10-K: Bridgewater Bancshares Reports $32.8 Million Net Income for 2024, Completes FMCB Acquisition

Bridgewater Bancshares' 2024 results show a decrease in net income compared to 2023, but include the successful acquisition of FMCB and continued focus on organic growth.

Summary

• Bridgewater Bancshares, Inc. reported a net income of $32.8 million for the year ended December 31, 2024, compared to $39.96 million in 2023.
• Earnings per diluted common share decreased to $1.03 in 2024 from $1.27 in 2023.
• The company completed the acquisition of FMCB in December 2024, adding approximately $245.0 million in assets and $225.7 million in deposits.
• Total assets reached $5.07 billion as of December 31, 2024, a 9.8% increase from the previous year.
• Total gross loans were $3.87 billion, representing a 3.9% increase year-over-year.
• Deposits totaled $4.09 billion, up 10.2% from the prior year.
• The net interest margin decreased to 2.26% in 2024 from 2.42% in 2023.
• The company continues to focus on organic growth and may consider opportunistic acquisitions in the future.
• The company had 290 full-time equivalent employees as of December 31, 2024, a 14% increase from the previous year.
• The company is committed to ESG initiatives and has launched an ESG webpage to share progress with stakeholders.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While the company shows growth in assets, loans, and deposits, the decrease in net income and net interest margin raises concerns. The successful acquisition of FMCB is a positive development, but the overall financial performance suggests a need for improvement.

Positives

• The successful acquisition of FMCB expands the company's market presence and adds new capabilities.
• Total assets, loans, and deposits all experienced growth, indicating a healthy expansion of the business.
• The company maintains a strong capital position, exceeding regulatory requirements.
• The company is committed to ESG initiatives and has launched an ESG webpage to share progress with stakeholders.

Negatives

• Net income and earnings per share decreased compared to the previous year.
• The net interest margin declined, indicating increased pressure on profitability.
• The company is subject to commercial real estate lending guidance issued by the federal banking regulators that impacts our operations and capital requirements.

Risks

• The company's loan portfolio has a concentration of commercial real estate loans, which involve risks specific to real estate values and the health and market dynamics of the real estate market generally.
• Liquidity risks could affect our operations and jeopardize our business, financial condition, results of operations and growth prospects.
• The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
• We are subject to extensive regulation, and the regulatory framework that applies to us, together with any future legislative or regulatory changes, may significantly affect our operations.
• Our business is subject to interest rate risk, and fluctuations in interest rates may adversely affect our earnings.

Future Outlook

The company intends to continue to execute its proven strategies to generate future growth, including focusing on organic growth in the market area, leveraging entrepreneurial culture and talent, and considering additional opportunistic acquisitions.

Industry Context

The company operates in the competitive Twin Cities Metropolitan Statistical Area (MSA) and competes with other, often much larger, retail and commercial banks and financial institutions.

Comparison to Industry Standards

• Two large, national banking chains, Wells Fargo and U.S. Bank, together controlled 61.7% of the deposit market share in the Twin Cities MSA as of June 30, 2024.
• By comparison, the Company had a deposit market share of approximately 1.6%, including the acquisition of FMCB completed in December 2024, which ranked the Company ninth in the Twin Cities MSA overall and fourth in the Twin Cities MSA among banks headquartered in Minnesota.

Related Party Transactions

• The Company has a lease agreement with a related party which is disclosed in Note 9 Leases.

Stakeholder Impact

• The company's performance impacts shareholders through stock value and potential dividends.
• Employees are affected by the company's ability to provide competitive compensation and benefits.
• Customers benefit from the company's ability to provide responsive support and personalized solutions.
• The company's commitment to community reinvestment impacts the communities in which it operates.

Next Steps

• The company plans to increase core deposits over time to support loan growth and build market share.
• The company plans to continue to expand its footprint through marketing and networking efforts focused on generating deposits.
• The company intends to rely on the expertise of the bankers, and believes the Company is well-positioned to continue to organically grow commercial loans based on the favorable market demographics in the Twin Cities MSA.
• The company will continue to evaluate acquisitions that would be complementary to its existing business and align with its strategic priorities.

Key Dates