Bridgewater Bancshares, Inc._2023 Annual Report

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

The Company used the S&P 600 CM Bank Index as its historical volatility index. The S&P 600 CM Bank Index is an index of publicly traded small capitalization, regional, commercial banks located throughout the United States. There were 60 banks in the index ranging in market capitalization from $500 million up to $4.0 billion. The weighted average assumptions used in the model for valuing stock option grants in 2023 is as follows:

December 31, 2023

Dividend Yield ..................................... Expected Life ...................................... ExpectedVolatility.................................. Risk-FreeInterestRate...............................

— %

7 Years

36.85 %

4.21 % The following table presents a summary of the status of the Company’s outstanding stock options for the years ended December 31, 2023 and 2022:

December 31, 2023

December 31, 2022

Weighted Average

Weighted Average

Shares

Exercise Price

Shares

Exercise Price

Outstanding at Beginning of Year . . . . . . 1,913,444 $

9.35 1,768,745 $

7.67 17.50 4.33 14.77 9.35

Granted ........................... Exercised.......................... Forfeitures .........................

421,500 (305,950) (14,000)

10.84 3.15 14.63

290,000 (133,301) (12,000)

10.57 1,913,444 $

Outstanding at Period End ............ 2,014,994 $

Options Exercisable at Period End...... 1,348,744 $

9.36 1,492,069 $

7.51

For the years ended December 31, 2023, 2022 and 2021, the Company recognized compensation expense for stock options of $851,000, $1.1 million and $922,000, respectively. The following table presents information pertaining to options outstanding at December 31, 2023:

Options Outstanding

Options Exercisable

Weighted Average

Number of Options

Weighted Average Remaining Contractual Number of

Weighted Average Exercise Price

Range of Exercise Prices

Exercise Price

Life in Years

Options

$

3.00 - 3.99 7.00 - 7.99 8.00 - 8.99 10.00 - 10.99 11.00 - 11.99 12.00 - 12.99 13.00 - 13.99 17.00 - 17.99

10,000 $

3.58 7.47 8.76

1.0 3.8 6.3 9.5 8.5 5.6 4.4 8.1 6.0

10,000 $

3.58 7.47 8.76

891,966 17,500 249,000 267,500 263,528 25,000 290,500

891,966 11,250 7,500 73,000 257,278 25,000 72,750

10.63 11.15 12.90 13.22 17.50 10.57

10.08 11.29 12.91 13.22 17.50 9.36

Totals

2,014,994 $

1,348,744 $

As of December 31, 2023, there was $2.8 million of total unrecognized compensation cost related to nonvested stock options that is expected to be recognized over a weighted-average period of 3.0 years.

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