Core deposits grew $165 million or 20% annualized in the third quarter.
Variable rate loans expanded to 26% of the loan portfolio.
Affordable housing loan balances grew 20% year over year.
On its third-quarter 2026 earnings call, held on Oct. 21, 2026, Bridgewater (NASDAQ:BWB) announced record revenue driven by widening margins on its loans. The regional bank is shifting toward higher-yielding loans while funding them through core deposits. That balance sheet discipline protects profitability against shifting interest rates and supports consistent tangible book value growth.
Three things management said stand out.
Bridgewater keeps loan growth aligned with core deposits to protect liquidity and profitability. Funding asset expansion through core relationships rather than costly wholesale borrowing stabilizes the bank's cost of funds.
As we have demonstrated, we have the ability to grow loans as much as we want, but it's really the core deposits that are the governor, and we were very pleased with what we saw in the third quarter.
-- Nick Place, Chief Banking Officer
Management expanded variable rate loans to 26% of the portfolio, up from 15% two years ago. Higher variable yields cushion earnings against rising interest rates and help stabilize net interest margin, which represents the spread between interest earned on loans and interest paid on deposits.
Over the past couple of years, we have been proactively increasing the mix of variable rate loans on the balance sheet to create additional repricing opportunities and be more rates neutral.
-- Joe Chybowski, President and Chief Financial Officer
Complex financing rules in affordable housing create high barriers to entry, giving Bridgewater pricing power. This niche vertical delivers elevated loan returns along with substantial compensating deposit balances from developers.
These loans tend to be higher yielding than traditional multifamily or CRE loans, given their complexity, and also tend to come with higher levels of compensating deposit balances.
-- Nick Place, Chief Banking Officer
Profitability momentum is building across the franchise, and executive leadership is showing clear satisfaction with quarterly results. The bank relies on a branch-light model, specialized lending, and tight risk controls while watching deposit competition.
I am thrilled with the momentum we have created, and I am optimistic of the outlook for the remainder of 2026 and beyond.
-- Jerry Baack, Chairman and Chief Executive Officer
Fixed-rate loan repricing provides yield upside over the next 12 months. With variable rate loans hedging higher benchmark rates, the balance sheet remains structured to generate expanding net interest income.
With continued loan growth and margin stability, we are well-positioned for ongoing net interest income growth in the quarters ahead.
-- Joe Chybowski, President and Chief Financial Officer
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