Bridgewater Bank(US:BWB)2026-01-28 15:00Financial Data and Key Metrics Changes - The company finished the year strong with robust loan and core deposit growth, net interest margin expansion, and higher fee income [4] - Net interest margin expanded by 12 basis points to 2.75%, driving strong growth in net interest income [5][11] - Core deposits grew by 9% in Q4 and 8% for the full year, while loans grew at an 11% pace, exceeding initial guidance [6] - Tangible book value per share grew 16.5% annualized and 15.3% year-over-year [7] Business Line Data and Key Metrics Changes - The company saw strong revenue growth from both spread and fee perspectives, with net interest income increasing by 5% during the quarter [11] - Non-interest income rebounded in Q4, driven by increases in swap fees and letter of credit fees [15] - Core deposit growth was 8.8% annualized in Q4, with significant growth in non-interest-bearing deposits [18] Market Data and Key Metrics Changes - The company is now the second-largest locally led bank in the Twin Cities, positioning itself well amid M&A disruptions in the market [9] - The affordable housing vertical saw a 27% annualized increase in balances in Q4, contributing significantly to loan growth [21] Company Strategy and Development Direction - The company aims to optimize profitable growth while aligning loan growth with core deposit growth and expanding net interest margin [30] - There is a focus on gaining market share in the Twin Cities and expanding expertise in targeted verticals, including nonprofits and SBA [31] - The company plans to continue expanding its affordable housing vertical and leverage technology investments for growth and efficiency [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ability to maintain loan growth in the high single digits in 2026, driven by strong core deposit growth [28] - The company expects to achieve a 3% net interest margin by the end of 2026, pulling forward previous expectations [28] - Management acknowledged the challenges in the operating environment but remains confident in the company's resilience and growth prospects [9] Other Important Information - The company closed one of the two branches added through the First Minnetonka City Bank acquisition due to proximity issues, with minimal deposit attrition post-merger [8] - The company is actively monitoring the impact of recent events in the Twin Cities on team members and clients [9] Q&A Session Summary Question: Can you unpack some of the deposit growth in the quarter? - Management noted that Q4 tends to be a seasonally high watermark for deposit growth, with expectations for modest growth in Q1 and Q2 [36] Question: Can you discuss the cadence of loan repricing? - Management indicated that loan repricing is well laid out and not concentrated in any one quarter, supporting the margin target [39] Question: What are the expectations for expenses in 2026? - Management expects expenses to grow in the high single digits, aligning with asset growth [42] Question: What is the company's appetite for potential acquisitions? - Management continues to engage with local bank owners and remains optimistic about future acquisition opportunities while focusing on organic growth [54] Question: How does the company view the affordable housing vertical's growth potential? - Management expressed confidence in the affordable housing space, expecting it to grow as a percentage of the overall loan book [59]