Bridgewater Bancshares (BWB) Q3 Earnings call transcript Oct 24, 2024
1min read Bridgewater Bancshares, a leading regional bank headquartered in the Twin Cities, reported a strong third quarter with solid earnings, highlighting strategic acquisitions, stable net interest margins, and core deposit growth. The company's leadership team, including CEO Jerry Baack, CFO Joe Chybowski, and COO Lisa Salazar, discussed key financial results and strategic initiatives during the earnings call.
Financial Highlights
Bridgewater Bancshares reported earnings of $0.27 per share, marking a solid quarter with a focus on net interest income growth, margin stability, and strong core deposit growth. The company's net interest margin held steady at 2.24% for the third consecutive quarter, a testament to its liability-sensitive balance sheet. Despite a decline in loan balances, elevated yields and earning asset growth through cash and securities resulted in increased net interest income and total revenue growth.
Strategic Moves and Acquisitions
The acquisition of First Minnetonka City Bank, announced in August, is a strategic move that checks several boxes for Bridgewater. The deal brings a low-cost, granular core deposit base, providing additional liquidity and balance sheet optionality. It also reduces Bridgewater's CRE concentration while adding a new fee income stream through the investment advisory platform. The acquisition, which is expected to close during the fourth quarter, is seen as a small in-market transaction with low integration risk.
Outlook and Challenges
Looking ahead, Bridgewater is poised for a strong outlook as it focuses on optimizing its balance sheet for longer-term growth. The company's recent funding trends, including strong core deposit growth, combined with First Minnetonka City Bank's deposit base and liquidity, position Bridgewater well heading into 2025.
However, challenges remain, with loan payoffs expected to remain elevated, and loan balances likely to remain relatively flat. The company is focused on generating profitable growth with strong borrowers while adhering to its conservative credit culture. The margin outlook for the fourth quarter is moderate, with the magnitude of expansion dependent on the pace of future rate cuts and the slope of the curve moving forward.
Credit Quality and Risk Management
Bridgewater's credit culture and risk management strategies have been key factors in its strong financial performance. Despite the occasional one-off credit issue, the company's credit metrics remain strong, with annualized year-to-date net charge-offs of just 0.03% and nonperforming assets of 0.19%. The company remains well reserved at 1.38% gross loans, significantly higher than peer levels.
Conclusion
Bridgewater Bancshares' Q3 earnings call highlighted a solid financial performance, strategic acquisitions, and a focus on margin expansion and loan growth. The company's leadership team provided insights into its strategic initiatives, including the acquisition of First Minnetonka City Bank and its efforts to optimize its balance sheet for longer-term growth. Despite challenges, Bridgewater remains confident in its ability to navigate the market and maintain a strong financial position.
