Key Highlights

  • Earnings per share reached USD 0.49, versus a USD 0.47 consensus estimate.
  • Net interest margin rose 2 bps from Q2 to 3.09%.
  • Efficiency ratio fell to 48.8%, below 50% for the first time since Q1 2023.
  • Annualized net charge-offs rose to 0.21% from 0.04% in the second quarter.

Bridgewater Bancshares (NASDAQ:BWB) reported third-quarter results on Oct. 20, with earnings per share of USD 0.49 against a consensus estimate of USD 0.47. Revenue came in at USD 43.2 million, essentially matching the estimate, a margin of 0.07%.

Bridgewater is the St. Louis Park, Minnesota based holding company for Bridgewater Bank, a branch-lite commercial bank focused on commercial real estate, multifamily and construction lending. Shares rose about 6.5% in after-hours trading following the release.

Margin and Efficiency Move Higher

Net interest income was USD 40.7 million, and the net interest margin reached 3.09%, up 2 bps from the second quarter. The efficiency ratio came in at 48.8%, below 50% for the first time since the first quarter of 2023.

Earnings per share compared with USD 0.45 in the second quarter and USD 0.38 a year earlier. The bank has topped estimates in 3 of its last 6 quarters, and the second quarter fell short of consensus.

Balance Sheet, Credit and Capital

Gross loans grew at a 7.2% annualized pace to USD 4.51 billion, while deposits rose at an 11.6% annualized pace to USD 4.47 billion. Core deposits increased at a 19.6% annualized rate. Management has said its shift toward variable-rate lending leaves the balance sheet better suited to a higher-rate environment.

Annualized net charge-offs rose to 0.21% from 0.04% in the second quarter. Nonperforming assets fell to 0.37% of total assets from 0.40%. The common equity tier 1 ratio stood at 9.63%, and tangible book value per share was USD 16.33.

The board also declared a quarterly dividend of USD 0.3672 per depositary share on the Series A preferred shares, payable Dec. 1.

Items to Watch After the Call

Management held its earnings call on Wednesday at 8:00 a.m. Central. Margin outlook and expense discipline were among the topics flagged for the discussion.

Key markers include whether the efficiency ratio stays below 50%, the pace of net interest margin changes from the 3.09% level, and the direction of net charge-offs after the rise from 0.04% to 0.21%. Loan and deposit growth rates against the annualized figures above are also worth following.