Bridgewater Bank(US:BWB)2025-10-30 11:06Acquisition 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]