Bridgewater Bancshares, Inc. (NASDAQ:BWB) Q1 2025 Earnings Conference Call April 24, 2025 9:00 AM ET Company Participants Justin Horstman - Vice President of Investor Relations Jerry Baack - Chairman and Chief Executive Officer Joe Chybowski - President and Chief Financial Officer Nick Place - Chief Banking Officer Jeff Shellberg - Chief Credit Officer Conference Call Participants Jeff Rulis - D.A. Davidson Nathan Race - Piper Sandler Brendan Nosal - Hovde Group Operator Good morning, and welcome to the Bri ...

Bridgewater (BWB) came out with quarterly earnings of $0.32 per share, beating the Zacks Consensus Estimate of $0.29 per share. This compares to earnings of $0.24 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 10.34%. A quarter ago, it was expected that this company would post earnings of $0.22 per share when it actually produced earnings of $0.27, delivering a surprise of 22.73%.Over the last four quarters, the company has s ...

Financial Performance - Net income for Q1 2025 was $9.6 million, or $0.31 per diluted common share, compared to $8.2 million in Q4 2024 and $7.8 million in Q1 2024[3] - Net Income for Q1 2025 reached $9,633,000, up 17.5% compared to $8,204,000 in Q4 2024[34] - Earnings per share (EPS) for the quarter was $0.31, compared to $0.26 in the previous quarter, reflecting a 19.2% increase[39] - Net income available to common shareholders was $9,050,000 for Q1 2025, up from $7,571,000 in Q4 2024, representing a growth of 19.5%[47] Revenue and Income Sources - Pre-provision net revenue increased by $1.5 million, or 11.5%, from Q4 2024, with net interest income rising by $3.2 million, or 12.0%[2] - Interest income for Q1 2025 was $65.7 million, an increase of $2.4 million from Q4 2024, attributed to higher loan interest and fee income[9] - Noninterest income decreased to $2.1 million in Q1 2025, down from $2.5 million in Q4 2024, but up from $1.6 million in Q1 2024[16] - Net operating revenue reached $32,286,000 in Q1 2025, representing a 9.1% increase compared to $29,500,000 in Q4 2024[45] Asset and Loan Growth - Gross loans increased by $151.6 million, or 15.9% annualized, from Q4 2024, while total deposits rose by $75.7 million, or 7.5% annualized[2] - Total gross loans at March 31, 2025, were $4.02 billion, an increase of $151.6 million, or 15.9% annualized, from $3.87 billion at December 31, 2024[19] - Total assets reached $5,071,446, an increase from $4,788,036 in the previous quarter, marking a growth of 5.9%[40] Efficiency and Cost Management - Efficiency ratio improved to 55.5%, down from 56.8% in Q4 2024, indicating better operational efficiency[2] - The efficiency ratio for the first quarter of 2025 was 55.5%, compared to 56.8% for the fourth quarter of 2024 and 58.2% for the first quarter of 2024[18] - Noninterest expense increased to $18.1 million in Q1 2025, up by $1.3 million from Q4 2024, indicating rising operational costs[17] Asset Quality and Credit Losses - Nonperforming assets to total assets ratio was 0.20% at March 31, 2025, compared to 0.01% at December 31, 2024, reflecting a slight increase in asset quality concerns[2] - The allowance for credit losses on loans to total loans was 1.34% at March 31, 2025, compared to 1.35% at December 31, 2024[18] - Nonperforming loans increased to $10,290, compared to $301 in the previous quarter, showing a significant rise[43] Capital and Equity - Total shareholders' equity at March 31, 2025, was $469.0 million, an increase of $11.0 million, or 2.4%, from $457.9 million at December 31, 2024[24] - Tangible book value per share increased by 12.2% annualized to $13.89 at March 31, 2025[2] - The Common Equity Tier 1 Risk-Based Capital Ratio was 9.03% at March 31, 2025, compared to 9.08% at December 31, 2024[30] Interest Margin and Yield - Net interest margin for Q1 2025 was 2.51%, a 19 basis point increase from Q4 2024, driven by lower deposit costs and higher loan yields[8] - Core net interest margin improved to 2.37% in Q1 2025, compared to 2.24% in Q4 2024[45] - Core loan yield for Q1 2025 was 5.50%, slightly up from 5.47% in Q4 2024[45]

Financial Performance - Net Income for 2024 was $32,825,000, down 17.9% from $39,960,000 in 2023[318] - Basic Earnings Per Share decreased to $1.05 in 2024 from $1.29 in 2023, a decline of 18.6%[318] - Adjusted net income for 2024 was $33.4 million, down from $40.0 million in 2023, a decrease of 16.5%[328] - Net income for the year ended December 31, 2024, was $32.8 million, a decrease of 18% from $40.0 million in 2023[328] - Net income available to common shareholders for 2024 was $28,771,000, a decrease of 20% from $35,906,000 in 2023[487] - Comprehensive income for 2024 was $37,707,000, slightly up from $39,656,000 in 2023[489] Assets and Liabilities - Total Assets increased by 9.8% to $5,066,242,000 in 2024 from $4,611,990,000 in 2023[319] - Total Loans, Gross rose by 3.9% to $3,868,514,000 in 2024 compared to $3,724,282,000 in 2023[319] - Total Deposits increased by 10.2% to $4,086,767,000 in 2024 from $3,709,948,000 in 2023[319] - The acquisition of FMCB added approximately $245,000,000 in assets and $225,700,000 in deposits[323] - Total assets reached $4.68 billion in 2024, compared to $4.49 billion in 2023, marking an increase of 4%[333] - Total gross loans rose by $144.2 million, or 3.9%, to $3.87 billion at December 31, 2024, from $3.72 billion at December 31, 2023[390] Interest Income and Expenses - Net Interest Income for 2024 was $102,193,000, a decrease of 2.3% from $105,174,000 in 2023[318] - Total interest income for the year ended December 31, 2024, was $245,898,000, an increase of 10.6% from $222,355,000 in 2023[487] - Interest income on loans for 2024 was $205.6 million, a $13.0 million, or 6.7%, increase from $192.7 million in 2023[345] - Interest expense on interest bearing liabilities was $143.7 million for 2024, an increase of $26.5 million, or 22.6%, from $117.2 million in 2023[347] - Interest expense on deposits rose to $128.8 million in 2024, a $32.8 million, or 34.1%, increase from $96.0 million in 2023[349] Efficiency and Ratios - Return on Average Assets (ROA) for 2024 was 0.70%, down from 0.89% in 2023[318] - The Efficiency Ratio increased to 57.9% in 2024 from 53.0% in 2023[318] - Return on average shareholder's equity (ROE) fell to 7.45% in 2024 from 9.73% in 2023, a decline of 23%[329] - Core Net Interest Margin decreased to 2.19% in 2024 from 2.34% in 2023[442] - Adjusted return on average assets for 2024 is 0.71%, down from 0.89% in 2023, indicating a decrease of 20.2%[444] Credit Quality - Nonperforming Loans decreased to $301,000 in 2024 from $919,000 in 2023[319] - The allowance for credit losses on loans increased by $2.5 million as of December 31, 2023, reflecting the impact of adopting CECL and a provision for credit losses of $2.1 million[365] - Total net charge-offs increased to $1.23 million in 2024 from $202,000 in 2023, reflecting a significant rise in credit losses[404] - Loans classified as "watch/special mention" totaled $46.6 million at December 31, 2024, compared to $26.5 million in 2023, indicating an increase of 75.8%[397] - The total nonperforming assets, including nonaccrual loans, were $301,000 at December 31, 2024, down from $919,000 in 2023[399] Employee and Operational Metrics - The company had 290 full-time equivalent employees at December 31, 2024, an increase from 255 employees at the end of 2023, largely due to the acquisition of FMCB[374] - Noninterest expense totaled $63.3 million for the year ended December 31, 2024, a $4.0 million, or 6.7%, increase from $59.3 million in 2023, mainly due to higher salaries and merger-related expenses[373] - The efficiency ratio was 57.9% for the year ended December 31, 2024, compared to 53.0% in 2023, indicating increased operational costs relative to income[376] Capital and Shareholder Information - Total shareholders' equity increased by $32.4 million, or 7.6%, to $457.9 million in 2024, driven by retained net income and changes in the securities portfolio[418] - Tangible book value per share increased by 5.1% to $13.49 in 2024 from $12.84 in 2023[419] - The company repurchased 446,509 shares of common stock in 2024, representing 1.6% of outstanding shares, at a total cost of $5.2 million[420] - The Company maintained a primary liquidity ratio of 16.3% as of December 31, 2024, compared to 14.3% in the previous year[436] Acquisition Impact - The company completed the acquisition of First Minnetonka City Bank on December 13, 2024, adding approximately $225.7 million in deposits and $117.1 million in loans[499] - Goodwill increased significantly to $11,982 thousand in 2024 from $2,626 thousand in 2023, reflecting the acquisition of First Minnetonka City Bank[485] - The fair value of assets acquired in the recent acquisition was $282.229 million, with liabilities assumed valued at $258.489 million[499]

Core Viewpoint - The article emphasizes the importance of identifying and sustaining stock price trends for successful short-term investing, highlighting the need for strong fundamentals and positive earnings revisions to maintain momentum [1][2]. Group 1: Stock Performance - Bridgewater (BWB) has shown a solid price increase of 1% over the past 12 weeks, indicating investor willingness to pay more for potential upside [4]. - Over the last four weeks, BWB's stock price has increased by 15.5%, suggesting that the upward trend is still intact [5]. - BWB is currently trading at 83.9% of its 52-week high-low range, indicating a potential breakout [5]. Group 2: Fundamental Strength - BWB holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [6]. - The Zacks Rank system has a strong track record, with Rank 1 stocks generating an average annual return of +25% since 1988 [7]. - The average broker recommendation for BWB is also 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [7]. Group 3: Investment Strategy - The "Recent Price Strength" screen is a useful tool for investors to identify stocks like BWB that are on an uptrend supported by strong fundamentals [3]. - In addition to BWB, there are other stocks that meet the criteria of the "Recent Price Strength" screen, providing additional investment opportunities [8].

Group 1: Breakout Stocks Strategy - The strategy involves identifying breakout stocks within a specific price band, suggesting selling if the price falls below the lower band and holding for gains if it exceeds the upper band [1] - Support and resistance levels are crucial for selecting breakout stocks, with support being the lower bound and resistance the upper bound for stock movements [2] - Genuine breakouts occur when a stock's previous resistance level becomes its new support level, which can be confirmed through long-term price trend analysis [5] Group 2: Screening Criteria - The screening criteria for breakout stocks include a percentage price change over four weeks between 10% and 20%, current price close to 52-week highs, and a Zacks Rank of 1 [6] - Additional criteria include a beta for 60 months less than or equal to 2 and a current price less than or equal to $20, narrowing the stock universe to only nine candidates [7] Group 3: Selected Breakout Stocks - Bridgewater Bancshares, Inc. (BWB) offers banking services with an expected earnings growth rate of 31.4% for the current year [7] - Eastern Bankshares, Inc. (EBC) provides banking products and services with an expected earnings growth rate of 40.6% for the current year [9] - BrainsWay Ltd. (BWAY) develops noninvasive neurostimulation treatments for mental health disorders, with an expected earnings growth rate of 130.8% for the current year [10]

Core Viewpoint - Bridgewater (BWB) is positioned as a strong investment opportunity due to significant revisions in earnings estimates, indicating a positive earnings outlook and potential for continued stock price gains [1][2]. Current-Quarter Estimate Revisions - The expected earnings for the current quarter are $0.29 per share, reflecting a year-over-year increase of +20.83% - Over the past 30 days, there has been one upward revision in estimates with no negative changes, leading to a 5.56% increase in the Zacks Consensus Estimate [4]. Current-Year Estimate Revisions - For the full year, the earnings estimate stands at $1.38 per share, representing a year-over-year change of +31.43% - Similar to the current quarter, there has been one upward revision in estimates over the past month, resulting in an 11.34% increase in the consensus estimate [5]. Favorable Zacks Rank - The positive revisions in earnings estimates have earned Bridgewater a Zacks Rank 1 (Strong Buy), indicating strong potential for outperformance - Historically, stocks with a Zacks Rank 1 and 2 have significantly outperformed the S&P 500 [6]. Bottom Line - Investors are increasingly optimistic about Bridgewater due to its solid estimate revisions, as evidenced by a 9.4% stock gain over the past four weeks, suggesting it may be a timely addition to investment portfolios [7].

Core Insights - The focus is on income investing through common shares, preferred shares, or bonds, with occasional analysis of the broader economy or specific company situations [1] - The author has a background in history, political science, and an MBA with a specialization in Finance and Economics, indicating a strong analytical foundation [1] Company and Industry Summary - The article mentions a beneficial long position in BWBBP shares, indicating a positive outlook on this specific investment [2] - The author emphasizes that the article reflects personal opinions and is not influenced by any business relationships with mentioned companies [2] - There is a disclaimer regarding past performance not guaranteeing future results, highlighting the importance of independent analysis in investment decisions [3]

Disclaimer Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, identified by words such as "may", "might", "should", "could ...

Core Viewpoint - Bridgewater (BWB) reported quarterly earnings of $0.27 per share, exceeding the Zacks Consensus Estimate of $0.22 per share, but down from $0.28 per share a year ago, indicating a 22.73% earnings surprise [1][2] Financial Performance - The company achieved revenues of $29.5 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 6.12%, compared to $26.72 million in the same quarter last year [2] - Over the last four quarters, Bridgewater has exceeded consensus EPS estimates three times and topped consensus revenue estimates three times [2] Stock Performance - Since the beginning of the year, Bridgewater shares have increased by approximately 1.1%, while the S&P 500 has gained 3.2% [3] - The current consensus EPS estimate for the upcoming quarter is $0.27 on revenues of $30.1 million, and for the current fiscal year, it is $1.24 on revenues of $128.6 million [7] Earnings Outlook - The estimate revisions trend for Bridgewater is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] - The outlook for the industry, specifically the Banks - Northeast sector, is favorable, ranking in the top 9% of over 250 Zacks industries, suggesting potential positive impacts on stock performance [8]