Bridgewater Bancshares, Inc. · NASDAQ:BWB
Bridgewater Bancshares — Q1 2024 Earnings Presentation
26 slides from Bridgewater Bancshares's earnings presentation, Apr 25, 2024
Slide 1: Earnings Presentation First Quarter 2024
EARNINGS PRESENTATION FIRST QUARTER 2024 i 'BRIDGEWATER BANCSHARES INC.
Slide 2: Disclaimer
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: 1Q24 Earnings Highlights
1Q24 Earnings Highlights Diluted Return on Return on Avg. Tangible Efficiency Nonperforming Assets EPS Average Assets Common Equity1 Ratio1 to Total Assets $0.24 0.69% 7.64% 58.2% 0.01% • Deposit balances up $97.3 million, or 10.5% annualized, from 4Q23, including core deposit2 growth of 14.3% annua
Slide 4: Consistent Tangible Book Value Per Share Outperformance
Consistent Tangible Book Value Per Share Outperformance Tangible Book Value Per Share1 Growth for 29 Consecutive Quarters 200% 192% 150% 100% 63% 50% 0% 1Q17 2Q17 1Q18 2Q18 1Q19 2Q19 1Q20 2Q20 1Q21 2Q21 1Q22 2Q22 1Q23 2Q23 1Q24 4Q16 4Q17 4Q18 4Q19 4Q20 4Q21 4Q22 4Q23 3Q17 3Q18 3Q19 3Q20 3Q21 3Q22 3Q
Slide 5: Slower Net Interest Margin Compression
Slower Net Interest Margin Compression Net Interest Income and Margin Trends Net Interest Margin Drivers 2.72% 2.40% 2.32% 2.27% 2.24% $28,567 $998 $25,872 $25,421 $25,314 $24,631 $941 $914 $751 $608 Net Interest Income / Net Interest Margin Commentary $27,569 Net Interest Income $24,931 $24,507 $24
Slide 6: Rising Funding Costs Slow as Asset Yields Move Higher
Rising Funding Costs Slow as Asset Yields Move Higher Loan Portfolio Repricing Higher Growth of High-Yielding Securities Portfolio 5.26% 5.33% 5.38% 4.63% 4.80% 5.06% 5.19% 4.39% 4.22% 4.24% 5.25% 5.31% $670 4.95% 5.09% 5.16% $630 $3,717 $3,723 $3,726 $3,729 $604 $595 $595 $3,630 1Q23 2Q23 3Q23 4Q23
Slide 7: Revenue Trends Impacted by Current Interest Rate Environment
Revenue Trends Impacted by Current Interest Rate Environment Pre-Provision Net Revenue (PPNR) Stabilization Spread-Based Revenue Model 1.49% 1.16% 1.01% 0.96% 0.95% 1.07% $30,510 0.88% 0.85% 0.77% 0.69% $1,943 $27,287 $27,147 $26,723 $26,181 $1,415 $1,726 $1,409 $16,198 $1,550 $12,963 $11,642 $11,41
Slide 8: Well-Controlled Expenses
Well-Controlled Expenses Highly Efficient Business Model Despite Recent Revenue Pressures Well-Controlled Expenses in 1Q24 Industry median efficiency ratio of 63%1 in 4Q23 Lower expenses driven by personnel, FDIC insurance and other NIE 58.8% 58.2% 56.1% 52.3% 45.9% $15,740 $15,237 $15,189 $14,069 $
Slide 9: Continued Core Deposit Growth Momentum
Continued Core Deposit Growth Momentum Deposit Growth With Ongoing Mix Shift $3,807 $3,676 $3,710 • Total deposit balances up 10.5% annualized $3,578 $3,411 • Core deposit1 balances up 14.3% annualized; up 6.8% YoY 26% • Mix shift from noninterest-bearing to interest-bearing transaction 27% 28% 27%
Slide 10: Strong Loan Growth Driven by Increased Demand
Strong Loan Growth Driven by Increased Demand Loan Growth With Increased Market Demand $3,784 • 1Q24 loan balances up $59.9M, or 6.5% annualized $3,736 $3,724 $3,722 • Loan pipeline began increasing in late 2023 as loan demand picked up $3,684 • Loan-to-deposit ratio of 99.4%, down from 108.0% in 1Q
Slide 11: Increase in New Loan Originations Driving Loan Growth
Increase in New Loan Originations Driving Loan Growth 1Q24 Loan Growth Waterfall New Originations Exceeded Advances for First Time Since 4Q22 $220 $158 $158 $163 $145 $131 $67 $87 $87 $84 $96 $75 $71 $71 $47 1Q23 2Q23 3Q23 4Q23 1Q24 New Originations Advances Loan Payoffs and Paydowns Remain at Relat
Slide 12: Well-Diversified Loan Portfolio with a Multifamily Focus
Well-Diversified Loan Portfolio with a Multifamily Focus Consumer & Other 0.2% 1Q24 Loan Growth by Type (vs. 4Q23) CRE OO C&I CRE Nonowner Occupied $48 4.8% 12.8% CRE NOO C&I $19 27.4% 1-4 Family 1-4 Family Mortgage $15 Loan Mix Mortgage $3.8 by Type 11.0% CRE Owner Occupied $7 Billion C&D Consumer
Slide 13: Managing Multifamily and Office-Related Risk
Managing Multifamily and Office-Related Risk Strong Multifamily Track Record in Stable Twin Cities Market Well-Managed CRE NOO Office Exposure2 Average Weighted Average NCOs Small CRE NOO Low Average Loan LTVs In-Line with the Loan Size LTV (since 2005) Office Portfolio Size Total Loan Portfolio $3.
Slide 14: Superb Asset Quality Continues
Superb Asset Quality Continues Allowance for Credit Losses Nonperforming Assets1 Net Charge-Offs Growth-driven provision in 1Q24 Consistently low NPA levels Cumulative NCOs of $534K since 2019 $51,347 $50,701 $50,585 $50,494 $50,148 $919 $809 $778 $749 1.36% 1.36% 1.36% 1.36% 1.36% $269 0.02% 0.02%
Slide 15: Watch and Substandard Loans Remain Stable
Watch and Substandard Loans Remain Stable Watch List Loans Substandard Loans $36,258 $33,821 $35,621 $35,858 $33,829 $27,574 $27,215 $26,877 $26,485 $21,624 1Q23 2Q23 3Q23 4Q23 1Q24 1Q23 2Q23 3Q23 4Q23 1Q24 C&I 2.4% CRE OO C&D 1-4 2.9% 0.2% Family 2.0% CRE Other 11.2% Multifamily 13.4% CRE NOO Subst
Slide 16: Strong Capital Ratios
Strong Capital Ratios Building Capital in the Current Environment Capital Priorities 13.50% 13.88% 13.97% 14.00% 1 Organic Growth 13.25% Drive profitability by supporting a proven organic loan growth engine 9.62% 9.66% 9.41% 9.47% 9.57% 2 Share Repurchases 9.07% 9.16% 9.21% Opportunistically return
Slide 17: Near-Term Expectations
Near-Term Expectations • Low-to-mid-single digit loan growth Balance Sheet • Focus on aligning loan growth with core deposit growth Growth • Target loan-to-deposit ratio between 95% and 105% • Modest net interest margin pressure in the near-term given uncertainty of the timing of potential interest
Slide 18: 2024 Strategic Priorities
2024 Strategic Priorities Generate Incremental Optimize Balance Sheet for Continue to Gain Loan and Scale ERM Function and Operational Efficiencies While Longer Term Profitable Growth Deposit Market Share Monitor Asset Quality Risks Investing in the Business • Opportunistically gather core • Expand
Slide 19: Appendix
——™ BRIDGEWATER BANCSHARES, INC. APPENDIX
Slide 20: Loan Portfolio to Reprice Higher Even If Interest Rates Decline
Loan Portfolio to Reprice Higher Even If Interest Rates Decline Fixed-Rate Portfolio Variable-Rate Portfolio Adjustable-Rate Portfolio ($2.6B) ($601M) ($576M) Adjustable-Rate Years to Maturity Variable-Rate Loan Floors Repricing/Maturity Schedule Loan Portfolio Mix $484 $642 $516 $126 $116 $389 $371
Slide 21: Interest Rate Sensitivity
Interest Rate Sensitivity Estimated Change in NII From Loan Portfolio Considerations Immediate Interest Rate Shocks Liability-sensitive balance sheet well positioned for potential rate cuts and a • Loan portfolio most sensitive to changes in the 3- to 5-year portion of the normalizing yield curve yi
Slide 22: High Quality Securities Portfolio
High Quality Securities Portfolio Securities Available for Sale Portfolio Derivatives Portfolio Offsetting AOCI Impact $27,201 $23,148 $633 $604 $559 $538 $553 18% 20% 15% 14% 18% 22% 21% 21% 21% 22% 23% 22% 21% 24% 22% $(17,896) $(15,716) 41% 41% 38% 38% 38% $(42,584) $(44,370) 1Q23 2Q23 3Q23 4Q23
Slide 23: Ample Liquidity and Borrowing Capacity
Ample Liquidity and Borrowing Capacity Liquidity Position with 2.3x Coverage of Uninsured Deposits Diverse Liquidity Mix Available Balance $2,234 $2,249 $2,181 Funding Source 3/31/2024 3/31/2023 Change Cash and Cash Equivalents $ 106 $ 177 $ (71) $1,962 $1,924 Unpledged Securities1 464 325 139 FHLB
Slide 24: Reconciliation of Non-GAAP Financial Measures – Efficiency, TCE, Core Loan Yield, and ROATCE
Reconciliation of Non-GAAP Financial Measures – Efficiency, TCE, Core Loan Yield, and ROATCE As of and for the quarter ended, As of and for the quarter ended, March 31, June 30, September 30, December 31, March 31, March 31, Efficiency Ratio 2023 2023 2023 2023 2024 ROATCE 2024 Noninterest Expense $
Slide 25: Reconciliation of Non-GAAP Financial Measures – PPNR
Reconciliation of Non-GAAP Financial Measures – PPNR As of and for the quarter ended, March 31, June 30, September 30, December 31, March 31, Pre-Provision Net Revenue 2023 2023 2023 2023 2024 Noninterest Income $ 1,943 $ 1,415 $ 1,726 $ 1,409 $ 1,550 Less: (Gain) Loss on Sales on Securities 56 (50)
Slide 26: Reconciliation of Non-GAAP Financial Measures – Tangible Book Value
Reconciliation of Non-GAAP Financial Measures – Tangible Book Value As of and for the quarter ended, December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, March 31, Tangible Book Value Per Share 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 Book
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