Summary of Bridgewater Bancshares Q4 2025 Earnings Call

1Key Financial Results and Metrics

Net Interest Margin (NIM): Expanded by 12 basis points to 2.75%, with expectations to reach 3% by the end of 2026, ahead of previous guidance.

Net Interest Income: Increased by 5% quarter-over-quarter, driven by margin expansion and loan growth.

Core Deposits: Grew by 9% in Q4 and 8% for the full year, supporting a loan growth of 9% in Q4 and 11% for the year.

Tangible Book Value: Increased by 16.5% annualized in Q4 and 15.3% year-over-year.

Adjusted Return on Assets (ROA): Just under 1% in Q4.

Expenses: Controlled growth at 9.5% annualized in Q4, with expectations to align future growth with asset growth.

2Strategic Updates and Business Highlights

Branch Expansion: Closed one of two branches from the First Minnetonka City Bank acquisition; opening a new branch in Lake Elmo in early 2026.

Market Position: Bridgewater is now the second-largest locally led bank in the Twin Cities, positioning itself well amid M&A disruptions.

Affordable Housing Focus: Continued growth in the affordable housing vertical, with a 27% annualized increase in related loans in Q4.

Technology Investments: Ongoing modernization of core banking systems to enhance efficiency and client service.

3Forward Guidance and Outlook

Loan Growth: Anticipated to remain in the high single digits for 2026, contingent on core deposit growth.

NIM Expectations: Optimistic outlook for achieving a 3% NIM by the end of 2026, assuming no additional rate cuts.

Expense Management: Expected to grow in line with assets, returning to historical norms after 2025's higher growth due to acquisition costs.

4Bad News, Challenges, or Points of Concern

Asset Quality: A modest uptick in nonperforming assets (NPAs) to 0.41% of assets and $1.2 million in net charge-offs, although overall credit quality remains strong.

Increased Competition: Noted heightened competition in the Twin Cities impacting loan spreads and deposit rates, although management views this as a positive for the banking ecosystem.

Seasonality in Deposits: Q1 typically sees lower deposit balances due to seasonal trends, which could affect growth metrics.

5Notable Q&A Insights

Deposit Growth: Q4 typically sees seasonal highs, with expectations for modest growth in Q1 and Q2 due to historical patterns.

Loan Repricing: The cadence of loan repricing is expected to be steady, contributing to NIM improvements.

Hiring Strategy: While the existing team can leverage operational efficiencies, management remains open to opportunistic hiring in response to market conditions.

Affordable Housing Growth: Management is optimistic about the growth potential in the affordable housing sector, which is expected to outpace overall portfolio growth.

M&A Outlook: Management continues to explore potential tuck-in acquisitions but emphasizes organic growth as the primary focus. Overall, Bridgewater Bancshares closed 2025 on a strong note with solid financial performance and strategic positioning for future growth, despite facing some challenges related to competition and asset quality.