News Details

BLOOMINGTON, Minn.--(BUSINESS WIRE)-- Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the “Company”), the parent company of Bridgewater Bank (the “Bank”), today announced financial results for the first quarter ended March 31, 2018. The Company announced net income for the first quarter of 2018 of $6.0 million, or $0.23 per diluted share, compared to net income for the first quarter of 2017 of $4.1 million, or $0.16 per diluted share.

Jerry Baack, Chairman, President, and Chief Executive Officer, commented, “We could not be more pleased with our first quarter activity and results. We recently completed our initial public offering (IPO) and listing on Nasdaq on March 14, 2018, becoming the first bank in Minnesota to go public in more than 25 years. The capital raised through the IPO creates a great opportunity in our market for continued growth by providing an unconventional experience to the clients, businesses, and communities that we serve. Our strong first quarter results are a product of the operational efficiency of our talented employees and the positive impact of tax reform. Looking ahead as a public company, we expect to build on our momentum from the IPO by continuing to live by our core values and by working to deliver strong and consistent results to enhance long-term shareholder value.”

FIRST QUARTER 2018 FINANCIAL RESULTS

Highlights

• Annualized return on average assets (ROA) and return on average common equity (ROE) for the first quarter of 2018 were 1.48% and 16.16%, respectively, compared to annualized ROA and ROE of 1.26% and 13.93%, respectively, for the first quarter of 2017.
• Net income was $6.0 million for the first quarter of 2018 compared to $4.1 million for the first quarter of 2017, an increase of 45.7%.
• Diluted earnings per share for the first quarter of 2018 were $0.23, compared to $0.16 for the first quarter of 2017.
• Gross loans increased $320.7 million to $1.41 billion at the end of the first quarter of 2018 compared to $1.08 billion as of the same time last year, an increase of 29.6%.
• Completed successful initial public offering of our common stock at an offering price of $11.75 per share, which generated net proceeds to the Company of $59.4 million. The stock began trading on the Nasdaq Capital Market on March 14^th under the ticker symbol “BWB.”

Key Financial Measures

Selected Financial Data

Income Statement

Net Interest Income

Net interest income was $14.8 million for the first quarter of 2018, an increase of $2.6 million, or 21.1%, compared to $12.2 million for the first quarter of 2017. The increase in net interest income was largely attributable to growth in average interest earning assets, which increased by 24.1% to $1.61 billion for the three months ended March 31, 2018, from $1.30 billion for the three months ended March 31, 2017. This increase in our average interest earning assets was due to continued organic growth in our loan portfolio.

Net interest margin (on a fully tax-equivalent basis) for the first quarter of 2018 was 3.77% compared to 3.97% for the first quarter of 2017, a decrease of 20 basis points. While net interest margin has benefitted from the repricing of variable-rate loans and the origination of new loans at higher rates, this was offset by increased balances and rates on non-core deposits and borrowings. Furthermore, the lower statutory federal tax rate reduced the tax equivalent adjustment by seven basis points.

Interest income on interest earning assets increased $3.8 million, or 25.2%, to $19.0 million for the first quarter of 2018, as compared to $15.1 million for the first quarter of 2017, primarily due to the increases in average balances on loans. The yield on interest earning assets rose to 4.76% in the first quarter of 2018, compared to 4.72% in the first quarter of 2017.

Interest expense on interest bearing liabilities increased $1.5 million, to $3.9 million for the first quarter of 2018, as compared to $2.4 million for the first quarter of 2017, primarily due to increases in average balances of both deposits and borrowings. The cost of interest bearing liabilities increased to 1.37% in the first quarter of 2018 from 1.08% in the first quarter of 2017 due to higher costs and average balances of non-core interest bearing deposits and the issuance of subordinated debt that occurred in the third quarter of 2017.

A summary of the Company’s average balances, interest income and expense, and net interest margin for the three-month periods ended March 31, 2018 and 2017 is as follows:

Provision for Loan Losses

The provision for loan losses was $600,000 for the first quarter of 2018, a decrease of $350,000 compared to the provision for loan losses of $950,000 for the first quarter of 2017. The provision decreased in the first quarter of 2018 due largely to lower net charge-offs and overall improvement in asset quality, coupled with moderate loan growth in comparison to the first quarter of 2017.

A reconciliation of the Company’s allowance for loan losses for the first quarters of 2018 and 2017 is as follows:

Noninterest Income and Expense

Noninterest income was $387,000 for the first quarter of 2018, a decrease of $93,000 from $480,000 for the first quarter of 2017. The decrease was primarily due to lower gains on sales of available for sale securities and foreclosed assets.

Noninterest expense was $6.5 million for the first quarter of 2018, an increase of $1.3 million, or 24.3% from $5.3 million for the first quarter of 2017. The increase was primarily driven by a $1.2 million increase in salaries and employee benefits as the result of merit increases and increased staff to meet the needs of the Company’s growing infrastructure.

The following table presents the major components of noninterest expense for the first quarter of 2018, compared to the first quarter of 2017:

Full-time equivalent employees increased from 101 at the end of the first quarter of 2017 to 118 at the end of the first quarter of 2018. Despite increased overhead, as well as higher operating costs associated with the IPO, the Company experienced only a marginal increase in the efficiency ratio, a non-GAAP financial measure. The efficiency ratio was 42.8% for the first quarter of 2018, compared to 41.2% for the first quarter of 2017.

Income Taxes

The effective combined federal and state income tax rate for the first quarter of 2018 was 25.8% as compared to 36.9% for the first quarter of 2017. The lower effective combined rate is primarily due to the reduction in the federal corporate tax rate from 35% to 21%.

Balance Sheet

Total assets at March 31, 2018 were $1.68 billion, up from $1.62 billion at December 31, 2017, and a 24.2% increase from $1.35 billion at March 31, 2017. The increase in total assets was primarily due to organic loan growth.

Total gross loans at March 31, 2018 were $1.41 billion, an increase of $58.3 million, or 4.3%, over total gross loans of $1.34 billion at December 31, 2017, and an increase of $320.7 million, or 29.6%, over total gross loans of $1.08 billion at March 31, 2017.

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

Total deposits at March 31, 2018 were $1.35 billion, an increase of $13.7 million, or 1.0%, over total deposits of $1.34 billion at December 31, 2017, and an increase of $211.2 million, or 18.5%, over total deposits of $1.14 billion at March 31, 2017. Noninterest bearing deposits were $315.0 million at March 31, 2018, compared to $292.5 million at December 31, 2017, and $322.6 million at March 31, 2017. Noninterest bearing deposits comprised 23.3% of total deposits at March 31, 2018, compared to 21.8% at December 31, 2017, and 28.2% at March 31, 2017. Interest bearing deposits were $1.04 billion at March 31, 2018, compared to $1.05 billion at December 31, 2017, and $819.3 million at March 31, 2017. Interest bearing deposits comprised 76.7% of total deposits at March 31, 2018, compared to 78.3% at December 31, 2017, and 71.8% at March 31, 2017.

Shareholders’ equity at March 31, 2018 was $199.0 million, an increase of $61.9 million, or 45.1%, over shareholders’ equity of $137.2 million at December 31, 2017, and an increase of $78.3 million, or 64.8%, over shareholders’ equity of $120.7 million at March 31, 2017. The increase in both periods was primarily due to capital raised in the initial public offering and net income for the respective periods.

Asset Quality

Asset quality metrics remained strong at March 31, 2018. Annualized net charge-offs as a percent of average loans for the first quarter of 2018 were (0.01%) (a net recovery), compared to 0.00% for the fourth quarter of 2017, and 0.03% for the first quarter of 2017. At March 31, 2018, the Company’s nonperforming assets, which include nonaccrual loans and other real estate owned, were $1.4 million, 0.08% of total assets, as compared to $1.7 million, 0.11% of total assets, at December 31, 2017, and $5.0 million, 0.37% of total assets, at March 31, 2017.

About the Company

Bridgewater Bancshares, Inc. is a financial holding company headquartered in Bloomington, Minnesota. The Company has two wholly owned subsidiaries, Bridgewater Bank, a Minnesota-chartered commercial bank founded in November 2005, and Bridgewater Risk Management, Inc., a captive insurance company founded in December 2016. Bridgewater Bank currently operates through 6 branches in Bloomington, Greenwood, Minneapolis (2), St. Louis Park, and Orono, all located within the Minneapolis-St. Paul-Bloomington metropolitan statistical area.

Use of Non-GAAP financial measures

In addition to the results presented in accordance with General 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 press 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 the future of 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: 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; our high concentration of large loans to certain borrowers; 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; the composition of our senior leadership team and our ability to attract and retain key personnel; the occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents; interruptions involving our information technology and telecommunications systems or third-party servicers; competition in the financial services industry; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and regulatory actions against us; the impact of recent and future legislative and regulatory changes; interest rate risk; fluctuations in the values of the securities held in our securities portfolio; and any other risks described in the “Risk Factors” sections of other 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.

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Bridgewater Bancshares, Inc.
Jerry Baack, 952-893-6866
Chief Executive Officer
investorrelations@bwbmn.com

Source: Bridgewater Bancshares, Inc.