Bridgewater Bank(US:BWB)2025-10-22 14:00Financial Data and Key Metrics Changes - In Q3 2025, the company reported a strong core deposit growth of 11.5% annualized, contributing to a $1.6 million increase in net interest income [5][6] - The net interest margin expanded by one basis point to 2.63%, with expectations for more significant expansion in the coming quarters [6][12] - Tangible book value per share increased by 20% annualized in Q3 and is up 14% annualized year to date [6] Business Line Data and Key Metrics Changes - Loan growth was strong at 6.6% annualized in Q3, with growth across multiple asset classes, including affordable housing [5][20] - Core deposits are now up 7.4% annualized year to date, indicating a healthy deposit pipeline [18] - Fee income saw a decline in Q3 due to a lack of swap fee income, but a rebound is expected in Q4 [16][17] Market Data and Key Metrics Changes - The company continues to see favorable trends in the Twin Cities market, with expectations for continued strong asset quality [11][30] - The overall credit profile remains strong, with non-performing assets at just 0.19% of total assets, well below peer levels [25][27] Company Strategy and Development Direction - The company aims to grow to a $10 billion bank by 2030, with a focus on taking advantage of M&A disruptions in the Twin Cities [10][30] - A new retail and small business online banking platform was launched, enhancing client financial management [8][30] - The company plans to close one of the two branches acquired from First Minnetonka City Bank to improve efficiency [31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan and deposit growth, with expectations for mid to high single-digit loan growth in the near term [10][28] - The company is well-positioned for net interest margin expansion, anticipating a path to a 3% margin by early 2027 [28][29] - Management highlighted the importance of maintaining a strong credit culture and proactive risk management [36][48] Other Important Information - The company has undergone leadership transitions, with key executives retiring in 2026, ensuring continuity in the bank's credit culture [9][10] - The systems conversion related to the acquisition of First Minnetonka City Bank was successfully completed, allowing for a return to normalized expense growth [11][29] Q&A Session Summary Question: Margin path towards 3% - Management expects a steady improvement of two to three basis points a month, assuming two rate cuts in October and December [34] Question: Impact of rate cuts on borrowers - Management is proactively addressing loans with repricing risk and feels confident about the credit risk management in place [36] Question: Merger costs allocation - The increase in expenses was primarily due to salaries and marketing efforts related to growth strategies, with merger costs highlighted separately [37][39] Question: Loan growth outlook and hiring impact - Management is optimistic about loan growth and is strategically hiring to align loan growth with deposit growth [52][56] Question: Affordable housing growth comfort level - The company has a strong history in affordable housing and is comfortable expanding this segment, focusing on top-tier borrowers [45][48] Question: Specific reserves on loans - The specific reserve for an office loan remains unchanged, and there are no specific reserves for a multifamily loan that was moved to substandard [60]