Bridgewater Bancshares, Inc._2023 Annual Report

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

The following table presents the risk category of loans by loan segment as of December 31, 2022:

December 31, 2022

(dollars in thousands) Total Commercial ............................................ $ 407,241 $ 9,477 $ 19,675 $ 436,393 Construction and Land Development ...................... 294,736 712 106 295,554 1-4 Family Construction .................................. 70,242 — — 70,242 Real Estate Mortgage: 1-4 Family Mortgage .................................... 354,401 681 392 355,474 Multifamily . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,303,468 3,270 — 1,306,738 CRE Owner Occupied ................................... 148,268 — 1,637 149,905 CRE Nonowner Occupied ................................ 922,657 18,112 6,239 947,008 Consumer and Other .................................... 8,132 — — 8,132 Totals................................................ $3,509,145 $32,252 $ 28,049 $3,569,446 On January 1, 2023, the Company adopted CECL, which added $650,000 to the total ACL. Under CECL, the Company recorded a $2.1 million provision for credit losses on loans for the year ended December 31, 2023, compared to a $7.7 million and $5.2 million provision for loan losses for the years ended December 31, 2022 and 2021, respectively, under the incurred loss method. The following table presents the activity in the allowance for credit losses, by segment, for the year ended December 31, 2023: Pass Watch Substandard

Construction and Land

CRE Owner

CRE

1- - 4 Family 1- - 4 Family

Non - owner Consumer

(dollars in thousands)

Commercial Development Construction Mortgage Multifamil y Occupied Occupied and Other Unallocated Total

Allowance for Credit Losses for Loans: Balance at January 1, 2023 ........... $ 6,501 $

3,911 $

845 $ 4,325 $ 17,459 $ 1,965 $ 12,576 $ 151 $

263 $ 47,996

Impact of Adopting CECL. . . . . . . . . . . Provision for Credit Losses for Loans . . . LoansCharged-off................ RecoveriesofLoans...............

(1,158)

(1,070) (685)

(235) (52)

(1,778)

3,318 1,440

(943)

2,869

(90)

(263)

650

— — —

2,050

225

99 —

162

780

81

— —

— —

— —

— —

— —

(44)

(224)

(180)

5

7

22

10

Balance at December 31, 2023 ........ $ 5,398 $

2,156 $

558 $ 2,651 $ 22,217 $ 1,184 $ 16,225 $ 105 $

— $ 50,494

The following table presents the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2022 and 2021, prepared using the previous GAAP incurred loss method prior to the adoption of CECL:

Construction and Land

CRE Owner

CRE

1- - 4 Family 1- - 4 Family

Non - owner Consumer

(dollars in thousands)

Commercial Development Construction Mortgage Multifamil y Occupied Occupied and Other Unallocated Total

Allowance for Loan Losses: Balance at January 1, 2021 ........... $ 5,773 $

1,679 $

812 $ 3,972 $ 9,517 $ 1,162 $ 10,991 $ 203 $

732 $ 34,841

Provision for Loan Losses . . . . . . . . . . . LoansCharged-off ................ RecoveriesofLoans............... Provision for Loan Losses . . . . . . . . . . . LoansCharged-off ................ RecoveriesofLoans...............

488

1,460

(194)

(236)

3,093

301

344

(24) (41)

(82)

5,150

(28)

— —

— —

(5)

— —

— 32

— —

— —

(74)

36

26

9

103

Balance at December 31, 2021 ......... $ 6,269 $

3,139 $

618 $ 3,757 $ 12,610 $ 1,495 $ 11,335 $ 147 $

650 $ 40,020

235

772

227

280

4,849

470

1,241

13

(387)

7,700

(13)

— —

— —

—

— —

— —

— —

(24)

— —

(37)

10

288

15

313

Balance at December 31, 2022 ......... $ 6,501 $

3,911 $

845 $ 4,325 $ 17,459 $ 1,965 $ 12,576 $ 151 $

263 $ 47,996

107