Core Insights - The market anticipates Bridgewater (BWB) to report a year-over-year earnings increase driven by higher revenues for the quarter ended September 2025 [1] - The upcoming earnings report on October 21 could significantly impact the stock price depending on whether the results meet or exceed expectations [2] Earnings Expectations - The Zacks Consensus Estimate predicts quarterly earnings of $0.41 per share, reflecting a year-over-year increase of +51.9% [3] - Expected revenues are $37.1 million, which is a 36.8% increase from the same quarter last year [3] Estimate Revisions - The consensus EPS estimate has been revised 7.32% higher in the last 30 days, indicating a positive reassessment by analysts [4] - The Most Accurate Estimate for Bridgewater is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +4.88% [12] Earnings Surprise Prediction - A positive Earnings ESP reading suggests a likely earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy) [10] - Bridgewater's current Zacks Rank is 1, indicating a strong likelihood of surpassing the consensus EPS estimate [12] Historical Performance - In the last reported quarter, Bridgewater exceeded the expected earnings of $0.35 per share by delivering $0.37, resulting in a surprise of +5.71% [13] - Over the past four quarters, the company has consistently beaten consensus EPS estimates [14] Industry Context - In the Zacks Banks - Northeast industry, Webster Financial (WBS) is expected to report earnings of $1.52 per share, reflecting a year-over-year change of +13.4% [18] - Webster Financial's revenue is projected to be $724.91 million, up 11.9% from the previous year [19]

Core Insights - Bridgewater (BWB) has a strong history of beating earnings estimates and is well-positioned for future earnings growth [1][5] - The company reported earnings of $0.37 per share for the most recent quarter, exceeding the expected $0.35, resulting in a surprise of 5.71% [2] - The average surprise for the last two quarters was 8.03%, indicating consistent performance above expectations [1][2] Earnings Performance - In the previous quarter, Bridgewater reported earnings of $0.32 per share against an expectation of $0.29, achieving a surprise of 10.34% [2] - The company's Earnings ESP (Expected Surprise Prediction) is currently +4.88%, suggesting analysts are optimistic about future earnings [8] Analyst Sentiment - The positive Earnings ESP combined with a Zacks Rank of 1 (Strong Buy) indicates a high likelihood of another earnings beat in the upcoming report [8] - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [6] Upcoming Earnings - Bridgewater's next earnings report is expected to be released on October 21, 2025 [8]

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] Group 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] - The author has been investing since 2000, suggesting extensive experience in the investment landscape [1] - The author currently serves as the CEO of an independent living retirement community in Illinois, which may provide insights into the healthcare and retirement sectors [1] Group 2 - The author holds a beneficial long position in the shares of BWBBP, indicating a personal investment interest in this company [2] - The article expresses the author's own opinions and is not influenced by compensation from any company mentioned [2] - There is no business relationship with any company whose stock is mentioned, ensuring an independent perspective [2]

Group 1 - The focus is on income investing through common shares, preferred shares, or bonds [1] - The author has been investing since 2000 and has a background in history, political science, and an MBA with a specialization in Finance and Economics [1] - The author targets two articles per week for publication on Monday and Tuesday [1] Group 2 - The author has a beneficial long position in the shares of BWBBP through stock ownership, options, or other derivatives [2] - The article expresses the author's own opinions and is not influenced by compensation from any company mentioned [2] - There is no business relationship with any company whose stock is mentioned in the article [2]

Summary of Bridgewater Bancshares (BWB) FY Conference Call Company Overview - **Company Name**: Bridgewater Bancshares Inc. (BWB) - **Ticker Symbol**: BWB - **Founded**: February 2005 - **Location**: Minneapolis area, specifically Saint Louis Park - **Assets**: Approximately $5.3 billion, primarily focused on commercial banking and entrepreneurs - **Branches**: 9 branches, with 5 being De Novo and 4 acquired through small market acquisitions [3][4] Core Points and Arguments Growth and Market Position - **Market Position**: BWB has grown from the 14th largest locally led institution in the Twin Cities to the 2nd largest, only behind US Bank [9] - **Organic Growth**: Achieved 20% compounded growth over the last ten years, primarily through organic means, with only two small acquisitions [11] - **Core Deposits**: Core deposits have grown at an 11% rate over the last five years, which is crucial for the bank's growth strategy [13] Risk Management and Efficiency - **Risk Management**: BWB has maintained lower charge-offs compared to peers, emphasizing a strong risk management process [8] - **Efficiency Model**: The bank operates with a light branch footprint, which has driven profitability and efficiency, with a target efficiency ratio of 45-50% [29][41] Loan Portfolio and Asset Class Focus - **Loan Growth**: Focused on high-quality loans, particularly in the multifamily sector, which has grown from 21% in 2015 to nearly 40% today [17] - **Multifamily Lending**: This asset class has historically performed well, with only $62,000 in charge-offs over 20 years [19] - **Affordable Housing**: BWB sees significant growth opportunities in affordable housing, which has grown at a 15% rate over the last year [24] Financial Performance and Revenue Streams - **Net Interest Margin**: Recent expansion in net interest margin due to repricing of loans, with expectations for continued growth as older loans roll off [26][28] - **Non-Interest Income**: Focus on diversifying income streams, with a record quarter for non-interest income in 2025 [25] Regulatory Environment - **Regulatory Relationships**: Improved relationships with regulators, leading to quicker approvals for M&A transactions [52] Additional Important Insights - **Market Disruption**: BWB has capitalized on market disruptions caused by consolidation among larger banks, allowing it to attract clients from competitors [10][76] - **Technology Investments**: Significant investments in technology over the past five years are expected to pay off as growth resumes [38] - **M&A Strategy**: BWB remains disciplined in its M&A approach, focusing on complementary businesses [40] Conclusion Bridgewater Bancshares is strategically positioned for growth in the Twin Cities market, leveraging its strong risk management, efficient operations, and focus on multifamily and affordable housing lending. The bank's proactive approach to market disruptions and regulatory relationships further enhances its potential for continued success.

PART I FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(unaudited)) Presents unaudited consolidated financial statements for Bridgewater Bancshares, Inc., detailing balance sheets, income, comprehensive income, equity, and cash flows [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheets show increased total assets and liabilities from December 2024 to June 2025, driven by loans and deposits | ASSETS (dollars in thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :---------------------------- | :------------------------ | :------------------ | | Cash and Cash Equivalents | $217,495 | $229,760 | | Securities Available for Sale | $743,889 | $768,247 | | Loans, Net | $4,082,405 | $3,809,436 | | Total Assets | $5,296,673 | $5,066,242 | | LIABILITIES (dollars in thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :---------------------------- | :------------------------ | :------------------ | | Total Deposits | $4,236,742 | $4,086,767 | | FHLB Advances | $404,500 | $359,500 | | Subordinated Debentures, Net | $108,689 | $79,670 | | Total Liabilities | $4,820,391 | $4,608,307 | | SHAREHOLDERS' EQUITY (dollars in thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :---------------------------- | :------------------------ | :------------------ | | Total Shareholders' Equity | $476,282 | $457,935 | | Total Liabilities and Equity | $5,296,673 | $5,066,242 | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated Statements of Income show increased net interest income and net income for Q2 and H1 2025, driven by higher interest income | (dollars in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Interest Income | $69,198 | $60,878 | $134,906 | $119,547 | | Total Interest Expense | $36,746 | $35,882 | $72,246 | $69,920 | | NET INTEREST INCOME | $32,452 | $24,996 | $62,660 | $49,627 | | Provision for Credit Losses | $2,000 | $600 | $3,500 | $1,350 | | Total Noninterest Income | $3,627 | $1,763 | $5,706 | $3,313 | | Total Noninterest Expense | $18,941 | $15,539 | $37,077 | $30,728 | | NET INCOME | $11,520 | $8,115 | $21,153 | $15,946 | | NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $10,506 | $7,101 | $19,126 | $13,919 | | Basic Earnings Per Share | $0.38 | $0.26 | $0.70 | $0.51 | | Diluted Earnings Per Share | $0.38 | $0.26 | $0.68 | $0.50 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income show increased net income but decreased other comprehensive income for Q2 and H1 2025, due to unrealized losses | (dollars in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income | $11,520 | $8,115 | $21,153 | $15,946 | | Other Comprehensive Income (Loss): | | | | | | Unrealized Gains (Losses) on Available for Sale Securities | (479) | 1,168 | 7,208 | 1,403 | | Unrealized Gains (Losses) on Cash Flow Hedges | (1,455) | 2,036 | (4,497) | 7,748 | | Reclassification Adjustment for Gains Realized in Income | (2,091) | (2,649) | (3,924) | (5,045) | | Income Tax Impact | 1,156 | (159) | 349 | (1,180) | | Total Other Comprehensive Income (Loss), Net of Tax | (2,869) | 396 | (864) | 2,926 | | Comprehensive Income | $8,651 | $8,511 | $20,289 | $18,872 | [Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Consolidated Statements of Shareholders' Equity detail changes in equity components, showing an overall increase in total shareholders' equity from December 2024 to June 2025 | (dollars in thousands) | Preferred Stock | Common Stock Amount | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | | :--------------------- | :-------------- | :------------------ | :------------------------- | :---------------- | :-------------------------------------------- | :---- | | BALANCE December 31, 2024 | $66,514 | $276 | $95,088 | $309,421 | $(13,364) | $457,935 | | Stock-based Compensation | — | — | 2,039 | — | — | 2,039 | | Comprehensive Income (Loss) | — | — | — | 21,153 | (864) | 20,289 | | Stock Options Exercised | — | — | 395 | — | — | 395 | | Stock Repurchases | — | (1) | (2,190) | — | — | (2,191) | | Restricted Shares Withheld for Taxes | — | — | (158) | — | — | (158) | | Preferred Stock Dividend | — | — | — | (2,027) | — | (2,027) | | BALANCE June 30, 2025 | $66,514 | $275 | $95,174 | $328,547 | $(14,228) | $476,282 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows show a net decrease in cash and cash equivalents for H1 2025, primarily due to cash used in investing activities | (dollars in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :----------------------------- | :----------------------------- | | Net Cash Provided by Operating Activities | $11,459 | $17,785 | | Net Cash Used in Investing Activities | $(243,566) | $(70,301) | | Net Cash Provided by Financing Activities | $219,842 | $58,047 | | NET CHANGE IN CASH AND CASH EQUIVALENTS | $(12,265) | $5,531 | | Cash and Cash Equivalents Ending | $217,495 | $134,093 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures for the consolidated financial statements, covering business, accounting policies, recent developments, and financial instruments [Note 1: Description of the Business and Summary of Significant Accounting Policies](index=8&type=section&id=Note%201%3A%20Description%20of%20the%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines Bridgewater Bancshares, Inc.'s operations, subsidiary, recent developments (FMCB acquisition, note issuance), and accounting policies - Bridgewater Bancshares, Inc. is a financial holding company operating through its wholly-owned subsidiary, Bridgewater Bank, which provides retail and commercial loan and deposit services primarily in the Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area[22](index=22&type=chunk) - On December 13, 2024, the Bank acquired First Minnetonka City Bank (FMCB), adding two branches, approximately **$225.7 million of deposits**, and **$117.1 million of loans** as of December 31, 2024[23](index=23&type=chunk) - On June 24, 2025, the Company issued **$80.0 million in 7.625% Fixed-to-Floating Rate Subordinated Notes due 2035**, using the proceeds to redeem **$50 million of outstanding 5.25% Fixed-to-Floating Rate Subordinated Notes due 2030** and for general corporate purposes[24](index=24&type=chunk) [Note 2: Earnings Per Share](index=10&type=section&id=Note%202%3A%20Earnings%20Per%20Share) This note details basic and diluted earnings per common share calculations, showing increases for Q2 and H1 2025 | (dollars in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income Available to Common Shareholders | $10,506 | $7,101 | $19,126 | $13,919 | | Weighted Average Common Stock Outstanding (Basic) | 27,460,982 | 27,386,713 | 27,514,579 | 27,539,057 | | Dilutive Effect of Stock Compensation | 537,026 | 361,471 | 508,013 | 382,544 | | Weighted Average Common Stock Outstanding (Dilutive) | 27,998,008 | 27,748,184 | 28,022,592 | 27,921,601 | | Basic Earnings per Common Share | $0.38 | $0.26 | $0.70 | $0.51 | | Diluted Earnings per Common Share | $0.38 | $0.26 | $0.68 | $0.50 | [Note 3: Securities](index=10&type=section&id=Note%203%3A%20Securities) This note details the Company's available-for-sale securities portfolio, showing decreased total securities and reduced unrealized losses from December 2024 to June 2025 | (dollars in thousands) | June 30, 2025 Amortized Cost | June 30, 2025 Fair Value | December 31, 2024 Amortized Cost | December 31, 2024 Fair Value | | :--------------------- | :--------------------------- | :----------------------- | :------------------------------- | :----------------------------- | | U.S. Treasury Securities | $155,939 | $145,654 | $179,835 | $167,748 | | Municipal Bonds | $129,599 | $115,054 | $139,891 | $122,265 | | Mortgage-Backed Securities | $280,504 | $269,898 | $259,833 | $244,890 | | Corporate Securities | $133,931 | $130,097 | $139,161 | $134,186 | | Total Securities Available for Sale | $783,050 | $743,889 | $817,664 | $768,247 | - At June 30, 2025, 431 debt securities had unrealized losses with aggregate depreciation of approximately **7.2%** from amortized cost, an improvement from **8.4%** at December 31, 2024. Management does not intend to sell these securities and expects to recover the amortized cost[41](index=41&type=chunk) | (dollars in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Proceeds From Sales of Securities | $58,503 | $38,049 | $59,595 | $50,833 | | Gross Gains on Sales | $480 | $320 | $484 | $1,106 | | Gross Losses on Sales | $(6) | $— | $(9) | $(693) | [Note 4: Loans and Allowance for Credit Losses](index=13&type=section&id=Note%204%3A%20Loans%20and%20Allowance%20for%20Credit%20Losses) This note details loan portfolio composition, credit quality, and Allowance for Credit Losses (ACL) activity, showing significant growth in gross loans and ACL | (dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Commercial | $549,259 | $497,662 | | Multifamily | $1,555,731 | $1,425,610 | | CRE Nonowner Occupied | $1,137,007 | $1,083,108 | | Total Loans, Gross | $4,145,799 | $3,868,514 | | Allowance for Credit Losses | $(55,765) | $(52,277) | | Total Loans, Net | $4,082,405 | $3,809,436 | - The Company classifies loans into six major credit quality categories: Pass, Watch, Special Mention, Substandard, Doubtful, and Loss. Loans classified as 'Watch/Special Mention' totaled **$53.3 million** at June 30, 2025, up from **$46.6 million** at December 31, 2024. 'Substandard' loans increased to **$45.0 million** from **$21.8 million** over the same period[49](index=49&type=chunk)[50](index=50&type=chunk)[59](index=59&type=chunk) | (dollars in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Beginning Balance ACL | $53,766 | $51,347 | $52,277 | $50,494 | | Provision for Credit Losses for Loans and Leases | $2,000 | $600 | $3,500 | $1,450 | | Loans and Leases Charged-off | $(6) | $(10) | $(18) | $(12) | | Recoveries of Loans and Leases | $5 | $12 | $6 | $17 | | Total Ending Allowance Balance | $55,765 | $51,949 | $55,765 | $51,949 | [Note 5: Goodwill and Other Intangible Assets](index=21&type=section&id=Note%205%3A%20Goodwill%20and%20Other%20Intangible%20Assets) This note details the Company's goodwill and other intangible assets, showing stable goodwill and decreased intangible assets due to amortization - Goodwill remained at **$12.0 million** at June 30, 2025, and December 31, 2024, and is subject to annual impairment testing[63](index=63&type=chunk) | (dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Core Deposit Intangible | $8,833 | $8,833 | | Favorable Lease | $445 | $445 | | Subtotal | $9,278 | $9,278 | | Accumulated Amortization | $(1,888) | $(1,428) | | Totals | $7,390 | $7,850 | - Amortization expense for other intangible assets significantly increased to **$230,000** for the three months ended June 30, 2025, from **$8,000** in the prior year, and to **$460,000** for the six months ended June 30, 2025, from **$17,000** in the prior year[63](index=63&type=chunk) [Note 6: Deposits](index=22&type=section&id=Note%206%3A%20Deposits) This note outlines the composition and maturities of the Company's deposits, showing increased total deposits, particularly in savings, money market, and brokered deposits | (dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Transaction Deposits | $1,579,616 | $1,663,005 | | Savings and Money Market Deposits | $1,441,694 | $1,259,503 | | Time Deposits | $344,882 | $338,506 | | Brokered Deposits | $870,550 | $825,753 | | Totals | $4,236,742 | $4,086,767 | | (dollars in thousands) | June 30, 2025 | | :--------------------- | :------------ | | Less than 1 Year | $650,703 | | 1 to 2 Years | $150,684 | | 2 to 3 Years $96,429 | | 3 to 4 Years | $72,099 | | 4 to 5 Years | $97,654 | | Totals | $1,067,569 | - The aggregate amount of time deposits greater than **$250,000** increased to approximately **$179.7 million** at June 30, 2025, from **$155.0 million** at December 31, 2024[68](index=68&type=chunk) [Note 7: Derivative Instruments and Hedging Activities](index=23&type=section&id=Note%207%3A%20Derivative%20Instruments%20and%20Hedging%20Activities) This note details the Company's use of derivative financial instruments for interest rate risk management, distinguishing between non-hedge and hedging derivatives - The Company uses interest rate swaps to facilitate client transactions, entering into offsetting positions to minimize risk. The notional amount for these non-hedge swaps increased to **$330.75 million** at June 30, 2025, from **$231.154 million** at December 31, 2024[71](index=71&type=chunk)[73](index=73&type=chunk) - For cash flow hedges, the notional amount of interest rate swaps increased to **$183.0 million** at June 30, 2025, from **$178.0 million** at December 31, 2024, with a net unrealized gain of **$1.311 million** at June 30, 2025[78](index=78&type=chunk) - Fair value hedges, used to mitigate interest rate risk on fixed-rate available-for-sale securities, had a notional amount of **$194.987 million** at June 30, 2025, up from **$145.850 million** at December 31, 2024[82](index=82&type=chunk) [Note 8: Federal Home Loan Bank Advances and Other Borrowings](index=26&type=section&id=Note%208%3A%20Federal%20Home%20Loan%20Bank%20Advances%20and%20Other%20Borrowings) This note details FHLB advances and other borrowing arrangements, including a revolving line of credit, showing increased FHLB advances and covenant compliance | (dollars in thousands) | June 30, 2025 Total Outstanding | December 31, 2024 Total Outstanding | | :--------------------- | :------------------------------ | :-------------------------------- | | Less than 1 Year | $320,500 | $288,000 | | 1 to 2 Years | $31,500 | $21,500 | | 2 to 3 Years | $30,000 | $27,500 | | 3 to 4 Years | $15,000 | $22,500 | | 4 to 5 Years | $7,500 | $— | | Totals | $404,500 | $359,500 | - The Company's total FHLB advances increased to **$404.5 million** at June 30, 2025, from **$359.5 million** at December 31, 2024. Remaining available capacity under the agreement was **$490.7 million** at June 30, 2025[86](index=86&type=chunk)[88](index=88&type=chunk) - The Company has a **$40.0 million** revolving line of credit, secured by 100% of the Bank's stock, with **$13.8 million** outstanding at both June 30, 2025, and December 31, 2024[89](index=89&type=chunk) [Note 9: Subordinated Debentures](index=27&type=section&id=Note%209%3A%20Subordinated%20Debentures) This note details the Company's subordinated debentures, highlighting new note issuance in June 2025 and redemption of existing ones, increasing total outstanding debentures - On June 24, 2025, the Company issued **$80.0 million in 7.625% Fixed-to-Floating Rate Subordinated Notes due 2035**. Proceeds were used to redeem **$50 million of 5.25% Fixed-to-Floating Rate Subordinated Notes due 2030** and for general corporate purposes[90](index=90&type=chunk) | (dollars in thousands) | June 30, 2025 Total Debt Outstanding | December 31, 2024 Total Debt Outstanding | | :--------------------- | :----------------------------------- | :--------------------------------------- | | 2030 Notes | $— | $50,000 | | 2031 Notes | $30,000 | $30,000 | | 2035 Notes | $80,000 | $— | | Subordinated Debentures | $110,000 | $80,000 | | Debt Issuance Costs | $(1,311) | $(330) | | Subordinated Debentures, Net of Issuance Costs | $108,689 | $79,670 | [Note 10: Commitments, Contingencies and Credit Risk](index=28&type=section&id=Note%2010%3A%20Commitments%2C%20Contingencies%20and%20Credit%20Risk) This note outlines off-balance sheet financial instruments, including unfunded commitments and letters of credit, and credit loss exposure, noting no material legal proceedings | (dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Unfunded Commitments Under Lines of Credit | $675,151 | $679,064 | | Letters of Credit | $118,002 | $124,397 | | Totals | $793,153 | $803,461 | - The Company had outstanding letters of credit with the FHLB of **$134.8 million** at June 30, 2025, up from **$103.2 million** at December 31, 2024[95](index=95&type=chunk) - The Allowance for Credit Losses (ACL) for off-balance sheet credit exposures remained stable at **$3.6 million** at both June 30, 2025, and December 31, 2024[96](index=96&type=chunk) [Note 11: Stock Options and Restricted Stock](index=29&type=section&id=Note%2011%3A%20Stock%20Options%20and%20Restricted%20Stock) This note details the Company's equity incentive plans, including stock options and restricted stock units, showing increased outstanding options and nonvested units - The Company has several equity incentive plans (2012, 2017, 2019, and 2023 EIPs) for directors, officers, and employees, with varying shares reserved for future grants[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) | (shares) | Six Months Ended June 30, 2025 | | :-------------------------- | :----------------------------- | | Outstanding at Beginning of Year | 1,860,609 | | Granted | 275,000 | | Exercised | (42,175) | | Forfeitures | (16,500) | | Outstanding at Period End | 2,076,934 | | Options Exercisable at Period End | 1,446,933 | - As of June 30, 2025, there was **$2.7 million** of total unrecognized compensation cost related to nonvested stock options, expected to be recognized over a weighted-average period of **2.6 years**. For restricted stock units, unrecognized compensation cost was **$4.8 million**, expected over **2.5 years**[108](index=108&type=chunk)[114](index=114&type=chunk) [Note 12: Regulatory Capital](index=32&type=section&id=Note%2012%3A%20Regulatory%20Capital) This note presents regulatory capital amounts and ratios for the Company and Bank, demonstrating compliance with all minimum capital adequacy requirements | (dollars in thousands) | June 30, 2025 Actual Amount | June 30, 2025 Actual Ratio | December 31, 2024 Actual Amount | December 31, 2024 Actual Ratio | | :--------------------- | :-------------------------- | :------------------------- | :------------------------------ | :----------------------------- | | Company (Consolidated): | | | | | | Total Risk-based Capital | $638,131 | 14.17% | $585,966 | 13.76% | | Tier 1 Risk-based Capital | $473,118 | 10.51% | $453,049 | 10.64% | | Common Equity Tier 1 Capital | $406,604 | 9.03% | $386,535 | 9.08% | | Tier 1 Leverage Ratio | $473,118 | 9.14% | $453,049 | 9.44% | | Bank: | | | | | | Total Risk-based Capital | $602,742 | 13.41% | $573,158 | 13.49% | | Tier 1 Risk-based Capital | $546,513 | 12.16% | $520,000 | 12.24% | | Common Equity Tier 1 Capital | $546,513 | 12.16% | $520,000 | 12.24% | | Tier 1 Leverage Ratio | $546,513 | 10.58% | $520,000 | 10.86% | - Both the Company and the Bank exceeded all minimum capital adequacy requirements and the capital conservation buffer as of June 30, 2025, and December 31, 2024[118](index=118&type=chunk)[119](index=119&type=chunk) [Note 13: Fair Value Measurement](index=33&type=section&id=Note%2013%3A%20Fair%20Value%20Measurement) This note explains the Company's fair value measurement practices, categorizing assets and liabilities into a three-level hierarchy based on input observability - The Company categorizes fair value measurements into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) | (dollars in thousands) | June 30, 2025 Total Fair Value | December 31, 2024 Total Fair Value | | :--------------------- | :----------------------------- | :--------------------------------- | | Financial Assets: | | | | Securities Available for Sale | $743,889 | $768,247 | | Fair Value Swaps | $7,531 | $10,487 | | Interest Rate Caps | $14,808 | $19,319 | | Interest Rate Swaps | $11,080 | $13,349 | | Total Fair Value of Financial Assets | $777,308 | $811,402 | | Financial Liabilities: | | | | Fair Value Swaps | $576 | $— | | Interest Rate Swaps | $9,769 | $8,210 | | Risk Participation Agreement | $19 | $— | | Total Fair Value of Financial Liabilities | $10,364 | $8,210 | - Individually evaluated loans, measured at fair value on a non-recurring basis, are classified as Level 3 due to the significance of unobservable inputs, such as internally determined values based on cost adjusted for depreciation and customized discounting criteria on appraisals[134](index=134&type=chunk) [Note 14: Accumulated Other Comprehensive Income](index=40&type=section&id=Note%2014%3A%20Accumulated%20Other%20Comprehensive%20Income) This note details components and changes in accumulated other comprehensive income (loss), net of tax, for Q2 and H1 2025 and 2024, showing a net loss due to unrealized losses | (dollars in thousands) | Three Months Ended June 30, 2025 Net of Tax | Three Months Ended June 30, 2024 Net of Tax | Six Months Ended June 30, 2025 Net of Tax | Six Months Ended June 30, 2024 Net of Tax | | :--------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net Unrealized Loss on Available for Sale Securities | $(341) | $832 | $5,137 | $1,000 | | Less: Reclassification Adjustment for Net Gains Included in Net Income | $(338) | $(228) | $(338) | $(294) | | Total Unrealized Gain (Loss) | $(679) | $604 | $4,799 | $706 | | Net Unrealized Loss on Cash Flow Hedge | $(1,038) | $1,451 | $(3,205) | $5,521 | | Less: Reclassification Adjustment for Gains Included in Net Income | $(1,152) | $(1,659) | $(2,458) | $(3,301) | | Total Unrealized Loss (Gain) | $(2,190) | $(208) | $(5,663) | $2,220 | | Other Comprehensive Income (Loss) | $(2,869) | $396 | $(864) | $2,926 | | (dollars in thousands) | Available For Sale Securities | Cash Flow Hedge | Accumulated Other Comprehensive Income (Loss) | | :--------------------- | :---------------------------- | :-------------- | :-------------------------------------------- | | Balance at December 31, 2024 | $(27,743) | $14,379 | $(13,364) | | Net Other Comprehensive Income (Loss) During Period (Six Months Ended June 30, 2025) | $4,799 | $(5,663) | $(864) | | Balance at June 30, 2025 | $(22,944) | $8,716 | $(14,228) | [Note 15: Subsequent Events](index=41&type=section&id=Note%2015%3A%20Subsequent%20Events) This note discloses subsequent events, including the extension of the Company's stock repurchase program and a quarterly cash dividend on preferred stock - On July 22, 2025, the Board of Directors extended the Company's 2022 Stock Repurchase Program expiration date from August 20, 2025, to August 26, 2026, with **$13.1 million** remaining under authorization[149](index=149&type=chunk) - On July 23, 2025, a quarterly cash dividend of **$36.72 per share** (**$0.3672 per depositary share**) was announced for the 5.875% Non-Cumulative Perpetual Preferred Stock, Series A, payable on September 2, 2025[150](index=150&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations for Q2 and H1 2025, discussing key financial trends and performance metrics [General](index=42&type=section&id=General) This section introduces the Company's financial condition and results of operations for Q2 and H1 2025, noting interim results may not predict full-year performance - The discussion explains the Company's financial condition and results of operations for the three and six months ended June 30, 2025, noting that annualized interim results may not be indicative of full-year or future periods[151](index=151&type=chunk) [Forward-Looking Statements](index=42&type=section&id=Forward-Looking%20Statements) This section contains cautionary statements regarding forward-looking statements, highlighting inherent uncertainties, risks, and changes that could cause actual results to differ - Forward-looking statements are based on current beliefs, expectations, and assumptions, but are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and outside of the Company's control[152](index=152&type=chunk) - Key risk factors include interest rate risk, effects of changes in U.S. economy and policies, fluctuations in securities values, credit risk, ability to manage liquidity, and impacts of legislative and regulatory changes[152](index=152&type=chunk)[153](index=153&type=chunk) [Overview](index=44&type=section&id=Overview) This section provides an overview of Bridgewater Bancshares, Inc. as a financial holding company, detailing its primary sources of funds and income, and its core strategy - The Company's principal sources of funds are transaction, savings, time, and other deposits, and short-term and long-term borrowings[155](index=155&type=chunk) - Primary income sources include interest and fees on loans, interest and dividends on investment securities, and service charges[155](index=155&type=chunk) - The Company's strategy focuses on providing responsive support and unconventional experiences to clients, driving profitable growth[155](index=155&type=chunk) [Critical Accounting Policies and Estimates](index=44&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section states no significant changes in critical accounting policies or assumptions since December 2024, emphasizing estimates could materially impact future financial results - No significant changes in critical accounting policies or assumptions have occurred since December 31, 2024[156](index=156&type=chunk) - The preparation of financial statements involves numerous estimates and strategic or economic assumptions that may prove inaccurate or subject to variation, potentially affecting reported results[156](index=156&type=chunk) [Recent Developments](index=44&type=section&id=Recent%20Developments) This section highlights key recent events, including the FMCB acquisition, **$80.0 million** subordinated note issuance, and the 'One Big Beautiful Bill Act', potentially impacting future tax deductibility - On December 13, 2024, Bridgewater Bank acquired First Minnetonka City Bank (FMCB), adding **$245.0 million of assets**, **$225.7 million of deposits**, **$117.1 million of loans**, and two branch locations. Merger-related expenses were **$540,000** for Q2 2025 and **$1.1 million** for H1 2025[157](index=157&type=chunk) - On June 24, 2025, the Company issued **$80.0 million in 7.625% Fixed-to-Floating Rate Subordinated Notes due 2035**, using proceeds to redeem **$50 million of 5.25% notes** and for general corporate purposes[158](index=158&type=chunk) - On July 4, 2025, the 'One Big Beautiful Bill Act' was signed into law, potentially allowing more favorable deductibility of certain business expenses (R&D, bonus depreciation, business interest) starting in 2025. The Company is evaluating its future impact[159](index=159&type=chunk)[160](index=160&type=chunk) [Operating Results Overview](index=45&type=section&id=Operating%20Results%20Overview) This section summarizes key financial results and performance ratios for the Company, highlighting increases in net interest income, net income, and EPS for Q2 2025, with improved net interest margin and efficiency ratio | (dollars in thousands, except per share data) | June 30, 2025 | June 30, 2024 | | :-------------------------------------------- | :------------ | :------------ | | Net Interest Income | $32,452 | $24,996 | | Net Income | $11,520 | $8,115 | | Net Income Available to Common Shareholders | $10,506 | $7,101 | | Basic Earnings Per Share | $0.38 | $0.26 | | Diluted Earnings Per Share | $0.38 | $0.26 | | Book Value Per Share | $14.92 | $13.63 | | Tangible Book Value Per Share (1) | $14.21 | $13.53 | | Total Assets | $5,296,673 | $4,687,035 | | Total Loans, Gross | $4,145,799 | $3,800,385 | | Deposits | $4,236,742 | $3,807,712 | | Total Shareholders' Equity | $476,282 | $439,241 | | Net Interest Margin (3) | 2.62 % | 2.24 % | | Efficiency Ratio (1) | 52.6 % | 58.7 % | - Net income for Q2 2025 was **$11.5 million**, up from **$8.1 million** in Q2 2024. Diluted EPS increased to **$0.38** from **$0.26** YoY[164](index=164&type=chunk) - The efficiency ratio improved to **52.6%** for Q2 2025, down from **58.7%** in Q2 2024, reflecting better operational performance[161](index=161&type=chunk)[205](index=205&type=chunk) [Discussion and Analysis of Results of Operations](index=46&type=section&id=Discussion%20and%20Analysis%20of%20Results%20of%20Operations) This section provides a detailed analysis of the Company's operating results, including net income, net interest income, provision for credit losses, noninterest income, noninterest expense, and income tax expense, comparing Q2 and H1 2025 with 2024 [Net Income](index=46&type=section&id=Net%20Income) Net income for Q2 2025 increased significantly to **$11.5 million**, up from **$8.1 million** in Q2 2024, with diluted EPS rising to **$0.38** - Net income for the second quarter of 2025 was **$11.5 million**, an increase from **$8.1 million** for the second quarter of 2024[164](index=164&type=chunk) - Diluted earnings per common share for Q2 2025 were **$0.38**, compared to **$0.26** for Q2 2024[164](index=164&type=chunk) - Adjusted net income (non-GAAP) was **$11.3 million** for Q2 2025, up from **$7.9 million** for Q2 2024, with adjusted diluted EPS of **$0.37** compared to **$0.25**[164](index=164&type=chunk) [Net Interest Income](index=46&type=section&id=Net%20Interest%20Income) Net interest income saw substantial growth for Q2 and H1 2025, driven by increased loan portfolio yields and growth, with improved net interest margin - Net interest income for Q2 2025 was **$32.5 million**, an increase of **$7.5 million (30%)** from **$25.0 million** in Q2 2024, primarily due to growth and higher yields in the loan portfolio[173](index=173&type=chunk) - Net interest margin (tax-equivalent) for Q2 2025 was **2.62%**, a **38 basis point increase** from **2.24%** in Q2 2024, driven by higher core loan yields, purchase accounting accretion, and lower deposit costs[174](index=174&type=chunk) - Total interest income (tax-equivalent) for Q2 2025 increased by **$8.3 million (13.6%)** to **$69.5 million**, mainly from loan portfolio growth and higher earning asset yields. Interest expense on interest-bearing liabilities increased by **$864,000** to **$36.7 million**[178](index=178&type=chunk)[182](index=182&type=chunk) | (dollars in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :----------------------------- | :----------------------------- | | Net Interest Income | $62,660 | $49,627 | | Net Interest Margin (tax-equivalent) | 2.56% | 2.24% | | Total Interest Income (tax-equivalent) | $135,480 | $120,200 | | Total Interest Expense | $72,246 | $69,920 | [Provision for Credit Losses](index=53&type=section&id=Provision%20for%20Credit%20Losses) The provision for credit losses on loans and leases increased for Q2 and H1 2025 compared to 2024, primarily due to loan portfolio growth and increased specific reserves - Provision for credit losses on loans and leases was **$2.0 million** for Q2 2025, up from **$600,000** for Q2 2024. For the six months, it was **$3.5 million**, up from **$1.5 million**[196](index=196&type=chunk) - The increase was primarily attributable to increased growth in the loan portfolio and an increase in specific reserves for loans individually evaluated[196](index=196&type=chunk) - The allowance for credit losses on loans and leases to total loans was **1.35%** at June 30, 2025, compared to **1.37%** at June 30, 2024[196](index=196&type=chunk) [Noninterest Income](index=53&type=section&id=Noninterest%20Income) Noninterest income significantly increased for Q2 and H1 2025, driven by higher swap fees, FHLB prepayment income, investment advisory fees, and gains on sales - Noninterest income for Q2 2025 was **$3.6 million**, an increase of **$1.9 million** from **$1.8 million** for Q2 2024[199](index=199&type=chunk) - The increase was primarily due to higher swap fees (**$938,000** vs. **$0**), FHLB prepayment income (**$301,000** vs. **$0**), investment advisory fees (**$213,000** vs. **$0**), and net gain on sales of securities (**$474,000** vs. **$320,000**)[199](index=199&type=chunk)[200](index=200&type=chunk) - For the six months ended June 30, 2025, noninterest income increased by **$2.4 million** to **$5.7 million**, compared to **$3.3 million** in 2024, driven by similar factors[199](index=199&type=chunk) [Noninterest Expense](index=54&type=section&id=Noninterest%20Expense) Noninterest expense increased for Q2 and H1 2025, primarily due to higher salaries and benefits, increased operating costs from the FMCB acquisition, and merger-related expenses - Noninterest expense for Q2 2025 was **$18.9 million**, an increase of **$3.4 million** from **$15.5 million** for Q2 2024[201](index=201&type=chunk) - Key drivers of the increase include salaries and employee benefits (up **$1.7 million**), occupancy and equipment (up **$182,000**), data processing (up **$153,000**), and other expense (up **$753,000**)[201](index=201&type=chunk)[207](index=207&type=chunk) - The Company had **308 full-time equivalent employees** at June 30, 2025, up from **258** at June 30, 2024, largely due to the FMCB acquisition[203](index=203&type=chunk) [Income Tax Expense](index=55&type=section&id=Income%20Tax%20Expense) Income tax expense increased for Q2 and H1 2025 compared to 2024, with a stable effective combined federal and state income tax rate - Income tax expense for Q2 2025 was **$3.6 million**, up from **$2.5 million** for Q2 2024. For the six months, it was **$6.6 million**, up from **$4.9 million**[209](index=209&type=chunk) - The effective combined federal and state income tax rate remained stable at **23.9%** for Q2 2025 (vs. **23.6%** for Q2 2024) and **23.9%** for H1 2025 (vs. **23.6%** for H1 2024)[209](index=209&type=chunk) [Financial Condition](index=55&type=section&id=Financial%20Condition) This section analyzes the Company's financial condition, detailing changes in assets, investment securities, loan portfolio, asset quality, deposits, borrowed funds, obligations, and capital [Assets](index=55&type=section&id=Assets) Total assets at June 30, 2025, increased by **$230.4 million (4.5%)** over December 2024, and by **$609.6 million (13.0%)** over June 2024, driven by loan growth and FMCB acquisition - Total assets at June 30, 2025, were **$5.30 billion**, an increase of **$230.4 million (4.5%)** from **$5.07 billion** at December 31, 2024[210](index=210&type=chunk) - The year-over-year increase in total assets was **$609.6 million (13.0%)** from **$4.69 billion** at June 30, 2024, primarily due to loan portfolio growth and the FMCB acquisition[210](index=210&type=chunk) [Investment Securities Portfolio](index=56&type=section&id=Investment%20Securities%20Portfolio) The investment securities portfolio, primarily available for sale, decreased by **$24.4 million (3.2%)** to **$743.9 million** at June 30, 2025, mainly due to the sale of FMCB-acquired securities - The investment securities portfolio is used for liquidity, stable income, and collateral, consisting primarily of U.S. treasury, mortgage-backed, municipal, corporate, and asset-backed securities[211](index=211&type=chunk)[213](index=213&type=chunk) - Securities available for sale were **$743.9 million** at June 30, 2025, a decrease of **$24.4 million (3.2%)** from **$768.2 million** at December 31, 2024, primarily due to the sale of **$58.5 million** of securities from the FMCB acquisition[214](index=214&type=chunk) | (dollars in thousands) | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :--------------------- | :----------------------- | :----------------------------- | | U.S. Treasury Securities | $145,654 | $167,748 | | Mortgage-Backed Securities | $269,898 | $244,890 | | Municipal Securities | $115,054 | $122,265 | | Corporate Securities | $130,097 | $134,186 | | Asset-Backed Securities | $72,030 | $77,076 | | Total | $743,889 | $768,247 | [Loan Portfolio](index=58&type=section&id=Loan%20Portfolio) The Company's gross loan portfolio grew significantly to **$4.15 billion** at June 30, 2025, driven by increased originations and the FMCB acquisition, concentrated in real estate mortgage lending - Total gross loans at June 30, 2025, were **$4.15 billion**, an increase of **$277.3 million (7.2%)** from **$3.87 billion** at December 31, 2024, and **$345.4 million (9.1%)** from **$3.80 billion** at June 30, 2024[217](index=217&type=chunk) - The loan portfolio is primarily focused on real estate mortgage lending, which constituted **81.1%** of the portfolio at June 30, 2025[219](index=219&type=chunk) - Investor CRE loans totaled **$2.87 billion** at June 30, 2025, representing **69.2%** of the total gross loan portfolio and **475.9%** of the Bank's total risk-based capital[220](index=220&type=chunk) [Asset Quality](index=58&type=section&id=Asset%20Quality) The Company's asset quality is managed through an internal classification system, with increased 'Watch/Special Mention' and 'Substandard' loans at June 2025 compared to December 2024 - Loans with 'Watch/Special Mention' risk ratings totaled **$53.3 million** at June 30, 2025, up from **$46.6 million** at December 31, 2024[226](index=226&type=chunk) - Loans with 'Substandard' risk ratings totaled **$45.0 million** at June 30, 2025, up from **$21.8 million** at December 31, 2024[226](index=226&type=chunk) | (dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Watch/Special Mention | $53,282 | $46,581 | | Substandard | $44,986 | $21,791 | | Totals | $98,268 | $68,372 | [Nonperforming Assets](index=59&type=section&id=Nonperforming%20Assets) Nonperforming assets significantly increased at June 30, 2025, due to a rise in nonaccrual loans and the addition of foreclosed assets, compared to December 2024 - Nonaccrual loans totaled **$10.1 million** as of June 30, 2025, a substantial increase from **$301,000** as of December 31, 2024[227](index=227&type=chunk) - Foreclosed assets were **$185,000** at June 30, 2025, compared to none at December 31, 2024[227](index=227&type=chunk) | (dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Total Nonaccrual Loans | $10,134 | $301 | | Total Nonperforming Loans | $10,134 | $301 | | Plus: Foreclosed Assets | $185 | $— | | Total Nonperforming Assets | $10,319 | $301 | | Nonperforming Assets to Total Loans Plus Foreclosed Assets | 0.25 % | 0.01 % | [Allowance for Credit Losses](index=60&type=section&id=Allowance%20for%20Credit%20Losses) The Allowance for Credit Losses (ACL) on loans and leases increased to **$55.8 million** at June 30, 2025, from **$52.3 million** at December 2024, reflecting expected lifetime losses, with low net charge-offs - The ACL on loans and leases was **$55.8 million** at June 30, 2025, an increase of **$3.5 million** from **$52.3 million** at December 31, 2024[231](index=231&type=chunk) - Net charge-offs (recoveries) totaled **$1,000** during Q2 2025 and **$12,000** for the six months ended June 30, 2025[231](index=231&type=chunk) - The ACL as a percentage of total loans was **1.35%** at June 30, 2025, consistent with **1.35%** at December 31, 2024[231](index=231&type=chunk) [Deposits](index=62&type=section&id=Deposits) Total deposits increased to **$4.24 billion** at June 30, 2025, driven by growth in core and brokered deposits, with brokered deposits as a supplemental funding source - Total deposits at June 30, 2025, were **$4.24 billion**, an increase of **$150.0 million (3.7%)** from **$4.09 billion** at December 31, 2024[235](index=235&type=chunk) - Core deposits (excluding brokered and large time deposits) increased by **$79.9 million (5.1% annualized)** from December 31, 2024, due to existing client balances and new client acquisitions[235](index=235&type=chunk) - Brokered deposits increased to **$870.6 million** at June 30, 2025, from **$825.8 million** at December 31, 2024, used as a supplemental funding source[236](index=236&type=chunk) [Borrowed Funds](index=63&type=section&id=Borrowed%20Funds) The Company's borrowed funds increased, with FHLB advances rising to **$404.5 million** at June 30, 2025, maintaining a revolving line of credit and Federal Reserve discount window access - Outstanding FHLB advances increased to **$404.5 million** at June 30, 2025, from **$359.5 million** at December 31, 2024[239](index=239&type=chunk) - The Company had **$490.7 million** in additional borrowing capacity under its FHLB credit facility at June 30, 2025[239](index=239&type=chunk) - The Bank's borrowing availability at the Federal Reserve discount window was approximately **$1.02 billion** at June 30, 2025, with no outstanding advances[241](index=241&type=chunk) [Contractual Obligations](index=63&type=section&id=Contractual%20Obligations) The Company's total contractual obligations amounted to **$4.77 billion** at June 30, 2025, with a significant portion due within one year, primarily deposits, expected to be met through various liquidity sources | (dollars in thousands) | Within One Year | One to Three Years | Three to Five Years | After Five Years | Total | | :--------------------- | :-------------- | :----------------- | :------------------ | :--------------- | :---- | | Deposits Without a Stated Maturity | $3,169,173 | $— | $— | $— | $3,169,173 | | Time Deposits | $650,703 | $247,113 | $169,753 | $— | $1,067,569 | | Notes Payable | $— | $13,750 | $— | $— | $13,750 | | FHLB Advances | $320,500 | $61,500 | $22,500 | $— | $404,500 | | Subordinated Debentures | $— | $— | $— | $110,000 | $110,000 | | Total | $4,143,202 | $323,153 | $192,623 | $110,045 | $4,769,023 | - The Company expects to meet all contractual obligations through earnings, loan and securities repayments, maturity activity, continued deposit gathering, and various short-term and long-term borrowing mechanisms[244](index=244&type=chunk) [Capital](index=64&type=section&id=Capital) Total shareholders' equity increased to **$476.3 million** at June 30, 2025, driven by retained net income and decreased unrealized losses, partially offset by derivative changes, preferred stock dividends, and stock repurchases - Total shareholders' equity at June 30, 2025, was **$476.3 million**, an increase of **$18.3 million (4.0%)** from **$457.9 million** at December 31, 2024[245](index=245&type=chunk) - The increase was primarily due to net income retained and a decrease in unrealized losses in the securities portfolio, partially offset by a decrease in unrealized gains in the derivatives portfolio, preferred stock dividends, and stock repurchases[245](index=245&type=chunk) - Tangible book value per share (non-GAAP) increased by **5.4%** to **$14.21** at June 30, 2025, from **$13.49** at December 31, 2024[246](index=246&type=chunk) [Regulatory Capital](index=64&type=section&id=Regulatory%20Capital) The Company and Bank continued to meet all regulatory capital requirements, including the capital conservation buffer, as of June 2025 and December 2024 | (dollars in thousands) | June 30, 2025 Actual Ratio | December 31, 2024 Actual Ratio | | :--------------------- | :------------------------- | :----------------------------- | | Company (Consolidated): | | | | Total Risk-based Capital | 14.17 % | 13.76 % | | Tier 1 Risk-based Capital | 10.51 % | 10.64 % | | Common Equity Tier 1 Capital | 9.03 % | 9.08 % | | Tier 1 Leverage Ratio | 9.14 % | 9.44 % | | Bank: | | | | Total Risk-based Capital | 13.41 % | 13.49 % | | Tier 1 Risk-based Capital | 12.16 % | 12.24 % | | Common Equity Tier 1 Capital | 12.16 % | 12.24 % | | Tier 1 Leverage Ratio | 10.58 % | 10.86 % | - Both the Company and the Bank maintained capital ratios sufficient to meet the capital conservation buffer of **2.5%** at June 30, 2025, avoiding limitations on capital distributions[250](index=250&type=chunk) [Off-Balance Sheet Arrangements](index=65&type=section&id=Off-Balance%20Sheet%20Arrangements) The Company engages in off-balance sheet arrangements, including unfunded commitments and letters of credit, to meet client financing needs, managing associated credit and interest rate risks | (dollars in thousands) | June 30, 2025 Fixed | June 30, 2025 Variable | December 31, 2024 Fixed | December 31, 2024 Variable | | :--------------------- | :------------------ | :--------------------- | :---------------------- | :------------------------- | | Unfunded Commitments Under Lines of Credit | $152,414 | $522,737 | $174,273 | $504,791 | | Letters of Credit | $7,314 | $110,688 | $9,012 | $115,385 | | Totals | $159,728 | $633,425 | $183,285 | $620,176 | - The Company had outstanding letters of credit with the FHLB of **$134.8 million** at June 30, 2025, up from **$103.2 million** at December 31, 2024[253](index=253&type=chunk) - Most off-balance sheet commitments mature within **two years**, and standby letters of credit are expected to expire without being drawn upon[251](index=251&type=chunk) [Liquidity](index=65&type=section&id=Liquidity) The Company maintains adequate liquidity through primary and secondary sources to meet obligations. Total liquidity increased to **$2.38 billion** at June 30, 2025, supported by core deposits and borrowing capacities - Total on- and off-balance sheet liquidity was **$2.38 billion** as of June 30, 2025, up from **$2.30 billion** at December 31, 2024[257](index=257&type=chunk) | (dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Primary Liquidity—On-Balance Sheet: | | | | Cash and Cash Equivalents | $192,709 | $188,884 | | Securities Available for Sale | $743,889 | $768,247 | | Less: Pledged Securities | $(282,025) | $(289,903) | | Total Primary Liquidity | $654,573 | $667,228 | | Secondary Liquidity—Off-Balance Sheet: | | | | Net Secured Borrowing Capacity with the FHLB | $490,748 | $483,245 | | Net Secured Borrowing Capacity with the Federal Reserve Bank | $1,019,087 | $925,798 | | Unsecured Borrowing Capacity with Correspondent Lenders | $200,000 | $200,000 | | Secured Borrowing Capacity with Correspondent Lender | $19,855 | $19,855 | | Total Secondary Liquidity | $1,729,690 | $1,628,898 | | Total Primary and Secondary Liquidity | $2,384,263 | $2,296,126 | - Core deposits totaled approximately **$3.19 billion** at June 30, 2025, representing **75.2%** of total deposits, providing a stable funding source[258](index=258&type=chunk) [Non-GAAP Financial Measures](index=67&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations of non-GAAP financial measures like Pre-Provision Net Revenue, Core Net Interest Margin, and Tangible Common Equity to GAAP, offering investors additional insights - The Company uses non-GAAP financial measures to supplement GAAP, believing they provide meaningful information for investors to understand operating performance and trends, and to facilitate peer comparisons[262](index=262&type=chunk) - Non-GAAP measures include Pre-Provision Net Revenue, Core Net Interest Margin, Core Loan Yield, Efficiency Ratio, Tangible Common Equity, and Adjusted Diluted Earnings Per Common Share[262](index=262&type=chunk) | (dollars in thousands) | June 30, 2025 | June 30, 2024 | | :--------------------- | :------------ | :------------ | | Pre-Provision Net Revenue | $16,363 | $10,900 | | Adjusted Pre-Provision Net Revenue | $16,903 | $10,900 | | Core Net Interest Margin | 2.49 % | 2.17 % | | Core Loan Yield | 5.59 % | 5.42 % | | Efficiency Ratio | 52.6 % | 58.7 % | | Adjusted Efficiency Ratio | 51.5 % | 58.7 % | | Tangible Common Equity | $390,396 | $369,930 | | Tangible Common Equity/Tangible Assets | 7.40 % | 7.90 % | | Tangible Book Value Per Common Share | $14.21 | $13.53 | | Adjusted Diluted Earnings Per Common Share | $0.37 | $0.25 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=70&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the Company's primary market risk, interest rate risk, and its management through the ALM Committee, detailing derivative use for hedging and net interest income simulation [Interest Rate Risk](index=70&type=section&id=Interest%20Rate%20Risk) Interest rate risk, the Company's primary market risk, arises from asset/liability mismatches and is managed by the ALM Committee using derivative instruments to mitigate exposure - Interest rate risk is the Company's primary market risk, managed by the ALM Committee through a board-approved risk management infrastructure[266](index=266&type=chunk)[267](index=267&type=chunk) - The Company uses cash flow hedges (notional amount **$308.0 million** at June 30, 2025) for brokered deposits and wholesale borrowings, and fair value hedges (notional amount **$195.0 million** at June 30, 2025) for U.S. treasury and mortgage-backed securities[269](index=269&type=chunk) [Net Interest Income Simulation](index=70&type=section&id=Net%20Interest%20Income%20Simulation) The Company uses a net interest income simulation model to forecast the impact of hypothetical interest rate changes over 12 months on a static balance sheet, showing a **5.10%** decrease for a **+400 bps** rate increase and a **17.01%** increase for a **-400 bps** rate decrease - The net interest income simulation model measures potential changes in net interest income over **12 months** from immediate and sustained interest rate shifts, assuming a static balance sheet[270](index=270&type=chunk) | Change (basis points) in Interest Rates (12-Month Projection) | June 30, 2025 Forecasted Net Interest Income | June 30, 2025 Percentage Change from Base | | :------------------------------------------------------------ | :------------------------------------------- | :---------------------------------------- | | +400 | $135,489 | (5.10)% | | +300 | $137,646 | (3.59) | | +200 | $139,348 | (2.40) | | +100 | $140,839 | (1.35) | | 0 | $142,771 | — | | −100 | $147,243 | 3.13 | | −200 | $153,065 | 7.21 | | −300 | $160,037 | 12.09 | | −400

Financial Data and Key Metrics Changes - The company reported strong revenue and balance sheet growth trends, with net interest income increasing by $2.2 million during the quarter and net interest margin expanding by 11 basis points to 2.62% [5][12] - Tangible book value per share grew nearly 11% annualized year to date, resuming its consistent growth trend after a decline in 2024 due to an acquisition [8][34] - Noninterest income increased by $773,000 or 37% during the quarter, driven primarily by swap fee income [18][19] Business Line Data and Key Metrics Changes - The loan portfolio grew at an annualized rate of 12.5% in the second quarter, with total loans up 14.5% year to date, exceeding expectations for mid to high single-digit growth [23][24] - Core deposits increased by $16 million or 2% annualized, while total deposits rose by $74 million or 7% annualized [22] - The majority of loan growth was driven by non-owner occupied commercial real estate (CRE), with continued growth in multifamily and construction sectors [27][28] Market Data and Key Metrics Changes - The company noted a competitive landscape with tighter spreads due to increased market participation from other banks following liquidity concerns subsiding [51][60] - The ongoing market disruption from Old National's acquisition of Bremer Bank is expected to create additional growth opportunities [9][60] Company Strategy and Development Direction - The company aims to gain market share and capitalize on opportunities arising from market disruptions in the Twin Cities [39] - Two significant technology initiatives are planned for the third quarter, including an upgraded online banking platform and systems conversion from a recent acquisition [10][39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued net interest margin expansion and loan growth, despite some headwinds from subordinated debt issuance [37][68] - The company remains focused on organic growth while exploring potential M&A opportunities, although no imminent deals are currently in sight [62] Other Important Information - The company repurchased $1.6 million of common stock early in the second quarter and has $13.1 million remaining under its current share repurchase authorization [9][34] - The overall credit profile remains strong, with nonperforming assets at 0.19% of total assets, well below peer levels [32] Q&A Session Summary Question: June average for the margin - The June average margin was $265 million [43] Question: Rate of securities sale relative to the total portfolio - The securities sold were primarily treasuries and mortgage-backed securities in the low 4s, below the blended securities portfolio yield [44][45] Question: Expectations for swap fees - Swap fees are expected to be more consistent going forward, although predicting exact quarterly amounts remains challenging [47][49] Question: Competition in the market - Increased competition has been noted, with local players returning to the market, but the company is optimistic about its strong pipeline [51][60] Question: Expectations for CRE growth - Growth in CRE is expected to align with other business lines, with a focus on affordable housing as a key growth driver [58][60] Question: NIM expansion outlook - Long-term expectations for NIM expansion remain positive, with ongoing loan repricing and opportunities to lower deposit costs [68][70]

Financial Performance - The company's reported diluted EPS was $038[6] - The company's reported Return on Average Assets was 090%[6] - The company's reported Return on Average Tangible Common Equity was 1093%[6] - The company's efficiency ratio was 526%[6] - Nonperforming assets to total assets was 019%[6] Net Interest Margin and Income - Net interest margin (NIM) increased by 11 bps from 1Q25 to 262%, while core NIM increased by 12 bps to 249%[6] - Net interest income increased by $22 million, or 74%, from 1Q25[6] Balance Sheet Growth - Loan balances increased by $126 million, or 125% annualized, from 1Q25[6] - Total deposit balances increased by $74 million, or 72% annualized, from 1Q25, with core deposit balances increasing by $16 million, or 21% annualized[6] Capital and Shareholder Value - Tangible book value per share increased by 92% annualized from 1Q25 to $1421[6] - The company repurchased 122,704 shares of common stock at an aggregate purchase price of $16 million, with an average price of $1280 per share[6]

Company Performance - Bridgewater reported quarterly earnings of $0.37 per share, exceeding the Zacks Consensus Estimate of $0.35 per share, and up from $0.26 per share a year ago, representing an earnings surprise of +5.71% [1] - The company posted revenues of $36.08 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 5.80%, compared to year-ago revenues of $26.76 million [2] - Over the last four quarters, Bridgewater has consistently surpassed consensus EPS and revenue estimates [2] Stock Movement and Outlook - Bridgewater shares have increased approximately 19% since the beginning of the year, outperforming the S&P 500's gain of 7.3% [3] - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.37 on revenues of $35.2 million, and for the current fiscal year, it is $1.40 on revenues of $138.2 million [7] Industry Context - The Banks - Northeast industry, to which Bridgewater belongs, is currently ranked in the top 24% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Bridgewater's performance [5][6]

Financial Performance - Net income for Q2 2025 was $11.5 million, or $0.38 per diluted common share, compared to $9.6 million in Q1 2025 and $8.1 million in Q2 2024[4] - Net income for the quarter was $11,520,000, representing a 19.1% increase compared to $9,633,000 in the prior quarter[37] - Earnings per share (EPS) for Q2 2025 was $0.38, up from $0.31 in Q1 2025, reflecting a growth of 22.6%[42] - For Q2 2025, net income available to common shareholders was $10,506,000, up from $8,620,000 in Q1 2025, representing a 21% increase[51] - Adjusted net income available to common shareholders for the first half of 2025 was $19,376,000, compared to $13,603,000 for the same period in 2024, a 42% increase[51] Revenue and Income Growth - Pre-provision net revenue increased by $2.2 million, or 15.6%, from Q1 2025, with net interest income rising by $2.2 million, or 7.4%[3] - Record noninterest income reached $3.6 million, up $1.5 million, or 74.5%, from Q1 2025[3] - Noninterest income rose to $3.6 million in Q2 2025, an increase of $1.5 million from Q1 2025 and $1.9 million from Q2 2024[17] - Total interest income for Q2 2025 was $69,198,000, an increase of 5.3% from $65,708,000 in Q1 2025[42] - Adjusted operating revenue for Q2 2025 was $35,304,000, compared to $32,286,000 in Q1 2025, reflecting an increase of 6.3%[50] Asset and Loan Growth - Total assets increased to $5,296,673,000 from $5,136,808,000 in the previous quarter, showing growth in the company's balance sheet[37] - Total gross loans reached $4.15 billion in Q2 2025, a $125.7 million increase, or 12.5% annualized, from Q1 2025, and a $345.4 million increase, or 9.1%, from Q2 2024[20] - Total deposits were $4.24 billion in Q2 2025, an increase of $74.3 million, or 7.2% annualized, from Q1 2025, and $429.0 million, or 11.3%, from Q2 2024[22] - Net loans reached $4,082,405 thousand, an increase of 3.1% from $3,959,092 thousand in the previous quarter[41] - Total interest earning assets increased to $5,019,058 thousand for the three months ended June 30, 2025, compared to $4,545,920 thousand for the same period in 2024, reflecting a growth of 10.4%[43] Cost Management and Efficiency - Efficiency ratio improved to 52.6%, down from 55.5% in Q1 2025, indicating better cost management[3] - The efficiency ratio improved to 52.6% in Q2 2025, down from 55.5% in Q1 2025 and 58.7% in Q2 2024[19] - The efficiency ratio improved to 51.5% in Q2 2025 from 53.7% in Q1 2025, indicating enhanced operational efficiency[50] - Total noninterest expense for Q2 2025 was $18,941,000, a slight increase from $18,136,000 in Q1 2025[42] - Adjusted noninterest expense to average assets (annualized) was 1.43% in Q2 2025, up from 1.41% in Q1 2025[50] Credit Quality and Provisioning - Provision for credit losses on loans was $2.0 million in Q2 2025, compared to $1.5 million in Q1 2025 and $600,000 in Q2 2024[15] - Nonperforming assets to total assets ratio was 0.19% at June 30, 2025, down from 0.20% at March 31, 2025, reflecting strong asset quality[3] - Nonperforming Loans decreased slightly to $10,134,000, representing 0.24% of total loans as of June 30, 2025, down from 0.26% in the previous quarter[47] - The allowance for credit losses at the end of June 30, 2025, was $55,765 thousand, with an allowance to total loans ratio of 1.35%[46] - The company reported a slight increase in foreclosed assets, totaling $185 thousand compared to none in the previous quarter[41] Shareholder Returns and Equity - Tangible book value per share increased by 9.2% annualized to $14.21 at June 30, 2025[3] - Total shareholders' equity increased to $476.3 million in Q2 2025, up $7.3 million, or 6.2% annualized, from Q1 2025[25] - The Company repurchased 122,704 shares of common stock at an average price of $12.80 per share, totaling $1.6 million[3] - Total common shareholders' equity increased to $409,768,000 in Q2 2025 from $402,461,000 in Q1 2025, a growth of 0.3%[50] - Adjusted return on average tangible common equity for Q2 2025 was 10.74%, up from 9.68% in Q1 2025[51]