Bridgewater Bancshares, Inc._2023 Annual Report

framework are set forth in the following tables. The Company’s and the Bank’s actual capital amounts and ratios are as of the dates indicated.

Minimum Required For Capital Adequacy

For Capital Adequacy Purposes Plus Capital Conservation Buffer

To be Well Capitalized Under Prompt Corrective Action Regulations

Actual

Purposes

(dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

Ratio

December 31, 2023 Company (Consolidated): Total Risk-based Capital. . . . $ 570,770 13.97 % $ 326,872

8.00 % $ 429,019

10.50 %

N/A N/A N/A N/A

N/A N/A N/A N/A

440,947 10.79

245,154

6.00

347,301

8.50

Tier 1 Risk-based Capital . . . Common Equity Tier 1 Capital.................. Tier 1 Leverage Ratio . . . . . . Tier 1 Risk-based Capital . . . Common Equity Tier 1 Capital.................. Tier 1 Leverage Ratio . . . . . .

374,433 440,947

9.16 9.57

183,865 184,383

4.50 4.00

286,013 184,383

7.00 4.00

Bank: Total Risk-based Capital. . . . $ 554,269 13.58 % $ 326,528

8.00 % $ 428,568

10.50 % $ 408,160

10.00 %

503,787 12.34

244,896

6.00

346,936

8.50

326,528

8.00

503,787 12.34 503,787 10.95

183,672 184,037

4.50 4.00

285,712 184,037

7.00 4.00

265,304 230,047

6.50 5.00

Minimum Required For Capital Adequacy

For Capital Adequacy Purposes Plus Capital Conservation Buffer

To be Well Capitalized Under Prompt Corrective Action Regulations

Actual

Purposes

(dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

Ratio

December 31, 2022 Company (Consolidated): Total Risk-based Capital. . . . $ 536,352 13.15 % $ 326,190

8.00 % $ 428,125

10.50 %

N/A N/A N/A N/A

N/A N/A N/A N/A

Tier 1 Risk-based Capital . . . Common Equity Tier 1 Capital.................. Tier 1 Leverage Ratio . . . . . . Tier 1 Risk-based Capital . . . Common Equity Tier 1 Capital.................. Tier 1 Leverage Ratio . . . . . .

409,092 10.03

244,643

6.00

346,577

8.50

342,578 409,092

8.40 9.55

183,482 171,368

4.50 4.00

285,417 171,368

7.00 4.00

Bank: Total Risk-based Capital. . . . $ 508,760 12.47 % $ 326,288

8.00 % $ 428,253

10.50 % $ 407,860

10.00 %

460,404 11.29

244,716

6.00

346,681

8.50

326,288

8.00

460,404 11.29 460,404 10.76

183,537 171,113

4.50 4.00

285,502 171,113

7.00 4.00

265,109 213,891

6.50

5.00 The Company and the Bank are subject to the rules of the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act. The rules require a capital conservation buffer of 2.5% that was added to the minimum requirements for capital adequacy purposes. A banking organization with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including dividend payments, stock repurchases and certain discretionary bonus payments to executive officers. At December 31, 2023, the ratios for the Company and the Bank were sufficient to meet the conservation buffer. Off-Balance Sheet Arrangements In the normal course of business, the Company enters into various transactions to meet the financing needs of clients, which, in accordance with GAAP, are not included in the consolidated balance sheets. These transactions include commitments to extend credit, standby letters of credit, and commercial letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. Most of these commitments mature within two years and the standby letters of credit are expected to expire without being drawn upon. All off-balance sheet commitments are included in the determination of the amount of risk based capital that the Company and the Bank are required to hold. The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit, standby letters of credit, and commercial letters of credit is represented by

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