Bridgewater Bancshares Inc
For the period ended Jun 30, 2024. Filed Aug 1, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 1, 2024
BWB$20.28+0.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0001558370-24-006454
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0001558370-24-010523
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 127 previous paragraphs and 142 current paragraphs.
69 unchanged; 54 reworded; 13 added; 2 removed; 2 previous and 6 current paragraphs rearranged.
Tables are not compared: 65 previous and 71 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
Second Quarter of 2024 Compared to Second Quarter of 2023
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
Net interest income was $49.6 million for the six months ended June 30, 2024, a decrease of $4.8 million, or 8.8%, compared to $54.4 million for the six months ended June 30, 2023. The decrease in net interest income was primarily due to higher rates paid on deposits and growth in the rising interest rate environment, offset partially by higher earning asset yields.
Current report
Average interest earning assets were $4.52 billion for the six months ended June 30, 2024, an increase of $159.8 million, or 3.7%, compared to $4.36 billion for the six months ended June 30, 2023. This increase in average interest earning assets was primarily due to organic growth in the loan portfolio, continued purchases of investment securities, and an increase in cash balances. Average interest bearing liabilities were $3.42 billion for the six months ended June 30, 2024, an increase of $226.7 million, or 7.1%, compared to $3.19 billion for the six months ended June 30, 2023. The increase in average interest bearing liabilities was primarily due to an increase in interest bearing transaction deposits, time deposits, brokered deposits, and FHLB advances, offset partially by a decrease in federal funds purchased.
Current report
Average interest earning assets produced a tax-equivalent yield of 5.35% for the six months ended June 30, 2024, compared to 4.99% for the six months ended June 30, 2023. The average rate paid on interest bearing liabilities was 4.11% for the six months ended June 30, 2024, compared to 3.32% for the six months ended June 30, 2023.
Current report
Interest income on the investment securities portfolio, on a tax-equivalent basis, increased $3.7 million during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to a $72.0 million, or 12.0%, increase in average balances and a 64 basis point increase in yield between the periods.
Current report
Interest income on loans, on a tax-equivalent basis, for the six months ended June 30, 2024 was $101.5 million, compared to $93.3 million for the six months ended June 30, 2023. The $8.1 million increase was primarily due to a 2.1% increase in the average balances of loans outstanding and a 32 basis point increase in yield.
Current report
*Interest Expense.*Interest expense on interest bearing liabilities was $69.9 million for the six months ended June 30, 2024, an increase of $17.4 million, compared to $52.6 million for the six months ended June 30, 2023. The increases were primarily due to higher rates paid on deposits in the rising interest rate environment and increased utilization of FHLB advances, offset partially be a decrease in federal funds purchased.
Current report
Interest expense on deposits increased to $61.8 million for the six months ended June 30, 2024, compared to $39.4 million for the six months ended June 30, 2023. The $22.4 million increase in interest expense on deposits was primarily due to upward repricing of the deposit portfolio in the higher interest rate environment.
Current report
Interest expense on borrowings was $8.1 million for the six months ended June 30, 2024, compared to $13.2 million for the six months ended June 30, 2023. This decrease was primarily due to lower average balances of federal funds purchased, offset partially by higher average balances of FHLB advances.
Current report
Second Quarter of 2024 Compared to Second Quarter of 2023
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
Noninterest expense was $30.7 million for the six months ended June 30, 2024, an increase of $2.4 million, from $28.3 million for the six months ended June 30, 2023. The increase was primarily attributable to increases in salaries and employee benefits, higher derivative collateral fees and increases in information technology and communications, professional and consulting fees and data processing fees.
Removed paragraphs (2)
Previous report
Average interest earning assets were $4.49 million for the first quarter of 2024, an increase of $169.0 million, or 3.9%, compared to $4.32 billion for the first quarter of 2023. This increase in average interest earning assets was
Previous report
In addition, the Bank is a member of the American Financial Exchange, or AFX, through which it may either borrow or lend funds on an overnight or short-term basis with a group of approved commercial banks. The availability of funds changes daily. As of March 31, 2024 and December 31, 2023, the Company had no borrowings outstanding through the AFX.
Reworded paragraphs (54)
Previous wording
The following discussion explains the Company’s financial condition and results of operations as of and for the three months ended March 31, 2024. Annualized results for this interim period may not be indicative of results for the full year or future periods. The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes presented elsewhere in this report and the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission, or the SEC, on March 7, 2024.
Current wording
The following discussion explains the Company’s financial condition and results of operations as of and for the three and six months ended June 30, 2024. Annualized results for these interim periods may not be indicative of results for the full year or future periods. The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes presented elsewhere in this report and the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission, or the SEC, on March 7, 2024.
Previous wording
This Quarterly Report on Form 10-Q 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
Current wording
This Quarterly Report on Form 10-Q 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
Previous wording
Net income was $7.8 million for the first quarter of 2024, compared to net income of $11.6 million for the first quarter of 2023. Earnings per diluted common share for the first quarter of 2024 were $0.24, compared to $0.37 per diluted common share for the first quarter of 2023.
Current wording
Net income was $8.1 million for the second quarter of 2024, compared to net income of $9.8 million for the second quarter of 2023. Earnings per diluted common share for the second quarter of 2024 were $0.26, compared to $0.31 per diluted common share for the second quarter of 2023. Net income was $15.9 million for the six months ended June 30, 2024, compared to net income of $21.5 million for the six months ended June 30, 2023. Earnings per diluted common share for the six months ended June 30, 2024 were $0.50, compared to $0.69 per diluted common share for the six months ended June 30, 2023.
Previous wording
The Company’s primary source of revenue is net interest income, which is impacted by the level of interest earning assets and related funding sources, as well as changes in the level of interest rates. The difference between the average yield on earning assets and the average rate paid for interest bearing liabilities is the net interest spread. Noninterest bearing sources of funds, such as demand deposits and shareholders’ equity, also support earning assets. The impact of the noninterest bearing sources of funds is captured in the net interest margin, which is calculated as net interest income divided by average earning assets. Both the net interest margin and net interest spread are presented on a tax-equivalent basis, which means that tax-free interest income has been adjusted to pretax-equivalent income, assuming a 21% federal tax rate. Management’s ability to respond to changes in interest rates by using effective asset-liability management techniques is critical to managing net interest margin and the Company’s primary source of earnings.
Current wording
The Company’s primary source of revenue is net interest income, which is impacted by the level of interest earning assets and related funding sources, as well as changes in interest rates. The difference between the average yield on earning assets and the average rate paid for interest bearing liabilities is the net interest spread. Noninterest bearing sources of funds, such as demand deposits and shareholders’ equity, also support earning assets. The impact of the noninterest bearing sources of funds is captured in the net interest margin, which is calculated as net interest income divided by average earning assets. Both the net interest margin and net interest spread are presented on a tax-equivalent basis, which means that tax-free interest income has been adjusted to pretax-equivalent income, assuming a 21% federal tax rate. Management’s ability to respond to changes in interest rates by using effective asset-liability management techniques is critical to managing net interest margin and the Company’s primary source of earnings.
Previous wording
The following table presents, for the three months ended March 31, 2024 and 2023, the average balances of each principal category of assets, liabilities and shareholders’ equity, and an analysis of net interest income. The average balances are principally daily averages and, for loans, include both performing and nonperforming balances. Interest income on loans includes the effects of net deferred loan origination fees and costs accounted for as yield adjustments. These tables are presented on a tax-equivalent basis, if applicable.
Current wording
The following tables present, for the three and six months ended June 30, 2024 and 2023, the average balances of each principal category of assets, liabilities and shareholders’ equity, and an analysis of net interest income. The average balances are principally daily averages and, for loans, include both performing and nonperforming balances. Interest income on loans includes the effects of net deferred loan origination fees and costs accounted for as yield adjustments. These tables are presented on a tax-equivalent basis, if applicable.
Previous wording
Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest earning assets and interest bearing liabilities, as well as changes in average interest rates. The following table presents the effect that these factors had on the interest earned on interest earning assets and the interest incurred on interest bearing liabilities. The effect of changes in volume is determined by multiplying the change in volume by the previous period’s average rate. Similarly, the effect of rate changes is calculated by multiplying the change in average rate by the previous period’s volume. The changes not attributable specifically to either volume or rate have been allocated to the changes due to volume. The following table presents the changes in the volume and rate of interest bearing assets and liabilities for the three months ended March 31, 2024, compared to the three months ended March 31, 2023:
Current wording
Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest earning assets and interest bearing liabilities, as well as changes in average interest rates. The following table presents the effect that these factors had on the interest earned on interest earning assets and the interest incurred on interest bearing liabilities. The effect of changes in volume is determined by multiplying the change in volume by the previous period’s average rate. Similarly, the effect of rate changes is calculated by multiplying the change in average rate by the previous period’s volume. The changes not attributable specifically to either volume or rate have been allocated to the changes due to volume. The following tables present the changes in the volume and rate of interest bearing assets and liabilities for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, and for the six months ended June 30, 2024, compared to the six months ended June 30, 2023:
Previous wording
Net interest income was $24.6 million for the first quarter of 2024, a decrease of $3.9 million compared to $28.6 million for the first quarter of 2023. The decrease in net interest income was 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.
Current wording
Net interest income was $25.0 million for the second quarter of 2024, a decrease of $876,000 compared to $25.9 million for the second quarter of 2023. The decrease in net interest income was 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.
Previous wording
Net interest margin (on a fully tax-equivalent basis) for the first quarter of 2024 was 2.24%, 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 44 basis point decline from 2.62% in the first quarter of 2023. The decline in the margin was primarily due to higher funding costs, offset partially by higher earning asset yields.
Current wording
Net interest margin (on a fully tax-equivalent basis) for the second quarter of 2024 was 2.24%, a 16 basis point decline from 2.40% in the second 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 2.17% for the second quarter of 2024, a 14 basis point decline from 2.31% in the second quarter of 2023. The decline in the margin was primarily due to higher funding costs, offset partially by higher earning asset yields.
Previous wording
primarily due to growth in the loan portfolio and purchases of investment securities. Average interest bearing liabilities were $3.39 billion for the first quarter of 2024, an increase of $260.5 million, or 8.3%, compared to $3.13 billion for the first quarter of 2023. The increase in average interest bearing liabilities was primarily due to an increase in interest bearing transaction deposits, time deposits, brokered deposits and FHLB advances, offset partially by a decrease in federal funds purchased.
Current wording
Average interest earning assets were $4.55 billion for the second quarter of 2024, an increase of $150.9 million, or 3.4%, compared to $4.40 billion for the second quarter of 2023. This increase in average interest earning assets was primarily due to growth in the loan portfolio and purchases of investment securities. Average interest bearing liabilities were $3.45 billion for the second quarter of 2024, an increase of $187.6 million, or 5.8%, compared to $3.26 billion for the second quarter of 2023. The increase in average interest bearing liabilities was primarily due to an increase in all deposit types and FHLB advances, offset partially by a decrease in federal funds purchased.
Previous wording
Average interest earning assets produced a tax-equivalent yield of 5.28% for the first quarter of 2024, compared to 4.91% for the first quarter of 2023. The 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. The average rate paid on interest bearing liabilities was 4.03% for the first quarter of 2024, compared to 3.03% for the first quarter of 2023. The increase was primarilydue to deposit repricing, which resulted from a rapid increase in market interest rates.
Current wording
Average interest earning assets produced a tax-equivalent yield of 5.41% for the second quarter of 2024, compared to 5.06% for the second quarter of 2023. The increase in the yield on interest earning assets was primarily due to the purchase of higher yielding securities and the growth and repricing of the loan and securities portfolios in the rising interest rate environment. The average rate paid on interest bearing liabilities was 4.19% for the second quarter of
Previous wording
*Interest Income.*Total interest income, on a tax-equivalent basis, was $59.0 million for the first quarter of 2024, compared to $52.4 million for the first quarter of 2023. The $6.7 million increase in total interest income on a tax-equivalent basis was primarily due to growth in the loan portfolio, purchases of investment securities and higher earning asset yields in the rising interest rate environment.
Current wording
*Interest Income.*Total interest income, on a tax-equivalent basis, was $61.2 million for the second quarter of 2024, compared to $55.4 million for the second quarter of 2023. The $5.8 million increase in total interest income on a tax-equivalent basis was primarily due to growth in the loan portfolio, purchases of investment securities and higher earning asset yields in the rising interest rate environment.
Previous wording
Interest income on the investment securities portfolio, on a tax-equivalent basis, increased $1.7 million for the first quarter of 2024, compared to the first quarter of 2023, primarily due to a $66.2 million, or 11.0%, increase in average balances between the two periods and higher rates earned on securities.
Current wording
Interest income on the investment securities portfolio, on a tax-equivalent basis, increased $2.0 million for the second quarter of 2024, compared to the second quarter of 2023, primarily due to a $77.8 million, or 13.1%, increase in average balances between the two periods and higher rates earned on securities.
Previous wording
Interest income on loans, on a tax-equivalent basis, was $49.9 million for the first quarter of 2024, compared to $45.3 million for the first quarter of 2023. The $4.6 million increase was primarily due to growth and repricing of the loan portfolio in the rising interest rate environment.
Current wording
Interest income on loans, on a tax-equivalent basis, was $51.6 million for the second quarter of 2024, compared to $48.1 million for the second quarter of 2023. The $3.5 million increase was primarily due to growth and repricing of the loan portfolio in the rising interest rate environment.
Previous wording
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, which was 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.
Current wording
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 5.50% in the second quarter of 2024, which was 31 basis points higher than 5.19% in the second 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.
Previous wording
*Interest Expense.*Interest expense on interest bearing liabilities was $34.0 million for the first quarter of 2024, an increase of $10.6 million, from $23.4 million for the first quarter of 2023. The increase was primarily due to growth and upward repricing of the deposit and FHLB advances portfolios in the higher interest rate environment.
Current wording
*Interest Expense.*Interest expense on interest bearing liabilities was $35.9 million for the second quarter of 2024, an increase of $6.8 million, from $29.1 million for the second quarter of 2023. The increase was primarily due to growth and upward repricing of the deposit portfolio in the higher interest rate environment, offset partially by an overall decrease in borrowings.
Previous wording
Interest expense on deposits was $30.2 million for the first quarter of 2024, an increase of $13.8 million, from $16.4 million for the first quarter of 2023. Theincrease in interest expense on deposits was primarily due to upward repricing of the deposit portfolio in the higher interest rate environment and the average balance of interest bearing deposits increasing by $463.0 million, or 18.5%. The cost of total deposits was 3.32% in the first quarter of 2024, a 131 basis point increase, compared to 2.01% in the first quarter of 2023. The increase was primarily due to the upward repricing of the deposit portfolio in the higher interest rate environment.
Current wording
Interest expense on deposits was $31.6 million for the second quarter of 2024, an increase of $8.6 million, from $23.0 million for the second quarter of 2023. Theincrease in interest expense on deposits was primarily due to upward repricing of the deposit portfolio in the higher interest rate environment and the average balance of interest bearing deposits increasing by $273.1 million, or 10.1%. The cost of total deposits was 3.46% in the second quarter of 2024, an 80 basis point increase, compared to 2.66% in the second quarter of 2023. The increase was primarily due to the upward repricing of the deposit portfolio in the higher interest rate environment.
Previous wording
Interest expense on borrowings was $3.8 million for the first quarter of 2024, a decrease of $3.2 million, compared to $7.1 million for the first quarter of 2023. The decrease was primarily due to a decreased utilization of federal funds purchased in the higher interest rate environment, offset partially by increased utilization of FHLB advances.
Current wording
Interest expense on borrowings was $4.3 million for the second quarter of 2024, a decrease of $1.9 million, compared to $6.1 million for the second quarter of 2023. The decrease was primarily due to a decreased utilization of federal funds purchased.
Previous wording
The provision for credit losses on loans was $850,000 for the first quarter of 2024, compared to $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 both March 31, 2024 and March 31, 2023.
Current wording
The provision for credit losses on loans was $600,000 for the second quarter of 2024, compared to $550,000 for the second quarter of 2023. The provision for credit losses on loans was $1.5 million for the six months ended June 30, 2024, compared to $2.1 million for the six months ended June 30, 2023. The provision for credit losses on loans recorded in the second quarter of 2024 was primarily attributable to changes in the mix of the loan portfolio. The allowance for credit losses on loans to total loans was 1.37% at June 30, 2024, compared to 1.36% at June 30, 2023.
Previous wording
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 $875,000 for the first quarter of 2023. The negative provision for both periods was due to a reduction in outstanding unfunded commitments primarily attributable to the migration to funded loans, as well as a moderation of volume of newly originated projects with unfunded commitments. The allowance for credit losses on off-balance sheet credit exposures was $2.9 million as of March 31, 2024, compared to $3.0 million as of December 31, 2023.
Current wording
There was no provision for credit losses for off-balance sheet credit exposures for the second quarter of 2024, compared to a negative provision of $500,000 for the second quarter of 2023. No provision was recorded during the second quarter of 2024 due to unfunded commitments remaining stable as the migration to funded loans was offset by the volume of newly originated loans with unfunded commitments. The provision for credit losses for off-balance sheet exposures was a negative provision of $100,000 for the six months ended June 30, 2024, compared to a negative provision of $1.4 million for the six months ended June 30, 2023. The negative provision for both periods was due to a reduction in outstanding unfunded commitments. The allowance for credit losses on off-balance sheet credit exposures was $2.9 million as of second quarter of 2024, compared to $3.0 million as of December 31, 2023.
Previous wording
Noninterest income was $1.6 million for the first quarter of 2024, a decrease of $393,000 from $1.9 million for the first quarter of 2023. The decrease was primarily due tolower 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.
Current wording
Noninterest income was $1.8 million for the second quarter of 2024, an increase of $348,000 from $1.4 million for the second quarter of 2023. The increase was primarily due toa net gain on sale of securities and an increase in the cash surrender value of bank-owned life insurance. Noninterest income was $3.3 million for the six months ended June 30, 2024, a decrease of $45,000 from $3.4 million for the six months ended June 30, 2023. The 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 an increase in net gain on sale of securities.
Previous wording
Noninterest expense was $15.2 million for the first quarter of 2024, an increase of $1.1 million from $14.1 million for the first quarter of 2023. The increase was primarily attributable to increases insalaries 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.
Current wording
Noninterest expense was $15.5 million for the second quarter of 2024, an increase of $1.3 million from $14.3 million for the second quarter of 2023. The increase was primarily attributable to increasesin salaries and employee benefits, higher derivative collateral fees and information technology and telecommunications, offset partially by a decrease in the FDIC insurance assessment.
Previous wording
The Company had 255 full-time equivalent employees at the end of the first quarter of 2024 compared to 246 employees at the end of the first quarter of 2023.
Current wording
The Company had 258 full-time equivalent employees at the end of the second quarter of 2024, compared to 253 at the end of the second quarter of 2023.
Previous wording
The efficiency ratio was 58.2% for the first quarter of 2024, compared to 45.9% for the first quarter of 2023. The efficiencies of the Company's "branch-light" model have positioned the Company well to continue navigating a challenging environment for a more spread-based revenue model.
Current wording
The efficiency ratio was 58.7% for the second quarter of 2024, compared to 52.3% for the second quarter of 2023. The efficiency ratio for the six months ended June 30, 2024 and 2023 was 58.5% and 48.9%, respectively. The efficiencies of the Company’s “branch-light” model have positioned the Company well to continue navigating a challenging environment for a more spread-based revenue model.
Previous wording
Income tax expense was $2.4 million for the first quarter of 2024, compared to $4.1 million for the first quarter of 2023. The effective combined federal and state income tax rate for the first quarter of 2024 was 23.5%, compared to 26.4% for the first quarter of 2023. The decrease in the effective tax rate was primarily due to the timing and delivery of tax credits.
Current wording
Income tax expense was $2.5 million for the second quarter of 2024, compared to $3.1 million for the second quarter of 2023. The effective combined federal and state income tax rate for the second quarter of 2024 was 23.6%, compared to 24.3% for the second quarter of 2023. Income tax expense was $4.9 million for the six months ended June 30, 2024, compared to $7.3 million for the six months ended June 30, 2023. The effective combined federal and state income tax rate for the six months ended June 30, 2024 and 2023 was 23.6% and 25.4%, respectively. The decrease in the effective tax rate across both periods was primarily due to the timing and delivery of tax credits.
Previous wording
Total assets at March 31, 2024 were $4.72 billion, an increase of $111.1 million, or 2.4%, over total assets of $4.61 billion at December 31, 2023, and an increase of $120.2 million, or 2.6%, over total assets of $4.60 billion at March 31, 2023. The growth in both periods was primarily due to organic loan growth and purchases of investment securities.
Current wording
Total assets at June 30, 2024 were $4.69 billion, an increase of $75.0 million, or 1.6%, over total assets of $4.61 billion at December 31, 2023, and an increase of $83.9 million, or 1.8%, over total assets of $4.60 billion at June 30, 2023. The year-to-date growth was primarily due to organic loan growth. The year-over-year growth was primarily due to organic loan growth and purchases of investment securities, offset partially by a decrease in cash and cash equivalents.
Previous wording
The investment securities portfolio consists primarily of U.S. government agency mortgage backed securities, municipal securities, and corporate securities comprised primarily of subordinated debentures of banks and financial holding companies. In addition, the Company also holds other mortgage backed and other debt securities, all with varying contractual maturities. These maturities do not necessarily represent the expected life of the securities as the securities may be called or paid down without penalty prior to their stated maturities. All investment securities are held as available for sale.
Current wording
The investment securities portfolio consists primarily of U.S. government agency mortgage backed securities, municipal securities, and corporate securities comprised primarily of subordinated debentures of banks and financial holding companies. In addition, the Company also holds other mortgage backed and other debt securities, all with
Previous wording
Securities available for sale were $633.3 million at March 31, 2024, compared to $604.1 million at December 31, 2023, an increase of $29.2 million or 4.8%. At March 31, 2024, U.S. government agency mortgage-backed securities represented 22.0% of the portfolio, municipal securities represented 20.9% of the portfolio, corporate securities represented 21.0% of the portfolio, SBA securities represented 2.7% of the portfolio, other mortgage-backed securities represented 16.5% of the portfolio, and asset-backed securities represented 16.9% of the portfolio.
Current wording
Securities available for sale were $601.1 million at June 30, 2024, compared to $604.1 million at December 31, 2023, a decrease of $3.0 million or 0.5%. At June 30, 2024, U.S. government agency mortgage-backed securities represented 16.5% of the portfolio, municipal securities represented 22.1% of the portfolio, corporate securities represented 23.3% of the portfolio, SBA securities represented 2.6% of the portfolio, other mortgage-backed securities represented 17.5% of the portfolio, and asset-backed securities represented 18.0% of the portfolio.
Previous wording
Total gross loans at March 31, 2024 were $3.78 billion, an increase of $59.9 million, or 1.6%, 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 primarily due to increased loan demand and originations as well as a moderation in loan payoffs. Gross loans grew on an annualized basis of 6.5% during the first quarter of 2024. The pace of loan growth has moderated, when compared to historical levels, due to active balance sheet management to align loan growth with the funding outlook and ultimately the impact of the higher interest rate environment on the number of prospective deals that meet underwriting standards.
Current wording
Total gross loans at June 30, 2024 were $3.80 billion, an increase of $76.1 million, or 2.0%, over total gross loans of $3.72 billion at December 31, 2023, and an increase of $64.2 million, or 1.7%, over total gross loans of $3.74 billion at June 30, 2023. For the six months ended June 30, 2024, the increase in the loan portfolio was primarily due to increased loan originations, partially offset by an increase in loan payoffs. Gross loans grew on an annualized basis of 4.1% during the six months ended June 30, 2024. The pace of loan growth has moderated, when compared to historical levels, due to active balance sheet management to align loan growth with the funding outlook and ultimately the impact of the higher interest rate environment on the number of prospective deals that meet underwriting standards.
Previous wording
The Company primarily focuses on real estate mortgage lending, which constituted 79.9% of the portfolio as of March 31, 2024. The composition of the portfolio has remained relatively consistent with prior periods and the Company does not expect any significant changes in the foreseeable future in the composition of the loan portfolio or in the emphasis on real estate lending.
Current wording
The Company primarily focuses on real estate mortgage lending, which constituted 81.1% of the portfolio at June 30, 2024. The composition of the portfolio has remained relatively consistent with prior periods and the Company does not expect any significant changes in the foreseeable future in the composition of the loan portfolio or in the emphasis on real estate lending.
Previous wording
As of March 31, 2024, investor CRE loans totaled $2.69 billion, consisting of $1.04 billion of loans secured by nonowner occupied CRE, $1.39 billion of loans secured by multifamily residential properties, $65.6 million of 1-4 family construction loans and $201.0 million of construction and land development loans. Investor CRE loans represented 71.1% of the total gross loan portfolio and 476.0% of the Bank’s total risk-based capital at March 31, 2024, compared to 71.8% and 482.4%, respectively, at December 31, 2023.
Current wording
As of June 30, 2024, investor CRE loans totaled $2.67 billion, consisting of $1.07 billion of loans secured by nonowner occupied CRE, $1.40 billion of loans secured by multifamily residential properties, $60.6 million of 1-4 family construction loans and $134.1 million of construction and land development loans. Investor CRE loans represented 70.2% of the total gross loan portfolio and 465.9% of the Bank’s total risk-based capital at June 30, 2024, compared to 71.8% and 482.4%, respectively, at December 31, 2023.
Previous wording
Loans that have potential weaknesses that warranted a watchlist risk rating at March 31, 2024, totaled $21.6 million, compared to $26.5 million at December 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. Management continues to actively work with these borrowers and closely monitor substandard credits.
Current wording
Loans that have potential weaknesses that warranted a watchlist risk rating at June 30, 2024 totaled $30.4 million, compared to $26.5 million at December 31, 2023. Loans that warranted a substandard risk rating at June 30, 2024 totaled $33.9 million, compared to $35.9 million at December 31, 2023. Management continues to actively work with these borrowers and closely monitor substandard credits.
Previous wording
Nonperforming loans include loans accounted for on a nonaccrual basis and loans 90 days past due and still accruing. Nonaccrual loans totaled $249,000 at March 31, 2024 and $919,000 at December 31, 2023, a decrease of $670,000. There were no loans 90 days past due and still accruing as of March 31, 2024 or December 31, 2023. There were foreclosed assets of $20,000 and -$0- as of March 31, 2024 and December 31, 2023, respectively.
Current wording
Nonperforming loans include loans accounted for on a nonaccrual basis and loans 90 days past due and still accruing. Nonaccrual loans totaled $678,000 at June 30, 2024 and $919,000 at December 31, 2023, a decrease of $242,000. There were no loans 90 days past due and still accruing as of June 30, 2024 or December 31, 2023. There were no foreclosed assets as of June 30, 2024 and December 31, 2023.
Previous wording
The balance of nonperforming assets can fluctuate due to changes in economic conditions. The Company has established a policy to discontinue accruing interest on a loan (that is, place the loan on nonaccrual status) after it has become 90 days delinquent as to payment of principal or interest, unless the loan is considered to be well-collateralized and is actively in the process of collection. In addition, a loan will be placed on nonaccrual status before it becomes 90 days delinquent unless management believes that the collection of interest is expected. Interest previously accrued but uncollected on such loans is reversed and charged against current income when the receivable is determined to be uncollectible. If management believes that a loan will not be collected in full, an increase to the allowance for credit
Current wording
The balance of nonperforming assets can fluctuate due to changes in economic conditions. The Company has established a policy to discontinue accruing interest on a loan (that is, to place the loan on nonaccrual status) after it has become 90 days delinquent as to payment of principal or interest, unless the loan is considered to be well-collateralized and is actively in the process of collection. In addition, a loan will be placed on nonaccrual status before it becomes 90 days delinquent unless management believes that the collection of interest is expected. Interest previously accrued but uncollected on such loans is reversed and charged against current income when the receivable is determined to be uncollectible. If management believes that a loan will not be collected in full, an increase to the allowance for credit
Previous wording
losses on loans is recorded to reflect management’s estimate of any potential exposure or loss. Generally, payments received on nonaccrual loans are applied directly to principal. Gross income that would have been recorded on nonaccrual loans during the three months ended March 31, 2024 and 2023 was $13,000 and $16,000, respectively.
Current wording
losses on loans is recorded to reflect management’s estimate of any potential exposure or loss. Generally, payments received on nonaccrual loans are applied directly to principal. Gross income that would have been recorded on nonaccrual loans during the three and six months ended June 30, 2024 was $23,000 and $36,000, respectively.
Previous wording
At March 31, 2024, the allowance for credit losses on loans was $51.3 million, an increase of $853,000 from $50.5 million at December 31, 2023. Net charge-offs (recoveries) totaled ($3,000) during the first quarter of 2024 and ($2,000) during the first quarter of 2023. The allowance for credit losses on loans as a percentage of total loans was 1.36% at both March 31, 2024 and December 31, 2023.
Current wording
At June 30, 2024, the allowance for credit losses on loans was $51.9 million, an increase of $1.5 million from $50.5 million at December 31, 2023. Net charge-offs (recoveries) totaled ($2,000) during the second quarter of 2024 and ($3,000) during the second quarter of 2023. Net charge-offs (recoveries) totaled ($5,000) for both the six months ended June 30, 2024 and June 30, 2023. The allowance for credit losses on loans as a percentage of total loans was 1.37% at June 30, 2024, compared to 1.36% at December 31, 2023.
Previous wording
Total deposits at March 31, 2024 were $3.81 billion, an increase of $97.3 million, or 2.6%, compared to 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. Deposits increased in the first quarter of 2024 primarily due to inflows of core deposits, defined as deposits excluding brokered deposits and time deposits greater than $250,000. Core deposits increased $90.3
Current wording
Total deposits at June 30, 2024 were $3.81 billion, an increase of $97.8 million, compared to total deposits of $3.71 billion at December 31, 2023, and an increase of $229.8 million, or 6.4%, over total deposits of $3.58 billion at June 30, 2023. Core deposits, defined as total deposits excluding brokered deposits and time deposits greater than $250,000, increased $37.6 million, or 3.0% annualized, from December 31, 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.
Previous wording
The Company relies on increasing the deposit base to fund loans and other asset growth. The Company is in a highly competitive market and competes for local deposits by offering attractive products with competitive rates. The Company expects to have a higher average cost of funds for local deposits compared to competitor banks due to the lack of an extensive branch network. The Company’s strategy is to offset the higher cost of funding with a lower level of operating expense. When appropriate, the Company utilizes alternative funding sources such as brokered deposits. The brokered deposit market provides flexibility in structure, optionality and efficiency not afforded in traditional retail deposit channels. At March 31, 2024, total brokered deposits were $992.8 million, a decrease of $31.7 million, compared to total brokered deposits of $1.02 billion at December 31, 2023. 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, to support loan portfolio growth.
Current wording
The Company relies on increasing the deposit base to fund loans and other asset growth. The Company is in a highly competitive market and competes for local deposits by offering attractive products with competitive rates. The Company expects to have a higher average cost of funds for local deposits compared to competitor banks due to the lack of an extensive branch network. The Company’s strategy is to offset the higher cost of funding with a lower level of operating expense. When appropriate, the Company utilizes alternative funding sources such as brokered deposits. The brokered deposit market provides flexibility in structure, optionality and efficiency not afforded in traditional retail deposit channels. As of June 30, 2024, total brokered deposits were $1.03 billion, an increase of $7.8 million, compared to total brokered deposits of $1.02 billion at December 31, 2023. Brokered deposits continue to be used as a supplemental funding source, as needed, to support loan portfolio growth.
Previous wording
The Company’s total uninsured deposits, which are the amounts of deposit accounts that exceed the FDIC insurance limit, currently $250,000, were approximately $989.1 million, or 26.0% of total deposits, at March 31, 2024 and $900.0 million, or 24.3% of total deposits, at December 31, 2023. These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes.
Current wording
The Company’s total uninsured deposits, which are the amounts of deposit accounts that exceed the FDIC insurance limit, currently $250,000, were approximately $858.0 million, or 22.5% of total deposits, at June 30, 2024 and $900.0 million, or 24.3% of total deposits, at December 31, 2023. These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes.
Previous wording
At March 31, 2024, the Company had outstanding of FHLB advances of $317.0 million, compared to $319.5 million at December 31, 2023. The Company’s borrowing capacity at the FHLB is determined based on collateral pledged, generally consisting of loans. The Company had additional borrowing capacity under this credit facility of $446.8 million and $498.7 million at March 31, 2024 and December 31, 2023, respectively.
Current wording
At June 30, 2024, the Company had outstanding FHLB advances of $287.0 million, compared to $319.5 million at December 31, 2023. The Company’s borrowing capacity at the FHLB is determined based on collateral pledged, generally consisting of loans. The Company had additional borrowing capacity under this credit facility of $451.2 million and $498.7 million at June 30, 2024 and December 31, 2023, respectively.
Previous wording
The Company has an outstanding Loan and Security Agreement and revolving note with a third party correspondent lender, which is secured by 100% of the issued and outstanding stock of the Bank. The maximum principal amount of the revolving line of credit is $40.0 million and matures on September 1, 2024. As of March 31, 2024 and December 31, 2023, the Company had $13.8 million of outstanding balances under the revolving line of credit.
Current wording
The Company has an outstanding Loan and Security Agreement and revolving note with a third party correspondent lender, which is secured by 100% of the issued and outstanding stock of the Bank. The maximum principal amount of the revolving line of credit is $40.0 million and matures on September 1, 2024. As of both June 30, 2024 and December 31, 2023, the Company had $13.8 million of outstanding balances under the revolving line of credit.
Showing the first 40 of 54 pairs. Open the source sections for the rest.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
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:
Current report — wording carried from elsewhere
2024, compared to 3.59% for the second quarter of 2023. The increase was primarilydue to deposit repricing, which resulted from a rapid increase in market interest rates.
Current report — wording carried from elsewhere
Net interest margin (on a fully tax-equivalent basis) for the six months ended June 30, 2024 was 2.24%, a 31 basis point decline from 2.55% for the six months ended June 30, 2023. Core net interest margin (on a fully tax-
Current report — wording carried from elsewhere
equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees, was 2.18% for the six months ended June 30, 2024, a 29 basis point decline from 2.47% for the six months ended June 30, 2023.
Current report — wording carried from elsewhere
*Interest Income.*Total interest income on a tax-equivalent basis was $120.2 million for the six months ended June 30, 2024, compared to $107.8 million for the six months ended June 30, 2023. The $12.4 million increase in total interest income on a tax-equivalent basis was primarily due to organic growth in the loan portfolio, purchases of investment securities and higher earning asset yields in the rising interest rate environment.
Current report — wording carried from elsewhere
varying contractual maturities. These maturities do not necessarily represent the expected life of the securities as the securities may be called or paid down without penalty prior to their stated maturities. All investment securities are held as available for sale.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:
Previous report — wording carried elsewhere
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.