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Bridgewater Bancshares Inc (BWB)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered steady profitability with adjusted diluted EPS of $0.39 and diluted EPS of $0.38; net income was $11.6M and net interest income rose 5% QoQ to $34.1M, supported by 6.6% annualized loan growth and 11.5% annualized core deposit growth .
  • Net interest margin expanded 1 bp QoQ to 2.63% (core NIM +3 bps to 2.52%) amid higher earning asset yields, partially offset by June sub-debt issuance and higher cash balances; management sees a path to ~3.00% NIM by early 2027 .
  • Asset quality remained strong: NPAs/Assets stayed at 0.19%; annualized net charge-offs were 0.03%; ACL/Loans was 1.34% .
  • Revenue beat consensus while EPS was roughly in line: Revenue (S&P Global) was $35.05M vs $34.20M consensus; Adjusted EPS was $0.39 vs $0.393 consensus* [GetEstimates].
  • Catalysts: accelerating NIM expansion in a rates-down environment (deposit repricing after the September cut), robust loan pipelines (with deals slid from Q3 to Q4), and affordable housing momentum; expense normalization expected post systems conversion .

What Went Well and What Went Wrong

What Went Well

  • Net interest income growth: +$1.6M QoQ to $34.1M driven by earning asset growth and loan/securities repricing .
  • Core funding momentum: core deposits +$92.1M QoQ (11.5% annualized), improving funding mix (non-interest-bearing up ~$35M; brokered down ~$36M) .
  • Strategic execution: successful FMCB systems conversion and launch of retail & SMB online banking; tangible book value per share up 20% annualized QoQ to $14.93 .

“Bridgewater produced another quarter of strong net interest income growth as we continued to execute on our strategic priority of gaining both loan and deposit market share.” – Jerry Baack, CEO .

What Went Wrong

  • Noninterest income volatility: fell to $2.1M (-$1.6M QoQ) on lower swap fees, gains on securities, and FHLB prepayment income .
  • Efficiency ratio deterioration: reported efficiency rose to 54.7% (adjusted 53.2%) on higher salaries, marketing, and consulting tied to growth/transition .
  • Credit migration: substandard loans increased to $58.1M (from $45.0M), primarily one multifamily loan migrating from special mention; watch/special mention declined QoQ .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Net Operating Revenue ($USD Thousands)$27,149 $35,304 $36,093
Net Interest Income ($USD Thousands)$25,599 $32,452 $34,091
Noninterest Income ($USD Thousands)$1,522 $3,627 $2,061
Diluted EPS ($)$0.27 $0.38 $0.38
Adjusted Diluted EPS ($)$0.28 $0.37 $0.39
Net Interest Margin (%)2.24 2.62 2.63
Core Net Interest Margin (%)2.16 2.49 2.52
Efficiency Ratio (%)58.0 52.6 54.7
Cost of Total Deposits (%)3.58 3.16 3.19

Estimates comparison (S&P Global values*)

Metric (Q3 2025)ConsensusActualSurprise
Adjusted EPS ($)0.393*0.39 -0.003*
Revenue ($USD Millions)34.20*35.05*+0.85* (≈ +2.5%)*

Values retrieved from S&P Global.

Segment/Portfolio Breakdown (Loans, $USD Thousands)

Loan CategoryQ3 2024Q2 2025Q3 2025
1-4 Family Mortgage$421,179 $474,269 $487,297
Multifamily$1,379,814 $1,555,731 $1,578,223
CRE Nonowner Occupied$1,032,142 $1,137,007 $1,158,622
CRE Owner Occupied$182,239 $192,837 $192,966
Construction & Land Development$118,596 $136,438 $159,991
Commercial$493,403 $549,259 $533,476
Leases— $44,817 $43,186
Consumer & Other$12,395 $16,346 $19,054
Total Loans, Gross$3,685,590 $4,145,799 $4,214,554

Key KPIs

KPIQ3 2024Q2 2025Q3 2025
Deposits ($USD Thousands)$3,747,442 $4,236,742 $4,292,764
Core Deposits / Total Deposits (%)71.5 75.2 76.4
Loan-to-Deposit Ratio (%)98.3 97.9 98.2
NPAs / Total Assets (%)0.19 0.19 0.19
Net Charge-offs to Avg Loans (Annualized, %)0.10 0.00 0.03
ACL / Loans (%)1.38 1.35 1.34
CET1 Ratio (Consolidated, %)9.79 9.03 9.08
Tangible Book Value / Share ($)$13.96 $14.21 $14.93

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest MarginThrough early 2027Slight expansion in Q3, more in Q4; ongoing expansion with repricing Path to ~3.00% NIM by early 2027; more meaningful expansion in Q4 and into 2026 Clarified/extended long-term target
Loan GrowthNear term (H2 2025)Mid-to-high single digits in H2; pipelines near 3-year highs Mid-to-high single digits near term; deals slid from Q3 to Q4 provide a head start Maintained; timing tailwind
Deposit CostsNear term (Q4 2025)Stabilizing; potential declines with rate cuts; $1.6B tied to short-term rates Decline expected in Q4; $1.7B funding tied to short-term, $1.4B immediately adjustable repriced lower post September cut More explicit near-term decline
Noninterest Expense2025 to 2026Elevated in 2025 due to conversion; growth in line with assets over time Post-conversion normalization; expenses to grow in line with asset growth Maintained; conversion completed
Capital/RepurchasesNear term$13.1M remaining; evaluate based on valuation and growth opportunities $13.1M remaining; no Q3 repurchases; capital levels to hold relatively stable near term Maintained; paused in Q3
Branch footprintLate 2025 / Early 2026FMCB integration in progress Close one acquired branch in Dec 2025; open new de novo in east metro in early 2026 New actions disclosed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
NIM expansion pathPace moderating Q2; slight Q3 expansion; accretion benefit diminishing Full quarter benefit from Sept cut; path to ~3% by early 2027 Improving trajectory
Core deposit growth+8.3% annualized in Q1; +2.1% annualized Q2; not always linear +11.5% annualized QoQ; mix improved (NIB up, brokered down) Strengthening
Loan growth & pipelinesQ1 +15.9% annualized; Q2 +12.5% annualized; pipelines near 3-year highs +6.6% annualized; several deals slid to Q4; mid-to-high single digits maintained Robust; timing shift to Q4
Affordable housing verticalPortfolio $581M (+15% YoY) by Q2; national expansion $611M portfolio; 27% annualized YTD growth; deposit relationships positive Expanding
Twin Cities M&A disruptionExpected opportunities for talent and clients (Bremer/ONB) Continues to provide market share gains and pipelines Tailwind persists
Expense trajectoryElevated in 2025 for conversion; normalization expected Redundant costs largely behind; normalization going forward Normalizing
Asset quality & office exposureOne CBD office to substandard/nonaccrual in Q1; specific reserve; limited overall office exposure One multifamily moved to substandard; office reserve unchanged; NPAs steady Stable with isolated items
Securities/ALMQ2 gains from FMCB portfolio sales; duration and yield optimization Higher securities yields; liability-sensitive positioning for cuts Opportunistic, supportive

Management Commentary

  • Strategic focus: “Our liability-sensitive balance sheet remains well positioned to benefit from the September interest rate cut and a rates-down environment.” – Jerry Baack .
  • Growth positioning: “We are optimistic about our ability to see more meaningful [margin] expansion in the coming quarters… path to get to a 3% margin by early 2027.” – Joe Chybowski .
  • Loan/Deposit outlook: “Loan pipelines remained near three-year highs… opportunities from M&A disruption… core deposits grew 11.5% annualized.” – Management remarks .
  • Affordable housing: “We continued to have success in our national affordable housing vertical… $611M… 27% annualized YTD growth.” – Katie Morrell .

Q&A Highlights

  • NIM trajectory cadence: Management outlined a steady path (2–3 bps/month) toward ~3.00% by early 2027, front-loaded deposit relief from anticipated cuts and steady asset repricing through 2026 .
  • Credit implications of cuts: No quantified model shared; proactive work on repricing-risk loans; expected borrower relief as rates decline .
  • Merger costs and expense outlook: Q3 included last quarter of redundant expenses; going forward, expenses to grow in line with assets .
  • Affordable housing expansion comfort: Long history since ~2007; high-quality sponsors; relationship deposits augment funding; short-term, churn-friendly structures .
  • Growth hiring focus: Offensive posture for production and selective new verticals; monitoring competitive dynamics post local M&A .

Estimates Context

  • Revenue beat: Revenue of $35.05M vs $34.20M consensus; positive surprise of ~$0.85M (~2.5%)*.
  • EPS in line/slight miss: Adjusted EPS of $0.39 vs $0.393* consensus; negligible delta*.
  • Street tone: No consolidated EBITDA or rating text available from S&P Global for this quarter*.

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Liability-sensitive balance sheet and immediate repricing on $1.4B of deposits post September cut set up Q4 deposit cost declines and NIM expansion from here .
  • Visible NIM trajectory (~3% by early 2027) alongside steady asset repricing (fixed and adjustable maturities) and strong loan pipelines supports sustained net interest income growth .
  • Affordable housing vertical is a differentiated growth engine (portfolio $611M, 27% annualized YTD), with accompanying relationship deposits enhancing core funding .
  • Expense normalization post systems conversion improves operating leverage; efficiency ratio should trend with asset growth after Q3 step-up .
  • Asset quality remains a strength (NPAs 0.19%, net charge-offs 0.03%), with isolated credit migrations monitored; reserve levels (ACL/Loans 1.34%) are conservative vs peers .
  • Market-share tailwinds from Twin Cities M&A disruption continue to provide client and talent acquisition opportunities, supporting both deposits and lending .
  • Near-term trading: revenue beat and clearer NIM path could be constructive into Q4; watch noninterest income lumpiness (swap fees rebound expected in Q4) and expense normalization execution .