Bridgewater Bancshares, Inc.

Good morning, and welcome to the Bridgewater Bank Chair's 2024 Third Quarter Earnings Call. My name is Wyatt, 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 touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, than 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.

Thank you, Wyatt, and good morning, everyone. Joining me on today's call are Jerry Bock, Chairman and Chief Executive Officer, Joe Schabowski, President and Chief Financial Officer, Nick Place, Chief Banking Officer, and Jeff Schellberg, Chief Credit Officer. In just a few moments, we will provide an overview of our 2024 third quarter financial results. We will be referencing a slide presentation that is available on the investor relations section of Bridgewater's website, investors.bridgewaterbankmad.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. Please see the forward-looking statement disclosure in our slide presentation and our 2024 third 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 September 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 third 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 to everyone for joining us this morning. We're pleased to report a solid quarter with earnings of 27 cents per share. Highlights included a second consecutive quarter of net interest income growth, ongoing net interest margin stability, strong core deposit growth, strong overall asset quality, and our previously announced acquisition of First Minnetonka Citibank. Net interest margin held steady at 2.24% for the third straight quarter. With the Fed's rate cut in September and potential for more later this year and into 2025, we're poised to start seeing margin expansion given our liability-sensitive balance sheet. Strong core deposit growth helped enhance our overall deposit mix during the quarter as we were able to push out some brokered and time deposits. We've really been pleased with the core deposit momentum we've seen going back to March of last year. On the asset side, elevated loan payoffs and competition in the market caused loan balances to decline. But higher yields and earning asset growth through cash and securities ultimately resulted in increased net interest income and total revenue growth. Asset quality continues to be one of our strengths. We didn't see an uptick in net charge-offs and non-performing loans in the third quarter, both due to one central business district office loan that we had mentioned over the last few quarters. Jeff will provide more color on this in a few minutes. But overall, we feel good about our portfolio, especially given the improving multifamily trends in the Twin Cities, such as declining vacancy rates. Turning to slide four, as you know, back in August, we announced the acquisition of First Minnetonka Citibank. This is a deal that we believe checks a lot of boxes strategically as we look at M&A. First Minnetonka Citibank brings a low cost granular core deposit base. Their loan-loaner deposit ratio will provide additional liquidity and balance sheet optionality. The transaction will also reduce our CRE concentration while adding a new income stream through the investment advisory platform. In addition, this is a small in-market transaction with low integration risk. Since the announcement, we've had really good conversations with all of the team members of First Minnetonka Citibank. Everyone is really excited about the benefits of the combination for all parties involved. We have received all required regulatory approvals and expect acquisition to close during the fourth quarter of this year. We also have integration teams in place that are collaborating regularly to actively prepare to bring the banks together. When you consider Bridgewater's recent funding trends, including strong core deposit growth, and combine it with the deposit base and liquidity that First Minnetonka City Bank brings, we feel really good about our outlook as we look to 2025. Turning to slide five, one of the parts of the Bridgewater story I'm most proud of has been our ability to consistently grow tangible book value, which was up another 3% in the third quarter, the 31st consecutive quarter of growth. We expect this streak to come to an end in the fourth quarter as we complete the acquisition, but generating consistent tangible book value growth will remain a focus for us as we move into 2025. Before I turn it over to Joe, I wanted to highlight a few recent enhancements we have made to our leadership structure. Earlier this month, Nick Place, our former chief lending officer, moved into the role of chief banking officer, where he will oversee lending, deposits, and all things revenue. In addition, Lisa Salazar has moved from her previous role of chief deposit officer to chief operating officer, where she will oversee operations, technology, and initiatives related to the organizational efficiency and client experience. We believe that these changes will propel us forward with an increased level of agility and focus. With that, I'll turn it over to Joe.