Financial Performance and Position - The company will remain an emerging growth company until it reaches total annual gross revenues of $1.235 billion or more[233] - As of December 31, 2022, the company had $884.3 million in noninterest bearing deposit accounts and $2.53 billion in interest bearing deposit accounts[249] - The fair value of the company's securities portfolio was approximately $548.6 million, representing 12.6% of total assets as of December 31, 2022[250] - The company experienced $34.1 million in unrealized losses, net of tax, in its securities portfolio as of December 31, 2022[254] - As of December 31, 2022, the company had $80.0 million in subordinated debentures and $69.0 million in preferred stock outstanding, indicating a substantial debt obligation[267] Interest Rate Risk - The Federal Reserve increased the target federal funds rate from 0.00%-0.25% to a range of 4.25%-4.50% in 2022, with further increases expected in 2023[247] - Rising interest rates may negatively impact the company's net interest income if the rates on deposits and borrowings increase more rapidly than the rates earned on loans[247] - The company may incur losses on securities held in its portfolio if interest rates increase or if economic conditions deteriorate[250] - The company’s net interest income simulation indicates a potential 4.84% decrease in net interest income with a 400 basis point increase in interest rates[443] - The company’s interest rate risk management includes hedging transactions with a total notional amount of $288.0 million as of December 31, 2022[439] - The company’s management of interest rate risk is overseen by its ALM Committee, which sets limits and targets for various metrics[437] - The company faces significant risks from potential interest rate hikes by the Federal Reserve, which could limit economic growth and decrease loan demand[256] - The company’s hedging strategies against interest rate risk may not be successful, exposing it to potential losses[248] Stock and Shareholder Considerations - The company plans to rely on exemptions under the JOBS Act until it no longer qualifies as an emerging growth company, potentially affecting the attractiveness of its common stock[234] - The company has a stock repurchase program authorized for up to $25.0 million, which may not necessarily enhance long-term shareholder value[268] - The company does not intend to pay cash dividends in the foreseeable future, relying instead on stock price appreciation for returns[261] - Future issuances of common stock could result in dilution, negatively affecting the market price of the company's common stock[266] - The average daily trading volume of the company's common stock is relatively low, which may lead to significant price volatility[257] - The company’s stock price may be subject to wide fluctuations due to factors beyond its control, including market conditions and investor confidence[259] Internal Controls and Audit - The company has not engaged an independent registered public accounting firm to audit its internal control over financial reporting, which may lead to material weaknesses[238]
BRIDGEWATER BANC(BWBBP) - 2022 Q4 - Annual Report