BRIDGEWATER BANC(BWBBP) - 2023 Q1 - Quarterly Report

Financial Performance - The Company reported financial results for the three months ended March 31, 2023, with annualized results not indicative of future performance [153]. - Net income for Q1 2023 was $11.6 million, a decrease from$12.3 million in Q1 2022, with diluted earnings per share at $0.37 compared to$0.39 in the prior year [177]. - The efficiency ratio for Q1 2023 was 46.2%, compared to 42.4% in Q1 2022, showing an increase of 8.95% [175]. - Noninterest income for Q1 2023 was $1.9 million, an increase of$386,000 from $1.6 million in Q1 2022, primarily due to increased letter of credit fees and FHLB prepayment income [202]. - Noninterest expense was$14.2 million for Q1 2023, an increase of $675,000 from$13.5 million in Q1 2022, mainly due to higher FDIC insurance assessments and derivative collateral fees [203]. - The provision for income taxes was $4.1 million for Q1 2023, a decrease from$4.3 million in Q1 2022, with an effective tax rate of 25.9% for both periods [210]. - Pre-provision net revenue for the three months ended March 31, 2023, was $16.2 million, down from$19.5 million in the previous quarter [267]. Asset and Loan Growth - Total assets increased to $4.6 billion as of March 31, 2023, up from$3.6 billion a year earlier, representing a growth of approximately 27.5% [175]. - Total loans, gross, rose to $3.68 billion, an increase of 23.3$2.99 billion in Q1 2022 [175]. - Average interest earning assets increased by $892.9 million, or 26.0$4.32 billion in Q1 2023 from $3.43 billion in Q1 2022 [188]. - Total gross loans reached$3.68 billion at March 31, 2023, an increase of $114.9 million, or 3.2$3.57 billion at December 31, 2022, and an increase of $696.4 million, or 23.3$2.99 billion at March 31, 2022 [212]. - The total real estate mortgage loans amounted to $2.82 billion, with multifamily loans making up$1.32 billion [223]. Interest Income and Expenses - Net interest income for Q1 2023 was $28.57 million, down from$30.18 million in Q1 2022, reflecting a decrease of 5.3% [176]. - Total interest income for Q1 2023 was $52.4 million, a$17.4 million, or 49.8%, increase from $35.0 million in Q1 2022 [190]. - Interest expense on interest bearing liabilities rose by$18.9 million, or 418.9%, to $23.4 million in Q1 2023 compared to$4.5 million in Q1 2022 [194]. - The average rate paid on interest bearing liabilities increased to 3.03% in Q1 2023 from 0.80% in Q1 2022, a rise of 223 basis points [189]. - Interest income on loans for Q1 2023 was $45.3 million, a$13.4 million, or 42.2%, increase from $31.8 million in Q1 2022 [191]. Credit Losses and Allowances - The allowance for credit losses increased to$50.15 million, up from $41.69 million a year ago, reflecting a growth of 20.2$1.5 million for Q1 2023, a decrease of 12.4% from $1.7 million in Q1 2022, with the allowance for credit losses on loans to total loans at 1.36$50.1 million as of March 31, 2023, an increase of $2.2 million from$48.0 million at December 31, 2022, reflecting a 4.6% rise [235]. - Nonperforming loans increased to $693,000 as of March 31, 2023, up from$639,000 at December 31, 2022 [229]. - The allowance for credit losses on off-balance sheet credit exposures was $4.3 million at March 31, 2023, compared to$360,000 at December 31, 2022, reflecting a negative provision of ($875,000) for Q1 2023 [200]. Liquidity and Deposits - The Company maintained total on- and off-balance sheet liquidity of$1.92 billion as of March 31, 2023, an increase of $540 million from$1.38 billion at December 31, 2022 [261]. - Total deposits decreased slightly by $5.4 million, or 0.2$3.41 billion as of March 31, 2023, compared to $3.42 billion at December 31, 2022, but increased by$375.5 million, or 12.4%, from $3.04 billion at March 31, 2022 [239]. - Brokered deposits increased by$83.5 million, or 10.8%, to $859.7 million as of March 31, 2023, compared to$776.2 million at December 31, 2022 [241]. - The Company has total contractual obligations of $4.15 billion as of March 31, 2023, with$3.36 billion due within one year [249]. - The Company’s total risk-based capital was $547.8 million with a ratio of 13.25% as of March 31, 2023, exceeding the minimum required ratio of 8.00% [253]. Risk Management - The Company faces risks from interest rate fluctuations, which could impact the value of securities held in its portfolio [154]. - The ALM Committee oversees the management of interest rate risk, ensuring compliance with the risk management infrastructure approved by the board of directors [270]. - In a hypothetical scenario of a 400 basis point increase in interest rates, net interest income would decrease by 18.88% [276]. - Conversely, a 300 basis point decrease in interest rates would result in a 17.87% increase in net interest income [276]. - The Company has various borrowing mechanisms in place for both short-term and long-term liquidity needs [249].