Bridgewater Bancshares ((BWB)) has held its Q3 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
The recent earnings call of Bridgewater Bancshares painted a picture of steady performance with promising growth prospects. The company reported strong deposit and loan growth, alongside increased net interest income, which were tempered by higher non-interest expenses and some credit challenges. Overall, the sentiment was positive, with a focus on future improvements.
Strong Core Deposit Growth
The earnings call revealed that Bridgewater Bancshares achieved an impressive 11.5% annualized growth in core deposits during the third quarter. This growth is a testament to the company’s successful market share gains and strategic initiatives aimed at expanding its customer base.
Loan Growth and Net Interest Income Increase
Bridgewater Bancshares reported a 6.6% annualized increase in loan growth for the third quarter, which contributed to a $1.6 million rise in net interest income. This growth also led to an expansion of the net interest margin to 2.63%, highlighting the company’s effective lending strategies.
Tangible Book Value Growth
The tangible book value per share saw a significant increase of 20% annualized in the third quarter, and 14% year to date. This growth reflects the company’s strong financial health and its ability to enhance shareholder value.
Successful System Conversions
Bridgewater Bancshares successfully completed the conversion of its retail and small business online banking platform, as well as the systems conversion of the First Minnetonka City Bank acquisition. These achievements underscore the company’s commitment to improving its technological infrastructure.
Asset Quality and Low Non-Performing Assets
The company maintained robust asset quality, with non-performing assets remaining at low levels and net charge-offs at just 0.03% of loans. This demonstrates Bridgewater’s effective risk management practices.
Higher Non-Interest Expenses
Non-interest expenses were higher in the third quarter due to redundant expenses from the systems conversion and increased salary and marketing expenses. These costs are seen as necessary investments in the company’s growth and operational efficiency.
Subordinated Debt Impact on Margin
The issuance of $80 million in subordinated debt at 7.625% to redeem $50 million of debt at 5.25% resulted in a six basis point net drag on the margin. This strategic financial move is aimed at optimizing the company’s debt structure.
Fee Income Decline
Fee income saw a decline in the third quarter, primarily due to the absence of swap fee income. This was a notable point of discussion during the earnings call, as the company seeks to diversify its income streams.
Loan Migration to Substandard
A multifamily loan migrated from special mention to substandard due to a canceled purchase agreement. This highlights some of the credit challenges faced by the company, although overall asset quality remains strong.
Forward-Looking Guidance
Looking ahead, Bridgewater Bancshares is targeting continued loan and deposit growth, with aspirations to reach a $10 billion bank size by 2030. The company plans to maintain its strong credit culture and growth trajectory, supported by strategic leadership transitions and technological advancements.
In summary, the earnings call of Bridgewater Bancshares reflected a steady performance with strong growth in deposits and loans, increased net interest income, and successful system conversions. While facing some challenges such as higher non-interest expenses and credit issues, the company remains optimistic about its future prospects and growth potential.