Bridgewater Bancshares, Inc._2023 Annual Report

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

The following table presents the impact of adopting CECL:

January 1, 2023

Impact of

As Reported

(dollars in thousands)

Pre-CECL Adoption CECL Adoption Under CECL

Assets: Loans Commercial .................................................. $ PaycheckProtectionProgram..................................... ConstructionandLandDevelopment............................... 1-4FamilyConstruction......................................... Real Estate Mortgage: 1-4FamilyMortgage ........................................ Multifamily................................................ CREOwnerOccupied........................................ CRENonownerOccupied..................................... ConsumerandOther............................................ Unallocated .................................................. AllowanceforCreditLossesonLoans............................... $ Liabilities: Allowance for Credit Losses on Off-balance Sheet Credit Exposures . . . . . . . $

6,500 $

(1,157) $

5,343

1

(1)

—

3,911

(1,070) (235) (1,778) 3,318 (943) 2,869

2,841

845

610

4,325 17,459 1,965 12,576

2,547 20,777 1,022 15,445

151 263

(90) (263)

61 —

47,996 $

650 $

48,646

360 $

4,850 $

5,210

In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This ASU updates guidance in Topic 326 to eliminate the accounting guidance for troubled debt restructurings, or TDRs, by creditors in Subtopic 310-40, Receivables – Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty. Additionally, the amendments to ASC 326 require that an entity disclose current period gross write offs by year of origination within the vintage disclosures, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivables by year of origination. The Company adopted this standard during the first quarter of 2023 and the adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In March 2023, the FASB issued ASU No. 2023-02, Investments Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method . These amendments allow reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. This guidance is effective for public business entities for fiscal years including interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted in any interim period. The Company reviewed its existing tax equity investment portfolios and evaluated the impact of the updated guidance on its consolidated financial statements and elected to early adopt the amendments in this ASU on a modified retrospective basis, effective as of January 1, 2023. As a result, the Company recorded a transitional adjustment of $21,000 to retained earnings. Impact of Recently Issued Accounting Standards The following ASUs have been issued by FASB and may impact the Company’s consolidated financial statements in future reporting periods. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic ASC 740) Income Taxes . The ASU improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in ASU

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