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What changed in Bridgewater Bancshares Inc's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Bridgewater Bancshares Inc's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+420 added−600 removedSource: 10-K (2024-03-07) vs 10-K (2023-03-07)

Top changes in Bridgewater Bancshares Inc's 2023 10-K

420 paragraphs added · 600 removed · 161 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeFor example, Minnesota law only permits banks to pay dividends if a bank has established a surplus fund equal to or more than 20% of the bank’s capital stock and if the dividends will not reduce the bank’s capital, undivided profits and reserves below specific requirements.
Biggest changeOnce this surplus amount reaches 50% of the Bank’s capital, the Bank may pay dividends out of net profits if the dividends will not reduce the Bank’s capital, undivided profits and reserves below requirements established by the MDOC. Further, the Bank may not declare or pay a dividend until cumulative dividends on preferred stock, if any, are paid in full.
We have established an informal, internal limit on a single loan to finance one transaction, but we may, under certain circumstances, consider going above this internal limit in situations where management’s understanding of the industry, the borrower’s financial condition, overall credit quality and property fundamentals are commensurate with the increased size of the loan.
The Bank has established an informal, internal limit on a single loan to finance one transaction, but may, under certain circumstances, consider going above this internal limit in situations where management’s understanding of the industry, the borrower’s financial condition, overall credit quality and property fundamentals are commensurate with the increased size of the relationship.
We have developed relationships with certain individuals and businesses that have resulted in a concentration of large deposits from a small number of clients. As of December 31, 2022, our 10 largest depositor relationships accounted for approximately 15.0% of our total deposits.
The Bank has developed relationships with certain individuals and businesses that have resulted in a concentration of large deposits from a small number of clients. As of December 31, 2023, the 10 largest depositor relationships accounted for approximately 13.0% of total deposits.
This high concentration of depositors presents a risk to our liquidity if one or more of them decides to change its relationship with us and to withdraw all or a significant portion of their deposits.
This high concentration of depositors, which declined from 15.0% as of December 31, 2022, presents a risk to liquidity if one or more of them decides to change its relationship with the Bank and to withdraw all or a significant portion of their accounts.
Accordingly, pursuant to guidance issued by the federal bank regulatory agencies, we are required to have heightened risk management practices in place to account for the heightened degree of risk associated with commercial real estate lending and may be required to maintain capital in excess of regulatory minimums.
Accordingly, pursuant to the Policy Guidance, the Bank is required to have heightened risk management practices in place to account for the heightened degree of risk associated with CRE lending. Consumer Financial Services.
The CRA requires the Bank, consistent with safe and sound operations, to ascertain and meet the credit needs of its entire community, including low and moderate income areas.
The CRA requires the Bank to have a continuing and affirmative obligation in a safe and sound manner to help meet the credit needs of the entire community, including low- and moderate-income neighborhoods. Federal regulators regularly assess the Bank’s record of meeting the credit needs of its communities.
Our growth over the last several years has been partially attributable to our ability to cultivate relationships with certain individuals and businesses that have resulted in a concentration of large loans to a small number of borrowers. As of December 31, 2022, our 10 largest borrowing relationships accounted for approximately 19.4% of our total gross loan portfolio.
As a result, the Bank’s ability to cultivate relationships with certain individuals and businesses has resulted in a concentration of large loans to a small number of borrowers.
We have a captive insurance company, which is a wholly-owned subsidiary of the Company that provides insurance coverage to the Company and its subsidiaries for risk management purposes or where commercial insurance may not be available or economically feasible.
Paul, Minnesota. The Company previously had a second wholly-owned subsidiary, Bridgewater Risk Management, Inc., a Nevada corporation (the “Captive”). The Captive insured the Company and its subsidiaries against certain risks unique to the operations of the Company and for which insurance was not available or economically feasible in the insurance marketplace.
The Company is subject to regulation and supervision by the Federal Reserve, and the Bank is subject to regulation and supervision by the FDIC and the Minnesota Department of Commerce.
Supervision and Regulation of the Company General. The Company, as the sole shareholder of the Bank, is a bank holding company that has elected financial holding company status. As a bank holding company, the Company is registered with, and is subject to regulation supervision and enforcement by, the Federal Reserve under the BHCA.
The Federal Reserve may require us to commit capital resources to support the Bank. As a matter of policy, the Federal Reserve expects a bank holding company to act as a source of financial and managerial strength to a subsidiary bank and to commit resources to support such subsidiary bank.
The Company is legally obligated to act as a source of financial strength to the Bank and to commit resources to support the Bank in circumstances where the Company might not otherwise do so. Under the BHCA, the Company is subject to periodic examination by the Federal Reserve.
Also, a bank holding company must obtain the prior approval of the Federal Reserve before, among other things, acquiring direct or indirect ownership or control of more than 5% of the voting shares of any bank, including the Bank.
The BHCA generally prohibits the Company from acquiring direct or indirect ownership or control of more than 5% of a class of the voting shares of any company that is not a bank and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to banks and their subsidiaries.
As of December 31, 2022, our commercial real estate secured loans represented 514.9% of the Bank’s total risk-based capital. As a result, we are deemed to have a concentration in commercial real estate lending under applicable regulatory guidelines.
As of December 31, 2023, the Bank’s total loans secured by multifamily and CRE nonowner occupied properties plus total construction and land development loans represented more than 482.4% of its total risk-based 19 Table of Contents capital. Thus, the Bank is deemed to have a concentration in CRE lending.
Removed
ITEM 1.A. RISK FACTORS Investing in the Company’s common stock involves various risks, many of which are specific to the Company’s business. Before making an investment decision, you should carefully read and consider the risk factors described below as well as the other information included in this report and other documents we file with the SEC.
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ITEM 1. BUSINESS Company Overview and History Bridgewater Bancshares, Inc. (the “Company”) is a Minnesota corporation and financial holding company with one wholly-owned subsidiary: Bridgewater Bank (the “Bank”).
Removed
The discussion below addresses the material risks and uncertainties, of which the Company is currently aware, that could have a material adverse effect on the Company’s business, results of operations, financial condition, and growth prospects.
Added
The Bank has two wholly-owned subsidiaries: BWB Holdings, LLC, which was formed for the purpose of holding repossessed property; and Bridgewater Investment Management, Inc., which was formed for the purposes of holding certain municipal securities and engaging in municipal lending activities. The Bank has seven full-service offices located in Bloomington, Greenwood, Minneapolis (2), St. Louis Park, Orono, and St.
Removed
Other risks that the Company does not know about now, or that the Company does not currently believe are significant, could negatively impact the Company’s business or the trading price of the Company’s securities. Summary This is a summary of some of the material risks and uncertainties that management believes affects us.
Added
The Captive pooled resources with several other insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves. Effective December 15, 2023, the Captive was dissolved and is no longer active. ​ The Company is headquartered in St. Louis Park, Minnesota, a suburb located approximately 5 miles southwest of downtown Minneapolis.
Removed
The list is not exhaustive but provides a high-level summary of some of the material risks that are further described in this Item 1.A. We encourage you to read Item 1A in its entirety.
Added
The Company and Bank were established in 2005 as a de novo bank by a group of industry veterans and local business leaders committed to serving the diverse needs of commercial real estate investors, entrepreneurs, business clients, and successful individuals.
Removed
Credit Risks ● Loan concentrations in our loan portfolio; ● the overall health of the local and national real estate market; ● business and economic conditions generally, and in the financial services industry, nationally and within our market area, including rising rates of inflation; ● the ability to successfully manage credit risk; ● the ability to maintain an adequate level of allowance for loan losses; ● new or revised accounting standards, including as a result of the implementation of the new Current Expected Credit Loss standard; and ● the concentration of large loans to certain borrowers.
Added
Since inception, the Company has grown significantly and profitably, with a focus on organic growth, driven primarily by commercial real estate lending.
Removed
Liquidity and Funding Risks ● The ability to successfully manage liquidity risk, especially in light of recent funding pressures at the Bank; ● the dependence on non-core funding sources and our cost of funds; ● the concentration of large deposits from certain clients; and ● the ability to raise additional capital to implement our business plan.
Added
Assets have grown at a compounded annual growth rate of 31.1% since 2005, surpassing total asset milestones of $500 million in 2013, $1.0 billion in 2016, $2.0 billion in 2019, $3.0 billion in 2021, and $4.0 billion in 2022.
Removed
Operational, Strategic and Reputational Risks ● The ability to implement the Company’s growth strategy and manage costs effectively; ● the ability to attract and retain key personnel, including the strategic leadership team; ● 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 critical systems or third-party servicers; ● competition in the financial services industry, including from nonbank competitors such as credit unions and “fintech” companies; ● severe weather, natural disasters, widespread disease or pandemics (including the COVID-19 pandemic), acts of war or terrorism, civil unrest or other adverse external events, including the Russian invasion of Ukraine; and 20 Table of Contents ● developments and uncertainty related to the future use and availability of some reference rates, such as the expected discontinuation of the London Interbank Offered Rate, as well as other alternative reference rates.
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While this growth has been almost entirely organic, in 2016 the Company completed a 4 Table of Contents complementary small bank acquisition that added approximately $76.1 million in assets, $66.7 million in seasoned core deposits and two branch locations within its market area.
Removed
Legal, Accounting and Compliance Risks ● The effectiveness of the risk management framework and programs; ● the imposition of governmental policies impacting the value of products produced by our commercial borrowers; ● potential impairment to the goodwill recorded in connection with a past acquisition; ● 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; and ● 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 ● risks related to climate change and the negative impact it may have on our customers and their businesses. ​ Market and Interest Rate Risks ● Interest rate risk, including the effects of anticipated interest rate volatility; and ● fluctuations in the values of the securities held in our securities portfolio or the values of derivative instruments held in our derivatives portfolio.
Added
As of December 31, 2023, total assets were $4.61 billion, total gross loans were $3.72 billion, total deposits were $3.71 billion, and total shareholders’ equity was $425.5 million. The principal sources of funds for loans and investments are transaction, savings, time, and other deposits, and short-term and long-term borrowings.
Removed
Credit Risks Our loan portfolio has a concentration of commercial real estate loans, which involve risks specific to real estate values and the health and market dynamics of the real estate market generally.
Added
The Company’s principal sources of income are interest and fees collected on loans, interest and dividends earned on investment securities and service charges. The Company’s principal expenses are interest paid on deposit accounts and borrowings, employee compensation and other overhead expenses.
Removed
As of December 31, 2022, we had $2.62 billion of commercial real estate loans, consisting of $947.0 million of loans secured by nonfarm nonresidential properties, $1.31 billion of loans secured by multifamily residential properties and $365.8 million of construction and land development loans.
Added
The Company’s simple, highly efficient business model of providing responsive support and simple solutions to clients continues to be the underlying principle that drives the Company’s profitable growth.
Removed
Additionally, we had $176.4 million in loans whose purpose was to finance commercial real estate projects, but were secured by other types of collateral. Commercial real estate secured loans represented 73.4% of our total gross loan portfolio and 514.9% of the Bank’s total risk-based capital at December 31, 2022.
Added
Market Area and Competition The Company operates in the Twin Cities Metropolitan Statistical Area, or MSA, which had total deposits of $237.6 billion as of June 30, 2023, and ranks as the 14th largest metropolitan statistical area in the United States in total deposits, and the third largest metropolitan statistical area in the Midwest in total deposits, based on Federal Deposit Insurance Corporation, or FDIC, data.
Removed
The market value of real estate securing our commercial real estate loans can fluctuate in a short period of time as a result of interest rates and market conditions. Adverse developments affecting real estate values in our market area could increase the credit risk associated with our loan portfolio.
Added
This area is commonly known as the “Twin Cities” after its two largest cities, Minneapolis, the city with the largest population in the state, and St. Paul, the state capital.
Removed
Additionally, the repayment of commercial real estate loans generally is dependent, in large part, on sufficient income from the properties securing the loans to cover operating expenses and debt service. Economic events or governmental regulations outside of the control of the borrower or lender could negatively impact the future cash flow and market values of the affected properties.
Added
The Twin Cities MSA is defined by attractive market demographics, including strong household incomes, dense populations, a resilient employee base and the presence of a diverse group of large and small businesses.
Removed
If the loans that are collateralized by real estate become troubled during a time when market conditions are declining or have declined, then we may not be able to realize the full value of the collateral that we anticipated at the time of originating the loan, which could force us to take charge-offs or require us to increase our provision for loan losses, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
Added
As of December 31, 2023, the Company’s market ranked first in median household income in the Midwest and seventh in the nation, when compared to the top 20 MSAs by population size in each area, based on data available on S&P Global Market Intelligence. According to the U.S.
Removed
Because a significant portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity, as well as environmental factors, could impair the value of collateral securing our real estate loans and result in loan and other losses.
Added
Bureau of Labor Statistics, the population in the Twin Cities MSA was approximately 3.7 million as of December 31, 2023, making it the third largest MSA in the Midwest and 16th largest MSA in the United States.
Removed
At December 31, 2022, approximately 87.6% of our total gross loan portfolio was comprised of loans with real estate as a primary component of collateral. As a result, adverse developments affecting real estate values in our market 21 Table of Contents area could increase the credit risk associated with our real estate loan portfolio.
Added
The Twin Cities MSA had an unemployment rate of 2.4%, which was lower than the national average of 3.7%, as of December 31, 2023. These strong labor market fundamentals can be attributed to the significant presence of national and international businesses across diverse industries operating within the Twin Cities MSA.
Removed
The market value of real estate can fluctuate significantly in a short period of time as a result of interest rates and market conditions in the area in which the real estate is located.
Added
The Company operates in a competitive market area and competes with other, often much larger, retail and commercial banks and financial institutions.
Removed
Adverse changes affecting real estate values and the liquidity of real estate in one or more of our markets could increase the credit risk associated with our loan portfolio, significantly impair the value of property pledged as collateral on loans and affect our ability to sell the collateral upon foreclosure without a loss or additional losses, which could result in losses that would adversely affect our profitability.
Added
Two large, national banking chains, Wells Fargo and US Bank, together controlled 61.2% of the deposit market share in the Twin Cities MSA as of June 30, 2023, based on FDIC data and as displayed in the table below.
Removed
Such declines and losses would have a material adverse effect on our business, financial condition, results of operations and growth prospects. In addition, if hazardous or toxic substances are found on properties pledged as collateral, the value of the real estate could be impaired.
Added
By comparison, as of the same date, the Company had a deposit market share of 5 Table of Contents approximately 1.5%, which ranked the Company tenth in the Twin Cities MSA overall and fourth in the Twin Cities MSA among banks headquartered in Minnesota. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Market ​ ​ ​ ​ State ​ Branch ​ Deposits ​ Share Rank ​ Institution ​ Headquarters ​ Count ​ ($000) ​ (%) 1 U.S.
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If we foreclose on and take title to such properties, we may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws may require us to incur substantial expenses to address unknown liabilities and may materially reduce the affected property’s value or limit our ability to use or sell the affected property.
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Bancorp MN 83 ​ 95,115,907 ​ 40.02 2 Wells Fargo & Co CA 88 ​ 50,360,064 ​ 21.19 3 ​ Ameriprise Financial, Inc. MN 2 ​ 20,933,401 ​ 8.81 4 ​ Huntington Bancshares, Inc.
Removed
In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
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OH 69 ​ 6,565,049 ​ 2.76 5 ​ Bank of Montreal N/A 30 ​ 6,479,589 ​ 2.73 6 Otto Bremer Trust MN 19 ​ 5,301,745 ​ 2.23 7 Bank of America Corp.
Removed
A decline in the business and economic conditions in our market could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Unlike larger banks that are more geographically diversified, we conduct our operations almost exclusively in the Twin Cities MSA.
Added
NC 17 ​ 4,520,617 ​ 1.90 8 ​ State Bankshares, Inc. ​ ND ​ 7 ​ 3,957,691 ​ 1.67 9 Old National Bancorp IN 29 ​ 3,631,394 ​ 1.53 10 Bridgewater Bancshares, Inc. ​ MN 8 ​ 3,608,662 ​ 1.52 ​ ​ Top 10 Institutions 352 200,474,119 84.36 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Bank Deposits 751 237,642,506 ​ ​ The market has experienced disruption in recent years due to acquisitions of local institutions by larger regional banks headquartered outside of the market.
Removed
Because of the geographic concentration of our operations in the Twin Cities MSA, if the local economy weakens, our growth and profitability could be constrained. Weak economic conditions are characterized by, among other indicators, deflation, elevated levels of unemployment, fluctuations in debt and equity capital markets and lower home sales and commercial activity.
Added
The disruption has created significant opportunities for the Company to add both talent and clients. In addition, the Company has developed a local banking advantage in the market with only four of the ten largest banks by deposit market share being headquartered in Minnesota.
Removed
These factors could negatively affect the volume of loan originations, increase the level of nonperforming assets, increase the rate of foreclosures and reduce the value of the properties securing our loans.
Added
Products and Services The Company offers a full array of simple, quality loan and deposit products primarily for commercial clients. While the Company provides products and services that compete with those offered by large national and regional competitors, the Company additionally offers responsive support and personalized solutions tailored for each client.
Removed
Any regional or local economic downturn that affects the Twin Cities MSA may affect us and our profitability more significantly and more adversely than those of our competitors whose operations are less geographically focused. Our business depends on our ability to manage credit risk. As a bank, our business requires us to manage credit risk.
Added
The Company emphasizes client service and believes in providing distinguishing levels of service through the experience of employees, the responsiveness and certainty of the credit process and the efficiency with which business is conducted. The Company believes that clients notice a difference in service compared to the much larger institutions in the market.
Removed
As a lender, we are exposed to the risk that our borrowers will be unable to repay their loans according to their terms, and that the collateral securing repayment of their loans, if any, may not be sufficient to ensure repayment.
Added
The Company has built a strong referral network that continually provides opportunities with new client relationships. At this time, the Company does not operate any non-depository business lines such as mortgage, wealth management or trust. Lending.
Removed
In addition, there are risks inherent in making any loan, including risks with respect to the period of time over which the loan may be repaid, risks relating to proper loan underwriting, risks resulting from changes in economic and industry conditions and risks inherent in dealing with individual borrowers, including the risk that a borrower may not provide information to us about its business in a timely manner, or may present inaccurate or incomplete information to us, as well as risks relating to the value of collateral.
Added
The Bank focuses primarily on commercial lending, consisting of loans secured by nonfarm, nonresidential properties, loans secured by multifamily residential properties, nonowner occupied single family residential properties, construction loans, land development loans and commercial and industrial loans. The Bank has a particular expertise in multifamily financing which has historically represented a large portion of the loan portfolio.
Removed
To manage our credit risk, we must, among other actions, maintain disciplined and prudent underwriting standards and ensure that our lenders follow those standards.
Added
This asset class has performed extremely well and has lower historical loss rates when compared to other loan types. Commercial real estate loans (excluding multifamily and construction) consist of owner and nonowner occupied properties. This portfolio segment is well diversified with loans secured by office buildings, retail strip centers, industrial properties, senior housing and hospitality properties and mixed-use properties.
Removed
The weakening of these standards for any reason, such as an attempt to attract higher yielding loans, a lack of discipline or diligence by our employees in underwriting and monitoring loans or our inability to adequately adapt policies and procedures to changes in economic or any other conditions affecting borrowers and the quality of our loan portfolio, may result in loan defaults, foreclosures and charge-offs and may necessitate that we significantly increase our allowance for loan losses, each of which could adversely affect our net income.
Added
In addition to loans secured by improved commercial real estate properties, the Bank engages in construction lending, which includes single family residential construction loans, land development, finished lots and raw land loans, and commercial and multifamily construction. In recent years, the Bank has increased its focus on commercial and industrial lending.
Removed
As a result, our inability to successfully manage credit risk could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Our allowance for loan losses may prove to be insufficient to absorb potential losses in our loan portfolio.
Added
This portfolio includes a mix of term equipment loans and revolving lines of credit to support the needs of local businesses.
Removed
We establish and maintain our allowance for loan losses at a level that management considers adequate to absorb probable loan losses based on an analysis of our loan portfolio and current market environment.
Added
Additionally, the Bank has a niche within the tax credit investment market whereby it bridges equity capital receivables on various tax credit projects. 6 Table of Contents The Bank focuses on lending to borrowers located or investing in the Twin Cities MSA across a diverse range of industries and property types, however, as a relationship lender, it will from time to time finance properties located outside of Minnesota for its existing local clients in select situations.
Removed
The allowance for loan losses represents our estimate of probable losses in the portfolio at each balance sheet date and is based upon relevant information available to us at such time.
Added
As of December 31, 2023, over 80% of the Bank’s real estate loan balances were secured by properties located in the Twin Cities market.
Removed
The allowance contains provisions for probable losses that have been 22 Table of Contents identified relating to specific borrowing relationships, as well as probable losses inherent in the loan portfolio that are not specifically identified.
Added
Robust and consistent growth over the last several years has been attributable to the Bank’s strengthening brand and service model in the Twin Cities, client and banker acquisitions resulting from M&A-related market disruption and the expansion of talented lending and business service teams.
Removed
Additions to the allowance for loan losses, which are charged to earnings through the provision for loan losses, are determined based on a variety of factors, including an analysis of the loan portfolio, historical loss experience and an evaluation of current economic conditions in our market area.
Added
The Bank’s pace of loan growth slowed in 2023 from historical levels as market loan demand declined due to the rising interest rate environment. Deposits. The Bank has developed a suite of deposit products targeted at commercial clients, including a variety of remote deposit and cash management products, along with commercial transaction accounts.

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Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed2 unchanged
Biggest changeAdditional information regarding our locations is set forth below: ​ ​ ​ Address Owned/Leased Headquarters and St. Louis Park Branch: ​ ​ 4450 Excelsior Boulevard, Suite 100, St.
Biggest changeIn February 2023, the Company purchased a parcel of land in Lake Elmo, Minnesota, upon which it intends to construct a branch office. Additional information regarding our locations is set forth below: ​ ​ ​ Address Owned/Leased Headquarters and St. Louis Park Branch: ​ ​ 4450 Excelsior Boulevard, Suite 100, St.
Louis Park, Minnesota 55416 ​ Owned Other Branch Locations: ​ ​ 21500 Highway 7, Greenwood, Minnesota 55331 Leased Northstar Center West, 625 Marquette Avenue, Suite #W0100, Minneapolis, Minnesota 55402 Leased 2445 Shadywood Road, Orono, Minnesota 55331 Owned 3100 Hennepin Avenue, Minneapolis, Minnesota 55408 (1) Owned 370 Wabasha Street N., St.
Louis Park, Minnesota 55416 ​ Owned Other Branch Locations: ​ ​ 21500 Highway 7, Greenwood, Minnesota 55331 Leased 60 South Sixth Street, Suite 285, Minneapolis, Minnesota 55402 Leased 2445 Shadywood Road, Orono, Minnesota 55331 Owned 3100 Hennepin Avenue, Minneapolis, Minnesota 55408 (1) Owned 370 Wabasha Street N., St.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 4. Mine Safety Disclosures ​ 47 ​ ​ ​ PART II ​ ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 47 ​ ​ ​ Item 6. [Reserved] ​ 50 ​ ​ ​
Biggest changeItem 4. Mine Safety Disclosures ​ 46 ​ ​ ​ PART II ​ ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 46 ​ ​ ​ Item 6. [Reserved] ​ 49 ​ ​ ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+0 added−1 removed9 unchanged
Biggest changeHolders of Record As of February 27, 2023, the Company had 97 holders of record of the Company’s common stock and an estimated 4,343 additional beneficial holders of the Company’s common stock whose stock was held in street name by brokerages or fiduciaries. 47 Table of Contents Issuer Purchases of Equity Securities The following table presents stock purchases made during the fourth quarter of 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Total Number of Shares Purchased (1) ​ Average Price Paid Per Share ​ Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) ​ Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 1 - 31, 2022 — ​ $ — ​ — ​ $ 25,000,000 November 1 - 30, 2022 — ​ ​ — ​ — ​ ​ 25,000,000 December 1 - 31, 2022 37,639 ​ ​ 18.48 ​ — ​ ​ 25,000,000 Total 37,639 ​ $ 18.48 ​ — ​ $ 25,000,000 (1) The total number of shares repurchased during the periods indicated includes shares repurchased as part of the Company’s stock repurchase program and shares withheld for income tax purposes in connection with vesting of restricted stock and stock options.
Biggest changeIssuer Purchases of Equity Securities The following table presents stock purchases made during the fourth quarter of 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Total Number of Shares Purchased (1) ​ Average Price Paid Per Share ​ Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) ​ Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 1 - 31, 2023 18,435 ​ $ 9.70 ​ 18,435 ​ $ 24,821,204 November 1 - 30, 2023 230,314 ​ ​ 10.43 ​ 230,314 ​ ​ 22,418,051 December 1 - 31, 2023 223,412 ​ ​ 11.24 ​ 175,000 ​ ​ 20,458,801 Total 472,161 ​ $ 10.79 ​ 423,749 ​ $ 20,458,801 (1) The total number of shares repurchased during the periods indicated includes shares repurchased as part of the Company’s stock repurchase program and shares withheld for income tax purposes in connection with vesting of restricted stock and stock options.
See "Supervision and Regulation—Supervision and Regulation of the Company—Dividend Payments." Because the Company is a financial holding company and does not engage directly in business activities of a material nature, the ability to pay dividends to shareholders depends, in large part, upon receipt of dividends from the Bank, which is also subject to numerous limitations on the payment of dividends under federal and state banking laws, regulations and policies.
See “Supervision and Regulation—Supervision and Regulation of the Company—Dividend Payments.” Because the Company is a financial holding company and does not engage directly in business activities of a material nature, the ability to pay dividends to shareholders depends, in large part, upon receipt of dividends from the Bank, which is also subject to numerous limitations on the payment of dividends under federal and state banking laws, regulations and policies.
Any future determination relating to the Company’s common stock dividend policy will be made by the board of directors and will depend on a number of factors, including historic and projected financial condition, liquidity and results of operations, capital levels and needs, tax considerations, any acquisitions or potential acquisitions that may be pursued, statutory and regulatory prohibitions and other limitations, the terms of any credit agreements or other borrowing arrangements that restrict the ability to pay cash dividends, general economic conditions and other factors deemed relevant by the board of directors.
Any future determination relating to the Company’s common stock dividend policy will be made by the board of directors and will depend on a number of factors, including historic and projected financial condition, liquidity and results of operations, capital levels and needs, tax considerations, any acquisitions or potential acquisitions that may be pursued, statutory and regulatory prohibitions and other limitations, the terms of any credit agreements or other borrowing arrangements that restrict the ability to pay cash dividends, general economic conditions and other factors deemed relevant by the board of 48 Table of Contents directors.
See "Supervision and Regulation—Supervision and Regulation of the Bank—Dividend Payments." Under the terms of a loan agreement with a third party correspondent lender which the Company entered into in March of 2021 and amended in July 2021 and September of 2022, the Company cannot declare or pay any cash dividend or make any other distribution in respect to capital stock, except in accordance with past practices and dividends paid on its preferred stock and so long as no default has occurred and is continuing.
See “Supervision and Regulation—Supervision and Regulation of the Bank—Dividend Payments.” Under the terms of a loan agreement with a third party correspondent lender which the Company entered into in March of 2021 and amended in each of July 2021 and September of 2022, the Company cannot declare or pay any cash dividend or make any other distribution in respect to capital stock, except in accordance with past practices and dividends paid on its preferred stock and so long as no default has occurred and is continuing.
This comparison assumes $100.00 was invested on March 14, 2018 and assumes the reinvestment of all cash dividends, if any, prior to any tax effect and retention of all stock dividends. There is no assurance that the Company's common stock performance will continue in the future with the same or similar results as shown in the graph.
This comparison assumes $100.00 was invested on December 31, 2018 and assumes the reinvestment of all cash dividends, if any, prior to any tax effect and retention of all stock dividends. There is no assurance that the Company's common stock performance will continue in the future with the same or similar results as shown in the graph.
The Company is not obligated to pay dividends on its common stock and is subject to restrictions on paying dividends on its common stock. 49 Table of Contents Although the Company intends to pay dividends on the Series A Preferred Stock, dividends on the Series A Preferred Stock are not cumulative or mandatory.
The Company is not obligated to pay dividends on its common stock and is subject to restrictions on paying dividends on its common stock. Although the Company intends to pay dividends on the Series A Preferred Stock, dividends on the Series A Preferred Stock are not cumulative or mandatory.
The stock repurchase program does not obligate the Company to repurchase any shares of its common stock, and other than repurchases that have been completed to date, there is no assurance that the Company will do so.
The stock repurchase program will expire on August 16, 2024. The stock repurchase program does not obligate the Company to repurchase any shares of its common stock, and other than repurchases that have been completed to date, there is no assurance that the Company will do so.
The Company may, in its discretion, begin, suspend or terminate repurchases at any time prior to the Program’s expiration, without any prior notice. 48 Table of Contents Performance Graph The following graph compares the percentage change in the cumulative shareholder return of the Company’s common stock during the period from the date of our initial public offering and listing on Nasdaq through December 31, 2022, with the cumulative return of the Nasdaq Composite Index and the total return of the Nasdaq Bank Index.
The Company may, in its discretion, begin, suspend or terminate repurchases at any time prior to the Program’s expiration, without any prior notice. 47 Table of Contents Performance Graph The following graph compares the percentage change in the cumulative shareholder return of the Company’s common stock between December 31, 2018 and December 31, 2023, with the cumulative return of the Nasdaq Composite Index and the total return of the Nasdaq Bank Index.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the Nasdaq Stock Market (“Nasdaq”) under the symbol “BWB.” Our depository shares, each representing a 1/100 th ownership interest in a share of our 5.875% Non-Cumulative Perpetual Preferred Stock, Series A, $0.01 par value per share (“Series A Preferred Stock”) trade on Nasdaq under the symbol “BWBBP”.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the Nasdaq Stock Market (“Nasdaq”) under the symbol “BWB.” Our depository shares, each representing a 1/100 th ownership interest in a share of our 5.875% Non-Cumulative Perpetual Preferred Stock, Series A, $0.01 par value per share (“Series A Preferred Stock”), trade on Nasdaq under the symbol “BWBBP”. 46 Table of Contents Holders of Record As of February 26, 2024, the Company had 58 holders of record of the Company’s common stock and an estimated 4,552 additional beneficial holders of the Company’s common stock whose stock was held in street name by brokerages or fiduciaries.
Removed
The stock repurchase program replaced and superseded the previous $40.0 million stock repurchase program which expired on October 27, 2022, under which approximately $1.6 million remained. The stock repurchase program will expire on August 16, 2024.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

126 edited+35 added−52 removed68 unchanged
Biggest changeThe following reconciliation table provides a more detailed analysis of these non-GAAP financial measures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2022 2021 ​ 2020 2019 ​ 2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-Provision Net Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Income ​ $ 6,332 ​ $ 5,309 ​ $ 5,839 ​ $ 3,826 ​ $ 2,543 ​ Less: (Gain) Loss on Sales of Securities ​ ​ (82) ​ ​ (750) ​ ​ (1,503) ​ ​ (516) ​ ​ 125 ​ Total Operating Noninterest Income ​ ​ 6,250 ​ ​ 4,559 ​ ​ 4,336 ​ ​ 3,310 ​ ​ 2,668 ​ Plus: Net Interest Income ​ ​ 129,698 ​ ​ 109,509 ​ ​ 87,964 ​ ​ 74,132 ​ ​ 64,738 ​ Net Operating Revenue ​ $ 135,948 ​ $ 114,068 ​ $ 92,300 ​ $ 77,442 ​ $ 67,406 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Expense ​ $ 56,620 ​ $ 48,095 ​ $ 45,387 ​ $ 36,932 ​ $ 31,562 ​ Less: Amortization of Tax Credit Investments ​ ​ (408) ​ ​ (562) ​ ​ (738) ​ ​ (3,225) ​ ​ (3,293) ​ Less: Debt Prepayment Fees ​ ​ — ​ ​ (582) ​ ​ (7,043) ​ ​ — ​ ​ — ​ Total Operating Noninterest Expense ​ $ 56,212 ​ $ 46,951 ​ $ 37,606 ​ $ 33,707 ​ $ 28,269 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-Provision Net Revenue ​ $ 79,736 ​ $ 67,117 ​ $ 54,694 ​ $ 43,735 ​ $ 39,137 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Plus: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-Operating Revenue Adjustments ​ ​ 82 ​ ​ 750 ​ ​ 1,503 ​ ​ 516 ​ ​ (125) ​ Less: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for Loan Losses ​ ​ 7,700 ​ ​ 5,150 ​ ​ 12,750 ​ ​ 2,700 ​ ​ 3,575 ​ Non-Operating Expense Adjustments ​ ​ 408 ​ ​ 1,144 ​ ​ 7,781 ​ ​ 3,225 ​ ​ 3,293 ​ Provision for Income Taxes ​ ​ 18,318 ​ ​ 15,886 ​ ​ 8,472 ​ ​ 6,923 ​ ​ 5,224 ​ Net Income ​ $ 53,392 ​ $ 45,687 ​ $ 27,194 ​ $ 31,403 ​ $ 26,920 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Assets ​ $ 3,866,480 ​ $ 3,189,800 ​ $ 2,617,579 ​ $ 2,114,211 ​ $ 1,777,592 ​ Pre-Provision Net Revenue Return on Average Assets ​ ​ 2.06 % ​ 2.10 % ​ 2.09 % ​ 2.07 % ​ 2.20 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ 2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Core Net Interest Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income (Tax-Equivalent Basis) ​ $ 130,920 ​ $ 110,373 ​ $ 88,883 ​ $ 75,040 ​ $ 65,752 ​ Less: Loan Fees ​ ​ (6,273) ​ ​ (5,173) ​ ​ (5,283) ​ ​ (4,562) ​ ​ (5,654) ​ Less: PPP Interest and Fees ​ ​ (970) ​ ​ (6,441) ​ ​ (4,143) ​ ​ — ​ ​ — ​ Core Net Interest Income ​ $ 123,677 ​ $ 98,759 ​ $ 79,457 ​ $ 70,478 ​ $ 60,098 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Interest Earning Assets ​ ​ 3,790,291 ​ ​ 3,115,883 ​ ​ 2,565,859 ​ ​ 2,091,198 ​ ​ 1,766,492 ​ Less: Average PPP Loans ​ ​ (7,441) ​ ​ (103,151) ​ ​ (122,240) ​ ​ — ​ ​ — ​ Core Average Interest Earning Assets ​ $ 3,782,850 ​ $ 3,012,732 ​ $ 2,443,619 ​ $ 2,091,198 ​ $ 1,766,492 ​ Core Net Interest Margin ​ 3.27 % 3.28 % 3.25 % 3.37 % 3.40 % ​ 78 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2022 2021 2020 2019 2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Efficiency Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Expense ​ $ 56,620 ​ $ 48,095 ​ $ 45,387 ​ $ 36,932 ​ $ 31,562 ​ Less: Amortization of Intangible Assets ​ ​ (191) ​ ​ (191) ​ ​ (191) ​ ​ (191) ​ ​ (191) ​ Adjusted Noninterest Expense ​ $ 56,429 ​ $ 47,904 ​ $ 45,196 ​ $ 36,741 ​ $ 31,371 ​ Net Interest Income ​ ​ 129,698 ​ ​ 109,509 ​ $ 87,964 ​ $ 74,132 ​ $ 64,738 ​ Noninterest Income ​ ​ 6,332 ​ ​ 5,309 ​ ​ 5,839 ​ ​ 3,826 ​ ​ 2,543 ​ Less: (Gain) Loss on Sales of Securities ​ ​ (82) ​ ​ (750) ​ ​ (1,503) ​ ​ (516) ​ ​ 125 ​ Adjusted Operating Revenue ​ $ 135,948 ​ $ 114,068 ​ $ 92,300 ​ $ 77,442 ​ $ 67,406 ​ Efficiency Ratio ​ 41.5 % 42.0 % 49.0 % 47.4 % 46.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Efficiency Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Expense ​ $ 56,620 ​ $ 48,095 ​ $ 45,387 ​ $ 36,932 ​ $ 31,562 ​ Less: Amortization of Tax Credit Investments ​ ​ (408) ​ ​ (562) ​ ​ (738) ​ ​ (3,225) ​ ​ (3,293) ​ Less: Debt Prepayment Fees ​ ​ — ​ ​ (582) ​ ​ (7,043) ​ ​ — ​ ​ — ​ Less: Amortization of Intangible Assets ​ ​ (191) ​ ​ (191) ​ ​ (191) ​ ​ (191) ​ ​ (191) ​ Adjusted Noninterest Expense ​ $ 56,021 ​ $ 46,760 ​ $ 37,415 ​ $ 33,516 ​ $ 28,078 ​ Net Interest Income ​ ​ 129,698 ​ ​ 109,509 ​ ​ 87,964 ​ ​ 74,132 ​ ​ 64,738 ​ Noninterest Income ​ ​ 6,332 ​ ​ 5,309 ​ ​ 5,839 ​ ​ 3,826 ​ ​ 2,543 ​ Less: (Gain) Loss on Sales of Securities ​ ​ (82) ​ ​ (750) ​ ​ (1,503) ​ ​ (516) ​ ​ 125 ​ Adjusted Operating Revenue ​ $ 135,948 ​ $ 114,068 ​ $ 92,300 ​ $ 77,442 ​ $ 67,406 ​ Adjusted Efficiency Ratio ​ 41.2 % 41.0 % 40.5 % 43.3 % 41.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2022 2021 ​ 2020 2019 ​ 2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Noninterest Expense to Average Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Expense ​ $ 56,620 ​ $ 48,095 ​ $ 45,387 ​ $ 36,932 ​ $ 31,562 ​ Less: Amortization of Tax Credit Investments ​ ​ (408) ​ ​ (562) ​ ​ (738) ​ ​ (3,225) ​ ​ (3,293) ​ Less: Debt Prepayment Fees ​ ​ — ​ ​ (582) ​ ​ (7,043) ​ ​ — ​ ​ — ​ Adjusted Noninterest Expense ​ $ 56,212 ​ $ 46,951 ​ $ 37,606 ​ $ 33,707 ​ $ 28,269 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Assets ​ $ 3,866,480 ​ $ 3,189,800 ​ $ 2,617,579 ​ $ 2,114,211 ​ $ 1,777,592 ​ Adjusted Noninterest Expense to Average Assets ​ ​ 1.45 % ​ 1.47 % ​ 1.44 % ​ 1.59 % ​ 1.59 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ 2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible Common Equity and Tangible Common Equity/Tangible Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Shareholders' Equity ​ $ 394,064 ​ $ 379,272 ​ $ 265,405 ​ $ 244,794 ​ $ 220,998 ​ Less: Preferred Stock ​ ​ (66,514) ​ ​ (66,514) ​ ​ — ​ ​ — ​ ​ — ​ Total Common Shareholders' Equity ​ ​ 327,550 ​ ​ 312,758 ​ ​ 265,405 ​ ​ 244,794 ​ ​ 220,998 ​ Less: Intangible Assets ​ ​ (2,914) ​ ​ (3,105) ​ ​ (3,296) ​ ​ (3,487) ​ ​ (3,678) ​ Tangible Common Equity ​ $ 324,636 ​ $ 309,653 ​ $ 262,109 ​ $ 241,307 ​ $ 217,320 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Assets ​ $ 4,345,662 ​ $ 3,477,659 ​ $ 2,927,345 ​ $ 2,268,830 ​ $ 1,973,741 ​ Less: Intangible Assets ​ ​ (2,914) ​ ​ (3,105) ​ ​ (3,296) ​ ​ (3,487) ​ ​ (3,678) ​ Tangible Assets ​ $ 4,342,748 ​ $ 3,474,554 ​ $ 2,924,049 ​ $ 2,265,343 ​ $ 1,970,063 ​ Tangible Common Equity/Tangible Assets ​ ​ 7.48 % 8.91 % 8.96 % 10.65 % 11.03 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible Book Value Per Share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Book Value Per Common Share ​ $ 11.80 ​ $ 11.09 ​ $ 9.43 ​ $ 8.45 ​ $ 7.34 ​ Less: Effects of Intangible Assets ​ ​ (0.11) ​ ​ (0.11) ​ ​ (0.12) ​ ​ (0.12) ​ ​ (0.12) ​ Tangible Book Value Per Common Share ​ $ 11.69 ​ $ 10.98 ​ $ 9.31 ​ $ 8.33 ​ $ 7.22 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on Average Tangible Common Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income Available to Common Shareholders ​ $ 49,338 ​ $ 44,516 ​ $ 27,194 ​ $ 31,403 ​ $ 26,920 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Shareholders' Equity ​ $ 384,033 ​ $ 316,237 ​ $ 258,736 ​ $ 232,539 ​ $ 194,083 ​ Less: Average Preferred Stock ​ ​ (66,514) ​ ​ (24,915) ​ ​ — ​ ​ — ​ ​ — ​ Average Common Equity ​ ​ 317,519 ​ ​ 291,322 ​ ​ 258,736 ​ ​ 232,539 ​ ​ 194,083 ​ Less: Effects of Average Intangible Assets ​ ​ (3,012) ​ ​ (3,204) ​ ​ (3,395) ​ ​ (3,582) ​ ​ (3,772) ​ Average Tangible Common Equity ​ $ 314,507 ​ $ 288,118 ​ $ 255,341 ​ $ 228,957 ​ $ 190,311 ​ Return on Average Tangible Common Equity ​ ​ 15.69 % ​ 15.45 % ​ 10.65 % ​ 13.72 % ​ 14.15 % ​ 79 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ 2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Diluted Earnings Per Common Share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income Available to Common Shareholders ​ $ 49,338 ​ $ 44,516 ​ $ 27,194 ​ $ 31,403 ​ $ 26,920 ​ Add: Debt Prepayment Fees ​ ​ — ​ ​ 582 ​ ​ 7,043 ​ ​ — ​ ​ — ​ Less: Tax Impact ​ ​ — ​ ​ (151) ​ ​ (1,676) ​ ​ — ​ ​ — ​ Net Income, Excluding Impact of Debt Prepayment Fees ​ $ 49,338 ​ $ 44,947 ​ $ 32,561 ​ $ 31,403 ​ $ 26,920 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted Weighted Average Shares Outstanding ​ ​ 28,668,177 ​ ​ 28,968,286 ​ ​ 29,170,220 ​ ​ 29,996,776 ​ ​ 29,436,214 ​ Adjusted Diluted Earnings Per Common Share ​ $ 1.72 ​ $ 1.55 ​ $ 1.12 ​ $ 1.05 ​ $ 0.91 ​ ​ ​ ​
Biggest changeThe following reconciliation table provides a more detailed analysis of these non-GAAP financial measures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2023 2022 ​ 2021 2020 ​ 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-Provision Net Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Income ​ $ 6,493 ​ $ 6,332 ​ $ 5,309 ​ $ 5,839 ​ $ 3,826 ​ Less: (Gain) Loss on Sales of Securities ​ ​ 33 ​ ​ (82) ​ ​ (750) ​ ​ (1,503) ​ ​ (516) ​ Less: FHLB Advance Prepayment Income ​ ​ (792) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ Total Operating Noninterest Income ​ ​ 5,734 ​ ​ 6,250 ​ ​ 4,559 ​ ​ 4,336 ​ ​ 3,310 ​ Plus: Net Interest Income ​ ​ 105,174 ​ ​ 129,698 ​ ​ 109,509 ​ ​ 87,964 ​ ​ 74,132 ​ Net Operating Revenue ​ $ 110,908 ​ $ 135,948 ​ $ 114,068 ​ $ 92,300 ​ $ 77,442 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Expense ​ $ 59,320 ​ $ 56,620 ​ $ 48,095 ​ $ 45,387 ​ $ 36,932 ​ Less: Amortization of Tax Credit Investments ​ ​ — ​ ​ (408) ​ ​ (562) ​ ​ (738) ​ ​ (3,225) ​ Less: Debt Prepayment Fees ​ ​ — ​ ​ — ​ ​ (582) ​ ​ (7,043) ​ ​ — ​ Total Operating Noninterest Expense ​ $ 59,320 ​ $ 56,212 ​ $ 46,951 ​ $ 37,606 ​ $ 33,707 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-Provision Net Revenue ​ $ 51,588 ​ $ 79,736 ​ $ 67,117 ​ $ 54,694 ​ $ 43,735 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Plus: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-Operating Revenue Adjustments ​ ​ 759 ​ ​ 82 ​ ​ 750 ​ ​ 1,503 ​ ​ 516 ​ Less: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision (Recovery of) for Credit Losses ​ ​ (175) ​ ​ 7,700 ​ ​ 5,150 ​ ​ 12,750 ​ ​ 2,700 ​ Non-Operating Expense Adjustments ​ ​ — ​ ​ 408 ​ ​ 1,144 ​ ​ 7,781 ​ ​ 3,225 ​ Provision for Income Taxes ​ ​ 12,562 ​ ​ 18,318 ​ ​ 15,886 ​ ​ 8,472 ​ ​ 6,923 ​ Net Income ​ $ 39,960 ​ $ 53,392 ​ $ 45,687 ​ $ 27,194 ​ $ 31,403 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Assets ​ $ 4,490,804 ​ $ 3,866,480 ​ $ 3,189,800 ​ $ 2,617,579 ​ $ 2,114,211 ​ Pre-Provision Net Revenue Return on Average Assets ​ ​ 1.15 % ​ 2.06 % ​ 2.10 % ​ 2.09 % ​ 2.07 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Core Net Interest Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income (Tax-Equivalent Basis) ​ $ 106,730 ​ $ 130,920 ​ $ 110,373 ​ $ 88,883 ​ $ 75,040 ​ Less: Loan Fees ​ ​ (3,604) ​ ​ (6,273) ​ ​ (5,173) ​ ​ (5,283) ​ ​ (4,562) ​ Less: PPP Interest and Fees ​ ​ NM ​ ​ (970) ​ ​ (6,441) ​ ​ (4,143) ​ ​ — ​ Core Net Interest Income ​ $ 103,126 ​ $ 123,677 ​ $ 98,759 ​ $ 79,457 ​ $ 70,478 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Interest Earning Assets ​ ​ 4,404,366 ​ ​ 3,790,291 ​ ​ 3,115,883 ​ ​ 2,565,859 ​ ​ 2,091,198 ​ Less: Average PPP Loans ​ ​ NM ​ ​ (7,441) ​ ​ (103,151) ​ ​ (122,240) ​ ​ — ​ Core Average Interest Earning Assets ​ $ 4,404,366 ​ $ 3,782,850 ​ $ 3,012,732 ​ $ 2,443,619 ​ $ 2,091,198 ​ Core Net Interest Margin ​ 2.34 % 3.27 % 3.28 % 3.25 % 3.37 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2023 2022 2021 2020 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Efficiency Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Expense ​ $ 59,320 ​ $ 56,620 ​ $ 48,095 ​ $ 45,387 ​ $ 36,932 ​ Less: Amortization of Intangible Assets ​ ​ (100) ​ ​ (191) ​ ​ (191) ​ ​ (191) ​ ​ (191) ​ Adjusted Noninterest Expense ​ $ 59,220 ​ $ 56,429 ​ $ 47,904 ​ $ 45,196 ​ $ 36,741 ​ Net Interest Income ​ ​ 105,174 ​ ​ 129,698 ​ $ 109,509 ​ $ 87,964 ​ $ 74,132 ​ Noninterest Income ​ ​ 6,493 ​ ​ 6,332 ​ ​ 5,309 ​ ​ 5,839 ​ ​ 3,826 ​ Less: (Gain) Loss on Sales of Securities ​ ​ 33 ​ ​ (82) ​ ​ (750) ​ ​ (1,503) ​ ​ (516) ​ Adjusted Operating Revenue ​ $ 111,700 ​ $ 135,948 ​ $ 114,068 ​ $ 92,300 ​ $ 77,442 ​ Efficiency Ratio ​ 53.0 % 41.5 % 42.0 % 49.0 % 47.4 % ​ ​ 77 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible Common Equity and Tangible Common Equity/Tangible Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Shareholders' Equity ​ $ 425,515 ​ $ 394,064 ​ $ 379,272 ​ $ 265,405 ​ $ 244,794 ​ Less: Preferred Stock ​ ​ (66,514) ​ ​ (66,514) ​ ​ (66,514) ​ ​ — ​ ​ — ​ Total Common Shareholders' Equity ​ ​ 359,001 ​ ​ 327,550 ​ ​ 312,758 ​ ​ 265,405 ​ ​ 244,794 ​ Less: Intangible Assets ​ ​ (2,814) ​ ​ (2,914) ​ ​ (3,105) ​ ​ (3,296) ​ ​ (3,487) ​ Tangible Common Equity ​ $ 356,187 ​ $ 324,636 ​ $ 309,653 ​ $ 262,109 ​ $ 241,307 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Assets ​ $ 4,611,990 ​ $ 4,345,662 ​ $ 3,477,659 ​ $ 2,927,345 ​ $ 2,268,830 ​ Less: Intangible Assets ​ ​ (2,814) ​ ​ (2,914) ​ ​ (3,105) ​ ​ (3,296) ​ ​ (3,487) ​ Tangible Assets ​ $ 4,609,176 ​ $ 4,342,748 ​ $ 3,474,554 ​ $ 2,924,049 ​ $ 2,265,343 ​ Tangible Common Equity/Tangible Assets ​ ​ 7.73 % 7.48 % 8.91 % 8.96 % 10.65 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible Book Value Per Share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Book Value Per Common Share ​ $ 12.94 ​ $ 11.80 ​ $ 11.09 ​ $ 9.43 ​ $ 8.45 ​ Less: Effects of Intangible Assets ​ ​ (0.10) ​ ​ (0.11) ​ ​ (0.11) ​ ​ (0.12) ​ ​ (0.12) ​ Tangible Book Value Per Common Share ​ $ 12.84 ​ $ 11.69 ​ $ 10.98 ​ $ 9.31 ​ $ 8.33 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on Average Tangible Common Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income Available to Common Shareholders ​ $ 35,906 ​ $ 49,338 ​ $ 44,516 ​ $ 27,194 ​ $ 31,403 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Shareholders' Equity ​ $ 410,478 ​ $ 384,033 ​ $ 316,237 ​ $ 258,736 ​ $ 232,539 ​ Less: Average Preferred Stock ​ ​ (66,514) ​ ​ (66,514) ​ ​ (24,915) ​ ​ — ​ ​ — ​ Average Common Equity ​ ​ 343,964 ​ ​ 317,519 ​ ​ 291,322 ​ ​ 258,736 ​ ​ 232,539 ​ Less: Effects of Average Intangible Assets ​ ​ (2,847) ​ ​ (3,012) ​ ​ (3,204) ​ ​ (3,395) ​ ​ (3,582) ​ Average Tangible Common Equity ​ $ 341,117 ​ $ 314,507 ​ $ 288,118 ​ $ 255,341 ​ $ 228,957 ​ Return on Average Tangible Common Equity ​ ​ 10.53 % ​ 15.69 % ​ 15.45 % ​ 10.65 % ​ 13.72 % ​ ​ ​ ​ ​ ­­
Goodwill and other intangibles that were recorded in a purchase business combination have the effect of increasing both equity and assets while not increasing our tangible equity or tangible assets. ● “Tangible book value per share” is defined as tangible common shareholders’ equity divided by total common voting and non-voting shares outstanding.
Goodwill and other intangibles that were recorded in a purchase business combination have the effect of increasing both equity and assets while not increasing our tangible equity or tangible assets. ● “Tangible book value per share” is defined as tangible common shareholders’ equity divided by total common voting shares outstanding.
If management believes that a loan will not be collected in full, an increase to the allowance for loan losses is recorded to reflect management’s estimate of any potential exposure or loss. Generally, payments received on nonaccrual loans are applied directly to principal.
If management believes that a loan will not be collected in full, an increase to the allowance for credit 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.
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 U.S. treasury securities and other debt securities, all with varying contractual maturities.
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.
Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present 67 Table of Contents make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted.
Assets classified as “doubtful” have all 66 Table of Contents of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted.
Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct material effect on the Company’s and Bank’s business. Management believes the Company and the Bank met all capital adequacy requirements to which they were subject as of December 31, 2022.
Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct material effect on the Company’s and Bank’s business. Management believes the Company and the Bank met all capital adequacy requirements to which they were subject as of December 31, 2023.
At December 31, 2022, the ratios for the Company and the Bank were sufficient to meet the conservation buffer. Off-Balance Sheet Arrangements In the normal course of business, the Company enters into various transactions to meet the financing needs of clients, which, in accordance with GAAP, are not included in the consolidated balance sheets.
At December 31, 2023, the ratios for the Company and the Bank were sufficient to meet the conservation buffer. Off-Balance Sheet Arrangements In the normal course of business, the Company enters into various transactions to meet the financing needs of clients, which, in accordance with GAAP, are not included in the consolidated balance sheets.
Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are required to be designated “watch.” The following table presents information on loan classifications at December 31, 2022.
Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are required to be designated “watch.” The following table presents information on loan classifications at December 31, 2023.
Paul-Bloomington, MN-WI Metropolitan Statistical Area across a diverse range of industries and property types. The Company lends primarily to commercial customers, consisting of loans secured by nonfarm, nonresidential properties, multifamily residential properties, land, and non-real estate business assets.
Paul-Bloomington, MN-WI Metropolitan Statistical Area across a diverse range of industries and property types. The Company lends primarily to commercial clients, consisting of loans secured by nonfarm, nonresidential properties, multifamily residential properties, land, and non-real estate business assets.
The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit, standby letters of credit, and commercial letters of credit is represented by 74 Table of Contents the contractual or notional amount of those instruments.
The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit, standby letters of credit, and commercial letters of credit is represented by 73 Table of Contents the contractual or notional amount of those instruments.
Investment Securities Portfolio The investment securities portfolio is used to make various term investments and is intended to provide the Company with adequate liquidity, a source of stable income, and at times, serve as collateral for certain types of deposits.
Investment Securities Portfolio The investment securities portfolio is used to make various term investments and is intended to provide the Company with adequate liquidity, a source of stable income, and at times, serve as collateral for certain types of deposits or borrowings.
ITEM 6. [RESERVED] ​ ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General The following discussion and analysis of the Company’s results of operations and financial condition should be read in conjunction with the Company’s consolidated financial statements and related notes included elsewhere in this report.
ITEM 6. [RESERVED] ​ Not Applicable. ​ ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General The following discussion and analysis of the Company’s results of operations and financial condition should be read in conjunction with the Company’s consolidated financial statements and related notes included elsewhere in this report.
The regulatory capital ratios for the Company and the Bank to meet the minimum capital adequacy standards and for the Bank to be considered well capitalized under the prompt corrective action 73 Table of Contents framework are set forth in the following tables.
The regulatory capital ratios for the Company and the Bank to meet the minimum capital adequacy standards and for the Bank to be considered well capitalized under the prompt corrective action 72 Table of Contents framework are set forth in the following tables.
The Company decreases its exposure to losses under these commitments by subjecting them to credit approval and monitoring procedures. The Company assesses the credit risk associated with certain commitments to extend credit and establishes a liability for probable credit losses.
The Company decreases its exposure to losses under these commitments by subjecting them to credit approval and monitoring procedures. The Company assesses the credit risk associated with certain commitments to extend credit and establishes a liability for expected credit losses.
The Company’s principal expenses are interest paid on deposit accounts and borrowings, employee compensation and other overhead expenses. The Company’s simple, 52 Table of Contents efficient business model of providing responsive support and unconventional experiences to clients continues to be the underlying principle that drives the Company’s profitable growth.
The Company’s principal expenses are interest paid on deposit accounts and borrowings, employee compensation and other overhead expenses. The Company’s simple, efficient business model of providing responsive support and unconventional experiences to clients continues to be the underlying principle that drives the Company’s profitable growth.
Louis Park, Minnesota. The principal sources of funds for loans and investments are transaction, savings, time, and other deposits, and short-term and long-term borrowings. The Company’s principal sources of income are interest and fees collected on loans, interest and dividends earned on investment securities and service charges.
The principal sources of funds for loans and investments are transaction, savings, time, and other deposits, and short-term and long-term borrowings. The Company’s principal sources of income are interest and fees collected on loans, interest and dividends earned on investment securities and service charges.
Management believes this non-GAAP financial measure provides a meaningful comparison of operational performance and facilitates investors’ assessments of business performance and trends in comparison to peers in the banking industry. The efficiency ratio was 41.5% for the year ended December 31, 2022, compared to 42.0% for the year ended December 31, 2021.
Management believes this non-GAAP financial measure provides a meaningful comparison of operational performance and facilitates investors’ assessments of business performance and trends in comparison to peers in the banking industry. The efficiency ratio was 53.0% for the year ended December 31, 2023, compared to 41.5% for the year ended December 31, 2022.
The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. ​ The Company had outstanding letters of credit with the FHLB in the amount of $78.4 million and $36.5 million at December 31, 2022 and 2021, respectively, on behalf of customers and to secure public deposits. ​ Liquidity Liquidity is the Company’s capacity to meet cash and collateral obligations at a reasonable cost.
The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. ​ The Company had outstanding letters of credit with the FHLB in the amount of $114.4 million and $78.4 million at December 31, 2023 and 2022, respectively, on behalf of customers and to secure public deposits. ​ Liquidity Liquidity is the Company’s capacity to meet cash and collateral obligations at a reasonable cost.
When financial instruments, such as investment securities and derivatives, are not actively traded, the Company determines fair value based on various sources and may apply matrix pricing with observable prices for similar instruments where a price for the identical instrument is not observable.
When financial 52 Table of Contents instruments, such as investment securities and derivatives, are not actively traded, the Company determines fair value based on various sources and may apply matrix pricing with observable prices for similar instruments where a price for the identical instrument is not observable.
Interest income on the investment securities portfolio on a fully-tax equivalent basis increased $6.8 million, or 66.3%, for the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily due to a $127.6 million, or 32.4%, increase in average balances between the two periods and higher rates earned on securities.
Interest income on the investment securities portfolio, on a fully-tax equivalent basis, increased $6.8 million, or 66.3%, for the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily due to a $127.6 million, or 32.4%, increase in average balances between the two periods and higher rates earned on securities. ​ Interest income on loans, on a fully-tax equivalent basis, for the year ended December 31, 2022 was $146.8 million, compared to $119.0 million for the year ended December 31, 2021.
There are not any loans, outside of those included in the tables above, that cause management to have serious doubts as to the ability of borrowers to comply with present repayment terms.
There are no loans, outside of those included in the tables above, that cause management to have serious doubts as to the ability of borrowers to comply with present repayment terms.
Readers of the Company’s Annual Report on Form 10-K should consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on forward-looking statements. ​ The following consolidated selected financial data is derived from the Company’s audited consolidated financial statements as of and for the five years ended December 31, 2022.
Readers of the Company’s Annual Report on Form 10-K should consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on forward-looking statements. 49 Table of Contents ​ The following consolidated selected financial data is derived from the Company’s audited consolidated financial statements as of and for the five years ended December 31, 2023.
(3) Ratio excludes the amortization of tax credit investments, debt prepayment fees and represents a non-GAAP financial measure. See "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" for further details. (4) Amounts calculated on a tax-equivalent basis using the statutory federal tax rate of 21%.
See “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for further details. (2) Ratio excludes the amortization of tax credit investments, debt prepayment fees and represents a non-GAAP financial measure. See “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for further details. (3) Amounts calculated on a tax-equivalent basis using the statutory federal tax rate of 21%.
The Company had additional borrowing capacity under this credit facility of $390.9 million and $550.8 million at December 31, 2022 and 2021, respectively. 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 Company had additional borrowing capacity under this credit facility of $498.7 million and $390.9 million at December 31, 2023 and 2022, respectively. 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.
As of December 31, 2022, the Company was in compliance with all established liquidity guidelines in the policy. GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures Some of the financial data included in this report are not measures of financial performance recognized by GAAP.
As of December 31, 2023, the Company was in compliance with all established liquidity guidelines in the policy. 75 Table of Contents GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures Some of the financial data included in this report are not measures of financial performance recognized by GAAP.
(5) Nonperforming assets are defined as nonaccrual loans plus loans 90 days past due plus foreclosed assets.
(4) Nonperforming assets are defined as nonaccrual loans plus loans 90 days past due plus foreclosed assets.
The Company performs an annual analysis on the pricing of investment securities to ensure that the prices represent reasonable estimates of fair value. The procedures include initial and ongoing reviews of pricing methodologies and trends.
The Company performs a periodic analysis on the pricing of investment securities to ensure that the prices represent reasonable estimates of fair value. The procedures include initial and ongoing reviews of pricing methodologies and trends.
Management’s ability to respond to changes in interest rates by using effective asset-liability management techniques is critical to maintaining the stability of the net interest margin and the momentum of the Company’s primary source of earnings. The FOMC increased the targeted federal funds rate by a total of 425 basis points throughout 2022.
Management’s ability to respond to changes in interest rates by using effective asset-liability management techniques is critical to managing the net interest margin and the Company’s primary source of earnings. The FOMC increased the targeted federal funds rate by a total of 100 basis points throughout 2023 and 425 basis points throughout 2022.
Management uses these non-GAAP financial measures in the analysis of performance: ​ 76 Table of Contents ● "Pre-Provision Net Revenue" is defined as net interest income plus total noninterest income (excluding all gains and losses on sales of assets) minus total non-interest expense, excluding the amortization of tax credit investments and debt prepayment fees. ● “Core Net Interest Margin” is defined as the ratio of net interest income (on a fully tax-equivalent basis), reduced by loan fees and PPP interest and fees, divided by interest earning assets, excluding average PPP loans. ● “Efficiency ratio” is defined as noninterest expense less the amortization of intangibles divided by our operating revenue, which is equal to net interest income plus noninterest income excluding gains and losses on sales of assets.
Management uses these non-GAAP financial measures in the analysis of performance: ​ ● “Pre-Provision Net Revenue” is defined as net interest income plus total noninterest income (excluding all gains and losses on sales of assets or extinguishments or prepayments of liabilities) minus total noninterest expense, excluding the amortization of tax credit investments and debt prepayment fees. ● “Core Net Interest Margin” is defined as the ratio of net interest income (on a fully tax-equivalent basis), reduced by loan fees and PPP interest and fees, divided by interest earning assets, excluding average PPP loans. ● “Efficiency ratio” is defined as noninterest expense less the amortization of intangibles divided by our operating revenue, which is equal to net interest income plus noninterest income excluding gains and losses on sales of assets.
At December 31, 2022, core deposits totaled approximately $2.55 billion and represented 74.6% of total deposits. These core deposits are normally less volatile, often with customer relationships tied to other products offered by the Company, which promote long-standing relationships and stable funding sources.
At December 31, 2023, core deposits totaled approximately $2.55 billion and represented 68.7% of total deposits. These core deposits are normally less volatile, often with customer relationships tied to other products offered by the Company, which promote long-standing relationships and stable funding sources.
At December 31, 2022, the Company had three PPP loans outstanding totaling $1.0 million, compared to 153 PPP loans outstanding totaling $26.2 million at December 31, 2021. Average interest earning assets for the year ended December 31, 2022 increased $674.4 million, or 21.6%, to $3.79 billion from $3.12 billion for the year ended December 31, 2021.
At December 31, 2022, the Company had three PPP loans outstanding totaling $1.0 million, compared to 153 PPP loans outstanding totaling $26.2 million at December 31, 2021. ​ Average interest earning assets were $3.79 billion for the year ended December 31, 2022, an increase of $674.4 million, or 21.6%, compared to $3.12 billion for the year ended December 31, 2021.
We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in common shareholders’ equity exclusive of changes in intangible assets.
The Company believes that this measure is important to many investors in the marketplace who are interested in changes from period to period in common shareholders’ equity exclusive of changes in intangible assets.
The Company’s future effective income tax rate will fluctuate based on the mix of taxable and tax-free investments and loans, the recognition and availability of tax credit investments, and overall taxable income. 2022 Compared to 2021 Income tax expense was $18.3 million for the year ended December 31, 2022, compared to $15.9 million for the year ended December 31, 2021.
The Company’s future effective income tax rate will fluctuate based on the mix of taxable and tax-free investments and loans, the recognition and availability of tax credit investments, and overall taxable income. 2023 Compared to 2022 Income tax expense was $12.6 million for the year ended December 31, 2023, compared to $18.3 million for the year ended December 31, 2022.
Other 70 Table of Contents intangible assets consist of core deposit relationships and favorable lease term intangibles. Total other intangible assets at December 31, 2022 and 2021 were $288,000 and $479,000, respectively. Other intangible assets are amortized over their estimated useful life.
Other intangible assets consist of core deposit relationships and favorable lease term intangibles. Total other intangible assets 69 Table of Contents at December 31, 2023 and 2022 were $188,000 and $288,000, respectively. Other intangible assets are amortized over their estimated useful life.
Interest expense on interest bearing liabilities increased $14.6 million, or 75.5%, to $34.0 million for the year ended December 31, 2022, compared to $19.4 million for the year ended December 31, 2021.
Interest expense on interest bearing liabilities was $34.0, an increase of $14.6 million, or 75.5%, for the year ended December 31, 2022, compared to $19.4 million for the year ended December 31, 2021.
There were no foreclosed assets as of December 31, 2022 and 2021. 68 Table of Contents The following table presents a summary of nonperforming assets, by category, at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ (dollars in thousands) 2022 2021 ​ 2020 2019 ​ 2018 ​ Total Nonaccrual Loans ​ $ 639 ​ $ 722 ​ $ 775 ​ $ 461 ​ $ 581 ​ Total Nonperforming Loans ​ $ 639 ​ $ 722 ​ $ 775 ​ $ 461 ​ $ 581 ​ Total Nonperforming Assets (1) ​ $ 639 ​ $ 722 ​ $ 775 ​ $ 461 ​ $ 581 ​ Total Restructured Accruing Loans ​ 82 ​ 1,304 ​ 265 ​ 276 ​ 181 ​ Total Nonperforming Assets and Restructured Accruing Loans ​ $ 721 ​ $ 2,026 ​ $ 1,040 ​ $ 737 ​ $ 762 ​ Nonaccrual Loans to Total Loans ​ 0.02 % 0.03 % 0.03 % 0.02 % 0.03 % Nonperforming Loans to Total Loans ​ 0.02 ​ 0.03 ​ 0.03 ​ 0.02 ​ 0.03 ​ Nonperforming Assets to Total Loans Plus Foreclosed Assets (1) ​ 0.02 ​ 0.03 ​ 0.03 ​ 0.02 ​ 0.03 ​ (1) Nonperforming assets are defined as nonaccrual loans and loans greater than 90 days past due still accruing plus foreclosed assets.
There were no foreclosed assets as of December 31, 2023 and 2022. 67 Table of Contents The following table presents a summary of nonperforming assets, by category, at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ (dollars in thousands) 2023 2022 ​ 2021 2020 ​ 2019 ​ Total Nonaccrual Loans ​ $ 919 ​ $ 639 ​ $ 722 ​ $ 775 ​ $ 461 ​ Total Nonperforming Loans ​ $ 919 ​ $ 639 ​ $ 722 ​ $ 775 ​ $ 461 ​ Total Nonperforming Assets (1) ​ $ 919 ​ $ 639 ​ $ 722 ​ $ 775 ​ $ 461 ​ Total Modified Accruing Loans (2) ​ 9,609 ​ 82 ​ 1,304 ​ 265 ​ 276 ​ Total Nonperforming Assets and Modified Accruing Loans (2) ​ $ 10,528 ​ $ 721 ​ $ 2,026 ​ $ 1,040 ​ $ 737 ​ Nonaccrual Loans to Total Loans ​ 0.02 % 0.02 % 0.03 % 0.03 % 0.02 % Nonperforming Loans to Total Loans ​ 0.02 ​ 0.02 ​ 0.03 ​ 0.03 ​ 0.02 ​ Nonperforming Assets to Total Loans Plus Foreclosed Assets (1) ​ 0.02 ​ 0.02 ​ 0.03 ​ 0.03 ​ 0.02 ​ (1) Nonperforming assets are defined as nonaccrual loans and loans greater than 90 days past due still accruing plus foreclosed assets.
This rapid increase may impact the comparability of net interest income between periods. 55 Table of Contents Average Balances and Yields The following table presents, for the years ended December 31, 2022, 2021 and 2020, the average balances of each principal category of assets, liabilities and shareholders’ equity, and an analysis of net interest income.
These rapid increases may impact the comparability of net interest income between periods. 54 Table of Contents Average Balances and Yields The following table presents, for the years ended December 31, 2023, 2022 and 2021, the average balances of each principal category of assets, liabilities and shareholders’ equity, and an analysis of net interest income.
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.
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 December 31, 2023, the Company had no borrowings outstanding through the AFX.
The following table presents the dollar and percentage composition of the deposit portfolio, by category, at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ December 31, 2021 ​ ​ December 31, 2020 ​ ​ December 31, 2019 ​ ​ December 31, 2018 (dollars in thousands) Amount Percent ​ Amount Percent ​ Amount Percent ​ Amount Percent ​ Amount Percent Noninterest Bearing Transaction Deposits ​ $ 884,272 ​ 25.9 % ​ $ 875,084 ​ 29.7 % ​ $ 671,903 ​ 26.9 % ​ $ 447,509 ​ 24.5 % ​ $ 369,203 ​ 23.6 % Interest Bearing Transaction Deposits ​ 451,992 ​ 13.2 ​ ​ 544,789 ​ 18.5 ​ ​ 366,290 ​ 14.6 ​ ​ 264,627 ​ 14.5 ​ ​ 179,567 ​ 11.5 ​ Savings and Money Market Deposits ​ 1,031,873 ​ 30.2 ​ ​ 863,567 ​ 29.3 ​ ​ 657,617 ​ 26.3 ​ ​ 516,785 ​ 28.3 ​ ​ 402,639 ​ 25.8 ​ Time Deposits ​ 272,253 ​ 8.0 ​ ​ 293,474 ​ 10.0 ​ ​ 353,543 ​ 14.1 ​ ​ 360,027 ​ 19.8 ​ ​ 318,356 ​ 20.4 ​ Brokered Deposits ​ 776,153 ​ 22.7 ​ ​ 369,323 ​ 12.5 ​ ​ 452,283 ​ 18.1 ​ ​ 234,362 ​ 12.9 ​ ​ 291,169 ​ 18.7 ​ Total Deposits ​ $ 3,416,543 ​ 100.0 % ​ $ 2,946,237 ​ 100.0 % ​ $ 2,501,636 ​ 100.0 % ​ $ 1,823,310 ​ 100.0 % ​ $ 1,560,934 ​ 100.0 % ​ Total deposits at December 31, 2022 were $3.42 billion, an increase of $470.3 million, or 16.0%, compared to total deposits of $2.95 billion at December 31, 2021.
The following table presents the dollar and percentage composition of the deposit portfolio, by category, at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ December 31, 2022 ​ ​ December 31, 2021 ​ ​ December 31, 2020 ​ ​ December 31, 2019 (dollars in thousands) Amount Percent ​ Amount Percent ​ Amount Percent ​ Amount Percent ​ Amount Percent Noninterest Bearing Transaction Deposits ​ $ 756,964 ​ 20.4 % ​ $ 884,272 ​ 25.9 % ​ $ 875,084 ​ 29.7 % ​ $ 671,903 ​ 26.9 % ​ $ 447,509 ​ 24.5 % Interest Bearing Transaction Deposits ​ 692,801 ​ 18.7 ​ ​ 451,992 ​ 13.2 ​ ​ 544,789 ​ 18.5 ​ ​ 366,290 ​ 14.6 ​ ​ 264,627 ​ 14.5 ​ Savings and Money Market Deposits ​ 935,091 ​ 25.2 ​ ​ 1,031,873 ​ 30.2 ​ ​ 863,567 ​ 29.3 ​ ​ 657,617 ​ 26.3 ​ ​ 516,785 ​ 28.3 ​ Time Deposits ​ 300,651 ​ 8.1 ​ ​ 272,253 ​ 8.0 ​ ​ 293,474 ​ 10.0 ​ ​ 353,543 ​ 14.1 ​ ​ 360,027 ​ 19.8 ​ Brokered Deposits ​ 1,024,441 ​ 27.6 ​ ​ 776,153 ​ 22.7 ​ ​ 369,323 ​ 12.5 ​ ​ 452,283 ​ 18.1 ​ ​ 234,362 ​ 12.9 ​ Total Deposits ​ $ 3,709,948 ​ 100.0 % ​ $ 3,416,543 ​ 100.0 % ​ $ 2,946,237 ​ 100.0 % ​ $ 2,501,636 ​ 100.0 % ​ $ 1,823,310 ​ 100.0 % ​ Total deposits at December 31, 2023 were $3.71 billion, an increase of $293.4 million, or 8.6%, compared to total deposits of $3.42 billion at December 31, 2022.
At December 31, 2022, government agency mortgage-backed securities represented 28.8% of the portfolio, municipal securities represented 23.9% of the portfolio, corporate securities represented 20.0% of the portfolio, U.S. treasury securities represented 0.5% of the portfolio, SBA securities represented 3.8% of the portfolio, other mortgage-backed securities represented 14.6% of the portfolio, and asset-backed securities represented 8.4% of the portfolio. 64 Table of Contents The following table presents the amortized cost and fair value of securities available for sale, by type, at December 31, 2022, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 December 31, 2021 December 31, 2020 ​ ​ Amortized ​ Fair ​ Amortized ​ Fair ​ Amortized ​ Fair (dollars in thousands) Cost Value Cost Value Cost Value U.S.
At December 31, 2023, government agency mortgage-backed securities represented 23.5% of the portfolio, municipal securities represented 21.9% of the portfolio, corporate securities represented 21.6% of the portfolio, other mortgage-backed securities represented 15.5% of the portfolio, asset-backed securities represented 14.4% of the portfolio, and SBA securities represented 3.1% of the portfolio. 63 Table of Contents The following table presents the amortized cost and fair value of securities available for sale, by type, at December 31, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 December 31, 2022 December 31, 2021 ​ ​ Amortized ​ Fair ​ Amortized ​ Fair ​ Amortized ​ Fair (dollars in thousands) Cost Value Cost Value Cost Value U.S.
Interest income on loans, on a fully-tax equivalent basis, for the year ended December 31, 2022 was $146.8 million, compared to $119.0 million for the year ended December 31, 2021.
Interest income on loans, on a fully-tax equivalent basis, for the year ended December 31, 2023 was $192.7 million, compared to $146.8 million for the year ended December 31, 2022.
Treasury Securities ​ $ 2,621 ​ $ 2,580 ​ $ 756 ​ $ 754 ​ $ — ​ $ — SBA Securities ​ ​ 20,957 ​ ​ 20,877 ​ ​ 30,474 ​ ​ 30,370 ​ ​ 40,455 ​ ​ 40,107 Mortgage-Backed Securities Issued or Guaranteed by U.S.
Treasury Securities ​ $ — ​ $ — ​ $ 2,621 ​ $ 2,580 ​ $ 756 ​ $ 754 SBA Securities ​ ​ 18,497 ​ ​ 18,674 ​ ​ 20,957 ​ ​ 20,877 ​ ​ 30,474 ​ ​ 30,370 Mortgage-Backed Securities Issued or Guaranteed by U.S.
The processes and procedures include board and management oversight, commercial real estate exposure limits, portfolio monitoring tools, management information systems, market reports, underwriting standards, internal and external loan review, and stress testing. Total gross loans increased $750.0 million, or 26.6%, to $3.57 billion at December 31, 2022, compared to $2.82 billion at December 31, 2021.
The processes and procedures include board and management oversight, commercial real estate exposure limits, portfolio monitoring tools, management information systems, market reports, underwriting standards, internal and external loan review, and stress testing. Total gross loans increased $154.8 million, or 4.3%, to $3.72 billion at December 31, 2023, compared to $3.57 billion at December 31, 2022.
Nonperforming assets consist of nonperforming loans plus foreclosed assets (i.e., real or personal property acquired through foreclosure). Nonaccrual loans totaled $639,000 at December 31, 2022 and $722,000 at December 31, 2021, a decrease of $83,000. There were no loans 90 days past due and still accruing as of December 31, 2022 and 2021.
Nonperforming assets consist of nonperforming loans plus foreclosed assets (i.e., real or personal property acquired through foreclosure). Nonaccrual loans totaled $919,000 at December 31, 2023 and $639,000 at December 31, 2022, an increase of $280,000. There were no loans 90 days past due and still accruing as of December 31, 2023 and 2022.
The Company had no federal funds purchased as of December 31, 2021. Other Borrowings At December 31, 2022, the Company had outstanding FHLB advances of $97.0 million. The Company’s borrowing capacity at the FHLB is determined based on collateral pledged, generally consisting of loans.
The Company had $-0- and $287.0 million federal funds purchased as of December 31, 2023 and 2022, respectively. Other Borrowings At December 31, 2023, the Company had outstanding FHLB advances of $319.5 million, compared to $97.0 million at December 31, 2022. The Company’s borrowing capacity at the FHLB is determined based on collateral pledged, generally consisting of loans.
Fair Value of Financial Instruments The fair value of a financial instrument is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts business.
As a result of this analysis, if the Company determines there is a more appropriate fair value, the price is adjusted accordingly. ​ Fair Value of Financial Instruments The fair value of a financial instrument is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts business.
Net income per diluted common share for the year ended December 31, 2022 was $1.72, a 12.0% increase, compared to $1.54 per diluted common share for the year ended December 31, 2021. ROA was 1.38% and 1.43% for the years ended December 31, 2022 and 2021, respectively.
Earnings per diluted common share for the year ended December 31, 2022 were $1.72, compared to $1.54 per diluted common share for the year ended December 31, 2021. ROA was 1.38% and 1.43% for the years ended December 31, 2022 and 2021, respectively.
The cost of interest bearing liabilities increased 41 basis points to 1.34% for the year ended December 31, 2022, compared to 0.93% for the year ended December 31, 2021. The increase was primarily due to the rapid increase in market interest rates that occurred between periods, which impacted all funding sources.
The cost of interest bearing liabilities was 3.61% for the year ended December 31, 2023, compared to 1.34% for the year ended December 31, 2022, primarily due to the rapid increase in market interest rates that occurred between the periods, which impacted all funding sources. Interest Income.
The allowance for loan losses as a percentage of total loans was 1.34% at December 31, 2022, compared to 1.42% at December 31, 2021. 69 Table of Contents The following table presents a summary of the activity in the allowance for loan loss reserve for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2022 2021 2020 2019 2018 Net Charge-offs (Recoveries) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 3 ​ $ (8) ​ $ 339 ​ $ 152 ​ $ (15) ​ Construction and Land Development ​ — ​ — ​ ​ — ​ ​ (1) ​ ​ 73 ​ Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 - 4 Family Mortgage ​ (288) ​ (21) ​ ​ 90 ​ ​ 27 ​ ​ (38) ​ CRE Owner Occupied ​ — ​ (32) ​ ​ (10) ​ ​ — ​ ​ — ​ Total Real Estate Mortgage Loans ​ (288) ​ (53) ​ 80 ​ 27 ​ (38) ​ Consumer and Other ​ 9 ​ ​ 32 ​ ​ 16 ​ ​ 27 ​ ​ 26 ​ Total Net Charge-offs (Recoveries) ​ $ (276) ​ $ (29) ​ $ 435 ​ $ 205 ​ $ 46 ​ Net Charge-offs to Average Loans ​ ​ ​ ​ ​ ​ Commercial ​ 0.00 % ​ 0.00 % ​ 0.12 % ​ 0.05 % ​ (0.01) % Construction and Land Development ​ 0.00 ​ ​ 0.00 ​ ​ 0.00 ​ ​ 0.00 ​ ​ 0.04 ​ Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 - 4 Family Mortgage ​ (0.09) ​ ​ (0.01) ​ ​ 0.03 ​ ​ 0.01 ​ ​ (0.02) ​ CRE Owner Occupied ​ 0.00 ​ ​ (0.04) ​ ​ (0.01) ​ ​ 0.00 ​ ​ 0.00 ​ Total Real Estate Mortgage Loans ​ (0.01) ​ ​ 0.00 ​ ​ 0.01 ​ ​ 0.00 ​ ​ 0.00 ​ Consumer and Other ​ 0.12 ​ ​ 0.45 ​ ​ 0.28 ​ ​ 0.65 ​ ​ 0.63 ​ Total Net Charge-offs (Recoveries) to Average Loans ​ (0.01) % 0.00 % ​ 0.02 % ​ 0.01 % ​ 0.00 % Gross Loans, End of Period ​ $ 3,569,446 ​ $ 2,819,472 ​ 2,326,428 ​ 1,912,038 ​ 1,664,931 ​ Average Loans ​ ​ 3,190,712 ​ 2,584,857 ​ 2,154,420 ​ 1,785,937 ​ ​ 1,491,166 ​ Allowance to Total Gross Loans ​ 1.34 % 1.42 % 1.50 % 1.18 % 1.20 % Allowance to Total Gross Loans, Excluding PPP Loans ​ 1.35 ​ 1.43 % 1.59 % N/A ​ N/A ​ ​ The following table presents a summary of the allocation of the allowance for loan losses by loan portfolio segment for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ December 31, ​ December 31, ​ December 31, ​ ​ ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ 2018 ​ (dollars in thousands) Amount Percent Amount Percent ​ Amount Percent ​ Amount Percent ​ Amount Percent ​ Commercial ​ $ 6,500 ​ 13.5 % $ 6,256 ​ 15.6 % $ 5,703 ​ 16.4 % $ 3,058 ​ 13.6 % $ 2,898 14.5 % Paycheck Protection Program ​ ​ 1 ​ — ​ ​ 13 ​ — ​ ​ 70 ​ 0.2 ​ ​ — ​ — ​ ​ — ​ — ​ Construction and Land Development ​ 4,756 ​ 9.9 ​ 3,757 ​ 9.4 ​ 2,491 ​ 7.1 ​ 2,202 ​ 9.8 ​ 2,451 12.2 ​ Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 - 4 Family Mortgage ​ 4,325 ​ 9.0 ​ 3,757 ​ 9.4 ​ 3,972 ​ 11.4 ​ 2,839 ​ 12.6 ​ 2,597 13.0 ​ Multifamily ​ 17,459 ​ 36.4 ​ 12,610 ​ 31.5 ​ 9,517 ​ 27.3 ​ 5,824 ​ 25.9 ​ 4,644 23.2 ​ CRE Owner Occupied ​ 1,965 ​ 4.1 ​ 1,495 ​ 3.7 ​ 1,162 ​ 3.3 ​ 792 ​ 3.5 ​ 808 4.0 ​ CRE Nonowner Occupied ​ 12,576 ​ 26.2 ​ 11,335 ​ 28.3 ​ 10,991 ​ 31.6 ​ 6,972 ​ 30.9 ​ 5,872 29.3 ​ Total Real Estate Mortgage Loans ​ 36,325 75.7 ​ 29,197 72.9 ​ 25,642 73.6 ​ 16,427 72.9 ​ 13,921 69.5 ​ Consumer and Other ​ 151 ​ 0.3 ​ 147 ​ 0.5 ​ 203 ​ 0.6 ​ 85 ​ 0.4 ​ 65 0.3 ​ Unallocated ​ 263 ​ 0.6 ​ 650 ​ 1.6 ​ 732 ​ 2.1 ​ 754 ​ 3.3 ​ 696 3.5 ​ Total Allowance for Loan Losses ​ $ 47,996 100.0 % $ 40,020 100.0 % $ 34,841 100.0 % $ 22,526 100.0 % $ 20,031 100.0 % ​ Goodwill and Other Intangible Assets Goodwill was $2.6 million at December 31, 2022 and 2021.
The allowance for credit losses on loans as a percentage of total loans was 1.36% at December 31, 2023, compared to 1.34% at December 31, 2022. 68 Table of Contents The following table presents a summary of net charge-offs for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2023 2022 2021 2020 2019 Net Charge-offs (Recoveries) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 170 ​ $ 3 ​ $ (8) ​ $ 339 ​ $ 152 ​ Construction and Land Development ​ — ​ — ​ ​ — ​ ​ — ​ ​ (1) ​ Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 Family Mortgage ​ (5) ​ (288) ​ ​ (21) ​ ​ 90 ​ ​ 27 ​ CRE Owner Occupied ​ — ​ — ​ ​ (32) ​ ​ (10) ​ ​ — ​ Total Real Estate Mortgage Loans ​ (5) ​ (288) ​ (53) ​ 80 ​ 27 ​ Consumer and Other ​ 37 ​ ​ 9 ​ ​ 32 ​ ​ 16 ​ ​ 27 ​ Total Net Charge-offs (Recoveries) ​ $ 202 ​ $ (276) ​ $ (29) ​ $ 435 ​ $ 205 ​ Net Charge-offs (Recoveries) to Average Loans ​ ​ ​ ​ ​ ​ Commercial ​ 0.04 % ​ 0.00 % ​ 0.00 % ​ 0.12 % ​ 0.05 % Construction and Land Development ​ 0.00 ​ ​ 0.00 ​ ​ 0.00 ​ ​ 0.00 ​ ​ 0.00 ​ Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 Family Mortgage ​ 0.00 ​ ​ (0.09) ​ ​ (0.01) ​ ​ 0.03 ​ ​ 0.01 ​ CRE Owner Occupied ​ 0.00 ​ ​ 0.00 ​ ​ (0.04) ​ ​ (0.01) ​ ​ 0.00 ​ Total Real Estate Mortgage Loans ​ 0.00 ​ ​ (0.01) ​ ​ 0.00 ​ ​ 0.01 ​ ​ 0.00 ​ Consumer and Other ​ 0.40 ​ ​ 0.12 ​ ​ 0.45 ​ ​ 0.28 ​ ​ 0.65 ​ Total Net Charge-offs (Recoveries) to Average Loans ​ 0.01 % (0.01) % ​ 0.00 % ​ 0.02 % ​ 0.01 % Gross Loans, End of Period ​ $ 3,724,282 ​ $ 3,569,446 ​ 2,819,472 ​ 2,326,428 ​ 1,912,038 ​ Average Loans ​ ​ 3,699,252 ​ 3,190,712 ​ 2,584,857 ​ 2,154,420 ​ ​ 1,785,937 ​ Allowance to Total Gross Loans ​ 1.36 % 1.34 % 1.42 % 1.50 % 1.18 % ​ The following table presents a summary of the allocation of the allowance for credit losses on loans by loan portfolio segment as of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ December 31, ​ December 31, ​ December 31, ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ (dollars in thousands) Amount Percent Amount Percent ​ Amount Percent ​ Amount Percent ​ Amount Percent ​ Commercial ​ $ 5,398 ​ 10.7 % $ 6,500 ​ 13.5 % $ 6,256 ​ 15.6 % $ 5,703 ​ 16.4 % $ 3,058 13.6 % Paycheck Protection Program ​ ​ NM ​ NM ​ ​ 1 ​ — ​ ​ 13 ​ — ​ ​ 70 ​ 0.2 ​ ​ — ​ — ​ Construction and Land Development ​ 2,156 ​ 4.3 ​ 3,911 ​ 8.1 ​ 3,139 ​ 7.9 ​ 1,679 ​ 4.8 ​ 1,274 5.7 ​ 1-4 Family Construction ​ ​ 558 ​ 1.1 ​ ​ 845 ​ 1.8 ​ ​ 618 ​ 1.5 ​ ​ 812 ​ 2.3 ​ ​ 928 ​ 4.1 ​ Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 Family Mortgage ​ 2,651 ​ 5.3 ​ 4,325 ​ 9.0 ​ 3,757 ​ 9.4 ​ 3,972 ​ 11.4 ​ 2,839 12.6 ​ Multifamily ​ 22,217 ​ 44.0 ​ 17,459 ​ 36.4 ​ 12,610 ​ 31.5 ​ 9,517 ​ 27.3 ​ 5,824 25.9 ​ CRE Owner Occupied ​ 1,184 ​ 2.3 ​ 1,965 ​ 4.1 ​ 1,495 ​ 3.7 ​ 1,162 ​ 3.3 ​ 792 3.5 ​ CRE Nonowner Occupied ​ 16,225 ​ 32.1 ​ 12,576 ​ 26.2 ​ 11,335 ​ 28.3 ​ 10,991 ​ 31.6 ​ 6,972 30.9 ​ Total Real Estate Mortgage Loans ​ 42,277 83.7 ​ 36,325 75.7 ​ 29,197 72.9 ​ 25,642 73.6 ​ 16,427 72.9 ​ Consumer and Other ​ 105 ​ 0.2 ​ 151 ​ 0.3 ​ 147 ​ 0.5 ​ 203 ​ 0.6 ​ 85 0.4 ​ Unallocated ​ — ​ — ​ 263 ​ 0.6 ​ 650 ​ 1.6 ​ 732 ​ 2.1 ​ 754 3.3 ​ Total Allowance for Credit Losses ​ $ 50,494 100.0 % $ 47,996 100.0 % $ 40,020 100.0 % $ 34,841 100.0 % $ 22,526 100.0 % ​ Goodwill and Other Intangible Assets Goodwill was $2.6 million at December 31, 2023 and 2022.
Provision for Loan Losses 2022 Compared to 2021 The allowance for loan losses increased $8.0 million as of December 31, 2022, compared to December 31, 2021, reflecting a provision for loan losses of $7.7 million and net recoveries of $276,000 during 2022.
The allowance for credit losses on off-balance sheet credit exposures was $3.0 million as of December 31, 2023, compared to $360,000 as of December 31, 2022. ​ 2022 Compared to 2021 The allowance for loan losses increased $8.0 million as of December 31, 2022, compared to December 31, 2021, reflecting a provision for loan losses of $7.7 million and net recoveries of $276,000 during 2022.
These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes. Borrowed Funds Federal Funds Purchased In addition to deposits, the Company utilizes overnight borrowings to meet the daily liquidity needs of clients and fund loan growth. The Company had $287.0 million federal funds purchased as of December 31, 2022.
These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes. Borrowed Funds Federal Funds Purchased In addition to deposits, the Company utilizes overnight borrowings to meet the daily liquidity needs as a supplemental funding source for loan growth.
This increase was primarily due to the increased utilization of federal funds purchased and FHLB advances in the rising interest rate environment. 2021 Compared to 2020 Net interest income was $109.5 million for the year ended December 31, 2021, an increase of $21.5 million, or 24.5%, compared to $88.0 million for the year ended December 31, 2020.
This increase was primarily due to the increased utilization of federal funds purchased and FHLB advances in the higher interest rate environment. 2022 Compared to 2021 Net interest income was $129.7 million for the year ended December 31, 2022, an increase of $20.2 million, or 18.4%, compared to $109.5 million for the year ended December 31, 2021.
The Company uses brokered deposits, the availability of which is uncertain and subject to competitive market forces and regulation, for liquidity and interest rate risk management purposes. At December 31, 2022, brokered deposits totaled $776.2 million, consisting of $591.9 million of brokered time deposits and $184.3 million of non-maturity brokered money market and transaction accounts.
The Company uses brokered deposits, the availability of which is uncertain and subject to competitive market forces and regulation, for liquidity and interest rate risk management purposes. At December 31, 2023, brokered deposits totaled $1.02 billion, consisting of $850.5 million of brokered time deposits and $174.0 million of non-maturity brokered money market and transaction accounts.
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 year ended December 31, 2021 was 3.28%, a 3 basis point increase from 3.25% for the year ended December 31, 2020.
Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees, and prior to 2023, PPP balances, interest, and fees, for the year ended December 31, 2023 was 2.34%, a 93 basis point decline from 3.27% for the year ended December 31, 2022.
In management’s judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to the Company’s core business. ● “Adjusted Efficiency ratio” is defined as the efficiency ratio adjusted to exclude the amortization of tax credit investments and debt prepayments fees from noninterest expense. ● “Adjusted Noninterest expense to average assets” is defined as the ratio of noninterest expense adjusted to exclude the amortization of tax credit investments and debt prepayment fees, divided by average assets. ● “Tangible common equity” is defined as shareholders’ equity reduced by preferred stock, goodwill and other intangible assets.
In management’s judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to the Company’s core business. ● “Tangible common equity” is defined as shareholders’ equity reduced by preferred stock, goodwill and other intangible assets.
The following table presents credit arrangements and financial instruments whose contract amounts represent credit risk as of December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ December 31, 2021 ​ Fixed Variable Fixed Variable (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unfunded Commitments Under Lines of Credit ​ $ 444,669 ​ $ 404,065 ​ $ 335,842 ​ $ 463,306 Letters of Credit ​ 20,658 ​ 95,111 ​ 10,521 ​ 109,126 Totals ​ $ 465,327 ​ $ 499,176 ​ $ 346,363 ​ $ 572,432 ​ Commitments to extend credit beyond current funding are agreements to lend to a customer as long as there is no violation of any condition established in the contract.
The following table presents credit arrangements and financial instruments whose contract amounts represent credit risk as of December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ December 31, 2022 ​ Fixed Variable Fixed Variable (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unfunded Commitments Under Lines of Credit ​ $ 164,880 ​ $ 381,752 ​ $ 444,669 ​ $ 404,065 Letters of Credit ​ 6,780 ​ 96,509 ​ 20,658 ​ 95,111 Totals ​ $ 171,660 ​ $ 478,261 ​ $ 465,327 ​ $ 499,176 ​ Commitments to extend credit beyond current funding are agreements to lend to a customer as long as there is no violation of any condition established in the contract.
Interest expense on borrowings increased $5.1 million to $10.6 million for the year ended December 31, 2022, compared to $5.5 million for the year ended December 31, 2021.
Interest expense on borrowings was $21.1 million for the year ended December 31, 2023, an increase of $10.5 million, compared to $10.6 million for the year ended December 31, 2022.
The cost of total deposits increased 24 basis points from 0.51% for the year ended December 31, 2021, to 0.75% for the year ended December 31, 2022. The increase was primarily due to the upward repricing of the deposit portfolio in the higher interest rate environment.
The cost of total deposits was 2.73% for the year ended December 31, 2023, a 198 basis point increase, compared to 0.75% for the year ended December 31, 2022. The increase was primarily due to the upward repricing of the deposit portfolio in the higher interest rate environment.
The following table presents the major components of noninterest expense for the year ended December 31, 2022, compared to the year ended December 31, 2021, and for the year ended December 31, 2021, compared to the year ended December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Increase/ ​ December 31, ​ Increase/ (dollars in thousands) 2022 2021 (Decrease) 2021 2020 (Decrease) Noninterest Expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Salaries and Employee Benefits ​ $ 36,941 ​ $ 30,889 ​ $ 6,052 ​ $ 30,889 ​ $ 25,568 ​ $ 5,321 Occupancy and Equipment ​ ​ 4,390 ​ ​ 3,916 ​ ​ 474 ​ ​ 3,916 ​ ​ 3,258 ​ ​ 658 FDIC Insurance Assessment ​ ​ 1,365 ​ ​ 1,305 ​ ​ 60 ​ ​ 1,305 ​ ​ 788 ​ ​ 517 Data Processing ​ ​ 1,396 ​ ​ 1,222 ​ ​ 174 ​ ​ 1,222 ​ ​ 1,027 ​ ​ 195 Professional and Consulting Fees ​ ​ 2,664 ​ ​ 2,520 ​ ​ 144 ​ ​ 2,520 ​ ​ 1,966 ​ ​ 554 Derivative Collateral Fees ​ ​ 687 ​ ​ 3 ​ ​ 684 ​ ​ 3 ​ ​ — ​ ​ 3 Information Technology and Telecommunications ​ ​ 2,495 ​ ​ 2,163 ​ ​ 332 ​ ​ 2,163 ​ ​ 1,374 ​ ​ 789 Marketing and Advertising ​ ​ 2,032 ​ ​ 1,487 ​ ​ 545 ​ ​ 1,487 ​ ​ 788 ​ ​ 699 Intangible Asset Amortization ​ ​ 191 ​ ​ 191 ​ ​ — ​ ​ 191 ​ ​ 191 ​ ​ — Amortization of Tax Credit Investments ​ ​ 408 ​ ​ 562 ​ ​ (154) ​ ​ 562 ​ ​ 738 ​ ​ (176) Debt Prepayment Fees ​ ​ — ​ ​ 582 ​ ​ (582) ​ ​ 582 ​ ​ 7,043 ​ ​ (6,461) Other Expense ​ ​ 4,051 ​ ​ 3,255 ​ ​ 796 ​ ​ 3,255 ​ ​ 2,646 ​ ​ 609 Totals ​ $ 56,620 ​ $ 48,095 ​ $ 8,525 ​ $ 48,095 ​ $ 45,387 ​ $ 2,708 ​ Income Tax Expense The provision for income taxes includes both federal and state taxes.
The following table presents the major components of noninterest expense for the year ended December 31, 2023, compared to the year ended December 31, 2022, and for the year ended December 31, 2022, compared to the year ended December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Increase/ ​ December 31, ​ Increase/ (dollars in thousands) 2023 2022 (Decrease) 2022 2021 (Decrease) Noninterest Expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Salaries and Employee Benefits ​ $ 36,538 ​ $ 36,941 ​ $ (403) ​ $ 36,941 ​ $ 30,889 ​ $ 6,052 Occupancy and Equipment ​ ​ 4,447 ​ ​ 4,390 ​ ​ 57 ​ ​ 4,390 ​ ​ 3,916 ​ ​ 474 FDIC Insurance Assessment ​ ​ 3,690 ​ ​ 1,365 ​ ​ 2,325 ​ ​ 1,365 ​ ​ 1,305 ​ ​ 60 Data Processing ​ ​ 1,574 ​ ​ 1,396 ​ ​ 178 ​ ​ 1,396 ​ ​ 1,222 ​ ​ 174 Professional and Consulting Fees ​ ​ 3,081 ​ ​ 2,664 ​ ​ 417 ​ ​ 2,664 ​ ​ 2,520 ​ ​ 144 Derivative Collateral Fees ​ ​ 1,900 ​ ​ 687 ​ ​ 1,213 ​ ​ 687 ​ ​ 3 ​ ​ 684 Information Technology and Telecommunications ​ ​ 2,889 ​ ​ 2,495 ​ ​ 394 ​ ​ 2,495 ​ ​ 2,163 ​ ​ 332 Marketing and Advertising ​ ​ 1,129 ​ ​ 2,032 ​ ​ (903) ​ ​ 2,032 ​ ​ 1,487 ​ ​ 545 Intangible Asset Amortization ​ ​ 100 ​ ​ 191 ​ ​ (91) ​ ​ 191 ​ ​ 191 ​ ​ — Amortization of Tax Credit Investments ​ ​ — ​ ​ 408 ​ ​ (408) ​ ​ 408 ​ ​ 562 ​ ​ (154) Debt Prepayment Fees ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 582 ​ ​ (582) Other Expense ​ ​ 3,972 ​ ​ 4,051 ​ ​ (79) ​ ​ 4,051 ​ ​ 3,255 ​ ​ 796 Totals ​ $ 59,320 ​ $ 56,620 ​ $ 2,700 ​ $ 56,620 ​ $ 48,095 ​ $ 8,525 ​ Income Tax Expense The provision for income taxes includes both federal and state taxes.
These tables are presented on a tax-equivalent basis, if applicable. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ December 31, 2021 December 31, 2020 ​ ​ 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 ​ $ 66,072 ​ $ 597 ​ 0.90 % $ 132,188 ​ $ 199 ​ 0.15 % $ 80,113 ​ $ 170 ​ 0.21 % Investment Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable Investment Securities ​ 448,500 ​ 13,960 ​ 3.11 ​ 317,954 ​ 7,015 ​ 2.21 ​ 234,873 ​ 5,712 ​ 2.43 ​ Tax-Exempt Investment Securities (1) ​ 72,379 ​ 3,101 ​ 4.29 ​ 75,313 ​ 3,242 ​ 4.30 ​ 87,587 ​ 3,807 ​ 4.35 ​ Total Investment Securities ​ 520,879 ​ 17,061 ​ 3.28 ​ 393,267 ​ 10,257 ​ 2.61 ​ 322,460 ​ 9,519 ​ 2.95 ​ Paycheck Protection Program Loans (2) ​ 7,441 ​ ​ 970 ​ 13.03 ​ 103,151 ​ ​ 6,441 ​ 6.24 ​ 122,240 ​ ​ 4,143 ​ 3.39 ​ Loans (1)(2) ​ 3,183,271 ​ ​ 145,857 ​ 4.58 ​ 2,481,706 ​ ​ 112,587 ​ 4.54 ​ 2,032,180 ​ ​ 101,469 ​ 4.99 ​ Total Loans ​ ​ 3,190,712 ​ 146,827 ​ 4.60 ​ ​ 2,584,857 ​ 119,028 ​ 4.60 ​ ​ 2,154,420 ​ 105,612 ​ 4.90 ​ Federal Home Loan Bank Stock ​ 12,628 ​ ​ 432 ​ 3.42 ​ 5,571 ​ ​ 259 ​ 4.65 ​ 8,866 ​ ​ 444 ​ 5.01 ​ Total Interest Earning Assets ​ 3,790,291 ​ 164,917 ​ 4.35 % 3,115,883 ​ 129,743 ​ 4.16 % 2,565,859 ​ 115,745 ​ 4.51 % Noninterest Earning Assets ​ ​ 76,189 ​ ​ ​ ​ ​ ​ ​ 73,917 ​ ​ ​ ​ ​ ​ ​ 51,720 ​ ​ ​ ​ ​ ​ Total Assets ​ $ 3,866,480 ​ ​ ​ ​ ​ ​ $ 3,189,800 ​ ​ ​ ​ ​ ​ $ 2,617,579 ​ ​ ​ ​ ​ ​ Interest Bearing Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest Bearing Transaction Deposits ​ $ 524,968 ​ $ 4,336 ​ 0.83 % $ 441,528 ​ $ 2,052 ​ 0.46 % $ 295,036 ​ $ 1,626 ​ 0.55 % Savings and Money Market Deposits ​ 963,096 ​ 9,129 ​ 0.95 ​ 773,779 ​ 3,729 ​ 0.48 ​ 523,520 ​ 5,341 ​ 1.02 ​ Time Deposits ​ 284,868 ​ 3,264 ​ 1.15 ​ 323,638 ​ 4,099 ​ 1.27 ​ 374,195 ​ 7,806 ​ 2.09 ​ Brokered Deposits ​ 449,095 ​ 6,650 ​ 1.48 ​ 406,863 ​ 3,962 ​ 0.97 ​ 348,126 ​ 5,040 ​ 1.45 ​ Total Interest Bearing Deposits ​ ​ 2,222,027 ​ ​ 23,379 ​ 1.05 ​ ​ 1,945,808 ​ ​ 13,842 ​ 0.71 ​ ​ 1,540,877 ​ ​ 19,813 ​ 1.29 ​ Federal Funds Purchased ​ 149,608 ​ 4,507 ​ 3.01 ​ 2,479 ​ 6 ​ 0.24 ​ 7,239 ​ 111 ​ 1.53 ​ Notes Payable ​ 2,863 ​ 202 ​ 7.04 ​ 1,658 ​ 61 ​ 3.66 ​ 11,749 ​ 439 ​ 3.73 ​ FHLB Advances ​ 64,278 ​ 1,221 ​ 1.90 ​ 53,294 ​ 831 ​ 1.56 ​ 148,524 ​ 3,390 ​ 2.28 ​ Subordinated Debentures ​ 89,584 ​ 4,688 ​ 5.23 ​ 82,865 ​ 4,630 ​ 5.59 ​ 50,954 ​ 3,109 ​ 6.10 ​ Total Interest Bearing Liabilities ​ 2,528,360 ​ 33,997 ​ 1.34 % 2,086,104 ​ 19,370 ​ 0.93 % 1,759,343 ​ 26,862 ​ 1.53 % Noninterest Bearing Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Bearing Transaction Deposits ​ 910,490 ​ ​ ​ ​ ​ ​ 764,087 ​ ​ ​ ​ ​ ​ 579,595 ​ ​ ​ ​ ​ ​ Other Noninterest Bearing Liabilities ​ ​ 43,597 ​ ​ ​ ​ ​ ​ ​ 23,372 ​ ​ ​ ​ ​ ​ ​ 19,905 ​ ​ ​ ​ ​ ​ Total Noninterest Bearing Liabilities ​ 954,087 ​ ​ ​ ​ ​ ​ 787,459 ​ ​ ​ ​ ​ ​ 599,500 ​ ​ ​ ​ ​ ​ Shareholders' Equity ​ ​ 384,033 ​ ​ ​ ​ ​ ​ ​ 316,237 ​ ​ ​ ​ ​ ​ 258,736 ​ ​ ​ ​ ​ ​ Total Liabilities and Shareholders' Equity ​ $ 3,866,480 ​ ​ ​ ​ ​ ​ $ 3,189,800 ​ ​ ​ ​ ​ ​ $ 2,617,579 ​ ​ ​ ​ ​ ​ Net Interest Income / Interest Rate Spread ​ ​ ​ ​ 130,920 ​ 3.01 % ​ ​ ​ 110,373 ​ 3.23 % ​ ​ ​ 88,883 ​ 2.98 % Net Interest Margin (3) ​ ​ ​ ​ ​ ​ ​ 3.45 % ​ ​ ​ ​ ​ ​ 3.54 % ​ ​ ​ ​ ​ ​ 3.46 % Taxable Equivalent Adjustment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tax-Exempt Investment Securities and Loans ​ ​ ​ ​ (1,222) ​ ​ ​ ​ ​ ​ (864) ​ ​ ​ ​ ​ ​ (919) ​ ​ ​ Net Interest Income ​ ​ ​ ​ $ 129,698 ​ ​ ​ ​ ​ ​ $ 109,509 ​ ​ ​ ​ ​ ​ $ 87,964 ​ ​ ​ ​ 56 Table of Contents (1) Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%.
These tables are presented on a tax-equivalent basis, if applicable. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ December 31, 2022 December 31, 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 ​ $ 77,759 ​ $ 3,170 ​ 4.08 % $ 66,072 ​ $ 597 ​ 0.90 % $ 132,188 ​ $ 199 ​ 0.15 % Investment Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable Investment Securities ​ 577,102 ​ 25,199 ​ 4.37 ​ 448,500 ​ 13,960 ​ 3.11 ​ 317,954 ​ 7,015 ​ 2.21 ​ Tax-Exempt Investment Securities (1) ​ 29,004 ​ 1,325 ​ 4.57 ​ 72,379 ​ 3,101 ​ 4.29 ​ 75,313 ​ 3,242 ​ 4.30 ​ Total Investment Securities ​ 606,106 ​ 26,524 ​ 4.38 ​ 520,879 ​ 17,061 ​ 3.28 ​ 393,267 ​ 10,257 ​ 2.61 ​ Paycheck Protection Program Loans (2) ​ NM ​ ​ NM ​ NM ​ 7,441 ​ ​ 970 ​ 13.03 ​ 103,151 ​ ​ 6,441 ​ 6.24 ​ Loans (1)(2) ​ 3,699,252 ​ ​ 192,679 ​ 5.21 ​ 3,183,271 ​ ​ 145,857 ​ 4.58 ​ 2,481,706 ​ ​ 112,587 ​ 4.54 ​ Total Loans ​ ​ 3,699,252 ​ 192,679 ​ 5.21 ​ ​ 3,190,712 ​ 146,827 ​ 4.60 ​ ​ 2,584,857 ​ 119,028 ​ 4.60 ​ Federal Home Loan Bank Stock ​ 21,249 ​ ​ 1,538 ​ 7.24 ​ 12,628 ​ ​ 432 ​ 3.42 ​ 5,571 ​ ​ 259 ​ 4.65 ​ Total Interest Earning Assets ​ 4,404,366 ​ 223,911 ​ 5.08 % 3,790,291 ​ 164,917 ​ 4.35 % 3,115,883 ​ 129,743 ​ 4.16 % Noninterest Earning Assets ​ ​ 86,438 ​ ​ ​ ​ ​ ​ ​ 76,189 ​ ​ ​ ​ ​ ​ ​ 73,917 ​ ​ ​ ​ ​ ​ Total Assets ​ $ 4,490,804 ​ ​ ​ ​ ​ ​ $ 3,866,480 ​ ​ ​ ​ ​ ​ $ 3,189,800 ​ ​ ​ ​ ​ ​ Interest Bearing Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest Bearing Transaction Deposits ​ $ 650,028 ​ $ 23,379 ​ 3.60 % $ 524,968 ​ $ 4,336 ​ 0.83 % $ 441,528 ​ $ 2,052 ​ 0.46 % Savings and Money Market Deposits ​ 922,799 ​ 30,639 ​ 3.32 ​ 963,096 ​ 9,129 ​ 0.95 ​ 773,779 ​ 3,729 ​ 0.48 ​ Time Deposits ​ 263,161 ​ 7,064 ​ 2.68 ​ 284,868 ​ 3,264 ​ 1.15 ​ 323,638 ​ 4,099 ​ 1.27 ​ Brokered Deposits ​ 909,662 ​ 34,963 ​ 3.84 ​ 449,095 ​ 6,650 ​ 1.48 ​ 406,863 ​ 3,962 ​ 0.97 ​ Total Interest Bearing Deposits ​ ​ 2,745,650 ​ ​ 96,045 ​ 3.50 ​ ​ 2,222,027 ​ ​ 23,379 ​ 1.05 ​ ​ 1,945,808 ​ ​ 13,842 ​ 0.71 ​ Federal Funds Purchased ​ 169,645 ​ 8,521 ​ 5.02 ​ 149,608 ​ 4,507 ​ 3.01 ​ 2,479 ​ 6 ​ 0.24 ​ Notes Payable ​ 13,750 ​ 1,143 ​ 8.31 ​ 2,863 ​ 202 ​ 7.04 ​ 1,658 ​ 61 ​ 3.66 ​ FHLB Advances ​ 238,000 ​ 7,489 ​ 3.15 ​ 64,278 ​ 1,221 ​ 1.90 ​ 53,294 ​ 831 ​ 1.56 ​ Subordinated Debentures ​ 79,090 ​ 3,983 ​ 5.04 ​ 89,584 ​ 4,688 ​ 5.23 ​ 82,865 ​ 4,630 ​ 5.59 ​ Total Interest Bearing Liabilities ​ 3,246,135 ​ 117,181 ​ 3.61 % 2,528,360 ​ 33,997 ​ 1.34 % 2,086,104 ​ 19,370 ​ 0.93 % Noninterest Bearing Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Bearing Transaction Deposits ​ 768,428 ​ ​ ​ ​ ​ ​ 910,490 ​ ​ ​ ​ ​ ​ 764,087 ​ ​ ​ ​ ​ ​ Other Noninterest Bearing Liabilities ​ ​ 65,763 ​ ​ ​ ​ ​ ​ ​ 43,597 ​ ​ ​ ​ ​ ​ ​ 23,372 ​ ​ ​ ​ ​ ​ Total Noninterest Bearing Liabilities ​ 834,191 ​ ​ ​ ​ ​ ​ 954,087 ​ ​ ​ ​ ​ ​ 787,459 ​ ​ ​ ​ ​ ​ Shareholders' Equity ​ ​ 410,478 ​ ​ ​ ​ ​ ​ ​ 384,033 ​ ​ ​ ​ ​ ​ 316,237 ​ ​ ​ ​ ​ ​ Total Liabilities and Shareholders' Equity ​ $ 4,490,804 ​ ​ ​ ​ ​ ​ $ 3,866,480 ​ ​ ​ ​ ​ ​ $ 3,189,800 ​ ​ ​ ​ ​ ​ Net Interest Income / Interest Rate Spread ​ ​ ​ ​ 106,730 ​ 1.47 % ​ ​ ​ 130,920 ​ 3.01 % ​ ​ ​ 110,373 ​ 3.23 % Net Interest Margin (3) ​ ​ ​ ​ ​ ​ ​ 2.42 % ​ ​ ​ ​ ​ ​ 3.45 % ​ ​ ​ ​ ​ ​ 3.54 % Taxable Equivalent Adjustment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tax-Exempt Investment Securities and Loans ​ ​ ​ ​ (1,556) ​ ​ ​ ​ ​ ​ (1,222) ​ ​ ​ ​ ​ ​ (864) ​ ​ ​ Net Interest Income ​ ​ ​ ​ $ 105,174 ​ ​ ​ ​ ​ ​ $ 129,698 ​ ​ ​ ​ ​ ​ $ 109,509 ​ ​ ​ ​ 55 Table of Contents (1) Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%.
Loan interest income and loan fees remain the primary contributing factors to the changes in yield on interest earning assets. The aggregate loan yield, excluding PPP loans increased to 4.58% for the year ended December 31, 2022, which was four basis points higher than 4.54% for the year ended December 31, 2021.
The aggregate loan yield, excluding PPP loans increased to 4.58% for the year ended December 31, 2022, which was four basis points higher than 4.54% for the year ended December 31, 2021. ​ Interest Expense.
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.
The impact of the noninterest bearing sources of funds is captured in the net interest margin, which is calculated as net 53 Table of Contents interest income divided by average earning assets.
Interest expense on deposits increased to $23.4 million for the year ended December 31, 2022, compared to $13.8 million for the year ended December 31, 2021.
Interest expense on deposits was $96.0 million for the year ended December 31, 2023, compared to $23.4 million for the year ended December 31, 2022.
Capital Total shareholders’ equity at December 31, 2022 was $394.1 million, an increase of $14.8 million, or 3.9%, over shareholders’ equity of $379.3 million at December 31, 2021, primarily due to net income retained and unrealized gains in the derivatives portfolio, offset partially by stock repurchases made under the Company’s stock repurchase program, preferred stock dividends, and an increase in unrealized losses in the securities portfolio.
Capital Total shareholders’ equity at December 31, 2023 was $425.5 million, an increase of $31.5 million, or 8.0%, over shareholders’ equity of $394.1 million at December 31, 2022, primarily due to net income retained and a decrease in unrealized losses in the securities portfolio, offset partially by a decrease in unrealized gains in the derivatives portfolio, the adoption of the CECL accounting methodology, preferred stock dividends, and stock repurchases.
This information should be read in connection with our audited consolidated financial statements and related notes appearing elsewhere in this report. 50 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands, except per share data) ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ 2018 ​ Per Common Share Data (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic Earnings Per Share ​ $ 1.78 ​ $ 1.59 ​ $ 0.95 ​ $ 1.07 ​ $ 0.93 ​ Diluted Earnings Per Share ​ ​ 1.72 ​ ​ 1.54 ​ ​ 0.93 ​ ​ 1.05 ​ ​ 0.91 ​ Adjusted Diluted Earnings Per Share (2) ​ ​ 1.72 ​ ​ 1.55 ​ ​ 1.12 ​ ​ N/A ​ ​ N/A ​ Book Value Per Share ​ ​ 11.80 ​ ​ 11.09 ​ ​ 9.43 ​ ​ 8.45 ​ ​ 7.34 ​ Tangible Book Value Per Share (2) ​ ​ 11.69 ​ ​ 10.98 ​ ​ 9.31 ​ ​ 8.33 ​ ​ 7.22 ​ Basic Weighted Average Shares Outstanding ​ ​ 27,758,336 ​ ​ 28,027,454 ​ ​ 28,582,064 ​ ​ 29,358,644 ​ ​ 29,001,393 ​ Diluted Weighted Average Shares Outstanding ​ ​ 28,668,177 ​ ​ 28,968,286 ​ ​ 29,170,220 ​ ​ 29,996,776 ​ ​ 29,436,214 ​ Shares Outstanding at Period End ​ ​ 27,751,950 ​ ​ 28,206,566 ​ ​ 28,143,493 ​ ​ 28,973,572 ​ ​ 30,097,274 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selected Performance Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on Average Assets (ROA) ​ ​ 1.38 % ​ 1.43 % ​ 1.04 % ​ 1.49 % ​ 1.51 % Pre-Provision Net Revenue Return on Average Assets (PPNR ROA) (3) ​ ​ 2.06 ​ ​ 2.10 ​ ​ 2.09 ​ ​ 2.07 ​ ​ 2.20 ​ Return on Average Shareholders' Equity (ROE) ​ ​ 13.90 ​ ​ 14.45 ​ ​ 10.51 ​ ​ 13.50 ​ ​ 13.87 ​ Return on Average Tangible Common Equity (2) ​ ​ 15.69 ​ ​ 15.45 ​ ​ 10.65 ​ ​ 13.72 ​ ​ 14.15 ​ Average Shareholders' Equity to Average Assets ​ ​ 9.93 ​ ​ 9.91 ​ ​ 9.88 ​ ​ 11.00 ​ ​ 10.92 ​ Yield on Interest Earning Assets ​ ​ 4.35 ​ ​ 4.16 ​ ​ 4.51 ​ ​ 5.01 ​ ​ 4.88 ​ Yield on Total Loans, Gross ​ ​ 4.60 ​ ​ 4.60 ​ ​ 4.90 ​ ​ 5.31 ​ ​ 5.23 ​ Cost of Interest Bearing Liabilities ​ ​ 1.34 ​ ​ 0.93 ​ ​ 1.53 ​ ​ 2.03 ​ ​ 1.65 ​ Cost of Total Deposits ​ ​ 0.75 ​ ​ 0.51 ​ ​ 0.93 ​ ​ 1.42 ​ ​ 1.12 ​ Net Interest Margin (4) ​ ​ 3.45 ​ ​ 3.54 ​ ​ 3.46 ​ ​ 3.59 ​ ​ 3.72 ​ Core Net Interest Margin (2)(4) ​ ​ 3.27 ​ ​ 3.28 ​ ​ 3.25 ​ ​ 3.37 ​ ​ 3.40 ​ Efficiency Ratio (2) ​ ​ 41.5 ​ ​ 42.0 ​ ​ 49.0 ​ ​ 47.4 ​ ​ 46.5 ​ Adjusted Efficiency Ratio (3) ​ ​ 41.2 ​ ​ 41.0 ​ ​ 40.5 ​ ​ 43.3 ​ ​ 41.7 ​ Noninterest Expense to Average Assets ​ ​ 1.46 ​ ​ 1.51 ​ ​ 1.73 ​ ​ 1.75 ​ ​ 1.78 ​ Adjusted Noninterest Expense to Average Assets (3) ​ ​ 1.45 ​ ​ 1.47 ​ ​ 1.44 ​ ​ 1.59 ​ ​ 1.59 ​ Loan to Deposit Ratio ​ ​ 104.5 ​ ​ 95.7 ​ ​ 93.0 ​ ​ 104.9 ​ ​ 106.7 ​ Core Deposits to Total Deposits (6) ​ ​ 74.6 ​ ​ 85.4 ​ ​ 78.1 ​ ​ 80.7 ​ ​ 74.2 ​ Tangible Common Equity to Tangible Assets (2) ​ ​ 7.48 ​ ​ 8.91 ​ ​ 8.96 ​ ​ 10.65 ​ ​ 11.03 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selected Asset Quality Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans 30-89 Days Past Due ​ $ 186 ​ $ 49 ​ $ 13 ​ $ 403 ​ $ 311 ​ Loans 30-89 Days Past Due to Total Loans ​ ​ 0.01 % ​ — % ​ — % ​ 0.02 % ​ 0.02 % Nonperforming Loans ​ $ 639 ​ $ 722 ​ $ 775 ​ $ 461 ​ $ 581 ​ Nonperforming Loans to Total Loans ​ ​ 0.02 % ​ 0.03 % ​ 0.03 % ​ 0.02 % ​ 0.03 % Foreclosed Assets ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ Nonaccrual Loans to Total Loans ​ ​ 0.02 % ​ 0.03 % ​ 0.03 % ​ 0.02 % ​ 0.03 % Nonaccrual Loans and Loans Past Due 90 Days and Still Accruing to Total Loans ​ ​ 0.02 ​ ​ 0.03 ​ ​ 0.03 ​ ​ 0.02 ​ ​ 0.03 ​ Nonperforming Assets (5) ​ $ 639 ​ $ 722 ​ $ 775 ​ $ 461 ​ $ 581 ​ Nonperforming Assets to Total Assets (5) ​ ​ 0.01 % ​ 0.02 % ​ 0.03 % ​ 0.02 % ​ 0.03 % Allowance for Loan Losses to Total Loans ​ ​ 1.34 ​ ​ 1.42 ​ ​ 1.50 ​ ​ 1.18 ​ ​ 1.20 ​ Allowance for Loan Losses to Total Loans, Excluding PPP Loans ​ ​ 1.35 ​ ​ 1.43 ​ ​ 1.59 ​ ​ N/A ​ ​ N/A ​ Allowance for Loans Losses to Nonaccrual Loans ​ ​ 7,511.11 ​ ​ 5,542.94 ​ ​ 4,495.61 ​ ​ 4,886.33 ​ ​ 3,447.68 ​ Net Loan Charge-Offs to Average Loans ​ ​ (0.01) ​ ​ 0.00 ​ ​ 0.02 ​ ​ 0.01 ​ ​ 0.00 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital Ratios (Bank Only) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Leverage Ratio ​ ​ 10.76 % ​ 11.09 % ​ 10.89 % ​ 11.01 % ​ 10.82 % Common Equity Tier 1 Risk-based Capital Ratio ​ ​ 11.29 ​ ​ 11.69 ​ ​ 12.12 ​ ​ 11.72 ​ ​ 11.63 ​ Tier 1 Risk-based Capital Ratio ​ ​ 11.29 ​ ​ 11.69 ​ ​ 12.12 ​ ​ 11.72 ​ ​ 11.63 ​ Total Risk-based Capital Ratio ​ ​ 12.47 ​ ​ 12.94 ​ ​ 13.37 ​ ​ 12.16 ​ ​ 12.76 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital Ratios (Consolidated) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Leverage Ratio ​ ​ 9.55 % ​ 10.82 % ​ 9.28 % ​ 10.69 % ​ 11.23 % Common Equity Tier 1 Risk-based Capital Ratio ​ ​ 8.40 ​ ​ 9.36 ​ ​ 10.35 ​ ​ 11.39 ​ ​ 12.07 ​ Tier 1 Risk-based Capital Ratio ​ ​ 10.03 ​ ​ 11.43 ​ ​ 10.35 ​ ​ 11.39 ​ ​ 12.07 ​ Total Risk-based Capital Ratio ​ ​ 13.15 ​ ​ 15.55 ​ ​ 14.58 ​ ​ 12.98 ​ ​ 14.55 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Growth Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage Change in Total Assets ​ ​ 25.0 % ​ 18.8 % ​ 29.0 % ​ 15.0 % ​ 22.1 % Percentage Change in Total Loans, Gross ​ ​ 26.6 ​ ​ 21.2 ​ ​ 21.7 ​ ​ 14.8 ​ ​ 23.6 ​ Percentage Change in Total Deposits ​ ​ 16.0 ​ ​ 17.8 ​ ​ 37.2 ​ ​ 16.8 ​ ​ 16.5 ​ Percentage Change in Shareholders' Equity ​ ​ 3.9 ​ ​ 42.9 ​ ​ 8.4 ​ ​ 10.8 ​ ​ 61.1 ​ Percentage Change in Net Income ​ ​ 16.9 ​ ​ 68.0 ​ ​ (13.4) ​ ​ 16.7 ​ ​ 59.4 ​ Percentage Change in Diluted Earnings Per Share ​ ​ 12.0 ​ ​ 64.8 ​ ​ (10.9) ​ ​ 14.5 ​ ​ 35.5 ​ Percentage Change in Tangible Book Value Per Share (2) ​ ​ 6.5 ​ ​ 17.9 ​ ​ 11.8 ​ ​ 15.3 ​ ​ 33.7 ​ 51 Table of Contents (1) Includes shares of common stock and non-voting common stock.
This information should be read in connection with our audited consolidated financial statements and related notes appearing elsewhere in this report. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands, except per share data) ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ Income Statement ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income ​ $ 105,174 ​ $ 129,698 ​ $ 109,509 ​ $ 87,964 ​ $ 74,132 ​ Provision for (Recovery of) Credit Losses ​ ​ (175) ​ ​ 7,700 ​ ​ 5,150 ​ ​ 12,750 ​ ​ 2,700 ​ Noninterest Income ​ ​ 6,493 ​ ​ 6,332 ​ ​ 5,309 ​ ​ 5,839 ​ ​ 3,826 ​ Noninterest Expense ​ ​ 59,320 ​ ​ 56,620 ​ ​ 48,095 ​ ​ 45,387 ​ ​ 36,932 ​ Net Income ​ ​ 39,960 ​ ​ 53,392 ​ ​ 45,687 ​ ​ 27,194 ​ ​ 31,403 ​ Net Income Available to Common Shareholders ​ ​ 35,906 ​ ​ 49,338 ​ ​ 44,516 ​ ​ 27,194 ​ ​ 31,403 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Per Common Share Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic Earnings Per Share ​ $ 1.29 ​ $ 1.78 ​ $ 1.59 ​ $ 0.95 ​ $ 1.07 ​ Diluted Earnings Per Share ​ ​ 1.27 ​ ​ 1.72 ​ ​ 1.54 ​ ​ 0.93 ​ ​ 1.05 ​ Book Value Per Share ​ ​ 12.94 ​ ​ 11.80 ​ ​ 11.09 ​ ​ 9.43 ​ ​ 8.45 ​ Tangible Book Value Per Share (1) ​ ​ 12.84 ​ ​ 11.69 ​ ​ 10.98 ​ ​ 9.31 ​ ​ 8.33 ​ Basic Weighted Average Shares Outstanding ​ ​ 27,857,420 ​ ​ 27,758,336 ​ ​ 28,027,454 ​ ​ 28,582,064 ​ ​ 29,358,644 ​ Diluted Weighted Average Shares Outstanding ​ ​ 28,315,587 ​ ​ 28,668,177 ​ ​ 28,968,286 ​ ​ 29,170,220 ​ ​ 29,996,776 ​ Shares Outstanding at Period End ​ ​ 27,748,965 ​ ​ 27,751,950 ​ ​ 28,206,566 ​ ​ 28,143,493 ​ ​ 28,973,572 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selected Performance Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on Average Assets (ROA) ​ ​ 0.89 % ​ 1.38 % ​ 1.43 % ​ 1.04 % ​ 1.49 % Pre-Provision Net Revenue Return on Average Assets (PPNR ROA) (2) ​ ​ 1.15 ​ ​ 2.06 ​ ​ 2.10 ​ ​ 2.09 ​ ​ 2.07 ​ Return on Average Shareholders' Equity (ROE) ​ ​ 9.73 ​ ​ 13.90 ​ ​ 14.45 ​ ​ 10.51 ​ ​ 13.50 ​ Return on Average Tangible Common Equity (1) ​ ​ 10.53 ​ ​ 15.69 ​ ​ 15.45 ​ ​ 10.65 ​ ​ 13.72 ​ Average Shareholders' Equity to Average Assets ​ ​ 9.14 ​ ​ 9.93 ​ ​ 9.91 ​ ​ 9.88 ​ ​ 11.00 ​ Net Interest Margin (3) ​ ​ 2.42 ​ ​ 3.45 ​ ​ 3.54 ​ ​ 3.46 ​ ​ 3.59 ​ Core Net Interest Margin (1)(3) ​ ​ 2.34 ​ ​ 3.27 ​ ​ 3.28 ​ ​ 3.25 ​ ​ 3.37 ​ Yield on Interest Earning Assets ​ ​ 5.08 ​ ​ 4.35 ​ ​ 4.16 ​ ​ 4.51 ​ ​ 5.01 ​ Yield on Total Loans, Gross ​ ​ 5.21 ​ ​ 4.60 ​ ​ 4.60 ​ ​ 4.90 ​ ​ 5.31 ​ Cost of Interest Bearing Liabilities ​ ​ 3.61 ​ ​ 1.34 ​ ​ 0.93 ​ ​ 1.53 ​ ​ 2.03 ​ Cost of Total Deposits ​ ​ 2.73 ​ ​ 0.75 ​ ​ 0.51 ​ ​ 0.93 ​ ​ 1.42 ​ Cost of Funds ​ ​ 2.92 ​ ​ 0.99 ​ ​ 0.68 ​ ​ 1.15 ​ ​ 1.58 ​ Efficiency Ratio (1) ​ ​ 53.0 ​ ​ 41.5 ​ ​ 42.0 ​ ​ 49.0 ​ ​ 47.4 ​ Noninterest Expense to Average Assets ​ ​ 1.32 ​ ​ 1.46 ​ ​ 1.51 ​ ​ 1.73 ​ ​ 1.75 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance Sheet ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Assets ​ $ 4,611,990 ​ $ 4,345,662 ​ $ 3,477,659 ​ $ 2,927,345 ​ $ 2,268,830 ​ Total Loans, Gross ​ ​ 3,724,282 ​ ​ 3,569,446 ​ ​ 2,819,472 ​ ​ 2,326,428 ​ ​ 1,912,038 ​ Deposits ​ ​ 3,709,948 ​ ​ 3,416,543 ​ ​ 2,946,237 ​ ​ 2,501,636 ​ ​ 1,823,310 ​ Total Shareholders' Equity ​ ​ 425,515 ​ ​ 394,064 ​ ​ 379,272 ​ ​ 265,405 ​ ​ 244,794 ​ Loan to Deposit Ratio ​ ​ 100.4 % ​ 104.5 % ​ 95.7 % ​ 93.0 % ​ 104.9 % Core Deposits to Total Deposits (5) ​ ​ 68.7 ​ ​ 74.6 ​ ​ 85.4 ​ ​ 78.1 ​ ​ 80.7 ​ Uninsured Deposits to Total Deposits ​ ​ 24.3 ​ ​ 38.5 ​ ​ 41.2 ​ ​ 43.3 ​ ​ 38.6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital Ratios (Consolidated) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Leverage Ratio ​ ​ 9.57 % ​ 9.55 % ​ 10.82 % ​ 9.28 % ​ 10.69 % Common Equity Tier 1 Risk-based Capital Ratio ​ ​ 9.16 ​ ​ 8.40 ​ ​ 9.36 ​ ​ 10.35 ​ ​ 11.39 ​ Tier 1 Risk-based Capital Ratio ​ ​ 10.79 ​ ​ 10.03 ​ ​ 11.43 ​ ​ 10.35 ​ ​ 11.39 ​ Total Risk-based Capital Ratio ​ ​ 13.97 ​ ​ 13.15 ​ ​ 15.55 ​ ​ 14.58 ​ ​ 12.98 ​ Tangible Common Equity to Tangible Assets (1) ​ ​ 7.73 ​ ​ 7.48 ​ ​ 8.91 ​ ​ 8.96 ​ ​ 10.65 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Growth Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage Change in Total Assets ​ ​ 6.1 % ​ 25.0 % ​ 18.8 % ​ 29.0 % ​ 15.0 % Percentage Change in Total Loans, Gross ​ ​ 4.3 ​ ​ 26.6 ​ ​ 21.2 ​ ​ 21.7 ​ ​ 14.8 ​ Percentage Change in Total Deposits ​ ​ 8.6 ​ ​ 16.0 ​ ​ 17.8 ​ ​ 37.2 ​ ​ 16.8 ​ Percentage Change in Shareholders' Equity ​ ​ 8.0 ​ ​ 3.9 ​ ​ 42.9 ​ ​ 8.4 ​ ​ 10.8 ​ Percentage Change in Net Income ​ ​ (25.2) ​ ​ 16.9 ​ ​ 68.0 ​ ​ (13.4) ​ ​ 16.7 ​ Percentage Change in Diluted Earnings Per Share ​ ​ (26.3) ​ ​ 12.0 ​ ​ 64.8 ​ ​ (10.9) ​ ​ 14.5 ​ Percentage Change in Tangible Book Value Per Share (1) ​ ​ 9.8 ​ ​ 6.5 ​ ​ 17.9 ​ ​ 11.8 ​ ​ 15.3 ​ 50 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ Selected Asset Quality Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans 30-89 Days Past Due ​ $ 15,110 ​ $ 186 ​ $ 49 ​ $ 13 ​ $ 403 ​ Loans 30-89 Days Past Due to Total Loans ​ ​ 0.41 % ​ 0.01 % ​ — % ​ — % ​ 0.02 % Nonperforming Loans ​ $ 919 ​ $ 639 ​ $ 722 ​ $ 775 ​ $ 461 ​ Nonperforming Loans to Total Loans ​ ​ 0.02 % ​ 0.02 % ​ 0.03 % ​ 0.03 % ​ 0.02 % Foreclosed Assets ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ Nonaccrual Loans to Total Loans ​ ​ 0.02 % ​ 0.02 % ​ 0.03 % ​ 0.03 % ​ 0.02 % Nonaccrual Loans and Loans Past Due 90 Days and Still Accruing to Total Loans ​ ​ 0.02 ​ ​ 0.02 ​ ​ 0.03 ​ ​ 0.03 ​ ​ 0.02 ​ Nonperforming Assets (4) ​ $ 919 ​ $ 639 ​ $ 722 ​ $ 775 ​ $ 461 ​ Nonperforming Assets to Total Assets (4) ​ ​ 0.02 % ​ 0.01 % ​ 0.02 % ​ 0.03 % ​ 0.02 % Allowance for Credit Losses on Loans to Total Loans ​ ​ 1.36 ​ ​ 1.34 ​ ​ 1.42 ​ ​ 1.50 ​ ​ 1.18 ​ Allowance for Credit Losses on Loans to Total Loans, Excluding PPP Loans ​ ​ 1.36 ​ ​ 1.35 ​ ​ 1.43 ​ ​ 1.59 ​ ​ N/A ​ Allowance for Credit Losses on Loans to Nonaccrual Loans ​ ​ 5,494.45 ​ ​ 7,511.11 ​ ​ 5,542.94 ​ ​ 4,495.61 ​ ​ 4,886.33 ​ Net Loan Charge-Offs to Average Loans ​ ​ 0.01 ​ ​ (0.01) ​ ​ 0.00 ​ ​ 0.02 ​ ​ 0.01 ​ (1) Represents a non-GAAP financial measure.
The increase was primarily due to increases in 61 Table of Contents customer service fees, swap fees, bank-owned life insurance income and other income, offset partially by lower gains on sales of securities. 2021 Compared to 2020 Noninterest income was $5.3 million for the year ended December 31, 2021, compared to $5.8 million for the year ended December 31, 2020, a decrease of $530,000, or 9.1%.
The increase was primarily due to increases in 60 Table of Contents customer service fees, bank-owned life insurance income and FHLB prepayment income, offset partially by lower swap fees and other income. 2022 Compared to 2021 Noninterest income was $6.3 million for the year ended December 31, 2022, compared to $5.3 million for the year ended December 31, 2021, an increase of $1.0 million, or 19.3%.
The following table presents a summary of the activity in the allowance for loan losses for the years ended December 31, 2022, 2021, and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (dollars in thousands) ​ 2022 2021 2020 Balance at Beginning of Period ​ $ 40,020 ​ $ 34,841 ​ $ 22,526 Provision for Loan Losses ​ ​ 7,700 ​ ​ 5,150 ​ ​ 12,750 Charge-offs ​ ​ (37) ​ ​ (74) ​ ​ (517) Recoveries ​ ​ 313 ​ ​ 103 ​ ​ 82 Balance at End of Period ​ $ 47,996 ​ $ 40,020 ​ $ 34,841 ​ Noninterest Income 2022 Compared to 2021 Noninterest income was $6.3 million for the year ended December 31, 2022, compared to $5.3 million for the year ended December 31, 2021, an increase of $1.0 million, or 19.3%.
The allowance for loan losses to total loans was 1.34% at December 31, 2022, compared to 1.42% at December 31, 2021. ​ The following table presents a summary of the activity in the allowance for credit losses on loans for the years ended December 31, 2023, 2022, and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (dollars in thousands) ​ 2023 2022 2021 Balance at Beginning of Period ​ $ 47,996 ​ $ 40,020 ​ $ 34,841 Impact of Adopting CECL ​ ​ 650 ​ ​ — ​ ​ — Provision for Credit Losses ​ ​ 2,050 ​ ​ 7,700 ​ ​ 5,150 Charge-offs ​ ​ (224) ​ ​ (37) ​ ​ (74) Recoveries ​ ​ 22 ​ ​ 313 ​ ​ 103 Balance at End of Period ​ $ 50,494 ​ $ 47,996 ​ $ 40,020 ​ The following table presents a summary of the activity in the provision for credit losses for the years ended December 31, 2023, 2022, and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (dollars in thousands) ​ 2023 2022 2021 Provision for Credit Losses on Loans ​ ​ 2,050 ​ ​ 7,700 ​ ​ 5,150 Recovery of Credit Losses for Off-Balance Sheet Credit Exposures ​ ​ (2,225) ​ ​ — ​ ​ — Provision for (Recovery of) Credit Losses ​ $ (175) ​ $ 7,700 ​ $ 5,150 ​ Noninterest Income 2023 Compared to 2022 Noninterest income was $6.5 million for the year ended December 31, 2023, compared to $6.3 million for the year ended December 31, 2022, an increase of $161,000, or 2.5%.
At December 31, 2021, brokered deposits totaled $369.3 million, consisting of $238.1 million of brokered time deposits and $131.2 million of non-maturity brokered money market and transaction accounts.
At December 31, 2022, brokered deposits totaled $776.2 million, consisting of $591.9 million of brokered time deposits and $184.3 million of non-maturity brokered money market and transaction accounts.
Interest Income. Total interest income on a tax-equivalent basis was $129.7 million for the year ended December 31, 2021, compared to $115.7 million for the year ended December 31, 2020.
Total interest income, on a tax-equivalent basis, was $223.9 million for the year ended December 31, 2023, compared to $164.9 million for the year ended December 31, 2022.
As of December 31, 2022, investor CRE loans totaled $2.62 billion, consisting of $1.31 billion of loans secured by multifamily residential properties, $947.0 million of loans secured by nonowner occupied CRE and $365.8 million of construction and land development loans.
As of December 31, 2023, investor CRE loans totaled $2.67 billion, consisting of $987.3 million of loans secured by nonowner occupied CRE, $1.39 billion of loans secured by multifamily residential properties, $65.1 million of 1-4 family construction loans and $232.8 million of construction and land development loans.
ROE was 13.90% and 14.45% for the years ended December 31, 2022 and 2021, respectively. 2021 Compared to 2020 Net income was $45.7 million for the year ended December 31, 2021, a 68.0% increase compared to net income of $27.2 million for the year ended December 31, 2020.
ROE was 9.73% and 13.90% for the years ended December 31, 2023 and 2022, respectively. 2022 Compared to 2021 Net income was $53.4 million for the year ended December 31, 2022, compared to net income of $45.7 million for the year ended December 31, 2021.
All investment securities are held as available for sale. ​ Securities available for sale were $548.6 million at December 31, 2022, compared to $439.4 million at December 31, 2021, an increase of $109.3 million, or 24.9%.
All investment securities are held as available for sale. ​ Securities available for sale were $604.1 million at December 31, 2023, compared to $548.6 million at December 31, 2022, an increase of $55.5 million, or 10.1%.
Agencies (MBS): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential Pass-Through: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Guaranteed by GNMA ​ 55,200 ​ 54,441 ​ 671 ​ 702 ​ 892 ​ 957 Issued by FNMA and FHLMC ​ 26,159 ​ 22,960 ​ 20,649 ​ 20,363 ​ 16,067 ​ 16,117 Other Residential Mortgage-Backed Securities ​ 80,299 ​ 70,184 ​ 83,394 ​ 82,271 ​ 94,440 ​ 94,409 Commercial Mortgage-Backed Securities ​ 10,993 ​ 10,345 ​ 10,646 ​ 11,138 ​ 11,254 ​ 12,032 All Other Commercial MBS ​ 80,268 ​ 79,854 ​ 10,203 ​ 10,063 ​ 742 ​ 745 Total MBS ​ 252,919 ​ 237,784 ​ 125,563 ​ 124,537 ​ 123,395 ​ 124,260 Municipal Securities ​ 156,506 ​ ​ 131,354 ​ ​ 151,665 ​ 158,369 ​ ​ 105,975 ​ 115,012 Corporate Securities ​ 116,871 ​ ​ 109,827 ​ ​ 81,925 ​ ​ 84,480 ​ ​ 71,116 ​ ​ 72,155 Asset-Backed Securities ​ ​ 46,623 ​ ​ 46,191 ​ ​ 39,867 ​ ​ 40,852 ​ ​ 38,135 ​ ​ 39,095 Total ​ $ 596,497 ​ $ 548,613 ​ $ 430,250 ​ $ 439,362 ​ $ 379,076 ​ $ 390,629 ​ Loan Portfolio The Company focuses on lending to borrowers located or investing in the Minneapolis-St.
Agencies (MBS): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential Pass-Through: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Guaranteed by GNMA ​ 45,256 ​ 44,188 ​ 55,200 ​ 54,441 ​ 671 ​ 702 Issued by FNMA and FHLMC ​ 24,319 ​ 21,687 ​ 26,159 ​ 22,960 ​ 20,649 ​ 20,363 Other Residential Mortgage-Backed Securities ​ 74,832 ​ 65,617 ​ 80,299 ​ 70,184 ​ 83,394 ​ 82,271 Commercial Mortgage-Backed Securities ​ 10,811 ​ 10,292 ​ 10,993 ​ 10,345 ​ 10,646 ​ 11,138 All Other Commercial MBS ​ 94,237 ​ 93,531 ​ 80,268 ​ 79,854 ​ 10,203 ​ 10,063 Total MBS ​ 249,455 ​ 235,315 ​ 252,919 ​ 237,784 ​ 125,563 ​ 124,537 Municipal Securities ​ 151,512 ​ ​ 132,524 ​ ​ 156,506 ​ 131,354 ​ ​ 151,665 ​ 158,369 Corporate Securities ​ 142,098 ​ ​ 130,605 ​ ​ 116,871 ​ ​ 109,827 ​ ​ 81,925 ​ ​ 84,480 Asset-Backed Securities ​ ​ 87,054 ​ ​ 86,986 ​ ​ 46,623 ​ ​ 46,191 ​ ​ 39,867 ​ ​ 40,852 Total ​ $ 648,616 ​ $ 604,104 ​ $ 596,497 ​ $ 548,613 ​ $ 430,250 ​ $ 439,362 ​ Loan Portfolio The Company focuses on lending to borrowers located or investing in the Minneapolis-St.
While the Company’s strong loan growth continued to be driven by the strong brand of the Bank in the Twin Cities market and the M&A-related market disruption resulting in client and banker acquisition opportunities, overall loan demand began declining late in 2022 due to the rising interest rate environment. 65 Table of Contents The following table presents the dollar and percentage composition of the loan portfolio by category, at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ December 31, 2021 ​ December 31, 2020 ​ December 31, 2019 December 31, 2018 (dollars in thousands) Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Commercial ​ $ 435,344 ​ 12.2 % $ 360,169 ​ 12.8 % $ 304,220 ​ 13.1 % $ 276,035 ​ 14.5 % $ 260,833 ​ 15.7 % Paycheck Protection Program ​ ​ 1,049 ​ — ​ ​ 26,162 ​ 0.9 ​ ​ 138,454 ​ 6.0 ​ ​ — ​ — ​ ​ — ​ — ​ Construction and Land Development ​ ​ 365,796 ​ 10.3 ​ ​ 281,474 ​ 10.0 ​ 170,217 ​ 7.3 ​ 196,776 ​ 10.3 ​ 210,041 ​ 12.6 ​ Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 - 4 Family Mortgage ​ ​ 355,474 ​ 10.0 ​ ​ 305,317 ​ 10.8 ​ 294,479 ​ 12.7 ​ 260,611 ​ 13.6 ​ 226,773 ​ 13.6 ​ Multifamily ​ ​ 1,306,738 ​ 36.6 ​ ​ 910,243 ​ 32.3 ​ 626,465 ​ 26.9 ​ 515,014 ​ 26.9 ​ 407,934 ​ 24.5 ​ CRE Owner Occupied ​ ​ 149,905 ​ 4.2 ​ ​ 111,096 ​ 4.0 ​ 75,604 ​ 3.2 ​ 66,584 ​ 3.5 ​ 64,458 ​ 3.9 ​ CRE Nonowner Occupied ​ ​ 947,008 ​ 26.5 ​ ​ 818,569 ​ 29.0 ​ 709,300 ​ 30.5 ​ 592,545 ​ 31.0 ​ 490,632 ​ 29.5 ​ Total Real Estate Mortgage Loans ​ 2,759,125 ​ 77.3 ​ 2,145,225 ​ 76.1 ​ 1,705,848 ​ 73.3 ​ 1,434,754 ​ 75.0 ​ 1,189,797 ​ 71.5 ​ Consumer and Other ​ ​ 8,132 ​ 0.2 ​ ​ 6,442 ​ 0.2 ​ 7,689 ​ 0.3 ​ 4,473 ​ 0.2 ​ 4,260 ​ 0.2 ​ Total Loans, Gross ​ 3,569,446 ​ 100.0 % 2,819,472 ​ 100.0 % 2,326,428 ​ 100.0 % 1,912,038 ​ 100.0 % 1,664,931 ​ 100.0 % Allowance for Loan Losses ​ ​ (47,996) ​ ​ ​ ​ (40,020) ​ ​ ​ (34,841) ​ ​ ​ (22,526) ​ ​ ​ (20,031) ​ ​ ​ Net Deferred Loan Fees ​ ​ (9,293) ​ ​ ​ ​ (9,535) ​ ​ ​ (9,151) ​ ​ ​ (5,512) ​ ​ ​ (4,515) ​ ​ ​ Total Loans, Net ​ $ 3,512,157 ​ ​ ​ $ 2,769,917 ​ ​ ​ $ 2,282,436 ​ ​ ​ $ 1,884,000 ​ ​ ​ $ 1,640,385 ​ ​ ​ ​ The Company primarily focuses on real estate mortgage lending, which constituted 77.3% of the portfolio as of December 31, 2022.
The Bank’s pace of loan growth slowed in 2023 from historical levels as the Company actively managed the balance sheet to better align loan growth with the funding outlook and market loan demand declined due to the rising interest rate environment. 64 Table of Contents The following table presents the dollar and percentage composition of the loan portfolio by category, at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ December 31, 2022 ​ December 31, 2021 ​ December 31, 2020 December 31, 2019 (dollars in thousands) Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Commercial ​ $ 464,061 ​ 12.4 % $ 435,344 ​ 12.2 % $ 360,169 ​ 12.8 % $ 304,220 ​ 13.1 % $ 276,035 ​ 14.5 % Paycheck Protection Program ​ ​ NM ​ NM ​ ​ 1,049 ​ — ​ ​ 26,162 ​ 0.9 ​ ​ 138,454 ​ 6.0 ​ ​ — ​ — ​ Construction and Land Development ​ ​ 232,804 ​ 6.3 ​ ​ 295,554 ​ 8.3 ​ 231,922 ​ 8.2 ​ 110,579 ​ 4.7 ​ 107,519 ​ 5.6 ​ 1-4 Family Construction ​ ​ 65,087 ​ 1.8 ​ ​ 70,242 ​ 2.0 ​ ​ 49,552 ​ 1.8 ​ ​ 59,638 ​ 2.6 ​ ​ 89,257 ​ 4.7 ​ Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 Family Mortgage ​ ​ 402,396 ​ 10.8 ​ ​ 355,474 ​ 10.0 ​ 305,317 ​ 10.8 ​ 294,479 ​ 12.7 ​ 260,611 ​ 13.6 ​ Multifamily ​ ​ 1,388,541 ​ 37.3 ​ ​ 1,306,738 ​ 36.6 ​ 910,243 ​ 32.3 ​ 626,465 ​ 26.9 ​ 515,014 ​ 26.9 ​ CRE Owner Occupied ​ ​ 175,783 ​ 4.7 ​ ​ 149,905 ​ 4.2 ​ 111,096 ​ 4.0 ​ 75,604 ​ 3.2 ​ 66,584 ​ 3.5 ​ CRE Nonowner Occupied ​ ​ 987,306 ​ 26.5 ​ ​ 947,008 ​ 26.5 ​ 818,569 ​ 29.0 ​ 709,300 ​ 30.5 ​ 592,545 ​ 31.0 ​ Total Real Estate Mortgage Loans ​ 2,954,026 ​ 79.3 ​ 2,759,125 ​ 77.3 ​ 2,145,225 ​ 76.1 ​ 1,705,848 ​ 73.3 ​ 1,434,754 ​ 75.0 ​ Consumer and Other ​ ​ 8,304 ​ 0.2 ​ ​ 8,132 ​ 0.2 ​ 6,442 ​ 0.2 ​ 7,689 ​ 0.3 ​ 4,473 ​ 0.2 ​ Total Loans, Gross ​ 3,724,282 ​ 100.0 % 3,569,446 ​ 100.0 % 2,819,472 ​ 100.0 % 2,326,428 ​ 100.0 % 1,912,038 ​ 100.0 % Allowance for Credit Losses ​ ​ (50,494) ​ ​ ​ ​ (47,996) ​ ​ ​ (40,020) ​ ​ ​ (34,841) ​ ​ ​ (22,526) ​ ​ ​ Net Deferred Loan Fees ​ ​ (6,573) ​ ​ ​ ​ (9,293) ​ ​ ​ (9,535) ​ ​ ​ (9,151) ​ ​ ​ (5,512) ​ ​ ​ Total Loans, Net ​ $ 3,667,215 ​ ​ ​ $ 3,512,157 ​ ​ ​ $ 2,769,917 ​ ​ ​ $ 2,282,436 ​ ​ ​ $ 1,884,000 ​ ​ ​ ​ The Company primarily focuses on real estate mortgage lending, which constituted 79.3% of the portfolio as of December 31, 2023.
The following table presents the major components of noninterest income for the year ended December 31, 2022, compared to the year ended December 31, 2021, and for the year ended December 31, 2021, compared to the year ended December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Increase/ ​ December 31, ​ Increase/ (dollars in thousands) 2022 2021 (Decrease) 2021 2020 (Decrease) Noninterest Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer Service Fees ​ $ 1,236 ​ $ 1,007 ​ $ 229 ​ $ 1,007 ​ $ 826 ​ $ 181 Net Gain on Sales of Securities ​ ​ 82 ​ ​ 750 ​ ​ (668) ​ ​ 750 ​ ​ 1,503 ​ ​ (753) Letter of Credit Fees ​ ​ 1,592 ​ ​ 1,676 ​ ​ (84) ​ ​ 1,676 ​ ​ 1,503 ​ ​ 173 Debit Card Interchange Fees ​ ​ 586 ​ ​ 563 ​ ​ 23 ​ ​ 563 ​ ​ 428 ​ ​ 135 Swap Fees ​ ​ 557 ​ ​ — ​ ​ 557 ​ ​ — ​ ​ 907 ​ ​ (907) Bank-Owned Life Insurance ​ ​ 762 ​ ​ 316 ​ ​ 446 ​ ​ 316 ​ ​ — ​ ​ 316 Other Income ​ ​ 1,517 ​ ​ 997 ​ ​ 520 ​ ​ 997 ​ ​ 672 ​ ​ 325 Totals ​ $ 6,332 ​ $ 5,309 ​ $ 1,023 ​ $ 5,309 ​ $ 5,839 ​ $ (530) ​ Noninterest Expense 2022 Compared to 2021 Noninterest expense totaled $56.6 million for the year ended December 31, 2022, an $8.5 million, or 17.7%, increase from $48.1 million for the year ended December 31, 2021.
The increase was primarily due to increases in customer service fees, swap fees, bank-owned life insurance income and other income, offset partially by lower gains on sales of securities. ​ The following table presents the major components of noninterest income for the year ended December 31, 2023, compared to the year ended December 31, 2022, and for the year ended December 31, 2022, compared to the year ended December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Increase/ ​ December 31, ​ Increase/ (dollars in thousands) 2023 2022 (Decrease) 2022 2021 (Decrease) Noninterest Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer Service Fees ​ $ 1,455 ​ $ 1,236 ​ $ 219 ​ $ 1,236 ​ $ 1,007 ​ $ 229 Net Gain (Loss) on Sales of Securities ​ ​ (33) ​ ​ 82 ​ ​ (115) ​ ​ 82 ​ ​ 750 ​ ​ (668) Letter of Credit Fees ​ ​ 1,746 ​ ​ 1,592 ​ ​ 154 ​ ​ 1,592 ​ ​ 1,676 ​ ​ (84) Debit Card Interchange Fees ​ ​ 595 ​ ​ 586 ​ ​ 9 ​ ​ 586 ​ ​ 563 ​ ​ 23 Swap Fees ​ ​ — ​ ​ 557 ​ ​ (557) ​ ​ 557 ​ ​ — ​ ​ 557 Bank-Owned Life Insurance ​ ​ 992 ​ ​ 762 ​ ​ 230 ​ ​ 762 ​ ​ 316 ​ ​ 446 FHLB Prepayment Income ​ ​ 792 ​ ​ — ​ ​ 792 ​ ​ — ​ ​ — ​ ​ — Other Income ​ ​ 946 ​ ​ 1,517 ​ ​ (571) ​ ​ 1,517 ​ ​ 997 ​ ​ 520 Totals ​ $ 6,493 ​ $ 6,332 ​ $ 161 ​ $ 6,332 ​ $ 5,309 ​ $ 1,023 ​ Noninterest Expense 2023 Compared to 2022 Noninterest expense totaled $59.3 million for the year ended December 31, 2023, a $2.7 million, or 4.8%, increase from $56.6 million for the year ended December 31, 2022.
The Company’s strategy is to offset the higher cost of funding with a lower level of operating expense. ​ The following table presents the average balance and average rate paid on each of the following deposit categories for the years ended December 31, 2022, 2021, and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the ​ As of and for the ​ As of and for the ​ ​ ​ Year Ended ​ Year Ended ​ Year Ended ​ ​ ​ December 31, 2022 ​ December 31, 2021 ​ December 31, 2020 ​ ​ ​ Average ​ Average ​ Average ​ Average ​ Average ​ Average ​ (dollars in thousands) Balance Rate Balance Rate ​ Balance Rate ​ Noninterest Bearing Transaction Deposits ​ $ 910,490 ​ — % $ 764,087 — % $ 579,595 ​ — % Interest Bearing Transaction Deposits ​ 524,968 ​ 0.83 ​ 441,528 0.46 ​ 295,036 ​ 0.55 ​ Savings and Money Market Deposits ​ 963,096 ​ 0.95 ​ 773,779 0.48 ​ 523,520 ​ 1.02 ​ Time Deposits ​ 215,419 ​ 1.00 ​ 255,808 1.24 ​ 244,779 ​ 2.13 ​ Time Deposits > $250,000 ​ 69,449 ​ 1.61 ​ 67,830 1.37 ​ 129,416 ​ 2.01 ​ Brokered Deposits ​ 449,095 ​ 1.48 ​ 406,863 0.97 ​ 348,126 ​ 1.45 ​ Total Deposits ​ $ 3,132,517 0.75 % $ 2,709,895 0.51 % $ 2,120,472 0.93 % ​ 71 Table of Contents The following table presents time deposits, including brokered time deposits, that are in excess of the FDIC insurance limit, currently $250,000, by time remaining until maturity: ​ ​ ​ ​ ​ ​ December 31, (dollars in thousands) ​ 2022 Three Months or Less ​ $ 38,325 Over Three Months through Six Months ​ ​ 5,317 Over Six Months through 12 Months ​ ​ 20,896 Over 12 Months ​ ​ 27,735 Totals ​ $ 92,273 ​ The Company’s total uninsured deposits, which are the amounts of deposit accounts that exceed the FDIC insurance limit, currently $250,000, were approximately $1.32 billion and $1.21 billion at December 31, 2022 and 2021, respectively.
The following table presents the average balance and average rate paid on each of the following deposit categories for the years ended December 31, 2023, 2022, and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the ​ As of and for the ​ As of and for the ​ ​ ​ Year Ended ​ Year Ended ​ Year Ended ​ ​ ​ December 31, 2023 ​ December 31, 2022 ​ December 31, 2021 ​ ​ ​ Average ​ Average ​ Average ​ Average ​ Average ​ Average ​ (dollars in thousands) Balance Rate Balance Rate ​ Balance Rate ​ Noninterest Bearing Transaction Deposits ​ $ 768,428 ​ — % $ 910,490 — % $ 764,087 ​ — % Interest Bearing Transaction Deposits ​ 650,028 ​ 3.60 ​ 524,968 0.83 ​ 441,528 ​ 0.46 ​ Savings and Money Market Deposits ​ 922,799 ​ 3.32 ​ 963,096 0.95 ​ 773,779 ​ 0.48 ​ Time Deposits ​ 179,242 ​ 2.33 ​ 215,419 1.00 ​ 255,808 ​ 1.24 ​ Time Deposits > $250,000 ​ 83,919 ​ 3.45 ​ 69,449 1.61 ​ 67,830 ​ 1.37 ​ Brokered Deposits ​ 909,662 ​ 3.84 ​ 449,095 1.48 ​ 406,863 ​ 0.97 ​ Total Deposits ​ $ 3,514,078 2.73 % $ 3,132,517 0.75 % $ 2,709,895 0.51 % ​ 70 Table of Contents The following table presents time deposits, including brokered time deposits, that are in excess of the FDIC insurance limit, currently $250,000, by time remaining until maturity: ​ ​ ​ ​ ​ ​ December 31, (dollars in thousands) ​ 2023 Three Months or Less ​ $ 32,818 Over Three Months through Six Months ​ ​ 25,057 Over Six Months through 12 Months ​ ​ 57,951 Over 12 Months ​ ​ 22,533 Totals ​ $ 138,359 ​ The Company’s total uninsured deposits, which are the amounts of deposit accounts that exceed the FDIC insurance limit, currently $250,000, were approximately $900.0 million, or 24% of total deposits, at December 31, 2023 and $1.32 billion, or 38% of total deposits, at December 31, 2022.
Stock Repurchase Program . During the year ended December 31, 2022, the Company repurchased 662,765 shares of its common stock, representing 2.4% of the Company’s outstanding shares. Shares were repurchased during this period at a weighted average price of $16.26 for a total of $10.8 million.
During the year ended December 31, 2023, the Company repurchased 423,749 shares of its common stock, representing 1.5% of the Company’s outstanding shares. Shares were repurchased during this period at a weighted average price of $10.72 for a total of $4.5 million. All shares repurchased under the stock repurchase program were converted to authorized but unissued shares.
The provision for loan losses was $5.2 million for the year ended December 31, 2021, a decrease of $7.6 million, compared to the provision for loan losses of $12.8 million for the year ended December 31, 2020.
The provision for credit losses on loans was $2.1 million for the year ended December 31, 2023, a decrease of $5.7 million, compared to the provision for credit losses on loans of $7.7 million for the year ended December 31, 2022.
Due to the low levels of nonaccrual loans, gross income that would have been recorded on nonaccrual loans during the years ended December 31, 2022 and 2021 was approximately $60,000. Allowance for Loan Losses The allowance for loan losses is a reserve established through charges to earnings in the form of a provision for loan losses.
Due to the low levels of nonaccrual loans, gross income that would have been recorded on nonaccrual loans during the years ended December 31, 2023 and 2022 was approximately $79,000 and $60,000, respectively.
The Company’s and the Bank’s actual capital amounts and ratios are as of the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Required ​ For Capital Adequacy ​ To be Well Capitalized ​ ​ ​ ​ ​ ​ ​ ​ For Capital Adequacy ​ Purposes Plus Capital ​ Under Prompt Corrective ​ ​ ​ Actual ​ Purposes ​ Conservation Buffer ​ Action Regulations ​ (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio ​ Amount Ratio ​ December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company (Consolidated): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Risk-based Capital ​ $ 536,352 ​ 13.15 % $ 326,190 ​ 8.00 % $ 428,125 ​ 10.50 % ​ N/A ​ N/A ​ Tier 1 Risk-based Capital ​ ​ 409,092 ​ 10.03 ​ ​ 244,643 ​ 6.00 ​ ​ 346,577 ​ 8.50 ​ ​ N/A ​ N/A ​ Common Equity Tier 1 Capital ​ ​ 342,578 ​ 8.40 ​ ​ 183,482 ​ 4.50 ​ ​ 285,417 ​ 7.00 ​ ​ N/A ​ N/A ​ Tier 1 Leverage Ratio ​ ​ 409,092 ​ 9.55 ​ ​ 171,368 ​ 4.00 ​ ​ 171,368 ​ 4.00 ​ ​ N/A ​ N/A ​ Bank: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Risk-based Capital ​ $ 508,760 ​ 12.47 % $ 326,288 ​ 8.00 % $ 428,253 ​ 10.50 % $ 407,860 ​ 10.00 % Tier 1 Risk-based Capital ​ ​ 460,404 ​ 11.29 ​ ​ 244,716 ​ 6.00 ​ ​ 346,681 ​ 8.50 ​ ​ 326,288 ​ 8.00 ​ Common Equity Tier 1 Capital ​ ​ 460,404 ​ 11.29 ​ ​ 183,537 ​ 4.50 ​ ​ 285,502 ​ 7.00 ​ ​ 265,109 ​ 6.50 ​ Tier 1 Leverage Ratio ​ ​ 460,404 ​ 10.76 ​ ​ 171,113 ​ 4.00 ​ ​ 171,113 ​ 4.00 ​ ​ 213,891 ​ 5.00 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Required ​ For Capital Adequacy ​ To be Well Capitalized ​ ​ ​ ​ ​ ​ ​ ​ For Capital Adequacy ​ Purposes Plus Capital ​ Under Prompt Corrective ​ ​ ​ Actual ​ Purposes ​ Conservation Buffer ​ Action Regulations ​ (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio ​ Amount Ratio ​ December 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company (Consolidated): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Risk-based Capital ​ $ 499,554 ​ 15.55 % $ 256,966 ​ 8.00 % $ 337,268 ​ 10.50 % ​ N/A ​ N/A ​ Tier 1 Risk-based Capital ​ ​ 367,161 ​ 11.43 ​ ​ 192,725 ​ 6.00 ​ ​ 273,027 ​ 8.50 ​ ​ N/A ​ N/A ​ Common Equity Tier 1 Capital ​ ​ 300,647 ​ 9.36 ​ ​ 144,543 ​ 4.50 ​ ​ 224,845 ​ 7.00 ​ ​ N/A ​ N/A ​ Tier 1 Leverage Ratio ​ ​ 367,161 ​ 10.82 ​ ​ 135,723 ​ 4.00 ​ ​ 135,723 ​ 4.00 ​ ​ N/A ​ N/A ​ Bank: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Risk-based Capital ​ $ 415,848 ​ 12.94 % $ 257,005 ​ 8.00 % $ 337,319 ​ 10.50 % $ 321,256 ​ 10.00 % Tier 1 Risk-based Capital ​ ​ 375,688 ​ 11.69 ​ ​ 192,754 ​ 6.00 ​ ​ 273,068 ​ 8.50 ​ ​ 257,005 ​ 8.00 ​ Common Equity Tier 1 Capital ​ ​ 375,688 ​ 11.69 ​ ​ 144,565 ​ 4.50 ​ ​ 224,879 ​ 7.00 ​ ​ 208,816 ​ 6.50 ​ Tier 1 Leverage Ratio ​ ​ 375,688 ​ 11.09 ​ ​ 135,508 ​ 4.00 ​ ​ 135,508 ​ 4.00 ​ ​ 169,386 ​ 5.00 ​ ​ The Company and the Bank are subject to the rules of the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act.
The Company’s and the Bank’s actual capital amounts and ratios are as of the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Required ​ For Capital Adequacy ​ To be Well Capitalized ​ ​ ​ ​ ​ ​ ​ ​ For Capital Adequacy ​ Purposes Plus Capital ​ Under Prompt Corrective ​ ​ ​ Actual ​ Purposes ​ Conservation Buffer ​ Action Regulations ​ (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio ​ Amount Ratio ​ December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company (Consolidated): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Risk-based Capital ​ $ 570,770 ​ 13.97 % $ 326,872 ​ 8.00 % $ 429,019 ​ 10.50 % ​ N/A ​ N/A ​ Tier 1 Risk-based Capital ​ ​ 440,947 ​ 10.79 ​ ​ 245,154 ​ 6.00 ​ ​ 347,301 ​ 8.50 ​ ​ N/A ​ N/A ​ Common Equity Tier 1 Capital ​ ​ 374,433 ​ 9.16 ​ ​ 183,865 ​ 4.50 ​ ​ 286,013 ​ 7.00 ​ ​ N/A ​ N/A ​ Tier 1 Leverage Ratio ​ ​ 440,947 ​ 9.57 ​ ​ 184,383 ​ 4.00 ​ ​ 184,383 ​ 4.00 ​ ​ N/A ​ N/A ​ Bank: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Risk-based Capital ​ $ 554,269 ​ 13.58 % $ 326,528 ​ 8.00 % $ 428,568 ​ 10.50 % $ 408,160 ​ 10.00 % Tier 1 Risk-based Capital ​ ​ 503,787 ​ 12.34 ​ ​ 244,896 ​ 6.00 ​ ​ 346,936 ​ 8.50 ​ ​ 326,528 ​ 8.00 ​ Common Equity Tier 1 Capital ​ ​ 503,787 ​ 12.34 ​ ​ 183,672 ​ 4.50 ​ ​ 285,712 ​ 7.00 ​ ​ 265,304 ​ 6.50 ​ Tier 1 Leverage Ratio ​ ​ 503,787 ​ 10.95 ​ ​ 184,037 ​ 4.00 ​ ​ 184,037 ​ 4.00 ​ ​ 230,047 ​ 5.00 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Required ​ For Capital Adequacy ​ To be Well Capitalized ​ ​ ​ ​ ​ ​ ​ ​ For Capital Adequacy ​ Purposes Plus Capital ​ Under Prompt Corrective ​ ​ ​ Actual ​ Purposes ​ Conservation Buffer ​ Action Regulations ​ (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio ​ Amount Ratio ​ December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company (Consolidated): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Risk-based Capital ​ $ 536,352 ​ 13.15 % $ 326,190 ​ 8.00 % $ 428,125 ​ 10.50 % ​ N/A ​ N/A ​ Tier 1 Risk-based Capital ​ ​ 409,092 ​ 10.03 ​ ​ 244,643 ​ 6.00 ​ ​ 346,577 ​ 8.50 ​ ​ N/A ​ N/A ​ Common Equity Tier 1 Capital ​ ​ 342,578 ​ 8.40 ​ ​ 183,482 ​ 4.50 ​ ​ 285,417 ​ 7.00 ​ ​ N/A ​ N/A ​ Tier 1 Leverage Ratio ​ ​ 409,092 ​ 9.55 ​ ​ 171,368 ​ 4.00 ​ ​ 171,368 ​ 4.00 ​ ​ N/A ​ N/A ​ Bank: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Risk-based Capital ​ $ 508,760 ​ 12.47 % $ 326,288 ​ 8.00 % $ 428,253 ​ 10.50 % $ 407,860 ​ 10.00 % Tier 1 Risk-based Capital ​ ​ 460,404 ​ 11.29 ​ ​ 244,716 ​ 6.00 ​ ​ 346,681 ​ 8.50 ​ ​ 326,288 ​ 8.00 ​ Common Equity Tier 1 Capital ​ ​ 460,404 ​ 11.29 ​ ​ 183,537 ​ 4.50 ​ ​ 285,502 ​ 7.00 ​ ​ 265,109 ​ 6.50 ​ Tier 1 Leverage Ratio ​ ​ 460,404 ​ 10.76 ​ ​ 171,113 ​ 4.00 ​ ​ 171,113 ​ 4.00 ​ ​ 213,891 ​ 5.00 ​ ​ The Company and the Bank are subject to the rules of the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFinancial Statements and Supplementary Data ​ 82 ​ ​ ​ Reports of Independent Registered Public Accounting Firm (Auditor Firm ID: 655 ) ​ 82 ​ ​ ​
Biggest changeFinancial Statements and Supplementary Data ​ 81 ​ ​ ​ Reports of Independent Registered Public Accounting Firm (CliftonLarsonAllen LLP, Auditor Firm ID: 655) ​ 81 ​ ​ ​ Reports of Independent Registered Public Accounting Firm ( RSM US LLP , Auditor Firm ID: 49 ) ​ 82 ​ ​ ​
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 50 ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 80 ​ ​ ​ Item 8.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 49 ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 78 ​ ​ ​ Item 8.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe Company has entered into certain hedging transactions including interest rate swaps and caps, which are designed to lessen elements of the Company’s interest rate exposure. Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions.
Biggest changeFor example, the Company occasionally uses special offers on deposits to alter the interest rates and terms associated with interest bearing liabilities. 78 Table of Contents The Company has entered into certain hedging transactions including interest rate swaps and caps, which are designed to lessen elements of the Company’s interest rate exposure.
Potential changes to the Company’s net interest income in hypothetical rising and declining rate scenarios calculated as of December 31, 2022 are presented in the table below.
Potential changes to the Company’s net interest income in hypothetical rising and declining rate scenarios calculated as of December 31, 2023 and 2022, are presented in the table below.
The simulation model also incorporates various other assumptions, which the Company believes are reasonable but which may have a significant impact on results, such as: (1) the timing of changes in interest 80 Table of Contents rates, (2) shifts or rotations in the yield curve, (3) re-pricing characteristics for market-rate-sensitive instruments, (4) differing sensitivities of financial instruments due to differing underlying rate indices, (5) varying loan prepayment speeds for different interest rate scenarios, (6) the effect of interest rate limitations in assets, such as floors and caps, and (7) overall growth and repayment rates and product mix of assets and liabilities.
The simulation model also incorporates various other assumptions, which the Company believes are reasonable but which may have a significant impact on results, such as: (1) the timing of changes in interest rates, (2) shifts or rotations in the yield curve, (3) re-pricing characteristics for market-rate-sensitive instruments, (4) differing sensitivities of financial instruments due to differing underlying rate indices, (5) varying loan prepayment speeds for different interest rate scenarios, (6) the effect of interest rate limitations in assets, such as floors and caps, and (7) overall growth and repayment rates and product mix of assets and liabilities.
Finally, these simulation results do not contemplate all the actions that the Company may undertake in response to potential or actual changes in interest rates, such as changes to the Company’s loan, investment, deposit, or funding strategies. ​ 81 Table of Contents
Finally, these simulation results do not contemplate all the actions that the Company may undertake in response to potential or actual changes in interest rates, such as changes to the Company’s loan, investment, deposit, or funding strategies. ​ 80 Table of Contents
In the event of an immediate 300 basis point decrease in interest rates, the Company would experience a 1.74% increase in net interest income. The results of this simulation analysis are hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted.
In the event of an immediate 300 basis point decrease in interest rates, the Company would experience an 8.86% increase in net interest income. The results of this simulation analysis are hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted.
An increasing interest rate environment could reduce projected net interest income if deposits and other short-term liabilities re-price faster than expected or re-price faster than the Company’s assets.
An increasing interest rate environment could reduce projected net interest income if deposits and other 79 Table of Contents short-term liabilities re-price faster than expected or re-price faster than the Company’s assets.
The Company manages the interest rate risk associated with interest bearing liabilities by managing the interest rates and terms associated with wholesale borrowings and deposits from customers which the Company relies on for funding. For example, the Company occasionally uses special offers on deposits to alter the interest rates and terms associated with interest bearing liabilities.
The Company manages the interest rate risk associated with interest bearing liabilities by managing the interest rates and terms associated with wholesale borrowings and deposits from customers which the Company relies on for funding.
The Company utilizes cash flow hedges to manage interest rate exposure for the brokered deposit and wholesale borrowing portfolios. At December 31, 2022 and December 31, 2021, these cash flow hedges had a total notional amount of $288.0 million and $235.0 million, respectively.
Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions. The Company utilizes cash flow hedges to manage interest rate exposure for the brokered deposit and wholesale borrowing portfolios. At December 31, 2023 and 2022, these cash flow hedges had a total notional amount of $308.0 million and $288.0 million, respectively.
In the current interest rate environment, a downward shift of the yield curve of 400 basis points does not provide meaningful results and thus is not presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ December 31, 2022 ​ December 31, 2021 Change (basis points) ​ Forecasted ​ Percentage ​ Forecasted ​ Percentage in Interest Rates Net Interest ​ Change Net Interest ​ Change (12-Month Projection) ​ Income ​ from Base ​ Income ​ from Base +400 ​ $ 129,621 ​ (4.84) % ​ $ 116,256 ​ 5.75 % +300 ​ 131,357 ​ (3.57) ​ ​ 114,328 ​ 4.00 ​ +200 ​ 133,089 ​ (2.30) ​ ​ 112,288 ​ 2.15 ​ +100 ​ 134,591 ​ (1.20) ​ ​ 110,539 ​ 0.55 ​ 0 ​ 136,220 ​ — ​ ​ 109,930 ​ — ​ −100 ​ ​ 137,641 ​ 1.04 ​ ​ ​ 106,955 ​ (2.71) ​ −200 ​ ​ 137,968 ​ 1.28 ​ ​ ​ NM ​ NM ​ −300 ​ ​ 138,587 ​ 1.74 ​ ​ ​ NM ​ NM ​ ​ The table above indicates that as of December 31, 2022, in the event of an immediate and sustained 400 basis point increase in interest rates, the Company would experience a 4.84% decrease in net interest income.
In the current interest rate environment, a downward shift of the yield curve of 400 basis points does not provide meaningful results and thus is not presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ December 31, 2023 ​ December 31, 2022 Change (basis points) ​ Forecasted ​ Percentage ​ Forecasted ​ Percentage in Interest Rates Net Interest ​ Change Net Interest ​ Change (12-Month Projection) ​ Income ​ from Base ​ Income ​ from Base +400 ​ $ 118,597 ​ (2.39) % ​ $ 129,621 ​ (4.84) % +300 ​ 118,983 ​ (2.08) ​ ​ 131,357 ​ (3.57) ​ +200 ​ 119,395 ​ (1.74) ​ ​ 133,089 ​ (2.30) ​ +100 ​ 119,916 ​ (1.31) ​ ​ 134,591 ​ (1.20) ​ 0 ​ 121,504 ​ — ​ ​ 136,220 ​ — ​ −100 ​ ​ 125,138 ​ 2.99 ​ ​ ​ 137,641 ​ 1.04 ​ −200 ​ ​ 128,643 ​ 5.87 ​ ​ ​ 137,968 ​ 1.28 ​ −300 ​ ​ 132,269 ​ 8.86 ​ ​ ​ 138,587 ​ 1.74 ​ ​ The table above indicates that as of December 31, 2023, in the event of an immediate and sustained 400 basis point increase in interest rates, the Company would experience a 2.39% decrease in net interest income.

Other BWB 10-K year-over-year comparisons