Bridgewater Bancshares Inc [BWB] Filings

10-Q 1 bwb-20230930x10q.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, 2023

☐	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 October 31, 2023 was 28,000,570.

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	8
Notes to Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3. Quantitative and Qualitative Disclosures About Market Risk	67
Item 4. Controls and Procedures	69

PART II OTHER INFORMATION	70

Item 1. Legal Proceedings	70
Item 1A. Risk Factors	70
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	70
Item 3. Defaults Upon Senior Securities	71
Item 4. Mine Safety Disclosures	71
Item 5. Other Information	71
Item 6. Exhibits	71

SIGNATURES	72

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,
	2023		2022
	(Unaudited)
ASSETS
Cash and Cash Equivalents	$	124,358	$	87,043
Bank-Owned Certificates of Deposit		1,225		1,181
Securities Available for Sale, at Fair Value		553,076		548,613
Loans, Net of Allowance for Credit Losses of $50,585 at September 30, 2023 (unaudited) and $47,996 at December 31, 2022		3,664,464		3,512,157
Federal Home Loan Bank (FHLB) Stock, at Cost		17,056		19,606
Premises and Equipment, Net		49,331		48,445
Accrued Interest		15,182		13,479
Goodwill		2,626		2,626
Other Intangible Assets, Net		197		288
Bank-Owned Life Insurance		34,209		33,485
Other Assets		95,346		78,739
Total Assets	$	4,557,070	$	4,345,662

LIABILITIES AND EQUITY
LIABILITIES
Deposits:
Noninterest Bearing	$	754,297	$	884,272
Interest Bearing		2,921,212		2,532,271
Total Deposits		3,675,509		3,416,543
Federal Funds Purchased		—		287,000
Notes Payable		13,750		13,750
FHLB Advances		294,500		97,000
Subordinated Debentures, Net of Issuance Costs		79,192		78,905
Accrued Interest Payable		3,816		2,831
Other Liabilities		74,343		55,569
Total Liabilities		4,141,110		3,951,598

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, 2023 (unaudited) and December 31, 2022		66,514		66,514
Common Stock- $0.01 par value; Authorized 75,000,000
Common Stock - Issued and Outstanding 28,015,505 at September 30, 2023 (unaudited) and 27,751,950 at December 31, 2022		280		278
Additional Paid-In Capital		100,120		96,529
Retained Earnings		272,812		248,685
Accumulated Other Comprehensive Loss		(23,766)		(17,942)
Total Shareholders' Equity		415,960		394,064
Total Liabilities and Equity	$	4,557,070	$	4,345,662

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,		September 30,		September 30,		September 30,
	2023		2022		2023		2022
INTEREST INCOME
Loans, Including Fees	$	48,999	$	37,666	$	141,675	$	103,768
Investment Securities		6,507		4,372		18,962		10,567
Other		1,303		321		3,165		500
Total Interest Income		56,809		42,359		163,802		114,835

INTEREST EXPENSE
Deposits		27,225		5,984		66,597		12,598
Notes Payable		296		—		844		—
FHLB Advances		2,316		329		5,269		646
Subordinated Debentures		1,003		1,242		2,979		3,658
Federal Funds Purchased		548		709		8,253		1,128
Total Interest Expense		31,388		8,264		83,942		18,030

NET INTEREST INCOME		25,421		34,095		79,860		96,805
Provision for (Recovery of) Credit Losses		(600)		1,500		75		6,200

NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES		26,021		32,595		79,785		90,605

NONINTEREST INCOME
Customer Service Fees		379		313		1,096		892
Net Gain (Loss) on Sales of Available for Sale Securities		—		—		(6)		52
Other Income		1,347		1,074		3,994		3,650
Total Noninterest Income		1,726		1,387		5,084		4,594

NONINTEREST EXPENSE
Salaries and Employee Benefits		9,519		9,449		26,923		27,120
Occupancy and Equipment		1,101		1,086		3,385		3,213
Other Expense		4,730		3,622		13,613		11,084
Total Noninterest Expense		15,350		14,157		43,921		41,417

INCOME BEFORE INCOME TAXES		12,397		19,825		40,948		53,782
Provision for Income Taxes		2,768		5,312		9,861		14,125
NET INCOME		9,629		14,513		31,087		39,657
Preferred Stock Dividends		(1,013)		(1,013)		(3,040)		(3,040)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	8,616	$	13,500	$	28,047	$	36,617

EARNINGS PER SHARE
Basic	$	0.31	$	0.49	$	1.01	$	1.32
Diluted		0.30		0.47		0.99		1.27

See accompanying notes to consolidated financial statements.

Table of Contents

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(dollars in thousands)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Net Income	$	9,629	$	14,513	$	31,087	$	39,657
Other Comprehensive Loss:
Unrealized Losses on Available for Sale Securities		(10,151)		(18,073)		(14,338)		(56,487)
Unrealized Gains on Cash Flow Hedges		7,763		7,725		10,167		21,117
Reclassification Adjustment for (Gains) Losses Realized in Income		(1,623)		(119)		(4,004)		511
Income Tax Impact		1,153		4,808		2,351		9,133
Total Other Comprehensive Loss, Net of Tax		(2,858)		(5,659)		(5,824)		(25,726)
Comprehensive Income	$	6,771	$	8,854	$	25,263	$	13,931

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, 2023 and 2022

(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		Loss		Total

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

BALANCE June 30, 2023	$	66,514	27,973,995	$	280	$	99,044	$	264,196	$	(20,908)	$	409,126
Stock-based Compensation		—	12,588		—		997		—		—		997
Comprehensive Income (Loss)		—	—		—		—		9,629		(2,858)		6,771
Stock Options Exercised		—	27,000		—		90		—		—		90
Vested Restricted Stock Units		—	3,000		—		—		—		—		—
Restricted Shares Withheld for Taxes		—	(1,078)		—		(11)		—		—		(11)
Preferred Stock Dividend		—	—		—		—		(1,013)		—		(1,013)
BALANCE September 30, 2023	$	66,514	28,015,505	$	280	$	100,120	$	272,812	$	(23,766)	$	415,960

See accompanying notes to consolidated financial statements.

Table of Contents


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

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

BALANCE December 31, 2022	$	66,514	27,751,950	$	278	$	96,529	$	248,685	$	(17,942)	$	394,064
Cumulative Effect of Change in Accounting Principle, Net of Tax		—	—		—		—		(3,920)		—		(3,920)
Balance as of January 1, 2023, as Adjusted for Change in Accounting Principle		66,514	27,751,950		278		96,529		244,765		(17,942)		390,144
Stock-based Compensation		—	35,460		—		2,910		—		—		2,910
Comprehensive Income (Loss)		—	—		—		—		31,087		(5,824)		25,263
Stock Options Exercised		—	226,000		2		715		—		—		717
Forfeiture of Restricted Stock Awards		—	(250)		—		—		—		—		—
Vested Restricted Stock Units		—	5,225		—		—		—		—		—
Restricted Shares Withheld for Taxes		—	(2,880)		—		(34)		—		—		(34)
Preferred Stock Dividend		—	—		—		—		(3,040)		—		(3,040)
BALANCE September 30, 2023	$	66,514	28,015,505	$	280	$	100,120	$	272,812	$	(23,766)	$	415,960

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,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	31,087	$	39,657
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Net Amortization on Securities Available for Sale		196		1,712
Net (Gain) Loss on Sales of Securities Available for Sale		6		(52)
Provision for Credit Losses on Loans		2,050		6,200
Credit for Off-Balance Sheet Exposures		(1,975)		—
Depreciation of Premises and Equipment		1,901		1,911
Amortization of Other Intangible Assets		91		143
Amortization of Right-of Use Asset		396		—
Amortization of Subordinated Debt Issuance Costs		287		320
Stock-based Compensation		2,910		2,557
Changes in Operating Assets and Liabilities:
Accrued Interest Receivable and Other Assets		(8,923)		(7,859)
Accrued Interest Payable and Other Liabilities		10,457		35,780
Net Cash Provided by Operating Activities

Bridgewater Bancshares Inc [BWB] Filings
Bridgewater Bancshares Inc [BWBBP] Filings
10-Q	[2023-11-02]
10-Q	[2023-08-03]
10-Q	[2023-05-04]
10-K	[2023-03-07]
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

Bridgewater Bancshares Inc [BWBBP] Filings