Bridgewater Bancshares' Q2 2025: Contradictions in Loan Growth, Deposit Costs, and Competitive Landscape

Deposit Cost Management and Loan Repricing, Competition and Market Conditions, and Loan Growth Expectations are the key contradictions discussed in Bridgewater Bancshares, Inc.'s latest 2025Q2 earnings call.



Revenue and Loan Growth:
- Bridgewater Bancshares reported a strong quarter with net interest income growing $2.2 million during the quarter, driven by a 12.5% annualized increase in loan growth.
- The growth in revenue and loans was facilitated by core deposit growth, which allowed for increased loan growth, and the repricing of the loan portfolio in the current rate environment.

Margins and Deposit Costs:
- The net interest margin expanded by 11 basis points to 2.62%, with the predominantly fixed rate loan portfolio continuing to reprice higher.
- Deposit costs stabilized, with a mere 2 basis points increase in the second quarter, reflecting the ongoing stabilization and potential for further decline with additional rate cuts.

Asset Quality and Credit Migration:
- Bridgewater maintained strong asset quality with no net charge-offs and nonperforming assets at 0.19%, well below peer levels.
- Despite this, there was a modest uptick in classified loans, with some migration into watch, special mention, and substandard categories, primarily due to identified credit weaknesses in certain relationships.

Capital Ratios and Share Repurchase:
- Total risk-based capital increased by 55 basis points, with the CET1 ratio holding steady at 9.03%.
- The company repurchased $1.6 million of common stock in April, maintaining opportunities for future repurchases based on valuation and capital levels.