Bridgewater Bancshares (BWB) Stock Forecast & Price Target

Bridgewater Bancshares Inc. demonstrated solid financial growth, with core deposits expanding at an annualized rate of 11.5% and non-interest-bearing balances increasing by 17.6% over the quarter. Furthermore, net interest income rose to $32.8 million, an 8% increase quarter-over-quarter, resulting in a reported net interest margin that expanded by 11 basis points to 2.62%. The company's focus on affordable housing loans, which grew 17% year-over-year, coupled with a projected increase in tangible common equity, reinforces a positive outlook for its financial performance moving forward.

Bridgewater Bancshares is experiencing a negative outlook due primarily to its declining net interest margin, which began to significantly underperform compared to its peers following the Federal Reserve's interest rate hikes. The company's high exposure to commercial real estate, comprising over one-third of its loan portfolio, coupled with a marked tangible common equity (TCE) ratio of 6.8%—230 basis points below the peer median—raises concerns about potential outsized losses during economic downturns. Additionally, the decline in noninterest income and the company's vulnerability to regulatory changes and the broader economic climate in Minnesota further complicate its financial stability prospects.