Bridgewater Bancshares, Inc._2023 Annual Report

The following table presents the amortized cost and fair value of securities available for sale, by type, at December 31, 2023, 2022 and 2021:

December 31, 2023

December 31, 2022

December 31, 2021

Amortized

Fair Value

Amortized

Fair Value

Amortized

Fair

(dollars in thousands) Value U.S. Treasury Securities ............... $ — $ — $ 2,621 $ 2,580 $ 756 $ 754 SBA Securities ....................... 18,497 18,674 20,957 20,877 30,474 30,370 Cost Cost Cost

Mortgage-Backed Securities Issued or Guaranteed by U.S. Agencies (MBS): Residential Pass-Through: Guaranteed by GNMA ............ Issued by FNMA and FHLMC. . . . . . Other Residential Mortgage-Backed Securities.......................... Commercial Mortgage-Backed Securities All Other Commercial MBS ........... Total MBS ...................... Municipal Securities .................. Corporate Securities .................. Asset-Backed Securities ...............

45,256 24,319 74,832 10,811 94,237 249,455 151,512 142,098 87,054

44,188 21,687 65,617 10,292 93,531 235,315 132,524 130,605 86,986

55,200 26,159 80,299 10,993 80,268 252,919 156,506 116,871 46,623

54,441 22,960 70,184 10,345 79,854 237,784 131,354 109,827 46,191

671

702

20,649

20,363

83,394 10,646 10,203 125,563 151,665 81,925 39,867

82,271 11,138 10,063 124,537 158,369 84,480

40,852 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 648,616 $ 604,104 $ 596,497 $ 548,613 $ 430,250 $ 439,362 Loan Portfolio The Company focuses on lending to borrowers located or investing in the Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area across a diverse range of industries and property types. The Company lends primarily to commercial clients, consisting of loans secured by nonfarm, nonresidential properties, multifamily residential properties, land, and non-real estate business assets. 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 risk management 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, commercial real estate exposure limits, portfolio monitoring tools, management information systems, market reports, underwriting standards, internal and external loan review, and stress testing. Total gross loans increased $154.8 million, or 4.3%, to $3.72 billion at December 31, 2023, compared to $3.57 billion at December 31, 2022. The 1-4 family mortgage, multifamily and commercial real estate, or CRE, nonowner occupied categories contributed most significantly to the $154.8 million of loan growth. As of December 31, 2023, 1-4 family mortgage loans increased $46.9 million, or 13.2%, multifamily loans increased $81.8 million, or 6.3%, and nonowner occupied CRE loans increased $40.3 million, or 4.3%, when compared to December 31, 2022. The Bank’s pace of loan growth slowed in 2023 from historical levels as the Company actively managed the balance sheet to better align loan growth with the funding outlook and market loan demand declined due to the rising interest rate environment.

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