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 $11.6 million for the first quarter of 2023, compared to $13.7 million for the fourth quarter of 2022, and $12.3 million for the first quarter of 2022. Earnings per diluted common share for the first quarter of 2023 were $0.37, compared to $0.45 per diluted common share for the fourth quarter of 2022, and $0.39 per diluted common share for the same period in 2022.
“While first quarter results included well-controlled expenses, superb asset quality, moderated loan growth, and expected net interest margin pressure, our focus was on supporting our clients and demonstrating the resiliency of our balance sheet and business model,” said Chairman, Chief Executive Officer, and President, Jerry Baack. “Bridgewater is a relationship-focused bank supporting a local real estate and small business client base. With a strong balance sheet, including a diversified loan portfolio, high level of insured deposits, and ample liquidity and borrowing capacity, we feel well-positioned to continue executing on our proven and successful business model.”
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First Quarter 2023 Financial Results |
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Diluted |
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Nonperforming |
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ROA |
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PPNR ROA (1) |
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ROE |
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earnings per share |
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Efficiency ratio (1) |
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assets to total assets |
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1.07 |
% |
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1.49 |
% |
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11.70 |
% |
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$ |
0.37 |
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46.2 |
% |
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0.02 |
% |
_____________________________________
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(1) Represents a non-GAAP financial measure. See “Non-GAAP Financial Measures” for further details. |
First Quarter 2023 Highlights
- Annualized return on average assets (ROA) and annualized return on average shareholders’ equity (ROE) for the first quarter of 2023 were 1.07% and 11.70%, compared to ROA and ROE of 1.28% and 14.06%, respectively, for the fourth quarter of 2022. Annualized return on average tangible common equity, a non-GAAP financial measure, was 12.90% for the first quarter of 2023, compared to 15.86% for the fourth quarter of 2022.
- Gross loans increased $114.9 million, or 13.1% annualized, from the fourth quarter of 2022.
- Deposits decreased slightly by $5.4 million, or 0.6% annualized, from the fourth quarter of 2022.
- Net interest margin (on a fully tax-equivalent basis) was 2.72%, compared to 3.16% in the fourth quarter of 2022.
- Efficiency ratio, a non-GAAP financial measure, was 46.2%, compared to 43.8% for the fourth quarter of 2022.
- Noninterest expense declined $1.0 million, or 6.7%, from the fourth quarter of 2022. Annualized noninterest expense to average assets was 1.31%, compared to 1.42% for the fourth quarter of 2022.
- A credit loss provision of $1.5 million was recorded to support continued loan growth in the first quarter of 2023. The allowance for credit losses to total loans was 1.36% at March 31, 2023, compared to 1.34% at December 31, 2022.
- Annualized net loan charge-offs (recoveries) as a percentage of average loans were 0.00% for the first quarter of 2023 and for the fourth quarter of 2022.
- Tangible book value per share, a non-GAAP financial measure, increased $0.26, or 8.9% annualized, to $11.95 at March 31, 2023 compared to $11.69 at December 31, 2022.
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Key Financial Measures |
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As of and for the Three Months Ended |
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March 31, |
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December 31, |
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March 31, |
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2023 |
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2022 |
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2022 |
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Per Common Share Data |
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Basic Earnings Per Share |
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$ |
0.38 |
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$ |
0.46 |
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$ |
0.40 |
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Diluted Earnings Per Share |
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0.37 |
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0.45 |
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0.39 |
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Book Value Per Share |
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12.05 |
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11.80 |
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11.12 |
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Tangible Book Value Per Share (1) |
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11.95 |
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11.69 |
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11.01 |
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Basic Weighted Average Shares Outstanding |
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27,726,894 |
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27,558,983 |
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28,123,809 |
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Diluted Weighted Average Shares Outstanding |
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28,490,046 |
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28,527,306 |
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29,156,085 |
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Shares Outstanding at Period End |
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27,845,244 |
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27,751,950 |
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28,150,389 |
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Selected Performance Ratios |
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Return on Average Assets (Annualized) |
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1.07 |
% |
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1.28 |
% |
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1.42 |
% |
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Pre-Provision Net Revenue Return on Average Assets (Annualized) (1) |
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1.49 |
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1.82 |
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2.12 |
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Return on Average Shareholders’ Equity (Annualized) |
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11.70 |
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14.06 |
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12.98 |
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Return on Average Tangible Common Equity (Annualized) (1) |
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12.90 |
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15.86 |
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14.56 |
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Yield on Interest Earning Assets (2) |
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4.91 |
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4.67 |
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4.13 |
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Yield on Total Loans, Gross (2) |
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5.06 |
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4.87 |
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4.45 |
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Cost of Total Deposits |
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2.01 |
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1.31 |
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0.43 |
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Cost of Funds |
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2.41 |
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1.67 |
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0.59 |
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Net Interest Margin (2) |
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2.72 |
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3.16 |
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3.60 |
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Core Net Interest Margin (1)(2) |
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2.62 |
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3.05 |
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3.34 |
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Efficiency Ratio (1) |
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46.2 |
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43.8 |
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42.4 |
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Noninterest Expense to Average Assets (Annualized) |
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1.31 |
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1.42 |
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1.56 |
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Loan to Deposit Ratio |
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108.0 |
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104.5 |
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98.4 |
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Core Deposits to Total Deposits (3) |
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72.4 |
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74.6 |
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84.3 |
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Tangible Common Equity to Tangible Assets (1) |
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7.23 |
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7.48 |
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8.60 |
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Capital Ratios (Bank Only) (4) |
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Tier 1 Leverage Ratio |
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10.61 |
% |
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10.76 |
% |
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11.13 |
% |
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Common Equity Tier 1 Risk-based Capital Ratio |
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11.37 |
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11.29 |
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11.42 |
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Tier 1 Risk-based Capital Ratio |
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11.37 |
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11.29 |
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11.42 |
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Total Risk-based Capital Ratio |
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12.62 |
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12.47 |
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12.65 |
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Capital Ratios (Consolidated) (4) |
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Tier 1 Leverage Ratio |
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9.41 |
% |
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9.55 |
% |
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10.78 |
% |
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Common Equity Tier 1 Risk-based Capital Ratio |
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8.48 |
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8.40 |
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9.13 |
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Tier 1 Risk-based Capital Ratio |
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10.08 |
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10.03 |
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11.08 |
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Total Risk-based Capital Ratio |
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13.25 |
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13.15 |
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15.02 |
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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 $250,000. |
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(4) |
Preliminary data. Current period subject to change prior to filings with applicable regulatory agencies. |
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Selected Financial Data |
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March 31, |
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December31, |
September 30, |
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June 30, |
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March 31, |
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(dollars in thousands) |
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2023 |
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2022 |
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2022 |
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2022 |
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2022 |
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Selected Balance Sheet Data |
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Total Assets |
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$ |
4,602,899 |
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$ |
4,345,662 |
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$ |
4,128,987 |
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$ |
3,883,264 |
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$ |
3,607,920 |
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Total Loans, Gross |
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3,684,360 |
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3,569,446 |
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3,380,082 |
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3,225,885 |
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2,987,967 |
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Allowance for Credit Losses |
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50,148 |
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47,996 |
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46,491 |
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44,711 |
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41,692 |
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Goodwill and Other Intangibles |
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2,866 |
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2,914 |
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2,962 |
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3,009 |
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3,057 |
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Deposits |
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3,411,123 |
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3,416,543 |
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3,305,074 |
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3,201,953 |
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3,035,611 |
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Tangible Common Equity (1) |
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332,626 |
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324,636 |
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312,531 |
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305,360 |
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309,870 |
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Total Shareholders’ Equity |
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402,006 |
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394,064 |
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382,007 |
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374,883 |
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379,441 |
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Average Total Assets – Quarter-to-Date |
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4,405,234 |
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4,251,345 |
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3,948,201 |
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3,743,575 |
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3,513,798 |
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Average Shareholders’ Equity – Quarter-to-Date |
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403,533 |
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|
387,589 |
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|
384,020 |
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|
381,448 |
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|
383,024 |
_____________________________________
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(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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March 31, |
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December 31, |
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March 31, |
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(dollars in thousands) |
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2023 |
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2022 |
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2022 |
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Selected Income Statement Data |
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Interest Income |
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$ |
51,992 |
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$ |
48,860 |
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$ |
34,694 |
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Interest Expense |
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23,425 |
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|
15,967 |
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|
4,514 |
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Net Interest Income |
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|
28,567 |
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|
32,893 |
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|
30,180 |
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Provision for Credit Losses |
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|
625 |
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|
1,500 |
|
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|
1,675 |
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Net Interest Income after Provision for Credit Losses |
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27,942 |
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31,393 |
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|
28,505 |
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Noninterest Income |
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1,943 |
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|
1,738 |
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|
1,557 |
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Noninterest Expense |
|
|
14,183 |
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|
15,203 |
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|
13,508 |
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Income Before Income Taxes |
|
|
15,702 |
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|
17,928 |
|
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|
16,554 |
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Provision for Income Taxes |
|
|
4,060 |
|
|
|
4,193 |
|
|
|
4,292 |
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Net Income |
|
|
11,642 |
|
|
|
13,735 |
|
|
|
12,262 |
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Preferred Stock Dividends |
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(1,013 |
) |
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(1,014 |
) |
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(1,013 |
) |
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Net Income Available to Common Shareholders |
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$ |
10,629 |
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$ |
12,721 |
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$ |
11,249 |
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Income Statement
Net Interest Income
Net interest income was $28.6 million for the first quarter of 2023, a decrease of $4.3 million, or 13.2%, from $32.9 million in the fourth quarter of 2022, and a decrease of $1.6 million, or 5.3%, from $30.2 million in the first quarter of 2022. The linked-quarter and year-over-year decrease in net interest income was primarily due to higher rates paid on deposits and increased borrowings in the rising interest rate environment. Average interest earning assets were $4.32 billion for the first quarter of 2023, an increase of $146.1 million, or 3.5%, from $4.18 billion for the fourth quarter of 2022, and an increase of $892.9 million, or 26.0%, from $3.43 billion for the first quarter of 2022. The linked-quarter increase in average interest earning assets was primarily due to continued growth in the loan portfolio. The year-over-year increase in average interest earning assets was primarily due to strong 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 first quarter of 2023 was 2.72%, a 44 basis point decrease from 3.16% in the fourth quarter of 2022, and an 88 basis point decrease from 3.60% in the first 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, for the first quarter of 2023 was 2.62%, a 43 basis point decrease from 3.05% in the fourth quarter of 2022, and a 72 basis point decrease from 3.34% in the first quarter of 2022. The decline in the margin when compared to both prior periods was primarily due to higher funding costs and increased borrowings in the rising interest rate environment, offset partially by higher earning asset yields.
Interest income was $52.0 million for the first quarter of 2023, an increase of $3.1 million, or 6.4%, from $48.9 million in the fourth quarter of 2022, and an increase of $17.3 million, or 49.9%, from $34.7 million in the first quarter of 2022. The yield on interest earning assets (on a fully tax-equivalent basis) was 4.91% in the first quarter of 2023, compared to 4.67% in the fourth quarter of 2022, and 4.13% in the first quarter of 2022. The linked-quarter increase in the yield on interest earning assets was primarily due to the increase in market interest rates resulting in new loan originations, loans repricing, and investment purchases to be 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 5.06% in the first quarter of 2023, which was 20 basis points higher than 4.86% in the fourth quarter of 2022, and 66 basis points higher than 4.40% in the first quarter of 2022. While loan fees have historically maintained a relatively stable contribution to the aggregate loan yield, the recent periods saw 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 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:
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Three Months Ended |
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March 31, 2023 |
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December 31, 2022 |
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September 30, 2022 |
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June 30, 2022 |
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March 31, 2022 |
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Interest |
|
4.95 |
% |
|
4.74 |
% |
|
4.42 |
% |
|
4.17 |
% |
|
4.15 |
% |
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Fees |
|
0.11 |
|
|
0.12 |
|
|
0.17 |
|
|
0.26 |
|
|
0.25 |
|
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Yield on Loans, Excluding PPP Loans |
|
5.06 |
% |
|
4.86 |
% |
|
4.59 |
% |
|
4.43 |
% |
|
4.40 |
% |
Interest expense was $23.4 million for the first quarter of 2023, an increase of $7.5 million, or 46.7%, from $16.0 million in the fourth quarter of 2022, and an increase of $18.9 million, or 418.9%, from $4.5 million in the first quarter of 2022. The cost of interest bearing liabilities increased 81 basis points on a linked-quarter basis from 2.22% in the fourth quarter of 2022 to 3.03% in the first quarter of 2023, primarily due to higher rates paid on deposits 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 223 basis points from 0.80% in the first quarter of 2022 to 3.03% in the first quarter of 2023, 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 $16.4 million for the first quarter of 2023, an increase of $5.6 million, or 51.9%, from $10.8 million in the fourth quarter of 2022, and an increase of $13.2 million, or 418.4%, from $3.2 million in the first quarter of 2022. The cost of total deposits increased 70 basis points on a linked-quarter basis from 1.31% in the fourth quarter of 2022, to 2.01% in the first quarter of 2023, primarily due to the rising interest rate environment and increased competition from other market alternatives. On a year-over-year basis, the cost of total deposits increased 158 basis points from 0.43% in the first quarter of 2022, to 2.01% in the first quarter of 2023, 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 March 31, 2023, December 31, 2022, and March 31, 2022 is as follows:
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For the Three Months Ended |
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March 31, 2023 |
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December 31, 2022 |
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March 31, 2022 |
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Average |
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Interest |
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Yield/ |
|
Average |
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Interest |
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Yield/ |
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Average |
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Interest |
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Yield/ |
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Balance |
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& Fees |
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Rate |
|
Balance |
|
& Fees |
|
Rate |
|
Balance |
|
& Fees |
|
Rate |
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(dollars in thousands) |
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Interest Earning Assets: |
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Cash Investments |
|
$ |
63,253 |
|
$ |
447 |
|
|
2.86 |
% |
$ |
65,393 |
|
$ |
366 |
|
|
2.22 |
% |
$ |
80,497 |
|
$ |
26 |
|
|
0.13 |
% |
|
Investment Securities: |
|
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|
|
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|
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|
Taxable Investment Securities |
|
|
574,242 |
|
|
5,958 |
|
|
4.21 |
|
|
540,601 |
|
|
5,268 |
|
|
3.87 |
|
|
373,021 |
|
|
2,255 |
|
|
2.45 |
|
|
Tax-Exempt Investment Securities (1) |
|
|
29,803 |
|
|
330 |
|
|
4.49 |
|
|
67,867 |
|
|
728 |
|
|
4.26 |
|
71,591 |
|
|
779 |
|
|
4.41 |
|
|
|
Total Investment Securities |
|
|
604,045 |
|
|
6,288 |
|
|
4.22 |
|
|
608,468 |
|
|
5,996 |
|
|
3.91 |
|
|
444,612 |
|
|
3,034 |
|
|
2.77 |
|
|
Paycheck Protection Program Loans (2) |
|
|
999 |
|
|
2 |
|
|
1.00 |
|
|
1,109 |
|
|
48 |
|
|
17.06 |
|
|
18,140 |
|
|
563 |
|
|
12.58 |
|
|
Loans (1)(2) |
|
|
3,629,447 |
|
|
45,263 |
|
|
5.06 |
|
|
3,481,041 |
|
|
42,654 |
|
|
4.86 |
|
|
2,881,845 |
|
|
31,275 |
|
|
4.40 |
|
|
Total Loans |
|
|
3,630,446 |
|
|
45,265 |
|
|
5.06 |
|
|
3,482,150 |
|
|
42,702 |
|
|
4.87 |
|
|
2,899,985 |
|
|
31,838 |
|
|
4.45 |
|
|
Federal Home Loan Bank Stock |
|
|
25,962 |
|
|
372 |
|
|
5.81 |
|
|
21,633 |
|
|
163 |
|
|
2.99 |
|
|
5,680 |
|
|
54 |
|
|
3.84 |
|
|
Total Interest Earning Assets |
|
|
4,323,706 |
|
|
52,372 |
|
|
4.91 |
% |
|
4,177,644 |
|
|
49,227 |
|
|
4.67 |
% |
|
3,430,774 |
|
|
34,952 |
|
|
4.13 |
% |
|
Noninterest Earning Assets |
|
|
81,528 |
|
|
|
|
|
|
|
73,701 |
|
|
|
|
|
|
|
83,024 |
|
|
|
|
|
|
|||
|
Total Assets |
|
$ |
4,405,234 |
|
|
|
|
|
|
$ |
4,251,345 |
|
|
|
|
|
|
$ |
3,513,798 |
|
|
|
|
|
|
|||
|
Interest Bearing Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Interest Bearing Transaction Deposits |
|
$ |
461,372 |
|
$ |
2,780 |
|
|
2.44 |
% |
$ |
464,631 |
|
$ |
2,013 |
|
|
1.72 |
% |
$ |
566,279 |
|
$ |
597 |
|
|
0.43 |
% |
|
Savings and Money Market Deposits |
|
|
1,044,794 |
|
|
6,499 |
|
|
2.52 |
|
|
1,048,227 |
|
|
4,533 |
|
|
1.72 |
|
|
876,580 |
|
|
918 |
|
|
0.42 |
|
|
Time Deposits |
|
|
248,174 |
|
|
1,069 |
|
|
1.75 |
|
|
281,334 |
|
|
1,007 |
|
|
1.42 |
|
|
288,914 |
|
|
745 |
|
|
1.05 |
|
|
Brokered Deposits |
|
|
743,465 |
|
|
6,026 |
|
|
3.29 |
|
|
537,351 |
|
|
3,228 |
|
|
2.38 |
|
|
406,648 |
|
|
898 |
|
|
0.90 |
|
|
Total Interest Bearing Deposits |
|
|
2,497,805 |
|
|
16,374 |
|
|
2.66 |
|
|
2,331,543 |
|
|
10,781 |
|
|
1.83 |
|
|
2,138,421 |
|
|
3,158 |
|
|
0.60 |
|
|
Federal Funds Purchased |
|
|
415,111 |
|
|
4,944 |
|
|
4.83 |
|
|
340,471 |
|
|
3,379 |
|
|
3.94 |
|
|
10,600 |
|
|
9 |
|
|
0.35 |
|
|
Notes Payable |
|
|
13,750 |
|
|
263 |
|
|
7.77 |
|
|
11,359 |
|
|
202 |
|
|
7.04 |
|
|
— |
|
|
— |
|
|
— |
|
|
FHLB Advances |
|
|
128,222 |
|
|
861 |
|
|
2.72 |
|
|
94,103 |
|
|
575 |
|
|
2.42 |
|
|
42,500 |
|
|
150 |
|
|
1.43 |
|
|
Subordinated Debentures |
|
|
78,945 |
|
|
983 |
|
|
5.05 |
|
|
81,242 |
|
|
1,030 |
|
|
5.03 |
|
|
92,286 |
|
|
1,197 |
|
|
5.26 |
|
|
Total Interest Bearing Liabilities |
|
|
3,133,833 |
|
|
23,425 |
|
|
3.03 |
% |
|
2,858,718 |
|
|
15,967 |
|
|
2.22 |
% |
|
2,283,807 |
|
|
4,514 |
|
|
0.80 |
% |
|
Noninterest Bearing Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Noninterest Bearing Transaction Deposits |
|
|
813,598 |
|
|
|
|
|
|
|
943,232 |
|
|
|
|
|
|
|
822,488 |
|
|
|
|
|
|
|||
|
Other Noninterest Bearing Liabilities |
|
|
54,270 |
|
|
|
|
|
|
|
61,806 |
|
|
|
|
|
|
|
24,479 |
|
|
|
|
|
|
|||
|
Total Noninterest Bearing Liabilities |
|
|
867,868 |
|
|
|
|
|
|
|
1,005,038 |
|
|
|
|
|
|
|
846,967 |
|
|
|
|
|
|
|||
|
Shareholders’ Equity |
|
|
403,533 |
|
|
|
|
|
|
|
387,589 |
|
|
|
|
|
|
|
383,024 |
|
|
|
|
|
|
|||
|
Total Liabilities and Shareholders’ Equity |
|
$ |
4,405,234 |
|
|
|
|
|
|
$ |
4,251,345 |
|
|
|
|
|
|
$ |
3,513,798 |
|
|
|
|
|
|
|||
|
Net Interest Income / Interest Rate Spread |
|
|
|
|
|
28,947 |
|
|
1.88 |
% |
|
|
|
|
33,260 |
|
|
2.45 |
% |
|
|
|
|
30,438 |
|
|
3.33 |
% |
|
Net Interest Margin (3) |
|
|
|
|
|
|
|
2.72 |
% |
|
|
|
|
|
|
3.16 |
% |
|
|
|
|
|
|
3.60 |
% |
|||
|
Taxable Equivalent Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Tax-Exempt Investment Securities and Loans |
|
|
|
|
|
(380 |
) |
|
|
|
|
|
|
|
(367 |
) |
|
|
|
|
|
|
|
(258 |
) |
|
|
|
|
Net Interest Income |
|
|
|
|
$ |
28,567 |
|
|
|
|
|
|
|
$ |
32,893 |
|
|
|
|
|
|
|
$ |
30,180 |
|
|
|
|
_____________________________________
|
(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 Credit Losses
On January 1, 2023, the Company adopted Accounting Standards Update No. 2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments,” more commonly referred to as “CECL.” Upon adoption of CECL, the Company’s allowance for credit losses on loans increased $650,000 and the allowance on unfunded commitments increased $4.9 million. The tax-effected impact of these two items totaled $3.9 million and was recorded as an adjustment to retained earnings as of January 1, 2023.
The provision for credit losses was $1.5 million for both the first quarter of 2023 and the fourth quarter of 2022, compared to $1.7 million in the first quarter of 2022. The provision recorded in the first quarter of 2023 was primarily attributable to the more moderated growth of the loan portfolio. The allowance for credit losses to total loans was 1.36% at March 31, 2023, compared to 1.34% at December 31, 2022, and 1.40% at March 31, 2022.
The following table presents the activity in the Company’s allowance for credit losses for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
Three Months Ended |
||||||||||
|
|
|
March 31, |
|
December 31, |
|
March 31, |
||||||
|
(dollars in thousands) |
|
2023 |
2022 |
|
2022 |
|||||||
|
Balance at Beginning of Period |
|
$ |
47,996 |
|
|
$ |
46,491 |
|
|
$ |
40,020 |
|
|
Impact of Adopting CECL |
|
|
650 |
|
|
|
— |
|
|
|
— |
|
|
Provision for Credit Losses |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
1,675 |
|
|
Charge-offs |
|
|
(4 |
) |
|
|
(3 |
) |
|
|
(15 |
) |
|
Recoveries |
|
|
6 |
|
|
|
8 |
|
|
|
12 |
|
|
Balance at End of Period |
|
$ |
50,148 |
|
|
$ |
47,996 |
|
|
$ |
41,692 |
|
The provision for unfunded commitments was a negative provision of ($875,000) for the first quarter of 2023 and zero for both the fourth quarter of 2022 and first quarter of 2022. The negative provision during the quarter was due to a reduction in outstanding unfunded commitments primarily attributable to the migration to funded loans.
Noninterest Income
Noninterest income was $1.9 million for the first quarter of 2023, an increase of $205,000 from $1.74 million for the fourth quarter of 2022, and an increase of $386,000 from $1.6 million for the first quarter of 2022. The linked-quarter increase was primarily due to an increase in letter of credit fees and FHLB prepayment income, offset partially by a decrease in other income. The year-over-year increase was primarily due to increased letter of credit fees and FHLB prepayment income, offset partially by no recorded swap fees.
The following table presents the major components of noninterest income for the periods indicated:
|
|
|
|
|
|
|
|
|
|
||
|
|
|
Three Months Ended |
||||||||
|
|
|
March 31, |
|
December 31, |
|
March 31, |
||||
|
(dollars in thousands) |
|
2023 |
|
2022 |
|
2022 |
||||
|
Noninterest Income: |
|
|
|
|
|
|
|
|
|
|
|
Customer Service Fees |
|
$ |
349 |
|
|
$ |
344 |
|
$ |
281 |
|
Net Gain (Loss) on Sales of Securities |
|
|
(56 |
) |
|
|
30 |
|
|
— |
|
Letter of Credit Fees |
|
|
634 |
|
|
|
358 |
|
|
242 |
|
Debit Card Interchange Fees |
|
|
138 |
|
|
|
148 |
|
|
133 |
|
Swap Fees |
|
|
— |
|
|
|
— |
|
|
557 |
|
Bank-Owned Life Insurance |
|
|
234 |
|
|
|
238 |
|
|
148 |
|
FHLB Prepayment Income |
|
|
299 |
|
|
|
— |
|
|
— |
|
Other Income |
|
|
345 |
|
|
|
620 |
|
|
196 |
|
Totals |
|
$ |
1,943 |
|
|
$ |
1,738 |
|
$ |
1,557 |
Noninterest Expense
Noninterest expense was $14.2 million for the first quarter of 2023, a decrease of $1.0 million from $15.2 million for the fourth quarter of 2022, and an increase of $675,000 from $13.5 million for the first quarter of 2022. The linked-quarter decrease was primarily due to decreases in salaries and employee benefits resulting from lower discretionary incentive accruals. The year-over-year increase was primarily attributable to increases in the FDIC insurance assessment and derivative collateral fees, offset partially by declines in marketing and advertising and other expense.
The following table presents the major components of noninterest expense for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|||||||
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|||
|
(dollars in thousands) |
|
2023 |
|
2023 |
|
2022 |
|||
|
Noninterest Expense: |
|
|
|
|
|
|
|
|
|
|
Salaries and Employee Benefits |
|
$ |
8,815 |
|
$ |
9,821 |
|
$ |
8,694 |
|
Occupancy and Equipment |
|
|
1,209 |
|
|
1,177 |
|
|
1,085 |
|
FDIC Insurance Assessment |
|
|
665 |
|
|
360 |
|
|
360 |
|
Data Processing |
|
|
357 |
|
|
371 |
|
|
297 |
|
Professional and Consulting Fees |
|
|
755 |
|
|
635 |
|
|
696 |
|
Derivative Collateral Fees |
|
|
380 |
|
|
535 |
|
|
2 |
|
Information Technology and Telecommunications |
|
|
683 |
|
|
673 |
|
|
578 |
|
Marketing and Advertising |
|
|
262 |
|
|
403 |
|
|
626 |
|
Intangible Asset Amortization |
|
|
48 |
|
|
48 |
|
|
48 |
|
Amortization of Tax Credit Investments |
|
|
114 |
|
|
114 |
|
|
117 |
|
Other Expense |
|
|
895 |
|
|
1,066 |
|
|
1,005 |
|
Totals |
|
$ |
14,183 |
|
$ |
15,203 |
|
$ |
13,508 |
The Company had 246 full-time equivalent employees at both March 31, 2023 and December 31, 2022, and 229 employees at March 31, 2022. The efficiency ratio, a non-GAAP financial measure, was 46.2% for the first quarter of 2023, compared to 43.8% for the fourth quarter of 2022, and 42.4% for the first quarter of 2022.
Income Taxes
The effective combined federal and state income tax rate for the first quarter of 2023 was 25.9%, an increase from 23.4% for the fourth quarter of 2022 and consistent with 25.9% for the first quarter of 2022.
Balance Sheet
Total assets at March 31, 2023 were $4.60 billion, a 5.9% increase from $4.35 billion at December 31, 2022, and a 27.6% increase from $3.61 billion at March 31, 2022. The linked-quarter increase in total assets was primarily due to continued loan growth and an increase in cash and cash equivalent balances. The year-over-year increase in total assets was primarily due to strong loan growth, purchases of investment securities and an increase in cash and cash equivalent balances.
Total gross loans at March 31, 2023 were $3.68 billion, an increase of $114.9 million, or 3.2%, over total gross loans of $3.57 billion at December 31, 2022, and an increase of $696.4 million, or 23.3%, over total gross loans of $2.99 billion at March 31, 2022. The increase in the loan portfolio during the first quarter of 2023 was primarily due to growth across all segments.
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
