Breaking Down Bridgewater Bancshares, Inc. (BWB) Financial Health: Key Insights for Investors

You're looking at Bridgewater Bancshares, Inc. (BWB) and asking the right question: is the growth story still intact, or are rising costs finally catching up? The third quarter of 2025 results give us a mixed but telling picture, so you need to look past the headline numbers. Honestly, the bank delivered a solid balance sheet performance with total gross loans hitting $4.21 billion as of September 30, 2025, representing a 6.6% annualized growth rate from the prior quarter, which is defintely a sign of continued market-share capture in the Twin Cities. But, here's the quick math: the adjusted earnings per diluted common share (EPS) of $0.39 missed the consensus estimate of $0.41, even as net interest margin (NIM) expanded slightly to 2.63% and net income reached $11.6 million.

The core issue is that while the bank is growing assets and maintaining pristine credit quality-nonperforming assets to total assets held steady at a low 0.19%-the efficiency ratio (a measure of a bank's overhead costs relative to its revenue) climbed to 54.7%, up from 52.6% in the second quarter. That's a trend we need to map to clear actions, because a bank that grows but can't control its operating expenses is just spinning its wheels. We'll break down where the opportunities lie for Bridgewater Bancshares, Inc. to turn that strong loan growth into more robust bottom-line profit.

Revenue Analysis

You need a clear picture of where Bridgewater Bancshares, Inc. (BWB) is making its money, and the takeaway is simple: this is a bank, and its core lending business is driving substantial growth. The company's trailing twelve-month (LTM) revenue ending Q3 2025 hit $127.24 million, reflecting a strong year-over-year increase of 20.40%. This is defintely a growth story in a challenging rate environment, which speaks to their market execution.

Here's the quick math on their revenue streams: nearly all of it comes from the traditional banking segment, which is primarily Net Interest Income (NII) (the profit from loans minus the cost of deposits). Noninterest income, while smaller, is where you see some interesting strategic changes, but NII is the engine.

Primary Revenue Streams: The NII Engine

For a regional bank like Bridgewater Bancshares, Inc., the primary revenue source is Net Interest Income (NII), which is the difference between the interest earned on assets-like loans-and the interest paid on liabilities, mainly deposits. Looking at the third quarter of 2025, NII was the dominant force, totaling $34.1 million.

Noninterest income, which includes things like service charges, swap fees, and advisory income, made up the remainder. In Q3 2025, this secondary stream was approximately $2.1 million. This breakdown shows a highly focused, interest-rate-sensitive business model.

• Net Interest Income contributed roughly 94.2% of Q3 2025 revenue.
• Noninterest Income contributed roughly 5.8% of Q3 2025 revenue.

Segment Contribution and Breakdown

The entire operation is essentially one segment-banking-but breaking down the components is crucial for understanding risk and opportunity. The heavy reliance on NII means that the company's net interest margin (NIM) is the single most important metric to watch. For more on that, you can check out the full analysis at Breaking Down Bridgewater Bancshares, Inc. (BWB) Financial Health: Key Insights for Investors.

To be fair, the noninterest income side is showing signs of becoming a more meaningful contributor, which helps diversify the revenue base. The table below shows the Q3 2025 revenue components, which totaled $36.2 million for the quarter.

Year-over-Year Revenue Growth and Changes

The growth story is strong. Bridgewater Bancshares, Inc. reported a significant year-over-year revenue growth rate of 20.40% for the LTM ending Q3 2025. This acceleration is a positive signal, especially when you compare it to the full-year 2024 annual revenue of $106.04 million, which was a decrease of 5.19% from the prior year.

The Q3 2025 revenue growth was even more robust, coming in at a 29.24% increase year-over-year. This near-term acceleration is driven by two factors: strong loan growth and a notable spike in noninterest income, though the latter is less predictable.

Specifically, the second quarter of 2025 saw record noninterest income of $3.6 million, a 74.5% jump from Q1 2025. This was helped by nearly $1 million in swap fee income and $200,000 in investment advisory fees. Plus, they booked a $474,000 gain from selling securities acquired in the First Minnetonka City Bank acquisition. You can't count on those non-core gains every quarter, so the NII growth needs to hold steady. That's the action item here: monitor NII growth, not just the headline total revenue number.

Profitability Metrics

You need to know the core profitability of Bridgewater Bancshares, Inc. (BWB) to assess its investment quality, and the quick takeaway is this: BWB is expanding its core lending margin but lags the industry on key return metrics like Return on Assets (ROA), though it maintains a better-than-average operational efficiency.

For a bank, we don't look at traditional gross profit, but rather Net Interest Income (NII) as the primary revenue engine. In the third quarter of 2025 (Q3 2025), Bridgewater Bancshares reported NII of $32.8 million on total revenue of $36.2 million. Here's the quick math on the key margins based on Q3 2025 results:

• Gross Profit Margin (NII Margin Proxy): Approximately 90.6% ($32.8M NII / $36.2M Revenue). This shows a very high reliance on core lending activities.
• Operating Profit Margin (Pre-Provision Net Revenue Margin Proxy): Approximately 45.3%. This margin reflects core operating profitability before factoring in loan loss provisions and taxes.
• Net Profit Margin: The reported net margin was 14.52%. The Q3 2025 net income was $11.6 million (GAAP).

Trends in Profitability and Operational Efficiency

The trend in the bank's core profitability, the Net Interest Margin (NIM), is positive. NIM, which is the difference between the interest income generated by assets and the interest paid on liabilities, expanded to 2.63% in Q3 2025, up from 2.51% in Q1 2025. This expansion is a clear sign that the bank is effectively managing its cost of deposits and increasing its loan yields, which is defintely a good near-term driver for earnings.

However, operational efficiency-how well the bank controls non-interest expenses-has slightly deteriorated. The efficiency ratio (non-interest expense as a percentage of net operating revenue) rose from 52.6% in Q2 2025 to 54.7% in Q3 2025. This increase was reportedly due to higher operating expenses related to production-focused hiring, which is an investment, but still a cost to watch. You can read more about the bank's strategy here: Mission Statement, Vision, & Core Values of Bridgewater Bancshares, Inc. (BWB).

Comparison with Industry Averages

When you stack BWB's performance against the broader regional bank industry, a mixed picture emerges. The bank's Q3 2025 Return on Assets (ROA) of 0.86% is notably below the aggregate industry ROA of 1.16% reported in Q1 2025. Similarly, the Return on Equity (ROE) of 10.27% is just shy of the regional bank average of 11% from late 2024.

What this estimate hides is BWB's strong operational discipline reflected in its efficiency ratio. At 54.7%, BWB is more efficient than the industry aggregate, which clocked in at 56.2% in Q1 2025. This tells me that while the bank may not be generating as much profit from its assets as peers, it is doing a better job of managing its non-interest costs relative to its operating revenue. The challenge for BWB is to translate this cost efficiency into superior asset returns.

Finance: Focus on the NIM expansion and monitor the efficiency ratio for a reversal of the Q3 trend.

Debt vs. Equity Structure

You're looking at Bridgewater Bancshares, Inc. (BWB) and trying to figure out if its growth is built on a solid foundation or too much borrowed money. The quick takeaway is that the bank runs with a higher debt-to-equity ratio (D/E) than its peers, but this is a deliberate strategy to fuel its aggressive growth in the Twin Cities market.

For a bank, the Debt-to-Equity ratio is a critical measure of financial leverage, showing how much of its operations are funded by debt versus shareholder equity. Bridgewater Bancshares, Inc.'s D/E ratio is currently sitting at about 1.19 as of November 2025.

Here's the quick math: A D/E of 1.19 means for every dollar of shareholder equity, the company has $1.19 in debt financing. To be fair, banks are inherently leveraged, but this figure is high. The average D/E ratio for U.S. Regional Banks is closer to 0.5 as of November 2025.

This higher leverage is a calculated move to capture market share, which is why you see total assets hitting $5.4 billion as of September 30, 2025.

Bridgewater Bancshares, Inc. balances its funding by strategically using both debt and equity. The recent activity clearly shows a preference for debt to optimize its capital structure and enhance return on equity (ROE).

• Debt Financing: The company uses debt, primarily in the form of deposits (a bank's core liability) and long-term debt like subordinated notes, to fund its loan growth.
• Equity Funding: Equity has grown, with tangible book value per share reaching $14.93 at September 30, 2025, showing that retained earnings and capital management are defintely contributing.

The most concrete recent action was a debt issuance in June 2025. Bridgewater Bancshares, Inc. issued $80 million of subordinated debt at a fixed rate of 7.625%. They used a portion of this, $50 million, to redeem outstanding subordinated debt, resulting in a net increase of $30 million in long-term debt. This move locks in a funding cost for a long duration, stabilizing their cost of capital, but it also increases their leverage profile.

This is a classic growth-oriented trade-off: higher leverage means higher risk if the economy turns, but it also means potentially higher profits (ROE) if the loan portfolio performs well. For a deeper dive into the bank's overall performance, you should check out the full post: Breaking Down Bridgewater Bancshares, Inc. (BWB) Financial Health: Key Insights for Investors.

The action item here is to monitor the bank's asset quality, specifically the nonperforming assets (NPA) to total assets ratio, which was low at 0.19% as of September 30, 2025. A higher D/E is fine, but only if the assets it funds stay clean.

Liquidity and Solvency

You need to know if Bridgewater Bancshares, Inc. (BWB) can cover its immediate obligations, especially in a tight credit environment. For a bank, liquidity is less about inventory and more about deposit stability and asset quality. The short answer is that BWB's liquidity position is defintely stable, anchored by strong core deposit growth, but its standard liquidity ratios look tight-which is normal for the sector.

Looking at the most recent data, Bridgewater Bancshares, Inc.'s Current Ratio (current assets divided by current liabilities) and Quick Ratio (cash and near-cash assets divided by current liabilities) both sit at a tight 1.01. This ratio, which measures the ability to pay short-term debts, would be a red flag for a manufacturing company, but for a bank, it's a standard reflection of the balance sheet where most assets are long-term loans and most liabilities are short-term deposits.

Here's the quick math on liquidity strength for a bank like Bridgewater Bancshares, Inc.:

• Core Deposit Growth: Core deposits (total deposits less brokered and large-denomination CDs) increased by 11.5% annualized in the third quarter of 2025. This organic funding is a massive liquidity strength, insulating the bank from volatile wholesale funding markets.
• Asset Quality: Nonperforming assets (NPAs) to total assets remained low and stable at 0.19% as of September 30, 2025. Low NPAs mean fewer assets are tied up in non-earning, illiquid positions.

Working capital trends, which for a bank are better viewed through deposit and loan growth, show a healthy expansion. Total deposits grew by 5.2% annualized in Q3 2025, which funds the gross loan growth of 6.6% annualized over the same period. This balanced growth indicates the bank is effectively managing its funding needs to support its lending operations.

The cash flow statement overview for 2025 shows a positive, though variable, trend in Free Cash Flow (FCF), which is the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. While the full breakdown of operating, investing, and financing cash flow is complex for a bank, the FCF figures give a clear picture of cash generation:

The jump in FCF from Q2 to Q3 2025 demonstrates a strong rebound in cash generation, which is a key indicator of operational efficiency. The main potential liquidity concern is the slight increase in the cost of total deposits to 3.19% in Q3 2025, a three-basis-point increase from the prior quarter, due to higher rates on time and brokered deposits. This means funding is getting marginally more expensive, but the strong core deposit base helps mitigate this risk.

For a deeper dive into the bank's operational performance, check out the full analysis: Breaking Down Bridgewater Bancshares, Inc. (BWB) Financial Health: Key Insights for Investors.

Valuation Analysis

You want to know if Bridgewater Bancshares, Inc. (BWB) is a buy, a hold, or a sell right now, and the numbers point to a clear opportunity. The short answer is that the stock appears undervalued based on its forward Price-to-Earnings (P/E) ratio and the consensus of Wall Street analysts, who see a significant upside from the current price.

As of November 2025, the stock is trading around the $16.17 to $16.95 range, but the average analyst price target is a robust $20.50. Here's the quick math: if the stock hits that target from a recent price of $16.17, you're looking at a potential upside of approximately 26.78%. That's a strong signal, but we need to look under the hood at the core valuation multiples.

• Buy consensus suggests a clear path to the $20.50 target.

Key Valuation Multiples (2025 Fiscal Year)

For a regional bank like Bridgewater Bancshares, Inc., we focus on two primary metrics: P/E and Price-to-Book (P/B). The Enterprise Value-to-EBITDA (EV/EBITDA) multiple is less applicable here, as it's a metric better suited for capital-intensive, non-financial companies, so we'll skip it and focus on what truly drives bank value.

Bridgewater Bancshares, Inc.'s forward P/E ratio for the 2025 fiscal year is estimated at a low 10.98. This is based on a projected 2025 Earnings Per Share (EPS) of $1.49. For context, many of the larger, more stable regional banks trade at a higher multiple, suggesting Bridgewater Bancshares, Inc. is comparatively cheaper on an earnings basis. The Price-to-Book (P/B) ratio, which compares the stock price to the company's net asset value, is currently sitting at a healthy 1.13 as of October 2025. A P/B ratio just above 1.0 is often seen as a good entry point for a growing bank, indicating you're paying a slight premium for future growth, but not an excessive one.

Stock Trend and Dividend Policy

The stock has shown resilience, gaining roughly 24% since the end of the 2024 fiscal year, but it still trades well within its 52-week range of $11.93 to $18.01. This means the stock has momentum but hasn't overheated, which is defintely a good sign for new capital. The analyst community has a clear consensus, with a mix of Buy and Strong Buy ratings, leading to an overall Moderate Buy rating.

A note on income: Bridgewater Bancshares, Inc. (BWB) common stock does not currently pay a dividend, so your return will be purely from capital appreciation. This is a strategic choice, as the company is reinvesting all earnings back into growth, which is exactly what you want to see from a bank focused on expanding its commercial lending and deposit base. If you are interested in the preferred stock, the ticker BWBBP offers a forward dividend yield of 7.27%, but that's a different risk profile altogether. To understand who is driving the current price action and institutional interest, you should read Exploring Bridgewater Bancshares, Inc. (BWB) Investor Profile: Who's Buying and Why?.

Next Step: Review Bridgewater Bancshares, Inc.'s Q3 2025 earnings report for any shifts in loan loss reserves, as that's the primary near-term risk for regional banks.

Risk Factors

You're looking at Bridgewater Bancshares, Inc. (BWB) and seeing strong growth in loans and deposits, but the real question is how they manage the risks that come with that aggressive expansion. The near-term outlook is a map of interest rate sensitivity, credit concentration, and the pressure to execute on M&A (Mergers and Acquisitions) integration without letting costs get out of hand. Honestly, it boils down to whether their risk management can keep pace with their ambition to become a $10 billion bank by 2030.

The biggest external risk is the continued volatility in interest rates. Bridgewater Bancshares is banking on favorable Federal Reserve rate cuts in late 2025 to help them hit their net interest margin (NIM)-the profit they make from lending-target of 3% by early 2027. The NIM for Q3 2025 was only 2.63%, a slight increase of one basis point from the prior quarter, but still a tight squeeze. Plus, the cost of total deposits is rising, hitting 3.19% in Q3 2025, up from 3.16% in Q2 2025, largely because time and brokered deposits are repricing higher. That's a direct hit to the margin.

Here's a quick look at the core risks and the numbers that matter:

• Interest Rate Risk: NIM at 2.63% in Q3 2025, needs rate cuts to reach 3% target.
• Credit Concentration: Over one-third of the loan portfolio is secured by commercial real estate (CRE).
• Operational Drag: Efficiency ratio increased to 54.7% in Q3 2025, up from 52.6% in the prior quarter.

Commercial Real Estate and Asset Quality Concerns

The most significant internal risk is Bridgewater Bancshares' substantial exposure to the commercial real estate sector, which accounts for over one-third of their total loan portfolio. In a softening economy, this concentration is defintely a vulnerability. While the bank is pushing for aggressive loan growth-6.6% annualized in Q3 2025-they must maintain their current, strong asset quality metrics. The good news is that nonperforming assets held steady at a low 0.19% of total assets, and net charge-offs were limited to just 0.03% of loans in Q3 2025. The bank's focus on multifamily lending, which makes up nearly 40% of the portfolio and has a weighted average loan-to-value ratio of 67%, is a key mitigation strategy here.

You can see the credit risk management in their portfolio mix:

Managing Execution and Expense Risk

The Q3 2025 earnings miss-adjusted EPS of $0.39 fell short of the $0.40 forecast, and revenue of $36.2 million missed the $36.8 million estimate-highlights an execution risk. This miss, coupled with an increase in the efficiency ratio to 54.7%, indicates that operational costs are rising faster than revenue. The bank is dealing with higher non-interest expenses, including costs from a recent acquisition's systems conversion and new production-focused hiring. The management team is addressing this by completing the systems conversion of the First Minnetonka City Bank acquisition and planning to close one of the two acquired branches in December 2025. This should streamline operations and help bring expense growth back in line with asset growth. You can learn more about the institutional interest in the bank by Exploring Bridgewater Bancshares, Inc. (BWB) Investor Profile: Who's Buying and Why?

Growth Opportunities

You're looking for a clear path forward for Bridgewater Bancshares, Inc. (BWB), and the near-term picture is one of targeted growth, not explosive expansion. The company is defintely executing a strategic pivot, moving from a loan-driven model to a more balanced approach that prioritizes core deposit growth and revenue diversification. This is a realist's strategy for a regional bank in a shifting rate environment.

The core of their future growth is tied to a few clear drivers, combining smart market moves with product innovation. The successful systems conversion of the First Minnetonka City Bank acquisition, completed in Q3 2025, is a key piece of the puzzle, allowing them to fully integrate that balance sheet growth. Plus, the ongoing M&A disruption in the Twin Cities market is providing a solid pipeline for new client and talent acquisition, which is a significant, low-cost opportunity for a bank of BWB's size.

Targeted Growth Drivers and Strategic Initiatives

BWB's strategy is focused on leveraging specific strengths for market share gains. They are not just waiting for the economy to turn; they are actively building a defensible niche. Their biggest competitive edge is their national expertise in the affordable housing vertical, which now comprises nearly $600 million of their portfolio. This focus is a smart move, as the nationwide shortage provides a long-term tailwind for this segment.

On the technology front, they launched a new retail and small business online banking platform in Q3 2025. This digital enhancement is crucial for stabilizing their funding base, as the bank aims to reduce its loan-to-deposit ratio by boosting low-cost core deposits. Honestly, digital is the new branch network for deposit gathering.

• Expand affordable housing vertical for stable loan demand.
• Capitalize on Twin Cities M&A disruption for new clients.
• Enhance digital platform to drive core deposit growth.

Financial Projections and Competitive Edge

For the full fiscal year 2025, the consensus estimates reflect this controlled, strategic growth. Analysts project full-year revenue to reach approximately $143.03 million, with earnings anticipated at $1.50 per share. This growth is supported by management's target of mid- to high-single-digit loan growth for the year, which is a realistic expectation given their Q3 2025 gross loans increased at a 6.6% annualized rate.

Here's the quick math on their core financials for the third quarter:

The bank's liability-sensitive balance sheet is a powerful, though often overlooked, advantage in a potential rates-down environment, positioning them to benefit from anticipated Federal Reserve interest rate cuts. They are targeting a 3.00% Net Interest Margin (NIM) by early 2027, which signals a clear path to improved profitability. This all feeds into their ambitious, but achievable, goal to grow to a $10 billion bank by 2030. For a deeper dive into their balance sheet health, see our full analysis: Breaking Down Bridgewater Bancshares, Inc. (BWB) Financial Health: Key Insights for Investors.

What this estimate hides is the potential for non-interest expense growth, which management has forecasted to be in the high teens for 2025 due to acquisition and investment costs. Still, the bank's strong asset quality, with nonperforming assets at a minimal 0.19% of total assets, provides a solid foundation for continued lending and growth.

Next Step: Portfolio Manager: Assess BWB's current weighting relative to your regional bank exposure and the projected 2025 EPS of $1.50 per share.