BWB

Bridgewater Bancshares just posted Q3 2026 numbers that lit up the fundamentals while the stock only flickered higher. Shares were up about 2.5% in Thursday trading, a modest move for a regional bank that delivered record quarterly revenue of US$40.5m and lifted basic earnings per share to roughly US$0.50. The market is cheering, but quietly. Traders seem more focused on the recent drip of returns over the past month than on what really shifted, which is profitability. Cost to income dropped below 50% and net interest margin nudged above 3%. For a lender, that efficiency swing is the real headline. Like the tighter cost-to-income ratio at Bridgewater Bancshares but wish you could compare it with regional banks that have similarly strong efficiency and balance sheets? Check out our short list built from the list of solid balance sheet and fundamentals stocks (25 results). - Total Revenue (Q3 2026 vs. Q3 2025): US$40.48m vs. US$35.05m (up about 15%) - Net Income, excl. extra items (Q3 2026 vs. Q3 2025): US$14.02m vs. US$10.59m (up about 32%) - Basic EPS (Q3 2026 vs. Q3 2025): US$0.50 vs. US$0.38 (up about 30%) - Net Interest Margin (NIM, Q3 2026 vs. Q3 2025): 3.09% vs. 2.63% (higher margin level) Earnings grab headlines, but investors who care about what they are really paying for usually pay closer attention to the cash moving through Bridgewater Bancshares' business. On cash flows alone, Bridgewater Bancshares' stock on NasdaqCM:BWB could be a dramatic 42% undervalued. The bullish narrative says Bridgewater Bancshares can turn better pricing and focused lending into disciplined expansion rather than just chasing volume. "Bridgewater Bancshares is already seeing net interest margin at 3.07% in Q2 2026, ahead of its earlier 3% year end goal, and the ongoing repricing of a largely fixed rate loan book and use of short term rate sensitive funding are still expected to support net interest income and earnings." Q3 results back this up. NIM held above 3% at 3.09%, loan growth ran in the mid single digits, and pre provision profit set a record while the efficiency ratio moved below 50%. That combination shows pricing discipline is translating into earnings quality, not just balance sheet growth. The bear case focuses on whether concentration and funding choices eventually erode those same margins. "The company's heavy concentration in commercial real estate, multifamily and construction lending remains a live issue, since two large nonperforming credits in a central business district office loan and a mixed use property now account for about 90% of nonperforming assets and may require further reserve adjustments, which could increase provision expense and weigh on net margins and earnings." Q3 credit data partly validates this concern. Most problem loans improved, yet those two exposures still drove charge offs and higher specific reserves, and management is guiding to elevated provisions again in Q4. Margins and returns absorbed the hit this quarter, but the clean profitability picture depends on resolving those credits without repeat spikes in provisioning. One Narrative disagrees with today's price. → See where this Narrative says Bridgewater Bancshares should trade. Bridgewater Bancshares just showed how stronger profitability does not always translate into a big price reaction. The real opportunity is spotting companies that could be undervalued before expectations and prices realign. - Company 1 - 45% below our estimate - targets larger LED video installations and recurring software and services for upgraded digital signage. - Company 2 - 47% below our estimate - converts a record backlog of technology heavy modular construction projects into installation and maintenance work over long contracts. - Company 3 - 21% below our estimate - sells liquid cooling and power systems that support AI data centers as traditional air based designs become constrained. Those are three of them. See every one of the 33 undervalued companies on it → This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include BWB. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Image source: The Motley Fool. Wednesday, Oct. 21, 2026 - Vice President of Investor Relations - Justin Horstman - Chairman and Chief Executive Officer - Jerry Baack - President and Chief Financial Officer - Joe Chybowski - Chief Banking Officer - Nick Place - Chief Credit Officer - Katie Morrell Operator: Good morning, and welcome to the Bridgewater Bancshares 2026 third quarter earnings call. My name is Betsy, and I will be your conference operator today. All participants have been placed in a listen-only mode. After Bridgewater's opening remarks, there will be a question-and-answer session. To ask a question, please press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Please note that today's call is being recorded. At this time, I would like to introduce Justin Horstman, vice president of Investor Relations, to begin the conference call. Please go ahead. Justin Horstman: Thank you, Betsy, and good morning, everyone. Joining me on today's call are Jerry Baack, chairman and chief executive officer; Joe Chybowski, president and chief financial officer; Nick Place, chief banking officer; and Katie Morrell, chief credit officer. In just a few moments, we will provide an overview of our 2026 third quarter financial results. We will be referencing a slide presentation that is available on the investor relations section of Bridgewater's website, investors.bridgewaterbankmn.com. Following our opening remarks, we will open the call for questions. During today's presentation, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We caution that such statements are predictions and that actual results may differ materially. Please see the forward-looking statement disclosure in the slide presentation and our 2026 third-quarter earnings release for more information about risks and uncertainties which may affect us. The information we will provide today is as of and for the quarter ended September 30, 2026, and we undertake no duty to update the information. We may also disclose non-GAAP financial measures during this call. We believe certain non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors to help them understand the company's operating performance and trends and to facilitate comparisons with the performance of our peers. We caution that these disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP. Please see our slide presentation and 2026 third quarter earnings release for reconciliations of non-GAAP disclosures to the comparable GAAP measures. I would now like to turn the call over to Bridgewater's chairman and CEO, Jerry Baack. Jerry Baack: Thank you, Justin, and thank you for joining us this morning. In the third quarter, disciplined execution of a thoughtful strategy resulted in an incredibly strong quarter. Growth and profitability were objectives, and both proved to be highlights. While we have always had the ability to generate robust loan growth, we have become more focused on creating balance sheet growth that prioritizes optimizing profitability. This strategy has never been more evident than it is now. Earlier in the year, we saw loan competition increasing with silly pricing that we weren't willing to stretch for. In addition, we knew that historically, core deposit growth was seasonal and typically slower during the first half of the year. In response, we strategically slowed our pace of loan growth to the mid-single-digit range, accommodating for these trends. As we expected, core deposit growth returned in the back half of the year with annualized growth of nearly 20%. This came not only from seasonality but from our new client relationships we have grown across the bank. This allowed us to accelerate loan growth during the past quarter to over 7% annualized, with loan and core deposit growth now in line on a year-to-date basis. This is a great example of how we are leveraging data, our market knowledge, balance sheet, and understanding of our client base to strategically and efficiently drive the growth and profitability of the bank. Overall, this translated into a record total revenue and pre-provision net revenue in the third quarter. Combine this with a decline in non-interest expense, and we are able to move our efficiency ratio below 50% for the first time since the first quarter of 2023. Another significant contributor to earnings was the continued growth in net interest income, as ongoing loan repricing drove two more basis points of net interest margin expansion of the third quarter. Looking ahead, we know we are entering a new rates-up environment, which Joe will speak to shortly. But we believe our balance sheet is better positioned for this environment than it has been in the past, as we have been proactively growing the variable rate mix of the loan portfolio. Our strong asset quality trends also remained a positive part of the story. As we have shared in recent quarters, we are working through two loans that we hope to resolve in the near term. Katie will provide more details on this later. But aside from those, we are very pleased with our loan portfolio as nonperforming assets remain well below peer levels and positive classified asset trends continue. On slide five, we will show Bridgewater's long track record of consistently growing tangible book value in excess of peers. This has been the case since before we went public in 2018, and even more recently since 2021. On a year-over-year basis, we have grown tangible book value at a 9.4% pace. Delivering shareholder value is key at Bridgewater. Overall, the third quarter was a very good quarter for Bridgewater. I am thrilled with the momentum we have created, and I am optimistic of the outlook for the remainder of 2026 and beyond. The team is incredibly strong and knows how to execute on the strategies we have in place. With that, I will turn it over to Joe. Joe Chybowski: Thanks, Jerry. Slide five highlights one of the key themes of the quarter, our improving profitability. This included record pre-provision net revenue, which was up 36% year-over-year, as well as continued improvements in return on assets and return on average tangible common equity. Much of this profitability momentum continues to be driven by strong revenue growth, which was up 20% year-over-year. The revenue growth came from both net interest income, which I will talk more about on the next slide, as well as solid non-interest income growth driven by higher letter of credit fees. Swap fees were a bit lighter in the third quarter as swap pricing dynamics are less favorable in the current rate environment. Turning to slide six, net interest income growth of 22% annualized in the third quarter once again came from both higher average earning assets, up 16% annualized, and net interest margin expansion. As expected, the pace of net interest margin expansion slowed from the second quarter but was still up two basis points to 309 as the loan portfolio continued to reprice higher while deposit costs remained relatively stable. Overall, margin expansion has exceeded our expectations as we originally didn't expect to hit 3% until the fourth quarter of this year. Operating above 3% for the majority of the year has been a boost to our overall profitability. Looking closer at the net interest margin drivers on slide seven, loan yields were up another five basis points to 596 as the portfolio continued to reprice higher, with average new production yields in the third quarter in the mid-sixes. While loan yields moved higher, deposit costs of 278 remained relatively stable for the third consecutive quarter. The question now is what happens to the net interest margin going forward given the recent rate hike and potential for more going forward. The most important thing to know is that we are better positioned today for a rates-up environment than we have been in the past. Over the past couple of years, we have been proactively increasing the mix of variable rate loans on the balance sheet to create additional repricing opportunities and be more rates neutral. Today, variable rate loans make up 26% of the portfolio, up from 15% just two years ago. This means we now have $1.2 billion of variable rate loans, which offsets much of the $1.6 billion of deposits directly tied to short-term rates. While we expect Fed rate hikes to push deposit costs higher across the sector, we also expect our loans to continue to reprice higher and not just from the higher variable rate mix, but also because of the ongoing back book repricing. We have $697 million of fixed-rate loans scheduled to mature over the next 12 months at a weighted average yield of 570 and another $105 million of adjustable-rate loans repricing or maturing at 423. With these lower yields running off the books and new originations going on the books at higher yields, we have further repricing upside ahead of us. Given this loan repricing, we expect our net interest margin to hold relatively stable over the near term despite the recent rate hike. This also assumes another rate hike in December and two more in the first half of 2027. This demonstrates how much better we are positioned today considering the margin compression we saw during the last rates-up cycle. With continued loan growth and margin stability, we are well-positioned for ongoing net interest income growth in the quarters ahead. Turning to slide eight, we have always operated the business in a highly efficient manner given our branch-light model and CRE focus. With the recent revenue momentum I just talked about, coupled with well-controlled expenses in the third quarter, our efficiency ratio once again dropped below 50% for the first time since the first quarter of 2023. After pulling forward some expense early in the year due to M&A-related talent acquisition opportunities, we expected to be able to hold third-quarter expenses in line with second quarter. However, we outperformed this as expenses came in even lower. Looking ahead to the fourth quarter, we would expect non-interest expense to return to that second quarter level. Overall, lower expenses in the third quarter translated to increased operating leverage given our strong revenue growth. We have a proven track record of being able to manage expenses effectively, and we expect to be able to continue to do this going forward while still investing in the business with a focus on driving further positive operating leverage. With that, I'll turn it over to Nick. Nick Place: Thanks, Joe. Turning to slide nine, I think the biggest highlight of the quarter for us was the $165 million or 20% annualized core deposit growth we generated. Over the past couple of years, we've developed a much better understanding of our core deposit flows and seasonality. While growth was more muted in the first half of the year, we expected it to return in the back half of the year, and that's exactly what we saw. But the growth was not just seasonality. We have made key hires within our treasury management team, taken advantage of marketplace disruption, and brought in deposits from new client relationships. This has also helped improve our overall deposit mix as non-interest-bearing deposits increased $63 million while higher cost brokered deposits declined $96 million. A lot of credit goes out to our treasury team for providing such a high level of insight into our asset and liability management and making sure our bankers know what we need from a funding standpoint to support our growth. We are seeing this translate to better relationship margins and increased profitability for the bank. As we have demonstrated, we have the ability to grow loans as much as we want, but it's really the core deposits that are the governor, and we were very pleased with what we saw in the third quarter. Given the core deposit growth, we generated stronger loan growth in the third quarter with balances up 7.2% annualized, as you can see on slide 10. We have made it clear that we want to grow the loan portfolio in line with core deposits over time. On a year-to-date basis, loan balances are up 6.1% annualized while core deposits are up 6.4%. This demonstrates disciplined execution from our teams as we focus on generating profitable growth across the bank. As we think about the loan growth outlook from here, core deposits will continue to be a governor, but there are other factors as well, including the interest rate environment, which we expect to have an impact on both origination and payoff activity. Looking at slide 11, new loan production was stronger in the third quarter, with increased loan originations and advances more than offsetting the elevated levels of payoffs. We are still seeing strong loan demand across our verticals, but with interest rates moving higher, we are starting to see fewer deals penciling out as we remain disciplined on pricing. We anticipate new origination activity could slow a bit from here. However, on the other side, higher rates mean that payoff activity could slow as well. Overall, we expect near-term loan growth in the mid-single-digit range as we navigate this higher rate environment and continue to emphasize profitable growth. Turning to slide 12, the majority of the loan growth we saw in the third quarter came from the construction, non-owner occupied CRE, and C&I portfolios. Multifamily balances declined during the quarter due to some elevated payoff and refinance activity in that portfolio. Overall, our affordable housing vertical continues to play a big role in our growth story, accounting for about half of the growth we saw across the construction and C&I portfolios. As you can see on slide 13, we remain focused on growing our presence in the affordable housing space, which has resulted in 20% year-over-year growth. Affordable housing made up over 25% of our loan growth in the third quarter and currently makes up 16% of the total loan book today. These loans tend to be higher yielding than traditional multifamily or CRE loans, given their complexity, and also tend to come with higher levels of compensating deposit balances. This is a high barrier to entry vertical, where we have established a differentiated level of expertise within the various parts of the transactions we tend to support. Our growing client base is strong as we work with several of the largest affordable housing developers across the country. As a result, we see a lot of growth runway, both locally and nationally, within this segment. With that, I'll turn it over to Katie. Katie Morrell: Thanks, Nick. As Jerry mentioned earlier, our asset quality profile remains strong. Starting on slide 14, our watch and special mention loans continued to decline during the quarter and are now down approximately 50% from year-end 2025 and represent just 0.5% of total loans. Substandard loan levels have also improved year-over-year and have remained stable over the last several quarters. We view these credit migration trends as an important leading indicator of overall portfolio health, and their continued improvement reflects both the strength of our underwriting discipline and our proactive approach to portfolio risk management. Turning to slide 15, our nonperforming assets declined modestly from last quarter, ending the period at 37 basis points and remaining well below peer levels. As we have discussed over the past couple of quarters, our nonperforming assets remain concentrated in two larger relationships. The first is a $10 million mixed-use multifamily property that moved to non-accrual last quarter. We previously had a $1 million specific reserve on this loan. However, as we advanced our workout strategy and moved towards a near-term sale of the asset, we ended up taking a $2.4 million charge-off during the third quarter. This charge-off was the primary driver of the uptick in annualized net charge-offs this quarter to 0.21%. The second larger NPA is the $8.6 million central business district office loan that has been on non-accrual since the first quarter of 2025. During the third quarter, we further increased the specific reserve on this loan to $5.3 million, reflecting our latest assessment of the underlying collateral value. We are still working toward a resolution of this asset as quickly as possible, and we would expect that some portion of the existing reserve could ultimately migrate to charge-offs as we execute on this strategy. Given the additional specific reserve and stronger loan growth, we booked a higher provision in the third quarter. However, our total allowance actually decreased a couple of basis points to 1.28%. We believe the allowance appropriately reflects the risk profile of the portfolio, including the specific reserves associated with these two larger relationships and our constructive outlook on the broader loan portfolio. Looking ahead, we expect provision expense to be a bit higher in the fourth quarter than it was in the third as we continue working toward resolution of these credits while supporting expected loan growth. We are also watching closely for signs of weakness related to economic uncertainty, inflationary pressures, and repricing risk related to the rise in interest rates. We implemented a very effective process during the last rates up move to proactively engage with clients well in advance of any repricing, and this process remains ongoing today. So far, these conversations are going well, and we have not identified any systemic issues. Overall, we remain confident in the quality of our portfolio, the strength of our underwriting and our borrowers, and our ability to navigate the remaining problem assets. I'll now turn it back over to Joe. Joe Chybowski: Thanks, Katie. Slide 16 highlights our stable capital position, which continues to be supported by our retained earnings. Notably, our CET1 ratio has increased 55 basis points year-over-year to 9.63%. We did not repurchase any shares in the third quarter. Turning to slide 17, I'll recap our near-term expectations. On the loan side, we expect mid-single-digit growth. Of course, this will continue to be dependent on our core deposit momentum over time, as well as the uncertainty around interest rates and the impact that has on our new originations and payoffs. We expect the net interest margin to hold relatively stable at current levels over the near term, even assuming an additional rate hike in December and two more in early 2027. This is driven by our balance sheet being better positioned today than it was during the last cycle, with more loan repricing opportunities offsetting higher deposit costs. After a better than expected expense quarter, we look for fourth quarter non-interest expense to be similar to second quarter levels. We also expect provision expense in the fourth quarter to increase from what we saw in the third quarter, given our loan growth and continued progress on resolving our two larger nonperforming assets. I'll now turn it back over to Jerry. Jerry Baack: Thanks, Joe. Before we open up for questions, I want to provide a quick update on our 2026 strategic priorities. Profitable growth is where we have been focused, and we believe it is having an impact. Aligning loan and core deposit growth has allowed us to drive net interest margin expansion while we continue to capture market share. Not only are we adding clients, but we also added 17 talented individuals to our team as a result of the M&A disruption. Nick spoke of the momentum we have seen in the affordable housing space, with balances up 17% annualized year-to-date. Finally, we have advanced to the execution phase of our AI strategy, focused on responsibly enabling our teams to achieve efficiencies across the organization. This includes establishing oversight, security, and risk frameworks, pushing out tools to our teams, and leveraging partnerships to help operationalize use case and workflows. We're still early in the process, but the benefits are becoming apparent. With that, we'll open it up for questions. Operator: As a reminder, to ask a question, please press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Jeff Rulis with D.A. Davidson. Please go ahead. Jeff Rulis: Thanks. Good morning. Just a question on the. I know Nick and Katie had talked about the impact of higher rates on both demand and hoping to get a little more detail on that, if you could, particularly if we get one or two more hikes. If you could touch on the demand expectations as well as, Katie, I do not know, walk through some of those maturity repricing schedules should we get another one or two hikes. Thanks. Nick Place: Hey, Jeff. Yeah, this is Nick. I think in the real near term, the recent rates up move will impact our loan origination activity slightly. I think there is always some sort of delayed momentum that will continue to push some transactions over the finish line here in the fourth quarter that were well underway in the third quarter. Long term, I think it is really just dependent on what happens in the belly of the curve there. We are up quite a bit since the beginning of the year, and our borrowers are pretty resilient on working through what that does to their capital stacks. But over the course of time, that will cause more and more transactions to not pencil out. I think what we saw in the last rates up move is that impact to loan origination activity was certainly offset by the refinance and payoff activity. Where there is a headwind on the new origination side, there is a bit of a tailwind on the payoff side. We still feel really good about our loan demand overall. Our affordable housing segment, as we talked about, is contributing to a larger and larger percentage of the growth every quarter. And there is seemingly more avenues to plug those holes in capital stacks on those transactions than there is maybe in market rate deals. We expect to continue to see a lot of opportunity within that space, even in this higher rate environment. We still feel good about it. But we are certainly watching what those rates are doing as it relates to deals spinning out of our pipeline. Katie Morrell: Jeff, this is Katie. As far as repricing credit risk is concerned, like I mentioned in the prepared remarks, we haven't really stopped our repricing analysis process over the last couple of years. Feeling good about that, especially as we go through covenant testing and looking ahead 12 months out, if there's a repricing event, how does that look for property performance? I think we do have a really good handle on any of the specific loans that would be affected and have action plans in place. While these rate hikes are going to make performance more challenging in some instances, I don't think we have any big surprises. Jeff Rulis: Appreciate it. Thanks. Maybe just one back to the margin, Joe. We've kind of got to this goal quicker than you thought. I guess the bigger picture, three or four years ago, the margin was at 350. Just want to kind of feel that out of sort of a terminal level. I know we're near term and then longer term, but the ability to grind higher on the margin and you said the balance sheet has changed. Any more detail about expectations? Maybe a little roadmap on the margin to kind of frame up how you maybe get back to the mid-three's or not would be helpful. Joe Chybowski: Jeff, this is Joe. I think we high level, we've been really pleased with the margin, as you said, and you highlighted the performance this year and ultimately the conviction that we feel to have margin stability going into a potentially higher rate sub-cycle. I think you're always reminded of 90 days ago we had Fed Funds probabilities with a cut in December and a 430 10-year, and we fast-forward 90 days, and we not only got a hike, we have three more hikes anticipated, and we have a 530 10-year. I think a lot has obviously changed over the last 90 days. That being said, I think, like I said, we're really pleased and encouraged with the durability and stability of the margin. I think to your point, a lot of that's been work over the last couple of years of really reorienting the portfolio on the loan side to be more variable rate to really match with the variable rate deposit book. I also think just the duration of the loan portfolio has shortened as well almost 12 months from the peak in 2022. I think there has been a lot of work there to really be more balanced and then to be able to weather both rates up and rates down. I think the dynamics of just the incremental loans that come on relative to the incremental cost of funds, I think that also gives us optimism, to your point on if loans come on the books today in the mid-sixe's, as we said with upside potential, given where rates have gone, and incremental cost of funds come on in the mid-three's, I think the margin itself, we feel good about the stability that can take place. Ideally, the back book loan repricing that continues throughout 2027 gives us potential upside. I think those are the dynamics, the puts and takes. But generally, I think we are really pleased with where we are at, and especially in light of what has transpired over the last 90 days. Jeff Rulis: I appreciate it. Thanks. I will step back. Operator: The next question comes from Brendan Nosal with Hovde. Please go ahead. Brendan Nosal: Hey, good morning, everybody. Thanks for taking the questions. Joe Chybowski: Hey, Brendan. Brendan Nosal: Maybe starting off here on capital. Good quarter for growth, a bit of AOCI drag, although not as much as most. If I look at your tangible capital ratio down from 860-815 or so, does that change the likelihood of you tapping the ATM versus three months ago as you look forward towards mid-single-digit growth? Or do you think you can generate enough capital internally for the time being where you're still reserving optionality but not leaning one way or the other, ATM versus buyback? Joe Chybowski: The latter part of your question, Brendan, I think is the way to put it. I think as we've said, optionality is always our goal. I think while TCE is down quarter-over-quarter, I do think when we think about the growth prospects of the company and how we think about the loan growth to Nick's comments, we certainly feel like we can self-generate the capital to support the growth. And then also have the optionality on both sides, given the buyback and given the ATM. I think nothing changes from that perspective. Brendan Nosal: Okay, perfect. Maybe kind of circling to growth. 6% annualized growth so far this year, both for core funding and for loans. Calling for mid-single-digit growth in the near term. Does that feel like the new steady state for you guys, just in terms of how fast you can grow core funding which is a strong pace, and then that just happens to be the pace we should be on average looking for loan growth from here? Nick Place: Hey, Brendan, this is Nick. Yes, I feel like especially in this current interest rate environment, that feels like the right run rate for us. To the extent that we get more accommodating fiscal policy that could allow us to potentially grow at a faster pace. But with what we're seeing today and what we're seeing in the market for opportunities, we're trying not to grow just for the sake of growth. I think we're trying to be really disciplined about growing as profitably as we can. And that's kind of where we're landing in that sort of mid-single digit on both sides. Brendan Nosal: Yep, makes sense. Okay, thanks for taking the questions. Nick Place: Thanks. Operator: The next question comes from Nathan Race with Piper Sandler. Please go ahead. Nathan Race: Hey, guys. Good morning. Thanks for taking the questions. Nick Place: Morning. Nathan Race: Going back to the last discussion topic around growth on the right side of the balance sheet. Obviously, really impressive core deposit gathering in the quarter. I'm just curious to what extent you guys have visibility into kind of the core deposit gathering pipeline and to what extent continued success on that front can maybe help wind down some of the higher cost funding that's maturing over the next 12 or over the course of 4Q and into 2027. Nick Place: Yeah. Hey, Nathan. This is Nick. Yeah, we feel really good about what we saw in the third quarter, and frankly, how we're positioned on a go-forward basis. We've been able to pick up really amazing talent in the market on the treasury management side of things. We picked up great commercial bankers in market. Our affordable housing vertical continues to build both loan opportunities and core deposit opportunities. We've been really pleased with what that team's been able to do to gather core deposits outside of the Minneapolis-St. Paul market through new relationships that are national affordable housing developers. We feel really good about our prospects to continue to grow core deposits. As we talked about earlier in the prepared remarks, we've done a lot of time to really evaluate and understand our deposit flows and our balance sheets. We do tend to see more core deposits build in the back half of the year. So there's always some tailwind for us there. But I don't want to take away from the great work that the teams are doing to not only bring in new relationships but expand existing ones, and take advantage of the opportunity in front of us. The core deposits will continue to be the governor for us as we think about loan growth. But our teams are doing a phenomenal job to build a really strong pipeline of new relationships and new deposits. You mentioned brokered and that sort of wholesale funding side. That's always going to be a part of the equation for us as we think about managing our overall liabilities. It's a really stable funding source. There's optionality within that portfolio that we can't get elsewhere. We are trying to be disciplined about our growth and then to allow us optionality to reduce those over time. But it'll always be part of the story. Nathan Race: Got it. That's helpful, Nick. I'm just curious on the payoff front. Any sense in terms of what inning you're in terms of maybe some of the lower yielding commercial real estate loans originated four or five years ago when rates were lower, kind of nearing the end and maybe payoffs are going to be less of a headwind as we can see in the chart on slide 11 in the deck? Nick Place: Yeah. It's been a pretty dynamic environment over the last 90 days. I think conversations that we have with clients around what they were expecting to do with their property 90 days ago. There's maybe more certainty of them either refinancing to an agency-type debt on a piece of multifamily property, or just selling the property just because interest rates were attractive enough for a new buyer. Some of those clients are now sort of reevaluating, if that makes sense, just given pricing guidance that they're getting from brokers on what they could get in a sale, given the rates up move. I think the nice thing, and Katie mentioned this, these clients have had a lot more time to think about and plan for this repricing than clients in 2023 that saw really rapid rates that move and that they weren't expecting. We feel good about the ability to work through any of those credit issues, and I think our clients are much more prepared today, even if they do have to sit and let the loan reprice or we provide extensions on those credits and the deal doesn't pay off. They just feel better about that, the prospects for that transaction, than some of the conversations we were having in 2023. Nathan Race: Okay, got it. If I could just sneak in one more confirmation for Joe. I think you alluded to kind of the incremental cost of deposits coming in the door are 3.5% today. Just want to confirm that's kind of what you're seeing here, or at least what happened in 3Q. Then where do you see that going over the next few quarters if we do get additional rate hikes just based on some of the competitive dynamics in the Twin Cities? Joe Chybowski: Yeah, I think that's a decent estimate, Nathan. I think when we couple kind of commercial relationships with a non-interest-bearing deposit with a more actively managed money market, I think that's kind of how we think about the incremental cost of funds. I do think that kind of the leading indicator of kind of deposit competition locally is always the short-term CD market. Primarily credit union driven. So I think we have seen some marketing related to that. So I think that's part of how we think about deposit cost competition potentially picking up just on the short end of the curve. But to Nick's point, we feel really good about the ability to continue to grow kind of whole commercial relationships, that are not just kind of chasing the highest rate. Nathan Race: Okay, great. I appreciate all the color. Thanks, guys. Operator: As a reminder, if you would like to ask a question, please press star then one to join the question queue. The next question comes from Brandon Rud with Stephens. Please go ahead. Brandon Rud: Morning. Thanks for taking my questions. If I could start just one on the expenses in the third quarter and expectations for the fourth quarter. I guess what drove the outperformance here in 3Q and then what's going to contribute to the step-up as we look towards the fourth quarter here? Joe Chybowski: Hey, Brandon, it's Joe. Yeah, I think when we talk about expenses on a quarter-over-quarter basis, we never try to get too in the weeds on one category versus the other, but more just think about generally a full year. I think our priorities continue to be investing in people and technology. As Jerry mentioned, Nick mentioned, we felt like we've had tremendous success attracting top talent in the market, and we're always going to prioritize that. I also think the technology investments we've made certainly continue to bear fruit and pay off and allow our people to be more efficient. So I think those are the priorities. I think when we think about expense growth on a go-forward basis, not quarter-over-quarter, but over a long term, the range of NIM to average assets is always a decent way to think about it. Ultimately, I think we're most focused on the continued positive operating leverage that we saw here quarter-over-quarter to see 20% year-over-year revenue growth, 10% year-over-year expense growth. That's certainly a dynamic that we continue to prioritize and are confident we'll continue to see as we head into 2027. Brandon Rud: Got it. Okay. Thank you for that. I think, maybe I heard this wrong. Katie, did you say that the provision here in the fourth quarter may be a bit higher than 3Q? If so, should we interpret that as maybe incremental charge-offs in 4Q, or would that be to fill the reserve and kind of see a step up in the ACL ratio? Katie Morrell: Yeah, Brandon. That was the comment in the prepared remarks that we expect fourth quarter to be a bit higher than we saw in the third. Obviously, this is an elevated level from our historical run rate. We're actively working through these nonperforming assets, so we're just working through them as quickly as possible, and we do anticipate that some of those reserves that we're holding on those loans could migrate to charge-offs. Couple that with the expected loan growth in the fourth quarter, we see that the provision would be slightly elevated. Brandon Rud: Got it. Okay. Thank you. If I could squeeze one more in. I think the security yield this last quarter was just over 5%. Thanks for the comments on the loan repricing side of things. How much opportunity is left on the securities repricing side as well that could maybe help the NIM over the medium term? Joe Chybowski: Yeah, Brandon, this is Joe. I think ultimately, the increase in the securities yield is less about portfolio roll-off and repricing and more about just incremental purchases. I think with the move up in rates, we certainly saw real opportunities to add to the portfolio, specifically in the tax-exempt municipal space. That certainly drove higher interest income. It also drove a lower tax rate here in 3Q relative to 2Q. I think we'll continue to be opportunistic in the investment portfolio as we balance loan growth, core deposit growth, and then ultimately securities purchases. I will say the environment with the move in rates up, securities can be a real alternative just given levels that you can add today in really high-quality credits. Brandon Rud: Okay. Thanks for taking my questions. Operator: This concludes our question-and-answer session. I would now like to turn the call back over to Jerry Baack for any closing remarks. Jerry Baack: Thanks, everyone, for joining our call today. We are very excited here at Bridgewater about our profitability outlook and our growth outlook, and very well-positioned to finish 2026 strong and optimistic about 2027. I want to say thanks again to our phenomenal team members here at Bridgewater. Everybody have a great day. Thank you. Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in Bridgewater Bancshares, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bridgewater Bancshares wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $370,440!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,330,110!* Now, it's worth noting Stock Advisor's total average return is 924% — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 21, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Bridgewater Bancshares (BWB) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

- Interested in Bridgewater Bancshares, Inc.? Here are five stocks we like better. - Record third-quarter performance: Bridgewater Bancshares reported 20% year-over-year total revenue growth and 36% growth in pre-provision net revenue. Net interest margin expanded to 3.09% as loan yields increased and deposit costs remained stable. - Deposits enabled renewed lending growth: Core deposits rose $165 million, or 20% annualized, allowing loan growth to accelerate to 7.2% annualized. Affordable housing, construction, commercial real estate and commercial-and-industrial lending drove growth, while management expects near-term loan growth in the mid-single digits. - Credit remains manageable but concentrated risks persist: Watch and special-mention loans fell sharply, but two troubled relationships remain significant, including a $2.4 million charge-off and a $5.3 million specific reserve on an office loan. Provision expense is expected to rise modestly in the fourth quarter as the bank resolves these credits and supports loan growth. Bridgewater Bancshares (NASDAQ:BWB) reported record total revenue and pre-provision net revenue for the third quarter of 2026, as higher core deposits, loan growth and continued loan repricing supported profitability, executives said on the company's earnings call. Chairman and Chief Executive Officer Jerry Baack said the bank's strategy during the year emphasized balancing growth with profitability. Bridgewater had slowed loan growth earlier in the year amid increased loan competition and what Baack characterized as aggressive pricing, while anticipating that core deposit growth would improve in the second half. → The AI Sell-Off Continues—These 3 Stocks Keep Raising Guidance Anyway That deposit growth returned during the third quarter, with core deposits increasing by $165 million, or at a 20% annualized rate. The increase enabled Bridgewater to accelerate loan growth to a 7.2% annualized pace during the quarter. Year to date, loan balances rose at a 6.1% annualized rate, compared with 6.4% annualized growth in core deposits. President and Chief Financial Officer Joe Chybowski said pre-provision net revenue increased 36% from a year earlier, while total revenue rose 20%. Net interest income grew at a 22% annualized rate in the third quarter, driven by a 16% annualized increase in average earning assets and further net interest margin expansion. → Tesla's Roadster Reveal Hints at 2 Much Bigger Moves Net interest margin increased 2 basis points from the prior quarter to 3.09%. Loan yields rose 5 basis points to 5.96%, while deposit costs remained at 2.78% for the third consecutive quarter. Average yields on new loan production were in the mid-6% range, Chybowski said. Bridgewater expects its margin to remain relatively stable in the near term despite higher interest rates. The outlook assumes another rate hike in December and two additional increases in the first half of 2027, according to Chybowski. → Luxury's Middle Market Is Cracking—These 3 Stocks Could Win The company has increased the variable-rate share of its loan portfolio to 26%, from 15% two years earlier. Bridgewater now has $1.2 billion of variable-rate loans, compared with $1.6 billion of deposits tied directly to short-term rates. The bank also has $697 million of fixed-rate loans scheduled to mature over the next 12 months at a weighted average yield of 5.70%, along with $105 million of adjustable-rate loans repricing or maturing at a 4.23% yield. "With these lower yields running off the books and new originations going on the books at higher yields, we have further repricing upside ahead of us," Chybowski said. Non-interest expense declined in the third quarter, helping push Bridgewater's efficiency ratio below 50% for the first time since the first quarter of 2023. Chybowski said expenses were lower than management had expected, though fourth-quarter non-interest expense is expected to return to approximately the second-quarter level. Chief Banking Officer Nick Place attributed core deposit growth to seasonal patterns, new client relationships, treasury-management hires and market disruption. Non-interest-bearing deposits increased by $63 million during the quarter, while higher-cost brokered deposits declined by $96 million. Place said core deposits will remain the primary constraint on loan growth. The bank expects near-term loan growth in the mid-single-digit range as it navigates the higher-rate environment, potential slowing in originations and changes in payoff activity. Construction, non-owner-occupied commercial real estate and commercial-and-industrial lending generated most of the third-quarter loan growth. Multifamily balances declined because of elevated payoff and refinance activity. Affordable housing remains a major lending focus. The segment accounted for more than 25% of third-quarter loan growth and represented 16% of total loans at quarter-end. Affordable housing balances grew 20% year over year, management said. Place said these loans generally carry higher yields than traditional multifamily or commercial real estate loans and often generate compensating deposit balances. Chief Credit Officer Katie Morrell said watch and special-mention loans fell about 50% from year-end 2025 and represented 0.5% of total loans. Nonperforming assets declined modestly from the second quarter to 37 basis points. Nonperforming assets remained concentrated in two relationships. Bridgewater recorded a $2.4 million charge-off on a $10 million mixed-use multifamily property during the third quarter as it moved toward a sale of the asset. The charge-off contributed to annualized net charge-offs of 0.21% for the quarter. The bank also increased the specific reserve on an $8.6 million central business district office loan to $5.3 million. The loan has been on non-accrual status since the first quarter of 2025. Morrell said some of that existing reserve could ultimately migrate to charge-offs as Bridgewater works toward resolving the credit. The allowance for credit losses declined 2 basis points to 1.28%, despite a higher provision during the third quarter. Management expects provision expense to rise modestly in the fourth quarter because of anticipated loan growth and continued work to resolve the two larger nonperforming credits. Bridgewater's common equity tier 1 ratio rose 55 basis points from a year earlier to 9.63%. The company did not repurchase shares in the third quarter. Chybowski said management believes retained earnings can support expected growth while maintaining flexibility around its share repurchase authorization and at-the-market equity program. Baack said Bridgewater added 17 employees amid merger-and-acquisition-related disruption in the market. The company has also advanced to the execution phase of its artificial intelligence strategy, establishing oversight, security and risk frameworks while deploying tools and partnerships intended to support operational efficiencies. Baack said management remains optimistic about the remainder of 2026 and 2027, citing the company's profitability momentum, deposit growth and focus on disciplined expansion. Bridgewater Bancshares, Inc is the bank holding company for Bridgewater Bank, a community-focused commercial bank headquartered in St. Louis Park, Minnesota. Founded in 2005, the company serves businesses, real estate professionals, entrepreneurs and individuals primarily in the Minneapolis–St. Paul metropolitan area and surrounding markets. Bridgewater Bank provides commercial and consumer banking products, including commercial real estate loans, commercial and industrial financing, residential real estate lending, construction and development loans, personal and business deposit accounts, cash-management services and online banking. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Bridgewater Bancshares Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

This article first appeared on GuruFocus. - Total Revenue: Record total revenue, up 20% year over year. - Pre-Provision Net Revenue: Record PPNR, up 36% year over year. - Net Interest Income: Up 22% annualized in Q3, driven by higher average earning assets (up 16% annualized) and margin expansion. - Net Interest Margin: 3.09%, up 2 basis points, exceeding expectations of reaching 3% only by Q4. - Loan Yields: 5.96%, up 5 basis points; new production yields in the mid-6s. - Deposit Costs: 2.78%, relatively stable for the third consecutive quarter. - Efficiency Ratio: Below 50% for the first time since Q1 2023, aided by lower non-interest expense. - Non-Interest Expense: Came in lower than expected (below Q2 level); Q4 expected to return to Q2 levels. - Non-Interest Income: Solid growth driven by higher letter of credit fees; swap fees lighter. - Core Deposit Growth: $165 million, or 20% annualized, in Q3; year-to-date up 6.4% annualized. - Deposit Mix: Non-interest-bearing deposits up $63 million; higher-cost broker deposits down $96 million. - Loan Growth: Up 7.2% annualized in Q3; year-to-date up 6.1% annualized; near-term outlook mid-single-digit. - Affordable Housing: 20% year-over-year growth; 16% of total loan book; over 25% of Q3 loan growth; up 17% annualized year-to-date. - Variable Rate Loans: 26% of portfolio (up from 15% two years ago); $1.2 billion in balances. - Loan Repricing Pipeline: $697 million fixed-rate loans maturing in next 12 months at 5.70% weighted average yield; $105 million adjustable-rate at 4.23%. - Non-Performing Assets: 37 basis points, down modestly from last quarter and well below peers. - Net Charge-Offs: 0.21% annualized, driven primarily by a $2.4 million charge-off on a mixed-use multi-family property. - Allowance for Credit Losses: 1.28%, down a couple of basis points; includes $5.3 million specific reserve on CBD office loan. - Watch/Special Mention Loans: Down ~50% from year-end 2025; 0.5% of total loans. - Provision Expense: Higher in Q3; expected to increase further in Q4. - CET1 Ratio: 9.63%, up 55 basis points year over year. - Tangible Book Value: Grown 9.4% year over year. - Share Repurchases: None in Q3. - Warning! GuruFocus has detected 8 Warning Signs with BWB. - Is BWB fairly valued? Test your thesis with our free DCF calculator. Release Date: October 21, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Record total revenue and pre-provision net revenue, with revenue up 20% year over year and PPNR up 36% year over year. - Net interest margin expanded 2 basis points to 3.09%, exceeding expectations, driven by loan repricing and stable deposit costs. - Core deposit growth was strong at 20% annualized, with non-interest-bearing deposits increasing $63 million and broker deposits declining $96 million. - Efficiency ratio dropped below 50% for the first time since Q1 2023, reflecting strong revenue growth and well-controlled expenses. - Asset quality remains strong with non-performing assets at 37 basis points, well below peers, and watch/special mention loans down 50% from year-end 2025. - Provision expense is expected to increase in Q4 due to resolution of two larger non-performing assets and loan growth. - Net charge-offs rose to 0.21% annualized, driven by a $2.4 million charge-off on a mixed-use multi-family property. - Loan growth may slow due to higher interest rates, with fewer deals penciling out and potential impact on origination activity. - Non-interest expense is expected to return to Q2 levels in Q4, which could pressure the efficiency ratio. - The company remains exposed to repricing risk and economic uncertainty, which could affect credit quality and loan demand. Q: With the recent rate hike and potential for more, how is Bridgewater positioned for a rising rate environment, and what is the outlook for net interest margin? A: President and CFO Joe Chybowski explained that the balance sheet is better positioned for a rates-up environment than in the past. Variable rate loans now make up 26% of the portfolio, up from 15% two years ago, totaling $1.2 billion, which offsets much of the $1.6 billion of deposits tied to short-term rates. With $697 million of fixed rate loans maturing over the next 12 months at a 5.70% weighted average yield and new production in the mid-6s, he expects the net interest margin to hold relatively stable near term, even assuming another hike in December and two more in the first half of 2027. Q: Can you provide more detail on the margin trajectory and the ability to grind higher over the longer term given the balance sheet changes? A: CFO Joe Chybowski noted the margin has exceeded expectations, operating above 3% for most of the year. He highlighted that the loan portfolio has been reoriented toward variable rates to better match the variable rate deposit book, and loan duration has shortened by almost 12 months from the 2022 peak. With incremental loans coming on in the mid-6s and incremental cost of funds in the mid-3s, plus continued back-book repricing through 2027, he sees potential upside and is pleased with the margin's durability despite the changed rate outlook over the last 90 days. Q: How are higher rates affecting loan demand and payoff activity, and what is the outlook for loan growth? A: Chief Lending Officer Nick Place said the recent rates-up move will slightly impact near-term origination activity, though some fourth-quarter transactions already underway should still close. Over time, higher rates will cause more deals to not pencil out, but that headwind on originations is offset by a tailwind of slower payoff and refinance activity. He still feels good about overall loan demand, particularly in affordable housing, and expects near-term loan growth in the mid-single-digit range. Q: What is the status of the two larger non-performing assets, and what is the outlook for provision expense? A: Chief Credit Officer Katie Morrell detailed that the $10 million mixed-use multi-family property resulted in a $2.4 million charge-off in the third quarter as the bank moved toward a near-term sale, driving annualized net charge-offs to 0.21%. The $8.6 million Central Business District Office loan saw its specific reserve increased to $5.3 million, and some portion could migrate to charge-offs upon resolution. Given these resolutions and expected loan growth, she expects fourth-quarter provision expense to be a bit higher than the third quarter. Q: What drove the strong core deposit growth in the third quarter, and can it continue to fund loan growth? A: Chief Lending Officer Nick Place attributed the $165 million, or 20% annualized, core deposit growth to seasonality as well as key treasury management hires, marketplace disruption, and new client relationships, including national affordable housing developers outside the Twin Cities. Non-interest-bearing deposits rose $63 million while higher-cost brokered deposits fell $96 million. He said core deposits will continue to be the governor for loan growth, and the teams have built a strong pipeline of new relationships. Q: Is mid-single-digit growth the new steady state for both loans and core funding? A: Chief Lending Officer Nick Place said that in the current interest rate environment, mid-single-digit growth on both sides of the balance sheet feels like the right run rate. He noted that more accommodating fiscal policy could allow faster growth, but the bank is focused on growing as profitably as possible rather than growing just for the sake of growth. Q: What drove the third-quarter expense outperformance, and what should we expect for the fourth quarter? A: CFO Joe Chybowski said priorities remain investing in people and technology, and the bank has had success attracting top talent. Third-quarter expenses came in lower than the expected second-quarter level. He expects fourth-quarter non-interest expense to return to second-quarter levels and emphasized the focus on positive operating leverage, citing 20% year-over-year revenue growth against 10% expense growth as a dynamic expected to continue into 2027. Q: How much opportunity remains on the securities repricing side to help the net interest margin? A: CFO Joe Chybowski said the increase in securities yield is less about portfolio roll-off and more about incremental purchases, particularly in the tax-exempt municipal space, which also drove a lower tax rate in the third quarter. He said the bank will remain opportunistic in the investment portfolio, and with rates moving higher, securities are a real alternative given the levels available in high-quality credits. Q: Does the decline in the tangible capital ratio change the likelihood of tapping the ATM versus buying back stock? A: CFO Joe Chybowski said optionality remains the goal. While tangible common equity is down quarter over quarter, he believes the company can self-generate capital to support expected loan growth while retaining optionality on both the buyback and the ATM. He noted no shares were repurchased in the third quarter. Q: How is the bank managing credit risk from loan repricing as rates rise? A: Chief Credit Officer Katie Morrell said the repricing analysis process has been ongoing for the past couple of years, including covenant testing and looking 12 months ahead at potential repricing events and property performance. She said the bank has a good handle on specific loans affected and action plans in place, and while rate hikes will make performance more challenging in some instances, she does not expect any big surprises. Q: What is the outlook for deposit costs and competition in the Twin Cities if additional rate hikes occur? A: CFO Joe Chybowski said an incremental cost of funds in the mid-3s is a decent estimate, reflecting a mix of commercial relationships with non-interest-bearing deposits and actively managed money markets. He noted the short-term CD market, primarily credit union driven, is the leading indicator of local deposit competition, and some marketing activity there suggests competition could pick up on the short end of the curve. Q: How prepared are clients for loan repricing compared with the 2023 rate cycle, and what does that mean for For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Management shifted focus from pure loan volume to optimizing profitability by aligning loan growth with core deposit seasonality and pricing discipline. - The bank achieved record revenue and pre-provision net revenue, driven by net interest margin expansion and a return to strong core deposit growth in the second half of the year. - Operational efficiency improved significantly, with the efficiency ratio dropping below 50% for the first time since early 2023 due to revenue momentum and controlled expenses. - Strategic talent acquisition from market M&A disruption bolstered the treasury management and commercial banking teams, contributing to a 20% annualized core deposit growth. - The affordable housing vertical has become a key differentiator, providing higher yields and compensating deposit balances while accounting for 25% of quarterly loan growth. - Management proactively increased the variable rate loan mix to 26% of the portfolio, up from 15% two years ago, to better position the balance sheet for a rising rate environment. - Management expects net interest margin to remain relatively stable despite rising rates, supported by the repricing of $697 million in fixed-rate loans maturing over the next 12 months. - Loan growth is projected to remain in the mid-single-digit range, serving as a 'governor' to ensure growth remains in line with core deposit gathering. - The bank's interest rate sensitivity model assumes an additional rate hike in December 2026 and two more in the first half of 2027. - Non-interest expense is expected to return to second-quarter levels in Q4 2026 as the bank continues to invest in technology and talent. - The strategic focus is shifting toward the execution phase of an AI strategy aimed at driving long-term operational efficiencies across the organization. - Asset quality remains concentrated in two large nonperforming relationships: a $10 million mixed-use property and an $8.6 million central business district office loan. - A $2.4 million charge-off was recognized on the mixed-use property as the bank moved toward a near-term sale of the asset. - Specific reserves on the office loan were increased to $5.3 million, with management warning that some of this reserve may migrate to charge-offs upon final resolution. - Watch and special mention loans declined by approximately 50% from year-end 2025, which management views as a positive leading indicator for the broader portfolio. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management noted that while higher rates may slow new originations as some deals no longer 'pencil out,' this is partially offset by a corresponding slowdown in payoff activity. - Borrowers are described as more resilient and prepared for repricing than in 2023, with proactive engagement starting 12 months before maturity. - The bank intends to maintain optionality between its ATM program and share buybacks, emphasizing that current internal capital generation is sufficient to support mid-single-digit growth. - Management expressed confidence in margin durability due to a shortened loan duration and the ability to price new loans in the mid-sixes against incremental funding costs in the mid-threes. - The 'back book' repricing of older, lower-yielding loans is expected to provide a tailwind through 2027.

Bridgewater (BWB) reported $44.31 million in revenue for the quarter ended September 2026, representing a year-over-year increase of 22.6%. EPS of $0.49 for the same period compares to $0.39 a year ago. The reported revenue compares to the Zacks Consensus Estimate of $43.14 million, representing a surprise of +2.69%. The company delivered an EPS surprise of +4.26%, with the consensus EPS estimate being $0.47. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately. Here is how Bridgewater performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: - Efficiency Ratio: 48.8% compared to the 51% average estimate based on three analysts. - Net Loan Charge-Offs (Recoveries) (Annualized) to Average Loans: 0.2% versus 0.1% estimated by three analysts on average. - Net Interest Margin: 3.1% versus the three-analyst average estimate of 3.1%. - Average Balance - Total interest earning assets: $5.35 billion versus the three-analyst average estimate of $5.25 billion. - Nonperforming Assets: $20.94 million versus $16.03 million estimated by two analysts on average. - Net Interest Income (FTE): $41.73 million versus $38.97 million estimated by three analysts on average. - Customer service fees: $0.54 million versus the three-analyst average estimate of $0.53 million. - Non-interest income: $2.57 million compared to the $2.35 million average estimate based on three analysts. - Net Interest Income: $40.66 million versus the two-analyst average estimate of $40.32 million. - Letter of Credit Fees: $0.64 million compared to the $0.36 million average estimate based on two analysts. - Debit Card Interchange Fees: $0.22 million versus $0.22 million estimated by two analysts on average. View all Key Company Metrics for Bridgewater here>>> Shares of Bridgewater have returned -2.8% over the past month versus the Zacks S&P 500 composite's +0.7% change. The stock currently has a Zacks Rank #4 (Sell), indicating that it could underperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bridgewater Bancshares, Inc. (BWB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Bridgewater (BWB) came out with quarterly earnings of $0.49 per share, beating the Zacks Consensus Estimate of $0.47 per share. This compares to earnings of $0.39 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +4.26%. A quarter ago, it was expected that this company would post earnings of $0.46 per share when it actually produced earnings of $0.45, delivering a surprise of -2.17%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Bridgewater, which belongs to the Zacks Banks - Northeast industry, posted revenues of $44.31 million for the quarter ended September 2026, surpassing the Zacks Consensus Estimate by 2.69%. This compares to year-ago revenues of $36.15 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Bridgewater shares have added about 16% since the beginning of the year versus the S&P 500's gain of 12.4%. While Bridgewater has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Bridgewater was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.50 on $44.38 million in revenues for the coming quarter and $1.83 on $173.26 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - Northeast is currently in the top 27% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Mid Penn Bancorp (MPB), another stock in the same industry, has yet to report results for the quarter ended September 2026. This company is expected to post quarterly earnings of $0.88 per share in its upcoming report, which represents a year-over-year change of +14.3%. The consensus EPS estimate for the quarter has been revised 0.4% lower over the last 30 days to the current level. Mid Penn Bancorp's revenues are expected to be $77.83 million, up 25.9% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bridgewater Bancshares, Inc. (BWB) : Free Stock Analysis Report Mid Penn Bancorp (MPB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Wall Street expects a year-over-year increase in earnings on higher revenues when Horizon Bancorp (HBNC) reports results for the quarter ended September 2026. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The earnings report, which is expected to be released on October 21, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower. While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise. This bank holding company is expected to post quarterly earnings of $0.53 per share in its upcoming report, which represents a year-over-year change of +76.7%. Revenues are expected to be $76.8 million, up 23.5% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 1.56% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core. The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Horizon Bancorp, the Most Accurate Estimate is the same as the Zacks Consensus Estimate, suggesting that there are no recent analyst views which differ from what have been considered to derive the consensus estimate. This has resulted in an Earnings ESP of 0%. On the other hand, the stock currently carries a Zacks Rank of #3. So, this combination makes it difficult to conclusively predict that Horizon Bancorp will beat the consensus EPS estimate. While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that Horizon Bancorp would post earnings of $0.51 per share when it actually produced earnings of $0.49, delivering a surprise of -3.92%. Over the last four quarters, the company has beaten consensus EPS estimates two times. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Horizon Bancorp doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Among the stocks in the Zacks Banks - Northeast industry, Bridgewater (BWB), is soon expected to post earnings of $0.47 per share for the quarter ended September 2026. This estimate indicates a year-over-year change of +20.5%. This quarter's revenue is expected to be $43.14 million, up 19.3% from the year-ago quarter. Over the last 30 days, the consensus EPS estimate for Bridgewater has been revised 4.2% up to the current level. Nevertheless, the company now has an Earnings ESP of 0.00%, reflecting an equal Most Accurate Estimate. When combined with a Zacks Rank of #4 (Sell), this Earnings ESP makes it difficult to conclusively predict that Bridgewater will beat the consensus EPS estimate. Over the last four quarters, the company surpassed EPS estimates just once. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Horizon Bancorp (IN) (HBNC) : Free Stock Analysis Report Bridgewater Bancshares, Inc. (BWB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The market expects Bridgewater (BWB) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended September 2026. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The earnings report, which is expected to be released on October 20, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower. While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise. This company is expected to post quarterly earnings of $0.47 per share in its upcoming report, which represents a year-over-year change of +20.5%. Revenues are expected to be $43.14 million, up 19.3% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 4.17% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core. The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Bridgewater, the Most Accurate Estimate is the same as the Zacks Consensus Estimate, suggesting that there are no recent analyst views which differ from what have been considered to derive the consensus estimate. This has resulted in an Earnings ESP of 0%. On the other hand, the stock currently carries a Zacks Rank of #4. So, this combination makes it difficult to conclusively predict that Bridgewater will beat the consensus EPS estimate. While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that Bridgewater would post earnings of $0.46 per share when it actually produced earnings of $0.45, delivering a surprise of -2.17%. Over the last four quarters, the company has beaten consensus EPS estimates just once. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Bridgewater doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Another stock from the Zacks Banks - Northeast industry, Citizens Financial Group (CFG), is soon expected to post earnings of $1.38 per share for the quarter ended September 2026. This estimate indicates a year-over-year change of +31.4%. Revenues for the quarter are expected to be $2.33 billion, up 9.9% from the year-ago quarter. Over the last 30 days, the consensus EPS estimate for Citizens Financial Group has been revised 0.6% down to the current level. Nevertheless, the company now has an Earnings ESP of -0.74%, reflecting a lower Most Accurate Estimate. When combined with a Zacks Rank of #3 (Hold), this Earnings ESP makes it difficult to conclusively predict that Citizens Financial Group will beat the consensus EPS estimate. The company beat consensus EPS estimates in each of the trailing four quarters. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bridgewater Bancshares, Inc. (BWB) : Free Stock Analysis Report Citizens Financial Group, Inc. (CFG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research