8-K
Bridgewater Bancshares Inc (BWB)
8-K
2024-11-05
For: 2024-11-05
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April 04, 2026
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
November 5, 2024
Date of Report
(Date of earliest event reported)
BRIDGEWATER BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
| <br><br><br><br> | <br><br> | <br><br><br><br> |
|---|---|---|
| Minnesota<br><br>(State or other jurisdiction of<br><br>incorporation) | 001-38412<br><br>(Commission File Number) | 26-0113412<br><br>(I.R.S. Employer<br><br>Identification No.) |
| | 4450 Excelsior Boulevard, Suite 100<br><br>St. Louis Park , Minnesota<br><br>(Address of principal executive offices) | 55416<br><br>(Zip Code) |
Registrant’s telephone number, including area code: (952) 893-6868
Not Applicable (Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading Symbol | Name of each exchange on which registered: |
|---|---|---|
| Common Stock, $0.01 Par Value<br><br>Depositary Shares, each representing a 1/100th interest in a share of 5.875% Non-Cumulative Perpetual Preferred Stock, Series A, $0.01 par value per share | BWB<br><br>BWBBP | The NASDAQ Stock Market LLC<br><br>The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01 Regulation FD Disclosure.
Bridgewater Bancshares, Inc. (the “Company”) is furnishing an Investor Presentation, which will be used, in whole or in part, from time to time by executives of the Company in meetings with investors and analysts. A copy of the Investor Presentation is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information furnished in this item of this Form 8-K, and the related exhibits, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d)****Exhibits
| Exhibit 99.1 | Investor Presentation dated November 5, 2024 |
|---|---|
| Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | Bridgewater Bancshares, Inc. |
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| Date: November 5, 2024 | |
| | By: /s/ Jerry Baack |
| | Name: Jerry Baack |
| | Title: Chairman and Chief Executive Officer |
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Exhibit 99.1
| Disclaimer<br>2<br>Forward-Looking Statements<br>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<br>concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, identified by words such as “may”, “might”, “should”,<br>“could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized”, “target” and “outlook”, or the negative version of those words or other comparable<br>words of a future or forward-looking nature.<br>Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding our business, future plans and strategies,<br>projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are<br>difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these<br>forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: interest rate<br>risk, including the effects of changes in interest rates; fluctuations in the values of the securities held in our securities portfolio, including as the result of changes in interest rates; business and economic conditions generally and in the<br>financial services industry, nationally and within our market area, including the level and impact of inflation and possible recession; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in recent bank failures; loan concentrations in our portfolio; the overall health of the local and national real estate market; our ability to successfully manage credit risk;<br>our ability to maintain an adequate level of allowance for credit losses; new or revised accounting standards; the concentration of large loans to certain borrowers; the concentration of large deposits from certain clients, including those<br>who have balances above current Federal Deposit Insurance Corporation (“FDIC”) insurance limits; our ability to successfully manage liquidity risk, which may increase our dependence on non-core funding sources such as brokered<br>deposits, and negatively impact our cost of funds; our ability to raise additional capital to implement our business plan; our ability to implement our growth strategy and manage costs effectively; the composition of our senior<br>leadership team and our ability to attract and retain key personnel; talent and labor shortages and employee turnover; the occurrence of fraudulent activity, breaches or failures of our or our third-party vendors’ information security<br>controls or cybersecurity-related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; interruptions involving our information technology and telecommunications systems or third-party<br>servicers; competition in the financial services industry, including from nonbank competitors such as credit unions and “fintech” companies; the effectiveness of our risk management framework; the commencement and outcome of<br>litigation and other legal proceedings and regulatory actions against us; the impact of recent and future legislative and regulatory changes, including in response to recent bank failures; risks related to climate change and the negative<br>impact it may have on our customers and their businesses; the imposition of other governmental policies impacting the value of products produced by our commercial borrowers; severe weather, natural disasters, wide spread disease or<br>pandemics, acts of war or terrorism or other adverse external events, including the ongoing conflict in the Middle East and the Russian invasion of Ukraine; potential impairment to the goodwill the Company recorded in connection with<br>our acquisitions; risks associated with our ongoing acquisition of First Minnetonka City Bank, including the possibility that the merger may be more difficult or expensive to accomplish than anticipated, diversion of management’s<br>attention from daily operations and the effect of the proposed merger on the Company’s customer and employee relationships and operating results; changes to U.S. or state tax laws, regulations and guidance; potential changes in<br>federal policy and at regular agencies as a result of the upcoming 2024 presidential election; and any other risks described in the “Risk Factors” sections of reports filed by the Company with the Securities and Exchange Commission.<br>Any forward-looking statement made by us in this presentation is based only on information currently available to us and speaks only as of the date on which it is made. The Company undertake no obligation to publicly update any<br>forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. Certain of the information contained in this presentation is derived<br>from information provided by industry sources. Although the Company believe that such information is accurate and that the sources from which it has been obtained are reliable, the Company cannot guarantee the accuracy of, and<br>have not independently verified, such information.<br>Use of Non-GAAP financial measures<br>In addition to the results presented in accordance with U.S. General Accepted Accounting Principles (“GAAP”), the Company routinely supplements its evaluation with an analysis of certain non-GAAP financial measures. The Company<br>believes these non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors to help them understand the Company’s operating performance and trends, and to facilitate<br>comparisons with the performance of peers. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures<br>that may be presented by other companies. Reconciliations of non-GAAP disclosures to the comparable GAAP measures are provided in this presentation. |
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| The Finest Entrepreneurial Bank<br>3<br>Company Overview Branch-Light Model in Attractive Twin Cities Market<br>Name: Bridgewater Bancshares, Inc.<br>Headquarters: St. Louis Park, MN<br>Ticker: NASDAQ: BWB; BWBBP<br>Assets: $4.7 Billion<br>Loans: $3.7 Billion<br>Deposits: $3.7 Billion<br>Shareholders’ Equity: $452.2 Million<br>Serving a Commercial-Focused Client Base Track Record of Profitability, Growth and Efficiency<br>• CRE lending<br>• Acquisition financing<br>• Construction lending<br>• Affordable housing<br>financing<br>• Long-term multifamily<br>financing<br>• Commercial & business<br>lending<br>• Business / treasury<br>management<br>• SBA lending<br>• 1-4 family rentals<br>• Personal banking<br>CRE,<br>33%<br>Multifamily,<br>38%<br>C&D,<br>5%<br>C&I,<br>13%<br>1-4 Family,<br>11%<br>Consumer,<br>0%<br>$3.7B<br>Business and<br>Personal Banking<br>Commercial<br>Banking<br>Loan Balances • Founded in 2005 by a group of banking industry veterans and local<br>business leaders<br>• Continuous profitability since the third month of operations<br>• Proven ability to generate strong organic growth in the Twin Cities<br>• Expertise in commercial real estate with a focus in multifamily lending<br>• Highly efficient operations with a branch-light model<br>• Organizational focus on risk management with a long track record of<br>superb asset quality<br>1 BWB announced the acquisition of First Minnetonka City Bank (FMCB) on August 28, 2024; the transaction is expected to close in 4Q24 subject to customary closing conditions<br>Data as of September 30, 2024<br>BWB FMCB1 Future BWB Denovo Branch Site<br>Twin Cities |
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| Jerry Baack<br>Chairman and Chief Executive Officer<br>• Former regulator and responsible for all aspects of BWB<br>formation<br>• Lead founder of BWB in 2005<br>• 30+ years of banking experience<br>Jeff Shellberg<br>EVP and Chief Credit Officer<br>• Board member and oversees strong credit and underwriting culture<br>• BWB founding member in 2005<br>• 35+ years of regulatory and banking experience<br>Nick Place<br>Chief Banking Officer<br>• Oversees all aspects of client growth and relationship management,<br>including lending, treasury management and deposits<br>• Joined BWB in 2007<br>• 15+ years of banking experience<br>Mary Jayne Crocker<br>EVP and Chief Strategy Officer<br>• Shapes long-term strategic plans and ensuring alignment with<br>company objectives<br>• Joined BWB in 2005<br>• 25+ years of financial services experience<br>Joe Chybowski<br>President and Chief Financial Officer<br>• Strategic insights across all aspects of the organization, including<br>finance, capital and liquidity management<br>• Joined BWB in 2013<br>• 14+ years of banking and capital markets experience<br>Lisa Salazar<br>Chief Operating Officer<br>• Oversees operations, technology and product initiatives to drive efficiencies<br>and enhance the overall client experience<br>• Joined BWB in 2018<br>• 30+ years of banking experience<br>Strategic Leadership Team (SLT) with<br>Broad Skill Sets and Industry Expertise<br>4<br>Approximately 20% of BWB’s common shares were owned by Board and SLT members<br>as of September 30, 2024, demonstrating strong alignment with shareholders |
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| A Culture-Driven Growth Story<br>5<br>Truly Unconventional Culture Highly Efficient Business Model<br>Robust Balance Sheet Growth Proactive Risk Management<br>• Entrepreneurial spirit unlike the culture at a typical<br>bank<br>• Modern headquarters with an open layout<br>promoting team member and client collaboration<br>• Commitment to providing clients with quick<br>answers, responsive support and simple solutions<br>• Continued progress on environmental, social and<br>governance (ESG) initiatives<br>• Long track record of generating robust organic<br>loan growth<br>• Emphasis on local commercial real estate and<br>small business clients<br>• M&A-related market disruption has created client<br>and banker acquisition opportunities to support<br>loan and deposit growth<br>• Recent loan growth moderation due to interest<br>rate and economic environment while aligning<br>loan growth with core deposit growth<br>• Branch-light model with a commercial real estate<br>focus<br>• Efficient operating philosophy, including<br>networking, banking tools and in-house expertise<br>• Relatively low levels of expenses as a percent of<br>total assets<br>• Efficiency ratio consistently better than peer<br>banks<br>• Invest in scaling the risk management function<br>to address emerging risks and support longer term<br>growth outlook<br>• Superb asset quality track record with consistently<br>low levels of NCOs and NPAs<br>• Conservative and decisive credit culture, including<br>measured risk selection, consistent underwriting,<br>active credit oversight and deep industry<br>experience<br>1 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation.<br>2 Includes publicly-traded banks on major exchanges with total assets between $3 billion and $10 billion as of September 30, 2024 (Source: S&P Capital IQ)<br>Consistent Tangible Book Value1<br>Growth and Outperformance<br>31 consecutive quarters of<br>Tangible Book Value per Share growth<br>208%<br>77%<br>4Q16<br>2Q17<br>4Q17<br>2Q18<br>4Q18<br>2Q19<br>4Q19<br>2Q20<br>4Q20<br>2Q21<br>4Q21<br>2Q22<br>4Q22<br>2Q23<br>4Q23<br>2Q24 3Q24<br>BWB Peer Bank Average2 |
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| Our Core Values<br>6<br>Unconventional.<br>Our clients notice a difference.<br>Responsive.<br>Under promise, over deliver.<br>Dedicated.<br>Don’t stop until you get it done.<br>Growth.<br>If you aren’t moving forward, where are you going?<br>Accurate.<br>It’s more than just an expectation.<br>6<br>Our Core Values |
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| An Award-Winning Workplace Culture<br>“In today’s environment, it is more important than<br>ever to be able to recruit, retain and develop top<br>talent. At Bridgewater, we have demonstrated an<br>ability to do this through our unconventional culture<br>and employee experience, extensive team member<br>referral network, and a seasoned internship program<br>to further enhance our talent pipelines.”<br>Jerry Baack<br>Chairman and CEO<br>Top Workplaces<br>Star Tribune<br>2016. 2017. 2018. 2020. 2021.<br>2022. 2023. 2024.<br>Best Banks to Work For<br>American Banker<br>2017. 2018. 2020. 2022. 2023.<br>Corporate Headquarters<br>Progressive Pay and Benefits<br>Health and Wellness<br>Committee<br>Diversity, Equity and<br>Inclusion Committee<br>Volunteer Paid Time Off<br>Modern, open design with an entrepreneurial spirit tailor-made for<br>team building and collaboration<br>Minimum wage of $20 per hour and discretionary bonuses for all<br>team members regardless of level<br>Providing team member opportunities to support physical fitness,<br>nutrition and mental health<br>Inclusive culture that encourages, supports and celebrates<br>diversity of team members and communities in which we serve<br>Team members receive up to 16 hours of PTO per year for<br>volunteer activities supporting the Community Reinvestment Act<br>7 |
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| A Responsive Service Model<br>8<br>Our clients can expect…<br>• Responsive support and<br>simple solutions<br>• A local bank of choice in a<br>market where many local<br>banks have left<br>• Flexibility, market<br>expertise and strong<br>network connections<br>The “Proven Process” for Our Clients<br>• BEST<br>Business Bank<br>• BEST<br>Small Business<br>Banking<br>• BEST<br>Commercial<br>Mortgage Lender<br>An Award-Winning Client Experience<br>• BEST<br>Business Bank<br>• BEST<br>Consumer Bank |
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| A Commitment to our Communities<br>9<br>Our communities can expect…<br>Bridgewater’s commitment to<br>investing, lending and volunteering<br>in ways that serve low-to-moderate<br>income segments in the Twin Cities<br>“Outstanding” Rating for Community<br>Reinvestment Act Performance<br>FDIC, 2023<br>$312K<br>Total<br>Contributions<br>in 2023<br>1,844<br>Volunteer<br>Hours<br>in 2023<br>Empowering Women in Entrepreneurship<br>In 2021, we established the BridgewatHER<br>Network, a women’s networking cohort which<br>brings together successful women in business<br>and female entrepreneurs throughout the Twin<br>Cities to network and share insights<br>• Over 350 female<br>entrepreneurs and<br>business leaders<br>• Events hosted at the<br>BWB Corporate Center<br>throughout the year<br>• Led by BWB’s Chief<br>Strategy Officer,<br>Mary Jayne Crocker<br>Mary Jayne Crocker<br>EVP and Chief<br>Strategy Officer |
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| Environmental, Social and Governance (ESG)<br>10<br>We are committed to establishing and advancing impactful initiatives that support our<br>corporate responsibility as one of the largest locally-led banks in the Twin Cities, while<br>regularly sharing our progress with our stakeholders<br>Our ESG<br>Commitment Our ESG Priorities<br>Team Members, Clients<br>and Communities<br>Diversity, Equity<br>and Inclusion<br>Leverage our unconventional corporate culture<br>to leave a positive lasting impact on our team<br>members, clients and communities<br>Ensure strong corporate governance oversight,<br>including an effective risk management<br>framework to support a growing organization<br>Create a diverse, equitable and inclusive work<br>environment and community<br>Contribute to a healthier natural environment in<br>the communities in which we live and work<br>Corporate Governance Environmental<br>ESG Oversight<br>• Board-level Nominating and ESG Committee<br>oversees Bridgewater's strategy and practices<br>related to ESG<br>• Management-level ESG Committee focuses on<br>developing, implementing and growing a formal<br>ESG program<br>For more about Bridgewater’s commitment, priorities and initiatives related to ESG,<br>please visit our ESG webpage at www.BWBMN.com/about-Bridgewater/esg |
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| Attractive Twin Cities Market<br>Built for Business<br>11<br>#3<br>Fortune 500 companies<br>per capita (17)1<br>Large Corporate Presence<br>#1<br>State with highest<br>average credit score (742)2<br>Credit Worthy Population<br>#5<br>Best state for<br>economic opportunity3<br>Economic Opportunity<br>#6<br>Top state for<br>business4<br>Top State for Business<br>#4<br>Best state<br>to move to5<br>State to Move to<br>Top 20<br>Most populated MSA<br>in the U.S.6<br>Populated MSA 2.74%<br>2.40%<br>Twin Cities US<br>$94,405<br>$75,874<br>Twin Cities US<br>Strong Market Demographics<br>2024 Median Household Income ($)5<br>2024 – 2029 Proj. Population Growth (%)5<br>1 Source: Minnesota Department of Employment and Economic Development (ranking among 30 largest metro areas)<br>2 Source: Experian – Average FICO Score by State, 2024<br>3 Source: U.S. News & World Report, 2024<br>4 Source: CNBC, 2024<br>5 Consumer Affairs, 2024<br>6 Source: S&P Capital IQ, 2024 |
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| Rank Bank HQ Branches<br>Deposits<br>($M)<br>Market<br>Share<br>1 U.S. Bancorp MN 80 $ 111,326 44.82%<br>2 Wells Fargo & Co. CA 85 $ 41,922 16.88%<br>3 Ameriprise Financial Inc. MN 2 $ 21,468 8.64%<br>4 Huntington Bancshares Inc. OH 58 $ 6,604 2.66%<br>5 Bank of Montreal CAN 30 $ 6,097 2.45%<br>6 Bank of America Corp. NC 20 $ 5,957 2.40%<br>7 Bremer Financial Corp. MN 19 $ 5,452 2.20%<br>8 State Bancshares, Inc. ND 7 $ 4,161 1.68%<br>9 Bridgewater Bancshares, Inc. M N 7 $ 3,823 1.54%<br>10 Old National Bancorp IN 29 $ 3,540 1.43%<br>Top 10 $ 210,350 84.69%<br>MSA Total $ 248,384<br>Deposit Market Share Momentum<br>in the Twin Cities Continues<br>12<br>Total Deposits – Minneapolis/St. Paul MSA1<br>2012 2024<br>Continuing to Gain Market Share<br>• Top-heavy deposit market (top 2 market share = 62%)<br>• Top 2 have combined to steadily lose market share over the past<br>10 years (2014: 84% / 2024: 62%)<br>• Very fragmented market after the top 2, with no other traditional<br>bank having market share over 3%<br>• BWB’s YoY in-market deposit growth exceeded MSA growth for<br>the 12th consecutive year<br>• BWB has a local banking advantage with only 4 of the top 10<br>banks headquartered in MN<br>1 Source: S&P Capital IQ (data as of June 30th of each year)<br>Rank Bank HQ Branches<br>Deposits<br>($M)<br>Market<br>Share<br>1 Wells Fargo & Co. CA 100 $ 79,407 49.80%<br>2 U.S. Bancorp MN 100 $ 43,088 27.02%<br>3 Ameriprise Financial Inc. MN 1 $ 5,107 3.20%<br>4 TCF Financial Corp. MN 102 $ 4,992 3.13%<br>5 Bank of Montreal CAN 34 $ 2,760 1.73%<br>6 Bremer Financial Corp. MN 30 $ 2,205 1.38%<br>7 Associated Banc-Corp WI 28 $ 1,395 0.87%<br>8 Klein Financial Inc. MN 18 $ 1,129 0.71%<br>9 Anchor Bancorp Inc. MN 15 $ 1,126 0.71%<br>10 Central Bancshares Inc. MN 16 $ 732 0.46%<br>1 7 Bridgewater Bancshares, Inc. M N 2 $ 398 0.25%<br>Top 10 $ 141,941 89.01%<br>MSA Total $ 159,467 |
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| History of Robust Organic Asset Growth<br>13<br>$1,184<br>$76 $929<br>$1,260<br>$1,617<br>$1,974<br>$2,269<br>$2,927<br>$3,478<br>$4,346<br>$4,612 $4,692<br>2015 2016 2017 2018 2019 2020 2021 2022 2023 3Q24<br>Organic Acquired Assets<br>Proven ability to consistently generate<br>robust annual asset growth<br>primarily in the Twin Cities market<br>Asset growth has primarily<br>been organic, with the exception of one<br>small bank acquisition in 2016<br>Dollars in millions<br>Ongoing evaluation of potential<br>M&A opportunities to complement<br>organic growth strategy<br>Announced acquisition of<br>First Minnetonka City Bank in 3Q24;<br>expected to close in 4Q24 |
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| Strategic Benefits of Proposed Acquisition<br>of First Minnetonka City Bank (FMCB)<br>14 1 Source: S&P Capital IQ (data as of June 30, 2024)<br>2 As of September 30, 2024<br>Adds High Quality Bank<br>With Complementary<br>Strengths<br>• Reduces CRE concentration by adding a well-diversified loan portfolio focused on 1-4 family and leases<br>• Diversifies the revenue mix by adding incremental fee income via an investment advisory platform<br>• Fills in pure-play Twin Cities branch footprint by adding two Minnetonka branch locations<br>• Pro forma deposit market share ranks #9 in the Twin Cities1<br>Enhances Deposit Base<br>and Liquidity Profile<br>• Improves the deposit mix by adding a low-cost, granular core deposit base<br>• Enhances the liquidity profile by adding a balance sheet with a loan-to-deposit ratio of 60%2<br>• Creates balance sheet optionality to put liquidity to work and/or pay down higher cost debt<br>Low Risk<br>Transaction<br>• Small, in-market acquisition of an established franchise with a 60-year history and strong cultural fit<br>• Leverages the recent scaling of our Enterprise Risk Management function<br>• Streamlined integration as both banks run on the same core banking platform<br>• Comprehensive due diligence and loan review processes<br>Financially<br>Compelling<br>• Estimated EPS accretion of 15% in 2025 with a tangible book value earnback period < 3 years<br>• Incremental operational efficiencies with expected cost savings of 30% in 2025 and 50% in 2026<br>• Estimated internal rate of return of 24% |
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| Cash<br>3.9%<br>Securities<br>39.0%<br>Loans<br>53.6%<br>Other<br>3.5%<br>$241<br>Million<br>First Minnetonka City Bank –<br>A Classic Minnesota Community Bank<br>15<br>First Minnetonka City Bank<br>• Headquarters: Minnetonka, MN<br>• Year Established: 1964<br>• Branches: 2 Full-Service Retail Branches<br>• YoY loan growth: 1.9%<br>• Loan yield: 6.19%<br>• CRE / RBC: 8%<br>• NOO CRE exposure: $2.1M<br>• 37% of the loan portfolio<br>matures over the next 3 years<br>Franchise Highlights<br>• Wide range of commercial, small business and consumer banking<br>services, including retirement, employee benefits and investment<br>advisory<br>• Attractive low-cost, granular deposit base with a low loan-to-deposit<br>ratio<br>• Strong asset quality including YTD net charge-offs/average loans of<br>0.10% and NPAs/assets of 0.03%<br>• Superior 5-Star Bauer rating1<br>3Q24 Financial Highlights<br>$241M<br>Total Assets<br>2.52%<br>Net Interest Margin<br>16.8%<br>Noninterest Income /<br>Revenue<br>60%<br>Loan-to-Deposit Ratio<br>1.68%<br>Cost of Funds<br>0.03%<br>Nonperforming Assets /<br>Assets<br>3Q24 Asset Composition<br>1-4 Fam<br>38.9%<br>Leases<br>35.1%<br>CRE<br>15.3%<br>C&I<br>8.9%<br>Consumer<br>1.3% Multifamily<br>0.1% Other<br>0.4%<br>$129<br>Million<br>Asset Mix Loan Mix<br>• High quality securities portfolio<br>with over 80% rated AAA<br>• No held-to-maturity securities<br>1 Source: Bauer Financial |
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| FMCB’s High Quality Deposit Base<br>Enhances Liquidity Profile<br>16<br>Noninterest-Bearing<br>Transaction<br>22.9%<br>Interest-Bearing<br>Transaction<br>18.6%<br>Savings<br>& MM<br>37.0%<br>Time<br>21.5%<br>$215<br>Million<br>FMCB 3Q24 Deposit Composition FMCB’s Low-Cost, Granular Core Deposit Base (3Q24)<br>Acquisition and Enhanced Liquidity Profile Create Balance Sheet Optionality for BWB<br>1.59%<br>Cost of<br>Deposits<br>95.6%<br>Core<br>Deposits1<br>22.9%<br>Noninterest-Bearing Deposits<br>No<br>Brokered<br>Deposits<br>68%<br>Deposits Below<br>$250K<br>~9,000<br>Deposit<br>Clients<br>~$4K<br>Median Account<br>Balance<br>$108M<br>Deposits<br>per Branch<br>~15 Yrs<br>Average Age<br>of Account<br>1 Total deposits less brokered deposits and certificates of deposit greater than $250,000<br>Accelerate<br>Loan Growth<br>Pay Off Higher Cost<br>Wholesale Borrowings<br>Retain Elevated<br>Liquidity Position<br>Reposition Balance<br>Sheet via FMCB<br>Securities Sale<br>60%<br>Loan-to-Deposit<br>Ratio |
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| Moderated Pace of Loan Growth<br>in the Current Environment<br>17<br>$3,722 $3,724 $3,784 $3,800<br>$3,686<br>3Q23 4Q23 1Q24 2Q24 3Q24<br>Dollars in millions<br>$2,326<br>$2,819<br>$3,569 $3,724 $3,686<br>2020 2021 2022 2023 3Q24<br>....loan growth has moderated recently due to the higher interest rate environment, increased competition and elevated payoffs<br>• 3Q24 loan balances decreased $16.2M<br>• YTD loan balances decreased $38.3M<br>• YTD loan balances impacted by elevated payoffs, up 42% from 2023 YTD<br>• Loan growth outlook drivers:<br>• Loan demand – growing pipelines and strong demand, aided by recent<br>interest rate cut<br>• Market and economic conditions – focused on profitable growth and strong<br>asset quality as increased competition puts pressure on new loan yields<br>• Pace of loan payoffs and paydowns – expect elevated payoff levels to<br>continue in the near-term<br>• Pace of core deposit growth – continue to align loan growth with<br>core deposit growth over time<br>While unique catalysts have created robust loan growth opportunities over the past several years…<br>• Strong brand presence and relationships in the market allow us to get in front of<br>high-quality clients and deals<br>• Operating in a competitive “sweet spot” in the Twin Cities – financing larger deals<br>than community banks, but under the radar of the larger banks<br>• M&A-related market disruption resulted in client and banker acquisition<br>opportunities<br>• Expansion of talented lending and treasury management teams |
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| Class A<br>40%<br>Class B<br>16%<br>Class C 41%<br>Construction<br>3%<br>Strong Diversification Within<br>Key Loan Portfolios<br>18<br>Size<br>YoY Growth<br>Go-to-Market<br>Strategy<br>Competitors<br>Growth Outlook<br>Key Stats<br>Portfolio<br>Diversification<br>Multifamily CRE Nonowner Occupied Construction & Development C&I<br>Bank of choice in the Twin Cities<br>market due to proven expertise and<br>differentiated service model<br>Knowledgeable lenders with<br>efficient closing processes and<br>ample capacity<br>Responsive support, simple<br>solutions and the local touch<br>entrepreneurs are looking for<br>Strong team focused on creating<br>additional client opportunities<br>JPMorgan Chase, agency lenders,<br>local banks and credit unions<br>Local banks and life insurance<br>companies Local banks Local and regional banks<br>Continued appetite given expertise<br>and market opportunities<br>Continued appetite given expertise<br>and market opportunities<br>Increased focus on expanding C&I<br>through targeted verticals<br>Portfolio run-off as deals complete<br>their construction phase<br>$3.2M<br>Avg. Loan<br>Size<br>67%<br>Weighted<br>Avg. LTV<br>100%<br>Loans with<br>Pass Rating<br>$2.2M<br>Avg. Loan<br>Size<br>59%<br>Weighted<br>Avg. LTV<br>98%<br>Loans with<br>Pass Rating<br>$583K<br>Avg. Loan<br>Size<br>0.03%<br>5-Year<br>NCOs<br>99%<br>Loans with<br>Pass Rating<br>$776K<br>Avg. Loan<br>Size<br>60%<br>Weighted<br>Avg. LTV<br>0.00%<br>5-Year<br>NCOs<br>Product<br>Type<br>Industrial<br>24%<br>Office<br>19%<br>Retail<br>16%<br>Senior<br>Housing<br>11%<br>Medical<br>Office<br>10%<br>Other<br>20%<br>Property<br>Type<br>RE, Rental<br>and<br>Leasing<br>43%<br>Constr.<br>16%<br>Manufact.<br>9%<br>Prof.<br>Services<br>8%<br>Finance &<br>Ins. 8%<br>Trade<br>3%<br>Accom. & Food<br>Service 1%<br>Other<br>12%<br>Industry<br>Residential<br>28%<br>Multifamily<br>30%<br>CRE Other<br>7%<br>Land<br>35%<br>Property<br>Type<br>Data as of September 30, 2024<br>$1,380M<br>38% of<br>portfolio $1,032M 28% of<br>portfolio $493M<br>13% of $164M portfolio<br>5% of<br>portfolio<br>0% 9% 54% 7% |
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| CRE NOO<br>28%<br>Multifamily<br>38%<br>C&D<br>5%<br>C&I<br>13%<br>CRE OO<br>5%<br>1-4 Family<br>11%<br>Consumer<br>& Other<br>0%<br>Well-Diversified Loan Portfolio<br>With Multifamily and CRE Expertise<br>19<br>CRE NOO<br>27%<br>Multifamily<br>21% C&D<br>15%<br>C&I<br>13%<br>CRE OO<br>6%<br>1-4 Family<br>18%<br>Consumer &<br>Other<br>0%<br>$0.8B<br>Evolution of Loan Mix by Type<br>2015 3Q24<br>Intentional mix shift toward Multifamily has aligned with the<br>build-out of talent and expertise in the segment,<br>and continued strong performance<br>CRE Concentration Has Trended Lower Since 2022<br>Multifamily / Bank Risk-Based Capital<br>CRE (ex. Multifamily) / Bank Risk-Based Capital<br>$3.7B<br>354% 333% 318% 304% 313%<br>266% 264% 258% 232% 209%<br>180%<br>164% 185%<br>177%<br>204%<br>190% 219% 257%<br>250%<br>240%<br>534%<br>497% 503%<br>480%<br>517%<br>456%<br>483%<br>515%<br>482%<br>449%<br>2015 2016 2017 2018 2019 2020 2021 2022 2023 3Q24 |
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| CRE Concentration Driven by a Proven,<br>Lower Risk Multifamily Portfolio<br>20<br>(0.20)%<br>0.00%<br>0.20%<br>0.40%<br>0.60%<br>0.80%<br>1.00%<br>1.20%<br>1.40%<br>Multi-family<br>CRE 1-4<br>Family<br>C&I C&D Consumer<br>(ex. cards<br>& auto)<br>Total<br>Loans<br>Last 5 Years Last 10 Years Last 15 Years Last 20 Years Last 25 Years<br>3Q24<br>240%<br>of Bank RBC<br>Multifamily<br>Traditional CRE3<br>209%<br>of Bank RBC<br>449%<br>of Bank RBC<br>Multifamily<br>Makes Up Over<br>Half of CRE<br>Concentration<br>Strong Multifamily Track Record in Stable Twin Cities Market<br>Multifamily Lending Approach in the Twin Cities<br>Multifamily Portfolio Characteristics Drive Track Record of Strong Asset Quality<br>WA LTV<br>Avg. Loan Size<br>Avg. Debt/Unit<br>NCOs (since 2005)<br>67%<br>$3.2M<br>$87K<br>$62K<br>Local Market Focus<br>Twin Cities<br>Metro<br>92%<br>Greater<br>MN<br>4%<br>Other 4%<br>Location<br>Product Type Diversification Well-Diversified<br>by Size<br>5-19<br>Units<br>11%<br>20-49<br>Units<br>25%<br>50-99<br>Units<br>29%<br>100+<br>Units<br>35%<br>Size<br>1<br>Includes formally subsidized properties (19%) and market rate properties with affordable set-asides (8%)<br>2 FDIC (data through 2Q24)<br>3<br>Includes nonowner-occupied CRE, construction and land development, and 1-4 family construction<br>• Bank of choice in the Twin Cities with expertise and differentiated<br>service model<br>• Greater tenant diversification compared to other asset classes<br>• Affordable housing makes up 27%1 of the multifamily portfolio<br>• Positive market trends with declining vacancy rates, strong<br>absorption, and reduced construction = favorable outlook for<br>occupancy and rent growth<br>• Market catalysts include relative affordability, steady population<br>growth, low unemployment, strong wages, and shortage of single-family housing<br>Low Historical Losses vs. Other Asset Classes<br>Average Historical Net Charge-Off Rates<br>(all FDIC-insured banks)2<br>Class A<br>40%<br>Class B<br>16%<br>Class C<br>41%<br>Construction<br>3%<br>Product<br>Type<br>Portfolio Balance<br>12 Mo. Maturities (fixed)<br>$1.4B<br>$204M |
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| 81-unit affordable housing property in<br>Bloomington, MN<br>Supporting Affordable Housing Initiatives<br>21 ¹ Source: Minnesota Housing Partnership, 2024 State of the State’s Housing<br>2<br>Includes formally subsidized properties (51%) and market rate properties with affordable set-asides (20%)<br>62-unit affordable housing property in<br>Columbia Heights, MN<br>• Leveraging affordable housing expertise to support communities and clients in the Twin Cities<br>and nationally<br>• $523M affordable housing portfolio as of September 30, 2024<br>• Strong market demand in the Twin Cities, driven by shortage of single-family housing<br>• Shortage of over 100,000 affordable and available homes in Minnesota1 results in low vacancy rates<br>• Government subsidy program helps to offset risk by supporting tenant rent payments and<br>increasing occupancy<br>• Prioritize market rate transactions with affordable set-asides<br>• Aligns with ESG focus on community support<br>Expertise in the High-Quality Affordable Housing Space<br>Multifamily<br>71%<br>Construction<br>1%<br>Land<br>2%<br>Non-RE<br>26%<br>$523M<br>Affordable<br>Housing<br>Mix<br>(as of 9/30/24)<br>2 |
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| Managing Office-Related Risk<br>22 1 Excludes medical office of $99 million<br>Data as of September 30, 2024<br>Percent of Total<br>Loans<br>Average Loan Size<br>5.4%<br>$2.4M<br>Weighted Average<br>LTV 61%<br>CRE NOO Office by Geography<br>Twin Cities<br>Suburban<br>51%<br>Minneapolis-St. Paul CBD<br>13%<br>Minneapolis-St. Paul Non-CBD<br>21%<br>Out-of-State<br>15%<br>$200M<br>• Majority of CRE NOO office<br>exposure in the Twin Cities suburbs<br>• Only 4 loans totaling $30M outside<br>of Minnesota, consisting of projects<br>for existing local clients<br>• Only 4 loans totaling $34M located<br>in CBDs, with one on Watch and one<br>moved to Nonaccrual in 3Q24<br>• $935K charge-off on one<br>nonaccrual CBD office loan in 3Q24;<br>property under contract and<br>expected to be sold during 4Q24<br>Well-Managed CRE NOO Office Exposure1 |
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| Core Deposit Growth Momentum<br>23 Dollars in millions<br>1 Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000<br>A track record of strong deposit growth…<br>• Strong and growing brand taking market share in the Twin Cities<br>• New client and banker acquisition opportunities due to M&A disruption<br>• Supplemented core deposits with wholesale funding to support future loan growth<br>• YTD deposit balances increased 1.3% annualized<br>• YTD core deposit1<br> balances increased 6.9% annualized and 8.5% since 1Q23<br>• Improved deposit mix in 3Q24:<br>• Noninterest bearing deposits $8M<br>• Brokered deposits $131M<br>• Time deposits $27M<br>• Core deposit growth not always linear due to nature of client base<br>• Uninsured deposits make up 25% of total deposits, down from 38% in 4Q22<br>• Loan-to-deposit ratio of 98.3%, down from 108.0% in 1Q23<br>…with a focus on growing core deposits<br>27% 30% 26% 20% 19%<br>15%<br>18% 13% 19% 22%<br>26%<br>14% 29% 30% 25% 26%<br>10% 8% 8% 9%<br>18%<br>13%<br>23% 28% 24%<br>$2,502<br>$2,946<br>$3,417<br>$3,710 $3,747<br>2020 2021 2022 2023 3Q24<br>Noninterest-Bearing Transaction Interest-Bearing Transaction<br>Savings and Money Market Time<br>Brokered<br>21% 20% 18% 18% 19%<br>21% 19% 21% 20% 22%<br>24% 25% 26% 25% 26%<br>7% 8% 9% 10% 9%<br>27% 28% 26% 27% 24%<br>$3,676 $3,710 $3,807 $3,808 $3,747<br>3Q23 4Q23 1Q24 2Q24 3Q24<br>2% YoY Growth |
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| A Spread-Based Revenue Model<br>24<br>Revenue Inflection in 2Q24<br>Dollars in thousands<br>• Spread-based revenue model with noninterest income<br>making up 6% of total revenue YTD in 2024<br>• Strong track record of revenue growth with a 7% revenue<br>CAGR since 2019<br>• Largest components of noninterest income include letter of<br>credit fees and customer service fees<br>• Lack of expense-heavy fee businesses (i.e. mortgage, wealth,<br>etc.) helps to maintain a lower efficiency ratio<br>• Ongoing evaluation of opportunities to add incremental<br>noninterest income sources moving forward<br>• Material increases to noninterest income most likely to come<br>through M&A<br>• Proposed acquisition of First Minnetonka City Bank would<br>add incremental fee income via an investment advisory<br>platform<br>Comfortable With Current Spread-Based Revenue Model<br>Net Interest Income Noninterest Income<br>$32,530 $34,095 $32,893<br>$28,567<br>$25,872 $25,421 $25,314 $24,631 $24,996 $25,599<br>$1,650<br>$1,387<br>$1,738<br>$1,943<br>$1,415 $1,726 $1,409 $1,550 $1,763 $1,522<br>$34,180<br>$35,482 $34,631<br>$30,510<br>$27,287 $27,147 $26,723 $26,181 $26,759 $27,121<br>2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 |
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| Stable NIM Supports<br>Net Interest Income Growth<br>25<br>$24,507 $24,563 $24,023 $24,229 $24,631<br>$914 $751 $608 $767 $968<br>$25,421 $25,314 $24,631 $24,996 $25,599<br>2.32%<br>2.27%<br>2.24% 2.24% 2.24%<br>3Q23 4Q23 1Q24 2Q24 3Q24<br>Net Interest Margin1<br>Net Interest Income (ex. Loan Fees)<br>Loan Fees<br>Net Interest Income and Margin Trends Net Interest Margin Drivers<br>3Q24 Net Interest Income / Net Interest Margin Commentary<br>1 Amounts calculated on a tax-equivalent basis using statutory federal tax rate of 21%<br>Dollars in thousands<br>Net Interest Income<br>• Net interest income growth driven by stable NIM and average earning<br>asset growth<br>• Higher loan fees as loan payoffs increased<br>Net Interest Margin<br>• NIM remained stable as the Fed cut interest rates late in 3Q24<br>• Well-positioned for rate cuts and a more normalized yield curve<br>• $1.4 billion of adjustable funding tied to short-term rates<br>• Loan portfolio positioned to continue repricing higher in a<br>rates-down environment |
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| 11%<br>25% 25%<br>17% 14% 9%<br>$62<br>$146 $147<br>$99 $85<br>$51<br>Less<br>Than<br>1 Year<br>1 to 2<br>Years<br>2 to 3<br>Years<br>3 to 4<br>Years<br>4 to 5<br>Years<br>5+<br>Years<br>22%<br>14% 16% 13% 15% 20%<br>$558<br>$357 $398 $330 $379<br>$508<br>Less<br>Than<br>1 Year<br>1 to 2<br>Years<br>2 to 3<br>Years<br>3 to 4<br>Years<br>4 to 5<br>Years<br>5+<br>Years<br>Loan Portfolio to Reprice Higher<br>in a Rates-Down Environment<br>26<br>Fixed,<br>69%<br>Variable,<br>15%<br>Adjustable,<br>16%<br>Loan Portfolio Mix<br>Fixed-Rate Portfolio<br>($2.5B)<br>Variable-Rate Portfolio<br>($566M)<br>Adjustable-Rate Portfolio<br>($590M)<br>Years to Maturity<br>• Large fixed-rate portfolio<br>provides support to total loan<br>yields in a rates-down<br>environment<br>• $558M of fixed-rate loans<br>maturing over the next year, with<br>a weighted average yield of<br>5.48%<br>Variable-Rate Loan Floors<br>• Small variable-rate portfolio<br>limits immediate repricing<br>pressure in a rates-down<br>environment<br>• 81% of variable-rate portfolio has<br>rate floors, with 78% of the floors<br>being above 5%<br>• 96% of variable-rate loans are<br>currently tied to SOFR or Prime<br>Adjustable-Rate<br>Repricing/Maturity Schedule<br>• Adjustable-rate loans likely to<br>reprice higher, even in a rates-down environment<br>• $62M of adjustable-rate loans<br>repricing or maturing over the<br>next year, with a weighted<br>average yield of 4.99%<br>Dollars in millions<br>WA<br>Yield 5.48% 5.04% 4.49% 4.96% 5.28% 4.23%<br>WA<br>Yield 4.99% 3.85% 4.79% 4.40% 5.49% 4.58%<br>10% 12%<br>19%<br>49%<br>10%<br>$45 $55<br>$89<br>$224<br>$44<br>Below<br>4%<br>4%-5% 5%-6% 6%-7% Above<br>7% |
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| A Highly Efficient Business Model<br>27<br>49.0%<br>42.0% 41.5%<br>53.0%<br>58.3%<br>57.5% 56.5% 56.0%<br>60.3%<br>62.2%<br>2020 2021 2022 2023 3Q24<br>YTD<br>BWB1<br>An Efficiency Ratio Consistently Below Peers<br>1 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation.<br>2<br>Includes publicly-traded banks on major exchanges with total assets between $3 billion and $10 billion as of September 30, 2024 (Source: S&P Capital IQ)<br>What Makes BWB So Efficient?<br>An Efficient Operating Culture With a CRE-Focused, Branch-Light Model<br>~2x<br>as many assets per FTE<br>employee compared to<br>the peer bank median2<br>7<br>Branches<br>(peer bank median2<br>: 39)<br>~5x<br>as many assets per<br>branch compared to<br>the peer bank median2<br>The higher cost of funds associated with a<br>branch-light model is more than offset<br>by lower overall operating expenses<br>Total Expenses to Average Earning Assets<br>(3Q24 YTD Annualized)<br>1.37%<br>2.50%<br>3.15%<br>2.34%<br>4.52%<br>4.84%<br>BWB Peer Bank Average<br>Peer Bank Median2<br>2<br>Interest Expense / Avg. Earning Assets<br>Noninterest Expense / Avg. Earning Assets |
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| Optimizing Recent Technology<br>Investments to Support Future Growth<br>28<br>Client-Facing<br>• Commercial online banking<br>upgrade completed in 2023<br>• Collaborative technology<br>tools integrated into BWB<br>Corporate Center<br>• Cybersecurity threat<br>detection and response<br>Scalable core to support growth outlook<br>Core Banking Platform<br>IT Strategy: improve client interactions, streamline processes,<br>automate activities, and embrace digital transformation<br>IT Decision-Making: driven by unconventional culture, enhancing<br>the client experience and improving organizational efficiencies<br>IT Current State<br>Loan and Deposit<br>Infrastructure<br>nCino<br>• Enhanced commercial loan<br>origination system that<br>digitizes the end-to-end<br>lending process<br>• Launched in 2022<br>Salesforce<br>• Enhanced customer<br>relationship management<br>for lending and deposit<br>opportunities<br>• Launched in 2022<br>Workflow Automation<br>and Analysis<br>ServiceNow<br>• Scalable workflow<br>automation platform to<br>enhance internal efficiencies<br>• Launched in 2020<br>Snowflake<br>• Real-time data analytics<br>and visualization to support<br>decision-making<br>• Launched in 2021<br>2024 IT Focus Areas<br>Leverage SalesForce CRM Tool<br>• 360° view of the client<br>• Activity tracking and actions plans to provide more<br>customized support<br>Retail/Small Business Online Banking Upgrade<br>• Enhanced online banking experience for retail and small<br>business clients<br>Microsoft 365 Adoption<br>• Enhance organizational efficiencies through tools that<br>support productivity, document control, and<br>collaboration |
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| Scaling Enterprise Risk Management<br>Across a Growing Organization<br>29<br>Manage and mitigate dynamic risks while enhancing shareholder value, being responsive to<br>clients, and delivering simple solutions in unconventional ways<br>BWB Risk Management<br>Philosophy<br>Enterprise Risk Management<br>Attributes in Place Today at BWB<br>• Proactively addressing top and emerging risks<br>across all risk categories<br>• Continuing to scale a risk framework aligned with<br>growth<br>• Leveraging technology to enhance processes and<br>controls while driving responsiveness<br>• Reinforcing operational and financial resilience<br>through all three lines of defense<br>• Making investments to bolster organizational<br>resiliency and third-party risk management<br>• Proactively making incremental enhancements to<br>ESG and DEI programs as well as committing to<br>recruitment and retention strategies<br>Making Investments to<br>Proactively Identify and Mitigate Emerging Risks<br>Credit<br>Concentration<br>Risk<br>Information and<br>Cybersecurity<br>Risk<br>Enterprise<br>Risk and<br>Compliance<br>Financial Risk<br>• Strong credit underwriting and administration program<br>• Proactive credit risk oversight, analytics and portfolio monitoring as well as<br>building upon the bank’s stress testing capabilities<br>• Expertise and specialization in key portfolios, including multifamily<br>• Investment in enhanced infrastructure and security protocols<br>• Proactively leverage technology to meet the evolving digital needs of clients while<br>maintaining safety and security<br>• Effective risk culture and awareness model with ongoing training initiatives and<br>tabletop simulations<br>• Focus on recruitment and retention of highly skilled risk professionals across the bank,<br>including the addition of an Information Security Officer<br>• Proactively monitoring internal and external trends to quantify changes in risk profile<br>• Maintaining compliance with evolving regulatory expectations and broadening suite of<br>products and services<br>• Monitoring and managing balance sheet growth with an eye toward economic and<br>interest rate volatility<br>• Actively monitoring, maintaining and strategically deploying liquidity while<br>developing long-term strategies for capital preservation<br>• Broadening the bank’s liquidity risk management tools through expanded digital<br>offerings and enhancements to the client experience |
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| A Strong Credit Culture<br>30<br>5-Year Peak Annual Net Charge-off Ratio<br>vs. Peers<br>5-Year Peak Nonperforming Assets2 / Assets<br>vs. Peers<br>0.03%<br>BWB Peer Bank Median1<br>0.13%<br>0.19%<br>BWB Peer Bank Median1<br>0.62%<br>1 Includes publicly-traded banks on major exchanges with total assets between $3 billion and $10 billion as of September 30, 2024 (Source: S&P Capital IQ)<br>2 Nonaccrual loans, loans 90 days past due and foreclosed assets<br>Data as of September 30, 2024<br>Asset Quality Consistently<br>Outperforms Peers<br>Consistent<br>Underwriting<br>Standards<br>Active<br>Credit Oversight<br>Experienced Banking<br>and Credit Teams<br>• Growth continues to<br>primarily be in-market<br>with nearly 80% of real<br>estate loan balances in<br>the Twin Cities market<br>• No new lending areas<br>or significant changes<br>in portfolio<br>composition –<br>continued focus on<br>multifamily expertise<br>• No individual lending<br>authorities<br>• Enhanced credit<br>concentration<br>monitoring<br>• Expanded covenant<br>testing and assess<br>repricing risk on<br>maturing loans<br>• Build-out of the credit<br>team to support loan<br>growth and credit risk<br>review<br>• Solid lender and credit<br>analyst expertise<br>across segments,<br>geographies and<br>relationships |
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| $749 $919 $269 $678<br>$8,812<br>0.02% 0.02% 0.01% 0.01%<br>0.19%<br>3Q23 4Q23 1Q24 2Q24 3Q24<br>$34,841<br>$40,020<br>$47,996 $50,494 $51,018<br>1.50% 1.42% 1.34% 1.36% 1.38%<br>2020 2021 2022 2023 3Q24<br>Credit Risk Management and Oversight<br>Driving Strong Asset Quality<br>31<br>Nonperforming Assets2<br>One central business district office loan<br>moved to nonaccrual in 3Q24<br>Allowance for Credit Losses<br>Well-reserved compared to peer median ACL/Loans of 1.11%1<br>$435<br>$(29)<br>$(276)<br>$202<br>$926<br>0.02%<br>0.00%<br>(0.01)%<br>0.01%<br>0.03%<br>2020 2021 2022 2023 3Q24<br>YTD<br>Net Charge-Offs<br>3Q24 YTD annualized NCOs of 0.03%;<br>3Q24 NCOs related to one central business district office loan<br>Net Charge-Offs % of Average Loans<br>$15,164<br>$22,641<br>$28,049<br>$35,858<br>$31,637<br>4.54% 5.45% 5.52% 6.46% 5.51%<br>2020 2021 2022 2023 3Q24<br>Substandard Loans<br>Substandard loans remain at relatively low levels<br>Substandard Loans % of Total Bank Capital<br>ACL % of Gross Loans<br>1 Includes publicly-traded banks on major exchanges with total assets between $3 billion and $10 billion as of September 30, 2024 (Source: S&P Capital IQ)<br>2 Nonaccrual loans plus loans 90 days past due and still accruing and foreclosed assets<br>Dollars in thousands<br>NPAs % of Assets |
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| High Quality Securities Portfolio<br>32<br>38% 39% 38% 34% 31%<br>22% 22% 21%<br>22% 17%<br>22%<br>22% 21%<br>23% 21%<br>18% 16%<br>17% 20% 21%<br>$553 15%<br>$604 $633 $601<br>$665<br>3Q23 4Q23 1Q24 2Q24 3Q24<br>Mortgage-Backed Securities Municipal Bonds<br>U.S. Treasuries<br>Corporate Securities<br>Securities Available for Sale Portfolio (dollars in millions)<br>AAA<br>39%<br>AA<br>29%<br>A<br>2%<br>BBB<br>14%<br>BB<br>1%<br>NR<br>15%<br>Rating Mix<br>Derivatives Portfolio Offsetting AOCI Impact (dollars in thousands)<br>$(62,216)<br>$(27,863)<br>$34,145<br>$17,217<br>$(23,766)<br>$(11,416)<br>3Q23 3Q24<br>MTM Securities MTM Derivatives Net Impact on AOCI1<br>• No held-to-maturity securities<br>• Securities portfolio average duration of 5.9 years<br>• Average securities portfolio yield of 5.01%<br>• Unrealized losses on available-for-sale securities were 6.2% of<br>stockholders’ equity<br>• AOCI / Total Risk-Based Capital of 2.0% vs. peer bank<br>median of 8.0%2<br>1 Includes the tax-effected impact of $9,583 in 3Q23 and $4,604 in 3Q24<br>2 2Q24 median for publicly-traded banks on major exchanges with total assets between $3 billion and $10 billion (Source: S&P Capital IQ)<br>Other |
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| Ample Liquidity and Borrowing Capacity<br>33 1 Excludes $146M of pledged securities at September 30, 2024<br>Dollars in millions<br>10.2% 11.5% 12.1% 11.3%<br>14.5%<br>37.6%<br>37.0% 35.5% 36.1%<br>34.2%<br>$2,181 $2,234 $2,249 $2,222<br>$2,290<br>3Q23 4Q23 1Q24 2Q24 3Q24<br>Off-Balance Sheet Liquidity as a % of Assets<br>On-Balance Sheet Liquidity as a % of Assets<br>Liquidity Position with 2.4x Coverage of Uninsured Deposits Significantly Enhanced Liquidity Position Since 2022<br>Funding Source 9/30/2024 12/31/2022 Change<br>Cash and Cash Equivalents $ 168 $ 4 8 $ 120<br>Unpledged Securities1<br> 519 549 (30)<br>FHLB Capacity 509 391 118<br>FRB Discount Window 868 158 710<br>Unsecured Lines of Credit 200 208 (8)<br>Secured Line of Credit 26 26 0<br> Total $ 2,290 $ 1,380 $ 910<br>Available Balance |
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| Steady Capital Growth Since 1Q23<br>1 34 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation<br>Capital Priorities<br>1<br>3<br>2<br>Organic Growth<br>Share Repurchases<br>M&A<br>4<br>Dividends<br>Drive profitability by supporting a proven organic loan growth engine<br>Opportunistically return capital to shareholders by buying back<br>stock based on valuation, capital levels, and other uses of capital<br>Review and evaluate M&A opportunities that complement BWB’s<br>business model<br>Have not historically paid a common stock dividend given loan<br>growth opportunities<br>8.60%<br>7.87%<br>7.57% 7.48%<br>7.23%<br>7.39%<br>7.61% 7.73% 7.72%<br>7.90%<br>8.17%<br>1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24<br>9.13%<br>8.50% 8.47% 8.40% 8.48%<br>8.72%<br>9.07% 9.16% 9.21%<br>9.41%<br>9.79%<br>1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24<br>Common Equity Tier 1 Capital Ratio<br>Tangible Common Equity Ratio1<br>Recent Capital Actions<br>• No shares of common stock repurchased during 3Q24; $15.3 million<br>remaining under current share repurchase authorization<br>• Announced the proposed acquisition of First Minnetonka City Bank on<br>August 28, 2024; expected to close in 4Q24 |
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| Near-Term Expectations<br>35<br>• Relatively flat loan balances in 4Q24 (excluding FMCB acquisition) due to continued elevated payoffs<br>• Focus on profitable growth while aligning loan growth with core deposit growth over time<br>• Target loan-to-deposit ratio between 95% and 105%<br>Balance Sheet<br>Growth<br>• Moderate NIM expansion beginning in 4Q24, dependent on pace of additional rate cuts and normalizing yield curve<br>• Closing of the FMCB acquisition to provide a NIM tailwind in 2025<br>Net Interest<br>Margin<br>• Modest decline in tangible common equity and CET1 ratios due to larger balance sheet from FMCB acquisition<br>• Ongoing evaluation of potential share repurchases based on valuation, capital levels, and other uses of capital<br>Capital<br>Levels |
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| 2024 Strategic Priorities<br>36<br>Optimize Balance Sheet for<br>Longer Term Profitable Growth<br>Continue to Gain Loan and<br>Deposit Market Share<br>Generate Incremental<br>Operational Efficiencies While<br>Investing in the Business<br>Scale ERM Function and<br>Monitor Asset Quality Risks<br>• Opportunistically gather core<br>deposits and build high quality<br>lending relationships<br>• Grow loan balances in line with<br>core deposits over time<br>• Generate more profitable growth<br>in a normalized interest rate<br>environment<br>• Expand lending focus on high<br>quality affordable housing sector<br>• Execute on new C&I initiatives<br>through targeted verticals,<br>including a network of women<br>business leaders and<br>entrepreneurial operating system<br>implementers<br>• Identify M&A opportunities and<br>potential markets that enhance<br>BWB’s overall business model<br>• Identify opportunities across all<br>functions to improve operational<br>efficiency<br>• Make proactive investments to<br>scale the business and position for<br>longer term growth<br>• Implement key IT investments,<br>including new CRM platform and<br>upgraded retail and small business<br>online banking solution<br>• Continue to focus on scaling the<br>enterprise risk management<br>function<br>• Monitor the loan portfolio for signs<br>of credit weakness, especially in<br>CRE and multifamily portfolios<br>• Ongoing covenant testing and<br>assess repricing risk on maturing<br>loans<br>YTD Progress<br>• Core deposit1 growth of 6.9%<br>annualized<br>• Announced strategic acquisition of<br>First Minnetonka City Bank<br>• C&I growth of 8.4% annualized<br>• Launched a new CRM platform to<br>enhance the client experience and<br>create new efficiencies<br>• YTD net charge-off ratio of 0.03%<br>annualized<br>• Well-reserved with allowance to<br>total loans of 1.38%<br>1 Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000 |
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| APPENDIX<br>37 |
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| Reconciliation of Non-GAAP Financial<br>Measures – Efficiency, TCE, ROATCE<br>38 Dollars in thousands<br>December 31, December 31, December 31, December 31,<br>Efficiency Ratio 2020 2021 2022 2023<br>Noninterest Expense $ 45,387 $ 48,095 $ 56,620 $ 59,320<br>Less: Amortization Intangible Assets (191) (191) (191) (100)<br>Adjusted Noninterest Expense $ 45,196 $ 47,904 $ 56,429 $ 59,220<br>Net Interest Income $ 87,964 $ 109,509 $ 129,698 $ 105,174<br>Noninterest Income 5,839 5,309 6,332 6,493<br>Less: (Gain) Loss on Sales of Securities (1,503) (750) (82) 3 3<br>Adjusted Operating Revenue $ 92,300 $ 114,068 $ 135,948 $ 111,700<br>Efficiency Ratio 49.0% 42.0% 41.5% 53.0%<br>As of and for the year ended,<br>Efficiency Ratio<br>September 30,<br>2023<br>December 31,<br>2023<br>March 31,<br>2024<br>June 30,<br>2024<br>September 30,<br>2024<br>Noninterest Expense $ 15,237 $ 15,740 $ 15,189 $ 15,539 $ 15,760 Net Income Available to Common Shareholders<br>Less: Amortization Intangible Assets (9) (9) (9) (8) (9)<br>Adjusted Noninterest Expense $ 15,228 $ 15,731 $ 15,180 $ 15,531 $ 15,751 Average Total Shareholders' Equity<br>Less: Average Preferred Stock<br>Net Interest Income $ 25,421 $ 25,314 $ 24,631 $ 24,996 $ 25,599 Average Total Common Shareholders' Equity<br>Noninterest Income 1,726 1,409 1,550 1,763 1,522 Less: Effects of Average Intangible Assets<br>Less: (Gain) Loss on Sales of Securities - 2 7 (93) (320) 2 8 Average Tangible Common Equity<br>Adjusted Operating Revenue $ 27,147 $ 26,750 $ 26,088 $ 26,439 $ 27,149 Annualized Return on Average Tangible Common Equity<br> Efficiency Ratio 56.1% 58.8% 58.2% 58.7% 58.0%<br>Tangible Common Equity &<br>Tangible Common Equity/Tangible Assets<br>September 30,<br>2023<br>December 31,<br>2023<br>March 31,<br>2024<br>June 30,<br>2024<br>September 30,<br>2024<br>Total Shareholders' Equity $ 415,960 $ 425,515 $ 433,611 $ 439,241 $ 452,200<br>Less: Preferred Stock (66,514) (66,514) (66,514) (66,514) (66,514)<br>Total Common Shareholders' Equity 349,446 359,001 367,097 372,727 385,686<br>Less: Intangible Assets (2,823) (2,814) (2,806) (2,797) (2,789)<br>Tangible Common Equity $ 346,623 $ 356,187 $ 364,291 $ 369,930 $ 382,897<br>Total Assets $ 4,557,070 $ 4,611,990 $ 4,723,109 $ 4,687,035 $ 4,691,517<br>Less: Intangible Assets (2,823) (2,814) (2,806) (2,797) (2,789)<br>Tangible Assets $ 4,554,247 $ 4,609,176 $ 4,720,303 $ 4,684,238 $ 4,688,728<br>Tangible Common Equity/Tangible Assets 7.61% 7.73% 7.72% 7.90% 8.17%<br>$ 443,077<br> (66,514)<br>$ 376,563<br> (2,794)<br>$ 373,769<br>8.16%<br>As of and for the quarter ended,<br>ROATCE<br>As of and for the quarter ended,<br>September 30,<br>2024<br>$ 7,662<br>As of and for the quarter ended, |
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| Reconciliation of Non-GAAP Financial<br>Measures – Tangible Book Value<br>39 Dollars in thousands<br>Tangible Book Value Per Share<br>December 31,<br>2016<br>March 31,<br>2017<br>June 30,<br>2017<br>September 30,<br>2017<br>December 31,<br>2017<br>March 31,<br>2018<br>June 30,<br>2018<br>September 30,<br>2018<br>December 31,<br>2018<br>March 31,<br>2019<br>Book Value Per Common Share $ 4.69 $ 4.91 $ 5.23 $ 5.43 $ 5.56 $ 6.62 $ 6.85 $ 7.01 $ 7.34 $ 7.70<br>Less: Effects of Intangible Assets (0.16) (0.16) (0.16) (0.16) (0.16) (0.13) (0.12) (0.12) (0.12) (0.12)<br>Tangible Book Value Per Common Share $ 4.53 $ 4.75 $ 5.07 $ 5.27 $ 5.40 $ 6.49 $ 6.73 $ 6.89 $ 7.22 $ 7.58<br>Total Common Shares 24,589,861 24,589,861 24,589,861 24,629,861 24,679,861 30,059,374 30,059,374 30,059,374 30,097,274 30,097,674<br>Tangible Book Value Per Share<br>June 30,<br>2019<br>September 30,<br>2019<br>December 31,<br>2019<br>March 31,<br>2020<br>June 30,<br>2020<br>September 30,<br>2020<br>December 31,<br>2020<br>March 31,<br>2021<br>June 30,<br>2021<br>September 30,<br>2021<br>Book Value Per Common Share $ 7.90 $ 8.20 $ 8.45 $ 8.61 $ 8.92 $ 9.25 $ 9.43 $ 9.92 $ 10.33 $ 10.73<br>Less: Effects of Intangible Assets (0.12) (0.12) (0.12) (0.12) (0.12) (0.12) (0.12) (0.12) (0.12) (0.11)<br>Tangible Book Value Per Common Share $ 7.78 $ 8.08 $ 8.33 $ 8.49 $ 8.80 $ 9.13 $ 9.31 $ 9.80 $ 10.21 $ 10.62<br>Total Common Shares 28,986,729 28,781,162 28,973,572 28,807,375 28,837,560 28,710,775 28,143,493 28,132,929 28,162,777 28,066,822<br>Tangible Book Value Per Share<br>December 31,<br>2021<br>March 31,<br>2022<br>June 30,<br>2022<br>September 30,<br>2022<br>December 31,<br>2022<br>March 31,<br>2023<br>June 30,<br>2023<br>September 30,<br>2023<br>December 31,<br>2023<br>March 31,<br>2024<br>Book Value Per Common Share $ 11.09 $ 11.12 $ 11.14 $ 11.44 $ 11.80 $ 12.05 $ 12.25 $ 12.47 $ 12.94 $ 13.30<br>Less: Effects of Intangible Assets (0.11) (0.11) (0.11) (0.11) (0.11) (0.10) (0.10) (0.10) (0.10) (0.10)<br>Tangible Book Value Per Common Share $ 10.98 $ 11.01 $ 11.03 $ 11.33 $ 11.69 $ 11.95 $ 12.15 $ 12.37 $ 12.84 $ 13.20<br>Total Common Shares 28,206,566 28,150,389 27,677,372 27,587,978 27,751,950 27,845,244 27,973,995 28,015,505 27,748,965 27,589,827<br>Tangible Book Value Per Share<br>June 30,<br>2024<br>September 30,<br>2024<br>Book Value Per Common Share $ 13.63 $ 14.06<br>Less: Effects of Intangible Assets (0.10) (0.10)<br>Tangible Book Value Per Common Share $ 13.53 $ 13.96<br>Total Common Shares 27,348,049 27,425,690<br>As of and for the quarter ended,<br>As of and for the quarter ended,<br>As of and for the quarter ended,<br>As of and for the quarter ended, |
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