Exhibit 99.1
Bridgewater Bancshares, Inc. Announces Earnings With Third Quarter 2018 Net Income up 38.2% Over Third Quarter 2017
Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the parent company of Bridgewater Bank (the Bank), today announced net income of $6.5 million for the third quarter of 2018, a 38.2% increase over net income of $4.7 million for the third quarter of 2017. Net income per diluted common share for the third quarter of 2018 was $0.21, a 12.5% increase, compared to $0.19 per diluted common share for the same period in 2017.
“We had another strong quarter and I could not be more pleased with the results.” says Jerry Baack, Chairman, Chief Executive Officer, and President. “Our third quarter results demonstrate strong organic growth on both sides of the balance sheet, which is supported by our continued investments in our people and infrastructure. We look to finish this milestone year by focusing on the expansion of our operations into the St. Paul market, as well as remaining active in attracting and onboarding displaced clients and personnel from recent M&A dislocation in our market.”
THIRD QUARTER 2018 FINANCIAL RESULTS
|
|
|
|
|
Basic |
|
Diluted |
|
|
|
Tangible book |
|||
|
ROA |
|
ROE |
|
Earnings per share |
|
Earnings per share |
|
Efficiency ratio (1) |
|
value per share (1) |
|||
|
1.41% |
|
12.28% |
|
$ |
0.22 |
|
$ |
0.21 |
|
42.7% |
|
$ |
6.89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details. |
Third Quarter 2018 Highlights
|
· |
Annualized return on average assets (ROA) and return on average common equity (ROE) for the third quarter of 2018 were 1.41% and 12.28%, respectively, compared to annualized ROA and ROE of 1.23% and 14.07%, respectively, for the third quarter of 2017. |
|
· |
Net income was $6.5 million for the third quarter of 2018 compared to $4.7 million for the third quarter of 2017, an increase of 38.2%. |
|
· |
Diluted earnings per common share for the third quarter of 2018 were $0.21, compared to $0.19 for the third quarter of 2017. |
|
· |
Gross loans increased $328.0 million to $1.60 billion at the end of the third quarter of 2018 compared to $1.27 billion as of the same time last year, an increase of 25.8%. |
|
· |
Nonperforming assets to total assets decreased to 0.04%, compared to 0.13% in the third quarter of 2017. |
Page 1 of 11
Key Financial Measures
|
|
|
As of and for the Three Months Ended |
|
|
As of and for the Nine Months Ended |
|
||||||||
|
|
|
September 30, |
|
September 30, |
|
|
September 30, |
|
September 30, |
|
||||
|
|
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
|
||||
|
Per Common Share Data (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per Share |
|
$ |
0.22 |
|
$ |
0.19 |
|
|
$ |
0.67 |
|
$ |
0.55 |
|
|
Diluted Earnings Per Share |
|
|
0.21 |
|
|
0.19 |
|
|
|
0.66 |
|
|
0.55 |
|
|
Book Value Per Share |
|
|
7.01 |
|
|
5.43 |
|
|
|
|
|
|
|
|
|
Tangible Book Value Per Share (2) |
|
|
6.89 |
|
|
5.27 |
|
|
|
|
|
|
|
|
|
Basic Weighted Average Shares Outstanding |
|
|
30,059,374 |
|
|
24,600,731 |
|
|
|
28,640,601 |
|
|
24,593,524 |
|
|
Diluted Weighted Average Shares Outstanding |
|
|
30,489,648 |
|
|
24,819,939 |
|
|
|
29,070,876 |
|
|
24,812,732 |
|
|
Shares Outstanding at Period End |
|
|
30,059,374 |
|
|
24,629,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Performance Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on Average Assets (Annualized) |
|
|
1.41 |
% |
|
1.23 |
% |
|
|
1.49 |
% |
|
1.29 |
% |
|
Return on Average Common Equity (Annualized) |
|
|
12.28 |
|
|
14.07 |
|
|
|
13.70 |
|
|
14.44 |
|
|
Return on Average Tangible Common Equity (Annualized) (2) |
|
|
12.51 |
|
|
14.50 |
|
|
|
13.99 |
|
|
14.91 |
|
|
Yield on Interest Earning Assets |
|
|
4.92 |
|
|
4.77 |
|
|
|
4.85 |
|
|
4.74 |
|
|
Yield on Total Loans, Gross |
|
|
5.25 |
|
|
5.13 |
|
|
|
5.22 |
|
|
5.08 |
|
|
Cost of Interest Bearing Liabilities |
|
|
1.73 |
|
|
1.24 |
|
|
|
1.54 |
|
|
1.15 |
|
|
Cost of Total Deposits |
|
|
1.19 |
|
|
0.81 |
|
|
|
1.05 |
|
|
0.78 |
|
|
Net Interest Margin (3) |
|
|
3.71 |
|
|
3.89 |
|
|
|
3.76 |
|
|
3.93 |
|
|
Efficiency Ratio (2) |
|
|
42.7 |
|
|
40.3 |
|
|
|
41.5 |
|
|
39.9 |
|
|
Noninterest Expense to Average Assets (Annualized) |
|
|
1.64 |
|
|
1.61 |
|
|
|
1.60 |
|
|
1.58 |
|
|
Loan to Deposit Ratio |
|
|
108.2 |
|
|
98.2 |
|
|
|
|
|
|
|
|
|
Core Deposits to Total Deposits |
|
|
76.6 |
|
|
76.6 |
|
|
|
|
|
|
|
|
|
Tangible Common Equity to Tangible Assets (2) |
|
|
11.01 |
|
|
8.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Ratios (Bank Only) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Leverage Ratio |
|
|
11.16 |
% |
|
10.12 |
% |
|
|
|
|
|
|
|
|
Tier 1 Risk-based Capital Ratio |
|
|
11.82 |
|
|
11.92 |
|
|
|
|
|
|
|
|
|
Total Risk-based Capital Ratio |
|
|
12.95 |
|
|
13.14 |
|
|
|
|
|
|
|
|
|
(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. |
Page 2 of 11
Selected Financial Data
|
|
|
September 30, |
|
September 30, |
|
|
|
|
||
|
(dollars in thousands) |
|
2018 |
|
2017 |
|
% Change |
|
|
||
|
Selected Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
1,885,793 |
|
$ |
1,556,665 |
|
21.1 |
% |
|
|
Total Loans, Gross |
|
|
1,599,964 |
|
|
1,271,962 |
|
25.8 |
|
|
|
Allowance for Loan Losses |
|
|
18,949 |
|
|
15,219 |
|
24.5 |
|
|
|
Goodwill and Other Intangibles |
|
|
3,726 |
|
|
3,916 |
|
(4.9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
1,479,088 |
|
|
1,294,748 |
|
14.2 |
|
|
|
Tangible Common Equity (1) |
|
|
207,126 |
|
|
129,759 |
|
59.6 |
|
|
|
Total Shareholders' Equity |
|
|
210,852 |
|
|
133,675 |
|
57.7 |
|
|
|
Average Total Assets - Quarter-to-Date |
|
|
1,816,485 |
|
|
1,505,307 |
|
20.7 |
|
|
|
Average Common Equity - Quarter-to-Date |
|
|
208,773 |
|
|
131,862 |
|
58.3 |
|
|
|
(1) |
Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details. |
|
|
|
For the Three Months Ended |
|
|
|
|
For the Nine Months Ended |
|
|
|
||||||||
|
|
|
September 30, |
|
September 30, |
|
|
|
|
September 30, |
|
September 30, |
|
|
|
||||
|
(dollars in thousands) |
|
2018 |
|
2017 |
|
% Change |
|
|
2018 |
|
2017 |
|
% Change |
|
||||
|
Selected Income Statement Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income |
|
$ |
22,136 |
|
|
17,384 |
|
27.3 |
% |
|
$ |
61,238 |
|
$ |
47,770 |
|
28.2 |
% |
|
Interest Expense |
|
|
5,502 |
|
|
3,323 |
|
65.6 |
|
|
|
13,942 |
|
|
8,446 |
|
65.1 |
|
|
Net Interest Income |
|
|
16,634 |
|
|
14,061 |
|
18.3 |
|
|
|
47,296 |
|
|
39,324 |
|
20.3 |
|
|
Provision for Loan Losses |
|
|
1,275 |
|
|
1,200 |
|
6.3 |
|
|
|
2,775 |
|
|
2,975 |
|
(6.7) |
|
|
Net Interest Income after Provision for Loan Losses |
|
|
15,359 |
|
|
12,861 |
|
19.4 |
|
|
|
44,521 |
|
|
36,349 |
|
22.5 |
|
|
Noninterest Income |
|
|
814 |
|
|
987 |
|
(17.5) |
|
|
|
1,686 |
|
|
1,953 |
|
(13.7) |
|
|
Noninterest Expense |
|
|
7,526 |
|
|
6,109 |
|
23.2 |
|
|
|
20,522 |
|
|
16,634 |
|
23.4 |
|
|
Income Before Income Taxes |
|
|
8,647 |
|
|
7,739 |
|
11.7 |
|
|
|
25,685 |
|
|
21,668 |
|
18.5 |
|
|
Provision for Income Taxes |
|
|
2,184 |
|
|
3,064 |
|
(28.7) |
|
|
|
6,526 |
|
|
8,113 |
|
(19.6) |
|
|
Net Income |
|
$ |
6,463 |
|
$ |
4,675 |
|
38.2 |
|
|
$ |
19,159 |
|
$ |
13,555 |
|
41.3 |
|
Income Statement
Net Interest Income
Net interest income was $16.6 million for the third quarter of 2018, an increase of $2.6 million, or 18.3%, compared to $14.1 million for the third quarter of 2017. The increase in net interest income was largely attributable to growth in average interest earning assets, which increased by 21.0% to $1.81 billion for the three months ended September 30, 2018, from $1.49 billion for the three months ended September 30, 2017. This increase in average interest earning assets was primarily due to continued organic growth in the loan portfolio.
Net interest margin (on a fully tax-equivalent basis) for the third quarter of 2018 was 3.71%, compared to 3.89% for the third quarter of 2017, a decrease of 18 basis points. While net interest margin has benefitted from the repricing of variable-rate loans and the origination of new loans at higher rates, this was offset by increased balances and rates on non-core deposits and borrowings. Furthermore, the new lower statutory federal tax rate reduced the tax equivalent adjustment by six basis points.
Interest income increased $4.8 million, or 27.3%, to $22.1 million for the third quarter of 2018, compared to $17.4 million for the third 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 4.92% in the third quarter of 2018, compared to 4.77% in the third quarter of 2017. Loan interest income and loan fees remain the primary contributing factors to the increase in yield on interest earning assets, driving the aggregate loan yield 12 basis points higher from 5.13% in the third quarter of 2017 to 5.25% in the third quarter of 2018.
Page 3 of 11
Interest expense increased $2.2 million to $5.5 million for the third quarter of 2018, compared to $3.3 million for the third quarter of 2017, primarily due to increases in interest rates and average balances of both deposits and borrowings. The cost of interest bearing liabilities increased to 1.73% in the third quarter of 2018 from 1.24% in the third quarter of 2017 due to higher costs of both deposits and borrowings compared to 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 September 30, 2018 and 2017 is as follows:
Consolidated Average Balances, Interest Yields and Rates
|
|
|
For the Three Months Ended |
|
||||||||||||||
|
|
|
September 30, 2018 |
|
September 30, 2017 |
|
||||||||||||
|
|
|
Average |
|
Interest |
|
Yield/ |
|
Average |
|
Interest |
|
Yield/ |
|
||||
|
|
|
Balance |
|
& Fees |
|
Rate |
|
Balance |
|
& Fees |
|
Rate |
|
||||
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Earning Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Investments |
|
$ |
23,822 |
|
$ |
72 |
|
1.20 |
% |
$ |
40,480 |
|
$ |
110 |
|
1.08 |
% |
|
Investment Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable Investment Securities |
|
|
132,197 |
|
|
839 |
|
2.52 |
|
|
102,592 |
|
|
491 |
|
1.90 |
|
|
Tax-Exempt Investment Securities (1) |
|
|
116,042 |
|
|
1,204 |
|
4.12 |
|
|
130,772 |
|
|
1,610 |
|
4.88 |
|
|
Total Investment Securities |
|
|
248,239 |
|
|
2,043 |
|
3.27 |
|
|
233,364 |
|
|
2,101 |
|
3.57 |
|
|
Loans (2) |
|
|
1,526,765 |
|
|
20,207 |
|
5.25 |
|
|
1,214,501 |
|
|
15,707 |
|
5.13 |
|
|
Federal Home Loan Bank Stock |
|
|
6,619 |
|
|
67 |
|
4.02 |
|
|
3,772 |
|
|
29 |
|
3.05 |
|
|
Total Interest Earning Assets |
|
|
1,805,445 |
|
|
22,389 |
|
4.92 |
% |
|
1,492,117 |
|
|
17,947 |
|
4.77 |
% |
|
Noninterest Earning Assets |
|
|
11,040 |
|
|
|
|
|
|
|
13,190 |
|
|
|
|
|
|
|
Total Assets |
|
$ |
1,816,485 |
|
|
|
|
|
|
$ |
1,505,307 |
|
|
|
|
|
|
|
Interest Bearing Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Bearing Transaction Deposits |
|
|
171,923 |
|
|
165 |
|
0.38 |
% |
|
178,074 |
|
|
97 |
|
0.22 |
% |
|
Savings and Money Market Deposits |
|
|
398,092 |
|
|
1,373 |
|
1.37 |
|
|
302,885 |
|
|
619 |
|
0.81 |
|
|
Time Deposits |
|
|
295,320 |
|
|
1,490 |
|
2.00 |
|
|
288,782 |
|
|
1,117 |
|
1.53 |
|
|
Brokered Deposits |
|
|
241,355 |
|
|
1,294 |
|
2.13 |
|
|
193,587 |
|
|
758 |
|
1.55 |
|
|
Federal Funds Purchased |
|
|
27,391 |
|
|
147 |
|
2.13 |
|
|
3,420 |
|
|
10 |
|
1.16 |
|
|
Notes Payable |
|
|
15,500 |
|
|
144 |
|
3.69 |
|
|
17,500 |
|
|
162 |
|
3.67 |
|
|
FHLB Advances |
|
|
89,652 |
|
|
488 |
|
2.16 |
|
|
53,217 |
|
|
212 |
|
1.58 |
|
|
Subordinated Debentures |
|
|
24,595 |
|
|
401 |
|
6.47 |
|
|
21,562 |
|
|
348 |
|
6.40 |
|
|
Total Interest Bearing Liabilities |
|
|
1,263,828 |
|
|
5,502 |
|
1.73 |
% |
|
1,059,027 |
|
|
3,323 |
|
1.24 |
% |
|
Noninterest Bearing Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Bearing Transaction Deposits |
|
|
335,483 |
|
|
|
|
|
|
|
307,361 |
|
|
|
|
|
|
|
Other Noninterest Bearing Liabilities |
|
|
8,401 |
|
|
|
|
|
|
|
7,057 |
|
|
|
|
|
|
|
Total Noninterest Bearing Liabilities |
|
|
343,884 |
|
|
|
|
|
|
|
314,418 |
|
|
|
|
|
|
|
Shareholders' Equity |
|
|
208,773 |
|
|
|
|
|
|
|
131,862 |
|
|
|
|
|
|
|
Total Liabilities and Shareholders' Equity |
|
$ |
1,816,485 |
|
|
|
|
|
|
$ |
1,505,307 |
|
|
|
|
|
|
|
Net Interest Income / Interest Rate Spread |
|
|
|
|
|
16,887 |
|
3.19 |
% |
|
|
|
|
14,624 |
|
3.53 |
% |
|
Net Interest Margin (3) |
|
|
|
|
|
|
|
3.71 |
% |
|
|
|
|
|
|
3.89 |
% |
|
Taxable Equivalent Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax-Exempt Investment Securities |
|
|
|
|
|
(253) |
|
|
|
|
|
|
|
(563) |
|
|
|
|
Net Interest Income |
|
|
|
|
$ |
16,634 |
|
|
|
|
|
|
$ |
14,061 |
|
|
|
|
(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 interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period. |
Provision for Loan Losses
The provision for loan losses was $1.3 million for the third quarter of 2018, an increase of $75,000 compared to the provision for loan losses of $1.2 million for the third quarter of 2017. The provision increased in the third quarter of 2018 primarily due to higher loan growth in comparison to the third quarter of 2017.
Page 4 of 11
A reconciliation of the Company’s allowance for loan losses for the three and nine month periods ended September 30, 2018 and 2017 is as follows:
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
|
|
September 30, |
|
September 30, |
||||||||
|
(dollars in thousands) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
||||
|
Balance at Beginning of Period |
|
$ |
17,666 |
|
$ |
14,053 |
|
$ |
16,502 |
|
$ |
12,333 |
|
Provision for Loan Losses |
|
|
1,275 |
|
|
1,200 |
|
|
2,775 |
|
|
2,975 |
|
Charge-offs |
|
|
(11) |
|
|
(47) |
|
|
(384) |
|
|
(130) |
|
Recoveries |
|
|
19 |
|
|
13 |
|
|
56 |
|
|
41 |
|
Balance at September 30, |
|
$ |
18,949 |
|
$ |
15,219 |
|
$ |
18,949 |
|
$ |
15,219 |
Noninterest Income
Noninterest income was $814,000 for the third quarter of 2018, a decrease of $173,000 from $987,000 for the third quarter of 2017.
The following table presents the major components of noninterest income for the three and nine month periods ended September 30, 2018, compared to the three and nine month periods ended September 30, 2017:
|
|
|
Three Months Ended |
|
|
|
|
Nine Months Ended |
|
|
|
||||||||
|
|
|
September 30, |
|
Increase/ |
|
September 30, |
|
Increase/ |
||||||||||
|
(dollars in thousands) |
|
2018 |
|
2017 |
|
(Decrease) |
|
2018 |
|
2017 |
|
(Decrease) |
||||||
|
Noninterest Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer Service Fees |
|
$ |
184 |
|
$ |
174 |
|
$ |
10 |
|
$ |
539 |
|
$ |
483 |
|
$ |
56 |
|
Net Gain (Loss) on Sales of Securities |
|
|
(49) |
|
|
15 |
|
|
(64) |
|
|
(108) |
|
|
(51) |
|
|
(57) |
|
Net Gain (Loss) on Sales of Foreclosed Assets |
|
|
(88) |
|
|
202 |
|
|
(290) |
|
|
(225) |
|
|
352 |
|
|
(577) |
|
Letter of Credit Fees |
|
|
447 |
|
|
387 |
|
|
60 |
|
|
814 |
|
|
634 |
|
|
180 |
|
Debit Card Interchange Fees |
|
|
99 |
|
|
101 |
|
|
(2) |
|
|
287 |
|
|
293 |
|
|
(6) |
|
Other Income |
|
|
221 |
|
|
108 |
|
|
113 |
|
|
379 |
|
|
242 |
|
|
137 |
|
Totals |
|
$ |
814 |
|
$ |
987 |
|
$ |
(173) |
|
$ |
1,686 |
|
$ |
1,953 |
|
$ |
(267) |
Noninterest Expense
Noninterest expense was $7.5 million for the third quarter of 2018, an increase of $1.4 million, or 23.2% from $6.1 million for the third 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 growth. The increase was partially offset by a decrease of $456,000 in professional and consulting fees due to higher expenses incurred in the third quarter of 2017 in contemplation of the initial public offering, in comparison to the third quarter of 2018.
The following table presents the major components of noninterest expense for the three and nine month periods ended September 30, 2018, compared to the three and nine month periods ended September 30, 2017:
|
|
|
Three Months Ended |
|
|
|
|
Nine Months Ended |
|
|
|
||||||||
|
|
|
September 30, |
|
Increase/ |
|
September 30, |
|
Increase/ |
||||||||||
|
(dollars in thousands) |
|
2018 |
|
2017 |
|
(Decrease) |
|
2018 |
|
2017 |
|
(Decrease) |
||||||
|
Noninterest Expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and Employee Benefits |
|
$ |
4,910 |
|
$ |
3,685 |
|
$ |
1,225 |
|
$ |
13,534 |
|
$ |
9,945 |
|
$ |
3,589 |
|
Occupancy and Equipment |
|
|
596 |
|
|
570 |
|
|
26 |
|
|
1,767 |
|
|
1,629 |
|
|
138 |
|
FDIC Insurance Assessment |
|
|
240 |
|
|
15 |
|
|
225 |
|
|
675 |
|
|
525 |
|
|
150 |
|
Data Processing |
|
|
167 |
|
|
138 |
|
|
29 |
|
|
325 |
|
|
464 |
|
|
(139) |
|
Professional and Consulting Fees |
|
|
313 |
|
|
769 |
|
|
(456) |
|
|
836 |
|
|
1,328 |
|
|
(492) |
|
Information Technology and Telecommunications |
|
|
271 |
|
|
178 |
|
|
93 |
|
|
674 |
|
|
500 |
|
|
174 |
|
Marketing and Advertising |
|
|
347 |
|
|
206 |
|
|
141 |
|
|
911 |
|
|
736 |
|
|
175 |
|
Intangible Asset Amortization |
|
|
48 |
|
|
48 |
|
|
— |
|
|
143 |
|
|
143 |
|
|
— |
|
Other Expense |
|
|
634 |
|
|
500 |
|
|
134 |
|
|
1,657 |
|
|
1,364 |
|
|
293 |
|
Totals |
|
$ |
7,526 |
|
$ |
6,109 |
|
$ |
1,417 |
|
$ |
20,522 |
|
$ |
16,634 |
|
$ |
3,888 |
Full-time equivalent employees increased from 115 at the end of the third quarter of 2017 to 139 at the end of the third quarter of 2018. The increase includes key strategic hires, particularly in deposit gathering roles, as the Company continues to capitalize on M&A disruption. Despite increased overhead, the Company experienced only a marginal increase in the efficiency ratio, a non-GAAP financial measure. The efficiency ratio was 42.7% for the third quarter of 2018, compared to 40.3% for the third quarter of 2017.
Page 5 of 11
Income Taxes
The effective combined federal and state income tax rate for the third quarter of 2018 was 25.3%, compared to 39.6% for the third quarter of 2017. The lower effective combined rate was primarily due to the reduction in the federal corporate tax rate from 35% to 21%.
Balance Sheet
Total assets at September 30, 2018 were $1.89 billion, a 7.6% increase from $1.75 billion at June 30, 2018, and a 21.1% increase from $1.56 billion at September 30, 2017. The increase in total assets was primarily due to organic loan growth.
Total gross loans at September 30, 2018 were $1.60 billion, an increase of $136.6 million, or 9.3%, over total gross loans of $1.46 billion at June 30, 2018, and an increase of $328.0 million, or 25.8%, over total gross loans of $1.27 billion at September 30, 2017.
The following table details the composition of the Company’s loan portfolio, by category, at the dates indicated:
|
|
|
September 30, 2018 |
|
June 30, 2018 |
|
March 31, 2018 |
|
December 31, 2017 |
|
September 30, 2017 |
|
|||||
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and Industrial |
|
$ |
235,502 |
|
$ |
204,072 |
|
$ |
199,262 |
|
$ |
217,753 |
|
$ |
192,840 |
|
|
Construction and Land Development |
|
|
187,919 |
|
|
164,492 |
|
|
147,842 |
|
|
130,586 |
|
|
119,427 |
|
|
Real Estate Mortgage: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 - 4 Family Mortgage |
|
|
224,124 |
|
|
213,265 |
|
|
200,573 |
|
|
195,707 |
|
|
187,573 |
|
|
Multifamily |
|
|
389,511 |
|
|
340,888 |
|
|
332,770 |
|
|
317,872 |
|
|
286,191 |
|
|
CRE Owner Occupied |
|
|
65,905 |
|
|
65,891 |
|
|
67,512 |
|
|
65,909 |
|
|
59,208 |
|
|
CRE Nonowner Occupied |
|
|
492,499 |
|
|
470,437 |
|
|
453,498 |
|
|
415,034 |
|
|
422,269 |
|
|
Total Real Estate Mortgage Loans |
|
|
1,172,039 |
|
|
1,090,481 |
|
|
1,054,353 |
|
|
994,522 |
|
|
955,241 |
|
|
Consumer and Other |
|
|
4,504 |
|
|
4,275 |
|
|
3,963 |
|
|
4,252 |
|
|
4,454 |
|
|
Total Loans, Gross |
|
|
1,599,964 |
|
|
1,463,320 |
|
|
1,405,420 |
|
|
1,347,113 |
|
|
1,271,962 |
|
|
Allowance for Loan Losses |
|
|
(18,949) |
|
|
(17,666) |
|
|
(17,121) |
|
|
(16,502) |
|
|
(15,219) |
|
|
Net Deferred Loan Fees |
|
|
(4,308) |
|
|
(4,058) |
|
|
(4,130) |
|
|
(4,104) |
|
|
(4,128) |
|
|
Total Loans, Net |
|
$ |
1,576,707 |
|
$ |
1,441,596 |
|
$ |
1,384,169 |
|
$ |
1,326,507 |
|
$ |
1,252,615 |
|
Total deposits at September 30, 2018 were $1.48 billion, an increase of $64.4 million, or 4.6%, over total deposits of $1.41 billion at June 30, 2018, and an increase of $184.3 million, or 14.2%, over total deposits of $1.29 billion at September 30, 2017.
The following table details the composition of the Company’s deposit portfolio, by category, at the dates indicated:
|
|
|
September 30, 2018 |
|
June 30, 2018 |
|
March 31, 2018 |
|
December 31, 2017 |
|
September 30, 2017 |
|
|
|||||
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Bearing Transaction Deposits |
|
$ |
342,292 |
|
$ |
323,320 |
|
$ |
315,036 |
|
$ |
292,539 |
|
$ |
303,824 |
|
|
|
Interest Bearing Transaction Deposits |
|
|
175,455 |
|
|
178,045 |
|
|
164,899 |
|
|
177,292 |
|
|
173,947 |
|
|
|
Savings and Money Market Deposits |
|
|
416,140 |
|
|
381,942 |
|
|
339,541 |
|
|
369,942 |
|
|
330,935 |
|
|
|
Time Deposits |
|
|
290,887 |
|
|
300,701 |
|
|
304,743 |
|
|
292,096 |
|
|
289,084 |
|
|
|
Brokered Deposits |
|
|
254,314 |
|
|
230,683 |
|
|
228,817 |
|
|
207,481 |
|
|
196,958 |
|
|
|
Total Deposits |
|
$ |
1,479,088 |
|
$ |
1,414,691 |
|
$ |
1,353,036 |
|
$ |
1,339,350 |
|
$ |
1,294,748 |
|
|
Total shareholders’ equity at September 30, 2018 was $210.9 million, an increase of $4.9 million, or 2.4%, over total shareholders’ equity of $205.9 million at June 30, 2018, and an increase of $77.2 million, or 57.7%, over total shareholders’ equity of $133.7 million at September 30, 2017. The increase in total shareholders’ equity for the three months ended September 30, 2018 compared to the three months ended June 30, 2018, was primarily due to net income retained. The increase in total shareholders’ equity for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017, was primarily due to capital raised in the initial public offering.
Asset Quality
Asset quality metrics for the Company remained strong at September 30, 2018. Annualized net charge-offs as a percent of average loans for the third quarter of 2018 were 0.00%, compared to 0.10% for the second quarter of 2018, and 0.01% for the third quarter of 2017. At September 30, 2018, the Company’s nonperforming assets, which include nonaccrual loans and other real estate owned, were $718,000, or 0.04% of total assets, as compared to $894,000, or 0.05% of total assets at June 30, 2018, and $2.0 million, or 0.13% of total assets at September 30, 2017.
Page 6 of 11
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, LLC. Bridgewater Bank currently operates through 7 branches in Bloomington, Greenwood, Minneapolis (2), St. Louis Park, Orono, and St. Paul, all located within the Minneapolis-St. Paul-Bloomington metropolitan statistical area.
Investor Relations Contact:
Jerry Baack
Chief Executive Officer
investorrelations@bwbmn.com
952-893-6866
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 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; o