Bridgewater Bancshares, Inc. Announces First Quarter 2024 Net Income of $7.8 Million, $0.24 Diluted Earnings Per Common Share

Share Name	Share Symbol	Market	Type
Bridgewater Bancshares Inc	NASDAQ:BWB	NASDAQ	Common Stock

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	13.09	12.84	19.20				0	00:00:00

Bridgewater Bancshares (NASDAQ:BWB)
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First Quarter 2024 Highlights

Tangible book value per share(1) of $13.20 for the first quarter of 2024, an increase of $0.37, or 11.5% annualized, compared to $12.84 for the fourth quarter of 2023.
Repurchased 193,802 shares of common stock at a weighted average price of $11.75 per share, for a total of $2.3 million.
Gross loans increased $59.9 million, or 6.5% annualized, from the fourth quarter of 2023.
Loan-to-deposit ratio of 99.4%, compared to 100.4% at December 31, 2023.
Deposits increased by $97.3 million, or 10.5% annualized, from the fourth quarter of 2023, including an increase in core deposits(2) of $90.3 million, or 14.3% annualized.
Net interest margin (on a fully tax-equivalent basis) of 2.24%, compared to 2.27% in the fourth quarter of 2023.
Efficiency ratio(1) of 58.2%, compared to 58.8% for the fourth quarter of 2023.
Noninterest expense declined $551,000, or 3.5%, from the fourth quarter of 2023. Annualized noninterest expense to average assets was 1.33%, compared to 1.37% for the fourth quarter of 2023.
A provision for credit losses on loans of $850,000 was recorded to support loan growth in the first quarter of 2024. The allowance for credit losses on loans to total loans was 1.36% at both March 31, 2024 and December 31, 2023.
Annualized net loan charge-offs as a percentage of average loans of 0.00% for the first quarter of 2024, compared to 0.01% for the fourth quarter of 2023.
Nonperforming assets to total assets of 0.01% at March 31, 2024, compared to 0.02% at December 31, 2023.

(1) Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details. (2) Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000.

Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the parent company of Bridgewater Bank (the Bank), today announced net income of $7.8 million for the first quarter of 2024, compared to $8.9 million for the fourth quarter of 2023, and $11.6 million for the first quarter of 2023. Earnings per diluted common share were $0.24 for the first quarter of 2024, compared to $0.28 for the fourth quarter of 2023, and $0.37 for the first quarter of 2023.

“Bridgewater’s 2024 first quarter results were highlighted by improved balance sheet growth, including the loan portfolio and core deposits,” said Chairman, Chief Executive Officer, and President, Jerry Baack. “We were encouraged by an uptick in loan balances due to the increased loan demand and pipelines we began seeing in late 2023. Deposit balances, including core deposits, also rebounded nicely during the quarter, resulting in our loan-to-deposit ratio dropping below 100% for the first time since the first quarter of 2022.

“During the first quarter, we also saw net interest margin compression continue to slow, well-controlled expenses, superb asset quality, and the 29th consecutive quarter of tangible book value per share growth. While the economic environment continues to evolve, we remain optimistic about our outlook as we execute on our proven business model and continue to provide a differentiated level of service to our clients.”

Key Financial Measures

As of and for the Three Months Ended

March 31,

December 31,

March 31,

2024

2023

Per Common Share Data

Basic Earnings Per Share

0.25

0.28

0.38

Diluted Earnings Per Share

0.24

0.28

0.37

Book Value Per Share

13.30

12.94

12.05

Tangible Book Value Per Share (1)

13.20

12.84

11.95

Financial Ratios

Return on Average Assets (2)

0.69

0.77

1.07

Pre-Provision Net Revenue Return on Average Assets (1)(2)

0.95

0.96

1.49

Return on Average Shareholders' Equity (2)

7.35

8.43

11.70

Return on Average Tangible Common Equity (1)(2)

7.64

8.95

12.90

Net Interest Margin (3)

2.24

2.27

2.72

Core Net Interest Margin (1)(3)

2.18

2.21

2.62

Cost of Total Deposits

3.32

3.19

2.01

Cost of Funds

3.34

3.23

2.41

Efficiency Ratio (1)

58.2

58.8

45.9

Noninterest Expense to Average Assets (2)

1.33

1.37

1.30

Tangible Common Equity to Tangible Assets (1)

7.72

7.73

7.23

Common Equity Tier 1 Risk-based Capital Ratio (Consolidated) (4)

9.21

9.16

8.48

Balance Sheet and Asset Quality (dollars in thousands)

Total Assets

4,723,109

4,611,990

4,602,899

Total Loans, Gross

3,784,205

3,724,282

3,684,360

Deposits

3,807,225

3,709,948

3,411,123

Loan to Deposit Ratio

99.4

100.4

108.0

Net Loan Charge-Offs (Recoveries) to Average Loans (2)

0.00

0.01

0.00

Nonperforming Assets to Total Assets (5)

0.01

0.02

Allowance for Credit Losses to Total Loans

1.36

_________________________________

(1)

Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.

(2)

Annualized.

(3)

Amounts calculated on a tax-equivalent basis using the statutory federal tax rate of 21%.

(4)

Preliminary data. Current period subject to change prior to filings with applicable regulatory agencies.

(5)

Nonperforming assets are defined as nonaccrual loans plus 90 days past due and still accruing plus foreclosed assets.

Income Statement

Net Interest Margin and Net Interest Income

Net interest margin (on a fully tax-equivalent basis) for the first quarter of 2024 was 2.24%, a three basis point decline from 2.27% in the fourth quarter of 2023 and a 48 basis point decline from 2.72% in the first quarter of 2023. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees, was 2.18% for the first quarter of 2024, a three basis point decline from 2.21% in the fourth quarter of 2023, and a 44 basis point decline from 2.62% in the first quarter of 2023.

The linked-quarter and year-over-year declines in the margin were primarily due to higher funding costs, offset partially by higher earning asset yields.

Net interest income was $24.6 million for the first quarter of 2024, a decrease of $683,000 from $25.3 million in the fourth quarter of 2023, and a decrease of $3.9 million from $28.6 million in the first quarter of 2023.

The linked-quarter and year-over year decreases in net interest income were primarily due to higher rates paid on deposits and growth in the rising interest rate environment, which outpaced the repricing of the loan and securities portfolios.

Interest income was $58.7 million for the first quarter of 2024, an increase of $116,000 from $58.6 million in the fourth quarter of 2023, and an increase of $6.7 million from $52.0 million in the first quarter of 2023.

The yield on interest earning assets (on a fully tax-equivalent basis) was 5.28% in the first quarter of 2024, compared to 5.22% in the fourth quarter of 2023 and 4.91% in the first quarter of 2023.
The linked-quarter increase in the yield on interest earning assets was primarily due to the purchase of higher yielding securities and loans repricing at yields accretive to the existing portfolio.
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.
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 increased to 5.38% in the first quarter of 2024, five basis points higher than 5.33% in the fourth quarter of 2023, and 32 basis points higher than 5.06% in the first quarter of 2023.
Despite the overall decrease in fee recognition, 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 for the periods indicated is as follows:

Three Months Ended

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

March 31, 2023

Interest

5.31

5.25

5.16

5.09

4.95

Fees

0.07

0.08

0.10

0.11

Yield on Loans

5.38

5.33

5.26

5.19

5.06

Interest expense was $34.0 million for the first quarter of 2024, an increase of $799,000 from $33.2 million in the fourth quarter of 2023, and an increase of $10.6 million from $23.4 million in the first quarter of 2023.

The cost of interest bearing liabilities was 4.03% in the first quarter of 2024, compared to 3.97% in the fourth quarter of 2023 and 3.03% in the first quarter of 2023.
The linked-quarter increase in the cost of interest bearing liabilities was primarily due to higher rates paid on deposits and changes in the deposit mix.
The year-over-year increase in the cost of interest bearing liabilities was primarily due to deposit repricing, which resulted from a rapid increase in market interest rates.

Interest expense on deposits was $30.2 million for the first quarter of 2024, an increase of $742,000 from $29.4 million in the fourth quarter of 2023, and an increase of $13.8 million from $16.4 million in the first quarter of 2023.

The cost of total deposits was 3.32% in the first quarter of 2024, compared to 3.19% in the fourth quarter of 2023 and 2.01% in the first quarter of 2023.
The linked-quarter increase in the cost of total deposits was primarily due to client demands for higher interest rates, increased competition, and changes in the mix of deposits.
The year-over-year increase in the cost of total deposits was primarily due to upward repricing of the deposit portfolio in the higher interest rate environment.

Provision for Credit Losses

The provision for credit losses on loans was $850,000 for the first quarter of 2024, compared to $0 for the fourth quarter of 2023 and $1.5 million for the first quarter of 2023.

The provision for credit losses on loans recorded in the first quarter of 2024 was primarily attributable to the increased growth of the loan portfolio.
The allowance for credit losses on loans to total loans was 1.36% at each of March 31, 2024, December 31, 2023 and March 31, 2023.

The provision for credit losses for off-balance sheet credit exposures was a negative provision of $100,000 for the first quarter of 2024, compared to a negative provision of $250,000 for the fourth quarter of 2023 and a negative provision of $875,000 for the first quarter of 2023.

The negative provision during the first quarter of 2024 was due to a reduction in outstanding unfunded commitments primarily attributable to the migration to funded loans, as well as a moderation in volume of newly originated projects with unfunded commitments.

Noninterest Income

Noninterest income was $1.6 million for the first quarter of 2024, an increase of $141,000 from $1.4 million for the fourth quarter of 2023 and a decrease of $393,000 from $1.9 million for the first quarter of 2023.

The linked-quarter increase was primarily due to a net gain on sale of securities and an increase in other income, offset partially by lower letter of credit fees.
The year-over-year decrease was primarily due to lower letter of credit fees and $299,000 of FHLB prepayment income recognized in the previous year which did not reoccur, offset partially by a net gain on sale of securities.

Noninterest Expense

Noninterest expense was $15.2 million for the first quarter of 2024, a decrease of $551,000 from $15.7 million for the fourth quarter of 2023 and an increase of $1.1 million from $14.1 million for the first quarter of 2023.

The linked-quarter decrease was primarily due to decreases in salaries and employee benefits, FDIC insurance assessment and other expense, offset partially by an increase in professional and consulting expense.
The year-over-year increase was primarily attributable to increases in salaries and employee benefits, industry-wide increases in the FDIC insurance assessment, higher professional and consulting fees, derivative collateral fees and information technology and telecommunications, offset partially by decreases in occupancy and equipment.
The efficiency ratio, a non-GAAP financial measure, was 58.2% for the first quarter of 2024, compared to 58.8% for the fourth quarter of 2023, and 45.9% for the first quarter of 2023.
The Company had 255 full-time equivalent employees at both March 31, 2024 and December 31, 2023, compared to 246 employees at March 31, 2023.

Income Taxes

The effective combined federal and state income tax rate for the first quarter of 2024 was 23.5%, an increase from 21.0% for the fourth quarter of 2023 and a decrease from 26.4% for the first quarter of 2023.

The linked-quarter increase in the effective tax rate was primarily due to the timing and delivery of tax credits in the fourth quarter of 2023.

Balance Sheet

Loans

(dollars in thousands)

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

March 31, 2023

Commercial

483,069

464,061

459,854

460,061

455,156

Construction and Land Development

200,970

232,804

294,818

351,069

312,277

1 - 4 Family Construction

65,606

65,087

64,463

69,648

85,797

Real Estate Mortgage:

1 - 4 Family Mortgage

417,773

402,396

404,716

400,708

380,210

Multifamily

1,389,345

1,388,541

1,378,669

1,314,524

1,320,081

CRE Owner Occupied

182,589

175,783

159,485

159,088

158,650

CRE Nonowner Occupied

1,035,702

987,306

951,263

971,532

962,671

Total Real Estate Mortgage Loans

3,025,409

2,954,026

2,894,133

2,845,852

2,821,612

Consumer and Other

9,151

8,304

9,003

9,581

9,518

Total Loans, Gross

3,784,205

3,724,282

3,722,271

3,736,211

3,684,360

Allowance for Credit Losses on Loans

(51,347

)

(50,494

)

(50,585

)

(50,701

)

(50,148

)

Net Deferred Loan Fees

(6,356

)

(6,573

)

(7,222

)

(7,718

)

(8,735

)

Total Loans, Net

3,726,502

3,667,215

3,664,464

3,677,792

3,625,477

Total gross loans at March 31, 2024 were $3.78 billion, an increase of $59.9 million, or 6.5% annualized, over total gross loans of $3.72 billion at December 31, 2023, and an increase of $99.8 million, or 2.7%, over total gross loans of $3.68 billion at March 31, 2023.

The increase in the loan portfolio during the first quarter of 2024 was due to increased loan demand and originations, partially offset by a decrease in construction and land development due to migration out of this category as deals complete the construction phase.

Deposits

(dollars in thousands)

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

March 31, 2023

Noninterest Bearing Transaction Deposits

698,432

756,964

754,297

751,217

742,198

Interest Bearing Transaction Deposits

783,736

692,801

780,863

719,488

630,037

Savings and Money Market Deposits

979,773

935,091

872,534

860,613

913,013

Time Deposits

352,510

300,651

265,737

271,783

266,213

Brokered Deposits

992,774

1,024,441

1,002,078

974,831

859,662

Total Deposits

3,807,225

3,709,948

3,675,509

3,577,932

3,411,123

Total deposits at March 31, 2024 were $3.81 billion, an increase of $97.3 million, or 10.5% annualized, over total deposits of $3.71 billion at December 31, 2023, and an increase of $396.1 million, or 11.6%, over total deposits of $3.41 billion at March 31, 2023.

Core deposits, defined as total deposits excluding brokered deposits and time deposits greater than $250,000, increased $90.3 million, or 14.3% annualized, from the fourth quarter of 2023. Growth in core deposits was primarily due to increased balances of existing clients and new client acquisitions. Based on the nature of these inflows, management believes core deposits could fluctuate in future periods as deposit growth is not always linear.
Brokered deposits, which declined for the first time since the fourth quarter of 2021, continue to be used as a supplemental funding source, as needed.
Uninsured deposits were 26% of total deposits as of March 31, 2024 and 24% of total deposits as of December 31, 2023.

Liquidity

Total on- and off-balance sheet liquidity was $2.25 billion as of March 31, 2024, compared to $2.23 billion at December 31, 2023 and $1.92 billion at March 31, 2023.

Primary Liquidity—On-Balance Sheet

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

March 31, 2023

(dollars in thousands)

Cash and Cash Equivalents

105,784

96,594

77,617

138,618

177,116

Securities Available for Sale

633,282

604,104

553,076

538,220

559,430

Less: Pledged Securities

(169,479

)

(170,727

)

(164,277

)

(236,206

)

(234,452

)

Total Primary Liquidity

569,587

529,971

466,416

440,632

502,094

Ratio of Primary Liquidity to Total Deposits

15.0

14.3

12.7

12.3

14.7

Secondary Liquidity—Off-Balance Sheet Borrowing Capacity

Net Secured Borrowing Capacity with the FHLB

446,801

498,736

516,501

400,792

246,795

Net Secured Borrowing Capacity with the Federal Reserve Bank

1,006,010

979,448

1,022,128

986,644

990,685

Unsecured Borrowing Capacity with Correspondent Lenders

200,000

150,000

108,000

158,000

Secured Borrowing Capacity with Correspondent Lender

26,250

Total Secondary Liquidity

1,679,061

1,704,434

1,714,879

1,521,686

1,421,730

Total Primary and Secondary Liquidity

2,248,648

2,234,405

2,181,295

1,962,318

1,923,824

Ratio of Primary and Secondary Liquidity to Total Deposits

59.1

60.2

59.3

54.8

56.4

Asset Quality

Overall asset quality remained superb due to the Company’s measured risk selection, consistent underwriting standards, active credit oversight, and experienced lending and credit teams.

Annualized net charge-offs as a percentage of average loans were 0.00% for the first quarter of 2024, 0.01% for the fourth quarter of 2023, and 0.00% for the first quarter of 2023.
At March 31, 2024, the Company’s nonperforming assets, which include nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $269,000, or 0.01% of total assets, compared to $919,000, or 0.02%, of total assets at December 31, 2023, and $809,000, or 0.02% of total assets at March 31, 2023.
Loans with potential weaknesses that warrant a watchlist risk rating at March 31, 2024 totaled $21.6 million, compared to $26.5 million at December 31, 2023, and $27.6 million at March 31, 2023.
Loans that warranted a substandard risk rating at March 31, 2024 totaled $33.8 million, compared to $35.9 million at December 31, 2023, and $36.3 million at March 31, 2023.

Capital

Total shareholders’ equity at March 31, 2024 was $433.6 million, an increase of $8.1 million, or 1.9%, compared to total shareholders’ equity of $425.5 million at December 31, 2023, and an increase of $31.6 million, or 7.9%, over total shareholders’ equity of $402.0 million at March 31, 2023.

The linked-quarter increase was primarily due to net income retained and an increase in unrealized gains in the derivatives portfolio, offset partially by preferred stock dividends and stock repurchases.
The year-over-year increase was due to net income retained and an increase in unrealized gains in the derivatives portfolio, offset partially by an increase in unrealized losses in the securities portfolio, preferred stock dividends, and stock repurchases.
The Common Equity Tier 1 Risk-Based Capital Ratio was 9.21% at March 31, 2024, compared to 9.16% at December 31, 2023 and 8.48% at March 31, 2023.
Tangible common equity as a percentage of tangible assets, a non-GAAP financial measure, was 7.72% at March 31, 2024, compared to 7.73% at December 31, 2023, and 7.23% at March 31, 2023.

Tangible book value per share, a non-GAAP financial measure, was $13.20 as of March 31, 2024, an increase of 2.9% from $12.84 as of December 31, 2023, and an increase of 10.5% from $11.95 as of March 31, 2023.

The Company has increased tangible book value per share each of the past 29 quarters.

During the first quarter of 2024, the Company repurchased 193,802 shares of its common stock. Shares were repurchased at a weighted average price of $11.75 per share, for a total of $2.3 million.

The Company has $18.2 million remaining under its current share repurchase authorization.

Today, the Company also announced that its Board of Directors has declared a quarterly cash dividend on its 5.875% Non-Cumulative Perpetual Preferred Stock, Series A (Series A Preferred Stock). The quarterly cash dividend of $36.72 per share, equivalent to $0.3672 per depositary share, each representing a 1/100th interest in a share of the Series A Preferred Stock (Nasdaq: BWBBP), is payable on June 3, 2024 to shareholders of record of the Series A Preferred Stock at the close of business on May 15, 2024.

Conference Call and Webcast

The Company will host a conference call to discuss its first quarter 2024 financial results on Thursday, April 25, 2024 at 8:00 a.m. Central Time. The conference call can be accessed by dialing 844-481-2913 and requesting to join the Bridgewater Bancshares earnings call. To listen to a replay of the conference call via phone, please dial 877-344-7529 and enter access code 8126492. The replay will be available through May 2, 2024. The conference call will also be available via a live webcast on the Investor Relations section of the Company’s website, investors.bridgewaterbankmn.com, and archived for replay.

About the Company

Bridgewater Bancshares, Inc. (Nasdaq: BWB) is a St. Louis Park, Minnesota-based financial holding company. Bridgewater's banking subsidiary, Bridgewater Bank, is a premier, full-service Twin Cities bank dedicated to serving the diverse needs of commercial real estate investors, entrepreneurs, business clients and successful individuals. By pairing a range of deposit, lending, and business services solutions with a responsive service model, Bridgewater has seen continuous growth and profitability. With total assets of $4.7 billion and seven branches as of March 31, 2024, Bridgewater is considered one of the largest locally led banks in the State of Minnesota, and has received numerous awards for its growth, banking services, and esteemed corporate culture.

Use of Non-GAAP financial measures

In addition to the results presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP), the Company routinely supplements its evaluation with an analysis of certain non-GAAP financial measures. The Company believes these non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors to help them understand the Company’s operating performance and trends, and to facilitate comparisons with the performance of peers. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of non-GAAP disclosures used in this earnings release to the comparable GAAP measures are provided in the accompanying tables.

Forward-Looking Statements

This earnings release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, identified by words such as “may”, “might”, “should”, “could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized”, “target” and “outlook”, or the negative version of those words or other comparable words of a future or forward-looking nature.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: interest rate risk, including the effects of significant rate increases by the Federal Reserve since 2020; fluctuations in the values of the securities held in our securities portfolio, including as the result of changes in interest rates; business and economic conditions generally and in the financial services industry, nationally and within our market area, including high rates of inflation and possible recession; the effects of developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in recent bank failures; loan concentrations in our portfolio; the overall health of the local and national real estate market; our ability to successfully manage credit risk; our ability to maintain an adequate level of allowance for credit losses on loans; new or revised accounting standards; the concentration of large loans to certain borrowers; the concentration of large deposits from certain clients, who have balances above current FDIC insurance limits; our ability to successfully manage liquidity risk, which may increase our dependence on non-core funding sources such as brokered deposits, and negatively impact our cost of funds; our ability to raise additional capital to implement our business plan; our ability to implement our growth strategy and manage costs effectively; the composition of our senior leadership team and our ability to attract and retain key personnel; talent and labor shortages and high rates of employee turnover; the occurrence of fraudulent activity, breaches or failures of our or our third-party vendors’ information security controls or cybersecurity-related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; interruptions involving our information technology and telecommunications systems or third-party servicers; competition in the financial services industry, including from nonbank competitors such as credit unions and “fintech” companies; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and regulatory actions against us; the impact of recent and future legislative and regulatory changes, including in response to the recent bank failures; risks related to climate change and the negative impact it may have on our customers and their businesses; the imposition of other governmental policies impacting the value of products produced by our commercial borrowers; severe weather, natural disasters, wide spread disease or pandemics, acts of war or terrorism or other adverse external events, including the ongoing Israeli-Palestinian conflict and the Russian invasion of Ukraine; potential impairment to the goodwill the Company recorded in connection with our past acquisition; changes to U.S. or state tax laws, regulations and guidance, including the 1% excise tax on stock buybacks by publicly traded companies; potential changes in federal policy and at regulatory agencies as a result of the upcoming 2024 presidential election; and any other risks described in the “Risk Factors” sections of reports filed by the Company with the Securities and Exchange Commission.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. The Company undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Bridgewater Bancshares, Inc. and Subsidiaries

Financial Highlights

(dollars in thousands, except share data)

As of and for the Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

(dollars in thousands)

2024

2023

Income Statement

Net Interest Income

24,631

25,314

25,421

25,872

28,567

Provision for (Recovery of) Credit Losses

750

(250

)

(600

)

625

Noninterest Income

1,550

1,409

1,726

1,415

1,943

Noninterest Expense

15,189

15,740

15,237

14,274

14,069

Net Income

7,831

8,873

9,629

9,816

11,642

Net Income Available to Common Shareholders

6,818

7,859

8,616

8,802

10,629

Per Common Share Data

Basic Earnings Per Share

0.25

0.28

0.31

0.32

0.38

Diluted Earnings Per Share

0.24

0.28

0.30

0.31

0.37

Book Value Per Share

13.30

12.94

12.47

12.25

12.05

Tangible Book Value Per Share (1)

13.20

12.84

12.37

12.15

11.95

Basic Weighted Average Shares Outstanding

27,691,401

27,870,430

27,943,409

27,886,425

27,726,894

Diluted Weighted Average Shares Outstanding

28,089,805

28,238,056

28,311,778

28,198,739

28,490,046

Shares Outstanding at Period End

27,589,827

27,748,965

28,015,505

27,973,995

27,845,244

Financial Ratios

Return on Average Assets (2)

0.69

0.77

0.85

0.88

1.07

Pre-Provision Net Revenue Return on Average Assets (1)(2)

0.95

0.96

1.01

1.16

1.49

Return on Average Shareholders' Equity (2)

7.35

8.43

9.23

9.69

11.70

Return on Average Tangible Common Equity (1)(2)

7.64

8.95

9.92

10.48

12.90

Net Interest Margin (3)

2.24

2.27

2.32

2.40

2.72

Core Net Interest Margin (1)(3)

2.18

2.21

2.24

2.31

2.62

Cost of Total Deposits

3.32

3.19

2.99

2.66

2.01

Cost of Funds

3.34

3.23

3.10

2.91

2.41

Efficiency Ratio (1)

58.2

58.8

56.1

52.3

45.9

Noninterest Expense to Average Assets (2)

1.33

1.37

1.34

1.28

1.30

Balance Sheet

Total Assets

4,723,109

4,611,990

4,557,070

4,603,185

4,602,899

Total Loans, Gross

3,784,205

3,724,282

3,722,271

3,736,211

3,684,360

Deposits

3,807,225

3,709,948

3,675,509

3,577,932

3,411,123

Total Shareholders' Equity

433,611

425,515

415,960

409,126

402,006

Loan to Deposit Ratio

99.4

100.4

101.3

104.4

108.0

Core Deposits to Total Deposits (4)

69.3

68.7

70.3

72.4

Uninsured Deposits to Total Deposits

26.0

24.3

22.2

22.1

24.0

Asset Quality

Net Loan Charge-Offs to Average Loans (2)

0.00

0.01

0.00

Nonperforming Assets to Total Assets (5)

0.01

0.02

Allowance for Credit Losses to Total Loans

1.36

Capital Ratios (Consolidated) (6)

Tier 1 Leverage Ratio

9.66

9.57

9.62

9.47

9.41

Common Equity Tier 1 Risk-based Capital Ratio

9.21

9.16

9.07

8.72

8.48

Tier 1 Risk-based Capital Ratio

10.83

10.79

10.69

10.33

10.08

Total Risk-based Capital Ratio

14.00

13.97

13.88

13.50

13.25

Tangible Common Equity to Tangible Assets (1)

7.72

7.73

7.61

7.39

7.23

___________________________________

(1)

Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.

(2)

Annualized.

(3)

Amounts calculated on a tax-equivalent basis using the statutory federal tax rate of 21%.

(4)

Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000.

(5)

Nonperforming assets are defined as nonaccrual loans plus 90 days past due and still accruing plus foreclosed assets.

(6)

Preliminary data. Current period subject to change prior to filings with applicable regulatory agencies.

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands, except share data)

March 31,

December 31,

September 30,

June 30,

March 31,

2024

2023

(Unaudited)

Assets

Cash and Cash Equivalents

143,355

128,562

124,358

177,101

209,192

Bank-Owned Certificates of Deposit

—

1,225

Securities Available for Sale, at Fair Value

633,282

604,104

553,076

538,220

559,430

Loans, Net of Allowance for Credit Losses

3,726,502

3,667,215

3,664,464

3,677,792

3,625,477

Federal Home Loan Bank (FHLB) Stock, at Cost

17,195

17,097

17,056

21,557

28,632

Premises and Equipment, Net

48,299

48,886

49,331

49,710

47,801

Accrued Interest

16,696

16,697

15,182

13,822

13,377

Goodwill

2,626

Other Intangible Assets, Net

180

188

197

206

240

Bank-Owned Life Insurance

34,778

34,477

34,209

33,958

33,719

Other Assets

100,196

92,138

95,346

86,968

81,180

Total Assets

4,723,109

4,611,990

4,557,070

4,603,185

4,602,899

Liabilities and Equity

Liabilities

Deposits:

Noninterest Bearing

698,432

756,964

754,297

751,217

742,198

Interest Bearing

3,108,793

2,952,984

2,921,212

2,826,715

2,668,925

Total Deposits

3,807,225

3,709,948

3,675,509

3,577,932

3,411,123

Federal Funds Purchased

—

195,000

437,000

Notes Payable

13,750

FHLB Advances

317,000

319,500

294,500

262,000

197,000

Subordinated Debentures, Net of Issuance Costs

79,383

79,288

79,192

79,096

79,001

Accrued Interest Payable

4,405

5,282

3,816

2,974

3,257

Other Liabilities

67,735

58,707

74,343

63,307

59,762

Total Liabilities

4,289,498

4,186,475

4,141,110

4,194,059

4,200,893

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 March 31, 2024 (unaudited), December 31, 2023, September 30, 2023 (unaudited), June 30, 2023 (unaudited), and March 31, 2023 (unaudited)

66,514

Common Stock- $0.01 par value; Authorized 75,000,000

Common Stock - Issued and Outstanding 27,589,827 at March 31, 2024 (unaudited), 27,748,965 at December 31, 2023, 28,015,505 at September 30, 2023 (unaudited), 27,973,995 at June 30, 2023 (unaudited), and 27,845,244 at March 31, 2023 (unaudited)

276

277

280

278

Additional Paid-In Capital

95,069

96,320

100,120

99,044

97,716

Retained Earnings

287,468

280,650

272,812

264,196

255,394

Accumulated Other Comprehensive Loss

(15,716

)

(18,246

)

(23,766

)

(20,908

)

(17,896

)

Total Shareholders' Equity

433,611

425,515

415,960

409,126

402,006

Total Liabilities and Equity

4,723,109

4,611,990

4,557,070

4,603,185

4,602,899

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in thousands, except per share data)

(Unaudited)

Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

(dollars in thousands)

2024

2023

Interest Income

Loans, Including Fees

49,581

49,727

48,999

47,721

44,955

Investment Securities

7,916

7,283

6,507

6,237

6,218

Other

1,172

1,543

1,303

1,043

819

Total Interest Income

58,669

58,553

56,809

55,001

51,992

Interest Expense

Deposits

30,190

29,448

27,225

22,998

16,374

Federal Funds Purchased

304

268

548

2,761

4,944

Notes Payable

295

299

296

285

263

FHLB Advances

2,258

2,220

2,316

2,092

861

Subordinated Debentures

991

1,004

1,003

993

983

Total Interest Expense

34,038

33,239

31,388

29,129

23,425

Net Interest Income

24,631

25,314

25,421

25,872

28,567

Provision for (Recovery of) Credit Losses

750

(250

)

(600

)

625

Net Interest Income After Provision for Credit Losses

23,881

25,564

26,021

25,822

27,942

Noninterest Income

Customer Service Fees

342

359

379

368

349

Net Gain (Loss) on Sales of Securities

(27

)

—

(56

)

Letter of Credit Fees

316

418

315

379

634

Debit Card Interchange Fees

141

152

150

155

138

Bank-Owned Life Insurance

301

268

252

238

234

FHLB Prepayment Income

—

493

—

299

Other Income

357

239

137

225

345

Total Noninterest Income

1,550

1,409

1,726

1,415

1,943

Noninterest Expense

Salaries and Employee Benefits

9,433

9,615

9,519

8,589

8,815

Occupancy and Equipment

1,057

1,062

1,101

1,075

1,209

FDIC Insurance Assessment

875

1,050

1,075

900

665

Data Processing

412

424

392

401

357

Professional and Consulting Fees

889

782

715

829

755

Derivative Collateral Fees

486

573

543

404

380

Information Technology and Telecommunications

796

812

683

711

683

Marketing and Advertising

322

324

222

321

262

Intangible Asset Amortization

Other Expense

910

1,089

978

1,010

895

Total Noninterest Expense

15,189

15,740

15,237

14,274

14,069

Income Before Income Taxes

10,242

11,233

12,510

12,963

15,816

Provision for Income Taxes

2,411

2,360

2,881

3,147

4,174

Net Income

7,831

8,873

9,629

9,816

11,642

Preferred Stock Dividends

(1,013

)

(1,014

)

(1,013

)

(1,014

)

(1,013

)

Net Income Available to Common Shareholders

6,818

7,859

8,616

8,802

10,629

Earnings Per Share

Basic

0.25

0.28

0.31

0.32

0.38

Diluted

0.24

0.28

0.30

0.31

0.37

Bridgewater Bancshares, Inc. and Subsidiaries

Analysis of Average Balances, Yields and Rates

(dollars in thousands, except per share data)

(Unaudited)

For the Three Months Ended

March 31, 2024

December 31, 2023

March 31, 2023

Average

Interest

Yield/

Average

Interest

Yield/

Average

Interest

Yield/

(dollars in thousands)

Balance

& Fees

Rate

Balance

& Fees

Rate

Balance

& Fees

Rate

Interest Earning Assets:

Cash Investments

75,089

829

4.44

106,275

1,233

4.60

63,253

447

2.86

Investment Securities:

Taxable Investment Securities

638,509

7,600

4.79

600,856

7,007

4.63

574,242

5,958

4.21

Tax-Exempt Investment Securities (1)

31,745

400

5.07

29,172

350

4.75

29,803

330

4.49

Total Investment Securities

670,254

8,000

4.80

630,028

7,357

4.63

604,045

6,288

4.22

Loans (1)(2)

3,729,355

49,858

5.38

3,726,126

50,022

5.33

3,630,446

45,265

5.06

Federal Home Loan Bank Stock

18,058

343

7.64

17,999

310

6.85

25,962

372

5.81

Total Interest Earning Assets

4,492,756

59,030

5.28

4,480,428

58,922

5.22

4,323,706

52,372

4.91

Noninterest Earning Assets

100,082

87,018

81,528

Total Assets

4,592,838

4,567,446

4,405,234

Interest Bearing Liabilities:

Deposits:

Interest Bearing Transaction Deposits

732,186

7,693

4.23

719,630

7,546

4.16

461,372

2,780

2.44

Savings and Money Market Deposits

896,844

8,781

3.94

911,835

9,003

3.92

1,044,794

6,499

2.52

Time Deposits

317,595

3,167

4.01

268,140

2,330

3.45

248,174

1,069

1.75

Brokered Deposits

1,014,197

10,549

4.18

1,009,166

10,569

4.16

743,465

6,026

3.29

Total Interest Bearing Deposits

2,960,822

30,190

4.10

2,908,771

29,448

4.02

2,497,805

16,374

2.66

Federal Funds Purchased

21,824

304

5.60

18,932

268

5.62

415,111

4,944

4.83

Notes Payable

13,750

295

8.64

13,750

299

8.62

13,750

263

7.77

FHLB Advances

318,648

2,258

2.85

303,467

2,220

2.90

128,222

861

2.72

Subordinated Debentures

79,328

991

5.02

79,233

1,004

5.02

78,945

983

5.05

Total Interest Bearing Liabilities

3,394,372

34,038

4.03

3,324,153

33,239

3.97

3,133,833

23,425

3.03

Noninterest Bearing Liabilities:

Noninterest Bearing Transaction Deposits

701,175

753,430

813,598

Other Noninterest Bearing Liabilities

69,043

72,074

54,270

Total Noninterest Bearing Liabilities

770,218

825,504

867,868

Shareholders' Equity

428,248

417,789

403,533

Total Liabilities and Shareholders' Equity

4,592,838

4,567,446

4,405,234

Net Interest Income / Interest Rate Spread

24,992

1.25

25,683

1.25

28,947

1.88

Net Interest Margin (3)

2.24

2.27

2.72

Taxable Equivalent Adjustment:

Tax-Exempt Investment Securities and Loans

(361

)

(369

)

(380

)

Net Interest Income

24,631

25,314

28,567

___________________________________

(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.

Bridgewater Bancshares, Inc. and Subsidiaries

Asset Quality Summary

(dollars in thousands) (unaudited)

As of and for the Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

(dollars in thousands)

2024

2023

Allowance for Credit Losses

Balance at Beginning of Period

50,494

50,585

50,701

50,148

47,996

Impact of Adopting CECL

—

650

Provision for Credit Losses

850

—

550

1,500

Charge-offs

)

(95

)

(122

)

Recoveries

Net Charge-offs

(91

)

(116

)

Balance at End of Period

51,347

50,494

50,585

50,701

50,148

Allowance for Credit Losses to Total Loans

1.36

As of and for the Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

(dollars in thousands)

2024

2023

Provision for Credit Losses on Loans

850

—

550

1,500

Recovery of Credit Losses for Off-Balance Sheet Credit Exposures

(100

)

(250

)

(600

)

(500

)

(875

)

Provision for (Recovery of) Credit Losses

750

(250

)

(600

)

625

As of and for the Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

(dollars in thousands)

2024

2023

Selected Asset Quality Data

Loans 30-89 Days Past Due

—

15,110

—

Loans 30-89 Days Past Due to Total Loans

0.00

0.41

0.00

Nonperforming Loans

249

919

749

662

693

Nonperforming Loans to Total Loans

0.01

0.02

Nonaccrual Loans to Total Loans

0.01

0.02

Nonaccrual Loans and Loans Past Due 90 Days and Still Accruing to Total Loans

0.01

0.02

Foreclosed Assets

—

116

Nonperforming Assets (1)

269

919

749

778

809

Nonperforming Assets to Total Assets (1)

0.01

0.02

Net Loan Charge-Offs (Annualized) to Average Loans

0.00

0.01

0.00

Watchlist Risk Rating Loans

21,624

26,485

26,877

27,215

27,574

Substandard Risk Rating Loans

33,829

35,858

35,621

33,821

36,258

__________________________________

(1)

Nonperforming assets are defined as nonaccrual loans plus 90 days past due and still accruing plus foreclosed assets.

Bridgewater Bancshares, Inc. and Subsidiaries

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

For the Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

(dollars in thousands)

2024

2023

Pre-Provision Net Revenue

Noninterest Income

1,550

1,409

1,726

1,415

1,943

Less: (Gain) Loss on Sales of Securities

(93

)

—

(50

)

Less: FHLB Advance Prepayment Income

—

(493

)

—

(299

)

Total Operating Noninterest Income

1,457

1,436

1,233

1,365

1,700

Plus: Net Interest Income

24,631

25,314

25,421

25,872

28,567

Net Operating Revenue

26,088

26,750

26,654

27,237

30,267

Noninterest Expense

15,189

15,740

15,237

14,274

14,069

Total Operating Noninterest Expense

15,189

15,740

15,237

14,274

14,069

Pre-Provision Net Revenue

10,899

11,010

11,417

12,963

16,198

Plus:

Non-Operating Revenue Adjustments

(27

)

493

243

Less:

Provision (Recovery of) for Credit Losses

750

(250

)

(600

)

625

Provision for Income Taxes

2,411

2,360

2,881

3,147

4,174

Net Income

7,831

8,873

9,629

9,816

11,642

Average Assets

4,592,838

4,567,446

4,504,937

4,483,662

4,405,234

Pre-Provision Net Revenue Return on Average Assets

0.95

0.96

1.01

1.16

1.49

Core Net Interest Margin

Net Interest Income (Tax-equivalent Basis)

24,992

25,683

25,822

26,280

28,947

Less: Loan Fees

(608

)

(751

)

(914

)

(941

)

(998

)

Core Net Interest Income

24,384

24,932

24,908

25,339

27,949

Average Interest Earning Assets

4,492,756

4,480,428

4,416,424

4,395,050

4,323,706

Core Net Interest Margin

2.18

2.21

2.24

2.31

2.62

Efficiency Ratio

Noninterest Expense

15,189

15,740

15,237

14,274

14,069

Less: Amortization of Intangible Assets

)

(34

)

(48

)

Adjusted Noninterest Expense

15,180

15,731

15,228

14,240

14,021

Net Interest Income

24,631

25,314

25,421

25,872

28,567

Noninterest Income

1,550

1,409

1,726

1,415

1,943

Less: Gain (Loss) on Sales of Securities

(93

)

—

(50

)

Adjusted Operating Revenue

26,088

26,750

27,147

27,237

30,566

Efficiency Ratio

58.2

58.8

56.1

52.3

45.9

Bridgewater Bancshares, Inc. and Subsidiaries

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

For the Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

(dollars in thousands)

2024

2023

Tangible Common Equity and Tangible Common Equity/Tangible Assets

Total Shareholders' Equity

433,611

425,515

415,960

409,126

402,006

Less: Preferred Stock

(66,514

)

(66,514

)

(66,514

)

(66,514

)

(66,514

)

Total Common Shareholders' Equity

367,097

359,001

349,446

342,612

335,492

Less: Intangible Assets

(2,806

)

(2,814

)

(2,823

)

(2,832

)

(2,866

)

Tangible Common Equity

364,291

356,187

346,623

339,780

332,626

Total Assets

4,723,109

4,611,990

4,557,070

4,603,185

4,602,899

Less: Intangible Assets

(2,806

)

(2,814

)

(2,823

)

(2,832

)

(2,866

)

Tangible Assets

4,720,303

4,609,176

4,554,247

4,600,353

4,600,033

Tangible Common Equity/Tangible Assets

7.72

7.73

7.61

7.39

7.23

Tangible Book Value Per Share

Book Value Per Common Share

13.30

12.94

12.47

12.25

12.05

Less: Effects of Intangible Assets

(0.10

)

(0.10

)

(0.10

)

(0.10

)

(0.10

)

Tangible Book Value Per Common Share

13.20

12.84

12.37

12.15

11.95

Return on Average Tangible Common Equity

Net Income Available to Common Shareholders

6,818

7,859

8,616

8,802

10,629

Average Shareholders' Equity

428,248

417,789

414,047

406,347

403,533

Less: Average Preferred Stock

(66,514

)

(66,514

)

(66,514

)

(66,514

)

(66,514

)

Average Common Equity

361,734

351,275

347,533

339,833

337,019

Less: Effects of Average Intangible Assets

(2,811

)

(2,819

)

(2,828

)

(2,846

)

(2,894

)

Average Tangible Common Equity

358,923

348,456

344,705

336,987

334,125

Return on Average Tangible Common Equity

7.64

8.95

9.92

10.48

12.90

View source version on businesswire.com: https://www.businesswire.com/news/home/20240423397106/en/

Media Contact: Jessica Stejskal | SVP Marketing Jessica.Stejskal@bwbmn.com | 952.893.6860

Investor Contact: Justin Horstman | VP, Investor Relations Justin.Horstman@bwbmn.com | 952.542.5169

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