Bridgewater Bancshares, Inc. Announces Record Fourth Quarter 2021 Net Income of $12.5 Million, $0.39 Diluted Earnings Per Common Share

Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the parent company of Bridgewater Bank (the Bank), today announced net income of $12.5 million for the fourth quarter of 2021, an 8.7% increase over net income of $11.5 million for the third quarter of 2021, and a 151.3% increase over net income of $5.0 million for the fourth quarter of 2020. Net income per diluted common share for the fourth quarter of 2021 was $0.39, a 1.2% decrease compared to $0.40 per diluted common share for the third quarter of 2021, and a 126.1% increase compared to $0.17 per diluted common share for the same period in 2020.

“Bridgewater reported a fourth consecutive quarter of record net income driven by the continuation of many of the same trends and momentum we created throughout 2021,” said Chairman, Chief Executive Officer, and President, Jerry Baack. “During the quarter, we continued to generate strong loan production and gather high-quality deposits across the Twin Cities market, leading to robust balance sheet growth. This level of consistent growth in today’s environment, along with a business model operating with a low 40% adjusted efficiency ratio, stable net interest margin and strong asset quality, remain key differentiators for us. As we look ahead to 2022, we expect to continue to leverage the ongoing M&A-related market disruption and our strengthening brand to drive additional balance sheet and revenue growth; make proactive investments in business scalability, automation and back-office functions; and maintain our highly efficient operating strategy. With a hard-working team of talented professionals supporting our clients every day and a strong capital and liquidity position, we are poised to build on our momentum into 2022 and beyond.”

The Company today also announced that its Board of Directors declared a quarterly cash dividend on its 5.875% Non-Cumulative Perpetual Preferred Stock, Series A ("Series A Preferred Stock"). The quarterly cash dividend of $36.72 per share, equivalent to $0.3672 per depositary share, each representing a 1/100th interest in a share of the Series A Preferred Stock (Nasdaq: BWBBP), is payable on March 1, 2022 to shareholders of record of the Series A Preferred Stock at the close of business on February 15, 2022.

Fourth Quarter 2021 Financial Results

 

 

 

 

 

 

 

 

 

Diluted

 

 

Nonperforming

 

 

Adjusted

 

ROA

 

 

PPNR ROA (1)

 

 

ROE

 

 

earnings per share

 

 

assets to total assets

 

 

efficiency ratio (1)

 

1.46

%

 

2.11

%

 

13.27

%

 

$

0.39

 

 

0.02

%

 

40.3

%

_________________________________

(1)

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

Fourth Quarter 2021 Highlights

  • Diluted earnings per common share were $0.39 for the fourth quarter of 2021, compared to $0.40 per common share for the third quarter of 2021.
  • Payment of the Company’s first quarterly preferred stock dividend negatively impacted diluted earnings per common share by $0.04 in the fourth quarter of 2021, compared to no preferred stock dividend payment in the third quarter of 2021.
  • Annualized return on average assets (ROA) and annualized return on average shareholders’ equity (ROE) for the fourth quarter of 2021 were 1.46% and 13.27%, compared to ROA and ROE of 1.37% and 13.81%, respectively, for the third quarter of 2021. Annualized return on average tangible common equity, a non-GAAP financial measure, was 14.78% for the fourth quarter of 2021, compared to 15.47% for the third quarter of 2021.
  • Pre-provision net revenue (PPNR), a non-GAAP financial measure, was $18.1 million for the fourth quarter of 2021, compared to $17.5 million for the third quarter of 2021. PPNR ROA, a non-GAAP financial measure, was 2.11% for the fourth quarter of 2021, compared to 2.09% for the third quarter of 2021.
  • Gross loans increased $107.5 million in the fourth quarter of 2021, or 15.7% annualized, compared to the third quarter of 2021. Gross loans, excluding Paycheck Protection Program (PPP) loans, increased $135.5 million in the fourth quarter of 2021, or 20.2% annualized, compared to the third quarter of 2021.
  • Deposits increased $92.1 million in the fourth quarter of 2021, or 12.8% annualized, compared to the third quarter of 2021.
  • Net interest margin (on a fully tax-equivalent basis) was 3.51% for the fourth quarter of 2021, compared to 3.54% in the third quarter of 2021. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and PPP balances, interest, and fees, expanded 3 basis points from 3.22% in the third quarter of 2021 to 3.25% in the fourth quarter of 2021.
  • The adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 40.3% for the fourth quarter of 2021, compared to 41.5% for the third quarter of 2021.
  • A loan loss provision of $1.2 million was recorded in the fourth quarter of 2021 to support strong organic loan growth. The allowance for loan losses to total loans was 1.42% at December 31, 2021, compared to 1.43% at September 30, 2021. The allowance for loan losses to total loans, excluding PPP loans, was 1.43% at December 31, 2021, compared to 1.46% at September 30, 2021.
  • Annualized net loan charge-offs as a percentage of average loans were 0.00% for both the fourth quarter of 2021, and the third quarter of 2021.
  • Tangible book value per share, a non-GAAP financial measure, increased $0.36, or 13.6% annualized, to $10.98 at December 31, 2021, compared to $10.62 at September 30, 2021.

Annual 2021 Highlights

  • Diluted earnings per common share for the year ended December 31, 2021 were $1.54, a 64.8% increase, compared to $0.93 for the year ended December 31, 2020.
  • PPNR, a non-GAAP financial measure, was $67.1 million for the year ended December 31, 2021, an increase of 22.7%, compared to $54.7 million for the year ended December 31, 2020. PPNR ROA, a non-GAAP financial measure, was 2.10% for the year ended December 31, 2021, compared to 2.09% for the year ended December 31, 2020.
  • Gross loans increased $493.0 million at December 31, 2021, or 21.2%, compared to December 31, 2020. Excluding PPP loans, gross loans increased 27.7%, at December 31, 2021, compared to December 31, 2020.
  • Deposits increased $444.6 million at December 31, 2021, or 17.8%, compared to December 31, 2020.
  • Net interest margin (on a fully tax-equivalent basis) was 3.54% for the year ended December 31, 2021, compared to 3.46% for the year ended December 31, 2020. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure, for the year ended December 31, 2021 was 3.28%, compared to 3.25% for the year ended December 31, 2020.
  • The adjusted efficiency ratio, a non-GAAP financial measure, was 41.0% for the year ended December 31, 2021, compared to 40.5% for the year ended December 31, 2020.
  • Net loan charge-offs as a percentage of average loans were 0.00% for the year ended December 31, 2021, compared to 0.02% for the year ended December 31, 2020.
  • The ratio of nonperforming assets to total assets was 0.02% at December 31, 2021, compared to 0.03% at December 31, 2020.
  • Tangible book value per share, a non-GAAP financial measure, increased 17.9%, or $1.66, to $10.98 at December 31, 2021, compared to $9.31 at December 31, 2020.

Key Financial Measures

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

 

As of and for the Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

 

December 31,

 

December 31,

 

 

 

2021

 

 

 

2021

 

 

 

2020

 

 

 

 

2021

 

 

 

2020

 

Per Common Share Data

 

 

 

 

 

 

 

Basic Earnings Per Share

 

$

0.41

 

$

0.41

 

$

0.18

 

 

$

1.59

 

$

0.95

 

Diluted Earnings Per Share

 

 

0.39

 

 

0.40

 

 

0.17

 

 

 

1.54

 

 

0.93

 

Adjusted Diluted Earnings Per Share (1)

 

 

0.39

 

 

0.41

 

 

0.32

 

 

 

1.55

 

 

1.12

 

Book Value Per Share

 

 

11.09

 

 

10.73

 

 

9.43

 

 

 

 

Tangible Book Value Per Share (1)

 

 

10.98

 

 

10.62

 

 

9.31

 

 

 

 

Basic Weighted Average Shares Outstanding

 

 

28,004,334

 

 

28,047,280

 

 

28,179,768

 

 

 

28,027,454

 

 

28,582,064

 

Diluted Weighted Average Shares Outstanding

 

 

29,038,785

 

 

29,110,547

 

 

28,823,384

 

 

 

28,968,286

 

 

29,170,220

 

Shares Outstanding at Period End

 

 

28,206,566

 

 

28,066,822

 

 

28,143,493

 

 

 

 

 

 

 

 

 

 

 

 

Selected Performance Ratios

 

 

 

 

 

 

 

Return on Average Assets (Annualized)

 

 

1.46

%

 

1.37

%

 

0.70

%

 

 

1.43

%

 

1.04

%

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

 

 

2.11

 

 

2.09

 

 

2.30

 

 

 

2.10

 

 

2.09

 

Return on Average Shareholders' Equity (Annualized)

 

 

13.27

 

 

13.81

 

 

7.45

 

 

 

14.45

 

 

10.51

 

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

 

 

14.78

 

 

15.47

 

 

7.55

 

 

 

15.45

 

 

10.65

 

Yield on Interest Earning Assets

 

 

4.06

 

 

4.14

 

 

4.46

 

 

 

4.16

 

 

4.51

 

Yield on Total Loans, Gross

 

 

4.49

 

 

4.65

 

 

4.89

 

 

 

4.60

 

 

4.90

 

Cost of Interest Bearing Liabilities

 

 

0.86

 

 

0.88

 

 

1.24

 

 

 

0.93

 

 

1.53

 

Cost of Total Deposits

 

 

0.45

 

 

0.48

 

 

0.69

 

 

 

0.51

 

 

0.93

 

Net Interest Margin (2)

 

 

3.51

 

 

3.54

 

 

3.61

 

 

 

3.54

 

 

3.46

 

Core Net Interest Margin (1)(2)

 

 

3.25

 

 

3.22

 

 

3.29

 

 

 

3.28

 

 

3.25

 

Efficiency Ratio (1)

 

 

40.8

 

 

43.9

 

 

59.0

 

 

 

42.0

 

 

49.0

 

Adjusted Efficiency Ratio (1)

 

 

40.3

 

 

41.5

 

 

36.6

 

 

 

41.0

 

 

40.5

 

Noninterest Expense to Average Assets (Annualized)

 

 

1.45

 

 

1.58

 

 

2.16

 

 

 

1.51

 

 

1.73

 

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

 

 

1.43

 

 

1.49

 

 

1.34

 

 

 

1.47

 

 

1.44

 

Loan to Deposit Ratio

 

 

95.7

 

 

95.0

 

 

93.0

 

 

 

 

Core Deposits to Total Deposits (3)

 

 

85.4

 

 

83.3

 

 

78.1

 

 

 

 

Tangible Common Equity to Tangible Assets (1)

 

 

8.91

 

 

8.81

 

 

8.96

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios (Bank Only) (4)

 

 

 

 

 

 

 

Tier 1 Leverage Ratio

 

 

11.09

%

 

10.96

%

 

10.89

%

 

 

 

Common Equity Tier 1 Risk-based Capital Ratio

 

 

11.69

 

 

11.88

 

 

12.12

 

 

 

 

Tier 1 Risk-based Capital Ratio

 

 

11.69

 

 

11.88

 

 

12.12

 

 

 

 

Total Risk-based Capital Ratio

 

 

12.94

 

 

13.13

 

 

13.37

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios (Consolidated) (4)

 

 

 

 

 

 

 

Tier 1 Leverage Ratio

 

 

10.82

%

 

10.70

%

 

9.28

%

 

 

 

Common Equity Tier 1 Risk-based Capital Ratio

 

 

9.36

 

 

9.47

 

 

10.35

 

 

 

 

Tier 1 Risk-based Capital Ratio

 

 

11.43

 

 

11.65

 

 

10.35

 

 

 

 

Total Risk-based Capital Ratio

 

 

15.55

 

 

15.93

 

 

14.58

 

 

 

 

_________________________________

(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

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

(dollars in thousands)

 

2021

 

2021

 

2021

 

2021

 

2020

Selected Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

3,477,659

 

$

3,389,125

 

$

3,162,612

 

$

3,072,359

 

$

2,927,345

Total Loans, Gross

 

 

2,819,472

 

 

 

2,712,012

 

 

 

2,594,186

 

 

 

2,426,123

 

 

 

2,326,428

 

Allowance for Loan Losses

 

 

40,020

 

 

 

38,901

 

 

 

37,591

 

 

 

35,987

 

 

 

34,841

 

Goodwill and Other Intangibles

 

 

3,105

 

 

 

3,153

 

 

 

3,200

 

 

 

3,248

 

 

 

3,296

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

2,946,237

 

 

 

2,854,157

 

 

 

2,720,906

 

 

 

2,638,654

 

 

 

2,501,636

 

Tangible Common Equity (1)

 

 

309,653

 

 

 

298,135

 

 

 

287,630

 

 

 

275,923

 

 

 

262,109

 

Total Shareholders' Equity

 

 

379,272

 

 

 

367,803

 

 

 

290,830

 

 

 

279,171

 

 

 

265,405

 

Average Total Assets - Quarter-to-Date

 

 

3,403,270

 

 

 

3,332,301

 

 

 

3,076,712

 

 

 

2,940,262

 

 

 

2,816,032

 

Average Shareholders' Equity - Quarter-to-Date

 

 

374,035

 

 

 

330,604

 

 

 

286,311

 

 

 

272,729

 

 

 

265,716

 

_________________________________

(1)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

(dollars in thousands)

 

2021

 

2021

 

2020

 

2021

 

2020

Selected Income Statement Data

 

 

 

 

 

 

 

 

 

 

Interest Income

 

$

33,775

 

 

$

33,517

 

$

30,699

 

$

128,879

 

 

$

114,826

Interest Expense

 

 

4,622

 

 

 

4,844

 

 

 

5,858

 

 

 

19,370

 

 

 

26,862

 

Net Interest Income

 

 

29,153

 

 

 

28,673

 

 

 

24,841

 

 

 

109,509

 

 

 

87,964

 

Provision for Loan Losses

 

 

1,150

 

 

 

1,300

 

 

 

3,900

 

 

 

5,150

 

 

 

12,750

 

Net Interest Income after Provision for Loan Losses

 

 

28,003

 

 

 

27,373

 

 

 

20,941

 

 

 

104,359

 

 

 

75,214

 

Noninterest Income

 

 

1,288

 

 

 

1,410

 

 

 

986

 

 

 

5,309

 

 

 

5,839

 

Noninterest Expense

 

 

12,459

 

 

 

13,236

 

 

 

15,258

 

 

 

48,095

 

 

 

45,387

 

Income Before Income Taxes

 

 

16,832

 

 

 

15,547

 

 

 

6,669

 

 

 

61,573

 

 

 

35,666

 

Provision for Income Taxes

 

 

4,318

 

 

 

4,038

 

 

 

1,690

 

 

 

15,886

 

 

 

8,472

 

Net Income

 

 

12,514

 

 

 

11,509

 

 

 

4,979

 

 

 

45,687

 

 

 

27,194

 

Preferred Stock Dividends

 

 

(1,171

)

 

 

 

 

 

 

 

 

(1,171

)

 

 

 

Net Income Available to Common Shareholders

 

$

11,343

 

 

$

11,509

 

 

$

4,979

 

 

$

44,516

 

 

$

27,194

 

Income Statement

Net Interest Income

Net interest income was $29.2 million for the fourth quarter of 2021, an increase of $480,000, or 1.7%, from $28.7 million in the third quarter of 2021, and an increase of $4.3 million, or 17.4%, from $24.8 million in the fourth quarter of 2020. The linked-quarter and year-over-year increases in net interest income were primarily due to growth in average interest earning assets and lower rates paid on deposits, offset partially by declining yields on loans. Average interest earning assets were $3.32 billion for the fourth quarter of 2021, an increase of $86.3 million, or 2.7%, from $3.23 billion for the third quarter of 2021, and an increase of $561.1 million, or 20.3%, from $2.76 billion for the fourth quarter of 2020. The linked-quarter increase in average interest earning assets was primarily due to continued strong organic growth in the loan portfolio, offset partially by the payoff of PPP loans and the reduction of cash balances. The year-over-year increase in average interest earning assets was primarily due to increased cash balances, continued purchases of investment securities, and strong organic growth in the loan portfolio, offset partially by the payoff of PPP loans.

Net interest margin (on a fully tax-equivalent basis) for the fourth quarter of 2021 was 3.51%, a 3 basis point decrease from 3.54% in the third quarter of 2021, and a 10 basis point decrease from 3.61% in the fourth quarter of 2020. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and PPP balances, interest, and fees, for the fourth quarter of 2021 was 3.25%, a 3 basis point increase from 3.22% in the third quarter of 2021, and a 4 basis point decline from 3.29% in the fourth quarter of 2020.

As the PPP loan portfolio pays down, the recognition of fees associated with the originations has benefited net interest margin for each of the past four quarters. The SBA has been forgiving PPP loans, which has accelerated the recognition of PPP fees starting in the fourth quarter of 2020 and continuing through the fourth quarter of 2021. The Company recognized $958,000 of PPP origination fees during the fourth quarter of 2021, compared to $1.6 million during the third quarter of 2021. The elevated fee recognition is illustrated in the 10.51% PPP loan yield for the fourth quarter of 2021, compared to 9.15% for the third quarter of 2021. Remaining PPP origination fees to be recognized as of December 31, 2021 were $898,000.

The following table summarizes PPP loan originations and net origination fees as of December 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

17

 

$

1,109

 

$

5,706

 

$

5,698

Round Two PPP Loans

 

651

 

 

78,386

 

136

 

 

25,053

 

 

3,544

 

 

2,654

Totals

 

1,851

 

$

259,986

 

153

 

$

26,162

 

$

9,250

 

$

8,352

Interest income was $33.8 million for the fourth quarter of 2021, an increase of $258,000, or 0.8%, from $33.5 million in the third quarter of 2021, and an increase of $3.1 million, or 10.0%, from $30.7 million in the fourth quarter of 2020. The yield on interest earning assets (on a fully tax-equivalent basis) was 4.06% in the fourth quarter of 2021, compared to 4.14% in the third quarter of 2021, and 4.46% in the fourth quarter of 2020. The linked-quarter decrease in the yield on interest earning assets was primarily due to the historically low interest rate environment resulting in a lower core loan yield, as well as lower PPP origination fees recognized during the period. The year-over-year decline in the yield on interest earning assets was primarily due to excess cash balances and the historically low interest rate environment resulting in lower loan and security yields.

Loan interest income and loan fees remain the primary contributing factors to the changes in yield on interest earning assets. The aggregate loan yield, excluding PPP loans, decreased to 4.41% in the fourth quarter of 2021, which was 10 basis points lower than 4.51% in the third quarter of 2021, and 46 basis points lower than 4.87% in the fourth quarter of 2020. While loan fees have maintained a relatively stable contribution to the aggregate loan yield, the historically low yield curve has resulted in a declining core yield on loans in comparison to both prior periods.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

December 31, 2021

 

September 30, 2021

 

June 30, 2021

 

March 31, 2021

 

December 31, 2020

Interest

 

4.20

%

 

4.28

%

 

4.37

%

 

4.50

%

 

4.59

%

Fees

 

0.21

 

 

0.23

 

 

0.17

 

 

0.22

 

 

0.28

 

Yield on Loans, Excluding PPP Loans

 

4.41

%

 

4.51

%

 

4.54

%

 

4.72

%

 

4.87

%

Interest expense was $4.6 million for the fourth quarter of 2021, a decrease of $222,000, or 4.6%, from $4.8 million in the third quarter of 2021, and a decrease of $1.2 million, or 21.1%, from $5.9 million in the fourth quarter of 2020. The cost of interest bearing liabilities declined 2 basis points on a linked-quarter basis from 0.88% in the third quarter of 2021 to 0.86% in the fourth quarter of 2021, primarily due to lower rates paid on deposits. On a year-over-year basis, the cost of interest bearing liabilities decreased 38 basis points from 1.24% in the fourth quarter of 2020 to 0.86% in the fourth quarter of 2021, primarily due to lower rates paid on deposits, the payoff of the Company’s notes payable, and the early extinguishment of $94.0 million of longer term FHLB advances, offset partially by strong growth of interest bearing deposits and additional subordinated debentures.

Interest expense on deposits was $3.2 million for the fourth quarter of 2021, a decrease of $176,000, or 5.2%, from $3.4 million in the third quarter of 2021, and a decrease of $838,000, or 20.5%, from $4.1 million in the fourth quarter of 2020. The cost of total deposits declined 3 basis points on a linked-quarter basis from 0.48% in the third quarter of 2021, and declined 24 basis points on a year-over-year basis from 0.69% in the fourth quarter of 2020, to 0.45% in the fourth quarter of 2021, primarily due to deposit rate cuts consistent with a lower rate environment and the continued downward repricing of time deposits.

A summary of the Company’s average balances, interest yields and rates, and net interest margin for the three months ended December 31, 2021, September 30, 2021, and December 31, 2020 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

December 31, 2021

 

September 30, 2021

 

December 31, 2020

 

 

Average

 

Interest

 

Yield/

 

Average

 

Interest

 

Yield/

 

Average

 

Interest

 

Yield/

 

 

Balance

 

& Fees

 

Rate

 

Balance

 

& Fees

 

Rate

 

Balance

 

& Fees

 

Rate

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Earning Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Investments

 

$

146,744

 

$

65

 

 

0.18

%

$

187,405

 

$

67

 

 

0.14

%

$

79,896

 

$

32

 

 

0.16

%

Investment Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable Investment Securities

 

 

341,325

 

 

 

1,893

 

 

2.20

 

 

314,367

 

 

 

1,751

 

 

2.21

 

 

290,093

 

 

 

1,632

 

 

2.24

 

Tax-Exempt Investment Securities (1)

 

 

71,602

 

 

 

782

 

 

4.33

 

 

71,801

 

 

 

737

 

 

4.07

 

 

81,370

 

 

 

888

 

 

4.34

 

Total Investment Securities

 

 

412,927

 

 

 

2,675

 

 

2.57

 

 

386,168

 

 

 

2,488

 

 

2.56

 

 

371,463

 

 

 

2,520

 

 

2.70

 

Paycheck Protection Program Loans (2)

 

 

39,900

 

 

 

1,057

 

 

10.51

 

 

76,006

 

 

 

1,753

 

 

9.15

 

 

165,099

 

 

 

2,097

 

 

5.05

 

Loans (1)(2)

 

 

2,715,722

 

 

 

30,154

 

 

4.41

 

 

2,579,021

 

 

 

29,348

 

 

4.51

 

 

2,136,229

 

 

 

26,168

 

 

4.87

 

Total Loans

 

 

2,755,622

 

 

 

31,211

 

 

4.49

 

 

2,655,027

 

 

 

31,101

 

 

4.65

 

 

2,301,328

 

 

 

28,265

 

 

4.89

 

Federal Home Loan Bank Stock

 

 

5,310

 

 

 

59

 

 

4.39

 

 

5,701

 

 

 

68

 

 

4.65

 

 

6,856

 

 

 

92

 

 

5.35

 

Total Interest Earning Assets

 

 

3,320,603

 

 

 

34,010

 

 

4.06

%

 

3,234,301

 

 

 

33,724

 

 

4.14

%

 

2,759,543

 

 

 

30,909

 

 

4.46

%

Noninterest Earning Assets

 

 

82,667

 

 

 

 

 

 

98,000

 

 

 

 

 

 

56,489

 

 

 

 

 

Total Assets

 

$

3,403,270

 

 

 

 

 

$

3,332,301

 

 

 

 

 

$

2,816,032

 

 

 

 

 

Interest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Bearing Transaction Deposits

 

$

499,475

 

 

$

548

 

 

0.43

%

$

479,580

 

 

$

562

 

 

0.47

%

$

353,806

 

 

$

420

 

 

0.47

%

Savings and Money Market Deposits

 

 

803,848

 

 

 

876

 

 

0.43

 

 

801,354

 

 

 

904

 

 

0.45

 

 

538,030

 

 

 

1,003

 

 

0.74

 

Time Deposits

 

 

299,823

 

 

 

830

 

 

1.10

 

 

318,222

 

 

 

928

 

 

1.16

 

 

362,469

 

 

 

1,607

 

 

1.76

 

Brokered Deposits

 

 

404,438

 

 

 

987

 

 

0.97

 

 

440,167

 

 

 

1,023

 

 

0.92

 

 

433,037

 

 

 

1,049

 

 

0.96

 

Total Interest Bearing Deposits

 

 

2,007,584

 

 

 

3,241

 

 

0.64

 

 

2,039,323

 

 

 

3,417

 

 

0.66

 

 

1,687,342

 

 

 

4,079

 

 

0.96

 

Federal Funds Purchased

 

 

10

 

 

 

 

 

0.67

 

 

 

 

 

 

 

 

 

4,072

 

 

 

4

 

 

0.33

 

Notes Payable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,000

 

 

 

105

 

 

3.77

 

FHLB Advances

 

 

44,185

 

 

 

162

 

 

1.46

 

 

54,130

 

 

 

213

 

 

1.56

 

 

99,196

 

 

 

551

 

 

2.21

 

Subordinated Debentures

 

 

92,189

 

 

 

1,219

 

 

5.25

 

 

91,337

 

 

 

1,214

 

 

5.27

 

 

73,696

 

 

 

1,119

 

 

6.04

 

Total Interest Bearing Liabilities

 

 

2,143,968

 

 

 

4,622

 

 

0.86

%

 

2,184,790

 

 

 

4,844

 

 

0.88

%

 

1,875,306

 

 

 

5,858

 

 

1.24

%

Noninterest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Bearing Transaction Deposits

 

 

861,473

 

 

 

 

 

 

784,148

 

 

 

 

 

 

654,299

 

 

 

 

 

Other Noninterest Bearing Liabilities

 

 

23,794

 

 

 

 

 

 

32,759

 

 

 

 

 

 

20,711

 

 

 

 

 

Total Noninterest Bearing Liabilities

 

 

885,267

 

 

 

 

 

 

816,907

 

 

 

 

 

 

675,010

 

 

 

 

 

Shareholders' Equity

 

 

374,035

 

 

 

 

 

 

330,604

 

 

 

 

 

 

265,716

 

 

 

 

 

Total Liabilities and Shareholders' Equity

 

$

3,403,270

 

 

 

 

 

$

3,332,301

 

 

 

 

 

$

2,816,032

 

 

 

 

 

Net Interest Income / Interest Rate Spread

 

 

 

 

29,388

 

 

3.20

%

 

 

 

28,880

 

 

3.26

%

 

 

 

25,051

 

 

3.22

%

Net Interest Margin (3)

 

 

 

 

 

3.51

%

 

 

 

 

3.54

%

 

 

 

 

3.61

%

Taxable Equivalent Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-Exempt Investment Securities and Loans

 

 

 

 

(235

)

 

 

 

 

 

(207

)

 

 

 

 

 

(210

)

 

 

Net Interest Income

 

 

 

$

29,153

 

 

 

 

 

$

28,673

 

 

 

 

 

$

24,841

 

 

 

_________________________________

(1)

Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a statutory federal income tax rate of 21%.

(2)

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

(3)

Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

Provision for Loan Losses

The provision for loan losses was $1.2 million for the fourth quarter of 2021, a decrease of $150,000 from $1.3 million for the third quarter of 2021, and a decrease of $2.8 million from $3.9 million for the fourth quarter of 2020. The provision recorded in the fourth quarter of 2021 was primarily attributable to growth of the loan portfolio. The allowance for loan losses to total loans was 1.42% at December 31, 2021, compared to 1.43% at September 30, 2021, and 1.50% at December 31, 2020. The allowance for loan losses to total loans, excluding PPP loans, was 1.43% at December 31, 2021, compared to 1.46% at September 30, 2021, and 1.59% at December 31, 2020.

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

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

(dollars in thousands)

 

 

2021

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Balance at Beginning of Period

 

$

38,901

 

 

$

37,591

 

 

$

31,381

 

 

$

34,841

 

 

$

22,526

 

Provision for Loan Losses

 

 

1,150

 

 

 

1,300

 

 

 

3,900

 

 

 

5,150

 

 

 

12,750

 

Charge-offs

 

 

(37

)

 

 

(20

)

 

 

(463

)

 

 

(74

)

 

 

(517

)

Recoveries

 

 

6

 

 

 

30

 

 

 

23

 

 

 

103

 

 

 

82

 

Balance at End of Period

 

$

40,020

 

 

$

38,901

 

 

$

34,841

 

 

$

40,020

 

 

$

34,841

 

Noninterest Income

Noninterest income was $1.3 million for the fourth quarter of 2021, a decrease of $122,000 from $1.4 million for the third quarter of 2021, and an increase of $302,000 from $986,000 for the fourth quarter of 2020. The linked-quarter decrease was primarily due to decreased gains on sales of securities and letter of credit fees. The year-over-year increase was primarily due to increased letter of credit fees and bank-owned life insurance income.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

(dollars in thousands)

 

 

2021

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

Customer Service Fees

 

$

274

 

$

268

 

$

251

 

$

1,007

 

$

826

Net Gain on Sales of Securities

 

 

 

 

 

48

 

 

 

30

 

 

 

750

 

 

 

1,503

 

Letter of Credit Fees

 

 

541

 

 

 

577

 

 

 

477

 

 

 

1,676

 

 

 

1,503

 

Debit Card Interchange Fees

 

 

149

 

 

 

143

 

 

 

118

 

 

 

563

 

 

 

428

 

Swap Fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

907

 

Bank-Owned Life Insurance

 

 

150

 

 

 

166

 

 

 

 

 

 

316

 

 

 

 

Other Income

 

 

174

 

 

 

208

 

 

 

110

 

 

 

997

 

 

 

672

 

Totals

 

$

1,288

 

 

$

1,410

 

 

$

986

 

 

$

5,309

 

 

$

5,839

 

Noninterest Expense

Noninterest expense was $12.5 million for the fourth quarter of 2021, a decrease of $777,000 from $13.2 million for the third quarter of 2021, and a decrease of $2.8 million from $15.3 million for the fourth quarter of 2020. The linked-quarter decrease was primarily due to lower salaries and employee benefits related to higher bonus accruals in the third quarter of 2021, and $582,000 of debt prepayment fees associated with a partial early redemption of $11.3 million of subordinated debentures issued in July 2017 that occurred in the third quarter of 2021. The year-over-year decrease was primarily attributable to $5.6 million of debt prepayment fees associated with the early extinguishment of $69.0 million of FHLB term advances incurred in the fourth quarter of 2020, partially offset by an increase in salaries and employee benefits, and marketing and advertising expenses.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

(dollars in thousands)

 

 

2021

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Noninterest Expense:

 

 

 

 

 

 

 

 

 

 

Salaries and Employee Benefits

 

$

7,966

 

$

8,309

 

$

6,216

 

$

30,889

 

$

25,568

Occupancy and Equipment

 

 

939

 

 

 

942

 

 

 

979

 

 

 

3,916

 

 

 

3,258

 

FDIC Insurance Assessment

 

 

345

 

 

 

355

 

 

 

270

 

 

 

1,305

 

 

 

788

 

Data Processing

 

 

306

 

 

 

325

 

 

 

293

 

 

 

1,222

 

 

 

1,027

 

Professional and Consulting Fees

 

 

719

 

 

 

708

 

 

 

566

 

 

 

2,523

 

 

 

1,966

 

Information Technology and Telecommunications

 

 

554

 

 

 

598

 

 

 

397

 

 

 

2,163

 

 

 

1,374

 

Marketing and Advertising

 

 

469

 

 

 

418

 

 

 

143

 

 

 

1,487

 

 

 

788

 

Intangible Asset Amortization

 

 

48

 

 

 

48

 

 

 

48

 

 

 

191

 

 

 

191

 

Amortization of Tax Credit Investments

 

 

152

 

 

 

152

 

 

 

146

 

 

 

562

 

 

 

738

 

Debt Prepayment Fees

 

 

 

 

 

582

 

 

 

5,613

 

 

 

582

 

 

 

7,043

 

Other Expense

 

 

961

 

 

 

799

 

 

 

587

 

 

 

3,255

 

 

 

2,646

 

Totals

 

$

12,459

 

 

$

13,236

 

 

$

15,258

 

 

$

48,095

 

 

$

45,387

 

The Company continues to add key talent across the organization, reaching 220 full-time equivalent employees at December 31, 2021, compared to 219 employees at September 30, 2021, and 183 employees at December 31, 2020.

The efficiency ratio, a non-GAAP financial measure, was 40.8% for the fourth quarter of 2021, compared to 43.9% for the third quarter of 2021, and 59.0% for the fourth quarter of 2020. Excluding the impact of certain non-routine income and expenses, the adjusted efficiency ratio, a non-GAAP financial measure, was 40.3% for the fourth quarter of 2021, 41.5% for the third quarter of 2021 and 36.6% for the fourth quarter of 2020. The efficiencies of the Company’s “branch-light” model have positioned the Company well, and going forward, provide more flexibility for the Company to make significant investments in technology as the industry adapts to evolving client behavior.

Income Taxes

The effective combined federal and state income tax rate for the fourth quarter of 2021 was 25.7%, a decrease from 26.0% for the third quarter of 2021 and an increase from 25.3% for the fourth quarter of 2020. The effective combined federal and state income tax rate for the year ended December 31, 2021 was 25.8%, compared to 23.8% for the year ended December 31, 2020.

Balance Sheet

Total assets at December 31, 2021 were $3.48 billion, a 2.6% increase from $3.39 billion at September 30, 2021, and an 18.8% increase from $2.93 billion at December 31, 2020. The linked-quarter increase in total assets was primarily due to strong organic loan growth, offset partially by a decrease in cash and cash equivalents. The year-over-year increase in total assets was primarily due to robust organic loan growth, as well as the continued purchases of investment securities.

Total gross loans at December 31, 2021 were $2.82 billion, an increase of $107.5 million, or 4.0%, over total gross loans of $2.71 billion at September 30, 2021, and an increase of $493.0 million, or 21.2%, over total gross loans of $2.33 billion at December 31, 2020. The increase in the loan portfolio during the fourth quarter of 2021 was primarily due to growth in the construction and land development, multifamily and CRE nonowner occupied segments, offset partially by the payoff of PPP loans. When excluding PPP loans, gross loans grew $135.5 million during the fourth quarter of 2021, or 20.2% on an annualized basis. The Company's continued strong loan growth has been driven by the expansion of its talented lending teams, PPP-related new client acquisitions, the strong, growing brand of the Bank in the Twin Cities market and the M&A-related market disruption in the Twin Cities resulting in client and banker acquisition opportunities.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

September 30, 2021

 

June 30, 2021

 

March 31, 2021

 

December 31, 2020

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

360,169

 

 

$

350,081

 

 

$

321,474

 

 

$

301,023

 

 

$

304,220

 

Paycheck Protection Program

 

 

26,162

 

 

 

54,190

 

 

 

99,072

 

 

 

163,258

 

 

 

138,454

 

Construction and Land Development

 

 

281,474

 

 

 

257,167

 

 

 

251,573

 

 

 

193,372

 

 

 

170,217

 

Real Estate Mortgage:

 

 

 

 

 

 

 

 

 

 

1 - 4 Family Mortgage

 

 

305,317

 

 

 

290,535

 

 

 

277,943

 

 

 

294,964

 

 

 

294,479

 

Multifamily

 

 

910,243

 

 

 

865,172

 

 

 

790,275

 

 

 

665,415

 

 

 

626,465

 

CRE Owner Occupied

 

 

111,096

 

 

 

101,834

 

 

 

87,507

 

 

 

79,665

 

 

 

75,604

 

CRE Nonowner Occupied

 

 

818,569

 

 

 

786,271

 

 

 

758,101

 

 

 

720,396

 

 

 

709,300

 

Total Real Estate Mortgage Loans

 

 

2,145,225

 

 

 

2,043,812

 

 

 

1,913,826

 

 

 

1,760,440

 

 

 

1,705,848

 

Consumer and Other

 

 

6,442

 

 

 

6,762

 

 

 

8,241

 

 

 

8,030

 

 

 

7,689

 

Total Loans, Gross

 

 

2,819,472

 

 

 

2,712,012

 

 

 

2,594,186

 

 

 

2,426,123

 

 

 

2,326,428

 

Allowance for Loan Losses

 

 

(40,020

)

 

 

(38,901

)

 

 

(37,591

)

 

 

(35,987

)

 

 

(34,841

)

Net Deferred Loan Fees

 

 

(9,535

)

 

 

(10,199

)

 

 

(11,450

)

 

 

(11,273

)

 

 

(9,151

)

Total Loans, Net

 

$

2,769,917

 

 

$

2,662,912

 

 

$

2,545,145

 

 

$

2,378,863

 

 

$

2,282,436

 

Total deposits at December 31, 2021 were $2.95 billion, an increase of $92.1 million, or 3.2%, over total deposits of $2.85 billion at September 30, 2021, and an increase of $444.6 million, or 17.8%, over total deposits of $2.50 billion at December 31, 2020. Deposit growth in the fourth quarter of 2021 was primarily due to an increase in noninterest bearing and interest bearing transaction deposits and savings and money market deposits, offset partially by declines in time deposits and brokered deposits. Similar to the loan portfolio, the growth in core deposits has been a result of successful new client and banker acquisition initiatives and the strong, growing brand of the Bank in the Twin Cities market. However, given the prospect for higher interest rates, management believes deposits could experience fluctuations in future periods.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

September 30, 2021

 

June 30, 2021

 

March 31, 2021

 

December 31, 2020

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

Noninterest Bearing Transaction Deposits

 

$

875,084

 

$

846,490

 

$

758,023

 

$

712,999

 

$

671,903

Interest Bearing Transaction Deposits

 

 

544,789

 

 

 

488,785

 

 

 

432,123

 

 

 

433,344

 

 

 

366,290

 

Savings and Money Market Deposits

 

 

863,567

 

 

 

791,861

 

 

 

761,485

 

 

 

791,583

 

 

 

657,617

 

Time Deposits

 

 

293,474

 

 

 

309,824

 

 

 

321,857

 

 

 

344,581

 

 

 

353,543

 

Brokered Deposits

 

 

369,323

 

 

 

417,197

 

 

 

447,418

 

 

 

356,147

 

 

 

452,283

 

Total Deposits

 

$

2,946,237

 

 

$

2,854,157

 

 

$

2,720,906

 

 

$

2,638,654

 

 

$

2,501,636

 

Capital

Total shareholders’ equity at December 31, 2021 was $379.3 million, an increase of $11.5 million, or 3.1%, over total shareholders’ equity of $367.8 million at September 30, 2021, and an increase of $113.9 million, or 42.9%, over total shareholders’ equity of $265.4 million at December 31, 2020. The linked-quarter increase was due to net income retained. The year-over-year increase was due to net income retained, the issuance of preferred stock and an increase in unrealized gains in the securities and derivatives portfolios.

During the fourth quarter of 2021, the Company repurchased 3,320 shares of its common stock. Shares were repurchased at a weighted average price of $16.36 for a total of $54,000. The Company remains committed to maintaining strong capital levels while enhancing shareholder value as it strategically executes its stock repurchase program in this fluid economic environment.

Tangible book value per share, a non-GAAP financial measure, was $10.98 as of December 31, 2021, an increase of 3.3% from $10.62 as of September 30, 2021, and an increase of 17.9% from $9.31 as of December 31, 2020. Tangible common equity as a percentage of tangible assets, a non-GAAP financial measure, was 8.91% at December 31, 2021, compared to 8.81% at September 30, 2021, and 8.96% at December 31, 2020.

Asset Quality

Annualized net charge-offs as a percent of average loans for both the third and fourth quarters of 2021 were 0.00%, compared to 0.08% for the fourth quarter of 2020. At December 31, 2021, the Company’s nonperforming assets, which include nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $722,000, or 0.02% of total assets, as compared to $734,000, or 0.02% of total assets at September 30, 2021, and $775,000 or 0.03% of total assets at December 31, 2020.

The Company has increased oversight and analysis of all segments of the loan portfolio in response to the COVID-19 pandemic, especially in vulnerable industries such as hospitality and restaurants, to proactively monitor evolving credit risk. Loans that have potential weaknesses that warrant a watchlist risk rating at December 31, 2021 totaled $49.3 million, compared to $67.4 million at September 30, 2021, and $44.8 million at December 31, 2020. As the COVID-19 pandemic continues to evolve, the length and extent of the economic uncertainty may result in further watchlist or adverse classifications in the loan portfolio. Loans that warranted a substandard risk rating at December 31, 2021 totaled $22.6 million, compared to $7.7 million at September 30, 2021, and $15.2 million at December 31, 2020. The linked-quarter increase to substandard loans was primarily due to the migration of two relationships previously listed as watch and both negatively impacted by the pandemic. Management continues to actively work with the borrowers and closely monitor substandard credits.

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

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

(dollars in thousands)

 

 

2021

 

 

 

2021

 

 

 

2021

 

 

 

2021

 

 

 

2020

 

Selected Asset Quality Data

 

 

 

 

 

 

Loans 30-89 Days Past Due

 

$

49

 

$

18

 

$

 

$

 

$

13

 

Loans 30-89 Days Past Due to Total Loans

 

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

Nonperforming Loans

 

$

722

 

$

734

 

$

761

 

$

770

 

$

775

 

Nonperforming Loans to Total Loans

 

 

0.03

%

 

0.03

%

 

0.03

%

 

0.03

%

 

0.03

%

Foreclosed Assets

 

$

 

$

 

$

 

$

 

$

 

Nonaccrual Loans to Total Loans

 

 

0.03

%

 

0.03

%

 

0.03

%

 

0.03

%

 

0.03

%

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

 

 

0.03

 

 

0.03

 

 

0.03

 

 

0.03

 

 

0.03

 

Nonperforming Assets (1)

 

$

722

 

$

734

 

$

761

 

$

770

 

$

775

 

Nonperforming Assets to Total Assets (1)

 

 

0.02

%

 

0.02

%

 

0.02

%

 

0.03

%

 

0.03

%

Allowance for Loan Losses to Total Loans

 

 

1.42

 

 

1.43

 

 

1.45

 

 

1.48

 

 

1.50

 

Allowance for Loan Losses to Total Loans, Excluding PPP Loans

 

 

1.43

 

 

1.46

 

 

1.50

 

 

1.59

 

 

1.59

 

Allowance for Loans Losses to Nonaccrual Loans

 

 

5,542.94

 

 

5,299.86

 

 

4,939.68

 

 

4,673.64

 

 

4,495.61

 

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

 

 

0.00

 

 

0.00

 

 

0.00

 

 

(0.01

)

 

0.08

 

_________________________________

(1)

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

The Company developed programs for clients who experienced business and personal disruptions due to the COVID-19 pandemic by providing interest-only modifications, loan payment deferrals, and extended amortization modifications. In accordance with interagency regulatory guidance and the CARES Act, qualifying loans modified in response to the COVID-19 pandemic are not considered troubled debt restructurings. The Company had 12 modified loans totaling $35.0 million outstanding as of December 31, 2021, representing 1.3% of the total loan portfolio, excluding PPP loans, which is down slightly from $35.4 million at September 30, 2021.

The following table presents a rollforward of loan modification activity, by modification type, from September 30, 2021 to December 31, 2021:

 

 

 

 

 

 

 

(dollars in thousands)

 

Interest-Only

 

Extended Amortization

 

Total

Principal Balance - Beginning of Period

 

$

30,597

 

 

$

4,764

 

 

$

35,361

 

Modification Expired

 

 

(468

)

 

 

 

 

 

(468

)

Net Principal Advances (Payments)

 

 

120

 

 

 

(24

)

 

 

96

 

Principal Balance - End of Period

 

$

30,249

 

 

$

4,740

 

 

$

34,989

 

About the Company

Bridgewater Bancshares, Inc. (Nasdaq: BWB) is a St. Louis Park, Minnesota-based financial holding company. Bridgewater's banking subsidiary, Bridgewater Bank, is a premier, full-service Twin Cities bank dedicated to serving the diverse needs of commercial real estate investors, entrepreneurs, business clients and high-net-worth individuals. By pairing a range of deposit, lending and business services solutions with a responsive service model, Bridgewater has seen continuous growth and profitability. With total assets of $3.5 billion and seven branches as of December 31, 2021, Bridgewater is considered one of the largest locally led banks in the State of Minnesota, and has received numerous awards for its growth, banking services and esteemed corporate culture.

Use of Non-GAAP financial measures

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

Forward-Looking Statements

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

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

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

 

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands, except share data)

 

 

 

December 31,

 

September 30,

 

December 31,

 

 

 

2021

 

 

 

2021

 

 

 

2020

 

 

 

(Unaudited)

 

(Unaudited)

 

 

ASSETS

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

143,473

 

$

189,502

 

$

160,675

Bank-Owned Certificates of Deposit

 

 

1,876

 

 

 

1,877

 

 

 

2,860

 

Securities Available for Sale, at Fair Value

 

 

439,362

 

 

 

413,149

 

 

 

390,629

 

Loans, Net of Allowance for Loan Losses of $40,020 at December 31, 2021 (unaudited), $38,901 at September 30, 2021 (unaudited) and $34,841 at December 31, 2020

 

 

2,769,917

 

 

 

2,662,912

 

 

 

2,282,436

 

Federal Home Loan Bank (FHLB) Stock, at Cost

 

 

5,242

 

 

 

5,442

 

 

 

5,027

 

Premises and Equipment, Net

 

 

49,395

 

 

 

49,803

 

 

 

50,987

 

Accrued Interest

 

 

9,186

 

 

 

8,550

 

 

 

9,172

 

Goodwill

 

 

2,626

 

 

 

2,626

 

 

 

2,626

 

Other Intangible Assets, Net

 

 

479

 

 

 

527

 

 

 

670

 

Other Assets

 

 

56,103

 

 

 

54,737

 

 

 

22,263

 

Total Assets

 

$

3,477,659

 

 

$

3,389,125

 

 

$

2,927,345

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest Bearing

 

$

875,084

 

 

$

846,490

 

 

$

671,903

 

Interest Bearing

 

 

2,071,153

 

 

 

2,007,667

 

 

 

1,829,733

 

Total Deposits

 

 

2,946,237

 

 

 

2,854,157

 

 

 

2,501,636

 

Notes Payable

 

 

 

 

 

 

 

 

11,000

 

FHLB Advances

 

 

42,500

 

 

 

47,500

 

 

 

57,500

 

Subordinated Debentures, Net of Issuance Costs

 

 

92,239

 

 

 

92,153

 

 

 

73,739

 

Accrued Interest Payable

 

 

1,409

 

 

 

1,656

 

 

 

1,615

 

Other Liabilities

 

 

16,002

 

 

 

25,856

 

 

 

16,450

 

Total Liabilities

 

 

3,098,387

 

 

 

3,021,322

 

 

 

2,661,940

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

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

 

 

 

 

 

 

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

 

 

66,514

 

 

 

66,515

 

 

 

 

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

 

 

 

 

 

 

Common Stock - Issued and Outstanding 28,206,566 at December 31, 2021 (unaudited), 28,066,822 at September 30, 2021 (unaudited) and 28,143,493 at December 31, 2020

 

 

282

 

 

 

281

 

 

 

281

 

Additional Paid-In Capital

 

 

104,123

 

 

 

103,471

 

 

 

103,714

 

Retained Earnings

 

 

199,347

 

 

 

188,004

 

 

 

154,831

 

Accumulated Other Comprehensive Income

 

 

9,006

 

 

 

9,532

 

 

 

6,579

 

Total Shareholders' Equity

 

 

379,272

 

 

 

367,803

 

 

 

265,405

 

Total Liabilities and Shareholders' Equity

 

$

3,477,659

 

 

$

3,389,125

 

 

$

2,927,345

 

 

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in thousands, except per share data)

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

 

 

 

2021

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

Loans, Including Fees

 

$

31,140

 

$

31,049

 

$

28,242

 

$

118,845

 

$

105,492

Investment Securities

 

 

2,511

 

 

 

2,333

 

 

 

2,333

 

 

 

9,576

 

 

 

8,720

 

Other

 

 

124

 

 

 

135

 

 

 

124

 

 

 

458

 

 

 

614

 

Total Interest Income

 

 

33,775

 

 

 

33,517

 

 

 

30,699

 

 

 

128,879

 

 

 

114,826

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

3,241

 

 

 

3,417

 

 

 

4,079

 

 

 

13,842

 

 

 

19,813

 

Notes Payable

 

 

 

 

 

 

 

 

105

 

 

 

61

 

 

 

439

 

FHLB Advances

 

 

162

 

 

 

213

 

 

 

551

 

 

 

831

 

 

 

3,390

 

Subordinated Debentures

 

 

1,219

 

 

 

1,214

 

 

 

1,119

 

 

 

4,630

 

 

 

3,109

 

Federal Funds Purchased

 

 

 

 

 

 

 

 

4

 

 

 

6

 

 

 

111

 

Total Interest Expense

 

 

4,622

 

 

 

4,844

 

 

 

5,858

 

 

 

19,370

 

 

 

26,862

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

 

 

29,153

 

 

 

28,673

 

 

 

24,841

 

 

 

109,509

 

 

 

87,964

 

Provision for Loan Losses

 

 

1,150

 

 

 

1,300

 

 

 

3,900

 

 

 

5,150

 

 

 

12,750

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME AFTER

 

 

 

 

 

 

 

 

 

 

PROVISION FOR LOAN LOSSES

 

 

28,003

 

 

 

27,373

 

 

 

20,941

 

 

 

104,359

 

 

 

75,214

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

Customer Service Fees

 

 

274

 

 

 

268

 

 

 

251

 

 

 

1,007

 

 

 

826

 

Net Gain on Sales of Available for Sale Securities

 

 

 

 

 

48

 

 

 

30

 

 

 

750

 

 

 

1,503

 

Other Income

 

 

1,014

 

 

 

1,094

 

 

 

705

 

 

 

3,552

 

 

 

3,510

 

Total Noninterest Income

 

 

1,288

 

 

 

1,410

 

 

 

986

 

 

 

5,309

 

 

 

5,839

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

Salaries and Employee Benefits

 

 

7,966

 

 

 

8,309

 

 

 

6,216

 

 

 

30,889

 

 

 

25,568

 

Occupancy and Equipment

 

 

939

 

 

 

942

 

 

 

979

 

 

 

3,916

 

 

 

3,258

 

Other Expense

 

 

3,554

 

 

 

3,985

 

 

 

8,063

 

 

 

13,290

 

 

 

16,561

 

Total Noninterest Expense

 

 

12,459

 

 

 

13,236

 

 

 

15,258

 

 

 

48,095

 

 

 

45,387

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

16,832

 

 

 

15,547

 

 

 

6,669

 

 

 

61,573

 

 

 

35,666

 

Provision for Income Taxes

 

 

4,318

 

 

 

4,038

 

 

 

1,690

 

 

 

15,886

 

 

 

8,472

 

NET INCOME

 

 

12,514

 

 

 

11,509

 

 

 

4,979

 

 

 

45,687

 

 

 

27,194

 

Preferred Stock Dividends

 

 

1,171

 

 

 

 

 

 

 

 

 

1,171

 

 

 

 

NET INCOME TO COMMON SHAREHOLDERS

 

$

11,343

 

 

$

11,509

 

 

$

4,979

 

 

$

44,516

 

 

$

27,194

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.41

 

 

$

0.41

 

 

$

0.18

 

 

$

1.59

 

 

$

0.95

 

Diluted

 

 

0.39

 

 

 

0.40

 

 

 

0.17

 

 

 

1.54

 

 

 

0.93

 

Dividends Paid Per Common Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bridgewater Bancshares, Inc. and Subsidiaries

Analysis of Average Balances, Yields and Rates

(dollars in thousands, except per share data)

 

 

 

For the Year Ended

 

 

December 31, 2021

 

December 31, 2020

 

 

Average

 

Interest

 

Yield/

 

Average

 

Interest

 

Yield/

 

 

Balance

 

& Fees

 

Rate

 

Balance

 

& Fees

 

Rate

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

Interest Earning Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash Investments

 

$

132,188

 

$

199

 

0.15

%

$

80,113

 

$

170

 

0.21

%

Investment Securities:

 

 

 

 

 

 

 

 

 

 

 

Taxable Investment Securities

 

 

317,954

 

 

 

7,015

 

 

2.21

 

 

234,873

 

 

 

5,712

 

 

2.43

 

Tax-Exempt Investment Securities (1)

 

 

75,313

 

 

 

3,242

 

 

4.30

 

 

87,587

 

 

 

3,807

 

 

4.35

 

Total Investment Securities

 

 

393,267

 

 

 

10,257

 

 

2.61

 

 

322,460

 

 

 

9,519

 

 

2.95

 

Paycheck Protection Program Loans (2)

 

 

103,151

 

 

 

6,441

 

 

6.24

 

 

122,240

 

 

 

4,143

 

 

3.39

 

Loans (1)(2)

 

 

2,481,706

 

 

 

112,587

 

 

4.54

 

 

2,032,180

 

 

 

101,469

 

 

4.99

 

Total Loans

 

 

2,584,857

 

 

 

119,028

 

 

4.60

 

 

2,154,420

 

 

 

105,612

 

 

4.90

 

Federal Home Loan Bank Stock

 

 

5,571

 

 

 

259

 

 

4.65

 

 

8,866

 

 

 

444

 

 

5.01

 

Total Interest Earning Assets

 

 

3,115,883

 

 

 

129,743

 

 

4.16

%

 

2,565,859

 

 

 

115,745

 

 

4.51

%

Noninterest Earning Assets

 

 

73,917

 

 

 

 

 

 

51,720

 

 

 

 

 

Total Assets

 

$

3,189,800

 

 

 

 

 

$

2,617,579

 

 

 

 

 

Interest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

Interest Bearing Transaction Deposits

 

$

441,528

 

 

$

2,052

 

 

0.46

%

$

295,036

 

 

$

1,626

 

 

0.55

%

Savings and Money Market Deposits

 

 

773,779

 

 

 

3,729

 

 

0.48

 

 

523,520

 

 

 

5,341

 

 

1.02

 

Time Deposits

 

 

323,638

 

 

 

4,099

 

 

1.27

 

 

374,195

 

 

 

7,806

 

 

2.09

 

Brokered Deposits

 

 

406,863

 

 

 

3,962

 

 

0.97

 

 

348,126

 

 

 

5,040

 

 

1.45

 

Total Interest Bearing Deposits

 

 

1,945,808

 

 

 

13,842

 

 

0.71

 

 

1,540,877

 

 

 

19,813

 

 

1.29

 

Federal Funds Purchased

 

 

2,479

 

 

 

6

 

 

0.24

 

 

7,239

 

 

 

111

 

 

1.53

 

Notes Payable

 

 

1,658

 

 

 

61

 

 

3.66

 

 

11,749

 

 

 

439

 

 

3.73

 

FHLB Advances

 

 

53,294

 

 

 

831

 

 

1.56

 

 

148,524

 

 

 

3,390

 

 

2.28

 

Subordinated Debentures

 

 

82,865

 

 

 

4,630

 

 

5.59

 

 

50,954

 

 

 

3,109

 

 

6.10

 

Total Interest Bearing Liabilities

 

 

2,086,104

 

 

 

19,370

 

 

0.93

%

 

1,759,343

 

 

 

26,862

 

 

1.53

%

Noninterest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Noninterest Bearing Transaction Deposits

 

 

764,087

 

 

 

 

 

 

579,595

 

 

 

 

 

Other Noninterest Bearing Liabilities

 

 

23,372

 

 

 

 

 

 

19,905

 

 

 

 

 

Total Noninterest Bearing Liabilities

 

 

787,459

 

 

 

 

 

 

599,500

 

 

 

 

 

Shareholders' Equity

 

 

316,237

 

 

 

 

 

 

258,736

 

 

 

 

 

Total Liabilities and Shareholders' Equity

 

$

3,189,800

 

 

 

 

 

$

2,617,579

 

 

 

 

 

Net Interest Income / Interest Rate Spread

 

 

 

 

110,373

 

 

3.23

%

 

 

 

88,883

 

 

2.98

%

Net Interest Margin (3)

 

 

 

 

 

3.54

%

 

 

 

 

3.46

%

Taxable Equivalent Adjustment:

 

 

 

 

 

 

 

 

 

 

 

Tax-Exempt Investment Securities

 

 

 

 

(864

)

 

 

 

 

 

(919

)

 

 

Net Interest Income

 

 

 

$

109,509

 

 

 

 

 

$

87,964

 

 

 

_________________________________

(1)

Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a statutory federal income tax rate of 21%

(2)

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

(3)

Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

 

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

 

 

 

For the Three Months Ended

 

For the Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

 

 

 

2021

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Pre-Provision Net Revenue

 

 

 

 

 

 

Noninterest Income

 

$

1,288

 

$

1,410

 

$

986

 

$

5,309

 

$

5,839

 

Less: Gain on sales of Securities

 

 

 

 

(48

)

 

(30

)

 

(750

)

 

(1,503

)

Total Operating Noninterest Income

 

 

1,288

 

 

1,362

 

 

956

 

 

4,559

 

 

4,336

 

Plus: Net Interest Income

 

 

29,153

 

 

28,673

 

 

24,841

 

 

109,509

 

 

87,964

 

Net Operating Revenue

 

$

30,441

 

$

30,035

 

$

25,797

 

$

114,068

 

$

92,300

 

 

 

 

 

 

 

 

Noninterest Expense

 

$

12,459

 

$

13,236

 

$

15,258

 

$

48,095

 

$

45,387

 

Less: Amortization of Tax Credit Investments

 

 

(152

)

 

(152

)

 

(146

)

 

(562

)

 

(738

)

Less: Debt Prepayment Fees

 

 

 

 

(582

)

 

(5,613

)

 

(582

)

 

(7,043

)

Total Operating Noninterest Expense

 

$

12,307

 

$

12,502

 

$

9,499

 

$

46,951

 

$

37,606

 

 

 

 

 

 

 

 

Pre-Provision Net Revenue

 

$

18,134

 

$

17,533

 

$

16,298

 

$

67,117

 

$

54,694

 

 

 

 

 

 

 

 

Plus:

 

 

 

 

 

 

Non-Operating Revenue Adjustments

 

 

 

 

48

 

 

30

 

 

750

 

 

1,503

 

Less:

 

 

 

 

 

 

Provision for Loan Losses

 

 

1,150

 

 

1,300

 

 

3,900

 

 

5,150

 

 

12,750

 

Non-Operating Expense Adjustments

 

 

152

 

 

734

 

 

5,759

 

 

1,144

 

 

7,781

 

Provision for Income Taxes

 

 

4,318

 

 

4,038

 

 

1,690

 

 

15,886

 

 

8,472

 

Net Income

 

$

12,514

 

$

11,509

 

$

4,979

 

$

45,687

 

$

27,194

 

 

 

 

 

 

 

 

Average Assets

 

$

3,403,270

 

$

3,332,301

 

$

2,816,032

 

$

3,189,800

 

$

2,617,579

 

Pre-Provision Net Revenue Return on Average Assets

 

 

2.11

%

 

2.09

%

 

2.30

%

 

2.10

%

 

2.09

%

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

As of and for the Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

 

 

 

2021

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Core Net Interest Margin

 

 

 

 

 

 

 

Net Interest Income (Tax-Equivalent Basis)

 

$

29,388

 

$

28,880

 

$

25,051

 

 

$

110,373

 

$

88,883

 

Less: Loan Fees

 

 

(1,462

)

 

(1,487

)

 

(1,514

)

 

 

(5,173

)

 

(5,283

)

Less: PPP Interest and Fees

 

 

(1,057

)

 

(1,753

)

 

(2,097

)

 

 

(6,441

)

 

(4,143

)

Core Net Interest Income

 

$

26,869

 

$

25,640

 

$

21,440

 

 

$

98,759

 

$

79,457

 

 

 

 

 

 

 

 

 

Average Interest Earning Assets

 

 

3,320,603

 

 

3,234,301

 

 

2,759,543

 

 

 

3,115,883

 

 

2,565,859

 

Less: Average PPP Loans

 

 

(39,900

)

 

(76,006

)

 

(165,099

)

 

 

(103,151

)

 

(122,240

)

Core Average Interest Earning Assets

 

$

3,280,703

 

$

3,158,295

 

$

2,594,444

 

 

$

3,012,732

 

$

2,443,619

 

Core Net Interest Margin

 

 

3.25

%

 

3.22

%

 

3.29

%

 

 

3.28

%

 

3.25

%

 

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

 

 

 

For the Three Months Ended

 

For the Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

 

 

 

2021

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Efficiency Ratio

 

 

 

 

 

 

 

Noninterest Expense

 

$

12,459

 

$

13,236

 

$

15,258

 

 

$

48,095

 

$

45,387

 

Less: Amortization of Intangible Assets

 

 

(48

)

 

(48

)

 

(48

)

 

 

(191

)

 

(191

)

Adjusted Noninterest Expense

 

$

12,411

 

$

13,188

 

$

15,210

 

 

$

47,904

 

$

45,196

 

Net Interest Income

 

$

29,153

 

$

28,673

 

$

24,841

 

 

$

109,509

 

$

87,964

 

Noninterest Income

 

 

1,288

 

 

1,410

 

 

986

 

 

 

5,309

 

 

5,839

 

Less: Gain on Sales of Securities

 

 

 

 

(48

)

 

(30

)

 

 

(750

)

 

(1,503

)

Adjusted Operating Revenue

 

$

30,441

 

$

30,035

 

$

25,797

 

 

$

114,068

 

$

92,300

 

Efficiency Ratio

 

 

40.8

%

 

43.9

%

 

59.0

%

 

 

42.0

%

 

49.0

%

 

 

 

 

 

 

 

 

Adjusted Efficiency Ratio

 

 

 

 

 

 

 

Noninterest Expense

 

$

12,459

 

$

13,236

 

$

15,258

 

 

$

48,095

 

$

45,387

 

Less: Amortization of Tax Credit Investments

 

 

(152

)

 

(152

)

 

(146

)

 

 

(562

)

 

(738

)

Less: Debt Prepayment Fees

 

 

 

 

(582

)

 

(5,613

)

 

 

(582

)

 

(7,043

)

Less: Amortization of Intangible Assets

 

 

(48

)

 

(48

)

 

(48

)

 

 

(191

)

 

(191

)

Adjusted Noninterest Expense

 

$

12,259

 

$

12,454

 

$

9,451

 

 

$

46,760

 

$

37,415

 

Net Interest Income

 

$

29,153

 

$

28,673

 

$

24,841

 

 

$

109,509

 

$

87,964

 

Noninterest Income

 

 

1,288

 

 

1,410

 

 

986

 

 

 

5,309

 

 

5,839

 

Less: Gain on Sales of Securities

 

 

 

 

(48

)

 

(30

)

 

 

(750

)

 

(1,503

)

Adjusted Operating Revenue

 

$

30,441

 

$

30,035

 

$

25,797

 

 

$

114,068

 

$

92,300

 

Adjusted Efficiency Ratio

 

 

40.3

%

 

41.5

%

 

36.6

%

 

 

41.0

%

 

40.5

%

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

For the Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

 

December 31,

 

December 31,

 

 

 

2021

 

 

 

2021

 

 

 

2020

 

 

 

 

2021

 

 

 

2020

 

Adjusted Noninterest Expense to Average Assets (Annualized)

 

 

 

 

 

 

 

Noninterest Expense

 

$

12,459

 

$

13,236

 

$

15,258

 

 

$

48,095

 

$

45,387

 

Less: Amortization of Tax Credit Investments

 

 

(152

)

 

(152

)

 

(146

)

 

 

(562

)

 

(738

)

Less: Debt Prepayment Fees

 

 

 

 

(582

)

 

(5,613

)

 

 

(582

)

 

(7,043

)

Adjusted Noninterest Expense

 

$

12,307

 

$

12,502

 

$

9,499

 

 

$

46,951

 

$

37,606

 

 

 

 

 

 

 

 

 

Average Assets

 

$

3,403,270

 

$

3,332,301

 

$

2,816,032

 

 

$

3,189,800

 

$

2,617,579

 

Adjusted Noninterest Expense to Average Assets (Annualized)

 

 

1.43

%

 

1.49

%

 

1.34

%

 

 

1.47

%

 

1.44

%

 

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

 

 

 

As of and for the Three Months Ended

 

 

As of and for the Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

 

December 31,

 

December 31,

 

 

 

2021

 

 

 

2021

 

 

 

2020

 

 

 

 

2021

 

 

 

2020

 

Tangible Common Equity and Tangible Common Equity/Tangible Assets

 

 

 

 

 

 

 

Total Shareholders' Equity

 

$

379,272

 

$

367,803

 

$

265,405

 

 

 

 

Less: Preferred Stock

 

 

(66,514

)

 

(66,515

)

 

 

 

 

 

Total Common Shareholders' Equity

 

 

312,758

 

 

301,288

 

 

265,405

 

 

 

 

Less: Intangible Assets