Bridgewater Bank(US:BWB)2025-10-22 14:02Financial Data and Key Metrics Changes - In Q3 2025, the company experienced a strong core deposit growth of 11.5% annualized, contributing to a steady net interest income growth [5][6] - Net interest income increased by $1.6 million during the quarter, with net interest margin expanding by 1 basis point to 2.63% [7][12] - Tangible book value per share increased by 20% annualized in Q3 and is up 14% annualized year to date [7] 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][10] - Core deposits are now up 7.4% annualized year to date, indicating a solid deposit pipeline [19] - Loan origination activity decreased slightly in Q3 but is expected to pick up in Q4 due to a strong pipeline [22] Market Data and Key Metrics Changes - The company noted favorable trends in the Twin Cities market, which supports continued strong asset quality [11][30] - The cost of total deposits stabilized at 3.19%, with expectations for a decline in deposit costs in Q4 [16] 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] - The company plans to close one of the two branches acquired from First Minnetonka City Bank to improve efficiency [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about net interest margin expansion in the coming quarters, with a target of reaching a 3% margin by early 2027 [10][28] - The overall credit profile remains strong, with low non-performing assets and net charge-offs [25][28] Other Important Information - The company has successfully completed significant initiatives, including the systems conversion of the First Minnetonka City Bank acquisition [8] - Management transitions were announced, with key leadership changes planned for 2026 [9][10] Q&A Session Summary Question: Margin path towards 3% - Management expects a steady improvement of 2 to 3 basis points per month towards the 3% margin target, assuming two rate cuts in October and December [36][38] Question: Impact of rate cuts on borrowers - Management has not quantified the tangible benefits of rate cuts but is proactively addressing loans with repricing risk [39] Question: Merger costs and future expenses - Management clarified that merger costs were highlighted separately and expects expenses to normalize post-conversion [40][42] Question: Affordable housing growth comfort level - The company has a strong history in affordable housing and is comfortable growing this segment, focusing on top-tier borrowers [51][53] Question: Loan growth outlook and hiring impact - Management is optimistic about loan growth and is strategically hiring to align loan growth with deposit growth [60][62]