Bridgewater Bancshares, Inc.

Good morning and welcome to the Bridgewater Bank Shares 2024 First Quarter Earnings Call. My name is Andrea and I will be your conference operator today. All participants have been placed in listen-only mode. After Bridgewater's opening remarks, there will be a question and answer session. To ask a question, please press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. Please note that today's call is being recorded. At this time, I would like to introduce Justin Hortzman, Vice President of Investor Relations, to begin the conference call. Please go ahead.

Thank you, Andrea, and good morning, everyone. Joining me on today's call are Jerry Bach, Chairman, President, and Chief Executive Officer, Joe Schabowski, Chief Financial Officer, Jeff Shelberg, Chief Credit Officer, and Nick Place, Chief Lending Officer. In just a few moments, we will provide an overview of our 2024 first quarter financial results. We will be referencing a slide presentation that is available on the investor relations section of Bridgewater's website, investors.bridgewaterbankmn.com. Following our opening remarks, we will open the call for questions. During today's presentation, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We caution that such statements are predictions and that actual results may differ materially. We see the forward-looking statement disclosure in the slide presentation and our 2024 first quarter earnings release for more information about risks and uncertainties which may affect us. The information we will provide today is as of and for the quarter ended March 31st, 2024, and we undertake no duty to update the information. We may also disclose non-GAAP financial measures during this call. We believe certain 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 comparisons with the performance of our peers. We caution that these disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP. Please see the slide presentation and 2024 first quarter earnings release for reconciliations of non-GAAP disclosures to the comparable GAAP measures. I would now like to turn the call over to Bridgewater's Chairman, President, and CEO, Jerry Bach.

Thank you, Justin, and thank you everyone for joining us today. During the first quarter, we were pleased to see the continuation of many of the same trends we saw over the back half of 2023 as we continue to navigate the current economic environment. Most notably, business activity continued to pick up in the Twin Cities. As we mentioned last quarter, our loan pipeline increased due to rising loan demand. This translated into stronger than expected loan growth in the first quarter with balances up 6.5% annualized. Even more encouraging was the deposit growth outpaced loan growth once again, including annualized core deposit growth of 14.3%. As a result, our loan deposit ratio dropped below 100% for the first time since the first quarter of 2022. We have several initiatives in place to help drive continued core deposit growth over time. This includes investments in our treasury management team through the hiring of a new sales lead, as well as the creation of a new deposit coordinator position that will be focusing on proactive outreach. We're also continuing to see traction in our business development initiatives, including implementers of the entrepreneurial operating system and the network of women business leaders and entrepreneurs we've mentioned in the past. While market demand and business activity remain encouraging, the interest rate environment remained challenging in the first quarter as we wait for more progress on inflation and ultimately a more normalized yield curve, a scenario that would be favorable for Bridgewater. With interest rates remaining elevated, we continue to see slight net interest margin compression as expanding loan yields were offset by a slower pace of rising funding costs. Joe will provide more details in a few minutes. Expense control was another highlight of the first quarter as non-interest expense declined 3.5% from the fourth quarter. Identifying new operational efficiencies remains a bank-wide effort across the organization in 2024. These could be initiatives that help us reduce costs, get things done quicker, or eliminate tasks that no longer add value. Bridgewater has always operated very efficiently, but we continue to look for ways to take this to the next level. On the other hand, we are continuing to make investments in the business through people and technology. For example, we have selected a new online banking platform that will provide an enhanced experience for our retail and small business clients. We're also on track for implementation of a new CRM platform later this year that will allow us to provide more customized support across our client base. Asset quality was a superb once again with no net charge-offs, very low levels of non-performing assets, and increased provision due to stronger loan growth. While our loan portfolio continues to perform well, we also recognize the broader industry concerns around office and multifamily over the past several months. Jeff will share some thoughts on what we are seeing in the Twin Cities in just a few minutes. But overall, we have been pleased with the performance of these portfolios given the experience and expertise of our teams and remain bullish over the long term. We also continue to see steady tangible book value per share growth, up another 11.8% in the first quarter. This marks the 29th consecutive quarter of tangible value per share growth at Bridgewater. Turning to slide four, you can see our tangible book value is up over 190% during these 29 quarters. compared to a median of just 60% with banks between $3 and $10 billion in assets. We continue to feel that this is a true differentiator for Bridgewater and in the way we can provide shareholder value going forward. I would also mention that we continued repurchasing shares during the first quarter. We bought back nearly 194,000 shares, or $2.3 million. With that, I will turn it over to Joe. Thank you, Jerry.