Bridgewater Bancshares Reports Second-Quarter 2026 Results as Loan Growth and Margin Expansion Support Earnings
Bridgewater Bancshares, Inc. (Nasdaq: BWB), the parent company of Bridgewater Bank, reported net income of $14.0 million for the second quarter of 2026, reflecting continued growth in its core banking operations, stronger net interest income and expansion in its net interest margin. The company’s second-quarter results demonstrated the benefits of loan portfolio growth, disciplined balance sheet management and a continued focus on relationship-based banking.
Diluted earnings per common share were $0.45 for the quarter ended June 30, 2026, compared with $0.58 in the first quarter of 2026 and $0.38 in the second quarter of 2025. Although quarterly earnings declined from the first quarter, the company’s performance improved significantly compared with the same period a year earlier, supported by higher net interest income and continued expansion of its loan portfolio.
For the first six months of 2026, Bridgewater Bancshares reported diluted earnings per share of $1.03, compared with $0.68 for the first half of 2025. The company also reported growth in several key financial measures, including net interest margin, tangible book value per share, total assets, loans and deposits.
“Bridgewater’s strong second quarter reflected continued progress across key profitability drivers, highlighted by improved revenue and net interest income growth trends,” said Jerry Baack, Chairman and Chief Executive Officer of Bridgewater Bancshares. “The profitable growth of our loan portfolio, supported by continued net interest margin expansion and higher loan repricing, helped drive stronger earnings performance while we maintained our disciplined credit underwriting approach and strong asset quality profile.”
Baack added that the company remains focused on executing its relationship-based growth strategy while continuing to recruit experienced talent across its production and support teams. According to management, these investments are designed to strengthen Bridgewater’s ability to serve clients, capitalize on future growth opportunities and create long-term value for shareholders.
Net Interest Margin Continues to Expand
One of the key highlights of Bridgewater Bancshares’ second-quarter performance was continued expansion in net interest margin. On a fully tax-equivalent basis, the company’s net interest margin increased to 3.07% in the second quarter of 2026, compared with 2.99% in the first quarter and 2.62% in the second quarter of 2025.
The eight-basis-point increase from the prior quarter was primarily driven by growth and repricing within the loan portfolio at higher yields, along with lower rates paid on deposits. Compared with the second quarter of 2025, the company’s net interest margin expanded by 45 basis points.
Core net interest margin, which excludes the impact of loan fees and purchase accounting accretion related to the acquisition of First Minnetonka City Bank, was 2.94% during the second quarter. That compared with 2.86% in the first quarter of 2026 and 2.49% in the year-earlier period.
Net interest income totaled $38.6 million during the quarter, an increase of $1.9 million from $36.6 million in the first quarter and $6.1 million from $32.5 million in the second quarter of 2025.
The quarter-over-quarter increase was primarily supported by continued loan growth at higher yields, higher cash balances and lower federal funds purchased balances. These benefits were partially offset by higher deposit balances.
On a year-over-year basis, the increase in net interest income was primarily attributable to growth in the loan portfolio and lower deposit costs. The benefit was partially offset by lower investment securities balances following the sale of $208.5 million of securities during the first quarter of 2026, as well as higher balances and rates paid on subordinated debt.
The yield on interest-earning assets increased to 5.73% in the second quarter, compared with 5.65% in the first quarter and 5.56% in the second quarter of 2025. The improvement was primarily driven by the growth and repricing of the loan portfolio.
The aggregate loan yield rose to 5.91%, compared with 5.81% in the first quarter and 5.74% in the year-earlier quarter. Core loan yield also increased to 5.76%, up from 5.66% in the first quarter and 5.59% in the second quarter of 2025.
At the same time, the cost of interest-bearing liabilities declined slightly to 3.51%, compared with 3.53% in the first quarter and 3.83% in the second quarter of 2025. The lower cost was primarily driven by reduced rates paid on interest-bearing deposits and lower balances and rates associated with federal funds purchased.
The cost of total deposits was 2.80% during the second quarter, broadly consistent with the 2.79% reported in the first quarter but significantly below the 3.16% recorded in the second quarter of 2025. The year-over-year decline primarily reflected lower deposit rates following interest-rate cuts in 2025 and growth in noninterest-bearing deposits.
Loan Portfolio Continues to Grow
Bridgewater Bancshares ended the second quarter with total gross loans of $4.43 billion, representing an increase of $58.3 million, or 5.4% on an annualized basis, from March 31, 2026. Compared with June 30, 2025, gross loans increased by $280.6 million, or 6.8%.
The primary driver of quarterly loan growth was the company’s multifamily real estate portfolio. Multifamily loans reached approximately $1.69 billion at June 30, 2026, compared with $1.59 billion at the end of the first quarter.
Total real estate mortgage loans stood at approximately $3.54 billion at the end of the quarter. Commercial loans totaled $591.0 million, while construction and land development loans stood at $186.2 million.
The company’s total loans, net of the allowance for credit losses and deferred loan fees, reached $4.36 billion at June 30, 2026.
Management continues to emphasize measured loan growth supported by its relationship-focused banking model and disciplined underwriting standards. The company’s strategy is designed to support long-term growth while maintaining appropriate risk controls across its commercial real estate, multifamily and other lending businesses.
Deposits Increase as Funding Base Remains Diverse
Total deposits reached $4.35 billion at June 30, 2026, an increase of $40.7 million, or 3.8% on an annualized basis, from the first quarter. Compared with the second quarter of 2025, deposits increased by $109.5 million, or 2.6%.
Interest-bearing transaction deposits rose by $44.6 million from the prior quarter and increased by $152.8 million compared with the same period a year earlier. The company also reported growth in brokered deposits, which increased by $45.2 million during the quarter and $20.9 million year over year.
Core deposits, defined as total deposits excluding brokered deposits and certificates of deposit greater than $250,000, declined by $29.9 million on a linked-quarter annualized basis but increased by $161.1 million, or 5.1%, from June 30, 2025.
Bridgewater said brokered deposits continue to serve as a supplemental funding source when needed, allowing the company to manage liquidity and support balance sheet growth.
Credit Quality Remains a Key Focus
The company continued to report strong overall credit quality, supported by measured risk selection, consistent underwriting standards and active credit oversight.
Net charge-offs were 0.04% of average loans on an annualized basis during the second quarter, compared with 0.05% in the first quarter and zero in the second quarter of 2025.
The provision for credit losses on loans and leases was $550,000 during the second quarter, down from $1.4 million in the first quarter and $2.0 million in the second quarter of 2025. The provision was primarily related to loan portfolio growth and was partially offset by changes in qualitative factors.
The allowance for credit losses represented 1.30% of total loans at June 30, 2026, compared with 1.31% at March 31, 2026 and 1.35% at June 30, 2025.
Nonperforming assets totaled $21.6 million, or 0.40% of total assets, at the end of the second quarter. This compared with $11.7 million, or 0.22% of total assets, at the end of the first quarter and $10.3 million, or 0.19%, a year earlier.
Loans classified as watch or special mention totaled $38.5 million, down from $47.7 million at March 31, 2026 and $53.3 million at June 30, 2025. Loans classified as substandard totaled $43.9 million at the end of the second quarter.
Noninterest Income Declines Following First-Quarter Securities Gain
Noninterest income totaled $2.3 million during the second quarter, down from $9.6 million in the first quarter and $3.6 million in the second quarter of 2025.
The quarter-over-quarter decline was primarily due to the absence of a gain on the sale of securities. Bridgewater recorded no net gain on securities sales during the second quarter, compared with $7.3 million in the first quarter.
The company did benefit from higher letter of credit fees during the period. Year over year, the decline in noninterest income was primarily attributable to lower swap fees, lower securities gains and the absence of certain Federal Home Loan Bank prepayment income.
Expenses Remain Controlled
Noninterest expense was $21.9 million in the second quarter, a decrease of $276,000 from the first quarter but an increase of $3.0 million from the second quarter of 2025.
The quarterly decline was primarily related to the absence of a Federal Home Loan Bank prepayment penalty, partially offset by higher salaries and employee benefits. The year-over-year increase was mainly driven by higher compensation expenses and increased information technology costs.
Bridgewater reported an efficiency ratio of 53.0% for the second quarter, compared with 56.3% in the first quarter and 52.6% in the second quarter of 2025.
The company had 355 full-time equivalent employees at June 30, 2026, up from 337 at the end of the first quarter and 308 a year earlier. The increase reflected the hiring of seasonal interns and the addition of key talent across the organization.
Capital Position Strengthens
Bridgewater Bancshares ended the second quarter with total shareholders’ equity of $547.9 million, an increase of $19.5 million from the first quarter and $71.6 million from the second quarter of 2025.
The increase was primarily driven by retained net income, a reduction in unrealized losses in the investment securities portfolio and higher unrealized gains in the derivatives portfolio. These improvements were partially offset by preferred stock dividends and, on a year-over-year basis, stock repurchases.
The company’s consolidated Common Equity Tier 1 risk-based capital ratio increased to 9.61%, compared with 9.53% in the first quarter and 9.03% a year earlier.
Tangible common equity as a percentage of tangible assets rose to 8.62%, compared with 8.34% at March 31, 2026 and 7.40% at June 30, 2025. Tangible book value per share increased to $16.61, up from $15.93 in the first quarter and $14.21 a year earlier.
During the quarter, Bridgewater repurchased 38,659 shares of common stock for an aggregate purchase price of $700,000, representing a weighted average price of $18.12 per share. The company had $12.4 million remaining under its current share repurchase authorization at the end of the quarter.
Bridgewater Bancshares also announced that its Board of Directors declared a quarterly cash dividend on its 5.875% Non-Cumulative Perpetual Preferred Stock, Series A.
The dividend is $36.72 per preferred share, equivalent to $0.3672 per depositary share. Each depositary share represents a 1/100th interest in a share of Series A Preferred Stock.
The dividend is scheduled to be paid on September 1, 2026, to shareholders of record as of the close of business on August 14, 2026.
Overall, Bridgewater Bancshares’ second-quarter results reflected continued progress in its core banking operations. Strong loan growth, improving loan yields, lower deposit costs and an expanding net interest margin helped support higher year-over-year earnings. While noninterest income declined following significant securities gains recorded in the first quarter, the company maintained a solid capital position and continued to report low net charge-offs.
With ongoing investments in talent, a relationship-based growth strategy and a focus on disciplined credit management, Bridgewater Bancshares is positioning itself to pursue additional opportunities while maintaining a strong foundation for long-term growth.
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