2020 Annual Report

Bridgewater Bancshares, Inc. and Subsidiaries Notes to Consolidated Financial Statements (dollars in thousands, except share data)

Less Than 12 Months

12 Months or Greater

Total

Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses Unrealized

December 31, 2019 Municipal Bonds. . . . . . . . . . . . . . . . . . . . . . . . $ 2,760 $ (23) $ 1,390 $ (13) $ 4,150 $ (36) Mortgage-Backed Securities . . . . . . . . . . . . . . 32,276 (242) 3,098 (39) 35,374 (281) Corporate Securities . . . . . . . . . . . . . . . . . . . . . 8,350 (131) — — 8,350 (131) SBA Securities . . . . . . . . . . . . . . . . . . . . . . . . . 11,907 (64) 31,036 (538) 42,943 (602) Total Securities Available for Sale . . . . . . . . $ 55,293 $ (460) $ 35,524 $ (590) $ 90,817 $ (1,050) At December 31, 2020, 150 debt securities had unrealized losses with aggregate depreciation of approximately 1.7% from the Company’s amortized cost basis. At December 31, 2019, 110 debt securities had unrealized losses with aggregate depreciation of approximately 1.1% from the Company’s amortized cost basis. These unrealized losses related principally to changes in interest rates and were not due to changes in the financial condition of the issuer, the quality of any underlying assets, or applicable credit enhancements. In analyzing whether unrealized losses on debt securities are other than temporary, management considers whether the securities are issued by a government body or agency, whether a rating agency has downgraded the securities, industry analysts’ reports, the financial condition and performance of the issuer, and the quality of any underlying assets or credit enhancements. Since management has the ability and intent to hold these debt securities for the foreseeable future, no declines were deemed to be other than temporary as of December 31, 2020. The following table presents a summary of amortized cost and estimated fair value of debt securities by the lesser of expected call date or contractual maturity as of December 31, 2020. Call date is used when a call of the debt security is expected, determined by the Company when the security has a market value above its amortized cost. Contractual maturities will differ from expected maturities for mortgage-backed, SBA securities and asset-backed securities because borrowers may have the right to call or prepay obligations without penalties.

December 31, 2020

Amortized Cost Fair Value

Due in One Year or Less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Due After One Year Through Five Years . . . . . . . . . . . . . . . . . . . . . . Due After Five Years Through 10 Years. . . . . . . . . . . . . . . . . . . . . . . Due After 10 Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,730 21,438 Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177,091 187,167 Mortgage-Backed Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123,395 124,260 SBA Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,455 40,107 Asset-Backed Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,135 39,095 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 379,076 $ 390,629 6,949 $ 6,985 58,476 60,244 92,936 98,500

As of December 31, 2020 and 2019, the securities portfolio was unencumbered.

The following table presents a summary of the proceeds from sales of securities available for sale, as well as gross gains and losses, for the years ended December 31, 2020 and 2019:

2020 2018 Proceeds From Sales of Securities . . . . . . . . . . . . . . . . . . . . . . . $ 40,862 $ 42,864 $ 24,684 Gross Gains on Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,592 774 290 Gross Losses on Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (89) (258) (415) 2019

110