interest bearing liabilities decreased 54 basis points from 2.04% in the third quarter of 2019 to 1.50% in the third quarter of 2020.

    Interest expense on deposits was $4.8 million for the third quarter of 2020, a decrease of $330,000, or 6.4%, from $5.2 million in the second quarter of 2020, and a decrease of $1.4 million, or 22.0%, from $6.2 million in the third quarter of 2019. The average cost of total deposits declined 12 basis points on a linked-quarter basis from 0.99% in the second quarter of 2020, and declined 55 basis points on a year-over-year basis from 1.42% in the third quarter of 2019, to 0.87% in the third 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 meaningful deposit repricing opportunities in future quarters.

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

     

     

    For the Three Months Ended

     

     

     

    September 30, 2020

     

    June 30, 2020

     

    September 30, 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

     

    $

    101,787

     

    $

    42

     

    0.16

    %

    $

    109,073

     

    $

    37

     

    0.14

    %

    $

    73,970

     

    $

    346

     

    1.86

    %

    Investment Securities:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Taxable Investment Securities

     

     

    256,808

     

     

    1,389

     

    2.15

     

     

    203,559

     

     

    1,304

     

    2.58

     

     

    151,319

     

     

    1,095

     

    2.87

     

    Tax-Exempt Investment Securities (1)

     

     

    82,579

     

     

    900

     

    4.33

     

     

    91,793

     

     

    996

     

    4.37

     

     

    95,575

     

     

    1,031

     

    4.28

     

    Total Investment Securities

     

     

    339,387

     

     

    2,289

     

    2.68

     

     

    295,352

     

     

    2,300

     

    3.13

     

     

    246,894

     

     

    2,126

     

    3.42

     

    Paycheck Protection Program Loans (2)

     

     

    181,397

     

     

    1,173

     

    2.57

     

     

    139,235

     

     

    873

     

    2.52

     

     

     

     

     

     

    Loans (1)(2)

     

     

    2,025,410

     

     

    25,081

     

    4.93

     

     

    2,013,163

     

     

    25,070

     

    5.01

     

     

    1,805,920

     

     

    24,220

     

    5.32

     

    Total Loans

     

     

    2,206,807

     

     

    26,254

     

    4.73

     

     

    2,152,398

     

     

    25,943

     

    4.85

     

     

    1,805,920

     

     

    24,220

     

    5.32

     

    Federal Home Loan Bank Stock

     

     

    7,901

     

     

    127

     

    6.38

     

     

    10,469

     

     

    125

     

    4.81

     

     

    8,111

     

     

    96

     

    4.72

     

    Total Interest Earning Assets

     

     

    2,655,882

     

     

    28,712

     

    4.30

    %

     

    2,567,292

     

     

    28,405

     

    4.45

    %

     

    2,134,895

     

     

    26,788

     

    4.98

    %

    Noninterest Earning Assets

     

     

    55,873

     

     

     

     

     

     

     

    54,980

     

     

     

     

     

     

     

    34,014

     

     

     

     

     

     

    Total Assets

     

    $

    2,711,755

     

     

     

     

     

     

    $

    2,622,272

     

     

     

     

     

     

    $

    2,168,909

     

     

     

     

     

     

    Interest Bearing Liabilities:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Deposits:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Interest Bearing Transaction Deposits

     

     

    306,162

     

     

    400

     

    0.52

    %

     

    272,565

     

     

    377

     

    0.56

    %

     

    250,667

     

     

    511

     

    0.81

    %

    Savings and Money Market Deposits

     

     

    501,246

     

     

    1,106

     

    0.88

     

     

    521,313

     

     

    1,327

     

    1.02

     

     

    453,340

     

     

    2,080

     

    1.82

     

    Time Deposits

     

     

    369,975

     

     

    1,899

     

    2.04

     

     

    388,357

     

     

    2,122

     

    2.20

     

     

    359,329

     

     

    2,229

     

    2.46

     

    Brokered Deposits

     

     

    419,744

     

     

    1,435

     

    1.36

     

     

    319,711

     

     

    1,344

     

    1.69

     

     

    242,600

     

     

    1,389

     

    2.27

     

    Total Interest Bearing Deposits

     

     

    1,597,127

     

     

    4,840

     

    1.21

     

     

    1,501,946

     

     

    5,170

     

    1.38

     

     

    1,305,936

     

     

    6,209

     

    1.89

     

    Federal Funds Purchased

     

     

    152

     

     

     

    0.33

     

     

    9

     

     

     

    0.72

     

     

     

     

     

     

    Notes Payable

     

     

    11,500

     

     

    108

     

    3.74

     

     

    12,000

     

     

    111

     

    3.72

     

     

    13,500

     

     

    127

     

    3.73

     

    FHLB Advances

     

     

    129,457

     

     

    748

     

    2.30

     

     

    193,819

     

     

    1,064

     

    2.21

     

     

    143,690

     

     

    908

     

    2.51

     

    Subordinated Debentures

     

     

    73,649

     

     

    1,118

     

    6.04

     

     

    31,228

     

     

    479

     

    6.17

     

     

    24,699

     

     

    393

     

    6.31

     

    Total Interest Bearing Liabilities

     

     

    1,811,885

     

     

    6,814

     

    1.50

    %

     

    1,739,002

     

     

    6,824

     

    1.58

    %

     

    1,487,825

     

     

    7,637

     

    2.04

    %

    Noninterest Bearing Liabilities:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Noninterest Bearing Transaction Deposits

     

     

    615,214

     

     

     

     

     

     

     

    603,456

     

     

     

     

     

     

     

    434,021

     

     

     

     

     

     

    Other Noninterest Bearing Liabilities

     

     

    21,461

     

     

     

     

     

     

     

    24,705

     

     

     

     

     

     

     

    14,473

     

     

     

     

     

     

    Total Noninterest Bearing Liabilities

     

     

    636,675

     

     

     

     

     

     

     

    628,161

     

     

     

     

     

     

     

    448,494

     

     

     

     

     

     

    Shareholders' Equity

     

     

    263,195

     

     

     

     

     

     

     

    255,109

     

     

     

     

     

     

     

    232,590

     

     

     

     

     

     

    Total Liabilities and Shareholders' Equity

     

    $

    2,711,755

     

     

     

     

     

     

    $

    2,622,272

     

     

     

     

     

     

    $

    2,168,909

     

     

     

     

     

     

    Net Interest Income / Interest Rate Spread

     

     

     

     

     

    21,898

     

    2.80

    %

     

     

     

     

    21,581

     

    2.87

    %

     

     

     

     

    19,151

     

    2.94

    %

    Net Interest Margin (3)

     

     

     

     

     

     

     

    3.28

    %

     

     

     

     

     

     

    3.38

    %

     

     

     

     

     

     

    3.56

    %

    Taxable Equivalent Adjustment:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Tax-Exempt Investment Securities

     

     

     

     

     

    (219)

     

     

     

     

     

     

     

    (239)

     

     

     

     

     

     

     

    (216)

     

     

     

    Net Interest Income

     

     

     

     

    $

    21,679

     

     

     

     

     

     

    $

    21,342

     

     

     

     

     

     

    $

    18,935

     

     

     

    __________________________________

    (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 $3.8 million for the third quarter of 2020, an increase of $750,000 from $3.0 million for the second quarter of 2020, and an increase of $2.9 million from $900,000 for the third quarter of 2019. The allowance for loan losses to total loans was 1.39% at September 30, 2020, compared to 1.26% at June 30, 2020, and 1.20% at September 30, 2019. The allowance for loan losses to total loans, excluding $181.6 million of PPP loans, was 1.51% at September 30, 2020. The continued reserve build in the third quarter of 2020 was primarily attributable to growth of the loan portfolio, economic uncertainties and evolving risks driven by the impact 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

     

    Nine Months Ended

     

     

    September 30,

     

    June 30,

     

    September 30,

     

    September 30,

     

    September 30,

    (dollars in thousands)

     

    2020

     

    2020

     

    2019

     

    2020

     

    2019

    Balance at Beginning of Period

     

    $

    27,633

     

     

    $

    24,585

     

     

    $

    21,362

     

     

    $

    22,526

     

     

    $

    20,031

     

    Provision for Loan Losses

     

     

    3,750

     

     

     

    3,000

     

     

     

    900

     

     

     

    8,850

     

     

     

    2,100

     

    Charge-offs

     

     

    (6

    )

     

     

    (1

    )

     

     

    (144

    )

     

     

    (54

    )

     

     

    (183

    )

    Recoveries

     

     

    4

     

     

     

    49

     

     

     

    6

     

     

     

    59

     

     

     

    176

     

    Balance at End of Period

     

    $

    31,381

     

     

    $

    27,633

     

     

    $

    22,124

     

     

    $

    31,381

     

     

    $

    22,124

     

    Noninterest Income

    Noninterest income was $1.2 million for the third quarter of 2020, a decrease of $820,000 from $2.0 million for the second quarter of 2020, and an increase of $211,000 from $946,000 for the third quarter of 2019. The linked-quarter decrease was primarily due to decreased gains on sales of securities, offset partially by increased letter of credit fees and customer service fees. The year-over-year increase was primarily due to increased letter of credit fees.

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

     

     

    Three Months Ended

     

    Nine Months Ended

     

     

    September 30,

     

    June 30,

     

    September 30,

     

    September 30,

     

    September 30,

    (dollars in thousands)

     

    2020

     

    2020

     

    2019

     

    2020

     

    2019

    Noninterest Income:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Customer Service Fees

     

    $

    200

     

    $

    135

     

    $

    184

     

    $

    575

     

    $

    564

    Net Gain on Sales of Securities

     

     

    109

     

     

    1,361

     

     

    58

     

     

    1,473

     

     

    516

    Net Gain on Sales of Foreclosed Assets

     

     

     

     

     

     

    69

     

     

     

     

    69

    Letter of Credit Fees

     

     

    487

     

     

    265

     

     

    331

     

     

    1,026

     

     

    790

    Debit Card Interchange Fees

     

     

    119

     

     

    99

     

     

    116

     

     

    310

     

     

    313

    Swap Fees

     

     

     

     

     

     

     

     

    907

     

     

    Other Income

     

     

    242

     

     

    117

     

     

    188

     

     

    562

     

     

    462

    Totals

     

    $

    1,157

     

    $

    1,977

     

    $

    946

     

    $

    4,853

     

    $

    2,714

    Noninterest Expense

    Noninterest expense was $9.7 million for the third quarter of 2020, a decrease of $1.0 million from $10.7 million for the second quarter of 2020, and an increase of $588,000 from $9.1 million for the third quarter of 2019. The linked-quarter decrease was primarily due to $1.4 million of FHLB advance prepayment fees incurred in the second quarter of 2020, as well as lower amortization of tax credit investments. The decrease was partially offset by increased salaries and employee benefits and occupancy and equipment expenses related to the new corporate headquarters. The year-over-year increase was attributed to increased salaries and employee benefits and FDIC insurance assessment, offset partially by decreased marketing and advertising and amortization of tax credit investments.

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

     

     

    Three Months Ended

     

    Nine Months Ended

     

     

    September 30,

     

    June 30,

     

    September 30,

     

    September 30,

     

    September 30,

    (dollars in thousands)

     

    2020

     

    2020

     

    2019

     

    2020

     

    2019

    Noninterest Expense:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Salaries and Employee Benefits

     

    $

    6,550

     

    $

    6,348

     

    $

    5,915

     

    $

    19,352

     

    $

    15,841

    Occupancy and Equipment

     

     

    894

     

     

    672

     

     

    761

     

     

    2,279

     

     

    2,202

    FDIC Insurance Assessment

     

     

    160

     

     

    168

     

     

     

     

    518

     

     

    570

    Data Processing

     

     

    267

     

     

    238

     

     

    182

     

     

    734

     

     

    486

    Professional and Consulting Fees

     

     

    492

     

     

    423

     

     

    414

     

     

    1,400

     

     

    1,253

    Information Technology and Telecommunications

     

     

    385

     

     

    326

     

     

    233

     

     

    977

     

     

    677

    Marketing and Advertising

     

     

    94

     

     

    85

     

     

    339

     

     

    645

     

     

    1,208

    Intangible Asset Amortization

     

     

    48

     

     

    47

     

     

    48

     

     

    143

     

     

    143

    Amortization of Tax Credit Investments

     

     

    145

     

     

    362

     

     

    530

     

     

    592

     

     

    2,097

    FHLB Advance Prepayment Fees

     

     

     

     

    1,430

     

     

     

     

    1,430

     

     

    Other Expense

     

     

    637

     

     

    612

     

     

    662

     

     

    2,059

     

     

    1,966

    Totals

     

    $

    9,672

     

    $

    10,711

     

    $

    9,084

     

    $

    30,129

     

    $

    26,443

    The Company had 180 full-time equivalent employees at September 30, 2020, compared to 173 employees at June 30, 2020, and 158 employees at September 30, 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 42.3% for the third quarter of 2020, compared to 48.6% for the second quarter of 2020, and 45.6% for the third quarter of 2019. Excluding the impact of certain non-routine income and expenses, the adjusted efficiency ratio, a non-GAAP financial measure, was 41.7% for the third quarter of 2020, 40.4% for the second quarter of 2020 and 42.9% for the third 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 third quarter of 2020 was 23.8%, an increase from 20.9% for the second quarter of 2020 and an increase from 21.1% for the third quarter of 2019. The effective combined federal and state income tax rate for the nine months ended September 30, 2020 was 23.4%.

    Balance Sheet

    Total assets at September 30, 2020 were $2.77 billion, a 0.7% increase from $2.75 billion at June 30, 2020, and a 24.3% increase from $2.23 billion at September 30, 2019. While the linked-quarter increase was nominal, restored organic loan growth and purchases of investment securities deployed excess liquidity build from the previous quarter. The year-over-year increase in total assets was primarily due to organic loan growth, PPP loan growth and purchases of investment securities.

    Total gross loans at September 30, 2020 were $2.26 billion, an increase of $65.5 million, or 3.0%, over total gross loans of $2.19 billion at June 30, 2020, and an increase of $413.0 million, or 22.4%, over total gross loans of $1.85 billion at September 30, 2019. Year-to-date annualized loan growth, excluding $181.6 million of PPP loans, was 11.6% as of September 30, 2020.

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

     

     

    September 30, 2020

     

    June 30, 2020

     

    March 31, 2020

     

    December 31, 2019

     

    September 30, 2019

     

    (dollars in thousands)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Commercial

     

    $

    287,254

     

    $

    302,536

     

    $

    299,425

     

    $

    276,035

     

    $

    291,723

     

    Paycheck Protection Program

     

     

    181,596

     

     

    180,228

     

     

     

     

     

     

     

    Construction and Land Development

     

     

    175,882

     

     

    191,768

     

     

    183,350

     

     

    196,776

     

     

    216,054

     

    Real Estate Mortgage:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    1 - 4 Family Mortgage

     

     

    286,089

     

     

    289,456

     

     

    272,590

     

     

    260,611

     

     

    254,782

     

    Multifamily

     

     

    585,814

     

     

    522,491

     

     

    536,380

     

     

    515,014

     

     

    456,257

     

    CRE Owner Occupied

     

     

    75,963

     

     

    73,539

     

     

    75,207

     

     

    66,584

     

     

    71,209

     

    CRE Nonowner Occupied

     

     

    660,058

     

     

    627,651

     

     

    631,541

     

     

    592,545

     

     

    551,992

     

    Total Real Estate Mortgage Loans

     

     

    1,607,924

     

     

    1,513,137

     

     

    1,515,718

     

     

    1,434,754

     

     

    1,334,240

     

    Consumer and Other

     

     

    6,572

     

     

    6,109

     

     

    4,324

     

     

    4,473

     

     

    4,201

     

    Total Loans, Gross

     

     

    2,259,228

     

     

    2,193,778

     

     

    2,002,817

     

     

    1,912,038

     

     

    1,846,218

     

    Allowance for Loan Losses

     

     

    (31,381)

     

     

    (27,633)

     

     

    (24,585)

     

     

    (22,526)

     

     

    (22,124)

     

    Net Deferred Loan Fees

     

     

    (10,367)

     

     

    (10,287)

     

     

    (5,336)

     

     

    (5,512)

     

     

    (5,788)

     

    Total Loans, Net

     

    $

    2,217,480

     

    $

    2,155,858

     

    $

    1,972,896

     

    $

    1,884,000

     

    $

    1,818,306

     

    Total deposits at September 30, 2020 were $2.27 billion, an increase of $31.0 million, or 1.4%, over total deposits of $2.24 billion at June 30, 2020, and an increase of $470.8 million, or 26.1%, over total deposits of $1.80 billion at September 30, 2019. Deposit growth in the third quarter of 2020 was primarily due to an increase in noninterest bearing and interest bearing transaction deposits, offset partially by a decline in savings and money market and time deposits. The growth in noninterest bearing and interest bearing transaction 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:

     

     

    September 30, 2020

     

    June 30, 2020

     

    March 31, 2020

     

    December 31, 2019

     

    September 30, 2019

     

    (dollars in thousands)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Noninterest Bearing Transaction Deposits

     

    $

    685,773

     

    $

    648,869

     

    $

    476,217

     

    $

    447,509

     

    $

    478,493

     

    Interest Bearing Transaction Deposits

     

     

    322,253

     

     

    285,386

     

     

    255,483

     

     

    264,627

     

     

    243,889

     

    Savings and Money Market Deposits

     

     

    498,397

     

     

    516,543

     

     

    514,113

     

     

    516,785

     

     

    470,518

     

    Time Deposits

     

     

    363,897

     

     

    382,187

     

     

    393,340

     

     

    360,027

     

     

    363,308

     

    Brokered Deposits

     

     

    402,724

     

     

    409,066

     

     

    260,974

     

     

    234,362

     

     

    246,028

     

    Total Deposits

     

    $

    2,273,044

     

    $

    2,242,051

     

    $

    1,900,127

     

    $

    1,823,310

     

    $

    1,802,236

     

    Total shareholders’ equity at September 30, 2020 was $265.4 million, an increase of $8.2 million, or 3.2%, over total shareholders’ equity of $257.2 million at June 30, 2020, and an increase of $29.4 million, or 12.4%, over total shareholders’ equity of $236.1 million at September 30, 2019. The linked-quarter increase was due to net income retained and an increase in unrealized gains in the securities portfolio, partially offset by stock repurchases made under the Company’s stock repurchase program. The year-over-year increase was due to net income retained, partially offset by stock repurchases made in the first and third quarters of 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 buyback program late in the third quarter of 2020. The Company remains committed to maintaining strong capital levels while enhancing shareholder value as it strategically executes its stock buyback program in this fluid economic environment. During the third quarter of 2020, the Company repurchased 137,984 shares of its common stock. Shares were repurchased at a weighted average price of $9.39 for a total of $1.3 million.

    Tangible book value per share, a non-GAAP financial measure, was $9.13 as of September 30, 2020, an increase of 3.7% from $8.80 as of June 30, 2020, and an increase of 13.0% from $8.08 as of September 30, 2019.

    Asset Quality

    The Company has not yet witnessed direct impacts of the COVID-19 pandemic in the Company’s asset quality metrics; however, management believes that the economic uncertainty that exists may begin to negatively impact the portfolio in future quarters. Annualized net charge-offs (recoveries) as a percent of average loans for the third quarter of 2020 were 0.00%, compared to (0.01)% for the second quarter of 2020, and 0.03% for the third quarter of 2019. At September 30, 2020, the Company’s nonperforming assets, which include nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $433,000, or 0.02% of total assets, as compared to $602,000, or 0.02% of total assets at June 30, 2020, and $828,000 or 0.04% of total assets at September 30, 2019.

    The Company has increased oversight and analysis of all segments within 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 September 30, 2020, were $50.9 million, compared to $45.7 million at June 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 warrant a substandard risk rating at September 30, 2020 were $16.1 million, compared to $3.7 million at June 30, 2020.

    The following table presents a summary of asset quality measurements at the dates indicated:

     

     

    As of and for the Three Months Ended

     

     

     

    September 30,

     

    June 30

     

    March 31

     

    December 31,

     

    September 30,

     

    (dollars in thousands)

     

    2020

     

    2020

     

    2020

     

    2019

     

    2019

     

    Selected Asset Quality Data

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Loans 30-89 Days Past Due

     

    $

    458

     

    $

    153

     

    $

    21

     

    $

    403

     

    $

     

    Loans 30-89 Days Past Due to Total Loans

     

     

    0.02

    %

     

    0.01

    %

     

    0.00

    %

     

    0.02

    %

     

    0.00

    %

    Nonperforming Loans

     

    $

    433

     

    $

    602

     

    $

    606

     

    $

    461

     

    $

    828

     

    Nonperforming Loans to Total Loans

     

     

    0.02

    %

     

    0.03

    %

     

    0.03

    %

     

    0.02

    %

     

    0.04

    %

    Foreclosed Assets

     

    $

     

    $

     

    $

     

    $

     

    $

     

    Nonaccrual Loans to Total Loans

     

     

    0.02

    %

     

    0.03

    %

     

    0.03

    %

     

    0.02

    %

     

    0.04

    %

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

     

     

    0.02

     

     

    0.03

     

     

    0.03

     

     

    0.02

     

     

    0.04

     

    Nonperforming Assets (1)

     

    $

    433

     

    $

    602

     

    $

    606

     

    $

    461

     

    $

    828

     

    Nonperforming Assets to Total Assets (1)

     

     

    0.02

    %

     

    0.02

    %

     

    0.03

    %

     

    0.02

    %

     

    0.04

    %

    Allowance for Loan Losses to Total Loans

     

     

    1.39

     

     

    1.26

     

     

    1.23

     

     

    1.18

     

     

    1.20

     

    Allowance for Loan Losses to Total Loans, Excluding PPP Loans

     

     

    1.51

     

     

    1.37

     

     

    N/A

     

     

    N/A

     

     

    N/A

     

    Allowance for Loans Losses to Nonperforming Loans

     

     

    7,247.34

     

     

    4,590.20

     

     

    4,056.93

     

     

    4,886.33

     

     

    2,671.98

     

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

     

     

    0.00

     

     

    (0.01)

     

     

    0.01

     

     

    0.04

     

     

    0.03

     

    __________________________________

    (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)

     

     

    September 30,

     

    December 31,

     

    September 30,

     

     

    2020

     

    2019

     

    2019

     

     

    (Unaudited)

     

     

     

     

    (Unaudited)

    ASSETS

     

     

     

     

     

     

     

     

     

    Cash and Cash Equivalents

     

    $

    91,510

     

    $

    31,935

     

    $

    89,619

    Bank-Owned Certificates of Deposit

     

     

    2,862

     

     

    2,654

     

     

    2,654

    Securities Available for Sale, at Fair Value

     

     

    373,955

     

     

    289,877

     

     

    263,803

    Loans, Net of Allowance for Loan Losses of $31,381 at September 30, 2020 (unaudited), $22,526 at December 31, 2019 and $22,124 at September 30, 2019 (unaudited)

     

     

    2,217,480

     

     

    1,884,000

     

     

    1,818,306

    Federal Home Loan Bank (FHLB) Stock, at Cost

     

     

    7,817

     

     

    7,824

     

     

    8,024

    Premises and Equipment, Net

     

     

    48,885

     

     

    27,628

     

     

    25,764

    Accrued Interest

     

     

    9,647

     

     

    6,775

     

     

    6,519

    Goodwill

     

     

    2,626

     

     

    2,626

     

     

    2,626

    Other Intangible Assets, Net

     

     

    718

     

     

    861

     

     

    909

    Other Assets

     

     

    19,064

     

     

    14,650

     

     

    14,115

    Total Assets

     

    $

    2,774,564

     

    $

    2,268,830

     

    $

    2,232,339

     

     

     

     

     

     

     

     

     

     

    LIABILITIES AND EQUITY

     

     

     

     

     

     

     

     

     

    LIABILITIES

     

     

     

     

     

     

     

     

     

    Deposits:

     

     

     

     

     

     

     

     

     

    Noninterest Bearing

     

    $

    685,773

     

    $

    447,509

     

    $

    478,493

    Interest Bearing

     

     

    1,587,271

     

     

    1,375,801

     

     

    1,323,743

    Total Deposits

     

     

    2,273,044

     

     

    1,823,310

     

     

    1,802,236

    Notes Payable

     

     

    11,500

     

     

    13,000

     

     

    13,500

    FHLB Advances

     

     

    127,500

     

     

    136,500

     

     

    141,500

    Subordinated Debentures, Net of Issuance Costs

     

     

    73,665

     

     

    24,733

     

     

    24,707

    Accrued Interest Payable

     

     

    2,082

     

     

    1,982

     

     

    1,763

    Other Liabilities

     

     

    21,341

     

     

    24,511

     

     

    12,574

    Total Liabilities

     

     

    2,509,132

     

     

    2,024,036

     

     

    1,996,280

     

     

     

     

     

     

     

     

     

     

    SHAREHOLDERS' EQUITY

     

     

     

     

     

     

     

     

     

    Preferred Stock- $0.01 par value

     

     

     

     

     

     

     

     

     

    Authorized 10,000,000; None Issued and Outstanding at September 30, 2020 (unaudited), December 31, 2019 and September 30, 2019 (unaudited)

     

     

     

     

     

     

    Common Stock- $0.01 par value

     

     

     

     

     

     

     

     

     

    Common Stock - Authorized 75,000,000; Issued and Outstanding 28,710,775 at September 30, 2020 (unaudited), 28,973,572 at December 31, 2019 and 28,781,162 at September 30, 2019 (unaudited)

     

     

    287

     

     

    290

     

     

    288

    Additional Paid-In Capital

     

     

    110,010

     

     

    112,093

     

     

    111,670

    Retained Earnings

     

     

    149,852

     

     

    127,637

     

     

    119,066

    Accumulated Other Comprehensive Income

     

     

    5,283

     

     

    4,774

     

     

    5,035

    Total Shareholders' Equity

     

     

    265,432

     

     

    244,794

     

     

    236,059

    Total Liabilities and Equity

     

    $

    2,774,564

     

    $

    2,268,830

     

    $

    2,232,339

     

    Bridgewater Bancshares, Inc. and Subsidiaries

    Consolidated Statements of Income

    (dollars in thousands, except per share data)

     

     

    Three Months Ended

     

    Nine Months Ended

     

     

    September 30,

     

    June 30,

     

    September 30,

     

    September 30,

     

    September 30,

     

     

    2020

     

    2020

     

    2019

     

    2020

     

    2019

     

     

    (Unaudited)

     

    (Unaudited)

     

    (Unaudited)

     

    (Unaudited)

     

    (Unaudited)

    INTEREST INCOME

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Loans, Including Fees

     

    $

    26,224

     

    $

    25,913

     

    $

    24,220

     

    $

    77,250

     

    $

    69,720

    Investment Securities

     

     

    2,100

     

     

    2,091

     

     

    1,910

     

     

    6,387

     

     

    5,739

    Other

     

     

    169

     

     

    162

     

     

    442

     

     

    490

     

     

    900

    Total Interest Income

     

     

    28,493

     

     

    28,166

     

     

    26,572

     

     

    84,127

     

     

    76,359

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    INTEREST EXPENSE

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Deposits

     

     

    4,840

     

     

    5,170

     

     

    6,209

     

     

    15,734

     

     

    17,932

    Notes Payable

     

     

    108

     

     

    111

     

     

    127

     

     

    334

     

     

    378

    FHLB Advances

     

     

    748

     

     

    1,064

     

     

    908

     

     

    2,839

     

     

    2,510

    Subordinated Debentures

     

     

    1,118

     

     

    479

     

     

    393

     

     

    1,990

     

     

    1,163

    Federal Funds Purchased

     

     

     

     

     

     

     

     

    107

     

     

    172

    Total Interest Expense

     

     

    6,814

     

     

    6,824

     

     

    7,637

     

     

    21,004

     

     

    22,155

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    NET INTEREST INCOME

     

     

    21,679

     

     

    21,342

     

     

    18,935

     

     

    63,123

     

     

    54,204

    Provision for Loan Losses

     

     

    3,750

     

     

    3,000

     

     

    900

     

     

    8,850

     

     

    2,100

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    NET INTEREST INCOME AFTER

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    PROVISION FOR LOAN LOSSES

     

     

    17,929

     

     

    18,342

     

     

    18,035

     

     

    54,273

     

     

    52,104

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    NONINTEREST INCOME

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Customer Service Fees

     

     

    200

     

     

    135

     

     

    184

     

     

    575

     

     

    564

    Net Gain on Sales of Available for Sale Securities

     

     

    109

     

     

    1,361

     

     

    58

     

     

    1,473

     

     

    516

    Net Gain on Sales of Foreclosed Assets

     

     

     

     

     

     

    69

     

     

     

     

    69

    Other Income

     

     

    848

     

     

    481

     

     

    635

     

     

    2,805

     

     

    1,565

    Total Noninterest Income

     

     

    1,157

     

     

    1,977

     

     

    946

     

     

    4,853

     

     

    2,714

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    NONINTEREST EXPENSE

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Salaries and Employee Benefits

     

     

    6,550

     

     

    6,348

     

     

    5,915

     

     

    19,352

     

     

    15,841

    Occupancy and Equipment

     

     

    894

     

     

    672

     

     

    761

     

     

    2,279

     

     

    2,202

    Other Expense

     

     

    2,228

     

     

    3,691

     

     

    2,408

     

     

    8,498

     

     

    8,400

    Total Noninterest Expense

     

     

    9,672

     

     

    10,711

     

     

    9,084

     

     

    30,129

     

     

    26,443

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    INCOME BEFORE INCOME TAXES

     

     

    9,414

     

     

    9,608

     

     

    9,897

     

     

    28,997

     

     

    28,375

    Provision for Income Taxes

     

     

    2,240

     

     

    2,010

     

     

    2,092

     

     

    6,782

     

     

    5,543

    NET INCOME

     

    $

    7,174

     

    $

    7,598

     

    $

    7,805

     

    $

    22,215

     

    $

    22,832

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    EARNINGS PER SHARE

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Basic

     

    $

    0.25

     

    $

    0.26

     

    $

    0.27

     

    $

    0.77

     

    $

    0.77

    Diluted

     

     

    0.25

     

     

    0.26

     

     

    0.27

     

     

    0.76

     

     

    0.76

    Dividends Paid Per Share

     

     

     

     

     

     

     

     

     

     

    Non-GAAP Financial Measures

    (dollars in thousands) (unaudited)

     

     

    For the Three Months Ended

     

     

    For the Nine Months Ended

     

     

     

    September 30,

     

    June 30,

     

    September 30,

     

     

    September 30,

     

    September 30,

     

     

     

    2020

     

    2020

     

    2019

     

     

    2020

     

    2019

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Efficiency Ratio

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Noninterest Expense

     

    $

    9,672

     

    $

    10,711

     

    $

    9,084

     

     

    $

    30,129

     

    $

    26,443

     

    Less: Amortization of Intangible Assets

     

     

    (48)

     

     

    (47)

     

     

    (48)

     

     

     

    (143)

     

     

    (143)

     

    Adjusted Noninterest Expense

     

    $

    9,624

     

    $

    10,664

     

    $

    9,036

     

     

    $

    29,986

     

    $

    26,300

     

    Net Interest Income

     

     

    21,679

     

     

    21,342

     

     

    18,935

     

     

     

    63,123

     

     

    54,204

     

    Noninterest Income

     

     

    1,157

     

     

    1,977

     

     

    946

     

     

     

    4,853

     

     

    2,714

     

    Less: Gain on Sales of Securities

     

     

    (109)

     

     

    (1,361)

     

     

    (58)

     

     

     

    (1,473)

     

     

    (516)

     

    Adjusted Operating Revenue

     

    $

    22,727

     

    $

    21,958

     

    $

    19,823

     

     

    $

    66,503

     

    $

    56,402

     

    Efficiency Ratio

     

     

    42.3

    %

     

    48.6

    %

     

    45.6

    %

     

     

    45.1

    %

     

    46.6

    %

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Adjusted Efficiency Ratio

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Noninterest Expense

     

    $

    9,672

     

    $

    10,711

     

    $

    9,084

     

     

    $

    30,129

     

    $

    26,443

     

    Less: Amortization of Tax Credit Investments

     

     

    (145)

     

     

    (362)

     

     

    (530)

     

     

     

    (592)

     

     

    (2,097)

     

    Less: FHLB Advance Prepayment Fees

     

     

     

     

    (1,430)

     

     

     

     

     

    (1,430)

     

     

     

    Less: Amortization of Intangible Assets

     

     

    (48)

     

     

    (47)

     

     

    (48)

     

     

     

    (143)

     

     

    (143)

     

    Adjusted Noninterest Expense

     

    $

    9,479

     

    $

    8,872

     

    $

    8,506

     

     

    $

    27,964

     

    $

    24,203

     

    Net Interest Income

     

     

    21,679

     

     

    21,342

     

     

    18,935

     

     

     

    63,123

     

     

    54,204

     

    Noninterest Income

     

     

    1,157

     

     

    1,977

     

     

    946

     

     

     

    4,853

     

     

    2,714

     

    Less: Gain on Sales of Securities

     

     

    (109)

     

     

    (1,361)

     

     

    (58)

     

     

     

    (1,473)

     

     

    (516)

     

    Adjusted Operating Revenue

     

    $

    22,727

     

    $

    21,958

     

    $

    19,823

     

     

    $

    66,503

     

    $

    56,402

     

    Adjusted Efficiency Ratio

     

     

    41.7

    %

     

    40.4

    %

     

    42.9

    %

     

     

    42.0

    %

     

    42.9

    %

     

     

    For the Three Months Ended

     

    For the Nine Months Ended

     

     

     

    September 30,

     

    June 30,

     

    September 30,

     

    September 30,

     

    September 30,

     

     

     

    2020

     

    2020

     

    2019

     

    2020

     

    2019

     

    Pre-Provision Net Revenue

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Noninterest Income

     

    $

    1,157

     

    $

    1,977

     

    $

    946

     

    $

    4,853

     

    $

    2,714

     

    Less: Gain on sales of Securities

     

     

    (109)

     

     

    (1,361)

     

     

    (58)

     

     

    (1,473)

     

     

    (516)

     

    Total Operating Noninterest Income

     

     

    1,048

     

     

    616

     

     

    888

     

     

    3,380

     

     

    2,198

     

    Plus: Net Interest income

     

     

    21,679

     

     

    21,342

     

     

    18,935

     

     

    63,123

     

     

    54,204

     

    Net Operating Revenue

     

    $

    22,727

     

    $

    21,958

     

    $

    19,823

     

    $

    66,503

     

    $

    56,402

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Noninterest Expense

     

    $

    9,672

     

    $

    10,711

     

    $

    9,084

     

    $

    30,129

     

    $

    26,443

     

    Less: Amortization of Tax Credit Investments

     

     

    (145)

     

     

    (362)

     

     

    (530)

     

     

    (592)

     

     

    (2,097)

     

    Less: FHLB Advance Prepayment Fees

     

     

     

     

    (1,430)

     

     

     

     

    (1,430)

     

     

     

    Total Operating Noninterest Expense

     

    $

    9,527

     

    $

    8,919

     

    $

    8,554

     

    $

    28,107

     

    $

    24,346

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Pre-Provision Net Revenue

     

    $

    13,200

     

    $

    13,039

     

    $

    11,269

     

    $

    38,396

     

    $

    32,056

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Plus:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Non-Operating Revenue Adjustments

     

     

    109

     

     

    1,361

     

     

    58

     

     

    1,473

     

     

    516

     

    Less:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Provision for Loan Losses

     

     

    3,750

     

     

    3,000

     

     

    900

     

     

    8,850

     

     

    2,100

     

    Non-Operating Expense Adjustments

     

     

    145

     

     

    1,792

     

     

    530

     

     

    2,022

     

     

    2,097

     

    Provision for Income Taxes

     

     

    2,240

     

     

    2,010

     

     

    2,092

     

     

    6,782

     

     

    5,543

     

    Net Income

     

    $

    7,174

     

    $

    7,598

     

    $

    7,805

     

    $

    22,215

     

    $

    22,832

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Average Assets

     

    $

    2,711,755

     

    $

    2,622,272

     

    $

    2,168,909

     

    $

    2,550,945

     

    $

    2,083,837

     

    Pre-Provision Net Revenue Return on Average Assets

     

     

    1.94

    %

     

    2.00

    %

     

    2.08

    %

     

    2.01

    %

     

    2.06

    %

     

     

    As of and for the Three Months Ended

     

     

    As of and for the Nine Months Ended

     

     

     

    September 30,

     

    June 30,

     

    September 30,

     

     

    September 30,

     

    September 30,

     

     

     

    2020

     

    2020

     

    2019

     

     

    2020

     

    2019

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Tangible Common Equity and Tangible Common Equity/Tangible Assets

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Common Equity

     

    $

    265,432

     

    $

    257,190

     

    $

    236,059

     

     

     

     

     

     

     

     

    Less: Intangible Assets

     

     

    (3,344)

     

     

    (3,391)

     

     

    (3,535)

     

     

     

     

     

     

     

     

    Tangible Common Equity

     

    $

    262,088

     

    $

    253,799

     

    $

    232,524

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total Assets

     

    $

    2,774,564

     

    $

    2,754,463

     

    $

    2,232,339

     

     

     

     

     

     

     

     

    Less: Intangible Assets

     

     

    (3,344)

     

     

    (3,391)

     

     

    (3,535)

     

     

     

     

     

     

     

     

    Tangible Assets

     

    $

    2,771,220

     

    $

    2,751,072

     

    $

    2,228,804

     

     

     

     

     

     

     

     

    Tangible Common Equity/Tangible Assets

     

     

    9.46

    %

     

    9.23

    %

     

    10.43

    %

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Tangible Book Value Per Share

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Book Value Per Common Share

     

    $

    9.25

     

    $

    8.92

     

    $

    8.20

     

     

     

     

     

     

     

     

    Less: Effects of Intangible Assets

     

     

    (0.12)

     

     

    (0.12)

     

     

    (0.12)

     

     

     

     

     

     

     

     

    Tangible Book Value Per Common Share

     

    $

    9.13

     

    $

    8.80

     

    $

    8.08

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Average Tangible Common Equity

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Average Common Equity

     

    $

    263,195

     

    $

    255,109

     

    $

    232,590

     

     

    $

    256,393

     

    $

    229,961

     

    Less: Effects of Average Intangible Assets

     

     

    (3,371)

     

     

    (3,419)

     

     

    (3,558)

     

     

     

    (3,418)

     

     

    (3,605)

     

    Average Tangible Common Equity

     

    $

    259,824

     

    $

    251,690

     

    $

    229,032

     

     

    $

    252,975

     

    $

    226,356

     

     

    Bridgewater Bancshares, Inc. and Subsidiaries

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

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

     

     

    For the Nine Months Ended

     

     

     

    September 30, 2020

     

    September 30, 2019

     

     

     

    Average

     

    Interest

     

    Yield/

     

    Average

     

    Interest

     

    Yield/

     

     

     

    Balance

     

    & Fees

     

    Rate

     

    Balance

     

    & Fees

     

    Rate

     

    (dollars in thousands)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Interest Earning Assets:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Cash Investments

     

    $

    80,186

     

    $

    138

     

    0.23

    %

    $

    46,158

     

    $

    604

     

    1.75

    %

    Investment Securities:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Taxable Investment Securities

     

     

    216,332

     

     

    4,080

     

    2.52

     

     

    143,583

     

     

    3,126

     

    2.91

     

    Tax-Exempt Investment Securities (1)

     

     

    89,674

     

     

    2,920

     

    4.35

     

     

    103,032

     

     

    3,307

     

    4.29

     

    Total Investment Securities

     

     

    306,006

     

     

    7,000

     

    3.06

     

     

    246,615

     

     

    6,433

     

    3.49

     

    Paycheck Protection Program Loans (2)

     

     

    107,541

     

     

    2,046

     

    2.54

     

     

     

     

     

     

    Loans (1)(2)

     

     

    1,997,553

     

     

    75,301

     

    5.04

     

     

    1,756,855

     

     

    69,720

     

    5.31

     

    Total Loans

     

     

    2,105,094

     

     

    77,347

     

    4.91

     

     

    1,756,855

     

     

    69,720

     

    5.31

     

    Federal Home Loan Bank Stock

     

     

    9,541

     

     

    352

     

    4.93

     

     

    7,906

     

     

    296

     

    5.00

     

    Total Interest Earning Assets

     

     

    2,500,827

     

     

    84,837

     

    4.53

    %

     

    2,057,534

     

     

    77,053

     

    5.01

    %

    Noninterest Earning Assets

     

     

    50,118

     

     

     

     

     

     

     

    26,303

     

     

     

     

     

     

    Total Assets

     

    $

    2,550,945

     

     

     

     

     

     

    $

    2,083,837

     

     

     

     

     

     

    Interest Bearing Liabilities:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Deposits:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Interest Bearing Transaction Deposits

     

     

    275,303

     

     

    1,207

     

    0.58

    %

     

    211,784

     

     

    1,130

     

    0.71

    %

    Savings and Money Market Deposits

     

     

    518,648

     

     

    4,338

     

    1.12

     

     

    433,430

     

     

    5,784

     

    1.78

     

    Time Deposits

     

     

    378,133

     

     

    6,199

     

    2.19

     

     

    347,731

     

     

    6,230

     

    2.40

     

    Brokered Deposits

     

     

    319,615

     

     

    3,990

     

    1.67

     

     

    266,976

     

     

    4,788

     

    2.40

     

    Total Interest Bearing Deposits

     

     

    1,491,699

     

     

    15,734

     

    1.41

     

     

    1,259,921

     

     

    17,932

     

    1.90

     

    Federal Funds Purchased

     

     

    8,302

     

     

    107

     

    1.73

     

     

    8,923

     

     

    172

     

    2.58

     

    Notes Payable

     

     

    12,000

     

     

    334

     

    3.72

     

     

    14,000

     

     

    378

     

    3.61

     

    FHLB Advances

     

     

    165,088

     

     

    2,839

     

    2.30

     

     

    133,097

     

     

    2,510

     

    2.52

     

    Subordinated Debentures

     

     

    43,318

     

     

    1,990

     

    6.14

     

     

    24,673

     

     

    1,163

     

    6.30

     

    Total Interest Bearing Liabilities

     

     

    1,720,407

     

     

    21,004

     

    1.63

    %

     

    1,440,614

     

     

    22,155

     

    2.06

    %

    Noninterest Bearing Liabilities:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Noninterest Bearing Transaction Deposits

     

     

    554,513

     

     

     

     

     

     

     

    401,973

     

     

     

     

     

     

    Other Noninterest Bearing Liabilities

     

     

    19,632

     

     

     

     

     

     

     

    11,289

     

     

     

     

     

     

    Total Noninterest Bearing Liabilities

     

     

    574,145

     

     

     

     

     

     

     

    413,262

     

     

     

     

     

     

    Shareholders' Equity

     

     

    256,393

     

     

     

     

     

     

     

    229,961

     

     

     

     

     

     

    Total Liabilities and Shareholders' Equity

     

    $

    2,550,945

     

     

     

     

     

     

    $

    2,083,837

     

     

     

     

     

     

    Net Interest Income / Interest Rate Spread

     

     

     

     

     

    63,833

     

    2.90

    %

     

     

     

     

    54,898

     

    2.95

    %

    Net Interest Margin (3)

     

     

     

     

     

     

     

    3.41

    %

     

     

     

     

     

     

    3.57