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 33.4% increase[172] - Diluted earnings per share for Q3 2025 were $0.38, compared to $0.27 in Q3 2024, reflecting a 40.7% increase[172] - Adjusted net income for Q3 2025 was $12.0 million, up from $8.9 million in Q3 2024, reflecting a 34.8% increase[172] - Noninterest income for Q3 2025 was $2.1 million, compared to $1.5 million in Q3 2024, marking a 37.5% increase[169] - Total assets reached $5.36 billion as of September 30, 2025, up from $4.69 billion a year earlier, indicating a 14.7% growth[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 efficiency ratio improved to 54.7% in Q3 2025 from 58.0% in Q3 2024, indicating better cost management[169] Income and Expenses - The Company’s principal sources of income include interest and fees collected on loans, and interest and dividends earned on investment securities[163] - The Company’s principal expenses are interest paid on deposit accounts and borrowings, employee compensation, and other overhead expenses[163] - 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] - 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] Risk Management - The Company is subject to various risks, including interest rate risk, credit risk, and competition from nonbank financial service providers[161] - The Company’s risk management infrastructure includes limits and management targets for net interest income simulation, which is crucial for managing interest rate risk[280] - The Company does not engage in speculative trading activities related to interest rates, foreign exchange rates, or commodities, focusing instead on managing interest rate risk through various strategies[281] Loans and Credit Quality - Nonperforming loans were $9.99 million, stable compared to $10.29 million in Q3 2024, maintaining a nonperforming loans to total loans ratio of 0.24%[170] - The allowance for credit losses on loans and leases was $56.4 million at September 30, 2025, an increase of $4.1 million from $52.3 million at December 31, 2024[242] - Loans classified as "watch/special mention" totaled $40.6 million, down from $46.6 million at December 31, 2024[236] - The total allowance for credit losses was $56.39 million as of September 30, 2025[229] Deposits and Liquidity - 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] - The Company had outstanding FHLB advances of $404.5 million as of September 30, 2025, up from $359.5 million at December 31, 2024[251] - The Company had total on- and off-balance sheet liquidity of $2.39 billion as of September 30, 2025, compared to $2.30 billion at December 31, 2024[270] Capital and Shareholder Equity - As of September 30, 2025, total shareholders' equity increased to $497.5 million, up $39.5 million or 8.6% from $457.9 million at December 31, 2024[258] - Tangible book value per share rose to $14.93, reflecting a 10.7% increase from $13.49 as of December 31, 2024[259] - 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] - The Company maintained a Tier 1 risk-based capital ratio of 10.52% as of September 30, 2025, above the minimum requirement of 6.00%[262] Interest Income and Margin - Net interest income increased to $34.1 million in Q3 2025 from $26.9 million in Q3 2024, a growth of 26.5%[169] - The net interest margin improved to 2.63% for the three months ended September 30, 2025, compared to 2.24% in the same period of 2024[176] - 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] Tax and Regulatory Changes - The financial impact of recent federal tax law changes, including immediate expensing of R&D expenditures and 100% bonus depreciation, was immaterial to the financial statements[167] - 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]
BRIDGEWATER BANC(BWBBP) - 2025 Q3 - Quarterly Report