Bridgewater Bancshares, Inc. Annual Report

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

December 31, 2018 Fair Value Hierarchy

Carrying

Estimated

Amount Level 1

Level 2

Level 3 Fair Value

Financial Assets: Cash and Due From Banks. . . . . . . . . . . . . . . . . . . . . . . . $ 28,444 $ 28,444 $

— $ — $ 28,444

Bank-Owned Certificates of Deposit. . . . . . . . . . . . . . . . 3,292 Securities Available for Sale . . . . . . . . . . . . . . . . . . . . . . 253,378 17,897 235,481 — 253,378 FHLB Stock, at Cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,614 — 7,614 — 7,614 Loans, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,640,385 — 1,634,196 — 1,634,196 Accrued Interest Receivable . . . . . . . . . . . . . . . . . . . . . . 6,589 — 6,589 — 6,589 Interest Rate Swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352 — 352 — 352 Financial Liabilities: Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,560,934 $ — $ 1,560,488 $ — $ 1,560,488 Federal Funds Purchased . . . . . . . . . . . . . . . . . . . . . . . . . 18,000 — 18,000 — 18,000 Notes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 — 15,551 — 15,551 FHLB Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124,000 — 124,952 — 124,952 Subordinated Debentures . . . . . . . . . . . . . . . . . . . . . . . . . 24,630 — 25,365 — 25,365 Accrued Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . 1,806 — 1,806 — 1,806 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 values 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. 3,305 — 3,292 —

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