Bridgewater Bancshares, Inc. · NASDAQ:BWB
Bridgewater Bancshares — Q2 2023 Earnings Presentation
35 slides from Bridgewater Bancshares's earnings presentation, Aug 4, 2023
Slide 1: Investor Presentation Second Quarter 2023
| INVESTOR PRESENTATION SECOND QUARTER 2023 — ~~ = 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 Twin Cities Name: Bridgewater Bancshares, Inc. Headquarters: St. Louis Park, MN Ticker: NASDAQ: BWB; BWBBP Assets: $4.6 Billion Loans: $3.7 Billion Deposits: $3.6 Billion Shareholders’ Equity: $409
Slide 4: Management Team
Jerry Baack Chairman, CEO and President • 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 • Holding company board member and oversees strong credit and underwriting culture •
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 • Modern headquarters with an open
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 • BEST Business Bank • BEST Small B
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 Built for Business
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 Top State for Business4 State for Business #
Slide 13: Deposit Market Share Momentum in the Twin Cities Continues
Deposit Market Share Momentum in the Twin Cities Continues 13 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 14: History of Organic Asset Growth Generation
History of Organic Asset Growth Generation 14 $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 2Q23 Organic Acquired Assets Proven ability to consistently generate robust annual asset growth primarily in the Twin Cities market Asset grow
Slide 15: Moderating Loan Growth in the Current Environment
Moderating Loan Growth in the Current Environment 15 $3,226 $3,380 $3,569 $3,684 $3,736 2Q22 3Q22 4Q22 1Q23 2Q23 Dollars in millions $1,912 $2,326 $2,819 $3,569 $3,736 2019 2020 2021 2022 2Q23 ....We Are Thoughtfully Managing Loan Growth in the Current Environment • 2Q23 loan growth of $51.9M, or 5.
Slide 16: Well-Diversified Loan Portfolio With a Commercial Focus
CRE NOO 26% Multifamily 35% C&D 11% C&I 12% CRE OO 4% 1-4 Family 11% Consumer & Other 0% Well-Diversified Loan Portfolio With a Commercial Focus 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 2Q23 Intentional mix s
Slide 17: Strong Diversification Across Key Loan Portfolios
Strong Diversification Across Key Loan Portfolios 17 5-19 Units 11% 20-49 Units 26% 50-99 Units 29% 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 18: Deposit Mix Shift in a More Challenging Funding Environment
Deposit Mix Shift in a More Challenging Funding Environment 18 1 Calculated as the change in ending deposit rate over the change in ending Fed Funds rate from February 2022 Dollars in millions 25% 27% 30% 26% 21% 14% 15% 18% 13% 20% 28% 26% 29% 30% 24% 20% 14% 10% 8% 8% 13% 18% 13% 23% 27% $1,823 $2
Slide 19: A Spread-Based Revenue Model
A Spread-Based Revenue Model 19 Industry-Wide Revenue Headwinds in the Current Environment $32,530 $34,095 $32,893 $28,567 $25,872 $1,650 $1,387 $1,738 $1,943 $1,415 $34,180 $35,482 $34,631 $30,510 $27,287 2Q22 3Q22 4Q22 1Q23 2Q23 Net Interest Income Noninterest Income Dollars in thousands • Spread-
Slide 20: Net Interest Income Impacted by Margin Pressure and Managed Loan Growth
Net Interest Income Impacted by Margin Pressure and Managed Loan Growth 20 $30,237 $32,599 $31,745 $27,567 $24,928 $263 $96 $48 $2 $3 $2,030 $1,400 $1,100 $998 $941 $32,530 $34,095 $32,893 $28,567 $25,872 3.58% 3.53% 3.16% 2.72% 3.34% 3.38% 2.40% 3.05% 2.62% 2.31% 2Q22 3Q22 4Q22 1Q23 2Q23 Core Net I
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% 49.3% 43.3% 40.5% 41.0% 41.2% 49.1% 59.6% 57.5% 56.6% 56.3% 58.7% 2019 2020 2021 2022 2Q23 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 Across a Growing Organization
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 $50,701 1.18% 1.50% 1.42% 1.34% 1.36% 2019 2020 2021 2022 2Q23 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 $778 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 0.16% 0.03% BWB Peer Bank Median1 0.56% 1 Includes publicly-traded banks on major exchanges with total assets between $
Slide 26: Managing CRE and Office-Related Risk
Managing CRE and Office-Related Risk 26 1 Excludes medical office of $87M at June 30, 2023 Data as of June 30, 2023 Dollars in millions Addressing CRE NOO Repricing Risk • CRE NOO loans primarily located in the Twin Cities market • Ongoing active client engagement • Clients with maturing loans or re
Slide 27: High Quality Securities Portfolio
30% 35% 43% 41% 41% 35% 31% 24% 23% 24% 21% 20% 20% 21% 21% 14% 13% 13% 15% 14% $483 $542 $549 $559 $538 2Q22 3Q22 4Q22 1Q23 2Q23 High Quality Securities Portfolio 27 1 Includes the tax-effected impact of $7,232 in 4Q22 and $8,430 in 2Q23 2 1Q23 median for publicly-traded banks with total assets bet
Slide 28: Ample Liquidity and Borrowing Capacity
Ample Liquidity and Borrowing Capacity 28 1 Excludes $236M of pledged securities at June 30, 2023 Dollars in millions 13.5% 14.0% 13.7% 10.9% 9.6% 25.0% 20.1% 17.0% 30.9% 33.1% $1,498 $1,409 $1,380 $1,924 $1,962 2Q22 3Q22 4Q22 1Q23 2Q23 Off-Balance Sheet Liquidity as a % of Assets On-Balance Sheet L
Slide 29: Prudent Capital Management
Prudent Capital Management 29 Total Risk-Based Capital Common Equity Tier 1 Capital Capital Ratios Supported by Profitability and Capital Markets Activity Tangible Common Equity to Tangible Assets1 1 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation. BWB Capital Prior
Slide 30: Near-Term Expectations
Near-Term Expectations 30 • High single-digit loan growth in the back half of 2023 – focus on aligning loan growth more closely with core deposit growth over time • Target loan-to-deposit ratio between 95% and 105% Balance Sheet Growth Net Interest Margin • Build tangible common equity and CET1 rati
Slide 31: 2023 Strategic Priorities – Positioning for Long-Term Success
2023 Strategic Priorities – Positioning for Long-Term Success 31 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 32: Appendix
w——™~ BRIDGEWATER BANCSHARES, INC. APPENDIX
Slide 33: 2Q23 Earnings Highlights
0.02% 2Q23 Earnings Highlights 33 • Deposit balances up $166.8 million, or 19.6% annualized, from 1Q23 • Core deposit2 growth of 7.4% annualized from 1Q23 outpaced loan growth of 5.6% annualized • Borrowings declined $176.9 million, or 24.3%, from 1Q23 • Net interest margin of 2.40%, down 32 bps fro
Slide 34: Reconciliation of Non-GAAP Financial Measures – Efficiency, TCE, TBV, NIM
Reconciliation of Non-GAAP Financial Measures – Efficiency, TCE, TBV, NIM 34 * 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 35: Reconciliation of Non-GAAP Financial Measures – PPNR
Reconciliation of Non-GAAP Financial Measures – PPNR 35 Dollars in thousands Pre-Provision Net Revenue December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 2Q23 Noninterest Income $ 2,543 $ 3,826 $ 5,839 $ 5,309 $ 6,332 $ 1,415 Less: (Gain) Loss on Sales of Secur
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