Bridgewater Bancshares, Inc._2023 Annual Report

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

Securities with a carrying value of $170.7 million at December 31, 2023 were pledged to secure borrowing capacity. The securities portfolio was unencumbered at December 31, 2022. The following tables present the fair value and gross unrealized losses of securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2023 and 2022:

Less Than 12 Months

12 Months or Greater

Total

Number of

Unrealized

Unrealized

Unrealized

Holdings Fair Value

Losses

Fair Value

Losses

Fair Value

Losses

(dollars in thousands, except number of holdings) December 31, 2023 MunicipalBonds....................... Mortgage-Backed Securities . . . . . . . . . . . . . . CorporateSecurities.................... SBASecurities ........................ Asset-Backed Securities . . . . . . . . . . . . . . . . . Total Securities Available for Sale. . . . . . . . (dollars in thousands, except number of holdings) December 31, 2022 U.S. Treasury Securities . . . . . . . . . . . . . . . MunicipalBonds..................... Mortgage-Backed Securities . . . . . . . . . . . . CorporateSecurities.................. SBASecurities...................... Asset-Backed Securities . . . . . . . . . . . . . . . Total Securities Available for Sale. . . . . .

212 128 110

$ 4,052 $

(17) $ 120,527 $ (19,018) $ 124,579 $ (19,035)

35,719 14,528 1,731 39,011

(310) (756)

135,829 101,311 7,072 13,805

(16,091) (11,123)

171,548 115,839 8,803 52,816

(16,401) (11,879)

47 24

(3)

(99) (191)

(102) (425)

(234)

521

$ 95,041 $ (1,320) $ 378,544 $ (46,522) $ 473,585 $ (47,842)

Less Than 12 Months

12 Months or Greater

Total

Number of Holdings

Unrealized

Unrealized

Unrealized

Fair Value

Losses

Fair Value

Losses

Fair Value

Losses

6

$ 2,330 $ (41) $ — $ — $ 2,330 $ (41)

225 130 100

59,912 123,224 88,486 2,498 21,919

(5,321) (5,427) (5,121)

69,424 62,882 17,054 9,750 6,186

(19,893) (12,173) (1,968)

129,336 186,106 105,540 12,248 28,105

(25,214) (17,600) (7,089)

49 20

(6)

(153) (224)

(159) (620)

(396)

530

$ 298,369 $ (16,312) $ 165,296 $ (34,411) $ 463,665 $ (50,723)

Beginning January 1, 2023, the Company evaluates all securities quarterly to determine if any securities in a loss position require an allowance for credit losses on securities in accordance with ASC 326 - Measurement of Credit Losses on Financial Instruments . At December 31, 2023, 521 debt securities had unrealized losses with aggregate depreciation of approximately 9.2% from the Company’s amortized cost basis. These unrealized losses have not been recognized into income because management does not intend to sell these securities, and it is not more likely than not it will be required to sell the securities before recovery of its amortized cost basis. Furthermore, the unrealized losses are due to changes in interest rates and other market conditions and were not reflective of credit events. To make this determination, consideration is given to such factors as the credit rating of the issuer, level of credit enhancement, changes in credit ratings, market conditions such as current interest rates, any adverse conditions specific to the security, and delinquency status on contractual payments. As of December 31, 2023, there was no allowance for credit losses carried on the Company’s securities portfolio. Accrued interest receivable on securities, which is recorded within accrued interest on the balance sheet, totaled $4.9 million at December 31, 2023 and is excluded from the estimate of credit losses. At December 31, 2022, 530 debt securities had unrealized losses with aggregate depreciation of approximately 9.9% from the Company’s amortized cost basis. For periods prior to the adoption of ASC 326, management conducted a quarterly review and evaluation of its securities for other than temporary impairment. In analyzing whether unrealized losses on debt securities are other than temporary, management considers the length of time and the extent to which the fair value was less than amortized cost, whether the securities are issued by a government body or agency, whether a

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