Bridgewater Bancshares, Inc. Annual Report

Interest expense on borrowings increased $2.1 million to $4.5 million for the year ended December 31, 2018, compared to $2.5 million for the year ended December 31, 2017. This increase was primarily due to increased rates and average balances of federal funds purchased and FHLB advances, offset in part by a reduction in interest expense on notes payable as a result of a decreased principal balance. Provision for Loan Losses 2019 Compared to 2018 The allowance for loan losses increased $2.5 million as of December 31, 2019, compared to December 31, 2018, reflecting a provision for loan losses of $2.7 million and net charge-offs of $205,000 during 2019. The provision for loan losses was $2.7 million for the year ended December 31, 2019, a decrease of $875,000, compared to the provision for loan losses of $3.6 million for the year ended December 31, 2018, due primarily to continued strength in credit quality and consistent performance of the loan portfolio. The allowance for loan losses at December 31, 2019 represented 1.18% of gross loans outstanding, compared to 1.20% at December 31, 2018. 2018 Compared to 2017 The allowance for loan losses increased $3.5 million as of December 31, 2018, compared to December 31, 2017, reflecting a provision for loan losses of $3.6 million and net charge-offs of $46,000 during 2018. The provision for loan losses was $3.6 million for the year ended December 31, 2018, a decrease of $600,000, compared to the provision for loan losses of $4.2 million for the year ended December 31, 2017, due primarily to continued strength in credit quality. The allowance for loan losses at December 31, 2018 represented 1.20% of gross loans outstanding, compared to 1.22% at December 31, 2017. The following table presents a summary of the activity in the allowance for loan losses for the years ended December 31, 2019, 2018, and 2017: 2017 Balance at Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,031 $ 16,502 $ 12,333 Provision for Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,700 3,575 4,175 Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (388) (421) (177) Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 375 171 Balance at End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,526 $ 20,031 $ 16,502 Year Ended December 31, December 31, December 31, (dollars in thousands) 2019 2018

Noninterest Income 2019 Compared to 2018

Noninterest income was $3.8 million for the year ended December 31, 2019, compared to $2.5 million for the year ended December 31, 2018, an increase of $1.3 million, or 50.5%. The increase was primarily due to an increase in

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