Bridgewater Bancshares, Inc. · NASDAQ:BWB
Bridgewater Bancshares — Q3 2023 Earnings Presentation
26 slides from Bridgewater Bancshares's earnings presentation, Oct 26, 2023
Slide 1: Third Quarter 2023 Earnings Presentation
I EARNINGS PRESENTATION THIRD QUARTER 2023 1S Bripcewarer 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: 3Q23 Earnings Highlights
3Q23 Earnings Highlights Diluted Return on Return on Avg. Tangible Efficiency Nonperforming Assets EPS Average Assets Common Equity1 Ratio1 to Total Assets $0.30 0.85% 9.92% 56.5% 0.02% • Net interest margin (NIM) of 2.32%, down 8 bps from 2Q23 Net Interest Margin • September 2023 NIM of 2.30%, down
Slide 4: Net Interest Income Impacted by Managed Loan Growth as NIM Stabilizes
Net Interest Income Impacted by Managed Loan Growth as NIM Stabilizes Net Interest Income and Margin Trends Net Interest Margin Drivers 3.53% 3.16% 2.72% 3.38% 2.40% 3.05% 2.32% 2.62% 2.31% 2.24% $34,095 $32,893 $1,400 $96 $1,100 Core NIM2 down 7 bps $48 $28,567 $998 $25,872 $2 $25,421 $941 $914 $3
Slide 5: Rising Funding Costs Begin to Slow as Asset Yields Move Higher
Rising Funding Costs Begin to Slow as Asset Yields Move Higher Loan Portfolio Repricing Higher as Growth Slows High-Yielding Securities Portfolio 5.19% 5.26% 5.06% 4.39% 4.86% 4.22% 4.24% 4.59% 3.91% 5.09% 5.16% 3.35% 4.95% 4.74% $608 $604 $595 $595 4.42% $537 $3,482 $3,630 $3,717 $3,723 $3,266 3Q22
Slide 6: Revenue Trends Impacted by Current Interest Rate Environment
Revenue Trends Impacted by Current Interest Rate Environment Continued Profitability in the Current Environment Spread-Based Revenue Model 2.15% 1.82% 1.49% 1.16% $35,482 1.01% $34,631 1.46% $1,387 1.28% $1,738 $21,439 1.07% $30,510 0.88% 0.85% $19,512 $1,943 $27,287 $27,147 $1,415 $1,726 $16,198 $1
Slide 7: Well-Controlled Expenses YTD
Well-Controlled Expenses YTD Highly Efficient Business Model Despite Recent Revenue Pressures Well-Controlled Expense Base in the Current Environment Industry median efficiency ratio of 62%1 in 2Q23 2023 YTD NIE up 6.0% vs. YTD 2022, below YoY asset growth of 10.4% 56.5% 52.7% 46.2% 43.8% $15,350 $1
Slide 8: Deposit Momentum Continues
Deposit Momentum Continues Strong Deposit Growth Again in 3Q23 $3,676 • Total deposit balances up 10.8% annualized $3,578 $3,417 $3,411 • Core deposit1 balances up 11.0% annualized $3,305 • Overall mix shift continued from noninterest-bearing into 27% 14% 23% 27% interest-bearing deposits 25% 9% • C
Slide 9: Managing Loan Growth in the Current Environment
Managing Loan Growth in the Current Environment Focus on Profitable Growth $3,684 $3,736 $3,722 $3,569 • Loan balances down $13.9M, or 1.5% annualized $3,380 • Focused on better aligning loan growth with core deposit growth over time • Core deposit growth outpaced loan growth over the past two quart
Slide 10: Increased Loan Payoffs and Paydowns
Increased Loan Payoffs and Paydowns New Loan Originations and Advances Loan Payoffs and Amortization/Paydowns $166 $308 $313 $153 $141 $220 $36 $111 $60 $139 $127 $42 $99 $158 $42 $131 $45 $145 $87 $117 $106 $169 $186 $84 $99 $69 $54 $75 $47 $71 3Q22 4Q22 1Q23 2Q23 3Q23 3Q22 4Q22 1Q23 2Q23 3Q23 New
Slide 11: Well-Diversified Loan Portfolio with a Multifamily Focus
Well-Diversified Loan Portfolio with a Multifamily Focus Consumer & Other 0% 3Q23 Loan Growth by Type (vs. 2Q23) CRE OO 4% C&I Multifamily $64 12% CRE NOO 1-4 Family Mortgage $4 26% 1-4 Family CRE Owner Occupied $0 Loan Mix Mortgage 11% $3.7 by Type C&I $0 Billion C&D Consumer & Other $(1) 10% Multi
Slide 12: Superb Asset Quality Continues
Superb Asset Quality Continues Allowance for Credit Losses Nonperforming Assets1 Net Charge-Offs Modest CECL Day 1 impact of $650K Consistently low NPA levels Cumulative NCOs of $446K since 2019 on January 1, 2023 $50,701 $50,585 $50,148 $47,996 $46,491 $809 $778 $749 $663 $639 1.38% 1.34% 1.36% 1.3
Slide 13: Watch and Substandard Loans Remain Stable
Watch and Substandard Loans Remain Stable Watch List Loans Substandard Loans $36,258 $33,821 $35,621 $32,252 $30,767 $27,574 $27,215 $26,877 $28,049 $22,759 3Q22 4Q22 1Q23 2Q23 3Q23 3Q22 4Q22 1Q23 2Q23 3Q23 Watch List Loans Substandard Loans CRE OO C&D 1-4 4.4% 0.2% Family 2.0% CRE Other 9.0% C&I 16
Slide 14: Managing CRE and Office-Related Risk
Managing CRE and Office-Related Risk Addressing CRE NOO Repricing Risk Well-Managed CRE NOO Office Exposure1 Lower Fixed-Rate Small CRE NOO Low Average Loan LTVs In-Line with the Low LTVs Repricing Risk Maturity Schedule Office Portfolio Size Total Loan Portfolio 81% $146M 59% 5.2% $2.3M 62% are Fix
Slide 15: Ample Liquidity and Borrowing Capacity
Ample Liquidity and Borrowing Capacity Liquidity Position with 2.7x Coverage of Uninsured Deposits Diverse Liquidity Mix Available Balance $2,181 Funding Source 9/30/2023 12/31/2022 Change Cash $ 78 $ 48 $ 30 $1,924 $1,962 Unpledged Securities1 389 549 (160) FHLB Capacity 516 391 125 FRB Discount Wi
Slide 16: Well-Capitalized with Steady Tangible Book Value Per Share Growth
Well-Capitalized with Steady Tangible Book Value Per Share Growth Increased Consolidated Capital Ratios in 3Q23 Steady Tangible Book Value Per Share1 Growth $12.37 13.78% 13.88% 13.50% $11.69 13.15% 13.25% $10.98 $9.31 $8.33 $7.22 9.98% 9.55% 9.47% 9.62% $5.40 9.41% 9.07% $4.52 8.72% 8.47% 8.40% 8.4
Slide 17: Near-Term Expectations
Near-Term Expectations • Limited near-term loan growth in the current environment; position the balance sheet for more profitable longer term growth Balance Sheet • Focus on aligning loan growth more closely with core deposit growth over time Growth • Continued core deposit growth over time, but may
Slide 18: 2023 Strategic Priorities – Positioning for Long-Term Success
2023 Strategic Priorities – Positioning for Long-Term Success Year-to-Date Progress • Slower pace of balance sheet growth in the current environment Manage High Quality • Manage the balance sheet to optimize net interest income Core deposit growth outpaced 1 Balance Sheet Growth • Increase emphasis
Slide 19: Appendix
——™ BRIDGEWATER BANCSHARES, INC. APPENDIX
Slide 20: 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 future interest • Loan portfolio most sensitive to changes in the 3- to 5-year portion of the rate cuts yield curve • Fi
Slide 21: Loan Portfolio Repricing
Loan Portfolio Repricing Fixed-Rate Portfolio Variable-Rate Portfolio Adjustable-Rate Portfolio ($2.5B) ($591M) ($584M) Adjustable-Rate Years to Maturity Variable-Rate Loan Floors Repricing Schedule Loan Portfolio Mix $708 $459 $151 $353 $377 $354 $501 $501 $501 $501 $501 $119 $297 $84 $99 $87 Adjus
Slide 22: High Quality Securities Portfolio
High Quality Securities Portfolio Securities Available for Sale Portfolio Derivatives Portfolio Offsetting AOCI Impact $34,145 $28,581 $542 $549 $559 $538 $553 13% 13% 15% 14% 18% 20% 20% 21% 21% 22% $(17,942) 24% $(23,766) 31% 23% 24% 22% $(47,884) 43% 41% 41% 38% 35% $(62,216) 3Q22 4Q22 1Q23 2Q23
Slide 23: Reconciliation of Non-GAAP Financial Measures – Annual
Reconciliation of Non-GAAP Financial Measures – Annual As of and for the year ended December 31, Tangible Common Equity & Tangible Common Equity/Tangible Assets 2016 2017 2018 2019 2020 2021 2022 Common Equity $ 115,366 $ 137,162 $ 220,998 $ 244,794 $ 265,405 $ 379,272 $ 394,064 Less: Preferred Stoc
Slide 24: Reconciliation of Non-GAAP Financial Measures – Profitability, TCE and TBV
Reconciliation of Non-GAAP Financial Measures – Profitability, TCE and TBV As of and for the quarter ended, As of and for the quarter ended, September 30, December 31, March 31, June 30, September 30, September 30, Efficiency Ratio 2022 2022 2023 2023 2023 ROATCE 2023 Noninterest Expense $ 14,157 $
Slide 25: Reconciliation of Non-GAAP Financial Measures – PPNR
Reconciliation of Non-GAAP Financial Measures – PPNR As of and for the quarter ended, September 30, December 31, March 31, June 30, September 30, Pre-Provision Net Revenue 2022 2022 2023 2023 2023 Noninterest Income $ 1,387 $ 1,738 $ 1,943 $ 1,415 $ 1,726 Less: (Gain) Loss on Sales on Securities - (
Slide 26: Reconciliation of Non-GAAP Financial Measures – Core NIM
Reconciliation of Non-GAAP Financial Measures – Core NIM As of and for the quarter ended, September 30, December 31, March 31, June 30, September 30, Core Net Interest Margin 2022 2022 2023 2023 2023 Net Interest Income (Tax-Equivalent Basis) $ 34,418 $ 33,260 $ 28,947 $ 26,280 $ 25,822 Less: Loan F
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