Bridgewater Bancshares, Inc. · NASDAQ:BWB
Bridgewater Bancshares — Q3 2024 Earnings Presentation
39 slides from Bridgewater Bancshares's earnings presentation, Nov 5, 2024
Slide 1: Investor Presentation Third Quarter 2024
| INVESTOR PRESENTATION THIRD QUARTER 2024 1 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 Name: Bridgewater Bancshares, Inc. Headquarters: St. Louis Park, MN Ticker: NASDAQ: BWB; BWBBP Assets: $4.7 Billion Loans: $3.7 Billion Deposits: $3.7 Billion Shareholders’ Equity: $452.2 Million S
Slide 4: Executive Management Team
Jerry Baack Chairman and Chief Executive Officer • 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 • Board member and oversees strong credit and underwriting culture • BWB fo
Slide 5: A Culture-Driven Growth Story
A Culture-Driven Growth Story 5 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 open layout promoting team member and client collaboration •
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 $312K Total Contributions in
Slide 10: Environmental, Social and Governance (ESG)
Environmental, Social and Governance (ESG) 10 We are committed to establishing and advancing impactful initiatives that support our corporate responsibility as one of the largest locally-led banks in the Twin Cities, while regularly sharing our progress with our stakeholders Our ESG Commitment Our E
Slide 11: Attractive Twin Cities Market Built for Business
Attractive Twin Cities Market Built for Business 11 #3 Fortune 500 companies per capita (17)1 Large Corporate Presence #1 State with highest average credit score (742)2 Credit Worthy Population #5 Best state for economic opportunity3 Economic Opportunity #6 Top state for business4 Top State for Busi
Slide 12: Deposit Market Share Momentum in the Twin Cities Continues
Rank Bank HQ Branches Deposits ($M) Market Share 1 U.S. Bancorp MN 80 $ 111,326 44.82% 2 Wells Fargo & Co. CA 85 $ 41,922 16.88% 3 Ameriprise Financial Inc. MN 2 $ 21,468 8.64% 4 Huntington Bancshares Inc. OH 58 $ 6,604 2.66% 5 Bank of Montreal CAN 30 $ 6,097 2.45% 6 Bank of America Corp. NC 20 $ 5,
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 $4,612 $4,692 2015 2016 2017 2018 2019 2020 2021 2022 2023 3Q24 Organic Acquired Assets Proven ability to consistently generate robust annual asset growth primarily in the Twin Cities market As
Slide 14: Strategic Benefits of Proposed Acquisition of First Minnetonka City Bank
Strategic Benefits of Proposed Acquisition of First Minnetonka City Bank (FMCB) 14 1 Source: S&P Capital IQ (data as of June 30, 2024) 2 As of September 30, 2024 Adds High Quality Bank With Complementary Strengths • Reduces CRE concentration by adding a well-diversified loan portfolio focused on 1-4
Slide 15: First Minnetonka City Bank – A Classic Minnesota Community Bank
Cash 3.9% Securities 39.0% Loans 53.6% Other 3.5% $241 Million First Minnetonka City Bank – A Classic Minnesota Community Bank 15 First Minnetonka City Bank • Headquarters: Minnetonka, MN • Year Established: 1964 • Branches: 2 Full-Service Retail Branches • YoY loan growth: 1.9% • Loan yield: 6.19%
Slide 16: FMCB's High Quality Deposit Base Enhances Liquidity Profile
FMCB’s High Quality Deposit Base Enhances Liquidity Profile 16 Noninterest-Bearing Transaction 22.9% Interest-Bearing Transaction 18.6% Savings & MM 37.0% Time 21.5% $215 Million FMCB 3Q24 Deposit Composition FMCB’s Low-Cost, Granular Core Deposit Base (3Q24) Acquisition and Enhanced Liquidity Profi
Slide 17: Moderated Pace of Loan Growth in the Current Environment
Moderated Pace of Loan Growth in the Current Environment 17 $3,722 $3,724 $3,784 $3,800 $3,686 3Q23 4Q23 1Q24 2Q24 3Q24 Dollars in millions $2,326 $2,819 $3,569 $3,724 $3,686 2020 2021 2022 2023 3Q24 ....loan growth has moderated recently due to the higher interest rate environment, increased compet
Slide 18: Strong Diversification Within Key Loan Portfolios
Class A 40% Class B 16% Class C 41% Construction 3% Strong Diversification Within Key Loan Portfolios 18 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 the Twin Ci
Slide 19: Well-Diversified Loan Portfolio With Multifamily and CRE Expertise
CRE NOO 28% Multifamily 38% C&D 5% C&I 13% CRE OO 5% 1-4 Family 11% Consumer & Other 0% Well-Diversified Loan Portfolio With Multifamily and CRE Expertise 19 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 3Q24 Intenti
Slide 20: CRE Concentration Driven by a Proven, Lower Risk Multifamily Portfolio
CRE Concentration Driven by a Proven, Lower Risk Multifamily Portfolio 20 (0.20)% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% Multi-family CRE 1-4 Family C&I C&D Consumer (ex. cards & auto) Total Loans Last 5 Years Last 10 Years Last 15 Years Last 20 Years Last 25 Years 3Q24 240% of Bank RBC Mul
Slide 21: Supporting Affordable Housing Initiatives
81-unit affordable housing property in Bloomington, MN Supporting Affordable Housing Initiatives 21 ¹ Source: Minnesota Housing Partnership, 2024 State of the State’s Housing 2 Includes formally subsidized properties (51%) and market rate properties with affordable set-asides (20%) 62-unit affordabl
Slide 22: Managing Office-Related Risk
Managing Office-Related Risk 22 1 Excludes medical office of $99 million Data as of September 30, 2024 Percent of Total Loans Average Loan Size 5.4% $2.4M Weighted Average LTV 61% CRE NOO Office by Geography Twin Cities Suburban 51% Minneapolis-St. Paul CBD 13% Minneapolis-St. Paul Non-CBD 21% Out-o
Slide 23: Core Deposit Growth Momentum
Core Deposit Growth Momentum 23 Dollars in millions 1 Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000 A track record of strong deposit growth… • Strong and growing brand taking market share in the Twin Cities • New client and banke
Slide 24: A Spread-Based Revenue Model
A Spread-Based Revenue Model 24 Revenue Inflection in 2Q24 Dollars in thousands • Spread-based revenue model with noninterest income making up 6% of total revenue YTD in 2024 • Strong track record of revenue growth with a 7% revenue CAGR since 2019 • Largest components of noninterest income include
Slide 25: Stable NIM Supports Net Interest Income Growth
Stable NIM Supports Net Interest Income Growth 25 $24,507 $24,563 $24,023 $24,229 $24,631 $914 $751 $608 $767 $968 $25,421 $25,314 $24,631 $24,996 $25,599 2.32% 2.27% 2.24% 2.24% 2.24% 3Q23 4Q23 1Q24 2Q24 3Q24 Net Interest Margin1 Net Interest Income (ex. Loan Fees) Loan Fees Net Interest Income and
Slide 26: Loan Portfolio to Reprice Higher in a Rates-Down Environment
11% 25% 25% 17% 14% 9% $62 $146 $147 $99 $85 $51 Less Than 1 Year 1 to 2 Years 2 to 3 Years 3 to 4 Years 4 to 5 Years 5+ Years 22% 14% 16% 13% 15% 20% $558 $357 $398 $330 $379 $508 Less Than 1 Year 1 to 2 Years 2 to 3 Years 3 to 4 Years 4 to 5 Years 5+ Years Loan Portfolio to Reprice Higher in a Rat
Slide 27: A Highly Efficient Business Model
A Highly Efficient Business Model 27 49.0% 42.0% 41.5% 53.0% 58.3% 57.5% 56.5% 56.0% 60.3% 62.2% 2020 2021 2022 2023 3Q24 YTD BWB1 An Efficiency Ratio Consistently Below Peers 1 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation. 2 Includes publicly-traded banks on maj
Slide 28: Optimizing Recent Technology Investments to Support Future Growth
Optimizing Recent Technology Investments to Support Future Growth 28 Client-Facing • Commercial online banking upgrade completed in 2023 • Collaborative technology tools integrated into BWB Corporate Center • Cybersecurity threat detection and response Scalable core to support growth outlook Core Ba
Slide 29: Scaling Enterprise Risk Management Across a Growing Organization
Scaling Enterprise Risk Management Across a Growing Organization 29 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 30: A Strong Credit Culture
A Strong Credit Culture 30 5-Year Peak Annual Net Charge-off Ratio vs. Peers 5-Year Peak Nonperforming Assets2 / Assets vs. Peers 0.03% BWB Peer Bank Median1 0.13% 0.19% BWB Peer Bank Median1 0.62% 1 Includes publicly-traded banks on major exchanges with total assets between $3 billion and $10 billi
Slide 31: Credit Risk Management and Oversight Driving Strong Asset Quality
$749 $919 $269 $678 $8,812 0.02% 0.02% 0.01% 0.01% 0.19% 3Q23 4Q23 1Q24 2Q24 3Q24 $34,841 $40,020 $47,996 $50,494 $51,018 1.50% 1.42% 1.34% 1.36% 1.38% 2020 2021 2022 2023 3Q24 Credit Risk Management and Oversight Driving Strong Asset Quality 31 Nonperforming Assets2 One central business district of
Slide 32: High Quality Securities Portfolio
High Quality Securities Portfolio 32 38% 39% 38% 34% 31% 22% 22% 21% 22% 17% 22% 22% 21% 23% 21% 18% 16% 17% 20% 21% $553 15% $604 $633 $601 $665 3Q23 4Q23 1Q24 2Q24 3Q24 Mortgage-Backed Securities Municipal Bonds U.S. Treasuries Corporate Securities Securities Available for Sale Portfolio (dollars
Slide 33: Ample Liquidity and Borrowing Capacity
Ample Liquidity and Borrowing Capacity 33 1 Excludes $146M of pledged securities at September 30, 2024 Dollars in millions 10.2% 11.5% 12.1% 11.3% 14.5% 37.6% 37.0% 35.5% 36.1% 34.2% $2,181 $2,234 $2,249 $2,222 $2,290 3Q23 4Q23 1Q24 2Q24 3Q24 Off-Balance Sheet Liquidity as a % of Assets On-Balance S
Slide 34: Steady Capital Growth Since 1Q23
Steady Capital Growth Since 1Q23 1 34 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation Capital Priorities 1 3 2 Organic Growth Share Repurchases M&A 4 Dividends Drive profitability by supporting a proven organic loan growth engine Opportunistically return capital to
Slide 35: Near-Term Expectations
Near-Term Expectations 35 • Relatively flat loan balances in 4Q24 (excluding FMCB acquisition) due to continued elevated payoffs • Focus on profitable growth while aligning loan growth with core deposit growth over time • Target loan-to-deposit ratio between 95% and 105% Balance Sheet Growth • Moder
Slide 36: 2024 Strategic Priorities
2024 Strategic Priorities 36 Optimize Balance Sheet for Longer Term Profitable Growth Continue to Gain Loan and Deposit Market Share Generate Incremental Operational Efficiencies While Investing in the Business Scale ERM Function and Monitor Asset Quality Risks • Opportunistically gather core deposi
Slide 37: Bridgewater Bancshares, Inc.
-— BRIDGEWATER BANCSHARES, INC.
Slide 38: Reconciliation of Non-GAAP Financial Measures – Efficiency, TCE, ROATCE
Reconciliation of Non-GAAP Financial Measures – Efficiency, TCE, ROATCE 38 Dollars in thousands December 31, December 31, December 31, December 31, Efficiency Ratio 2020 2021 2022 2023 Noninterest Expense $ 45,387 $ 48,095 $ 56,620 $ 59,320 Less: Amortization Intangible Assets (191) (191) (191) (100
Slide 39: Reconciliation of Non-GAAP Financial Measures – Tangible Book Value
Reconciliation of Non-GAAP Financial Measures – Tangible Book Value 39 Dollars in thousands Tangible Book Value Per Share December 31, 2016 March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 March 31, 2019 Book Value Pe
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