Bridgewater Bancshares, Inc._2023 Annual Report

Bridgewater Bancshares, Inc. and Subsidiaries Notes to Consolidated Financial Statements (dollars in thousands, except share data)

Note 20: Preferred Stock In 2021, the Company announced the closing of its underwritten public offering of 2,400,000 depositary shares, each representing a 1/100 th interest in a share of the Company’s 5.875% Non-Cumulative Perpetual Preferred Stock, Series A, $0.01 par value per share (“Series A Preferred Stock”). The underwriters of the offering exercised in full their option to purchase 360,000 additional depositary shares to cover over-allotments. As a result, the gross proceeds from the offering totaled $69.0 million. Dividends on the Series A Preferred Stock will be non-cumulative and, if declared, accrue and are payable quarterly, in arrears, at a rate of 5.875% per annum. The Series A Preferred Stock qualifies as additional Tier 1 capital for the purposes of the regulatory capital calculations. The net proceeds from the issuance and sale of the depositary shares, each representing a 1/100 th ownership interest in the Series A Preferred Stock, after deducting $2.5 million of issuance costs, including the underwriting discount and professional service fees, were $66.5 million. Note 21: Regulatory Capital The Company and the Bank are subject to various regulatory requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank must also meet certain specific capital guidelines under the regulatory framework for prompt corrective action. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain minimum amounts and ratios of common equity Tier 1 capital, Tier 1 capital and total capital to risk-weighted assets and of Tier 1 capital to average consolidated assets (referred to as the “leverage ratio”), as defined under the applicable regulatory capital rules. The following tables present the capital amounts and ratios for the Company, on a consolidated basis, and the Bank as of December 31, 2023 and 2022:

Minimum Required For Capital Adequacy

For Capital Adequacy Purposes Plus Capital Conservation Buffer

To be Well Capitalized Under Prompt Corrective Action Regulations

Actual

Purposes

(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 N/A N/A

N/A N/A N/A N/A

440,947 10.79

245,154

6.00

347,301

8.50

Tier 1 Risk-based Capital . . . Common Equity Tier 1 Capital.................. Tier 1 Leverage Ratio . . . . . . Tier 1 Risk-based Capital . . . Common Equity Tier 1 Capital.................. Tier 1 Leverage Ratio . . . . . .

374,433 440,947

9.16 9.57

183,865 184,383

4.50 4.00

286,013 184,383

7.00 4.00

Bank: Total Risk-based Capital. . . . $ 554,269 13.58 % $ 326,528

8.00 % $ 428,568

10.50 % $ 408,160

10.00 %

503,787 12.34

244,896

6.00

346,936

8.50

326,528

8.00

503,787 12.34 503,787 10.95

183,672 184,037

4.50 4.00

285,712 184,037

7.00 4.00

265,304 230,047

6.50 5.00

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