Bridgewater Bancshares, Inc. · NASDAQ:BWB
Bridgewater Bancshares — Q2 2024 Earnings Presentation
37 slides from Bridgewater Bancshares's earnings presentation, Aug 20, 2024
Slide 1: Investor Presentation Second Quarter 2024
| INVESTOR PRESENTATION SECOND QUARTER 2024 1 BriDGEWATER BANCSHARES INC.
Slide 2: 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: $4.7 Billion Loans: $3.8 Billion Deposits: $3.8 Billion Shareholders’ Equity: $439
Slide 4: Executive Leadership 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 Organic Growth Story
A Culture-Driven Organic 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 collabor
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 $312K Total Contributions in
Slide 10: Environmental, Social and Governance (ESG)
Environmental, Social and Governance (ESG) 10 We are committed to establishing and advancing impactful initiatives that support our corporate responsibility as one of the largest locally-led banks in the Twin Cities, while regularly sharing our progress with our stakeholders Our ESG Commitment Our E
Slide 11: Attractive Twin Cities Market
Attractive Twin Cities Market Built for Business 11 #3 Fortune 500 companies per capita (17)1 Large Corporate Presence #1 State with highest average credit score (742)2 Credit Worthy Population #2 Best state for economic opportunity3 Economic Opportunity #6 Top state for business4 Top State for Busi
Slide 12: Deposit Market Share Momentum in the Twin Cities Continues
Rank Bank HQ Branches Deposits ($M) Market Share 1 U.S. Bancorp MN 84 $ 95,116 40.02% 2 Wells Fargo & Co. CA 88 $ 50,360 21.19% 3 Ameriprise Financial Inc. MN 2 $ 20,933 8.81% 4 Huntington Bancshares Inc. OH 69 $ 6,565 2.76% 5 Bank of Montreal CAN 27 $ 6,480 2.73% 6 Bremer Financial Corp. MN 19 $ 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 $4,687 2015 2016 2017 2018 2019 2020 2021 2022 2023 2Q24 Organic Acquired Assets Proven ability to consistently generate robust annual asset growth primarily in the Twin Cities market As
Slide 14: Moderated Pace of Loan Growth in the Current Environment
Moderated Pace of Loan Growth in the Current Environment 14 $3,736 $3,722 $3,724 $3,784 $3,800 2Q23 3Q23 4Q23 1Q24 2Q24 Dollars in millions $2,326 $2,819 $3,569 $3,724 $3,800 2020 2021 2022 2023 2Q24 ....loan growth has moderated recently due to reduced loan demand and funding capacity • 2Q24 loan b
Slide 15: Strong Diversification Within Key Loan Portfolios
Class A 40% Class B 16% Class C 40% Construction 4% Strong Diversification Within Key Loan Portfolios 15 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 16: Well-Diversified Loan Portfolio With Multifamily and CRE Expertise
CRE NOO 28% Multifamily 37% C&D 5% C&I 14% CRE OO 5% 1-4 Family 11% Consumer & Other 0% Well-Diversified Loan Portfolio With Multifamily and CRE Expertise 16 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 2Q24 Intenti
Slide 17: CRE Concentration Driven by a Lower Risk Multifamily Portfolio
CRE Concentration Driven by a Proven, Lower Risk Multifamily Portfolio 17 (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 2Q24 245% of Bank RBC Mul
Slide 18: Supporting Affordable Housing Initiatives
81-unit affordable housing property in Bloomington, MN Supporting Affordable Housing Initiatives 18 ¹ Source: Minnesota Housing Partnership, 2023 Minnesota State Housing Profile 2 Includes formally subsidized properties (46%) and market rate properties with affordable set-asides (21%) 62-unit afford
Slide 19: Managing CRE and Office-Related Risk
Managing CRE and Office-Related Risk 1 19 Excludes medical office of $91M at June 30, 2024 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 the next 12 months • Ident
Slide 20: Deposit Growth Continues to Track With Loan Growth
Deposit Growth Continues to Track With Loan Growth 20 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
Slide 21: A Spread-Based Revenue Model
A Spread-Based Revenue Model 21 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 22: Stable NIM Supports Net Interest Income Growth
Stable NIM Supports Net Interest Income Growth 22 $24,931 $24,507 $24,563 $24,023 $24,229 $941 $914 $751 $608 $767 $25,872 $25,421 $25,314 $24,631 $24,996 2.40% 2.32% 2.27% 2.24% 2.24% 2Q23 3Q23 4Q23 1Q24 2Q24 Net Interest Margin1 Net Interest Income (ex. Loan Fees) Loan Fees Net Interest Income and
Slide 23: Loan Portfolio to Reprice Higher Even If Rates Decline
10% 20% 25% 17% 19% 9% $57 $121 $152 $100 $116 $52 Less Than 1 Year 1 to 2 Years 2 to 3 Years 3 to 4 Years 4 to 5 Years 5+ Years 22% 13% 15% 14% 14% 22% $576 $341 $377 $375 $361 $581 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 Even I
Slide 24: A Highly Efficient Business Model
A Highly Efficient Business Model 24 49.0% 42.0% 41.5% 53.0% 58.5% 57.5% 56.5% 56.1% 60.7% 63.3% 2020 2021 2022 2023 2Q24 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 25: Optimizing Recent Technology Investments
Optimizing Recent Technology Investments to Support Future Growth 25 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 26: Scaling Enterprise Risk Management
Scaling Enterprise Risk Management Across a Growing Organization 26 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 27: Credit Risk Management and Oversight Driving Superb Asset Quality
$34,841 $40,020 $47,996 $50,494 $51,949 1.50% 1.42% 1.34% 1.36% 1.37% 2020 2021 2022 2023 2Q24 Credit Risk Management and Oversight Driving Superb Asset Quality 27 $775 $722 $639 $919 $678 0.03% 0.02% 0.01% 0.02% 0.01% 2020 2021 2022 2023 2Q24 Nonperforming Assets2 Consistently low NPA levels NPAs %
Slide 28: A Strong Credit Culture
A Strong Credit Culture 28 5-Year Peak Annual Net Charge-off Ratio vs. Peers 5-Year Peak Nonperforming Assets2 / Assets vs. Peers 0.02% BWB Peer Bank Median1 0.13% 0.03% BWB Peer Bank Median1 0.54% 1 Includes publicly-traded banks on major exchanges with total assets between $3 billion and $10 billi
Slide 29: High Quality Securities Portfolio
High Quality Securities Portfolio 29 41% 38% 38% 38% 34% 24% 22% 22% 21% 22% 21% 22% 22% 21% 23% 14% 18% 18% 20% 21% $538 $553 $604 $633 $601 2Q23 3Q23 4Q23 1Q24 2Q24 Mortgage-Backed Securities Municipal Bonds Corporate Securities Other Securities Available for Sale Portfolio (dollars in millions) A
Slide 30: Ample Liquidity and Borrowing Capacity
Ample Liquidity and Borrowing Capacity 30 1 Excludes $169M of pledged securities at June 30, 2024 Dollars in millions 9.6% 10.2% 11.5% 12.1% 11.3% 33.1% 37.6% 37.0% 35.5% 36.1% $1,962 $2,181 $2,234 $2,249 $2,222 2Q23 3Q23 4Q23 1Q24 2Q24 Off-Balance Sheet Liquidity as a % of Assets On-Balance Sheet L
Slide 31: Steady Capital Growth Since 1Q23
Steady Capital Growth Since 1Q23 31 1 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 32: Near-Term Expectations
Near-Term Expectations 32 • Low-to-mid-single digit loan growth for full-year 2024 • Focus on aligning loan growth with core deposit growth • Target loan-to-deposit ratio between 95% and 105% Balance Sheet Growth • Continued NIM stabilization in the current interest rate environment • Positioned to
Slide 33: 2024 Strategic Priorities
2024 Strategic Priorities 33 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 34: Appendix
w——™~ BRIDGEWATER BANCSHARES, INC. APPENDIX
Slide 35: 2Q24 Earnings Highlights
0.01% 2Q24 Earnings Highlights 35 • Deposit balances up $487K from 1Q24, or 0.1% annualized • Loan balances up $16.2 million, or 1.7% annualized, from 1Q24, impacted by increased payoffs • YTD deposit growth of 5.3% annualized and core deposit2 growth of 3.0%, compared to loan growth of 4.1% annuali
Slide 36: Reconciliation of Non-GAAP Measures – Efficiency, TCE, ROATCE
Reconciliation of Non-GAAP Financial Measures – Efficiency, TCE, ROATCE 36 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 37: Reconciliation of Non-GAAP Measures – Tangible Book Value
Reconciliation of Non-GAAP Financial Measures – Tangible Book Value 37 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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