Bridgewater Bancshares, Inc. · NASDAQ:BWB
Bridgewater Bancshares — Investor Presentation (May 2023)
34 slides from Bridgewater Bancshares's investor presentation, May 12, 2023
Slide 1: Investor Presentation First Quarter 2023
INVESTOR PRESENTATION FIRST QUARTER 2023 4S BRIDGEWATER BANCSHARES, INC.
Slide 2: Disclaimer: Forward-Looking Statements
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: 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: $3.4 Billion Shareholders’ Equity: $402
Slide 4: Management Team
Jerry Baack Chairman, CEO and President • Past 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 • B
Slide 5: A Culture-Driven Organic Growth Story
A Culture-Driven Organic Growth Story 5 Consistent Profitability and Shareholder Return Truly Unconventional Culture Highly Efficient Business Model Robust Balance Sheet Growth Proactive Risk Management • Entrepreneurial spirit unlike the culture at a typical bank • Headquarters with modern, open la
Slide 6: A Local, Relationship-Focused Bank
A Local, Relationship-Focused Bank 6 • Local bank with local clients • Focus on commercial real estate and small business clients • No cryptocurrency exposure Simple and Consistent Business Model Strong Deposit Relationships Ample Liquidity and Borrowing Capacity • Recent and ongoing investments in
Slide 7: Our Core Values
Our Core Values 7 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. 7 Our Core Values
Slide 8: 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 9: A Responsive Service Model
A Responsive Service Model 9 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 • #1 BEST Business Bank • #1 BEST S
Slide 10: A Commitment to our Communities
A Commitment to our Communities 10 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 11: Environmental, Social and Governance (ESG)
Environmental, Social and Governance (ESG) 11 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 12: Attractive Twin Cities Market
Attractive Twin Cities Market Built for Business 12 #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 State with educational achievement beyond hi
Slide 13: History of Organic Asset Growth
History of Organic Asset Growth Generation 13 $1,184 $76 $929 $1,260 $1,617 $1,974 $2,269 $2,927 $3,478 $4,346 $4,603 2015 2016 2017 2018 2019 2020 2021 2022 1Q23 Organic Acquired Assets Proven ability to consistently generate robust annual asset growth primarily in the Twin Cities market Asset grow
Slide 14: Long Track Record of Robust Loan Growth
Long Track Record of Robust Loan Growth 14 $1,912 $2,326 $2,819 $3,569 $3,684 2019 2020 2021 2022 1Q23 Loans Dollars in millions ....While Thoughtfully Managing Loan Growth in the Current Environment • Overall loan demand has declined as fewer deals are making financial sense due to the higher inter
Slide 15: Commercial-Focused Loan Portfolio
CRE NOO 26% Multifamily 36% C&D 11% C&I 12% CRE OO 4% 1-4 Family 10% Consumer & Other 0% Commercial-Focused Loan Portfolio 15 354% 333% 318% 304% 313% 266% 264% 258% 261% 180% 164% 185% 177% 204% 190% 219% 257% 253% 534% 497% 503% 480% 517% 456% 483% 515% 514% 2015 2016 2017 2018 2019 2020 2021 2022
Slide 16: Strong Diversification Across Key Loan Portfolios
Strong Diversification Across Key Loan Portfolios 16 5-19 Units 12% 20-49 Units 26% 50-99 Units 28% 100+ Units 34% 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: Granular and Diversified CRE NOO Office Portfolio
Granular and Diversified CRE NOO Office Portfolio1 17 $200 $176 $176 $174 $195 1Q22 2Q22 3Q22 4Q22 1Q23 CRE NOO Office Stable CRE NOO Office Portfolio Small CRE NOO Office Portfolio Low Average Loan Size LTVs In-Line with the Rest of the Loan Portfolio 5.3% of Total Loans $2.2M Average Loan Size 62%
Slide 18: Deposit Mix Shift in a More Challenging Funding Environment
Deposit Mix Shift in a More Challenging Funding Environment 18 25% 27% 30% 26% 22% 14% 15% 18% 13% 18% 28% 26% 29% 30% 27% 20% 14% 10% 8% 8% 13% 18% 13% 23% 25% $1,823 $2,502 $2,946 $3,417 $3,411 2019 2020 2021 2022 1Q23 Noninterest-Bearing Transaction Interest-Bearing Transaction Savings and Money
Slide 19: A Deeper Look at the Deposit Base
• $53M of core deposit outflows in March 2023 • Flows primarily impacted by normal seasonality, including tax season, client profit distributions, industry cyclicality, as well as continued moves toward higher rate alternatives • Similar trajectory of core deposit flows in March 2022 and March 2023
Slide 20: Deposit Market Share Momentum in the Twin Cities
Deposit Market Share Momentum in the Twin Cities Continues 20 Total Deposits – Minneapolis/St. Paul MSA1 2012 2022 Market Ripe for Continued Market Share Gains • Top-heavy deposit market (top 2 market share = 62%) • Top 2 have lost market share each of the last eight years (2014: 84% / 2022: 62%) •
Slide 21: Among the Most Efficient Banks in the Industry
Among the Most Efficient Banks in the Industry 21 47.4% 49.0% 42.0% 41.5% 46.2% 43.3% 40.5% 41.0% 41.2% 46.3% 59.5% 57.4% 56.5% 56.3% 57.9% 2019 2020 2021 2022 2023 YTD BWB Adjusted1 BWB Reported1 An Efficiency Ratio Consistently Well Below Peers Peer Bank Median2 1 Represents a Non-GAAP financial m
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
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 $50,148 1.18% 1.50% 1.42% 1.34% 1.36% 2019 2020 2021 2022 1Q23 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 $809 0.
Slide 25: Credit Risk Management Supports Continued Loan Growth
Credit Risk Management Supports Continued Loan Growth 25 5-Year Peak Net Charge-off Ratio vs. Peers 5-Year Peak Nonperforming Assets2 / Assets vs. Peers 0.02% BWB Peer Bank Median1 0.17% 0.03% BWB Peer Bank Median1 0.53% 1 Includes publicly-traded banks on major exchanges with total assets between $
Slide 26: High Quality Securities Portfolio
High Quality Securities Portfolio 26 27% 30% 35% 43% 41% 36% 35% 31% 24% 23% 18% 21% 19% 20% 20% 21% 14% $459 13% 13% 15% $483 $542 $549 $559 1Q22 2Q22 3Q22 4Q22 1Q23 Mortgage-Backed Securities Municipal Bonds Corporate Securities Other Securities Available for Sale Portfolio AAA, 19% AA, 50% A, 2%
Slide 27: Ample Liquidity and Borrowing Capacity
Ample Liquidity and Borrowing Capacity 27 1 Excludes $234M of pledged securities at March 31, 2023 Dollars in millions 14.1% 13.5% 14.0% 13.7% 10.9% 25.9% 25.0% 20.1% 17.0% 30.9% $1,444 $1,498 $1,409 $1,380 $1,924 1Q22 2Q22 3Q22 4Q22 1Q23 Off-Balance Sheet Liquidity as a % of Assets On-Balance Sheet
Slide 28: Prudent Capital Management
Prudent Capital Management 28 12.98% 14.58% 15.55% 13.15% 13.25% 11.39% 10.35% 9.36% 8.40% 8.48% 10.69% 9.28% 10.82% 9.55% 9.41% 10.65% 8.96% 8.91% 7.48% 7.23% 2019 2020 2021 2022 1Q23 Total Risk-Based Capital Common Equity Tier 1 Capital Capital Ratios Supported by Profitability and Capital Markets
Slide 29: Near-Term Expectations
Near-Term Expectations 29 • Balance sheet growth to slow from 2022 levels • High single-digit to low double-digit loan growth in 2023 – focus on aligning loan growth more closely with core deposit growth over the course of the year • Target loan-to-deposit ratio between 95% and 105% Balance Sheet Gr
Slide 30: 2023 Strategic Priorities
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: 1Q23 Earnings Highlights
0.02% 1Q23 Earnings Highlights 32 • Moderating loan growth with gross loan balances up $114.9 million, or 13.1% annualized, from 4Q22 • Deposit balances down $5.4 million, or 0.6% annualized, from 4Q22 • Net interest margin of 2.72%, down 44 bps from 4Q22 • Yield on interest-earning assets of 4.91%,
Slide 33: Reconciliation of Non-GAAP 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
Slide 34: Reconciliation of Non-GAAP Measures – PPNR
Reconciliation of Non-GAAP Financial Measures – PPNR 34 Dollars in thousands Pre-Provision Net Revenue December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 1Q23 Noninterest Income $ 2,543 $ 3,826 $ 5,839 $ 5,309 $ 6,332 $ 1,943 Less: (Gain) Loss on Sales of Secur
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