Bridgewater Bank Annual Report

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

December 31, 2017 Fair Value Hierarchy

Carrying

Estimated

Amount Level 1

Level 2

Level 3 Fair Value

Financial Assets: Cash and Due From Banks. . . . . . . . . . . . . . . . . . . . . . . . $ 23,725 $ 23,725 $

— $ — $ 23,725

Bank-Owned Certificates of Deposit. . . . . . . . . . . . . . . . Securities Available for Sale . . . . . . . . . . . . . . . . . . . . . . 229,491 FHLB Stock, at Cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,147 Loans, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,326,507 Accrued Interest Receivable . . . . . . . . . . . . . . . . . . . . . . 5,342 Interest Rate Swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344 3,072

—

3,075 —

3,075

— 229,491 — 229,491

—

5,147 —

5,147

— 1,323,495 — 1,323,495

— —

5,342 — 344 —

5,342

344

Financial Liabilities: Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,339,350 $ — $ 1,340,109 $ — $ 1,340,109 Federal Funds Purchased . . . . . . . . . . . . . . . . . . . . . . . . . 23,000 — 23,000 — 23,000 Notes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,000 — 17,024 — 17,024 FHLB Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,000 — 67,282 — 67,282 Subordinated Debentures . . . . . . . . . . . . . . . . . . . . . . . . . 24,527 — 25,090 — 25,090 Accrued Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . 1,408 — 1,408 — 1,408 The following methods and assumptions were used by the Company to estimate fair value of consolidated financial statements not previously discussed. Cash and due from banks – The carrying amount of cash and cash equivalents approximates their fair value. Bank-owned certificates of deposit – Fair values of bank-owned certificates of deposit are estimated using the discounted cash flow analysis based on current rates for similar types of deposits. FHLB stock – The carrying amount of FHLB stock approximates its fair value. Loans, Net – Fair values for loans are estimated based on discounted cash flows, using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality. Accrued interest receivable – The carrying amount of accrued interest receivable approximates its fair value since it is short term in nature and does not present anticipated credit concerns. Deposits – The fair values disclosed for demand deposits without stated maturities (interest and noninterest transaction, savings, and money market accounts) are equal to the amount payable on demand at the reporting date (their carrying amounts). Fair values for the fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits. Federal funds purchased – The carrying amount of federal funds purchased approximates the fair value. Notes payable and subordinated debentures – The fair value of the Company’s notes payable and subordinated debentures are estimated using a discounted cash flow analysis, based on the Company’s current incremental borrowing rate for similar types of borrowing arrangements.

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