Bridgewater Bancshares, Inc. Announces First Quarter 2025 Financial Results

First Quarter 2025 Highlights

• Net income of $9.6 million, or $0.31 per diluted common share; adjusted net income of $10.1 million, or $0.32 per diluted common share.⁽¹⁾
• Pre-provision net revenue⁽¹⁾ increased $1.5 million, or 11.5%, from the fourth quarter of 2024.
• Net interest income increased $3.2 million, or 12.0%, from the fourth quarter of 2024.
• Net interest margin (on a fully tax-equivalent basis) of 2.51% for the first quarter of 2025, an increase of 19 basis points from the fourth quarter of 2024.
• Gross loans increased by $151.6 million, or 15.9% annualized, from the fourth quarter of 2024.
• Total deposits increased by $75.7 million, or 7.5% annualized, from the fourth quarter of 2024; core deposits⁽²⁾ increased by $63.7 million, or 8.3% annualized, from the fourth quarter of 2024.
• Efficiency ratio⁽¹⁾ of 55.5%, down from 56.8% for the fourth quarter of 2024; adjusted efficiency ratio⁽¹⁾ of 53.7%, down from 55.2% for the fourth quarter of 2024.
• Annualized net loan charge-offs as a percentage of average loans of 0.00%, compared to 0.03% for the fourth quarter of 2024.
• Nonperforming assets to total assets of 0.20% at March 31, 2025, compared to 0.01% at December 31, 2024.
• Tangible book value per share⁽¹⁾ of $13.89 at March 31, 2025, an increase of 12.2% annualized, from the fourth quarter of 2024.
• Repurchased 45,005 shares of common stock at an aggregate purchase price of $0.6 million.

Bridgewater Bancshares, Inc. (NASDAQ:BWB) (the Company), the parent company of Bridgewater Bank (the Bank), today announced net income of $9.6 million for the first quarter of 2025, compared to $8.2 million for the fourth quarter of 2024, and $7.8 million for the first quarter of 2024. Earnings per diluted common share were $0.31 for the first quarter of 2025, compared to $0.26 for the fourth quarter of 2024, and $0.24 for the first quarter of 2024. Adjusted net income, a non-GAAP financial measure, was $10.1 million for the first quarter of 2025, compared to $8.6 million for the fourth quarter of 2024, and $7.8 million for the first quarter of 2024. Adjusted earnings per diluted common share, a non-GAAP financial measure, were $0.32 for the first quarter of 2025, compared to $0.27 for the fourth quarter of 2024, and $0.24 for the first quarter of 2024.

"Bridgewater is off to a strong start in 2025 with the continuation of growth and profitability momentum which began in late 2024," said Chairman and Chief Executive Officer, Jerry Baack. "Core deposit growth trends continued, allowing us to be more offensive-minded on the loan growth front. With increased demand resulting in a strong loan pipeline, we saw our second consecutive quarter of robust organic loan growth. In addition, revenue growth accelerated in the first quarter as declining deposit costs drove continued net interest margin expansion.

"While a new wave of economic uncertainty has been introduced into the market, the key for us is to remain focused on doing what we do best. This includes being experts in our markets, supporting our clients, maintaining superb asset quality, and continuing to grow tangible book value."

Key Financial Measures

Income Statement

Net Interest Margin and Net Interest Income

Net interest margin (on a fully tax-equivalent basis) for the first quarter of 2025 was 2.51%, a 19 basis point increase from 2.32% in the fourth quarter of 2024, and a 27 basis point increase from 2.24% in the first quarter of 2024. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and purchase accounting accretion and amortization, was 2.37% for the first quarter of 2025, a 13 basis point increase from 2.24% in the fourth quarter of 2024, and a 19 basis point increase from 2.18% in the first quarter of 2024.

• Net interest margin expanded to 2.51% in the first quarter of 2025 primarily due to lower costs of deposits, higher purchase accounting accretion, and higher core loan yields.

Net interest income was $30.2 million for the first quarter of 2025, an increase of $3.2 million from $27.0 million in the fourth quarter of 2024, and an increase of $5.6 million from $24.6 million in the first quarter of 2024.

• The linked-quarter increase in net interest income was primarily due to increased loan interest and fee income, higher purchase accounting accretion, and lower costs of deposits.
• The year-over-year increase in net interest income was primarily due to growth and higher yields in the securities and loan portfolios.

Interest income was $65.7 million for the first quarter of 2025, an increase of $2.4 million from $63.3 million in the fourth quarter of 2024, and an increase of $7.0 million from $58.7 million in the first quarter of 2024.

• The yield on interest earning assets (on a fully tax-equivalent basis) was 5.43% in the first quarter of 2025, compared to 5.40% in the fourth quarter of 2024, and 5.28% in the first quarter of 2024.
• The linked-quarter and year-over-year increases in the yield on interest earning assets were primarily due to growth and repricing of the loan portfolio in the higher interest rate environment and purchase accounting accretion attributable to the acquisition of First Minnetonka City Bank (FMCB).
• The aggregate loan yield increased to 5.61% in the first quarter of 2025, six basis points higher than 5.55% in the fourth quarter of 2024, and 23 basis points higher than 5.38% in the first quarter of 2024.
• Core loan yield, a non-GAAP financial measure, increased three basis points to 5.50% in the first quarter of 2025.

A summary of interest and fees recognized on loans for the periods indicated is as follows:

Interest expense was $35.5 million for the first quarter of 2025, a decrease of $857,000 from $36.4 million in the fourth quarter of 2024, and an increase of $1.5 million from $34.0 million in the first quarter of 2024.

• The cost of interest bearing liabilities was 3.82% in the first quarter of 2025, compared to 4.06% in the fourth quarter of 2024, and 4.03% in the first quarter of 2024.
• The linked-quarter and year-over-year decreases in the cost of interest bearing liabilities were primarily due to lower rates paid on deposits and decreases in average brokered deposit balances.

Interest expense on deposits was $32.1 million for the first quarter of 2025, a decrease of $707,000 from $32.8 million in the fourth quarter of 2024, and an increase of $1.9 million from $30.2 million in the first quarter of 2024.

• The cost of total deposits was 3.18% in the first quarter of 2025, compared to 3.40% in the fourth quarter of 2024, and 3.32% in the first quarter of 2024.
• The linked-quarter decrease in the cost of total deposits was primarily due to interest rate cuts by the Federal Reserve that occurred in the fourth quarter of 2024 and the reduction of higher cost funding.
• The year-over-year increase in the cost of total deposits was primarily due to higher balances in interest bearing transaction deposits, savings and money market deposits, and time deposits.

Provision for Credit Losses

The provision for credit losses on loans and leases was $1.5 million for the first quarter of 2025, compared to $1.5 million for the fourth quarter of 2024 and $850,000 the first quarter of 2024.

• The provision for credit losses on loans recorded in the first quarter of 2025 was primarily attributable to increased growth in the loan portfolio.
• The allowance for credit losses on loans to total loans was 1.34% at March 31, 2025, compared to 1.35% at December 31, 2024, and 1.36% at March 31, 2024.

The provision for credit losses for off-balance sheet credit exposures was $-0- for the first quarter of 2025, compared to $725,000 for the fourth quarter of 2024, and a negative provision of $100,000 for the first quarter of 2024.

Noninterest Income

Noninterest income was $2.1 million for the first quarter of 2025, a decrease of $454,000 from $2.5 million for the fourth quarter of 2024, and an increase of $529,000 from $1.6 million for the first quarter of 2024.

• The linked-quarter decrease was primarily due to lower letter of credit fees and swap fees, offset partially by an increase in investment advisory fees.
• The year-over-year increase was primarily due to higher customer service fees, letter of credit fees, and investment advisory fees.

Noninterest Expense

Noninterest expense was $18.1 million for the first quarter of 2025, an increase of $1.3 million from $16.8 million for the fourth quarter of 2024 and an increase of $2.9 million from $15.2 million for the first quarter of 2024.

• The linked-quarter increase was primarily due to increases in salaries and employee benefits, increased operating costs related to the FMCB acquisition, primarily driven by the inclusion of a full quarter of FMCB expenses, and merger-related expenses.
• The year-over-year increase was primarily attributable to increases in salaries and employee benefits, increased operating costs related to the acquisition, and merger-related expenses, offset partially by a decrease in the FDIC insurance assessment, which resulted from decreased brokered deposits and moderated loan growth.
• Noninterest expense for the first quarter of 2025 included $565,000 of merger-related expenses, compared to $488,000 for the fourth quarter of 2024.
• The efficiency ratio, a non-GAAP financial measure, was 55.5% for the first quarter of 2025, compared to 56.8% for the fourth quarter of 2024, and 58.2% for the first quarter of 2024.
• The Company had 292 full-time equivalent employees at March 31, 2025, compared to 290 at December 31, 2024, and 255 at March 31, 2024.

Income Taxes

The effective combined federal and state income tax rate was 23.9% for the first quarter of 2025, compared to 22.0% for the fourth quarter of 2024, and 23.5% for the first quarter of 2024.

Balance Sheet

Loans

Total gross loans at March 31, 2025 were $4.02 billion, an increase of $151.6 million, or 15.9% annualized, over total gross loans of $3.87 billion at December 31, 2024, and an increase of $235.9 million, or 6.2%, over total gross loans of $3.78 billion at March 31, 2024.

• The increase in the loan portfolio during the first quarter of 2025 was due to increased loan originations.

Deposits

Total deposits at March 31, 2025 were $4.16 billion, an increase of $75.7 million, or 7.5% annualized, over total deposits of $4.09 billion at December 31, 2024, and an increase of $355.2 million, or 9.3%, over total deposits of $3.81 billion at March 31, 2024.

• Core deposits, defined as total deposits excluding brokered deposits and certificates of deposits greater than $250,000, increased $63.7 million, or 8.3% annualized, from the fourth quarter of 2024. Growth in core deposits was due to both increased balances of existing clients and new client acquisitions. Based on the nature of the Company's client base, core deposit balances can fluctuate from quarter to quarter, as deposit growth is not always linear.

Asset Quality

Overall asset quality remained superb due to the Company's measured risk selection, consistent underwriting standards, active credit oversight, and experienced lending and credit teams.

• Annualized net charge-offs as a percentage of average loans were 0.00% for the first quarter of 2025, compared to 0.03% for the fourth quarter of 2024, and 0.00% for the first quarter of 2024.
• At March 31, 2025, the Company's nonperforming assets, which include nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $10.3 million, or 0.20% of total assets, compared to $301,000, or 0.01% of total assets, at December 31, 2024, and $269,000, or 0.01% of total assets, at March 31, 2024. The increase in nonperforming assets was primarily due to one central business district office loan that previously had a special mention risk rating.
• Loans with potential weaknesses that warranted a watch/special mention risk rating at March 31, 2025 totaled $38.3 million, compared to $46.6 million at December 31, 2024, and $21.6 million at March 31, 2024.
• Loans that warranted a substandard risk rating at March 31, 2025 totaled $31.6 million, compared to $21.8 million at December 31, 2024, and $33.8 million at March 31, 2024.

Capital

Total shareholders' equity at March 31, 2025 was $469.0 million, an increase of $11.0 million, or 2.4%, compared to total shareholders' equity of $457.9 million at December 31, 2024, and an increase of $35.4 million, or 8.2%, over total shareholders' equity of $433.6 million at March 31, 2024.

• The linked-quarter and year-over-year increases were primarily due to net income retained and a decrease in unrealized losses in the securities portfolio, offset partially by a decrease in unrealized gains in the derivatives portfolio, preferred stock dividends, and stock repurchases.
• The Common Equity Tier 1 Risk-Based Capital Ratio was 9.03% at March 31, 2025, compared to 9.08% at December 31, 2024, and 9.21% at March 31, 2024.
• Tangible common equity as a percentage of tangible assets, a non-GAAP financial measure, was 7.48% at March 31, 2025, compared to 7.36% at December 31, 2024, and 7.72% at March 31, 2024.

Tangible book value per share, a non-GAAP financial measure, was $13.89 as of March 31, 2025, an increase of 12.2% annualized from $13.49 as of December 31, 2024, and an increase of 5.2% from $13.20 as of March 31, 2024.

During the first quarter of 2025, the Company repurchased 45,005 shares of its common stock at an aggregate purchase price of $0.6 million.

• The Company had $14.7 million remaining under its current share repurchase authorization at March 31, 2025.

Today, the Company also announced that its Board of Directors has declared a quarterly cash dividend on its 5.875% Non-Cumulative Perpetual Preferred Stock, Series A (Series A Preferred Stock). The quarterly cash dividend of $36.72 per share, equivalent to $0.3672 per depositary share, each representing a 1/100th interest in a share of the Series A Preferred Stock (NASDAQ:BWBBP), is payable on June 2, 2025 to shareholders of record of the Series A Preferred Stock at the close of business on May 15, 2025.

Conference Call and Webcast

The Company will host a conference call to discuss its first quarter 2025 financial results on Thursday, April 24, 2025 at 8:00 a.m. Central Time. The conference call can be accessed by dialing 844-481-2913 and requesting to join the Bridgewater Bancshares earnings call. To listen to a replay of the conference call via phone, please dial 877-344-7529 and enter access code 9827138. The replay will be available through May 1, 2025. The conference call will also be available via a live webcast on the Investor Relations section of the Company's website, investors.bridgewaterbankmn.com, and archived for replay.

About the Company

Bridgewater Bancshares, Inc. (NASDAQ:BWB) is a St. Louis Park, Minnesota-based financial holding company founded in 2005. Its banking subsidiary, Bridgewater Bank, is a premier, full-service bank dedicated to providing responsive support and simple solutions to businesses, entrepreneurs, and successful individuals across the Twin Cities. Bridgewater offers a comprehensive suite of products and services spanning deposits, lending, and treasury management solutions. Bridgewater has also received numerous awards for its banking services and esteemed corporate culture. With total assets of $5.1 billion and nine strategically located branches as of March 31, 2025, Bridgewater is one of the largest locally-led banks in Minnesota and is committed to being the finest entrepreneurial bank. For more information, please visit www.bridgewaterbankmn.com.

Use of Non-GAAP Financial Measures

In addition to the results presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP), the Company routinely supplements its evaluation with an analysis of certain non-GAAP financial measures. The Company believes these non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors to help them understand the Company's operating performance and trends, and to facilitate comparisons with the performance of peers. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of non-GAAP disclosures used in this earnings release to the comparable GAAP measures are provided in the accompanying tables.

Forward-Looking Statements

This earnings release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, identified by words such as "may", "might", "should", "could", "predict", "potential", "believe", "expect", "continue", "will", "anticipate", "seek", "estimate", "intend", "plan", "projection", "would", "annualized", "target" and "outlook", or the negative version of those words or other comparable words of a future or forward-looking nature.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: interest rate risk, including the effects of changes in interest rates; effects on the U.S. economy resulting from the threat or implementation of, or changes to, existing policies and executive orders, including tariffs, immigration policy, regulatory or other governmental agencies, foreign policy, and tax regulations; fluctuations in the values of the securities held in our securities portfolio, including as the result of changes in interest rates; business and economic conditions generally and in the financial services industry, nationally and within our market area, including the level and impact of inflation, including future monetary policies of the Federal Reserve in response thereto, and possible recession; the effects of developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in several bank failures; credit risk and risks from concentrations (by type of borrower, geographic area, collateral and industry) within the Company's loan portfolio or large loans to certain borrowers (including CRE loans); the overall health of the local and national real estate market; our ability to successfully manage credit risk; our ability to maintain an adequate level of allowance for credit losses on loans; new or revised accounting standards as may be adopted by state and federal regulatory agencies, the Financial Accounting Standards Board, Securities and Exchange Commission or Public Company Accounting Oversight Board; the concentration of large deposits from certain clients, including those who have balances above current Federal Deposit Insurance Corporation insurance limits; our ability to successfully manage liquidity risk, which may increase our dependence on non-core funding sources such as brokered deposits, and negatively impact our cost of funds; our ability to raise additional capital to implement our business plan; our ability to implement our growth strategy and manage costs effectively; the composition of our senior leadership team and our ability to attract and retain key personnel; talent and labor shortages and employee turnover; the occurrence of fraudulent activity, breaches or failures of our or our third-party vendors' information security controls or cybersecurity-related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools or as a result of insider fraud; interruptions involving our information technology and telecommunications systems or third-party servicers; competition in the financial services industry, including from nonbank competitors such as credit unions, "fintech" companies and digital asset service providers; the effectiveness of our risk management framework; the commencement, cost and outcome of litigation and other legal proceedings and regulatory actions against us; the impact of recent and future legislative and regulatory changes, domestic or foreign; risks related to climate change and the negative impact it may have on our customers and their businesses; the imposition of tariffs or other governmental policies impacting the global supply chain and the value of products produced by our commercial borrowers; severe weather, natural disasters, wide spread disease or pandemics, acts of war or terrorism or other adverse external events, including ongoing conflicts in the Middle East and the Russian invasion of Ukraine; potential impairment to the goodwill the Company recorded in connection with acquisitions; risks associated with our integration of FMCB, including the possibility that the merger may be more difficult or expensive to integrate than anticipated, and the effect of the merger on the Company's customer and employee relationships and operating results; changes to U.S. or state tax laws, regulations and governmental policies concerning the Company's general business, including changes in interpretation or prioritization of such rules and regulations; and any other risks described in the "Risk Factors" sections of reports filed by the Company with the Securities and Exchange Commission.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. The Company undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.