Bridgewater Bancshares Inc [BWB] Filings

10-Q 1 bwb-20220930x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ________

Commission File Number 001-38412

BRIDGEWATER BANCSHARES, INC.

(Exact name of registrant as specified in its charter)


Minnesota (State or other jurisdiction of incorporation or organization)		26-0113412 (I.R.S. Employer Identification No.)

4450 Excelsior Boulevard, Suite 100 St. Louis Park, Minnesota (Address of principal executive offices)		55416 (Zip Code)

(952) 893-6868

(Registrant’s telephone number, including area code)

. Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Stock, $0.01 Par Value	BWB	The Nasdaq Stock Market LLC
Depositary Shares, each representing a 1/100^th interest in a share of 5.875% Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01 per share	BWBBP	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
	Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the Common Stock outstanding as of November 1, 2022 was 27,590,978.

Table of Contents

Table of Contents


PART I FINANCIAL INFORMATION	3

Item 1. Consolidated Financial Statements (unaudited)	3
Consolidated Balance Sheets	3
Consolidated Statements of Income	4
Consolidated Statements of Comprehensive Income	5
Consolidated Statements of Shareholders’ Equity	6
Consolidated Statements of Cash Flows	7
Notes to Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3. Quantitative and Qualitative Disclosures About Market Risk	62
Item 4. Controls and Procedures	64

PART II OTHER INFORMATION	65

Item 1. Legal Proceedings	65
Item 1A. Risk Factors	65
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 3. Defaults Upon Senior Securities	66
Item 4. Mine Safety Disclosures	66
Item 5. Other Information	67
Item 6. Exhibits	67

SIGNATURES	68

Table of Contents

PART 1 – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands, except share data)


	September 30,		December 31,
	2022		2021
	(Unaudited)
ASSETS
Cash and Cash Equivalents	$	75,496	$	143,473
Bank-Owned Certificates of Deposit		1,182		1,876
Securities Available for Sale, at Fair Value		542,007		439,362
Loans, Net of Allowance for Loan Losses of $46,491 at September 30, 2022 (unaudited) and $40,020 at December 31, 2021		3,324,503		2,769,917
Federal Home Loan Bank (FHLB) Stock, at Cost		15,603		5,242
Premises and Equipment, Net		48,941		49,395
Accrued Interest		11,198		9,186
Goodwill		2,626		2,626
Other Intangible Assets, Net		336		479
Other Assets		107,095		56,103
Total Assets	$	4,128,987	$	3,477,659

LIABILITIES AND EQUITY
LIABILITIES
Deposits:
Noninterest Bearing	$	961,084	$	875,084
Interest Bearing		2,343,990		2,071,153
Total Deposits		3,305,074		2,946,237
Federal Funds Purchased		212,000		—
FHLB Advances		71,500		42,500
Subordinated Debentures, Net of Issuance Costs		92,559		92,239
Accrued Interest Payable		2,214		1,409
Other Liabilities		63,633		16,002
Total Liabilities		3,746,980		3,098,387

SHAREHOLDERS' EQUITY
Preferred Stock- $0.01 par value; Authorized 10,000,000
Preferred Stock - Issued and Outstanding 27,600 Series A shares ($2,500 liquidation preference) at September 30, 2022 (unaudited) and December 31, 2021		66,514		66,514
Common Stock- $0.01 par value; Authorized 75,000,000
Common Stock - Issued and Outstanding 27,587,978 at September 30, 2022 (unaudited) and 28,206,566 at December 31, 2021		276		282
Additional Paid-In Capital		95,973		104,123
Retained Earnings		235,964		199,347
Accumulated Other Comprehensive Income (Loss)		(16,720)		9,006
Total Shareholders' Equity		382,007		379,272
Total Liabilities and Equity	$	4,128,987	$	3,477,659

See accompanying notes to consolidated financial statements.

Table of Contents

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,		September 30,
	2022		2022		2021		2022		2021
INTEREST INCOME
Loans, Including Fees	$	37,666	$	34,358	$	31,049	$	103,768	$	87,705
Investment Securities		4,372		3,325		2,333		10,567		7,065
Other		321		99		135		500		334
Total Interest Income		42,359		37,782		33,517		114,835		95,104

INTEREST EXPENSE
Deposits		5,984		3,456		3,417		12,598		10,601
Notes Payable		—		—		—		—		61
FHLB Advances		329		167		213		646		669
Subordinated Debentures		1,242		1,219		1,214		3,658		3,411
Federal Funds Purchased		709		410		—		1,128		6
Total Interest Expense		8,264		5,252		4,844		18,030		14,748

NET INTEREST INCOME		34,095		32,530		28,673		96,805		80,356
Provision for Loan Losses		1,500		3,025		1,300		6,200		4,000

NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		32,595		29,505		27,373		90,605		76,356

NONINTEREST INCOME
Customer Service Fees		313		298		268		892		733
Net Gain on Sales of Available for Sale Securities		—		52		48		52		750
Other Income		1,074		1,300		1,094		3,650		2,538
Total Noninterest Income		1,387		1,650		1,410		4,594		4,021

NONINTEREST EXPENSE
Salaries and Employee Benefits		9,449		8,977		8,309		27,120		22,923
Occupancy and Equipment		1,086		1,042		942		3,213		2,977
Other Expense		3,622		3,733		3,985		11,084		9,736
Total Noninterest Expense		14,157		13,752		13,236		41,417		35,636

INCOME BEFORE INCOME TAXES		19,825		17,403		15,547		53,782		44,741
Provision for Income Taxes		5,312		4,521		4,038		14,125		11,568
NET INCOME		14,513		12,882		11,509		39,657		33,173
Preferred Stock Dividends		(1,013)		(1,014)		—		(3,040)		—
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	13,500	$	11,868	$	11,509	$	36,617	$	33,173

EARNINGS PER SHARE
Basic	$	0.49	$	0.43	$	0.41	$	1.32	$	1.18
Diluted		0.47		0.41		0.40		1.27		1.14

Table of Contents

See accompanying notes to consolidated financial statements.

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(dollars in thousands)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net Income	$	14,513	$	11,509	$	39,657	$	33,173
Other Comprehensive Income (Loss):
Unrealized Gains (Losses) on Available for Sale Securities		(18,073)		(237)		(56,487)		114
Unrealized Gains (Losses) on Cash Flow Hedges		7,725		242		21,117		3,295
Reclassification Adjustment for (Gains) Losses Realized in Income		(119)		358		511		329
Income Tax Impact		4,808		(73)		9,133		(785)
Total Other Comprehensive Income (Loss), Net of Tax		(5,659)		290		(25,726)		2,953
Comprehensive Income	$	8,854	$	11,799	$	13,931	$	36,126

See accompanying notes to consolidated financial statements.

Table of Contents

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity

Three and Nine Months Ended September 30, 2022 and 2021

(dollars in thousands, except share data)

(Unaudited)


										Accumulated
						Additional				Other
	Preferred		Common Stock			Paid-In		Retained		Comprehensive
Three Months Ended	Stock		Shares	Amount		Capital		Earnings		Income (Loss)		Total

BALANCE June 30, 2021	$	—	28,162,777	$	282	$	104,811	$	176,495	$	9,242	$	290,830
Stock-based Compensation		—	4,552		—		608		—		—		608
Comprehensive Income (Loss)		—	—		—		—		11,509		290		11,799
Preferred Stock Offering, Net of Issuance Costs		66,515	—		—		—		—		—		66,515
Stock Options Exercised		—	26,000		—		89		—		—		89
Stock Repurchases		—	(126,507)		(1)		(2,037)		—		—		(2,038)
BALANCE September 30, 2021	$	66,515	28,066,822	$	281	$	103,471	$	188,004	$	9,532	$	367,803

BALANCE June 30, 2022	$	66,514	27,677,372	$	277	$	96,689	$	222,464	$	(11,061)	$	374,883
Stock-based Compensation		—	4,744		—		876		—		—		876
Comprehensive Income (Loss)		—	—		—		—		14,513		(5,659)		8,854
Stock Options Exercised		—	3,250		—		41		—		—		41
Stock Repurchases		—	(99,310)		(1)		(1,615)		—		—		(1,616)
Vested Restricted Stock Units		—	3,000		—		—		—		—		—
Restricted Shares Withheld for Taxes		—	(1,078)		—		(18)		—		—		(18)
Preferred Stock Dividend		—	—		—		—		(1,013)		—		(1,013)
BALANCE September 30, 2022	$	66,514	27,587,978	$	276	$	95,973	$	235,964	$	(16,720)	$	382,007

										Accumulated
						Additional				Other
	Preferred		Common Stock			Paid-In		Retained		Comprehensive
Nine Months Ended	Stock		Shares	Amount		Capital		Earnings		Income (Loss)		Total

BALANCE December 31, 2020	$	—	28,143,493	$	281	$	103,714	$	154,831	$	6,579	$	265,405
Stock-based Compensation		—	14,408		—		1,765		—		—		1,765
Comprehensive Income		—	—		—		—		33,173		2,953		36,126
Preferred Stock Offering, Net of Issuance Costs		66,515	—		—		—		—		—		66,515
Stock Options Exercised		—	52,400		1		242		—		—		243
Stock Repurchases		—	(143,125)		(1)		(2,245)		—		—		(2,246)
Restricted Shares Withheld for Taxes		—	(354)		—		(5)		—		—		(5)
BALANCE September 30, 2021	$	66,515	28,066,822	$	281	$	103,471	$	188,004	$	9,532	$	367,803

BALANCE December 31, 2021	$	66,514	28,206,566	$	282	$	104,123	$	199,347	$	9,006	$	379,272
Stock-based Compensation		—	14,400		—		2,557		—		—		2,557
Comprehensive Income (Loss)		—	—		—		—		39,657		(25,726)		13,931
Stock Options Exercised		—	28,000		—		106		—		—		106
Stock Repurchases		—	(662,765)		(6)		(10,772)		—		—		(10,778)
Forfeiture of Restricted Stock Awards		—	(1,000)		—		(3)		—		—		(3)
Vested Restricted Stock Units		—	5,100		—		—		—		—		—
Restricted Shares Withheld for Taxes		—	(2,323)		—		(38)		—		—		(38)
Preferred Stock Dividend		—	—		—		—		(3,040)		—		(3,040)
BALANCE September 30, 2022	$	66,514	27,587,978	$	276	$	95,973	$	235,964	$	(16,720)	$	382,007

See accompanying notes to consolidated financial statements.

Table of Contents

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(dollars in thousands)

(Unaudited)


	Nine Months Ended
	September 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	39,657	$	33,173
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Net Amortization on Securities Available for Sale		1,712		2,567
Net Gain on Sales of Securities Available for Sale		(52)		(750)
Provision for Loan Losses		6,200		4,000
Depreciation of Premises and Equipment		1,911		1,755
Amortization of Other Intangible Assets		143		143
Amortization of Subordinated Debt Issuance Costs		320		299
Stock-based Compensation		2,557		1,765
Changes in Operating Assets and Liabilities:
Accrued Interest Receivable and Other Assets		(7,859)		(6,957)
Accrued Interest Payable and Other Liabilities		35,780		7,876
Net Cash Provided by Operating Activities		80,369		43,871

CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in Bank-Owned Certificates of Deposit		694		983
Proceeds from Sales of Securities Available for Sale		25,066		11,877
Proceeds from Maturities, Paydowns, Payups and Calls of Securities Available for Sale		30,253		33,250
Purchases of Securities Available for Sale		(210,432)		(64,669)
Net Increase in Loans		(560,786)		(384,476)
Net Increase in FHLB Stock		(10,361)		(415)
Purchases of Premises and Equipment		(1,457)		(571)
Purchase of Bank-Owned Life Insurance		(7,407)		(25,166)
Net Cash Used in Investing Activities		(734,430)		(429,187)

CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Deposits		358,837		352,521
Net Increase in Federal Funds Purchased		212,000		—
Principal Payments on Notes Payable		—		(11,000)
Proceeds from FHLB Advances		29,000		—
Principal Payments on FHLB Advances		—		(10,000)
Issuance of Preferred Stock, net of Issuance Costs		—		66,515
Preferred Stock Dividends Paid		(3,040)		—
Issuance of Subordinated Debt, net of Issuance Costs		—		29,365<

Bridgewater Bancshares Inc [BWB] Filings
Bridgewater Bancshares Inc [BWBBP] Filings
10-Q	[2022-11-03]
10-Q	[2022-08-04]
10-Q	[2022-05-05]
10-K	[2022-03-08]
10-Q	[2021-11-04]
10-Q	[2021-07-30]
10-Q	[2021-05-06]
10-K	[2021-03-11]
10-Q	[2020-11-05]
10-Q	[2020-08-06]
10-Q	[2020-05-07]
10-K	[2020-03-12]
10-Q	[2019-11-07]
10-Q	[2019-08-08]
10-Q	[2019-05-09]
10-K	[2019-03-14]
10-Q	[2018-11-08]
10-Q	[2018-08-09]
10-Q	[2018-05-10]
S-1	[2018-02-16]

Bridgewater Bancshares Inc [BWB] Filings

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