Bridgewater Bank Annual Report

Maturity as of December 31, 2017

Due in One Year

More Than One Year to Five Years

More Than Five Years to Ten Years

or Less

Due After Ten Years

Weighted Average

Weighted Average

Weighted Average

Weighted Average

Fair Value

Fair Value

Fair Value

Fair Value

Yield

Yield

Yield

Yield

U.S. Treasury Securities SBA Securities . . . . . . . . . . $ —

— % $

—

— % $ 11,132

2.29 % $ 34,251

2.24 %

Mortgage-Backed Securities Issued or Guaranteed by U.S. Agencies (MBS): Residential

Pass-Through: Guaranteed by GNMA. . . . . . . . . . . . — Issued by FNMA and GHLMC. . . . . . . . . . . — Other Residential Mortgage-Backed Securities . . . . . . . . . . . — All Other Commercial MBS . . . . . . . . . . . . . . . . . — Total MBS . . . . . . . . . . — Municipal Securities . . . . . 2,008 Corporate Securities . . . . . — Total . . . . . . . . . . . . . . . . . . . $ 2,008 Commercial Mortgage-Backed Securities . . . . . . . . . . . —

—

—

—

—

— 6,940

2.27

—

—

— 678

2.16 10,594

1.38

— 838

1.69 448

2.60 27,548

2.36

— 2,593

1.74 5,526

2.34 3,629

2.75

—

—

—

—

— 1,887 2.34 50,598 4.96 84,862

3.52 2.21 4.70

— 3,431 3.07 9,513

1.73 6,652 3.93 21,937 — 5,107 3.34 % $ 44,828

—

—

5.16

—

—

3.07 % $ 12,944

3.93 % $ 169,711

3.46 %

Loan Portfolio The Company focuses on lending to borrowers located or investing in the Twin Cities MSA across a diverse range of industries and property types. The Company lends primarily to commercial customers, consisting of loans secured by nonfarm, nonresidential properties, loans secured by multifamily residential properties, construction loans, land development loans, and commercial and industrial loans. Responsive service, local decision making, and an efficient turnaround time from application to closing have been significant factors in growing the loan portfolio. The Company manages concentrations of credit exposure through a comprehensive program which implements formalized processes and procedures specifically for managing and mitigating risk within the loan portfolio. The processes and procedures include board and management oversight, CRE exposure limits, portfolio monitoring tools, management information systems, market reports, underwriting standards, a credit risk review function, and periodic stress testing to evaluate potential credit risk and the subsequent impact on capital and earnings. Total gross loans increased $317.8 million, or 23.6%, to $1.66 billion at December 31, 2018, compared to $1.35 billion at December 31, 2017. The multifamily, construction and land development, and CRE nonowner occupied categories contributed most significantly to the $317.8 million growth. As of December 31, 2018, multifamily loans increased $90.1 million, or 28.3%, construction and land development loans increased $79.5 million, or 60.8%, and nonowner occupied CRE loans increased $75.6, or 18.2%, when compared to December 31, 2017.

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