Market Overview

Bridgewater Bancshares, Inc. Announces Record Earnings with Second Quarter 2018 Net Income up 41% over Second Quarter 2017

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Bridgewater Bancshares, Inc. (NASDAQ:BWB) (the Company), the parent
company of Bridgewater Bank (the Bank), today announced record net
income of $6.7 million for the second quarter of 2018, a 40.6% increase
over net income of $4.8 million for the second quarter of 2017. Net
income per diluted common share for the second quarter of 2018 was
$0.22, a 14.4% increase, compared to $0.19 per diluted common share for
the same period in 2017.

Jerry Baack, Chairman, President, and Chief Executive Officer, commented
on the quarter, "We are very pleased to report another strong quarter as
a publicly traded company. We achieved record net income this quarter,
driven by continued organic balance sheet growth, tax reform, and strong
asset quality. We have seamlessly integrated the costs associated with
being a publicly traded company and continue to exhibit favorable
operating leverage. Our customer acquisition and development activities
have never been stronger as we seek to capitalize on continued M&A
disruption and establish ourselves as the only locally led, publicly
traded community bank in the Twin Cities market."

 

SECOND QUARTER 2018 FINANCIAL RESULTS

                   
Basic Diluted Tangible book

   ROA   

   ROE   

Earnings per share Earnings per share Efficiency ratio (1) value per share (1)
1.58 % 13.39 % $ 0.22 $ 0.22 39.0 % $ 6.73
       

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

 

Second Quarter 2018 Highlights

  • Annualized return on average assets (ROA) and return on average common
    equity (ROE) for the second quarter of 2018 were 1.58% and 13.39%,
    respectively, compared to annualized ROA and ROE of 1.37% and 15.28%,
    respectively, for the second quarter of 2017.
  • Net income was $6.7 million for the second quarter of 2018, compared
    to $4.8 million for the second quarter of 2017, an increase of 40.6%.
  • Diluted earnings per common share for the second quarter of 2018 were
    $0.22, compared to $0.19 for the second quarter of 2017.
  • Gross loans increased $290.5 million to $1.46 billion at the end of
    the second quarter of 2018, compared to $1.17 billion as of the same
    time last year, an increase of 24.8%.
  • Nonperforming assets to total assets decreased to 0.05%, compared to
    0.25% in the second quarter of 2017.
 

Key Financial Measures

               
As of and for the Three Months Ended As of and for the Six Months Ended
June 30, June 30, June 30, June 30,
2018 2017 2018 2017
Per Common Share Data (1)
Basic Earnings Per Share $ 0.22 $ 0.20 $ 0.45 $ 0.36
Diluted Earnings Per Share 0.22 0.19 0.45 0.36
Book Value Per Share 6.85 5.23
Tangible Book Value Per Share (2) 6.73 5.07
Basic Weighted Average Shares Outstanding 30,059,374 24,589,861 27,919,457 24,589,861
Diluted Weighted Average Shares Outstanding 30,486,801 24,809,069 28,345,844 24,809,069
Shares Outstanding at Period End 30,059,374 24,589,861
 
Selected Performance Ratios
Return on Average Assets (Annualized) 1.58 % 1.37 %

1.53

%

 

1.32 %
Return on Average Common Equity (Annualized) 13.39 15.28 14.56 14.63
Return on Average Tangible Common Equity (Annualized) (2) 13.64 15.78 14.88 15.13
Yield on Interest Earning Assets 4.88 4.72 4.83 4.72
Yield on Total Loans, Gross 5.29 5.03 5.20 5.06
Cost of Interest Bearing Liabilities 1.52 1.12 1.45 1.10
Cost of Total Deposits 1.03 0.78 0.97 0.76
Net Interest Margin (3) 3.82 3.94 3.80 3.95
Efficiency Ratio (2) 39.0 38.3 40.8 39.7
Noninterest Expense to Average Assets (Annualized) 1.51 1.51 1.57 1.56
Loan to Deposit Ratio 103.4 96.0
Core Deposits to Total Deposits 76.4 75.7
Tangible Common Equity to Tangible Assets (2) 11.56 8.63
 
Capital Ratios (Bank Only)
Tier 1 Leverage Ratio 11.32 % 9.80 %
Tier 1 Risk-based Capital Ratio 12.44 11.78
Total Risk-based Capital Ratio 13.60 13.03
 

(1) Includes shares of common stock and non-voting common stock.

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

(3) Amounts calculated on a tax-equivalent basis using the
statutory federal tax rate of 21% for 2018 and 35% for 2017.

 
 

Selected Financial Data

     
June 30, June 30,
2018 2017 % Change
Selected Balance Sheet Data
Total Assets $ 1,752,918 $ 1,447,505 21.1 %
Total Loans, Gross 1,463,320 1,172,803 24.8
Allowance for Loan Losses 17,666 14,053 25.7
Goodwill and Other Intangibles 3,773 3,964 (4.8 )
 
Deposits 1,414,691 1,222,040 15.8
Tangible Common Equity (1) 202,154 124,561 62.3
Total Shareholders' Equity 205,927 128,525 60.2
Average Total Assets - Quarter-to-Date 1,715,335 1,400,402 22.5
Average Common Equity - Quarter-to-Date 202,101 125,886 60.5
 

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

 
           
For the Three Months Ended For the Six Months Ended
June 30, June 30, June 30, June 30,
2018 2017 % Change 2018 2017 % Change
Selected Income Statement Data
Interest Income $ 20,392 $ 15,774 29.3 % $ 39,102 $ 30,386 28.7 %
Interest Expense   4,493   2,702 66.3   8,440   5,123 64.7
Net Interest Income   15,899   13,072 21.6   30,662   25,263 21.4
Provision for Loan Losses   900   825 9.1   1,500   1,775 (15.5 )
Net Interest Income after Provision for Loan Losses 14,999 12,247 22.5 29,162 23,488 24.2
Noninterest Income 485 486 (0.2 ) 872 966 (9.7 )
Noninterest Expense   6,464   5,271 22.6   12,996   10,525 23.5
Income Before Income Taxes 9,020 7,462 20.9 17,038 13,929 22.3
Provision for Income Taxes   2,274   2,665 (14.7 )   4,342   5,049 (14.0 )
Net Income $ 6,746 $ 4,797 40.6 $ 12,696 $ 8,880 43.0
 

Income Statement

Net Interest Income

Net interest income was $15.9 million for the second quarter of 2018, an
increase of $2.8 million, or 21.6%, compared to $13.1 million for the
second quarter of 2017. The increase in net interest income was largely
attributable to growth in average interest earning assets, which
increased by 22.2% to $1.70 billion for the three months ended
June 30, 2018, from $1.39 billion for the three months ended
June 30, 2017. This increase in average interest earning assets was due
to continued organic growth in the loan portfolio.

Net interest margin (on a fully tax-equivalent basis) for the second
quarter of 2018 was 3.82%, compared to 3.94% for the second quarter of
2017, a decrease of 12 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 partially offset by increased
balances and rates on non-core deposits and borrowings. Furthermore, the
new lower statutory federal tax rate reduced the tax equivalent
adjustment by six basis points.

Interest income increased $4.6 million, or 29.3%, to $20.4 million for
the second quarter of 2018, compared to $15.8 million for the second
quarter of 2017, primarily due to the increase in average loan balances.
The yield on interest earning assets (on a fully tax-equivalent basis)
rose to 4.88% in the second quarter of 2018, compared to 4.72% in the
second quarter of 2017, primarily due to the rising loan portfolio
yield. With new loan production at yields accretive to the existing
portfolio yield, as well as loan related fees providing a strong yield
enhancement, the aggregate loan yield increased 26 basis points from
5.03% in the second quarter of 2017 to 5.29% in the second quarter of
2018.

Interest expense increased $1.8 million to $4.5 million for the second
quarter of 2018, compared to $2.7 million for the second quarter of
2017, primarily due to increases in average balances of both deposits
and borrowings. The cost of interest bearing liabilities increased to
1.52% in the second quarter of 2018 from 1.12% in the second quarter of
2017, primarily 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 yields and rates,
and net interest margin for the three months ended June 30, 2018 and
2017 is as follows:

 

Consolidated Average Balances, Interest Yields and Rates

                       
For the Three Months Ended
June 30, 2018 June 30, 2017
Average Interest Yield/ Average Interest Yield/
Balance & Fees Rate Balance & Fees Rate
(dollars in thousands)
Interest Earning Assets:
Cash Investments $ 25,082 $ 65 1.04 % $ 19,881 $ 37 0.75 %
Investment Securities:
Taxable Investment Securities 119,244 488 1.64 98,592 476 1.94
Tax-Exempt Investment Securities (1)   120,965   1,247   4.13   136,664   1,647   4.83
Total Investment Securities 240,209 1,735 2.90 235,256 2,123 3.62
Loans (2) 1,426,751 18,800 5.29 1,129,284 14,161 5.03
Federal Home Loan Bank Stock   5,486   54   3.95     4,395   29   2.65  
Total Interest Earning Assets 1,697,528 20,654 4.88 1,388,816 16,350 4.72 %
Noninterest Earning Assets   17,807   11,586
Total Assets $ 1,715,335 $ 1,400,402
Interest Bearing Liabilities:
Interest Bearing Transaction Deposits 178,775 160 0.36 % 163,619 100 0.25 %
Savings and Money Market Deposits 346,009 877 1.02 246,375 465 0.76
Time Deposits 305,077 1,386 1.82 288,955 1,077 1.50
Brokered Deposits 225,532 1,099 1.95 176,541 646 1.47
Federal Funds Purchased 12,340 56 1.82 20,445 60 1.18
Notes Payable 16,000 146 3.66 18,000 168 3.74
FHLB Advances 76,473 372 1.95 51,143 186 1.46
Subordinated Debentures   24,570   397   6.48          
Total Interest Bearing Liabilities 1,184,776 4,493 1.52 % 965,078 2,702 1.12 %
Noninterest Bearing Liabilities:
Noninterest Bearing Transaction Deposits 320,581 306,420
Other Noninterest Bearing Liabilities   7,877   3,018
Total Noninterest Bearing Liabilities 328,458 309,438
Shareholders' Equity   202,101   125,886
Total Liabilities and Shareholders' Equity $ 1,715,335 $ 1,400,402
Net Interest Income/ Interest Rate Spread 16,161 3.36 % 13,648 3.60 %
Net Interest Margin (3) 3.82 % 3.94 %
Taxable Equivalent Adjustment:
Tax-Exempt Investment Securities   (262 )   (576 )
Net Interest Income $ 15,899   $ 13,072  
 

(1) Interest income and average rates for tax-exempt investment
securities are presented on a tax-equivalent basis, assuming a
statutory federal income tax rate of 21% in 2018 and 35% in 2017.

(2) Average loan balances include nonaccrual loans. Interest
income on loans includes amortization of deferred loan fees, net
of deferred loan costs.

(3) Net tax-equivalent interest margin during the periods
presented represents: (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 $900,000 for the second quarter of
2018, an increase of $75,000 compared to the provision for loan losses
of $825,000 for the second quarter of 2017. The provision increased in
the second quarter of 2018 due to a modest increase in net charge-offs
in comparison to the second quarter of 2017.

A reconciliation of the Company's allowance for loan losses for the
three and six month periods ended June 30, 2018 and 2017 is as follows:

               
Three Months Ended Six Months Ended
June 30, June 30,
(dollars in thousands) 2018 2017 2018 2017
Balance at Beginning of Period $ 17,121 $ 13,216 $ 16,502 $ 12,333
Provision for Loan Losses 900 825 1,500 1,775
Charge-offs (361 ) (3 ) (373 ) (83 )
Recoveries   6     15     37     28  
Balance at June 30, $ 17,666   $ 14,053   $ 17,666   $ 14,053  
 

Noninterest Income

Noninterest income was $485,000 for the second quarter of 2018, a
decrease of $1,000 from $486,000 for the second quarter of 2017.

The following table presents the major components of noninterest income
for the three and six month periods ended June 30, 2018, compared to the
three and six month periods ended June 30, 2017:

                       
Three Months Ended Six Months Ended
June 30, Increase/ June 30, Increase/
(dollars in thousands) 2018 2017 (Decrease) 2018 2017 (Decrease)
Noninterest Income:
Customer Service Fees $ 185 $157 $ 28 $ 355 $ 309 $ 46
Net Loss on Sales of Securities (59 ) (97 ) 38 (59 ) (66 ) 7
Net Gain (Loss) on Sales of Foreclosed Assets (141 ) 111 (252 ) (137 ) 150 (287 )
Letter of Credit Fees 297 121 176 367 247 120
Debit Card Interchange Fees 96 99 (3 ) 188 192 (4 )
Other Income   107   95     12     158     134     24  
Totals $ 485   $486   $ (1 ) $ 872   $ 966   $ (94 )
 

Noninterest Expense

Noninterest expense was $6.5 million for the second quarter of 2018, an
increase of $1.2 million, or 22.6% from $5.3 million for the second
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 three and six month periods ended June 30, 2018, compared to the
three and six month periods ended June 30, 2017:

                       
Three Months Ended Six Months Ended
June 30, Increase/ June 30, Increase/
(dollars in thousands) 2018 2017 (Decrease) 2018 2017 (Decrease)
Noninterest Expense:
Salaries and Employee Benefits $ 4,306 $ 3,092 $ 1,214 $ 8,624 $ 6,260 $ 2,364
Occupancy and Equipment 597 510 87 1,171 1,059 112
FDIC Insurance Assessment 165 255 (90 ) 435 510 (75 )
Data Processing 126 132 (6 ) 158 326 (168 )
Professional and Consulting Fees 222 331 (109 ) 523 559 (36 )
Information Technology and Telecommunications 220 155 65 403 322 81
Marketing and Advertising 280 276 4 564 530 34
Intangible Asset Amortization 47 47 95 95
Other Expense   501   473   28     1,023   864   159  
Totals $ 6,464 $ 5,271 $ 1,193   $ 12,996 $ 10,525 $ 2,471  
 

Full-time equivalent employees increased from 112 at the end of the
second quarter of 2017 to 125 at the end of the second quarter of 2018.
Despite increased overhead, as well as higher operating costs associated
with the Company's initial public offering, the Company experienced only
a marginal increase in the efficiency ratio, a non-GAAP financial
measure. The efficiency ratio was 39.0% for the second quarter of 2018,
compared to 38.3% for the second quarter of 2017.

Income Taxes

The effective combined federal and state income tax rate for the second
quarter of 2018 was 25.2%, compared to 35.7% for the second 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 June 30, 2018 were $1.75 billion, a 4.2% increase from
$1.68 billion at March 31, 2018, and a 21.1% increase from $1.45 billion
at June 30, 2017. The increase in total assets was primarily due to
organic loan growth.

Total gross loans at June 30, 2018 were $1.46 billion, an increase of
$57.9 million, or 4.1%, over total gross loans of $1.41 billion at
March 31, 2018, and an increase of $290.5 million, or 24.8%, over total
gross loans of $1.17 billion at June 30, 2017.

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

                   
June 30, 2018 March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017
(dollars in thousands)
Commercial and Industrial $ 204,072 $ 199,262 $ 217,753 $ 192,840 $ 156,491
Construction and Land Development 164,492 147,842 130,586 119,427 123,880
Real Estate Mortgage:
1 - 4 Family Mortgage 213,265 200,573 195,707 187,573 180,892
Multifamily 340,888 332,770 317,872 286,191 255,767
CRE Owner Occupied 65,891 67,512 65,909 59,208 60,738
CRE Nonowner Occupied   470,437     453,498     415,034     422,269     390,586  
Total Real Estate Mortgage Loans 1,090,481 1,054,353 994,522 955,241 887,983
Consumer and Other   4,275     3,963     4,252     4,454     4,449  
Total Loans, Gross 1,463,320 1,405,420 1,347,113 1,271,962 1,172,803
Allowance for Loan Losses (17,666 ) (17,121 ) (16,502 ) (15,219 ) (14,053 )
Net Deferred Loan Fees   (4,058 )   (4,130 )   (4,104 )   (4,128 )   (3,740 )
Total Loans, Net $ 1,441,596   $ 1,384,169   $ 1,326,507   $ 1,252,615   $ 1,155,010  
 

Total deposits at June 30, 2018 were $1.41 billion, an increase of $61.7
million, or 4.6%, over total deposits of $1.35 billion at
March 31, 2018, and an increase of $192.7 million, or 15.8%, over total
deposits of $1.22 billion at June 30, 2017.

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

                   
June 30, 2018 March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017
(dollars in thousands)
Noninterest Bearing Transaction Deposits $ 323,320 $ 315,036 $ 292,539 $ 303,824 $ 301,642
Interest Bearing Transaction Deposits 178,045 164,899 177,292 188,485 183,824
Savings and Money Market Deposits 381,942 339,541 369,942 316,397 250,387
Time Deposits 300,701 304,743 292,096 289,084 296,186
Brokered Deposits   230,683   228,817   207,481   196,958   190,001
Total Deposits $ 1,414,691 $ 1,353,036 $ 1,339,350 $ 1,294,748 $ 1,222,040
 

Total shareholders' equity at June 30, 2018 was $205.9 million, an
increase of $6.9 million, or 3.5%, over total shareholders' equity of
$199.0 million at March 31, 2018, and an increase of $77.4 million, or
60.2%, over total shareholders' equity of $128.5 million at
June 30, 2017. The increase in total shareholders' equity was primarily
due to net income retained and capital raised in the initial public
offering for the periods, respectively.

Asset Quality

Asset quality metrics remained strong at June 30, 2018. Annualized net
charge-offs as a percent of average loans for the second quarter of 2018
were 0.10%, compared to (0.01%) (a net recovery) for the first quarter
of 2018, and 0.00% for the second quarter of 2017. At June 30, 2018, the
Company's nonperforming assets, which include nonaccrual loans and other
real estate owned, were $894,000, or 0.05% of total assets, as compared
to $1.4 million, 0.08% of total assets, at March 31, 2018, and $3.7
million, 0.25% of total assets, at June 30, 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 has
two wholly owned subsidiaries, Bridgewater Investment Management, Inc.
and BWB Holdings, Inc. 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 U.S. 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 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; the imposition of tariffs or other governmental policies
impacting the value of products produced by our commercial borrowers;
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.

 
Bridgewater Bancshares, Inc. and Subsidiaries
Consolidated Balance Sheets

(dollars in thousands, except share data)

       
June 30, December 31,
2018 2017
(Unaudited)
ASSETS
Cash and Cash Equivalents $ 21,917 $ 23,725
Bank-owned Certificates of Deposits 3,803 3,072
Securities Available for Sale, at Fair Value 246,071 229,491
Loans, Net of Allowance for Loan Losses of $17,666 at June 30, 2018
(unaudited) and $16,502 at December 31, 2017
1,441,596 1,326,507
Federal Home Loan Bank (FHLB) Stock, at Cost 5,294 5,147
Premises and Equipment, Net 10,457 10,115
Foreclosed Assets 148 581
Accrued Interest 5,971 5,342
Goodwill 2,626 2,626
Other Intangible Assets, Net 1,147 1,243
Other Assets   13,888     8,763
Total Assets $ 1,752,918   $ 1,616,612
 
LIABILITIES AND EQUITY
LIABILITIES
Deposits:
Noninterest Bearing $ 323,320 $ 292,539
Interest Bearing   1,091,371     1,046,811
Total Deposits 1,414,691 1,339,350
Federal Funds Purchased 23,000
Notes Payable 16,000 17,000
FHLB Advances 84,000 68,000
Subordinated Debentures, Net of Issuance Costs 24,578 24,527
Accrued Interest Payable 1,502 1,408
Other Liabilities   6,220     6,165
Total Liabilities   1,546,991     1,479,450
 
SHAREHOLDERS' EQUITY
Preferred Stock- $0.01 par value
Authorized 10,000,000; None Issued and Outstanding at June 30, 2018
(unaudited) and December 31, 2017
Common Stock- $0.01 par value
Common Stock - Authorized 75,000,000; Issued and Outstanding
27,235,832 at June 30, 2018 (unaudited) and 20,834,001 at December
31, 2017
272 208
Non-voting Common Stock- Authorized 10,000,000; Issued and
Outstanding 2,823,542 at June 30, 2018 (unaudited) and 3,845,860 at
December 31, 2017
28 38
Additional Paid-In Capital 125,516 66,324
Retained Earnings 82,010 69,508
Accumulated Other Comprehensive Income (Loss)   (1,899 )   1,084
Total Shareholders' Equity   205,927     137,162
Total Liabilities and Equity $ 1,752,918   $ 1,616,612
 
 
Bridgewater Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income

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

               
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
INTEREST INCOME
Loans, Including Fees $ 18,800 $ 14,161 $ 35,848 $ 27,353
Investment Securities 1,473 1,547 3,040 2,906
Other   119     66     214     127  
Total Interest Income   20,392     15,774     39,102     30,386  
 
INTEREST EXPENSE
Deposits 3,522 2,288 6,531 4,306
Notes Payable 146 168 298 335
FHLB Advances 372 186 671 373
Subordinated Debentures 397 766
Federal Funds Purchased   56     60     174     109  
Total Interest Expense   4,493     2,702     8,440     5,123  
 
NET INTEREST INCOME 15,899 13,072 30,662 25,263
Provision for Loan Losses   900     825     1,500     1,775  
 
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 14,999 12,247 29,162 23,488
 
NONINTEREST INCOME
Customer Service Fees 185 157 355 309
Net Loss on Sales of Available for Sale Securities (59 ) (97 ) (59 ) (66 )
Net Gain (Loss) on Sales of Foreclosed Assets (141 ) 111 (137 ) 150
Other Income   500     315     713     573  
Total Noninterest Income   485     486     872     966  
 
NONINTEREST EXPENSE
Salaries and Employee Benefits 4,306 3,092 8,624 6,260
Occupancy and Equipment 597 510 1,171 1,059
Other Expense   1,561     1,669     3,201     3,206  
Total Noninterest Expense   6,464     5,271     12,996     10,525  
 
INCOME BEFORE INCOME TAXES 9,020 7,462 17,038 13,929
Provision for Income Taxes   2,274     2,665     4,342     5,049  
NET INCOME $ 6,746   $ 4,797   $ 12,696   $ 8,880  
 
EARNINGS PER SHARE
Basic $ 0.22 $ 0.20 $ 0.45 $ 0.36
Diluted 0.22 0.19 0.45 0.36
Dividends Paid Per Share
 
Bridgewater Bancshares, Inc. and Subsidiaries
Summary Quarterly Consolidated Financial Data (Unaudited)

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

           
As of and for the Three Months Ended
June 30, March 31, June 30,
2018 2018 2017
Selected Asset Quality Data
Loans 30-89 Days Past Due $ 645 $ 19 $ 1,355
Loans 30-89 Days Past Due to Total Loans 0.04 % 0.00 % 0.12 %
Nonperforming Loans $ 746 $ 1,128 $ 1,498
Nonperforming Loans to Total Loans 0.05 % 0.08 % 0.13 %
Foreclosed Assets $ 148 $ 288 $ 2,162
Nonaccrual Loans to Total Loans 0.05 % 0.08 % 0.13 %
Nonaccrual Loans and Loans Past Due 90 Days and Still Accruing to
Total Loans
0.05 0.08 0.13
Nonperforming Assets (1) $ 894 $ 1,416 $ 3,660
Nonperforming Assets to Total Assets (1) 0.05 % 0.08 % 0.25 %
Allowance for Loan Losses to Total Loans 1.21 1.22

1.20

Allowance for Loans Losses to Nonperforming Loans 2,368.10 1,517.82

938.12

Net Loan Charge-Offs (Recoveries) (Annualized) to Average Loans 0.10 (0.01 ) 0.00

 

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

 
 

Non-GAAP Financial Measures

               
As of and for the Three Months Ended As of and for the Six Months Ended
June 30, June 30, June 30, June 30,
2018 2017 2018 2017
(dollars in thousands, except share data)
Efficiency Ratio
Noninterest Expense $ 6,464 $ 5,271 $ 12,996 $ 10,525
Less: Amortization of Intangible Assets   (47 )   (47 )   (95 )   (95 )
Adjusted Noninterest Expense $ 6,417   $ 5,224   $ 12,901   $ 10,430  
Net Interest Income 15,899 13,072 30,662 25,263
Noninterest Income 485 486 872 966
Less: Loss on Sales of Securities   59     97     59     66  
Adjusted Operating Revenue $ 16,443   $ 13,655   $ 31,593   $ 26,295  
Efficiency Ratio 39.0 % 38.3 % 40.8 % 39.7 %
 
Tangible Common Equity and Tangible Common Equity/Tangible Assets
Common Equity $ 205,927 $ 128,525
Less: Intangible Assets   (3,773 )   (3,964 )
Tangible Common Equity   202,154     124,561  
Total Assets 1,752,918 1,447,505
Less: Intangible Assets   (3,773 )   (3,964 )
Tangible Assets $ 1,749,145   $ 1,443,541  
Tangible Common Equity/Tangible Assets 11.56 % 8.63 %
 
Tangible Book Value Per Share
Book Value Per Common Share $ 6.85 $ 5.23
Less: Effects of Intangible Assets   (0.12 )   (0.16 )
Tangible Book Value Per Common Share $ 6.73   $ 5.07  
 
Average Tangible Common Equity
Average Common Equity $ 202,101 $ 125,886 $ 175,855 $ 122,378
Less: Effects of Average Intangible Assets   (3,796 )   (3,980 )   (3,820 )   (4,004 )
Average Tangible Common Equity $ 198,305   $ 121,906   $ 172,035   $ 118,374  
 
 
Bridgewater Bancshares, Inc. and Subsidiaries
Analysis of Average Balances, Yields and Rates (year-to-date)

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

                       
For the Six Months Ended
June 30, 2018 June 30, 2017
Average Interest Yield/ Average Interest Yield/
Balance & Fees Rate Balance & Fees Rate
(dollars in thousands)
Interest Earning Assets:
Cash Investments $ 23,396 $ 115 0.98 % $ 19,449 $ 70 0.73 %
Investment Securities:
Taxable Investment Securities 118,485 1,121 1.91 97,596 850 1.76
Tax-Exempt Investment Securities (1)   117,913   2,430   4.16   133,464   3,163   4.78
Total Investment Securities 236,398 3,551 3.03 231,060 4,013 3.50
Loans (2) 1,390,094 35,848 5.20 1,090,389 27,353 5.06
Federal Home Loan Bank Stock   5,439   99   3.67     4,283   57   2.68  
Total Interest Earning Assets 1,655,327 39,613 4.83 1,345,181 31,493 4.72 %
Noninterest Earning Assets   15,462   11,295
Total Assets $ 1,670,789 $ 1,356,476
Interest Bearing Liabilities:
Interest Bearing Transaction Deposits 180,348 272 0.30 % 145,583 176 0.24 %
Savings and Money Market Deposits 349,987 1,633 0.94 248,692 884 0.72
Time Deposits 301,724 2,643 1.77 284,142 2,095 1.49
Brokered Deposits 211,657 1,983 1.89 165,037 1,151 1.41
Federal Funds Purchased 20,381 174 1.72 21,693 109 1.01
Notes Payable 16,250 298 3.70 18,250 335 3.70
FHLB Advances 72,398 671 1.87 52,066 373 1.44
Subordinated Debentures   24,557   766   6.29          
Total Interest Bearing Liabilities 1,177,302 8,440 1.45 % 935,463 5,123 1.10 %
Noninterest Bearing Liabilities:
Noninterest Bearing Transaction Deposits 308,216 296,658
Other Noninterest Bearing Liabilities   9,416   1,977
Total Noninterest Bearing Liabilities 317,632 298,635
Shareholders' Equity   175,855   122,378
Total Liabilities and Shareholders' Equity $ 1,670,789 $ 1,356,476
Net Interest Income/ Interest Rate Spread 31,173 3.38 % 26,370 3.62 %
Net Interest Margin (3) 3.80 % 3.95 %
Taxable Equivalent Adjustment:
Tax-Exempt Investment Securities   (511 )   (1,107 )
Net Interest Income $ 30,662   $ 25,263  
 

(1) Interest income and average rates for tax-exempt investment
securities are presented on a tax-equivalent basis, assuming a
statutory federal income tax rate of 21% in 2018 and 35% in 2017.

(2) Average loan balances include nonaccrual loans. Interest
income on loans includes amortization of deferred loan fees, net
of deferred loan costs.

(3) Net tax-equivalent interest margin during the periods
presented represents: (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.

 

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