8-K
Bridgewater Bancshares Inc (BWB)
8-K
2021-11-08
For: 2021-11-08
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UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934
November 8, 2021
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 | 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 8, 2021 |
|---|---|
| Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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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. |
| | |
| | |
| Date: November 8, 2021 | |
| | By: /s/ Jerry Baack |
| | Name: Jerry Baack |
| | Title: Chairman, Chief Executive Officer and President |
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Exhibit 99.1
| 1<br>Investor Presentation<br>Third Quarter 2021 |
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| Disclaimer<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 concerning plans,<br>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”, “could”, “predict”, “potential”,<br>“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 words of a future or forward-looking<br>nature. 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, projections,<br>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 difficult to predict and many of<br>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 forward-looking statements. Important factors that<br>could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: the negative effects of the COVID-19 pandemic, including its effects on the economic<br>environment, our clients and our operations, including due to supply chain disruptions, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic; loan concentrations in our portfolio; the<br>overall health of the local and national real estate market; our ability to successfully manage credit risk; business and economic conditions generally and in the financial services industry, nationally and within our market area; our ability to maintain an<br>adequate level of allowance for loan losses; new or revised accounting standards, including as a result of the future implementation of the Current Expected Credit Loss standard; the concentration of large loans to certain borrowers; the concentration of<br>large deposits from certain clients; our ability to successfully manage liquidity risk; our dependence on non-core funding sources and our cost of funds; our ability to raise additional capital to implement our business plan; our ability to implement our<br>growth strategy and manage costs effectively; developments and uncertainty related to the future use and availability of some reference rates, such as the London Interbank Offered Rate, as well as other alternative reference rates; the composition of<br>our senior leadership team and our ability to attract and retain key personnel; the occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents; interruptions involving our information<br>technology and telecommunications systems or third-party servicers; competition in the financial services industry; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and<br>regulatory actions against us; the impact of recent and future legislative and regulatory changes, including changes to federal and state corporate tax rates; interest rate risk; fluctuations in the values of the securities held in our securities portfolio; the<br>imposition of tariffs or other governmental policies impacting the value of products produced by our commercial borrowers; severe weather, natural disasters, wide spread disease or pandemics (including the COVID-19 pandemic), acts of war or<br>terrorism or other adverse external events; potential impairment to the goodwill we recorded in connection with our past acquisition; changes to U.S. or state tax laws, regulations and guidance, including recent proposals to increase the federal<br>corporate tax rate; 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 press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement,<br>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 from information provided by industry sources.<br>Although we believe that such information is accurate and that the sources from which it has been obtained are reliable, we cannot guarantee the accuracy of, and 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 believes these non-<br>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 comparisons with the performance of peers.<br>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 that may be presented by other companies. Reconciliations of<br>non-GAAP disclosures to the comparable GAAP measures are provided in this presentation.<br>2 |
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| The Finest Entrepreneurial Bank<br>in the Twin Cities<br>Company Overview Branch-Light Model in Attractive Twin Cities Market<br>Twin Cities MSA Name: Bridgewater Bancshares, Inc.<br>Headquarters: St. Louis Park, MN<br>Ticker: NASDAQ: BWB; BWBBP<br>Assets: $3.4 Billion<br>Loans: $2.7 Billion<br>Deposits: $2.9 Billion<br>Equity: $367.8 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<br>multifamily financing<br>• Commercial &<br>business lending<br>• Business / cash<br>management<br>• SBA lending<br>• 1-4 family rentals<br>• Personal banking<br>CRE,<br>33%<br>Multifamily,<br>32% C&D,<br>9% PPP,<br>2%<br>C&I,<br>13%<br>1-4 Family,<br>11%<br>Consumer,<br>0%<br>$2.7B<br>Business and<br>Personal Banking<br>Commercial<br>Banking Loan Balances<br>• 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 stability, growth and profitability through both the Great Recession<br>and the COVID-19 pandemic<br>• Expertise in commercial real estate with a focus in multifamily lending<br>• Organizational focus on risk management<br>• Effective operating model, with one of the lowest efficiency ratios in the<br>industry<br>Data as of September 30, 2021 3 |
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| Strategic Leadership Team with Broad<br>Skill Sets and Industry Expertise<br>4<br>Jerry Baack<br>Chairman, CEO and President<br>• Past regulator and responsible for all aspects of BWB formation<br>• Lead founder of BWB in 2005<br>• 30+ years of banking experience<br>Jeff Shellberg<br>EVP and Chief Credit Officer<br>• Holding company board member and oversees strong credit and<br>underwriting culture<br>• BWB founding member in 2005<br>• 35+ years of regulatory and banking experience<br>Nick Place<br>Chief Lending Officer<br>• Client-focused while meeting and responding to market demands<br>• Joined BWB in 2007<br>• 15 years of banking experience<br>Mark Hokanson<br>Chief Technology Officer<br>• Proactively drives technology and innovative solutions to support future<br>growth<br>• Joined BWB in 2019<br>• 14 years of financial services technology experience<br>Mary Jayne Crocker<br>EVP and Chief Operating Officer<br>• Implementation of unique corporate culture and strategic execution<br>• Joined BWB in 2005<br>• 20+ years of financial services experience<br>Joe Chybowski<br>Chief Financial Officer<br>• Strategic insights across the organization including capital and liquidity<br>management<br>• Joined BWB in 2013<br>• 12 years of banking and capital markets experience<br>Lisa Salazar<br>Chief Deposit Officer<br>• Selected as one of the Finance & Commerce Top Women in Finance in 2021<br>• Joined BWB in 2018<br>• 28 years of banking experience |
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| A Culture-Driven Organic Growth Story<br>5<br>Consistent Profitability and<br>Shareholder Return<br>Truly Unconventional Culture Highly Efficient Business Model<br>Robust Organic Growth Proactive Risk Management<br>• Entrepreneurial spirit unlike the culture at a typical<br>bank<br>• New HQ with modern, open layout promoting team<br>member and client collaboration<br>• Commitment to provide clients with quick answers,<br>responsive support and simple solutions<br>• Commitment to positively impacting the<br>communities we serve<br>• Generating robust organic loan growth is simply<br>who we are (25% CAGR1 since 2015)<br>• Commercial business expertise with a multifamily<br>focus<br>• Deposit growth keeping pace with loan growth<br>• M&A-related market disruption resulting in client<br>and banker acquisition opportunities to support<br>loan and deposit growth<br>• Branch-light model<br>• Efficient operating philosophy, including<br>networking, banking tools and in-house expertise<br>• Low levels of expenses as a percent of total assets<br>compared to peers<br>• Efficiency ratio consistently in the low 40% range,<br>among the lowest in the industry<br>• Scaling of risk management function to address<br>emerging risks and support growth plans<br>• Decisive credit culture including consistent<br>underwriting, active loan monitoring and deep<br>industry experience<br>• Well diversified loan portfolio across asset classes<br>• Superb asset quality despite the COVID-19 impact<br>>2%<br>Consistent<br>Pre-Provision Net Revenue<br>(PPNR) ROA2<br>21% Diluted EPS CAGR3<br>since 2017<br>20% Tangible book value<br>per share CAGR<br>since 2017<br>1 Excludes PPP loans<br>2 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation.<br>3 Assumes 2021 YTD diluted EPS annualized |
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| Our Core Values<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, where are you going?<br>Accurate.<br>It’s more than just an expectation.<br>6 |
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| An Award-Winning Workplace Culture<br>“I envisioned a bank where clients would<br>notice a difference, where people would be<br>challenged to grow both professionally and<br>personally and where team members would<br>be appreciated for sharing their skills and<br>rewarded for a job well done.”<br>Jerry Baack<br>Chairman, CEO and President<br>Top Workplaces<br>Star Tribune<br>2016. 2017. 2018. 2020. 2021.<br>Best Banks to Work For<br>American Banker<br>2017. 2018. 2020.<br>7<br>New Corporate Headquarters<br>Progressive Pay and Benefits<br>Health and Wellness<br>Committee<br>Diversity, Equity and Inclusion<br>Committee<br>Volunteer Paid Time Off<br>Modern, open design with an entrepreneurial spirit tailor-made for<br>team building and collaboration<br>Increased minimum wage to $20 per hour in August 2021, with<br>benefits including flexible work environment and paid parental leave<br>(mother or father)<br>Providing team member opportunities to support physical and mental<br>health, including fitness events and access to the Headspace app<br>Inclusive culture that encourages, supports and celebrates diversity of<br>team members and communities in which we serve<br>Team members receive up to 16 hours of PTO per year for volunteer<br>activities supporting the Community Reinvestment Act (CRA) |
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| A Responsive Service Model<br>Our clients can expect…<br>• Responsive support and<br>simple solutions<br>• A local bank of choice in<br>a market where many<br>local banks have left<br>• Flexibility, market<br>expertise and strong<br>network connections<br>8<br>“Bridgewater’s ability to adapt, keep pace<br>and deliver unconventional results is<br>invaluable. They are a complete joy to<br>work with.” Josh Brandsted<br>Greco<br>The “Proven Process” for Our Clients |
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| A Commitment to Our Communities<br>Our communities can expect…<br>Bridgewater’s commitment to investing, lending<br>and volunteering in ways that serve low-to-<br>moderate income segments in the Twin Cities<br>‘Outstanding’ Rating for Community Reinvestment Act Performance<br>FDIC, 2020<br>Impacting<br>the greater<br>good.<br>9 |
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| Attractive Twin Cities Market<br>Built for Business<br>10<br>#1<br>Fortune 500 companies<br>per capita (16)1<br>Large Corporate Presence<br>#1<br>State with highest<br>average credit score (720)2<br>Credit Worthy Population<br>#1<br>Best place for<br>women entrepreneurs3<br>Women Entrepreneurs<br>#5<br>State with educational<br>achievement beyond high school<br>(59% of age 25-64 population)4<br>Educated Workforce<br>#7<br>America’s top states<br>for business5<br>Business Focus<br>Top 20<br>Most populated area in the U.S.<br>with 4% projected<br>population growth by 2026<br>High Growth MSA<br>4.00%<br>1.08%<br>2.91%<br>Twin Cities Midwest US<br>$86,382<br>$64,386 $67,761<br>Twin Cities Midwest US<br>Banking industry disruption caused by M&A activity leading to<br>opportunities for client and talent acquisition in the Twin Cities<br>Banking Industry Disruption<br>2021 Median Household Income ($)⁶<br>2021 – 2026 Proj. Population Growth (%)⁶<br>1 Source: Minnesota Department of Employment and Economic Development<br>2 Source: Experian – State of Credit, 2020<br>3 Source: Minneapolis-St. Paul Smart AssetTM, 2020<br>4 Source: Lumina Foundation, A Stronger Nation – National Report, 2019<br>5 Source: CNBC, 2019<br>6 Source: S&P Capital IQ, Midwest includes ND, SD, NE, KS, MN, IA, MO, WI, IL, IN and OH |
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| History of Organic Asset Growth<br>Generation<br>11<br>$1,184<br>$76<br>$929<br>$1,260<br>$1,617<br>$1,974<br>$2,269<br>$2,927<br>$3,389<br>2015 2016 2017 2018 2019 2020 3Q21<br>Acquired Assets Organic<br>Proven ability to consistently generate<br>20%+ annual asset growth<br>primarily in the Twin Cities market<br>Asset growth has almost exclusively<br>been organic, with the exception of a<br>small bank acquisition in 2016<br>Dollars in millions<br>Anticipate the Twin Cities market can support<br>BWB growth to at least $5B in assets over the<br>next few years |
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| Robust Loan Growth Isn’t Unusual<br>at BWB, It’s Who We Are<br>12<br>$799<br>$1,001<br>$1,347<br>$1,665<br>$1,912<br>$2,188<br>$2,658<br>$138<br>$54<br>$799<br>$1,001<br>$1,347<br>$1,665<br>$1,912<br>$2,326<br>$2,712<br>2015 2016 2017 2018 2019 2020 3Q21<br>PPP Loans (ex. PPP)<br>Current BWB Loan Growth Catalysts<br>Strong brand and service model<br>in the Twin Cities market<br>Expanding referral base means getting<br>a look at the CRE deals we want<br>M&A-related market disruption<br>resulting in client and banker<br>acquisition opportunities<br>PPP-related client acquisition<br>opportunities<br>Over 40% of PPP loan originations<br>were to new clients<br>Expansion of talented lending<br>and business services teams<br>Supporting loan and deposit growth and<br>enhancing client experience<br>Expect near-term annualized loan growth (ex. PPP)<br>in the high teens range<br>Dollars in millions<br>Manageable competition in the<br>Twin Cities market<br>Limited number of mid-cap banks<br>competing for deals |
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| Well-Diversified Loan Portfolio With a<br>Commercial Focus<br>13<br>CRE NOO<br>29%<br>Multifamily<br>32%<br>C&D<br>9%<br>1-4 Family<br>11%<br>CRE OO<br>4%<br>C&I<br>13%<br>PPP<br>2%<br>Consumer &<br>Other 0%<br>$2.7B<br>CRE NOO<br>27%<br>Multifamily<br>21% C&D<br>15%<br>1-4 Family<br>18%<br>CRE OO<br>6%<br>C&I<br>13%<br>Consumer &<br>Other 0%<br>$0.8B<br>Evolution of Loan Mix by Type<br>2015 3Q21<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>354% 333% 318% 304% 313% 266% 261%<br>180% 164% 185% 177% 204%<br>190% 216%<br>534% 497% 503% 480% 517%<br>456% 477%<br>2015 2016 2017 2018 2019 2020 3Q21<br>Track Record of Successfully Managing CRE Portfolio<br>Above 300% of Bank Capital<br>Multifamily / Bank Risk-Based Capital<br>CRE (ex. Multifamily) / Bank Risk-Based Capital<br>• Remain comfortable with current CRE concentration levels<br>• Declining CRE concentration (ex. Multifamily) now below 300% of bank capital<br>• View Multifamily separate from traditional CRE given its lower risk profile<br>• Low weighted average debt per unit of less than $120K<br>• No net charge-offs over the past five years<br>• Only $62K of net charge-offs since inception<br>Ability to consistently supplement the capital stack with<br>capital raises to support continued CRE growth |
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| Well-Positioned for Continued Growth<br>Opportunities Across Key Portfolios<br>14<br>5-19<br>Units<br>15%<br>20-49<br>Units<br>26%<br>50-99<br>Units<br>30%<br>100+<br>Units<br>29%<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 C&I Construction & Development<br>$865M 32% of<br>portfolio $786M 29% of<br>portfolio $350M 13% of<br>portfolio $257M 9% of<br>portfolio<br>48% 19% 22% 46%<br>Bank of choice in the Twin Cities<br>market due to proven expertise and<br>service model<br>Knowledgeable lenders with efficient<br>closing processes and ample capacity<br>Responsive support, simple solutions<br>and the local touch entrepreneurs<br>are looking for<br>Loan advances increasing following<br>build-out of team over the past years<br>JPMorgan Chase, agency lenders,<br>local banks and credit unions Local banks, life insurance companies Local banks Local banks<br>Continued appetite given expertise<br>and market opportunities<br>Strong market fundamentals and<br>recent hires drive market share gains<br>Growth due to recent hires with goal<br>to add loan diversification over time<br>Growth to continue as recent projects<br>fund over 12-24 months<br>$2.5M<br>Avg. Loan<br>Size<br>64%<br>Weighted<br>Avg. LTV<br>100%<br>Loans with<br>Pass Rating<br>$2.1M<br>Avg. Loan<br>Size<br>61%<br>Weighted<br>Avg. LTV<br>96%<br>Loans with<br>Pass Rating<br>$460K<br>Avg. Loan<br>Size<br>0.03%<br>5-Year<br>NCOs<br>97%<br>Loans with<br>Pass Rating<br>$750K<br>Avg. Loan<br>Size<br>61%<br>Weighted<br>Avg. LTV<br>0.00%<br>5-Year<br>NCOs<br>Unit<br>Type<br>Office<br>27%<br>Retail 21% Industrial<br>27%<br>Senior<br>Housing<br>9%<br>Hotel 3%<br>Resta<br>urant<br>3% Other<br>10%<br>Property<br>Type<br>RE<br>Rental<br>and<br>Leasing<br>38%<br>Constr.<br>15%<br>Manufact.<br>15%<br>Finance<br>& Ins.<br>11%<br>Prof.<br>Services<br>5%<br>Accom. &<br>Food Service<br>5%<br>Trade<br>4% Other<br>7%<br>Industry<br>Residential<br>24%<br>Multifamily<br>40%<br>CRE Other<br>12%<br>Land<br>24%<br>Property<br>Type<br>Data as of September 30, 2021 |
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| Deposit Market Share Momentum<br>in the Twin Cities Continues<br>15<br>Total Deposits – Minneapolis/St. Paul MSA<br>2012 2021<br>Rank Bank HQ Branches<br>Deposits<br>($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>17 Bridgewater Bancshares, Inc. MN 2 398 $ 0.25%<br>Top 10 141,941 $ 89.01%<br>MSA Total 159,467 $<br>Market Ripe for Continued Market Share Gains<br>• Top-heavy deposit market (top 2 market share = 58%)<br>• Top 2 have lost market share each of the last seven years<br>(2012: 77% / 2021: 58%)<br>• Very fragmented market after the top 2 with no other bank having<br>market share over 5%<br>• Significant M&A activity in the market creating opportunities for<br>talent and client acquisition<br>• BWB has a local banking advantage with only 4 of the top 10<br>banks headquartered in MN<br>Source: S&P Capital IQ<br>Rank Bank HQ Branches<br>Deposits<br>($M)<br>Market<br>Share<br>1 U.S. Bancorp MN 84 75,920 $ 41.16%<br>2 Wells Fargo & Co. CA 91 30,141 $ 16.34%<br>3 Ameriprise Financial Inc. MN 2 8,673 $ 4.70%<br>4 Bank of Montreal CAN 26 7,849 $ 4.26%<br>5 Huntington Bancshares, Inc. OH 77 6,545 $ 3.55%<br>6 Bremer Financial Corp. MN 21 5,705 $ 3.09%<br>7 Bank of America Corp. NC 13 5,134 $ 2.78%<br>8 Old National Bancorp IN 29 3,886 $ 2.11%<br>9 Bridgewater Bancshares Inc. MN 7 2,748 $ 1.49%<br>10 State Bankshares, Inc. ND 6 2,558 $ 1.39%<br>Top 10 149,160 $ 80.87%<br>MSA Total 184,444 $ |
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| Deposit Growth With Improving Mix<br>Provides Funding for Loan Growth<br>16<br>22% 23% 22% 24% 25%<br>27%<br>30%<br>17% 13% 13% 11%<br>14%<br>15%<br>17%<br>20%<br>23%<br>28%<br>26%<br>28%<br>26%<br>28%<br>25%<br>27%<br>22%<br>20%<br>20%<br>14%<br>11%<br>16%<br>14%<br>15%<br>19%<br>13%<br>18%<br>14%<br>$762<br>$1,024<br>$1,339<br>$1,561<br>$1,823<br>$2,502<br>$2,854<br>2015 2016 2017 2018 2019 2020 3Q21<br>Interest-Bearing Transaction Noninterest-Bearing Transaction<br>Time Savings and Money Market<br>Brokered<br>Robust Deposit Growth Improving Deposit Mix1<br>• Recent deposit growth drivers include:<br>• New client and banker acquisition<br>opportunities due to M&A disruption<br>• Expansion of treasury management<br>team<br>• Deposits from PPP relationships<br>• Deposit Growth Plan – incentive<br>program for team members to refer<br>new business (~$480M of balances)<br>• Expect deposit growth to continue to fund<br>loan growth going forward<br>20% 28%<br>39% 47%<br>25% 11%<br>Transaction Deposits<br>Savings & MM<br>Time Deposits<br>Executing on Deposit Strategies to Continue to Fund Loan Growth<br>• Capitalizing on market opportunities through client and banker<br>acquisitions, including expanding commercial client relationships<br>1 Mix changes from 2015 to 3Q21<br>Dollars in thousands<br>Transaction<br>• Capitalizing on market opportunities as well, while also focusing on<br>retaining maturing CD balances through money market accounts<br>Savings and<br>Money Market<br>• Running off time deposit balances to help manage overall cost<br>of funds ($146M maturing over the next five quarters) Time<br>• Looking to efficiently supplement core deposit growth with<br>occasional low-cost brokered deposits (added $75M at 1 bp in 2Q21) Brokered<br>3Q21 Cost of Deposits<br>0.48% Down<br>39 bps YoY<br>A “branch light” model<br>further reduces the<br>overall cost of deposit<br>acquisition due to less<br>branch expense and<br>overhead |
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| Scaling Enterprise Risk Management<br>Across a Growing Organization<br>17<br>Manage and mitigate dynamic risks while enhancing shareholder value, being<br>responsive to clients, and delivering simple solutions in unconventional ways<br>BWB<br>Risk Management<br>Philosophy<br>Enterprise Risk Management<br>Attributes in Place Today at BWB<br>• Proactively addressing emerging risks across all risk<br>categories<br>• Recruited a highly experienced Chief Risk Officer to<br>scale a risk framework aligned with superior asset<br>growth<br>• Leveraging technology to enhance processes and<br>controls<br>• Reinforcing operational and financial resilience<br>through all three lines of defense<br>• Strengthening governance and oversight through an<br>enhanced cadence of risk review<br>• Making investments to bolster vendor/third-party<br>risk management program<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 Risk<br>and Compliance<br>Financial<br>Risk<br>• Exceptionally strong credit underwriting and administration program<br>• Active credit oversight and monitoring<br>• Expertise and specialization in key portfolios, including multifamily<br>• Investment in enhanced infrastructure and security protocols<br>• Partner with industry-leading service providers to aid in monitoring<br>• Effective risk culture and awareness model with ongoing training initiatives<br>• Recruitment of highly skilled risk professionals<br>• Investments in technology to enable scalable and effective CMS<br>• Formal Risk Appetite Statement aligned with BWB’s strategic objectives<br>• Solidified capital stack through sub debt and preferred stock offerings<br>• Actively monitoring and deploying excess liquidity<br>• Continued investments in CECL prep, LIBOR transition and SOX implementation |
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| Credit Risk Management Supports<br>Strong Loan Growth Momentum<br>18<br>5-Year Peak Net Charge-off Ratio vs. Peers<br>5-Year Peak Nonperforming Assets2 /<br>Assets vs. Peers<br>0.02%<br>BWB Peer Bank Median1<br>0.15%<br>0.11%<br>BWB Peer Bank Median1<br>0.56%<br>1 Includes publicly-traded banks with total assets between $2 billion and $10 billion as of September 30, 2021 (Source: S&P Capital IQ)<br>2 Nonaccrual loans, loans 90 days past due and foreclosed assets<br>Consistent Asset Quality<br>Outperformance vs. Peers<br>Why is BWB comfortable with its consistent pace of loan growth?<br>No Changes in<br>Underwriting Standards<br>Active Credit Oversight<br>and Monitoring<br>Experienced Lending<br>and Credit Teams<br>• Growth continues to<br>primarily be in-market<br>with over 85% of loans in<br>the Twin Cities market<br>• No significant changes in<br>portfolio composition –<br>continued focus on<br>multifamily expertise<br>• Growth is a function of<br>enhanced brand, market<br>disruption (M&A),<br>favorable economics and<br>expanding lending staff<br>• Credit department<br>approval required for all<br>loan transactions<br>• Full loan committee<br>approval required for<br>approximately 80% of<br>loan origination volume<br>YTD (ex. PPP)<br>• Enhanced credit<br>concentration monitoring<br>• Added 5 SVP lenders<br>since early 2020<br>averaging 15+ years of<br>experience<br>• Continued build-out of<br>the credit team,<br>including real estate due<br>diligence and internal<br>credit risk review<br>positions<br>• Solid lender and credit<br>analyst expertise across<br>segments, geographies<br>and relationships |
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| Credit Management Driving Superb<br>Asset Quality Despite COVID Impact<br>19<br>$5,888<br>$4,184<br>$2,695<br>$15,164<br>$7,742<br>3.43% 1.82% 1.01%<br>4.54% 1.93%<br>2017 2018 2019 2020 3Q21<br>Classified Assets<br>2020 increase due to two COVID-related relationships<br>Classified Assets % of Bank Tier 1 Capital + ALLL<br>$1,720<br>$581 $461<br>$775 $734 0.11%<br>0.03% 0.02% 0.03% 0.02%<br>2017 2018 2019 2020 3Q21<br>Nonperforming Assets1<br>Consistently low NPA levels<br>NPAs % of Assets<br>1 Nonaccrual loans, loans 90 days past due and foreclosed assets<br>Dollars in thousands<br>$16,502<br>$20,031 $22,526<br>$34,841<br>$38,901<br>1.59% 1.46%<br>1.22% 1.20% 1.18% 1.50% 1.43%<br>2017 2018 2019 2020 3Q21<br>Allowance for Loan Losses<br>Current reserves at appropriate levels;<br>CECL adoption coming in 2023<br>ALLL % of Gross Loans<br>$6 $46<br>$205<br>$435<br>$(60) 0.00% 0.00%<br>0.01% 0.02% 0.00%<br>2017 2018 2019 2020 3Q21<br>YTD<br>Net Charge-Offs<br>Cumulative NCOs of $632K since 2017<br>Net Charge-Offs % of Average Loans (annualized)<br>% of Gross Loans (ex. PPP)<br>Limited Exposure to COVID<br>Impacted Sectors (as of Sept. 30, 2021)<br>Hotels<br>Restaurants<br>(CRE)<br>Office<br>• Only four hotel relationships<br>($20M, or 0.7% of loans)<br>• Two relationships on the<br>Watch list<br>• Only 18 restaurant loans<br>($25M, or 0.9% of loans)<br>• All 18 loans are Pass rated<br>• 98 CRE office loans<br>($209M, or 7.7% of loans)<br>• 96 loans are Pass rated<br>• Most are small office buildings<br>less than 125K square feet |
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| Consistent Spread-Based Revenue<br>Growth Model<br>20<br>$32,695<br>$42,118<br>$54,173<br>$64,738<br>$74,132<br>$87,964<br>$107,436<br>$1,872<br>$2,567<br>$2,536<br>$2,543<br>$3,826<br>$5,839<br>$5,376<br>$34,567<br>$44,685<br>$56,709<br>$67,281<br>$77,958<br>$93,803<br>$112,812<br>2015 2016 2017 2018 2019 2020 3Q21<br>YTD<br>Noninterest Income Net Interest Income<br>1 Amounts calculated on a tax-equivalent basis using statutory federal tax rate of 21%<br>2 Excludes loan fees and PPP loan balances, interest and fees; represents a Non-GAAP financial measure, see Appendix for Non-GAAP reconciliation<br>3 Annualized<br>Dollars in thousands<br>Net<br>Interest<br>Income<br>Noninterest<br>Income<br>20%<br>YoY<br>Loan Growth<br>28%<br>YoY<br>Loan Growth<br>(ex. PPP)<br>3.54% 3.22%<br>3Q21 Core Net<br>Interest Margin2<br>3Q21 Net<br>Interest Margin1<br>• Primary revenue source<br>• Net interest income growth to be driven by robust loan<br>growth and strong net interest margin<br>• Estimated $1.9M of PPP fees yet to be recognized<br>• Comfortable with spread-based revenue stream given<br>commercial-focused business model<br>• Less exposure to volatile revenue streams such as<br>mortgage and credit cards<br>• No material exposure to overdraft revenue<br>• Noninterest income growth to be tied to client account<br>growth<br>• Ongoing review and evaluation of new potential streams of<br>noninterest income<br>3 |
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| 44.4%<br>46.5% 47.4% 49.0%<br>42.4%<br>41.1% 41.7% 43.3%<br>40.5% 41.3%<br>60.6% 60.1% 59.9%<br>57.4% 56.5%<br>2017 2018 2019 2020 3Q21 YTD<br>Among the Most Efficient Banks<br>in the Industry<br>21<br>BWB Adjusted1 BWB Reported1<br>An Efficiency Ratio Consistently Well Below Peers<br>Peer Bank Median2<br>1 Represents a Non-GAAP financial measure. see Appendix for Non-GAAP reconciliation.<br>2 Includes publicly-traded banks with total assets between $2 billion and $10 billion as of September 30, 2021 (Source: S&P Capital IQ)<br>3 3Q21 YTD annualized<br>What Makes BWB So Efficient?<br>Efficient<br>Operating Culture<br>~2x<br>as many assets per FTE<br>employee compared to<br>the peer bank median2<br>1.53%<br>NIE/average assets3<br>(peer bank median: 2.15%)<br>7<br>Branches<br>~4x<br>as many assets per<br>branch compared to the<br>peer bank median2<br>Lower compensation and occupancy expenses as a<br>percent of average assets compared to peers<br>Branch-Light<br>Service Model<br>Branch-light model allows key investments in<br>technology while maintaining a low efficiency ratio<br>To maintain a low<br>efficiency ratio while<br>continuing to invest<br>in the business…<br>BWB CAGR Since 2017<br>Asset Growth Revenue Growth3 NIE Growth3<br>23% 20% 19%<br>…we expect revenue and<br>expenses to continue<br>to grow as the<br>balance sheet grows |
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| Leveraging Technology to<br>Support Growth<br>22<br>Client-Facing Enhancements<br>• Modern platforms and payment<br>options for business and<br>personal clients:<br>• Commercial Center<br>• P2P<br>• A2A<br>• E signature<br>• Real time alerts<br>15%<br>YoY increase in<br>digital users<br>Infrastructure Improvements<br>• Collaborative technology tools<br>integrated into new BWB<br>Corporate Center<br>• Remote capabilities to support<br>pandemic resiliency<br>• Data center upgrades for<br>maintaining core infrastructure<br>• IT service management and<br>delivery enhancements<br>• Cyber threat detection and<br>response<br>Workforce and Collaboration<br>• Leveraging visualization and<br>analytics to support decision-<br>making processes<br>• Implementation of scalable<br>workflow automation to improve<br>efficiencies<br>• PPP technology integration –<br>highlighting the need for<br>automation<br>20%<br>YoY increase in number<br>of mobile deposits<br>Scalable core to support near-term 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>NEED:<br>PPP Case Study<br>An automated process to manage<br>workflows and track loan status<br>SOLUTION: Partnership with ServiceNow to develop a<br>loan management platform<br>• Integrated into existing workflows<br>• Real-time status updates<br>• Central tracking of customer data<br>• Less than one week from concept to<br>launch-ready<br>IMPACT:<br>• Ongoing benefits include deposit<br>product integration and client follow-up<br>efficiencies<br>• Changing how BWB is evaluating<br>future technology solutions<br>48%<br>Reduction in workload<br>per case file<br>3<br>Hours saved per day<br>due to automation |
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| Investments in Technology Continue<br>23<br>What’s Next?<br>Enhanced Commercial<br>Loan Origination Platform<br>• Launching an industry leading Commercial<br>LOS in 2022<br>• Focusing on the core strength in Commercial<br>lending and customer responsiveness<br>• Digitizing the end-to-end lending process<br>• Creating broad organizational efficiencies to<br>support overall growth<br>Core Banking<br>Enhancements<br>• Expand cloud technology adoption to<br>accelerate time to value for the business<br>• Partnership with JAM FINTOP to monitor<br>emerging trends<br>Cloud Adoption<br>and Fintech<br>Technology Spend Becoming a Larger Portion of Total Expenses<br>57%<br>48%<br>29%<br>17%<br>13%<br>12%<br>1%<br>24%<br>$415<br>$480 $495<br>$564<br>$652<br>$690<br>$753<br>$849<br>$923<br>3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21<br>1 Includes data processing and information technology and telecommunications expense<br>2 Excludes and FHLB advance prepayment fees and debt prepayment fees<br>Dollars in thousands<br>Technology expense mix shift toward increased efficiencies<br>through investments in workflow automation<br>Infrastructure Core Banking<br>Workflow Automation Security<br>4.6%<br>4.6% 5.1%<br>6.1%<br>6.7%<br>7.2%<br>6.9%<br>7.4%<br>7.3%<br>• Accelerate digital adoption and enrich the<br>client experience<br>• Enhance end-user functionality<br>• Modernize fraud and anomaly detection<br>Technology expense1 as a % of total NIE2 |
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| Proactive Capital Management<br>24<br>12.46%<br>14.55%<br>12.98%<br>14.58%<br>15.93%<br>9.49%<br>12.07%<br>11.39%<br>10.35%<br>9.47%<br>8.26%<br>11.03% 10.65%<br>8.96% 8.81%<br>2017 2018 2019 2020 3Q21<br>Total Risk-Based Capital Common Equity Tier 1 Capital<br>Capital Ratios Supported by Profitability and Capital Markets Activity<br>Tangible Common Equity to Tangible Assets1<br>1 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation.<br>Recent Capital Actions<br>3Q21<br>Issued Sub Debt<br>Redeemed Sub Debt<br>Issued Preferred Stock<br>Restarted Share Buybacks<br>Issued $30M of 3.25% Fixed-to-Floating Rate Subordinated Notes<br>Repurchased $11.3M of the $25M of 5.875% Fixed-to-Floating Rate<br>Subordinated Notes issued in 2017<br>Issued $69M of 5.875% Non-Cumulative Perpetual Preferred Stock<br>Repurchased 126,507 shares of common stock ($2.0M) at a<br>weighted average price of $16.11<br>Using net proceeds to support organic growth plans, support<br>bank level capital ratios and repurchase outstanding<br>indebtedness<br>Redeemed a portion of the higher cost sub debt with the<br>remainder becoming callable in July 2022<br>Expect to continue repurchasing stock at appropriate<br>valuations ($12.5M left under current program)<br>BWB Capital Priorities<br>1 2<br>3<br>Organic Growth Share Repurchases<br>M&A 4 Dividends<br>Ample room for growth and<br>profitability via strong organic loan<br>growth pipelines<br>Proactively return capital to<br>shareholders by buying back stock at<br>appropriate valuations<br>Review and evaluate corporate<br>development opportunities that<br>complement BWB’s business model<br>Have not historically paid a common<br>stock dividend given robust loan<br>growth opportunities |
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| Funding Source<br>Available<br>Balance<br>Cash 179 $<br>Unpledged Securities 413<br>FHLB Advances 487<br>FRB Discount Window 106<br>Unsecured Lines of Credit 208<br>Secured Line of Credit 25<br> Total 1,418 $<br>Putting Excess Liquidity to Work<br>25<br>14.3% 14.2%<br>18.3% 17.5%<br>16.5% 18.9%<br>19.8%<br>24.4%<br>$608<br>$750<br>$1,121<br>$1,418<br>2018 2019 2020 3Q21<br>Strong Liquidity Position<br>Off-Balance Sheet Liquidity as a % of Assets<br>On-Balance Sheet Liquidity as a % of Assets<br>1.44% 1.41%<br>5.49% 5.59% 3.16%<br>3.89%<br>6.99%<br>9.17%<br>2018 2019 2020 3Q21<br>Well-Managed Excess Cash in Current Environment<br>In an environment with<br>unprecedented levels of excess liquidity,<br>BWB has been able to deploy liquidity into<br>robust loan growth in 2021, instead of<br>holding it in cash<br>BWB Peer Bank Median1<br>1 Includes publicly-traded banks with total assets between $2 billion and $10 billion as of September 30, 2021 (Source: S&P Capital IQ)<br>Dollars in millions<br>106.7%<br>104.9%<br>93.0%<br>95.0%<br>2018 2019 2020 3Q21<br>Cash and Cash Equivalents / Assets Ratio<br>Recent deposit inflows have<br>lowered the loan-to-deposit ratio,<br>but we remain comfortable operating<br>at 100% or above<br>Loan-to-Deposit Ratio Below 100%<br>BWB 3Q21 cash includes<br>$97M from 3Q21 sub debt<br>and preferred stock offerings |
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| Corporate Strategy Driving<br>Above-Peer Returns and Value Creation<br>26<br>Truly Unconventional Culture<br>Highly Efficient Business Model<br>Robust Organic Growth<br>Proactive Risk Management<br>Our Culture Driven Organic Growth Story<br>Return on Average Assets<br>1.16%<br>1.51% 1.49%<br>1.24%<br>1.44%<br>0.82%<br>1.16% 1.17%<br>0.97%<br>1.27%<br>2017 2018 2019 2020 3Q21 YTD<br>BWB Adjusted1 Peer Bank Median2<br>Pre-Provision Return on Average Assets1<br>2.30% 2.20%<br>2.07% 2.09% 2.10%<br>1.62% 1.65% 1.62% 1.66% 1.61%<br>2017 2018 2019 2020 3Q21 YTD<br>BWB Peer Bank Median2<br>Return on Average Tangible Common Equity1<br>13.60% 14.15% 13.72%<br>12.75%<br>15.90%<br>9.29%<br>12.54% 12.50%<br>10.66%<br>15.09%<br>2017 2018 2019 2020 3Q21 YTD<br>BWB Adjusted1 Peer Bank Median2<br>Tangible Book Value Per Share1<br>$5.40<br>$7.22<br>$8.33 $9.31<br>$10.62<br>2017 2018 2019 2020 3Q21<br>BWB<br>1 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation.<br>2 Includes publicly-traded banks with total assets between $2 billion and $10 billion as of<br>September 30, 2021 (Source: S&P Capital IQ) |
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| 27<br>A p p e n d i x |
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| 3Q21 Earnings Highlights<br>28 1 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation.<br>• Gross loan balances up $117.8 million, or 18.0% annualized from 2Q21 (25.9% ex. PPP)<br>• Deposit balances up $133.3 million, or 19.4% annualized from 2Q21<br>• Cash build of $97.3 million, primarily due to 3Q21 sub debt and preferred stock offerings<br>• Adjusted efficiency ratio1 of 41.5%, in-line with 2Q21<br>• Total revenue of $30.1 million, up 7.9% from 2Q21, driven by $2.4 million of net interest income growth<br>• Noninterest expense up $1.8 million, or 15.3% from 2Q21 (adjusted noninterest expense1 up 10.3%)<br>• Annualized net charge-offs to average loans of 0.00%<br>• Growth-driven provision of $1.3 million, bringing allowance to total loans to 1.46% (ex. PPP)<br>• Nonperforming assets to total assets of 0.02%, in-line with 2Q21<br>• Completed $30 million subordinated debt and $69 million preferred stock offerings<br>• Tangible common equity ratio1 of 8.81%, down 29 bps from 2Q21<br>• Total risk-based capital ratio of 15.93% up 244 bps from 2Q21<br>Robust Balance Sheet<br>Growth Continues<br>Highly Efficient<br>Operating Performance<br>Superb<br>Asset Quality<br>Enhanced Capital<br>Position<br>$0.40<br>Reported<br>Diluted<br>EPS<br>Efficiency<br>Ratio1<br>Return on Avg. Tangible<br>Common Equity1<br>Return on<br>Average Assets<br>PPNR Return on Average<br>Assets1<br>$0.41<br>Adjusted1<br>1.37% 2.09% 15.47% 41.5%<br>Adjusted1 |
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| Reconciliation of Non-GAAP Financial<br>Measures – Efficiency, TCE, TBV, NIM<br>29<br>This 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<br>Company believes these non-GAAP financial measures provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. Because not all companies use the<br>same calculations for these measures, the information in this presentation may not be comparable to other similarly titled measures as calculated by other companies.<br>* Efficiency Ratio is adjusted to exclude the historic tax credit amortization and debt prepayment fees.<br>Dollars in thousands<br>Core Net Interest Margin<br>September 30,<br>2021<br>Net Interest Income (Tax-Equivalent Basis) 28,880 $<br>Less: Loan Fees (1,487)<br>Less: PPP Interest and Fees (1,753)<br> Core Net Interest Margin 25,640 $<br>Average Interest Earning Assets 3,234,301 $<br>Less: Avergage PPP Loans (76,006)<br> Core Average Interest Earning Assets 3,158,295 $<br>Core Net Interest Margin 3.22%<br>As of and for the quarter ended,<br>Efficiency Ratio 2017 2017* 2018 2018* 2019 2019* 2020 2020* YTD 3Q21 YTD 3Q21* 3Q21 3Q21*<br>Noninterest Expense 25,496 $ 25,496 $ 31,562 $ 31,562 $ 36,932 $ 36,932 $ 45,387 $ 45,387 $ 35,636 $ 35,636 $ 13,236 $ 13,236 $<br>Less: Amortization of Tax Credit Investments - (1,916) - (3,293) - (3,225) - (738) - (410) - (152)<br>Less: Debt Prepayment Fees - - - - - - - (7,043) - (582) - (582)<br>Less: Amortization Intangible Assets (191) (191) (191) (191) (191) (191) (191) (191) (143) (143) (48) (48)<br>Adjusted Noninterest Expense 25,305 $ 23,389 $ 31,371 $ 28,078 $ 36,741 $ 33,516 $ 45,196 $ 37,415 $ 35,493 $ 34,501 $ 13,188 $ 12,454 $<br>Net Interest Income 54,173 $ 54,173 $ 64,738 $ 64,738 $ 74,132 $ 74,132 $ 87,964 $ 87,964 $ 80,356 $ 80,356 $ 28,673 $ 28,673 $<br>Noninterest Income 2,536 2,536 2,543 2,543 3,826 3,826 5,839 5,839 4,021 4,021 1,410 1,410<br>Less: (Gain) Loss on Sales of Securities 250 250 125 125 (516) (516) (1,503) (1,503) (750) (750) (48) (48)<br>Adjusted Operating Revenue 56,959 $ 56,959 $ 67,406 $ 67,406 $ 77,442 $ 77,442 $ 92,300 $ 92,300 $ 83,627 $ 83,627 $ 30,035 $ 30,035 $<br>Efficiency Ratio 44.4% 41.1% 46.5% 41.7% 47.4% 43.3% 49.0% 40.5% 42.4% 41.3% 43.9% 41.5%<br>Tangible Common Equity &<br>Tangible Common Equity/Tangible<br>Assets 2017 2018 2019 2020 3Q21<br>Total Shareholders' Equity 137,162 $ 220,998 $ 244,794 $ 265,405 $ 367,803 $<br>Less: Preferred Stock - - - - (66,515)<br>Total Common Shareholders' Equity 137,162 220,998 244,794 265,405 301,288<br>Less: Intangible Assets (3,869) (3,678) (3,487) (3,296) (3,153)<br>Tangible Common Equity 133,293 $ 217,320 $ 241,307 $ 262,109 $ 298,135 $<br>Total Assets 1,616,612 $ 1,973,741 $ 2,268,830 $ 2,927,345 $ 3,389,125 $<br>Less: Intangible Assets (3,869) (3,678) (3,487) (3,296) (3,153)<br>Tangible Assets 1,612,743 $ 1,970,063 $ 2,265,343 $ 2,924,049 $ 3,385,972 $<br>Tangible Common Equity/Tangible Assets 8.26% 11.03% 10.65% 8.96% 8.81%<br>Tangible Book Value Per Share 2017 2018 2019 2020 3Q21<br>Book Value Per Common Share 5.56 $ 7.34 $ 8.45 $ 9.43 $ 10.73 $<br>Less: Effects of Intangible Assets (0.16) (0.12) (0.12) (0.12) (0.11)<br>Tangible Book Value Per Common Share 5.40 $ 7.22 $ 8.33 $ 9.31 $ 10.62 $<br>Total Common Shares 24,679,861 30,097,274 28,973,572 28,143,493 28,066,822<br>As of and for the year ended,<br>As of and for the year ended, |
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| Reconciliation of Non-GAAP Financial<br>Measures – PPNR<br>30<br>This 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<br>Company believes these non-GAAP financial measures provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. Because not all companies use the<br>same calculations for these measures, the information in this presentation may not be comparable to other similarly titled measures as calculated by other companies.<br>Dollars in thousands<br>Pre-Provision Net Revenue 2017 2018 2019 2020 YTD 3Q21 3Q21<br>Noninterest Income 2,536 $ 2,543 $ 3,826 $ 5,839 $ 4,021 $ 1,410 $<br>Less: Gain on sales of Securities 250 125 (516) (1,503) (750) (48)<br>Total Operating Noninterest Income 2,786 2,668 3,310 4,336 3,271 1,362<br>Plus: Net Interest Income 54,173 64,738 74,132 87,964 80,356 28,673<br> Net Operating Revenue 56,959 $ 67,406 $ 77,442 $ 92,300 $ 83,627 $ 30,035 $<br>Noninterest Expense 25,496 $ 31,562 $ 36,932 $ 45,387 $ 35,636 $ 13,236 $<br>Less: Amortization of Tax Credit Investments (1,916) (3,293) (3,225) (738) (410) (152)<br>Less: Debt Prepayment Fees - - - (7,043) (582) (582)<br> Total Operating Noninterest Expense 23,580 $ 28,269 $ 33,707 $ 37,606 $ 34,644 $ 12,502 $<br>Pre-Provision Net Revenue 33,379 $ 39,137 $ 43,735 $ 54,694 $ 48,983 $ 17,533 $<br> Plus:<br>Non-Operating Revenue Adjustments (250) (125) 516 1,503 750 48<br> Less:<br>Provision for Loan Losses 4,175 3,575 2,700 12,750 4,000 1,300<br>Non-Operating Expense Adjustments 1,916 3,293 3,225 7,781 992 734<br>Provision for Income Taxes 10,149 5,224 6,923 8,472 11,568 4,038<br>Net Income 16,889 $ 26,920 $ 31,403 $ 27,194 $ 33,173 $ 11,509 $<br>Average Assets 1,451,732 $ 1,777,592 $ 2,114,211 $ 2,617,579 $ 3,117,861 $ 3,332,301 $<br>Pre-Provision Net Revenue Return on Average Assets 2.30% 2.20% 2.07% 2.09% 2.10% 2.09%<br>As of and for the year ended, |
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| Reconciliation of Non-GAAP Financial<br>Measures – Diluted EPS, ROA, ROATCE<br>31<br>This 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<br>Company believes these non-GAAP financial measures provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. Because not all companies use the<br>same calculations for these measures, the information in this presentation may not be comparable to other similarly titled measures as calculated by other companies.<br>Dollars in thousands<br>2017 2018 2019 2020 YTD 3Q21 3Q21<br>Net Income 16,889 $ 26,920 $ 31,403 $ 27,194 $ 33,173 $ 11,509 $<br>Add: Debt Prepayment Fees - - - 7,043 582 582<br>Less: Tax Impact - - - (1,676) (151) (151)<br>Net Income, Excluding Impact of Debt Prepayment Fees 16,889 $ 26,920 $ 31,403 $ 32,561 $ 33,604 $ 11,940 $<br>Diluted Weighted Average Shares Outstanding 25,017,690 $ 29,436,214 $ 29,996,776 $ 29,170,220 $ 29,077,850 $ 29,110,547 $<br>Adjusted Diluted Earnings Per Common Share 0.68 $ 0.91 $ 1.05 $ 1.12 $ 1.16 $ 0.41 $<br>Average Assets 1,451,732 $ 1,777,592 $ 2,114,211 $ 2,617,579 $ 3,117,861 $<br>Adjusted Annualized ROA 1.16% 1.51% 1.49% 1.24% 1.44%<br>Average Total Shareholders' Equity 128,123 $ 194,083 $ 232,539 $ 258,736 $ 296,760 $ 330,604 $<br>Less: Average Preferred Stock - - - - (10,896) (32,332)<br>Average Total Common Shareholders' Equity 128,123 $ 194,083 $ 232,539 $ 258,736 $ 285,864 $ 298,272 $<br>Less: Effects of Average Intangible Assets (3,956) (3,772) (3,582) (3,395) (3,227) (3,180)<br>Average Tangible Common Equity 124,167 $ 190,311 $ 228,957 $ 255,341 $ 282,637 $ 295,092 $<br>Annualized Return on Average Tangiible Common Equity 13.60% 14.15% 13.72% 10.65% 15.69% 15.47%<br>Adjusted Annualized ROTCE 13.60% 14.15% 13.72% 12.75% 15.90%<br>Diluted EPS, ROA & ROATCE<br>As of and for the year ended, |
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