Bridgewater Bancshares (NasdaqCM:BWB) Q4 2025 Earnings call January 28, 2026 09:00 AM ET Company ParticipantsJerry Baack - Chairman and CEOJoseph Chybowski - President and CFOJustin Horstman - VP of Investor RelationsKatie Morrell - Chief Credit OfficerNick Place - Chief Banking OfficerConference Call ParticipantsBrendan Nosal - AnalystJeff Rulis - AnalystNathan Race - AnalystOperatorGood morning, and welcome to the Bridgewater Bankshares 2025 fourth quarter earnings call. My name is Betsy, and I will be yo ...

Financial Data and Key Metrics Changes - The company finished the year strong with robust loan and core deposit growth, net interest margin expansion, and higher fee income [4] - Net interest margin expanded by 12 basis points to 2.75%, with net interest income increasing by 5% during the quarter [6][11] - Core deposits grew by 9% in the fourth quarter and 8% for the full year, while loans grew at an 11% pace [7] - Tangible book value per share grew 16.5% annualized and was up 15.3% year-over-year [7] Business Line Data and Key Metrics Changes - The construction sector was the largest driver of loan growth, particularly in affordable housing, which saw a 27% annualized increase in the fourth quarter [22] - Non-interest income rebounded in the fourth quarter, driven by increases in swap fees and letter of credit fees [16] - The company reported a 9.5% annualized increase in expenses during the fourth quarter, aligning more closely with expected asset growth [17] Market Data and Key Metrics Changes - The company is now the second-largest locally led bank in the Twin Cities, positioning itself well amid M&A disruptions in the market [9] - Core deposit growth was strong, with an annualized growth of 8.8% in the fourth quarter [18] - Loan balances increased by 8.9% annualized in the fourth quarter and 11.4% for the year, indicating robust demand across the market [19] Company Strategy and Development Direction - The company aims to optimize profitable growth while aligning loan growth with core deposit growth and expanding net interest margin [30] - There is a focus on gaining market share in the Twin Cities and expanding expertise in targeted verticals such as nonprofits and SBA [31] - The company plans to enhance its affordable housing vertical and leverage technology investments to support growth and efficiency [31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ability to continue driving net interest income growth and achieving a 3% net interest margin by the end of 2026 [12][29] - The company is monitoring the impact of recent events in the Twin Cities on team members and clients, emphasizing support for the community [9] - Management remains confident in the strength of the asset quality profile despite a modest uptick in non-performing assets and net charge-offs [24] Other Important Information - The company closed one of the two branches added through the First Minnetonka City Bank acquisition due to proximity to other branches, with minimal deposit attrition post-merger [8] - The CET1 ratio increased slightly from 9.08% to 9.17%, indicating a comfortable capital position [27] Q&A Session Summary Question: Can you unpack some of the deposit growth in the quarter? - Management noted that Q4 tends to be a seasonally high watermark for deposit growth, with expectations for modest growth in Q1 and Q2 [36][39] Question: What is the cadence of loan repricing? - Management indicated that loan repricing is well spread out, contributing to the target of achieving a 3% margin [40][41] Question: What are the expectations for expenses in 2026? - Management expects expenses to grow in line with asset growth, targeting high single-digit growth [42] Question: What is the company's appetite for potential acquisitions? - Management continues to engage with local bank owners for potential acquisitions but emphasizes organic growth as the primary focus [55] Question: How does the company view the affordable housing vertical's growth potential? - Management expressed confidence in the affordable housing space, indicating plans for continued growth without specific caps on size [59][60]

Financial Data and Key Metrics Changes - The company finished the year strong with robust loan and core deposit growth, net interest margin expansion, and higher fee income [4] - Net interest margin expanded by 12 basis points to 2.75%, driving strong growth in net interest income [5][11] - Core deposits grew by 9% in Q4 and 8% for the full year, while loans grew at an 11% pace, exceeding initial guidance [6] - Tangible book value per share grew 16.5% annualized and 15.3% year-over-year [7] Business Line Data and Key Metrics Changes - The company saw strong revenue growth from both spread and fee perspectives, with net interest income increasing by 5% during the quarter [11] - Non-interest income rebounded in Q4, driven by increases in swap fees and letter of credit fees [15] - Core deposit growth was 8.8% annualized in Q4, with significant growth in non-interest-bearing deposits [18] Market Data and Key Metrics Changes - The company is now the second-largest locally led bank in the Twin Cities, positioning itself well amid M&A disruptions in the market [9] - The affordable housing vertical saw a 27% annualized increase in balances in Q4, contributing significantly to loan growth [21] Company Strategy and Development Direction - The company aims to optimize profitable growth while aligning loan growth with core deposit growth and expanding net interest margin [30] - There is a focus on gaining market share in the Twin Cities and expanding expertise in targeted verticals, including nonprofits and SBA [31] - The company plans to continue expanding its affordable housing vertical and leverage technology investments for growth and efficiency [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ability to maintain loan growth in the high single digits in 2026, driven by strong core deposit growth [28] - The company expects to achieve a 3% net interest margin by the end of 2026, pulling forward previous expectations [28] - Management acknowledged the challenges in the operating environment but remains confident in the company's resilience and growth prospects [9] Other Important Information - The company closed one of the two branches added through the First Minnetonka City Bank acquisition due to proximity issues, with minimal deposit attrition post-merger [8] - The company is actively monitoring the impact of recent events in the Twin Cities on team members and clients [9] Q&A Session Summary Question: Can you unpack some of the deposit growth in the quarter? - Management noted that Q4 tends to be a seasonally high watermark for deposit growth, with expectations for modest growth in Q1 and Q2 [36] Question: Can you discuss the cadence of loan repricing? - Management indicated that loan repricing is well laid out and not concentrated in any one quarter, supporting the margin target [39] Question: What are the expectations for expenses in 2026? - Management expects expenses to grow in the high single digits, aligning with asset growth [42] Question: What is the company's appetite for potential acquisitions? - Management continues to engage with local bank owners and remains optimistic about future acquisition opportunities while focusing on organic growth [54] Question: How does the company view the affordable housing vertical's growth potential? - Management expressed confidence in the affordable housing space, expecting it to grow as a percentage of the overall loan book [59]

In addition to the results presented in accordance with U.S. General Accepted Accounting Principles ("GAAP"), the Company routinely supplements its evaluation with an analysis of certain non-GAAP financial measures. The Company believes these non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors to help them understand the Company's operating performance and trends, and to facilitate comparisons with the performance of peers. These disclosures sho ...

Core Viewpoint - Bridgewater reported quarterly earnings of $0.44 per share, exceeding the Zacks Consensus Estimate of $0.42 per share, and showing an increase from $0.27 per share a year ago, indicating a positive earnings surprise of +6.02% [1] Financial Performance - The company achieved revenues of $38.84 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 1.93% and up from $29.5 million year-over-year [2] - Over the last four quarters, Bridgewater has exceeded consensus EPS estimates three times and has also topped consensus revenue estimates three times [2] Stock Performance - Bridgewater shares have increased approximately 4.7% since the beginning of the year, outperforming the S&P 500, which gained 1.5% [3] Future Outlook - The company's earnings outlook will be crucial for determining the stock's immediate price movement, with current consensus EPS estimates at $0.41 for the coming quarter and $1.80 for the current fiscal year [4][7] - The Zacks Rank for Bridgewater is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Banks - Northeast industry, to which Bridgewater belongs, is currently ranked in the top 22% of over 250 Zacks industries, suggesting a favorable environment for performance [8]

Exhibit 99.1 Media Contact: Emily Karpenske | Senior Communication Specialist Emily.Karpenske@bwbmn.com | 952.653.0624 Investor Contact: Justin Horstman | VP Investor Relations Justin.Horstman@bwbmn.com | 952.542.5169 January 27, 2026 Bridgewater Bancshares, Inc. Announces Fourth Quarter 2025 Financial Results Fourth Quarter 2025 Highlights Full Year 2025 Highlights (1) Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details. (2) Core deposits are defined as total depo ...

Core Insights - Crude Value Insights provides an investment service and community focused on the oil and natural gas sectors, emphasizing cash flow and the companies that generate it, which leads to value and growth prospects with real potential [1] Group 1 - The service offers subscribers access to a 50+ stock model account, which includes in-depth cash flow analyses of exploration and production (E&P) firms [1] - Subscribers can participate in live chat discussions about the sector, enhancing community engagement and knowledge sharing [1]

Group 1 - Investors in Bridgewater Bancshares, Inc. (BWB) should monitor the stock due to significant activity in the options market, particularly the Jan 16, 2025 $10.00 Put, which has high implied volatility [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant change in the stock's price, potentially due to an upcoming event [2] - Bridgewater Bancshares currently holds a Zacks Rank 3 (Hold) in the Banks - Northeast Industry, which is in the top 26% of the Zacks Industry Rank, with no analysts increasing their earnings estimates for the current quarter and one analyst revising it downwards, leading to a consensus estimate decrease from 44 cents to 42 cents per share [3] Group 2 - The high implied volatility for Bridgewater Bancshares may indicate a developing trading opportunity, as options traders often seek to sell premium on options with high implied volatility to capture decay, hoping the stock does not move as much as expected by expiration [4]

Acquisition and Merger - The Company completed the acquisition of FMCB on December 13, 2024, adding approximately $245.0 million in assets, $225.7 million in deposits, and $117.1 million in loans and leases[165] - During the three and nine months ended September 30, 2025, the Company incurred merger-related expenses of $530,000 and $1.6 million, respectively[165] - The acquisition of FMCB aligns with the Company's strategic priorities for growth within the Twin Cities market[165] - The company’s loan portfolio growth was primarily due to increased loan originations and the acquisition of FMCB in Q4 2024[227] Financial Performance - Net income for Q3 2025 was $11.6 million, up from $8.7 million in Q3 2024, representing a year-over-year increase of 33.4%[172] - Diluted earnings per share for Q3 2025 were $0.38, compared to $0.27 in Q3 2024, reflecting a 40.7% increase[172] - Net interest income increased to $34.1 million in Q3 2025 from $26.9 million in Q3 2024, a growth of 26.5%[169] - Noninterest income for Q3 2025 was $2.1 million, compared to $1.5 million in Q3 2024, marking a 37.0% increase[169] - Adjusted net income for Q3 2025 was $12.0 million, up from $8.9 million in Q3 2024, a significant increase of 34.8%[172] Assets and Loans - Total assets reached $5.36 billion as of September 30, 2025, up from $4.69 billion a year earlier, indicating a growth of 14.7%[169] - Total loans, gross, increased to $4.21 billion in Q3 2025 from $3.69 billion in Q3 2024, a rise of 14.3%[169] - The loan to deposit ratio was 98.2% as of September 30, 2025, compared to 94.7% a year prior, indicating a tightening of liquidity[169] - Total gross loans reached $4.21 billion at September 30, 2025, an increase of $346.0 million, or 8.9%, from $3.87 billion at December 31, 2024[227] Credit Quality and Risk Management - The Company emphasizes the importance of managing credit risk and maintaining an adequate level of allowance for credit losses on loans[161] - Nonperforming loans were $9.99 million, representing 0.24% of total loans, stable compared to 0.24% in the previous quarter[170] - The allowance for credit losses on loans and leases to total loans was 1.34% at September 30, 2025, compared to 1.38% at September 30, 2024[205] - The allowance for credit losses was $56.39 million as of September 30, 2025, reflecting a consistent approach to credit quality management[229] Deposits and Funding - Total deposits reached $4.29 billion as of September 30, 2025, an increase of $206 million, or 5.0%, compared to $4.09 billion at December 31, 2024[246] - Core deposits increased by $172 million, or 7.4% annualized, from December 31, 2024, driven by both existing client balances and new client acquisitions[246] - Brokered deposits totaled $834.4 million as of September 30, 2025, an increase of $8.7 million from $825.8 million at December 31, 2024[247] Interest Income and Expense - Total interest income for Q3 2025 was $74.2 million, a $10.8 million or 17.1% increase from $63.3 million in Q3 2024[188] - Interest income on loans for Q3 2025 was $60.3 million, up $8.2 million or 15.7% from $52.1 million in Q3 2024[190] - Interest expense on interest bearing liabilities was $39.5 million for Q3 2025, an increase of $2.1 million from $37.4 million in Q3 2024[191] Operational Efficiency - The efficiency ratio improved to 54.7% in Q3 2025 from 58.0% in Q3 2024, reflecting better cost management[169] - Noninterest expense for Q3 2025 was $20.0 million, an increase of $4.2 million, or 26.6%, from $15.8 million in Q3 2024[211] Tax and Regulatory Compliance - Income tax expense for Q3 2025 was $3.5 million, compared to $2.7 million in Q3 2024, with an effective tax rate of 23.2%[219] - Total risk-based capital for the Company was $652.4 million with a ratio of 14.12% as of September 30, 2025, exceeding the minimum required ratio of 8.00%[262] Interest Rate Risk Management - The Company’s net interest income simulation model evaluates potential changes in net interest income over the next 12 months based on interest rate shifts[283] - Interest rate risk management is overseen by the ALM Committee, which sets limits and targets for various metrics related to net interest income[280] - As of September 30, 2025, a 400 basis point increase in interest rates would lead to a 10.03% decrease in net interest income, amounting to $138,605[286]

Financial Data and Key Metrics Changes - In Q3 2025, the company experienced a strong core deposit growth of 11.5% annualized, contributing to a steady net interest income growth [5][6] - Net interest income increased by $1.6 million during the quarter, with net interest margin expanding by 1 basis point to 2.63% [7][12] - Tangible book value per share increased by 20% annualized in Q3 and is up 14% annualized year to date [7] Business Line Data and Key Metrics Changes - Loan growth was strong at 6.6% annualized in Q3, with growth across multiple asset classes, including affordable housing [5][10] - Core deposits are now up 7.4% annualized year to date, indicating a solid deposit pipeline [19] - Loan origination activity decreased slightly in Q3 but is expected to pick up in Q4 due to a strong pipeline [22] Market Data and Key Metrics Changes - The company noted favorable trends in the Twin Cities market, which supports continued strong asset quality [11][30] - The cost of total deposits stabilized at 3.19%, with expectations for a decline in deposit costs in Q4 [16] Company Strategy and Development Direction - The company aims to grow to a $10 billion bank by 2030, with a focus on taking advantage of M&A disruptions in the Twin Cities [10][30] - A new retail and small business online banking platform was launched, enhancing client financial management [8] - The company plans to close one of the two branches acquired from First Minnetonka City Bank to improve efficiency [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about net interest margin expansion in the coming quarters, with a target of reaching a 3% margin by early 2027 [10][28] - The overall credit profile remains strong, with low non-performing assets and net charge-offs [25][28] Other Important Information - The company has successfully completed significant initiatives, including the systems conversion of the First Minnetonka City Bank acquisition [8] - Management transitions were announced, with key leadership changes planned for 2026 [9][10] Q&A Session Summary Question: Margin path towards 3% - Management expects a steady improvement of 2 to 3 basis points per month towards the 3% margin target, assuming two rate cuts in October and December [36][38] Question: Impact of rate cuts on borrowers - Management has not quantified the tangible benefits of rate cuts but is proactively addressing loans with repricing risk [39] Question: Merger costs and future expenses - Management clarified that merger costs were highlighted separately and expects expenses to normalize post-conversion [40][42] Question: Affordable housing growth comfort level - The company has a strong history in affordable housing and is comfortable growing this segment, focusing on top-tier borrowers [51][53] Question: Loan growth outlook and hiring impact - Management is optimistic about loan growth and is strategically hiring to align loan growth with deposit growth [60][62]