Bridgewater Bancshares, Inc. · NASDAQ:BWB
Bridgewater Bancshares — Debt Investor Presentation (July 2021)
48 slides from Bridgewater Bancshares's debt investor presentation, Jul 8, 2021
Slide 1: Investor Presentation: Subordinated Notes Offering
Investor Presentation Fourth Quarter 2019 INVESTOR PRESENTATION SUBORDINATED NOTES OFFERING Strictly Private & Confidential
Slide 2: Forward-Looking Statements
Forward-Looking Statements This Confidential Investor 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,
Slide 3: Private placement notice
The information contained herein is a summary and it is not complete. It has been prepared for use only in connection with the private placement (the “Placement”) of securities (the “Securities”) of the Company, the holding company of Bridgewater Bank (the “Bank”). The Securities have not been regis
Slide 4: Terms of the Proposed Offering
Terms of the Proposed Offering 4 • Bridgewater Bancshares, Inc. (NASDAQ: BWB) Issuer • Subordinated Notes Security • 10 years / 2031 Term / Maturity • $30 Million Offering Size • Five-year non-call period, callable at par plus accrued but unpaid interest thereafter Redemption • 5 year fixed rate, se
Slide 5: Company Overview
Company Overview 5 Company Highlights Company Overview Franchise Footprint Name: Bridgewater Bancshares, Inc. Headquarters: Saint Louis Park, MN Ticker: NASDAQ: BWB Assets: $3.1 Billion Loans: $2.4 Billion Deposits: $2.6 Billion Equity: $279 Million • Founded in 2005 by a group of banking industry v
Slide 6: Our History
Our History 6 March: Bridgewater Bancshares, Inc. completes its IPO and stock is publicly traded on Nasdaq Stock Market November: St. Paul branch opens for business June: Private offering raises $5.2 million December: Issues subordinated debt for $3.5 million April: Assets surpass $1.0 billion May:
Slide 7: Management team
Mark Hokanson Chief Technology Officer Mark joined Bridgewater Bank in 2019 as Chief Technology Officer. In his position, Mark is responsible for driving the Bank’s technology strategy by developing innovative, robust, and secure solutions that generate efficiencies across the organization. By leadi
Slide 8: Attractive Twin Cities market
4.00% 1.08% 2.91% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% Minneapolis Midwest US 8 #1 Fortune 500 companies per capita (16)1 Large Corporate Presence #1 State with highest average credit score (720)2 Credit Worthy Population #1 Best place for women entrepreneurs3 Women Entrepreneurs #5 State with educat
Slide 9: Growing Market Share
Source: S&P Global Market Intelligence; deposit market share data as of June 30, 2020 Growing Market Share 2006 Total Market 2020 Total Market Top 10 Institutions Deposits ($000) Share Top 10 Institutions Deposits ($000) Share Wells Fargo & Co. 16,308,234 $ 27.59% U.S. Bancorp 83,341,943 $ 38.23% U.
Slide 10: Business Line Highlights
Business Line Highlights 10 Commercial Banking • Commercial Real Estate Lending • Acquisition Lending • Construction Lending • Tax Credit Bridge Financing • Long-term Multifamily Financing • Commercial & Business Lending • Business Banking • Business / Cash Management Services • Personal Banking • H
Slide 11: Differentiators
Differentiators 11 Highly visible brand with extensive referral network
Slide 12: Financial Highlights
Financial Highlights Profitability Net Income $31.4 million $27.2 million $10.7 million Pre-Provision Net Revenue (“PPNR”) 1 $43.7 million $54.7 million $15.6 million ROAA 1.49% 1.04% 1.47% PPNR ROAA 1 2.07% 2.09% 2.15% ROAE 13.5% 10.5% 15.9% Net Interest Margin (FTE) 3.59% 3.46% 3.60% Adjusted Effi
Slide 13: Exceptional Core Earnings
$39,137 $43,735 $54,694 $62,392 $26,920 $31,403 $27,194 $42,684 2.20% 2.07% 2.09% 2.15% 1.51% 1.49% 1.04% 1.47% 2018 2019 2020 Q1 2021 PPNR¹ Net Income PPNR ROAA¹ ROAA 1 Represents a Non-GAAP financial measure to exclude the historic tax credit amortization, FHLB prepayment fees and gains on sales o
Slide 14: Growing Net Interest Income
*Amounts calculated on a tax-equivalent basis using statutory federal tax rate of 21% Note: Dollars in thousands • 26.3% YoY growth in net interest income (Q1 2021 vs Q1 2020) • Net interest income included the accelerated recognition of $1.1 million of PPP loan origination fees in Q1 2021, which co
Slide 15: Stable Core Operating Efficiency
1.59 1.59 1.44 1.49 0.19 0.16 0.29 0.02 41.7 43.3 40.5 40.7 46.5 47.4 49.0 41.2 -50 -30 -10 10 30 50 70 0 0.5 1 1.5 2 2.5 3 2018 2019 2020 Q1 2021 Adjustment Factors¹ / Avg. Assets Adj. NIE / Avg. Assets Adjusted Efficiency Ratio¹ Efficiency Ratio¹ $18,620 $22,076 $25,568 $28,408 $2,351 $3,085 $3,25
Slide 16: Organic Balance Sheet Growth
$221 $245 $265 $279 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 2018 2019 2020 Q1 2021 $1,561 $1,823 $2,502 $2,639 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 2018 2019 2020 Q1 2021 $1,974 $2,269 $2,927 $3,072 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 2018 2019 20
Slide 17: Historical Loan Composition
• Robust organic growth, without M&A • Well diversified portfolio among asset classes • Geographic concentration in Twin Cities MSA, with greater than 85% of loans within the market • Multifamily focus and expertise 12.6% 10.3% 7.3% 8.0% 13.6% 13.6% 12.7% 12.2% 0.2% 0.2% 0.3% 0.3% 24.5% 26.9% 26.9%
Slide 18: Loan Portfolio Composition
$293,010 $191,381 $66,552 $37,083 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Loan Portfolio Composition Loans by Type Loan Portfolio Composition CRE NOO 29.7% Multifamily 27.4% C&D 8.0% 1-4 Family 12.2% CRE OO 3.3% C&I 12.4% PPP 6.7% Consumer & Other 0.3% $2.43 Billion COVID-19 Loan Modification Summary ($000)
Slide 19: PPP Loans
New vs. Existing Client PPP Origination Summary as of March 31, 2021 Number of Loans Principal Balance Origination Fees Round 1 1,200 $ 181,600 $ 5,706 Round 2 517 70,144 3,041 Total 1,717 $ 251,744 $ 8,747 PPP Loans Existing Client 58.3% New Client 41.7% PPP Outstanding Summary As of and for the Th
Slide 20: Asset Quality
Asset Quality Asset Quality Classified Assets Nonperforming Assets ¹ Allowance for Loan Losses Net Charge-Offs 20 ¹ NPAs / Assets = (Nonaccrual Loans + OREO) / Total Assets Note: Dollars in thousands $4,184 $2,695 $15,164 $6,739 1.82% 1.01% 4.54% 1.94% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% $- $2,0
Slide 21: Asset Quality: Watch and Classified Lists
CRE NOO Retail 45.7% 1-4 Family 20.1% Owner Occupied 12.9% C&I 18.9% C&D 2.2% Consumer & Other 0.2% $7 Million C&I 48.0% CRE NOO Retail 15.8% CRE NOO Hotels 27.0% 1-4 Family 1.2% CRE Other 8.0% Investor Real Estate Secured: CRE Nonowner Occupied (“NOO”) Watch List By Loan Type Classified List By Loa
Slide 22: Historical Deposit Composition
23.6% 24.5% 26.9% 27.0% 11.5% 14.5% 14.6% 16.4% 25.8% 28.3% 26.3% 30.0% 20.4% 19.8% 14.1% 13.1% 18.7% 12.9% 18.1% 13.5% $1,560,934 $1,823,310 $2,501,636 $2,638,654 2018 2019 2020 Q1 2021 Noninterest Bearing Transaction Deposits Interest Bearing Transaction Deposits Savings & Money Market Deposits Ti
Slide 23: Deposit Repricing Opportunities
$37,838 $33,351 $22,315 $16,741 $9,248 $34,468 $10,164 $29,182 $11,458 $13,896 $72,306 $43,515 $51,497 $28,199 $23,144 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Retail Time Deposit Maturities Wholesale Time Deposit Maturities* *Excludes rolling short term brokered funding balances related to interest
Slide 24: Liquidity
14.3% 14.2% 18.4% 19.2% 16.5% 18.9% 19.8% 22.3% $607,993 $749,816 $1,121,145 $1,272,829 2018 2019 2020 Q1 2021 On-Balance Sheet Liquidity as a % of Assets Off-Balance Sheet Liquidity as a % of Assets Liquidity 24 Sources of Liquidity • The Company’s liquidity position remains strong • Primary fundin
Slide 25: Securities Portfolio Highlights
$115.5M CA 20.4% MN 20.1% MI 8.0% IL 5.6% NY 4.6% IN 4.1% PA 3.9% ND 3.4% VA 3.1% TX 3.0% Other 23.9% Securities Portfolio Highlights Portfolio Distribution Portfolio Detail $388.3M Treasury 0.3% SBA 9.9% MBS 31.9% Municipal 29.8% Corporate 18.6% ABS 9.6% 25 • Corporate securities comprised of finan
Slide 26: Consolidated Capital Ratios
14.55% 12.98% 14.58% 14.46% 11.50% 12.00% 12.50% 13.00% 13.50% 14.00% 14.50% 15.00% 2018 2019 2020 Q1 2021 12.07% 11.39% 10.35% 10.34% -1.00% 1.00% 3.00% 5.00% 7.00% 9.00% 11.00% 13.00% 15.00% 2018 2019 2020 Q1 2021 11.23% 10.69% 9.28% 9.11% -1.00% 1.00% 3.00% 5.00% 7.00% 9.00% 11.00% 13.00% 15.00%
Slide 27: Pro Forma Capital Ratios
Pro Forma Capital Ratios ¹ Assumes a $30 million subordinated debt offering with a 1.50% placement fee and $150 thousand of fixed offering costs 2 Sometime after the offering of the Sub Debt, the Company may conduct an offering of preferred stock (or depositary shares representing a fractional owner
Slide 28: Double Leverage and Debt Service Coverage
Double Leverage and Debt Service Coverage ¹ For illustrative purposes assumes 100% of net proceeds from capital offerings are downstreamed to bank level equity (except scenario with redemption of $25 million sub notes) 2 Illustrative subordinated debt coupon of 3.25%; includes amortization of illust
Slide 29: Preliminary Observations: Q2 2021
• Gross loans excluding PPP loans are expected to be between $2.4 billion and $2.55 billion • Total deposits are expected to be between $2.6 billion and $2.75 billion • Net interest margin is expected to remain relatively stable between 3.45% and 3.60% • Provision for loan losses is expected to be b
Slide 30: Investor Highlights
Investor Highlights Investor Highlights 30 The vision to see banking differently. • Fundamentally sound community bank operating in attractive Twin Cities market ✓ Disciplined business model highlighted by focus on risk management ✓ Highly profitable and highly efficient ✓ Stable and valuable core d
Slide 31: Appendix
| APPENDIX BRIDGEWATER BANCSHARES, INC.
Slide 32: CRE Nonowner Occupied Portfolio Characteristics
Investor Real Estate Secured: CRE Nonowner Occupied (“NOO”) Portfolio Characteristics – CRE NOO Loan Balance Outstanding $720,396 % of Total Loans, Gross 29.7% Number of Loans 346 Average Loan Size $2,082 Loan-to-Value (Weighted Average) 60.2% 5 Year Net Charge-Offs (%) 0.01% By Property Type Office
Slide 33: CRE NOO Office
By Property Square Footage Portfolio Characteristics – CRE NOO Office Loan Balance Outstanding $216,009 % of Total Loans, Gross 8.9% Number of Loans 99 Average Loan Size $2,182 Loan-to-Value (Weighted Average) 63.5% Investor Real Estate Secured: CRE NOO Retail Investor Real Estate Secured: CRE NOO O
Slide 34: CRE NOO Retail
By Property Square Footage Portfolio Characteristics – CRE NOO Retail Loan Balance Outstanding $153,417 % of Total Loans, Gross 6.3% Number of Loans 100 Average Loan Size $1,534 Loan-to-Value (Weighted Average) 60.6% Investor Real Estate Secured: CRE NOO Retail Investor Real Estate Secured: CRE NOO
Slide 35: CRE NOO Industrial
By Property Square Footage Portfolio Characteristics – CRE NOO Industrial Loan Balance Outstanding $154,541 % of Total Loans, Gross 6.4% Number of Loans 67 Average Loan Size $2,307 Loan-to-Value (Weighted Average) 56.2% Investor Real Estate Secured: CRE NOO Retail Investor Real Estate Secured: CRE N
Slide 36: CRE NOO Hotels
*Based on state of primary real property collateral if available, otherwise borrower address is used Investor Real Estate Secured: CRE NOO Hotels Portfolio Characteristics – CRE NOO Hotels Loan Balance Outstanding $31,417 % of Total Loans, Gross 1.3% Number of Loans 6 Average Loan Size $5,236 Loan-t
Slide 37: CRE NOO Restaurant
Portfolio Characteristics – CRE NOO Restaurant Loan Balance Outstanding $22,933 % of Total Loans, Gross 1.0% Number of Loans 18 Average Loan Size $1,274 Loan-to-Value (Weighted Average) 59.6% Investor Real Estate Secured: CRE NOO Restaurant Investor Real Estate Secured: CRE NOO Restaurant Full-Servi
Slide 38: Multifamily Portfolio Characteristics
5-19 Units 15.7% 20-49 Units 27.4% 50-99 Units 27.0% 100+ Units 29.9% $665 Million Portfolio Characteristics – Multifamily Loan Balance Outstanding $665,415 % of Total Loans, Gross 27.4% Number of Loans 309 Average Loan Size $2,153 Loan-to-Value (Weighted Average) 61.7% 5 Year Net Charge-Offs (%) 0.
Slide 39: Construction and Development Portfolio
Residential 29.4% Multifamily 40.3% CRE Other 9.1% Land 21.2% $193 Million Twin Cities MSA 94.4% MN 0.4% Other States 5.2% By Property Type By Geography* Land Portfolio Composition Investor Real Estate Secured: CRE NOO Restaurant Investor Real Estate Secured: Construction and Development Portfolio C
Slide 40: CRE Owner Occupied Portfolio
Investor Real Estate Secured: CRE Nonowner Occupied (“NOO”) Portfolio Characteristics – CRE OO Loan Balance Outstanding $79,665 % of Total Loans, Gross 3.3% Number of Loans 130 Average Loan Size $613 Loan-to-Value (Weighted Average) 58.8% 5 Year Net Charge-Offs (%) (0.01%) Office 29.6% Retail 12.9%
Slide 41: Commercial and Industrial Portfolio
Real Estate and Rental and Leasing, 32.8% Construction, 22.4% Manufacturing, 12.7% Finance & Insurance, 9.5% Other, 7.5% Professional Services, 6.2% Wholesale/Retail Trade, 5.7% Accomodation & Food Services, 3.2% $301 Million Portfolio Characteristics – C&I Loan Balance Outstanding $301,023 % of Tot
Slide 42: Loan Portfolio Repricing
Note: Dollars in thousands Loan Portfolio Repricing Loan Portfolio – Repricing Composition 17.6%, Adjustable 23.0%, Variable 59.4%, Fixed Variable/Adjustable Loans vs. Rate Floors Fixed/Adjustable Years to Maturity/Repricing 88% 76% 61% 63% 81% 85% 12% 24% 39% 37% 19% 15% $238,810 $291,276 $275,243
Slide 43: Net Interest Drivers
$1,954,959 $2,152,398 $2,206,807 $2,301,328 $2,389,919 5.17% 5.01% 4.93% 4.87% 4.72% 4.90% 4.76% 4.69% 4.59% 4.50% Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Average Loans Loan Yield Loan Yield Excluding Fees *Yield is adjusted to exclude PPP loans Note: Dollars in thousands Spot Rate 2.59% Spot Rate 4
Slide 44: Interest Rate Sensitivity
Interest Rate Sensitivity 44 • The following table summarizes the potential changes to the Company’s net interest income using a base case scenario given an immediate change in interest rates as the specified levels based on forecasted assumptions of prepayment speeds, nominal interest rates and loa
Slide 45: Reconciliation of Annual Non-GAAP Measures
This Confidential Investor Presentation includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of these non-GAAP financial measures are provided below. The Company believes these non-GAAP financial measures provide useful in
Slide 46: Reconciliation of Quarterly Non-GAAP Measures
This Confidential Investor Presentation includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of these non-GAAP financial measures are provided below. The Company believes these non-GAAP financial measures provide useful in
Slide 47: Reconciliation of Non-GAAP Measures – Pre-Provision
This Confidential Investor Presentation includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of these non-GAAP financial measures are provided below. The Company believes these non-GAAP financial measures provide useful in
Slide 48: Bridgewater Bancshares, Inc.
BRIDGEWATER BANCSHARES, INC.
Bridgewater Bancshares — Debt Investor Presentation (July 2021) on 6ix