Bridgewater Bancshares, Inc. · NASDAQ:BWB
Bridgewater Bancshares — Q4 2023 Earnings Presentation
37 slides from Bridgewater Bancshares's earnings presentation, Feb 6, 2024
Slide 1: Investor Presentation Fourth Quarter 2023
© INVESTOR PRESENTATION y FOURTH QUARTER 2023 a — ~~ = 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: The Finest Entrepreneurial Bank: 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: $3.7 Billion Shareholders’ Equity: $425
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 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 $315K Total Contributions in
Slide 10: Environmental, Social and Governance (ESG)
Environmental, Social and Governance (ESG) 10 We are committed to establishing and advancing impactful initiatives that support our corporate responsibility as one of the largest locally-led banks in the Twin Cities, while regularly sharing our progress with our stakeholders Our ESG Commitment Our E
Slide 11: Attractive Twin Cities Market Built for Business
Attractive Twin Cities Market Built for Business 11 #3 Fortune 500 companies per capita (16)1 Large Corporate Presence #1 State with highest average credit score (742)2 Credit Worthy Population #2 Best state for economic opportunity3 Economic Opportunity #5 Top State for Business4 State for Business
Slide 12: Deposit Market Share Momentum in the Twin Cities Continues
Rank Bank HQ Branches Deposits ($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 2015 2016 2017 2018 2019 2020 2021 2022 2023 Organic Acquired Assets Proven ability to consistently generate robust annual asset growth primarily in the Twin Cities market Asset growth h
Slide 14: Moderated Loan Growth in 2023, But Loan Demand Improved Heading into 2024
Moderated Loan Growth in 2023, But Loan Demand Improved Heading into 2024 14 $3,569 $3,684 $3,736 $3,722 $3,724 4Q22 1Q23 2Q23 3Q23 4Q23 Dollars in millions $1,912 $2,326 $2,819 $3,569 $3,724 2019 2020 2021 2022 2023 ....loan growth slowed in 2023, but loan demand has started to pick back up again •
Slide 15: Strong Diversification Within Key Loan Portfolios
Class A 36% Class B 15% Class C 40% Construction 9% 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 Commercial Expertise
CRE NOO 27% Multifamily 37% C&D 8% C&I 12% CRE OO 5% 1-4 Family 11% Consumer & Other 0% Well-Diversified Loan Portfolio With Commercial 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 2023 Intentional mix
Slide 17: CRE Concentration Driven by a Proven, Lower Risk Multifamily Portfolio
(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 CRE Concentration Driven by a Proven, Lower Risk Multifamily Portfolio 17 4Q23 250% of Bank RBC Mul
Slide 18: Affordable Housing Focus To Support Twin Cities Housing Initiatives
81-unit affordable housing property in Bloomington, MN Affordable Housing Focus To Support Twin Cities Housing Initiatives 18 • $526M affordable housing portfolio as of December 31, 2023 • Strong market demand in the Twin Cities, driven by shortage of single-family housing • Shortage of over 100,000
Slide 19: Managing CRE and Office-Related Risk
Managing CRE and Office-Related Risk 19 1 Excludes medical office of $52M at December 31, 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 resetting rates over th
Slide 20: Continued Deposit Growth Momentum
Continued Deposit Growth Momentum 20 Dollars in millions 1 Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000 25% 27% 30% 26% 20% 14% 15% 18% 13% 19% 28% 26% 29% 30% 25% 20% 14% 10% 8% 8% 13% 18% 13% 23% 28% $1,823 $2,502 $2,946 $3,41
Slide 21: A Spread-Based Revenue Model
A Spread-Based Revenue Model 21 Industry-Wide Revenue Headwinds in the Current Environment $32,893 $28,567 $25,872 $25,421 $25,314 $1,738 $1,943 $1,415 $1,726 $1,409 $34,631 $30,510 $27,287 $27,147 $26,723 4Q22 1Q23 2Q23 3Q23 4Q23 Net Interest Income Noninterest Income Dollars in thousands • Spread-
Slide 22: Net Interest Income and Margin Continue to Stabilize
Net Interest Income and Margin Continue to Stabilize 22 $31,793 $27,569 $24,931 $24,507 $24,563 $1,100 $998 $941 $914 $751 $32,893 $28,567 $25,872 $25,421 $25,314 3.16% 2.72% 3.05% 2.40% 2.32% 2.27% 2.62% 2.31% 2.24% 2.21% 4Q22 1Q23 2Q23 3Q23 4Q23 Core Net Interest Margin1,2 Net Interest Margin1 Net
Slide 23: Loan Portfolio to Reprice Higher Even If Interest Rates Decline
13% 10% 24% 26% 12% 15% $73 $59 $136 $147 $71 $86 Less Than 1 Year 1 to 2 Years 2 to 3 Years 3 to 4 Years 4 to 5 Years 5+ Years 19% 15% 12% 15% 12% 27% $502 $391 $309 $387 $327 $700 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 If
Slide 24: A Highly Efficient Business Model
A Highly Efficient Business Model 24 47.4% 49.0% 42.0% 41.5% 53.0% 58.9% 57.2% 56.2% 56.3% 61.1% 2019 2020 2021 2022 2023 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 major e
Slide 25: Optimizing Recent Technology Investments to Support Future Growth
Optimizing Recent Technology Investments to Support Future Growth 25 Client-Facing • Commercial online banking (Commercial Center) upgrade completed in 2023 • Collaborative technology tools integrated into BWB Corporate Center • Cybersecurity threat detection and response Scalable core to support gr
Slide 26: Scaling Enterprise Risk Management Across a Growing Organization
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
$22,526 $34,841 $40,020 $47,996 $50,494 1.18% 1.50% 1.42% 1.34% 1.36% 2019 2020 2021 2022 2023 Credit Risk Management and Oversight Driving Superb Asset Quality 27 1 Nonaccrual loans plus loans 90 days past due and still accruing and foreclosed assets Dollars in thousands $461 $775 $722 $639 $919 0.
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 0.16% 0.03% BWB Peer Bank Median1 0.58% 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 43% 41% 41% 38% 38% 24% 23% 24% 22% 22% 20% 21% 21% 22% 22% 13% 15% 14% 18% 18% $549 $559 $538 $553 $604 4Q22 1Q23 2Q23 3Q23 4Q23 Mortgage-Backed Securities Municipal Bonds Corporate Securities Other Securities Available for Sale Portfolio AAA, 26% AA, 43% A, 3%
Slide 30: Ample Liquidity and Borrowing Capacity
Ample Liquidity and Borrowing Capacity 30 1 Excludes $171M of pledged securities at December 31, 2023 Dollars in millions 13.7% 10.9% 9.6% 10.2% 11.5% 17.0% 30.9% 33.1% 37.6% 37.0% $1,380 $1,924 $1,962 $2,181 $2,234 4Q22 1Q23 2Q23 3Q23 4Q23 Off-Balance Sheet Liquidity as a % of Assets On-Balance She
Slide 31: Building Capital Ratios
Building Capital Ratios 31 9.55% 9.41% 9.47% 9.62% 9.57% 8.40% 8.48% 8.72% 9.07% 9.16% 13.15% 13.25% 13.50% 13.88% 13.97% 7.48% 7.23% 7.39% 7.61% 7.73% 4Q22 1Q23 2Q23 3Q23 4Q23 Total Risk-Based Capital Ratio Common Equity Tier 1 Capital Ratio Tier 1 Leverage Ratio Building Capital in the Current Env
Slide 32: 2024 Expectations
2024 Expectations 32 • Low-to-mid-single digit loan growth, likely weighted more toward 2H24 • Focus on aligning loan growth with core deposit growth • Target loan-to-deposit ratio between 95% and 105% Balance Sheet Growth • Continued near-term stabilization in the current interest rate environment
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: 4Q23 Earnings Highlights
0.02% 4Q23 Earnings Highlights 35 • Deposit balances up $34.4 million, or 3.7% annualized, from 3Q23 • Continued to moderate loan growth with balances up $2.0 million, or 0.2% annualized, from 3Q23 • Loan-to-deposit ratio of 100.4%, down from 108.0% at March 31, 2023 • Net interest margin (NIM) of 2
Slide 36: Efficiency Ratio Reconciliation
Efficiency Ratio December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Noninterest Expense $ 15,203 $ 14,069 $ 14,274 $ 15,237 $ 15,740 Net Income Available to Common Shareholders Less: Amortization Intangible Assets (48) (48) (34) (9) (9) Adjusted Noninterest Expense $
Slide 37: Reconciliation of Non-GAAP Financial 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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