BWB — Bridgewater Bancshares, Inc.

Summary of Bridgewater Bancshares, Inc. Q3 2025 Earnings Call

1. Key Financial Results and Metrics:

• Net Interest Income: Increased by $1.6 million, driven by strong loan growth.
• Core Deposits: Grew 11.5% annualized, reflecting a solid relationship banking model.
• Loan Growth: Achieved 6.6% annualized growth in loans, with a year-to-date increase of 12%.
• Net Interest Margin: Expanded by one basis point to 2.63%.
• Tangible Book Value: Increased by 20% annualized in Q3, up 14% year-to-date.
• Asset Quality: Non-performing assets remained low at 0.19% of total assets; net charge-offs were just 0.03% of loans.

2. Strategic Updates and Business Highlights:

• Technology Initiatives: Launched a new retail and small business online banking platform and completed the systems conversion from the acquisition of First Minnetonka City Bank.
• Leadership Changes: Transitioned key leadership roles in preparation for upcoming retirements, ensuring continuity in the bank's culture and strategy.
• Market Positioning: Continued to capitalize on M&A disruptions in the Twin Cities, aiming to grow to a $10 billion bank by 2030.

3. Forward Guidance and Outlook:

• Loan and Deposit Growth: Expect mid to high single-digit loan growth in the near term, supported by a strong pipeline.
• Net Interest Margin: Optimistic about achieving a 3% margin by early 2027, driven by loan yield repricing and declining deposit costs.
• Expense Management: Anticipate a return to normalized expense growth in line with asset growth following the completion of recent systems conversions.

4. Bad News, Challenges, or Points of Concern:

• Margin Pressure: The recent issuance of subordinated debt at a higher rate negatively impacted margins, creating a six basis point drag.
• Fee Income Volatility: Experienced a decline in fee income due to the lumpiness of swap fees, which could affect revenue consistency.
• Credit Risk: Noted some risk rating migration within the loan portfolio, including one multifamily loan moving to substandard status, although overall credit quality remains strong.

5. Notable Q&A Insights:

• Margin Path: Management indicated a steady improvement in margins, with expectations of 2-3 basis points monthly increases, contingent on further Fed rate cuts.
• Credit Health: Management is proactively addressing repricing risks and feels confident about the health of the loan portfolio, despite some borrowers facing challenges.
• Hiring Strategy: Plans to continue hiring across various banking functions, with a focus on enhancing expertise in commercial and industrial lending.

Overall, Bridgewater Bancshares demonstrated solid financial performance in Q3 2025, with strong growth in loans and deposits, while also addressing strategic initiatives and leadership transitions. The outlook remains positive, although there are some challenges regarding margin pressures and fee income volatility.