BWBBP

Key Points

• Finished 2025 strong with loan and core deposit growth, net interest margin expansion, and higher fee income. Expenses controlled, asset quality strong.
• Net interest margin expanded 12 basis points to 2.75% in Q4, with expectation to reach 3% by end of 2026. Core deposits grew 9% in Q4, loans 9%.
• Asset quality remained strong despite modest uptick in nonperforming assets and net charge-offs. Multifamily portfolio performed well with low net charge-offs.
• Strategic priorities for 2026 include optimizing profitability growth, gaining market share in Twin Cities, expanding affordable housing vertical, and leveraging technology investments.

Forward-Looking Statements

• Expect to reach 3% net interest margin by end of 2026 without assuming additional rate cuts.
• Anticipate loan growth in the high single digits in 2026, dependent on core deposit growth and maintaining loan-to-deposit ratio in 95%-105% range.
• Expenses expected to grow in line with asset growth, similar to historical pace.

In the 2025 fourth quarter, Bridgewater Bancshares saw robust loan and core deposit growth. The net interest margin expanded 12 basis points to 2.75%, driving strong net interest income growth. Core deposits grew 9% in the quarter, with full-year core deposits up 8%, and loans grew 9% in the quarter, full-year loans up 11%. Noninterest income was boosted by swap fees and letter of credit fees. Adjusted ROA was just under 1% in the fourth quarter. Revenue contribution: Net interest income was driven by margin expansion, while noninterest income came from swap fees and other fees.

Risks Discussed

• Isolated issues in nonperforming assets and net charge-offs, though both were isolated and followed an extended period of low such metrics.
• Impact of market events in the Twin Cities on team members and clients.
• Increased competition in the Twin Cities potentially affecting loan spreads and new deposit rates.

Q: Nathan Race asked about deposit growth, seasonality, and deposit gathering pipeline.

A: Nick Place responded that Q4 is seasonally high, they feel good about deposit growth pipeline, and will supplement with broker deposits if needed.

Q: Nathan Race asked about loan repricing cadence and expense outlook.

A: Joe Chybowski said loan repricing is spread out, and expenses are expected to be in high single digits in line with asset growth.

Q: Brendan Nosal asked about asset quality of a CBD office loan.

A: Katie Morrell said it's a longer-term workout with a specific reserve.

Q: Brendan Nosal asked about M&A appetite.

A: Jerry Baack said they continue to have M&A conversations and are optimistic about potential tuck-in acquisitions.

Q: Jeff Rulis asked about affordable housing vertical growth.

A: Nick Place said it's ~15% of the book, expected to grow as a percentage, and swap fees could be driven by it.

Q: Brandon Rud asked about core banking system modernization.

A: Joe Chybowski said it's a longer-term initiative for efficiencies and client service.

Q: Brandon Rud asked about increased competition impact.

A: Nick Place said they see increased competition but have a strong pipeline and are optimistic about growth despite it.