Bridgewater Bancshares, Inc._2023 Annual Report

of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are required to be designated “watch.” The following table presents information on loan classifications at December 31, 2023. The Company had no assets classified as doubtful or loss at December 31, 2023. Total Commercial....................................................... $ 4,055 $ 16,143 $ 20,198 Construction and Land Development .................................. — 80 80 1-4FamilyConstruction............................................. — 249 249 Real Estate Mortgage: 1-4FamilyMortgage............................................. — 689 689 Multifamily .................................................... 2,916 — 2,916 CRE Owner Occupied ............................................ — 1,559 1,559 CRENonownerOccupied......................................... 19,514 17,138 36,652 Total Real Estate Mortgage Loans .................................... 22,430 19,386 41,816 Totals.......................................................... $ 26,485 $ 35,858 $ 62,343 Loans that have potential weaknesses that warranted a watchlist risk rating at December 31, 2023 totaled $26.5 million, compared to $32.3 million at December 31, 2022. Loans that warranted a substandard risk rating at December 31, 2023 totaled $35.9 million, compared to $28.0 million at December 31, 2022. Management continues to actively work with these borrowers and closely monitor substandard credits. Nonperforming Assets Nonperforming loans include loans accounted for on a nonaccrual basis and loans 90 days past due and still accruing. Nonperforming assets consist of nonperforming loans plus foreclosed assets (i.e., real or personal property acquired through foreclosure). Nonaccrual loans totaled $919,000 at December 31, 2023 and $639,000 at December 31, 2022, an increase of $280,000. There were no loans 90 days past due and still accruing as of December 31, 2023 and 2022. There were no foreclosed assets as of December 31, 2023 and 2022. Risk Category (dollars in thousands) Watch Substandard

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