Bridgewater Bancshares, Inc. · NASDAQ:BWB
Bridgewater Bancshares — Q3 2023 Earnings Presentation
33 slides from Bridgewater Bancshares's earnings presentation, Nov 13, 2023
Slide 1: Investor Presentation, Third Quarter 2023
© INVESTOR PRESENTATION , THIRD QUARTER 2023 — ~~ = BRIDGEWATER BANCSHARES, INC.
Slide 2: Disclaimer: Forward-Looking Statements
Disclaimer 2 Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements concerning plans, estimate
Slide 3: Company Overview
The Finest Entrepreneurial Bank 3 Company Overview Branch-Light Model in Attractive Twin Cities Market Twin Cities Name: Bridgewater Bancshares, Inc. Headquarters: St. Louis Park, MN Ticker: NASDAQ: BWB; BWBBP Assets: $4.6 Billion Loans: $3.7 Billion Deposits: $3.7 Billion Shareholders’ Equity: $416
Slide 4: Management Team
Jerry Baack Chairman, CEO and President • Former regulator and responsible for all aspects of BWB formation • Lead founder of BWB in 2005 • 30+ years of banking experience Jeff Shellberg EVP and Chief Credit Officer • Holding company board member and oversees strong credit and underwriting culture •
Slide 5: A Culture-Driven Organic Growth Story
A Culture-Driven Organic Growth Story 5 Strong Profitability and Shareholder Return Profile Truly Unconventional Culture Highly Efficient Business Model Robust Balance Sheet Growth Proactive Risk Management • Entrepreneurial spirit unlike the culture at a typical bank • Modern headquarters with an o
Slide 6: Our Core Values
Our Core Values 6 Unconventional. Our clients notice a difference. Responsive. Under promise, over deliver. Dedicated. Don’t stop until you get it done. Growth. If you aren’t moving forward, where are you going? Accurate. It’s more than just an expectation. 6 Our Core Values
Slide 7: An Award-Winning Workplace Culture
An Award-Winning Workplace Culture “In today’s environment, it is more important than ever to be able to recruit, retain and develop top talent. At Bridgewater, we have demonstrated an ability to do this through our unconventional culture and employee experience, extensive team member referral netwo
Slide 8: A Responsive Service Model
A Responsive Service Model 8 Our clients can expect… • Responsive support and simple solutions • A local bank of choice in a market where many local banks have left • Flexibility, market expertise and strong network connections The “Proven Process” for Our Clients • BEST Business Bank • BEST Small B
Slide 9: A Commitment to our Communities
A Commitment to our Communities 9 Our communities can expect… Bridgewater’s commitment to investing, lending and volunteering in ways that serve low-to-moderate income segments in the Twin Cities ‘Outstanding’ Rating for Community Reinvestment Act Performance FDIC, 2023 $315K Total Contributions in
Slide 10: Environmental, Social and Governance (ESG)
Environmental, Social and Governance (ESG) 10 We are committed to establishing and advancing impactful initiatives that support our corporate responsibility as a growing local bank in the Twin Cities, while regularly sharing our progress with our stakeholders Our ESG Commitment Our ESG Priorities Te
Slide 11: Attractive Twin Cities Market Built for Business
Attractive Twin Cities Market Built for Business 11 #1 Fortune 500 companies per capita (16)1 Large Corporate Presence #1 State with highest average credit score (726)2 Credit Worthy Population #1 Best place for women entrepreneurs3 Women Entrepreneurs #5 Top State for Business4 State for Business #
Slide 12: Deposit Market Share Momentum in the Twin Cities Continues
Deposit Market Share Momentum in the Twin Cities Continues 12 Total Deposits – Minneapolis/St. Paul MSA1 2012 2023 Market Ripe for Continued Market Share Gains • Top-heavy deposit market (top 2 market share = 61%) • Top 2 have lost market share each of the last eight years (2014: 84% / 2023: 61%) •
Slide 13: History of Robust Organic Asset Growth
History of Robust Organic Asset Growth 13 $1,184 $76 $929 $1,260 $1,617 $1,974 $2,269 $2,927 $3,478 $4,346 $4,557 2015 2016 2017 2018 2019 2020 2021 2022 3Q23 Organic Acquired Assets Proven ability to consistently generate robust annual asset growth primarily in the Twin Cities market Asset growth h
Slide 14: Managing Loan Growth in the Current Environment
Managing Loan Growth in the Current Environment 14 $3,380 $3,569 $3,684 $3,736 $3,722 3Q22 4Q22 1Q23 2Q23 3Q23 Dollars in millions $1,912 $2,326 $2,819 $3,569 $3,722 2019 2020 2021 2022 3Q23 ....We Are Thoughtfully Managing Loan Growth in the Current Environment • 3Q23 loan balances down $13.9M, or
Slide 15: Well-Diversified Loan Portfolio With a Commercial Focus
CRE NOO 26% Multifamily 37% C&D 10% C&I 12% CRE OO 4% 1-4 Family 11% Consumer & Other 0% Well-Diversified Loan Portfolio With a Commercial Focus 15 CRE NOO 27% Multifamily 21% C&D 15% C&I 13% CRE OO 6% 1-4 Family 18% Consumer & Other 0% $0.8B Evolution of Loan Mix by Type 2015 3Q23 Intentional mix s
Slide 16: Strong Diversification Across Key Loan Portfolios
Strong Diversification Across Key Loan Portfolios 16 5-19 Units 11% 20-49 Units 25% 50-99 Units 28% 100+ Units 36% Size YoY Growth Go-to-Market Strategy Competitors Growth Outlook Key Stats Portfolio Diversification Multifamily CRE Nonowner Occupied Construction & Development C&I Bank of choice in t
Slide 17: Managing CRE and Office-Related Risk
Managing CRE and Office-Related Risk 17 1 Excludes medical office of $87M at September 30, 2023 Dollars in millions Addressing CRE NOO Repricing Risk • CRE NOO loans primarily located in the Twin Cities market • Ongoing active client engagement • Clients with maturing loans or resetting rates over t
Slide 18: Deposit Growth Momentum Returned in a Challenging Funding Environment
Deposit Growth Momentum Returned in a Challenging Funding Environment 18 1 Calculated as the change in ending deposit rate over the change in ending Fed Funds rate from February 2022 to September 2023 Dollars in millions 25% 27% 30% 26% 21% 14% 15% 18% 13% 21% 28% 26% 29% 30% 24% 20% 14% 10% 8% 7% 1
Slide 19: A Spread-Based Revenue Model
A Spread-Based Revenue Model 19 Industry-Wide Revenue Headwinds in the Current Environment $34,095 $32,893 $28,567 $25,872 $25,421 $1,387 $1,738 $1,943 $1,415 $1,726 $35,482 $34,631 $30,510 $27,287 $27,147 3Q22 4Q22 1Q23 2Q23 3Q23 Net Interest Income Noninterest Income Dollars in thousands • Spread-
Slide 20: Net Interest Income Impacted by Managed Loan Growth as NIM Stabilizes
Net Interest Income Impacted by Managed Loan Growth as NIM Stabilizes 20 $32,599 $31,745 $27,567 $24,928 $24,505 $96 $48 $2 $3 $2 $1,400 $1,100 $998 $941 $914 $34,095 $32,893 $28,567 $25,872 $25,421 3.53% 3.16% 2.72% 2.40% 2.32% 3.38% 3.05% 2.62% 2.31% 2.24% 3Q22 4Q22 1Q23 2Q23 3Q23 Core Net Interes
Slide 21: A Highly Efficient Business Model
A Highly Efficient Business Model 21 47.4% 49.0% 42.0% 41.5% 51.6% 43.3% 40.5% 41.0% 41.2% 51.7% 59.5% 57.4% 56.5% 56.3% 60.3% 2019 2020 2021 2022 3Q23 YTD BWB Adjusted1 BWB Reported1 An Efficiency Ratio Consistently Well Below Peers 1 Represents a Non-GAAP financial measure. See Appendix for Non-GA
Slide 22: Leveraging Recent Technology Investments to Support Growth
Leveraging Recent Technology Investments to Support Growth 22 Client-Facing • Modern platforms and payment options for business and personal clients • Collaborative technology tools integrated into BWB Corporate Center • Cybersecurity threat detection and response Scalable core to support growth out
Slide 23: Scaling Enterprise Risk Management Across a Growing Organization
Scaling Enterprise Risk Management Across a Growing Organization 23 Manage and mitigate dynamic risks while enhancing shareholder value, being responsive to clients, and delivering simple solutions in unconventional ways BWB Risk Management Philosophy Enterprise Risk Management Attributes in Place T
Slide 24: Credit Risk Management and Oversight Driving Superb Asset Quality
$22,526 $34,841 $40,020 $47,996 $50,585 1.18% 1.50% 1.42% 1.34% 1.36% 2019 2020 2021 2022 3Q23 Credit Risk Management and Oversight Driving Superb Asset Quality 24 1 Nonaccrual loans plus loans 90 days past due and still accruing and foreclosed assets Dollars in thousands $461 $775 $722 $639 $749 0.
Slide 25: Credit Risk Management Supports Robust Loan Growth
Credit Risk Management Supports Robust Loan Growth 25 5-Year Peak Annual Net Charge-off Ratio vs. Peers 5-Year Peak Nonperforming Assets2 / Assets vs. Peers 0.02% BWB Peer Bank Median1 0.16% 0.03% BWB Peer Bank Median1 0.58% 1 Includes publicly-traded banks on major exchanges with total assets betwe
Slide 26: High Quality Securities Portfolio
High Quality Securities Portfolio 26 35% 43% 41% 41% 38% 31% 24% 23% 24% 22% 20% 20% 21% 21% 22% 13% 13% 15% 14% 18% $542 $549 $559 $538 $553 3Q22 4Q22 1Q23 2Q23 3Q23 Mortgage-Backed Securities Municipal Bonds Corporate Securities Other Securities Available for Sale Portfolio AAA, 23% AA, 46% A, 3%
Slide 27: Ample Liquidity and Borrowing Capacity
Ample Liquidity and Borrowing Capacity 27 1 Excludes $164M of pledged securities at September 30, 2023 Dollars in millions 14.0% 13.7% 10.9% 9.6% 10.2% 20.1% 17.0% 30.9% 33.1% 37.6% $1,409 $1,380 $1,924 $1,962 $2,181 3Q22 4Q22 1Q23 2Q23 3Q23 Off-Balance Sheet Liquidity as a % of Assets On-Balance Sh
Slide 28: Prudent Capital Management
Prudent Capital Management 28 Total Risk-Based Capital Common Equity Tier 1 Capital Capital Ratios Supported by Profitability and Capital Markets Activity Tangible Common Equity to Tangible Assets1 1 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation. BWB Capital Prior
Slide 29: Near-Term Expectations
Near-Term Expectations 29 • Limited near-term loan growth in the current environment; position the balance sheet for more profitable longer term growth • Focus on aligning loan growth more closely with core deposit growth over time • Continued core deposit growth over time, but may not be linear qua
Slide 30: 2023 Strategic Priorities – Positioning for Long-Term Success
2023 Strategic Priorities – Positioning for Long-Term Success 30 Manage High Quality Balance Sheet Growth 1 2 3 4 Maintain High Efficiency While Investing in the Business Continue Scalability of ERM Function, Including Proactive Assessment of Asset Quality Risks Implement Longer Term Strategic Readi
Slide 31: Appendix
w——™~ BRIDGEWATER BANCSHARES, INC. APPENDIX
Slide 32: 3Q23 Earnings Highlights
0.02% 3Q23 Earnings Highlights 32 • Deposit balances up $97.6 million, or 10.8% annualized, from 2Q23, including core deposit2 growth of 11.0% annualized • Borrowings declined $162.4 million, or 29.5%, from 2Q23, with no overnight borrowings as of September 30, 2023 • Loan balances declined $13.9 mi
Slide 33: Reconciliation of Non-GAAP Financial Measures – Efficiency, TCE, TBV, NIM
Reconciliation of Non-GAAP Financial Measures – Efficiency, TCE, TBV, NIM 33 * Efficiency Ratio is adjusted to exclude the historic tax credit amortization, debt prepayment fees and FHLB advance prepayment income Dollars in thousands December 31, December 31, December 31, December 31, December 31, D
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