8-K: Bridgewater Bancshares Furnishes Investor Presentation, Highlights Strategic Priorities for 2025

Bridgewater Bancshares releases an investor presentation outlining its strategic priorities for 2025, including mid-to-high single-digit loan growth and continued market share gains in the Twin Cities.

Summary

• Bridgewater Bancshares, Inc. furnished an investor presentation on February 18, 2025.
• The presentation outlines the company's strategic priorities and financial performance.
• BWB aims for mid-to-high single-digit loan growth in 2025.
• The company is focused on profitable growth, aligning loan growth with core deposit growth.
• BWB targets a loan-to-deposit ratio between 95% and 105%.
• Modest NIM expansion is expected in the current interest rate environment, driving net interest income growth.
• High-teen noninterest expense growth is projected for 2025, excluding merger-related expenses.
• Capital ratio expansion is anticipated as loan growth increases.
• The company completed the acquisition of First Minnetonka City Bank (FMCB) on December 13, 2024.
• BWB is focused on integrating FMCB and leveraging technology to support business growth.
• The company is evaluating additional M&A opportunities.
• BWB reported total assets of $5.1 billion, loans of $3.9 billion, and deposits of $4.1 billion as of December 31, 2024.
• Shareholders equity was $457.9 million as of December 31, 2024.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook for Bridgewater Bancshares, with a focus on growth and efficiency. While there are some challenges noted, such as expense growth, the overall tone is optimistic.

Positives

• Bridgewater Bancshares is targeting mid-to-high single-digit loan growth in 2025.
• The company aims for a loan-to-deposit ratio between 95% and 105%.
• Modest net interest margin (NIM) expansion is expected, driving net interest income growth.
• The company completed the acquisition of First Minnetonka City Bank on December 13, 2024.
• Approximately 20% of BWB's common shares were owned by Board and SLT members as of December 31, 2024.
• BWB's efficiency ratio consistently outperforms peers.
• The company has an outstanding rating for Community Reinvestment Act performance from the FDIC in 2023.
• BWB's core deposits grew 64% annualized in 4Q24.
• BWB's total deposits grew 36% annualized in 4Q24.
• BWB's loan balances increased 19.7% annualized (7.1% ex. FMCB) in 4Q24.
• BWB's FY24 loan balances increased 3.9% (1.8% ex. FMCB).

Negatives

• High-teen noninterest expense growth is projected for 2025, excluding merger-related expenses.
• Capital ratios were impacted by the acquisition of First Minnetonka City Bank.

Risks

• Interest rate risk, including the effects of changes in interest rates.
• Fluctuations in the values of the securities held in our securities portfolio.
• Business and economic conditions generally and in the financial services industry, nationally and within our market area, including the level and impact of inflation and possible recession.
• Credit risk and risks from concentrations within the Company's loan portfolio.
• The overall health of the local and national real estate market.
• Our ability to successfully manage credit risk.
• Our ability to maintain an adequate level of allowance for credit losses.
• The concentration of large loans to certain borrowers.
• The concentration of large deposits from certain clients.
• Our ability to successfully manage liquidity risk.
• Our ability to raise additional capital to implement our business plan.
• Our ability to implement our growth strategy and manage costs effectively.
• Talent and labor shortages and employee turnover.
• The occurrence of fraudulent activity, breaches or failures of our or our third-party vendors information security controls or cybersecurity-related incidents.
• Interruptions involving our information technology and telecommunications systems or third-party servicers.
• Competition in the financial services industry, including from nonbank competitors.
• The effectiveness of our risk management framework.
• The commencement, cost and outcome of litigation and other legal proceedings and regulatory actions against us.
• The impact of recent and future legislative and regulatory changes.
• Risks related to climate change and the negative impact it may have on our customers and their businesses.
• The imposition of tariffs or other governmental policies impacting the value of products produced by our commercial borrowers.
• Severe weather, natural disasters, wide spread disease or pandemics, acts of war or terrorism or other adverse external events.
• Potential impairment to the goodwill the Company recorded in connection with acquisitions.
• Risks associated with our acquisition of First Minnetonka City Bank (FMCB), including the possibility that the merger may be more difficult or expensive to integrate than anticipated and the effect of the merger on the Company's customer and employee relationships and operating results.
• Changes to U.S. or state tax laws, regulations and government policies concerning the Company's general business.

Future Outlook

Bridgewater Bancshares anticipates mid-to-high single-digit loan growth in 2025, modest NIM expansion, and high-teen noninterest expense growth. The company is focused on profitable growth and integrating the acquisition of First Minnetonka City Bank.

Management Comments

• Jerry Baack, Chairman and CEO, highlighted the company's unconventional culture and employee experience.
• Management is focused on optimizing the balance sheet and aligning loan growth with core deposit growth.

Industry Context

The presentation highlights Bridgewater Bancshares' position in the competitive Twin Cities market, noting market share gains and opportunities arising from M&A-related disruption. The company emphasizes its local banking advantage and expertise in commercial real estate lending.

Comparison to Industry Standards

• Bridgewater Bancshares' efficiency ratio consistently outperforms its peers, which include publicly-traded banks on major exchanges with total assets between $3 billion and $10 billion.
• The company's asset quality also consistently outperforms peers, as measured by peak annual net charge-off ratio and year-end nonperforming assets/assets.
• BWB has ~2x as many assets per FTE employee compared to the peer bank median.
• BWB has ~4x as many assets per branch compared to the peer bank median.

Stakeholder Impact

• Shareholders can expect continued focus on profitable growth and potential share repurchases.
• Employees will benefit from investments in people and technology initiatives.
• Clients will experience enhanced services through technology upgrades and a responsive service model.
• Communities will benefit from Bridgewater's commitment to investing, lending, and volunteering in low-to-moderate income segments.

Next Steps

• Successfully complete systems integration of First Minnetonka City Bank acquisition.
• Evaluate additional M&A opportunities that support BWBs business model and growth outlook.
• Implement upgraded retail and small business online banking solution.
• Define a 3-year roadmap for the next stage of BWBs technology journey.

Key Dates