ST. LOUIS PARK, Minn.–(BUSINESS WIRE)–Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the parent company of Bridgewater Bank (the Bank), today announced net income of $13.7 million for the fourth quarter of 2022, a 5.4% decrease from net income of $14.5 million for the third quarter of 2022, and a 9.8% increase from net income of $12.5 million for the fourth quarter of 2021. Earnings per diluted common share for the fourth quarter of 2022 were $0.45, a 5.6% decrease compared to $0.47 per diluted common share for the third quarter of 2022, and a 14.2% increase compared to $0.39 per diluted common share for the same period in 2021.
“Bridgewater delivered another strong year of financial results in 2022 highlighted again by our robust balance sheet growth, highly efficient business model and superb asset quality, with all of these trends continuing in the fourth quarter,” said Chairman, Chief Executive Officer and President, Jerry Baack. “As expected, we also saw net interest margin compression during the quarter as the persistent rising interest rate environment created additional funding pressure given our strong loan growth. While we expect the operating environment to remain challenging as we head into 2023, we are taking steps to actively manage our balance sheet in the near-term, with a focus on profitable growth, to drive sustained success over the long-term.”
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Fourth Quarter 2022 Financial Results |
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Diluted |
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Adjusted |
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Nonperforming |
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ROA |
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PPNR ROA (1) |
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ROE |
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earnings per share |
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efficiency ratio (1) |
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assets to total assets |
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1.28 |
% |
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1.82 |
% |
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14.06 |
% |
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$ |
0.45 |
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43.5 |
% |
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0.01 |
% |
_________________________
| (1) |
Represents a non-GAAP financial measure. See “Non-GAAP Financial Measures” for further details. |
Fourth Quarter 2022 Highlights
- Diluted earnings per common share were $0.45, compared to $0.47 per common share for the third quarter of 2022.
- Pre-provision net revenue (PPNR), a non-GAAP financial measure, of $19.5 million, compared to $21.4 million for the third quarter of 2022, a decrease of $1.9 million, or 9.0%. PPNR ROA, a non-GAAP financial measure, was 1.82%, compared to 2.15% for the third quarter of 2022.
- Annualized return on average assets (ROA) and annualized return on average shareholders’ equity (ROE) for the fourth quarter of 2022 were 1.28% and 14.06%, compared to ROA and ROE of 1.46% and 14.99%, respectively, for the third quarter of 2022. Annualized return on average tangible common equity, a non-GAAP financial measure, was 15.86% for the fourth quarter of 2022, compared to 17.03% for the third quarter of 2022.
- Gross loans increased $189.4 million, or 22.2% annualized, from the third quarter of 2022.
- Deposits increased $111.5 million, or 13.4% annualized, from the third quarter of 2022.
- Net interest margin (on a fully tax-equivalent basis) was 3.16%, compared to 3.53% in the third quarter of 2022. 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, was 3.05%, compared to 3.38% in the third quarter of 2022.
- Adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 43.5%, compared to 39.4% for the third quarter of 2022.
- A loan loss provision of $1.5 million was recorded to support strong organic loan growth in the fourth quarter of 2022. The allowance for loan losses to total loans was 1.34% at December 31, 2022, compared to 1.38% at September 30, 2022.
- Annualized net loan charge-offs (recoveries) as a percentage of average loans were 0.00% for the fourth quarter of 2022, compared to (0.03)% for the third quarter of 2022.
- Tangible book value per share, a non-GAAP financial measure, increased $0.36, or 12.7% annualized, to $11.69 at December 31, 2022, compared to $11.33 at September 30, 2022.
Annual 2022 Highlights
- Diluted earnings per common share for the year ended December 31, 2022 were $1.72, a 12.0% increase, compared to $1.54 for the year ended December 31, 2021.
- PPNR, a non-GAAP financial measure, was $79.7 million for the year ended December 31, 2022, an increase of 18.8%, compared to $67.1 million for the year ended December 31, 2021. PPNR ROA, a non-GAAP financial measure, was 2.06% for the year ended December 31, 2022, compared to 2.10% for the year ended December 31, 2021.
- Gross loans increased $750.0 million at December 31, 2022, or 26.6%, compared to December 31, 2021.
- Deposits increased $470.3 million at December 31, 2022, or 16.0%, compared to December 31, 2021.
- Net interest margin (on a fully tax-equivalent basis) was 3.45% for the year ended December 31, 2022, compared to 3.54% for the year ended December 31, 2021. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure, for the year ended December 31, 2022 was 3.27%, compared to 3.28% for the year ended December 31, 2021.
- Adjusted efficiency ratio, a non-GAAP financial measure, was 41.2% for the year ended December 31, 2022, compared to 41.0% for the year ended December 31, 2021.
- Net loan charge-offs (recoveries) as a percentage of average loans were (0.01)% for the year ended December 31, 2022, compared to 0.00% for the year ended December 31, 2021.
- The ratio of nonperforming assets to total assets was 0.01% at December 31, 2022, compared to 0.02% at December 31, 2021.
- Tangible book value per share, a non-GAAP financial measure, increased $0.71, or 6.5%, to $11.69 at December 31, 2022, compared to $10.98 at December 31, 2021, despite the market value depreciation of the securities portfolio due to rapidly rising interest rates, which continue to negatively impact accumulated other comprehensive income.
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Key Financial Measures |
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As of and for the Three Months Ended |
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As of and for the Year Ended |
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December 31, |
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September 30, |
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December 31, |
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December 31, |
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December 31, |
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2022 |
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2022 |
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2021 |
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2022 |
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2021 |
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Per Common Share Data |
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Basic Earnings Per Share |
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$ |
0.46 |
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$ |
0.49 |
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$ |
0.41 |
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$ |
1.78 |
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$ |
1.59 |
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Diluted Earnings Per Share |
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0.45 |
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0.47 |
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|
0.39 |
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1.72 |
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|
1.54 |
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Book Value Per Share |
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11.80 |
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11.44 |
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11.09 |
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Tangible Book Value Per Share (1) |
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11.69 |
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11.33 |
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10.98 |
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Basic Weighted Average Shares Outstanding |
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27,558,983 |
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27,520,117 |
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28,004,334 |
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27,758,336 |
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28,027,454 |
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Diluted Weighted Average Shares Outstanding |
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28,527,306 |
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28,592,854 |
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29,038,785 |
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|
28,668,177 |
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28,968,286 |
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Shares Outstanding at Period End |
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27,751,950 |
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27,587,978 |
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28,206,566 |
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Selected Performance Ratios |
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Return on Average Assets (Annualized) |
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1.28 |
% |
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1.46 |
% |
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1.46 |
% |
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1.38 |
% |
|
1.43 |
% |
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Pre-Provision Net Revenue Return on Average Assets (Annualized) (1) |
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1.82 |
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2.15 |
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2.11 |
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2.06 |
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2.10 |
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Return on Average Shareholders’ Equity (Annualized) |
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14.06 |
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14.99 |
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13.27 |
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|
13.90 |
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|
14.45 |
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Return on Average Tangible Common Equity (Annualized) (1) |
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15.86 |
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17.03 |
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14.78 |
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15.69 |
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15.45 |
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Yield on Interest Earning Assets(2) |
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4.67 |
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4.37 |
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4.06 |
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4.35 |
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4.16 |
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Yield on Total Loans, Gross(2) |
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4.87 |
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4.59 |
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4.49 |
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4.60 |
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4.60 |
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Cost of Total Deposits |
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1.31 |
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|
0.73 |
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0.45 |
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|
0.75 |
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|
0.51 |
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Cost of Funds |
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1.67 |
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0.93 |
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0.61 |
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0.99 |
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|
0.68 |
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Net Interest Margin (2) |
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3.16 |
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3.53 |
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3.51 |
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3.45 |
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3.54 |
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Core Net Interest Margin (1)(2) |
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3.05 |
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3.38 |
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3.25 |
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3.27 |
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3.28 |
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Efficiency Ratio (1) |
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43.8 |
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39.8 |
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40.8 |
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41.5 |
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42.0 |
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Adjusted Efficiency Ratio (1) |
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43.5 |
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39.4 |
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40.3 |
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41.2 |
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41.0 |
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Noninterest Expense to Average Assets (Annualized) |
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1.42 |
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1.42 |
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1.45 |
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1.46 |
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1.51 |
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Adjusted Noninterest Expense to Average Assets (Annualized) (1) |
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1.41 |
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1.41 |
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1.43 |
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|
1.45 |
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1.47 |
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Loan to Deposit Ratio |
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104.5 |
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102.3 |
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95.7 |
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Core Deposits to Total Deposits (3) |
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74.6 |
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83.0 |
|
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85.4 |
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Tangible Common Equity to Tangible Assets (1) |
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7.48 |
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7.57 |
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8.91 |
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Capital Ratios (Bank Only) (4) |
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Tier 1 Leverage Ratio |
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10.76 |
% |
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11.24 |
% |
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11.09 |
% |
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Common Equity Tier 1 Risk-based Capital Ratio |
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11.29 |
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11.46 |
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11.69 |
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Tier 1 Risk-based Capital Ratio |
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11.29 |
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11.46 |
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11.69 |
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Total Risk-based Capital Ratio |
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12.47 |
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12.67 |
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12.94 |
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Capital Ratios (Consolidated) (4) |
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Tier 1 Leverage Ratio |
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9.55 |
% |
|
9.98 |
% |
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10.82 |
% |
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Common Equity Tier 1 Risk-based Capital Ratio |
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8.40 |
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8.47 |
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9.36 |
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Tier 1 Risk-based Capital Ratio |
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10.03 |
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10.19 |
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11.43 |
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Total Risk-based Capital Ratio |
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13.15 |
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13.78 |
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15.55 |
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_________________________
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(1) |
Represents a non-GAAP financial measure. See “Non-GAAP Financial Measures” for further details. |
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(2) |
Amounts calculated on a tax-equivalent basis using the statutory federal tax rate of 21%. |
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(3) |
Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000. |
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(4) |
Preliminary data. Current period subject to change prior to filings with applicable regulatory agencies. |
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Selected Financial Data |
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December 31, |
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September 30, |
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June 30, |
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March 31, |
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December 31, |
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(dollars in thousands) |
|
2022 |
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2022 |
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2022 |
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2022 |
|
2021 |
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Selected Balance Sheet Data |
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Total Assets |
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$ |
4,345,662 |
|
$ |
4,128,987 |
|
$ |
3,883,264 |
|
$ |
3,607,920 |
|
$ |
3,477,659 |
|
Total Loans, Gross |
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|
3,569,446 |
|
|
3,380,082 |
|
|
3,225,885 |
|
|
2,987,967 |
|
|
2,819,472 |
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Allowance for Loan Losses |
|
|
47,996 |
|
|
46,491 |
|
|
44,711 |
|
|
41,692 |
|
|
40,020 |
|
Goodwill and Other Intangibles |
|
|
2,914 |
|
|
2,962 |
|
|
3,009 |
|
|
3,057 |
|
|
3,105 |
|
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Deposits |
|
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3,416,543 |
|
|
3,305,074 |
|
|
3,201,953 |
|
|
3,035,611 |
|
|
2,946,237 |
|
Tangible Common Equity (1) |
|
|
324,636 |
|
|
312,531 |
|
|
305,360 |
|
|
309,870 |
|
|
309,653 |
|
Total Shareholders’ Equity |
|
|
394,064 |
|
|
382,007 |
|
|
374,883 |
|
|
379,441 |
|
|
379,272 |
|
Average Total Assets – Quarter-to-Date |
|
|
4,251,345 |
|
|
3,948,201 |
|
|
3,743,575 |
|
|
3,513,798 |
|
|
3,403,270 |
|
Average Shareholders’ Equity – Quarter-to-Date |
|
|
387,589 |
|
|
384,020 |
|
|
381,448 |
|
|
383,024 |
|
|
374,035 |
_________________________
| (1) |
Represents a non-GAAP financial measure. See “Non-GAAP Financial Measures” for further details. |
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For the Three Months Ended |
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For the Year Ended |
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December 31, |
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September 30, |
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December 31, |
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December 31, |
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December 31, |
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(dollars in thousands) |
|
2022 |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
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Selected Income Statement Data |
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Interest Income |
|
$ |
48,860 |
|
|
$ |
42,359 |
|
|
$ |
33,775 |
|
|
$ |
163,695 |
|
|
$ |
128,879 |
|
|
Interest Expense |
|
|
15,967 |
|
|
|
8,264 |
|
|
|
4,622 |
|
|
|
33,997 |
|
|
|
19,370 |
|
|
Net Interest Income |
|
|
32,893 |
|
|
|
34,095 |
|
|
|
29,153 |
|
|
|
129,698 |
|
|
|
109,509 |
|
|
Provision for Loan Losses |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
1,150 |
|
|
|
7,700 |
|
|
|
5,150 |
|
|
Net Interest Income after Provision for Loan Losses |
|
|
31,393 |
|
|
|
32,595 |
|
|
|
28,003 |
|
|
|
121,998 |
|
|
|
104,359 |
|
|
Noninterest Income |
|
|
1,738 |
|
|
|
1,387 |
|
|
|
1,288 |
|
|
|
6,332 |
|
|
|
5,309 |
|
|
Noninterest Expense |
|
|
15,203 |
|
|
|
14,157 |
|
|
|
12,459 |
|
|
|
56,620 |
|
|
|
48,095 |
|
|
Income Before Income Taxes |
|
|
17,928 |
|
|
|
19,825 |
|
|
|
16,832 |
|
|
|
71,710 |
|
|
|
61,573 |
|
|
Provision for Income Taxes |
|
|
4,193 |
|
|
|
5,312 |
|
|
|
4,318 |
|
|
|
18,318 |
|
|
|
15,886 |
|
|
Net Income |
|
|
13,735 |
|
|
|
14,513 |
|
|
|
12,514 |
|
|
|
53,392 |
|
|
|
45,687 |
|
|
Preferred Stock Dividends |
|
|
(1,014 |
) |
|
|
(1,013 |
) |
|
|
(1,171 |
) |
|
|
(4,054 |
) |
|
|
(1,171 |
) |
|
Net Income Available to Common Shareholders |
|
$ |
12,721 |
|
|
$ |
13,500 |
|
|
$ |
11,343 |
|
|
$ |
49,338 |
|
|
$ |
44,516 |
|
Income Statement
Net Interest Income
Net interest income was $32.9 million for the fourth quarter of 2022, a decrease of $1.2 million, or 3.5%, from $34.1 million in the third quarter of 2022, and an increase of $3.7 million, or 12.8%, from $29.2 million in the fourth quarter of 2021. The linked-quarter decrease in net interest income was due to higher rates paid on deposits and increased borrowings in the rising interest rate environment. The year-over-year increase in net interest income was primarily due to growth in average interest earning assets and higher yields on investment securities and core loans, offset partially by higher rates paid on deposits and borrowings. Average interest earning assets were $4.18 billion for the fourth quarter of 2022, an increase of $305.7 million, or 7.9%, from $3.87 billion for the third quarter of 2022, and an increase of $857.0 million, or 25.8%, from $3.32 billion for the fourth quarter of 2021. The linked-quarter increase in average interest earning assets was primarily due to strong organic growth in the loan portfolio and purchases of investment securities. The year-over-year increase in average interest earning assets was primarily due to strong organic growth in the loan portfolio and purchases of investment securities, offset partially by the forgiveness of PPP loans and the reduction of cash balances.
Net interest margin (on a fully tax-equivalent basis) for the fourth quarter of 2022 was 3.16%, a 37 basis point decrease from 3.53% in the third quarter of 2022, and a 35 basis point decrease from 3.51% in the fourth 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, for the fourth quarter of 2022 was 3.05%, a 33 basis point decrease from 3.38% in the third quarter of 2022, and a 20 basis point decrease from 3.25% in the fourth quarter of 2021. The Company remains focused on managing the impact of continued interest rate hikes and the evolving shape of the yield curve during this unique interest rate environment.
As the PPP loan portfolio has almost fully paid off, the recognition of fees associated with the originations has decreased significantly, which impacts comparability between periods. The Company recognized $45,000 of PPP origination fees during the fourth quarter of 2022, compared to $90,000 during the third quarter of 2022, and $958,000 during the fourth quarter of 2021. There were no remaining PPP origination fees to be recognized as of December 31, 2022.
Interest income was $48.9 million for the fourth quarter of 2022, an increase of $6.5 million, or 15.3%, from $42.4 million in the third quarter of 2022, and an increase of $15.1 million, or 44.7%, from $33.8 million in the fourth quarter of 2021. The yield on interest earning assets (on a fully tax-equivalent basis) was 4.67% in the fourth quarter of 2022, compared to 4.37% in the third quarter of 2022, and 4.06% in the fourth quarter of 2021. The linked-quarter increase in the yield on interest earning assets was primarily due to the rapid increase in market interest rates resulting in new loan originations, loans repricing, and investment purchases at yields accretive to the existing portfolios. The year-over-year increase in the yield on interest earning assets was primarily due to growth and repricing of the loan and securities portfolios in the rising interest rate environment, offset partially by the lower recognition of PPP origination fees.
Loan interest income and loan fees remain the primary contributing factors to the changes in the yield on interest earning assets. The aggregate loan yield, excluding PPP loans, increased to 4.86% in the fourth quarter of 2022, which was 27 basis points higher than 4.59% in the third quarter of 2022, and 45 basis points higher than 4.41% in the fourth quarter of 2021. While loan fees have historically maintained a relatively stable contribution to the aggregate loan yield, the recent periods were impacted by fewer loan prepayments, which historically has accelerated the recognition of loan fees. Despite the decrease in fee recognition, the Company is encouraged that the core loan yield continues to rise as new loan originations and the existing portfolio loans reprice in the higher rate environment.
A summary of interest and fees recognized on loans, excluding PPP loans, for the periods indicated is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
||||||||||||
|
|
|
December 31, 2022 |
|
|
September 30, 2022 |
|
|
June 30, 2022 |
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
|
Interest |
|
4.74 |
% |
|
4.42 |
% |
|
4.17 |
% |
|
4.15 |
% |
|
4.20 |
% |
|
Fees |
|
0.12 |
|
|
0.17 |
|
|
0.26 |
|
|
0.25 |
|
|
0.21 |
|
|
Yield on Loans, |
|
4.86 |
% |
|
4.59 |
% |
|
4.43 |
% |
|
4.40 |
% |
|
4.41 |
% |
Interest expense was $16.0 million for the fourth quarter of 2022, an increase of $7.7 million, or 93.2%, from $8.3 million in the third quarter of 2022, and an increase of $11.3 million, or 245.4%, from $4.6 million in the fourth quarter of 2021. The cost of interest bearing liabilities increased 92 basis points on a linked-quarter basis from 1.30% in the third quarter of 2022 to 2.22% in the fourth quarter of 2022, primarily due to higher rates paid on deposits, drawing on the Company’s revolving line of credit, and the increased utilization of federal funds purchased and FHLB advances in the rising interest rate environment. On a year-over-year basis, the cost of interest bearing liabilities increased 136 basis points from 0.86% in the fourth quarter of 2021 to 2.22% in the fourth quarter of 2022, primarily due to the rapid increase in market interest rates that occurred between the periods, which impacted all funding sources.
Interest expense on deposits was $10.8 million for the fourth quarter of 2022, an increase of $4.8 million, or 80.2%, from $6.0 million in the third quarter of 2022, and an increase of $7.5 million, or 232.6%, from $3.2 million in the fourth quarter of 2021. The cost of total deposits increased 58 basis points on a linked-quarter basis from 0.73% in the third quarter of 2022, to 1.31% in the fourth quarter of 2022. On a year-over-year basis, the cost of total deposits increased 86 basis points from 0.45% in the fourth quarter of 2021, to 1.31% in the fourth quarter of 2022. The linked-quarter and year-over-year increases were primarily due to the upward repricing of the deposit portfolio in the higher interest rate environment.
A summary of the Company’s average balances, interest yields and rates, and net interest margin for the three months ended December 31, 2022, September 30, 2022, and December 31, 2021 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
For the Three Months Ended |
|
|||||||||||||||||||||||||
|
|
|
December 31, 2022 |
|
September 30, 2022 |
|
December 31, 2021 |
|
|||||||||||||||||||||
|
|
|
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 |
|
$ |
65,393 |
|
$ |
366 |
|
|
2.22 |
% |
$ |
57,613 |
|
$ |
165 |
|
|
1.13 |
% |
$ |
146,744 |
|
$ |
65 |
|
|
0.18 |
% |
|
Investment Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Taxable Investment Securities |
|
|
540,601 |
|
|
5,268 |
|
|
3.87 |
|
|
461,255 |
|
|
3,741 |
|
|
3.22 |
|
|
341,325 |
|
|
1,893 |
|
|
2.20 |
|
|
Tax-Exempt Investment Securities (1) |
|
|
67,867 |
|
|
728 |
|
|
4.26 |
|
|
75,801 |
|
|
799 |
|
|
4.18 |
|
|
71,602 |
|
|
782 |
|
|
4.33 |
|
|
Total Investment Securities |
|
|
608,468 |
|
|
5,996 |
|
|
3.91 |
|
|
537,056 |
|
|
4,540 |
|
|
3.35 |
|
|
412,927 |
|
|
2,675 |
|
|
2.57 |
|
|
Paycheck Protection Program Loans (2) |
|
|
1,109 |
|
|
48 |
|
|
17.06 |
|
|
2,424 |
|
|
96 |
|
|
15.75 |
|
|
39,900 |
|
|
1,057 |
|
|
10.51 |
|
|
Loans (1)(2) |
|
|
3,481,041 |
|
|
42,654 |
|
|
4.86 |
|
|
3,263,390 |
|
|
37,724 |
|
|
4.59 |
|
|
2,715,722 |
|
|
30,154 |
|
|
4.41 |
|
|
Total Loans |
|
|
3,482,150 |
|
|
42,702 |
|
|
4.87 |
|
|
3,265,814 |
|
|
37,820 |
|
|
4.59 |
|
|
2,755,622 |
|
|
31,211 |
|
|
4.49 |
|
|
Federal Home Loan Bank Stock |
|
|
21,633 |
|
|
163 |
|
|
2.99 |
|
|
11,413 |
|
|
156 |
|
|
5.42 |
|
|
5,310 |
|
|
59 |
|
|
4.39 |
|
|
Total Interest Earning Assets |
|
|
4,177,644 |
|
|
49,227 |
|
|
4.67 |
% |
|
3,871,896 |
|
|
42,681 |
|
|
4.37 |
% |
|
3,320,603 |
|
|
34,010 |
|
|
4.06 |
% |
|
Noninterest Earning Assets |
|
|
73,701 |
|
|
|
|
|
|
|
76,305 |
|
|
|
|
|
|
|
82,667 |
|
|
|
|
|
|
|||
|
Total Assets |
|
$ |
4,251,345 |
|
|
|
|
|
|
$ |
3,948,201 |
|
|
|
|
|
|
$ |
3,403,270 |
|
|
|
|
|
|
|||
|
Interest Bearing Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Interest Bearing Transaction Deposits |
|
$ |
464,631 |
|
$ |
2,013 |
|
|
1.72 |
% |
$ |
517,658 |
|
$ |
1,032 |
|
|
0.79 |
% |
$ |
499,475 |
|
$ |
548 |
|
|
0.43 |
% |
|
Savings and Money Market Deposits |
|
|
1,048,227 |
|
|
4,533 |
|
|
1.72 |
|
|
999,932 |
|
|
2,494 |
|
|
0.99 |
|
|
803,848 |
|
|
876 |
|
|
0.43 |
|
|
Time Deposits |
|
|
281,334 |
|
|
1,007 |
|
|
1.42 |
|
|
288,621 |
|
|
847 |
|
|
1.16 |
|
|
299,823 |
|
|
830 |
|
|
1.10 |
|
|
Brokered Deposits |
|
|
537,351 |
|
|
3,228 |
|
|
2.38 |
|
|
447,034 |
|
|
1,612 |
|
|
1.43 |
|
|
404,438 |
|
|
987 |
|
|
0.97 |
|
|
Total Interest Bearing Deposits |
|
|
2,331,543 |
|
|
10,781 |
|
|
1.83 |
|
|
2,253,245 |
|
|
5,985 |
|
|
1.05 |
|
|
2,007,584 |
|
|
3,241 |
|
|
0.64 |
|
|
Federal Funds Purchased |
|
|
340,471 |
|
|
3,379 |
|
|
3.94 |
|
|
106,826 |
|
|
709 |
|
|
2.63 |
|
|
10 |
|
|
— |
|
|
0.67 |
|
|
Notes Payable |
|
|
11,359 |
|
|
202 |
|
|
7.04 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
FHLB Advances |
|
|
94,103 |
|
|
575 |
|
|
2.42 |
|
|
72,343 |
|
|
328 |
|
|
1.80 |
|
|
44,185 |
|
|
162 |
|
|
1.46 |
|
|
Subordinated Debentures |
|
|
81,242 |
|
|
1,030 |
|
|
5.03 |
|
|
92,503 |
|
|
1,242 |
|
|
5.33 |
|
|
92,189 |
|
|
1,219 |
|
|
5.25 |
|
|
Total Interest Bearing Liabilities |
|
|
2,858,718 |
|
|
15,967 |
|
|
2.22 |
% |
|
2,524,917 |
|
|
8,264 |
|
|
1.30 |
% |
|
2,143,968 |
|
|
4,622 |
|
|
0.86 |
% |
|
Noninterest Bearing Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Noninterest Bearing Transaction Deposits |
|
|
943,232 |
|
|
|
|
|
|
|
991,545 |
|
|
|
|
|
|
|
861,473 |
|
|
|
|
|
|
|||
|
Other Noninterest Bearing Liabilities |
|
|
61,806 |
|
|
|
|
|
|
|
47,719 |
|
|
|
|
|
|
|
23,794 |
|
|
|
|
|
|
|||
|
Total Noninterest Bearing Liabilities |
|
|
1,005,038 |
|
|
|
|
|
|
|
1,039,264 |
|
|
|
|
|
|
|
885,267 |
|
|
|
|
|
|
|||
|
Shareholders’ Equity |
|
|
387,589 |
|
|
|
|
|
|
|
384,020 |
|
|
|
|
|
|
|
374,035 |
|
|
|
|
|
|
|||
|
Total Liabilities and Shareholders’ Equity |
|
$ |
4,251,345 |
|
|
|
|
|
|
$ |
3,948,201 |
|
|
|
|
|
|
$ |
3,403,270 |
|
|
|
|
|
|
|||
|
Net Interest Income / Interest Rate Spread |
|
|
|
|
|
33,260 |
|
|
2.45 |
% |
|
|
|
|
34,417 |
|
|
3.07 |
% |
|
|
|
|
29,388 |
|
|
3.20 |
% |
|
Net Interest Margin (3) |
|
|
|
|
|
|
|
3.16 |
% |
|
|
|
|
|
|
3.53 |
% |
|
|
|
|
|
|
3.51 |
% |
|||
|
Taxable Equivalent Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Tax-Exempt Investment Securities and Loans |
|
|
|
|
|
(367 |
) |
|
|
|
|
|
|
|
(322 |
) |
|
|
|
|
|
|
|
(235 |
) |
|
|
|
|
Net Interest Income |
|
|
|
|
$ |
32,893 |
|
|
|
|
|
|
|
$ |
34,095 |
|
|
|
|
|
|
|
$ |
29,153 |
|
|
|
|
_________________________
|
(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 $1.5 million for both the third and fourth quarter of 2022 and $350,000 higher than the $1.2 million provided in the fourth quarter of 2021. The provision recorded in the fourth quarter of 2022 was primarily attributable to the growth of the loan portfolio. The allowance for loan losses to total loans was 1.34% at December 31, 2022, compared to 1.38% at September 30, 2022, and 1.42% at December 31, 2021.
As an emerging growth company, the Company anticipates adopting Accounting Standards Update No. 2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments,” as of January 1, 2023 and does not expect a material adjustment upon adoption. The current estimate and future calculations are highly dependent on loan composition, macroeconomic conditions and forecasts, and other management assumptions and judgements.
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) |
|
2022 |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||||
|
Balance at Beginning of Period |
|
$ |
46,491 |
|
|
$ |
44,711 |
|
|
$ |
38,901 |
|
|
$ |
40,020 |
|
|
$ |
34,841 |
|
|
Provision for Loan Losses |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
1,150 |
|
|
|
7,700 |
|
|
|
5,150 |
|
|
Charge-offs |
|
|
(3 |
) |
|
|
(5 |
) |
|
|
(37 |
) |
|
|
(37 |
) |
|
|
(74 |
) |
|
Recoveries |
|
|
8 |
|
|
|
285 |
|
|
|
6 |
|
|
|
313 |
|
|
|
103 |
|
|
Balance at End of Period |
|
$ |
47,996 |
|
|
$ |
46,491 |
|
|
$ |
40,020 |
|
|
$ |
47,996 |
|
|
$ |
40,020 |
|
Contacts
Media Contact:
Jessica Stejskal | SVP Marketing
[email protected] | 952.893.6860
Investor Contact:
Justin Horstman | Director of Investor Relations
[email protected] | 952.542.5169
