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

    Company Release - 10/28/2021

    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 $11.5 million for the third quarter of 2021, a 4.7% increase over net income of $11.0 million for the second quarter of 2021, and a 60.4% increase over net income of $7.2 million for the third quarter of 2020. Net income per diluted common share for the third quarter of 2021 was $0.40, a 4.8% increase compared to $0.38 per diluted common share for the second quarter of 2021, and a 60.8% increase, compared to $0.25 per diluted common share for the same period in 2020.

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

    Third Quarter 2021 Financial Results

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Diluted

     

     

    Nonperforming

     

    Adjusted

    ROA

     

    PPNR ROA (1)

     

    ROE

     

    earnings per share

     

     

    assets to total assets

     

    efficiency ratio (1)

    1.37

    %

     

    2.09

    %

     

    13.81

    %

     

    $

    0.40

     

     

    0.02

    %

     

    41.5

    %

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

    Third Quarter 2021 Highlights

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

       

    Key Financial Measures

     

     

     

     

     

     

     

     

     

     

     

     

     

    As of and for the Three Months Ended

     

    As of and for the Nine Months Ended

     

     

    September 30,

     

    June 30,

     

    September 30,

     

    September 30,

     

    September 30,

     

     

    2021

     

    2021

     

    2020

     

    2021

     

    2020

    Per Common Share Data

     

     

     

     

     

     

     

     

     

     

    Basic Earnings Per Share

     

    $

    0.41

     

     

    $

    0.39

     

     

    $

    0.25

     

     

    $

    1.18

     

     

    $

    0.77

     

    Diluted Earnings Per Share

     

     

    0.40

     

     

     

    0.38

     

     

     

    0.25

     

     

     

    1.14

     

     

     

    0.76

     

    Adjusted Diluted Earnings Per Share (1)

     

     

    0.41

     

     

     

    0.38

     

     

     

    0.25

     

     

     

    1.16

     

     

     

    0.80

     

    Book Value Per Share

     

     

    10.73

     

     

     

    10.33

     

     

     

    9.25

     

     

     

    10.73

     

     

     

    9.25

     

    Tangible Book Value Per Share (1)

     

     

    10.62

     

     

     

    10.22

     

     

     

    9.13

     

     

     

    10.62

     

     

     

    9.13

     

    Basic Weighted Average Shares Outstanding

     

     

    28,047,280

     

     

     

    28,040,762

     

     

     

    28,683,855

     

     

     

    28,035,246

     

     

     

    28,717,142

     

    Diluted Weighted Average Shares Outstanding

     

     

    29,110,547

     

     

     

    29,128,181

     

     

     

    29,174,601

     

     

     

    29,077,850

     

     

     

    29,300,763

     

    Shares Outstanding at Period End

     

     

    28,066,822

     

     

     

    28,162,777

     

     

     

    28,710,775

     

     

     

    28,066,822

     

     

     

    28,710,775

     

     

     

     

     

     

     

     

     

     

     

     

    Selected Performance Ratios

     

     

     

     

     

     

     

     

     

     

    Return on Average Assets (Annualized)

     

     

    1.37

    %

     

     

    1.43

    %

     

     

    1.05

    %

     

     

    1.42

    %

     

     

    1.16

    %

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

     

     

    2.09

     

     

     

    2.07

     

     

     

    1.94

     

     

     

    2.10

     

     

     

    2.01

     

    Return on Average Shareholders' Equity (Annualized)

     

     

    13.81

     

     

     

    15.40

     

     

     

    10.84

     

     

     

    14.95

     

     

     

    11.57

     

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

     

     

    15.47

     

     

     

    15.58

     

     

     

    10.98

     

     

     

    15.69

     

     

     

    11.73

     

    Yield on Interest Earning Assets

     

     

    4.14

     

     

     

    4.17

     

     

     

    4.30

     

     

     

    4.20

     

     

     

    4.53

     

    Yield on Total Loans, Gross

     

     

    4.65

     

     

     

    4.56

     

     

     

    4.73

     

     

     

    4.65

     

     

     

    4.91

     

    Cost of Interest Bearing Liabilities

     

     

    0.88

     

     

     

    0.96

     

     

     

    1.50

     

     

     

    0.95

     

     

     

    1.63

     

    Cost of Total Deposits

     

     

    0.48

     

     

     

    0.54

     

     

     

    0.87

     

     

     

    0.53

     

     

     

    1.03

     

    Net Interest Margin (2)

     

     

    3.54

     

     

     

    3.52

     

     

     

    3.28

     

     

     

    3.55

     

     

     

    3.41

     

    Core Net Interest Margin (1)(2)

     

     

    3.22

     

     

     

    3.31

     

     

     

    3.14

     

     

     

    3.29

     

     

     

    3.24

     

    Efficiency Ratio (1)

     

     

    43.9

     

     

     

    42.0

     

     

     

    42.3

     

     

     

    42.4

     

     

     

    45.1

     

    Adjusted Efficiency Ratio (1)

     

     

    41.5

     

     

     

    41.5

     

     

     

    41.7

     

     

     

    41.3

     

     

     

    42.0

     

    Noninterest Expense to Average Assets (Annualized)

     

     

    1.58

     

     

     

    1.50

     

     

     

    1.42

     

     

     

    1.53

     

     

     

    1.58

     

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

     

     

    1.49

     

     

     

    1.48

     

     

     

    1.40

     

     

     

    1.49

     

     

     

    1.47

     

    Loan to Deposit Ratio

     

     

    95.0

     

     

     

    95.3

     

     

     

    99.4

     

     

     

     

     

    Core Deposits to Total Deposits (3)

     

     

    83.3

     

     

     

    81.2

     

     

     

    77.1

     

     

     

     

     

    Tangible Common Equity to Tangible Assets (1)

     

     

    8.81

     

     

     

    9.10

     

     

     

    9.46

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Capital Ratios (Bank Only) (4)

     

     

     

     

     

     

     

     

     

     

    Tier 1 Leverage Ratio

     

     

    10.96

    %

     

     

    10.57

    %

     

     

    11.24

    %

     

     

     

     

    Common Equity Tier 1 Risk-based Capital Ratio

     

     

    11.88

     

     

     

    11.24

     

     

     

    12.60

     

     

     

     

     

    Tier 1 Risk-based Capital Ratio

     

     

    11.88

     

     

     

    11.24

     

     

     

    12.60

     

     

     

     

     

    Total Risk-based Capital Ratio

     

     

    13.13

     

     

     

    12.49

     

     

     

    13.85

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Capital Ratios (Consolidated) (4)

     

     

     

     

     

     

     

     

     

     

    Tier 1 Leverage Ratio

     

     

    10.70

    %

     

     

    9.08

    %

     

     

    9.83

    %

     

     

     

     

    Common Equity Tier 1 Risk-based Capital Ratio

     

     

    9.47

     

     

     

    9.67

     

     

     

    11.03

     

     

     

     

     

    Tier 1 Risk-based Capital Ratio

     

     

    11.65

     

     

     

    9.67

     

     

     

    11.03

     

     

     

     

     

    Total Risk-based Capital Ratio

     

     

    15.93

     

     

     

    13.49

     

     

     

    15.45

     

     

     

     

     

         

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

    (2) Amounts calculated on a tax-equivalent basis using the statutory federal tax rate of 21%.

    (3) Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000.

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

    Selected Financial Data

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    September 30,

     

    June 30,

     

    March 31,

     

    December 31,

     

    September 30,

    (dollars in thousands)

     

    2021

     

    2021

     

    2021

     

    2020

     

    2020

    Selected Balance Sheet Data

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total Assets

     

    $

    3,389,125

     

    $

    3,162,612

     

    $

    3,072,359

     

    $

    2,927,345

     

    $

    2,774,564

    Total Loans, Gross

     

     

    2,712,012

     

     

    2,594,186

     

     

    2,426,123

     

     

    2,326,428

     

     

    2,259,228

    Allowance for Loan Losses

     

     

    38,901

     

     

    37,591

     

     

    35,987

     

     

    34,841

     

     

    31,381

    Goodwill and Other Intangibles

     

     

    3,153

     

     

    3,200

     

     

    3,248

     

     

    3,296

     

     

    3,344

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Deposits

     

     

    2,854,157

     

     

    2,720,906

     

     

    2,638,654

     

     

    2,501,636

     

     

    2,273,044

    Tangible Common Equity (1)

     

     

    298,135

     

     

    287,630

     

     

    275,923

     

     

    262,109

     

     

    262,088

    Total Shareholders' Equity

     

     

    367,803

     

     

    290,830

     

     

    279,171

     

     

    265,405

     

     

    265,432

    Average Total Assets - Quarter-to-Date

     

     

    3,332,301

     

     

    3,076,712

     

     

    2,940,262

     

     

    2,816,032

     

     

    2,711,755

    Average Shareholders' Equity - Quarter-to-Date

     

     

    330,604

     

     

    286,311

     

     

    272,729

     

     

    265,716

     

     

    263,195

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

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    For the Three Months Ended

     

    For the Nine Months Ended

     

     

    September 30,

     

    June 30,

     

    September 30,

     

    September 30,

     

    September 30,

    (dollars in thousands)

     

    2021

     

    2021

     

    2020

     

    2021

     

    2020

    Selected Income Statement Data

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Interest Income

     

    $

    33,517

     

    $

    31,147

     

    $

    28,493

     

    $

    95,104

     

    $

    84,127

    Interest Expense

     

     

    4,844

     

     

    4,859

     

     

    6,814

     

     

    14,748

     

     

    21,004

    Net Interest Income

     

     

    28,673

     

     

    26,288

     

     

    21,679

     

     

    80,356

     

     

    63,123

    Provision for Loan Losses

     

     

    1,300

     

     

    1,600

     

     

    3,750

     

     

    4,000

     

     

    8,850

    Net Interest Income after Provision for Loan Losses

     

     

    27,373

     

     

    24,688

     

     

    17,929

     

     

    76,356

     

     

    54,273

    Noninterest Income

     

     

    1,410

     

     

    1,603

     

     

    1,157

     

     

    4,021

     

     

    4,853

    Noninterest Expense

     

     

    13,236

     

     

    11,477

     

     

    9,672

     

     

    35,636

     

     

    30,129

    Income Before Income Taxes

     

     

    15,547

     

     

    14,814

     

     

    9,414

     

     

    44,741

     

     

    28,997

    Provision for Income Taxes

     

     

    4,038

     

     

    3,821

     

     

    2,240

     

     

    11,568

     

     

    6,782

    Net Income

     

    $

    11,509

     

    $

    10,993

     

    $

    7,174

     

    $

    33,173

     

    $

    22,215

    Income Statement

    Net Interest Income

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

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

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

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

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Originated

     

    Outstanding

     

    Program Lifetime

     

     

    Number

     

    Principal

     

    Number

     

    Principal

     

    Net Origination

     

    Net Origination

    (dollars in thousands)

     

    of Loans

     

    Balance

     

    of Loans

     

    Balance

     

    Fees Generated

     

    Fees Earned

    Round One PPP Loans

     

     

    1,200

     

    $

    181,600

     

     

    72

     

    $

    6,715

     

    $

    5,706

     

    $

    5,624

    Round Two PPP Loans

     

     

    651

     

     

    78,386

     

     

    301

     

     

    47,475

     

     

    3,544

     

     

    1,769

    Totals

     

     

    1,851

     

    $

    259,986

     

     

    373

     

    $

    54,190

     

    $

    9,250

     

    $

    7,393

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

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

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

     

     

     

     

     

     

     

     

     

     

     

     

     

    Three Months Ended

     

     

    September 30, 2021

     

    June 30, 2021

     

    March 31, 2021

     

    December 31, 2020

     

    September 30, 2020

    Interest

     

    4.28

    %

     

    4.37

    %

     

    4.50

    %

     

    4.59

    %

     

    4.69

    %

    Fees

     

    0.23

     

     

    0.17

     

     

    0.22

     

     

    0.28

     

     

    0.24

     

    Yield on Loans, Excluding PPP Loans

     

    4.51

    %

     

    4.54

    %

     

    4.72

    %

     

    4.87

    %

     

    4.93

    %

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

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

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

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    For the Three Months Ended

     

     

    September 30, 2021

     

    June 30, 2021

     

    September 30, 2020

     

     

    Average

     

    Interest

     

    Yield/

     

    Average

     

    Interest

     

    Yield/

     

    Average

     

    Interest

     

    Yield/

     

     

    Balance

     

    & Fees

     

    Rate

     

    Balance

     

    & Fees

     

    Rate

     

    Balance

     

    & Fees

     

    Rate

    (dollars in thousands)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Interest Earning Assets:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Cash Investments

     

    $

    187,405

     

    $

    67

     

     

    0.14

    %

     

    $

    88,067

     

    $

    33

     

     

    0.15

    %

     

    $

    101,787

     

    $

    42

     

     

    0.16

    %

    Investment Securities:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Taxable Investment Securities

     

     

    314,367

     

     

    1,751

     

     

    2.21

     

     

     

    314,049

     

     

    1,647

     

     

    2.10

     

     

     

    256,808

     

     

    1,389

     

     

    2.15

     

    Tax-Exempt Investment Securities (1)

     

     

    71,801

     

     

    737

     

     

    4.07

     

     

     

    77,029

     

     

    842

     

     

    4.38

     

     

     

    82,579

     

     

    900

     

     

    4.33

     

    Total Investment Securities

     

     

    386,168

     

     

    2,488

     

     

    2.56

     

     

     

    391,078

     

     

    2,489

     

     

    2.55

     

     

     

    339,387

     

     

    2,289

     

     

    2.68

     

    Paycheck Protection Program Loans (2)

     

     

    76,006

     

     

    1,753

     

     

    9.15

     

     

     

    149,312

     

     

    1,767

     

     

    4.75

     

     

     

    181,397

     

     

    1,173

     

     

    2.57

     

    Loans (1)(2)

     

     

    2,579,021

     

     

    29,348

     

     

    4.51

     

     

     

    2,384,759

     

     

    27,011

     

     

    4.54

     

     

     

    2,025,410

     

     

    25,081

     

     

    4.93

     

    Total Loans

     

     

    2,655,027

     

     

    31,101

     

     

    4.65

     

     

     

    2,534,071

     

     

    28,778

     

     

    4.56

     

     

     

    2,206,807

     

     

    26,254

     

     

    4.73

     

    Federal Home Loan Bank Stock

     

     

    5,701

     

     

    68

     

     

    4.65

     

     

     

    6,221

     

     

    54

     

     

    3.51

     

     

     

    7,901

     

     

    127

     

     

    6.38

     

    Total Interest Earning Assets

     

     

    3,234,301

     

     

    33,724

     

     

    4.14

    %

     

     

    3,019,437

     

     

    31,354

     

     

    4.17

    %

     

     

    2,655,882

     

     

    28,712

     

     

    4.30

    %

    Noninterest Earning Assets

     

     

    98,000

     

     

     

     

     

     

    57,275

     

     

     

     

     

     

    55,873

     

     

     

     

    Total Assets

     

    $

    3,332,301

     

     

     

     

     

    $

    3,076,712

     

     

     

     

     

    $

    2,711,755

     

     

     

     

    Interest Bearing Liabilities:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Deposits:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Interest Bearing Transaction Deposits

     

    $

    479,580

     

    $

    562

     

     

    0.47

    %

     

    $

    421,132

     

    $

    520

     

     

    0.50

    %

     

    $

    306,162

     

    $

    400

     

     

    0.52

    %

    Savings and Money Market Deposits

     

     

    801,354

     

     

    904

     

     

    0.45

     

     

     

    764,632

     

     

    940

     

     

    0.49

     

     

     

    501,246

     

     

    1,106

     

     

    0.88

     

    Time Deposits

     

     

    318,222

     

     

    928

     

     

    1.16

     

     

     

    332,346

     

     

    1,075

     

     

    1.30

     

     

     

    369,975

     

     

    1,899

     

     

    2.04

     

    Brokered Deposits

     

     

    440,167

     

     

    1,023

     

     

    0.92

     

     

     

    379,768

     

     

    978

     

     

    1.03

     

     

     

    419,744

     

     

    1,435

     

     

    1.36

     

    Total Interest Bearing Deposits

     

     

    2,039,323

     

     

    3,417

     

     

    0.66

     

     

     

    1,897,878

     

     

    3,513

     

     

    0.74

     

     

     

    1,597,127

     

     

    4,840

     

     

    1.21

     

    Federal Funds Purchased

     

     

     

     

     

     

     

     

     

    9,932

     

     

    6

     

     

    0.24

     

     

     

    152

     

     

     

     

    0.33

     

    Notes Payable

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    11,500

     

     

    108

     

     

    3.74

     

    FHLB Advances

     

     

    54,130

     

     

    213

     

     

    1.56

     

     

     

    57,500

     

     

    228

     

     

    1.59

     

     

     

    129,457

     

     

    748

     

     

    2.30

     

    Subordinated Debentures

     

     

    91,337

     

     

    1,214

     

     

    5.27

     

     

     

    73,862

     

     

    1,112

     

     

    6.04

     

     

     

    73,649

     

     

    1,118

     

     

    6.04

     

    Total Interest Bearing Liabilities

     

     

    2,184,790

     

     

    4,844

     

     

    0.88

    %

     

     

    2,039,172

     

     

    4,859

     

     

    0.96

    %

     

     

    1,811,885

     

     

    6,814

     

     

    1.50

    %

    Noninterest Bearing Liabilities:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Noninterest Bearing Transaction Deposits

     

     

    784,148

     

     

     

     

     

     

    732,299

     

     

     

     

     

     

    615,214

     

     

     

     

    Other Noninterest Bearing Liabilities

     

     

    32,759

     

     

     

     

     

     

    18,930

     

     

     

     

     

     

    21,461

     

     

     

     

    Total Noninterest Bearing Liabilities

     

     

    816,907

     

     

     

     

     

     

    751,229

     

     

     

     

     

     

    636,675

     

     

     

     

    Shareholders' Equity

     

     

    330,604

     

     

     

     

     

     

    286,311

     

     

     

     

     

     

    263,195

     

     

     

     

    Total Liabilities and Shareholders' Equity

     

    $

    3,332,301

     

     

     

     

     

    $

    3,076,712

     

     

     

     

     

    $

    2,711,755

     

     

     

     

    Net Interest Income / Interest Rate Spread

     

     

     

     

    28,880

     

     

    3.26

    %

     

     

     

     

    26,495

     

     

    3.21

    %

     

     

     

     

    21,898

     

     

    2.80

    %

    Net Interest Margin (3)

     

     

     

     

     

    3.54

    %

     

     

     

     

     

    3.52

    %

     

     

     

     

     

    3.28

    %

    Taxable Equivalent Adjustment:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Tax-Exempt Investment Securities and Loans

     

     

     

     

    (207

    )

     

     

     

     

     

     

    (207

    )

     

     

     

     

     

     

    (219

    )

     

     

    Net Interest Income

     

     

     

    $

    28,673

     

     

     

     

     

     

    $

    26,288

     

     

     

     

     

     

    $

    21,679

     

     

     

     
    (1) Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a statutory federal income tax rate of 21%.
    (2) Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.
    (3) Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

    Provision for Loan Losses

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

    As an emerging growth company, the Company is not subject to Accounting Standards Update No. 2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments,“ or CECL, until January 1, 2023.

    The following table presents the activity in the Company’s allowance for loan losses for the periods indicated:

     

     

     

     

     

     

     

     

     

     

     

     

     

    Three Months Ended

     

    Nine Months Ended

     

     

    September 30,

     

    June 30,

     

    September 30,

     

    September 30,

     

    September 30,

    (dollars in thousands)

     

    2021

     

    2021

     

    2020

     

    2021

     

    2020

    Balance at Beginning of Period

     

    $

    37,591

     

     

    $

    35,987

     

     

    $

    27,633

     

     

    $

    34,841

     

     

    $

    22,526

     

    Provision for Loan Losses

     

     

    1,300

     

     

     

    1,600

     

     

     

    3,750

     

     

     

    4,000

     

     

     

    8,850

     

    Charge-offs

     

     

    (20

    )

     

     

    (3

    )

     

     

    (6

    )

     

     

    (37

    )

     

     

    (54

    )

    Recoveries

     

     

    30

     

     

     

    7

     

     

     

    4

     

     

     

    97

     

     

     

    59

     

    Balance at End of Period

     

    $

    38,901

     

     

    $

    37,591

     

     

    $

    31,381

     

     

    $

    38,901

     

     

    $

    31,381

     

    Noninterest Income

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

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

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Three Months Ended

     

    Nine Months Ended

     

     

    September 30,

     

    June 30,

     

    September 30,

     

    September 30,

     

    September 30,

    (dollars in thousands)

     

    2021

     

    2021

     

    2020

     

    2021

     

    2020

    Noninterest Income:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Customer Service Fees

     

    $

    268

     

    $

    231

     

    $

    200

     

    $

    733

     

    $

    575

    Net Gain on Sales of Securities

     

     

    48

     

     

    702

     

     

    109

     

     

    750

     

     

    1,473

    Letter of Credit Fees

     

     

    577

     

     

    231

     

     

    487

     

     

    1,135

     

     

    1,026

    Debit Card Interchange Fees

     

     

    143

     

     

    141

     

     

    119

     

     

    414

     

     

    310

    Swap Fees

     

     

     

     

     

     

     

     

     

     

    907

    Other Income

     

     

    374

     

     

    298

     

     

    242

     

     

    989

     

     

    562

    Totals

     

    $

    1,410

     

    $

    1,603

     

    $

    1,157

     

    $

    4,021

     

    $

    4,853

    Noninterest Expense

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

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

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Three Months Ended

     

    Nine Months Ended

     

     

    September 30,

     

    June 30,

     

    September 30,

     

    September 30,

     

    September 30,

    (dollars in thousands)

     

    2021

     

    2021

     

    2020

     

    2021

     

    2020

    Noninterest Expense:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Salaries and Employee Benefits

     

    $

    8,309

     

    $

    7,512

     

    $

    6,550

     

    $

    22,923

     

    $

    19,352

    Occupancy and Equipment

     

     

    942

     

     

    980

     

     

    894

     

     

    2,977

     

     

    2,279

    FDIC Insurance Assessment

     

     

    355

     

     

    290

     

     

    160

     

     

    960

     

     

    518

    Data Processing

     

     

    325

     

     

    300

     

     

    267

     

     

    916

     

     

    734

    Professional and Consulting Fees

     

     

    708

     

     

    552

     

     

    492

     

     

    1,804

     

     

    1,400

    Information Technology and Telecommunications

     

     

    598

     

     

    549

     

     

    385

     

     

    1,609

     

     

    977

    Marketing and Advertising

     

     

    418

     

     

    314

     

     

    94

     

     

    1,018

     

     

    645

    Intangible Asset Amortization

     

     

    48

     

     

    47

     

     

    48

     

     

    143

     

     

    143

    Amortization of Tax Credit Investments

     

     

    152

     

     

    140

     

     

    145

     

     

    410

     

     

    592

    Debt Prepayment Fees

     

     

    582

     

     

     

     

     

     

    582

     

     

    1,430

    Other Expense

     

     

    799

     

     

    793

     

     

    637

     

     

    2,294

     

     

    2,059

    Totals

     

    $

    13,236

     

    $

    11,477

     

    $

    9,672

     

    $

    35,636

     

    $

    30,129

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

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

    Income Taxes

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

    Balance Sheet

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

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

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

     

     

     

     

     

     

     

     

     

     

     

     

     

    September 30, 2021

     

    June 30, 2021

     

    March 31, 2021

     

    December 31, 2020

     

    September 30, 2020

    (dollars in thousands)

     

     

     

     

     

     

     

     

     

     

    Commercial

     

    $

    350,081

     

     

    $

    321,474

     

     

    $

    301,023

     

     

    $

    304,220

     

     

    $

    287,254

     

    Paycheck Protection Program

     

     

    54,190

     

     

     

    99,072

     

     

     

    163,258

     

     

     

    138,454

     

     

     

    181,596

     

    Construction and Land Development

     

     

    257,167

     

     

     

    251,573

     

     

     

    193,372

     

     

     

    170,217

     

     

     

    175,882

     

    Real Estate Mortgage:

     

     

     

     

     

     

     

     

     

     

    1 - 4 Family Mortgage

     

     

    290,535

     

     

     

    277,943

     

     

     

    294,964

     

     

     

    294,479

     

     

     

    286,089

     

    Multifamily

     

     

    865,172

     

     

     

    790,275

     

     

     

    665,415

     

     

     

    626,465

     

     

     

    585,814

     

    CRE Owner Occupied

     

     

    101,834

     

     

     

    87,507

     

     

     

    79,665

     

     

     

    75,604

     

     

     

    75,963

     

    CRE Nonowner Occupied

     

     

    786,271

     

     

     

    758,101

     

     

     

    720,396

     

     

     

    709,300

     

     

     

    660,058

     

    Total Real Estate Mortgage Loans

     

     

    2,043,812

     

     

     

    1,913,826

     

     

     

    1,760,440

     

     

     

    1,705,848

     

     

     

    1,607,924

     

    Consumer and Other

     

     

    6,762

     

     

     

    8,241

     

     

     

    8,030

     

     

     

    7,689

     

     

     

    6,572

     

    Total Loans, Gross

     

     

    2,712,012

     

     

     

    2,594,186

     

     

     

    2,426,123

     

     

     

    2,326,428

     

     

     

    2,259,228

     

    Allowance for Loan Losses

     

     

    (38,901

    )

     

     

    (37,591

    )

     

     

    (35,987

    )

     

     

    (34,841

    )

     

     

    (31,381

    )

    Net Deferred Loan Fees

     

     

    (10,199

    )

     

     

    (11,450

    )

     

     

    (11,273

    )

     

     

    (9,151

    )

     

     

    (10,367

    )

    Total Loans, Net

     

    $

    2,662,912

     

     

    $

    2,545,145

     

     

    $

    2,378,863

     

     

    $

    2,282,436

     

     

    $

    2,217,480

     

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

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

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    September 30, 2021

     

    June 30, 2021

     

    March 31, 2021

     

    December 31, 2020

     

    September 30, 2020

    (dollars in thousands)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Noninterest Bearing Transaction Deposits

     

    $

    846,490

     

    $

    758,023

     

    $

    712,999

     

    $

    671,903

     

    $

    685,773

    Interest Bearing Transaction Deposits

     

     

    488,785

     

     

    432,123

     

     

    433,344

     

     

    366,290

     

     

    322,253

    Savings and Money Market Deposits

     

     

    791,861

     

     

    761,485

     

     

    791,583

     

     

    657,617

     

     

    498,397

    Time Deposits

     

     

    309,824

     

     

    321,857

     

     

    344,581

     

     

    353,543

     

     

    363,897

    Brokered Deposits

     

     

    417,197

     

     

    447,418

     

     

    356,147

     

     

    452,283

     

     

    402,724

    Total Deposits

     

    $

    2,854,157

     

    $

    2,720,906

     

    $

    2,638,654

     

    $

    2,501,636

     

    $

    2,273,044

    Capital

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

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

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

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

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

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

    Asset Quality

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

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

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

     

     

     

     

     

     

     

     

     

     

     

     

     

    As of and for the Three Months Ended

     

     

    September 30,

     

    June 30,

     

    March 31,

     

    December 31,

     

    September 30,

    (dollars in thousands)

     

    2021

     

    2021

     

    2021

     

    2020

     

    2020

    Selected Asset Quality Data

     

     

     

     

     

     

     

     

     

     

    Loans 30-89 Days Past Due

     

    $

    18

     

     

    $

     

     

    $

     

     

    $

    13

     

     

    $

    458

     

    Loans 30-89 Days Past Due to Total Loans

     

     

    0.00

    %

     

     

    0.00

    %

     

     

    0.00

    %

     

     

    0.00

    %

     

     

    0.02

    %

    Nonperforming Loans

     

    $

    734

     

     

    $

    761

     

     

    $

    770

     

     

    $

    775

     

     

    $

    433

     

    Nonperforming Loans to Total Loans

     

     

    0.03

    %

     

     

    0.03

    %

     

     

    0.03

    %

     

     

    0.03

    %

     

     

    0.02

    %

    Foreclosed Assets

     

    $

     

     

    $

     

     

    $

     

     

    $

     

     

    $

     

    Nonaccrual Loans to Total Loans

     

     

    0.03

    %

     

     

    0.03

    %

     

     

    0.03

    %

     

     

    0.03

    %

     

     

    0.02

    %

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

     

     

    0.03

     

     

     

    0.03

     

     

     

    0.03

     

     

     

    0.03

     

     

     

    0.02

     

    Nonperforming Assets (1)

     

    $

    734

     

     

    $

    761

     

     

    $

    770

     

     

    $

    775

     

     

    $

    433

     

    Nonperforming Assets to Total Assets (1)

     

     

    0.02

    %

     

     

    0.02

    %

     

     

    0.03

    %

     

     

    0.03

    %

     

     

    0.02

    %

    Allowance for Loan Losses to Total Loans

     

     

    1.43

     

     

     

    1.45

     

     

     

    1.48

     

     

     

    1.50

     

     

     

    1.39

     

    Allowance for Loan Losses to Total Loans, Excluding PPP Loans

     

     

    1.46

     

     

     

    1.50

     

     

     

    1.59

     

     

     

    1.59

     

     

     

    1.51

     

    Allowance for Loans Losses to Nonperforming Loans

     

     

    5,299.86

     

     

     

    4,939.68

     

     

     

    4,673.64

     

     

     

    4,495.61

     

     

     

    7,247.34

     

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

     

     

    0.00

     

     

     

    0.00

     

     

     

    (0.01

    )

     

     

    0.08

     

     

     

    0.00

     

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

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

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

     

     

     

     

     

     

     

    (dollars in thousands)

     

    Interest-Only

     

    Extended Amortization

     

    Total

    Principal Balance - June 30, 2021

     

    $

    29,159

     

     

    $

    4,778

     

     

    $

    33,937

     

    Modification Expired

     

     

    (27,521

    )

     

     

    (4,764

    )

     

     

    (32,285

    )

    Additional Modification Granted

     

     

    18,313

     

     

     

    4,764

     

     

     

    23,077

     

    New Modifications

     

     

    10,623

     

     

     

     

     

     

    10,623

     

    Net Principal Advances (Payments)

     

     

    23

     

     

     

    (14

    )

     

     

    9

     

    Principal Balance - September 30, 2021

     

    $

    30,597

     

     

    $

    4,764

     

     

    $

    35,361

     

    About the Company

    Bridgewater Bancshares, Inc. (Nasdaq: BWB) is a St. Louis Park, Minnesota-based financial holding company. Bridgewater's banking subsidiary, Bridgewater Bank, is a premier, full-service Twin Cities bank dedicated to serving the diverse needs of commercial real estate investors, entrepreneurs, business clients and high-net-worth individuals. By pairing a range of deposit, lending and business services solutions with a responsive service model, Bridgewater has seen continuous growth and profitability. With total assets of $3.4 billion and seven branches as of September 30, 2021, Bridgewater is considered one of the largest locally led banks in the State of Minnesota, and has received numerous awards for its growth, banking services and esteemed corporate culture.

    Use of Non-GAAP financial measures

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

    Forward-Looking Statements

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

    Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: the negative effects of the COVID-19 pandemic, including its effects on the economic environment, our clients and our operations, including due to supply chain disruptions, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic; loan concentrations in our portfolio; the overall health of the local and national real estate market; our ability to successfully manage credit risk; business and economic conditions generally and in the financial services industry, nationally and within our market area; our ability to maintain an adequate level of allowance for loan losses; new or revised accounting standards, including as a result of the future implementation of the Current Expected Credit Loss standard; the concentration of large loans to certain borrowers; the concentration of large deposits from certain clients; our ability to successfully manage liquidity risk; our dependence on non-core funding sources and our cost of funds; our ability to raise additional capital to implement our business plan; our ability to implement our growth strategy and manage costs effectively; developments and uncertainty related to the future use and availability of some reference rates, such as the London Interbank Offered Rate, as well as other alternative reference rates; the composition of our senior leadership team and our ability to attract and retain key personnel; the occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents; interruptions involving our information technology and telecommunications systems or third-party servicers; competition in the financial services industry; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and regulatory actions against us; the impact of recent and future legislative and regulatory changes, including changes to federal and state corporate tax rates; interest rate risk; fluctuations in the values of the securities held in our securities portfolio; the imposition of tariffs or other governmental policies impacting the value of products produced by our commercial borrowers; severe weather, natural disasters, wide spread disease or pandemics (including the COVID-19 pandemic), acts of war or terrorism or other adverse external events; potential impairment to the goodwill we recorded in connection with our past acquisition; changes to U.S. or state tax laws, regulations and guidance, including recent proposals to increase the federal corporate tax rate; and any other risks described in the “Risk Factors” sections of reports filed by the Company with the Securities and Exchange Commission.

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

    Bridgewater Bancshares, Inc. and Subsidiaries

    Consolidated Balance Sheets

    (dollars in thousands, except share data)

     

     

     

     

     

     

     

     

     

     

     

     

    September 30,

     

    December 31,

     

    September 30,

     

     

    2021

     

    2020

     

    2020

     

     

    (Unaudited)

     

     

     

     

    (Unaudited)

    ASSETS

     

     

     

     

     

     

     

     

     

    Cash and Cash Equivalents

     

    $

    189,502

     

    $

    160,675

     

    $

    91,510

    Bank-Owned Certificates of Deposit

     

     

    1,877

     

     

    2,860

     

     

    2,862

    Securities Available for Sale, at Fair Value

     

     

    413,149

     

     

    390,629

     

     

    373,955

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

     

     

    2,662,912

     

     

    2,282,436

     

     

    2,217,480

    Federal Home Loan Bank (FHLB) Stock, at Cost

     

     

    5,442

     

     

    5,027

     

     

    7,817

    Premises and Equipment, Net

     

     

    49,803

     

     

    50,987

     

     

    48,885

    Accrued Interest

     

     

    8,550

     

     

    9,172

     

     

    9,647

    Goodwill

     

     

    2,626

     

     

    2,626

     

     

    2,626

    Other Intangible Assets, Net

     

     

    527

     

     

    670

     

     

    718

    Other Assets

     

     

    54,737

     

     

    22,263

     

     

    19,064

    Total Assets

     

    $

    3,389,125

     

    $

    2,927,345

     

    $

    2,774,564

     

     

     

     

     

     

     

     

     

     

    LIABILITIES AND EQUITY

     

     

     

     

     

     

     

     

     

    LIABILITIES

     

     

     

     

     

     

     

     

     

    Deposits:

     

     

     

     

     

     

     

     

     

    Noninterest Bearing

     

    $

    846,490

     

    $

    671,903

     

    $

    685,773

    Interest Bearing

     

     

    2,007,667

     

     

    1,829,733

     

     

    1,587,271

    Total Deposits

     

     

    2,854,157

     

     

    2,501,636

     

     

    2,273,044

    Notes Payable

     

     

     

     

    11,000

     

     

    11,500

    FHLB Advances

     

     

    47,500

     

     

    57,500

     

     

    127,500

    Subordinated Debentures, Net of Issuance Costs

     

     

    92,153

     

     

    73,739

     

     

    73,665

    Accrued Interest Payable

     

     

    1,656

     

     

    1,615

     

     

    2,082

    Other Liabilities

     

     

    25,856

     

     

    16,450

     

     

    21,341

    Total Liabilities

     

     

    3,021,322

     

     

    2,661,940

     

     

    2,509,132

     

     

     

     

     

     

     

     

     

     

    SHAREHOLDERS' EQUITY

     

     

     

     

     

     

     

     

     

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

     

     

     

     

     

     

     

     

     

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

     

     

    66,515

     

     

     

     

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

     

     

     

     

     

     

     

     

     

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

     

     

    281

     

     

    281

     

     

    287

    Additional Paid-In Capital

     

     

    103,471

     

     

    103,714

     

     

    110,010

    Retained Earnings

     

     

    188,004

     

     

    154,831

     

     

    149,852

    Accumulated Other Comprehensive Income

     

     

    9,532

     

     

    6,579

     

     

    5,283

    Total Shareholders' Equity

     

     

    367,803

     

     

    265,405

     

     

    265,432

    Total Liabilities and Equity

     

    $

    3,389,125

     

    $

    2,927,345

     

    $

    2,774,564

     

    Bridgewater Bancshares, Inc. and Subsidiaries

    Consolidated Statements of Income

    (dollars in thousands, except per share data)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Three Months Ended

     

    Nine Months Ended

     

     

    September 30,

     

    June 30,

     

    September 30,

     

    September 30,

     

    September 30,

     

     

    2021

     

    2021

     

    2020

     

    2021

     

    2020

     

     

    (Unaudited)

     

    (Unaudited)

     

    (Unaudited)

     

    (Unaudited)

     

    (Unaudited)

    INTEREST INCOME

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Loans, Including Fees

     

    $

    31,049

     

    $

    28,748

     

    $

    26,224

     

    $

    87,705

     

    $

    77,250

    Investment Securities

     

     

    2,333

     

     

    2,312

     

     

    2,100

     

     

    7,065

     

     

    6,387

    Other

     

     

    135

     

     

    87

     

     

    169

     

     

    334

     

     

    490

    Total Interest Income

     

     

    33,517

     

     

    31,147

     

     

    28,493

     

     

    95,104

     

     

    84,127

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    INTEREST EXPENSE

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Deposits

     

     

    3,417

     

     

    3,513

     

     

    4,840

     

     

    10,601

     

     

    15,734

    Notes Payable

     

     

     

     

     

     

    108

     

     

    61

     

     

    334

    FHLB Advances

     

     

    213

     

     

    228

     

     

    748

     

     

    669

     

     

    2,839

    Subordinated Debentures

     

     

    1,214

     

     

    1,112

     

     

    1,118

     

     

    3,411

     

     

    1,990

    Federal Funds Purchased

     

     

     

     

    6

     

     

     

     

    6

     

     

    107

    Total Interest Expense

     

     

    4,844

     

     

    4,859

     

     

    6,814

     

     

    14,748

     

     

    21,004

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    NET INTEREST INCOME

     

     

    28,673

     

     

    26,288

     

     

    21,679

     

     

    80,356

     

     

    63,123

    Provision for Loan Losses

     

     

    1,300

     

     

    1,600

     

     

    3,750

     

     

    4,000

     

     

    8,850

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    NET INTEREST INCOME AFTER

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    PROVISION FOR LOAN LOSSES

     

     

    27,373

     

     

    24,688

     

     

    17,929

     

     

    76,356

     

     

    54,273

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    NONINTEREST INCOME

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Customer Service Fees

     

     

    268

     

     

    231

     

     

    200

     

     

    733

     

     

    575

    Net Gain on Sales of Available for Sale Securities

     

     

    48

     

     

    702

     

     

    109

     

     

    750

     

     

    1,473

    Other Income

     

     

    1,094

     

     

    670

     

     

    848

     

     

    2,538

     

     

    2,805

    Total Noninterest Income

     

     

    1,410

     

     

    1,603

     

     

    1,157

     

     

    4,021

     

     

    4,853

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    NONINTEREST EXPENSE

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Salaries and Employee Benefits

     

     

    8,309

     

     

    7,512

     

     

    6,550

     

     

    22,923

     

     

    19,352

    Occupancy and Equipment

     

     

    942

     

     

    980

     

     

    894

     

     

    2,977

     

     

    2,279

    Other Expense

     

     

    3,985

     

     

    2,985

     

     

    2,228

     

     

    9,736

     

     

    8,498

    Total Noninterest Expense

     

     

    13,236

     

     

    11,477

     

     

    9,672

     

     

    35,636

     

     

    30,129

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    INCOME BEFORE INCOME TAXES

     

     

    15,547

     

     

    14,814

     

     

    9,414

     

     

    44,741

     

     

    28,997

    Provision for Income Taxes

     

     

    4,038

     

     

    3,821

     

     

    2,240

     

     

    11,568

     

     

    6,782

    NET INCOME

     

    $

    11,509

     

    $

    10,993

     

    $

    7,174

     

    $

    33,173

     

    $

    22,215

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    EARNINGS PER SHARE

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Basic

     

    $

    0.41

     

    $

    0.39

     

    $

    0.25

     

    $

    1.18

     

    $

    0.77

    Diluted

     

     

    0.40

     

     

    0.38

     

     

    0.25

     

     

    1.14

     

     

    0.76

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    For the Nine Months Ended

     

     

    September 30, 2021

     

    September 30, 2020

     

     

    Average

     

    Interest

     

    Yield/

     

    Average

     

    Interest

     

    Yield/

     

     

    Balance

     

    & Fees

     

    Rate

     

    Balance

     

    & Fees

     

    Rate

    (dollars in thousands)

     

     

     

     

     

     

     

     

     

     

     

     

    Interest Earning Assets:

     

     

     

     

     

     

     

     

     

     

     

     

    Cash Investments

     

    $

    127,283

     

    $

    134

     

     

    0.14

    %

     

    $

    80,186

     

    $

    138

     

     

    0.23

    %

    Investment Securities:

     

     

     

     

     

     

     

     

     

     

     

     

    Taxable Investment Securities

     

     

    310,078

     

     

    5,122

     

     

    2.21

     

     

     

    216,332

     

     

    4,080

     

     

    2.52

     

    Tax-Exempt Investment Securities (1)

     

     

    76,564

     

     

    2,460

     

     

    4.30

     

     

     

    89,674

     

     

    2,920

     

     

    4.35

     

    Total Investment Securities

     

     

    386,642

     

     

    7,582

     

     

    2.62

     

     

     

    306,006

     

     

    7,000

     

     

    3.06

     

    Paycheck Protection Program Loans (2)

     

     

    124,466

     

     

    5,384

     

     

    5.78

     

     

     

    107,541

     

     

    2,046

     

     

    2.54

     

    Loans (1)(2)

     

     

    2,402,844

     

     

    82,433

     

     

    4.59

     

     

     

    1,997,553

     

     

    75,301

     

     

    5.04

     

    Total Loans

     

     

    2,527,310

     

     

    87,817

     

     

    4.65

     

     

     

    2,105,094

     

     

    77,347

     

     

    4.91

     

    Federal Home Loan Bank Stock

     

     

    5,658

     

     

    200

     

     

    4.71

     

     

     

    9,541

     

     

    352

     

     

    4.93

     

    Total Interest Earning Assets

     

     

    3,046,893

     

     

    95,733

     

     

    4.20

    %

     

     

    2,500,827

     

     

    84,837

     

     

    4.53

    %

    Noninterest Earning Assets

     

     

    70,968

     

     

     

     

     

     

    50,118

     

     

     

     

    Total Assets

     

    $

    3,117,861

     

     

     

     

     

    $

    2,550,945

     

     

     

     

    Interest Bearing Liabilities:

     

     

     

     

     

     

     

     

     

     

     

     

    Deposits:

     

     

     

     

     

     

     

     

     

     

     

     

    Interest Bearing Transaction Deposits

     

    $

    422,000

     

    $

    1,504

     

     

    0.48

    %

     

    $

    275,303

     

    $

    1,207

     

     

    0.58

    %

    Savings and Money Market Deposits

     

     

    763,646

     

     

    2,853

     

     

    0.50

     

     

     

    518,648

     

     

    4,338

     

     

    1.12

     

    Time Deposits

     

     

    331,664

     

     

    3,269

     

     

    1.32

     

     

     

    378,133

     

     

    6,199

     

     

    2.19

     

    Brokered Deposits

     

     

    407,680

     

     

    2,975

     

     

    0.98

     

     

     

    319,615

     

     

    3,990

     

     

    1.67

     

    Total Interest Bearing Deposits

     

     

    1,924,990

     

     

    10,601

     

     

    0.74

     

     

     

    1,491,699

     

     

    15,734

     

     

    1.41

     

    Federal Funds Purchased

     

     

    3,311

     

     

    6

     

     

    0.24

     

     

     

    8,302

     

     

    107

     

     

    1.73

     

    Notes Payable

     

     

    2,216

     

     

    61

     

     

    3.66

     

     

     

    12,000

     

     

    334

     

     

    3.72

     

    FHLB Advances

     

     

    56,364

     

     

    669

     

     

    1.59

     

     

     

    165,088

     

     

    2,839

     

     

    2.30

     

    Subordinated Debentures

     

     

    79,723

     

     

    3,411

     

     

    5.72

     

     

     

    43,318

     

     

    1,990

     

     

    6.14

     

    Total Interest Bearing Liabilities

     

     

    2,066,604

     

     

    14,748

     

     

    0.95

    %

     

     

    1,720,407

     

     

    21,004

     

     

    1.63

    %

    Noninterest Bearing Liabilities:

     

     

     

     

     

     

     

     

     

     

     

     

    Noninterest Bearing Transaction Deposits

     

     

    731,269

     

     

     

     

     

     

    554,513

     

     

     

     

    Other Noninterest Bearing Liabilities

     

     

    23,228

     

     

     

     

     

     

    19,632

     

     

     

     

    Total Noninterest Bearing Liabilities

     

     

    754,497

     

     

     

     

     

     

    574,145

     

     

     

     

    Shareholders' Equity

     

     

    296,760

     

     

     

     

     

     

    256,393

     

     

     

     

    Total Liabilities and Shareholders' Equity

     

    $

    3,117,861

     

     

     

     

     

    $

    2,550,945

     

     

     

     

    Net Interest Income / Interest Rate Spread

     

     

     

     

    80,985

     

     

    3.25

    %

     

     

     

     

    63,833

     

     

    2.90

    %

    Net Interest Margin (3)

     

     

     

     

     

    3.55

    %

     

     

     

     

     

    3.41

    %

    Taxable Equivalent Adjustment:

     

     

     

     

     

     

     

     

     

     

     

     

    Tax-Exempt Investment Securities and Loans

     

     

     

     

    (629

    )

     

     

     

     

     

     

    (710

    )

     

     

    Net Interest Income

     

     

     

    $

    80,356

     

     

     

     

     

     

    $

    63,123

     

     

     

     
    (1) Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a statutory federal income tax rate of 21%
    (2) Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.
    (3) Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

     

    Non-GAAP Financial Measures

     

    (dollars in thousands) (unaudited)

     

     

     

     

     

     

     

     

     

     

     

     

     

    For the Three Months Ended

     

    For the Nine Months Ended

     

     

    September 30,

     

    June 30,

     

    September 30,

     

    September 30,

     

    September 30,

     

     

    2021

     

    2021

     

    2020

     

    2021

     

    2020

    Pre-Provision Net Revenue

     

     

     

     

     

     

     

     

     

     

    Noninterest Income

     

    $

    1,410

     

     

    $

    1,603

     

     

    $

    1,157

     

     

    $

    4,021

     

     

    $

    4,853

     

    Less: Gain on sales of Securities

     

     

    (48

    )

     

     

    (702

    )

     

     

    (109

    )

     

     

    (750

    )

     

     

    (1,473

    )

    Total Operating Noninterest Income

     

     

    1,362

     

     

     

    901

     

     

     

    1,048

     

     

     

    3,271

     

     

     

    3,380

     

    Plus: Net Interest Income

     

     

    28,673

     

     

     

    26,288

     

     

     

    21,679

     

     

     

    80,356

     

     

     

    63,123

     

    Net Operating Revenue

     

    $

    30,035

     

     

    $

    27,189

     

     

    $

    22,727

     

     

    $

    83,627

     

     

    $

    66,503

     

     

     

     

     

     

     

     

     

     

     

     

    Noninterest Expense

     

    $

    13,236

     

     

    $

    11,477

     

     

    $

    9,672

     

     

    $

    35,636

     

     

    $

    30,129

     

    Less: Amortization of Tax Credit Investments

     

     

    (152

    )

     

     

    (140

    )

     

     

    (145

    )

     

     

    (410

    )

     

     

    (592

    )

    Less: Debt Prepayment Fees

     

     

    (582

    )

     

     

     

     

     

     

     

     

    (582

    )

     

     

    (1,430

    )

    Total Operating Noninterest Expense

     

    $

    12,502

     

     

    $

    11,337

     

     

    $

    9,527

     

     

    $

    34,644

     

     

    $

    28,107

     

     

     

     

     

     

     

     

     

     

     

     

    Pre-Provision Net Revenue

     

    $

    17,533

     

     

    $

    15,852

     

     

    $

    13,200

     

     

    $

    48,983

     

     

    $

    38,396

     

     

     

     

     

     

     

     

     

     

     

     

    Plus:

     

     

     

     

     

     

     

     

     

     

    Non-Operating Revenue Adjustments

     

     

    48

     

     

     

    702

     

     

     

    109

     

     

     

    750

     

     

     

    1,473

     

    Less:

     

     

     

     

     

     

     

     

     

     

    Provision for Loan Losses

     

     

    1,300

     

     

     

    1,600

     

     

     

    3,750

     

     

     

    4,000

     

     

     

    8,850

     

    Non-Operating Expense Adjustments

     

     

    734

     

     

     

    140

     

     

     

    145

     

     

     

    992

     

     

     

    2,022

     

    Provision for Income Taxes

     

     

    4,038

     

     

     

    3,821

     

     

     

    2,240

     

     

     

    11,568

     

     

     

    6,782

     

    Net Income

     

    $

    11,509

     

     

    $

    10,993

     

     

    $

    7,174

     

     

    $

    33,173

     

     

    $

    22,215

     

     

     

     

     

     

     

     

     

     

     

     

    Average Assets

     

    $

    3,332,301

     

     

    $

    3,076,712

     

     

    $

    2,711,755

     

     

    $

    3,117,861

     

     

    $

    2,550,945

     

    Pre-Provision Net Revenue Return on Average Assets

     

     

    2.09

    %

     

     

    2.07

    %

     

     

    1.94

    %

     

     

    2.10

    %

     

     

    2.01

    %

     

     

     

     

     

     

     

     

     

     

     

     

     

    As of and for the Three Months Ended

     

    As of and for the Nine Months Ended

     

     

    September 30,

     

    June 30,

     

    September 30,

     

    September 30,

     

    September 30,

     

     

    2021

     

    2021

     

    2020

     

    2021

     

    2020

    Core Net Interest Margin

     

     

     

     

     

     

     

     

     

     

    Net Interest Income (Tax-Equivalent Basis)

     

    $

    28,880

     

     

    $

    26,495

     

     

    $

    21,898

     

     

    $

    80,985

     

     

    $

    63,833

     

    Less: Loan Fees

     

     

    (1,487

    )

     

     

    (1,023

    )

     

     

    (1,198

    )

     

     

    (3,712

    )

     

     

    (3,769

    )

    Less: PPP Interest and Fees

     

     

    (1,753

    )

     

     

    (1,767

    )

     

     

    (1,173

    )

     

     

    (5,384

    )

     

     

    (2,046

    )

    Core Net Interest Income

     

    $

    25,640

     

     

    $

    23,705

     

     

    $

    19,527

     

     

    $

    71,889

     

     

    $

    58,018

     

     

     

     

     

     

     

     

     

     

     

     

    Average Interest Earning Assets

     

     

    3,234,301

     

     

     

    3,019,437

     

     

     

    2,655,882

     

     

     

    3,046,893

     

     

     

    2,500,827

     

    Less: Average PPP Loans

     

     

    (76,006

    )

     

     

    (149,312

    )

     

     

    (181,397

    )

     

     

    (124,466

    )

     

     

    (107,541

    )

    Core Average Interest Earning Assets

     

    $

    3,158,295

     

     

    $

    2,870,125

     

     

    $

    2,474,485

     

     

    $

    2,922,427

     

     

    $

    2,393,286

     

    Core Net Interest Margin

     

     

    3.22

    %

     

     

    3.31

    %

     

     

    3.14

    %

     

     

    3.29

    %

     

     

    3.24

    %

     

    Non-GAAP Financial Measures

         

    (dollars in thousands) (unaudited)

         

     

     

     

     

     

     

     

     

     

     

     

     

     

    For the Three Months Ended

     

    For the Nine Months Ended

     

     

    September 30,

     

    June 30,

     

    September 30,

     

    September 30,

     

    September 30,

     

     

    2021

     

    2021

     

    2020

     

    2021

     

    2020

    Efficiency Ratio

     

     

     

     

     

     

     

     

     

     

    Noninterest Expense

     

    $

    13,236

     

     

    $

    11,477

     

     

    $

    9,672

     

     

    $

    35,636

     

     

    $

    30,129

     

    Less: Amortization of Intangible Assets

     

     

    (48

    )

     

     

    (47

    )

     

     

    (48

    )

     

     

    (143

    )

     

     

    (143

    )

    Adjusted Noninterest Expense

     

    $

    13,188

     

     

    $

    11,430

     

     

    $

    9,624

     

     

    $

    35,493

     

     

    $

    29,986

     

    Net Interest Income

     

     

    28,673

     

     

     

    26,288

     

     

     

    21,679

     

     

     

    80,356

     

     

     

    63,123

     

    Noninterest Income

     

     

    1,410

     

     

     

    1,603

     

     

     

    1,157

     

     

     

    4,021

     

     

     

    4,853

     

    Less: Gain on Sales of Securities

     

     

    (48

    )

     

     

    (702

    )

     

     

    (109

    )

     

     

    (750

    )

     

     

    (1,473

    )

    Adjusted Operating Revenue

     

    $

    30,035

     

     

    $

    27,189

     

     

    $

    22,727

     

     

    $

    83,627

     

     

    $

    66,503

     

    Efficiency Ratio

     

     

    43.9

    %

     

     

    42.0

    %

     

     

    42.3

    %

     

     

    42.4

    %

     

     

    45.1

    %

     

     

     

     

     

     

     

     

     

     

     

    Adjusted Efficiency Ratio

     

     

     

     

     

     

     

     

     

     

    Noninterest Expense

     

    $

    13,236

     

     

    $

    11,477

     

     

    $

    9,672

     

     

    $

    35,636

     

     

    $

    30,129

     

    Less: Amortization of Tax Credit Investments

     

     

    (152

    )

     

     

    (140

    )

     

     

    (145

    )

     

     

    (410

    )

     

     

    (592

    )

    Less: Debt Prepayment Fees

     

     

    (582

    )

     

     

     

     

     

     

     

     

    (582

    )

     

     

    (1,430

    )

    Less: Amortization of Intangible Assets

     

     

    (48

    )