Bridgewater Bancshares Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Bridgewater Bancshares Inc. on March 1, 2021. The filing discloses the entry into a material definitive agreement and the creation of a direct financial obligation. The Company is incorporated in Minnesota and its common stock trades on The Nasdaq Stock Market LLC under the symbol "BWB".
Key Financial Metrics and Agreement Terms
The filing details a new revolving line of credit with the following terms:
- Facility Amount: Maximum principal of $25.0 million.
- Lender: ServisFirst Bank.
- Maturity Date: February 28, 2023.
- Interest Rate: Variable, equal to the greater of the Wall Street Journal Prime Rate or a floor of 3.85%.
- Non-Use Fee: 0.20% per annum on the unused portion (waived if at least $12.5 million is outstanding for more than six consecutive months).
- Collateral: First priority security interest in all capital stock of the subsidiary, Bridgewater Bank.
The filing does not provide current revenue, profit, cash flow, or existing debt levels. It only specifies the terms of the new credit facility.
Material Changes and Covenants
The primary material change is the establishment of the $25.0 million credit facility. The agreement imposes specific financial covenants that the Company and its subsidiary bank must maintain:
- Return on Assets (Bank): At least 0.60%.
- Tier 1 Leverage Capital Ratio (Bank): At least 8.5%.
- Non-Performing Assets Ratio (Bank): Non-performing assets to capital and loan/lease loss reserves must be less than 25.0%.
- Interest Reserve (Company): Must maintain a cash interest reserve of at least $2.5 million at the Bank at all times.
Outlook, Risks, and Contingencies
The agreement includes standard events of default, including payment defaults, breaches of representations, and bankruptcy proceedings. Upon an uncured default, the Lender may accelerate payment of all outstanding amounts and exercise remedies regarding the pledged stock of the subsidiary bank. The filing does not contain forward-looking guidance, management commentary on future performance, or discussion of unusual items beyond the new agreement.
Key Facts for Investor Verification
- Verify the Company's current compliance with the new covenants, specifically the 0.60% return on assets and 8.5% Tier 1 leverage ratio.
- Confirm the Company's ability to maintain the required $2.5 million cash interest reserve.
- Review the full text of the Loan and Security Agreement (Exhibit 10.1) for additional restrictive covenants not summarized in the 8-K.
- Monitor the utilization of the $25.0 million line to determine if the non-use fee waiver threshold ($12.5 million outstanding for six months) is met.