Bridgewater Bancshares, Inc. · NASDAQ:BWB
Bridgewater Bancshares — IPO Roadshow (August 2021)
49 slides from Bridgewater Bancshares's IPO roadshow presentation, Aug 9, 2021
Slide 1: Investor Presentation August 2021
Filed pursuant to Rule 433 Issuer Free Writing Prospectus Dated August 9, 2021 Registration No. 333-230533 INVESTOR PRESENTATION AUGUST 2021
Slide 2: Disclaimers: Forward-Looking Statements
Disclaimers Forward-Looking Statements This Investor 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,
Slide 3: Disclaimers: No Offer or Solicitation
Disclaimers No Offer or Solicitation This Investor Presentation shall not constitute an offer to sell, or the solicitation of an offer to buy, securities, nor shall there be any offer or sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful
Slide 4: Terms of the Proposed Offering
Terms of the Proposed Offering • Bridgewater Bancshares, Inc. (NASDAQ: BWB) • Depositary shares (“Depositary Shares”), each representing a 1/100th interest in a share of the Company’s Non-Cumulative Perpetual Preferred Stock, Series A (“Preferred Stock”) • BB+ / Stable Outlook (Kroll Bond Rating Age
Slide 5: The Finest Entrepreneurial Bank in the Twin Cities
The Finest Entrepreneurial Bank in the Twin Cities Name: Headquarters: Ticker: Assets: Loans: Deposits: Equity: Bridgewater Bancshares, Inc. St. Louis Park, MN NASDAQ: BWB $3.2 Billion $2.6 Billion $2.7 Billion $290.8 Million • • • • • Founded in 2005 by a group of banking industry veterans and loca
Slide 6: Our History
BRIDGEWATER I Our History 2008 June: Private offering raises $5.2 million 2011 October: Bridgewater Bank climbs to 25th largest bank in the state of Minnesota 2006 January: Bridgewater Bank reaches profitability in third month of operation December: Issued subordinated debt for $3.5 million November
Slide 7: Strategic Leadership Team
Strategic Leadership Team J e rry B a a c k C h a i rm a n of t h e B oa rd , C h i e f E x e c u t i v e O f f i c e r & Pre s i d e n t Li s a Sa l a z a r C h i e f De p o s i t O f f i c e r As the principal founder of the Company and the Bank, Jerry was responsible for all aspects of the Bank’s
Slide 8: Attractive Twin Cities/Minnesota Market
Attractive Twin Cities/Minnesota Market #1 Fortune 500 companies per capita (16)1 #1 State with highest average credit score (720)2 2021 Median Household Income ($) ⁶ #5 State with educational achievement beyond high school (59% of age 25-64 population)4 #1 Best place for women entrepreneurs3 $86,38
Slide 9: Growing Market Share
Growing Market Share 2006 To t a l De p o s i t s ( $000) M a rk e t Sh a re 2020 To t a l De p o s i t s ( $000) M a rk e t Sh a re To p 1 0 In s ti tu ti o n s To p 1 0 In s ti tu ti o n s Wells Fargo & Co. U.S. Bancorp TCF Financial Corp. Marshall & Iisley Corp. Bremer Financial Corp. Associated
Slide 10: Business Line Highlights
Business Line Highlights • • • • • Commercial Real Estate Lending Acquisition Lending Construction Lending Tax Credit Bridge Financing Long-term Multifamily Financing • • • • • Commercial & Business Lending Business Banking Business / Cash Management Services Personal Banking HELOCs 10 Business and
Slide 11: Differentiators
Differentiators 11 Bridgewater Bancshares, Inc. Commercial business expertise Multifamily niche Highly visible brand with extensive referral network Responsive support and simple solutions Experienced and non-hierarchical leadership Culture based on accountability Entrepreneurial Highly efficient te
Slide 12: 2Q21 Earnings Highlights
2Q21 Earnings Highlights $0.38 1.43% 15.40% 42.0% • • Gross loan balances up $168.1 million, or 27.8% annualized from 1Q21 (up 41.2% ex. PPP) Deposit balances up $82.3 million, or 12.5% annualized from 1Q21 • • • Total revenue of $27.9 million, up 5.6% from 1Q21 Pre-provision net revenue1 (PPNR) of
Slide 13: Financial Highlights
Financial Highlights 2019 2020 YTD 2Q21 Net Income $31.4 million $27.2 million $21.7 million Pre-Provision Net Revenue (“PPNR”) 1 $43.7 million $54.7 million $31.5 million ROAA 1.49% 1.04% 1.45% PPNR ROAA 1 2.07% 2.09% 2.11% ROAE 13.5% 10.5% 15.6% Net Interest Margin (FTE) 3.59% 3.46% 3.56% Adjusted
Slide 14: Strong Profitability and Revenue Generation
Strong Profitability and Revenue Generation 2.20% 2.11% 2.09% 2.07% $108,588 1.51% 1.49% 1.45% 1.04% $62,900 8 YTD 2Q21 2 YTD 2Q21 2 2018 2019 2020 2018 2019 2020 PPNR1 Net Income PPNR ROA1 ROA Net Interest Income Noninterest Income 1 Represents a Non-GAAP financial measure. See Appendix for Non-GAA
Slide 15: Growing Net Interest Income With a Stable Core Net Interest Margin
Growing Net Interest Income With a Stable Core Net Interest Margin • 23.2% YoY growth in net interest income 2Q21 net interest income includes the recognition of $1.4 million of PPP loan origination fees, which contributed 19 bps to net interest margin Estimated $3.4 million of PPP fees yet to be re
Slide 16: Efficiency Ratio Among Lowest in Industry
Efficiency Ratio Among Lowest in Industry 49.0% 47.4% 46.5% 41.6% $45,387 $44,800 43.3% 41.7% 41.1% 40.5% 1.78% 1.75% 1.73% 2018 2019 2020 YTD 2Q21 2018 2019 Personnel Technology 2020 YTD 2Q21 3 Occupancy Other FHLB Advance Prepayment Fees Adjusted NIE / Avg. Assets2 Adjusted Efficiency Ratio2 Adjus
Slide 17: Strong Organic Balance Sheet Growth
Strong Organic Balance Sheet Growth $2,594 $3,163 $2,927 $2,326 $1,974 2018 2019 2020 2Q21 2018 2019 2020 2Q21 Loans (ex. PPP) PPP $2,721 $2,502 $291 $265 $221 2018 2019 2020 2Q21 2018 2019 2020 2Q21 Dollars in millions Note: CAGRs calculated using December 31, 2017 and June 30, 2021 balances 17 $24
Slide 18: Historical Loan Composition
Historical Loan Composition • • Robust organic growth Well diversified portfolio among asset classes Multifamily focus and expertise Geographic concentration in Twin Cities MSA, with greater than 85% of loans in market $2,594 • • the Twin Cities market acquisition opportunities 2018 2019 2020 2Q21 C
Slide 19: A Proven Loan Growth Engine
A Proven Loan Growth Engine • Despite payoffs and paydowns of $125 million and a net PPP balance reduction of $64 million in 2Q21, gross loan portfolio grew $168 million from 1Q21 Loan pipeline remains strong and diversified among various asset classes • Total Increase Decrease 19 Dollars in million
Slide 20: Well-Diversified Loan Portfolio
Well-Diversified Loan Portfolio Consumer & Other 0.3% PPP 3.8 Multifamily $125 CRE OO 3.4% C&I 12.4% C&D CRE NOO 29.2% CRE NOO $2.59 Billion C&I 1-4 Family 10.7% CRE OO C&D 9.7% Consumer & Other Multifamily 30.5% $(64) • • • 2Q21 loan growth across all commercial portfolios, led by multifamily and C
Slide 21: Superb Asset Quality Despite COVID Impact
Superb Asset Quality Despite COVID Impact $15,164 $775 $761 $461 $2,695 2018 2019 2020 2Q21 2018 2019 2020 2Q21 Classified Assets % of Bank Tier 1 Capital + ALLL NPAs % of Assets $37,591 $34,841 $435 $20,031 0.01% 2018 2019 2020 2Q21 0.00% 2018 (0.01)% 2Q21 2019 Net Charge-offs 2020 ALLL % of Gross
Slide 22: Classified Assets Remain at Modest Levels
Classified Assets Remain at Modest Levels 1-4 Family 1.2% Only 3 hotel relationships as of June 30, 2021, with 2 on Watch CRE Other 8.2% C&I 46.9% $57 Million CRE NOO Hotels 27.7% CRE N Retail 16.0% Consumer & Other 0.2% C&D 1.9% C&I 16.9% $7 Million Owner Occupied 12.0% CRE NOO Retail 50.2% 1-4 Fam
Slide 23: Historical Deposit Composition
Historical Deposit Composition $2,721 • Continue to attract in-market lenders and deposit gatherers with loyal client bases from institutions disrupted by M&A Core deposits1 increased from 74% of total deposits in 2018 to 81% as of June 30, 2021 Will continue to opportunistically and efficiently sup
Slide 24: Deposit Repricing Opportunities
Deposit Repricing Opportunities $52,354 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 $ 13,093 16,679 13,551 27,043 10,681 14,630 10,911 11,238 6,382 12,435 10,848 10,505 3,836 4,883 2,643 1.53% 1.68% 1.21% 1.51% 1.37% 1.62% 1.34% 1.69% 1.27
Slide 25: Liquidity
Liquidity • The Company’s liquidity position remains strong • Primary funding source is relationship driven core deposits • The Company has not historically paid dividends on its common stock $1,305 • As of June 30, 2021, the Holding Company had $27.2 million of cash and cash equivalents • Securitie
Slide 26: Investment Securities Portfolio Highlights
Investment Securities Portfolio Highlights Treasury 0.3% SBA 9.0% CA 20.8% A S 9. % Other 23.6% Muni 31.3% TX 3.1% $392 Million $119 Million Corporate 19.1% VA 3.2% MN 20.8% ND 3.5% MI 7.5% MBS 30.9% PA 3.5% IN 4.2% NY 4.7% IL 5.1% U.S. Treasury Securities SBA Securities MBS Municipal Bonds Corporat
Slide 27: Consolidated Capital Ratios
Consolidated Capital Ratios 11.23% 11.03% 10.65% 10.69% 2018 2019 2020 2Q21 2018 2019 2020 2Q21 14.55% 14.58% 13.49% 12.07% 11.39% 10.35% 9.67% 2018 2019 2020 2Q21 2018 2019 2020 2Q21 27 1 Represents a Non-GAAP financial measure; see Appendix for Non-GAAP reconciliation Completed private placement o
Slide 28: Pro Forma Capital Ratios
Pro Forma Capital Ratios Pro Forma Adjustments as of June 30, 2021 Completed Offering (7/8/2021) Potential Use of Proceeds Proposed Offering Cash & Securities Net Loans Intangible Assets Other Assets Total Assets $503,183 2,545,145 3,200 111,084 $532,583 2,545,145 3,200 111,084 $580,758 2,545,145 3,
Slide 29: Double Leverage and Debt Service Coverage
Double Leverage and Debt Service Coverage Completed Offering (7/8/2021) Potential Use of Proceeds Proposed Offering Equity Investment in Subsidiaries Consolidated Equity 253,456 244,794 311,329 265,405 338,876 290,830 368,276 290,830 416,451 339,005 391,589 339,005 Completed Offering (7/8/2021) Pote
Slide 30: Investor Highlights
Investor Highlights Pre-eminent real estate bank in the Twin Cities market with a focus on multifamily lending Operational strategy focused on generating consistently profitable organic growth 1 2 Superior profitability driven by a highly efficient business model Very experienced and deep group of m
Slide 31: Appendix
APPENDIX BRIDGEWATER BANCSHARES, INC.
Slide 32: Investor Real Estate Secured – CRE Nonowner Occupied
Investor Real Estate Secured – CRE Nonowner Occupied (NOO) Restaurant 3.5% Hotels 2.6% Other 10.5% Office 28.2% Nursing/Assisted Living 9.7% $758 Million Industrial 24.6% Retail 20.9% 77% 32 Dollars in thousands Risk Rating Number of Loans 2Q21 Total Pass 345 $725,077 Watch 9 29,409 Classified 3 3,6
Slide 33: CRE NOO Office
Investor Real Estate Secured – CRE NOO Office 200k+ Sq Ft, 16.3% 0-50k Sq Ft, 43.8% $214 Million 125k - 200k Sq Ft, 19.8% - 125k Sq Ft, 20.1% 33 Dollars in thousands Risk Rating Number of Loans 2Q21 Total Pass 98 $213,713 Watch - - Classified - - Total 98 $213,713 By Property Square Footage Portfoli
Slide 34: CRE NOO Retail
Investor Real Estate Secured – CRE NOO Retail 125k+ Sq Ft, 7.9% 75k - 125k Sq F , 14.1% $158 Million 0-25k Sq Ft, 46.6% 25k - 75k Sq Ft, 31.4% 34 Dollars in thousands Risk Rating Number of Loans 2Q21 Total Pass 94 $145,653 Watch 4 9,062 Classified 3 3,615 Total 101 $158,330 By Property Square Footag
Slide 35: CRE NOO Industrial
Investor Real Estate Secured – CRE NOO Industrial 0-50k Sq Ft, 23.1% $187 Million 125k+ Sq Ft, 41.6% 50k - 125k Sq Ft, 35.3% 35 Dollars in thousands Risk Rating Number of Loans 2Q21 Total Pass 76 $186,605 Watch - - Classified - - Total 76 $186,605 By Property Square Footage Portfolio Characteristics
Slide 36: CRE NOO Hotels
Investor Real Estate Secured – CRE NOO Hotels MN 18.4% $19 Million Twin Cities MSA 81.6% 1 Based on state of primary real property collateral if available, otherwise borrower address is used Dollars in thousands 36 Risk Rating Number of Loans 2Q21 Total Pass 2 $3,659 Watch 3 15,707 Classified - - To
Slide 37: CRE NOO Restaurants
Investor Real Estate Secured – CRE NOO Restaurants Coffee Shops & Bakeries 10.7% Tap Rooms .9% $26 Million Full-Service 51.5% Quick-Service 28.9% 96% 37 Dollars in thousands Risk Rating Number of Loans 2Q21 Total Pass 19 $26,385 Watch - - Classified - - Total 19 $26,385 By Restaurant Type Portfolio
Slide 38: Investor Real Estate Secured – Multifamily
Investor Real Multifamily Estate Secured – 5-19 Units 100+ Units 31.9% $790 Million 20-49 Units 26.9% 50-99 Units 26.0% 38 Dollars in thousands Risk Rating Number of Loans 2Q21 Total Pass 334 $790,275 Watch - - Classified - - Total 334 $790,275 By Unit Type Portfolio Characteristics – Multifamily Lo
Slide 39: Investor Real Estate Secured – Construction and Development
Investor Real Estate Secured – Construction and Development Land 18.5% Residential 25.7% $252 Million CRE Other 11.5% Multifamily 44.3% Other States 3.3% MN 0.5% Undeveloped Land, 11.2% Finished Lots, 29.3% $252 Million $46 Million Developed Land, 59.4% Twin Cities MSA 96.2% 1 Based on state of prim
Slide 40: Real Estate Secured – CRE Owner Occupied
Real Estate Secured – CRE Owner Occupied Restaurant 3.3% Other 11.9% O ce 30.1% $88 Million Industrial 43.2% Reta l 11.5% 40 Dollars in thousands Risk Rating Number of Loans 2Q21 Total Pass 140 $86,642 Watch - - Classified 4 865 Total 144 $87,507 By Property Type Portfolio Characteristics – CRE OO L
Slide 41: Commercial and Industrial
Commercial and Industrial Accomodation & Food Services, 4.2% Wholesale/Retail Trade, 5.9% Professional Services, 7.0% Real Estate and Rental and Leasing, 35.9% $321 Million 9.0% Finance & Insurance, 9.9% Construction, 12.4% Manufacturing, 15.8% 1 Distribution by North American Industry Classificatio
Slide 42: PPP Loans
PPP Loans New Client 42.3% Client Existing Client 57.7% 42 Dollars in thousands PPP Outstanding Summary As of and for the Three Months Ended 6/30/2021 Program Lifetime # of Loans Principal Balance Net Fees Earned Unrecognized Fees Net Fees Generated Net Fees Earned Round 1 225 $ 27,184 $ 971 $376 $
Slide 43: Net Interest Drivers
Net Interest Drivers 3.13% 4.89% 4.85% 4.73% 4.74% 2.55% 4.56% 4.76% 4.69% 4.59% $391 4.50% 4.37% $2,534 $2,390 $2,301 $2,207 $2,152 2Q20 3Q20 4Q20 1Q21 2Q21 2Q20 3Q20 4Q20 1Q21 2Q21 Loan Yield (ex. Loan Fees and PPP)2 Average Investments Investment Yield Average Loans Loan Yield 1.17% 1.38% 1.12% 0
Slide 44: Interest Rate Sensitivity
Interest Rate Sensitivity • The following table summarizes the potential changes to the Company’s net interest income using a base case scenario given an immediate change in interest rates as the specified levels based on forecasted assumptions of prepayment speeds, nominal interest rates and loan a
Slide 45: Reconciliation of Annual Non-GAAP Financial Measures
Reconciliation of Annual Non-GAAP Financial Measures This presentation includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of these non-GAAP financial measures are provided below. The Company believes these non-GAAP finan
Slide 46: Reconciliation of Quarterly Non-GAAP Financial Measures
Reconciliation of Quarterly Non-GAAP Financial Measures This presentation includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of these non-GAAP financial measures are provided below. The Company believes these non-GAAP fi
Slide 47: Reconciliation of Quarterly Non-GAAP Financial Measures – PPNR
Reconciliation of Quarterly Non-GAAP Financial Measures – PPNR This presentation includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of these non-GAAP financial measures are provided below. The Company believes these non-
Slide 48: Reconciliation of Quarterly Non-GAAP Financial Measures – Core NIM
Reconciliation of Quarterly Non-GAAP Financial Measures – Core NIM This presentation includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of these non-GAAP financial measures are provided below. The Company believes these
Slide 49: Thank You
THANK YOU BRlDGEWATER BANCSHARES, [NC.