Bridgewater Bancshares, Inc. · NASDAQ:BWB
Bridgewater Bancshares — Q2 2023 Earnings Presentation
26 slides from Bridgewater Bancshares's earnings presentation, Jul 27, 2023
Slide 1: Earnings Presentation Second Quarter 2023
I EARNINGS PRESENTATION SECOND 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: 2Q23 Earnings Highlights
2Q23 Earnings Highlights Diluted Return on Return on Avg. Tangible Efficiency Nonperforming Assets EPS Average Assets Common Equity1 Ratio1 to Total Assets $0.31 0.88% 10.48% 52.7% 0.02% • Deposit balances up $166.8 million, or 19.6% annualized, from 1Q23 Improving Balance • Core deposit2 growth of
Slide 4: Net Interest Income Impacted by Margin Pressure and Managed Loan Growth
Net Interest Income Impacted by Margin Pressure and Managed Loan Growth Net Interest Income and Margin Trends Net Interest Margin Drivers 3.58% 3.53% 3.16% 2.72% 3.34% 3.38% 2.40% 3.05% 2.62% 2.31% $34,095 $32,530 $32,893 $1,400 $2,030 $96 $1,100 $48 Core NIM2 down 31 bps $263 $28,567 $998 $25,872 $
Slide 5: Funding Costs Outpacing Asset Yields
Funding Costs Outpacing Asset Yields Loan Portfolio Steadily Repricing Higher High-Yielding Securities Portfolio 5.19% 4.22% 4.24% 5.06% 3.91% 4.87% 4.59% 3.35% 4.45% 5.09% 4.95% 2.85% 4.74% $608 $604 $595 4.17% 4.42% $537 $3,482 $3,630 $3,717 $491 $3,108 $3,266 2Q22 3Q22 4Q22 1Q23 2Q23 2Q22 3Q22 4Q
Slide 6: Revenue Trends Impacted by Current Environment
Revenue Trends Impacted by Current Environment Continued Profitability in the Current Environment Spread-Based Revenue Model 2.19% 2.15% 1.82% 1.46% 1.49% $35,482 1.38% $34,180 $34,631 1.28% $1,387 1.16% $1,650 $1,738 $21,439 1.07% $30,510 $20,439 $19,512 0.88% $1,943 $27,287 $1,415 $16,198 $14,513
Slide 7: Well-Controlled Expenses
Well-Controlled Expenses Highly Efficient Business Model Despite Revenue Pressures Well-Controlled Expense Base in the Current Environment Industry median efficiency ratio of 57%1 NIE growth tracking below asset growth YoY 52.7% 46.2% 43.8% $15,203 40.2% 39.8% $14,388 $14,157 $14,183 $13,752 1.47% $
Slide 8: Strong Rebound in Deposit Growth
Strong Rebound in Deposit Growth Deposit Balances Rise in 2Q23 $3,578 • Total deposit balances up 19.6% annualized $3,417 $3,411 $3,305 • Core deposit1 balances up 7.4% annualized $3,202 • Overall mix shift continued from noninterest-bearing into 14% 27% 15% 23% 25% interest-bearing deposits 9% • Co
Slide 9: Managed Pace of Loan Growth
Managed Pace of Loan Growth $3,684 $3,736 $3,569 Managing Loan Growth $3,380 • 2Q23 loan growth of $51.9M, or 5.6% annualized $3,226 • YTD loan growth of $166.8M, or 9.4% annualized • Strong brand presence and relationships in the market allow us to continue to get in front of high-quality clients a
Slide 10: Well-Diversified Loan Portfolio
Well-Diversified Loan Portfolio Consumer & Other 0.2% 2Q23 Loan Growth by Type (vs. 1Q23) CRE OO Construction & Development C&I $23 4.3% 12.3% CRE NOO 1-4 Family Mortgage $20 26.0% 1-4 Family CRE Nonowner Occupied $9 Loan Mix Mortgage 10.7% $3.7 by Type C&I $5 Billion C&D CRE Owner Occupied $- 11.2%
Slide 11: Loan Originations and Payoffs Are Slowing
Loan Originations and Payoffs Are Slowing New Loan Originations and Advances Loan Payoffs and Amortization/Paydowns $393 $194 $308 $313 $31 $153 $125 $141 $220 $36 $111 $139 $127 $42 $99 $131 $42 $145 $163 $45 $268 $117 $169 $186 $84 $99 $69 $54 $75 $47 2Q22 3Q22 4Q22 1Q23 2Q23 2Q22 3Q22 4Q22 1Q23 2
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 $376K since 2017 on January 1, 2023 $50,701 $50,148 $47,996 $46,491 $809 $778 $44,711 $688 $663 $639 0.00% 0.00% 0.00% 0.0
Slide 13: Watch and Substandard Loans Remain Stable
Watch and Substandard Loans Remain Stable Watch List Loans Substandard Loans $34,705 $36,258 $33,821 $32,252 $30,767 $27,574 $27,215 $26,991 $28,049 $22,759 2Q22 3Q22 4Q22 1Q23 2Q23 2Q22 3Q22 4Q22 1Q23 2Q23 Watch List Loans Substandard Loans CRE NOO 1-4 Office Family CRE OO C&D 1-4 2.6% 2.5% 4.7% 0.
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 79% $114M 61% 5.2% $2.2M 62% are Fix
Slide 15: Ample Liquidity and Borrowing Capacity
Ample Liquidity and Borrowing Capacity Liquidity Position with 2.5x Coverage of Uninsured Deposits Diverse Liquidity Mix $1,962 Available Balance $1,924 Funding Source 6/30/2023 12/31/2022 Change Cash $ 139 $ 48 $ 91 Unpledged Securities1 302 549 (247) $1,498 FHLB Capacity 401 391 10 $1,409 $1,380 F
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 2Q23 Steady Tangible Book Value Per Share1 Growth $12.15 $11.69 $10.98 13.98% 13.78% 13.50% 13.15% 13.25% $9.31 $8.33 $7.22 10.33% $5.40 9.98% 9.55% 9.41% 9.47% $4.52 8.50% 8.47% 8.40% 8.48% 8.
Slide 17: Near-Term Expectations
Near-Term Expectations • High single-digit loan growth in the back half of 2023 – focus on aligning loan growth more closely with core deposit Balance Sheet growth over time Growth • Target loan-to-deposit ratio between 95% and 105% Net Interest • Expect the pace of net interest margin compression t
Slide 18: 2023 Strategic Priorities – Positioning for Long-Term Success
2023 Strategic Priorities – Positioning for Long-Term Success Progress-to-Date • 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 on ge
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 • Loan portfolio most sensitive to changes in the 3- to 5-year portion of the 2Q22 3Q22 4Q22 1Q23 2Q23 yield curve • Fixed-rate nature of the loan portfolio (67%) results in slower rep
Slide 21: Loan Portfolio Repricing
Loan Portfolio Repricing Fixed-Rate Portfolio Variable-Rate Portfolio Adjustable-Rate Portfolio ($2.5B) ($644M) ($602M) Adjustable-Rate Years to Maturity Variable-Rate Loan Floors Repricing Schedule Loan Portfolio Mix $736 $422 $550 $550 $550 $550 $550 $115 $126 $119 $363 $354 $351 $102 $99 Adjustab
Slide 22: High Quality Securities Portfolio
High Quality Securities Portfolio Securities Available for Sale Portfolio Derivatives Portfolio Offsetting AOCI Impact $28,581 $28,203 $542 $549 $559 $538 $483 13% 15% 13% 14% 14% 20% 20% 21% 21% 21% 24% 23% 24% $(17,942) 31% $(20,908) 35% 43% 41% 41% 35% 30% $(47,884) $(52,064) 2Q22 3Q22 4Q22 1Q23
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, June 30, September 30, December 31, March 31, June 30, Efficiency Ratio 2022 2022 2022 2023 2023 ROATCE June 30, 2023 Noninterest Expense $ 13,752 $ 14,157 $ 1
Slide 25: Reconciliation of Non-GAAP Financial Measures – PPNR
Reconciliation of Non-GAAP Financial Measures – PPNR As of and for the quarter ended, June 30, September 30, December 31, March 31, June 30, Pre-Provision Net Revenue 2022 2022 2022 2023 2023 Noninterest Income $ 1,650 $ 1,387 $ 1,738 $ 1,943 $ 1,415 Less: (Gain) Loss on Sales on Securities (52) - (
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, June 30, September 30, December 31, March 31, June 30, Core Net Interest Margin 2022 2022 2022 2023 2023 Net Interest Income (Tax-Equivalent Basis) $ 32,806 $ 34,418 $ 33,260 $ 28,947 $ 26,280 Less: Loan Fees (
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