Bridgewater Bancshares, Inc. · NASDAQ:BWB
Bridgewater Bancshares — Q3 2024 Earnings Presentation
27 slides from Bridgewater Bancshares's earnings presentation, Oct 24, 2024
Slide 1: Third Quarter 2024 Earnings Presentation
: EARNINGS PRESENTATION THIRD 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: 3Q24 Earnings Highlights
3Q24 Earnings Highlights Diluted Return on Return on Avg. Tangible Efficiency Nonperforming Assets EPS Average Assets Common Equity1 Ratio1 to Total Assets $0.27 0.73% 8.16% 58.0% 0.19% • Net interest income increased $603K, or 2.4%, from 2Q24 NIM Stability and • Net interest margin (NIM) of 2.24% f
Slide 4: Strategic Benefits of the Proposed Acquisition of First Minnetonka City Bank
Strategic Benefits of the Proposed Acquisition of First Minnetonka City Bank • Reduces CRE concentration by adding a well-diversified loan portfolio focused on 1-4 family and leases Adds High Quality Bank • Diversifies the revenue mix by adding incremental fee income via an investment advisory platf
Slide 5: Consistent Tangible Book Value Per Share Outperformance
Consistent Tangible Book Value Per Share Outperformance Tangible Book Value Per Share1 Growth for 31 Consecutive Quarters 208% 69% 1Q17 2Q17 1Q18 2Q18 1Q19 2Q19 1Q20 2Q20 1Q21 2Q21 1Q22 2Q22 1Q23 2Q23 1Q24 2Q24 4Q16 4Q17 4Q18 4Q19 4Q20 4Q21 4Q22 4Q23 3Q17 3Q18 3Q19 3Q20 3Q21 3Q22 3Q23 3Q24 BWB Peer
Slide 6: Stable NIM Supports Net Interest Income Growth
Stable NIM Supports Net Interest Income Growth Net Interest Income and Margin Trends Net Interest Margin Drivers 2.32% 2.27% 2.24% 2.24% 2.24% $25,421 $25,314 $24,996 $25,599 $24,631 $914 $751 $968 $608 $767 3Q24 Net Interest Income / Net Interest Margin Commentary $24,507 $24,563 $24,229 $24,631 $2
Slide 7: Higher Asset Yields Drive NIM Stabilization
Higher Asset Yields Drive NIM Stabilization Loans Continued to Reprice Higher Growth of High-Yielding Securities Portfolio 5.57% 4.94% 5.01% 5.38% 5.50% 4.63% 4.80% 5.26% 5.33% 4.39% $700 5.42% 5.47% $670 $673 5.16% 5.25% 5.31% $630 $3,723 $3,726 $3,729 $3,772 $3,722 $595 3Q23 4Q23 1Q24 2Q24 3Q24 3Q
Slide 8: Revenue Growth Drives Rising Profitability
Revenue Growth Drives Rising Profitability Pre-Provision Net Revenue (PPNR) Growth Revenue Growth Due to a Stable NIM 1.01% 0.96% 0.95% 0.96% $35,482 0.94% $34,180 $34,631 $1,387 $1,650 $1,738 0.85% $30,510 0.77% $1,943 0.73% $27,287 $27,147 $26,723 $27,121 0.69% 0.70% $26,181 $26,759 $1,415 $1,726
Slide 9: Well-Controlled Expenses
Well-Controlled Expenses Highly Efficient Business Model Well-Controlled Expenses YTD Peer median efficiency ratio of 63%1 in 2Q24 Continuing to invest in people and technology $15,740 $15,539 $15,760 58.8% 58.2% 58.7% 58.0% $15,237 $15,189 56.1% $3,045 $2,636 $2,483 $2,827 $2,602 $852 $1,149 $715 $
Slide 10: Strong Core Deposit Growth Drives Positive Deposit Mix Shift
Strong Core Deposit Growth Drives Positive Deposit Mix Shift Improving Deposit Mix Deposit Growth Outpacing Loan Growth YTD $3,676 $3,710 $3,807 $3,808 $3,747 • YTD core deposit1 balances increased 6.9% annualized, up 14.4% in 3Q24 27% 28% 26% 27% 24% • YTD deposit balances increased 1.3% annualized
Slide 11: Loan Growth Impacted by Elevated Payoffs
Loan Growth Impacted by Elevated Payoffs Loan Demand Continued Despite Elevated Payoffs $3,800 $3,784 • 3Q24 loan balances decreased $114.8M $3,724 $3,722 • YTD loan balances decreased $38.3M $3,686 • YTD loan payoffs increased 42% from 2023 YTD • Strong loan pipeline build in 3Q24 • Loan-to-deposit
Slide 12: Elevated Payoffs More Than Offset New Originations
Elevated Payoffs More Than Offset New Originations 3Q24 Loan Growth Waterfall New Originations Impacted by Competition and Interest Rates $158 $158 $163 $141 $67 $106 $87 $87 $50 $46 $96 $91 $71 $71 $60 3Q23 4Q23 1Q24 2Q24 3Q24 New Originations Advances Elevated Loan Payoffs Impacted Overall Growth
Slide 13: Loan Portfolio to Reprice Higher in a Rates-Down Environment
Loan Portfolio to Reprice Higher in a Rates-Down Environment Fixed-Rate Portfolio Variable-Rate Portfolio Adjustable-Rate Portfolio ($2.5B) ($566M) ($590M) Adjustable-Rate Years to Maturity Variable-Rate Loan Floors Repricing/Maturity Schedule Loan Portfolio Mix $224 $558 $508 $398 $146 $147 $357 $3
Slide 14: 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 Portfolio With Limited CBD Exposure2 Average Weighted NPAs/ NCOs Percent of Total Weighted Average Average Loan Size Loan Size Average LTV Loans (since 2005) Loans LT
Slide 15: Asset Quality Remains Strong
Asset Quality Remains Strong Allowance for Credit Losses Nonperforming Assets2 Net Charge-Offs Well-reserved compared to peer median One CBD office loan 3Q24 YTD annualized NCOs of 0.03%; ACL/Loans of 1.13%1 moved to nonaccrual in 3Q24 3Q24 NCOs related to one CBD office loan $51,949 $51,347 $51,018
Slide 16: Watch List and Substandard Loans Remain at Low Levels
Watch List and Substandard Loans Remain at Low Levels Watch List Loans Substandard Loans $35,621 $35,858 $33,829 $33,908 $30,436 $31,991 $31,637 $26,877 $26,485 $21,624 3Q23 4Q23 1Q24 2Q24 3Q24 3Q23 4Q23 1Q24 2Q24 3Q24 1-4 Family C&I CRE OO 2.5% C&D 1-4 1.5% CRE OO 5.4% 0.2% Family CRE NOO 3.1% CRE
Slide 17: Strong Capital Ratios
Strong Capital Ratios Building Capital Ratios Capital Allocation Priorities 14.62% 13.88% 13.97% 14.00% 14.16% 1 Organic Growth Drive profitability by supporting a proven organic loan growth engine 9.79% 9.62% 9.57% 9.66% 9.66% 2 M&A 9.75% 9.07% 9.16% 9.21% 9.41% Review and evaluate M&A opportunitie
Slide 18: Near-Term Expectations
Near-Term Expectations • Relatively flat loan balances in 4Q24 (excluding FMCB acquisition) due to continued elevated payoffs Balance Sheet • Focus on profitable growth while aligning loan growth with core deposit growth over time Growth • Target loan-to-deposit ratio between 95% and 105% Net Intere
Slide 19: 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 20: Appendix
——™ BRIDGEWATER BANCSHARES, INC. APPENDIX 20
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 interest rate cuts and a • Loan portfolio most sensitive to changes in the 3- to 5-year portion of the normalizing yield curve yie
Slide 22: Well-Diversified Loan Portfolio with Multifamily Expertise
Well-Diversified Loan Portfolio with Multifamily Expertise Consumer & Other 0.3% 3Q24 Loan Growth by Type (vs. 2Q24) C&I 1-4 Family Mortgage $4 CRE OO 5.0% 13.4% CRE NOO Consumer & Other $3 28.0% CRE Owner Occupied $(4) Loan Mix 1-4 Family Mortgage $3.7 C&I by Type $(25) 11.4% Billion Multifamily $(
Slide 23: High Quality Securities Portfolio
High Quality Securities Portfolio Securities Available for Sale Portfolio (dollars in millions) Derivatives Portfolio Offsetting AOCI Impact (dollars in thousands) $34,145 $665 $17,217 $633 $604 $601 $553 15% 17% 20% 21% 18% 16% 22% 21% 22% 23% 21% $(11,416) 22% 21% $(23,766) 22% 22% 17% $(27,863) 3
Slide 24: Ample Liquidity and Borrowing Capacity
Ample Liquidity and Borrowing Capacity Liquidity Position with 2.4x Coverage of Uninsured Deposits Significantly Enhanced Liquidity Position Since 2022 $2,290 $2,181 $2,234 $2,249 $2,222 Available Balance Funding Source 9/30/2024 12/31/2022 Change Cash and Cash Equivalents $ 168 $ 48 $ 120 Unpledged
Slide 25: 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, September 30, December 31, March 31, June 30, September 30, September 30, Efficiency Ratio 2023 2023 2024 2024 2024 ROATCE 2024 Noninterest E
Slide 26: 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 2023 2023 2024 2024 2024 Noninterest Income $ 1,726 $ 1,409 $ 1,550 $ 1,763 $ 1,522 Less: (Gain) Loss on Sales on Securities - 2
Slide 27: 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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