Bridgewater Bancshares, Inc. · NASDAQ:BWB
Bridgewater Bancshares — Q1 2023 Earnings Presentation
27 slides from Bridgewater Bancshares's earnings presentation, Apr 27, 2023
Slide 1: Earnings Presentation First Quarter 2023
EARNINGS PRESENTATION FIRST QUARTER 2023 SY BRIDGEWATER BANCSHARES INC.
Slide 2: Disclaimer
Disclaimer 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, estimates,
Slide 3: A Local, Relationship-Focused Bank
A Local, Relationship-Focused Bank • No held-to-maturity (HTM) securities • Local bank with local clients • Well-diversified available-for-sale (AFS) Simple and Consistent • Focus on commercial real estate and small High Quality securities portfolio Business Model business clients Securities Portfol
Slide 4: 1Q23 Earnings Highlights
1Q23 Earnings Highlights Diluted Return on Return on Avg. Tangible Efficiency Nonperforming Assets EPS Average Assets Common Equity1 Ratio1 to Total Assets $0.37 1.07% 12.90% 46.2% 0.02% Moderated Balance • Moderating loan growth with gross loan balances up $114.9 million, or 13.1% annualized, from
Slide 5: Net Interest Income Impacted by Additional Margin Pressure
Net Interest Income Impacted by Additional Margin Pressure Net Interest Income and Margin Trends Net Interest Margin Drivers 3.60% 3.58% 3.53% 3.16% 2.72% 3.34% 3.34% 3.38% 3.05% 2.62% $34,095 $32,530 $32,893 $1,400 $30,180 $2,030 $96 $1,100 Core NIM2 down 43 bps $48 $28,567 $1,743 $263 $563 $998 $2
Slide 6: Funding Costs Outpacing Asset Yields
Funding Costs Outpacing Asset Yields Loan Portfolio Steadily Repricing Higher High-Yielding Securities 5.06% 4.22% 4.87% 3.91% 4.59% 3.35% 4.45% 4.45% 4.95% 4.74% 2.77% 2.85% 4.42% $608 $604 4.15% 4.17% $3,630 $537 $3,482 $491 $3,108 $3,266 $445 $2,900 1Q22 2Q22 3Q22 4Q22 1Q23 1Q22 2Q22 3Q22 4Q22 1Q
Slide 7: Revenue Growth Impacted by Current Environment
Revenue Growth Impacted by Current Environment Highly Profitable Franchise Spread-Based Revenue Model 2.12% 2.19% 2.15% 1.82% 1.46% 1.49% $35,482 1.42% 1.38% $34,180 $34,631 1.28% $1,387 $31,737 $1,650 $1,738 $21,439 1.07% $30,510 $20,439 $1,557 $19,512 $1,943 $18,346 $16,198 $14,513 $13,735 $12,882
Slide 8: Well-Controlled Expenses
Well-Controlled Expenses Well-Controlled Expense Base Consistently Efficient Business Model in the Current Environment Industry median efficiency ratio of 55%1 1Q23 decrease primarily due to reduced discretionary compensation 46.2% 43.8% 42.4% 40.2% 39.8% $15,203 $14,157 $14,183 1.56% $13,508 $13,75
Slide 9: Deposit Mix Shift in a More Challenging Environment
Deposit Mix Shift in a More Challenging Environment $3,417 $3,411 $3,305 $3,202 1Q23 Deposit Growth Factors $3,036 14% 15% 23% 25% • Core deposit growth remained challenging amid recent bank 14% failures, heightened competition and rising interest rate 9% 9% environment 9% 8% 8% • Primary focus shif
Slide 10: A Deeper Look at the Deposit Base
A Deeper Look at the Deposit Base March Core Deposit Inflows (Outflows) Decreased Levels of Uninsured Deposits as Balances Move to IntraFi Product 2023 2022 $75 $3,417 $3,411 $50 $818M of uninsured deposits at 38% 24% 24% Uninsured $25 38% Uninsured March 31, 2023 Uninsured $0 25% Fully insured; not
Slide 11: Moderated Pace of Loan Growth
Moderated Pace of Loan Growth $3,684 $3,569 $3,380 Managing Loan Growth $3,226 • 1Q23 loan growth of $114.9 million, or 13.1% annualized $2,988 • Strong brand presence and relationships in the market allow us to get in front of high-quality clients and deals • Overall loan demand has declined as few
Slide 12: Loan Originations and Payoffs Are Slowing
Loan Originations and Payoffs Are Slowing New Loan Originations and Advances Loan Payoffs and Amortization/Paydowns $393 $194 $364 $181 $308 $313 $31 $153 $125 $33 $141 $123 $220 $36 $111 $139 $127 $42 $42 $145 $148 $163 $241 $268 $117 $169 $186 $99 $69 $75 1Q22 2Q22 3Q22 4Q22 1Q23 1Q22 2Q22 3Q22 4Q
Slide 13: Well-Diversified Loan Portfolio
Well-Diversified Loan Portfolio Consumer & Other 0.3% 1Q23 Loan Growth by Type (vs. 4Q22) CRE OO C&I Construction & Development $32 4.3% 12.3 % CRE NOO 1-4 Family Mortgage $25 26.2% 1-4 Family C&I $19 Loan Mix Mortgage 10.3% $3.7 by Type CRE Nonowner Occupied $16 Billion C&D Multifamily $13 10.8% Mu
Slide 14: Superb Asset Quality Continues
Superb Asset Quality Continues Classified Assets Nonperforming Assets1 Continue to closely monitor credits Consistently low NPA levels $36,258 $30,767 $809 $26,991 $28,049 $706 $688 $663 $639 $18,611 6.26% 6.95% 5.70% 5.52% 4.32% 0.02% 0.02% 0.01% 0.02% 0.02% 1Q22 2Q22 3Q22 4Q22 1Q23 1Q22 2Q22 3Q22
Slide 15: Watch and Classified Assets
Watch and Classified Assets Watch List by Loan Type Classified List by Loan Type 1-4 CRE NOO 1-4 Family CRE OO C&D Family Office 2.5% 4.4% 0.3% 0.7% 5.6% CRE NOO C&I Retail 18.3% 7.5% C&D CRE NOO 2.6% CRE NOO Retail Hotels 21.5% 9.2% $28 Multifamily $36 C&I 50.9% Million 11.8% Million CRE NOO Office
Slide 16: High Quality Securities Portfolio
High Quality Securities Portfolio Securities Available for Sale Portfolio Derivatives Portfolio Offsetting AOCI Impact $28,581 $23,148 $542 $549 $559 $459 $483 13% 15% 13% 14% 19% 20% 20% 21% 21% 18% 24% 23% $(17,942) $(17,896) 31% 35% 36% 43% 41% 30% 35% $(42,584) 27% $(47,884) 1Q22 2Q22 3Q22 4Q22
Slide 17: Ample Liquidity and Borrowing Capacity
Ample Liquidity and Borrowing Capacity 1Q23 Liquidity More Than 2X Coverage of Uninsured Deposits Diverse Liquidity Mix $1,924 Available Balance Funding Source 3/31/2023 12/31/2022 Change Cash $ 177 $ 48 $ 129 Unpledged Securities1 325 549 (224) $1,444 $1,498 FHLB Capacity 247 391 (144) $1,409 $1,38
Slide 18: Well-Capitalized with Tangible Book Value Per Share Growth
Well-Capitalized with Tangible Book Value Per Share Growth Consolidated Capital Ratios Tangible Book Value Per Share1 Growth $11.69 $11.95 15.02% $10.98 13.98% 13.78% 13.15% 13.25% $9.31 $8.33 $7.22 10.78% 10.33% $5.40 9.98% 9.55% 9.41% $4.52 9.13% 8.50% 8.47% 8.40% 8.48% 8.60% 7.87% 7.57% 7.48% 7.2
Slide 19: Near-Term Expectations
Near-Term Expectations • Balance sheet growth to slow from 2022 levels Balance Sheet • High single-digit to low double-digit loan growth in 2023 – focus on aligning loan growth more closely with core Growth deposit growth over the course of the year • Target loan-to-deposit ratio between 95% and 105
Slide 20: 2023 Strategic Priorities – Positioning for Long-Term Success
2023 Strategic Priorities – Positioning for Long-Term Success YTD Progress • Slower pace of balance sheet growth in the current environment Manage High Quality • Manage the balance sheet to optimize net interest income 1 Balance Sheet Growth • Increase emphasis on generating core deposit growth to s
Slide 21: Appendix
——™ BRIDGEWATER BANCSHARES, INC. APPENDIX 21
Slide 22: Interest Rate Sensitivity
Interest Rate Sensitivity Estimated Change in NII From Loan Portfolio Considerations Immediate Interest Rate Shocks • Loan portfolio most sensitive to changes in the 3- to 5-year portion of the 2Q22 3Q22 4Q22 1Q23 yield curve • Fixed-rate nature of the loan portfolio (66%) results in slower repricin
Slide 23: Loan Portfolio Repricing
Loan Portfolio Repricing Fixed-Rate Portfolio Variable-Rate Portfolio Adjustable-Rate Portfolio ($2.4B) ($643M) ($616M) Adjustable-Rate Years to Maturity Variable-Rate Loan Floors Repricing Schedule Loan Portfolio Mix $836 $548 $548 $548 $548 $548 $123 $136 $115 $326 $332 $314 $298 $320 35% $83 $83
Slide 24: Reconciliation of Non-GAAP Financial Measures – Annual
Reconciliation of Non-GAAP Financial Measures – Annual As of and for the year ended December 31, Tangible Common Equity & Tangible Common Equity/Tangible Assets 2016 2017 2018 2019 2020 2021 2022 Common Equity $ 115,366 $ 137,162 $ 220,998 $ 244,794 $ 265,405 $ 379,272 $ 394,064 Less: Preferred Stoc
Slide 25: Reconciliation of Non-GAAP Financial Measures – Profitability, TCE and TBV
Reconciliation of Non-GAAP Financial Measures – Profitability, TCE and TBV As of and for the quarter ended, March 31, March 31, June 30, June 30, September 30, September 30, December 31, December 31, March 31, March 31, Efficiency Ratio 2022 2022* 2022 2022* 2022 2022* 2022 2022* 2023 2023* Noninter
Slide 26: Reconciliation of Non-GAAP Financial Measures – PPNR
Reconciliation of Non-GAAP Financial Measures – PPNR As of and for the quarter ended, March 31, June 30, September 30, December 31, March 31, Pre-Provision Net Revenue 2022 2022 2022 2022 2023 Noninterest Income $ 1,557 $ 1,650 $ 1,387 $ 1,738 $ 1,943 Less: (Gain) Loss on Sales on Securities - (52)
Slide 27: Reconciliation of Non-GAAP Financial Measures – Core NIM
Reconciliation of Non-GAAP Financial Measures – Core NIM As of and for the quarter ended, March 31, June 30, September 30, December 31, March 31, Core Net Interest Margin 2022 2022 2022 2022 2023 Net Interest Income (Tax-Equivalent Basis) $ 30,438 $ 32,806 $ 34,418 $ 33,260 $ 28,947 Less: Loan Fees
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