Executive Summary

BWB delivered a clean beat: diluted EPS $0.31 vs $0.29 consensus*, and “revenue” (S&P definition) $30.79M vs $29.87M consensus*, driven by 19 bps NIM expansion (2.51% TE) and 12% q/q net interest income growth. Management highlighted lower deposit costs, higher loan yields, and purchase accounting accretion as key drivers .
Core deposit momentum and loan growth accelerated: core deposits up 8.3% annualized and gross loans up 15.9% annualized q/q; pipelines at the highest level since 2022, supporting a more “offensive-minded” posture on growth .
Asset quality remained strong (0.00% annualized NCOs) though nonperforming assets rose to 0.20% of assets due to one CBD office loan migrating to nonaccrual—an issue previously flagged .
Forward outlook intact: management expects continued NIM expansion (pace moderating in Q2), mid- to high-single-digit FY25 loan growth (potential to outperform), and high-teens FY25 expense growth ex-merger costs; margin sensitivity remains positively levered to further Fed cuts .

What Went Well and What Went Wrong

What Went Well
- NIM expansion and NII growth: NIM (TE) rose to 2.51% (+19 bps q/q) and net interest income increased 12% q/q on lower deposit costs, higher loan yields, and 8 bps of purchase accounting accretion .
- Strong balance sheet momentum: core deposits +8.3% annualized and gross loans +15.9% annualized q/q; management cited the ability to be “more offensive-minded” on lending with pipelines at 2022 highs .
- Operating leverage improved: adjusted efficiency ratio improved to 53.7% from 55.2% q/q as revenue momentum outpaced expense growth .
What Went Wrong
- NPA uptick: nonperforming assets/total assets increased to 0.20% from 0.01% q/q due to one CBD office credit moved to nonaccrual; a specific reserve was established in Q1 .
- Higher expenses: noninterest expense rose to $18.1M (+$1.3M q/q) driven by salaries/benefits, full-quarter run-rate from the FMCB acquisition, and $565k of merger-related costs .
- Noninterest income normalized: noninterest income declined to $2.1M (-$0.45M q/q) on lower letter of credit and swap fees, partially offset by investment advisory fees .

Financial Results

Q1 2025 vs Street consensus (S&P Global definitions)

Metric	Consensus*	Actual	Surprise
EPS (diluted)	$0.29*	$0.31	+$0.02 (Beat)
Revenue ($)	$29.87M*	$30.79M*	+$0.92M (Beat)

Values marked with * retrieved from S&P Global.

Quarterly P&L and profitability (oldest → newest)

Metric	Q1 2024	Q4 2024	Q1 2025
Net Interest Income ($)	$24.63M	$26.97M	$30.21M
Noninterest Income ($)	$1.55M	$2.53M	$2.08M
Net Operating Revenue ($)	$26.09M	$29.50M	$32.29M
Provision for Credit Losses ($)	$0.75M	$2.18M	$1.50M
Net Income ($)	$7.83M	$8.20M	$9.63M
Diluted EPS ($)	$0.24	$0.26	$0.31
Adjusted Diluted EPS ($)	$0.24	$0.27	$0.32
NIM (TE) (%)	2.24	2.32	2.51
Core NIM (TE) (%)	2.18	2.24	2.37
Efficiency Ratio (%)	58.2	56.8	55.5
Adjusted Efficiency Ratio (%)	58.2	55.2	53.7

Balance sheet and asset quality (oldest → newest)

Metric	Q1 2024	Q4 2024	Q1 2025
Gross Loans ($)	$3.78B	$3.87B	$4.02B
Total Deposits ($)	$3.81B	$4.09B	$4.16B
Loan/Deposit Ratio (%)	99.4	94.7	96.6
Cost of Total Deposits (%)	3.32	3.40	3.18
NPA / Assets (%)	0.01	0.01	0.20
Net Charge-offs / Avg Loans (ann.) (%)	0.00	0.03	0.00
ACL / Total Loans (%)	1.36	1.35	1.34
CET1 Ratio (%)	9.21	9.08	9.03
Tangible Book Value/Share ($)	$13.20	$13.49	$13.89

Loan portfolio mix (dollars in thousands; oldest → newest)

Category	Q1 2024	Q4 2024	Q1 2025
Multifamily	$1,389,345	$1,425,610	$1,534,747
CRE Nonowner Occupied	$1,035,702	$1,083,108	$1,055,157
1–4 Family Mortgage	$417,773	$474,383	$479,461
Construction & Land Dev	$200,970	$97,255	$128,073
Commercial	$483,069	$497,662	$528,801
Leases	—	$44,291	$43,958
Total Gross Loans	$3,784,205	$3,868,514	$4,020,076

KPIs and operating drivers (Q/Q, Y/Y context)

Core deposits +$63.7M q/q (8.3% annualized); brokered deposits $831.5M vs $825.8M q/q as mix improves over time .
Purchase accounting accretion contributed 8 bps to NIM; core loan yield rose to 5.50% (+3 bps q/q) .
Preferred dividend declared: $36.72 per share ($0.3672 per depositary share) on Series A, payable June 2, 2025 (BWBBP) .

Guidance Changes

Metric	Period	Previous Guidance (Q4’24 call)	Current Guidance (Q1’25 call)	Change
Loan Growth	FY 2025	Mid- to high-single digits; maintain L/D 95–105%	Mid- to high-single digits with potential to outperform given strong start and pipelines	Maintained/Upbeat bias
NIM	2025	Modest expansion; 1–2 bps/quarter accretion included	Continued expansion but pace moderates in Q2; less accretion benefit later in 2025; rate cuts would add upside	Maintained with pacing nuance
Net Interest Income	2025	Low double-digit growth expectation tied to asset growth and repricing	Continued NII growth focus with margin expansion + balance sheet growth	Maintained
Noninterest Expense (ex-merger)	FY 2025	High-teens growth to support larger base and tech/integration	High-teens growth reiterated; Q1 included $565k merger costs; eff. ratio trending low-50s	Maintained
Provision	2025	Dependent on loan growth and asset quality; potential add for unfunded commitments	Growth-driven; remained well-reserved at 1.34% of loans	Maintained
Capital/Buybacks	Near-term	CET1 >9%; buybacks opportunistic post-acquisition	CET1 ~9%; ~$14.7M remaining authorization; repurchased ~$0.6M in Q1; evaluate vs growth & M&A	Maintained

Earnings Call Themes & Trends

Topic	Q3 2024 (Q-2)	Q4 2024 (Q-1)	Q1 2025 (Current)	Trend
NIM trajectory & deposit costs	NIM stable; deposit costs beginning to decline post Sept cut	NIM +8 bps; deposit costs -18 bps to 3.40%	NIM +19 bps to 2.51%; deposit costs down to 3.18%; accretion +8 bps; March NIM 2.53%	Improving
Loan growth & pipeline	Elevated payoffs; flat outlook ex acquisition; pipeline rebuilt	Demand uptick; pipelines near 2-yr highs	15.9% ann. loan growth; pipeline highest since 2022; originations mid-to-high 6% yields	Improving
Multifamily & affordable housing	Positive Twin Cities trends; bullish stance	Continued strength; construction commitments rising	Multifamily growth led by affordable housing; ~$600M portfolio, +13% y/y	Improving
Office CRE	CBD loan to nonaccrual; sale planned	One CBD loan resolved/sold; 3 CBD loans remain	One CBD moved to nonaccrual; specific reserve set; limited exposure (5% of loans)	Mixed (idiosyncratic)
M&A	FMCB approval expected Q4	FMCB closed mid-Dec; integration underway	Integration on track; monitoring opportunities; nothing imminent	Stable
Tariffs/macro	—	—	Management monitoring tariff-related uncertainty; client outreach ongoing	Emerging risk
Technology initiatives	CRM launched; investments continue	Systems conversion planned; tech investments ongoing	New retail/small business online banking; acquisition systems conversion in 2025	Improving

Management Commentary

“Adjusted EPS of $0.32… highlighted by robust balance sheet growth and net interest margin expansion… pipelines to the highest level since 2022.” — CEO Jerry Baack .
“Margin increased 19 bps to 2.51%… driven by lower deposit pricing… loan yields… accretion (8 bps). Expect expansion to moderate in Q2; less accretion impact over the year.” — CFO Joe Chybowski .
“Core deposits were up 8.3% annualized… we’ve generated $368M of core deposit growth over the past 3 quarters.” — CBO Nick Place .
“One CBD office loan moved to nonaccrual… we remain well reserved at 1.34% of loans… overall credit profile remains strong.” — CCO Jeff Shellberg .
“Tangible book value bounced back, up 12% annualized; opportunistically repurchased about $600,000 of common stock.” — CEO Jerry Baack .

Q&A Highlights

Margin cadence and deposit costs: March NIM 2.53% vs 2.51% quarterly; deposit costs 3.17% in March vs 3.18% quarterly; expect continued expansion but slower pace as deposit costs stabilize; rate cuts would help .
Loan growth pacing: Growth was relatively even across Q1 (slightly back-end loaded); new originations around 6.5% yields; competition tightening spreads modestly .
Office credit: The CBD nonaccrual likely a longer workout; specific reserve allocated in Q1 .
Buybacks vs growth: Repurchases remain opportunistic; capital prioritized for growth and potential M&A .
Rate sensitivity: $1.6B of funding explicitly linked to short-term rates—more cuts = more NIM upside; balance sheet positioned to benefit .

Estimates Context

Q1 2025 EPS: $0.31 actual vs $0.29 consensus*; Revenue (S&P definition = NII + noninterest income − provision): $30.79M actual vs $29.87M consensus*. Small analyst coverage (3 estimates for EPS and revenue)*.
Implication: The beat came from faster-than-expected NIM expansion and lower deposit costs; with pipelines strong and incremental deposit repricing still available, out-quarter NII/earnings estimates may drift higher, though management guided to a moderating pace of NIM expansion in Q2 .
Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Positive inflection: Second consecutive quarter of meaningful NIM expansion and double-digit q/q NII growth signal operating leverage returning to the model .
Growth runway: Core deposits, loan pipelines, and affordable housing vertical support sustained loan growth within or above mid- to high-single-digit FY25 target .
Credit risk contained: NPA uptick is idiosyncratic to one CBD office loan; reserves (1.34% of loans) and low NCOs underscore portfolio resilience .
Estimate bias: With another beat and management signaling continued (if slower) margin expansion, near-term EPS/NII revisions skew upward absent adverse macro surprises* .
Watch items: Q2 NIM cadence (less accretion, stabilizing deposit costs), payoff activity vs originations, and any tariff-related demand caution flagged by clients .
Capital flexibility: CET1 ~9% and remaining repurchase authorization ($14.7M) provide optionality; buybacks remain secondary to growth and potential M&A .