Bridgewater Bancshares, Inc.

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

Thank you, Cole, and good morning, everyone. Joining me on today's call are Jerry Box, Chairman and Chief Executive Officer, Joe Chabowski, President and Chief Financial Officer, and Nick Place, Chief Lending Officer. In just a few moments, we will provide an overview of our 2024 second 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'll open it up 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. Please see the forward-looking statement disclosure in the slide presentation and our 2024 second 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 June 30, 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 our slide presentation and 2024 second 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 and CEO, Jerry Bach.

Thank you, Justin, and thank you, everyone, for joining us today. I'm pleased to share our second quarter results, which showed a stabilized net interest margin, a return to revenue growth, and continued superb asset quality. After seeing the pace of margin compression steadily slow over the past few quarters, we saw it hold steady in the second quarter. When coupled with average earning asset growth, we were able to drive net interest income and overall revenue growth for the first time since the third quarter of 2022. resulting in stabilization across our profitability metrics. As we have said in the past, Bridgewater is well-positioned to benefit from future interest rate cuts and a normalizing yield curve. Reaching a point of margin and overall profitability stabilization bodes well for us, especially as we witness more encouraging macro data, including the continued slowing of inflation. After strong balance sheet growth in the first quarter, loan and deposit growth were more muted in the second quarter. Loan growth was impacted by higher levels of payoffs, while deposit growth continued to be chunky given the nature of the deposit base. As expected, on a year-to-date basis, loan and deposit growth were still in the low to mid single-digit range. The team continues to participate in good conversations with new and existing clients, keeping us abreast of market opportunities. Asset quality continued to be very strong in the second quarter with no net charge-offs and very low levels of non-performing assets. Our consistent underwriting standards, active credit oversight, and experienced lending and credit teams have always been differentiators for us, and we are seeing the discipline pay off in the current environment. While CRE and multifamily continue to be a focus across the industry, And for us, given our high concentrations, we've been pleased with how these portfolios have performed. Nick will provide more insight into these portfolios and what we are seeing across the Twin Cities later in the presentation. In the meantime, I think it is worth reminding everyone that our teams are exceptionally talented at making CRE and multifamily loans. We have a lot of experience and expertise in the Twin Cities, which is why we are so comfortable with our current loan mix. Finally, this marks the 30th consecutive quarter of tangible book value per share growth, up 9.8% annualized from the first quarter. On slide four, you can see our tangible book value is up nearly 200% during those 30 quarters, compared to sub-70% median for banks with $3 to $10 billion in assets. We continue to believe this is a true differentiator for Bridgewater, and how we will provide shareholder value going forward. Before I turn it over to Joe, I wanted to highlight a few other things we've been working on. On the client front, as part of our commitment to win, retain, and grow our network, we launched a new CRM platform. This will be a game changer for us in terms of how we interact with clients while also enhancing efficiencies across the bank. Our product team is also working diligently on a new online banking solution for our retail and small business clients, ultimately enhancing the overall user experience. More to come in future updates on this client-centric initiative. Finally, our culture has always been something we take very seriously, and so we are thrilled to be recognized as a top workplace by the Star Tribune for the fifth year in a row. This further demonstrates how our unconventional corporate culture is appreciated by our diverse employee base and ultimately allowing us to attract and retain top talent. We aim to be unconventional with an inclusive and empowering culture. Just a few weeks ago, we hosted an all-team happy hour capped off with a meat raffle. All proceeds went to support local charity. It's activities like this that bring our team together and encourage collaboration at every junction. We truly have a great team. And I'll turn it over to Joe, who in addition to being our chief financial officer, we recently elevated to the role of president. Joe is well-suited for this role, and we are excited about what Joe can bring in this capacity. Joe? Thank you, Jerry.