Bridgewater Bancshares, Inc._2023 Annual Report

The following tables present a summary of primary and secondary liquidity levels as of the dates indicated:

Primary Liquidity—On-Balance Sheet

December 31, 2023 December 31, 2022

(dollars in thousands) CashandCashEquivalents.............................................. $ Securities Available for Sale ............................................ Less:PledgedSecurities................................................ Total Primary Liquidity ............................................... $ Ratio of Primary Liquidity to Total Deposits ............................... Secondary Liquidity—Off-Balance Sheet Borrowing Capacity Net Secured Borrowing Capacity with the FHLB ........................... $ Net Secured Borrowing Capacity with the Federal Reserve Bank .............. Unsecured Borrowing Capacity with Correspondent Lenders. . . . . . . . . . . . . . . . . . Secured Borrowing Capacity with Correspondent Lender. . . . . . . . . . . . . . . . . . . . . Total Secondary Liquidity ............................................. $ Total Primary and Secondary Liquidity .................................. $ Ratio of Primary and Secondary Liquidity to Total Deposits ..................

96,594 $

48,090 548,613

604,104 (170,727)

—

529,971 $

596,703

14.3 %

17.5 %

498,736 $

390,898 157,827 208,000 26,250 782,975

979,448 200,000 26,250

1,704,434 $ 2,234,405 $

1,379,678

60.2 % 40.4 % During the year ended December 31, 2023, primary liquidity decreased $66.7 million due to an increase in pledged securities of $170.7 million, offset partially by a $48.5 million increase in cash and cash equivalents and a $55.5 million increase in securities available for sale. Secondary liquidity increased $916.5 million as of December 31, 2023 due to a $107.8 million increase in the borrowing capacity with the FHLB and an $821.6 million increase in the borrowing capacity with the Federal Reserve Bank, offset partially by an $8.0 million decrease in the unsecured borrowing capacity with a correspondent lender. In addition to primary liquidity, the Company generates liquidity from cash flows from the loan and securities portfolios and from the large base of core customer deposits, defined as noninterest bearing transaction, interest bearing transaction, savings, non-brokered money market accounts and non-brokered time deposits less than $250,000. At December 31, 2023, core deposits totaled approximately $2.55 billion and represented 68.7% of total deposits. These core deposits are normally less volatile, often with customer relationships tied to other products offered by the Company, which promote long-standing relationships and stable funding sources. The Company uses brokered deposits, the availability of which is uncertain and subject to competitive market forces and regulation, for liquidity and interest rate risk management purposes. At December 31, 2023, brokered deposits totaled $1.02 billion, consisting of $850.5 million of brokered time deposits and $174.0 million of non-maturity brokered money market and transaction accounts. At December 31, 2022, brokered deposits totaled $776.2 million, consisting of $591.9 million of brokered time deposits and $184.3 million of non-maturity brokered money market and transaction accounts. The Company’s liquidity policy includes guidelines for On-Balance Sheet Liquidity (a measurement of primary liquidity to total deposits plus borrowings), Total On-Balance Sheet Liquidity with Borrowing Capacity (a measurement of primary and secondary liquidity to total deposits plus borrowings), Wholesale Funding Ratio (a measurement of total wholesale funding to total deposits plus borrowings), and other guidelines developed for measuring and maintaining liquidity. As of December 31, 2023, the Company was in compliance with all established liquidity guidelines in the policy.

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