Bridgewater Bancshares, Inc. Announces Record Third Quarter 2022 Net Income of $14.5 Million, $0.47 Diluted Earnings Per Common Share

By: Bridgewater Bancshares, Inc. via Business Wire

October 27, 2022 at 07:05 AM EDT

Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the parent company of Bridgewater Bank (the Bank), today announced record net income of $14.5 million for the third quarter of 2022, a 12.7% increase over net income of $12.9 million for the second quarter of 2022, and a 26.1% increase over net income of $11.5 million for the third quarter of 2021. Earnings per diluted common share for the third quarter of 2022 were $0.47, a 14.6% increase compared to $0.41 per diluted common share for the second quarter of 2022, and a 19.4% increase compared to $0.40 per diluted common share for the same period in 2021.

“Bridgewater’s ability to produce consistent financial results remained evident in the third quarter with record pre-provision net revenue and continued growth of tangible book value per share,” said Chairman, Chief Executive Officer, and President, Jerry Baack. “Our impressive profitability was driven by robust loan growth, well controlled expenses and the hard work of our team members to expand and deepen our client relationships.

“While the current economic environment creates an elevated level of uncertainty, we remain confident in our business model. As the rise in interest rates drives deposit costs higher and creates near-term net interest margin pressure, we believe our proven ability to grow the balance sheet can support our continued focus on overall revenue growth. Couple this with our superb credit quality and an efficiency ratio among the best in the industry and we have a story that is poised to continue driving sustained shareholder value.”

Third Quarter 2022 Financial Results

Diluted

Adjusted

Nonperforming

ROA

PPNR ROA ⁽¹⁾

ROE

earnings per share

efficiency ratio ⁽¹⁾

assets to total assets

1.46

2.15

14.99

0.47

39.4

0.02

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

Third Quarter 2022 Highlights

Diluted earnings per common share were $0.47, compared to $0.41 per common share for the second quarter of 2022.
Tangible book value per share, a non-GAAP financial measure, increased $0.30, or 10.8% annualized, to $11.33, compared to $11.03 at June 30, 2022, despite the market value depreciation of the securities portfolio due to rapidly rising interest rates, which continues to negatively impact accumulated other comprehensive income.
Record pre-provision net revenue (PPNR), a non-GAAP financial measure, of $21.4 million, compared to $20.4 million for the second quarter of 2022, an increase of $1.0 million, or 4.9%. PPNR ROA, a non-GAAP financial measure, was 2.15%, compared to 2.19% for the second quarter of 2022.
Annualized return on average assets (ROA) and annualized return on average shareholders’ equity (ROE) for the third quarter of 2022 were 1.46% and 14.99%, compared to ROA and ROE of 1.38% and 13.55%, respectively, for the second quarter of 2022. Annualized return on average tangible common equity, a non-GAAP financial measure, was 17.03% for the third quarter of 2022, compared to 15.26% for the second quarter of 2022.
Gross loans increased $154.2 million, or 19.0% annualized, from the end of the second quarter of 2022.
Deposits increased $103.1 million, or 12.8% annualized, from the end of the second quarter of 2022.
Net interest margin (on a fully tax-equivalent basis) was 3.53%, compared to 3.58% in the second quarter of 2022. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and PPP balances, interest, and fees, was 3.38%, compared to 3.34% in the second quarter of 2022.
Adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 39.4%, compared to 40.0% for the second quarter of 2022.
A loan loss provision of $1.5 million was recorded to support strong organic loan growth. The allowance for loan losses to total loans was 1.38% at September 30, 2022, compared to 1.39% at June 30, 2022.
Annualized net loan charge-offs (recoveries) as a percentage of average loans were (0.03)% for the third quarter of 2022, compared to 0.00% for the second quarter of 2022.

Year-Over-Year Highlights

Net income was $14.5 million for the third quarter of 2022, compared to $11.5 million for the third quarter of 2021, an increase of $3.0 million, or 26.1%.
Diluted earnings per common share for the third quarter of 2022 were $0.47, compared to $0.40 for the third quarter of 2021, an increase of 19.4%.
Net interest margin (on a fully tax-equivalent basis) was 3.53% for the third quarter of 2022 compared to 3.54% for the third quarter of 2021. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure, was 3.38% for the third quarter of 2022, compared to 3.22% for the third quarter of 2021.
Gross loans increased $668.1 million at September 30, 2022, or 24.6%, compared to September 30, 2021.
Deposits increased $450.9 million at September 30, 2022, or 15.8%, compared to September 30, 2021.

Key Financial Measures
	As of and for the Three Months Ended									As of and for the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2022			2022			2021			2022			2021
Per Common Share Data
Basic Earnings Per Share	$	0.49		$	0.43		$	0.41		$	1.32		$	1.18
Diluted Earnings Per Share		0.47			0.41			0.40			1.27			1.14
Book Value Per Share		11.44			11.14			10.73			11.44			10.73
Tangible Book Value Per Share ⁽¹⁾		11.33			11.03			10.62			11.33			10.62
Basic Weighted Average Shares Outstanding		27,520,117			27,839,260			28,047,280			27,825,517			28,035,246
Diluted Weighted Average Shares Outstanding		28,592,854			28,803,842			29,110,547			28,882,701			29,077,850
Shares Outstanding at Period End		27,587,978			27,677,372			28,066,822			27,587,978			28,066,822

Selected Performance Ratios
Return on Average Assets (Annualized)		1.46	%		1.38	%		1.37	%		1.42	%		1.42	%
Pre-Provision Net Revenue Return on Average Assets (Annualized) ⁽¹⁾		2.15			2.19			2.09			2.15			2.10
Return on Average Shareholders' Equity (Annualized)		14.99			13.55			13.81			13.85			14.95
Return on Average Tangible Common Equity (Annualized)⁽¹⁾		17.03			15.26			15.47			15.63			15.69
Yield on Interest Earning Assets⁽²⁾		4.37			4.16			4.14			4.23			4.20
Yield on Total Loans, Gross⁽²⁾		4.59			4.45			4.65			4.50			4.65
Cost of Total Deposits		0.73			0.46			0.48			0.55			0.53
Cost of Funds		0.93			0.63			0.65			0.73			0.70
Net Interest Margin ⁽²⁾		3.53			3.58			3.54			3.57			3.55
Core Net Interest Margin ⁽¹⁾⁽²⁾		3.38			3.34			3.22			3.36			3.29
Efficiency Ratio⁽¹⁾		39.8			40.2			43.9			40.7			42.4
Adjusted Efficiency Ratio ⁽¹⁾		39.4			40.0			41.5			40.4			41.3
Noninterest Expense to Average Assets (Annualized)		1.42			1.47			1.58			1.48			1.53
Adjusted Noninterest Expense to Average Assets (Annualized) ⁽¹⁾		1.41			1.47			1.49			1.47			1.49
Loan to Deposit Ratio		102.3			100.7			95.0
Core Deposits to Total Deposits ⁽³⁾		83.0			82.9			83.3
Tangible Common Equity to Tangible Assets ⁽¹⁾		7.57			7.87			8.81

Capital Ratios (Bank Only) ⁽⁴⁾
Tier 1 Leverage Ratio		11.24	%		11.43	%		10.96	%
Common Equity Tier 1 Risk-based Capital Ratio		11.46			11.53			11.88
Tier 1 Risk-based Capital Ratio		11.46			11.53			11.88
Total Risk-based Capital Ratio		12.67			12.74			13.13

Capital Ratios (Consolidated)⁽⁴⁾
Tier 1 Leverage Ratio		9.98	%		10.33	%		10.70	%
Common Equity Tier 1 Risk-based Capital Ratio		8.47			8.50			9.47
Tier 1 Risk-based Capital Ratio		10.19			10.29			11.65
Total Risk-based Capital Ratio		13.78			13.98			15.93

________________________________
(1)	Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.
(2)	Amounts calculated on a tax-equivalent basis using the statutory federal tax rate of 21%.
(3)	Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000.
(4)	Preliminary data. Current period subject to change prior to filings with applicable regulatory agencies.

Selected Financial Data
	September 30,		June 30,		March 31,		December 31,		September 30,
(dollars in thousands)	2022		2022		2022		2021		2021
Selected Balance Sheet Data
Total Assets	$	4,128,987	$	3,883,264	$	3,607,920	$	3,477,659	$	3,389,125
Total Loans, Gross		3,380,082		3,225,885		2,987,967		2,819,472		2,712,012
Allowance for Loan Losses		46,491		44,711		41,692		40,020		38,901
Goodwill and Other Intangibles		2,962		3,009		3,057		3,105		3,153

Deposits		3,305,074		3,201,953		3,035,611		2,946,237		2,854,157
Tangible Common Equity⁽¹⁾		312,531		305,360		309,870		309,653		298,135
Total Shareholders' Equity		382,007		374,883		379,441		379,272		367,803
Average Total Assets - Quarter-to-Date		3,948,201		3,743,575		3,513,798		3,403,270		3,332,301
Average Shareholders' Equity - Quarter-to-Date		384,020		381,448		383,024		374,035		330,604

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


	For the Three Months Ended						For the Nine Months Ended
	September 30,		June 30,		September 30,		September 30,		September 30,
(dollars in thousands)	2022		2022		2021		2022		2021
Selected Income Statement Data
Interest Income	$	42,359	$	37,782	$	33,517	$	114,835	$	95,104
Interest Expense		8,264		5,252		4,844		18,030		14,748
Net Interest Income		34,095		32,530		28,673		96,805		80,356
Provision for Loan Losses		1,500		3,025		1,300		6,200		4,000
Net Interest Income after Provision for Loan Losses		32,595		29,505		27,373		90,605		76,356
Noninterest Income		1,387		1,650		1,410		4,594		4,021
Noninterest Expense		14,157		13,752		13,236		41,417		35,636
Income Before Income Taxes		19,825		17,403		15,547		53,782		44,741
Provision for Income Taxes		5,312		4,521		4,038		14,125		11,568
Net Income		14,513		12,882		11,509		39,657		33,173
Preferred Stock Dividends		(1,013)		(1,014)		—		(3,040)		—
Net Income Available to Common Shareholders	$	13,500	$	11,868	$	11,509	$	36,617	$	33,173

Income Statement

Net Interest Income

Net interest income was $34.1 million for the third quarter of 2022, an increase of $1.6 million, or 4.8%, from $32.5 million in the second quarter of 2022, and an increase of $5.4 million, or 18.9%, from $28.7 million in the third quarter of 2021. The linked-quarter increase in net interest income was primarily due to growth in average interest earning assets and higher yields on investment securities and loans, offset partially by higher rates paid on deposits. The year-over-year increase in net interest income was primarily due to growth in average interest earning assets and higher yields on investment securities and core loans, offset partially by higher rates paid on deposits and lower PPP fee recognition. Average interest earning assets were $3.87 billion for the third quarter of 2022, an increase of $200.1 million, or 5.5%, from $3.67 billion for the second quarter of 2022, and an increase of $637.6 million, or 19.7%, from $3.23 billion for the third quarter of 2021. The linked-quarter and year-over-year increases in average interest earning assets were primarily due to strong organic growth in the loan portfolio and continued 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 third quarter of 2022 was 3.53%, a five basis point decrease from 3.58% in the second quarter of 2022, and a modest one basis point decline from 3.54% in the third quarter of 2021. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and PPP balances, interest, and fees, for the third quarter of 2022 was 3.38%, a four basis point increase from 3.34% in the second quarter of 2022, and a 16 basis point increase from 3.22% in the third quarter of 2021. The Company remains focused on managing the impact of continued interest rate hikes and the evolving shape of the yield curve during this unique interest rate environment.

As the PPP loan portfolio has almost fully paid off, the recognition of fees associated with the originations has decreased significantly, which impacts comparability between periods. The Company recognized $90,000 of PPP origination fees during the third quarter of 2022, compared to $244,000 during the second quarter of 2022, and $1.6 million during the third quarter of 2021. Remaining PPP origination fees to be recognized as of September 30, 2022 were $45,000.

Interest income was $42.4 million for the third quarter of 2022, an increase of $4.6 million, or 12.1%, from $37.8 million in the second quarter of 2022, and an increase of $8.8 million, or 26.4%, from $33.5 million in the third quarter of 2021. The yield on interest earning assets (on a fully tax-equivalent basis) was 4.37% in the third quarter of 2022, compared to 4.16% in the second quarter of 2022, and 4.14% in the third quarter of 2021. The linked-quarter expansion in the yield on interest earning assets was primarily due to the rapid increase in market interest rates resulting in new loan originations and investment purchases at yields accretive to the existing portfolios. The year-over-year increase in the yield on interest earning assets was primarily due to growth and repricing of the loan and securities portfolios in the rising interest rate environment, offset partially by the lower recognition of PPP origination fees.

Loan interest income and loan fees remain the primary contributing factors to the changes in the yield on interest earning assets. The aggregate loan yield, excluding PPP loans, increased to 4.59% in the third quarter of 2022, which was 16 basis points higher than 4.43% in the second quarter of 2022, and eight basis points higher than 4.51% in the third quarter of 2021. While loan fees have maintained a relatively stable contribution to the aggregate loan yield, the current period was impacted by fewer loan prepayments, which historically has accelerated the recognition of loan fees. Despite the decrease in fee recognition, the Company is encouraged that the core loan yield continues to rise as new loan originations and the existing portfolio reprice in the higher rate environment.

A summary of interest and fees recognized on loans, excluding PPP loans, for the periods indicated is as follows:


	Three Months Ended
	September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021
Interest	4.42	%	4.17	%	4.15	%	4.20	%	4.28	%
Fees	0.17		0.26		0.25		0.21		0.23
Yield on Loans, Excluding PPP Loans	4.59	%	4.43	%	4.40	%	4.41	%	4.51	%

Interest expense was $8.3 million for the third quarter of 2022, an increase of $3.0 million, or 57.3%, from $5.3 million in the second quarter of 2022, and an increase of $3.4 million, or 70.6%, from $4.8 million in the third quarter of 2021. The cost of interest bearing liabilities increased 44 basis points on a linked-quarter basis from 0.86% in the second quarter of 2022 to 1.30% in the third quarter of 2022, primarily due to the rapid increase in market interest rates that occurred during the quarter. On a year-over-year basis, the cost of interest bearing liabilities increased 42 basis points from 0.88% in the third quarter of 2021 to 1.30% in the third quarter of 2022, 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.

Interest expense on deposits was $6.0 million for the third quarter of 2022, an increase of $2.5 million, or 73.1%, from $3.5 million in the second quarter of 2022, and an increase of $2.6 million, or 75.1%, from $3.4 million in the third quarter of 2021. The cost of total deposits increased 27 basis points on a linked-quarter basis from 0.46% in the second quarter of 2022, to 0.73% in the third quarter of 2022, primarily due to the rapid increase in rates in 2022. On a year-over-year basis, the cost of total deposits increased 25 basis points from 0.48% in the third quarter of 2021, to 0.73% in the third quarter of 2022, 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 September 30, 2022, June 30, 2022, and September 30, 2021 is as follows:


	For the Three Months Ended
	September 30, 2022						June 30, 2022						September 30, 2021
	Average		Interest		Yield/		Average		Interest		Yield/		Average		Interest		Yield/
	Balance		& Fees		Rate		Balance		& Fees		Rate		Balance		& Fees		Rate
(dollars in thousands)
Interest Earning Assets:
Cash Investments	$	57,613	$	165	1.13	%	$	61,046	$	40	0.26	%	$	187,405	$	67	0.14	%
Investment Securities:
Taxable Investment Securities		461,255		3,741	3.22			417,142		2,696	2.59			314,367		1,751	2.21
Tax-Exempt Investment Securities⁽¹⁾		75,801		799	4.18			74,261		795	4.30			71,801		737	4.07
Total Investment Securities		537,056		4,540	3.35			491,403		3,491	2.85			386,168		2,488	2.56
Paycheck Protection Program Loans ⁽²⁾		2,424		96	15.75			8,335		263	12.67			76,006		1,753	9.15
Loans ⁽¹⁾⁽²⁾		3,263,390		37,724	4.59			3,099,344		34,205	4.43			2,579,021		29,348	4.51
Total Loans		3,265,814		37,820	4.59			3,107,679		34,468	4.45			2,655,027		31,101	4.65
Federal Home Loan Bank Stock		11,413		156	5.42			11,620		59	2.04			5,701		68	4.65
Total Interest Earning Assets		3,871,896		42,681	4.37	%		3,671,748		38,058	4.16	%		3,234,301		33,724	4.14	%
Noninterest Earning Assets		76,305						71,827						98,000
Total Assets	$	3,948,201					$	3,743,575					$	3,332,301
Interest Bearing Liabilities:
Deposits:
Interest Bearing Transaction Deposits	$	517,658	$	1,032	0.79	%	$	552,502	$	694	0.50	%	$	479,580	$	562	0.47	%
Savings and Money Market Deposits		999,932		2,494	0.99			925,354		1,185	0.51			801,354		904	0.45
Time Deposits		288,621		847	1.16			280,645		665	0.95			318,222		928	1.16
Brokered Deposits		447,034		1,612	1.43			403,931		912	0.91			440,167		1,023	0.92
Total Interest Bearing Deposits		2,253,245		5,985	1.05			2,162,432		3,456	0.64			2,039,323		3,417	0.66
Federal Funds Purchased		106,826		709	2.63			137,379		410	1.20			—		—	—
FHLB Advances		72,343		328	1.80			47,511		167	1.41			54,130		213	1.56
Subordinated Debentures		92,503		1,242	5.33			92,396		1,219	5.29			91,337		1,214	5.27
Total Interest Bearing Liabilities		2,524,917		8,264	1.30	%		2,439,718		5,252	0.86	%		2,184,790		4,844	0.88	%
Noninterest Bearing Liabilities:
Noninterest Bearing Transaction Deposits		991,545						882,477						784,148
Other Noninterest Bearing Liabilities		47,719						39,932						32,759
Total Noninterest Bearing Liabilities		1,039,264						922,409						816,907
Shareholders' Equity		384,020						381,448						330,604
Total Liabilities and Shareholders' Equity	$	3,948,201					$	3,743,575					$	3,332,301
Net Interest Income / Interest Rate Spread				34,417	3.07	%				32,806	3.30	%				28,880	3.26	%
Net Interest Margin ⁽³⁾					3.53	%					3.58	%					3.54	%
Taxable Equivalent Adjustment:
Tax-Exempt Investment Securities and Loans				(322)						(276)						(207)
Net Interest Income			$	34,095					$	32,530					$	28,673

________________________________
(1)	Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a statutory federal income tax rate of 21%.
(2)	Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.
(3)	Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

Provision for Loan Losses

The provision for loan losses was $1.5 million for the third quarter of 2022, a decrease of $1.5 million from $3.0 million for the second quarter of 2022, and an increase of $200,000 from $1.3 million for the third quarter of 2021. The provision recorded in the third quarter of 2022 was primarily attributable to the strong growth of the loan portfolio. The allowance for loan losses to total loans was 1.38% at September 30, 2022, compared to 1.39% at June 30, 2022, and 1.43% at September 30, 2021.

As an emerging growth company, the Company is not subject to Accounting Standards Update No. 2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments,“ or CECL, until January 1, 2023.

The following table presents the activity in the Company’s allowance for loan losses for the periods indicated:


	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,		September 30,
(dollars in thousands)	2022		2022		2021		2022		2021
Balance at Beginning of Period	$	44,711	$	41,692	$	37,591	$	40,020	$	34,841
Provision for Loan Losses		1,500		3,025		1,300		6,200		4,000
Charge-offs		(5)		(14)		(20)		(34)		(37)
Recoveries		285		8		30		305		97
Balance at End of Period	$	46,491	$	44,711	$	38,901	$	46,491	$	38,901

Noninterest Income

Noninterest income was $1.4 million for the third quarter of 2022, a decrease of $263,000 from $1.7 million for the second quarter of 2022, and a decrease of $23,000 from $1.4 million for the third quarter of 2021. The linked-quarter decrease was primarily due to a decrease in letter of credit fees and other income, offset partially by an increase in bank-owned life insurance income. The year-over-year decrease was primarily due to decreased letter of credit fees and gains on sales of securities, offset partially by an increase in bank-owned life insurance income.

The following table presents the major components of noninterest income for the periods indicated:


	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,		September 30,
(dollars in thousands)	2022		2022		2021		2022		2021
Noninterest Income:
Customer Service Fees	$	313	$	298	$	268	$	892	$	733
Net Gain on Sales of Securities		—		52		48		52		750
Letter of Credit Fees		428		564		577		1,234		1,135
Debit Card Interchange Fees		153		152		143		438		414
Swap Fees		—		—		—		557		—
Bank-Owned Life Insurance		227		149		166		524		166
Other Income		266		435		208		897		823
Totals	$	1,387	$	1,650	$	1,410	$	4,594	$	4,021

Noninterest Expense

Noninterest expense was $14.2 million for the third quarter of 2022, an increase of $405,000 from $13.8 million for the second quarter of 2022, and an increase of $921,000 from $13.2 million for the third quarter of 2021. The linked-quarter increase was primarily due to an increase in salaries and employee benefits and technology expenses, offset partially by a decrease in professional and consulting fees, marketing and advertising expenses, and other expenses. The year-over-year increase was primarily attributable to increases in salaries and employee benefits, occupancy and equipment, and other expenses, offset partially by a decrease in debt prepayment fees.

The following table presents the major components of noninterest expense for the periods indicated:


	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,		September 30,
(dollars in thousands)	2022		2022		2021		2022		2021
Noninterest Expense:
Salaries and Employee Benefits	$	9,449	$	8,977	$	8,309	$	27,120	$	22,923
Occupancy and Equipment		1,086		1,042		942		3,213		2,977
FDIC Insurance Assessment		315		330		355		1,005		960
Data Processing		372		356		325		1,025		916
Professional and Consulting Fees		716		769		708		2,181		1,804
Information Technology and Telecommunications		650		594		598		1,822		1,609
Marketing and Advertising		479		524		418		1,629		1,018
Intangible Asset Amortization		48		47		48		143		143
Amortization of Tax Credit Investments		114		63		152		294		410
Debt Prepayment Fees		—		—		582		—		582
Other Expense		928		1,050		799		2,985		2,294
Totals	$	14,157	$	13,752	$	13,236	$	41,417	$	35,636

The Company continues to add key talent across the organization, reaching 246 full-time equivalent employees at September 30, 2022, compared to 236 employees at June 30, 2022, and 219 employees at September 30, 2021.

The efficiency ratio, a non-GAAP financial measure, was 39.8% for the third quarter of 2022, compared to 40.2% for the second quarter of 2022, and 43.9% for the third quarter of 2021. Excluding the impact of certain non-routine income and expenses, the adjusted efficiency ratio, a non-GAAP financial measure, was 39.4% for the third quarter of 2022, 40.0% for the second quarter of 2022 and 41.5% for the third quarter of 2021.

Income Taxes

The effective combined federal and state income tax rate for the third quarter of 2022 was 26.8%, a slight increase from 26.0% for the second quarter of 2022 and 26.0% for the third quarter of 2021.

Balance Sheet

Total assets at September 30, 2022 were $4.13 billion, a 6.3% increase from $3.88 billion at June 30, 2022, and a 21.8% increase from $3.39 billion at September 30, 2021. The linked-quarter increase in total assets was primarily due to strong organic loan growth and continued purchases of investment securities. The year-over-year increase in total assets was primarily due to robust organic loan growth and purchases of investment securities, offset partially by a decrease in cash and cash equivalents.

Total gross loans at September 30, 2022 were $3.38 billion, an increase of $154.2 million, or 4.8%, over total gross loans of $3.23 billion at June 30, 2022, and an increase of $668.1 million, or 24.6%, over total gross loans of $2.71 billion at September 30, 2021. The increase in the loan portfolio during the third quarter of 2022 was primarily due to growth in the commercial and multifamily segments, offset partially by a decrease in the construction and land development segment which was the result of completed construction projects migrating to permanent financing. While the Company’s loan growth in the third quarter of 2022 remained strong, the pace began to moderate slightly, compared to the first half of 2022 due to active balance sheet management to align loan growth with the funding outlook, sales of participations on larger originations to manage growth, and the impact of the higher interest rate environment on the number of deals that made financial sense.

The following table presents the dollar composition of the Company’s loan portfolio, by category, at the dates indicated:


	September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021
(dollars in thousands)
Commercial	$	412,448	$	403,569	$	363,290	$	360,169	$	350,081
Paycheck Protection Program		1,192		4,860		12,309		26,162		54,190
Construction and Land Development		335,557		359,191		321,131		281,474		257,167
Real Estate Mortgage:
1 - 4 Family Mortgage		341,102		334,815		312,201		305,317		290,535
Multifamily		1,230,509		1,087,865		1,012,623		910,243		865,172
CRE Owner Occupied		151,088		142,214		117,969		111,096		101,834
CRE Nonowner Occupied		900,691		886,432		840,463		818,569		786,271
Total Real Estate Mortgage Loans		2,623,390		2,451,326		2,283,256		2,145,225		2,043,812
Consumer and Other		7,495		6,939		7,981		6,442		6,762
Total Loans, Gross		3,380,082		3,225,885		2,987,967		2,819,472		2,712,012
Allowance for Loan Losses		(46,491)		(44,711)		(41,692)		(40,020)		(38,901)
Net Deferred Loan Fees		(9,088)		(9,536)		(9,065)		(9,535)		(10,199)
Total Loans, Net	$	3,324,503	$	3,171,638	$	2,937,210	$	2,769,917	$	2,662,912

Total deposits at September 30, 2022 were $3.31 billion, an increase of $103.1 million, or 3.2%, over total deposits of $3.20 billion at June 30, 2022, and an increase of $450.9 million, or 15.8%, over total deposits of $2.85 billion at September 30, 2021. Deposit growth in the third quarter of 2022 was primarily due to an increase in savings and money market deposits and time deposits, offset partially by a decline in interest bearing transaction deposits and brokered deposits. In addition to the continued growth of core deposits, brokered deposits are also being used as a supplemental funding source, as needed, for the robust loan portfolio growth. Given the rapid rise in interest rates in 2022 and the prospect for more, management believes deposits could experience fluctuations in future periods.

The following table presents the dollar composition of the Company’s deposit portfolio, by category, at the dates indicated:


	September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021
(dollars in thousands)
Noninterest Bearing Transaction Deposits	$	961,084	$	961,998	$	835,482	$	875,084	$	846,490
Interest Bearing Transaction Deposits		510,396		522,151		598,402		544,789		488,785
Savings and Money Market Deposits		1,077,333		952,138		890,926		863,567		791,861
Time Deposits		293,052		272,424		286,674		293,474		309,824
Brokered Deposits		463,209		493,242		424,127		369,323		417,197
Total Deposits	$	3,305,074	$	3,201,953	$	3,035,611	$	2,946,237	$	2,854,157

Capital

Total shareholders’ equity at September 30, 2022 was $382.0 million, an increase of $7.1 million compared to total shareholders’ equity of $374.9 million at June 30, 2022, and an increase of $14.2 million, or 3.9%, over total shareholders’ equity of $367.8 million at September 30, 2021. The linked-quarter increase was due to net income retained and unrealized gains in the derivatives portfolio, offset partially by unrealized losses in the securities portfolio. The year-over-year increase was due to net income retained and unrealized gains in the derivatives portfolio, offset partially by an increase in stock repurchases made under the Company’s stock repurchase program and an increase in unrealized losses in the securities portfolio.

During the third quarter of 2022, the Company repurchased 99,310 shares of its common stock. Shares were repurchased at a weighted average price of $16.27 per share, for a total of $1.6 million. On August 18, 2022, the Company announced that its board of directors approved a new stock repurchase program which authorizes the Company to repurchase up to $25.0 million of its common stock, subject to certain limitations and conditions. The new stock repurchase program replaced and superseded the $40.0 million stock repurchase program, under which approximately $1.6 million remained. As of September 30, 2022, no shares have been repurchased under the new plan. The Company remains committed to maintaining strong capital levels while enhancing shareholder value as it strategically executes its stock repurchase program based on various factors including valuation, capital levels and other uses of capital.

Tangible book value per share, a non-GAAP financial measure, was $11.33 as of September 30, 2022, an increase of 2.7% from $11.03 as of June 30, 2022, and an increase of 6.6% from $10.62 as of September 30, 2021. The linked-quarter and year-over-year increase occurred despite the market value depreciation of the securities portfolio driven by the rapidly rising interest rate environment, which continues to negatively impact accumulated other comprehensive income. Tangible common equity as a percentage of tangible assets, a non-GAAP financial measure, was 7.57% at September 30, 2022, compared to 7.87% at June 30, 2022, and 8.81% at September 30, 2021.

Today the Company also announced that its Board of Directors 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 December 1, 2022 to shareholders of record of the Series A Preferred Stock at the close of business on November 15, 2022.

Asset Quality

Annualized net charge-offs (recoveries) as a percent of average loans were (0.03)% for the third quarter of 2022, compared to 0.00% for each of the previous four quarters. At September 30, 2022, the Company’s nonperforming assets, which include nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $663,000, or 0.02% of total assets, as compared to $688,000, or 0.02% of total assets at June 30, 2022, and $734,000, or 0.02% of total assets at September 30, 2021.

Loans that have potential weaknesses that warrant a watchlist risk rating at September 30, 2022 totaled $22.8 million, compared to $34.7 million at June 30, 2022, and $67.4 million at September 30, 2021. The linked-quarter decrease was primarily due to the migration of one relationship to substandard and the payoff of one other relationship. Loans that warranted a substandard risk rating at September 30, 2022 totaled $30.8 million, compared to $27.0 million at June 30, 2022, and $7.7 million at September 30, 2021.

The following table presents a summary of asset quality measurements at the dates indicated:


	As of and for the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
(dollars in thousands)	2022			2022			2022			2021			2021
Selected Asset Quality Data
Loans 30-89 Days Past Due	$	38		$	225		$	13		$	49		$	18
Loans 30-89 Days Past Due to Total Loans		0.00	%		0.01	%		0.00	%		0.00	%		0.00	%
Nonperforming Loans	$	663		$	688		$	706		$	722		$	734
Nonperforming Loans to Total Loans		0.02	%		0.02	%		0.02	%		0.03	%		0.03	%
Foreclosed Assets	$	—		$	—		$	—		$	—		$	—
Nonaccrual Loans to Total Loans		0.02	%		0.02	%		0.02	%		0.03	%		0.03	%
Nonaccrual Loans and Loans Past Due 90 Days and Still Accruing to Total Loans		0.02			0.02			0.02			0.03			0.03
Nonperforming Assets ⁽¹⁾	$	663		$	688		$	706		$	722		$	734
Nonperforming Assets to Total Assets ⁽¹⁾		0.02	%		0.02	%		0.02	%		0.02	%		0.02	%
Allowance for Loan Losses to Total Loans		1.38			1.39			1.40			1.42			1.43
Allowance for Loan Losses to Total Loans, Excluding PPP Loans		1.38			1.39			1.40			1.43			1.46
Allowance for Loans Losses to Nonaccrual Loans		7,012.22			6,498.69			5,905.38			5,542.94			5,299.86
Net Loan Charge-Offs (Recoveries) (Annualized) to Average Loans		(0.03)			0.00			0.00			0.00			0.00

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

During the COVID-19 pandemic, the Company developed programs for clients who experienced business and personal disruptions by providing interest-only modifications, loan payment deferrals, and extended amortization modifications. In accordance with interagency regulatory guidance and the CARES Act, qualifying loans modified in response to the COVID-19 pandemic are not considered troubled debt restructurings. The Company had one modified loan totaling $10.6 million outstanding as of September 30, 2022, representing 0.3% of the total loan portfolio, excluding PPP loans, which is down from $29.8 million at June 30, 2022.

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 $4.1 billion and seven branches as of September 30, 2022, 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 recent and anticipated rate increases by the Federal Reserve; fluctuations in the values of the securities held in our securities portfolio, including as the result of rising interest rates; business and economic conditions generally and in the financial services industry, nationally and within our market area, including rising rates of inflation; the negative effects of the ongoing COVID-19 pandemic, including its effects on the economic environment, our clients and our operations, including due to supply chain disruptions, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic; 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 loan losses; new or revised accounting standards, including as a result of the future implementation of the Current Expected Credit Loss standard; the concentration of large loans to certain borrowers; the concentration of large deposits from certain clients; our ability to successfully manage liquidity risk, especially in light of recent excess liquidity at the Bank; our dependence on non-core funding sources and 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; developments and uncertainty related to the future use and availability of some reference rates, such as the London Interbank Offered Rate, as well as other alternative reference rates; 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 information security controls or cybersecurity-related incidents; 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 changes to federal and state corporate tax rates; the imposition of tariffs or other governmental policies impacting the value of products produced by our commercial borrowers; severe weather, natural disasters, wide spread disease or pandemics (including the COVID-19 pandemic), acts of war or terrorism or other adverse external events including the Russian invasion of Ukraine; potential impairment to the goodwill we recorded in connection with our past acquisition; changes to U.S. or state tax laws, regulations and guidance, including the new 1% excise tax on stock buybacks by publicly traded companies; 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. We undertake 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 Consolidated Balance Sheets *(dollars in thousands, except share data)*
	September 30,		December 31,		September 30,
	2022		2021		2021
	(Unaudited)				(Unaudited)
ASSETS
Cash and Cash Equivalents	$	75,496	$	143,473	$	189,502
Bank-Owned Certificates of Deposit		1,182		1,876		1,877
Securities Available for Sale, at Fair Value		542,007		439,362		413,149
Loans, Net of Allowance for Loan Losses of $46,491 at September 30, 2022 (unaudited), $40,020 at December 31, 2021 and $38,901 at September 30, 2021 (unaudited)		3,324,503		2,769,917		2,662,912
Federal Home Loan Bank (FHLB) Stock, at Cost		15,603		5,242		5,442
Premises and Equipment, Net		48,941		49,395		49,803
Accrued Interest		11,198		9,186		8,550
Goodwill		2,626		2,626		2,626
Other Intangible Assets, Net		336		479		527
Other Assets		107,095		56,103		54,737
Total Assets	$	4,128,987	$	3,477,659	$	3,389,125

LIABILITIES AND EQUITY
LIABILITIES
Deposits:
Noninterest Bearing	$	961,084	$	875,084	$	846,490
Interest Bearing		2,343,990		2,071,153		2,007,667
Total Deposits		3,305,074		2,946,237		2,854,157
Federal Funds Purchased		212,000		—		—
FHLB Advances		71,500		42,500		47,500
Subordinated Debentures, Net of Issuance Costs		92,559		92,239		92,153
Accrued Interest Payable		2,214		1,409		1,656
Other Liabilities		63,633		16,002		25,856
Total Liabilities		3,746,980		3,098,387		3,021,322

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 September 30, 2022 (unaudited), December 31, 2021, and September 30, 2021 (unaudited)		66,514		66,514		66,515
Common Stock- $0.01 par value; Authorized 75,000,000
Common Stock - Issued and Outstanding 27,587,978 at September 30, 2022 (unaudited), 28,206,566 at December 31, 2021 and 28,066,822 at September 30, 2021 (unaudited)		276		282		281
Additional Paid-In Capital		95,973		104,123		103,471
Retained Earnings		235,964		199,347		188,004
Accumulated Other Comprehensive Income (Loss)		(16,720)		9,006		9,532
Total Shareholders' Equity		382,007		379,272		367,803
Total Liabilities and Equity	$	4,128,987	$	3,477,659	$	3,389,125

Bridgewater Bancshares, Inc. and Subsidiaries Consolidated Statements of Income *(dollars in thousands, except per share data)* *(Unaudited)*
	Three Months Ended						Nine Months Ended
	September 30,		June 30		September 30,		September 30,		September 30,
	2022		2022		2021		2022		2021
INTEREST INCOME
Loans, Including Fees	$	37,666	$	34,358	$	31,049	$	103,768	$	87,705
Investment Securities		4,372		3,325		2,333		10,567		7,065
Other		321		99		135		500		334
Total Interest Income		42,359		37,782		33,517		114,835		95,104

INTEREST EXPENSE
Deposits		5,984		3,456		3,417		12,598		10,601
Notes Payable		—		—		—		—		61
FHLB Advances		329		167		213		646		669
Subordinated Debentures		1,242		1,219		1,214		3,658		3,411
Federal Funds Purchased		709		410		—		1,128		6
Total Interest Expense		8,264		5,252		4,844		18,030		14,748

NET INTEREST INCOME		34,095		32,530		28,673		96,805		80,356
Provision for Loan Losses		1,500		3,025		1,300		6,200		4,000

NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		32,595		29,505		27,373		90,605		76,356

NONINTEREST INCOME
Customer Service Fees		313		298		268		892		733
Net Gain on Sales of Available for Sale Securities		—		52		48		52		750
Other Income		1,074		1,300		1,094		3,650		2,538
Total Noninterest Income		1,387		1,650		1,410		4,594		4,021

NONINTEREST EXPENSE
Salaries and Employee Benefits		9,449		8,977		8,309		27,120		22,923
Occupancy and Equipment		1,086		1,042		942		3,213		2,977
Other Expense		3,622		3,733		3,985		11,084		9,736
Total Noninterest Expense		14,157		13,752		13,236		41,417		35,636

INCOME BEFORE INCOME TAXES		19,825		17,403		15,547		53,782		44,741
Provision for Income Taxes		5,312		4,521		4,038		14,125		11,568
NET INCOME		14,513		12,882		11,509		39,657		33,173
Preferred Stock Dividends		(1,013)		(1,014)		—		(3,040)		—
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	13,500	$	11,868	$	11,509	$	36,617	$	33,173

EARNINGS PER SHARE
Basic	$	0.49	$	0.43	$	0.41	$	1.32	$	1.18
Diluted		0.47		0.41		0.40		1.27		1.14

Bridgewater Bancshares, Inc. and Subsidiaries Analysis of Average Balances, Yields and Rates *(dollars in thousands, except per share data)* *(Unaudited)*
	For the Nine Months Ended
	September 30, 2022						September 30, 2021
	Average		Interest		Yield/		Average		Interest		Yield/
	Balance		& Fees		Rate		Balance		& Fees		Rate
(dollars in thousands)
Interest Earning Assets:
Cash Investments	$	66,301	$	231	0.47	%	$	127,283	$	134	0.14	%
Investment Securities:
Taxable Investment Securities		417,462		8,692	2.78			310,078		5,122	2.21
Tax-Exempt Investment Securities⁽¹⁾		73,900		2,373	4.29			76,564		2,460	4.30
Total Investment Securities		491,362		11,065	3.01			386,642		7,582	2.62
Paycheck Protection Program Loans ⁽²⁾		9,575		922	12.88			124,466		5,384	5.78
Loans ⁽¹⁾⁽²⁾		3,082,924		103,204	4.48			2,402,844		82,433	4.59
Total Loans		3,092,499		104,126	4.50			2,527,310		87,817	4.65
Federal Home Loan Bank Stock		9,593		269	3.75			5,658		200	4.71
Total Interest Earning Assets		3,659,755		115,691	4.23	%		3,046,893		95,733	4.20	%
Noninterest Earning Assets		77,028						70,968
Total Assets	$	3,736,783					$	3,117,861
Interest Bearing Liabilities:
Deposits:
Interest Bearing Transaction Deposits	$	545,301	$	2,322	0.57	%	$	422,000	$	1,504	0.48	%
Savings and Money Market Deposits		934,408		4,597	0.66			763,646		2,853	0.50
Time Deposits		286,059		2,257	1.05			331,664		3,269	1.32
Brokered Deposits		419,352		3,422	1.09			407,680		2,975	0.98
Total Interest Bearing Deposits		2,185,120		12,598	0.77			1,924,990		10,601	0.74
Federal Funds Purchased		85,287		1,128	1.77			3,311		6	0.24
Notes Payable		—		—	—			2,216		61	3.66
FHLB Advances		54,227		646	1.59			56,364		669	1.59
Subordinated Debentures		92,396		3,658	5.29			79,723		3,411	5.72
Total Interest Bearing Liabilities		2,417,030		18,030	1.00	%		2,066,604		14,748	0.95	%
Noninterest Bearing Liabilities:
Noninterest Bearing Transaction Deposits		899,456						731,269
Other Noninterest Bearing Liabilities		37,463						23,228
Total Noninterest Bearing Liabilities		936,919						754,497
Shareholders' Equity		382,834						296,760
Total Liabilities and Shareholders' Equity	$	3,736,783					$	3,117,861
Net Interest Income / Interest Rate Spread				97,661	3.23	%				80,985	3.25	%
Net Interest Margin ⁽³⁾					3.57	%					3.55	%
Taxable Equivalent Adjustment:
Tax-Exempt Investment Securities and Loans				(856)						(629)
Net Interest Income			$	96,805					$	80,356

________________________________
(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 Non-GAAP Financial Measures *(dollars in thousands) (unaudited)*
	For the Three Months Ended									For the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2022			2022			2021			2022			2021
Pre-Provision Net Revenue
Noninterest Income	$	1,387		$	1,650		$	1,410		$	4,594		$	4,021
Less: Gain on Sales of Securities		—			(52)			(48)			(52)			(750)
Total Operating Noninterest Income		1,387			1,598			1,362			4,542			3,271
Plus: Net Interest Income		34,095			32,530			28,673			96,805			80,356
Net Operating Revenue	$	35,482		$	34,128		$	30,035		$	101,347		$	83,627

Noninterest Expense	$	14,157		$	13,752		$	13,236		$	41,417		$	35,636
Less: Amortization of Tax Credit Investments		(114)			(63)			(152)			(294)			(410)
Total Operating Noninterest Expense	$	14,043		$	13,689		$	12,502		$	41,123		$	34,644

Pre-Provision Net Revenue	$	21,439		$	20,439		$	17,533		$	60,224		$	48,983

Plus:
Non-Operating Revenue Adjustments		—			52			48			52			750
Less:
Provision for Loan Losses		1,500			3,025			1,300			6,200			4,000
Non-Operating Expense Adjustments		114			63			734			294			992
Provision for Income Taxes		5,312			4,521			4,038			14,125			11,568
Net Income	$	14,513		$	12,882		$	11,509		$	39,657		$	33,173

Average Assets	$	3,948,201		$	3,743,575		$	3,332,301		$	3,736,783		$	3,117,861
Pre-Provision Net Revenue Return on Average Assets		2.15	%		2.19	%		2.09	%		2.15	%		2.10	%


	As of and for the Three Months Ended									As of and for the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2022			2022			2021			2022			2021
Core Net Interest Margin
Net Interest Income (Tax-Equivalent Basis)	$	34,417		$	32,806		$	28,880		$	97,662		$	80,985
Less: Loan Fees		(1,400)			(2,030)			(1,487)			(5,173)			(3,712)
Less: PPP Interest and Fees		(96)			(263)			(1,753)			(922)			(5,384)
Core Net Interest Income	$	32,921		$	30,513		$	25,640		$	91,567		$	71,889

Average Interest Earning Assets	$	3,871,896		$	3,671,748		$	3,234,301		$	3,659,755		$	3,046,893
Less: Average PPP Loans		(2,424)			(8,335)			(76,006)			(9,575)			(124,466)
Core Average Interest Earning Assets	$	3,869,472		$	3,663,413		$	3,158,295		$	3,650,180		$	2,922,427
Core Net Interest Margin		3.38	%		3.34	%		3.22	%		3.35	%		3.29	%

Non-GAAP Financial Measures *(dollars in thousands) (unaudited)*
	For the Three Months Ended									For the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2022			2022			2021			2022			2021
Efficiency Ratio
Noninterest Expense	$	14,157		$	13,752		$	13,236		$	41,417		$	35,636
Less: Amortization of Intangible Assets		(48)			(47)			(48)			(143)			(143)
Adjusted Noninterest Expense	$	14,109		$	13,705		$	13,188		$	41,274		$	35,493
Net Interest Income		34,095			32,530			28,673			96,805			80,356
Noninterest Income		1,387			1,650			1,410			4,594			4,021
Less: Gain on Sales of Securities		—			(52)			(48)			(52)			(750)
Adjusted Operating Revenue	$	35,482		$	34,128		$	30,035		$	101,347		$	83,627
Efficiency Ratio		39.8	%		40.2	%		43.9	%		40.7	%		42.4	%

Adjusted Efficiency Ratio
Noninterest Expense	$	14,157		$	13,752		$	13,236		$	41,417		$	35,636
Less: Amortization of Tax Credit Investments		(114)			(63)			(152)			(294)			(410)
Less: Debt Prepayment Fees		—			—			(582)			—			(582)
Less: Amortization of Intangible Assets		(48)			(47)			(48)			(143)			(143)
Adjusted Noninterest Expense	$	13,995		$	13,642		$	12,454		$	40,980		$	34,501
Net Interest Income		34,095			32,530			28,673			96,805			80,356
Noninterest Income		1,387			1,650			1,410			4,594			4,021
Less: Gain on Sales of Securities		—			(52)			(48)			(52)			(750)
Adjusted Operating Revenue	$	35,482		$	34,128		$	30,035		$	101,347		$	83,627
Adjusted Efficiency Ratio		39.4	%		40.0	%		41.5	%		40.4	%		41.3	%


	For the Three Months Ended									For the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2022			2022			2021			2022			2021
Adjusted Noninterest Expense to Average Assets (Annualized)
Noninterest Expense	$	14,157		$	13,752		$	13,236		$	41,417		$	35,636
Less: Amortization of Tax Credit Investments		(114)			(63)			(152)			(294)			(410)
Less: Debt Prepayment Fees		—			—			(582)			—			(582)
Adjusted Noninterest Expense	$	14,043		$	13,689		$	12,502		$	41,123		$	34,644

Average Assets	$	3,948,201		$	3,743,575		$	3,332,301		$	3,736,783		$	3,117,861
Adjusted Noninterest Expense to Average Assets (Annualized)		1.41	%		1.47	%		1.49	%		1.47	%		1.49	%

Non-GAAP Financial Measures *(dollars in thousands) (unaudited)*
	As of and for the Three Months Ended									As of and for the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2022			2022			2021			2022			2021
Tangible Common Equity and Tangible Common Equity/Tangible Assets
Total Shareholders' Equity	$	382,007		$	374,883		$	367,803
Less: Preferred Stock		(66,514)			(66,514)			(66,515)
Total Common Shareholders' Equity		315,493			308,369			301,288
Less: Intangible Assets		(2,962)			(3,009)			(3,153)
Tangible Common Equity	$	312,531		$	305,360		$	298,135

Total Assets	$	4,128,987		$	3,883,264		$	3,389,125
Less: Intangible Assets		(2,962)			(3,009)			(3,153)
Tangible Assets	$	4,126,025		$	3,880,255		$	3,385,972
Tangible Common Equity/Tangible Assets		7.57	%		7.87	%		8.81	%

Tangible Book Value Per Share
Book Value Per Common Share	$	11.44		$	11.14		$	10.73
Less: Effects of Intangible Assets		(0.11)			(0.11)			(0.11)
Tangible Book Value Per Common Share	$	11.33		$	11.03		$	10.62

Return on Average Tangible Common Equity
Net Income Available to Common Shareholders	$	13,500		$	11,868		$	11,509		$	36,617		$	33,173

Average Shareholders' Equity	$	384,020		$	381,448		$	330,604		$	382,834		$	296,760
Less: Average Preferred Stock		(66,514)			(66,514)			(32,332)			(66,514)			(10,896)
Average Common Equity		317,506			314,934			298,272			316,320			285,864
Less: Effects of Average Intangible Assets		(2,989)			(3,037)			(3,180)			(3,036)			(3,227)
Average Tangible Common Equity	$	314,517		$	311,897		$	295,092		$	313,284		$	282,637
Return on Average Tangible Common Equity		17.03	%		15.26	%		15.47	%		15.63	%		15.69	%


	Three Months Ended
	September 30,		June 30,		March 31,		December 31,		September 30,
	2022		2022		2022		2021		2021
Tangible Common Equity
Total Shareholders' Equity	$	382,007	$	374,883	$	379,441	$	379,272	$	367,803
Less: Preferred Stock		(66,514)		(66,514)		(66,514)		(66,514)		(66,515)
Common Shareholders' Equity		315,493		308,369		312,927		312,758		301,288
Less: Intangible Assets		(2,962)		(3,009)		(3,057)		(3,105)		(3,153)
Tangible Common Equity	$	312,531	$	305,360	$	309,870	$	309,653	$	298,135

View source version on businesswire.com: https://www.businesswire.com/news/home/20221026005659/en/

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Media Contact:

Jessica Stejskal | SVP Marketing

Jessica.stejskal@bwbmn.com | 952.893.6860

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Justin Horstman | Director of Investor Relations

Justin.Horstman@bwbmn.com | 952.542.5169

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Bridgewater Bancshares, Inc. Announces Record Third Quarter 2022 Net Income of $14.5 Million, $0.47 Diluted Earnings Per Common Share

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