Bridgewater Bancshares Q4 2024: Contradictions in Loan Growth, Expenses, and Margin Expansion

These are the key contradictions discussed in Bridgewater Bancshares' latest 2024Q4 earnings call, specifically including: Loan Growth Expectations, Expense Growth Outlook, Deposit Cost Expectations, and Margin Expansion Expectations:



Strong Financial Performance and Growth Outlook:
- Bridgewater Bancshares reported adjusted earnings of $0.27 per share in Q4 2024, excluding merger-related expenses, with core deposit growth momentum of 31% annualized.
- The growth was driven by robust balance sheet expansion, net interest margin improvement, and a strategic focus on core deposit growth, enhanced by the acquisition of First Minnetonka City Bank.

Loan Growth and Deposit Optimization:
- Loan growth increased by 7% annualized in the fourth quarter, excluding acquired loans, and core deposit growth was 13% for the year, excluding acquired deposits.
- This was supported by increasing loan demand and strategic efforts to reduce higher-cost broker deposits, optimizing the deposit mix.

Net Interest Margin Expansion:
- The net interest margin expanded by 8 basis points in Q4 2024, contributing to total revenue growth of nearly 9%.
- This expansion was driven by declining deposit costs, a steady loan yield, and the impact of the Fed's rate cuts, which resulted in immediate repricing of short-term deposits.

Asset Quality and Acquisition Performance:
- Bridgewater maintained strong asset quality, with net charge-offs and nonperforming assets trending downwards, and achieved a smooth onboarding of new clients from First Minnetonka City Bank.
- The acquisition was completed quickly with regulatory approval in just 55 days, demonstrating strategic planning and operational efficiency.