Bridgewater Bancshares, Inc. Announces Third Quarter 2026 Financial Results

ST. LOUIS PARK, Minn.--(BUSINESS WIRE)--Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the “Company”), the parent company of Bridgewater Bank (the “Bank”), today announced net income of $15.0 million for the third quarter of 2026, compared to $14.0 million for the second quarter of 2026, and $11.6 million for the third quarter of 2025. Earnings per diluted common share were $0.49 for the third quarter of 2026, compared to $0.45 for the second quarter of 2026, and $0.38 for the third quarter of 2025.

“Bridgewater delivered an impressive quarter highlighted by strong profitability and balance sheet growth as we continued to execute on our profitable growth strategy,” said Chairman and Chief Executive Officer, Jerry Baack. “Across-the-board revenue growth and well-controlled expenses in the third quarter resulted in a meaningful increase in pre-provision net revenue and an efficiency ratio below 50% for the first time since the first quarter of 2023. In addition, we generated robust core deposit growth during the quarter, which supported our organic loan growth engine, improved our overall deposit mix, and helped drive continued net interest margin expansion.

“Looking ahead, our balance sheet is better positioned today for a higher interest rate environment given our intentional mix shift toward more variable-rate loans over the past few years. Our teams continue to deliver an unconventional level of service that deepens existing client relationships and creates new ones, reinforcing our ability to sustain profitable growth and generate long-term value for shareholders.”

Key Financial Measures

Income Statement

Net Interest Margin and Net Interest Income

Net interest margin (on a fully tax-equivalent basis) for the third quarter of 2026 was 3.09%, a two basis point increase from 3.07% in the second quarter of 2026, and a 46 basis point increase from 2.63% in the third quarter of 2025. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and purchase accounting accretion attributable to the acquisition of First Minnetonka City Bank (“FMCB”), was 2.98% for the third quarter of 2026, a four basis point increase from 2.94% in the second quarter of 2026, and a 46 basis point increase from 2.52% in the third quarter of 2025.

• Net interest margin expanded to 3.09% in the third quarter of 2026 primarily due to growth and repricing of the loan and investment securities portfolios at higher yields.
• The year-over-year expansion in net interest margin was primarily due to growth and repricing of the loan portfolio at higher yields and lower rates paid on deposits.

Net interest income was $40.7 million for the third quarter of 2026, an increase of $2.1 million from $38.6 million in the second quarter of 2026, and an increase of $6.6 million from $34.1 million in the third quarter of 2025.

• The linked-quarter increase in net interest income was primarily driven by growth in the loan and investment securities portfolios at higher yields and higher cash balances, offset partially by higher deposit balances.
• The year-over-year increase in net interest income was primarily due to growth in the loan portfolio at higher yields and lower rates paid on deposits, offset partially by lower balances and yields in the investment securities portfolio and lower cash balances.

Interest income was $76.6 million for the third quarter of 2026, an increase of $4.0 million from $72.7 million in the second quarter of 2026, and an increase of $3.0 million from $73.6 million in the third quarter of 2025.

• The yield on interest earning assets (on a fully tax-equivalent basis) was 5.76% in the third quarter of 2026, compared to 5.73% in the second quarter of 2026, and 5.63% in the third quarter of 2025.
• The linked-quarter increase in the yield on interest earning assets (on a fully tax-equivalent basis) was primarily driven by growth and repricing of the loan portfolio at higher yields and higher yielding investment securities balances.
• The year-over-year increase in the yield on interest earning assets (on a fully tax-equivalent basis) was primarily due to growth and repricing of the loan portfolio at accretive yields.
• The aggregate loan yield was 5.96% in the third quarter of 2026, five basis points higher than 5.91% in the second quarter of 2026, and 17 basis points higher than 5.79% in the third quarter of 2025.
• Core loan yield, a non-GAAP financial measure, was 5.82% in the third quarter of 2026, six basis points higher than 5.76% in the second quarter of 2026, and 16 basis points higher than 5.66% in the third quarter of 2025.

A summary of interest and fees recognized on loans for the periods indicated is as follows:

Interest expense was $36.0 million for the third quarter of 2026, an increase of $1.9 million from $34.1 million in the second quarter of 2026, and a decrease of $3.6 million from $39.5 million in the third quarter of 2025.

• The cost of interest bearing liabilities was 3.54% in the third quarter of 2026, compared to 3.51% in the second quarter of 2026, and 3.89% in the third quarter of 2025.
• The linked-quarter increase in the cost of interest bearing liabilities was primarily due to higher balances and rates paid on interest bearing transaction deposits, time deposits, and FHLB advances.
• The year-over-year decrease in the cost of interest bearing liabilities was primarily due to lower rates paid on interest bearing deposits.

Interest expense on deposits was $30.9 million for the third quarter of 2026, an increase of $1.2 million from $29.7 million in the second quarter of 2026, and a decrease of $3.7 million from $34.6 million in the third quarter of 2025.

• The cost of total deposits was 2.78% in the third quarter of 2026, two basis points lower than 2.80% in the second quarter of 2026, and 41 basis points lower than 3.19% in the third quarter of 2025.
• The linked-quarter decrease in the cost of total deposits was primarily due to lower rates paid on brokered deposits and an increase in noninterest bearing deposits.
• The year-over-year decrease in the cost of total deposits was primarily due to lower rates paid on deposits following interest rate cuts in 2025 and an increase in noninterest bearing deposits.

Provision for Credit Losses

The provision for credit losses on loans and leases was $2.8 million for the third quarter of 2026, compared to $550,000 for the second quarter of 2026, and $900,000 for the third quarter of 2025.

• The provision recorded in the third quarter of 2026 was primarily attributable to growth in the loan portfolio and an additional specific reserve.
• The allowance for credit losses on loans to total loans was 1.28% at September 30, 2026, compared to 1.30% at June 30, 2026, and 1.34% at September 30, 2025.

The provision for credit losses for off-balance sheet credit exposures was $-0- for both the second and third quarters of 2026, compared to a provision of $200,000 for the third quarter of 2025.

Noninterest Income

Noninterest income was $2.6 million for the third quarter of 2026, an increase of $249,000 from $2.3 million for the second quarter of 2026, and an increase of $512,000 from $2.1 million for the third quarter of 2025.

• The linked-quarter increase was primarily due to higher letter of credit fees, offset partially by lower swap fees.
• The year-over-year increase was primarily due to higher letter of credit fees and swap fees.

Noninterest Expense

Noninterest expense was $21.3 million for the third quarter of 2026, a decrease of $553,000 from $21.9 million for the second quarter of 2026, and an increase of $1.4 million from $20.0 million for the third quarter of 2025.

• The linked-quarter decrease was primarily due to lower marketing and advertising expenses and lower professional and consulting costs, offset partially by higher salaries and employee benefits.
• The year-over-year increase was primarily attributable to increases in salaries and employee benefits and information technology expenses.
• Noninterest expense for the second and third quarters of 2026 included no merger-related expenses associated with the acquisition of FMCB, compared to merger-related expenses of $530,000 for the third quarter of 2025, which is considered a non-core item.
• The efficiency ratio (on a fully tax-equivalent basis), a non-GAAP financial measure, was 48.8% for the third quarter of 2026, compared to 53.0% for the second quarter of 2026, and 54.7% for the third quarter of 2025.
• The Company had 360 full-time equivalent employees at September 30, 2026, compared to 355 at June 30, 2026, and 325 at September 30, 2025. The linked-quarter and the year-over-year increases were primarily driven by hiring of key talent across the organization.

Income Taxes

The effective combined federal and state income tax rate was 21.5% for the third quarter of 2026, compared to 24.1% for the second quarter of 2026, and 23.2% for the third quarter of 2025.

• The linked-quarter and the year-over-year decreases were primarily due to the increase in tax-exempt interest income following the purchase of tax-exempt municipal securities investments.

Balance Sheet

Loans

Total gross loans at September 30, 2026 were $4.51 billion, an increase of $80.4 million, or 7.2% annualized, compared to total gross loans of $4.43 billion at June 30, 2026, and an increase of $292.3 million, or 6.9%, compared to total gross loans of $4.21 billion at September 30, 2025.

• The increase in the loan portfolio during the third quarter of 2026 was primarily due to growth in the construction and land development, commercial real estate (“CRE”) nonowner occupied, and commercial portfolios.

Deposits

Total deposits at September 30, 2026 were $4.47 billion, an increase of $126.8 million, or 11.6% annualized, compared to total deposits of $4.35 billion at June 30, 2026, and an increase of $180.3 million, or 4.2%, compared to total deposits of $4.29 billion at September 30, 2025.

• Core deposits, defined as total deposits excluding brokered deposits and certificates of deposit greater than $250,000, increased $165.3 million, or 19.6% annualized, from June 30, 2026, and increased $234.3 million, or 7.1%, from September 30, 2025.
• Noninterest bearing transaction deposits increased $62.9 million, or 30.0% annualized, from June 30, 2026, and increased $71.2 million, or 8.7%, from September 30, 2025.
• Brokered deposits decreased $96.4 million from June 30, 2026, and decreased $39.4 million from September 30, 2025. Consistent with historical practice, brokered deposits continue to be used as a supplemental funding source, as needed.

Asset Quality

Overall asset quality remained strong due to the Company’s measured risk selection, consistent underwriting standards, active credit oversight, and experienced lending and credit teams.

• Annualized net charge-offs as a percentage of average loans were 0.21% for the third quarter of 2026, compared to 0.04% for the second quarter of 2026, and 0.03% for the third quarter of 2025.
• At September 30, 2026, the Company’s nonperforming assets, which included nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $20.9 million, or 0.37% of total assets, compared to $21.6 million, or 0.40% of total assets, at June 30, 2026, and $10.0 million, or 0.19% of total assets, at September 30, 2025.
• Loans with potential weaknesses that warranted a watch/special mention risk rating at September 30, 2026 totaled $23.6 million, compared to $38.5 million at June 30, 2026, and $40.6 million at September 30, 2025.
• Loans that warranted a substandard risk rating at September 30, 2026 totaled $42.9 million, compared to $43.9 million at June 30, 2026, and $58.1 million at September 30, 2025.

Capital

Total shareholders’ equity at September 30, 2026 was $541.4 million, a decrease of $6.5 million, or 4.7% annualized, compared to $547.9 million at June 30, 2026, and an increase of $43.9 million, or 8.8%, over $497.5 million at September 30, 2025.

• The linked-quarter decrease was primarily due to an increase in unrealized losses in the investment securities portfolio and preferred stock dividends, offset partially by net income retained and an increase in unrealized gains in the derivatives portfolio.
• The year-over-year increase was primarily due to net income retained and an increase in unrealized gains in the derivatives portfolio, offset partially by an increase in unrealized losses in the investment securities portfolio, preferred stock dividends and stock repurchases.
• The Consolidated Common Equity Tier 1 Risk-Based Capital Ratio was 9.63% at September 30, 2026, compared to 9.61% at June 30, 2026, and 9.08% at September 30, 2025.
• Tangible common equity as a percentage of tangible assets, a non-GAAP financial measure, was 8.16% at September 30, 2026, compared to 8.62% at June 30, 2026, and 7.71% at September 30, 2025.

Tangible book value per share, a non-GAAP financial measure, was $16.33 as of September 30, 2026, a decrease of 6.7% annualized from $16.61 as of June 30, 2026, and an increase of 9.4% from $14.93 as of September 30, 2025.

The Company did not repurchase any shares of its common stock during both the third quarter of 2026 and 2025, compared to 38,659 shares repurchased during the second quarter of 2026.

• The Company had $12.4 million remaining under its current share repurchase authorization at September 30, 2026.

The Company did not sell any shares during the third quarter of 2026 as part of its existing at-the-market offering.

Today, the Company also announced that its Board of Directors has declared a quarterly cash dividend on its 5.875% Non-Cumulative Perpetual Preferred Stock, Series A (“Series A Preferred Stock”). The quarterly cash dividend of $36.72 per share, equivalent to $0.3672 per depositary share, each representing a 1/100th interest in a share of the Series A Preferred Stock (Nasdaq: BWBBP), is payable on December 1, 2026 to shareholders of record of the Series A Preferred Stock at the close of business on November 13, 2026.

Conference Call and Webcast

The Company will host a conference call to discuss its third quarter 2026 financial results on Wednesday, October 21, 2026 at 8:00 a.m. Central Time. The conference call can be accessed by dialing 844-481-2913 and requesting to join the Bridgewater Bancshares earnings call. To listen to a replay of the conference call via phone, please dial 855-669-9658 and enter access code 9617563. The replay will be available through October 28, 2026. The conference call will also be available via a live webcast on the Investor Relations section of the Company’s website, investors.bridgewaterbankmn.com, and archived for replay.

About the Company

Bridgewater Bancshares, Inc. (Nasdaq: BWB) is a St. Louis Park, Minnesota-based financial holding company founded in 2005. Its banking subsidiary, Bridgewater Bank, is a premier, full-service bank dedicated to providing responsive support and simple solutions to businesses, entrepreneurs, and successful individuals across the Twin Cities. Bridgewater offers a comprehensive suite of products and services spanning deposits, lending, and treasury management solutions. Bridgewater has received numerous awards for its banking services and esteemed corporate culture. With total assets of $5.6 billion as of September 30, 2026 and nine strategically located branches, Bridgewater is one of the largest locally-led banks in Minnesota and is committed to being the finest entrepreneurial bank. For more information, please visit www.bridgewaterbankmn.com.

Use of Non-GAAP Financial Measures

In addition to the results presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company routinely supplements its evaluation with an analysis of certain non-GAAP financial measures. The Company believes these 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 peers. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of non-GAAP disclosures used in this earnings release to the comparable GAAP measures are provided in the accompanying tables.

Forward-Looking Statements

This earnings release contains “forward-looking statements” within the meanings of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, identified by words such as “may”, “might”, “should”, “could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized”, “target” and “outlook”, or the negative version of those words or other comparable words of a future or forward-looking nature.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent known and unknown uncertainties, risks, changes in circumstances and other factors that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: interest rate risk, including the effects of the recent increase in the benchmark federal funds rate by the Federal Reserve; effects on the U.S. economy resulting from actions taken by the federal government, including the threat or implementation of tariffs, immigration enforcement, executive orders, and changes in foreign policy; fluctuations in the values of the securities held in our securities portfolio, including as the result of changes in interest rates; 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 future monetary policies of the Federal Reserve and executive orders in response thereto, and possible recession; credit risk and risks from concentrations (including by type of borrower, geographic area, collateral and industry) within the Company’s loan portfolio or large loans to certain borrowers (including CRE loans); 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 on loans; new or revised accounting standards as may be adopted by state and federal regulatory agencies, the Financial Accounting Standards Board, Securities and Exchange Commission or Public Company Accounting Oversight Board; the concentration of large deposits from certain clients, including those who have balances above current Federal Deposit Insurance Corporation insurance limits; our ability to successfully manage liquidity risk, which may increase our dependence on non-core funding sources such as brokered deposits, and negatively impact our cost of funds; our ability to raise additional capital to implement our business plan; our ability to implement our growth strategy and manage costs effectively; the composition of our senior leadership team and our ability to attract and retain key personnel; 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, including as a result of sophisticated attacks using artificial intelligence and similar tools or as a result of insider fraud; interruptions involving our information technology and telecommunications systems or third-party servicers; competition in the financial services industry, including from nonbank competitors such as credit unions, “fintech” companies and digital asset service providers; the effectiveness of our risk management framework; rapid technological changes implemented by us and other parties in the financial services industry, including third-party vendors, which may be more difficult to implement or more expensive than anticipated or which may have unforeseen consequences to us and our customers, including the development and implementation of tools incorporating artificial intelligence; emerging issues related to the development and use of artificial intelligence that could give rise to legal or regulatory action, damage our reputation, or otherwise materially harm our business or customers; 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, domestic or foreign; 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 global supply chain and the value of products produced by our commercial borrowers; severe weather, natural disasters, widespread disease or pandemics, acts of war, military conflicts, or terrorism, changes in foreign relations, or other adverse external events, including the wars in Iran and Ukraine, ongoing conflicts in the Middle East and other international military conflicts that can increase levels of political and economic unpredictability, contribute to rising energy and commodity prices, affect global supply chains, increase the volatility of financial markets, and other matters beyond our control; potential impairment to the goodwill the Company recorded in connection with acquisitions; the availability of future equity and debt issuances and other capital raising opportunities on favorable terms; changes to U.S. or state tax laws, regulations and governmental policies concerning the Company’s general business, including changes in interpretation or prioritization of such rules and regulations; the impact of bank failures or adverse developments at other banks and related negative publicity about the banking industry in general on investor and depositor sentiment regarding the stability and liquidity of banks; and any other risks described in the “Risk Factors” sections of reports filed by the Company with the Securities and Exchange Commission.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. The Company undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.