Business Wire | Jul 29, 2021 07:05AM EDT

Bridgewater Bancshares, Inc. Announces Record Second Quarter 2021 Net Income of $11.0 Million, $0.38 Diluted Earnings Per Common Share

Jul. 29, 2021

ST. LOUIS PARK, Minn.--(BUSINESS WIRE)--Jul. 29, 2021--Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the parent company of Bridgewater Bank (the Bank), today announced net income of $11.0 million for the second quarter of 2021, a 3.0% increase over net income of $10.7 million for the first quarter of 2021, and a 44.7% increase over net income of $7.6 million for the second quarter of 2020. Net income per diluted common share for the second quarter of 2021 was $0.38, a 2.4% increase compared to $0.37 per diluted common share for the first quarter of 2021, and a 44.9% increase, compared to $0.26 per diluted common share for the same period in 2020.

"Bridgewater reported another quarter of record net income driven by robust organic loan growth, superb asset quality and a highly efficient business model," said Chairman, Chief Executive Officer, and President, Jerry Baack. "Our unique ability to generate profitable loan growth in the current market has been the result of client acquisition opportunities from M&A-related market disruption, the expansion of our lending teams through opportunistic hires, and our strong brand and service model in the Twin Cities. This loan growth, along with a stabilizing core net interest margin, has led to continued revenue growth, all while maintaining consistently low levels of net charge-offs and nonperforming assets. With our proven growth engine and an efficiency ratio among the lowest in the industry, we believe we are well-positioned to continue gaining market share in the attractive Twin Cities market."

Second Quarter 2021 Financial Results

Diluted Nonperforming Adjusted

ROA PPNR ROA ROE earnings assets to total efficiency ratio ^(1) per share assets ^(1)

1.43% 2.07% 15.40% $ 0.38 0.02% 41.5%

_________________________________(1) Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures"for further details.

Second Quarter 2021 Highlights

* Diluted earnings per common share were $0.38 for the second quarter of 2021, compared to $0.37 per common share for the first quarter of 2021.

* Annualized return on average assets (ROA) and annualized return on average common equity (ROE) for the second quarter of 2021 were 1.43% and 15.40%, compared to ROA and ROE of 1.47% and 15.87%, respectively, for the first quarter of 2021.

* Pre-provision net revenue (PPNR), a non-GAAP financial measure, was $15.9 million for the second quarter of 2021, an increase of 1.6%, compared to $15.6 million from the first quarter of 2021. PPNR ROA, a non-GAAP financial measure, was 2.07% for the second quarter of 2021, compared to 2.15% for the first quarter of 2021.

* Gross loans increased $168.1 million in the second quarter of 2021, or 27.8% annualized, compared to the first quarter of 2021. Gross loans, excluding Paycheck Protection Program (PPP) loans, increased $232.2 million in the second quarter of 2021, or 41.2% annualized, compared to the first quarter of 2021.

* Deposits increased $82.3 million in the second quarter of 2021, or 12.5% annualized, compared to the first quarter of 2021.

* Net interest margin was 3.52% for the second quarter of 2021, compared to 3.60% in the first quarter of 2021.

* The adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 41.5% for the second quarter of 2021, compared to 40.7% for the first quarter of 2021.

* A loan loss provision of $1.6 million was recorded in the second quarter of 2021 to support strong organic loan growth. The allowance for loan losses to total loans was 1.45% at June 30, 2021, compared to 1.48% at March 31, 2021. The allowance for loan losses to total loans, excluding PPP loans, was 1.50% at June 30, 2021, compared to 1.59% at March 31, 2021.

* Annualized net loan charge-offs (recoveries) as a percentage of average loans were 0.00% for the second quarter of 2021, compared to (0.01)% for the first quarter of 2021.

* Tangible book value per share, a non-GAAP financial measure, increased 4.3%, or $0.42, to $10.22 at June 30, 2021, compared to $9.80 at March 31, 2021.

* The Company purchased $25.0 million of bank owned life insurance policies on certain officers.

Recent Developments

On July 8, 2021, the Company announced the completion of a private placement of $30.0 million in aggregate principal amount of 3.25% fixed-to-floating rate subordinated notes due 2031. The Company intends to use the net proceeds of the private placement for general corporate purposes, including support for organic growth plans, support for bank level capital ratios and possible redemption or repurchase of currently outstanding indebtedness.

Key Financial Measures

As of and for the Three Months Ended As of and for the Six Months Ended

June 30, March 31, June 30, June 30, June 30,

2021 2021 2020 2021 2020

Per Common Share Data

Basic Earnings $ 0.39 $ 0.38 $ 0.26 $ 0.77 $ 0.52 Per Share

DilutedEarnings Per 0.38 0.37 0.26 0.75 0.51 Share

Book Value Per 10.33 9.92 8.92 10.33 8.92 Share

Tangible BookValue Per 10.22 9.80 8.80 10.22 8.80 Share ^(1)

Basic WeightedAverage Shares 28,040,762 28,017,366 28,676,441 28,029,129 28,733,968 Outstanding

DilutedWeighted 29,128,181 28,945,212 29,165,157 29,048,424 29,350,426 Average SharesOutstanding

SharesOutstanding at 28,162,777 28,132,929 28,837,560 28,162,777 28,837,560 Period End



SelectedPerformance Ratios

Return onAverage Assets 1.43 % 1.47 % 1.17 % 1.45 % 1.22 %(Annualized)

Pre-ProvisionNet RevenueReturn on 2.07 2.15 2.00 2.11 2.05 Average Assets(Annualized) ^(1)

Return onAverage Common 15.40 15.87 11.98 15.63 11.96 Equity(Annualized)

Return onAverageTangible 15.58 16.06 12.14 15.81 12.12 Common Equity(Annualized)^(1)

Yield onInterest 4.17 4.31 4.45 4.24 4.66 Earning Assets

Yield on Total 4.56 4.74 4.85 4.64 5.00 Loans, Gross

Cost ofInterest 0.96 1.04 1.58 1.00 1.70 BearingLiabilities

Cost of Total 0.54 0.59 0.99 0.56 1.12 Deposits

Net Interest 3.52 3.60 3.38 3.56 3.48 Margin ^(2)

Core NetInterest 3.31 3.34 3.22 3.33 3.29 Margin ^(1)(2)

Efficiency 42.0 41.2 48.6 41.6 46.5 Ratio^ (1)

AdjustedEfficiency 41.5 40.7 40.4 41.1 42.2 Ratio ^(1)

NoninterestExpense to 1.50 1.51 1.64 1.50 1.67 Average Assets(Annualized)

AdjustedNoninterestExpense to 1.48 1.49 1.37 1.48 1.51 Average Assets(Annualized) ^(1)

Loan to 95.3 91.9 97.8 Deposit Ratio

Core Depositsto Total 81.2 83.5 75.7 Deposits^(3)

TangibleCommon Equity 9.10 8.99 9.23 to TangibleAssets ^(1)



Capital Ratios(Bank Only) ^ (4)

Tier 1 10.57 % 10.65 % 11.36 % Leverage Ratio

Tier 1Risk-based 11.24 12.08 12.96 Capital Ratio

TotalRisk-based 12.49 13.33 14.21 Capital Ratio



Capital Ratios(Consolidated) ^ (4)

Tier 1 9.08 % 9.11 % 9.94 % Leverage Ratio

Tier 1Risk-based 9.67 10.34 11.39 Capital Ratio

TotalRisk-based 13.49 14.46 15.99 Capital Ratio

_________________________________(1)

Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.

(2)

Amounts calculated on a tax-equivalent basis using the statutory federal tax rate of 21%.

(3)

Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000.

(4)

Preliminary data. Current period subject to change prior to filings with applicable regulatory agencies.

Selected Financial Data

_________________________________(1) Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.

(2) Amounts calculated on a tax-equivalent basis using the statutory federal tax rate of 21%.

(3) Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000.

(4) Preliminary data. Current period subject to change prior to filings with applicable regulatory agencies.

Selected Financial Data

June 30, March 31, December September June 30, 31, 30,

(dollars in 2021 2021 2020 2020 2020thousands)

SelectedBalance Sheet Data

Total Assets $ 3,162,612 $ 3,072,359 $ 2,927,345 $ 2,774,564 $ 2,754,463

Total Loans, 2,594,186 2,426,123 2,326,428 2,259,228 2,193,778Gross

Allowance for 37,591 35,987 34,841 31,381 27,633Loan Losses

Goodwill andOther 3,200 3,248 3,296 3,344 3,391Intangibles



Deposits 2,720,906 2,638,654 2,501,636 2,273,044 2,242,051

Tangible Common 287,630 275,923 262,109 262,088 253,799Equity^ (1)

TotalShareholders' 290,830 279,171 265,405 265,432 257,190Equity

Average TotalAssets - 3,076,712 2,940,262 2,816,032 2,711,755 2,622,272Quarter-to-Date

Average CommonEquity - 286,311 272,729 265,716 263,195 255,109Quarter-to-Date

_________________________________(1)

Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.

_________________________________(1) Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.

For the Three Months Ended

For the Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

(dollars in thousands)

2021

2021

2020

2021

2020

Selected Income Statement Data

Interest Income

$

31,147

$

30,440

$

28,166

$

61,587

$

55,634

Interest Expense

4,859

5,045

6,824

9,904

14,190

Net Interest Income

26,288

25,395

21,342

51,683

41,444

Provision for Loan Losses

1,600

1,100

3,000

2,700

5,100

Net Interest Income after Provision for Loan Losses

24,688

24,295

18,342

48,983

36,344

Noninterest Income

1,603

1,008

1,977

2,611

3,696

Noninterest Expense

11,477

10,923

10,711

22,400

20,457

Income Before Income Taxes

14,814

14,380

9,608

29,194

19,583

Provision for Income Taxes

3,821

3,709

2,010

7,530

4,542

Net Income

$

10,993

$

10,671

$

7,598

$

21,664

$

15,041

Income Statement

Net Interest Income

Net interest income was $26.3 million for the second quarter of 2021, an increase of $893,000, or 3.5%, from $25.4 million in the first quarter of 2021, and an increase of $4.9 million, or 23.2%, from $21.3 million in the second quarter of 2020. The linked-quarter and year-over-year increases in net interest income were primarily due to growth in average interest earning assets, lower rates paid on deposits, and the recognition of PPP loan origination fees, offset partially by declining yields on loans. Average interest earning assets were $3.02 billion for the second quarter of 2021, an increase of $136.4 million, or 4.7%, from $2.88 billion for the first quarter of 2021, and an increase of $452.1 million, or 17.6%, from $2.57 billion for the second quarter of 2020. The linked-quarter increase in average interest earning assets was primarily due to robust organic growth in the loan portfolio. The year-over-year increase in average interest earning assets was primarily due to strong organic growth in the loan portfolio, as well as continued purchases of investment securities.

Net interest margin (on a fully tax-equivalent basis) for the second quarter of 2021 was 3.52%, an 8 basis point decline from 3.60% in the first quarter of 2021, and a 14 basis point increase from 3.38% in the second quarter of 2020. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and PPP balances, interest, and fees, for the second quarter of 2021 was 3.31%, a 3 basis point decline from 3.34% in the first quarter of 2021, and a 9 basis point increase from 3.22% in the second quarter of 2020.

While the origination volume of PPP loans earning 1.00% negatively impacted net interest margin, the recognition of fees associated with the originations has benefited net interest margin for each of the past three quarters. The SBA began forgiving PPP loans, which has accelerated the recognition of PPP fees starting in the fourth quarter of 2020 and continuing into the second quarter of 2021. The Company recognized $1.4 million of PPP origination fees during the second quarter of 2021, compared to $1.5 million during the first quarter of 2021. The elevated fee recognition is illustrated in the 4.75% PPP loan yield for the second quarter of 2021.

The following table summarizes PPP loan originations and net origination fees as of June 30, 2021:

For the Three Months Ended For the Six Months Ended

June 30, March June 30, June 30, June 30, 31,

(dollars in thousands) 2021 2021 2020 2021 2020

Selected Income Statement Data

Interest Income $ 31,147 $ 30,440 $ 28,166 $ 61,587 $ 55,634

Interest Expense 4,859 5,045 6,824 9,904 14,190

Net Interest Income 26,288 25,395 21,342 51,683 41,444

Provision for Loan 1,600 1,100 3,000 2,700 5,100Losses

Net Interest Incomeafter Provision for Loan 24,688 24,295 18,342 48,983 36,344Losses

Noninterest Income 1,603 1,008 1,977 2,611 3,696

Noninterest Expense 11,477 10,923 10,711 22,400 20,457

Income Before Income 14,814 14,380 9,608 29,194 19,583Taxes

Provision for Income 3,821 3,709 2,010 7,530 4,542Taxes

Net Income $ 10,993 $ 10,671 $ 7,598 $ 21,664 $ 15,041

Income Statement

Net Interest Income

Net interest income was $26.3 million for the second quarter of 2021, an increase of $893,000, or 3.5%, from $25.4 million in the first quarter of 2021, and an increase of $4.9 million, or 23.2%, from $21.3 million in the second quarter of 2020. The linked-quarter and year-over-year increases in net interest income were primarily due to growth in average interest earning assets, lower rates paid on deposits, and the recognition of PPP loan origination fees, offset partially by declining yields on loans. Average interest earning assets were $3.02 billion for the second quarter of 2021, an increase of $136.4 million, or 4.7%, from $2.88 billion for the first quarter of 2021, and an increase of $452.1 million, or 17.6%, from $2.57 billion for the second quarter of 2020. The linked-quarter increase in average interest earning assets was primarily due to robust organic growth in the loan portfolio. The year-over-year increase in average interest earning assets was primarily due to strong organic growth in the loan portfolio, as well as continued purchases of investment securities.

Net interest margin (on a fully tax-equivalent basis) for the second quarter of 2021 was 3.52%, an 8 basis point decline from 3.60% in the first quarter of 2021, and a 14 basis point increase from 3.38% in the second quarter of 2020. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and PPP balances, interest, and fees, for the second quarter of 2021 was 3.31%, a 3 basis point decline from 3.34% in the first quarter of 2021, and a 9 basis point increase from 3.22% in the second quarter of 2020.

While the origination volume of PPP loans earning 1.00% negatively impacted net interest margin, the recognition of fees associated with the originations has benefited net interest margin for each of the past three quarters. The SBA began forgiving PPP loans, which has accelerated the recognition of PPP fees starting in the fourth quarter of 2020 and continuing into the second quarter of 2021. The Company recognized $1.4 million of PPP origination fees during the second quarter of 2021, compared to $1.5 million during the first quarter of 2021. The elevated fee recognition is illustrated in the 4.75% PPP loan yield for the second quarter of 2021.

The following table summarizes PPP loan originations and net origination fees as of June 30, 2021:

Originated Outstanding Program Lifetime

Number Principal Number Principal Net Net Origination Origination

(dollars of of Feesin Loans Balance Loans Balance Generated Fees Earnedthousands)

Round One 1,200 $ 181,600 225 $ 27,184 $ 5,706 $ 5,330PPP Loans

Round Two 651 78,386 606 71,888 3,544 498PPP Loans

Totals 1,851 $ 259,986 831 $ 99,072 $ 9,250 $ 5,828

Interest income was $31.1 million for the second quarter of 2021, an increase of $707,000, or 2.3%, from $30.4 million in the first quarter of 2021, and an increase of $3.0 million, or 10.6%, from $28.2 million in the second quarter of 2020. The yield on interest earning assets (on a fully tax-equivalent basis) was 4.17% in the second quarter of 2021, compared to 4.31% in the first quarter of 2021, and 4.45% in the second quarter of 2020. The linked-quarter decrease in the yield on interest earning assets was primarily due to the historically low interest rate environment resulting in a lower loan yield and lower loan fees recognized, offset partially by $1.4 million of PPP loan origination fees. The year-over-year decline in the yield on interest earning assets was primarily due to the historically low interest rate environment resulting in lower loan and security yields.

Loan interest income and loan fees remain the primary contributing factors to the changes in yield on interest earning assets. The aggregate loan yield, excluding PPP loans, decreased to 4.54% in the second quarter of 2021, which was 18 basis points lower than 4.72% in the first quarter of 2021, and 47 basis points lower than 5.01% in the second quarter of 2020. While loan fees have maintained a relatively stable contribution to the aggregate loan yield, the historically low yield curve has resulted in a declining core yield on loans in comparison to both prior periods.

A summary of interest and fees recognized on loans, excluding PPP loans, for the periods indicated is as follows:

Three Months Ended

June 30, March December September June 30, 2021 31, 2021 31, 2020 30, 2020 2020

Interest 4.37 % 4.50 % 4.59 % 4.69 % 4.76 %

Fees 0.17 0.22 0.28 0.24 0.25

Yield on Loans, 4.54 % 4.72 % 4.87 % 4.93 % 5.01 %Excluding PPP Loans

Interest expense was $4.9 million for the second quarter of 2021, a decrease of $186,000, or 3.7%, from $5.0 million in the first quarter of 2021, and a decrease of $2.0 million, or 28.8%, from $6.8 million in the second quarter of 2020. The cost of interest bearing liabilities declined 8 basis points on a linked-quarter basis from 1.04% in the first quarter of 2021 to 0.96% in the second quarter of 2021, primarily due to lower rates paid on deposits. On a year-over-year basis, the cost of interest bearing liabilities decreased 62 basis points from 1.58% in the second quarter of 2020 to 0.96% in the second quarter of 2021, primarily due to lower rates paid on deposits, the payoff of the Company's notes payable, and the early extinguishment of $94.0 million of longer term FHLB advances, offset partially by strong growth of interest bearing deposits and additional subordinated debentures.

Interest expense on deposits was $3.5 million for the second quarter of 2021, a decrease of $159,000, or 4.3%, from $3.7 million in the first quarter of 2021, and a decrease of $1.7 million, or 32.1%, from $5.2 million in the second quarter of 2020. The cost of total deposits declined 5 basis points on a linked-quarter basis from 0.59% in the first quarter of 2021, and declined 45 basis points on a year-over-year basis from 0.99% in the second quarter of 2020, to 0.54% in the second quarter of 2021, primarily due to deposit rate cuts consistent with a lower rate environment and the downward repricing of time deposits. The Company anticipates more opportunities to lower the cost of total deposits due to continued deposit repricing as time deposits mature and the recent success of adding efficient, low-cost brokered deposits.

A summary of the Company's average balances, interest yields and rates, and net interest margin for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020 is as follows:

For the Three Months Ended

June 30, 2021 March 31, 2021 June 30, 2020

Average Interest Yield/ Average Interest Yield/ Average Interest Yield/

Balance & Fees Rate Balance & Fees Rate Balance & Fees Rate

(dollars in thousands)

Interest Earning Assets:

Cash Investments $ 88,067 $ 33 0.15 % $ 105,477 $ 34 0.13 % $ 109,073 $ 37 0.14 %

Investment Securities:

TaxableInvestment 314,049 1,647 2.10 301,680 1,723 2.32 203,559 1,304 2.58 Securities

Tax-ExemptInvestment 77,029 842 4.38 80,963 881 4.41 91,793 996 4.37 Securities^ (1)

Total Investment 391,078 2,489 2.55 382,643 2,604 2.76 295,352 2,300 3.13 Securities

PaycheckProtection 149,312 1,767 4.75 148,881 1,864 5.08 139,235 873 2.52 Program Loans ^(2)

Loans ^(1)(2) 2,384,759 27,011 4.54 2,241,038 26,074 4.72 2,013,163 25,070 5.01

Total Loans 2,534,071 28,778 4.56 2,389,919 27,938 4.74 2,152,398 25,943 4.85

Federal Home Loan 6,221 54 3.51 5,045 78 6.28 10,469 125 4.81 Bank Stock

Total Interest 3,019,437 31,354 4.17 % 2,883,084 30,654 4.31 % 2,567,292 28,405 4.45 %Earning Assets

Noninterest 57,275 57,178 54,980 Earning Assets

Total Assets $ 3,076,712 $ 2,940,262 $ 2,622,272

Interest Bearing Liabilities:

Deposits:

Interest BearingTransaction $ 421,132 $ 520 0.50 % $ 364,017 $ 422 0.47 % $ 272,565 $ 377 0.56 %Deposits

Savings and Money 764,632 940 0.49 724,104 1,008 0.56 521,313 1,327 1.02 Market Deposits

Time Deposits 332,346 1,075 1.30 344,715 1,267 1.49 388,357 2,122 2.20

Brokered Deposits 379,768 978 1.03 402,694 974 0.98 319,711 1,344 1.69

Total Interest 1,897,878 3,513 0.74 1,835,530 3,671 0.81 1,501,946 5,170 1.38 Bearing Deposits

Federal Funds 9,932 6 0.24 - - - 9 - 0.72 Purchased

Notes Payable - - - 6,722 61 3.66 12,000 111 3.72

FHLB Advances 57,500 228 1.59 57,500 228 1.61 193,819 1,064 2.21

Subordinated 73,862 1,112 6.04 73,776 1,085 5.96 31,228 479 6.17 Debentures

Total InterestBearing 2,039,172 4,859 0.96 % 1,973,528 5,045 1.04 % 1,739,002 6,824 1.58 %Liabilities

NoninterestBearing Liabilities:

NoninterestBearing 732,299 676,173 603,456 TransactionDeposits

Other NoninterestBearing 18,930 17,832 24,705 Liabilities

Total NoninterestBearing 751,229 694,005 628,161 Liabilities

Shareholders' 286,311 272,729 255,109 Equity

Total Liabilitiesand Shareholders' $ 3,076,712 $ 2,940,262 $ 2,622,272 Equity

Net InterestIncome / Interest 26,495 3.21 % 25,609 3.27 % 21,581 2.87 %Rate Spread

Net Interest 3.52 % 3.60 % 3.38 %Margin ^(3)

TaxableEquivalent Adjustment:

Tax-ExemptInvestment (207 ) (214 ) (239 ) Securities andLoans

Net Interest $ 26,288 $ 25,395 $ 21,342 Income

_________________________________(1)

Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a statutory federal income tax rate of 21%.

(2)

Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

(3)

Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

Provision for Loan Losses

The provision for loan losses was $1.6 million for the second quarter of 2021, an increase of $500,000 from $1.1 million for the first quarter of 2021, and a decrease of $1.4 million from $3.0 million for the second quarter of 2020. The provision recorded in the second quarter of 2021 was primarily attributable to growth of the loan portfolio. The allowance for loan losses to total loans was 1.45% at June 30, 2021, compared to 1.48% at March 31, 2021, and 1.26% at June 30, 2020. The allowance for loan losses to total loans, excluding PPP loans, was 1.50% at June 30, 2021, compared to 1.59% at March 31, 2021, and 1.37% at June 30, 2020.

As an emerging growth company, the Company is not subject to Accounting Standards Update No. 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments," or CECL, until January 1, 2023.

The following table presents the activity in the Company's allowance for loan losses for the periods indicated:

_________________________________ Interest income and average rates for tax-exempt investment securities and(1) loans are presented on a tax-equivalent basis, assuming a statutory federal income tax rate of 21%.

(2) Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on(3) interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

Provision for Loan Losses

The provision for loan losses was $1.6 million for the second quarter of 2021, an increase of $500,000 from $1.1 million for the first quarter of 2021, and a decrease of $1.4 million from $3.0 million for the second quarter of 2020. The provision recorded in the second quarter of 2021 was primarily attributable to growth of the loan portfolio. The allowance for loan losses to total loans was 1.45% at June 30, 2021, compared to 1.48% at March 31, 2021, and 1.26% at June 30, 2020. The allowance for loan losses to total loans, excluding PPP loans, was 1.50% at June 30, 2021, compared to 1.59% at March 31, 2021, and 1.37% at June 30, 2020.

As an emerging growth company, the Company is not subject to Accounting Standards Update No. 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments," or CECL, until January 1, 2023.

The following table presents the activity in the Company's allowance for loan losses for the periods indicated:

Three Months Ended Six Months Ended

June 30, March 31, June 30, June 30, June 30,

(dollars in 2021 2021 2020 2021 2020thousands)

Balance atBeginning of $ 35,987 $ 34,841 $ 24,585 $ 34,841 $ 22,526 Period

Provision for 1,600 1,100 3,000 2,700 5,100 Loan Losses

Charge-offs (3 ) (14 ) (1 ) (17 ) (48 )

Recoveries 7 60 49 67 55

Balance at End $ 37,591 $ 35,987 $ 27,633 $ 37,591 $ 27,633 of Period

Noninterest Income

Noninterest income was $1.6 million for the second quarter of 2021, an increase of $595,000 from $1.0 million for the first quarter of 2021, and a decrease of $374,000 from $2.0 million for the second quarter of 2020. The linked-quarter increase was primarily due to increased gains on sales of securities, offset partially by a decrease in letter of credit fees. The year-over-year decrease was primarily due to lower gains on sales of securities, offset partially by increased customer service fees and other income.

The following table presents the major components of noninterest income for the periods indicated:

Three Months Ended Six Months Ended

June March June June June 30, 31, 30, 30, 30,

(dollars in thousands) 2021 2021 2020 2021 2020

Noninterest Income:

Customer Service Fees $ 231 $ 234 $ 135 $ 465 $ 375

Net Gain on Sales of 702 - 1,361 702 1,364Securities

Letter of Credit Fees 231 327 265 558 539

Debit Card Interchange Fees 141 130 99 271 191

Swap Fees - - - - 907

Other Income 298 317 117 615 320

Totals $ 1,603 $ 1,008 $ 1,977 $ 2,611 $ 3,696

Noninterest Expense

Noninterest expense was $11.5 million for the second quarter of 2021, an increase of $554,000 from $10.9 million for the first quarter of 2021, and an increase of $766,000 from $10.7 million for the second quarter of 2020. The linked-quarter increase was primarily due to an increase in salaries and employee benefits and technology expenses. The year-over-year increase was primarily attributable to increased salaries and employee benefits, occupancy and equipment, technology, and marketing and advertising expenses, offset partially by a $1.4 million decrease in FHLB advance prepayment fees incurred in the second quarter of 2020, as well as lower amortization of tax credit investments.

The following table presents the major components of noninterest expense for the periods indicated:

Three Months Ended Six Months Ended

June 30, March June 30, June 30, June 30, 31,

(dollars in thousands) 2021 2021 2020 2021 2020

Noninterest Expense:

Salaries and Employee $ 7,512 $ 7,102 $ 6,348 $ 14,614 $ 12,802Benefits

Occupancy and Equipment 980 1,055 672 2,035 1,385

FDIC Insurance 290 315 168 605 358Assessment

Data Processing 300 291 238 591 467

Professional and 552 544 423 1,096 908Consulting Fees

Information Technology 549 462 326 1,011 592and Telecommunications

Marketing and 314 286 85 600 551Advertising

Intangible Asset 47 48 47 95 95Amortization

Amortization of Tax 140 118 362 258 447Credit Investments

FHLB Advance Prepayment - - 1,430 - 1,430Fees

Other Expense 793 702 612 1,495 1,422

Totals $ 11,477 $ 10,923 $ 10,711 $ 22,400 $ 20,457

In the second quarter of 2021, the Company attracted 18 new hires in lending, deposit gathering, technology, risk management, and other supportive roles, which continued to demonstrate the Company's status as a preferred employer amidst ongoing market disruption. The Company reached 214 full-time equivalent employees at June 30, 2021, compared to 200 employees at March 31, 2021, and 173 employees at June 30, 2020.

The efficiency ratio, a non-GAAP financial measure, was 42.0% for the second quarter of 2021, compared to 41.2% for the first quarter of 2021, and 48.6% for the second quarter of 2020. Excluding the impact of certain non-routine income and expenses, the adjusted efficiency ratio, a non-GAAP financial measure, was 41.5% for the second quarter of 2021, 40.7% for the first quarter of 2021 and 40.4% for the second quarter of 2020. The efficiencies of the Company's "branch-light" model have positioned the Company well for when the pandemic ends, and going forward, providing more flexibility for the Company to make significant investments in technology as the industry adapts to evolving client behavior.

Income Taxes

The effective combined federal and state income tax rate for the first and second quarters of 2021 was 25.8%, an increase from 20.9% for the second quarter of 2020.

Balance Sheet

Total assets at June 30, 2021 were $3.16 billion, a 2.9% increase from $3.07 billion at March 31, 2021, and a 14.8% increase from $2.75 billion at June 30, 2020. The linked-quarter increase in total assets was primarily due to robust organic loan growth, offset partially by a corresponding decrease in cash and cash equivalents. The year-over-year increase in total assets was primarily due to robust organic loan growth, as well as deploying excess liquidity into investment securities.

Total gross loans at June 30, 2021 were $2.59 billion, an increase of $168.1 million, or 6.9%, over total gross loans of $2.43 billion at March 31, 2021, and an increase of $400.4 million, or 18.3%, over total gross loans of $2.19 billion at June 30, 2020. The increase in the loan portfolio during the second quarter of 2021 was primarily due to growth in the multifamily and construction and land development segments, offset partially by declining PPP loan balances. When excluding the PPP loans altogether, gross loans grew $232.2 million during the second quarter of 2021, or 41.2% on an annualized basis. The Company's continued strong loan growth has been driven by M&A-related market disruption in the Twin Cities resulting in client and banker acquisition opportunities, PPP-related client acquisition opportunities, the expansion of the talented lending teams, and the strong and growing brand in the Twin Cities market.

The following table presents the dollar composition of the Company's loan portfolio, by category, at the dates indicated:

June 30, 2021 March 31, December 31, September 30, June 30, 2020 2021 2020 2020

(dollars in thousands)

Commercial $ 321,474 $ 301,023 $ 304,220 $ 287,254 $ 302,536

PaycheckProtection 99,072 163,258 138,454 181,596 180,228 Program

Constructionand Land 251,573 193,372 170,217 175,882 191,768 Development

Real Estate Mortgage:

1 - 4 Family 277,943 294,964 294,479 286,089 289,456 Mortgage

Multifamily 790,275 665,415 626,465 585,814 522,491

CRE Owner 87,507 79,665 75,604 75,963 73,539 Occupied

CRE Nonowner 758,101 720,396 709,300 660,058 627,651 Occupied

Total RealEstate 1,913,826 1,760,440 1,705,848 1,607,924 1,513,137 MortgageLoans

Consumer and 8,241 8,030 7,689 6,572 6,109 Other

Total Loans, 2,594,186 2,426,123 2,326,428 2,259,228 2,193,778 Gross

Allowancefor Loan (37,591 ) (35,987 ) (34,841 ) (31,381 ) (27,633 )Losses

Net Deferred (11,450 ) (11,273 ) (9,151 ) (10,367 ) (10,287 )Loan Fees

Total Loans, $ 2,545,145 $ 2,378,863 $ 2,282,436 $ 2,217,480 $ 2,155,858 Net

Total deposits at June 30, 2021 were $2.72 billion, an increase of $82.3 million, or 3.1%, over total deposits of $2.64 billion at March 31, 2021, and an increase of $478.9 million, or 21.4%, over total deposits of $2.24 billion at June 30, 2020. Deposit growth in the second quarter of 2021 was primarily due to an increase in noninterest bearing transaction deposits and brokered deposits, offset partially by a decline in savings and money market deposits and time deposits. Similar to the loan portfolio, the growth in core deposits has been a result of successful new client and banker acquisition initiatives and the strong, growing brand in the Twin Cities market. Brokered deposits increased back to levels last seen in the fourth quarter of 2020 due to the opportunity to obtain $75.0 million in funding at 1 basis point at various short-term maturities ranging from 3-12 months. As illustrated, the brokered deposit market provides flexibility in structure, optionality and efficiency not provided in traditional, retail deposit channels. Given the fluid environment, management believes deposits could experience fluctuations in future periods.

The following table presents the dollar composition of the Company's deposit portfolio, by category, at the dates indicated:

June 30, March 31, December September June 30, 2021 2021 31, 2020 30, 2020 2020

(dollars in thousands)

NoninterestBearing $ 758,023 $ 712,999 $ 671,903 $ 685,773 $ 648,869TransactionDeposits

InterestBearing 432,123 433,344 366,290 322,253 285,386TransactionDeposits

Savings andMoney Market 761,485 791,583 657,617 498,397 516,543Deposits

Time Deposits 321,857 344,581 353,543 363,897 382,187

Brokered 447,418 356,147 452,283 402,724 409,066Deposits

Total Deposits $ 2,720,906 $ 2,638,654 $ 2,501,636 $ 2,273,044 $ 2,242,051

Total shareholders' equity at June 30, 2021 was $290.8 million, an increase of $11.7 million, or 4.2%, over total shareholders' equity of $279.2 million at March 31, 2021, and an increase of $33.6 million, or 13.1%, over total shareholders' equity of $257.2 million at June 30, 2020. The linked-quarter increase was due to net income retained. The year-over-year increase was due to net income retained and an increase in unrealized gains in the securities and derivatives portfolios, offset partially by stock repurchases made under the Company's stock repurchase program. The Company did not repurchase any shares of its common stock during the second quarter of 2021.

Tangible book value per share, a non-GAAP financial measure, was $10.22 as of June 30, 2021, an increase of 4.3% from $9.80 as of March 31, 2021, and an increase of 16.2% from $8.80 as of June 30, 2020.

Subsequent to the end of the quarter, on July 8, 2021 the Company issued $30.0 million of 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031 in a private placement transaction. These notes are callable starting on July 15, 2026 and qualify for tier 2 capital treatment at the holding company level. The Company intends to use the net proceeds of the private placement for general corporate purposes, including support for organic growth plans, support for bank level capital ratios and possible redemption or repurchase of currently outstanding indebtedness.

Asset Quality

Annualized net charge-offs (recoveries) as a percent of average loans for the second quarter of 2021 were 0.00%, compared to (0.01)% for the first quarter of 2021, and (0.01)% for the second quarter of 2020. At June 30, 2021, the Company's nonperforming assets, which include nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $761,000, or 0.02% of total assets, as compared to $770,000, or 0.03% of total assets at March 31, 2021, and $602,000 or 0.02% of total assets at June 30, 2020.

The Company has increased oversight and analysis of all segments of the loan portfolio in response to the COVID-19 pandemic, especially in vulnerable industries such as hospitality and restaurants, to proactively monitor evolving credit risk. Loans that have potential weaknesses that warrant a watchlist risk rating at June 30, 2021 totaled $56.7 million, compared to $58.3 million at March 31, 2021. As the COVID-19 pandemic continues to evolve, the length and extent of the economic uncertainty may result in further watchlist or adverse classifications in the loan portfolio. Loans that warranted a substandard risk rating at June 30, 2021 totaled $7.2 million, compared to $6.7 million at March 31, 2021.

The following table presents a summary of asset quality measurements at the dates indicated:

As of and for the Three Months Ended

June 30, March 31 December 31, September June 30, 30,

(dollars in 2021 2021 2020 2020 2020thousands)

SelectedAsset Quality Data

Loans 30-89 $ - $ - $ 13 $ 458 $ 153 Days Past Due

Loans 30-89Days Past Due 0.00 % 0.00 % 0.00 % 0.02 % 0.01 %to TotalLoans

Nonperforming $ 761 $ 770 $ 775 $ 433 $ 602 Loans

NonperformingLoans to 0.03 % 0.03 % 0.03 % 0.02 % 0.03 %Total Loans

Foreclosed $ - $ - $ - $ - $ - Assets

NonaccrualLoans to 0.03 % 0.03 % 0.03 % 0.02 % 0.03 %Total Loans

NonaccrualLoans andLoans PastDue 90 Days 0.03 0.03 0.03 0.02 0.03 and StillAccruing toTotal Loans

Nonperforming $ 761 $ 770 $ 775 $ 433 $ 602 Assets ^(1)

NonperformingAssets to 0.02 % 0.03 % 0.03 % 0.02 % 0.02 %Total Assets^(1)

Allowance forLoan Losses 1.45 1.48 1.50 1.39 1.26 to TotalLoans

Allowance forLoan Lossesto Total 1.51 1.59 1.59 1.51 1.37 Loans,Excluding PPPLoans

Allowance forLoans Lossesto 4,939.68 4,673.64 4,495.61 7,247.34 4,590.20 NonperformingLoans

Net LoanCharge-Offs(Recoveries) 0.00 (0.01 ) 0.08 0.00 (0.01 )(Annualized)to AverageLoans

_________________________________(1)

Nonperforming assets are defined as nonaccrual loans plus loans 90 days past due plus foreclosed assets.

The Company developed programs for clients who experienced business and personal disruptions due to the COVID-19 pandemic by providing interest-only modifications, loan payment deferrals, and extended amortization modifications. In accordance with interagency regulatory guidance and the CARES Act, qualifying loans modified in response to the COVID-19 pandemic are not considered troubled debt restructurings. The Company had 19 modified loans totaling $33.9 million outstanding as of June 30, 2021, representing 1.4% of the total loan portfolio, excluding PPP loans.

The following table presents a rollforward of loan modification activity, by modification type, from March 31, 2021 to June 30, 2021:

_________________________________(1) Nonperforming assets are defined as nonaccrual loans plus loans 90 days past due plus foreclosed assets.

The Company developed programs for clients who experienced business and personal disruptions due to the COVID-19 pandemic by providing interest-only modifications, loan payment deferrals, and extended amortization modifications. In accordance with interagency regulatory guidance and the CARES Act, qualifying loans modified in response to the COVID-19 pandemic are not considered troubled debt restructurings. The Company had 19 modified loans totaling $33.9 million outstanding as of June 30, 2021, representing 1.4% of the total loan portfolio, excluding PPP loans.

The following table presents a rollforward of loan modification activity, by modification type, from March 31, 2021 to June 30, 2021:



(dollars in thousands) Interest-Only Payment Extended Total Deferral Amortization

Principal Balance - $ 31,663 $ 618 $ 4,802 $ 37,083 March 31, 2021

Modification Expired (4,139 ) (618 ) - (4,757 )

Additional Modification 1,173 - - 1,173 Granted

New Modifications 468 - - 468

Net Principal Advances (6 ) - (24 ) (30 )(Payments)

Principal Balance - $ 29,159 $ - $ 4,778 $ 33,937 June 30, 2021

About the Company

Bridgewater Bancshares, Inc. (Nasdaq: BWB) is a St. Louis Park, Minnesota-based financial holding company. Bridgewater's banking subsidiary, Bridgewater Bank, is a premier, full-service Twin Cities bank dedicated to serving the diverse needs of commercial real estate investors, entrepreneurs, business clients and high-net-worth individuals. By pairing a range of deposit, lending and business services solutions with a responsive service model, Bridgewater has seen continuous growth and profitability. With total assets of $3.2 billion and seven branches as of June 30, 2021, Bridgewater is considered one of the largest locally led banks in the State of Minnesota, and has received numerous awards for its growth, banking services and esteemed corporate culture.

Use of Non-GAAP financial measures

In addition to the results presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP), the Company routinely supplements its evaluation with an analysis of certain non-GAAP financial measures. The Company believes these non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors to help them understand the Company's operating performance and trends, and to facilitate comparisons with the performance of peers. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of non-GAAP disclosures used in this earnings release to the comparable GAAP measures are provided in the accompanying tables.

Forward-Looking Statements

This earnings release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, identified by words such as "may", "might", "should", "could", "predict", "potential", "believe", "expect", "continue", "will", "anticipate", "seek", "estimate", "intend", "plan", "projection", "would", "annualized", "target" and "outlook", or the negative version of those words or other comparable words of a future or forward-looking nature.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: the negative effects of the COVID-19 pandemic, including its effects on the economic environment, our clients and our operations, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic; loan concentrations in our portfolio; the overall health of the local and national real estate market; our ability to successfully manage credit risk; business and economic conditions generally and in the financial services industry, nationally and within our market area; our ability to maintain an adequate level of allowance for loan losses; new or revised accounting standards, including as a result of the future implementation of the Current Expected Credit Loss standard; the concentration of large loans to certain borrowers; the concentration of large deposits from certain clients; our ability to successfully manage liquidity risk; our dependence on non-core funding sources and our cost of funds; our ability to raise additional capital to implement our business plan; our ability to implement our growth strategy and manage costs effectively; developments and uncertainty related to the future use and availability of some reference rates, such as the London Interbank Offered Rate, as well as other alternative reference rates; the composition of our senior leadership team and our ability to attract and retain key personnel; the occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents; interruptions involving our information technology and telecommunications systems or third-party servicers; competition in the financial services industry; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and regulatory actions against us; the impact of recent and future legislative and regulatory changes; interest rate risk; fluctuations in the values of the securities held in our securities portfolio; the imposition of tariffs or other governmental policies impacting the value of products produced by our commercial borrowers; severe weather, natural disasters, wide spread disease or pandemics (including the COVID-19 pandemic), acts of war or terrorism or other adverse external events; potential impairment to the goodwill we recorded in connection with our past acquisition; changes to U.S. tax laws, regulations and guidance; and any other risks described in the "Risk Factors" sections of reports filed by the Company with the Securities and Exchange Commission.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands, except share data)



June 30, December June 30, 31,

2021 2020 2020

(Unaudited) (Unaudited)

ASSETS

Cash and Cash Equivalents $ 92,197 $ 160,675 $ 178,428

Bank-Owned Certificates of Deposit 2,368 2,860 2,895

Securities Available for Sale, at 402,786 390,629 326,295Fair Value

Loans, Net of Allowance for LoanLosses of $37,591 at June 30, 2021(unaudited), $34,841 at December 31, 2,545,145 2,282,436 2,155,8582020 and $27,633 at June 30, 2020(unaudited)

Federal Home Loan Bank (FHLB) Stock, 5,832 5,027 8,617at Cost

Premises and Equipment, Net 50,177 50,987 43,062

Accrued Interest 8,728 9,172 8,267

Goodwill 2,626 2,626 2,626

Other Intangible Assets, Net 574 670 765

Other Assets 52,179 22,263 27,650

Total Assets $ 3,162,612 $ 2,927,345 $ 2,754,463



LIABILITIES AND EQUITY

LIABILITIES

Deposits:

Noninterest Bearing $ 758,023 $ 671,903 $ 648,869

Interest Bearing 1,962,883 1,829,733 1,593,182

Total Deposits 2,720,906 2,501,636 2,242,051

Notes Payable - 11,000 12,000

FHLB Advances 57,500 57,500 147,500

Subordinated Debentures, Net of 73,913 73,739 73,658Issuance Costs

Accrued Interest Payable 2,654 1,615 1,953

Other Liabilities 16,809 16,450 20,111

Total Liabilities 2,871,782 2,661,940 2,497,273



SHAREHOLDERS' EQUITY

Preferred Stock- $0.01 par value

Authorized 10,000,000; None Issuedand Outstanding at June 30, 2021 - - -(unaudited), December 31, 2020 andJune 30, 2020 (unaudited)

Common Stock- $0.01 par value

Common Stock - Authorized 75,000,000;Issued and Outstanding 28,162,777 atJune 30, 2021 (unaudited), 28,143,493 282 281 288at December 31, 2020 and 28,837,560at June 30, 2020 (unaudited)

Additional Paid-In Capital 104,811 103,714 110,906

Retained Earnings 176,495 154,831 142,678

Accumulated Other Comprehensive 9,242 6,579 3,318Income

Total Shareholders' Equity 290,830 265,405 257,190

Total Liabilities and Equity $ 3,162,612 $ 2,927,345 $ 2,754,463

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in thousands, except per share data)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2021

2021

2020

2021

2020

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

INTEREST INCOME

Loans, Including Fees

$

28,748

$

27,908

$

25,913

$

56,656

$

51,026

Investment Securities

2,312

2,420

2,091

4,732

4,287

Other

87

112

162

199

321

Total Interest Income

31,147

30,440

28,166

61,587

55,634

INTEREST EXPENSE

Deposits

3,513

3,671

5,170

7,184

10,894

Notes Payable

-

61

111

61

226

FHLB Advances

228

228

1,064

456

2,091

Subordinated Debentures

1,112

1,085

479

2,197

872

Federal Funds Purchased

6

-

-

6

107

Total Interest Expense

4,859

5,045

6,824

9,904

14,190

NET INTEREST INCOME

26,288

25,395

21,342

51,683

41,444

Provision for Loan Losses

1,600

1,100

3,000

2,700

5,100

NET INTEREST INCOME AFTERPROVISION FOR LOAN LOSSES

24,688

24,295

18,342

48,983

36,344

NONINTEREST INCOME

Customer Service Fees

231

234

135

465

375

Net Gain on Sales of Available for Sale Securities

702

-

1,361

702

1,364

Other Income

670

774

481

1,444

1,957

Total Noninterest Income

1,603

1,008

1,977

2,611

3,696

NONINTEREST EXPENSE

Salaries and Employee Benefits

7,512

7,102

6,348

14,614

12,802

Occupancy and Equipment

980

1,055

672

2,035

1,385

Other Expense

2,985

2,766

3,691

5,751

6,270

Total Noninterest Expense

11,477

10,923

10,711

22,400

20,457

INCOME BEFORE INCOME TAXES

14,814

14,380

9,608

29,194

19,583

Provision for Income Taxes

3,821

3,709

2,010

7,530

4,542

NET INCOME

$

10,993

$

10,671

$

7,598

$

21,664

$

15,041

EARNINGS PER SHARE

Basic

$

0.39

$

0.38

$

0.26

$

0.77

$

0.52

Diluted

0.38

0.37

0.26

0.75

0.51

Dividends Paid Per Share

-

-

-

-

-

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in thousands, except per share data)



Three Months Ended Six Months Ended

June 30, March 31, June 30, June 30, June 30,

2021 2021 2020 2021 2020

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

INTEREST INCOME

Loans,Including $ 28,748 $ 27,908 $ 25,913 $ 56,656 $ 51,026Fees

Investment 2,312 2,420 2,091 4,732 4,287Securities

Other 87 112 162 199 321

TotalInterest 31,147 30,440 28,166 61,587 55,634Income



INTEREST EXPENSE

Deposits 3,513 3,671 5,170 7,184 10,894

Notes - 61 111 61 226Payable

FHLB 228 228 1,064 456 2,091Advances

Subordinated 1,112 1,085 479 2,197 872Debentures

FederalFunds 6 - - 6 107Purchased

TotalInterest 4,859 5,045 6,824 9,904 14,190Expense



NET INTEREST 26,288 25,395 21,342 51,683 41,444INCOME

Provisionfor Loan 1,600 1,100 3,000 2,700 5,100Losses



NET INTERESTINCOME AFTERPROVISION 24,688 24,295 18,342 48,983 36,344FOR LOANLOSSES



NONINTEREST INCOME

Customer 231 234 135 465 375Service Fees

Net Gain onSales ofAvailable 702 - 1,361 702 1,364for SaleSecurities

Other Income 670 774 481 1,444 1,957

TotalNoninterest 1,603 1,008 1,977 2,611 3,696Income



NONINTEREST EXPENSE

Salaries andEmployee 7,512 7,102 6,348 14,614 12,802Benefits

Occupancyand 980 1,055 672 2,035 1,385Equipment

Other 2,985 2,766 3,691 5,751 6,270Expense

TotalNoninterest 11,477 10,923 10,711 22,400 20,457Expense



INCOMEBEFORE 14,814 14,380 9,608 29,194 19,583INCOME TAXES

Provisionfor Income 3,821 3,709 2,010 7,530 4,542Taxes

NET INCOME $ 10,993 $ 10,671 $ 7,598 $ 21,664 $ 15,041



EARNINGS PER SHARE

Basic $ 0.39 $ 0.38 $ 0.26 $ 0.77 $ 0.52

Diluted 0.38 0.37 0.26 0.75 0.51

DividendsPaid Per - - - - -Share

Bridgewater Bancshares, Inc. and Subsidiaries

Analysis of Average Balances, Yields and Rates (year-to-date)

(dollars in thousands, except per share data) (Unaudited)

For the Six Months Ended

June 30, 2021

June 30, 2020

Average

Interest

Yield/

Average

Interest

Yield/

Balance

& Fees

Rate

Balance

& Fees

Rate

(dollars in thousands)

Interest Earning Assets:

Cash Investments

$

96,724

$

67

0.14

%

$

69,267

$

96

0.28

%

Investment Securities:

Taxable Investment Securities

307,898

3,371

2.21

195,873

2,691

2.76

Tax-Exempt Investment Securities (1)

78,985

1,723

4.40

93,260

2,020

4.36

Total Investment Securities

386,883

5,094

2.66

289,133

4,711

3.28

Paycheck Protection Program Loans (2)

149,098

3,631

4.91

70,037

873

2.51

Loans (1)(2)

2,313,295

53,085

4.63

1,983,641

50,220

5.09

Total Loans

2,462,393

56,716

4.64

2,053,678

51,093

5.00

Federal Home Loan Bank Stock

5,636

132

4.74

10,370

225

4.37

Total Interest Earning Assets

2,951,636

62,009

4.24

%

2,422,448

56,125

4.66

%

Noninterest Earning Assets

57,228

47,208

Total Assets

$

3,008,864

$

2,469,656

Interest Bearing Liabilities:

Deposits:

Interest Bearing Transaction Deposits

$

392,732

$

942

0.48

%

$

259,704

$

808

0.63

%

Savings and Money Market Deposits

744,480

1,949

0.53

527,445

3,232

1.23

Time Deposits

338,497

2,341

1.39

382,256

4,299

2.26

Brokered Deposits

391,167

1,952

1.01

269,000

2,555

1.91

Total Interest Bearing Deposits

1,866,876

7,184

0.78

1,438,405

10,894

1.52

Federal Funds Purchased

4,993

6

0.24

12,422

107

1.74

Notes Payable

3,343

61

3.66

12,253

226

3.71

FHLB Advances

57,500

456

1.60

183,099

2,091

2.30

Subordinated Debentures

73,819

2,197

6.00

27,986

872

6.27

Total Interest Bearing Liabilities

2,006,531

9,904

1.00

%

1,674,165

14,190

1.70

%

Noninterest Bearing Liabilities:

Noninterest Bearing Transaction Deposits

704,391

523,828

Other Noninterest Bearing Liabilities

18,384

18,708

Total Noninterest Bearing Liabilities

722,775

542,536

Shareholders' Equity

279,558

252,955

Total Liabilities and Shareholders' Equity

$

3,008,864

$

2,469,656

Net Interest Income / Interest Rate Spread

52,105

3.24

%

41,935

2.96

%

Net Interest Margin (3)

3.56

%

3.48

%

Taxable Equivalent Adjustment:

Tax-Exempt Investment Securities and Loans

(422

)

(491

)

Net Interest Income

$

51,683

$

41,444

Bridgewater Bancshares, Inc. and Subsidiaries

Analysis of Average Balances, Yields and Rates (year-to-date)

(dollars in thousands, except per share data) (Unaudited)

For the Six Months Ended

June 30, 2021 June 30, 2020

Average Interest Yield/ Average Interest Yield/

Balance & Fees Rate Balance & Fees Rate

(dollars in thousands)

InterestEarning Assets:

Cash $ 96,724 $ 67 0.14 % $ 69,267 $ 96 0.28 %Investments

Investment Securities:

TaxableInvestment 307,898 3,371 2.21 195,873 2,691 2.76 Securities

Tax-ExemptInvestment 78,985 1,723 4.40 93,260 2,020 4.36 Securities^ (1)

TotalInvestment 386,883 5,094 2.66 289,133 4,711 3.28 Securities

PaycheckProtection 149,098 3,631 4.91 70,037 873 2.51 Program Loans ^(2)

Loans ^(1)(2) 2,313,295 53,085 4.63 1,983,641 50,220 5.09

Total Loans 2,462,393 56,716 4.64 2,053,678 51,093 5.00

Federal HomeLoan Bank 5,636 132 4.74 10,370 225 4.37 Stock

Total Interest 2,951,636 62,009 4.24 % 2,422,448 56,125 4.66 %Earning Assets

Noninterest 57,228 47,208 Earning Assets

Total Assets $ 3,008,864 $ 2,469,656

InterestBearing Liabilities:

Deposits:

InterestBearing $ 392,732 $ 942 0.48 % $ 259,704 $ 808 0.63 %Transaction Deposits

Savings andMoney Market 744,480 1,949 0.53 527,445 3,232 1.23 Deposits

Time Deposits 338,497 2,341 1.39 382,256 4,299 2.26

Brokered 391,167 1,952 1.01 269,000 2,555 1.91 Deposits

Total InterestBearing 1,866,876 7,184 0.78 1,438,405 10,894 1.52 Deposits

Federal Funds 4,993 6 0.24 12,422 107 1.74 Purchased

Notes Payable 3,343 61 3.66 12,253 226 3.71

FHLB Advances 57,500 456 1.60 183,099 2,091 2.30

Subordinated 73,819 2,197 6.00 27,986 872 6.27 Debentures

Total InterestBearing 2,006,531 9,904 1.00 % 1,674,165 14,190 1.70 %Liabilities

NoninterestBearing Liabilities:

NoninterestBearing 704,391 523,828 Transaction Deposits

OtherNoninterest 18,384 18,708 Bearing Liabilities

TotalNoninterest 722,775 542,536 Bearing Liabilities

Shareholders' 279,558 252,955 Equity

TotalLiabilitiesand $ 3,008,864 $ 2,469,656 Shareholders'Equity

Net InterestIncome / 52,105 3.24 % 41,935 2.96 %Interest Rate Spread

Net Interest 3.56 % 3.48 %Margin ^(3)

TaxableEquivalent Adjustment:

Tax-ExemptInvestment (422 ) (491 ) Securities and Loans

Net Interest $ 51,683 $ 41,444 Income

_________________________________(1)

Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a statutory federal income tax rate of 21%

(2)

Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

(3)

Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

_________________________________ Interest income and average rates for tax-exempt investment securities and(1) loans are presented on a tax-equivalent basis, assuming a statutory federal income tax rate of 21%

(2) Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on(3) interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

For the Three Months Ended

For the Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2021

2021

2020

2021

2020

Pre-Provision Net Revenue

Noninterest Income

$

1,603

$

1,008

$

1,977

$

2,611

$

3,696

Less: Gain on sales of Securities

(702

)

-

(1,361

)

(702

)

(1,364

)

Total Operating Noninterest Income

901

1,008

616

1,909

2,332

Plus: Net Interest income

26,288

25,395

21,342

51,683

41,444

Net Operating Revenue

$

27,189

$

26,403

$

21,958

$

53,592

$

43,776

Noninterest Expense

$

11,477

$

10,923

$

10,711

$

22,400

$

20,457

Less: Amortization of Tax Credit Investments

(140

)

(118

)

(362

)

(258

)

(447

)

Less: FHLB Advance Prepayment Fees

-

-

(1,430

)

-

(1,430

)

Total Operating Noninterest Expense

$

11,337

$

10,805

$

8,919

$

22,142

$

18,580

Pre-Provision Net Revenue

$

15,852

$

15,598

$

13,039

$

31,450

$

25,196

Plus:

Non-Operating Revenue Adjustments

702

-

1,361

702

1,364

Less:

Provision for Loan Losses

1,600

1,100

3,000

2,700

5,100

Non-Operating Expense Adjustments

140

118

1,792

258

1,877

Provision for Income Taxes

3,821

3,709

2,010

7,530

4,542

Net Income

$

10,993

$

10,671

$

7,598

$

21,664

$

15,041

Average Assets

$

3,076,712

$

2,940,262

$

2,622,272

$

3,008,864

$

2,469,656

Pre-Provision Net Revenue Return on Average Assets

2.07

%

2.15

%

2.00

%

2.11

%

2.05

%

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)



For the Three Months Ended For the Six Months Ended

June 30, March 31, June 30, June 30, June 30,

2021 2021 2020 2021 2020

Pre-Provision Net Revenue

Noninterest $ 1,603 $ 1,008 $ 1,977 $ 2,611 $ 3,696 Income

Less: Gain onsales of (702 ) - (1,361 ) (702 ) (1,364 )Securities

TotalOperating 901 1,008 616 1,909 2,332 Noninterest Income

Plus: NetInterest 26,288 25,395 21,342 51,683 41,444 income

Net Operating $ 27,189 $ 26,403 $ 21,958 $ 53,592 $ 43,776 Revenue



Noninterest $ 11,477 $ 10,923 $ 10,711 $ 22,400 $ 20,457 Expense

Less:Amortization (140 ) (118 ) (362 ) (258 ) (447 )of Tax Credit Investments

Less: FHLBAdvance - - (1,430 ) - (1,430 )Prepayment Fees

TotalOperating $ 11,337 $ 10,805 $ 8,919 $ 22,142 $ 18,580 Noninterest Expense



Pre-Provision $ 15,852 $ 15,598 $ 13,039 $ 31,450 $ 25,196 Net Revenue



Plus:

Non-OperatingRevenue 702 - 1,361 702 1,364 Adjustments

Less:

Provision for 1,600 1,100 3,000 2,700 5,100 Loan Losses

Non-OperatingExpense 140 118 1,792 258 1,877 Adjustments

Provision for 3,821 3,709 2,010 7,530 4,542 Income Taxes

Net Income $ 10,993 $ 10,671 $ 7,598 $ 21,664 $ 15,041



Average $ 3,076,712 $ 2,940,262 $ 2,622,272 $ 3,008,864 $ 2,469,656 Assets

Pre-ProvisionNet RevenueReturn on 2.07 % 2.15 % 2.00 % 2.11 % 2.05 %AverageAssets

As of and for the Three Months Ended

As of and for the Six Months Ended

June 30,

March 31

June 30,

June 30,

June 30,

2021

2021

2020

2021

2020

Core Net Interest Margin

Net Interest Income (Tax-Equivalent Basis)

$

26,495

$

25,609

$

21,581

$

52,105

$

41,935

Less: Loan Fees

(1,023

)

(1,202

)

(1,264

)

(2,225

)

(2,571

)

Less: PPP Interest and Fees

(1,767

)

(1,864

)

(873

)

(3,631

)

(873

)

Core Net Interest Income

$

23,705

$

22,543

$

19,444

$

46,249

$

38,491

Average Interest Earning Assets

3,019,437

2,883,084

2,567,292

2,951,636

2,422,448

Less: Average PPP Loans

(149,312

)

(148,881

)

(139,235

)

(149,098

)

(70,037

)

Core Average Interest Earning Assets

$

2,870,125

$

2,734,203

$

2,428,057

$

2,802,538

$

2,352,411

Core Net Interest Margin

3.31

%

3.34

%

3.22

%

3.33

%

3.29

%

As of and for the Three Months Ended As of and for the Six Months Ended

June 30, March 31 June 30, June 30, June 30,

2021 2021 2020 2021 2020

Core Net Interest Margin

Net InterestIncome $ 26,495 $ 25,609 $ 21,581 $ 52,105 $ 41,935 (Tax-Equivalent Basis)

Less: Loan Fees (1,023 ) (1,202 ) (1,264 ) (2,225 ) (2,571 )

Less: PPPInterest and (1,767 ) (1,864 ) (873 ) (3,631 ) (873 )Fees

Core Net $ 23,705 $ 22,543 $ 19,444 $ 46,249 $ 38,491 Interest Income



AverageInterest 3,019,437 2,883,084 2,567,292 2,951,636 2,422,448 Earning Assets

Less: Average (149,312 ) (148,881 ) (139,235 ) (149,098 ) (70,037 )PPP Loans

Core AverageInterest $ 2,870,125 $ 2,734,203 $ 2,428,057 $ 2,802,538 $ 2,352,411 Earning Assets

Core Net 3.31 % 3.34 % 3.22 % 3.33 % 3.29 %Interest Margin

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

For the Three Months Ended

For the Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2021

2021

2020

2021

2020

Efficiency Ratio

Noninterest Expense

$

11,477

$

10,923

$

10,711

$

22,400

$

20,457

Less: Amortization of Intangible Assets

(47

)

(48

)

(47

)

(95

)

(95

)

Adjusted Noninterest Expense

$

11,430

$

10,875

$

10,664

$

22,305

$

20,362

Net Interest Income

26,288

25,395

21,342

51,683

41,444

Noninterest Income

1,603

1,008

1,977

2,611

3,696

Less: Gain on Sales of Securities

(702

)

-

(1,361

)

(702

)

(1,364

)

Adjusted Operating Revenue

$

27,189

$

26,403

$

21,958

$

53,592

$

43,776

Efficiency Ratio

42.0

%

41.2

%

48.6

%

41.6

%

46.5

%

Adjusted Efficiency Ratio

Noninterest Expense

$

11,477

$

10,923

$

10,711

$

22,400

$

20,457

Less: Amortization of Tax Credit Investments

(140

)

(118

)

(362

)

(258

)

(447

)

Less: FHLB Advance Prepayment Fees

-

-

(1,430

)

-

(1,430

)

Less: Amortization of Intangible Assets

(47

)

(48

)

(47

)

(95

)

(95

)

Adjusted Noninterest Expense

$

11,290

$

10,757

$

8,872

$

22,047

$

18,485

Net Interest Income

26,288

25,395

21,342

51,683

41,444

Noninterest Income

1,603

1,008

1,977

2,611

3,696

Less: Gain on Sales of Securities

(702

)

-

(1,361

)

(702

)

(1,364

)

Adjusted Operating Revenue

$

27,189

$

26,403

$

21,958

$

53,592

$

43,776

Adjusted Efficiency Ratio

41.5

%

40.7

%

40.4

%

41.1

%

42.2

%

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)



For the Three Months Ended For the Six Months Ended

June 30, March 31, June 30, June 30, June 30,

2021 2021 2020 2021 2020

Efficiency Ratio

Noninterest $ 11,477 $ 10,923 $ 10,711 $ 22,400 $ 20,457 Expense

Less:Amortization (47 ) (48 ) (47 ) (95 ) (95 )of Intangible Assets

AdjustedNoninterest $ 11,430 $ 10,875 $ 10,664 $ 22,305 $ 20,362 Expense

Net Interest 26,288 25,395 21,342 51,683 41,444 Income

Noninterest 1,603 1,008 1,977 2,611 3,696 Income

Less: Gain onSales of (702 ) - (1,361 ) (702 ) (1,364 )Securities

AdjustedOperating $ 27,189 $ 26,403 $ 21,958 $ 53,592 $ 43,776 Revenue

Efficiency 42.0 % 41.2 % 48.6 % 41.6 % 46.5 %Ratio



AdjustedEfficiency Ratio

Noninterest $ 11,477 $ 10,923 $ 10,711 $ 22,400 $ 20,457 Expense

Less:Amortization (140 ) (118 ) (362 ) (258 ) (447 )of Tax Credit Investments

Less: FHLBAdvance - - (1,430 ) - (1,430 )Prepayment Fees

Less:Amortization (47 ) (48 ) (47 ) (95 ) (95 )of Intangible Assets

AdjustedNoninterest $ 11,290 $ 10,757 $ 8,872 $ 22,047 $ 18,485 Expense

Net Interest 26,288 25,395 21,342 51,683 41,444 Income

Noninterest 1,603 1,008 1,977 2,611 3,696 Income

Less: Gain onSales of (702 ) - (1,361 ) (702 ) (1,364 )Securities

AdjustedOperating $ 27,189 $ 26,403 $ 21,958 $ 53,592 $ 43,776 Revenue

AdjustedEfficiency 41.5 % 40.7 % 40.4 % 41.1 % 42.2 %Ratio

For the Three Months Ended

For the Six Months Ended

June 30,

March 31

June 30,

June 30,

June 30,

2021

2021

2020

2021

2020

Adjusted Noninterest Expense to Average Assets

Noninterest Expense

$

11,477

$

10,923

$

10,711

$

22,400

$

20,457

Less: Amortization of Tax Credit Investments

(140

)

(118

)

(362

)

(258

)

(447

)

Less: FHLB Advance Prepayment Fees

-

-

(1,430

)

-

(1,430

)

Adjusted Noninterest Expense

$

11,337

$

10,805

$

8,919

$

22,142

$

18,580

Average Assets

$

3,076,712

$

2,940,262

$

2,622,272

$

3,008,864

$

2,469,656

Adjusted Noninterest Expense to Average Assets

1.48

%

1.49

%

1.37

%

1.48

%

1.51

%

For the Three Months Ended For the Six Months Ended

June 30, March 31 June 30, June 30, June 30,

2021 2021 2020 2021 2020

AdjustedNoninterestExpense to AverageAssets

Noninterest $ 11,477 $ 10,923 $ 10,711 $ 22,400 $ 20,457 Expense

Less:Amortizationof Tax (140 ) (118 ) (362 ) (258 ) (447 )CreditInvestments

Less: FHLBAdvance - - (1,430 ) - (1,430 )Prepayment Fees

AdjustedNoninterest $ 11,337 $ 10,805 $ 8,919 $ 22,142 $ 18,580 Expense



Average $ 3,076,712 $ 2,940,262 $ 2,622,272 $ 3,008,864 $ 2,469,656 Assets

AdjustedNoninterestExpense to 1.48 % 1.49 % 1.37 % 1.48 % 1.51 %AverageAssets

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

As of and for the Three Months Ended

As of and for the Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2021

2021

2020

2021

2020

Tangible Common Equity and Tangible Common Equity/Tangible Assets

Common Equity

$

290,830

$

279,171

$

257,190

Less: Intangible Assets

(3,200

)

(3,248

)

(3,391

)

Tangible Common Equity

$

287,630

$

275,923

$

253,799

Total Assets

$

3,162,612

$

3,072,359

$

2,754,463

Less: Intangible Assets

(3,200

)

(3,248

)

(3,391

)

Tangible Assets

$

3,159,412

$

3,069,111

$

2,751,072

Tangible Common Equity/Tangible Assets

9.10

%

8.99

%

9.23

%

Tangible Book Value Per Share

Book Value Per Common Share

$

10.33

$

9.92

$

8.92

Less: Effects of Intangible Assets

(0.11

)

(0.12

)

(0.12

)

Tangible Book Value Per Common Share

$

10.22

$

9.80

$

8.80

Return on Average Tangible Common Equity

Net Income

$

10,993

$

10,671

$

7,598

$

21,664

$

15,041

Average Common Equity

$

286,311

$

272,729

$

255,109

$

279,558

$

252,955

Less: Effects of Average Intangible Assets

(3,228

)

(3,276

)

(3,419

)

(3,251

)

(3,442

)

Average Tangible Common Equity

$

283,083

$

269,453

$

251,690

$

276,307

$

249,513

Return on Average Tangible Common Equity

15.58

%

16.06

%

12.14

%

15.81

%

12.12

%

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)



As of and for the Three Months Ended As of and for the Six Months Ended

June 30, March 31, June 30, June 30, June 30,

2021 2021 2020 2021 2020

TangibleCommonEquity andTangible CommonEquity/TangibleAssets

Common $ 290,830 $ 279,171 $ 257,190 Equity

Less:Intangible (3,200 ) (3,248 ) (3,391 ) Assets

TangibleCommon $ 287,630 $ 275,923 $ 253,799 Equity



Total $ 3,162,612 $ 3,072,359 $ 2,754,463 Assets

Less:Intangible (3,200 ) (3,248 ) (3,391 ) Assets

Tangible $ 3,159,412 $ 3,069,111 $ 2,751,072 Assets

TangibleCommonEquity/ 9.10 % 8.99 % 9.23 % TangibleAssets



TangibleBook Value Per Share

Book ValuePer Common $ 10.33 $ 9.92 $ 8.92 Share

Less:Effects of (0.11 ) (0.12 ) (0.12 ) IntangibleAssets

TangibleBook Value $ 10.22 $ 9.80 $ 8.80 Per CommonShare



Return onAverageTangible CommonEquity

Net Income $ 10,993 $ 10,671 $ 7,598 $ 21,664 $ 15,041



AverageCommon $ 286,311 $ 272,729 $ 255,109 $ 279,558 $ 252,955 Equity

Less:Effects ofAverage (3,228 ) (3,276 ) (3,419 ) (3,251 ) (3,442 )IntangibleAssets

AverageTangible $ 283,083 $ 269,453 $ 251,690 $ 276,307 $ 249,513 CommonEquity

Return onAverageTangible 15.58 % 16.06 % 12.14 % 15.81 % 12.12 %CommonEquity

Three Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

Tangible Common Equity

Common Equity

$

290,830

$

279,171

$

265,405

$

265,432

$

257,190

Less: Intangible Assets

(3,200

)

(3,248

)

(3,296

)

(3,344

)

(3,391

)

Tangible Common Equity

$

287,630

$

275,923

$

262,109

$

262,088

$

253,799

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729005241/en/

CONTACT: Justin Horstman Director of Investor Relations investorrelations@bwbmn.com 952-542-5169